AUTHORITY: Implementing and authorized by the Savings Bank Act [205 ILCS 205].

SOURCE: Emergency Rules adopted at 14 Ill. Reg. 15029, effective September 4, 1990, for a maximum of 150 days; adopted at 15 Ill. Reg. 1916, effective January 25, 1991; amended at 16 Ill. Reg. 4891, effective March 16, 1992; amended at 17 Ill. Reg. 8894, effective June 7, 1993; expedited correction at 17 Ill. Reg. 18223, effective June 7, 1993; emergency amendment adopted at 18 Ill. Reg. 7016, effective April 22, 1994, for a maximum of 150 days; amended at 18 Ill. Reg. 15094, effective September 26, 1994; emergency amendment at 19 Ill. Reg. 10277, effective June 29, 1995, for a maximum of 150 days; amended at 19 Ill. Reg. 15474, effective October 31, 1995; recodified from Chapter VIII, Commissioner of Savings and Residential Finance, to Chapter II, Office of Banks and Real Estate, pursuant to PA 89-508, at 20 Ill. Reg. 12645; amended at 22 Ill. Reg. 6719, effective March 30, 1998; amended at 24 Ill. Reg. 73, effective January 1, 2000; emergency amendment at 24 Ill. Reg. 6986, effective April 24, 2000, for a maximum of 150 days; emergency expired on September 20, 2000; amended at 24 Ill. Reg. 15026, effective September 26, 2000; emergency amendment at 24 Ill. Reg. 19331, effective December 15, 2000, for a maximum of 150 days; emergency amendment repealed at 25 Ill. Reg. 3698, effective January 30, 2001, in response to an objection of the Joint Committee on Administrative Rules at 25 Ill. Reg. 1858; amended at 25 Ill. Reg. 6197, effective May 17, 2001; amended at 26 Ill. Reg. 13483, effective September 13, 2002; emergency amendment at 27 Ill. Reg. 16043, effective September 29, 2003, for a maximum of 150 days; emergency amendments suspended at 27 Ill. Reg. 18485, effective November 18, 2003; emergency suspension withdrawn at 28 Ill. Reg. 409, effective December 16, 2003; emergency repealed at 28 Ill. Reg. 427, effective December 16, 2003, in response to the objection and suspension of the Joint Committee on Administrative Rules; amended at 28 Ill. Reg. 807, effective December 29, 2003; amended at 28 Ill. Reg. 7285, effective May 7, 2004; amended at 30 Ill. Reg. 19068, effective December 1, 2006; amended at 41 Ill. Reg. 11336, effective August 28, 2017; amended at 41 Ill. Reg. 12459, effective October 6, 2017; amended at 42 Ill. Reg. 16507, effective August 23, 2018; amended at 46 Ill. Reg. 18013, effective October 27, 2022.

SUBPART A: FILINGS

 

Section 1075.100  Filings

 

Filings pertaining to matters named hereafter shall be subject to the indicated fee pursuant to the Savings Bank Act (the Act) [205 ILCS 205]. Such fee or fees shall be paid at the Department of Financial and Professional Regulation-Division of Banking (Division) at the time of filing. Payment shall be by check, draft or money order made payable to the Department of Financial and Professional Regulation (Department).

 

a)	Permit to Organize (Section 3001 of the Act)....................................................................................................			$ 1,000
b)	Merger (Section 8005 of the Act)....................................................................................................			$ 1,000
c)	Sale of Assets (Section 8010 of the Act)....................................................................................................			$ 1,000
d)	Amendment to Articles of Incorporation Providing for the Issuance of Permanent Reserve Shares (Section 5004 of the Act) (Section 1075.400 of this Part).................................................................................................... ....................................................................................................			$ 1,000
e)	Conversion from Savings Bank Charter to any Federal Charter (Section 8001 of the Act)...........................................................			One times the last total annual Supervisory Fee calculated and assessed against the Savings Bank as set forth in Section 1075.130(a) and (b).
f)	Hearing or Oral Argument – each applicant requesting a hearing or oral argument and/or each objector requesting a hearing or oral argument and/or each adversary participating in a hearing or oral argument (Section 9018 of the Act, 38 Ill. Adm. Code 100, and Section 1075.725 of this Part)................			$   500
	Each applicant requesting a hearing or oral argument and/or each objector requesting a hearing or oral argument and/or each adversary participating in a hearing or oral argument shall bear its pro rata share of all expense incurred in said proceedings.
g)	Application for Subsidiary Acquisition Fee (Section 2004 of the Act)...........................................................			$    250
h)	Conversion from Mutual to Capital Stock Form of Ownership (Section 5004 of the Act) (Subpart O of this Part)....................................................................................................			$10,000
i)	Acquisition of Control of a Savings Bank (Sections 5002, 5004 and 5006 of the Act) (Subpart N of this Part)....................................................................................................			$     500
j)	Photocopy and Duplication Fees
	1)	Photocopies (per page)........................................................................................		$      .25
	2)	Savings Bank Act (bound edition)........................................................................................		$       25
	3)	Rules (bound edition)........................................................................................		$       25
	4)	Annual Report (additional copies)........................................................................................		$       25
	5)	Mailing Labels..............................................................		$       35
k)	Holding Company Registration Fee (Section 2002 of the Act)....................................................................................................			$  1,000
l)	Application for Subsidiary Acquisition Fee, Illinois Savings Bank Holding Company (Section 2004 of the Act)....................................................................................................			$     250
m)	The following fees apply to mutual holding company transactions:
	1)	Mutual Holding Company Reorganization with resulting savings bank stock offered to party other than the mutual holding company (Section 2007 of the Act)........................................................................................		$10,000
	2)	Mutual Holding Company Reorganization with no resulting savings bank stock offered to any party except the mutual holding company (Section 2007 of the Act)........................................................................................		$  3,000
	3)	Subsequent Offerings:
		A)	First offering of resulting savings bank stock to a party other than the mutual holding company after reorganization described in subsection (m)(2) of this Section.........................................................................	$  7,000
		B)	All other offerings to a party other than the mutual holding company.........................................................................	$  1,000
	4)	Conversion of Mutual Holding Company to Stock Holding Company (Section 2007 of the Act)........................................................................................		$10,000

 

(Source:  Amended at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.110  Conditions

 

a)         No submission subject to a fee shall be considered complete without the stipulated fee.

 

b)         The fee shall be non-refundable regardless of the subsequent action with respect to the submission.

 

c)         The Director may waive the payment of the applicable fee otherwise required by this Section and Section 1075.100 of this Part when:

 

1)         the Director determines that the respective merger or bulk sale of assets avoids the need for the Director to take custody of the respective savings bank pursuant to Section 10001 of the Act; or

 

2)         the establishment of a branch office is at the location of the home office of the savings bank which ceases to exist as the result of a merger or bulk sale of assets which avoids the need for the Director to take custody of the respective savings bank pursuant to Section 10001 of the Act; or

 

3)         the termination of operation and closing of a branch office pertains to a branch office of a savings bank which ceases to exist as the result of a merger or bulk sale of assets which avoids the need for the Director to take custody of the respective savings bank pursuant to Section 10001 of the Act and the closing of the respective branch office is a condition stipulated in the plan of the respective merger or bulk sale of assets.

 

d)         Should a person desire to submit any information it considers to be of a confidential nature as part of a submission, such information shall be separately bound and labeled in capital letters, "CONFIDENTIAL", and a statement shall be submitted with the bound copy briefly setting forth the grounds on which such information should be treated as confidential.  Only general reference need be made of that "CONFIDENTIAL" portion in the portion of the submission that the applicant considers not to be confidential. If any material has been granted confidential treatment under State or federal law or by a government agency or a court, those circumstances should be described.  All materials filed are available for inspection, except for portions that are bound and labeled in capital letters, "CONFIDENTIAL", and that the Director determines to hold from public availability because of their confidential nature.  The Director's determination to hold material from public inspection shall be based on considerations of safety and soundness of the applicant, the propriety nature of the material, privacy of the applicants or their organization directors, officers, employees or customers, or on the treatment of the material by other government agencies or by the courts.  The Director will not permit public inspection or copying of any material that is or would be confidential under State or federal law.  The Director will advise the party filing the submission of any decision to make available to the public information labeled in capital letters, "CONFIDENTIAL". It should be understood that it may be necessary for the Director to release materials previously given confidential treatment.  It should be further understood that even though parts of the submission are considered confidential as far as public inspection is concerned, the Director may comment on the confidential portions of submissions, without prior notice, in any public statement in connection with the Director's decision on the submission.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.120  Examination Fees (Repealed)

 

(Source:  Repealed at 42 Ill. Reg. 16507, effective August 23, 2018)

 

Section 1075.130  Regulatory Fees

 

a)         Each savings bank shall pay fees as set forth in Section 9002.5(a) of the Act.

 

b)         When service corporations and/or finance subsidiaries are owned by the savings bank, the owned assets may be consolidated with the assets of the savings bank for calculation of the fee under Section 9002.5(a) of the Act.

 

c)         Each savings bank shall pay to the Secretary an electronic data processing fee equal to 16% of the savings bank's fee set forth in Section 9002.5(a) of the Act. The electronic data processing fee shall be calculated by the Secretary and billed to the savings bank for remittance with the fee set forth in Section 9002.5(a) of the Act.  Each savings bank shall pay fees as set forth in Section 9002.5(c) of the Act.

 

d)         If a savings bank has received a Uniform Financial Institution Rating System (UFIRS) composite rating of 3, 4 or 5 on its last State or federal examination, the savings bank's quarterly fee shall be increased by 25% for a 3 rated savings bank and 50% for a 4 or 5 rated savings bank on the savings bank's subsequent quarter billing. This assessment shall stay in effect until the quarter following the savings bank's receipt of a UFIRS composite rating of 1 or 2 at the next State or federal examination.

 

e)         When a conversion or merger results in a savings bank, and no statement of condition for the resulting savings bank for the preceding quarter was submitted to the Secretary, fees shall be calculated in the same manner set forth in subsections (a), (b) and (c) based on the most recent period report of the condition submitted by the former depository institution to its primary regulator.

 

f)         When a savings bank ceases to be a savings bank, the former savings bank shall remain liable to the Secretary for accumulated fees under the Act or this Section up to and including the date, as determined by the Secretary, that savings bank ceases to be a savings bank. The former savings bank shall not be eligible for any credit or be liable for any assessment described in Section 9002.1(b) of the Act.

 

g)         Nothing in this Section is to be construed as limiting or being applicable to other fees that the Department may assess pursuant to the Act or other State laws or rules.  The dates of billings shall not prejudice the validity of an invoice for any fees billed at a later date.

 

(Source:  Amended at 42 Ill. Reg. 16507, effective August 23, 2018)

 

Section 1075.140  Adjusted Supervisory Fees (Repealed)

 

(Source:  Repealed at 41 Ill. Reg. 11336, effective August 28, 2017)

 

Section 1075.141  Special Credit (Repealed)

 

(Source:  Repealed at 24 Ill. Reg. 73, effective December 16, 1999)

 

Section 1075.150  Withdrawal of Applications or Other Filings

 

a)         Unless otherwise specified in the Savings Bank Act [205 ILCS 205] or this Part, an application or other filing submitted under the Savings Bank Act or this Part shall be deemed withdrawn if the person making the filing fails to respond within 120 days after a request by the Director for additional documents or information related to the filing.   All withdrawn applications or other filings shall be terminated and shall be ineffective. The Director may agree to extend the time in which the application or other filing shall be deemed withdrawn unless the Savings Bank Act or this Part requires otherwise.

 

b)         Notwithstanding subsection (a) of this Section, applications or other filings submitted on or before September 15, 2002 shall not be deemed withdrawn unless the person making the filings fails to respond within 120 days after that date to a request by the Director for additional documents or information related to the filing.

 

c)         Nothing in this Section requires the Director to reissue requests for additional documents or information made prior to September 15, 2002.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

SUBPART B: DEFINITIONS

 

Section 1075.200  Definitions

 

Words or terms that are defined in the Act shall retain the same meaning when used in this Part.

 

"Act" means the Savings Bank Act [205 ILCS 205].

 

"Company" means any corporation, partnership, business trust, association, or similar organization, or any other trust unless by its terms it must terminate within 25 years or not later than 21 years and 10 months after the death of individuals living on the effective date of the trust, but shall not include any corporation the majority of the shares of which are owned by the United States or by any state.

 

"Controlling Interest" means a person, or company has a controlling interest in a proposed savings bank, a lender, or a company, if the person, or company:

 

directly or indirectly or acting through one or more other persons or companies owns, controls, or has power to vote 25% or more of any class of voting securities at the proposed savings bank, lender, or company; or

 

controls in any manner the election of the majority of the directors or trustees of the proposed savings bank, lender, or company; or

 

the Director determines, after a hearing, that the company directly or indirectly exercises a controlling influence over the management policies of the proposed savings bank, lender, or company; or

 

directly or indirectly, or acting through one or more other persons or companies, owns, controls, or has power to vote 25% or more of any class of securities that invests the owner, controller, or voter with the right to vote to approve or disapprove of voluntary corporate changes and amendment of the Articles of Incorporation and bylaws.

 

"Department" means the Department of Financial and Professional Regulation.

 

"Director" means the Director of the Department of Financial and Professional Regulation-Division of Banking.

 

"Division" means the Department of Financial and Professional Regulation-Division of Banking.

 

"Lender" means a secured or unsecured creditor or creditors named as such in the debt obligation and documents, creating any security interest.

 

"Organization Director" means any person defined as a Director by Section 1007.55 of the Act.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

SUBPART C: REPORTS

 

Section 1075.300  Contracts

 

a)         Except employment contracts, loans on savings accounts, or contracts with consideration of less than $25,000, a savings bank shall file with the Director, within 10 days after the contract's execution, a copy of any contract with the following:

 

1)         any person owning 10% or more of the outstanding shares of stock of the savings bank, if that savings bank issues stock;

 

2)         any organization director, officer, employee, agent, or attorney of the savings bank;

 

3)         any representative, partner or immediate relative of an officer, organization director or 10% shareholder of the savings bank or savings bank holding company;

 

4)         any corporation in which any of the persons listed in this subsection have a 10% interest; or

 

5)        any trust in which any of the persons listed in this subsection has an interest.

 

b)         Any savings bank knowingly entering into a contract with a organization director, officer, or a 10% or more shareholder of any other financial institution either directly or with a corporation or trust in which the organization director, officer, or 10% or more shareholder owns 10% or more of the voting stock of that corporation, or has a beneficial interest in that trust, shall file with the Director a copy of the contract within 10 days after its execution.

 

c)         Every contract entered into by a savings bank of a kind or nature stated in subsection (a) or (b) shall be approved by the board of directors of that savings bank, and that approval shall be reflected in the minutes of the meeting of the board of directors and kept on file at the savings bank.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.310  Financial Reports

 

Each savings bank shall file quarterly financial reports on forms prescribed by the Director. Such reports shall be delivered to the Director by the last day of the month following the quarter end for which the report applies. Any savings bank that fails to submit required reports in the time prescribed by this Section shall be subject to fine as provided for in the Act.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

SUBPART D: OPERATIONS

 

Section 1075.400  Capital Stock (Repealed)

 

(Source:  Repealed at 22 Ill. Reg. 6719, effective March 30, 1998)

 

Section 1075.410  Minimum Capital Requirement

 

a)         The Director may establish a minimum capital level for a savings bank at such amount or at such ratio of capital-to-assets as the Director determines to be necessary or appropriate in consideration of the circumstances of the savings bank.

 

b)         For a financial institution applying to convert to a savings bank charter, the Director may accept as being in full compliance with Section 5001 of the Act a financial institution with less than the minimum capital required in Section 5001 if the financial institution has an approved capital plan under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (12 USC1464(5)(s)(5)), and the Director finds that the financial institution is otherwise being operated in a safe and sound manner. The Director's determination shall be made after review of financial reports and statements, reports of examination and other information as the Director shall consider necessary for making a determination that the financial institution is being operated in a safe and sound manner.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.415  Conflicting Federal Powers, Law and Regulations

 

With regard to the exercise of any power derived from Section 1006(a) of The Act, and in case of conflict between The Act and any other statute or regulation from which a power is derived under Section 1006(a) of The Act, or in cases where clarification is sought regarding the manner of exercising a derived power, its context or the limits to be observed in its exercise, The Act, the Federal Deposit Insurance Act (12 C.F.R. 300 et seq.) and the Federal Deposit Insurance Corporation Rules (12 U.S.C. 1811 et seq.) shall prevail.

 

(Source:  Amended at 26 Ill. Reg. 13483, effective September 13, 2002)

 

Section 1075.420  Advertising

 

If a savings bank advertises a rate of return on any class of deposit account and there are restrictions or conditions which must be complied with in order for the investor to be entitled to receive such rate, such advertising shall clearly set forth such restrictions or conditions. The terminology shall be consistent with Section 7001 of The Act.

 

Section 1075.430  Maintenance of Records

 

To enable the Director to examine a savings bank, holding company, service corporation or affiliate of a savings bank pursuant to Section 9004 of the Act, each savings bank shall establish and maintain accounting and other records of all business transacted, and the documents, files and other material comprising such records shall at all times be available for examination wherever any of such files, documents or materials may be. At a minimum, a savings bank and service corporations shall establish and maintain the following records.

 

a)         Disbursement Records

A savings bank's funds shall be disbursed in accordance with a resolution adopted by the board of directors and reviewed at least annually. Each disbursement shall be documented to show the date, the amount and the purpose of the disbursement and the names of the person or persons or other entities receiving such disbursements whether paid directly, indirectly or through an escrow.

 

b)         Record Retention

 

1)         Before approving any loan or issuing any commitment, a savings bank shall determine that every person that proposes to become liable to the savings bank has the financial ability to service the proposed debt. The procedure for determining the financial capacity of every person that proposes to become liable to the savings bank shall be in accordance with procedures adopted by the board of directors and reviewed at least annually. Thereafter, a savings bank shall retain the application and other documentation supporting each loan, as well as the complete servicing record, as part of the records of the savings bank throughout the duration of the savings bank's investment in the respective loan.

 

2)         A savings bank shall retain each rejected loan application and the information in support thereof for a period of thirty-six (36) months following such rejection.

 

c)         The savings bank shall:

 

1)         require every borrower that is:

 

A)        a trust to provide a certification by the trustee listing the current beneficiaries of the trust;

 

B)        a corporation to provide a certification by the corporate secretary listing the names and percentage of ownership of all 10% or more shareholders; and

 

C)        a partnership to provide a certified list of partners.

 

2)         retain such documents as a part of the savings bank's records and that shall be maintained throughout the duration of the savings bank's investment in the respective loan.

 

d)         Loan Registers

 

1)         A savings bank shall maintain one or more loan registers which shall contain the original entry and be a permanent record, and shall show for every loan the account number, date of the loan, amount of the loan, name of the borrower, nature of security by types, the amount of fees, the amount of the note, including precomputed loans, rate of interest, the term of the loan, and such other information as desired by the savings bank.

 

2)         All loan registers shall be kept numerically by number of loans in order made.

 

e)         Loans Secured by Real Estate

 

1)         An application for the loan, signed by the borrower or its agent, in such form and containing information as will disclose the purpose for the loan, that is construction, purchase, refinancing, and the identity of any security property.

 

2)         A note evidencing the borrower's debt to repay the amount of the loan, executed by the borrower or its agent.

 

3)         A copy of the deed of trust or mortgage instrument on the real estate or other document customarily used in the jurisdiction in which the real estate security is located, evidencing the creation of a security interest in the real estate for the benefit of the lender, which deed of trust, mortgage instrument, or other document has been signed by the borrower or the borrower's agent; and, if the loan is made to finance the purchase of the real estate security for the loan, a signed statement by the borrower or its agent, as part of or as an attachment to the application for the loan, disclosing the purchase price of such real estate security.

 

4)         One or more written appraisal reports, prepared at the request of the lender or its agent and for the lender's use, and signed before the approval of the application (except in the case of an approval conditioned upon obtaining an appraisal) or, if the loan is an insured loan or a guaranteed loan, a certification of the valuation assigned to real estate security by the appraiser accepted by the insuring or guaranteeing agency and furnished to the lender by the agency. Loans of less than $250,000 may be supported by estimates of value other than an appraisal, such as in-house appraisals and valuations, previous appraisals, tax assessments, tax assessment valuations, and insurance evaluations.

 

5)         Documentation showing the financial ability of the borrower to repay the loan, or a written credit report prepared by the savings bank or by others at the request of the savings bank.

 

6)         Documentation showing when and by whom the loan was approved and any terms of the approval.

 

7)         Documentation showing the date, amount, purpose, the recipient of every disbursement of the proceeds of the loan, and to the best of the lender's knowledge, any actual recipient of any proceeds when the stated recipient is acting as an agent or intermediary for another.

 

8)         An opinion signed by the lender's attorney, a title insurance policy, or other documentary evidence customarily used in the jurisdiction in which the real estate security is located, affirming the quality and validity of the lender's lien on the real estate security for the loan.

 

9)         Documentation showing that the savings bank, upon the closing of the loan, furnished to the borrower, a loan settlement statement setting forth in detail the charges or fees the borrower has paid or is obligated to pay to such savings bank or to any other concern or person in connection with the loan, which documentation shall include a copy of the loan settlement statement.

 

10)         A record showing the status and current payment of taxes, assessments, insurance premiums, other charges on the security for the loan, and documenting any loss incurred on the loan security, as well as any amounts recovered pursuant to an insurance settlement of the loss.

 

11)         Documentation evidencing any modifications of the original documents by which a security interest for the benefit of the lender was created, showing appropriate approval of each party to the modification.

 

12)         Documentation evidencing any release of any portion of the collateral pledged to secure the loan, showing the portion of the collateral released, the consideration, if any, paid to effect the release, and a record of the appropriate approval of each release.

 

f)         Loans Not Secured by Real Estate

The records with respect to each unsecured loan or loan not secured by real estate that the savings bank makes shall include the documents referred to in subsection (g) that are relevant to the loan. If the loan is secured by collateral other than real estate, the lender's records also shall include documents evidencing the creation and perfection of a security interest in the collateral, including any financing statement. In addition, if the loan is made to a business entity, the records shall include documentation showing whether the obligor on the loan can generate sufficient cash flow to meet scheduled interest and debt reduction payments, and if not sufficient, the records shall include documentation demonstrating the anticipated source of the borrower's payments.

 

g)         Transfer of Records

A savings bank shall not transfer the location of any of its general accounting or control records from its home office to a branch or other office, or from a branch or other office to its home office or to another branch or office unless the savings bank has sent prior written notice of the transfer to the Director.

 

h)         Data Processing

 

1)         A savings bank that maintains it records by a data processing service shall, before establishing such service, notify the Director in writing. The notice shall be delivered at least 90 days before the date on which the maintenance of records will begin. The notification shall include identification of the records to be maintained by data processing services and a statement as to the location at which the information will be maintained. Any contract shall expressly provide that the records to be maintained by the services shall at all times be available for examination by the Director.

 

2)         A savings bank's data processing service center shall provide, annually, a copy of the third party audit review, if performed.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.440  Business Plan

 

a)         All savings banks whose operations are considered unsafe or unsound by the Director pursuant to the Act or who have total capital less than the amount required under Section 5007 of the Act, or any condition that would endanger the ongoing viability of the savings bank, shall develop a business plan and have the same available for review by the examiners. The period covered by the business plan shall not be less than one year, but may be for any greater number of periods that the Director may require. Each plan shall contain the following:

 

1)         introduction;

 

2)         mission statement;

 

3)         corporate objectives;

 

4)         corporate strategies; and

 

5)         financial projections for the period covered by the business plan.

 

b)         The savings bank's business plan shall be reviewed to determine its continued viability in accordance with current economic conditions and approved or revised, as determined by the board of directors, at least annually.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.450  Excess Insurance

 

a)         Section 1005 of the Act allows savings banks to secure deposit insurance in excess of the amounts available under federally sponsored programs. The excess insurance may be obtained only through an entity authorized to do business in this State and which is under the regulation of the Division. Providers of excess insurance must be preapproved by the Director. Each approved insurer shall be found to be financially sound and to employ approved actuarial practices.

 

b)         Before entering into an agreement to obtain excess insurance a savings bank must notify the Director of its intent. The notice shall include a copy of the proposed contract and sufficient information regarding the proposed insurer to allow the Director to determine as to the financial stability of the proposed insurer. The Director shall have 30 days in which to notify the savings bank of any objections that the Director may have. Any request for additional information that the Director may make shall be made within 20 days after receipt of the notice. Failure of the Director to notify the savings bank within the 30 days as prescribed in this subsection shall constitute a finding of no objection.

 

c)         To obtain approval from the Director, any prospective provider of excess insurance shall agree to provide the Director with any information he or she considers necessary to determine as to the current and continuing financial condition of the proposed insurer. This information shall include but not be limited to the following:

 

1)         quarterly financial reports;

 

2)         report of audit conducted by an independent certified public accountant;

 

3)         copies of minutes of board of directors' meetings; and

 

4)         copies of examination reports made by examiners for any regulatory agency.

 

d)         Any insurer shall agree as a condition of approval to submit to examination by the Director. The cost of any such examination shall be paid by the insurer. The cost of the examination shall be based on the same fee schedule that applies to savings banks.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.455  Vacancies in the Board of Directors

 

If one or more vacancies occur on a board of directors of a savings bank, the remaining organization directors may continue management of the savings bank, including consenting to any enforcement actions or any other regulatory or supervisory requirements. If the number of organization directors falls below 5, the remaining organization directors or the officers of the savings bank shall so inform the Director within 5 business days after the loss of the fifth organization director. The remaining organization directors shall elect temporary organization directors at the next regular or special meeting of the board of directors. Temporary organization directors' terms shall expire at the next regular or special meeting of voting members of the savings bank.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.460  Bond of Officers, Organization Directors, Employees and Agents

 

Every savings bank shall maintain bond coverage with a bonding company acceptable to the Director for every officer, organization director, employee and agent of the savings bank or such other persons in positions requiring the receipt, payment, management or use of money belonging to the savings bank or whose duties permit or require access to or custody of a savings bank's assets or require the making of entries on the books and records of the savings bank.

 

a)         Bond Schedule. The minimum amount of bond shall be based on total consolidated assets of the savings bank and its subsidiaries in accordance with the following schedule:

 

Total Assets	Minimum Coverage
Less than $1,000,000	$135,000.
$1,000,001 to $10,000,000	$135,000 plus $25,000 for each $1,000,000 or fraction thereof over $1,000,000.
$10,000,001 to $50,000,000	$360,000 plus $50,000 for each $5,000,000 or fraction thereof over $10,000,000.
$50,000,001 to $500,000,000	$760,000 plus $75,000 for each $25,000,000 or fraction thereof over $50,000,000.
Over $500,000,000	$2,110,000 plus $100,000 for each $50,000,000 over $500,000,000.

 

b)         No savings bank shall be required to maintain bond coverage in an amount greater than $3,000,000.

 

c)         Coverage in excess of the above minimum requirements is optional at the discretion of the board of directors of the savings bank.

 

d)         The bond shall not provide for more than one deductible from all losses caused by the same person or caused by the same persons acting in collusion or combination in cases in which the losses result from dishonesty. A deductible shall not exceed an amount determined in accordance with the following schedule:

 

Total Capital	Permissible Deductible
Less than 4% of total assets	10% of total capital.
Greater than 4% but less than 6% of total assets	15% of total capital.
Greater than 6% of total assets	20% of total capital.

 

e)         The bond shall be in the form known as Standard Form No. 22, Standard Form No. 24 or an equivalent as determined by the Director.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.465  Indemnification of Officers, Organization Directors, Employees and Agents

 

a)         No officer, organization director, employee, or agent of a savings bank may be indemnified by a savings bank against any expense incurred, if the officer, organization director, employee or agent:

 

1)         is subject to an Order of Removal, Suspension or Industrywide Prohibition under the Act or this Part; or

 

2)         is subject to a final order assessing civil money penalties or requiring affirmative action by an individual or individuals in the form of payments to the savings bank.

 

b)         In accordance with supervisory responsibilities, the Director may, in his or her discretion, review the threat to bank safety and soundness posed by any indemnification or proposed indemnification of officers, organization directors, employees, or agents by a savings bank or for the consistency of any such indemnification with the standards adopted by that savings bank in its articles. Based upon this review, the Director may direct a modification of a specific indemnification by a savings bank through administrative action.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.470  Deceptively Similar Names

 

a)         No savings bank may adopt or use any name deceptively similar to that of another current existing savings bank or financial institution that is located within the area as defined as follows:

 

1)         within the counties of Cook, Lake, DuPage, McHenry, Kane and Will, a radius of one mile of the main office of another savings bank or other financial institution; and

 

2)         within all other counties of the State, excluding those specifically identified in subsection (a), a radius of 50 miles of a savings bank or other financial institution.

 

b)         For purposes of Subpart D of this Part, the determination of the deceptive similarity of a name shall be made by the Director or other person or persons as are authorized to act on the Director's behalf.

 

c)         A savings bank chartered under the Act must use the words "Savings Bank" or the initials "SB" in its name.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.480  Manner of Display of Annual Meeting Notice

 

Notice as required pursuant to Section 4003(a) of the Act shall be prominently displayed and located in plain view of customers at each business location with at least one copy on or near each door or entrance accessible to the general public.

 

(Source:  Amended at 22 Ill. Reg. 6719, effective March 30, 1998)

 

Section 1075.490  Procedures for Exercise of Dissenters Rights

 

Pursuant to Section 4012(c) of the Act, the procedures to be used by savings banks and dissenters in arriving at a value and price for dissenters' shares, as well as how distribution shall be made shall be as follows.

 

a)         Within 10 days after the date on which the action giving rise to the right to dissent is effective or 30 days after the shareholder delivers to the savings bank the written demand for payment, whichever is later, the savings bank shall send each shareholder who has delivered a written demand for payment a statement setting forth the opinion of the savings bank as to the estimated value of the shares, the savings bank's latest balance sheet as of the end of a fiscal year ending not earlier than 16 months before the delivery of the statement, together with the statement of income for that year and the latest available interim financial statements, and either a commitment to pay for the shares of the dissenting shareholder at the estimated value thereof upon transmittal to the savings bank of the certificate or certificates, or other evidence of ownership, with respect to such shares, or instructions to the dissenting shareholder to sell his or her shares within 10 days after delivery of the savings bank's statement to the shareholder. The savings bank may instruct the shareholder to sell only if there is a public market for the shares at which the shares may be readily sold. If the shareholder does not sell within the 10 day period after being so instructed by the savings bank, for purposes of this Section the shareholder shall be deemed to have sold his or her shares at the average closing price of such shares, if listed on a national exchange, or the average of the bid and asked price with respect to such shares quoted by a principal market maker, if not listed on a national exchange, during the 10 day period.

 

b)         If the shareholder does not agree with the opinion of the savings bank as to the estimated value of the shares, the shareholder, within 30 days from the delivery of the savings bank's statement of value, shall notify the savings bank in writing of the shareholder's estimate of value and demand payment for the difference between the shareholder's estimate of value and the amount of the payment by the savings bank or the proceeds of sale by the shareholder, whichever applies because of the procedure for which the savings bank opted pursuant to subsection (a).

 

c)         If, within 60 days from delivery to the savings bank of the shareholder notification of estimate of value of the shares, the savings bank and the dissenting shareholder have not agreed in writing upon the value of the shares, the savings bank shall either pay the difference in value demanded by the shareholder or file a petition in the circuit court of the county in which either the registered office or the principal office of the savings bank is located, requesting the court to determine the fair value of the shares. The savings bank shall make all dissenters, whether or not residents of this State, whose demands remain unsettled parties to the proceeding as an action against their shares and all parties should be served with a copy of the petition. Nonresidents may be served by registered or certified mail or by publication as provided by law. Failure of the savings bank to commence an action pursuant to this Section shall not limit or affect the right of the dissenting shareholders to otherwise commence an action as permitted by law.

 

d)         The jurisdiction of the court in which the proceeding is commenced under subsection (c) by a savings bank is plenary and exclusive. The court may appoint one or more persons as appraisers to receive evidence and recommend decision on the question of fair value. The appraisers have the power described in the order appointing them, or in any amendment to it.

 

e)         Each dissenter made a party to the proceeding is entitled to judgment for the amount, if any, by which the court finds that the fair value of his or her share exceeds the amount paid by the savings bank or the proceeds of sale by the shareholder, whichever amount applies. The judgment shall include an allowance for interest at such rate as the court may find to be fair and equitable in all the circumstances, from the date on which the corporate action giving rise to the right to dissent is approved to the date of payment.

 

f)         The court, in an appraisal proceeding commenced under subsection (c), shall determine all costs of the proceeding, including the reasonable compensation and expenses of the appraisers, if any, and experts employed by any party, but shall exclude the fees and expenses of counsel for any party. If the fair value of the shares as determined by the court materially exceeds the amount the savings bank offered to pay for those shares, or if no offer was made, then all or any part of the expenses may be assessed against the savings bank. Except as otherwise provided in this Section, the practice, procedure, judgment and costs shall be governed by the Code of Civil Procedure [735 ILCS 5].

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

SUBPART E: INVESTMENTS

 

Section 1075.500  Prudent Person Rule

 

a)         When making an authorized investment of savings bank funds, the board of directors, all officers, employees, and agents of any kind must exercise the judgment and care under circumstances then prevailing that persons of prudence, discretion, and intelligence exercise in the management of their own affairs, not in regard to speculation, but in regard to the permanent disposition of their funds, considering the probable income as well as the probable safety of their capital.

 

b)         A violation of The Act shall constitute an unsafe and unsound practice. Any person who knowingly violates any provision of The Act shall be subject to enforcement action or civil money penalties as provided for in The Act.

 

Section 1075.505  Investment Underwriting Practice

 

A savings bank may grant a loan or invest in other authorized assets under the Act.

 

a)         For all types of secured and unsecured loans granted, and other investments entered into, a savings bank's board of directors shall establish and approve, at least annually, written loan underwriting and other investment policies and procedures. These policies and procedures shall set forth criteria sufficient to allow a decision to be made in accordance with Section 1075.500 of this Part.

 

b)         A loan or other investment may be apportioned among appropriate categories, and may be moved, in whole or part, from one category to another as follows.

 

1)         To classify a loan as a real estate loan, a savings bank must rely substantially upon the real estate as the primary security for the loan.

 

2)         For purposes of determining whether aggregate investments under this Part exceed an applicable percentage-of-assets limitation, a loan commitment shall be counted as an investment and shall be included in total assets of a savings bank only to the extent that funds have been advanced (and not repaid) pursuant to the commitment. The term "loan commitment" used in the preceding sentence includes a loan in process, a letter of credit, or any other commitment to extend credit.

 

3)         Loans sold to a third party shall be included in calculation of a percentage-of-assets investment limitation only to the extent they are sold with recourse.

 

4)         A savings bank may make a loan secured by assignment of loans to the extent that it could, under applicable law and regulations, make or purchase the underlying assigned loans.

 

c)         The written policies and procedures pertaining to loans secured by collateral other than real estate, mobile home chattel paper, or the cash surrender value of life insurance shall provide specific procedures for determining the value of the respective collateral.

 

(Source:  Amended at 22 Ill. Reg. 6719, effective March 30, 1998)

 

Section 1075.510  Discrimination and Redlining

 

a)         It shall be considered discriminatory to refuse to grant loans or to vary the terms of loans or the application procedures for loans because of:

 

1)         the proposed borrower's race, color, religion, national origin, age, sex, physical disability or marital status; or

 

2)         the geographic location of the proposed mortgage loan security.

 

b)         A presumption of discrimination shall be attached to any inquiry regarding a loan authorized by the savings bank's board of directors when:

 

1)         a savings bank refused to accept a written application; or

 

2)         a loan application is rejected and not supported by adequate documentation which includes information sufficient to permit an informed non-interested party to reach the same conclusion as the lender concerning the disposition of the application.

 

c)         In cases of a savings bank's non-compliance with this Subpart, the Director, by written notice, shall require that all inquiries for loans received from proposed borrowers be accepted in writing on application forms that provide information sufficient to make an informed decision concerning the final disposition of the respective loan application. Thereafter, the savings bank shall submit a copy of each rejected application to the Director with a written statement setting forth the reason for rejecting the application and a copy of each document supporting the decision.

 

d)         A savings bank shall be required to comply with the Director's directive issued pursuant to subsection (c) for a minimum of 6 months. Should a presumption of discrimination exist at the close of the six-month period, the respective savings bank shall be required to continue reporting until the Director, by examination, determines that discriminatory practices have ceased and the savings bank is so notified.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.515  Loans Secured by Real Estate

 

a)         A savings bank may originate, invest in, sell, purchase, service, participate, or otherwise deal in (including brokerage or warehousing) real estate loans or interest in those loans.

 

b)         In determining compliance with the maximum loan-to-value limitations specified in this Subpart, a savings bank shall add to the loan amount the total of all other existing liens or other encumbrances on the security property having priority over the savings bank lien (including the lien to be established by the savings bank but excluding liens that will be released as the result of payments made from the proceeds of the new loan).

 

c)         At the time of origination, a real estate secured loan granted under the provisions shall not exceed the maximum loan-to-value ratio as follows.

 

1)         With respect to home loans originated or refinanced in excess of 90% of the appraised value of the security property, that part of the unpaid balance that exceeds 80% of the property's value shall be insured or guaranteed by mortgage insurance.

 

2)         With respect to all other loans on the security of real estate originated in excess of 90% of the appraised value of the security property, a savings bank's board of directors, or loan comittee, shall approve each loan before its origination and such approval, or ratification of the loan committee approval, shall be recorded in the minutes of its meeting.

 

3)         In determining compliance with the maximum loan-to-value ratio limitations for real estate loans, at the time of making a loan a savings bank shall add together the unpaid amount, or in the case of a line-of-credit loan the approved credit limit, of all recorded loans secured by prior mortgages, liens or other encumbrances on the security property that would have priority over the savings bank's lien, and shall not make such a loan unless the total amount of the loans (including the one to be made but excluding loans that will be paid off out of the proceeds of the new loan) does not exceed the applicable maximum loan-to-value ratio limitations prescribed in subsection (c). In valuing the real estate security, a savings bank may use the current appraised value of the security property, which may include any expected value of improvements to be financed. "Value" for a real estate loan means the market value of the real estate. For loans granted pursuant to Section 6002(3) of the Act, alternative methods of valuation or other procedures that result in an estimate of value may be used.

 

d)         The loan-to-value limitations specified in subsection (c) shall not apply to the following.

 

1)         To loans guaranteed or insured wholly or in part by the United States or any of its instrumentalities.

 

2)         To loans or contracts made to finance the purchase of real estate owned that has been acquired by the savings bank through default on a prior investment provided that the minutes of organization directors' meetings substantiate that the sale is made in compliance with the following:

 

A)        the board of directors approved the specific terms of the loan or contract before the savings bank's issuance of a letter of commitment. If no letter of commitment is to be issued, such approval shall be before the execution of a note, mortgage, or contract for deed between the purchaser and the savings bank;

 

B)        the board of directors' resolution of approval of the respective sale specifically indicates why the sale is in the best interest of the savings bank and that approval is given after duly considering the provisions of this Subpart;

 

C)        the resolution identifies the specific documentation they have utilized in determining that the sale was in the best interest of the savings bank; and

 

D)        all documentation used in evidencing compliance with this Subpart is retained as a part of the records of the savings bank for so long as the savings bank has a direct or indirect interest in the respective real estate.

 

3)         Loans or contracts having additional eligible collateral pledged in an amount equal to that part of the loan or contract that is in excess of the lending limitations specified in subsection (c). Eligible collateral means:

 

A)        any investment permissible for savings banks under the Act;

 

B)        any savings or time deposit in a commercial bank that is insured by the Federal Deposit Insurance Corporation and not under control of any supervisory authority; or

 

C)        the cash surrender value of a life insurance policy validly assigned to the savings bank.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.520  Construction Loans

 

Construction lending policies and procedures shall provide that

 

a)         No disbursements shall be made unless in conformity with a contractor's statement or amended statement, which statement or amended statement shall comply with the mechanics' lien laws of the State in which the collateral property is located and shall be kept on file at the savings bank throughout the duration of the savings bank's investment in the respective loan.

 

b)         No construction funds shall be disbursed before receipt of a written statement indicating that the work for which payment is being requested has been completed. Such written statement shall be furnished by a person authorized by the board of directors.

 

c)         No construction funds shall be disbursed unless approved by the borrower or the borrower's authorized agent. A blanket authorization may be accepted.

 

d)         The savings bank shall at all times retain construction funds sufficient to complete the improvements in accordance with the contractor's statement or amended statement.  A savings bank may take into consideration equity provided by the borrower in the form of labor.

 

e)         Waivers of mechanics' liens shall be required and shall be delivered to the savings bank or its agent before each disbursement of construction funds unless a lien free form of title insurance policy is obtained before such disbursement.

 

(Source:  Amended at 22 Ill. Reg. 6719, effective March 30, 1998)

 

Section 1075.525  Mobile Home Financing (Repealed)

 

(Source:  Repealed at 22 Ill. Reg. 6719, effective March 30, 1998)

 

Section 1075.530  Overdraft Loans

 

A savings bank may extend secured or unsecured credit to cover the payment of checks, drafts, or other funds transfer orders in excess of the available balance of an account on which they are drawn.

 

(Source:  Amended at 22 Ill. Reg. 6719, effective March 30, 1998)

 

Section 1075.535  Education Loans

 

A savings bank may invest in loans, debts, and advances of credit made for the financing of primary, secondary, undergraduate or post-graduate education.

 

(Source:  Amended at 22 Ill. Reg. 6719, effective March 30, 1998)

 

Section 1075.540  Vehicle/Automobile Loans

 

A savings bank may invest in loans, debts and advances of credit made for the purpose of financing vehicle/automobile purchases.

 

For the purposes of this Section, vehicles/automobiles shall include all motorized forms of transportation which the board of directors of a savings bank shall by written policy consider to be adequate collateral.

 

Section 1075.545  Home Equity Loans

 

Savings banks are permitted, without limitation on the percentage of total assets, to establish revolving lines of credit on the security of a first or junior lien on the borrower's personal residence, based primarily on the borrower's equity. The proceeds of such loan may be used for any purpose.

 

Section 1075.550  Letter of Credit

 

A savings bank is permitted to issue letters of credit provided that the total funds advanced plus secured and unsecured loans for business, corporate, commercial, agricultural, or overdraft purposes does not exceed 15 percent of total assets.

 

a)         The letter of credit must clearly indicate it as a letter of credit, that the issuer's debt to pay is solely dependent upon conforming documents, that the account party must have an unqualified obligation to reimburse the issuer for payments made, and include a specified expiration date or definite term.

 

b)         The underwriting and documentation for a letter of credit must be in conformance with Section 1075.505 of this Part.

 

c)         All documentation used in evidencing compliance with this Section is retained as part of the records of the savings bank for the term of the letter of credit.

 

d)         Nothwithstanding any provision of this Section, a savings bank may issue letters of credit to the same extent and manner as permitted to any other type of depository institution.

 

(Source:  Amended at 26 Ill. Reg. 13483, effective September 13, 2002)

 

Section 1075.555  Other Investments

 

Pursuant to Section 6003 of the Act, a savings bank is permitted to invest in loans secured by stock or equity securities, other than stock or equity securities of a depository institution, if the stock or equity security has a readily available market. Such investment shall not exceed 1 percent of the total assets of the savings bank. Notwithstanding any provision of this Section, a savings bank may invest in loans secured by stock or equity securities to the same extent and manner as permitted to any other type of depository institution.

 

(Source:  Amended at 26 Ill. Reg. 13483, effective September 13, 2002)

 

Section 1075.560  Commercial Paper

 

a)         A savings bank is permitted to invest in commercial paper to the extent that the total of loans for business, corporate, commercial, overdrafts and agriculture, plus corporate debt securities and commercial paper does not exceed 30 percent of the total assets of the savings bank.

 

b)         Investments in commercial paper are limited as follows:

 

1)         up to 1 percent of assets, or $1,000,000, whichever is more, in commercial paper of any one issuer rated, as of the date of purchase, in the highest category by a national rating service;

 

2)         up to ½ of 1 percent of assets, or $500,000, whichever is more, in commercial paper of any one issuer rated, as of the date of purchase, in one of the two highest categories by a national rating service; or

 

3)         up to ¼ of 1 percent of assets, or $250,000, whichever is more, in commercial paper of any one issuer rated, as of the date of purchase, in one of the four highest categories by a national rating service.

 

Notwithstanding any provision of this Section, a savings bank may invest in commercial paper to the same extent and manner as permitted any other type of depository institution.

 

(Source:  Amended at 26 Ill. Reg. 13483, effective September 13, 2002)

 

Section 1075.565  Financial Futures

 

a)         Definitions as used in this Section apply unless the context otherwise requires.

 

            "Financial Futures Transaction" means the purchase or sale of a financial futures contract.

 

            "Forward Commitment" means a written commitment to make, purchase or issue mortgage loans or mortgage-related securities at a price and on or before a date specified in the commitment.

 

            "Long Position" means the purchase of a financial futures contract to take delivery of a financial instrument.

 

            "Mortgage-Related Securities" means securities based on and backed by mortgages, including mortgage-backed securities guaranteed by the Government National Mortgage Association (GNMA's), Mortgage Participation Certificates of the Federal Home Loan Mortgage Corporation, and similar obligations issued by a private issuer or in which the savings bank shall invest.

 

            "Offset" means to cancel an obligation to make or take delivery of securities under a financial instrument under a financial futures contract. A futures contract to purchase a financial instrument is offset by a futures contract to sell a financial instrument of the same type for the same delivery month. A futures contract to sell a financial instrument is offset by a futures contract to purchase a financial instrument of the same type for the same delivery month.

 

            "Short Position" means the holding of a financial futures contract to make delivery of a financial instrument.

 

b)         Permitted Transactions – to the extent that it has legal power to do so, a savings bank may engage in interest rate futures transactions to reduce its net interest rate risk exposure as provided in this subsection. For purposes of this Section, net interest rate risk exposure is the volatility in a savings bank's earnings that can arise from the mismatching of the maturities of assets and liabilities. A savings bank may enter into short positions that are appropriate for reducing its net interest-risk exposure. A savings bank may enter into long positions, other than those that offset short positions, only under the following conditions.

 

1)         The futures position must be matched against a firm forward commitment to sell mortgages not yet originated or to issue mortgage-related securities to be based on mortgages not yet originated. For purposes of subsection (b), a firm forward commitment is a written commitment obligating the seller to make delivery, and the buyer to take delivery of mortgage loans not yet originated or mortgage-related securities to be based on mortgages not yet originated, at a price and on or before a date specified in the commitment.

 

2)         The futures position may be entered into and maintained only to the extent that the savings bank's firm forward commitments exceed 10% of long-term assets with fixed interest rates. For purposes of this Section, long-term assets are those having remaining terms to maturity in excess of 5 years.

 

c)         Authorized Contracts – savings banks may engage in interest rate futures transactions using any interest rate futures contracts designated by the Commodity Futures Trading Commission (CFTC) and based upon a financial instrument in which the savings bank has authority to invest or to issue.

 

d)         Board of Directors' Authorization – before engaging in interest rate futures transactions, a savings bank's board of directors must authorize such activity. In authorizing futures trading, the board of directors shall consider any plan to engage in financial futures transactions, shall endorse specific written policies, and shall require the establishment of internal control procedures. Policy objectives must be specific enough to outline permissible contract strategies, taking into account price and yield correlations between assets or liabilities and the financial futures contracts with which they are matched; the relationship of the strategies to the savings bank's operations; and how such strategies reduce the savings bank's net interest rate risk exposure. Internal control procedures shall include, at a minimum, periodic reports to management, segregation of duties and internal review procedures. In addition, the minutes of the meeting of the board of directors shall set forth limits applicable to futures transactions, identify personnel authorized to engage in futures transactions, and set forth the duties, responsibilities and limits of authority of such personnel. The board of directors shall review the position limit, all outstanding positions, and the unrelated gains or losses on those positions at each regular meeting of the board.

 

e)         Notification – a savings bank engaging in financial futures transactions shall notify the Director that it is engaging in those transactions. The savings bank shall report its gross outstanding long and short financial futures positions on its monthly report.

 

f)         Record Keeping Requirements – a savings bank engaging in financial futures transactions shall maintain records of those transactions sufficient to document how the transactions reduce the net interest rate risk exposure of the savings bank in accordance with the following requirements.

 

1)         Contract Register – the savings bank shall maintain a contract register adequate to identify and control all financial futures contracts and including, at a minimum, the type and amount of each contract, the maturity date of each contract, the cost of each contract, the dollar amount and description of the asset or liability with which the futures contract is matched, and the date and manner in which a contract is closed out. The register shall be prepared in a manner sufficient to indicate at any time the savings bank's total outstanding long and short financial futures positions.

 

2)         Other Documentation – the savings bank shall maintain, as part of the documentation of its financial futures strategy, a schedule of the assets and the liabilities for which net interest rate risk exposure is being reduced and the purpose of each contract entered.

 

3)         Maintenance of Records – the records designated in this subsection (f) shall be maintained for all futures transactions closed-out during the preceding 2 years.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.570  Financial Options

 

a)         Definitions as used in this Section apply unless the context otherwise requires.

 

1)         "Call" means an option which gives the holder the right to purchase a financial instrument at a price and on or before the expiration date specified in the option contract.

 

2)         "Deliverable Instrument" means a financial instrument whose terms satisfy the requirements for fulfilling delivery obligations of an option.

 

3)         "Effective Exercise Price" means the yield equivalent price of an instrument whose coupon rate differs from the standard instrument specified in the option,

 

4)         "Financial Options Contract" means an agreement (other than an optional delivery forward commitment contract to purchase and sell mortgages or mortgage-backed securities when used as part of the mortgage loan origination process) to make or take delivery of a financial instrument upon demand by the holder of the contract at any time before the expiration date specified in the agreement, under terms established either by:

 

A)        a board of trade designated as a contract market for the trading of option contracts by the CFTC or a national securities exchange registered with the Securities Exchange Commission (SEC); or

 

B)        the savings bank and a "permissible counterparty," as defined in subsection (a)(10), that are counterparties in an over-the-counter option transaction (other than an over-the-counter commodity optional transaction subject to the jurisdiction of the CFTC that is not otherwise authorized under the Commodity Exchange Act (7 USC 1) and the regulations under that Act).

 

5)         "Financial Options Transaction" means the purchase or sale of a financial options contract.

 

6)         "Immediate Exercise Value" means the market value gained by exercising an option with the lowest cost deliverable instrument at its effective exercise price compared to purchasing (or selling) an identical instrument with the same coupon rate in the cash market.

 

7)         "Long Position" means the holding of a financial options contract with the option to make or take delivery of a financial instrument.

 

8)         "Option Commitment Fee" means the option premium minus the immediate exercise value of the option.

 

9)         "Option Premium" means the price paid or received for establishing an option position.

 

10)         "Permissible Counterparty" means any entity that is:

 

A)        a primary dealer as defined in subsection (a)(11) of this Section;

 

B)        a bank subject to the regulation and supervision of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, or the Board of Governors of the Federal Reserve System and that is in compliance with applicable regulatory capital requirements;

 

C)        a savings bank that is subject to the regulation and supervision of the Division and is in compliance with applicable regulatory capital requirements or subject to the regulation and supervision of the Division;

 

D)        a broker or dealer registered with the Securities and Exchange Commission (SEC) and subject to regulation and supervision by a Registered Securities Association (registered pursuant to section 15A of the Securities and Exchange Act of 1934 (15 USC 78(o)) (Exchange Act) or a National Securities Exchange (registered pursuant to sections 6 and 19(a) of the Exchange Act) and that is in compliance with applicable capital requirements;

 

E)        a government securities broker or dealer registered with the SEC that is subject to examination and supervision by a Registered Securities Association (registered pursuant to section 15A of the Exchange Act) or National Securities Exchange (registered pursuant to sections 6 and 19(a) of the Exchange Act) and that is in compliance with applicable capital requirements;

 

F)         a futures commission merchant registered with the CFTC and that is in compliance with applicable capital requirements;

 

G)        the Federal Home Loan Banks;

 

H)        the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, or the Government National Mortgage Association or the Government National Mortgage Association; or

 

I)         any other entity that the Director , upon application, determines to be adequately regulated, capitalized, and audited or examined such that acting as a counterparty in an over-the-counter options transaction with a savings bank would not entail substantial credit risks for the savings bank.

 

11)         "Primary Dealer in Government Securities" means any member of the Association of Primary Dealers in United States Government Securities and any parent, subsidiary, or affiliated entity of such primary dealer:  provided, that the member guarantees (to the satisfaction of the Division) the over-the-counter financial options transactions between its parent, subsidiary, or affiliated entity with a savings bank, and provided further that the parent, subsidiary, or affiliated entity is substantially engaged in similar activities.

 

12)         "Put" means an option that gives the holder the right to sell a financial instrument at a price on or before the expiration date specified in the financial options contract.

 

13)         "Short Position" means a commitment through a financial options contract to stand ready during the term of the contract to make or take delivery of a financial instrument.

 

b)         Permitted Transactions – to the extent that it has legal power to do so, a savings bank may engage in financial options transactions as follows:

 

1)         Long Positions – a savings bank may enter into long positions without numerical limit.

 

2)         Short Positions – a savings bank may enter into short call positions without numerical limit. If a savings bank meets its capital requirement, it may enter into short put options to the extent that the aggregate amount of its short put options and forward commitments to purchase securities does not exceed 15% of total assets. If capital requirements are not met, the savings bank may enter into short put options only with prior written approval from the Director.  Permission shall be granted if the Director finds the investment is not for speculative purposes and that the investment is made in accordance with a well-defined hedging program adopted by the savings bank board of directors.

 

c)         Authorized Contracts – a savings bank may engage in financial options transactions using any financial options contracts either:

 

1)         designated by the CFTC or approved by the SEC; or

 

2)         entered into with a "permissible counter-party", as defined in subsection (a)(10), and based upon a financial instrument that the savings bank has authority to invest in or to issue.

 

d)         Board of Directors' Authorization – before engaging in financial options transactions, a savings bank's board of directors must authorize such activity. In authorizing options, the board of directors shall consider any plan to engage in writing or purchasing financial options contracts, shall endorse specific written policies, and shall require the establishment of internal control procedures. For options positions that will be matched with cash or forward market positions, policy objectives must be specific enough to outline permissible options contract strategies, taking into account price and yield correlations between assets or liabilities and the financial options contracts; the relationship of the strategies to the savings bank's operations; the rationale for the ratio of the value of options positions to the value of the matched cash market positions; and how the options strategy reduces the savings bank's interest rate risk exposure. For unmatched option positions, policy objectives must specify the relationship of the strategy to the savings bank's operations. Prudent business judgment shall be exercised by participating savings banks engaging in financial options transactions to maintain a safe and sound financial position. Internal control procedures shall include, at a minimum, periodic reports to management, segregation of duties and internal review procedures. In addition, the minutes of the meeting of the board of directors shall set forth limits applicable to financial options transactions, identify personnel authorized to engage in financial options transactions, and set forth the duties, responsibilities and limits of authority of such personnel. The board of directors shall review the position limit, all outstanding options contract positions, and the unrealized gains or losses on those positions at each regular meeting of the board.

 

e)         Notification, Reporting, and Approval

 

1)         A savings bank shall notify the Director immediately following authorization of its board of directors to engage in financial options transactions. The savings bank shall report its outstanding positions, together with the total unrealized gain or loss from those positions to the Director monthly.

 

2)         A savings bank shall not engage in over-the-counter financial option transactions with any permissible counterparty unless the counterparty agrees to notify the Director. A savings bank shall not continue to engage in over-the-counter financial option transactions with any permissible counterparty that has failed to so notify the Director with respect to previous over-the-counter financial option transactions with that savings bank. Notwithstanding the foregoing, no savings bank shall engage in a long over-the-counter financial option transaction with a specific permissible counterparty, without obtaining the prior approval of the Director, whenever the aggregate exercise value of all long over-the-counter financial option positions with the counterparty exceeds the limitations contained in Section 6013 of the Act. The Director may approve any financial option transaction whenever it determines that such transaction does not subject the savings bank to undue risk. In making such determinations, the Director shall consider:

 

A)        the credit worthiness of the specific counterparty;

 

B)        the savings bank's experience with the counterparty and with transacting in financial option and futures contracts generally;

 

C)        the nature of the subject contracts (e.g., matched or unmatched); and

 

D)        any other circumstances considered relevant by the Director. An application to enter into a financial option transaction under this Section shall be considered approved if the Director does not deny the application within 10 calendar days from the date the application was filed.

 

f)         Record Keeping Requirements – a savings bank engaging in financial options transactions shall maintain records of those transactions in accordance with the following requirements.

 

1)         Contract Register – the savings bank shall maintain a contract register adequate to identify and control all financial options contracts and sufficient to indicate at any time the amounts of financial options contracts required to be reported on its monthly report. At a minimum, the register shall list the type, amount, expiration date and the cost of income from each contract.

 

2)         Other Documentation – the savings bank shall maintain as part of the documentation of its financial options strategy a schedule of any cash market or forward commitment position with which the option is matched and the purpose of each contract.

 

3)         Maintenance of Records – the records designated in this Section shall be maintained for all financial options closed out during the preceding 2 years.

 

g)         Accounting

 

1)         Purchase or Sale – upon initial purchase or sale of a financial options contract, a memorandum entry of the information specified in this Section shall be made and appropriate margin accounts shall be established.

 

2)         Option Commitment Fee

 

A)        The option commitment fee paid for a long position or received from the sale of a short put option shall be amortized to income or expense over the term of the option, except as provided in this Section.

 

B)        The option commitment fee received from the sale of a matched short call option shall be deferred until the option position is terminated. The option commitment fee received from the sale of an unmatched short call option shall be amortized to income over the term of the option.

 

3)         Options Contracts

 

A)        Gains or losses on options contracts that are matched with assets or liabilities carried at the lower of cost or market value, or carried at market value shall be considered in determining the market value of the asset or liability.

 

B)        Options positions that are matched with assets or liabilities carried at cost or to be carried at cost shall be accounted for as follows.

 

i)          If a commitment fee will be or has been received with respect to the matched asset, the option commitment fee shall be treated as an adjustment of such fee. The adjusted commitment fee shall then be treated as a fee paid or received in connection with the matched asset.

 

ii)         If a commitment fee has not been received with respect to a matched asset, the option commitment fee (except if received for the sale of a short call option) shall be amortized to income or expense over the commitment period by the straight line method.

 

iii)        Any resulting gain or loss from an option position (except from a short call option) shall be treated as a discount or premium on the matched asset or liability.

 

iv)        Any resulting gain or loss from a short call option position shall be recognized as income or expense upon termination of the option position.

 

v)         If an option position is not matched with a cash-market or forward-commitment position or the cash-market or forward-commitment position with which an option is matched is sold or will not occur, the option shall be marked to market.

 

C)        The immediate exercise value of short puts and other unmatched option positions shall be carried at their current market value.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.575  Finance Leasing

 

Savings banks may engage in leasing activities that are the functional equivalent of lending, subject to the limitations of this Section.

 

a)         A savings bank may become the legal or beneficial owner of tangible personal property or real property to lease such property, may obtain an assignment of a lessor's interest in a lease of such property, and may incur obligations incidental to its position as the legal or beneficial owner and lessor of the leased property, if:

 

1)         the lease is a net, full-payout lease representing a non-cancelable obligation of the lessee, not-withstanding the possible early termination of the lease; and

 

2)         at the expiration of the lease, the savings bank's interest in the property shall be liquidated or released on a net basis as soon as practicable.

 

b)         A lease of tangible personal property made to a natural person for personal, family or household purposes pursuant to this Section shall be subject to all limitations applicable to the amount of a savings bank's investment in similar loans. A lease made for commercial, corporate, business or agricultural purposes pursuant to this Section shall be subject to all limitations applicable to the amount of a savings bank's investment in commercial loans. A lease of residential or nonresidential real property made pursuant to this Section shall be subject to all limitations applicable to the amount of a savings bank's investment in real estate loans.

 

c)         Definitions − for the purposes of this Section shall be the following.

 

1)         The term "net lease" means a lease under which the savings bank will not, directly or indirectly provide or be obligated to provide for:

 

A)        the servicing, repair or maintenance of the leased property during the lease term;

 

B)        the purchasing of parts and accessories for the leased property, except that improvements and additions to the leased property may be leased to the lessee upon its request in accordance with the full-payout requirements of this Section;

 

C)        the loan of replacement or substitute property while the leased property is being serviced;

 

D)        the purchasing of insurance for the lessee, except where the lessee has failed to discharge a contractual obligation to purchase or maintain insurance; or

 

E)        the renewal of any license, registration of filing for the property unless such action by the savings bank is necessary to protect its interest as an owner or financier of the property.

 

2)         The term "full-payout" lease means one from which the lessor can reasonably expect to realize a return of its full investment in the leased property, plus the estimated cost of financing the property over the term of the lease, from rentals, estimated tax benefits, guarantees and other sources, and the estimated residual value of the property at the expiration of the initial term of the lease. Provided that no more than 20 percent of the return may be realized from the residual value of the property at the expiration of the initial term of the lease, both the estimated residual value of the property and that portion of the estimated residual value relied upon by the lessor to satisfy the requirements of a full-payout lease must be reasonable in light of the nature of the leased property and all relevant circumstances so that realization of the lessor's full investment plus the cost of financing the property depends primarily on the credit worthiness of the lessee, and not on the residual market value of the leased property. The maximum term of a full-payout lease shall be 20 years.

 

d)         Salvage Powers − if, in good faith, a savings bank believes that there has been an unanticipated change in conditions that threatens its financial position by significantly increasing its exposure to loss, this Section shall not prevent the savings bank:

 

1)         as the owner and lessor under a net, full-payout lease, from taking reasonable and appropriate action to salvage or protect the value of the property and its interest arising under the lease;

 

2)         as the assignee of a lessor's interest in a lease, from becoming the owner and lessor of the leased property pursuant to its contractual right, or from taking any reasonable and appropriate action to salvage or protect the value of the property or its interest arising under the lease; or

 

3)         from including any provisions in a lease, or from making any additional agreements, to protect its financial position or investment in the circumstances set forth in this Section.

 

e)         Notwithstanding any limitation of this Section, a savings bank may engage in leasing activities to the same extent and manner permitted to any other type of depository institution.

 

(Source:  Amended at 26 Ill. Reg. 13483, effective September 13, 2002)

 

Section 1075.580  Suretyship

 

A  savings bank may enter into an agreement to act as a surety subject to the following provisions.

 

a)         A savings bank operating under the Act may exercise surety powers only to the extent authorized by the Federal Deposit Insurance Corporation.

 

b)         A savings bank may enter into a suretyship agreement only if the agreement would create an obligation authorized for investment by a savings bank. A savings bank's obligation under the suretyship agreement shall be treated as a loan to its principal for purposes of Sections 6010 and 6013 of the Act and Section 1075.500  of this Part.

 

c)         A savings bank must take and maintain a security interest in real estate or marketable investment securities, as defined at Section 1007.85 of the Act, of its principal having a market value, determined in accordance with the provisions of the Act and this Part, of at least 110 percent of the savings bank's total suretyship obligations. In determining compliance with the 110 percent collateralization requirement, the savings bank shall consider the value available above prior mortgages or liens, except those held by the party for whose protection the suretyship agreement is made. If marketable investment securities, the savings bank shall provide for the maintenance of the collateral value at the required level throughout the term of the suretyship agreement.

 

d)         To the extent that a savings bank is required to meet its obligations under a suretyship agreement, the amount expended shall be treated as an extension of credit subject to the limitations imposed on similar loans under the various provisions of the Act and this Part.

 

e)         Notwithstanding any provision of this Section, a savings bank may act as a surety to the same extent and manner as permitted to any other type of depository institution.

 

(Source:  Amended at 26 Ill. Reg. 13483, effective September 13, 2002)

 

Section 1075.585  Asset Reserves

 

a)         Scope

The classification system described in this Section applies to all assets or portions of assets held by a savings bank.

 

b)         Classifications

 

1)         Substandard – assets classified substandard are inadequately protected by the current paying capacity of the obligor or of the collateral pledged, if any. Assets so classified must have a well-defined weakness or weaknesses. They are characterized by the distinct possibility that the savings bank will sustain some loss if the deficiencies are not corrected.

 

2)         Doubtful – assets classified doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that collection of the asset in full, on the basis of currently existing facts, conditions, and values, is highly questionable and improbable.

 

3)         Loss – assets classified loss are considered uncollectible and of such little value that their continuance as assets without establishment of a reserve is not warranted. This classification does not mean that an asset has absolutely no recovery or salvage value, but, rather, that it is not practical or desirable to defer writing off a basically worthless asset even though partial recovery may be effected in the future.

 

c)         Implementation of Classification System

 

1)         In connection with examinations of a savings bank or its affiliates, the examiner shall have authority to identify problem assets and, if appropriate, classify them.

 

2)         Each savings bank shall classify its own assets on a regular basis. In addition to any other remedies available to the Division under applicable statutes and regulations, a savings bank's failure to set aside prudent valuation allowances, or to monitor portfolio risk with an effective self-classification procedure, will be considered by the examiner in determining the amount of valuation allowances to be established by the savings bank.

 

3)         In its reports to the Division , each savings bank shall include aggregate totals of assets that the savings bank has classified in each of the 3 asset classification categories, and the aggregate general and specific valuation allowances established. To the extent a savings bank's specific valuation allowances have decreased from the previous reporting period, the savings bank shall identify the amount of the decrease attributable to a savings bank's between examination upgrading of classifications.

 

d)         Effect of Classification

 

1)         When, pursuant to this Section, a savings bank has classified one or more assets, or portions of assets, substandard or doubtful, the savings bank shall establish prudent general allowances for loan losses. When, pursuant to this Section, an examiner has classified one or more assets or portions of assets substandard or doubtful and has determined that the existing valuation allowances are inadequate, the savings bank shall establish general allowances for loan losses in an appropriate amount as determined by the examiner, subject to approval of the Director.

 

2)         When, pursuant to this Section, either a savings bank or an examiner has classified one or more assets or portions of assets loss, the savings bank shall either establish allowances for losses in the amount of 100% of the portion of the assets classified loss, or charge off that amount against current income.

 

3)         Adequate valuation allowances consistent with generally accepted accounting principles shall be established for classified assets. Asset evaluations (and the corresponding allowances) that are consistent with the practice of the federal banking agencies may be used for supervisory purposes.

 

e)         Assets Deserving "Special Mention"

Assets that do not currently expose a savings bank to a sufficient degree of risk to warrant classification under this Section but do have credit deficiencies or potential weaknesses deserving management's close attention shall be designated "special mention" by either the savings bank or the examiner. Special mention assets have a potential weakness or pose an unwarranted financial risk that, if not corrected, could weaken the asset and increase risk in the future.

 

f)         Delegations and Interpretations

 

1)         The Director or designee may approve, disapprove, or modify any classifications of assets made pursuant to this Section and any amounts of allowances for loan losses established by a savings bank or required by examiners pursuant to this Section.

 

2)         When an appraisal is required or made in connection with any reevaluation of assets, the Director may approve or reject the appraisal and any valuation related to it.

 

3)         The Division shall, from time to time, issue supervisory interpretations and other informational material regarding classification of assets.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.590  Asset Composition Test

 

As an alternative asset test prescribed pursuant to Section 1009 of the Act, the composition of the assets, including loans and investments, of a savings bank is permitted to consist of any type, and in any amount, authorized by the Act and this Part, provided that the savings bank:

 

a)         is a member of a Federal Home Loan Bank as a Federal Home Loan Bank qualified thrift lender or community financial institution under the Federal Home Loan Bank Act (12 USC 1421 et seq.);

 

b)         has at least 10 percent of its total assets in residential mortgage loans as of the most recent fiscal year-end; or

 

c)         has total average assets for the three preceding fiscal years of less than $500,000,000.

 

This Section does not require membership in a Federal Home Loan Bank.

 

(Source:  Added at 26 Ill. Reg. 13483, effective September 13, 2002)

SUBPART F: SERVICE CORPORATION AND OPERATING SUBSIDIARIES

 

Section 1075.600  Requirements

 

a)         No savings bank shall invest in or lend to a service corporation, as defined in Section 1007.105 of the Act, unless the service corporation has been approved by the Director.

 

b)         Subpart F of this Part shall not apply to investments in single purpose corporations authorized under Sections 1008(9) and 6009 of the Act.

 

c)         Savings banks may designate a service corporation or other subsidiary as an operating subsidiary as follows:

 

1)         Upon approval of the Director, a subsidiary of a savings bank that is majority owned and controlled by the savings bank may be designated as an operating subsidiary provided that the subsidiary engages solely in activities that are permitted for a depository institution or an operating subsidiary of a depository association.

 

2)         An operating subsidiary shall be subject to the provisions of this Subpart except that a savings bank's total investment, including equity and debt securities and loans, in its first-tier operating subsidiary is not limited by this Subpart.  Loans made by the savings bank to its operating subsidiary shall not be subject to Section 6013 of the Act.  

 

3)         Upon approval of the Director, a subsidiary of a first-tier operating subsidiary may be designated as an operating subsidiary; provided that the lower tier subsidiary is wholly-owned and controlled by the first-tier operating subsidiary and engages solely in activities that are permitted for a depository institution or an operating subsidiary of a depository association.  The total investment, including equity and debt securities and loans, by the savings bank or its first-tier operating subsidiary in the wholly-owned and controlled lower-tier operating subsidiary is not limited by this Subpart or Section 6013 of the Act.

 

4)         The total investment, including equity and debt securities and loans, by the savings bank and its first-tier operating subsidiary in a service corporation or an operating subsidiary that is not wholly-owned and controlled by the savings bank's first-tier operating subsidiary is subject to the same limitations under this Subpart that apply to the savings bank's investment in a service corporation that is not an operating subsidiary.

 

5)         As used in this subsection (c):

 

"Subsidiary" means a corporation, limited liability company, partnership, business trust, joint venture, pool, syndicate or other similar business organization.

 

"Majority-owned" means the savings bank owns more than 50% of the voting interest or equivalent ownership interest  of the subsidiary.

 

            "Control" means effective operating control.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.610  Approval by the Director

 

a)         Except as provided in subsection (b) of this Section, an application for approval of a service corporation shall be approved by the Director provided that:

 

1)         its purpose or purposes are reasonably incident to the accomplishment of the powers conferred upon savings banks by the Act, or are purposes granted or allowed to service corporations organized or owned by savings and loan associations; or its sole purpose is to operate as a finance subsidiary of a savings bank to the extent authorized for finance subsidiaries of savings and loan associations under the Illinois Savings and Loan Act of 1985 [205 ILCS 105]; and

 

2)         the application for approval of a service corporation includes:   the appropriate fee; a copy of the service corporation's Articles of Incorporation; a list of proposed shareholders; the fiscal year-end date; and an undertaking by the service corporation with the continuing conditions specified in subsection (c) of this Section and in a form prescribed by the Director.

 

b)         An application for approval of a service corporation shall be denied by the Director in writing if the Director finds that any proposed shareholder is conducting business in an unsafe manner.

 

c)         Continuing Conditions

 

1)         A service corporation shall not amend its Articles of Incorporation nor adopt an assumed corporate name without the prior written approval of the Director. A proposed amendment to Articles of Incorporation not involving a name change shall be approved unless it is in non-compliance with subsection (a)(1). A proposed name change shall be approved unless such proposed name is either deceptively similar to that of a savings bank as specified in Section 3005(b)(3) of the Act or of a nature which might imply that the entity is a savings bank.

 

2)         Each service corporation shall cause its affairs to be audited by a licensed public accountant at least once each fiscal year, and cause the accountant to deliver a copy of the certified statement to the Director simultaneously with the delivery of the statement to the service corporation.

 

3)         Each service corporation shall be examined in conjunction with the examination of its parent savings banks. The Director shall require additional reports and/or examinations if the Director, or his or her staff members engaged in examination of the savings bank's monthly report, determine that more information is needed to determine the viability of the service corporation.

 

4)         A service corporation shall not acquire any classified items as defined in Section 1075.585(b) from any financial institution, except that a service corporation may acquire real estate owned by any savings bank.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.620  Investment Limitations

 

a)         A savings bank may make investments in capital stock of service corporations that are 90% or more owned by one or more savings banks in an amount that shall not exceed 10% of the savings bank's total assets. A savings bank that has met and maintained the capital levels required for a savings bank, the deposit accounts of which are insured by the Federal Deposit Insurance Corporation, may invest an additional 50% of the excess capital provided that in no event shall a savings bank's maximum investment in service corporations exceed 20% of its total assets.

 

b)         A savings bank may make investments in capital stock of service corporations that are at least 51% but less than 90% owned by one or more savings banks, in an amount not to exceed 1% of the savings bank's total assets.

 

c)         All loans to service corporations shall be subject to all lending limitations contained in the Act and this Part, except that:

 

1)         a savings bank may make loans to a wholly owned service corporation in an amount equal to the savings bank's total capital or in an amount that exceeds the savings bank's total capital if the excess amount is fully secured by collateral, of a type upon which the savings bank itself could lend, of a value determined in accordance with the Act and with rules promulgated by the Director; and

 

2)         loans shall not be subject to the percentage of asset limitations of Section 6002(8) of the Act.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.630  Investments by Service Corporations

 

a)         A service corporation may invest its assets in any manner not expressly prohibited by law, provided the investments are made in the exercise of reasonable judgment and care under the circumstances then prevailing that persons of prudence, discretion and intelligence exercise in the management of their own affairs, not in regard to speculation but in regard to the permanent disposition of their funds, considering the probable income as well as the probable safety of their capital.

 

b)         If a service corporation has not been approved, or if approval is withdrawn, all loans to or investments in the service corporation shall constitute an unauthorized investment. However, the savings bank shall be granted a reasonable time within which to dispose of the loans or investments.

 

c)         A basis for withdrawal of approval of a service corporation exists if:

 

1)         the service corporation is subject to involuntary dissolution for failure to file annual reports or pay fees pursuant to the Business Corporation Act [805 ILCS 5]; or

 

2)         the service corporation fails to pay, within 60 days after the billing date, supervisory fees or examination fees due the Director;

 

3)         the service corporation fails to file, when due, those reports required by Sections 1075.670 and 1075.680 of this Part;

 

4)         the Director determines that the service corporation is engaged in activities that are not reasonably incidental to the accomplishment of the powers conferred upon savings banks by the Act;

 

5)         the investment of any parent savings bank in the respective service corporations is in excess of the investment limitations set forth at Section 1075.620 of this Part; or

 

6)         the Director determines that the service corporation is conducting business in a fraudulent, illegal, or unsafe manner.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.640  Ownership of Capital Stock of Service Corporation

 

a)         A minimum of 51% of all classes of capital stock of a first-tier service corporation shall be owned by one or more savings banks, bank, or savings and loan associations. First-tier service corporation means any corporation which is 51% or more owned by one or more savings banks, bank, or savings and loan associations whose purpose or purposes are reasonably incident to the accomplishment of the powers conferred upon savings banks by the Act.

 

b)         Subject to approval by the Director, an amount not to exceed 49% of all classes of capital stock of a service corporation may be owned by a person or persons other than a savings bank. The ownership shall be approved if the Director finds:

 

1)         the sale or issuance of stock is at no less than the book value of the stock;

 

2)         if no sale is involved, that the stock issuance to employees or officers is part of the compensation program documented by a written employment contract; and

 

3)         the ownership of the stock is subject to a repurchase agreement that provides that the service corporation has the right of first refusal to reacquire the stock from the person or persons or the estate of the person or persons at book value at the time of death or termination of employment.

 

c)         The book value of the stock shall be determined in accordance with generally accepted accounting principles by the independent auditor of the service corporation.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.650  Prohibited Transactions

 

a)         Without prior approval of the Director, no service corporation shall enter into any contract (except an employment contract), grant any loan, directly or indirectly, to any officer, organization director, individual stockholder or employee of the service corporation or of its parent savings banks except upon real estate occupied as a homestead or on the security of a personal automobile. A service corporation may, without prior approval, enter into a contract for the sale of real estate to be occupied by any of the foregoing persons as their bona fide homestead.

 

b)         A service corporation may enter into a contract to purchase an insurance agency or brokerage in which any of the foregoing persons have an interest.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.660  Disclosure to Service Corporation

 

a)         Service corporations shall require as a condition of any contract, loan, joint venture agreement or partnership agreement, that the party entering into such relationship with the service corporation disclose the names and true identity:

 

1)         in the case of trusts, owners of beneficial interests of said trusts;

 

2)         in the case of corporations, the names and addresses of all shareholders owning 10 percent or more of the capital stock; and

 

3)         in the case of partnerships, a list of names and addresses of all partners.

 

b)         Such disclosure shall be certified by the respective trustee, secretary or general partner. This certification shall become a permanent part of the file of each such contract, loan, joint venture or partnership agreement.

 

Section 1075.670  Reporting Requirements

 

a)         Within 45 days after the close of each calendar year, each service corporation shall submit to the Director a report, in such form as the Director shall prescribe, setting forth complete and true statements of condition and operations of the service corporation and of every partnership, joint venture or corporation in which the service corporation has a cash and/or equity interest of 50% or more.

 

b)         All corporate subsidiaries, partnerships and joint ventures in which the service corporation has a cash and/or equity interest of 50% or more shall, within 15 days after a request by the Director, submit true and correct copies of all contracts, mortgages, partnership agreements, joint ventures and loan commitments.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.680  Audit Requirements

 

a)         Each service corporation shall cause its books and records to be audited at least once annually by an independent licensed public accountant. Except as provided after this, the report of audit shall be separate from the report of audit of any parent savings bank.

 

b)         The report of audit of a wholly-owned service corporation may be consolidated with the report of audit of the parent savings bank provided that the report sets forth:

 

1)         the auditor's opinion that the activity of the service corporation does not materially affect the financial position of the parent savings bank; and

 

2)         all details of consolidation.

 

c)         The auditor shall test compliance with the Act and this Part and determine the effect that the service corporation has on the financial position of the parent savings banks.

 

d)         The auditor shall determine and report any facts relating to any direct or indirect self-dealing by any service corporation officer, organization director, employee or shareholder other than a savings bank. The auditor shall also determine and report any facts relating to any direct or indirect conflict of interest of any officer, organization director, employee or shareholder of a savings bank holding stock in the service corporation.

 

e)         Any noncompliance with the Act or this Part, self-dealing or conflict of interest which are discovered during the audit shall be set forth in the report of audit delivered to the service corporation's board of directors. The service corporation's board of directors shall promptly report the noncompliance to the Director and to the board of directors of the parent savings banks.

 

f)         A copy of the audit report shall be filed with the Director within 90 days after the audit date, except upon receipt of written notice setting forth the reason delivery of the report of audit is delayed by circumstances beyond the control of the service corporation, the Director may extend the filing date for up to 60 additional days.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

SUBPART G: RELOCATIONS AND BRANCHING

 

Section 1075.700  General

 

a)         A branch office of a savings bank is any office other than its home office, drive-in facility, pedestrian facility, agency office, or a remote service unit.

 

b)         Any business of a savings bank may be transacted at a branch office. When a branch office provides any product, it must have all the resources necessary to support that product offering at the branch location.

 

c)         A savings bank shall not establish a branch office nor change the location of its home office unless its respective application has been approved by the Director. An application shall be approved only if the Director finds that:

 

1)         the office can be established at the proposed location without undue injury to properly conducted existing savings banks;

 

2)         the policies and financial condition of the applicant are not a basis for supervisory objection; and

 

3)         the proposed office will open within 12 months of approval unless occupancy is delayed by circumstances beyond the control of the applicant and, consequently, additional time is allowed by the Director.

 

d)         A savings bank proposing a change of location of its home office or branch office may request a waiver of the otherwise applicable requirements of this Subpart G. The request will be approved only if:

 

1)         the Director can make the same findings as those required at subsection  (c);

 

2)         the applicant demonstrates that the area to be served from the proposed location is essentially the same as that served from the present location;

 

3)         the applicant gives the reasons for the change of location; and

 

4)         the applicant submits a request that sets forth information sufficient to allow the making of all determinations required by subsection (d).

 

e)         If requested by the applicant, the Director shall approve a temporary location of a home office or a branch office if the temporary location is:

 

1)         in the immediate vicinity of the approved permanent location; and

 

2)         not more competitive to any other properly conducted existing savings bank than the approved permanent location.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.705  Application

 

a)         A savings bank may apply for a branch office or for a change of location of its home office provided that the applicant obtains the prescribed form of application and form of notice and related instructions from the Director unless waived pursuant to Section 1075.700(d) of this Part.

 

b)         An application is considered complete and a priority filing date is established when the Director determines that all required information has been submitted.

 

c)         Changes to all but material information of the application may be made up to the time the approval/denial is determined. For purposes of this Section, material information is defined as but is not limited to:

 

1)         savings bank name;

 

2)         savings bank address;

 

3)         nature and purpose of application; and

 

4)         any other information which if changed, would likely cause the approval or denial decision to be reversed.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.710  Request for Preliminary Determination

 

a)         A savings bank that intends to file an application for a branch office or for a change of location of its home office may, before the filing of the application, submit to the Director written advice of intent to file the application and request a preliminary determination as to whether supervisory objection will be raised on the basis of the applicant's policies and financial condition. Within 30 days following receipt of the advice of intent, the applicant shall be advised of the Director's  decision, and if applicable, the reason for supervisory objection.

 

b)         If at any time subsequent to preliminary determination the Director determines that a basis for supervisory objection exists, further processing of the respective application shall be denied.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.715  Public Notice and Inspection

 

a)         At the time of the filing of the application, the applicant shall publish notice of intent to relocate or establish a branch office. The notice shall be in form and content as prescribed by the Director. The applicant shall publish notice in a newspaper printed in the English language having a general circulation in the applicant's home office community and in the community to be served from the proposed location.

 

b)         Within 10 days following the date of publication, the applicant shall furnish the Director with one copy each of the required notices and the publisher's affidavits of publication.

 

c)         Subject to Section 1075.110(d) of this Part, the application shall be available for public inspection at the Division, by appointment.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.720  Protest

 

Protests, answers to protests and other related communications shall be in writing and submitted only as provided in this Section.

 

a)         Within 10 calendar days following the date of publication of Notice of Application (or 20 calendar days after the date of publication if extension is requested in writing within the 10 day period) any person may file a communication in favor or protest of the application with the Director. Any person filing a communication shall simultaneously furnish a copy to the applicant.

 

b)         Within 15 calendar days after receipt of a protest, the objector and the applicant shall be advised in writing whether the Director considers the protest to be substantial.

 

c)         No protest shall be considered "substantial" unless it is in writing, filed on time, and contains at least the following:

 

1)         a summary of the reasons for the protest;

 

2)         the specific matters in the application to which objection is raised and the reasons for each objection;

 

3)         facts supporting the protest, including relevant economic or financial data; and

 

4)         adverse effects on the objector that may result from approval of the application.

 

d)         The Director's  determination as to whether a protest is "substantial" shall be made on the basis of data showing undue injury to properly conducted existing savings banks and/or data disputing the propriety of information set forth in the respective application.

 

e)         Within 20 calendar days following the date of notice that a protest has been considered substantial, the applicant may file an answer to the protest with the Director.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.725  Oral Argument

 

a)         Oral argument on the merits of an application shall be heard if:

 

1)         the applicant, or a person who has filed a protest considered to be substantial, so requests and the request is received by the Director within 10 calendar days after the time for filing answers to all protests has expired; and

 

2)         the Director, after reviewing the application and other pertinent information, considers oral argument desirable because of protests that dispute the propriety of information set forth in the application.

 

b)         Any hearing of oral argument shall be subject to the appropriate fee and expenses prescribed in Section 1075.100 of this Part. A transcript of any hearing of oral argument shall be taken and made a part of the record in the matter.

 

c)         The Director shall mail notice of the date (which shall be at least 10 calendar days after the mailing), time and place of oral argument to the applicant and persons who filed protests or other communications. The Director shall ensure that the time and place of any oral argument are reasonably convenient to the applicant and the objectors.

 

d)         The Director or any person designated by the Director shall hear oral argument and determine all matters relating to the conduct of the hearing. Arguments shall be made in person or by authorized representatives. A maximum of one hour of oral argument shall be allowed in favor of and against the application. In hearing oral arguments, the person presiding shall determine the order of presentation. The parties may agree on a division of time; otherwise, the person presiding shall make the determination. Arguments may be consolidated. In the event of multiple substantial protests, the person presiding may permit additional time for argument and rebuttal. Arguments shall be based only on the facts and information on file; however, a party may introduce newly discovered matter by giving a written memorandum of same to the person presiding when the hearing commences. The memorandum shall include an affidavit as to why the matter was not previously known and not previously filed. No party to an oral argument shall be permitted more than one filing of new matter. If the person presiding rules that there is in fact substantive new matter, the party introducing it shall be required to provide copies of the memorandum of the new matter to all parties. If the parties agree to argue on the basis of the new matter, the hearing shall continue.

 

e)         If any party wishes to file a rebuttal, 10 calendar days shall be allowed for the submission of the rebuttal, and the person presiding shall adjourn the hearing and set a date, time and place for it to be reconvened. Rebuttal to new matter shall not be considered a filing of new matter.

 

f)         If oral argument is heard by a person other than the Director, that person's findings shall be submitted to the Director, in writing, within 25 calendar days after final adjournment of the hearing. Within 10 calendar days following receipt of the findings the parties shall be advised, in writing, of the Director's decision. If the Director presides at the hearing, the parties to the hearing shall be advised of the decision within 25 calendar days after the final adjournment of the hearing.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.730  Application for the Maintenance of Branch Office after Conversion, Consolidation, Purchase of Assets or Merger

 

a)         With written approval of the Director, a savings bank that acquires an office or offices through merger, purchase, purchase of all assets or consolidation shall assume the operation of any acquired offices. An existing depository institution that converts to a savings bank shall maintain all of its offices existing or approved before the conversion.

 

b)         If the Director has approved a Plan of Conversion from a savings bank charter for a savings bank or has evidence of a savings bank's intent to file a Plan of Conversion, he or she shall deny an application for a branch office.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.735  Redesignation of Offices

 

A savings bank may designate an existing branch office as its main business office and designate its existing main business office as a branch office by submitting an appropriate bylaw amendment for approval. No other Sections in Subpart G of this Part shall apply to redesignation of offices.

 

Section 1075.740  Termination of Operation and/or Closing of a Branch Office

 

a)         A savings bank may offer to sell branch offices to another savings bank or other depository institution.

 

1)         Before any such sale, a copy of the proposed agreement shall be submitted to the Director. Within 30 calendar days the Director shall notify the proposed seller, in writing, as to whether there is supervisory objection to the proposed sale, or the Director may advise the proposed seller of any additional information or further review considered necessary to make such a determination. The Director in considering supervisory objection shall review the policies and financial condition of the selling savings bank and the acquiring financial institution.

 

2)         The selling savings bank and, if applicable, the acquiring financial institution shall submit an appropriate bylaw amendment for the Director's approval.

 

b)         A savings bank showing justification for termination of operation and the closing of branch offices may do so with the prior written approval of the Director. Any request for the closing of any office shall be subject to the publication requirements of Section 1075.715(a) of this Part.

 

c)         The filing of a request for termination of operation and the closing of branch offices shall constitute authority for the Director to seek a successor to assume operation of the branch offices.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.745  Agency Offices

 

a)         A savings bank may establish or maintain agency offices which only service and originate (but do not approve) loans and contracts and/or manage or sell real estate owned by the savings bank.

 

b)         An agency office shall maintain records of all business it transacts and transmit copies to a branch or home office of the savings bank.

 

Section 1075.750  Remote Drive-In and/or Remote Pedestrian Facilities

 

a)         A savings bank may, without prior approval of the Director, establish a remote drive-in and/or remote pedestrian facility in conjunction with each savings bank business office. Each facility may be designed to simultaneously accommodate more than one customer.

 

b)         The term "business office" means the business office premises, including non-remote drive-in and/or non-remote pedestrian facilities that are those facilities within the boundaries of real estate on which a home office or any branch office is located and the areas contiguous to the facility, that the savings bank has the exclusive right as owner or lessee to use or maintain for ingress or egress or for parking in connection with that business office.

 

c)         Remote drive-in and remote pedestrian facilities are defined as follows:

 

1)         A remote drive-in facility is a facility that is not located on the premises of a business office as defined in subsection (b) and at which the customer transacts business from a vehicle.

 

2)         A remote pedestrian facility is a facility that is not located on the premises of a business office as defined in subsection (b) and at which the customer need not enter an office but may remain outside the structure and transact business with a teller located inside the structure.

 

d)         Remote drive-in and remote pedestrian facilities may be placed in a store or location of some other business if the savings bank's quarters are used exclusively for the conduct of the savings bank's business. There will be no objection to a remote pedestrian facility that faces on an enclosed mall and serves pedestrians who remain in the mall while transacting business with the savings bank.

 

e)         Functions that are routinely performed by the establishing savings bank's tellers at its business offices may be performed at a remote drive-in and/or remote pedestrian facility.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

SUBPART H: CAPITAL NOTES AND DEBENTURES

 

Section 1075.800  Approval

 

No savings bank may issue and sell its capital notes or debentures without the prior written approval of the Director, subject to any conditions the Director may impose with regard to safety and soundness and maintenance of adequate financial condition, especially in areas of preservation of capital, quality of earnings and adequacy of reserves.  A stock savings bank shall also have the prior approval of a majority of the shareholders owning a majority of the issued and outstanding shares of the savings bank to issue convertible capital notes or debentures.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.810  Conversion to Stock

 

Capital notes or debentures issued by a stock savings bank may be converted into shares in accordance with provisions approved by the Director and contained in the capital notes or debentures. Convertible capital notes or debentures may be issued without preemptive rights to existing shareholders if provided by the Articles of Incorporation of the savings bank and authorized by the Director.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.820  Priority of Claim

 

Capital notes and debentures shall be an unsecured indebtedness of the savings bank and shall be subordinate to the claims of account holders and all other creditors of the savings bank, regardless of whether the claims of account holders or other creditors arose before or after the issuance of such debentures or capital notes. In the event of liquidation, all account holders and other creditors of the savings bank shall be entitled to be paid in full before any payment shall be made on account of principal or interest on capital notes or debentures. Capital notes and debentures shall contain a statement of the rights and priorities of the lenders.

SUBPART I: ADMINISTRATIVE HEARING PROCEDURES

 

Section 1075.900  Hearings

 

All administrative hearings shall be conducted in accordance with 38 Ill. Adm. Code 100.

 

(Source:  Amended at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.905  Definitions (Repealed)

 

(Source:  Repealed at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.910  Early Neutral Evaluation (Repealed)

 

(Source:  Repealed at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.915  Conference Adjudicative Hearing (Repealed)

 

(Source:  Repealed at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.920  Filing (Repealed)

 

(Source:  Repealed at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.925  Form of Documents (Repealed)

 

(Source:  Repealed at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.930  Computation of Time (Repealed)

 

(Source:  Repealed at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.935  Appearances (Repealed)

 

(Source:  Repealed at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.940  Notice of Hearing (Repealed)

 

(Source:  Repealed at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.945  Service of the Notice of Hearing (Repealed)

 

(Source:  Repealed at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.950  Motion and Answer (Repealed)

 

(Source:  Repealed at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.955  Consolidation and Severance of Matters – Additional Parties (Repealed)

 

(Source:  Repealed at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.960  Intervention (Repealed)

 

(Source:  Repealed at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.965  Postponement or Continuance of Hearing (Repealed)

 

(Source:  Repealed at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.970  Authority of Hearing Officer (Repealed)

 

(Source:  Repealed at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.975  Bias or Disqualification of Hearing Officer (Repealed)

 

(Source:  Repealed at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.980  Prehearing Conferences (Repealed)

 

(Source:  Repealed at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.985  Discovery (Repealed)

 

(Source:  Repealed at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.990  Subpoenas (Repealed)

 

(Source:  Repealed at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.995  Conduct of the Hearing (Repealed)

 

(Source:  Repealed at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.1000  Default (Repealed)

 

(Source:  Repealed at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.1005  Evidence (Repealed)

 

(Source:  Repealed at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.1010  Official Notice (Repealed)

 

(Source:  Repealed at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.1015  Hostile Witnesses (Repealed)

 

(Source:  Repealed at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.1020  Transcription of Proceedings (Repealed)

 

(Source:  Repealed at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.1025  Briefs (Repealed)

 

(Source:  Repealed at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.1030  Hearing Officer's Findings, Opinions and Recommendations (Repealed)

 

(Source:  Repealed at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.1035  Order of the Director (Repealed)

 

(Source:  Repealed at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.1040  Rehearings (Repealed)

 

(Source:  Repealed at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.1045  Existing Statutory or Division Procedures and Practices (Repealed)

 

(Source:  Repealed at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.1050  Costs of Hearing (Repealed)

 

(Source:  Repealed at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.1055  Emergency Adjudication (Repealed)

 

(Source:  Repealed at 46 Ill. Reg. 18013, effective October 27, 2022)

SUBPART J: SAVINGS BANK HOLDING COMPANIES

 

Section 1075.1100  Applicability

 

a)         Subpart J of this Part shall apply to stock holding companies or savings banks that directly or indirectly own or control or seek to own or control 25% or more of the voting shares or rights of any insured institution in any manner and to mutual holding companies and mutual savings banks reorganizing as mutual holding companies. This Subpart does not apply when the ownership arises in the regular course of business as set forth in Section 2001.05 of the Act.

 

b)         Except with the permission of the Director, no company shall become a savings bank holding company.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1105   Definitions

 

            "Acquiree savings bank" means any subsidiary savings bank, other than a resulting savings bank, that is acquired by a mutual holding company as part of, and concurrently with, a mutual holding company reorganization and is in mutual form immediately prior to such acquisition.

 

            "Affiliate" means any company that controls, is controlled by, or is under common control with a person.

 

            "Assets" means the total assets of the savings bank minus goodwill and any other intangible assets, including but not limited to, purchased deposit base and branch network, and leasehold improvements net of accumulated depreciation.

 

            "Capital stock" includes permanent stock, guaranty stock, permanent reserve stock, any similar certificate evidencing non-withdrawable capital, preferred stock, or convertible preferred stock of a savings bank created or acquired under this Subpart or of a subsidiary, institution or holding company.

 

            "Charter" includes articles of incorporation, articles of reincorporation, or any similar instrument, as amended, effecting (either with or without filing with any government agency) the organization or creation of an incorporated or unincorporated person.

 

            "Company" means a corporation or partnership, a savings bank, a joint stock company, a trust or an unincorporated organization.

 

            "Control" is defined as it is in Section 1007.35 of the Act.

 

            "Eligible account holder" means any person holding a qualifying deposit as of a given date.

 

            "Eligibility record date" shall mean the record date for determining eligible account holders of an institution.

 

            "Employee" does not include an organization director or an officer.

 

            "Equity security" means any stock or similar security or any security convertible, with or without consideration, into such a security, or carrying any warrant or right to subscribe to or purchase a security, or any warrant or right.

 

            "Member" means any person qualifying as a member of an insured institution pursuant to its charter or bylaws.

 

            "Mutual savings bank" means a mutual savings bank organized and operating under the Act.

 

            "Net worth" means the aggregate of capital stock accounts, capital surplus and retained earnings accounts and all other reserve accounts except valuation reserves and specific reserves that are in the nature of valuation reserves.

 

            "Person" means an individual, a company, or a government or political subdivision.

 

            "Pre-existing depository institution" means a subsidiary depository institution that is not an acquiree savings bank, a resulting savings bank or a savings bank in mutual form when acquired.

 

            "Purchase" or "Buy" includes every contract to purchase, buy, or otherwise acquire a security or interest in a security for value.

 

            "Qualifying deposit" means a deposit determined pursuant to Section 1075.1935 of this Part.

 

            "Reorganizing savings bank" means a mutual savings bank that proposes to reorganize to become a mutual holding company pursuant to this Subpart.

 

            "Resulting savings bank" means a savings bank in stock form that is organized as a subsidiary of a reorganizing savings bank to receive the substantial portion of the assets, all the insured deposits, and part or all of the other liabilities of the reorganizing savings bank.

 

            "Sale" or "Sell" includes every contract to sell or otherwise dispose of a security or interest in a security for value; but these terms do not include an exchange of securities in connection with a merger or acquisition approved by the Director.

 

            "Security" includes any stock, note, treasury stock, bond, debenture, transferrable share, investment contract, voting trust certificate, or, in general, any instrument commonly known as a "security"; or any certificate of interest or participation in, temporary or interim certificate for, receipt for, or warrant, or right to subscribe to or purchase any of the foregoing.

 

            "Stock" means common or preferred stock, or any other type of equity, security, including (without limitation) warrants or options to acquire common or preferred stock, or other securities that are convertible into common or preferred stock.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1110  Mutual Holding Company Reorganizations

 

A mutual savings bank may reorganize to become a mutual holding company, or join in a mutual holding company reorganization or thereafter as an acquiree savings bank or a pre-existing depository institution, only upon satisfaction of the following conditions:

 

a)         A Reorganization Plan is approved by a majority of the board of directors of the reorganizing savings bank and any acquiree savings bank or pre-existing depository institution.

 

b)         A Reorganization Notice is filed with the Director and the Director has given written notice of its approval of the proposed reorganization as being in accordance with applicable law.

 

c)         The Reorganization Plan is submitted to the members of the reorganizing savings bank and any acquiree pursuant to a proxy statement cleared in advance by the Director and the Reorganization Plan is approved by a majority of the total votes of the members of each savings bank eligible to be cast at a meeting held at the call of each savings bank's directors in accordance with the procedures prescribed by each savings bank's charter and bylaws.  When the Reorganization Plan involves acquiring a pre-existing depository institution, the Plan is submitted to the stockholders of the pre-existing depository institution and is approved by the majority of the total votes of the shareholders eligible to be cast at a meeting held at the call of the institution's directors in accordance with the institution's charter and bylaws.

 

d)         All necessary regulatory approvals have been obtained and all requirements of this Subpart are met.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1111  Subsidiary Holding Company

 

As part of a mutual holding company reorganization or thereafter, a mutual holding company may establish a subsidiary stock holding company which shall wholly own and control the resulting savings bank and any acquiree savings banks.  A subsidiary holding company shall be subject to Sections 1075.1225 and 1075.1330 as if it were a resulting savings bank.  The subsidiary holding company shall be subject to Section 1075.1275(c) as if it were the mutual holding company and the mutual holding company shall remain subject to Section 1075.1275(c).  The Director may impose other requirements to ensure that the members of the resulting savings bank and any acquiree savings bank have the same rights, opportunities, and protection as if no subsidiary stock holding company been established.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1115  Prohibition Against Approval of Certain Applications for Reorganization

 

No application for reorganization may be approved by the Director if:

 

a)         The plan of reorganization adopted by the applicant's board of directors is not in accordance with this Subpart;

 

b)         The reorganization reasonably could be expected to result in a resulting or acquiree savings bank or pre-existing depository institution with capital below requirements established by the Director and by Federal law;

 

c)         The reorganization results in a taxable reorganization under the United States Internal Revenue Code of 1986 (26 USC 1 et seq.) and the Director upon a written finding determines that the reorganization will endanger the safety and soundness of a resulting or acquiree or pre-existing savings bank; or

 

d)         A resulting savings bank does not secure insurance of its deposit accounts backed by the full faith and credit of the United States government before reorganization.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

 

Section 1075.1120  Contents of Reorganization Plans

 

Each Reorganization Plan shall contain a complete description of all the significant terms of the proposed reorganization, shall attach and incorporate any Stock Issuance Plan proposed in connection with the Reorganization Plan, and shall:

 

a)         Provide for amendment of the charter and bylaws of the reorganizing savings bank in accordance with this Subpart and attach and incorporate the charter and bylaws;

 

b)         Provide for the incorporation and organization of the resulting savings bank in accordance with this Subpart and attach and incorporate all required material;

 

c)         Provide for amendment of the charter and bylaws of any acquiree savings bank to read in the form of the charter and bylaws of a stock savings bank and attach and incorporate the charter and bylaws;

 

d)         Provide for the transfer of assets and liabilities pursuant to Section 2007(a)(2) of the Act and this Subpart from the reorganizing savings bank to the resulting savings bank;

 

e)         Provide that all assets, rights, obligations, and liabilities of whatever nature of the reorganizing savings bank that are not expressly retained by the mutual holding company shall be deemed transferred to the resulting savings bank;

 

f)         Provide that each depositor in the reorganizing savings bank, any acquiree savings bank, or any pre-existing depository institution immediately prior to the reorganization shall upon consummation of the reorganization receive without payment, an identical account in the resulting savings bank or the acquiree savings bank, as the case may be (appropriate modifications shall be made to this provision if a merger is a part of the reorganization);

 

g)         Provide that the Reorganization Plan as adopted by the boards of directors of the reorganizing savings bank, any acquiree savings bank and any pre-existing depository institution may be substantively amended by those boards of directors as a result of comments from regulatory authorities or otherwise prior to the solicitation of proxies from the members of the reorganizing savings bank and any acquiree savings bank or stockholders of any pre-existing depository institution to vote on the Reorganization Plan and at any time thereafter with the concurrence of the Director; and that the reorganization may be terminated by the board of directors of the reorganizing savings bank, any acquiree savings bank or any pre-existing depository institution at any time prior to the meeting of the members or stockholders called to consider the Reorganization Plan and at any time thereafter with the concurrence of the Director; the Director shall concur with an amendment or termination under this Section unless he or she finds that to do so would be inequitable to members or injurious to a savings bank;

 

h)         Provide that the Reorganization Plan shall be terminated if not completed within a specified period of time.  The time period shall not be more than 24 months from the date upon which the members of the reorganizing savings bank or the date upon which the members of any acquiree savings bank, or stockholder of any pre-existing depository institution, whichever is earlier, approve the Reorganization Plan and may not be extended by the reorganizing or acquiree savings bank or the pre-existing depository institution; and

 

i)          Provide that the expenses incurred in connection with the reorganization shall be reasonable.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1125  Capital Stock (Repealed)

 

(Source:  Repealed at 18 Ill. Reg. 15094, effective September 26, 1994)

 

Section 1075.1130  Charter (Repealed)

 

(Source:  Repealed at 18 Ill. Reg. 15094, effective September 26, 1994)

 

Section 1075.1135  Control (Repealed)

 

(Source:  Repealed at 18 Ill. Reg. 15094, effective September 26, 1994)

 

Section 1075.1140  Eligible Account Holder (Repealed)

 

(Source:  Repealed at 18 Ill. Reg. 15094, effective September 26, 1994)

 

Section 1075.1145  Eligibility Record Date (Repealed)

 

(Source:  Repealed at 18 Ill. Reg. 15094, effective September 26, 1994)

 

Section 1075.1150  Employee (Repealed)

 

(Source:  Repealed at 18 Ill. Reg. 15094, effective September 26, 1994)

 

Section 1075.1155  Equity Security (Repealed)

 

(Source:  Repealed at 18 Ill. Reg. 15094, effective September 26, 1994)

 

Section 1075.1160  Insured Institution (Repealed)

 

(Source:  Repealed at 18 Ill. Reg. 15094, effective September 26, 1994)

 

Section 1075.1165  Member (Repealed)

 

(Source:  Repealed at 18 Ill. Reg. 15094, effective September 26, 1994)

 

Section 1075.1170  Net Worth (Repealed)

 

(Source:  Repealed at 18 Ill. Reg. 15094, effective September 26, 1994)

 

Section 1075.1175  Officer (Repealed)

 

(Source:  Repealed at 18 Ill. Reg. 15094, effective September 26, 1994)

 

Section 1075.1180  Person (Repealed)

 

(Source:  Repealed at 18 Ill. Reg. 15094, effective September 26, 1994)

 

Section 1075.1185  Qualifying Deposit (Repealed)

 

(Source:  Repealed at 18 Ill. Reg. 15094, effective September 26, 1994)

 

Section 1075.1190  Sale (Repealed)

 

(Source:  Repealed at 18 Ill. Reg. 15094, effective September 26, 1994)

 

Section 1075.1195  Security (Repealed)

 

(Source:  Repealed at 18 Ill. Reg. 15094, effective September 26, 1994)

 

Section 1075.1200  Source Documents (Repealed)

 

(Source:  Repealed at 18 Ill. Reg. 15094, effective September 26, 1994)

 

Section 1075.1205  Subsidiary (Repealed)

 

(Source:  Repealed at 18 Ill. Reg. 15094, effective September 26, 1994)

 

Section 1075.1210  Liquidation Account and Proxies

 

a)         Each mutual savings bank converting to form a holding company must establish a "liquidation account" for members of the mutual savings bank before conversion. The liquidation account may be maintained at a holding company level or by the savings bank. The total amount allocated to the liquidation account shall be equivalent to the amount of stock issued to the holding company by the stock subsidiary upon infusion of assets and liabilities to the stock subsidiary.

 

b)         Each member of the liquidation account who maintains an account in the stock subsidiary savings banks shall be entitled, upon liquidation of the mutual holding company, to a fractional share of the value of the mutual holding company. The numerator of the fractional share shall be the amount of qualifying deposits in the member's account on the record eligibility date, which date shall be set by the board of directors in their Plan of Conversion and/or application to form a mutual holding company, and/or the supplemental eligibility record date and the denominator of the fractional share shall be the total amount of qualifying deposits of all eligible and supplemental eligible account holders in the converting mutual savings bank on the eligibility record date. Any plan to liquidate the mutual holding company must be approved by the Director and must satisfy all claims of creditors, including liquidation account holders. Any remaining value in the mutual holding company shall be transferred to the capital accounts of the subsidiary stock savings banks.

 

c)         All proxies previously executed and assigned by members of the mutual savings bank converting to form a holding company shall remain valid and effective without impairment as long as the member maintains an account in the new stock savings bank.

 

d)         A liquidation account need not be established under this Section if one is established under Section 1075.1225 and Subpart O of this Part.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1215  Mutual Holding Company Ceasing to be a Depository Institution

 

a)         Each mutual savings bank that converts to holding company status in conjunction with the chartering of a stock subsidiary shall be issued a "restated or amended charter" as a mutual holding company by the Director and the organization directors shall either return the original charter, insurance undertakings and certificate of insurance to the issuing authority, as evidence of ceasing to be an insured depository institution or may transfer them to the stock subsidiary with permission of the Director. The Director's permission shall be given upon successful completion of an examination to assure conformance with regulatory and statutory requirements.

 

b)         Upon the issuance of the charter of a stock savings bank by the Director, a mutual holding company shall cease to be a savings bank.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1220  Directors of a Mutual Holding Company

 

a)         Each new board of directors for the mutual holding company shall be selected by vote of members, in a process to be determined by the bylaws of each entity.

 

b)         Each board of directors shall have at least five members.

 

c)         Sections 4008, 4009, 4010, and Article 11 of the Act shall apply to a mutual holding company with regard to organization directors' vacancies, organization directors' attendance at meetings, qualifications to be an organization director, enforcement powers, and similar matters, except that the mutual holding company may file a written request for waiver of compliance with any provision with the Director. The request must provide detailed discussion of the grounds for the request. In determining whether to grant a waiver of compliance, the Director shall consider the following factors, including, but not limited to:

 

1)         whether applications of those provision to mutual holding companies would be inappropriate because the provisions are drafted for savings banks;

 

2)         whether a mutual holding company and its subsidiary meet or exceed all applicable capital requirements and are not in violation of any statutes or rules;

 

3)         whether there are pending contested regulatory matters; and

 

4)         whether waiver would work undue hardship or result in undue advantage or risk, prejudicing a situation currently or in the future.

 

d)         Upon creation of the resulting savings bank, the board of directors of the reorganizing savings bank shall nominate a board of directors for the resulting savings bank.

 

e)         A mutual holding company may provide for cumulative voting for organization directors in its bylaws.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1225  Stock Issuance Plan

 

If the reorganizing savings bank offers stock to any party other than the mutual holding company, it shall submit a stock issuance plan that meets the following conditions:

 

a)         At all times, a mutual holding company shall own and control more than 50% of each class of common stock and more than 50% of the capital stock in the aggregate, issued by the resulting savings bank, any acquiree savings bank, or any savings bank, in the mutual form when acquired.  The foregoing restriction shall not apply to an acquisition by a mutual holding company of a pre-existing depository institution.

 

b)         Any capital stock issued and offered for sale by a subsidiary savings bank as described in subsection (a) of this Section, to persons other than the mutual holding company, shall be offered in accordance with Subpart O of this Part, but subject to subsection (d) of this Part except that:

 

1)         the words "mutual savings bank" shall refer to resulting savings banks or acquiree savings banks;

 

2)         references to conversion from mutual to stock form shall refer to mutual holding company reorganization;

 

3)         the words "plan of conversion" shall refer to the Reorganization Plan;

 

4)         the words "total offering', and "offering" shall refer to the minority portion of the capital stock issuance that may be offered and purchased by persons other than the mutual holding company;

 

5)         Sections 1075.1990 and 1075.2170 of this Part shall not apply;

 

6)         At Section 1075.2110 of this Part, the reference to Section 1075.2160 of this Part shall not apply and the words "converted savings bank" shall refer to the resulting stock savings bank;

 

7)         Nothing in Section 1075.2150 of this Part shall interfere with the requirements of subsection (a) of this Section; and

 

8)         At Section 1075.1950 of this Part, receipt of a liquidation distribution from the liquidation account shall be in the event of a complete liquidation of the mutual holding company rather than the converted savings bank.

 

c)         To the extent the pricing materials submitted pursuant to Subpart O of this Part include any discount due to the minority status of the stock to be offered, the materials must indicate the amount of the discount and how that amount was determined.  Furthermore, if the plan calls for a waiver of dividends for the shares owned by the mutual holding company, the materials should indicate whether this waiver results in an ability to pay higher dividends to minority shareholders and, if so, why the discount is nonetheless warranted.

 

d)         The Director may waive a requirement of Subpart O of this Part upon a finding that the waiver would not work an injury on the mutual holding company or its subsidiaries, that it would be inequitable to members and eligible account holders, that the reorganization, if the waiver is granted, provides protections and opportunities equivalent to those that would exist if no waiver were granted, and that no other course of action that fully complies with Subpart O of this Part and this Subpart exists.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1230  Stock of a Subsidiary of a Mutual Holding Company

 

a)         A resulting savings bank shall issue shares to the holding company only after sufficient assets to match transferred deposit liabilities are transferred to the resulting savings bank and, if applicable, an acquiree savings bank and after written confirmation of continuation of insurance of accounts is received from the deposit insurance corporation.

 

b)         Stock issuance shall initially be only common stock, but other classes of stock may be issued upon application to and approval by the Director.

 

c)         Each share of common stock shall entitle its owner to one vote.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1235  Stock Subsidiary Formation

 

In conjunction with the formation of a resulting savings bank of a mutual holding company, the requirements of Article 3, Incorporation and Organization, of the Act shall apply with the following additions.

 

a)         In the case of a change of corporate form, which does not alter the assets and liabilities of the reorganizing savings bank, or any acquiree savings bank, as transferred to the resulting savings bank with regard to their amount or quality, the "minimum initial capital...which would be required to obtain insurance of accounts by the Federal Deposit Insurance Corporation" shall mean the amount of minimum capital which the reorganizing savings bank, or any acquiree savings bank, was required to have to maintain its federal insurance of accounts.

 

b)         The application to organize shall be made by the organization directors of the reorganizing savings bank. Copies of organization directors' and officers' affidavits and statements of personal interest from the last 5 years' examination reports may be submitted to the Director to the extent that they provide business and financial information on affiliations with any other financial institutions. Each applicant shall submit amendments to these materials to provide omitted, but required, information.

 

c)         Exhibits and maps shall display the original and new savings bank's customer area, and provide quarterly Federal and/or State reports for the four quarters preceding application, as well as the reorganizing savings bank's last 2 audited financial statements.

 

d)         The Director may require information as to:

 

1)         how stock shall be distributed. Such reports shall be required upon formation of the holding company, before issuance or marketing of stock and at any other time necessary to ensure fundamental fairness to stockholders, members, depositors and for reasons related to the safe and sound financial operation of any resulting savings bank, acquiree savings bank, or pre-existing depository institution;

 

2)         the form and manner of expressing ownership; and

 

3)         the amount of treasury stock that shall be held and any planned issuances of capital stock or equity securities, with projected dates and amounts.

 

e)         Once the resulting savings bank is formed, if the reorganizing savings bank no longer retains any deposits, it shall no longer be required to maintain insurance of accounts.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1240  Net Worth Maintenance Agreement (Repealed)

 

(Source:  Repealed at 22 Ill. Reg. 6719, effective March 30, 1998)

 

Section 1075.1245  Members' Rights

 

Rights of members of the resulting savings bank, acquiree savings bank, any savings banks in the mutual form when acquired shall be transferred to the mutual holding company, except that a savings bank may eliminate borrowers' rights in the process of forming the holding company by incorporating a new definition of membership in the holding company's and subsidiaries' Articles of Incorporation. Each depositor in the resulting savings bank, an acquiree savings bank, and any savings banks in the mutual form when acquired shall be a member of the mutual holding company and shall have one vote for each $100 of value of each account; notwithstanding the foregoing restriction, a mutual holding company may upon giving notice to the Director limit the number of votes cast by any persons to 1000 votes unless the Director finds upon review of relevant law and facts, the limitation is inequitable to depositors.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1250  Investment

 

A mutual holding company may invest in the stock of or other forms of equity ownership of any company or entity which the board of directors determines to be in the best interests of stock owners and depositors, and such investment shall be documented in the holding company's minutes with reference to items such as price/earnings rates, future prospects, sources of income, level of risk, compatibility with the overall business plan of the holding company and complete disclosure of any organization directors', officers', employees' or 5% or more stockholders' interests in the entity.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1255  Notice Requirement/Corrective Action

 

A holding company shall give immediate written notice to the Director of any corrective action ordered or requested by a governmental agency, relative to the financial affairs of the holding company, except those actions ordered by the Director. A holding company shall give written notice before acting upon such orders or requests, except when such order is effective immediately upon receipt. The method of transmittal shall be by messenger mail, private messenger service or telefax transmittal. Any such corrective actions required to be performed immediately shall be reported to the Director within 24 hours after receipt.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1260  Insider Abuses

 

Matters or issues resulting from apparent wrongdoing, including insider abuses, shall be brought to the Director's attention within 10 business days after discovery, by the appropriate management personnel of the holding company. Copies of any required reports, including police and Federal Bureau of Investigation reports, shall be included with the notification to the Director.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1265  Determination of the Qualification and Condition of an Out-of-State Acquisition

 

When requested, the Director shall review the laws of any state to determine whether the laws of that state expressly authorize an Illinois savings bank holding company to acquire a savings bank or savings bank holding company in that state. The Director  shall issue a finding that such other state law either does or does not provide qualifications and conditions that are unduly restrictive for the acquisition when compared to those imposed by the laws of Illinois.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1270  Acquisition and Disposal of Subsidiaries

 

a)         As permitted by the Act, this Part, and applicable federal law, a mutual holding company, with approval of its board of directors, the Director, and its members, may:

 

1)         acquire control of, or make non-controlling investments in the stock of, a stock depository institution or stock depository institution holding company;

 

2)         acquire a mutual savings bank, upon approval of acquiree's board of directors and members, pursuant to a merger into the resulting savings bank, into an acquiree savings bank, or into another savings bank that was in the mutual form when acquired or with a bridge charter;

 

3)         acquire a mutual savings bank or savings bank holding company, upon approval of the acquiree's board of directors and members, by merging with the mutual savings bank holding company;

 

4)         acquire control of, or make non-controlling investments in the stock of, other corporations.

 

b)         A stock holding company may make acquisitions or investments or enter into mergers as permitted by the Act, this Part, and applicable federal law with approval of its board of directors, the Director and its stockholders.

 

c)         Each holding company disposing of a subsidiary shall give not less than 30 days prior notice of the planned disposition to the Director. Disposal of a subsidiary must be approved by the Director.

 

d)         The Director shall approve a transaction contemplated by this Section upon finding that the transaction complies with applicable law, has received necessary approvals under federal law, and is not inequitable to members or injurious to a savings bank.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1275  Dividend Limitations and Waivers

 

a)         No subsidiary savings bank may declare or pay a cash dividend on or repurchase any of its capital stock unless the declaration or payment of the dividend or repurchase would be in accordance with the requirements of Section 5008 of the Act and would not reduce the capital of the converted savings bank below the greatest of:

 

1)         the amount required for the liquidation account;

 

2)         the amount required by the Director; or

 

3)         the amount required by federal law.

 

b)         A converted mutual savings bank may pay dividends on preferred stock at the rate or rates agreed in connection with the issuance of preferred stock, if such issuance has been approved by the Director.  However, the Director shall approve no issuance or payment that would reduce the capital of the converted savings bank below the greatest of:

 

1)         the amount required for the liquidation account;

 

2)         the amount required by the Director; or

 

3)         the amount required by federal law.

 

c)         No mutual holding company may waive its right to receive any dividend declared by a subsidiary unless:

 

1)         No insider of the mutual holding company, associate of an insider, or tax-qualified or non-tax-qualified employee stock benefit plan of the mutual holding company holds any share of stock in the class of stock to which the waiver would apply; or

 

2)         The mutual holding company provides the Director with written notice of its intent to waive its right to receive dividends 30 days prior to the proposed date of payment of the dividend and the Director does not object. The Director shall not object to a notice of intent to waive dividends if:

 

A)        the waiver would not be detrimental to the safe and sound operation of the savings bank; and

 

B)        the board of directors of the mutual holding company expressly determines that waiver of the dividend by the mutual holding company is consistent with the organization directors' fiduciary duties to the mutual members of the company.  A dividend waiver notice shall include a copy of the resolution of the board of directors of the mutual holding company, in form and substance satisfactory to the Director, together with any supporting materials relied upon by the board, concluding that the proposed dividend waiver is consistent with the board's fiduciary duties to the mutual members of the mutual holding company.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1280  Officers and Organization Directors List

 

The secretary of each holding company shall submit to the Director a list of all officers and organization directors of the holding company. This list shall be submitted within 10 days after the election of the holding company's board of directors, and any changes or additions in the list shall be submitted to the Director within 10 days after the occurrence of the change or addition. Along with the list there shall also be submitted an affidavit executed by each officer and organization director containing a statement that shall set forth details as to the present and, for the 5 years preceding, the business of every officer and organization director and the nature of their prior affiliations with any financial institution and its subsidiaries, holding company or subsidiary of a financial institution holding company.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1285  Access to Books and Records

 

The Director shall have access to subsidiaries' and holding companies' books and records.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1290  Annual Audit Requirements

 

Every holding company shall cause its books and records to be audited at least once annually by an independent licensed public accountant. The Director shall receive a copy of the licensed public accountant's annual audit report, along with all supporting documentation. The report of audit shall be on a consolidated basis unless, in the auditor's opinion, certain subsidiaries or parent entities should be reported on separately. If separate reports are prepared, they should be prepared on the same basis as the report on the holding company.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1295  Maintenance of Records

 

Every holding company shall maintain such corporate books and records as may be necessary to facilitate a full, complete examination of the activities of the entity. While the books and records will be primarily of an accounting nature, certain other records such as minutes of meetings shall be required to document review and approval of activities and plans.

 

a)         All accounting records shall be maintained in accordance with The Act.

 

b)         All stock entities shall at a minimum maintain or cause to be maintained on their behalf full, complete lists of stockholders including address, state of residence, taxpayer identification number, amount of stock owned, and any other data necessary to determine the principals and ownership of the entity.

 

c)         All holding companies shall prepare and maintain a full, complete book of minutes for meetings of the board of directors, executive management committees, and other meetings wherein business of a substantial nature is contemplated or transacted. This requirement shall be in effect for all subsidiary entities of the holding companies as well.

 

d)         Primary records such as books of record and source documents shall be maintained by the individual holding company for a period of not less than seven (7) years, provided that if a longer retention period is prescribed by another regulatory body having jurisdiction over the holding company, that longer period shall be followed.

 

(Source:  Amended at 18 Ill. Reg. 15094, effective September 26, 1994)

 

Section 1075.1300  Notice of Appointment of Independent Accountants

 

a)         Notice shall be made to the Director of the appointment of the licensed public accountant not less than 60 days before the fiscal year-end of the holding companies. Any change in the licensed public accountants shall be forwarded to the Director within 60 days after the change along with a letter from the replaced accountant stating whether the change, was the result of a dispute over the accounting treatment of a material matter.

 

b)         Copies of the Annual Audit shall be filed, in triplicate, with the Division of Banks and Real Estate within 90 days after the fiscal year-end of the registrant.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1305  Holding Company Filing Fees (Repealed)

 

(Source:  Repealed at 22 Ill. Reg. 6719, effective March 30, 1998)

 

Section 1075.1310  Holding Company Supervisory Fees (Repealed)

 

(Source:  Repealed at 42 Ill. Reg. 16507, effective August 23, 2018)

 

Section 1075.1315  Examination Fees (Repealed)

 

(Source:  Repealed at 42 Ill. Reg. 16507, effective August 23, 2018)

 

Section 1075.1320  Conditions (Repealed)

 

(Source:  Repealed at 42 Ill. Reg. 16507, effective August 23, 2018)

 

Section 1075.1325  Manner of Payment (Repealed)

 

(Source:  Repealed at 42 Ill. Reg. 16507, effective August 23, 2018)

 

Section 1075.1330  Conversion of Mutual Holding Companies

 

With approval of the Director, upon a finding by the Director that the conversion complies with applicable law, has received necessary approvals under federal law, and is not inequitable to members or injurious to a savings bank, a mutual holding company may convert to a capital stock holding company.  Any capital stock issued and offered for sale by a converting holding company shall be offered in accordance with Subpart O of this Part except that:

 

a)         The words "mutual savings bank" shall refer to mutual holding company.

 

b)         Section 1075.2170 of this Part shall not apply unless a subsidiary depository institution does not meet applicable capital requirement and the mutual holding company is unable to meet the requirements of the applicable net worth agreement entered into under Section 1075.1240 of this Part.

 

c)         Requirements in Subpart O of this Part for filing presentation or disclosure of financial, regulatory operations or management information shall apply to either the mutual holding company or its subsidiaries, or both, whichever filing, presentation or disclosure provides, as determined by the Director, the most complete description of the mutual holding company and its subsidiaries.

 

d)         Stock issued pursuant to Section 1075.1225 of this Subpart may be exchanged for stock issued by the mutual holding company in a conversion of the mutual holding company to stock form under this Section if the mutual holding company demonstrates that the exchange is equitable to the subsidiary depository institution and the mutual holding company members.

 

e)         The Director may waive a requirement of Subpart O of this Part upon a finding that the waiver is not injurious or inequitable to the mutual holding company or its subsidiaries, that it is not inequitable to members or eligible account holders, that the conversion, if the waiver is granted, provides the equivalent protections and opportunities as a conversion that fully complies with Subpart O of this Part and this Section, and that no other course of action that fully complies with Subpart O of this Part and this Section exists.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

SUBPART K: CONVERSION OF AN EXISTING DEPOSITORY INSTITUTION INTO AN ILLINOIS SAVINGS BANK

 

Section 1075.1400  Scope of Rules

 

No existing depository institution shall convert to an Illinois savings bank without the written approval of the Director pursuant to this Subpart.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1405  Definitions

 

Words or terms that are defined in The Act shall retain the same meaning when used in these regulations.

 

            "APPLICANT" means an existing depository institution that has applied to convert to an Illinois savings bank pursuant to these provisions.

 

            "CONVERSION PLAN" means a plan adopted by an existing depository institution in order to convert into an Illinois savings bank pursuant to these regulations.

 

            "CONVERTING DEPOSITORY INSTITUTION" or "CONVERTING INSTITUTION" means an existing depository institution that is in the process of converting to an Illinois savings bank.

 

            "RESULTING SAVINGS BANK" means an existing depository institution that has converted to an Illinois savings bank pursuant to these regulations.

 

Section 1075.1410  General Rules for Conversion Plan

 

a)         An application for conversion shall be approved only if the Director finds that:

 

1)         the conversion plan adopted by the applicant's board of directors or trustees (board), and all documentation submitted in support of the application for conversion complies with the provisions of this Part, the Act, and other applicable provisions of law;

 

2)         the resulting savings bank will operate in a safe, sound and prudent manner;

 

3)         the conversion plan will result in a savings bank that has adequate capital, and satisfactory management and earnings prospects as prescribed in the Act;

 

4)         the owners and organization directors of the converting depository institution and of the resulting savings bank are qualified by character and financial responsibility to legally and properly control and operate the proposed savings bank to be formed as a result of the conversion plan;

 

5)         the converting depository institution has taken steps to obtain insurance of accounts from the deposit insurance corporation;

 

6)         the conversion plan is equitable to account holders, borrowers, creditors, employees or stockholders and is in the public interest; and

 

7)         the converting institution has paid all outstanding bills for supervisory fees, examination fees, and penalties associated with its original charter.

 

b)         The experience and the performance record of the persons to be in control or in key management positions shall be evaluated by the Director as to the probability of sound operation of the resulting savings bank.

 

c)         The Director shall make the same investigation and determine the same questions as would be required by law to make and determine in the case of the submission to the Director of an Articles of Incorporation for a proposed new Illinois savings bank.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1415  Adopting and Filing of a Conversion Plan

 

a)         The board of directors of an existing depository institution desiring to convert in accordance with this Part shall adopt a conversion plan at a meeting of the board of directors.

 

b)         Upon the adoption of the conversion plan as provided in subsection (a), an existing depository institution shall file with the Director 3 copies of the application for approval of a Plan of Conversion, which shall include the conversion plan and each document required to be part of the conversion plan. The application shall be in the form required by the Director.

 

c)         An application for approval of a conversion plan shall be on forms prescribed by the Director.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1420  Conversion Plan Requirements (Repealed)

 

(Source:  Repealed at 22 Ill. Reg. 6719, effective March 30, 1998)

 

Section 1075.1425  Vote by Shareholders and Members (Repealed)

 

(Source:  Repealed at 22 Ill. Reg. 6719, effective March 30, 1998)

 

Section 1075.1430  Issuance of Certificate of Approval

 

The Director, upon approving a conversion plan, shall issue a certificate of approval of the conversion plan which shall authorize the applicant to proceed with its conversion plan. The Director may add such conditions to the certificate of approval as he or she considers necessary.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1435  Final Approval of the Conversion

 

a)         Upon a determination by the Director that all applicable requirements of law have been met, including the surrender of the original charter, the Director shall issue to the applicant a Certificate of Authority to Operate. The savings bank shall then file its amended charter and Articles of Incorporation as an Illinois savings bank with the County Recorder in the county in which the savings bank is headquartered.

 

b)         Upon filing, the applicant shall be an Illinois savings bank under sole supervision of the Director and of the Federal Deposit Insurance Corporation.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1440  Powers of Resulting Savings Bank

 

The resulting savings bank shall have all the rights, privileges, and powers granted by its amended charter and by the statutes applicable to savings banks holding such charters, and the entire assets, business, and goodwill of the converting depository institution shall be vested in the resulting savings bank without deed or transfer, provided such resulting savings bank may execute such deeds or instruments of conveyances as may be convenient to confirm such transfer, and such resulting savings bank shall assume and be liable for all debts, accounts, undertakings, contractual obligations, and liabilities of the converting depository institution.

 

Section 1075.1445  Obligations of Resulting Savings Bank

 

The resulting savings bank shall be subject to the duties, relations, obligations, trusts, and liabilities of the converting depository institution, whether as debtor, depository, registrar, transfer agent, executor, administrator, trustee, or otherwise, and shall be liable to pay and discharge all such debts and liabilities, to perform all such duties, and to administer all such trusts in the same manner and to the same extent as if such resulting savings bank had itself incurred the obligation or liability or assumed the duty, relation, or trust; and all rights of creditors and all liens upon the property of such resulting savings bank shall be entitled to receive, accept, collect, hold, and enjoy any and all gifts, bequests, devises, conveyances, trusts, and appointments in favor of or in the name of such converting depository institution, whether made or created to take effect before or after the conversion.

 

Section 1075.1450  Organization Directors of Resulting Savings Bank

 

The persons named as organization directors in the Plan of Conversion shall be the organization directors of the resulting savings bank until the first election of organization directors thereafter, or until the expiration of their terms as organization directors, and shall have the power to take all necessary measures and to adopt regulations concerning the business and management of the resulting converted savings bank.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

SUBPART L: SUPERVISION

 

Section 1075.1500  Sale of Offices or Facilities

 

a)         Except the sale of a branch office under Section 1075.740 of this Part, a savings bank contemplating sale of any office or facility must provide 90 days notice to the Director of its intent to do so. A copy of a signed letter of intent to purchase must be received by the Director at least 30 days before the closing date of the contemplated sale.

 

b)         Notice to the Director shall include:

 

1)         addresses of the facilities and offices to be sold;

 

2)         analyses of the accounts, loans and obligations of the facilities' and offices' business;

 

3)         a draft of notifications to be sent to all parties who would be affected by the sale, including depositors, creditors, account holders, and borrowers;

 

4)         notifications must detail names and addresses of the seller and buyer, what business will be transferred to the buyer, if anything shall remain with the seller, when business remaining with the seller will be administered;

 

5)         all final notifications under this Section must be registered mail, certified mail, or personally delivered. A time schedule for notifications must be included; and

 

6)         an analysis of the effect on the selling savings bank's financial condition, including discussion of any accounting issues, and pro forma financial statements for before and after the transaction. Specific discussion must be included about the manner of payment and deviation of pricing.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1510  Purchase of Offices (Repealed)

 

(Source:  Repealed at 22 Ill. Reg. 6719, effective March 30, 1998)

 

Section 1075.1520  Bridge Charters

 

a)         A savings bank may apply to the Director for authority to form a "bridge charter" to facilitate a corporate restructuring or voluntary change, only on condition that an additional savings bank is not created. Organization of a bridge charter shall not be subject to the requirements of Article 3 of the Act.

 

b)         The Director may only authorize the formation of an interim savings bank charter under this Section. An applicant desiring another type of financial institution charter shall apply for same to the regulator appropriate to that charter.

 

c)         Each application shall specify the purpose of the interim charter, the required end result, the ownership size, capital business plan, management structure, and duration of the initial, interim and final savings bank.

 

d)         An applicant for an interim charter under this Section shall inform the Director of any transaction contemplating use of an interim charter at least 90 days before the closing date of the transaction.

 

e)         Except to the extent established by the original savings bank, no interim charter may do retail business with the public; advertise; make purchases; or pay salaries, bonuses or fees, obligate to hire, or contract.

 

f)         An interim charter may exist for no more than 3 days, which may not be business days. On a normal business day, an interim charter may not be in existence for more than the time required to sign or otherwise finalize documents.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1530  Unsafe and Unsound Practices

 

If the Director receives notice of failure to renew or of cancellation of the bond required by Section 4009(a) of the Act, or if such bond is determined, from examination or from reports made by the savings bank, to be inadequate when compared with the amounts of the bond carried by savings banks of comparable capital size, pursuing similar investment policies and similar management capabilities, or with amounts required by its federal insurer of accounts, he or she shall immediately pursue one of the remedies enumerated in Articles 9 and 10 of the Act.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1540  Failure to Comply with Report of Examination

 

If the Director determines that a savings bank has failed to comply with recommendations made in or as the result of a report of examination within 45 days after the date the report is transmitted, then he or she may poll the savings bank's officers and board of directors personally concerning his or her recommendations, and, absent convincing or compelling changes of information, market conditions or financial condition of the savings bank, he or she shall summarily issue a temporary suspension in writing to officers and organization directors who refused or prevented taking the recommended steps. The suspension shall bar the specified individual until the Order is modified or vacated by the Director.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1550  Publication

 

a)         Publication shall be made once in a general or legal newspaper of the largest general circulation in:

 

1)         the county of the savings bank's headquarters; and

 

2)         in Sangamon County; or

 

3)         in Cook County.

 

b)         The notice shall:

 

1)         cite Section 9005 of The Act;

 

2)         provide the names of the savings bank, its officers and its board of directors; and

 

3)         quote the particular directive, summarizing any explanatory material of more than 25 words.

SUBPART M: REMOVALS, SUSPENSIONS AND INDUSTRY WIDE PROHIBITION

 

Section 1075.1600  Scope

 

The Director, in accordance with the Act and this Part, may remove or suspend any officer, organization director, employee or agent of a savings bank operating under the Act or prohibit an individual from further participation in any manner in the affairs at any savings bank operating under the Act.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1610  Notice of Intention and Answer

 

a)         Subject to Section 1075.1630 of this Part, proceedings to remove or suspend an officer, organization director, employee or agent of a savings bank operating under the Act or to prohibit an individual from further participation in any manner in the affairs of any savings bank operating and regulated under the Act shall commence upon service of Notice of Intention to Remove, Suspend or Prohibit.

 

b)         The notice shall:

 

1)         state the grounds for the action;

 

2)         recite the statutory basis for the action;

 

3)         be signed by the Director;

 

4)         contain a notice of hearing on the matter that sets a hearing date within 30 days after service of the notice of intention and names a hearing officer who shall conduct the hearing; and

 

5)         include a copy of the Director's rules pertaining to hearings.

 

c)         Hearing shall be conducted in accordance with 38 Ill. Adm. Code 100.

 

(Source:  Amended at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.1620  Removal and Prohibition by Order

 

In the event of consent, or, if upon the record submitted by the presiding hearing officer pursuant to 38 Ill. Adm. Code 100, and subject to Section 1075.1630 of this Part, the Director finds that any of the charges have been established, the Director may issue an Order of removal or suspension from office or of prohibition from participation in any manner in the affairs of a savings bank operating under the Act. The Order is effective upon service (except in the case of an Order issued upon consent that is effective at the time specified in the Order) and shall remain effective and enforceable unless stayed, modified, terminated or set aside by action of the Director or a reviewing court.

 

(Source:  Amended at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.1630  Suspension by Notice

 

a)         Upon determination that suspension is necessary for the protection of a savings bank operating under the Act or for depositors and in accordance with the Act and this Part, the Director may by notice suspend an officer, organization director, employee or agent of a savings bank operating under the Act and suspend the individual from participation in any manner in the affairs of any savings bank operating under the Act.

 

b)         A suspension Order by the Director issued pursuant to this Section shall be in effect and enforceable upon service and, unless stayed by a reviewing court, shall remain in effect until the charges are dismissed and the administrative proceedings are completed, or until the effective date of any final Order of removal, suspension or prohibition that is issued by the Director.

 

c)         A suspension Order by the Director issued pursuant to this Section shall:

 

1)         contain findings of fact sufficient to support imposition of a suspension by notice;

 

2)         recite the statutory basis for the Order;

 

3)         appoint a hearing officer;

 

4)         impose an immediate suspension of participation in any manner in the affairs of any savings bank operating under the Act;

 

5)         be signed by the Director or by a person authorized to act in her or his stead; and

 

6)         be with a notice of suspension that:

 

A)        sets a hearing date within 30 days after the date on which the Order takes effect;

 

B)        names the hearing officer who shall conduct the hearing; and

 

C)        includes a copy of the Director's rules pertaining to hearings.

 

d)         Subject to this Subpart M, hearing shall be pursuant to 38 Ill. Adm. Code 100.

 

(Source:  Amended at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.1640  Industrywide Prohibition

 

a)         Any person subject to an Order of removal or suspension or prohibited from participation in any manner in the affairs of a savings bank operating under the Act upon an Order of the Director, without hearing on the matter, shall be prohibited from participation in any manner in the conduct of affairs of a savings bank regulated by the State of Illinois, another insured depository institution regulated by the State of Illinois, or any other financial services entity regulated by the State of Illinois.

 

b)         An Order for industrywide prohibition shall:

 

1)         state the grounds for the industrywide prohibition;

 

2)         recite the statutory basis for the action;

 

3)         include the Order of removal, suspension or prohibition to which the party is subject; and

 

4)         be signed by the Director.

 

c)         Notwithstanding subsection (a), a prohibition from participation shall cease to apply to the party, but only to the extent that consent is granted, if, on or after the date an Order is issued under this Section a party receives the written consent of:

 

1)         the Director; and

 

2)         all other regulatory bodies of the insured depository institution or financial services entity to which the party proposes to participate in the conduct of affairs.

 

d)         Request for consent of the Director shall be made in writing to the Director. The decision of the Director is not reviewable. The request shall include:

 

1)         a written statement of the consent that is requested;

 

2)         a written statement of the proposed participation in the conduct of affairs of an insured depository institution financial or financial services entity; and

 

3)         a written statement, supported by all relevant documentation, of the reasons why the party believes consent should be granted.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1650  Unauthorized Participation of Convicted Individual

 

a)         Upon a finding by the Director, without hearing on the matter, that a current or proposed officer, organization director, agent or employee of a savings bank operating under the Act has been convicted of any criminal offense involving dishonesty or a breach of trust, the Director shall Order that such person shall not participate in any manner, at the conduct of affairs at a savings bank operating under the Act.

 

b)         The Order of the Director shall:

 

1)         state the grounds for the Order;

 

2)         recite the statutory basis for the Order;

 

3)         include true copy of the final judgment of the conviction of the individual; and

 

4)         be signed by the Director.

 

c)         Notwithstanding subsection (a), the Director, upon prior request, may grant written consent to participate in a savings bank operated under the Act.  A request must be made in writing to the Director.  The decision of the Director is not reviewable.

 

d)         Request for consent of the Director shall be made in writing to the Director.  The request shall include:

 

1)         a written statement of the consent that is requested;

 

2)         a written statement of proposed participation in the conduct of affairs of an insured depository institution or financial services entity; and

 

3)         a written statement, supported by all relevant documentation, of the reasons why the party believes consent should be granted.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

SUBPART N: ACQUISITION OF CONTROL OF SAVINGS BANK

 

Section 1075.1700  Acquisition of Control of Savings Bank

 

a)         As used in this Section, the following definitions apply:

 

1)         "Affiliate" means any company that controls, is controlled by, or is under common control with a person.

 

2)         "Company" means a corporation, a partnership, an association, a joint stock company, a trust or an unincorporated organization.

 

3)         "Control" means the ability of any person, entity, persons, or entities acting alone or in concert with one or more persons or entities, to own, hold, or direct with power to vote, or to hold proxies representing, 10% or more of the voting shares or rights of a savings bank, savings bank subsidiary, savings bank affiliate, or savings bank holding company, or the ability to achieve in any manner the election or appointment of a majority of the directors of a savings bank.  This definition shall not apply to the voting of proxies obtained from depositors if the proxies are voted as directed by a majority of the board of directors of the savings bank or of a committee of organization directors when the committee's composition and powers may be revoked by a majority vote of the board of directors.

 

4)         "Person" means an individual, a company or a group acting in concert.

 

5)         "Associate", when used to indicate relationship with any person, means:

 

A)        any corporation or organization (other than the applicant or a wholly owned subsidiary of the applicant) of which the person is an officer or partner or is, directly or indirectly, either alone or together with one or more members of his or her immediate family, the beneficial owner of  10% or more of any class of securities;

 

B)        any trust or other estate in which the person has a substantial beneficial interest or as to which the person serves as trustee or in a similar fiduciary capacity;

 

C)        any relative or spouse of the person or any relative of the spouse, who has the same home as the person or who is an organization director or officer of the savings bank or a related entity; or

 

D)        anyone who has an agreement, arrangement, or understanding, with the person, the purpose or effect of which is to enable the person to enter into and consummate any transaction described in subsection (m) on terms more advantageous than had the transaction been entered into or consummated by a person who was not a party to the agreement, arrangement, or understanding.

 

6)         "Savings Bank Holding Company" means any company defined by Section 2001.35 of the Act.

 

b)         It is unlawful for any person to acquire control of a savings bank or related entity unless acquired pursuant to this Section.  Any acquisition of control in violation of this Section shall be ineffective and void.

 

c)         Application to acquire control of a savings bank shall be made to the Director.  The application shall be under oath or affirmation, and shall contain substantially all the following information, plus any additional information that the Director may prescribe as necessary or appropriate to protect depositors, borrowers, stockholders, creditors, or the public interest.

 

1)         The identity and banking and business experience of each person by whom or on whose behalf the acquisition is to be made, including, but not limited to, his or her business activities and affiliations during the past 10 years, and a description of any pending legal or administrative proceedings in which he or she is a party and any criminal indictment or any conviction of such person by any state or federal court.

 

2)         If not entirely described in subsection (c)(1), for each person by whom or on whose behalf the acquisition is to be made, any past (for the past 10 years), present or proposed affiliation with an insured depository institution, including, but not limited to, any past, present or proposed employment and all affiliation or connection of the kind described under the definition of "affiliated person of a savings bank or insured institution" as defined in this Section.

 

3)         Financial Statements

 

A)        A statement of the assets and liabilities, including contingent liabilities, of each person by whom or on whose behalf the acquisition is to be made, as of the end of the fiscal year for each of the 5 years immediately preceding the date of the notice, including statements of income and source and application of funds for each of the fiscal years then concluded, all prepared in accordance with generally accepted accounting principles consistently applied.

 

B)        An interim statement of the assets and liabilities, including contingent liabilities, for each person by whom or on whose behalf the acquisition is to be made, including related statements of income and source and application of funds, as of a date not more than 90 days before the date of the filing of the notice.

 

4)         The terms of the proposed acquisition and the manner in which the acquisition is to be made.

 

5)         The identity, source and amount of the funds or other consideration used, or to be used, in making the acquisition.  If any part of these funds or other consideration has been or is to be borrowed or otherwise obtained to make the acquisition, a description of the transaction, the names of the parties, and any arrangements, agreements, or understandings with those parties.

 

6)         Any plans or proposals that any acquiring party may have to liquidate the bank, to sell its assets or merge it with any company or to make any other major change in its business or corporate structure or management.

 

7)         The identity of any person employed, retained, or to be compensated by the acquiring party, or by any person on his or her behalf, to make solicitations or recommendations to stockholders to assist in the acquisition, and a brief description of the terms of the employment, retainer, or arrangement for compensation.

 

8)         Copies of all invitations or tenders or advertisements making a tender offer to stockholders for purchase of their stock to be used in connection with the proposed acquisition.

 

9)         In lieu of the application and information required by subsections (c)(1) through (8), the Director may accept a certified  true and accurate copy of notice or application filed with the federal depository institution regulator for the purpose of gaining approval of the proposed change in control or acquisition transaction; provided that the federal application or notice is filed in compliance with the 60 day notice period prescribed by Section 8015 of the Act. Nothing in this subsection (c)(9) precludes the Director from requiring the applicant to file additional information as permitted by this Section.

 

d)         When a person, other than an individual or corporation, is required to file an application under this Section, the Director may require that the information required by subsections (c)(1), (2), (3), and (7) be given with respect to each person, as defined in subsection (a)(3), who has an interest in or controls a person filing an application under this Section.

 

e)         When a corporation is required to file an application under this Section, the Director may require that information required by subsections (c)(1), (2), (3), and (7) be given for the corporation, each officer and director of the corporation, and each person who is directly or indirectly the beneficial owner of 25% or more of the outstanding voting securities of the corporation.

 

f)         If any tender offer, request, or invitation for tenders or other agreements to acquire control is proposed to be made by a registration statement under the Securities Act of 1933 (15 USC 77a et seq.), or in circumstances requiring the disclosure of similar information under the Securities Exchange Act of 1934 (15 USC 78a et seq.), the registration statement or application may be filed with the Director instead of the requirements of this Section.

 

g)         Any acquiring party shall deliver a copy of any notice or application required by this Section to the savings bank proposed to be acquired within 2 days after the notice or application is filed with the Director.

 

h)         Any person who willfully or intentionally violates this Section is subject to Section 11006(1) of the Act.  Each day's violation shall be considered a separate violation.  This subsection in no way limits investigation, examination, prosecution, conviction, levying of fines, or any other legal action or remedy carried out pursuant to any other applicable state or federal law.

 

i)          The Director may disapprove the acquisition of a savings bank after the filing of a complete application if:

 

1)         The poor financial condition of any acquiring party may adversely affect the financial stability of the savings bank or may adversely affect the interest of depositors, borrowers, creditors, or stockholders;

 

2)         The plan or proposal of the acquiring party to liquidate the savings bank, to sell its assets, to merge it with any person, or to make any other major change in its business, corporate structure, or management may adversely affect the financial stability of the savings bank, is not fair and reasonable to its depositors, borrowers, creditors, or stockholders or is not otherwise in the public interest;

 

3)         Insufficient banking and business experience or a lack of competence or integrity of any acquiring party may adversely affect the savings bank or the savings bank's depositors, borrowers, creditors, or stockholders;

 

4)         The information provided by the application is insufficient for the Director to determine whether the acquisition should be approved or the Director is unable to verify the information provided or to examine the qualifications of the acquiring party; or

 

5)         The acquisition is not otherwise in the public interest.

 

j)          The Director shall set forth the basis for disapproval of any proposed acquisition in writing and shall provide a copy of the findings and order to the applicants and to the bank involved.  The findings and order shall not be disclosed to any other party and shall not be subject to public disclosure unless the findings or order are appealed and subject to hearing.

 

k)         Whenever a change in control occurs, each party to the transaction shall report promptly to the Director any changes or replacement of its chief executive officer or of any organization director occurring in the next 12 month period, including in its report a statement of the past and current business and professional affiliations of the new chief executive officers or organization directors.

 

l)          For a period of 10 years following the acquisition of control by any person, neither the acquiring party nor any associate or affiliate of the acquiring party or the acquired savings bank shall receive any loan or the use of any of the funds of, nor purchase, lease, or otherwise receive any property from, nor receive any consideration from the sale, lease, or any other conveyance of property to, any savings bank in which the acquiring party has control; except that:  

 

1)         the provisions of this subsection (l) shall not apply to transactions permitted under sections 22(g), 22(h), 23A or 23B of the Federal Reserve Act (12 USC 375a, 375b, 371c and 371c-1), or transactions with any person (including such person's affiliates and associates) after the person ceases to be in control of the savings bank, or ceases to be an affiliate or associate of a person in control of a savings bank; and

 

2)         upon application by any acquiring party or associate or affiliate or affiliated person of a savings bank or insured institution subject to this subsection (l), the Director may approve a transaction between a savings bank and the acquiring party, person, or associate or affiliate or affiliated person of a savings bank or insured institution, upon finding that the terms of the transaction are at least as advantageous to the savings bank as the savings bank would obtain in a comparable transaction with any person that is not an acquiring party or an associate or affiliate of the acquiring party.

 

m)        To enable any person to purchase any or all shares of its capital stock, no savings bank shall make a loan to, pledge or otherwise transfer any of its assets as security for a loan to such person or to any associate or affiliate or affiliated person of a savings bank or insured institution, or except as otherwise permitted in this subsection, pay any dividends to any such person or associate or affiliate or affiliated person of a savings bank or insured institution except upon a finding by the Director that such transactions are fair to stockholders, depositors, borrowers, and creditors and does not otherwise violate any provision of the Act.  Nothing in this Section shall prohibit a dividend among shareholders in proportion to their shareholdings.

 

n)         The accuracy and completeness of any information submitted by the applicants may be determined by the Director pursuant to the Director's examination authority.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1710  Anti-Takeover Provisions

 

a)         With approval of the Director, a savings bank may amend its articles of incorporation with regard to the acquisition by any person or persons of its equity securities.  The savings bank shall file with its application for approval an opinion, acceptable to the Director, of counsel independent from the savings bank that the proposed amendments would be permitted to be adopted by a corporation chartered by Illinois pursuant to the Business Corporation Act of 1983 [805 ILCS 5].

 

b)         No amendments of a savings bank's articles of incorporation pursuant to subsection (a) may be made or approved by the Director if the savings bank's capital is below requirements established by the Director or by federal law or if the savings bank's most recent composite rating (CAMEL) is composite 4 or composite 5.  This subsection shall not be construed to grant automatic approval of applications that do not fall within the restrictions of this subsection.

 

c)         Other than specified in subsections (a) and (b), a savings bank shall amend its articles of incorporation in accordance with Section 7308-2 of the Act.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

SUBPART O: CONVERSION OF MUTUAL SAVINGS BANK TO CAPITAL STOCK SAVINGS BANK

 

Section 1075.1800  Subpart Exclusive – Prohibition on Conversion Without Approval – Waiver of Requirements

 

This Subpart shall exclusively govern the conversion of mutual savings banks to capital stock savings banks.  No mutual savings bank may convert to the capital stock form of organization without the prior written approval of the Director pursuant to this Subpart. Notwithstanding any provision of this Subpart, the Director may waive a requirement of this Subpart if:

 

a)         waiver is required by applicable federal law or regulation;

 

b)         waiver avoids, ameliorates, or corrects a condition enumerated in Section 10001 of the Act or serves a purpose enumerated in Section 10002 of the Act;

 

c)         waiver is due to unforeseen circumstances that leave no other reasonable course of action that complies with the requirement and waiver is not injurious to the converting savings bank and not inequitable to its members; or

 

d)         waiver permits the converting savings bank to convert to stock form under terms or conditions available to a state or federal savings association or under terms or conditions permitted by the deposit insurance corporation.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1805  Forms

 

The Director may prescribe under this Subpart forms for use by a mutual savings bank seeking to convert to a capital stock savings bank pursuant to this Subpart.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1810  Request of Noncompliance Requirements (Repealed)

 

(Source:  Repealed at 22 Ill. Reg. 6719, effective March 30, 1998)

 

Section 1075.1815  Definitions

 

Terms defined in other Subparts of this Part, when used in this Subpart, shall have the meanings given in those definitions, to the extent those definitions are not inconsistent with the definitions contained in this Subpart unless the context otherwise requires.  As used in this Subpart, the following definitions apply, unless the context otherwise requires:

 

"Acting in Concert" means knowing participation in a joint activity or interdependent conscious parallel action toward a common goal whether pursuant to an express agreement, or a combination or pooling of voting or other interests in the securities of an issuer for a common purpose pursuant to any contract, understanding, relationship, agreement or other arrangement, whether written or otherwise; a person or company that acts in concert with another person or company (other party) shall also be considered to be acting in concert with any person or company who is also acting in concert with that other party, except that any employee stock benefit plan as defined in this Section will not be considered to be acting in concert with its trustee or a person who serves in a similar capacity solely to determine whether stock held by the trustee and stock held by the plan will be aggregated.

 

"Affiliate" means any company that controls, is controlled by, or is under common control with a person.

 

"Amount", when used in regard to securities, means the principal amount if relating to evidences of indebtedness, the number of shares if relating to shares of common or preferred stock, and the number of units if relating to any other kind of security.

 

"Applicant" is a mutual savings bank that has applied to convert pursuant to this Subpart.

 

"Broker" means any person engaged in the business of effecting transactions in securities for the account of others.

 

"Capital Stock" includes permanent stock, guaranty stock, permanent reserve stock, any similar certificate evidencing nonwithdrawable capital, preferred stock, or convertible preferred stock of a savings bank converted under this Subpart or of a subsidiary, institution or holding company.

 

"Charter" includes articles of incorporation, articles of reincorporation, and certificates of incorporation, as amended, effecting (either with or without filing with any governmental agency) the organization or creation of an incorporated person.

 

"Company" means a corporation, a partnership, an association, a joint stock company, a trust or an unincorporated organization.

 

"Control" is defined as it is defined in Section 1007.35 of the Act.

 

"Dealer" means any person who engages either for all or part of his or her time, directly or indirectly, as agent, broker, or principal, in the business of offering, buying, selling, or otherwise dealing or trading in securities issued by another person.

 

"Department" means the Department of Financial and Professional Regulation.

 

"Deposit Accounts" means any account defined as a deposit account at Section 7001 of the Act.

 

"Director" means the Director of the Department of Financial and Professional Regulation-Division of Banking.

 

"Division" means the Department of Financial and Professional Regulation-Division of Banking.

 

"Eligibility Record Date" means the record date for determining eligible account holders of a converting mutual savings bank.

 

"Eligible Account Holder" means any person holding a qualifying deposit as determined in accordance with Section 1075.1935.

 

"Employee" does not include an organization director or officer.

 

"Employee Stock Benefit Plan" means any defined benefit plan or defined contribution plan, such as an employee stock ownership plan, employee stock purchase plan, stock bonus plan, profit-sharing plan or other plan and its related trust.

 

"Equity Security" means any stock or similar security; or any security convertible, with or without consideration, into such a security, or carrying any warrant or right to subscribe to or purchase such a security; or any such warrant or right.

 

"Market Maker" means a dealer who, with respect to a particular security:

 

regularly publishes bona fide, competitive bid and offer quotations in a recognized interdealer quotation system; or furnishes bona fide competitive bid and offer quotations on request; and

 

is ready, willing, and able to effect a transaction in reasonable quantities at his or her quoted prices with other brokers or dealers.

 

"Mutual Savings Bank" means a mutual savings bank organized and operating under the Act.

 

"Offer of Sale" shall include "offer", "offer to sell", or "offer of sale" and shall include every attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security, for value.  These terms shall not include preliminary negotiations or agreements between an applicant and any underwriter or among underwriters who are or are to be in privity of contract with an applicant.

 

"Officer", for purposes of the purchase of stock in a conversion under this Subpart or the sale of this stock, means the chairman of the board, president, vice president, secretary, treasurer or principal financial officer, comptroller or principal accounting officer, and any other person performing similar functions with respect to any organization, whether incorporated or unincorporated.

 

"Organization Director" means any person defined as a director by Section 1007.55 of the Act.

 

"Person" means an individual, a company, or a government or political subdivision.

 

"Principal Underwriter" means an underwriter, as defined in this Section, in privity of contract with the applicant or other issuer of securities as to which that person is the underwriter.

 

"Proxy" includes every form of authorization by which a person is or may be designated to act for a stockholder in the exercise of his or her voting rights in the affairs of an institution.  The authorization may take the form of failure to dissent or object.

 

"Purchase" or "Buy" includes every contract to purchase, buy, or otherwise acquire a security or interest in a security for value.

 

"Sale" or "Sell" includes every contract to sell or otherwise dispose of a security or interest in a security for value; but these terms do not include an exchange of securities in connection with a merger or acquisition approved by the Director.

 

"Security" includes any note, stock, treasury stock, bond, debenture, transferable share, investment contract, voting-trust certificate, or in general, any instrument commonly known as a "security"; or any certificate of interest or participation in, temporary or interim certificate for, receipt for, or warrant or right to subscribe to or purchase any of the foregoing.

 

"Subsidiary" of a specified person is a company controlled by the person, directly or indirectly through one or more intermediaries.

 

"Supplemental Eligibility Record Date" means the supplemental record date for determining supplemental eligible account holders of a converting savings bank required by Section 1075.1845.  The date shall be the last day of the calendar quarter preceding Director approval of the application for conversion.

 

"Supplemental Eligible Account Holder" means any person holding a qualifying deposit, as of the supplemental eligibility record date, excluding officers, organization directors and their associates, except as provided in Section 1075.1845.

 

"Underwriter" means any person who has purchased from an applicant with a view to, or offers or sells for the applicant in connection with, the distribution of any security, or participates or has a direct or indirect participation in the direct or indirect underwriting of any such undertaking; but the term does not include a person whose interest is limited to a commission from an underwriter or dealer not in excess of the usual and customary distributor's or seller's commission.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1820  Prohibition on Approval of Certain Applications for Conversion

 

No application for conversion may be approved by the Director if:

 

a)         The plan of conversion adopted by the applicant's board of directors is not in accordance with this Subpart;

 

b)         The conversion reasonably could be expected to result in a reduction of the applicant's capital below requirements established by the Director and by Federal law;

 

c)         The conversion may result in a taxable reorganization of the applicant under the United States Internal Revenue Code of 1986 (26 USC 1 et seq.), and the Director upon a written finding determines that the reorganization will endanger the safety and soundness of the converting savings bank;

 

d)         The converted savings bank does not secure insurance of its deposit accounts backed by the full faith and credit of the United States government before commencing business; or

 

e)         Where a holding company is contemplated, the holding company will not be either a bank holding company registered with the Federal Reserve Board under the Bank Holding Company Act (12 USC 1841 et seq.) or a savings and loan holding company registered with the Office of Thrift Supervision under the Home Owners' Loan Act (12 USC 1461 et seq.).

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1825  Requirements of Plan of Conversion

 

The plan of conversion shall contain all the provisions set forth in Sections 1075.1830 through 1075.1905.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.1830  Issuance of Capital Stock – Price

 

A converted savings bank shall issue and sell capital stock at a total price at least equal to the estimated pro forma market value of the stock issued in connection with the conversion, based on an independent valuation, as provided in Section 1075.2070.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.1835  Stock Purchase Subscription Rights – Eligible Account Holders

 

a)         Each eligible account holder shall receive, without payment, nontransferable subscription rights to purchase capital stock in an amount ranging from .1% to 5% of the total offering, with each receiving subscription rights to the same percentage of capital stock, or in an amount that reflects a proportioned amount that is based on the amount of the eligible account holder's qualifying deposit relative to the total amount of qualifying deposits.  The allocation of subscription rights to purchase shares of capital stock under this subsection shall not give the organization directors in the aggregate subscriptions equal to more than 20% of the total offering.

 

b)         When a conversion plan is effected pursuant to Section 1075.2170, the total number of shares refers to that number of shares not sold to the acquiror or acquirors designated in the plan.

 

c)         Allotment

 

1)         If the allotment made in this Section results in an oversubscription, the plan of conversion may provide that shares be allocated first to organization directors, officers and employees who have been account holders for the entire 5 years before the conversion.  However, the Director may waive the 5 year requirement for an individual upon a written finding that the individual who has not been a 5 year account holder participated in and greatly contributed to rehabilitating the savings bank or that the waiver is necessary to maintain the savings bank's independent ownership.  Any shares not allocated to the organization directors, officers and employees shall be allocated among other subscribing eligible account holders on an equitable basis, related to the amounts of their qualifying deposits, as may be provided in the plan of conversion. 

 

2)         For the purposes of shares allocated pursuant to subsection (c)(1), organization directors may be allocated additional shares in the same manner as other eligible account holders.

 

d)         If the allotment in this Section results in an undersubscription, the plan of conversion may provide that the directors, officers and employees of the savings bank who are eligible account holders receive, without payment, nontransferable subscription rights to purchase unallocated shares of capital stock.  The subscription rights shall be allocated among organization directors, officers and employees on an equitable basis such as by giving weight to period of service, compensation, or position.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1840  Stock Purchase Subscription Rights – Received by Officers, Organization Directors, and their Associates – Subordination

 

Nontransferable subscription rights to purchase capital stock received by officers and organization directors and affiliated persons of the converting savings bank based on their increased deposits in the converting savings bank in the one-year period preceding the eligibility record date shall be subordinated to all other subscriptions involving the exercise of nontransferable subscription rights to purchase shares pursuant to Section 1075.1835.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1845  Supplemental Share Purchase Subscription Rights – Supplemental Eligible Account Holder – Conditions

 

a)         In plans with an eligibility record date that is more than 15 months before the date of the latest amendment to the application for conversion filed before the Director's approval, a supplemental eligibility record date shall be determined in which each supplemental eligible account holder of the converting savings bank shall receive, without payment, nontransferable subscription rights to purchase shares in an amount ranging from .1% to 5% of the total offering, with each receiving subscription rights to the same percentage of capital stock, or in an amount that is based on a proportioned amount that is based on the amount of the eligible account holder's qualifying deposit relative to the total amount of qualifying deposits in the converting savings bank on the supplemental eligibility record date.  When a conversion plan is effected pursuant to Section 1075.2170, the total number of shares refers to that number of shares not sold to the acquiror or acquirors designated in the plan.

 

b)         Subscription rights received pursuant to this Section shall be subordinated to all rights received by eligible account holders to purchase shares pursuant to Sections 1075.1835 and 1075.1840.

 

c)         Any nontransferable subscription rights to purchase shares received by an eligible account holder in accordance with Sections 1075.1835 and 1075.1840 shall be applied in partial satisfaction of the subscription rights to be distributed pursuant to this Section.

 

d)         In the event of an oversubscription for supplemental shares pursuant to this Section, shares shall be allocated among the subscribing supplemental eligible account holders on such equitable basis, related to the amounts of their respective qualifying deposits, as may be provided in the plan of conversion.

 

e)         An organization director or officer of the converting savings bank shall be entitled to subscription rights as a supplemental eligible account holder only if:

 

1)         the person is not also an eligible account holder entitled to subscription rights under Section 1075.1835; and

 

2)         the person became a director or officer of the converting savings bank after the eligibility record date established under Section 1075.1875.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1850  Voting Members Who Are Not Eligible Account Holders

 

a)         Voting members who are not either eligible account holders or supplemental eligible account holders may receive, without payment, nontransferable subscription rights to purchase capital stock in an amount equal to the greater of the maximum purchase limitation established for the public offering or direct community offering, or one-tenth of one percent of the total offering of shares.

 

1)         Subscription rights received pursuant to this Section shall be subordinated to all rights received by employee stock benefit plans, eligible account holders and supplemental account holders to purchase shares pursuant to Sections 1075.1835, 1075.1840, and 1075.1845.

 

2)         In the event of an oversubscription to capital stock pursuant to this Section, shares shall be allocated among the subscribing voting members on such equitable basis as may be provided in the plan of conversion.

 

b)         When a conversion plan is effected pursuant to Section 1075.2170, the total number of shares refers to that number of shares not sold to the acquiror or acquirors designated in the plan.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.1855  Sale of Shares Not Sold in Subscription Offering – Methods – Conditions

 

Any shares of the converting savings bank not sold in the subscription offering shall either be sold in a public offering through an underwriter or directly by the converting savings bank in a direct community marketing, subject to the applicant demonstrating to the Director the feasibility of the method of sale and to such conditions as may be provided in the plan of conversion.  The conditions shall include, but not be limited to, the following.

 

a)         A condition that any direct community offering by the converting savings bank shall give a preference to natural persons residing in the counties in which the savings bank has an office.  The methods by which preference shall be given shall be approved by the Director.

 

b)         A condition requiring the stock to be offered and sold in the public offering or the direct community offering, to be offered and sold in a manner that will achieve the widest distribution of the stock.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1860  Uniform Sales Price of Shares Required – Application to Specify Arrangements on Sale of Shares Not Sold in Subscription Offering

 

a)         The sales price of the shares of capital stock to be sold in the conversion shall be a uniform price determined in accordance with Sections 1075.2055, 1075.2070, and 1075.2090.  The applicant shall specify in its conversion application the underwriting and other marketing arrangements to be made to assure the sale of all shares not sold in the subscription offering.

 

b)         In a conversion of a mutual savings bank that is in the process of acquisition by a depository institution holding company or in the process of merger or consolidation with a depository institution, the pricing requirements of subsection (a) may be waived by the Director with respect to sales of shares of capital stock during the subscription offering to persons entitled to subscription rights under Sections 1075.1835, 1075.1845, 1075,1850, 1075.1910 and 1075.1925(b) and (c).  Waiver shall be granted only upon a written finding by the Director that the provision is not inequitable to members and would not injure the converting savings bank and, in the case of a waiver for sales to employee stock benefit plans or management recognition plans under Section 1075.1910, only if employees of the converting savings bank are, or upon consummation of the acquisition, merger or consolidation, will be, eligible to participate in those plans.  The finding of the Director shall include grounds as to why the provision is not inequitable or injurious.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1865  Savings Account Holder to Receive Withdrawable Savings Accounts – Amount

 

Each deposit account holder of the converting savings bank shall receive, without payment, a deposit account or accounts in the converted savings bank equal in amount, rate of return and general terms, to the withdrawable account holder's deposit account or accounts in the pre-conversion mutual savings bank.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1870  Liquidation Account – Establishment and Maintenance Required

 

A converting savings bank shall establish and maintain a liquidation account for the benefit of eligible account holders and supplemental eligible account holders in the event of a subsequent complete liquidation of the converted savings bank, in accordance with Sections 1075.1940 through 1075.1960.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.1875  Establishment of Eligibility Record Date Required

 

The applicant shall establish an eligibility record date, which shall not be less than 90 days before the date of adoption of the plan by the converting savings bank's board of directors.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.1880  Voting Rights

 

Stockholders of the converted savings bank shall have exclusive voting rights as prescribed in Section 4005 of The Act.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.1885  Amendment and Termination of Plan of Conversion

 

The plan of conversion adopted by the applicant's board of directors may be amended or withdrawn by the board of directors at any time before final approval of the Director and solicitation of proxies from the applicant's members to vote on the plan, provided that no such amendment or withdrawal shall be effective unless the Director is notified of the amendment or withdrawal and the Director acknowledges receipt of notification.  The plan of conversion adopted by the applicant's board of directors may be amended or withdrawn by the board of directors after final approval of the Director and solicitation of proxies from the applicant's members to vote on the plan only with the approval of the Director.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1890  Restriction on Sale of Shares of Stock by Organization Directors and Officers

 

a)         All shares of capital stock purchased by organization directors on original issue in the conversion either directly from the savings bank (by subscription or otherwise) or from an underwriter of the shares shall be subject to the restriction that the shares shall not be sold for a period ranging from one year to 5 years following the date of purchase, except in the event of death of the organization director.  Within the one-to-5 year range, the length of the restriction shall be determined by the savings bank.

 

b)         Notwithstanding the sales restriction of subsection (a), after an organization director has owned such capital stock purchased on original issuance for a period of not less than one year from the date of purchase, an organization director may request the Director's permission to sell the stock.  The Director may grant permission to sell the stock upon a written finding that:

 

1)         the sale would substantially contribute to averting otherwise unavoidable injury to the savings bank; or

 

2)         due to a change in the organization director's financial or personal circumstances that was unforeseen at the time of purchase of the stock, disallowing the sale would result in substantial, imminent and otherwise unavoidable hardship.

 

c)         All shares of capital stock purchased by officers on original issue in the conversion either directly from the savings bank (by subscription or otherwise) or from an underwriter of the shares shall be subject to the restriction that the shares shall not be sold for a period of not less than one year following the date of purchase, except in the event of death of the officer.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1895  Conditions on Shares of Stock Subject to Restriction on Sale

 

In connection with shares of capital stock subject to restriction on sale:

 

a)         each certificate for the stock shall bear a legend giving appropriate notice of the restriction;

 

b)         appropriate instructions shall be issued to the transfer agent for the capital stock with respect to applicable restrictions on transfer of any such restricted stock; and

 

c)         any shares issued as a stock dividend, stock split, or otherwise with respect to any such restricted stock shall be subject to the same restrictions as may apply to the restricted stock.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.1900  Registration of Securities – Marketing of Securities – Listing of Shares on Securities Exchange or NASDAQ Quotation System

 

A converted savings bank or savings bank holding company shall:

 

a)         promptly register securities issued in its conversion pursuant to the Securities and Exchange Act of 1934 (15 USC 78a et seq.) and undertake not to deregister the securities for a period of 3 years thereafter;

 

b)         use its best efforts to encourage and assist a market maker to establish and maintain a market for the securities issued in connection with the conversion; and

 

c)         use its best efforts to list those shares issued in connection with the conversion on a national or regional securities exchange or on the National Association of Securities Dealers Automated Quotations (NASDAQ) system.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1905  Reasonable Expenses Required

 

The expenses incurred in the conversion shall be reasonable.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.1910  Employee Stock Benefit Plan – Priority.

 

a)         Employee stock benefit plans in the aggregate have priority to purchase up to 15 percent of the total offering of shares of capital stock before eligible and supplemental eligible account holders and voting members who have subscription rights.

 

b)         In addition to the subscription rights of employee stock benefit plans under subsection (a), management recognition plans and benefit income plans in the aggregate have priority to purchase up to 5% of the total offering of shares of capital stock before eligible and supplemental eligible account holders and voting members who have subscription rights.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1915  Employee Stock Benefit Plan – Contributions

 

Scheduled discretionary contributions to an employee stock benefit plan may be made if the contributions do not cause the savings bank to fail to meet capital requirements established by the Director or by federal law.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1920  Plan of Conversion – Prohibited Provisions

 

a)         The plan of conversion shall contain no provision that the Director determines to be inequitable or detrimental to the applicant, its account holders, or other savings banks or to be contrary to the public interest.

 

b)         Except for loans to eligible account holders and supplemental eligible account holders that are fully secured by certificates of deposit with the converting savings bank of the account holders, the plan of conversion shall contain no provision that permits or requires the applicant to extend credit of any kind in any way or to distribute assets of any kind in any way to any person or entity to purchase the applicant's capital stock before or during the conversion.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1925  Optional Provisions in Plan of Conversion

 

The plan of conversion may provide any or all the following:

 

a)         That the converting savings bank may begin the direct community offering or the public offering, or both, concurrently with or at any time during the subscription offering.  The subscription offering may begin concurrently with or at any time after the mailing to savings bank members, pursuant to Section 1075.2040(b), of the proxy statement authorized for use by the Director. The subscription offering may be closed before the meeting of the savings bank members held to vote on the plan of conversion only if the offer and the sale of the capital stock shall be conditioned upon the approval of the plan of conversion by the savings bank members as provided in Section 1075.2040.

 

b)         That the directors, officers and employees of the converting savings bank shall receive, without payment, non-transferable subscription rights to purchase shares of capital stock that are available after satisfying the subscriptions provided for under Sections 1075.1835, 1075.1845, 1075.1855 and 1075.1910, subject to such conditions as may be provided in the plan of conversion.  In the event of an oversubscription by organization directors, officers and employees, the shares available shall be allocated among the subscribing organization directors, officers and employees on an equitable basis, such as by giving weight to period of service, compensation or position.

 

c)         That any account holder receiving rights to purchase stock in the subscription offering shall also receive, without payment, non-transferable subscription rights to purchase up to 1% of the total offering of shares of capital stock, to the extent that the shares are available after satisfying the subscriptions provided for under subsection (b) and Sections 1075.1835, 1075.1845, 1075.1850 and 1075.1910, subject to such conditions as may be provided in the plan of conversion.  In the event of an oversubscription for additional shares, the shares available shall be allocated among the subscribing eligible account holders, supplemental eligible account holders and voting members on an equitable basis, related to the amounts of their respective subscriptions, as may be provided in the plan of conversion.

 

d)         That the converting savings bank may require savings bank members to return by a reasonable date certain a postage-paid written communication provided by the converting savings bank requesting receipt of a subscription offering circular, or a preliminary or final offering circular in an offering pursuant to subsection (h), in order to be entitled to receive an offering circular from the converting savings bank.  The subscription offering or the offering pursuant to subsection (h) shall not be closed until the expiration of 30 days after the mailing by the converting savings bank to bank members of the postage-paid written communication.  If the subscription offering or the offering pursuant to subsection (h) is not started within 45 days after the meeting of savings bank members, the converting savings bank that has adopted this optional provision shall transmit no more than 30 days before the start of the subscription offering or the offering pursuant to subsection (h) to each savings bank member who has been furnished with proxy soliciting materials, written notice of the start of the offering, which notice shall state that the converting savings bank is not required to furnish an offering circular to a savings bank member unless the savings bank member returns by a reasonable date certain the postage-paid written communication provided by the converting savings bank requesting receipt of an offering circular.

 

e)         That the converting savings bank may require eligible account holders and supplemental eligible account holders who are not voting members to return by a reasonable date certain a postage-paid written communication provided by the converting savings bank requesting the receipt of a subscription offering circular, or a preliminary or final offering circular in an offering pursuant to subsection (i), in order to be entitled to receive an offering circular from the converting savings bank.  The subscription offering or the offering pursuant to subsection (i) shall not be closed until the expiration of 30 days after the mailing by the converting savings bank to the non-voting eligible account holders and supplemental eligible account holders of the postage-paid written communication.  If the subscription offering or the offering pursuant to subsection (i) is not started within 45 days after the meeting of savings bank members, the converting savings bank that has adopted this optional provision shall transmit no more than 30 days before the start of the subscription offering or the offering pursuant to subsection (i) written notice of the start of the offering, which notice shall state that the converting savings bank is not required to furnish an offering circular to a non-voting eligible account holder or supplemental eligible account holder unless the eligible account holder or supplemental eligible account holder returns by a reasonable date certain the postage-paid written communications provided by the converting savings bank requesting receipt of an offering circular.

 

f)         That any shares of the converting savings bank not sold in the subscription offering or in a public offering referred to in Section 1075.1855 may be sold in another manner  provided in the plan with the Director's approval.

 

g)         That the converted savings bank shall issue and sell, instead of shares of its capital stock, units of securities consisting of capital stock and warrants or other equity securities, in which event any reference in this Subpart to capital stock shall apply to the units of equity securities unless the context otherwise requires.

 

h)         That, instead of a separate subscription offering, all subscription rights issued in connection with the conversion shall be exercisable by delivery of properly completed and executed order form to the underwriters or selling group for the public offering or pursuant to any other procedure, subject to the applicant demonstrating to the Director the feasibility of the method of exercising those rights and to conditions provided in the plan of conversion. The conditions shall include, but not be limited to, requiring that orders for stock in the public offering or direct community offering shall first be filled, in the order of priority set forth in this Subpart by orders of persons exercising subscription rights.

 

i)          Any person exercising subscription rights to purchase capital stock may be required to purchase a minimum number of shares to the extent the shares are available, but the aggregate price for any minimum share purchase requirement shall not exceed $500.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1930  Approval of Other Provisions

 

The Director may approve other provisions upon a written finding that the provision is not inequitable to members and will not injure the converting savings bank.  The written findings shall include grounds as to why the provision is not inequitable or injurious.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1935  Amount of Qualifying Deposit of Eligible Account Holder or Supplemental Eligible Account Holder

 

a)         Unless otherwise provided in the plan of conversion, the amount of the qualifying deposit of an eligible account holder or supplemental eligible account holder shall be the total of the deposit balances in the eligible account holder's or supplemental eligible account holder's deposit accounts in the converting savings bank as of the close of business on the eligibility record date or supplemental eligibility record date.  However, the plan of conversion may provide that any deposit accounts with total deposit balances of less than $1000 (or any lesser amount) shall not constitute a qualifying deposit.

 

b)         As used in this Section, the term "deposit account" includes a predecessor or successor account of a given savings account which is held only in the same right and capacity and on the same terms as the given deposit account.  However, the plan of conversion may provide for lesser requirements for determining predecessor or successor accounts.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.1940  Liquidation Account – Establishment Required – Amount – Function

 

Each converted savings bank shall, at the time of conversion, establish a liquidation account in an amount equal to the amount of net worth of the converting savings bank as of the latest practicable date before conversion. For purposes of this Section, the savings bank, in the final offering circular, shall use the net worth figure stated in its most recent audited statement of financial condition, prepared according to Generally Accepted Accounting Principles ("Accounting Standards Current Text General Standards", June 1, 1992, no subsequent dates or editions. Financial Accounting Standards Board, 401 Merritt 7, P. O. Box 5116, Norwalk, CT 06856-5116). The function of the liquidation account is to establish a priority to be followed on liquidation and, except as provided in Section 1075.1970, the existence of the liquidation account shall not operate to restrict the use or application of any of the capital accounts of the converted savings bank.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.1945  Liquidation Account – Maintenance Required – Subaccounts

 

The liquidation account shall be maintained by the converted savings bank for the benefit of eligible account holders and supplemental eligible account holders who maintain their savings accounts in the bank.  Each such eligible account holder and supplemental eligible account holder shall, with respect to each savings account, have a related inchoate interest in a portion of the liquidation account balance ("subaccount").

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.1950  Liquidation Account – Distribution Upon Complete Liquidation

 

In the event of a complete liquidation of the converted savings bank (and only in this event), each eligible account holder and supplemental eligible account holder shall be entitled to receive a liquidation distribution from the liquidation account, in the amount of the then current adjusted subaccount balances for savings accounts then held, before any liquidation distribution may be made with respect to capital stock.  No merger, consolidation, purchase of bulk assets with assumption of savings accounts and other liabilities, or similar transaction, in which the converted savings bank is not the survivor, is considered to be a complete liquidation for this purpose.  In these transactions, the liquidation account shall be assumed by the surviving institution.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.1955  Liquidation Account – Determination of Subaccount Balances

 

The initial subaccount balance for a savings account held by an eligible account holder or supplemental eligible account holder shall be determined by multiplying the opening balance in the liquidation account by a fraction of which the numerator is the amount of qualifying deposits in the savings account on the eligibility record date or the supplemental eligibility record date and the denominator is the total amount of qualifying deposits of all eligible account holders and supplemental eligible account holders in the converting savings bank on these dates.  For savings accounts in existence at both dates, separate subaccounts shall be determined on the basis of the qualifying deposits in these savings accounts on these record dates.  The initial subaccount balances shall not be increased, and it shall be subject to downward adjustment as provided in Section 1075.1960.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.1960  Reduction of Subaccount Balance

 

If the deposit balance in any deposit account of an eligible account holder or supplemental eligible account holder at the close of business on any annual closing date subsequent to the respective record dates is less than the lesser of:

 

a)         the deposit balance in the deposit account at the close of business on any other annual closing date subsequent to the eligibility record date; or

 

b)         the amount of qualifying deposit as of the eligibility record date or the supplemental eligibility record date, the subaccount balance for the deposit account shall be adjusted by reducing the subaccount balance in an amount proportionate to the reduction in the deposit balance.  In the event of such a downward adjustment, the subaccount balance shall not be subsequently increased, notwithstanding any increase in the deposit balance of the related deposit account.  If any such deposit account is closed, the related subaccount balance shall be reduced to zero.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.1965  Converted Savings Bank Prohibited from Repurchasing its Stock Without Approval

 

A converted savings bank shall not, for a period of one year from the date of the completion of the conversion, repurchase any of its capital stock, except that capital stock repurchases of no greater than 5% of the capital stock issued in the conversion may be repurchased during this one-year period if the Director finds that:

 

a)         the repurchase would not adversely affect the financial condition of the savings bank;

 

b)         the repurchase would not reduce the savings bank's capital below requirements established by the Director or federal law;

 

c)         the repurchase would be equitable to shareholders;

 

d)         the repurchase would be undertaken for legitimate business reason; and

 

e)         the information submitted by the savings bank is sufficient upon which to base the findings required by this Section.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1970  Limitation on Cash Dividends

 

No converted savings bank may declare or pay a cash dividend on, or repurchase any of, its capital stock unless the declaration or payment repurchase dividend or repurchase would be in accordance with the requirements of Section 5001(c) of the Act and would not reduce the capital of the converted savings bank below the greatest of:

 

a)         the amount required for the liquidation account;

 

b)         the amount required by the Director; or

 

c)         the amount required by federal law.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1975  Dividends on Preferred Stock

 

A converted mutual savings bank may pay dividends on preferred stock at the rate or rates agreed in connection with the issuance of preferred stock, if such issuance has been approved by the Director.  However, the Director shall approve no issuance or payment that would reduce the capital of the converted savings bank below the greatest of:

 

a)         the amount required for the liquidation account,

 

b)         the amount required by the Director, or

 

c)         the amount required by federal law.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1980  Prohibitions on Offer, Sale, or Purchase of Securities

 

a)         In the offer, sale, or purchase of securities issued incident to its conversion, no savings bank or any organization director, officer, attorney, agent, or employee thereof may:

 

1)         employ any device, scheme or artifice to defraud;

 

2)         obtain money or property by any untrue statement of a material fact or any omission to state a material fact necessary to make the statements made, in the light of the circumstances under which they were made, not misleading; or

 

3)         engage in any act, transaction, practice, or course of business that operates or would operate as a fraud or deceit upon a purchaser or seller.

 

b)         In addition, any act that the U.S. Securities Exchange Commission finds violates section 10 of the Securities Exchange Act of 1934 (15 USC 78j) or Rule 10b-5, as promulgated by the U.S. Securities Exchange Act of 1934 (17 CFR 240.10b-5) shall be considered a violation of this Section.  A violation found by the Securities Exchange Commission includes, regardless of pending of appeal, any violation found by the Commission, any violation admitted within a plea agreement or in a plea of nolo contendere, any violation proved or admitted with respect to an unindicted co-conspirator, any conviction for violation of the Securities Exchange Act of 1934 (15 USC 78j) or Rule (17 CFR 240.10b-5), as promulgated by the U.S. Securities Exchange Commission, and any violation found by any body of competent jurisdiction of the Securities Exchange Act of 1934 (15 USC 78); or Rule (17 CFR 240.10b-5), as promulgated by the U.S. Securities Exchange Commission.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1985  Acquisitions of Control of a Converted Savings Bank

 

Acquisition of control of a converted savings bank shall be ineffective and void unless in accordance with Section 8015 of The Act and Section 1075.1700.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.1990  Articles of Incorporation – Restrictions Permitted

 

a)         A converting savings bank's articles of incorporation may include the following provision:

 

1)         Certain Provisions Applicable for 5 Years.  Notwithstanding anything contained in the savings bank's charter article, articles of incorporation, or bylaws to the contrary, for a period of (specify number of years up to 5) years from the date of completion of the conversion of the savings bank from mutual to stock form, the following provisions shall apply:

 

A)        Beneficial Ownership Limitation.  Except for sales of stock required by the federal insurer of accounts or the Director, no person shall directly or indirectly offer to acquire or acquire the beneficial ownership of more than 10% of any class of an equity security of the savings bank.  This limitation shall not apply to a transaction in which the savings bank forms a holding company without change in the respective beneficial ownership interests of its stockholders other than pursuant to the exercise of any dissenter and appraisal rights, the purchase of shares by underwriters in connection with a public offering, or the purchase of shares by a employee stock benefit plan.  In the event shares are acquired in violation of this Section, all shares beneficially owned by any person in excess of 10% shall be considered "excess shares" and shall not be counted as shares entitled to vote and shall not be voted by any person or counted as voting shares in connection with any matters submitted to the stockholders for a vote.  For purposes of this provision, the following definitions apply:  the term "person" includes an individual, a group acting in concert, a corporation, a partnership, an association, a joint stock company, a trust, an unincorporated organization or similar company, a syndicate or any other group formed to acquire, hold or dispose of the equity securities of the savings bank; the term "offer" includes every offer to buy or otherwise acquire, solicitation of an offer to sell, tender offer for, or request or invitation for tenders of, a security or interest in a security for value; the term "acquire" includes every type of acquisition, whether effected by purchase, exchange, operation of law or otherwise; and the term "acting in concert" means knowing participation in a joint activity or conscious parallel action towards a common goal whether pursuant to an express agreement, or a combination or pooling of voting or other interests in the securities of an issuer for a common purpose pursuant to any contract, understanding, relationship, agreement or other arrangements, whether written or otherwise.

 

B)        Cumulative Voting Limitation. Stockholders shall not be permitted to cumulate their votes for election of organization directors.

 

C)        Call for Special Meetings.  Special meetings of stockholders relating to changes in control of the association or amendments to its charter shall be called only upon direction of the board of directors.

 

2)         If the savings bank chooses to include the provisions allowed pursuant to this subsection (a), the language in subsection (a)(1) constitutes the exact language that shall be used in the savings bank's articles of incorporation, except that in the subsection (a)(1), a number of years, up to 5 years, shall be substituted for the language, "(specify number of years up to 5)".

 

b)         There may also be included in the articles of incorporation any provision that could be approved as an amendment pursuant to Section 1075.1710. Such provisions must be approved by the Director.  Application for such approval must include independent counsel's opinion that the proposed provision would be permitted to be adopted in a corporation chartered by Illinois pursuant to the Business Corporation Act of 1983.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.1995  Confidentiality of Consideration to Convert – Remedial Measures for Breach

 

A savings bank that is considering converting pursuant to this Subpart and its organization directors, officers, and employees shall keep this consideration in the strictest confidence and shall only discuss the potential conversion as would be consistent with the need to prepare information for filing an application for conversion.  Should this confidence be breached, the Director may require remedial measures including:

 

a)         a public statement by the savings bank that its board of directors is currently considering converting pursuant to this Subpart;

 

b)         providing for an eligibility record date that shall be a date before the adoption of the plan by the converting savings bank's board of directors as to assure that the conversion is equitable;

 

c)         limitation of the subscription rights of any person violating or aiding the violation of this Section; and

 

d)         any other actions the Director may consider appropriate and necessary to assure the fairness and equitability of the conversion.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2000  Public Statement Authorized

 

If it should become essential as a result of rumors before the adoption of a plan of conversion by the applicant's board of directors, a public statement limited to that purpose may be made by the applicant.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.2005  Adoption of Plan of Conversion – Notice to and Inspection by Account Holders – Statement and Letter – Press Release Authorized

 

a)         Promptly after the adoption of a plan of conversion by not less than two-thirds of its board of directors, the savings bank shall:

 

1)         Notify, its account holders of the action by publishing a statement in a newspaper having general circulation in each community in which an office of the savings bank is located or by mailing a letter to each of its account holders; and

 

2)         Have copies of the adopted plan of conversion available for inspection by its account holders at each office of the savings bank.

 

b)         The savings bank may also issue a press release with respect to the action.  Copies of the proposed statement, letter, and press release are not required to be filed with the Director but may be submitted to the Director for comment.  Copies of the definitive statement, letter, and press release shall be filed with the Director as part of the application for conversion.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2010  Statement, Letter and Press Release – Content Permitted

 

The statement, letter, and press release of the applicant issued pursuant to Section 1075.2005, unless otherwise authorized by the Director, shall contain only (but need not contain all of) the following:

 

a)         A statement that the board of directors has adopted a plan to convert the savings bank from a mutual savings bank to a capital stock savings bank;

 

b)         A statement that the plan of conversion is subject to approval by the Director and by the appropriate federal regulatory authority or authorities (naming such an authority or authorities) before the plan can become effective and that account holders of the applicant will have an opportunity to file written comments including objections and materials supporting the objections with the Director;

 

c)         A statement that the plan of conversion is contingent upon obtaining favorable tax rulings from the Internal Revenue Service or an appropriate tax opinion;

 

d)         A statement that there is no assurance that the approval of the Director or the approval of any appropriate federal authority or authorities will be obtained, and also no assurance that the favorable tax rulings or tax opinion will be received;

 

e)         The proposed record date for determining the eligible account holders entitled to receive nontransferable subscription rights to purchase capital stock of the applicant;

 

f)         A brief statement describing the circumstances that would require supplemental eligible account holders to receive nontransferable subscription rights to purchase capital stock of the applicant;

 

g)         A brief description of the plan of conversion;

 

h)         The par value and approximate number of shares of capital stock to be issued and sold under the plan of conversion;

 

i)          A brief statement as to the extent to which organization directors, officers, and employees will participate in the conversion;

 

j)          A statement that savings account holders will continue to hold accounts in the converted savings bank identical as to dollar amount, rate of return, and general terms and that their accounts will continue to be insured by the Federal Deposit Insurance Corporation;

 

k)         A statement that borrowers' loans will be unaffected by conversion and that the amount, rate, maturity, security, and other conditions will remain contractually fixed as they existed before conversion;

 

l)          A statement that the normal business of the savings bank in accepting savings and making loans will continue without interruption; that the converted savings bank will continue after conversion to conduct its present services to savings account holders and borrowers under current policies to be carried on in existing offices and by the present management and staff;

 

m)        A statement that the plan of conversion may be substantively amended or ended by the board of directors with the concurrence of the Director; and

 

n)         A statement that questions of account holders may be answered by telephoning or writing to the savings bank.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2015  Statement, Letter and Press Release – Contents Prohibited – Inquiries

 

The statement, letter, and press release of the applicant issued pursuant to Section 1075.2005 shall not include financial statements or describe the benefits of conversion or the value of the capital stock of the savings bank upon conversion.  In replying to inquiries, the savings bank should limit its answers to the matters listed in Section 1075.2010.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.2020  Notices of Filing of Application – Requests for Subscription Offering Circular

 

a)         Upon determination that an application for conversion is properly executed and is not materially incomplete, the Director shall advise the applicant, in writing, to publish notices of the filing of the application.  Promptly after receipt of the advice, the applicant shall prominently post the notice in each of its offices and publish a notice of the filing in a newspaper printed in the English language and having general circulation in each community in which an office of the applicant is located.

 

b)         The first notice shall be entitled:  "Notice of Filing of an Application for Approval to Convert to a Stock Savings Bank".

 

c)         The first paragraph under the title shall read as follows:

 

            "Notice is hereby given that, pursuant to 38 Ill. Adm. Code 1075.2020, (fill in name of applicant), has filed an application with the Director of Banking for approval to convert to the stock form of organization.  Copies of the application have been delivered to the Division of Banking in Chicago and Springfield, Illinois."

 

d)         The second paragraph under the title shall read as follows:

 

            "Written comments, including objections to the plan of conversion and materials supporting the objections, from any account holder of the applicant or aggrieved person, will be considered by the Director if filed within 20 business days after the date of this notice.  Failure to make written comments in objection may preclude the pursuit of any administrative or judicial remedies.  Three copies of the comments should be sent to the aforementioned.  The proposed plan of conversion and any comments thereon will be available for inspection by any account holder of the applicant at the Division of Banking in Chicago and Springfield, Illinois.  A copy of the plan may also be inspected at each office of the applicant.

 

e)         If a significant number of the applicant's account holders speak a language other than English and a newspaper in that language is published in the area served by the applicant, an appropriate translation of the notice shall also be published in that newspaper.  A copy of the notice may be sent by mail to the converting savings bank's depositors with a statement that the converting institution will not mail a subscription offering circular to an eligible account holder or a supplemental eligible account holder unless the eligible account holder or the supplemental eligible account holder, before the beginning of the subscription offering, requests the subscription offering circular by returning a postcard.  The issuer of stock in the conversion shall pay the postage of this postcard and shall inform the eligible account holder or supplemental eligible holder that the postage is paid.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2025  Filing of Notice and Affidavit of Publication Required

 

Promptly after publication of the notices prescribed in Section 1075.2020 in this Part, the applicant shall file with the Director the notice and affidavit of publication from each newspaper publisher in the manner the Director shall require.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2030  Application Available for Public Inspection – Confidential Information

 

Should the applicant desire to submit any information it considers to be of a confidential nature regarding any portion of the application under this Subpart, such information may be submitted pursuant to Section 1075.2220(k).

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.2035  Solicitation of Proxies; Proxy Statements

 

a)         Solicitations to which this Section applies – this Section applies to every solicitation of a proxy from a member of a savings bank for the meeting at which a plan of conversion will be voted upon, except the following:

 

1)         any solicitation made otherwise than on behalf of the management of the savings bank where the total number of persons solicited is not more than 50;

 

2)         any solicitation through the medium of a newspaper advertisement which informs members, following approval of the plan of conversion, of a source from which they may obtain copies of a proxy statement, form of proxy, or any other solicitation material and does no more than;

 

A)        name the savings bank,

 

B)        state the reason for the advertisement,

 

C)        identify the proposal or proposals to be acted upon by members, and

 

D)        urge members to vote at the meeting.

 

b)         Use of Proxy Soliciting Material To Be Authorized – no proxy solicitation material required to be filed with the Director before use shall be furnished to members or otherwise released for distribution until the use of that material has been authorized in writing by the Director.  Proxy material authorized for use by the Director shall be mailed to the members within 10 days after such authorization unless extended by the Director in writing upon a showing that adherence to the 10 day rule would work a hardship upon the savings bank and that the delay, if approved, would not be disadvantageous to any interested party.

 

c)         Information To Be Furnished Members – no solicitation shall be made unless each person solicited is concurrently furnished, or has previously been furnished, a written proxy statement the use of which has been authorized in writing by the Director.

 

d)         Requirements As To Proxy:

 

1)         The form of proxy shall:

 

A)        indicate in bold face type whether the proxy is solicited on behalf of management;

 

B)        provide specifically designated blank spaces for dating and signing the proxy;

 

C)        identify clearly and impartially each matter or group of related matters intended to be acted upon;

 

D)        be clearly labeled "Revocable Proxy" in bold face type of at least 18 point;

 

E)        describe any charter or state law requirement restricting or conditioning voting by proxy;

 

F)         contain an acknowledgement by the person giving the proxy that the person has received a proxy statement before signing the form of proxy;

 

G)        contain the date, time, and place of meeting, if practicable;

 

H)        provide, by a box or otherwise, a means whereby the person solicited is afforded an opportunity to specify by ballot a choice between approval or disapproval of each matter intended to be acted upon; and

 

I)         indicate in bold face type how the proxy shall be voted on each such matter if no choice is specified.

 

2)         No proxy obtained pursuant to the conversion shall confer authority to vote at any meeting other than the meeting, or any adjournment of the meeting, to vote on the plan of conversion.  A proxy may be considered to confer authority to vote with respect to matters incident to the conduct of the meeting.  If the plan of conversion is considered at an annual meeting, existing proxies may be voted with respect to matters not related to the plan of conversion or in accordance with subsection (d)(4).

 

3)         The proxy statement or form of proxy shall provide that the votes represented by the proxy will be voted.  Where the person solicited specifies by a ballot provided pursuant to subsection (d)(1)(H) a choice with respect to any matter to be acted upon, the votes will be voted in accordance with the specifications.  If no choice is specified, the votes will be cast as indicated in bold face type on the form of proxy.

 

4)         Notwithstanding any other provisions of this subsection, the proxy may be in a form previously obtained from a voting member and conferring general authority to vote on all matters at any meeting of the members or other authority to vote on matters to be presented at the special meeting if the voting member has been furnished a proxy statement conforming with Sections 1075.2300 through 1075.2460 and has been notified that a previously obtained proxy will be exercised if the voting member does not grant a later-dated proxy to vote at the meeting to consider the plan of conversion or attend the meeting and vote in person.

 

e)         Material Required To Be Filed:

 

1)         Applicants shall file a preliminary copy of the proxy materials required by Sections 1075.2300 through 1075.2460.

 

2)         A preliminary copy of any additional solicitation material including press release and radio or television scripts, to be used or furnished to members subsequent to furnishing the proxy statement, shall be filed with the Director at least 5 business days before the date on which the Director is requested to authorize the use of the material.  Speeches may, but need not, be filed with the Commissioner before use.

 

3)         A copy of the proxy statement and a copy of the form of proxy and all other solicitation material, in the form in which the material is furnished to members, shall be filed with or mailed for filing to the Director not later than the date the material is first sent or given to members.  All materials filed pursuant to this subsection (e)(3) shall be with a statement of the date on which copies of the materials are to be released to members.

 

4)         If the solicitation is to be made in whole or in part by personal solicitation, a preliminary copy of all written instructions or other material that discusses or reviews, or comments upon the merits of, any matter to be acted upon and that is to be furnished to the individuals making the actual solicitation for their use directly or indirectly in connection with the solicitation shall be filed with the Director at least 5 business days before the date on which the Director is requested to authorize the use of the material.

 

5)         All preliminary copies of material filed pursuant to subsections (e)(1), (2), and (4) shall be clearly marked on the cover page "Preliminary Copy". The preliminary copies shall be for the information of the Director only and shall not be available for public inspection except that the material may be disclosed to any department or agency of the United States, this State, or any other state that has concurrent jurisdiction over the applicant.  The Director may make inquiries or investigations in regard to the material as may be necessary for an adequate review.

 

6)         Unless requested by the Director, copies of replies to inquiries from members and copies of communications that do no more than request that forms of proxy previously solicited be signed and returned need not be filed pursuant to this subsection (e).

 

7)         When any proxy statement, form of proxy or other material filed pursuant to this subsection (e) is amended or revised, a copy of the amended or revised material filed with the Director shall be marked to indicate clearly and precisely the changes effected subsequent to the previous filing.

 

f)         Mailing Communications for Member – If the applicant has adopted a plan of conversion, the applicant shall perform such of the following acts as may be duly requested in writing with respect to a matter to be considered at the meeting to vote on the plan of conversion by any member who will defray the reasonable expenses to be incurred by the applicant in the performance of the act or acts requested:

 

1)         The applicant shall mail or otherwise furnish to the member the following information as promptly as practicable after the receipt of the request:

 

A)        a statement of the approximate number of members who have been or are to be solicited on behalf of management, or any group of members the member shall designate;

 

B)        an estimate of the cost of mailing a specified proxy statement, form of proxy, or the communication to the members.

 

2)         Copies of any proxy statement, form of proxy, or other communication furnished by the member and as approved by the Director shall be mailed by the applicant to any of the members specified in subsection (f)(1)(A) as the member may designate.

 

3)         Any material that is furnished by the member shall be mailed with reasonable promptness by the applicant after receipt of the material to be mailed, including envelopes or other containers, and the appropriate postage or payment for postage.

 

4)         Neither management nor the applicant shall be responsible for the proxy statement, form of proxy, or other communication.

 

g)         False and Misleading Statements:

 

1)         No solicitation of a proxy by the applicant, its management, or any other person for the meeting to vote on the plan of conversion shall be made by any proxy statement, form of proxy, notice of meeting, or other communication, written or oral, containing any statement that, at the time and in the light of the circumstances under which it is made, is false or misleading with respect to any material fact, or that omits any material fact necessary in order to make the statements in the communication not false or misleading or necessary to correct any statement in any earlier communication with respect to the solicitation of a proxy for the meeting that has become false or misleading.

 

2)         The fact that a proxy statement, form of proxy, or other solicitation material has been filed with or examined by the Director and authorized for use shall not be considered a finding by the Director that the material is accurate or complete or not false or misleading, or that the Director has passed upon the merits of or approved any proposal contained in the material.  No representation to the contrary shall be made by any person.

 

3)         If a solicitation by management violates any provision of this Section, the Director may require remedial measures including:

 

A)        correction of any violation by a retraction and new solicitation;

 

B)        rescheduling of the meeting for a vote on the plan of conversion; and

 

C)        any other actions the Director finds appropriate under the circumstances in order to ensure a fair vote.

 

h)         Prohibition of Certain Solicitations – No person soliciting a proxy from a member for the meeting to vote on the plan of conversion shall solicit:

 

1)         any undated or post-dated proxy; or

 

2)         any proxy that provides that it shall be dated as of any date subsequent to the date on which it is signed by the members; or

 

3)         any proxy that is not revocable at will by the member giving it; or

 

4)         any proxy that is part of any other document or instrument, such as an account card.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2040  Vote by Members

 

a)         Following approval of the plan of conversion by the Director, the plan of conversion shall be submitted for consideration to an annual or special meeting of members.

 

b)         Notice of the meeting to consider a plan of conversion shall be given by the proxy statement authorized for use by the Director.  For the purposes of this subsection (b), the proxy statement may be in summary form, provided:

 

1)         A statement is made in bold-face type on the notice to members required under this subsection (b) that a more detailed description of the proposed transaction may be obtained by returning an attached postage-paid postcard or other written communication requesting a supplemental information statement that, together with the summary proxy statement, complies with the requirements of this Subpart;

 

2)         The last date on which the summary proxy statement is mailed to members will be considered the date on which notice is given for the purposes of this subsection (b).  Without prior approval by the Director, the special meeting of members shall not be held fewer than 20 days after the last date on which the supplemental information statement is mailed to requesting members;

 

3)         The supplemental information statement required to be furnished to members may be combined with any form prescribed under Sections 1075.2500 through 1075.2580, if the subscription offering is started concurrently with or during the proxy solicitation period pursuant to Section 1075.1925(a);

 

4)         The summary proxy statement shall be prepared in accordance with the following requirements:

 

A)        All the requirements of Sections 1075.2300 through 1075.2460, except:

 

i)          Section 1075.2360;

 

ii)         Section 1075.2370(c) through (m) and (o);

 

iii)        Section 1075.2440; and

 

iv)        Section 1075.2450(b).

 

B)        The disclosure requirements of Sections 1075.2380(j), 1075.2390 and 1075.2430 may be prepared in summary form.

 

C)        The disclosure requirements of Section 1075.2350 may be met through disclosure of the names, ages, and present occupations of all organization directors and executive officers.

 

D)        The plan of conversion shall not be required to be attached to the summary proxy statement under Section 1075.2460.

 

c)         The plan of conversion shall be approved by a vote of at least a majority of the total outstanding votes.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2045  Offers and Sales of Securities – Prohibitions

 

No offer to sell securities of an applicant pursuant to a plan of conversion may be made before approval by the Director of the application for conversion and before any approval necessary to maintain federal deposit insurance.  No sale of these securities in the subscription offering may be made except by the final offering circular for the subscription offering.  No sale of unsubscribed securities may be made except by the final offering circular for the public offering or direct community marketing.  The offering of shares in the direct community marketing may begin during the subscription offering upon the declaration of effectiveness by the Director of the offering circular proposed for the community offering.  This Section shall not apply to preliminary negotiations or agreements between an applicant and any underwriter or among underwriters who are to be in privity of contract with the applicant.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2050  Distribution of Offering Circulars Authorized

 

Any preliminary offering circular for the subscription offering, the public offering, or the direct community marketing which has been filed with the Director may be distributed to eligible account holders or supplemental eligible account holders and to others in connection with the offering after the Director has advised the applicant in writing that the application is properly executed and is not materially incomplete under Section 1075.2020.  No final offering circular may be distributed until the offering circular has been declared effective by the Director.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2055  Preliminary Offering Circular for Subscription Offering – Estimated Subscription Price Range Required

 

With respect to the capital stock of the applicant to be sold under the plan of conversion, any preliminary offering circular for the subscription offering may set forth the estimated subscription price which may be stated as the pro forma market value.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.2060  Review of Price Information by the Director

 

The Director shall review the price information required under Section 1075.2055 in determining whether to give approval to an application for conversion.  No representations may be made in any manner that the price information has been approved by the Director or that the shares of capital stock sold pursuant to the plan of conversion have been approved or disapproved by the Director or that the Director has passed upon the accuracy or adequacy of an offering circular covering the shares.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2065  Underwriting Commission

 

Underwriting commissions shall not exceed an amount or percentage per share accepted as reasonable by the Director.  No underwriting commission may be allowed or paid with respect to shares of capital stock sold in the subscription offering; however, an underwriter may be reimbursed for accountable expenses in connection with the subscription offering.  In the case in which no public offering occurs, an underwriter may be paid a consulting fee reasonable under the circumstances as the Director shall accept.  The term "underwriting commissions" includes underwriting discounts.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2070  Consideration of Pricing Information by the Director – Guidelines

 

In considering the pricing information required under Section 1075.2055, the Director shall apply the following guidelines.

 

a)         The materials shall be prepared by persons independent of the applicant, experienced and expert in the area of corporate appraisal, and acceptable to the Director.

 

b)         The materials shall contain data which are sufficient to support the conclusions reached in the materials.

 

c)         The materials shall contain a complete and detailed description of the appraisal methodology employed.

 

d)         To the extent that the appraisal is based on a capitalization of the pro forma income of the converted savings bank, the materials shall indicate the basis for determination of the income to be derived from the proceeds of the sale of stock and demonstrate the appropriateness of the earnings multiple used, including assumptions made as to future earnings growth.  To the extent that the appraisal is based on comparison of the capital stock of the applicant with outstanding capital stock of existing stock savings banks or stock savings and loan associations, the materials shall demonstrate the appropriate comparability of the form and substance of the outstanding capital stock and of the existing stock savings banks and stock savings and loan associations in terms of such factors as size, market area, competitive conditions, profit history, and expected future earnings.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2075  Submission of Information by Applicant

 

a)         In addition to the information required in Section 1075.2070, the applicant shall submit information demonstrating to the satisfaction of the Director the independence and expertise of any person preparing materials under Section 1075.2070.  However, a person will not be considered as lacking independence because the person will participate in effecting the sale of capital stock under the plan of conversion or will receive a fee from the applicant for services given in connection with the appraisal only if the person provides full and accurate disclosure of the fact of participation and receipt of fee to the Director and in the offering circular.  The Director shall find no disclosure full and adequate unless the following information is clearly and prominently stated:

 

1)         the extent to which the person is directly or indirectly involved in preparing material required by Section 1075.2070 and in effecting the sale of capital stock under the conversion plan; and

 

2)         an itemized statement of fees received for preparing information required by Section 1075.2070 and for all other services given.

 

b)         The Director may require additional disclosures where necessary to ensure the integrity and accuracy of the information presented pursuant to Section 1075.2070.

 

c)         No information provided pursuant to Section 1075.2070 shall be approved by the Director unless the Director finds that full and adequate disclosure required by this Section has been made.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2080  Subscription Offering – Distribution of Order Forms for the Purchase of Shares

 

Promptly after the Director has declared the offering circular for the subscription offering effective, the applicant shall distribute order forms for the purchase of shares of capital stock, in the subscription offering to all eligible account holders, supplemental eligible account holders (if applicable), and other persons who may subscribe for the shares under the plan of conversion.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2085  Order Forms – Final Offering Circular and Detailed Instructions

 

Each order form distributed pursuant to Section 1075.2080 shall be accompanied or preceded by the final offering circular for the subscription offering and a set of detailed instructions explaining how to properly complete the order forms.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.2090  Subscription Price

 

The maximum subscription price stated on each order form distributed pursuant to Section 1075.2080 shall be the amount to be paid when the order form is returned.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.2095  Order Form – Contents

 

Each order form distributed pursuant to Section 1075.2080 shall be prepared so as to indicate to the person receiving it, in as simple, clear, and intelligible a manner as possible, the actions which are required or available to the person with respect to the form and the capital stock offered for purchase thereby.  Specifically, each order form shall:

 

a)         Indicate the maximum number of shares that may be purchased pursuant to the subscription offering;

 

b)         Indicate the time within which the subscription rights must be exercised, which time shall not be less than 20 days following the date of the mailing of the order form;

 

c)         State the maximum subscription price per share of capital stock;

 

d)         Indicate any requirements as to the minimum number of shares of capital stock which may be purchased;

 

e)         Provide a specifically designated blank space or spaces for indicating the number of shares of capital stock which the eligible account holder or other person wishes to purchase;

 

f)         Indicate that payment may be made by cash if delivered in person or by check or by withdrawal from an account holder's savings account.  If payment is to be made by withdrawal, a box to check should be provided;

 

g)         Provide specifically designated blank spaces for dating and signing the order form;

 

h)         Contain an acknowledgement by the account holder or other person signing the order form that the person has received the final offering circular for the subscription offering before signing; and

 

i)          Indicate the consequences of failing to properly complete and return the order form, including a statement that the subscription rights are nontransferable and will become void at the end of the subscription period. The order form may, and the set of instructions shall, indicate the place or places to which the order forms are to be returned and when the applicant will consider order forms received, such as by date and time of actual receipt in the applicant's offices or by date and time of postmark.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.2100  Order Form – Additional Provision Authorized – Payment by Withdrawal

 

The order form distributed pursuant to Section 1075.2080 may provide that it may not be modified without the applicant's consent after its receipt as set forth in the order form.  If payment is to be made by withdrawal from a savings account the applicant may, but need not, cause the withdrawal to be made upon receipt of the order form.  If the withdrawal is made at any time before the closing date of the public offering, the applicant shall pay interest to the account holder on the amount withdrawn as if the amount had remained in the account from which it was withdrawn until the closing date.  If the withdrawal is not made until the closing date, the amount to be withdrawn on the closing date is unavailable for withdrawal by account holder.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.2105  Time Period for Completion of Sale of all Shares of Capital Stock

 

The sale of all shares of capital stock of the converting savings bank to be made under the plan of conversion, including any sale in public offering or direct community marketing, shall be completed as promptly as possible and within 45 calendar days after the last date of the subscription period, unless extended by the Director.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2110  Continuity of Corporate Existence

 

Upon the filing of the articles of incorporation of a converted savings bank with the Director in accordance with Section 1075.2160, the corporate existence of the mutual savings bank converting to a stock savings bank pursuant to this Subpart shall not discontinue, but the converted savings bank shall be a continuation of the entity of the mutual savings bank so converted and shall have the same rights and obligations as it had before the conversion.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2115  Application to Furnish Information

 

Every application shall furnish information in accordance with this Subpart. If applicable, the applicant shall furnish information in accordance with Section 1075.1700.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.2120  Additional Filing Requirements

 

An applicant whose plan of conversion has been approved by the Director shall fulfill the following requirements.

 

a)         The applicant shall file with the Director promptly after the meeting of members called to consider the plan of conversion a certified copy of each resolution adopted at the meeting relating to the plan of conversion, together with the following statements:

 

1)         The total number of votes eligible to be cast;

 

2)         The total number of votes represented in person or by proxy at the meeting;

 

3)         The total number of votes cast in favor of and against each matter (the compilation of the votes cast at the meeting may be prepared for the savings bank by an independent public accountant, or by an independent transfer agent); and

 

4)         The percentage of votes necessary to approve each matter.

 

b)         The applicant shall file with the Director promptly after the meeting of savings bank members called to consider the plan of conversion an opinion of counsel to the effect that:

 

1)         The meeting of members was duly held in accordance with all requirements of applicable law and this Part;

 

2)         All requirements of State law applicable to the conversion have been complied with; and

 

3)         If the savings bank has used proxies executed before the proxy solicitation required by Section 1075.2035, the authority conferred by the proxies includes authority to vote on the plan of conversion.

 

c)         Each offering circular for the offering shall be prepared in compliance with this Subpart.  The applicant shall file with the Director 5 copies of each preliminary offering circular and 10 copies of each final offering circular.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2125  Availability for Conferences in Advance of Filing of Application – Refusal of Prefiling Review

 

a)         The Division shall be available for conferences with prospective applicants or their representatives in advance of filing an application to convert.  These conferences may be held to discuss generally the problems confronting an applicant in effective conversion or to resolve specific problems of an unusual nature.

 

b)         Prefiling review of an application may be refused by the staff of the Director if the review would delay the examination and processing of material that has already been filed or would favor certain applicants at the expense of others.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2130  Appeal from Refusal to Approve Application

 

From the Director's refusal to approve an application for conversion, the applicant may, within 30 days after the date of the mailing by the Director of notice of refusal to approve, appeal pursuant to 38 Ill. Adm. Code 100 and the Illinois Administrative Procedure Act [5 ILCS 100].

 

(Source:  Amended at 46 Ill. Reg. 18013, effective October 27, 2022)

 

Section 1075.2135  Postconversion Reports

 

The applicant shall file postconversion reports concerning its conversion as the Director may require.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2140  Certain Agreement to Transfer and Transfers of Ownership in Rights or Securities Prohibited

 

Before completion of a conversion, no person may transfer or enter into any agreement or understanding to transfer the legal or beneficial ownership of conversion subscription rights, or the underlying securities, to the account of another.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.2145  Certain Offers and Announcements on Securities Prohibited

 

Before completion of a conversion, no person may make any offer, or announcement of an offer or intent to make an offer, for any security of a converting savings bank issued or to be issued in connection with the conversion.  Nor shall any person knowingly acquire securities of the converted savings bank issued in connection with the conversion in excess of the maximum purchase limitations established in the savings bank's approved plan of conversion.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.2150  Certain Offers and Acquisitions Prohibited

 

a)         Except as required by the federal insurer of accounts or the Director, for 3 years following the date of the conversion, no person may directly or indirectly offer to acquire or acquire the beneficial ownership of more than 10% of any class of an equity security of any savings bank converted in accordance with this Subpart without the prior written approval of the board of directors and of the Director.  Where any person, directly or indirectly, acquires beneficial ownership of more than 10% of any class of any equity security of a savings bank converted in accordance with this Subpart, without prior written approval of the Director as required by this Section, the securities beneficially owned by such person in excess of 10% shall not be counted as shares entitled to vote and shall not be voted by any person or counted as voting shares in connection with any matter submitted to the stockholders for a vote.  For the purposes of this Section, a person shall be considered to have acquired beneficial ownership of more than 10% of a class of equity security of a savings bank where the person holds any combination of stock or revocable or irrevocable proxies of the savings bank. In obtaining prior written approval of the Director under this Section, the criteria for approval under subsection (d) may be addressed, if applicable, by the filing required by Section 1075.1700 of this Part.  Notwithstanding the immediately preceding sentence, acquisitions under this Section require approval of both the board of directors of the converting savings bank and of the Director.

 

b)         A conversion shall be complete on the date all the converting savings bank's conversion stock was sold.

 

c)         An acquisition of shares shall be presumed to have been made if the acquiror entered into a binding written agreement for the transfer of shares. An offer shall be considered made when communicated.

 

d)         The Director shall not approve an application involving an offer for, an announcement , or an acquisition of any security of a converted savings bank if the Director finds that the offer frustrates the purposes of this Subpart, is manipulative or deceptive, subverts the fairness of the conversion, is likely to result in injury to the savings bank, is not consistent with the Act, is otherwise violative of law or regulation, or would not contribute to the prudent deployment of the savings bank's conversion proceeds.

 

e)         Subsection (a) shall not apply to any offer with a view toward public resale made exclusively to the savings bank or to the underwriters or a selling group acting on its behalf.

 

f)         Unless made applicable by the Director by prior advice in writing, the restriction contained in subsection (a) shall not apply to any offer or announcement of an offer which if consummated would result in the acquisition by a person, together with all other acquisitions by the person of the same class of securities during the preceding 12-month period, of not more than 1% of the class of securities.

 

g)         Subsection (a) shall not apply to the acquisition of securities of a savings bank or holding company of a savings bank by any one or more employee stock benefit plans of such savings bank or holding company if the plan or plans do not have beneficial ownership in the aggregate of more than 25% of any class of equity security of the converted savings bank or holding company.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2155  Definitions – Certain Transfers, Offers and Acquisitions Prohibited

 

For Sections 1075.2140, 1075.2145 and 1075.2150, the following definitions apply:

 

a)         The term "person" includes an individual, a group acting in concert, a corporation, a partnership, an association, a joint stock company, a trust, an unincorporated organization or similar company, a syndicate or any other group formed to acquire, hold or dispose of securities of a savings bank.

 

b)         The term "offer" includes every offer to buy or acquire, solicitation of an offer to sell, tender offer for, or request or invitation for tenders of, a security or interest in a security for value except that the term "offer" shall not include:

 

1)         Inquiries directed solely to the management of a savings bank and not intended to be communicated to stockholders, designed to elicit an indication of management's receptivity to the basic structure of a potential acquisition with respect to the amount of securities, manner of acquisition and formula for determining price, or

 

2)         Non-binding expressions of understanding or letters of intent with the management of a savings bank regarding the basic structure of a potential acquisition with respect to the amount of securities, manner of acquisition, and formula for determining price.

 

c)         The term "acquire" includes every type of acquisition, whether effected by purchase, exchange, operation of law or otherwise.

 

d)         The term "security" includes nontransferable subscription rights issued pursuant to a plan of conversion as well as a "security" as defined in the Securities Exchange Act of 1934 (15 USC 78c(a)(10)).

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2160  Amendments to Charter Required in Application – Articles of Incorporation – Filing of Certificate Required – Contents – Issuance and Filing of Authorization Certificate

 

a)         An application for conversion under this Subpart shall include amendments to the articles of incorporation of the converting savings bank.

 

b)         When all the stock of a converting savings bank has been subscribed for in accordance with the plan and any amendments to the plan, the board of directors shall issue the stock and shall cause to be filed with the Director, in triplicate, a certificate subscribed and acknowledged by the persons who are to be directors of the converted savings bank, stating:

 

1)         That all the stock of the converted savings bank has been issued;

 

2)         That the attached articles of incorporation have been executed by all the persons who are to be directors of the converted savings bank;

 

3)         The place where the bank is to be located and its business transacted, naming the city, or town and county, which city or town shall be the same as that where the principal place of business of the predecessor mutual savings bank has been located;

 

4)         The name, occupation, residence, and post office address of each signer of the certificate;

 

5)         The amount of the assets of the predecessor mutual savings bank, the amount of its liabilities and undivided profits as of the first day of the current calendar month; and

 

6)         A declaration that each signer will accept the responsibilities and faithful discharge the duties of a director of the converted savings bank and is free from all the disqualifications specified in the laws applicable to converted savings banks.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2165  Conversion Incident to Acquisition by Savings Bank Holding Company or Merger or Consolidation with Savings Bank Holding Company Subsidiary – Restriction on Sale of Shares of Stock by Organization Directors and Officers

 

a)         In a conversion of a mutual savings bank that is in the process of acquisition by a depository institution holding company, or in the process of merger or consolidation with another depository institution, the restrictions imposed by Section 1075.1890 on resale of stock apply to shares of the holding company purchased on original issue by any director or officer of the converting savings bank that is in the process of acquisition, merger, or consolidation, and the restrictions imposed by this Subpart apply to the ownership of capital stock in the depository institution holding company or other depository institution with the same force and effect as they would apply to the ownership of capital stock of the unconverted mutual savings bank, if shares of this savings bank were offered to depositors or the public pursuant to this Subpart.

 

b)         The tender of shares by directors and officers of a converted savings bank in exchange for shares of another converted savings bank, or for shares of a holding company, do not constitute a sale for purposes of Section 1075.1890. However, the shares received in such an exchange shall not be sold for a period of one year following the date of such purchase on original issue, except that the Director may waive this restriction upon a finding that allowing a sale would substantially contribute to averting otherwise unavoidable injury to a savings bank.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2170  Sale of Control in Connection with the Conversion of a Mutual Savings Bank to Capital Stock Savings Bank − Undercapitalized Mutual Savings Bank

 

a)         A mutual savings bank not meeting an applicable capital requirement as of the end of the most recent period for which the savings bank has prepared audited financial statements, may seek approval to convert to stock form pursuant to a plan of conversion that provides for the sale of its capital stock directly to acquirors, who may be a person, company, depository institution, holding company, who will be in control of the savings bank upon the purchase of the capital stock.  If in accordance with applicable laws and regulations, the conversion may result in the converting savings bank being merged into or consolidated with an existing or newly created depository institution.

 

b)         The provisions of this Section shall govern a conversion authorized by subsection (a).  All other Sections of this Subpart shall not apply to the conversion unless provided in the plan of conversion adopted by the board of directors of the converting savings bank or required by the Director.

 

c)         A majority of the converting savings bank board of directors must adopt a plan of conversion that complies with this Section.  The members of the association have no rights or approval or participation in a conversion under this Section or to the continuance of any legal or beneficial ownership interests in the converted savings bank, unless otherwise provided by the Director.  The members shall have an interest in a liquidation account established pursuant to Section 1075.1940 of this Subpart if one is established pursuant to subsection (h).

 

d)         In connection with approval under this Section, the Director may impose conditions and restrictions on the converting or resulting institution, the acquiror, and controlling parties, organization directors and officers of either, to prevent unsafe and unsound practices, to protect the deposit insurance fund and the public interest, and to prevent potential injury or detriment to the converting or resulting institution.

 

e)         The Director may deny a savings bank's conversion if he or she determines that the converting or resulting institution, the acquiror, or controlling parties or organization directors or officers of either, have engaged in unsafe or unsound practices in connection with the conversion, or that the conversion is detrimental to or would cause potential injury to the converting or resulting institution, deposit insurance funds, or is contrary to the public interest.

 

f)         For 3 years following the date of completion of a conversion under this Section, neither any controlling shareholder nor the resulting institution may acquire shares from minority shareholders without prior approval of the Director.

 

g)         An application for conversion under this Section shall, at a minimum, include:

 

1)         A plan of conversion adopted by a majority of the directors of the savings bank, which shall contain at a minimum the name and address of the savings bank; the names, addresses, dates and places of birth, and social security numbers of the proposed purchasers of conversion stock and their relationship to the savings bank; the title, per-unit par value, number, and per-unit and aggregate offering price of shares of conversion stock to be authorized and issued; the number and percentage of shares of conversion stock to be purchased by each investor, the aggregate number and percentage of shares of conversion stock to be purchased by organization directors, officers and their affiliates and associates; a description of the liquidation account, if required under subsection (h), or if otherwise established; and certified copies of all resolutions of the board of directors relating to the plan of conversion;

 

2)         A copy of any agreements between the savings bank and the proposed conversion stock purchasers;

 

3)         An opinion of qualified, independent counsel or an independent, certified public accountant regarding the tax consequences to the savings bank arising from the conversion;

 

4)         A business plan, which shall contain a description of the proposed operating policies of the savings bank or the resulting savings bank following the conversion, including a statement as to how the conversion proceeds will be used, and a projection of the savings bank's results of operations for the 3 year period following completion of the conversion.  The projections should show the continuing ability of the converted savings bank to meet applicable capital requirements.  The savings bank shall specify the assumptions on which its projections are based;

 

5)         An application under Section 1075.1700 of Subpart N of this Part;

 

6)         The proposed charter and bylaws of the converted savings bank;

 

7)         The proposed stock certificate form;

 

8)         A description of all existing and proposed employment contracts, if applicable;

 

9)         All findings required under the securities offering rules of this Subpart;

 

10)         Applications for permission to organize a stock savings bank and for approval of a merger, if applicable, and FDIC insurance of accounts, if applicable;

 

11)         Information to support the value of any non-cash assets to be contributed to the savings bank in connection with the conversion, if applicable.  Appraisals submitted in this connection must be acceptable to the Director;

 

12)         A description of the estimated expenses of the conversion to the savings bank;

 

13)         The savings bank's most recent audited financial statements with an appropriate explanation to support the determination that the savings bank's current capital levels qualify it to undertake a supervisory conversion;

 

14)         "Pro forma" financial statements to reflect the effects of the transaction.  These pro forma financial statements should be supplemented to identify the converting or resulting capital levels and show the appropriate adjustments necessary to compute such capital levels;

 

15)         A specific description of any of the features of the savings bank's application that do not conform to the requirements of this Subpart;

 

16)         A specific description of and detailed justification for any waivers or supervisory forbearances that are requested as part of the conversion;

 

17)         A statement of all other applications required pursuant to federal law for all transactions related to the savings bank's conversion, copies of all decisions, orders, opinions, and other similar dispositive documents issued by regulatory authorities relating to such applications, and, if requested, copies of such applications and related documents; and

 

18)        Opinion of financial advisor:

 

A)        The savings bank shall be required to retain a reputable financial advisor with expertise in valuing depository institutions to advise it as to the fairness or the consideration to be paid by the proposed acquiror.  The financial advisor shall furnish a written opinion specifically informing the converting savings bank as to the fairness from a financial point of view to the converting savings bank of the proposed consideration.

 

B)        The written opinion shall specifically disclose in reasonable detail:

 

i)          the professional standards employed by the financial advisor in arriving at its conclusions; and

 

ii)         the factual basis upon which the conclusions were reached.

 

C)        The opinion shall specifically state whether the financial advisor, in arriving at his or her conclusions as to the fairness of the proposed consideration, has made efforts to determine whether, in his or her judgment, there is the reasonable significant probability that financially able purchasers of the character generally capable of securing regulatory approval other than the proposed acquiror, given an opportunity, might have made good faith offers to purchase control of the converting savings bank for a consideration materially greater than that proposed to be paid by the proposed acquiror, and has compared the consideration to be paid by the proposed acquiror with the consideration paid in the purchase of other savings banks or savings and loan associations of comparable size, market area, profit history, competitive conditions and projected future earnings.

 

D)        If the financial advisor has made any such efforts or comparisons, the nature and scope of the efforts and comparisons shall be discussed in detail.  The written opinion shall state whether and on what basis the financial advisor believes that the consideration to be paid by the proposed acquiror exceeds the aggregate amount of net proceeds which the converting savings bank could have realized if the capital stock to be sold to the proposed acquiror had been sold in a subscription offering followed by an underwritten public offering.  The written opinion shall be delivered to the Director before any approval of the application for conversion will be granted by the Director.

 

h)         A liquidation account must be established in accordance with Section 1075.1940 of this Subpart; however, the Director may waive this requirement upon a written finding that the savings bank's net worth is zero or less than zero, or for other good cause upon a written finding that specifies the existence of good cause.

 

i)          No solicitation of proxies in connection with a conversion pursuant to this Section shall be made unless the person so solicited is concurrently furnished with or has been previously furnished with a proxy statement or a short-form proxy statement complying with this Subpart.  If the persons to whom capital stock is offered or sold pursuant to a conversion effected in compliance with this Section shall exceed 20 in number, each of the persons shall be furnished with an offering circular complying with this Subpart before the consummation of any sale.

 

j)          Upon the Director's approval of the plan of conversion, the mutual savings bank charter shall be surrendered to the Director and a stock charter issued by the Director.

 

k)         The corporate existence of a mutual savings bank converting to stock savings bank shall not terminate and shall be considered to be a continuation of the savings bank so converted.

 

l)          The Director's approval of a conversion under this Section shall be conditioned upon the following:

 

1)         Completion of the sale of conversion stock within 3 months after the Director approves the application, or within an additional period as the Director may for good cause grant;

 

2)         Compliance with all filing requirements of this Subpart, subject to subsection (b); and

 

3)         Satisfaction of any other requirements or conditions the Director may impose.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2175  Conversion of a Savings Bank in Connection with the Formation of a Holding Company

 

A savings bank may convert to the stock form pursuant to this Subpart as part of a transaction in which a holding company is organized to acquire upon issuance all the capital stock of the converted savings bank.  In such a transaction eligible account holders, supplemental eligible account holders, and voting members of the converting savings association shall receive, without payment, nontransferable rights under Sections 1075.1835, 1075.1845 and 1075.1850 of this Part to purchase capital stock of the newly formed holding company in lieu of capital stock of the converting association. Unless clearly inapplicable, all of the requirements of this Subpart shall apply to a conversion under this Section.

 

(Source:  Added at 18 Ill. Reg. 15094, effective September 26, 1994)

 

Section 1075.2200  Application – Application Requirements

 

An application to convert from a mutual savings bank to a capital stock savings bank shall contain information as required by this Subpart.  In addition to the information expressly required to be included in any application under this Subpart, there shall be added such further material information, if any, as may be necessary to make the required statements, in the light of the circumstances under which they are made, not misleading.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.2210  Application – Filing the Application and Fees

 

a)         An application shall be prepared by a mutual savings bank that proposes to convert to a stock owned savings bank.  The application must demonstrate that the applicant complies with the Act and this Part.  Not including copies filed pursuant to Section 1075.2020, 3 completed manually signed copies with all exhibits, with an application fee of $10,000, shall be filed with the Director, Division of Banking, Department of Financial and Professional Regulation, 310 South Michigan Avenue, Suite 2130, Chicago, Illinois 60604-4278.  The date a document is actually received by the Director shall be the date of filing.

 

b)         Any application for approval that is improperly executed, or that does not contain copies of a plan of conversion, amendments to the charter of the applicant in the form of new articles of incorporation, proxy materials, and preliminary offering circulars for the subscription offering and for the public offering or direct community marketing, shall not be accepted for filing and shall be returned to the applicant.  Any application for approval containing a materially incomplete plan of conversion, offering circular, or proxy statement shall be returned by the Director to the applicant.  Applicants for conversions effected pursuant to Section 1075.2170 need not file documents or information to the extent that Section 1075.2170(d) allows.

 

c)         Signature page:

 

1)         Every application and every amendment to an application filed shall include a signature page that shall be manually signed by:

 

A)        A duly authorized representative of the applicant on its behalf;

 

B)        Its principal executive officer;

 

C)        Its principal financial officer;

 

D)        Its principal accounting officer; and

 

E)        At least two-thirds of its organization directors.

 

2)         Those signing the application shall attest on the signature page as follows:

 

A)        In submitting an application, the applicant understands and agrees that if further examinations, investigations, or appraisals are required by the Director, they will be conducted by, or as approved by, the Director at the expense of the applicant and applicant will pay the costs thereof as computed by the Director.

 

B)        The application has been approved by at least two-thirds of the board of directors of the applicant.  In accordance with the Act and this Part by the filing of this application, the applicant by its duly authorized representative, the undersigned officers and each member of the applicant's board of directors severally represent:

 

i)          that each person has read this application; and

 

ii)         that in the opinion of each person, he or she has made such examination and investigation as is necessary to enable him or her to express an informed opinion that this application complies to the best of his or her knowledge and belief with the application requirements of the Act and this Part.

 

3)         If any name is signed to an application or any amendment to an application pursuant to a power of attorney, a manually signed copy of the power of attorney shall be filed with each copy of the application.

 

d)         Except as provided in subsection (e), the filing of any application or amendment to any application under this Subpart shall constitute a representation of the applicant by its duly authorized representative, the applicant's principal executive officer, the applicant's principal financial officer, and the applicant's principal accounting officer, and each member of the applicant's board of directors (whether the organization director has signed the application or any amendment to an application) severally that:

 

1)         he or she has read the application or amendment,

 

2)         in the opinion of each person he or she has made such examination and investigation as is necessary to enable him or her to express an informed opinion that the application or amendment complies to the best of his or her knowledge and belief with the applicable requirements of this Subpart, and

 

3)         each person holds this informed opinion.

 

e)         The representations specified in subsection (d) shall not be considered to have been made by any organization director of the applicant who did not sign the application or any amendment to the application, if, and only to the extent that, the organization director files with the Director within 10 business days after the filing of the application or amendment a statement describing those portions of the filing as to which he or she does not so represent.

 

f)         If applicable, the applicant shall furnish information in accordance with Subpart N of this Part.

 

g)         Consent of experts:

 

1)         If any accountant, attorney, investment banker, appraiser, financial advisor, or other person whose profession gives authority to a statement made in any application under this Subpart is named as having prepared, reviewed, passed upon, or certified any part of the application, or any report or valuation for use in connection with the application, the written consent of the person shall be filed with the application.  If any portion of an expert's report is quoted or summarized as such in any filing under this Subpart, the written consent of the expert shall expressly state that the expert consents to this quotation or summarization.

 

2)         All written consents filed pursuant to this Section shall be dated and signed manually.  A list of the consents shall be filed with the application. Where the consent of the expert is contained in the expert's report, the list shall state that the report contains the consent.

 

h)         After the Division has reviewed the filed materials, the applicant may be required to furnish additional information as an amendment to the application. Further, the applicant may amend the application at its discretion.  All amendments shall be clearly identified as such, numbered consecutively, and shall comply with all pertinent requirements of the application, including signature.

 

i)          Whenever the Director prohibits by order or otherwise the use of any filing under this Part, the form and contents of any filing used after the prohibition shall conform to the requirements of the order and the applicable regulations in effect at the time the prohibition is no longer effective.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2220  Application – Preparing the Application

 

a)         Requirements as to paper and printing:

 

1)         Applications shall be filed on good quality, unglazed, white paper approximately 8½ by 12 or 8½ by 11 inches in size, as is practicable.  However, tables, charts, maps and financial statements may be on larger paper if folded to those sizes, and the plan of conversion, proxy statement and offering circular may be on a smaller paper if the applicant so desires.

 

2)         Applications and, as is practicable, all papers and documents filed as a part those applications, shall be printed, lithographed, mimeographed or typewritten.  However, applications or any portion of the applications may be prepared by any similar process that, in the opinion of the Director, produces copies suitable for a permanent record.  Irrespective of the process used, all copies of the material shall be clear, easily readable and suitable for repeated photocopying.  Debits in credit categories and credits in debit categories shall be designated so as to be clearly distinguishable  on photocopies.

 

b)         Every application shall include a cross reference sheet showing the location in the proxy statement and offering circular of the response to the appropriate Section of this Part.  If any item is inapplicable, or the answer is in the negative and is omitted, a statement to that effect shall be made in the cross reference sheet.

 

c)         The body of all printed plans of conversion, proxy statements, and offering circulars, including all notes to financial statements and other tabular data included in the statements, shall be in Roman type at least as large and as legible as 10-point modern type.  However, to the extent necessary for convenient presentation, financial statements and other tabular data, including tabular data in notes, may be in Roman type at least as large and as legible as 8-point modern type.  All the type shall be leaded at least 2 points.

 

d)         Interpretation of requirements:

 

1)         Unless the context indicates otherwise, the information required is only as to the applicant.

 

2)         Whenever words relate to the future, they have reference solely to present intention.

 

3)         Any words indicating the holder of a position or office include persons, by whatever titles designated, whose duties are those ordinarily performed by holders of those positions or offices.

 

e)         Incorporation of certain information by reference:

 

1)         Where an item in an application calls for information not required to be included in the proxy statement or offering circular, matter contained in any other part of the application, including exhibits, may be incorporated by reference in answer, or partial answer, to the items.

 

2)         No information may be incorporated by reference in a proxy statement or offering circular, unless the document containing that information is attached to the statement or circular or is summarized or outlined as provided in subsection (f). However, an offering circular may incorporate by reference the information contained in a proxy statement previously delivered, without need of summary or outline.

 

3)         Material incorporated by reference shall be clearly identified in the reference.  An express statement that the specified matter is incorporated by reference shall be made at the particular place in the application where the information is required.  Material shall not be incorporated by reference in any case where the incorporation would make the statement incomplete, unclear or confusing.

 

f)         Where a summary or outline of the provisions of any document is required, only a brief statement shall be made, in succinct and condensed form, as to the most important provisions of the document.  In addition to the statement, the summary or outline may incorporate by reference particular items, sections or paragraphs of any exhibit and may be included in its entirety by the reference.

 

g)         Presentation of information:

 

1)         The information required in a proxy statement or offering circular need not follow the order of its presentation or other requirements in the appropriate sections.  The information shall not, however, be set forth in a fashion as to obscure any of the required information or any information necessary to keep the required information from being incomplete or misleading. Where a section requires information to be given in tabular form it shall be given in substantially the tabular form specified in the section.

 

2)         All information contained in a plan of conversion, proxy statement or offering circular shall be set forth under appropriate captions or headings reasonably indicative of the principal subject matter set forth in the plan, statement or circular. Except as to financial statements and other tabular data, all information set forth in any form under this Subpart shall be divided into reasonably short paragraphs or sections.

 

3)         Every proxy statement and offering circular shall include in its forepart a reasonably detailed table of contents showing the subject matter of its various sections or subdivisions and the page number on which each section or subdivision begins.

 

4)         All information required to be included in a proxy statement or offering circular shall be clearly understandable without the necessity of referring to the particular Section of this Subpart.  Except as to financial statements and information required in tabular form, the information set forth in a proxy statement or offering circular may be expressed in condensed or summarized form.

 

5)         Financial statements are to be set forth in comparative form and shall include any notes and the accountants' certificate or certificates.

 

h)         All amendments to an application under this Subpart shall be filed under cover of an appropriate facing sheet, shall be numbered consecutively in the order in which filed, and shall conform to all pertinent requirements of this Subpart.

 

i)          Information required needs to be given only insofar as it is known or reasonably available to the applicant.  The applicant may not omit information that is in fact known regardless of whether the information was reasonably available.  If any required information is unknown and not reasonably available to the applicant, either because the obtaining thereof would involve unreasonable effort or expense or because it rests peculiarly within the knowledge of another person not affiliated with the applicant, the information may be omitted, subject to the following conditions:

 

1)         The applicant shall give any information on the subject as it has or can acquire without unreasonable effort or expense, together with the sources of the information; and

 

2)         The applicant shall include a statement either showing that unreasonable effort or expense would be involved or indicating the absence of any affiliation with the person within whose knowledge the information rests and stating the result of a request made to the person for the information.

 

j)          The information provided should be presented in such a manner that the reader does not have to refer to the applicable Section of this Subpart to understand what is being conveyed.  It is not necessary that the applicant restate the text of any section, but the applicant should structure responses in such a manner as to clearly indicate to which Section the response applies. The nonapplicability of any item should be affirmatively noted.  The following shall be also applicable:

 

1)         Include an index of Sections and subsections.

 

2)         Exhibits and inserts are permissible if referenced under the appropriate Section, with identification tabs attached.

 

3)         If required information is not reasonably or economically available to the applicant, explanation for its omission should be included.

 

4)         Material available for public inspection may be incorporated by reference in response to any Section, but specified, including item, page, and paragraph number, if applicable.

 

k)         Should the applicant desire to submit any information it considers to be of a confidential nature regarding the response to any part of an application, the information shall be separately bound and labeled in capital letters, "CONFIDENTIAL" and a statement shall be submitted therewith briefly setting forth the grounds on which such information should be treated as confidential. Only general reference need be made of that confidential portion in the portion of the application which the applicant considers not to be confidential.  If any material has been granted confidential treatment under State or federal law, or by a government agency, or the New York Stock Exchange, the circumstances should be described.  All materials filed as part of this application are available for inspection, except for portions that are bound and labeled in capital letters, "CONFIDENTIAL" and that the Director determines to hold from public availability because of their confidential nature.  The Director will not permit public inspection or copying of any material that is or would be confidential under State law.  The Director will advise the applicant of any decision to make available to the public information labeled in capital letters, "CONFIDENTIAL". It should be understood that it may be necessary for the Director to release materials heretofore given confidential treatment.  It should be further understood that even though parts of the application are considered "confidential" as far as public inspection is concerned, the Director may comment on the confidential submissions in any public statement in connection with the Director's decision on the application without prior notice to the applicant.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2230  Application – Application Contents

 

The application shall include:

 

a)         The complete formal written plan adopted by the board of directors for conversion of the applicant to the stock form of organization.  The terms of the plan submitted pursuant to this subsection will be a basis for the Director's approval, and the plan as approved will be distributed as an attachment to the proxy statement and the offering circular;

 

b)         Preliminary copies of the proxy statement and offering circular.  The proxy statement and offering circular should be prepared in accordance with Sections 1075.2300 through 1075.2460 and 1025.2500 through 1025.2580 respectively, that are attached to the application;

 

c)         Preliminary copies of the form of proxy to be distributed to members by management of the applicant;

 

d)         The expected chronological order of the events connected with the plan of conversion beginning with the filing of this application through completion of the sale of all the capital stock under the Conversion Plan (Indicate the expected timing of any requisite approvals by other regulatory authorities. Indicate the proposed timing of all aspects of the subscription offering. If there will be an underwritten public or direct community marketing of the applicant's securities as part of the Conversion Plan, indicate the proposed timing of all aspects of the offering.);

 

e)         If the applicant's Conversion Plan contains an eligibility record date substantially earlier than 90 days before the date of adoption of the Conversion Plan by the board of directors, state the reason for the selection of the earlier date.  Indicate the circumstances that will require the use of a supplemental eligibility record date;

 

f)         In substantially the tabular form indicated below, the estimated expense of the conversion to the applicant:

 

Legal..................................................................................		................
Postage and Mailing..........................................................		................
Printing..............................................................................		................
Escrow or Agent Fees.......................................................		................
Underwriting Fees.............................................................		................
Appraisal Fees...................................................................		................
Transfer Agent Fees..........................................................		................
Auditing and Accounting..................................................		................
Proxy Solicitation Fees.....................................................		................
Advertising........................................................................		................
Other Expenses..................................................................		................
Total.......................................................................		................

 

 

1)         The applicant may exclude costs represented by salaries and wages of regular employees and officers if a statement to that effect is made.  The cost of solicitation by specially engaged employees or paid solicitors under Section 1075.2330(b) shall be stated under "Proxy Solicitation Fees".

 

2)         If the applicant has any category of expenses exceeding $10,000 that is not specified in this Section, the expense shall be itemized rather than including it under the category "Other Expenses".

 

3)         If the solicitation is conducted other than by management of the applicant, the information required in this Section shall be provided with respect to the cost of such solicitation, and

 

g)         A statement of the general effect of any charter provision, bylaw, contract, arrangement, statute, or regulation to be in effect during or after the conversion under which any underwriter, appraiser, lawyer, accountant or expert, or organization director or officer of the applicant will be insured or indemnified in any manner against any liability that he or she may incur in his or her capacity as such.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2240  Application – Application Exhibits

 

The following exhibits shall be attached to the application:

 

a)         The following documents, contracts and agreements:

 

1)         Proposed certificates for capital stock and any other securities to be issued;

 

2)         Proposed order forms with respect to the subscription rights;

 

3)         Any proposed stock option plan and form of stock option agreement;

 

4)         Any proposed management employment contracts;

 

5)         Any contract described in complying with Section 1075.2360;

 

6)         Contracts or agreements with paid solicitors described in complying with Section 1075.2330(b);

 

7)         Any material loan agreements relating to borrowing by the applicant other than from a Federal Home Loan Bank and other than subordinated debt securities approved by the Director;

 

8)         Any appraisal agreement or proposed agreement, underwriting contracts or agreements among underwriters;

 

9)         Any proposed contracts or agreements among members of a group regarding the purchase of unsubscribed shares;

 

10)         Any required undertaking or affidavits by officers or organization directors purchasing shares in the conversion that they are acting independently;

 

11)         Any documents referred to in complying with Section 1075.2230(g);

 

12)         Any trustee agreements or indentures;

 

13)         Any agreements for the making of markets or the listing on exchanges of the stock of the converted savings bank.  Documents, contracts and agreements that are furnished in proposed form under this exhibit shall be furnished in final form immediately after the meeting of members to consider the plan of conversion, except for documents that by their nature cannot be practically expected until a later time required by subsections (a)(8) and (9) in which case they shall be furnished in substantially final form; and

 

14)         Any documents referred to in complying with Section 1075.2230(g).

 

b)         An opinion of counsel for the applicant regarding each of the following matters:

 

1)         The legal sufficiency of the applicant's proposed certificate and order forms for capital stock and any other securities;

 

2)         Whether State and, if applicable, federal law, requirements will be fulfilled by the Conversion Plan;

 

3)         The legal sufficiency of the applicant's proposed charter and bylaws;

 

4)         The continuation of insurance of the applicant's accounts by the Federal Deposit Insurance Corporation after conversion; and

 

5)         The type and extent of each class of voting rights in the applicant after conversion;

 

c)         An opinion of:

 

1)         the applicant's tax advisor or an Internal Revenue ruling as to the federal income tax consequences of the Conversion Plan to the applicant and to the various account holders who receive nontransferable subscription rights to purchase capital stock; and

 

2)         the applicant's tax advisor or, if applicable, a ruling from the appropriate State taxing authority as to any tax consequences of the Conversion Plan under State law.  The opinion should relate to the applicant and to eligible account holders;

 

d)         Any materials required to be filed by Section 1075.2105 regarding the valuation of the applicant's capital stock.  An applicant is not required to file these materials if the offering of capital stock will not begin before the meeting of members to vote on the Conversion Plan;

 

e)         The notices to the applicant's members required by Sections 1075.2005 through 1075.2020;

 

f)         Additional exhibits:

 

1)         If information required pursuant to a relevant Section of this Part is not given for the reasons specified in Section 1075.2220(i), the statement required for each such omission;

 

2)         All consents required to be filed by Sections 1075.2210(g) and 1075.2520;

 

3)         If applicable, the statement required by Section 1075.2350 regarding events which occurred within the last 10 years to organization directors of the applicant;

 

4)         Any powers of attorney employed pursuant to Section 1075.2210(c); and

 

5)         The cross-reference sheet referred to in Section 1075.2220(b).

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2300  Proxy Statement – Information Required in Conversion Proxy Statement

 

a)         The conversion proxy statement shall conform to the requirements of this Section 1075.2300 through Section 1075.2460.

 

b)         Except as otherwise specifically provided, where any Section calls for information for a specified period in regard to organization directors, officers or other persons holding specified positions or relationships, the information shall be given in regard to any person who held any of the specified positions or relationships at any time during the period.  However, information need not be included for any portion of the period during which the person did not hold any such position or relationship provided a statement to that effect is made.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2310  Proxy Statement – Notice of Meeting

 

a)         The cover page of the proxy statement shall give notice of the meeting of the members called by the board of directors to act upon the Plan of Conversion.  The cover page shall include the date, time, and place of the meeting, a brief description of each matter to be acted upon at the meeting, the date of record for members entitled to vote at the meeting, the date of the statement, and the full address, ZIP code and telephone number of the applicant.

 

b)         If the applicant intends to use previously obtained proxies at the meeting in accordance with Section 1075.2035(d)(4), the notice of the meeting shall include the following bold-face legend:

 

            The institution may use your previously-executed proxies to vote for the Plan of Conversion in the event you do not execute another proxy for this meeting, attend and vote in person, or otherwise revoke your previously-executed proxies.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.2320  Proxy Statement – Revocability of Proxy

 

State that the person giving the proxy has the power to revoke it before the proxy is exercised at the meeting.  If the right or revocation is subject to compliance with any formal procedure, briefly describe such procedure.  Briefly describe any charter, bylaw or applicable federal or State law requirements otherwise restricting voting by proxy.  State that the proxy is solicited for that meeting, and any adjournment thereof, and will not be used for any other meeting.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.2330  Proxy Statement – Persons Making the Solicitations

 

a)         State whether the solicitation is made by the management of the applicant.  Give the name of any organization director or the applicant who has informed the management in writing that he or she intends to oppose any action intended to be taken by the management and indicate the action which he or she intends to oppose.

 

b)         If the solicitation is to be made otherwise than by the use of the mails, describe the methods to be employed.  If the solicitation is to be made by specially engaged employees or paid solicitors, state the material features of any contract or arrangement for such solicitation and identify the parties.

 

c)         If the solicitation is made otherwise than by the management of the applicant, so state and give the names of the persons by whom and on whose behalf it is made.  The solicitation normally need not respond to Sections 1075.2330 through 1075.2460, but must include such information as to make such solicitation comply with Section 1075.2035(d)(3).

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2340  Proxy Statement − Voting Rights and Vote Required for Approval

 

a)         Describe briefly the voting rights of each class of members, state the approximate total number of votes entitled to be cast at the meeting, and the approximate number of votes to which each class is entitled.  Discuss the voting rights of beneficiaries of accounts held in a fiduciary capacity such as IRA accounts.

 

b)         As part of the description, give the date of record for members entitled to vote at the meeting.

 

c)         As to each matter which will be submitted to a vote of members, state the vote required for its approval.

 

d)         If the applicant intends to use previously executed proxies to vote on the plan of conversion in accordance with Section 1075.2035(d)(4), discuss how such proxies were obtained, the circumstances in which such proxies may be used, and how such proxies will be voted.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.2350  Proxy Statement – Organization Directors and Executive Officers

 

a)         Furnish the information regarding organization directors and executive officers and certain relationships and related transactions required to be disclosed in a registration or proxy statement filed under the Securities Exchange Act of 1934 (15 USC 78a et seq.), as amended to July 1, 1991.  In particular, see Items 401 and 404 of the "General Rules Regarding Disclosures:  Regulations S-K – Standard Instructions for Filing Forms under Securities Act of 1933 and the Securities Exchange Act of 1934" (17 CFR 229.401 and 404, November, 1992, no subsequent dates or editions), and Item 6 of Regulation 14A of the "Rules and Regulations Under Securities Exchange Act of 1934 (17 CFR 240.14a-101, October, 1992, no subsequent dates or editions).  Unless the context otherwise requires, the words "registrant" and "issuer" in those regulations shall refer to the applicant and the word "Commission" shall refer to the Director.

 

b)         State whether control of the applicant has been exercised through the use of proxies and the nature of the control.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2360  Proxy Statement – Management Remuneration

 

Furnish the information regarding management remuneration required to be disclosed in a registration or proxy statement filed under the Securities Exchange Act of 1934.  In particular, see Item 402 of the "General Rules Regarding Disclosures:  Regulations S-K - Standard Instructions for Filing Forms under Securities Act of 1933", no subsequent dates or editions, U.S. Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, DC 20549, as of the effective date of this Section 1075.2360, and the Securities Exchange Act of 1934" (17 CFR 229.402 and 404, 1992, no subsequent dates or editions), and Item 7 of Regulation 14A of the "Rules and Regulations Under Securities Exchange Act of 1934 (17 CFR 240.14a-101) as of the effective date of this Section 1075.2360, no subsequent dates or editions. Unless the context otherwise requires, the words "registrant" and "Commission" in those regulations shall refer to the applicant and to the Director, respectively.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2370  Proxy Statement – Business of the Applicant

 

a)         Narrative description of business.

 

1)         Discuss briefly the organizational history of the applicant, including the year of organization, the identity of the chartering authority, and any charter conversions.

 

2)         Describe the business conducted and intended to be conducted by the applicant and its subsidiaries.  This should include a description of the general development of the business of the applicant and any predecessors during the past 5 years, or a shorter period as the applicant may have been engaged in business.  Information shall be disclosed for earlier periods if material to an understanding of the general development of the business. Any material changes in the mode of conducting the business should be discussed.

 

3)         Consideration should be given to inclusion of a description of the applicant's historical practices, including the average remaining term to maturity of its portfolio of mortgage loans, and present intention regarding the making of loans, whether real estate or other, the nature of security received, the terms of loans, whether carrying fixed or variable interest rates, and the retention of loans or their resale in secondary mortgage markets.  Historical description might require a general identification of the magnitude of various activities.

 

4)         Explain any significant impact to the institution as a result of any material acquisitions.

 

b)         Selected financial data – Furnish in comparative columnar form a summary of selected financial data for the applicant for:

 

1)         each of the last 5 fiscal years of the applicant (or for the life of the applicant and its predecessors, if less); and

 

2)         any additional fiscal years necessary to keep the summary from being misleading.

 

3)         In furnishing the information required by this subsection, the following shall apply:

 

A)        The purpose of the summary of selected financial data shall be to supply in convenient and readable format selected data that highlight significant trends in the applicant's financial condition and results of operations.

 

B)        Subject to appropriate variation to conform to the nature of the applicant's business, the following items, as a minimum, shall be included in the summary:  Total interest income; total interest expense; income (loss) from continuing operations; net income; total loans; total investments; total assets; total savings; total borrowings; total capital; and total number of customer service facilities indicating the number which provide full service. Applicants may include additional items which they believe would enhance understanding and highlight trends in their financial condition and results of operation.  Briefly describe, or cross-reference to a discussion of, factors such as accounting changes, business combinations, or dispositions of business operations that materially affect the comparability of the information reflected in selected financial data.  Discussion of, or reference to, any material uncertainties should also be included where those matters might cause the data reflected not to be indicative of the applicant's future financial condition or results of operations.

 

C)        Those applicants that elect to provide 5 year summary information in accordance with Section C28 of the Financial Accounting Standards Board's Statement of Financial Accounting Standards (FASB Statement 89), "Financial Reporting and Changing Prices", (Accounting Standards Current Text General Standards as of June 1, 1992, no subsequent date or addition, Financial Accounting Standards Board, 401 Merritt 7, P.O. Box 5116, Norwalk CT 06856-5116), may combine the information with the selected financial data appearing pursuant to this Section.

 

D)        All references to the applicant in the summary and in these instructions shall mean the applicant and its consolidated subsidiaries.

 

E)        If interim-period financial statements are included, or are required to be included by Section 1075.2450, applicants should update the selected financial data for the interim period to reflect any material change in the trends indicated; when updating information is necessary, applicants should provide the information on a comparative basis unless not necessary to an understanding of the updating information.

 

c)         Management's discussion and analysis of financial condition and results of operation.

 

1)         Discuss the applicant's financial condition, and results of operations.  The discussion shall provide information as specified in subsection (c)(1)(A), (B), and (C) with respect to liquidity, capital resources, and results of operations and also should provide all other information that the applicant believes to be necessary to an understanding of its financial condition, changes in financial condition, and results of operations.  Significant business combinations should be discussed.  Discussion of liquidity and capital resources may be combined whenever the 2 topics are interrelated.  Where in the applicant's judgment a discussion of subdivisions of the applicant's business would be appropriate to an understanding of the business, the discussion should focus on each relevant, reportable segment or other subdivision of the business and on the applicant as a whole.

 

A)        Liquidity – Identify any known trends or any known demands, commitments, events, or uncertainties that will result in or that are reasonably likely to result in the applicant's liquidity increasing or decreasing in any material way.  If a material deficiency is identified, indicate the course of action that the applicant has taken or proposes to take to remedy the deficiency.  Identify and separately describe internal and external sources of liquidity, and briefly discuss any material unused sources of liquid assets.  Comment on maturity imbalances between assets and liabilities and planned activities in the secondary mortgage market.

 

B)        Committed resources.

 

i)          Describe the applicant's material commitments for loan fundings or other expenditures as of the end of the latest fiscal period and indicate the general purpose of the commitments and the anticipated source of funds needed to fulfill the commitments.

 

ii)         Describe any known material trends, favorable or unfavorable, in the applicant's committed resources.  Indicate any expected material changes in the mix and the relative cost of the resources.  This discussion should consider changes between savings, equity, debt, and any off-balance-sheet financing arrangements.

 

C)        Results of operations.

 

i)          Describe any unusual or infrequent events or transactions or any significant economic changes that materially affected the amount of reported income from continuing operations and, in each case, indicate the extent to that income was affected.  In addition, describe any other significant components of revenues or expenses which, in the applicant's judgment, should be described in order to understand the applicant's results of operations.

 

ii)         Describe any known trends and uncertainties that have had, or that the applicant reasonably expects will have, a materially favorable or unfavorable impact on net sales or revenues or income from continuing operations.  If the applicant knows of events that will cause a material change in the relationship between costs and revenues (such as known future increases in costs of money or interest rates), the change in the relationship should be disclosed.

 

iii)        To the extent that the financial statements disclose material increases in interest expense, provide a narrative discussion of the extent to which the increases are attributable to increases in rates or to increases in volume.

 

iv)        For the 3 most recent fiscal years of the applicant, discuss the impact of inflation and changing prices on the applicant's revenues and on income from continuing operations.

 

v)         For the most recent financial statement presented, discuss any unusual risk characteristics in the assets of the applicant.  This would include real estate development, significant amounts of commercial real estate as loan collateral, and any other significant risk factors inherent in the applicant's lending or investment portfolios, including significant increases in amounts of non-accrual, past due, restructured, and potential problem loans (U.S. Securities and Exchange Commission's Securities Act Industry Guide 3, Section III C 1992, no subsequent dates or editions, U.S. Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, DC 20549).

 

D)        In completing subsection (c)(1), the following shall apply:

 

i)          The applicant's discussion and analysis shall be of the financial statements and of other statistical data that the applicant believes will enhance a reader's understanding of its financial condition, changes in financial condition, and results of operations.  Generally, the discussion should cover the 3 year period covered by the financial statements and should use year-to-year comparisons or other formats that, in the applicant's judgment, enhance a reader's understanding.  However, where trend information is relevant, reference to the 5 year selected financial data appearing in subsection (b) may be necessary.

 

ii)         The purpose of the discussion and analysis should be to provide to investors and other users information relevant to an assessment of the financial condition and results of operations of the applicant as determined by evaluating the amounts and certainty of cash flows from operations and from outside sources.  The information provided in this subsection need only include that which is available to the applicant without undue effort or expense and does not clearly appear in the applicant's financial statements.

 

iii)        The discussion and analysis should specifically focus on material events and uncertainties known to management that would cause reported financial information not to be necessarily indicative of future operating results or future financial condition.  This would include description and amounts of matters that would have an impact on future operations and have not had an impact in the past, and matters that have had an impact on reported operations and are not expected to have an impact upon future operations.

 

iv)        Where the consolidated financial statements reveal material changes from year to year in one or more line items, the causes for the changes should be described to the extent necessary to an understanding of the applicant's business as a whole; provided, however, if the causes for a change in one line item also relate to other line items, no repetition is required and a line-by-line analysis of the financial statements as a whole is not required or generally appropriate.  Applicants need not recite the amount of changes from year to year that are readily computable from the financial statements.  The discussion should not merely repeat numerical data contained in the consolidated financial statements.

 

v)         The term "liquidity" as used in subsection (c)(1)(A) refers to the ability of an enterprise to generate adequate amounts of cash to meet the enterprises' needs for cash.  Except where it is otherwise clear from the discussion, the applicant should indicate those balance sheet conditions or income or cash flow items that the applicant believes may be indicators of the liquidity condition.  Liquidity generally should be discussed on both a long-term and short-term basis.  The issue of liquidity should be discussed in the context of the applicant's own business or businesses.

 

vi)        Applicants are encouraged, but not required, to supply forward-looking information.  This is to be distinguished from presently known data that will have an impact upon future operating results, such as known future increases in rates or other costs.  This latter data is required to be disclosed.

 

vii)       Applicants that elect to provide narrative explanations of supplementary information disclosed in accordance with SFAS 89, as referred to in subsection (b)(3)(C), may combine the explanations with their discussion and analysis required pursuant to this provision or they may supply the information separately.  If the information is combined, it shall be located in reasonable proximity to the discussion and analysis.  If the information is not combined, the discussion of the impact of inflation otherwise required by this subsection may be omitted if there is an appropriate cross-reference to the explanations provided pursuant to SFAS 89, as referred to in subsection 1075.2370(b)(3)(C).

 

viii)      Applicants which elect not to provide explanations of supplementary information disclosed in accordance with SFAS 89 may discuss the effects of inflation and changes in prices in whatever manner appears appropriate under the circumstances.  Although voluntary compliance with SFAS 89 is encouraged, all that is required is a brief textual presentation of management's views.  No specific numerical financial data need be presented.

 

ix)        All references to the applicant in the discussion and in these instructions shall mean the applicant and its consolidated subsidiaries.

 

2)         If interim-period financial statements are included or are required to be included by Section 1075.2440, a management's discussion and analysis of the financial condition and results of operations shall be provided to enable the reader to assess material changes in financial condition and results of operations between the period specified in subsection (c)(2)(A) and (B).  The discussion and analysis shall include a discussion of material changes in those items specifically listed in subsection (c)(1), except that the impact of inflation and changing prices on operations for interim periods need not be addressed.

 

A)        Material changes in financial condition.  Discuss any material changes in financial condition from the end of the preceding fiscal year to the date of the most recent interim balance sheet provided.  If the interim financial statements include an interim balance sheet as of the corresponding interim date of the preceding fiscal year, any material change in financial condition from that date to the date of the most recent interim balance sheet provided shall also be discussed.  If discussions of changes from both the end and the corresponding interim date of the preceding fiscal year are required, the discussions may be combined at the discretion of the applicant.

 

B)        Material changes in results of operations.  Discuss any material changes in the applicant's results of operations with respect to the most recent fiscal year-to-date period for which an income statement is provided and the corresponding year-to-date period of the preceding fiscal year.  If the applicant is required to or has elected to provide an income statement for the most recent fiscal year quarter, the discussion also shall cover material changes with respect to that fiscal quarter and the corresponding fiscal quarter in the preceding fiscal year. In addition, if the applicant has elected to provide an income statement for the 12-month period ended as of the date of the most recent interim balance sheet provided, the discussions shall also cover material changes with respect to that 12-month period and the 12-month period ended as of the corresponding interim balance sheet date of the preceding fiscal year.

 

C)        In completing subsection (c)(2), the following instructions shall apply:

 

i)          If interim financial statements are presented together with financial statements for full fiscal years, the discussion of the interim financial information shall be prepared pursuant to subsection (c)(2) and the discussion of the full fiscal year information shall be prepared pursuant to subsection (c)(1).  Such discussions may be combined.

 

ii)         The discussion and analysis required by subsection (c)(2) is required to focus only on material changes.  Where the interim financial statements reveal material change from period to period in one or more significant line items, the causes for the changes should be described if they have not already been disclosed; however, if the causes for a change in one line item also relate to other line items, no repetition is required. Applicants need not recite the amounts of changes from period to period that are readily computable from the financial statements.  This discussion should not merely repeat numerical date contained in the financial statements.  The information provided should include that which is available to the applicant without undue effort or expense and  does not clearly appear in the applicant's interim financial statements.

 

iii)        The applicant's discussion of material changes in results of operations should identify any significant elements of the applicant's income or loss from continuing operations that do not arise from, or are not necessarily representative of, the applicant's ongoing business.

 

iv)        Applicants are encouraged, but are not required, to discuss forward-looking information.

 

d)         Lending activities.

 

1)         Briefly describe the applicable federal and State restrictions on the lending activities of the applicant, including applicable laws affecting mortgage loan interest rates.  Also briefly describe the applicant's general policy concerning loan-to-value ratios; customary methods of obtaining loan originations, such as the use of loan consultants; approval of properties as security for loans; the use of a loan committee, if any; and policies as to requiring title, fire insurance, and casualty insurance on security properties. Indicate the applicant's general future intentions with respect to activities in secondary mortgage markets, including transactions with the Federal Home Loan Mortgage Corporation or mortgage bankers.  If significant, indicate loan service fee income as a percentage of net interest income for the years required by Section 1075.2440(b).

 

2)         As to the lending area of the applicant, describe briefly:

 

A)        the lending area restrictions, if any, applicable to the applicant;

 

B)        the areas in which the applicant normally lends; and

 

C)        any material loan concentration areas of the applicant.  The descriptions may include maps illustrating one or more of these areas.  Furnish an estimate of the housing vacancy rates in areas where the applicant's loan concentrations are located, if practicable.

 

3)         Describe briefly the general long-term nature of investment in mortgage loans and the consequent effect upon the earnings spread of savings institutions.  State the normal maturity of loans made by the applicant on the security of single-family dwellings and furnish an estimate as to the average length of time the loans are outstanding.

 

4)         For each of the periods required by Section 1075.2440(b), set forth in tabular form, excluding fees that are not considered adjustments of yield, the following:

 

A)        Average yield during the period, computed on no greater than a monthly basis, on:

 

i)          loan portfolio;

 

ii)         investment portfolio;

 

iii)        other interest-earning assets; and

 

iv)        all interest earning assets.

 

B)        Average rate paid during the period, computed on no greater than a monthly basis, on:

 

i)          deposits;

 

ii)         borrowings and Federal Home Loan Bank advances;

 

iii)        other interest-bearing liabilities; and

 

iv)        all interest-bearing liabilities (subsection (d)(4)(A)(i), (ii), and (iii)).

 

C)        Weighted-average yield at end of the latest required period, for the items in subsection (d)(4)(A) and (B).

 

D)        The net yield on average interest-earning assets (net interest earnings divided by average interest-earning assets with net interest earnings equaling the difference between the dollar amount of interest earned and paid).  Average interest-earning assets should be determined on an interval no more frequent than monthly.

 

E)        For each of the periods required by Section 1075.2440(b), set forth in tabular form:

 

i)          the dollar amount of change in interest income, and

 

ii)         the dollar amount of change in interest expense.  The changes should be segregated for each major category of interest-earning asset and interest-bearing liability (as stated in subsection (d)(4)(A) and (B)) into amount attributable to changes in volume change (change in volume multiplied by old rate), and changes in rates (change in rate multiplied by old volume), and changes in rate-volume (change in rate multiplied by the change in volume).  The rate/volume variances should be allocated on a consistent basis between rate and volume variance and the basis of allocation disclosed in a note to the table.

 

5)         For each of the periods required by Section 1075.2440(b), present the following:

 

A)        Return on assets (net income divided by average total assets).

 

B)        Return on equity (net income divided by average equity).

 

C)        Equity-to-assets ratio (average equity divided by average total assets).

 

D)        Applicants should supply any additional ratios necessary to explain their operations.

 

6)         Loans:

 

A)        As of the end of the latest fiscal year reported on, present separately the amounts of loans in the categories of real estate mortgages, real estate construction, installment, and commercial, financial and agricultural that are due:

 

i)          In each of the 3 years following the balance sheet;

 

ii)         after 3 through 5 years;

 

iii)        after 5 through 10 years;

 

iv)        after 10 through 15 years; and

 

v)         after 15 years.  In addition, present separately the total amount of all such loans due after one year that have predetermined interest rates and floating or adjustable interest rates.

 

B)        In completing subsection (d)(6)(A), the following shall apply:

 

i)          Scheduled principal repayments should be reported in that maturity category in which the payment is due.

 

ii)         Demand loans, loans having no stated schedule of repayments and no stated maturity, and overdrafts should be reported as due in one year or less.

 

iii)        Determinations of maturities should be based upon contract terms. However, the terms may vary due to the applicant's "rollover policy," in which case the maturity should be revised as appropriate and the rollover policy should be briefly discussed.

 

7)         Describe briefly the risk elements within the loan and investment portfolios including the applicant's customary procedures regarding delinquent loans.  As of the end of each of the periods covered by the statements of operation required by Section 1075.2440(b)(1) and as of the date of the latest statement of financial condition required by Section 1075.2440(a), set forth in tabular form the amounts and categories of non-accrual, past due, restructured, and potential problem loans (see Securities and Exchange Commission's Securities Act Industry Guide 3, Section III C) and the ratio of such loans to total assets.  Where the amount of real estate that has been in substance foreclosed, acquired by foreclosure, or by deed in lieu of foreclosure is significant, include a brief description of the major properties and a statement as to the applicant's probable losses, if any, upon disposition of such properties.

 

e)         Savings activities.

 

1)         State whether the maximum rate of interest that the applicant may pay is established by regulatory authorities. State that, in the event of liquidations of the applicant after conversion, savings account holders will be entitled to full payment of their accounts before payment to shareholders.  Also indicate the percentage of total savings accounts that are from out-of-state sources, if the total is significant.

 

2)         Set forth in tabular form the amounts of time deposit accounts by categories of interest rates as of the dates of each balance sheet filed.  Each interest-rate category should not be more than 200 basis points.  As of the date of the latest balance sheet, set forth in tabular form for each interest-rate category, the amounts of savings maturing during each of the three years following the balance sheet date and the total maturing thereafter.

 

3)         Disclose the weighted-average rate and general terms (as well as formal provisions for the extension of the maturity) of each category of short-term borrowings, along with the maximum amount of borrowings in each category outstanding at any month-end during each period for which an end-of-period balance sheet is required.  In addition, disclose the approximate average short-term borrowings outstanding during the period and the approximate weighted-average interest rate (and a brief description of the means used to compute such average) for the aggregate short-term borrowings.  The disclosure required by this subsection need not be furnished as regards borrowings in each particular category when the aggregate amount of such borrowings at the balance sheet date does not exceed one percent of assets at that date.  Notwithstanding this reporting threshold, if the weighted average of the borrowings at year-end, the disclosure called by this subsection should be furnished.  This information is not required to be given for any category of short-term borrowings for which the average balance outstanding during the period was less than 30% of stockholders equity at the end of the period.

 

f)         Federal regulation.  Describe briefly, to the extent not otherwise covered by other items, federal regulation of the applicant and the conduct of its operations.  In particular, describe briefly the insurance of accounts and the general regulatory authority of the Federal Deposit Insurance Corporation, and federal regulatory capital requirements; the results of failure to meet those requirements; and the applicant's regulatory capital position in relation to those requirements.  Also, describe the assessment authority and requirements of the Federal Deposit Insurance Corporation, the Financing Corporation, and the Resolution Funding Corporation.

 

g)         Federal Home Loan Bank System.  If a member, describe briefly the Federal Home Loan Bank System and state that the applicant is a member.  The description shall include:

 

1)         Limitations on borrowings;

 

2)         Recent loan policies of the applicant's Federal Home Loan Bank and current interest rates; and

 

3)         Federal Home Loan Bank stock purchase requirements and the applicant's position with respect to those requirements.

 

h)         State regulation.  Describe briefly, to the extent not otherwise covered by other items, State regulation of the applicant and the conduct of its operations.  In particular, describe briefly the general regulatory authority of the Director, and State regulatory capital requirements, the results of failure to meet those requirements, and the applicant's regulatory capital position in relation to those requirements (Section 5001 of the Act and Section 1075.410).  Also describe the supervisory fee assessment authority and requirements of the Director.

 

i)          Federal and state taxation.  Describe briefly the federal income tax laws applicable to the applicant including:

 

1)         Permissible bad debt reserves;

 

2)         The applicant's position with respect to the maximum bad debt reserve limitations as of the date of the latest statement of financial condition required under Section 1075.2440(a);

 

3)         Future increases in the effective income tax rate;

 

4)         The date through which the applicant's federal income tax returns have been audited by the Internal Revenue Service; and

 

5)         The tax effect to the applicant of the payment of cash dividends on capital stock of the applicant after conversion.  Also describe briefly the State taxation of the applicant.

 

j)          Competition.  Describe the material sources of competition for savings banks generally and indicate to the extent practicable the applicant's position in its principal lending and deposit markets.  In answering this subsection, give to the extent known the applicant's deposit and mortgage product market shares by county in its geographic market.  Also indicate its rank and any material changes or trends in its competitive standing.

 

k)         Office and other material properties.

 

1)         Furnish the location of the applicant's home office and each existing and approved branch office and other office facilities (such as mobile or satellite offices).  State the total net book value of all its offices as of the date of the latest statement of financial condition required by Section 1075.2440(a). If any office is leased, state the expiration dates of those leases.

 

2)         Describe briefly undeveloped land owned by the applicant, including location, net book value, and prospective use and holding period.  If the applicant or a subsidiary owns or leases electronic data processing equipment principally for its own use, describe briefly the equipment indicating net book value if owned or the principal lease terms if leased.

 

l)          Employees.  State the number of persons employed full time by the applicant including executive officers listed under Section 1075.2350.  State whether employees are represented by a collective bargaining group and whether the applicant's relations with its employees is satisfactory.  Summarize briefly any loans, profit sharing, retirement, medical, hospitalization or other remuneration plans provided for employees not already included pursuant to Section 1075.2360.

 

m)        Service corporations.  Describe briefly the applicant's investment in any subsidiary and the major lines of business (including any joint ventures) of the subsidiary that are material to its operations.

 

n)         Legal proceedings.  Furnish the information regarding legal proceedings required to be disclosed in a registration statement filed under the Securities Exchange Act of 1934 (15 USC 78a et seq., as amended to July 1, 1991, no subsequent dates or editions). In particular, see Item 103 of the "General Rules Regarding Disclosures: Regulations S-K – Standard Instructions for Filing Forms under Securities Act of 1933 and the Securities Exchange Act of 1934" (17 CFR 229.103) November 1992, no subsequent dates or editions, U.S. Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, DC  20549. Unless the context otherwise requires, the word "registrant" in that regulation shall refer to the applicant.

 

o)         Additional information.  The Director may upon the request of applicant, and where consistent with the protection of account holders and others, permit the omission of any of the information required by this Section or the furnishing in substitution therefor of appropriate information of comparable character.  The Director may also require the furnishing of other information in addition to, or in substitution for, the information required by this Section in any case in which the information is necessary or appropriate for an adequate description of the applicant's business done or intended to be done.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2380  Proxy Statement – Description of the Plan of Conversion

 

a)         A statement to the following effect shall be inserted in the proxy statement immediately preceding the information required by this Section: "The Director of Banks and Real Estate has given approval to the plan of conversion, subject to its approval by members and the satisfaction of certain other conditions.  However, approval by the Director does not constitute a recommendation or endorsement of the plan by the Director ".

 

b)         The proxy statement shall contain a description of the plan of conversion.  The description shall contain the information required by subsections (c) through (j) and additional information as may be necessary to accurately describe the material provisions of the plan.

 

c)         Briefly describe the effects of conversion from a mutual institution to a stock institution including the following information:

 

1)         State that deposit accounts of the applicant will not be affected by the conversion with respect to such matters as balances in the accounts and the extent of insurance of accounts by the Savings Association Insurance Fund or the Bank Insurance Fund, as the case may be;

 

2)         State that deposit and borrowing members of the applicant will not continue to have voting rights in the applicant after conversion and that the members of the stock savings bank shall be only the owners of its capital stock;

 

3)         State the present liquidation rights of account holders and describe the liquidation account to be established and maintained by the applicant, including the conditions under which the account will be paid, the interest of eligible account holders in the account and the formula by which the account will be adjusted;

 

4)         State that the rights and obligations of borrowers from the applicant will not be changed in any manner;

 

5)         State that capital stock to be sold by the applicant will not be insured by the Savings Association Insurance Fund or the Bank Insurance Fund, as the case may be;

 

6)         State that none of the assets of the applicant will be distributed in order to effect the conversion other than to pay expenses incident to the conversion; and

 

7)         State briefly the reasons why management is recommending the conversion, including any advantages to the community served by the applicant.

 

d)         With respect to the subscription rights of members, furnish the following information:

 

1)         The formula to be used for determining the subscription rights of account holders to purchase shares;

 

2)         Any optional provisions included in the plan of conversion pursuant to Section 1075.1925 for the purchase of shares of capital stock;

 

3)         The allocation formulas to be used when there is an oversubscription of shares at any time during the sale of stock under the plan of conversions; and

 

4)         The use and time of the order forms with respect to the exercise of subscription rights.

 

e)         Offering price range:

 

1)         Set forth on a per-share basis the estimated public offering price range of the shares of capital stock to be sold pursuant to the plan of conversion, except that an estimated price range is not required to be stated if the offering of stock is not to begin until after the meeting of members to vote on the plan of conversion;

 

2)         State that the offering price will be the "pro forma" market value of the shares as determined by the applicant's management and the underwriter, as the case may be; and

 

3)         State that all the shares are required to be sold.

 

f)         Earning and book value per share:

 

1)         Unless the offering of stock is not to begin until after the meeting of members to vote on the plan of conversion, discuss:

 

A)        the earnings per share of the capital stock to be sold on a "pro forma" basis as of the most recent year-end and interim period required by Section 1075.2440(a); and

 

B)        the book value per share on a "pro forma" basis as of the most recent year-end and interim period required by Section 1075.2440(a).

 

2)         In completing subsection (f)(1), the following shall apply:

 

A)        Earnings and book value per share shall be furnished without giving effect to the estimated net proceeds from the sale of the capital stock and then after giving effect to those proceeds, with all assumptions used clearly stated.

 

B)        In computing "pro forma" earnings, the applicant shall use the arithmetic average of the:

 

i)          average yield on all interest-earning assets (Section 1075.2370(d)(4)(A)(iv)); and

 

ii)         average rate paid on deposits (Section 1075.2370(d)(4)(B)(i)).

 

C)        If significant changes in interest rates occur during the period presented, the Director will consider permitting alternative computations proposed by an applicant that are properly supported.

 

D)        An appropriate statement should be included which explains that the "pro forma" data should not be relied upon as indicative of the actual financial position or results of continuing operations that will be experienced by the applicant after its conversion.

 

g)         State the proposed beginning and ending dates of the subscription period and describe any provisions in the plan of conversion related to the timing or extension of the subscription period.  Also, state:

 

1)         That a maximum subscription price will be set forth in the offering circular used for offering of subscription rights,

 

2)         That the actual subscription price will be the public offering price;

 

3)         That the actual subscription price will not exceed the maximum subscription price shown on the order form; and

 

4)         That any difference between the maximum and actual subscription prices will be refunded unless the subscribers affirmatively elect to have the differences applied to the purchase of additional shares of capital stock.

 

h)         Furnish the following information:

 

1)         Describe to the extent practicable the applicant's present intentions with respect to listing the capital stock on an exchange or otherwise providing a market for the purchase and sale of the capital stock in the future;

 

2)         Describe briefly the tax effect of the conversion both to the applicant and to the various classes of account holders receiving nontransferable subscription rights to purchase capital stock in the conversion; and

 

3)         State that the plan of conversion is attached as an exhibit to the proxy statement (or will be made available on request if the summary proxy statement provided for by Section 1075.1925 is being used) and should be consulted for further information.

 

i)          State whether the plan of conversion provides for:

 

1)         unsubscribed capital stock to be offered to the public through underwriters or directly by the converting savings bank.  If this is the case, provide the information to the extent known required by Section 1075.2580 and indicate the estimated timing of the proposed offering; and

 

2)         the purchase by any person or group of any insignificant residue of shares remaining at the conclusion of the offering.

 

j)          Furnish the following information in tabular form regarding proposed purchases of capital stock involving organization directors and officers of the applicant:

 

1)         State the total number of shares proposed to be purchased by all officers, directors and their affiliates as a group without naming them.

 

2)         As to each officer and organization director named in Section 1075.2350(a), name him or her, state his or her position, and the number of shares proposed to be purchased by him or her.

 

3)         As to any officer, organization director or affiliate of the organization who proposes to purchase 1% or more of the total number of shares of capital stock of the applicant to be outstanding, name him or her, state his or her position, and the number of shares proposed to be purchased by him or her.

 

4)         With respect to the information required by subsections (j)(1), (2) and (3), indicate separately the number of shares proposed to be purchased in each offering category.

 

5)         With respect to the information requested as to affiliates of officers, the information is required only to the extent known.  In a case where the confirmation is not obtainable, only the number of shares that the affiliate is given subscription rights to purchase need be disclosed.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2390  Proxy Statement – Description of Capital Stock

 

a)         Furnish the information regarding capital stock of the applicant required to be disclosed in a registration statement filed under the Securities Exchange Act of 1934.  In particular, see Item 202 of the "General Rules Regarding Disclosures:  Regulations S-K – Standard Instructions for Filing Forms under Securities Act of 1933 and the Securities Exchange Act of 1934" (17 CFR 229.202), November, 1992 no subsequent dates or editions).  Unless the context otherwise requires the term "registrant" in the regulation shall refer to the applicant.

 

b)         An undertaking should be included in the proxy statement that the applicant where practical will use its best efforts to encourage and assist a professional market maker in establishing and maintaining a market for the capital stock of the applicant.

 

c)         Trading market:

 

1)         Outline briefly the trading market that is expected to exist for the capital stock following the conversion including the estimated number of market makers and stockholders, and the anticipated success of the applicant in listing the stock.

 

2)         Any discussion of the listing of the applicant's stock should include the basic requirements that must be met for such listing.

 

d)         If the rights evidenced by the capital stock will be materially limited or qualified by the rights of savings account holders or borrowers, include the information regarding the limitations or qualifications necessary to enable investors to understand the rights evidenced by the capital stock.

 

(Source:  Expedited correction at 17 Ill. Reg. 18223, effective June 7, 1993)

 

Section 1075.2400  Proxy Statement – Capitalization

 

a)         Set forth in substantially the tabular form indicated below the dollar amounts of the capitalization of the applicant.  Captions in the following form may be modified as appropriate.

 

				(A)	(B)	(C)
				Capitalization as of Most Recent Balance Sheet Date	Pro forma adjustments as a Result of Conversion	Pro forma Capitalization, After Giving Effect to the Conversion
	Deposits
		FHL bank advances.............................................
		Other.............................................
Borrowings
		Capital Stock.............................................
		Preferred stock
		Paid-in capital.............................................
Retained earnings:
		Restricted.............................................
		Unrestricted.............................................
	Total............

 

 

b)         In furnishing the information required by subsection (a), the following shall apply:

 

1)         With respect to capital stock, indicate in the table or in a footnote the total number of shares to be authorized, the par or stated value of such shares, and the number of shares to be sold as part of the conversion.

 

2)         With respect to the funds to be received by the applicant from the sale of its capital stock, indicate in the table the estimated total amount of funds to be obtained, and in a footnote, state the price per share used in making the estimate.  The total amount and price per share shall be clearly identified as being estimates.

 

3)         With respect to Column A, the applicant should use the most recent balance sheet date required by Section 1075.2450.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2410  Proxy Statement – Use of New Capital

 

a)         State the principal purposes for which the net proceeds to the applicant from the capital stock to be sold are intended to be invested or otherwise used and the approximate amount intended for each such purpose.

 

b)         Detail of proposed investments are not to be given.  There needs be furnished, for example, only a brief statement of any investment or other activity of the applicant which will be affected materially by availability of the proceeds.  Examples of such activities may include expanded secondary market activities, larger scale lending projects, loan portfolio diversification, increased liquidity investments, repayment of debt, additional branch offices and other facilities, service corporation investments, and acquisitions.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.2420  Proxy Statement – New Charter, Bylaws, or Other Documents

 

Describe briefly any material differences between the existing charter, bylaws, and any similar documents of the applicant and those which will take effect after conversion.  This Section requires only a brief summary of the provisions which are permitted from both an investment standpoint and a voting standpoint.  A complete legal description of the provisions referred to is not required and should not be given.  Do not set forth the provisions verbatim; only a succinct resume is required.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.2430  Proxy Statement – Other Matters

 

If applicable, state that the applicant will register its capital stock under Section 12(g) of the Securities Exchange Act of 1934, and that it will not deregister such stock for a period of three years.  It should be noted that upon such registration, the proxy rules, insider trading reporting and restrictions, annual and periodic reporting and other requirements of the Securities Exchange Act of 1934 will be applicable.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.2440  Proxy Statement – Financial Statements

 

This Section specifies the consolidated balance sheets, the consolidated statements of income, the consolidated statements of cash flows, and stockholders' equity required to be included in the proxy statement.  If the applicant has previously used an audit period in connection with its certified financial statements that does not coincide with its fiscal year, that audit period may be used in place of any fiscal year requirements provided it covers a full 12 months' operations and is used consistently.

 

a)         Consolidated balance sheets.

 

1)         There shall be furnished for the applicant and its subsidiaries consolidated, audited balance sheets as of the end of each of the 2 most recent fiscal years.

 

2)         If the latest balance sheets furnished under subsection (a)(1) are in excess of 135 days before the date of the Director's approval of the conversion, there shall be furnished an interim balance sheet as of a date within 135 days after this approval.  This interim balance sheet need not be audited.

 

b)         Consolidated statements of income and cash flows.

 

1)         There shall be furnished for the applicant and its subsidiaries and predecessors consolidated, audited statements of income and cash flows for each of the 3 fiscal years preceding the date of the most recent balance sheet furnished.  Nothwithstanding the requirement of submitting consolidated statements for the preceding 3 fiscal years, if the applicant would qualify as a "Small Business Issuer" under U.S. Securities and Exchange Commission Regulation S-B, 17 CFR 226, the applicant may furnish consolidated statements for the periods that would be required of a small business issuer if the applicant complies with all other provisions of Sections 1075.2370 and 1075.2440 and includes a 2-year balance sheet in its proxy statement and offering circular.

 

2)         In addition, for any interim period between the latest audited balance sheet and the date of the most recent interim balance sheet being filed, and for the corresponding period of the preceding fiscal year, statements of income and cash flows shall be furnished.  The interim financial statements may be unaudited.

 

c)         Changes in stockholders' equity.  An analysis of the changes in each caption of stockholders' equity presented in the balance sheets shall be given in a note or separate statement.  This analysis shall be presented in the form of a reconciliation of the beginning balance to the ending balance for each period for which an income statement is required to be furnished, with all significant reconciling items described by appropriate captions.

 

d)         Financial statements of business acquired or to be acquired.  There shall be furnished the information required by 17 CFR 210.3-05 and 17 CFR 210.11-01 to 210.11-03, 1992, no subsequent dates or editions, regarding business acquired or to be acquired.

 

e)         Separate financial statements of subsidiaries not consolidated and 50% or less owned persons.  There shall be furnished the information required by 17 CFR 210.3-09 regarding separate financial statements of subsidiaries not consolidated and 50% or less owned persons.

 

f)         Filing of other statements in certain cases.  The Director may, upon the request of the applicant, and where consistent with the protection of account holders and others, permit the omission of one or more of the statements required or the filing of substitute appropriate statements of comparable character.  The Director may also require the inclusion of other statements in addition to, or in substitution for, the statements required in any case in which the statements are necessary or appropriate for an adequate presentation of the financial condition of any person whose financial statements are required, or whose statements are otherwise necessary for the protection of account holders and others.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2450  Proxy Statement – Consents of Experts and Reports

 

a)         The proxy statement shall briefly describe all consents of experts filed pursuant to Section 1075.2210(g).

 

b)         The statement shall contain a report of the independent public accountants who have certified the financial statements and other matters in the statement.

 

c)         Subsections (a) and (b) require only a brief summary of the provisions that are permitted from an investment standpoint and a voting standpoint.  A complete legal description of the provision referred to is not required and should not be given.  Do not set forth the provision verbatim; only a succinct resume is required.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2460  Proxy Statement – Attachments

 

There shall be attached to the proxy statement distributed to members and others a copy of the applicant's plan of conversion as approved by the Director unless the proxy statement contains a provision indicating that the plan of conversion will not be provided unless the recipient so requests within a specified period by a postage-paid postcard or other written communication.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2500  Offering Circular

 

An offering circular shall conform to the requirements of Sections 1075.2500 through 1075.2580.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.2510  Offering Circular – Certain Manner of Presentation of Required Information Prohibited

 

The information required in an offering circular shall not be set forth in such fashion as to obscure any of the required information or any information necessary to keep the required information from being incomplete or misleading.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.2520  Offering Circular – Certain Named Persons – Filing of Written Consent Required

 

If any person who has not signed an application is named in the offering circular as about to become an organization director, the written consent of this person shall be filed with the Director in the form the Director prescribes.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2530  Offering Circular – Information Required

 

a)         The offering circular shall be dated as of the date of its issuance. The offering circular shall contain substantially the same information required to be included in the proxy statement of the applicant distributed to members to vote upon the plan of conversion.  Information of the type required to be included in the proxy statement may be omitted from the offering circular only to the extent that it is clearly inapplicable.  The offering circular may be in "wrap around" form with the proxy statement attached.  The term "offering circular" refers to both the offering circular for the subscription offering and the offering circular for the public offering through an underwriter or the direct community marketing by the converting savings bank of the unsubscribed shares, unless otherwise indicated.

 

b)         An offering circular for the subscription offering in "wrap around" form distributed to members and other persons who have previously been furnished a copy of the proxy statement need not contain the proxy statement as an attachment provided such offering circular states that a copy of the proxy statement has previously been furnished to such persons and that an additional copy thereof will be furnished promptly upon request to the applicant (with the telephone number and mailing address of the applicant stated).

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.2540  Offering Circular – Additional Current Information Required

 

Each offering circular shall, as of its respective dates of issuance, include, to the extent available, the following additional current information to the extent that such information is not already included in the proxy statement:

 

a)         Information with respect to the vote of members upon the plan of conversion and any other proposals considered at the meeting of members.

 

b)         Information with respect to any recent material developments in the business or affairs of the applicant.

 

c)         Information with respect to the trading market that is expected to exist for the capital stock following the conversion.

 

d)         Information, on the outside front cover page, summarizing the results of any separate subscription offering including the number of shares sold to eligible account holders, voting members and others, the price at which the shares were sold, and the number of unsubscribed shares.

 

e)         The information required by Section 1075.2380(e)(1) and (f).

 

f)         Any other information necessary to make such offering circular current, including full financial statements of the applicant within 6 months before the date of issuance of such offering circular.  In addition, a subscription offering circular shall contain any more recent financial statements which, at the time the subscription offering begins, it can be determined will be required to be included in an offering circular to be used in the direct community offering or public offering pursuant to this subsection.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.2550  Offering Circular – Statement Required in Offering Circulars

 

There shall be set forth on the outside cover page of every offering circular the following statement in capital letters printed in bold-face Roman type at least as large as 10-point modern type and at least 2 points leaded:  "These shares have not been approved or disapproved by the Director of the Division of Banking, nor has the Director passed upon the accuracy or adequacy of this offering circular.  Any representation to the contrary is unlawful."

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2560  Offering Circular – Preliminary Offering Circular

 

The outside front cover page of any preliminary offering circular shall bear, in red ink, the caption "Preliminary Offering Circular", the date of its issuance, and the following statement printed in type as large as that used generally in the body of the offering circular:

 

"This offering circular has been filed with the Director of Banks and Real Estate, but has not been authorized for use in final form.  Information contained in this offering circular is subject to completion or amendment. The shares covered may not be sold, nor may offers to buy be accepted, before the time the offering circular is declared effective by the Director.  The offering circular shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of theses shares in any state in which such offer, solicitation or sale would be unlawful before registration or qualification under the securities laws of that state."

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.2570  Offering Circular – Information with Respect to Exercise of Subscription Rights

 

Any offering circular which is required to be delivered to subscribers shall describe all material terms of the offering relating to the exercise of subscription rights to the extent that such description is not already in the proxy statement.  Such terms include the expiration date, any subscription agent, method of exercising subscription rights, payment for shares, delivery of stock certificates for shares purchased, maximum subscription prices, possible reduction of subscription price, relationship of subscription price to public offering price, requirements that all unsubscribed shares be sold, and any other material conditions relating to the exercise of subscription rights.

 

(Source:  Added at 17 Ill. Reg. 8894, effective June 7, 1993)

 

Section 1075.2580   Offering Circular – Information with Respect to Public Offering or Direct Community Offering

 

Each offering circular shall describe the material terms of the plan or plans of distribution for all unsubscribed shares of capital stock to the extent the description is not already in the proxy statement, including the following:

 

a)         If the shares are to be offered through underwriters, the outside front cover page of both offering circulars shall give the information called for by this subsection.  In the case of the offering circular for any public offering, the information shall be given in substantially the tabular form set forth in this subsection.  In any other case, the information may be given in narrative form.  If the information is not known at the time of the subscription offering, so state and estimate.

 

	Price to Public	Underwriting Discounts and Commissions	Proceeds to Applicant
Per Share	$	$	$
Total	$	$	$

 

 

b)         An offering circular for a public offering or direct community marketing, where the plan of conversion does not contain the optional provision permitted by Section 1075.1925(g), may omit the description relating to the exercise of subscription rights required by Section 1075.2570.

 

c)         If any shares are to be offered through underwriters, the offering circular for the public offering shall state the names of the principal underwriters and the respective amounts underwritten by each.  The names of the principal underwriters other than the managing underwriters and the respective amounts to be underwritten may be omitted from the offering circular for the subscription offering, unless the plan of conversion contains the optional provision permitted by Section 1075.2935(g).  Each offering circular shall identify each principal underwriter having a material relationship to the applicant and state the nature of the relationship.  Each offering circular shall state briefly the nature of the underwriter's obligation to take the unsubscribed shares.

 

d)         The offering circular for the public offering shall state briefly the discounts and commissions to be allowed or paid to dealers in connection with the sale of the unsubscribed shares.  This information may be omitted from the offering circular for any subscription offering, unless the plan of conversion contains the optional provision permitted by Section 1075.1925(g).

 

e)         If any shares are to be offered through underwriters, the offering circular for the public offering shall identify any principal underwriter that intends to confirm sales to any accounts over which it exercises discretionary authority and include an estimate of the number of shares so intended to be confirmed.  The information may be omitted from the offering circular for any subscription offering.  With respect to this subsection, the following shall apply:

 

1)         Commissions include all cash, securities, contracts, or anything else of value, paid, to be set aside, disposed of, or understandings made with or for the benefit of any persons in which any underwriter or dealer is interested, in connection with the sale of the shares.

 

2)         Only commissions paid by the applicant in cash are to be included in the table.  Any other consideration to the underwriters shall be set forth following the table with a reference in the second column of the table. Any finder's fees or similar payments shall be appropriately disclosed.

 

3)         All that is required as to the nature of the underwriters' obligation is whether the underwriters are, or will be, committed to take and to pay for all the shares if any are taken, or whether it is merely an agency of "best efforts" arrangement under which the underwriters are required to take and pay for only the shares they may sell to the public.  Conditions precedent to the underwriters' taking the shares, including customary "market outs," need not be described.  If a "best efforts" arrangement is used, describe any standby commitments for shares not sold.

 

f)         If any shares are to be sold by the converting savings bank through a direct community marketing, indicate the timing of the offering, the geographical area where the offering will be made, the method to be employed to market the shares, including the frequency and nature of communications or contracts with potential purchasers, any preferences that will be given any such geographical area or class of potential purchasers, and the limitations on purchases by potential purchasers.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

SUBPART P: HIGH RISK HOME LOANS

 

Section 1075.3000  Definitions (Repealed)

 

(Source:  Repealed at 41 Ill. Reg. 11336, effective August 28, 2017)

 

Section 1075.3100  Ability to Repay (Repealed)

 

(Source:  Repealed at 41 Ill. Reg. 11336, effective August 28, 2017)

 

Section 1075.3150  Verification of Ability to Pay Loan (Repealed)

 

(Source:  Repealed at 41 Ill. Reg. 11336, effective August 28, 2017)

 

Section 1075.3200  Fraudulent or Deceptive Practices (Repealed)

 

(Source:  Repealed at 41 Ill. Reg. 11336, effective August 28, 2017)

 

Section 1075.3225  Prepayment Penalty (Repealed)

 

(Source:  Repealed at 41 Ill. Reg. 11336, effective August 28, 2017)

 

Section 1075.3250  Pre-paid Insurance Products and Warranties (Repealed)

 

(Source:  Repealed at 41 Ill. Reg. 11336, effective August 28, 2017)

 

Section 1075.3300  Refinancing Prohibited in Certain Cases (Repealed)

 

(Source:  Repealed at 41 Ill. Reg. 11336, effective August 28, 2017)

 

Section 1075.3325  Balloon Payments (Repealed)

 

(Source:  Repealed at 41 Ill. Reg. 11336, effective August 28, 2017)

 

Section 1075.3350  Financing of Certain Points and Fees (Repealed)

 

(Source:  Repealed at 41 Ill. Reg. 11336, effective August 28, 2017)

 

Section 1075.3400  Payments to Contractors (Repealed)

 

(Source:  Repealed at 41 Ill. Reg. 11336, effective August 28, 2017)

 

Section 1075.3450  Negative Amortization (Repealed)

 

(Source:  Repealed at 41 Ill. Reg. 11336, effective August 28, 2017)

 

Section 1075.3500  Negative Equity (Repealed)

 

(Source:  Repealed at 41 Ill. Reg. 11336, effective August 28, 2017)

 

Section 1075.3550  Counseling Prior to Perfecting Foreclosure Proceedings (Repealed)

 

(Source:  Repealed at 41 Ill. Reg. 11336, effective August 28, 2017)

 

Section 1075.3600  Mortgage Awareness Program (Repealed)

 

(Source:  Repealed at 41 Ill. Reg. 11336, effective August 28, 2017)

 

Section 1075.3650  Report of Default and Foreclosure Rates on Conventional Loans (Repealed)

 

(Source:  Repealed at 41 Ill. Reg. 11336, effective August 28, 2017)

 

Section 1075.3700  The Director's Authority – Unusually High Rate on Conventional Loans (Repealed)

 

(Source:  Repealed at 41 Ill. Reg. 11336, effective August 28, 2017)

 

Section 1075.3750  Third Party Review of High Risk Home Loans (Repealed)

 

(Source:  Repealed at 41 Ill. Reg. 11336, effective August 28, 2017)

SUBPART Q: DISCLOSURE OF CONFIDENTIAL SUPERVISORY INFORMATION

 

Section 1075.4010   Definitions

 

For purposes of this Subpart:

 

"Act" means the Savings Bank Act [205 ILCS 205].

 

"Director " means the Director of Banks and Real Estate, or a person authorized by the Director to act in the Director's stead.

 

"Compelling need" means that no other non-confidential source is available to obtain information of equal relevance.

 

"Complete request" means a request that provides all of the information required in Section 1075.4030 of this Subpart.

 

"Confidential supervisory information" shall have the same meaning ascribed to that term in Section 9012 of the Act [205 ILCS 205/9012].

 

"Person" shall have the same meaning ascribed to that term in Section 1007.90 of the Act [205 ILCS 205/1007.90].

 

"Relevant" means the requested confidential supervisory information could substantially contribute to the resolution of the issues identified in the pleadings contained within the request.

 

"Requester" means any person who makes a request for the discovery or disclosure of confidential supervisory information, whether by subpoena, order, or other judicial or administrative process.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.4020   Purpose and Scope

 

a)         Purpose. The purpose of this Subpart is to establish the procedures and standards by which the Director shall determine whether to disclose confidential supervisory information in response to a request for discovery or disclosure of this information.

 

b)         Scope. This Subpart applies to requests, whether by subpoena, order, or other judicial or administrative process, for discovery or disclosure of confidential supervisory information prepared or obtained by the Director under the Act and any report of examination, visitation or investigation prepared by the state regulatory authority of another state that examines a branch of an Illinois savings bank in that state. This Subpart does not apply to:

 

1)         a request made pursuant to the Freedom of Information Act [5 ILCS 140] (FOIA), provided that, if the information requested constitutes confidential supervisory information, it shall nonetheless be exempt from disclosure pursuant to Section 7(l)(x) of FOIA;

 

2)         a request made by a party to whom the Director may furnish confidential supervisory information as permitted in Section 9012 of the Act [205 ILCS 205/9012]; or

 

3)         a request made by a party to whom a savings bank or other financial institution may furnish confidential supervisory information as permitted in Section 9012(b) of the Act [205 ILCS 205/9012].

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.4030   Requests for Confidential Supervisory Information

 

Pursuant to Section 9012 of the Act [205 ILCS 205/9012], a request for confidential supervisory information arising from an adversarial matter, whether by subpoena, order, or other judicial or administrative process, shall be made to the Director. If the request is for a record, the requester must adequately describe the records sought by type and date. The request shall be accompanied by:

 

a)         a copy of the formal complaint or pleading setting forth the assertions of the adversarial matter;

 

b)         the caption and docket number assigned to the adversarial proceeding;

 

c)         the name, address, and telephone number of designated legal counsel to each party named in the adversarial proceeding;

 

d)         a statement detailing the relevance of the requested confidential supervisory information;

 

e)         a statement detailing a compelling need for the requested confidential supervisory information;

 

f)         a statement describing any prior judicial decisions or pending motions in the case that may bear on the asserted relevance of the requested information; and



g)         a statement detailing why the requester believes that the compelling need outweighs the public interest considerations in maintaining confidentiality and why the compelling need outweighs the burden on the Division of Banks and Real Estate to produce the requested confidential supervisory information.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.4040  Where to Submit a Request

 

A person requesting discovery or disclosure of confidential supervisory information under this Subpart shall mail, or hand deliver, the request to:

 

Division of Banks and Real Estate

Department of Financial and Professional Regulation

Bureau of Residential Finance/Thrift Division

310 South Michigan Avenue, Suite 2130

Chicago, Illinois 60604-4278

Attention:  Thrift Legal Counsel

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.4050  Consideration of Requests



a)         Standards for the Disclosure of Confidential Supervisory Information. When making a determination with respect to the disclosure of confidential supervisory information, the Director shall consider the following standards:

 

1)         the confidential supervisory information identified in the request is relevant;

 

2)         a compelling need exists;

 

3)         if the requested confidential supervisory information is to be used in connection with an adversarial matter, the lawsuit or administrative action has been filed; and

 

4)         the production and disclosure of the confidential supervisory information is not unduly burdensome to the Division of Banks and Real Estate.

 

b)         Director Inquiries. In determining whether to disclose the requested confidential supervisory information, the Director may inquire into the circumstances of any case underlying the request and rely on sources of information other than the requester, including other parties.

 

c)         Time Required by the Director to Respond. The Director, within 15 days, shall determine whether to disclose the requested confidential supervisory information. The 15-day time period shall not commence until the Director receives a complete request. If the request is not complete, the Director shall notify the requester of the required information that has not previously been provided.

 

d)         Notice to Other Parties. Following receipt of a complete request for confidential supervisory information, the Director may notify the savings bank or Illinois savings bank holding company office that is the subject of the requested information, unless the Director determines that to do so would advantage or prejudice any of the parties in the matter at issue.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.4060   Disclosure of Confidential Supervisory Information

 

a)         Conditions and Limitations. The Director may impose any conditions and limitations on the disclosure of confidential supervisory information that are necessary to protect the confidentiality of this information. Except as authorized by the Director, no person obtaining access to confidential supervisory information under this Subpart may make a copy of the confidential supervisory information.

 

b)         Restrictions on Dissemination of Confidential Supervisory Information. The Director may condition a decision to disclose confidential supervisory information on entry of a protective order by the court or administrative tribunal presiding in the particular case or on a written agreement of confidentiality. In a case in which a protective order or agreement has already been entered between parties other than the Director, the Director may nevertheless condition approval for release of confidential supervisory information upon the inclusion of additional or amended provisions in the protective order. The Director may authorize a party who obtained the records for use in one case to provide them to another party in another case, subject to any conditions that the Director may impose on either or both parties.

 

c)         Notification of Parties and Procedures for Sharing and Using Confidential Supervisory Information in Litigation. The requester shall promptly notify other parties to a case of the release of confidential supervisory information obtained pursuant to this Subpart and, upon entry of a protective order, shall provide copies of confidential supervisory information to the other parties.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.4070  Retrieval and Destruction of Previously Disclosed Confidential Supervisory Information Used in Litigation

 

At the conclusion of an action:

 

a)         the requester shall retrieve the disclosed confidential supervisory information from the judicial or administrative file as soon as the presiding judicial or administrative authority no longer requires the information;

 

b)         the requester, and each party who may have subsequently received confidential supervisory information pursuant to a protective order, shall destroy the disclosed confidential supervisory information covered by the protective order; and

 

c)         each party shall certify to the Director that the disclosed confidential supervisory information covered by the protective order has been destroyed.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.4080   Fees for Services

 

a)         The Director may charge the following fees for any record search or copying performed by the Director:

 

1)         Reproduction costs incurred in making photocopies of documents shall be reimbursed at $.25 per exposure.

 

2)         All other costs, including, but not limited to, the cost of telephone calls, telegrams, and shipping incurred in searching for and transporting data pursuant to a request for confidential supervisory information shall be reimbursed at actual costs.

 

b)        The Director may require a requester to remit payment prior to providing the requested confidential supervisory information.

 

(Source:  Amended at 30 Ill. Reg. 19068, effective December 1, 2006)

SUBPART R: PAYDAY LOANS

 

Section 1075.5000  Purpose and Scope

 

This Subpart applies to savings banks chartered under the Savings Bank Act [205 ILCS 205/1001].

 

(Source:  Added at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.5010  Definitions

 

"Payday Loan" or "loan" means a loan with a finance charge exceeding an annual percentage rate of 36% and with a term that does not exceed 120 days, including any transaction conducted via any medium whatsoever, including, but not limited to, paper, facsimile, Internet, or telephone, in which:

 

A lender accepts one or more checks dated on the date written and agrees to hold them for a period of days before deposit or presentment, or accepts one or more checks dated subsequent to the date written and agrees to hold them for deposit; or

 

A lender accepts one or more authorizations to debit a consumer's account; or

 

A lender accepts an interest in a consumer's wages, including, but not limited to, a wage assignment.

 

"PLRA" means the Payday Loan Reform Act [815 ILCS 122].  Savings Banks are expressly exempt from the provisions of the PLRA.

 

"Savings Bank" means a savings bank chartered under the Savings Bank Act [205 ILCS 205/1001].

 

(Source:  Added at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.5020  Applicability of Subpart

 

This Subpart shall apply only to payday loans made by a savings bank.  Products and services offered by a savings bank that are not offered by lenders governed by the PLRA shall not be subject to this Subpart.

 

(Source:  Added at 30 Ill. Reg. 19068, effective December 1, 2006)

 

Section 1075.5030  Issuance of Payday Loans by Savings Banks

 

a)         A savings bank making a payday loan shall satisfactorily address all safety and soundness considerations identified by the Division of Banking in its examination and supervision of the savings bank.  Safety and soundness considerations include, without limitation:

 

1)         Risk-management practices for payday loan activities, particularly with regard to concentrations of payday loans;

 

2)         Capital adequacy, depending on the level and volatility of risk;

 

3)         Allowance for loan losses to ensure the allowance is adequate to absorb estimated credit losses within the payday loan portfolio;

 

4)         Classification of payday loans, given the unsecured nature of the credit and weakness of repayment capacity inherent in payday loans; and

 

5)         The establishment and maintenance of extension, deferral, renewal and rewrite standards consistent with the PLRA.

 

b)         In the event the Division of Banking determines the savings bank's management of safety and soundness risks relating to its payday loan portfolio is deficient, the Division of Banking may initiate corrective enforcement action, as authorized under the Savings Bank Act.

 

(Source:  Added at 30 Ill. Reg. 19068, effective December 1, 2006)





 

Section 1075.APPENDIX A  Estimated Monthly Income and Expenses Worksheet

 

ESTIMATED MONTHLY INCOME:
1.	Paycheck (Net/"Take Home")		$
2.	Interest/Dividends
3.	Social Security/Pension
4.	Alimony/Child Support
5.	Other
6.		Total Estimated Monthly Income				$
		(Add Lines 1 through 5)
ESTIMATED MONTHLY EXPENSES:
7.	Mortgages/Rent		$
8.	Homeowner's/Renter's Insurance
9.	Real Estate Taxes
10.	Water & Sewer
11.	House Repairs
12.	Groceries
13.	Telephone
14.	Gas (House)
15.	Electric
16.	Credit Cards
17.	Car Payments
18.	Car Insurance
19.	Licenses (Car)
20.	Gas (Car)
21.	Car Repairs/Maintenance
22.	Clothing
23.	Medical/Dental
24.	Medical Insurance
25.	Prescriptions
26.	Loan Payments
		(Not included in Line 2 or 17)
27.	Tuition
28.	Contribution
29.	Cellular Telephone
30.	Pager
31.	Recreation/Vacation
32.	Other Insurance (Life, etc.)
33.	Income Taxes
34.	Alimony/Child Support
35.	Transportation

 

36.	Miscellaneous
37.	Other
38.		Total Estimated Monthly Expenses			$
		(Add Lines 7 through 37)
39.		*Excess/Deficit			$
		(Subtract Line 38 from Line 6)
*If Line 38 is greater than Line 6, your estimated monthly expenses exceed your estimated monthly income.

 

(Source:  Added at 25 Ill. Reg. 6197, effective May 17, 2001)




Section 1075.APPENDIX B   Mortgage Ratio Worksheet

 

Part I

 

LOAN-TO-VALUE-RATIO

 

1.	Mortgage Amounts	$
2.	Appraised Value	$
3.	Line 1 divided by Line 2

 

Note:   This is the Percentage of the purchase price appraised value of your home that will be allocated to your total mortgage.  A percentage rate over 80% may result in you incurring additional costs.

 

 

 

Borrower's Signature

 




 

Part II

 

INCOME RATIO

 

MONTHLY HOUSING EXPENSES:

 

1.	Principal and Interest Payment	$
2.	Homeowner's Insurance
3.	Real Estate Tax
4.	Mortgage Insurance Premium
5.	Homeowner's Assoc. Fee
6.	Ground Rents
7.	Payments on Existing or Proposed
	2nd Mortgage
8.	Total Housing Expense
	(Add Lines 1 through 7)			$

 

MONTHLY GROSS INCOME:

 

9.	Gross Salary	$
10.	Dividends/Interest
11.	Social Security/Pension
12.	Alimony/Child Support
13.	Other
14.	Total Gross Income			$
15.	Divide Line 8 by Line 14

 

Note:   This is the percentage of your gross monthly income that will be allocated to your mortgage expenses.

 




 

Part III

 

LONG-TERM DEBT RATIO

 

MONTHLY EPXNESES:

 

1.	Total Housing Expense (Part II, Line 8)	$
2.	Credit Cards
3.	Car Payments
4.	Loans
	(Not Included on Line 1 or Line 3)
5.	Alimony/Child Support
6.	Total Expenses			$
	(Lines 1 through 5)

 

MONTHLY INCOME:

 

7.	Total Gross Income
	(Part II, Line 14)			$
8.	Divided Line 6 by Line 7

 

Note:   This is the percentage of your gross monthly income that will be allocated to your mortgage expenses and other debt that you pay on a monthly basis.

 

 

 

Borrower's Signature

 

(Source:  Added at 25 Ill. Reg. 6197, effective May 17, 2001)