Wisconsin Administrative Code › Department of Financial Institutions › DFI-SB 1-22 - Department of Financial Institutions-Savings Banks › Chapter DFI-SB 16 - Authorized Activities Of Savings Banks › Section DFI-SB 16.03 - Authorized investments

Current through June 24, 2024
A savings bank may invest its funds in the following:
(1) MUTUAL FUNDS. Shares of an open-end
				investment company, commonly known as a "mutual fund", but limited to 5% of a
				savings bank's total assets in any one company. The open-end investment company
				shall be registered with the federal securities and exchange commission and an
				individual fund's portfolio shall consist of obligations that are eligible for
				direct purchase by a savings bank. However, a savings bank may purchase, with
				the prior written approval of the division, an investment in an open-end
				investment company containing mortgage-backed, asset-backed or other derivative
				products. The savings bank shall monitor the open-end investment company's
				portfolio on a quarterly basis to determine whether an appropriate level of
				obligations that are eligible for direct purchase by a savings bank is
				maintained.
Note:
This language parallels the authority of
				  federal savings and loan associations and savings banks in
				  12 CFR
				  560.32 (formerly
				  12 CFR
				  545.76).
(2) COLLATERALIZED MORTGAGE OBLIGATIONS AND
				REAL ESTATE MORTGAGE INVESTMENT CONDUITS. A collateralized mortgage obligation
				and a real estate mortgage investment conduit issued by a state or federal
				agency or by a private issuer. In acquiring and retaining the security, a
				savings bank shall comply with the federal financial institutions examination
				council's "Statement of Policy on Securities Activities" originally issued on
				January 10, 1992 and revised on April 15, 1994. Collateralized mortgage
				obligations and real estate mortgage investment conduits issued by a private
				issuer shall be rated in one of the 2 highest categories by a nationally
				recognized rating service. The maximum purchase of any one private issue is
				limited to the greater of $1,000,000 or one percent of a savings bank's total
				assets. A savings bank may invest in stripped mortgage backed securities or
				residuals with the prior written approval of the division.
Note:
This language parallels the authority of
				  federal savings and loan association and federal savings banks in
				  12 USC
				  1464(5)(c)(1)(R) except the
				  last sentence which codifies agency policy.
(3) MORTGAGE BACKED SECURITIES; MORTGAGE
				BACKED DEBT. Mortgage backed securities and mortgage backed debt issued by a
				state or federal agency or by a private issuer. The underlying mortgage loans
				shall be secured by owner-occupied, one to 4 unit dwellings. Private issues of
				these securities must be rated in one of the 2 highest categories by a
				nationally recognized rating service. The maximum purchase of any one private
				issue is limited to the greater of $1,000,000 or one percent of a savings
				bank's total assets.
Note:
This language parallels the authority of
				  federal savings and loan associations and savings banks in
				  12 USC
				  1464(5)(c)(1)(R) except the
				  last sentence, which codifies this agency's policy.
(4) NON-MORTGAGE DERIVATIVE PRODUCTS AND
				CONTRACTS. Non-mortgage derivative products and contracts, including interest
				rate swaps with the prior written approval of the division. Contracts must be
				U.S. dollar denominated and used for the express purpose of reducing, hedging
				or managing interest rate risk.
Note:
This parallels agency policy for this type
				  of investment for savings and loan associations.
(5) LOAN-BACKED SECURITIES. Securities backed
				by commercial or consumer loans or loan receivables. If the security is issued
				by a private source, the security shall be rated as investment-grade by a
				nationally recognized rating service. Privately issued securities are also
				limited to 10% of unimpaired surplus of a savings bank in any one issuer and
				aggregate limitations are limited to 10% of total assets of a savings bank when
				combined with other commercial or consumer loans unless a greater amount is
				authorized by prior written approval of the division.
(6) INDUSTRIAL DEVELOPMENT REVENUE BONDS.
				Industrial development revenue bonds issued under s.
				66.1103, Stats. The bonds shall
				be secured by a mortgage or security interest in the project and the bond
				indebtedness may not exceed 75% of the appraised value of the project. Revenues
				of the project shall be pledged to repay bond interest and principal. The
				repayment of the bonds shall be guaranteed by an insurance company or financial
				institution with demonstrated financial ability to repay the
				liability.
(7) INVESTMENTS IN
				DEVELOPMENT COMPANIES. A savings bank is authorized to invest, in an amount not
				to exceed in the aggregate 5% of its capital, in shares of small business
				investment companies located in this state.
(8) STOCK IN BANK-OWNED BANKS. A savings bank
				may, with the prior written approval of the division, acquire and hold stock,
				in an aggregate amount not exceeding 10% of its capital, in one or more of the
				following:
(a) A bank chartered under s.
				221.1202, Stats.
(b) A bank chartered under
				27 USC
				27(b)(1).
(c) A bank holding company wholly owning a
				bank under sub. (1) or (2).