Limit of loans and investments. 221.0320(1)(1)
Except as provided in subs. (2)
and s. 221.0319 (3)
, the total liabilities of any person, other than a municipal corporation, to a bank for money borrowed may not, at any time, exceed 20 percent of the capital of the bank. In determining compliance with this section, the total liabilities of a partnership includes the liabilities of the general partners of the partnership, computed individually as to each general partner on the basis of his or her direct liability.
(2) Warehouse receipts and certain bonds and notes.
The percentage limitation under sub. (1)
is 50 percent of the bank's capital, if the liabilities under sub. (1)
are limited to the following types of liabilities:
A liability secured by warehouse receipts issued by warehouse keepers licensed and bonded in this state under ss. 99.02
or under the federal bonded warehouse act or holding a license under s. 126.26
, if all of the following requirements are met:
The receipts cover readily marketable nonperishable staples.
The staples are insured, if it is customary to insure the staples.
The market value of the staples is not, at any time, less than 140 percent of the face amount of the obligation.
A liability in the form of a note or bond that meets any of the following qualifications:
The note or bond is secured by not less than a like amount of bonds or notes of the United States issued since April 24, 1917, or certificates of indebtedness of the United States.
The note or bond is secured or covered by guarantees or by commitments or agreements to take over, or to purchase the bonds or notes, and the guarantee, commitment or agreement is made by a federal reserve bank, the federal small business administration, the federal department of defense or the federal maritime commission.
The note or bond is secured by mortgage or trust deeds insured by the federal housing administrator.
(3) Obligations of certain local governmental units. 221.0320(3)(b)
Except as otherwise provided in this subsection, the total liabilities of a local governmental unit to a bank for money borrowed may not, at any time, exceed 25 percent of the capital of the bank.
Liabilities in the form of revenue obligations of a local governmental unit are subject to the limitations provided in par. (b)
. In addition, a bank is permitted to invest in a general obligation of that local governmental unit in an amount that will bring the combined total of the general obligations and revenue obligations of a single local governmental unit to a sum not in excess of 50 percent of the capital of the bank.
If the liabilities of the local governmental unit are in the form of bonds, notes or other evidences of indebtedness that are a general obligation of a local governmental unit in this state, the total liability of the local governmental unit may not exceed 50 percent of the capital of the bank.
The total amount of temporary borrowings of any local governmental unit maturing within one year after the date of issue may not exceed 60 percent of the capital of the bank. Temporary borrowings and longer-term general obligation borrowings of a single local governmental unit in this state may be considered separately in arriving at the limitations provided in this subsection.
(4) Obligations of certain international organizations; other foreign bonds.
A bank may purchase bonds offered for sale by the International Bank for Reconstruction and Redevelopment and the Inter-American Development Bank or such other foreign bonds as may be approved under rules established by the division. At no time shall the aggregate investment in any of these bonds issued by a single issuer exceed 10 percent of the capital of such bank.
(5) Foreign national government bonds.
A bank may invest in general obligation bonds issued by any foreign national government if the bonds are payable in American funds. The aggregate investment in these foreign bonds may not exceed 3 percent of the capital of the bank, except that this limitation does not apply to bonds of the Canadian government and Canadian provinces that are payable in American funds.
A bank may invest in time deposits and certificates of deposit of other financial institutions in an amount not to exceed the following:
In each domestic insured U.S. bank, including its offshore branches, and in each domestic insured savings and loan association, savings bank or credit union, 20 percent of capital or, in domestic insured financial institutions including their offshore branches designated by the board of directors, 50 percent of capital.
In each uninsured bank or foreign bank, including its domestic branches, and in any other savings and loan association, savings bank or credit union, 20 percent of capital.
A bank may not make or renew a loan or loans, the aggregate total of which exceeds the level established by the board of directors without being supported by a signed financial statement unless the loan is secured by collateral having a value in excess of the amount of the loan. A signed financial statement furnished by the borrower to a bank in compliance with this paragraph must be renewed annually as long as the loan or any renewal of the loan remains unpaid and is subject to this paragraph.
A loan or a renewal of a loan made by a bank in compliance with par. (a)
, without a signed financial statement, may be treated by the bank as entirely independent of any secured loan made to the same borrower if the loan does not exceed the limitations provided in this section.
This section does not apply to any of the following:
A liability that is secured by not less than a like amount of direct obligations of the United States which will mature not more than 18 months after the date such liabilities to the bank are entered into.
A liability that is a direct obligation of the United States or this state, or an obligation of any governmental agency of the United States or this state, that is fully and unconditionally guaranteed by the United States or this state.
A liability in the form of a note, debenture or certificate of interest of the Commodity Credit Corporation.
A liability in the form of a note or debenture issued by the Federal National Mortgage Association or the export-import bank of Washington.
A liability in the form of a note, debenture or bond issued by the federal home loan bank.
A liability created by the discounting of bills of exchange drawn in good faith against actually existing values or the discounting of commercial or business paper actually owned by the person negotiating the same.
History: 1995 a. 336
; 2001 a. 16
; 2003 a. 33
See also ch. DFI-Bkg 18
, Wis. adm. code.
Other loans and investments. 221.0321(1)(1)
Except as provided in sub. (3)
, a bank may lend under this subsection, through the bank or a subsidiary of the bank, to all borrowers from the bank and all of its subsidiaries, an aggregate amount not to exceed the percentage of its capital established by the division under sub. (3)
. Neither a bank nor any subsidiary of the bank may lend to any borrower, under this subsection and any other law or rule, an amount that would result in an aggregate amount for all loans to that borrower that exceeds the percentage of the bank's capital established under sub. (3)
. A bank or its subsidiary may take an equity position or other form of interest as security in a project funded through these loans. A transaction by a bank or its subsidiary under this subsection requires prior approval by the board of directors of the bank or its subsidiary, respectively. Except as provided in sub. (3)
, these loans are not subject to s. 221.0326
or to classification as losses, for a period of 2 years from the date of each loan.
(2) Permitted investments.
Except as provided in sub. (3)
, a bank may invest under this subsection, through the bank or subsidiary of the bank, amounts not to exceed, in the aggregate, that percentage of its capital established by the division under sub. (3)
in equity positions, such as profit-participation projects. A bank may take an investment position in a project with respect to which it is also a lender. The bank shall limit its liability as an investor in a specific project under this subsection to an amount not exceeding the amount of its investment in that project. For purposes of calculating the bank's aggregate investment under this subsection, the amount of each investment shall be established as of the date that the investment is made. A transaction by a bank under this subsection requires prior approval by the board of directors of the bank and shall be disclosed to the shareholders of the bank prior to each annual meeting of the shareholders.
(3) Limits established by the division.
The division shall establish for each bank the applicable percentage, not to exceed 20 percent, under sub. (1)
and the applicable percentage, not to exceed 20 percent, under sub. (2)
. The division may withdraw or suspend a percentage established under this subsection and, in such case, may specify how outstanding loans or investments shall be treated by the bank or its subsidiary. Among the factors that the division may consider in establishing, withdrawing or suspending a percentage under this subsection are the bank's capital, assets, management and liquidity ratio, and capital ratio.
(4) Record-keeping requirements.
At the time of making a loan or investment, the bank or its subsidiary shall note in its records whether it is made under sub. (1)
. The forms of security for loans under sub. (1)
and the forms of investment under sub. (2)
shall be as approved by the division by rule.
(5) Certain secured loans.
A bank may make loans secured by assignment or transfer of stock certificates or other evidence of the borrower's ownership interest in a corporation formed for the cooperative ownership of real estate. Sections 846.10
, as they apply to a foreclosure of a mortgage involving a one-family residence, apply to a proceeding to enforce the lender's rights in security given for a loan under this subsection. The division shall promulgate joint rules with the office of credit unions that establish procedures for enforcing a lender's rights in security given for a loan under this subsection.
(6) Investments in other financial institutions.
In addition to the authority granted under s. 221.1201
and subject to the limitations of sub. (3)
, a bank may invest in other financial institutions.
See also ch. DFI-Bkg 18
, Wis. adm. code.
Additional banking authority. 221.0322(1)(1)
Other permitted activities or powers.
Subject to any regulatory approval required by law and subject to sub. (2)
and s. 221.0315 (2)
, a bank, directly or through a subsidiary of the bank, may undertake any activity, exercise any power or offer any financially related product or service in this state that any other provider of financial products or services may undertake, exercise or provide or that the division finds to be financially related.
(2) Division rules.
The activities, powers, products and services that may be undertaken, exercised or offered by banks under sub. (1)
are limited to those specified by rule of the division and, with respect to loans under s. 221.0321 (1)
and investments under s. 221.0321 (2)
, are subject to the limitations set forth in s. 221.0321
. The division may direct any bank to cease any activity, the exercise of any power or the offering of any product or service authorized by rule under this subsection. Among the factors that the division may consider in so directing a bank are the bank's capital, assets, management and liquidity ratio, and capital ratio.
History: 1995 a. 336
See also ch. DFI-Bkg 16
, Wis. adm. code.
Bank purchase of its own stock. 221.0323(1)(1)
A bank may be the holder or purchaser of not more than 10 percent of its capital stock, capital notes or debentures, except as provided in sub. (2)
(2) Debts previously contracted.
A bank may be the holder or purchaser of more than 10 percent of its capital stock, capital notes or debentures if the purchase is necessary to prevent loss upon a debt previously contracted in good faith. Stock, notes or debentures purchased under this subsection may not be held by the bank for more than 6 months if the stock, notes or debentures can be sold for the amount of the claim of the bank against the same, and they must be sold for the best price obtainable within one year, or they shall be canceled, and shall then amount to a reduction of the capital stock, capital notes or debentures. If the reduction reduces the capital stock below the minimum required by law, the bank's capital stock must be increased to the amount required by law.
(3) Use as security.
A bank may not loan any part of its capital, surplus or deposits on the capital stock, capital notes or debentures of its own bank as collateral security.
(4) Status of treasury shares.
Treasury shares are issued shares but not outstanding shares. All shares acquired by a bank after July 1, 1996, constitute treasury shares unless any of the following conditions exists:
The articles of incorporation prohibit treasury shares.
The board of directors, by resolution, cancels the acquired shares, in which event the shares are restored to the status of authorized but unissued shares.
(5) Prohibition in articles of incorporation.
If the articles of incorporation prohibit treasury shares, all of its own shares acquired by the bank shall be restored to the status of authorized but unissued shares.
(6) Saving clause.
Treasury shares existing on July 1, 1996, remain treasury shares until disposed of, canceled or restored to the status of authorized but unissued shares by action of the board of directors or shareholders.
History: 1995 a. 336
Assets not to be pledged as security. 221.0324(1)(1)
A bank or bank officer may not give preference to any depositor or creditor by pledging the assets of the bank as collateral security, except to secure deposits where otherwise permitted or required by law for a particular depositor, to secure repurchase agreements entered into by the bank or as otherwise provided under this section.
(2) Government deposits.
A bank may deposit with the treasurer of the United States, or in the custody of federal reserve banks or branches of the federal reserve banks designated by a court, so much of its assets, not exceeding its capital and surplus, as may be necessary to do any of the following:
To qualify as a depository for postal savings funds and other government deposits.
To qualify as a depository for bankrupt estates, debtors, corporations and railroads under reorganization under federal bankruptcy laws and receivers, trustees and other officers thereof appointed by any U.S. district court or by any bankruptcy court of the United States. In acting as a depository under this paragraph, a state bank has all the rights and privileges granted to banking institutions under section 61 of the U.S. bankruptcy act, as amended.
(3) Temporary purposes.
A bank may borrow money for temporary purposes, and may pledge assets of the bank not exceeding 50 percent in excess of the amount borrowed as collateral security for this borrowing, if the board of directors has adopted a resolution designating the lender from which the money may be borrowed, the maximum amount for which the bank may become indebted at any one time and the names of the officers who may sign the promissory note evidencing the indebtedness.
(4) Bond requirements.
A bank that is authorized to exercise trust powers and that complies with s. 223.02
is exempt from furnishing the bond specified in s. 221.0316
and is entitled to the same exemption as to making and filing any oath or giving any bond or security as is conferred on trust company banks by s. 223.03 (6) (a)
(5) Pledges to federal reserve board.
A bank may pledge assets in an amount not to exceed 4 times the amount of its capital to the federal reserve bank, as fiscal agent of the United States, of the federal reserve district in which it is located, except that no such pledge shall be made in excess of the amount of its capital without the consent of the division.
(6) Borrowing to reloan.
If a bank is borrowing habitually for the purpose of reloaning, the division may require the bank to repay money so borrowed.
(7) Rediscounting and endorsing negotiable notes.
This section does not prevent a bank from rediscounting in good faith and endorsing its negotiable notes, if authorized by a recorded resolution of the board of directors.
(8) Certificates of deposit.
A bank may not issue its certificate of deposit for the purpose of borrowing money. A bank may not make partial payments upon certificates of deposit.
(9) Pledges to and loans from the federal home loan bank.
Notwithstanding sub. (3)
, a bank that is a member of the federal home loan bank may borrow money from the federal home loan bank and may pledge bank assets as collateral to secure the loan or any other extension of credit from the federal home loan bank.
An officer, employee or agent of a bank may not certify a check, draft or order drawn upon the bank unless the person, firm or corporation drawing the check, draft or order has on deposit with the bank at the time the check, draft or order is certified an amount of money equal to the amount specified in the check, draft or order. A check, draft or order so certified by the duly authorized officer, employee or agent is a valid obligation against the bank.
History: 1995 a. 336
All debts due a bank, on which interest is past due and unpaid for a period of 12 months, shall be considered bad debts and shall be charged off to the profit and loss account at the expiration of one year from the date on which the debt became past due, unless the debts are well secured or in process of collection.
History: 1995 a. 336
Charges to surplus account.
A loss sustained by a bank in excess of its undivided profits may be charged to its surplus account, if its surplus fund is thereafter reimbursed from its earnings. Cash dividends on capital stock may not be declared or paid by the bank in excess of 50 percent of its net earnings until its surplus fund is fully restored to the amount that was in the surplus account immediately preceding the charge of the loss.
(2) Reimbursement of surplus and restricted dividends.
If the surplus fund of a bank is in excess of 100 percent of its capital stock and if losses charged against it do not reduce the surplus account to an amount less than 100 percent of its capital stock, the bank is not subject to sub. (1)
with respect to reimbursement of the surplus account and with respect to restricted dividends on capital stock.
History: 1995 a. 336
Except as provided in sub. (2)
, the board of directors of a bank may declare and pay a dividend from its undivided profits in an amount they consider expedient. The board of directors shall provide for the payment of all expenses, losses, required reserves, taxes, and interest accrued or due from the bank before the declaration of dividends from undivided profits. If dividends declared and paid in either of the 2 immediately preceding years exceeded net income for either of those 2 years respectively, the bank may not declare or pay any dividend in the current year that exceeds year-to-date net income except with the written consent of the division.
(2) Liability of shareholders.
A bank's dividends may not in any way impair or diminish the capital of the bank other than by reducing undivided profits. If a dividend is paid that does not comply with this section, every shareholder receiving the dividend is liable to restore the full amount of the dividend unless the capital is subsequently made good.
(3) Liability of directors.
If the board of directors of a bank pays dividends when the bank is insolvent or in danger of insolvency, or not having reason to believe that there were sufficient undivided profits to pay the dividends, the members of the board of directors are jointly and severally liable to the creditors of the bank at the time of declaring dividends in an amount equal to twice the amount of the dividends.
(4) Reduction of capital.
Subject to the approval of the division, and subject to ss. 221.0211 (4)
and 221.0323 (1)
, a bank may, by a vote of shareholders owning, in the aggregate, at least two-thirds of its capital stock, reduce its capital. Notwithstanding sub. (2)
and subject to ss. 221.0216 (5)
, as part of its capital reduction plan approved by the division in accordance with this subsection, and with the affirmative vote of shareholders owning at least two-thirds of the shares of each class of its stock outstanding, a bank may distribute cash or other assets to its shareholders.
History: 1995 a. 336
; 2017 a. 340
Savings promotion prize programs. 221.0329(1)(a)
“Nonqualifying account" means a savings, time, or money market account that is not a qualifying account.
“Qualifying account" means a savings, time, or money market account through which a bank's depositors may obtain chances to win prizes in a savings promotion.