DFI-SB 17.08
DFI-SB 17.08 Funds awaiting investment or distribution. DFI-SB 17.08(1)(1)
General. Funds held in a fiduciary capacity by a savings bank awaiting investment or distribution may not be held uninvested or undistributed any longer than is reasonable for the proper management of the account.
DFI-SB 17.08(2)
(2) Use by association in regular business. Funds held in trust by a savings bank, including managed agency accounts, awaiting investment or distribution may, unless prohibited by the instrument creating the trust or by local law, be deposited in other departments of the savings bank, except the savings bank shall first set aside under control of the trust department as collateral security:
DFI-SB 17.08(2)(a)
(a) Direct obligations of the United States, or other obligations fully guaranteed by the United States as to principal and interest;
DFI-SB 17.08(2)(b)
(b) Readily marketable securities of the classes in which state chartered corporate fiduciaries may invest trust funds; or
DFI-SB 17.08(3)
(3) Contingent lien. A savings bank shall ensure that in the event of its failure, the owners of the funds held in trust for investment under this chapter shall have a lien on the bonds or other securities set apart under
sub. (2) in addition to their claim against the estate of the savings bank.
DFI-SB 17.08(4)
(4) Amount of collateral. Collateral securities or securities substituted for collateral securities as collateral shall at all times be at least equal in face value to the amount of trust funds deposited under
sub. (2), but the security is not required to the extent that the funds so deposited are insured by the federal deposit insurance corporation.
DFI-SB 17.08(5)
(5) Productivity. Any funds held by a savings bank as fiduciary awaiting investment or distribution and deposited in other departments of the savings bank shall be made productive.
DFI-SB 17.08 History
History: Cr.
Register, February, 1994, No. 458, eff. 3-1-94.
DFI-SB 17.09
DFI-SB 17.09 Investment of funds held as fiduciary. DFI-SB 17.09(1)(1)
Private trusts. Funds held by a savings bank in a fiduciary capacity shall be invested in accordance with the instrument establishing the fiduciary relationship and local law. If the instrument does not specify the character or class of investments to be made and does not give the savings bank, its directors, or its officers investment discretion in the matter, funds held under the instrument may be invested in any investment in which state chartered corporate fiduciaries may invest under local law.
DFI-SB 17.09(2)
(2) Court trusts. If, under local law, corporate fiduciaries appointed by a court are permitted to exercise discretion in investments, or if a savings bank acting as fiduciary under appointment by a court is vested with discretion in investments by an order of the court, funds of the accounts may be invested in any investments which are permitted by local law. Otherwise, a savings bank acting as fiduciary under appointment by a court shall make all investments of funds in such accounts under an order of that court. The orders in either case shall be preserved with the fiduciary records of the savings bank.
DFI-SB 17.09(3)
(3) Collective investment of trust funds. The collective investment of funds received or held by a savings bank as fiduciary is governed by
ss. DFI-SB 17.13 and
17.14.
DFI-SB 17.09 History
History: Cr.
Register, February, 1994, No. 458, eff. 3-1-94.
DFI-SB 17.10(1)
(1)
Purchases. Unless authorized by the instrument creating the relationship, or by court order or local law, funds held by a savings bank as fiduciary shall not be invested in:
DFI-SB 17.10(1)(a)
(a) Stock or obligations of, or property acquired from, the savings bank or its directors, officers, or employees, or individuals with whom there exists a connection, or organizations in which there exists an interest, which may affect the exercise of the best judgment of the savings bank in acquiring the property; or
DFI-SB 17.10(1)(b)
(b) Stock or obligations of, or property acquired from, affiliates of the savings bank or their directors, officers or employees.
DFI-SB 17.10(2)
(2) Loans. No savings bank may lend any officer, director, or employee any funds held in trust under the powers conferred by this chapter.
DFI-SB 17.10(3)
(3) Sale or transfer. Property held by a savings bank as fiduciary shall not be sold or transferred, by loan or otherwise, to the savings bank or its directors, officers, or employees, or to individuals with whom there exists a connection, or organizations in which there exists such an interest, which may affect the exercise of the best judgment of the savings bank in selling or transferring the property, or to affiliates of the savings bank or their directors, officers or employees, except:
DFI-SB 17.10(3)(a)
(a) When lawfully authorized by the instrument creating the relationship or by court order or by local law;
DFI-SB 17.10(3)(b)
(b) The savings bank may, if it has been advised by its counsel in writing that it has incurred as fiduciary a contingent or potential liability and desires to relieve itself from the liability, so sell or transfer property with the approval of the board of directors and the division. The savings bank, upon the consummation of the sale or transfer, shall make reimbursement in cash at no loss to the account;
DFI-SB 17.10(3)(c)
(c) As provided in the laws and rules governing collective investments; or
DFI-SB 17.10(4)
(4) Investment in stock of savings bank. Except as provided in
s. DFI-SB 17.08, funds held by a savings bank as fiduciary shall not be invested by the purchase of stock or obligations of the savings bank or its affiliates unless authorized by the instrument creating the relationship or by court order or by local law. However, if the retention of stock or obligations of the savings bank or its affiliates is authorized by the instrument creating the relationship or by court order or by local law, it may exercise rights to purchase its own stock or securities convertible into its own stock when offered pro rata to stockholders, unless forbidden by local law. When the exercise of rights or receipt of a stock dividend results in fractional share holdings, additional fractional shares may be purchased to complement the fractional shares so acquired. In elections of directors, a savings bank's share held by the savings bank as sole trustee, whether in its own name as trustee or in the name of its nominee, may not be voted by the registered owner unless, under the terms of the trust, the manner in which the shares shall be voted may be determined by a donor or beneficiary of the trust and the donor or beneficiary actually directs how the shares will be voted.
DFI-SB 17.10(5)(a)(a) A savings bank may sell assets held by it as fiduciary in one account to itself as fiduciary in another account if the transaction is fair to both accounts and if such transaction is not prohibited by the terms of any governing instrument or by local law.
DFI-SB 17.10(5)(b)
(b) A savings bank may make a loan to an account from the funds belonging to another account, when the making of loans to a designated account is authorized by the instrument creating the account from which the loans are made, and is not prohibited by local law, and the terms of the transaction are fair to all accounts.
DFI-SB 17.10(5)(c)
(c) A savings bank may make a loan to an account and may take as security assets of the account, provided the transaction is fair to the account and is not prohibited by local law.
DFI-SB 17.10 History
History: Cr.
Register, February, 1994, No. 458, eff. 3-1-94.
DFI-SB 17.11(1)
(1)
Segregation of trust assets and joint custody. The investments of each account shall be kept separate from the assets of the savings bank, and shall be placed in the joint custody or control of not fewer than 2 of the officers or employees of the savings bank designated for that purpose either by the board of directors of the savings bank or by one or more officers designated by the board of directors of the savings bank, and all such officers and employees shall be adequately bonded. To the extent permitted by law, a savings bank may permit the investments of a fiduciary account to be deposited elsewhere.
DFI-SB 17.11(2)
(2) Segregation of accounts. The investments of each account shall be either:
DFI-SB 17.11 History
History: Cr.
Register, February, 1994, No. 458, eff. 3-1-94.
DFI-SB 17.12(1)(1)
General. If the amount of the compensation for acting in a fiduciary capacity is not regulated by local law or provided for in the instrument creating the fiduciary relationship or otherwise agreed to by the parties, a savings bank acting in such capacity may charge or deduct a reasonable compensation for its services. When the savings bank is acting in a fiduciary capacity under appointment by a court, it shall receive the compensation allowed or approved by that court or by local law.
DFI-SB 17.12(2)
(2) Officer or employee of savings bank as co-fiduciary. No savings bank may except with the specific approval of its board of directors, permit any of its officers or employees, while serving as a co-fiduciary, to retain any compensation for acting as a co-fiduciary with the savings bank in the administration of any account undertaken by it.
DFI-SB 17.12(3)
(3) Bequests or gifts to trust officers and employees. No savings bank may permit an officer or employee engaged in the operation of its trust department to accept a bequest or gift of assets held in a fiduciary capacity by the savings bank unless the bequest or gift is directed or made by a relative of the officer or employee or is approved by the board of directors of the savings bank.
DFI-SB 17.12 History
History: Cr.
Register, February, 1994, No. 458, eff. 3-1-94.
DFI-SB 17.13(1)
(1)
Definition. In this section and in
s. DFI-SB 17.14, the term “savings bank" includes 2 or more savings banks which are members of the same affiliated group with respect to any fund established under this section of which any of the affiliated savings banks is trustee, or of which 2 or more of the affiliated savings banks are co-trustees.
DFI-SB 17.13(2)
(2) Funds. When not prohibited by local law, funds held by a savings bank as fiduciary may be held in:
DFI-SB 17.13(2)(a)
(a) A common trust fund maintained by the savings bank exclusively for the collective investment and reinvestment of moneys contributed to the common trust fund by the savings bank in its capacity as trustee, executor, administrator, personal representative, guardian, or custodian under a uniform transfers to minors act;
DFI-SB 17.13(2)(b)
(b) A fund consisting solely of assets of retirement, pension, profit sharing, stock bonus or other trusts which are exempt from federal income taxation under the Internal Revenue Code.
DFI-SB 17.13(3)
(3) Administration; reports. Collective investments of funds or other property by a savings bank under
sub. (1) shall be administered in accordance with
s. DFI-SB 17.14. Any documents required to be filed with the comptroller of the currency under
12 CFR 9.18 shall also be filed with the division who may review the documents for compliance with all relevant laws and rules.
DFI-SB 17.13 History
History: Cr.
Register, February, 1994, No. 458, eff. 3-1-94.
DFI-SB 17.14
DFI-SB 17.14 Common trust funds. Investment of funds or other property under
s. DFI-SB 17.13 shall be administered as follows:
DFI-SB 17.14(1)
(1) Collective investment funds. Each collective investment fund shall be established and maintained in accordance with a written plan which shall be approved by a resolution of the savings bank's board of directors and filed with the division. A copy of the plan shall be available at the principal office of the savings bank for inspection during all business hours, and upon request a copy of the plan shall be furnished to any person. The plan shall contain appropriate provisions not inconsistent with this chapter as to the manner in which the fund is to be operated. The plan shall include provisions relating to:
DFI-SB 17.14(1)(a)
(a) The investment powers and a general statement of the investment policy of the savings bank with respect to the fund;
DFI-SB 17.14(1)(c)
(c) The terms and conditions governing the admission or withdrawal of participations in the fund;
DFI-SB 17.14(1)(d)
(d) The auditing of accounts of the savings bank with respect to the fund;
DFI-SB 17.14(1)(e)
(e) The basis and method of valuing assets in the fund, setting forth specific criteria for each type of asset;
DFI-SB 17.14(1)(g)
(g) The period following each valuation date during which the valuation may be made which period in usual circumstances shall not exceed 10 business days;
DFI-SB 17.14(1)(i)
(i) Other matters as may be necessary to define clearly the rights of participants in the fund.
DFI-SB 17.14(2)
(2) Trusts. Property held by a savings bank in its capacity as trustee of retirement, pension, profit-sharing, stock bonus or other trusts which are exempt from federal income taxation under any provisions of the Internal Revenue Code may be invested in collective investment funds established under
s. DFI-SB 17.13 (2) (a) or
(b) subject to restrictions under this section. Assets of retirement, pension, profit-sharing, stock bonus, or other trusts which are exempt from federal income taxation under section
401 of the Internal Revenue Code may be invested in collective investment funds established under
s. DFI-SB 17.13 (2) (b) if the fund qualifies for tax exemption under Revenue Ruling 56.267 and following rulings.
DFI-SB 17.14(3)
(3) Participants. All participants in a collective investment fund shall be on the basis of a proportionate interest in all of the assets. In order to determine whether the investment of funds received or held by a savings bank as fiduciary in a participation in a collective investment fund is proper, the savings bank may consider the collective investment fund as a whole and shall not, for example, be prohibited from making the investment because any particular asset is non-income producing.
DFI-SB 17.14(4)
(4) Valuation. Not less frequently than once during each period of 3 months, a savings bank administering a collective investment fund shall determine the value of the assets in the fund as of the date set for the valuation of assets. No participation may be admitted to or withdrawn from the fund except on the basis of the valuation as of the valuation date; and on written request for or notice of intention of taking that action which is entered on or before the valuation date in the fiduciary records of the savings bank and approved in the manner the board of directors prescribes. No request or notice may be canceled or countermanded after the valuation date.
DFI-SB 17.14(5)(a)(a) A savings bank administering a collective investment fund shall at least once during each period of 12 months cause an adequate audit to be made of the collective investment fund by auditors responsible only to the board of directors of the savings bank. In the event the audit is performed by independent public accountants, the reasonable expenses of the audit may be charged to the collective investment fund.
DFI-SB 17.14(5)(b)
(b) A savings bank administering a collective investment fund shall at least once during each period of 12 months prepare a financial report of the fund. This report, based upon the audit required under
par. (a), shall contain a list of investments in the fund showing the cost and current market value of each investment; a statement for the period since the previous report showing purchases, with cost; sales, with profit or loss and any other investment changes; income and disbursements; and an appropriate notation as to any investments in default.
DFI-SB 17.14(5)(c)
(c) The financial report under
par. (b) may include a description of the fund's value on previous dates, as well as its income and disbursements during previous accounting periods. No predictions or representations as to future results may be made. In addition, as to funds described in
s. DFI-SB 17.13 (2) (a) neither the report nor any other publication of the savings bank may make reference to the performance of funds other than those administered by the savings bank.
DFI-SB 17.14(5)(d)
(d) A copy of the financial report required under
par. (b) shall be furnished, or notice shall be given that a copy of the report is available and will be furnished without charge upon request, to each person to whom a regular periodic accounting would ordinarily be rendered with respect to each participating account. A copy of the financial report may be furnished to prospective customers. The cost of printing and distribution of these reports shall be borne by the savings bank. In addition, a copy of the report shall be furnished upon request to any person for a reasonable charge. The fact of the availability of the report for any fund described in
s. DFI-SB 17.13 (2) (a) may be given publicity solely in connection with the promotion of the fiduciary services of the savings bank.
DFI-SB 17.14(5m)
(5m) Distributions. When participations are withdrawn from a collective investment fund, distributions may be made in cash or ratably in kind, or partly in cash and partly in kind except that all distributions as of any one valuation date shall be made on the same basis.
DFI-SB 17.14(6)
(6) Withdrawals. If for any reason an investment is withdrawn in kind from a collective investment fund for the benefit of all participants in the fund at the time of the withdrawal and the investment is not distributed ratably in kind, it shall be segregated and administered or realized upon for the benefit ratably of all participants in the collective investment fund at the time of withdrawal.
DFI-SB 17.14(7)(a)(a) No savings bank may have any interest in a collective investment fund other than in its fiduciary capacity. Except for temporary net cash overdrafts or as otherwise specifically provided under this section, a savings bank may not lend money to a fund, sell property to, or purchase property from a fund. No assets of a collective investment fund may be invested in stock or obligations, including time or savings deposits, of the savings bank or any of its affiliates except that deposits may be made of funds awaiting investment or distribution. Subject to this chapter, funds held by a savings bank as fiduciary for its own employees may be invested in a collective investment fund. A savings bank may not make any loan on the security of a participation in a fund. If, because of a creditor relationship or otherwise, the savings bank acquires an interest in a participation in a fund, the participation shall be withdrawn on the first date on which withdrawal can be affected. However, an unsecured advance until the time of the next valuation date to an account holding a participation is not deemed to constitute the acquisition of an interest by the savings bank.
DFI-SB 17.14(7)(b)
(b) Any savings bank administering a collective investment fund may purchase for its own account from the fund any defaulted fixed income investment held by the fund, if in the judgment of the board of directors the cost of segregation of the investment would be greater than the difference between its market value and its principal amount plus interest and penalty charges due. If the savings bank elects to so purchase the investment, it shall do so at its market value or at the sum of cost, accrued unpaid interest, and penalty charges, whichever is greater.
DFI-SB 17.14(8)(a)
(a) No funds or other property may be invested in a participation in a collective investment fund if as a result of the investment the participant would have an interest aggregating in excess of 10% of the then market value of the fund except in applying this limitation if 2 or more accounts are created by the same person and as much as one-half of the income or principal of each account is payable or applicable to the use of the same person the accounts shall be considered as one.
DFI-SB 17.14(8)(b)
(b) No investment for a collective investment fund may be made in stocks, bonds, or other obligations of any one person, firm, or corporation if as a result of the investment the total amount invested in stocks, bonds or other obligations issued or guaranteed by the person, firm or corporation would aggregate in excess of 10% of the then market value of the fund except this limitation does not apply to investments in direct obligations of the United States or other obligations fully guaranteed by the United States as to principal and interest.
DFI-SB 17.14(8)(c)
(c) Any savings bank administering a collective investment fund shall maintain in cash and readily marketable investments a portion of the assets of the fund sufficient to provide adequately for the needs of participants and to prevent inequities between the participants. If, prior to any admissions to or withdrawals from a fund, the savings bank determines that after affecting the admissions and withdrawals which are to be made less than 40% of the value of the remaining assets of the collective investment fund would be composed of cash and readily marketable investments, no admissions to or withdrawals from the fund may be permitted as of the valuation date upon which the determination is made except a ratable distribution upon all participants may be made.
DFI-SB 17.14(9)
(9) Expenses. The reasonable expenses incurred in servicing mortgages held by a collective investment fund may be charged against the income account of the fund and paid to servicing agents, including the savings bank administering the fund.
DFI-SB 17.14(10)(a)(a) A savings bank may transfer up to 5% of the net income derived by a collective investment fund from mortgages held by the fund during any regular accounting period to a reserve account. No transfers shall be made which would cause the amount in the account to exceed l% of the outstanding principal amount of all mortgages held in the fund. The amount of the reserve account, if established, shall be deducted from the assets of the fund in determining the fair market value of the fund for the purposes of admissions and withdrawals.
DFI-SB 17.14(10)(b)
(b) At the end of each accounting period all interest payments which are due but unpaid with respect to mortgages in the fund shall be charged against the reserve account to the extent available and credited to income distributed to participants. If interest payments are subsequently recovered by the fund, the reserve account shall be credited with the amount recovered.
DFI-SB 17.14(11)
(11) Management. A savings bank administering a collective investment fund shall manage the fund exclusively. The savings bank may charge a fee for the management of the collective investment fund. The fractional part of the fee proportionate to the interest of each participant shall not, when added to any other compensation charged by a savings bank to a participant, exceed the total amount of compensation which would have been charged to the participant if no assets of the participant had been invested in participation in the fund. The savings bank shall absorb the costs of establishing or reorganizing a collective investment fund.
DFI-SB 17.14(12)
(12) Certificates prohibited. No savings bank administering a collective investment fund may issue any certificate or other document evidencing a direct or indirect interest in the fund in any form.
