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90_HB1656
205 ILCS 205/3004 from Ch. 17, par. 7303-4
205 ILCS 205/4008 from Ch. 17, par. 7304-8
205 ILCS 205/4010 from Ch. 17, par. 7304-10
205 ILCS 205/6002 from Ch. 17, par. 7306-2
205 ILCS 205/6003 from Ch. 17, par. 7306-3
Amends the Savings Bank Act. Provides that a savings
bank may establish a maximum age for directors. Requires
that only a majority (now two-thirds) of the directors be
residents of Illinois. Allows directors to consider the
effects actions will have on customers, suppliers, and
communities when considering mergers and other transactions.
Removes limits on certain business, commercial, or
agricultural loans and other investments. Effective
immediately.
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1 AN ACT to amend the Savings Bank Act by changing Sections
2 3004, 4008, 4010, 6002, and 6003.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Savings Bank Act is amended by changing
6 Sections 3004, 4008, 4010, 6002, and 6003 as follows:
7 (205 ILCS 205/3004) (from Ch. 17, par. 7303-4)
8 Sec. 3004. Contents of bylaws.
9 (a) The bylaws of the savings bank shall provide for the
10 following matters consistent with any applicable provisions
11 of this Act:
12 (1) The number of directors and the minimum
13 frequency of directors' meetings, which shall be at least
14 monthly.
15 (2) The titles and duties of the officers.
16 (3) The officers authorized, or who may be
17 authorized, by the directors to execute instruments.
18 (4) A description of the corporate seal.
19 (5) The fiscal year of the savings bank.
20 (6) The location of the business office.
21 (7) The date of the annual meeting of the members,
22 which may be not more than 120 days after the close of
23 the savings bank's fiscal year.
24 (b) The bylaws may provide also for any or all of the
25 following matters, among others, consistent with any
26 applicable provisions of this Act:
27 (1) The method of calling special meetings of the
28 members, requirements for giving notice of meetings of
29 members in addition to the notice prescribed by this Act,
30 methods of nominating directors and other voting and
31 election procedures.
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1 (2) The method of determining the record date for
2 voting, dividend, and other purposes.
3 (3) The procedure for the transfer of ownership of
4 capital and for the enforcement of charges and liens.
5 (4) The plan or plans under which deposit accounts
6 are to be issued; the classes into which they may be
7 divided; and the characteristics of each class as to time
8 of issuance, times and amounts of payments to be made,
9 classification for payment of interest, and other terms
10 as are permitted by this Act.
11 (5) The method by which the directors may enforce
12 retirement of unpledged deposit accounts.
13 (6) The frequency with which profits of the savings
14 bank shall be apportioned and the methods of
15 apportionment.
16 (7) Provision for establishment of executive, loan,
17 investment, and appraisal committees, other special or
18 standing committees as may be desirable, and for an
19 overall business plan for the savings bank.
20 (8) The maximum age beyond which no person shall be
21 eligible for election or appointment to the board of
22 directors, subject to applicable law.
23 (c) The Commissioner may publish one or more standard
24 forms of bylaws conforming to the provisions of this Act
25 which may be adopted by savings banks.
26 (Source: P.A. 89-320, eff. 1-1-96.)
27 (205 ILCS 205/4008) (from Ch. 17, par. 7304-8)
28 Sec. 4008. Directors.
29 (a) The business and affairs of the savings bank shall
30 be exercised by its elected board of directors. The board of
31 directors shall consist of the number of directors fixed by
32 the bylaws, but shall not be fewer than 5. No more than 40%
33 of the directors shall be salaried employees of the savings
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1 bank. At least a majority two-thirds of the directors shall
2 be residents of this State.
3 (b) A vacancy in the board of directors shall be filled
4 for the balance of the term by a majority of the board of
5 directors at a regular meeting.
6 (Source: P.A. 86-1213.)
7 (205 ILCS 205/4010) (from Ch. 17, par. 7304-10)
8 Sec. 4010. Conduct of directors and officers.
9 (a) Directors and officers occupy a fiduciary
10 relationship to the savings bank of which they are directors
11 or officers, and a director or officer shall not engage or
12 participate, directly or indirectly, in any business or
13 transaction conducted on behalf of or involving the savings
14 bank that would result in a conflict of their own personal
15 interests with those of the savings bank which they serve,
16 unless: (i) the business or transactions are conducted in
17 good faith and are honest, fair, and reasonable to the
18 savings bank; (ii) a full disclosure of the business or
19 transaction and the nature of the director's or officer's
20 interest is made to the board of directors; and (iii) the
21 business or transaction is approved in good faith by the
22 board of directors with any interested director abstaining.
23 The approval of the business or transaction shall be recorded
24 in the minutes. Any profits inuring to the officer or
25 director shall not be at the expense of the savings bank.
26 The business or transaction shall not represent a breach of
27 the officer's or director's fiduciary duty and shall not be
28 fraudulent or illegal. Notwithstanding any other provisions
29 of this Section, the Commissioner may require the disclosure
30 by directors, officers, and employees of their personal
31 interest, directly or indirectly, in any business or
32 transaction on behalf of or involving the savings bank and of
33 their control of or active participation in enterprises
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1 having activities related to the business of the savings
2 bank. The following restrictions governing the conduct of
3 directors and officers expressly are specified, but that
4 specification does not excuse those persons from the
5 observance of any other aspect of the general fiduciary duty
6 owed by them to the savings bank which they serve:
7 (1) An officer or director of a mutual savings bank
8 shall not hold office or status as a director or officer
9 of another mutual savings bank subject to this Act.
10 (2) A director shall receive as remuneration only
11 reasonable fees for services as a director or for service
12 as a member of a committee of directors. A director who
13 is also an officer or employee of the savings bank may
14 receive compensation for service as an officer or
15 employee.
16 (3) A director or officer shall not have any
17 interest, direct or indirect, in the purchase at less
18 than its face value of any evidence of a savings account,
19 deposit, or other indebtedness issued by the savings
20 bank.
21 (4) A savings bank or director or officer thereof
22 shall not directly or indirectly require, as a condition
23 to the granting of any loan or the extension of any other
24 service by the savings bank or its affiliates that the
25 borrower or any other person undertake a contract of
26 insurance or any other agreement or understanding with
27 respect to the direct or indirect furnishing of any other
28 goods or services with any specific company, agency, or
29 individual.
30 (5) An officer or director acting as proxy for a
31 member of a mutual savings bank shall not exercise,
32 transfer, or delegate that right in any consideration of
33 a private benefit or advantage, direct or indirect,
34 accruing to himself nor surrender control or pass his
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1 office to any other for any consideration of a private
2 benefit or advantage, direct or indirect. The voting
3 rights of members shall not be the subject of sale or
4 similar transaction, either directly or indirectly. Any
5 officer or director who violates the provisions of this
6 subsection shall be held accountable to the savings bank
7 for any increment.
8 (6) A director or officer shall not solicit,
9 accept, or agree to accept, directly or indirectly, from
10 any person other than the savings bank any gratuity,
11 compensation, or other personal benefit for any action
12 taken by the savings bank or for endeavoring to procure
13 any action by the savings bank.
14 (7) Subject to the approval of the Commissioner, a
15 savings bank's bylaws may provide for reasonable
16 indemnification to its officers, directors, and employees
17 in connection with the faithful performance of their
18 duties for the savings bank. The Commissioner may
19 promulgate model indemnification provisions and may
20 consider provisions available under the Business
21 Corporation Act of 1983, the Illinois Banking Act, and
22 those available to national banks.
23 (b) The bylaws of a savings bank may contain a provision
24 providing that a director is not personally liable to the
25 savings bank or its shareholders for monetary damages for a
26 breach of the director's fiduciary duty; provided, however,
27 that such provision may not eliminate or limit the liability
28 of a director for any of the following:
29 (1) An act or omission that is grossly negligent.
30 (2) A breach of the director's duty of loyalty to
31 the savings bank or its shareholders.
32 (3) Acts or omissions not in good faith or that
33 involve intentional misconduct or a knowing violation of
34 law.
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1 (4) A transaction from which the director derived
2 an improper personal benefit.
3 (5) An act or omission occurring before the
4 effective date of the provision in the bylaws authorized
5 by this subsection.
6 (c) In discharging the duties of their respective
7 positions, the board of directors, committees of the board,
8 and individual directors may, in considering the best long
9 term and short term interests of the savings bank, consider
10 the effects of any action (including, without limitation,
11 action that may involve or relate to a merger or potential
12 merger of the savings bank, to a change or potential change
13 in control of the savings bank, or to a change or potential
14 change in form of ownership of the savings bank) upon
15 employees, depositors, suppliers, and customers of the
16 savings bank or its subsidiaries, communities in which the
17 main savings bank premises, branches, offices, or other
18 establishments of the savings bank or its subsidiaries are
19 located, and all pertinent factors. Nothing in this
20 subsection (c) affects the right of any member as granted by
21 this Act or rules promulgated under this Act.
22 (Source: P.A. 89-320, eff. 1-1-96.)
23 (205 ILCS 205/6002) (from Ch. 17, par. 7306-2)
24 Sec. 6002. Investment in loans. Subject to the
25 regulations of the Commissioner, a savings bank may loan
26 funds as follows:
27 (1) On the security of deposit accounts, but no
28 such loan shall exceed the withdrawal value of the
29 pledged account.
30 (2) On the security of real estate:
31 (A) of a value, determined in accordance with
32 this Act, sufficient to provide good and ample
33 security for the loan;
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1 (B) with a fee simple title or a leasehold
2 title of not less duration than 10 years beyond the
3 maturity of the loan;
4 (C) with the title established by evidence of
5 title as is consistent with sound lending practices
6 in the locality;
7 (D) with the security interest in the real
8 estate evidenced by an appropriate written
9 instrument and the loan evidenced by a note, bond,
10 or similar written instrument; a loan on the
11 security of the whole of the beneficial interest in
12 a land trust satisfies the requirements of this
13 paragraph if the title to the land is held by a
14 corporate trustee and if the real estate held in the
15 land trust meets the other requirements of this
16 subsection;
17 (E) with a mortgage loan not to exceed 40
18 years.
19 (3) For the purpose of repair, improvement,
20 rehabilitation, furnishing, or equipment of real estate.
21 (4) For the purpose of financing or refinancing an
22 existing ownership interest in certificates of stock,
23 certificates of beneficial interest, other evidence of an
24 ownership interest in, or a proprietary lease from a
25 corporation, trust, or partnership formed for the purpose
26 of the cooperative ownership of real estate, secured by
27 the assignment or transfer of certificates or other
28 evidence of ownership of the borrower.
29 (5) Through the purchase of loans that, at the time
30 of purchase, the savings bank could make in accordance
31 with this Section and the bylaws.
32 (6) Through the purchase of installment contracts
33 for the sale of real estate and title thereto that is
34 subject to the contracts, but in each instance only if
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1 the savings bank, at the time of purchase, could make a
2 mortgage loan of the same amount and for the same length
3 of time on the security of the real estate.
4 (7) Through loans guaranteed or insured, wholly or
5 in part, by the United States or any of its
6 instrumentalities.
7 (8) Subject to regulations adopted by the
8 Commissioner, through secured or unsecured loans for
9 business, corporate, commercial, or agricultural
10 purposes; provided that the total of all loans granted
11 under this paragraph shall not exceed 15% of the savings
12 bank's total assets unless a greater amount is authorized
13 in writing by the Commissioner.
14 (9) For the purpose of mobile home financing
15 subject, however, to the regulation of the Commissioner.
16 (10) Through loans secured by the cash surrender
17 value of any life insurance policy or any collateral that
18 would be a legal investment under the terms of this Act
19 if made by the savings bank.
20 (11) Any provision of this Act, except for
21 paragraph (18) of Section 6003, to the contrary
22 notwithstanding and subject to the Commissioner's
23 regulations, any savings bank may make any loan or
24 investment or engage in any activity that it could make
25 or engage in if it were organized under State law as a
26 savings and loan association or under federal law as a
27 federal savings and loan association or federal savings
28 bank.
29 (12) A savings bank may issue letters of credit or
30 other similar arrangements only as provided for by
31 regulation of the Commissioner with regard to aggregate
32 amounts permitted, take out commitments for stand-by
33 letters of credit, underlying documentation and
34 underwriting, legal limitations on loans of the savings
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1 bank, control and subsidiary records, and other
2 procedures deemed necessary by the Commissioner.
3 (13) For the purpose of automobile financing,
4 subject to the regulation of the Commissioner.
5 (14) For the purpose of financing primary,
6 secondary, undergraduate, or postgraduate education.
7 (15) Through revolving lines of credit on the
8 security of a first or junior lien on the borrower's
9 personal residence, based primarily on the borrower's
10 equity, the proceeds of which may be used for any
11 purpose; those loans being commonly referred to as home
12 equity loans.
13 (16) As secured or unsecured credit to cover the
14 payment of checks, drafts, or other funds transfer orders
15 in excess of the available balance of an account on which
16 they are drawn, subject to the regulations of the
17 Commissioner.
18 (Source: P.A. 87-498; 88-112.)
19 (205 ILCS 205/6003) (from Ch. 17, par. 7306-3)
20 Sec. 6003. Other investments. If the board of directors
21 determines at any time that funds are available in excess of
22 the demands and needs for loans, maturities, and withdrawals,
23 a savings bank may invest funds as provided in this Section:
24 (1) In demand, time, or savings deposits or
25 accounts, withdrawable accounts, or other insured
26 obligations of any financial institution the accounts of
27 which are insured by a federal agency.
28 (2) In participating interests in loans of a type
29 that the savings bank would be authorized to make, but
30 only if the other participants are (A) savings banks
31 organized under this Act, (B) savings and loan
32 associations, banks, credit unions, and licensees under
33 the Consumer Installment Loan Act or the Sales Finance
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1 Agency Act, organized under the laws of this State, (C)
2 associations or corporations insured by an
3 instrumentality of the United States, (D)
4 instrumentalities of or corporations owned wholly or in
5 part by the United States or this State, or, (E) subject
6 to regulations of the Commissioner, service corporations
7 of a savings bank organized under this Act or
8 subsidiaries of a savings and loan association, bank, or
9 credit union organized under the laws of this State or
10 the United States.
11 (3) In obligations of, or obligations that are
12 fully guaranteed by the United States and in stocks or
13 obligations of any Federal Reserve Bank, Federal Home
14 Loan Bank, the Student Loan Market Association, the
15 Government National Mortgage Association, the Federal
16 National Mortgage Association, The Federal Home Loan
17 Mortgage Corporation, the Federal Deposit Insurance
18 Corporation, or any other agency of the United States.
19 (4) In bonds or other direct obligations of, or
20 guaranteed as to principal and interest by, this State.
21 (5) In obligations that by the laws of this State
22 are made legal investments for savings banks.
23 (6) In bonds or other evidences of indebtedness
24 that are direct general obligations of any unit of local
25 government of this State or in bonds or other evidences
26 of indebtedness that are payable from revenues or
27 earnings specifically pledged therefor of a unit of local
28 government, but in no event shall the total amount of the
29 securities of any one maker or obligor exceed 15% of the
30 savings bank's total capital, nor shall the aggregate
31 amount of investments under this paragraph exceed 15% of
32 the savings bank's total assets.
33 (7) Equity investments in real estate. With the
34 prior written consent of the Commissioner, a savings bank
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1 may invest in the initial purchase and development, or
2 the purchase or commitment to purchase after completion,
3 of home sites and housing for sale or rental, including,
4 but not limited to, projects for the reconstruction,
5 rehabilitation, or rebuilding of residential properties
6 to meet the minimum standards of health and occupancy
7 prescribed by appropriate local authorities, the
8 provision of accommodations for retail stores, shops, and
9 other community services that are reasonably incident to
10 that housing or in the shares of a corporation that owns
11 one or more of those projects and that is wholly owned by
12 one or more financial institutions whose investments are
13 regulated by the laws of this State or of the United
14 States. In no event shall the total investment in any
15 one project exceed 15% of the savings bank's total
16 capital, nor shall the aggregate investment under this
17 paragraph exceed 50% of its total capital. No savings
18 bank may make an investment of this type unless it is in
19 compliance with the capital requirements of this Act and
20 with the capital maintenance requirements of its insurer
21 of deposit accounts. The Commissioner shall approve the
22 investment only if the savings bank shows:
23 (A) that the savings bank has adequate assets
24 available for the investment;
25 (B) that the proposed investment does not
26 exceed the reasonable market value of the property
27 or interest therein as determined in accordance with
28 the appraisal requirements of this Act; and
29 (C) that all other requirements of this
30 Section have been met.
31 Nothing contained in this paragraph prohibits a
32 savings bank from developing or building on land acquired
33 by it under any other provision of this Act nor from
34 completing the construction of buildings in accordance
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1 with any construction loan contract where the borrower
2 has failed to comply with the terms of the contract.
3 (8) In obligations of the State of Israel or
4 obligations fully guaranteed by the State of Israel as to
5 payment of principal and interest, but in no event shall
6 the total amount of that investment exceed 15% of the
7 savings bank's total capital.
8 (9) In stocks or obligations of business
9 development corporations chartered by this State or by
10 the United States or an agency thereof, but in no event
11 shall the aggregate amount of stock exceed 2.5% of the
12 savings bank's total capital or $250,000, whichever is
13 greater.
14 (10) In obligations of urban renewal investment
15 corporations chartered under the laws of this State, or
16 the United States, or in certificates of beneficial
17 interest of urban renewal investment trusts, but in no
18 event shall the aggregate amount of the stock,
19 obligations or beneficial interest certificates of any
20 one maker exceed 2.5% of the savings bank's total
21 capital, nor shall the aggregate amount of investments
22 under this paragraph exceed 15% of its total capital.
23 (11) Subject to the regulations of the
24 Commissioner, in loans deemed sufficiently secured by the
25 board of directors of the savings bank. However, if the
26 security is stock or equity securities of any kind other
27 than those of a financial institution, the stock or
28 securities must be listed on a national exchange or
29 actively traded and quoted on an over-the-counter market
30 or their value must be ascertainable in accordance with
31 regulations promulgated by the Commissioner.
32 (12) In commercial paper. As used in this Section,
33 the term "commercial paper" means short term obligations
34 having a maturity ranging from 2 to 270 days issued by
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1 banks, corporations, or other borrowers. Investments in
2 commercial paper under this Section must be in securities
3 rated in one of the 4 highest categories by a nationally
4 recognized rating service.
5 (13) Purchase of stock in insurance companies.
6 Notwithstanding any provision of this Act to the
7 contrary, a savings bank may purchase shares of, or
8 otherwise acquire equity interests in, insurance
9 companies and insurance holding companies organized to
10 provide insurance for savings institutions and
11 corporations and individuals affiliated with savings
12 institutions, provided ownership of equity interests is a
13 prerequisite to obtaining directors and officers' and
14 blanket bond insurance through the company or companies.
15 The Commissioner may promulgate regulations concerning
16 the size of each savings bank's investment and manner of
17 holding those investments.
18 (14) Subject to the regulation of the Commissioner,
19 in equity or debt securities or instruments of a service
20 corporation subsidiary of the savings bank.
21 (15) Through advances of federal funds to
22 designated depositories, provided that the advances are
23 made on the condition that they be repaid on the next
24 business day following the date on which the advance is
25 made. For the purposes of this paragraph, the term
26 "federal funds" means funds that a savings bank has on
27 deposit at a depository that are exchangeable for funds
28 on deposit at a federal reserve bank; the term "business
29 day" means any day on which the savings bank, the
30 depository, and the federal reserve bank where the funds
31 are on deposit are all open for general business.
32 (16) In financial futures or options transactions
33 subject to the regulations of the Commissioner.
34 (17) In a subsidiary chartered for the purpose of
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1 exercising all powers necessary to act as a corporate
2 fiduciary under the Corporate Fiduciary Act.
3 (18) In marketable investment securities, but in no
4 event shall the total amount of those securities of any
5 one maker or obligor exceed 15% of the savings bank's
6 total capital nor shall the aggregate amount of
7 investments under this Section exceed 15% of total
8 assets. As used in this Section, the term "marketable
9 investment securities" does not include stocks, but means
10 investment grade marketable obligations evidencing
11 indebtedness of any person in the form of bonds, notes,
12 or debentures commonly known as investment securities,
13 and of a type customarily sold on recognized exchanges or
14 traded over the counter and investment grade marketable
15 obligations of the International Bank for Reconstruction
16 and Development, the Inter-American Development Bank, the
17 Asian Development Bank, the African Development Bank, or
18 the International Finance Corporation. As used in this
19 Section, the term "investment grade" means being rated in
20 one of the 4 highest categories by at least one
21 nationally recognized rating service.
22 (Source: P.A. 88-481; 89-317, eff. 8-11-95.)
23 Section 99. Effective date. This Act takes effect upon
24 becoming law.