AB596: Bill Text

1995 - 1996 LEGISLATURE

1995 Assembly BILL 596

October 2, 1995 - Introduced by Representatives Kaufert, Gard, Olsen, Goetsch, Green, Kreibich, Lehman, Hahn, Vrakas, Seratti, Grothman and Ward, cosponsored by Senator Darling, by request of Commissioner of Savings and Loan. Referred to Committee on Financial Institutions.

AB596,1,10 An Act to renumber 214.30 (1); to amend 214.04 (22), 214.095 (2), 214.305, 214.33 (2) (c), 214.485 (9), 214.49 (4), 214.49 (5) (intro.), 214.49 (8), 214.49 (9), 214.49 (12), 214.49 (14), 214.49 (15), 214.545, 214.625, 214.63, 214.65 (2) (a) and (b), 214.665 (1), 214.67, 214.755 (2), 214.76 (4m) and 214.93; to repeal and recreate 214.305, 214.345 (5), 214.345 (5), 214.485 (9), 214.49 (5) (intro.), 214.49 (12), 214.49 (14), 214.49 (15), 214.545, 214.625, 214.63, 214.65 (2) (a) and (b), 214.665 (1), 214.67 and 214.93; and to create 214.30 (1) (b), 214.49 (9m), 214.755 (1m) and 214.76 (4m) of the statutes; relating to: savings bank chapter revisions, providing an exemption from rule-making procedures and providing a penalty.

Analysis by the Legislative Reference Bureau

This bill makes several revisions to the savings bank chapter created by 1991 Wisconsin Act 221. The revisions include:

1. Permitting a savings bank to make consumer loans in a total amount that is greater than 10% of the savings bank's total assets, if the commissioner of savings and loan (the regulating authority) authorizes the lending. Currently, the 10% limit may not be exceeded.

2. Permitting a savings bank to maintain collection agency trust accounts.

3. Extending provisions that provide reasonable indemnification to directors, officers and employes to also provide limitations on the liability of directors and officers in connection with their duties and eliminating certain types of proceedings for which indemnification is not extended.

4. Providing for imprisonment for up to 20 years as a penalty for making a false statement or report under the chapter. Civil forfeitures are the only penalties that currently apply to false statements.

5. Requiring members or stockholders of a savings bank who previously gave a proxy for their votes to disclose their intention to vote personally, instead of by proxy, if they attend a meeting at which a vote will be taken.

6. Changing the approval process for savings bank reorganizations. Currently, for most issues affecting a savings bank, a member or shareholder that is entitled to vote on the issue holds one vote for every $100 of deposits in the savings bank. An exception to this rule involves a savings bank reorganization. Current law says that a savings bank reorganization must be approved by a majority of all voting members or shareholders. The bill revises this procedure by specifying that a savings bank reorganization must be approved by a majority of all votes entitled to be cast.

7. Permitting a savings bank to hold an annual or special meeting of members or stockholders at the home office of the savings bank or at another location in a county in which the savings bank maintains an office. Currently, annual or special meetings may be held at the home office or at another location in the county in which the home office is located.

8. Providing that members of a mutual savings bank have the right to share in the net profit of the bank, after payment of creditors, if the bank liquidates.

9. Making various changes to permissible investments for savings banks. Under current law, savings banks may invest in short-term commercial paper if the paper is rated in one of the 4 highest categories by a nationally recognized rating service. This provision is amended to require that the paper be rated in the 2 highest categories. A new provision is added authorizing savings banks to invest in shares of stock in a corporation providing the savings bank with electronic banking or other electronic financial services. Current law allows savings banks to invest in financial forwards, futures, options and other financial products for the purpose of reducing, hedging or otherwise managing its interest rate risk exposure. Except for forward contracts, this bill requires prior written approval of the commissioner before a savings bank may invest in these instruments. Current law permits a savings bank to invest in marketable investment securities, if the total amount of these securities of any one issuer does not exceed 5% of the savings bank's capital. This bill changes the percentage limit to 10%. Current law also limits the total aggregate amount of these types of investment to 15% of the savings bank's capital. This bill lowers this percentage threshold to 10%, but allows savings banks to exceed this amount with the prior written approval of the commissioner.

10. Changing the commissioner's authority with respect to setting permissible levels of investment and permissible concentrations of assets of savings banks. Current law allows the commissioner to determine these permissible levels and concentrations of assets by rule. This bill provides that these maximum levels and concentrations need not be set by rule.

11. Changing certain provisions in current law regarding mergers of savings banks so that they only apply to mergers of stock savings banks.

12. Prohibiting officers or employes of a savings bank from disclosing the contents of an examination report except to law enforcement or prosecutorial agencies, courts, their attorneys and accountants, and the saving bank's deposit insurance corporation. Persons who violate this prohibition forfeit their office or position.

13. Authorizing the commissioner to order an audit of a savings bank at any time the commissioner considers it advisable. The savings bank is required to pay for the cost of the audit and to file a copy of the audit report with the commissioner. Current law requires savings banks to conduct annual audits. This bill authorizes the commissioner to conduct the audit, if requested by the savings bank's board of directors. The commissioner is required to charge the savings bank for the audit the same rate as for examinations by the commissioner.

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB596, s. 1 Section 1. 214.04 (22) of the statutes is amended to read:

AB596,3,5 214.04 (22) To maintain real estate broker trust accounts under s. 452.13, attorney trust accounts under s. 757.293, collection agency trust accounts under s. 218.04 (9g), burial trust accounts under s. 445.125 and care funds and preneed trust funds under s. 157.19.

AB596, s. 2 Section 2. 214.095 (2) of the statutes is amended to read:

AB596,3,12 214.095 (2) In order to effect a reorganization under sub. (1), the board of directors of the original savings bank shall approve a plan providing for the reorganization. The plan shall be submitted for approval by a majority of the voting all votes entitled to be cast by members or stockholders of the savings bank at a meeting held in accordance with the savings bank's articles of incorporation and bylaws.

AB596, s. 3 Section 3. 214.30 (1) of the statutes is renumbered 214.30 (1) (a).

AB596, s. 4 Section 4. 214.30 (1) (b) of the statutes is created to read:

AB596,4,5 214.30 (1) (b) A member has the right to share in the net profit of a mutual savings bank, after payment of creditors, if the savings bank liquidates. This right does not permit a member to claim a share of net profits absent a liquidation and does not permit a member to seek liquidation except in any manner permitted by the mutual savings bank's articles of incorporation or bylaws.

AB596, s. 5 Section 5. 214.305 of the statutes is amended to read:

AB596,4,16 214.305 Annual and special meetings. The date of the annual meeting of members or stockholders shall be specified in the bylaws. Failure to hold an annual meeting may not cause a dissolution of the savings bank. Special meetings may be called by the board of directors, by stockholders of not less than 20% of the outstanding stock, by members constituting not less than 20% of the eligible votes or by any other person designated in the bylaws. The commissioner may call a special meeting with not less than 7 days' written or oral notice. An annual or special meeting shall be held at the home office of the savings bank or in at another place within the same a county in which the savings bank maintains an office if specifically designated in the notice of the meeting.

AB596, s. 6 Section 6. 214.305 of the statutes, as affected by 1995 Wisconsin Acts 27 and .... (this act), is repealed and recreated to read:

AB596,5,3 214.305 Annual and special meetings. The date of the annual meeting of members or stockholders shall be specified in the bylaws. Failure to hold an annual meeting may not cause a dissolution of the savings bank. Special meetings may be called by the board of directors, by stockholders of not less than 20% of the outstanding stock, by members constituting not less than 20% of the eligible votes or by any other person designated in the bylaws. The division may call a special meeting with not less than 7 days' written or oral notice. An annual or special meeting shall be held at the home office of the savings bank or at another place within a county in which the savings bank maintains an office if specifically designated in the notice of the meeting.

AB596, s. 7 Section 7. 214.33 (2) (c) of the statutes is amended to read:

AB596,5,9 214.33 (2) (c) For any meeting at which the member or stockholder who gave a proxy is present, provided that before the taking of any vote, notice of the member's or stockholder's attendance and intention to vote at the meeting is given by that person to an official whom the savings bank shall identify at the meeting as having responsibility for maintaining a record of attendance.

AB596, s. 8 Section 8. 214.345 (5) of the statutes is repealed and recreated to read:

AB596,5,16 214.345 (5) (a) Subject to the approval of the commissioner, a savings bank's bylaws shall provide for reasonable indemnification to its officers, directors and employes in connection with the faithful performance of their duties for the savings bank. For stock savings banks, the provisions shall be consistent with those under ss. 180.0850 to 180.0859. For mutual savings banks, the provisions shall be consistent with those under ss. 215.512 to 215.525.

AB596,5,21 (b) The provisions relating to the limited liability of directors under s. 180.0828, as they apply to a director of a corporation, apply to a director of a stock savings bank. The provisions relating to the limited liability of directors and officers under s. 215.525, as they apply to a director or officer of a mutual savings and loan association, apply to a director or officer of a mutual savings bank.

AB596, s. 9 Section 9 . 214.345 (5) of the statutes, as affected by 1995 Wisconsin Acts 27 and .... (this act), is repealed and recreated to read:

AB596,6,4 214.345 (5) (a) Subject to the approval of the division, a savings bank's bylaws shall provide for reasonable indemnification to its officers, directors and employes in connection with the faithful performance of their duties for the savings bank. For stock savings banks, the provisions shall be consistent with those under ss. 180.0850 to 180.0859. For mutual savings banks, the provisions shall be consistent with those under ss. 215.512 to 215.525.

AB596,6,9 (b) The provisions relating to the limited liability of directors under s. 180.0828, as they apply to a director of a corporation, apply to a director of a stock savings bank. The provisions relating to the limited liability of directors and officers under s. 215.525, as they apply to a director or officer of a mutual savings and loan association, apply to a director or officer of a mutual savings bank.

AB596, s. 10 Section 10. 214.485 (9) of the statutes is amended to read:

AB596,6,14 214.485 (9) Through secured or unsecured loans for personal, family or household purposes if the total of all loans granted under this subsection does not exceed 10% of the savings bank's total assets, unless a greater amount is authorized in writing by the commissioner.

AB596, s. 11 Section 11. 214.485 (9) of the statutes, as affected by 1995 Wisconsin Act .... (this act), is repealed and recreated to read:

AB596,6,20 214.485 (9) Through secured or unsecured loans for personal, family or household purposes if the total of all loans granted under this subsection does not exceed 10% of the savings bank's total assets, unless a greater amount is authorized in writing by the division.

AB596, s. 12 Section 12. 214.49 (4) of the statutes is amended to read:

AB596,7,6 214.49 (4) In bonds, notes or other evidences of indebtedness which are a general obligation of any city, town, village, county, technical college district or school district in this state. The total liability of any such A savings bank's total investments in a local governmental unit may not at any time exceed 50% of the capital of the savings bank. The A savings bank's total amount of investment in temporary borrowings of any such a local governmental unit maturing within one year from the date of issue may not exceed 60% of the capital of the savings bank. Temporary borrowings and longer-term general obligation borrowings of a single local governmental unit may be considered separately in arriving at the limitations under this subsection.

AB596, s. 13 Section 13. 214.49 (5) (intro.) of the statutes is amended to read:

AB596,7,22 214.49 (5) (intro.) With the prior written consent of the commissioner, a savings bank may invest in the initial purchase and development, or the purchase or commitment to purchase after completion, of home sites and housing for sale or rental, including projects for the reconstruction, rehabilitation or rebuilding of residential properties to meet the minimum standards of health and occupancy prescribed by a local governmental unit, the provision of accommodations for retail stores, shops and other community services that are reasonably incident to that housing, or in the stock of a corporation that owns one or more of those projects and that is wholly owned by one or more financial institutions. The total investment in any one project may not exceed 15% of the savings bank's capital, nor may the aggregate investment under this subsection exceed 50% of its capital. A savings bank may not make an investment under this subsection unless it is in compliance with the capital requirements under s. 214.43 and with the capital maintenance requirements of its deposit insurance corporation. The commissioner may approve the investment only if the savings bank shows all of the following:

AB596, s. 14 Section 14. 214.49 (5) (intro.) of the statutes, as affected by 1995 Wisconsin Acts 27 and .... (this act), is repealed and recreated to read:

AB596,8,15 214.49 (5) (intro.) With the prior written consent of the division, in the initial purchase and development, or the purchase or commitment to purchase after completion, of home sites and housing for sale or rental, including projects for the reconstruction, rehabilitation or rebuilding of residential properties to meet the minimum standards of health and occupancy prescribed by a local governmental unit, the provision of accommodations for retail stores, shops and other community services that are reasonably incident to that housing, or in the stock of a corporation that owns one or more of those projects and that is wholly owned by one or more financial institutions. The total investment in any one project may not exceed 15% of the savings bank's capital, nor may the aggregate investment under this subsection exceed 50% of its capital. A savings bank may not make an investment under this subsection unless it is in compliance with the capital requirements under s. 214.43 and with the capital maintenance requirements of its deposit insurance corporation. The division may approve the investment only if the savings bank shows all of the following:

AB596, s. 15 Section 15. 214.49 (8) of the statutes is amended to read:

AB596,8,20 214.49 (8) In short-term commercial paper having a maturity from 2 to 270 days issued by a financial institution, corporation or other borrower. An investment under this subsection shall be in securities rated in one of the 4 2 highest categories by a nationally recognized rating service.

AB596, s. 16 Section 16. 214.49 (9) of the statutes is amended to read:

AB596,9,2 214.49 (9) A savings bank may purchase shares of, or otherwise acquire In an equity interest in, an insurance company and in or an insurance holding company organized to provide insurance for savings banks and persons affiliated with savings banks solely to the extent that ownership is a prerequisite to obtaining directors' and officers' insurance or blanket bond insurance for the savings bank through the company.

AB596, s. 17 Section 17. 214.49 (9m) of the statutes is created to read:

AB596,9,6 214.49 (9m) In shares of stock, whether purchased or otherwise acquired, in a corporation providing the savings bank with electronic banking or other electronic financial services.

AB596, s. 18 Section 18. 214.49 (12) of the statutes is amended to read:

AB596,9,11 214.49 (12) In forward commitments and, with the prior written approval of the commissioner, in financial futures transactions, financial options transactions, forward commitments or other financial products for the purpose of reducing, hedging or otherwise managing its interest rate risk exposure.

AB596, s. 19 Section 19. 214.49 (12) of the statutes, as affected by 1995 Wisconsin Act .... (this act), is repealed and recreated to read:

AB596,9,17 214.49 (12) In forward commitments and, with the prior written approval of the division, in financial futures transactions, financial options transactions or other financial products for the purpose of reducing, hedging or otherwise managing its interest rate risk exposure.

AB596, s. 20 Section 20. 214.49 (14) of the statutes is amended to read:

AB596,9,23 214.49 (14) In marketable investment securities, if the total amount of those securities of any one issuer or obligor does not exceed 5% 10% of the savings bank's capital and the. The aggregate amount of investments under this subsection does combined with other commercial loans may not exceed 15% 10% of capital the savings bank's total assets without the prior written approval of the commissioner.

AB596, s. 21 Section 21. 214.49 (14) of the statutes, as affected by 1995 Wisconsin Act .... (this act), is repealed and recreated to read:

AB596,10,5 214.49 (14) In marketable investment securities, if the total amount of those securities of any one issuer or obligor does not exceed 10% of the savings bank's capital. The aggregate amount of investments under this subsection combined with other commercial loans may not exceed 10% of the savings bank's total assets without the prior written approval of the division.

AB596, s. 22 Section 22. 214.49 (15) of the statutes is amended to read:

AB596,10,9 214.49 (15) In any other investment authorized by rule of the commissioner. The commissioner need not promulgate lists of authorized investments as rules under ch. 227.

AB596, s. 23 Section 23. 214.49 (15) of the statutes, as affected by 1995 Wisconsin Acts 27 and .... (this act), is repealed and recreated to read:

AB596,10,13 214.49 (15) In any other investment authorized by the division. The division need not promulgate lists of authorized investments as rules under ch. 227.

AB596, s. 24 Section 24. 214.545 of the statutes is amended to read:

AB596,10,23 214.545 (title) Rules Permissible levels of investments. The commissioner shall promulgate rules to determine permissible levels of investment and permissible concentrations of assets for savings banks that apply to all lending and investment authority under this subchapter. The rules commissioner shall give due regard to capital adequacy, operating income, underwriting standards, risk inherent in the investment or loan, and competitive parity with other financial institutions when setting permissible levels. The commissioner need not promulgate permissible levels of investment or permissible concentrations of assets as rules under ch. 227.

AB596, s. 25 Section 25. 214.545 of the statutes, as affected by 1995 Wisconsin Acts 27 and .... (this act), is repealed and recreated to read:

AB596,11,8 214.545 Permissible levels of investments. The division shall determine permissible levels of investment and permissible concentrations of assets for savings banks that apply to all lending and investment authority under this subchapter. The division shall give due regard to capital adequacy, operating income, underwriting standards, risk inherent in the investment or loan, and competitive parity with other financial institutions when setting permissible levels. The division need not promulgate permissible levels of investment or permissible concentrations of assets as rules under ch. 227.

AB596, s. 26 Section 26. 214.625 of the statutes is amended to read:

AB596,11,15 214.625 (title) Merger; stockholder vote of approval. If approved by the commissioner, the plan of merger shall be submitted to the members or stockholders of each merging stock financial institution for approval. A meeting of the members or stockholders of a savings bank shall be called and held in accordance with ss. 214.305 and 214.31. The plan is approved if it receives the affirmative vote of the majority of the total votes entitled to be cast.

AB596, s. 27 Section 27. 214.625 of the statutes, as affected by 1995 Wisconsin Acts 27 and .... (this act), is repealed and recreated to read:

AB596,11,23 214.625 Merger; stockholder vote of approval. If approved by the division, the plan of merger shall be submitted to the stockholders of each merging stock financial institution for approval. A meeting of the stockholders of a savings bank shall be called and held in accordance with ss. 214.305 and 214.31. The plan is approved if it receives the affirmative vote of the majority of the total votes entitled to be cast.

AB596, s. 28 Section 28. 214.63 of the statutes is amended to read:

AB596,12,14 214.63 Merger; commissioner's certificate. The executed merger agreement, together with a certified copy of the minutes of the meeting of members or stockholders of each merging stock financial institution approving the merger agreement, shall be filed with the commissioner. The commissioner shall issue to the resulting savings bank a certificate of merger, setting forth the name of each merging financial institution, the name of the resulting savings bank and the date on which the commissioner approves the articles of incorporation and bylaws of the resulting savings bank. The merger takes effect on the date of the recording of the certificate or a later date if the certificate provides for a different date. Recording shall be completed in the same manner as required for savings bank articles of incorporation, in each county in which the home office of any of the merging financial institutions was located and in the county in which the home office of the resulting savings bank is located. The certificate shall be conclusive evidence of the merger and of the correctness of the merger proceedings except against this state.

AB596, s. 29 Section 29. 214.63 of the statutes, as affected by 1995 Wisconsin Acts 27 and .... (this act), is repealed and recreated to read:

AB596,13,5 214.63 Merger; certificate. The executed merger agreement, together with a certified copy of the minutes of the meeting of stockholders of each merging stock financial institution approving the merger agreement, shall be filed with the division. The division shall issue to the resulting savings bank a certificate of merger, setting forth the name of each merging financial institution, the name of the resulting savings bank and the date on which the division approves the articles of incorporation and bylaws of the resulting savings bank. The merger takes effect on the date of the recording of the certificate or a later date if the certificate provides for a different date. Recording shall be completed in the same manner as required for savings bank articles of incorporation, in each county in which the home office of any of the merging financial institutions was located and in the county in which the home office of the resulting savings bank is located. The certificate shall be conclusive evidence of the merger and of the correctness of the merger proceedings except against this state.

AB596, s. 30 Section 30. 214.65 (2) (a) and (b) of the statutes are amended to read: