Section DFI-SB 16.03 - Authorized investments 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).Wis. Admin. Code Department of Financial Institutions DFI-SB 16.03
Cr.. Register. December, 1995, No. 480, eff. 1-1-96; correction in (6) made under s. 13.93(2m) (b) 7, Stats; CR 01-056: CR (7), Register August 2001 No. 548, eff. 9-1-01; CR 02-022: CR (8), Register, June, 2002, No. 558, eff. 7-1-02.Amended by, CR 23-039: am. (5) Register February 2024 No. 819, eff. 4/1/2024This section interprets or implements s. 214.49, Stats. and parallels the long standing agency policy for savings and loan associations.