Chapter DFI-SB 21

DFI-SB 21.11 DFI-SB 21.11 Optional provisions in plan of conversion. A plan of conversion may provide any of the following:

DFI-SB 21.11(1) (1) Direct community or public offering. The savings bank may commence the direct community offering or the public offering, or both, concurrently with or at any time during the subscription offering. The subscription offering may be commenced concurrently with or at any time after the mailing of the proxy statement to members under s. DFI-SB 21.23 (2). The subscription offering may be closed before the meeting of members held to vote on the plan of conversion, provided that the offer and sale of the capital stock shall be conditioned upon the members’ approval of the plan of conversion.

DFI-SB 21.11(2) (2) Additional subscription rights for insiders. Directors, officers and employees of the savings bank shall receive, without payment, nontransferable subscription rights to purchase shares of capital stock that are available after satisfying the subscriptions of employee benefit plans but prior to satisfying the subscriptions of eligible account holders, supplemental eligible account holders and members under this subsection and sub. (4). The percentage of the total offering subject to subscription rights under this subsection and the maximum purchase allowable to any individual officer, director or employee shall not exceed the percentages specified in the plan of conversion and approved by the division.

DFI-SB 21.11(3) (3) Limitation on subscription rights; over-subscription. Any deposit account holder receiving rights to purchase stock in the subscription offering which is available after satisfying other persons’ subscription rights shall also receive, without payment, nontransferable subscription rights to purchase shares of capital stock, to the extent that the shares are available. If an over-subscription for these additional shares occurs, the shares available shall be allocated among the subscribing eligible account holders and supplemental eligible account holders on a basis provided in the plan of conversion.

DFI-SB 21.11(4) (4) Limitation on stock purchases. Purchases in the public offering or in the direct community offering by any person together with any associate or group of persons acting in concert with the person shall be limited as specified in the plan of conversion approved by the division.

DFI-SB 21.11(5) (5) Offering circular. The savings bank may require its eligible account holders or all members to return by a reasonable date a postage-paid written communication provided by it requesting receipt of a subscription offering circular, or a preliminary or final offering circular in an offering under sub. (9), in order to receive an offering circular from the savings bank, provided that the subscription offering or the offering under sub. (1) shall not be closed until the expiration of 30 days after the mailing by the savings bank to members of the postage-paid written communication. If the subscription offering or the offering under sub. (9) is not commenced within 45 days after the meeting of members, the savings bank that has adopted this optional provision shall transmit no less than 30 days prior to the commencement of the subscription offering or the offering under sub. (1) to each member who has been furnished with proxy soliciting materials, written notice of the commencement of the offering, which shall state that the savings bank is not required to furnish an offering circular to a member unless the member returns by a reasonable date certain the postage-paid written communication provided requesting receipt of an offering circular.

DFI-SB 21.11(6) (6) Unsold shares. Any relatively insignificant residue of shares of the savings bank not sold in the subscription offering, the public offering or the direct community offering may be sold in another manner as provided in the plan.

DFI-SB 21.11(7) (7) Minimum shares purchased. Any person exercising subscription rights to purchase capital stock shall be required to purchase a minimum number of shares as established in the plan of conversion.

DFI-SB 21.11(8) (8) Units of securities; warrants. The savings bank may issue and sell, in lieu of shares of its capital stock, units of securities consisting of capital stock and long-term warrants or other equity securities, subject to approval by the division.

DFI-SB 21.11(9) (9) Public and direct community offering. 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 forms to the underwriters or selling group for the public offering or pursuant to any other procedure, subject to the applicant demonstrating to the division the feasibility of the method of exercising the rights and the conditions as provided in the plan of conversion. Conditions shall include a requirement that orders for stock in the public offering or direct community offering shall first be filled, in the order of priority set forth in subs. (2) to (4) and (6) by orders of persons exercising subscription rights.

DFI-SB 21.11(10) (10) Other provisions. The division may approve other equitable provisions including the receipt without payment by other classes of members or customers or both of nontransferable subscription rights, subordinate to the rights of eligible account holders and supplemental eligible account holders, for the purchase of stock or other provisions as may be necessary to avert imminent injury to the savings bank.

DFI-SB 21.11 Note Note: This section interprets or implements s. 214.685, Stats.

DFI-SB 21.11 History History: Cr. Register, February, 1994, No. 458, eff. 3-1-94.

DFI-SB 21.12 DFI-SB 21.12 Determination of amount of qualifying deposits. Unless otherwise provided in the plan of conversion, the amount of the qualifying deposit of an eligible account holder or a supplemental eligible account holder shall be the total of the deposit balances in the person’s deposit accounts in the savings bank as of the close of business on the eligibility record date or the supplemental eligibility record date respectively. However, the plan of conversion may provide that any savings accounts with total deposit balances of less than $500 or any lesser amount shall not constitute a qualifying deposit. In this section, “deposit account” includes a predecessor or successor account of a given deposit account which is held only in the same right and capacity and on the same terms and conditions as the given deposit account. However, the plan of conversion may provide for lesser requirements for consideration as a predecessor or successor account.

DFI-SB 21.12 Note Note: This section interprets or implements s. 214.685, Stats.

DFI-SB 21.12 History History: Cr. Register, February, 1994, No. 458, eff. 3-1-94.

DFI-SB 21.13 DFI-SB 21.13 Liquidation account.

DFI-SB 21.13(1) (1) Requirement. At the time of conversion, each savings bank shall establish a liquidation account in an amount equal to the amount of net worth of the savings bank prior to conversion. The savings bank shall use the net worth figure established no later than that set forth in its latest statement of financial condition contained in the final offering circular. The function of the liquidation account is to establish a priority on liquidation and, except as provided in s. DFI-SB 21.14 (2), the existence of the liquidation account shall not restrict the use or application of any of the accounts of the savings bank.

DFI-SB 21.13(2) (2) Purpose. The liquidation account shall be maintained for the benefit of eligible account holders and supplemental eligible account holders who maintain their deposit accounts. Each eligible account holder and supplemental eligible account holder shall, with respect to each deposit account held, have a related inchoate interest in a portion of the liquidation account balance (“subaccount”).

DFI-SB 21.13(3) (3) Distribution. In the event of a complete liquidation of the converted savings bank, each eligible account holder and supplemental eligible account holder shall be entitled to receive a liquidation distribution from the liquidation account for deposit accounts held, in the amount of the date of complete liquidation subaccount balances adjusted under subs. (4) and (5) before any liquidation distribution may be made with respect to capital at the time of the conversion in exchange for the surrender of any mutual capital certificates issued in accordance with 12 CFR 563.74 by the institution prior to conversion. A merger, consolidation, sale of bulk assets, or similar combination or transaction with another FDIC-insured institution is not considered a complete liquidation, and in this kind of transaction, the liquidation account shall be assumed by the surviving institution. Preferred stock issued in exchange for mutual capital certificates may receive distributions in a liquidation prior to distribution from the liquidation account to the holders of the mutual capital certificates that would have been entitled to priority over the residual rights of deposit account holders had the savings bank not been converted as of the date of liquidation.

DFI-SB 21.13(4) (4) Calculating individual distributions. The initial subaccount balance for a deposit 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 institution on those dates. For deposit accounts in existence on both dates, separate subaccounts shall be determined on the basis of the qualifying deposits in the accounts on the appropriate record date. The initial subaccount balances shall not be increased, and they shall be subject to downward adjustment under sub. (5).

DFI-SB 21.13(5) (5) Account and subaccount balances.

DFI-SB 21.13(5)(a) (a) Subparagraph (b) applies if the balance in any deposit account of an eligible account holder or supplemental eligible account holder at the close of business on any fiscal year’s last day subsequent to the respective record dates is less than the lesser of:

DFI-SB 21.13(5)(a)1. 1. The balance in the deposit account at the close of business on any other fiscal year’s last day subsequent to the eligibility record date or supplemental eligibility record date; or

DFI-SB 21.13(5)(a)2. 2. The amount of qualifying deposit as of the eligibility record date or the supplemental eligibility record date.

DFI-SB 21.13(5)(b) (b) 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. If a downward adjustment is made, the subaccount balance shall not be subsequently increased, notwithstanding any increase in the deposit balance of the related deposit account. The savings bank is not required to recompute the liquidation account and subaccount balances provided the savings bank maintains records sufficient to make necessary computations in the event of a complete liquidation or any other events requiring a computation of the balance of the liquidation account. The liquidation subaccount of an eligible account holder or supplemental eligible account holder shall be maintained for as long as the eligible account holder or supplemental eligible account holder maintains an account with the same social security number.

DFI-SB 21.13 Note Note: This section interprets or implements s. 214.685, Stats.

DFI-SB 21.13 History History: Cr. Register, February, 1994, No. 458, eff. 3-1-94; CR 23-039: am. (3) Register March 2024 No. 819, eff. 4-1-24.

DFI-SB 21.14 DFI-SB 21.14 Restrictions on repurchase of stock and payment of dividends. Each savings bank that converts under this chapter shall be subject to the following conditions:

DFI-SB 21.14(1) (1) Stock repurchase restrictions. No savings bank for 3 years from the date of the completion of the conversion, may repurchase any of its capital stock from any person, except that this restriction shall not apply to:

DFI-SB 21.14(1)(a) (a) A repurchase, on a proportionate basis, pursuant to an offer approved by the division and made to all shareholders of the savings bank;

DFI-SB 21.14(1)(b) (b) The repurchase of shares of a director; or

DFI-SB 21.14(1)(c) (c) A purchase in the open market by an employee benefit plan in an amount reasonable and appropriate to fund the plan.

DFI-SB 21.14(2) (2) Dividend payment restrictions. No savings bank shall declare or pay a dividend on, or repurchase any of its capital stock, if the effect would cause the regulatory capital of the savings bank under s. 214.43, Stats., to be reduced below the amount required for its liquidation account.

DFI-SB 21.14(3) (3) Preapproval of certain repurchases of stock. A savings bank subject to sub. (1) may repurchase its capital stock if the repurchases do not reduce the savings bank’s ratio of regulatory capital to assets below 6% under s. 214.43, Stats., and any of the following apply:

DFI-SB 21.14(3)(a) (a) The repurchases are part of an open-market stock repurchase program or other stock repurchase program approved by the division that does not involve greater than 5% of the savings bank’s outstanding capital stock during a 6 month period.

DFI-SB 21.14(3)(b) (b) The savings bank provides to the division, no later than 10 days prior to the commencement of a repurchase program, written notice containing a full description of the repurchase program to be undertaken and the effect of these repurchases on its regulatory capital position, and the division does not disapprove the repurchase program based upon a determination that:

DFI-SB 21.14(3)(b)1. 1. The repurchase program would adversely affect the financial condition of the savings bank; or

DFI-SB 21.14(3)(b)2. 2. The information submitted by the savings bank is insufficient upon which to base a conclusion as to whether its financial condition would be adversely affected.

DFI-SB 21.14(3)(c) (c) An open market or other stock repurchase program containing terms and conditions other than those in this subsection if approved by the division in writing.

DFI-SB 21.14 History History: Cr. Register, February, 1994, No. 458, eff. 3-1-94.

DFI-SB 21.15 DFI-SB 21.15 Manipulative and deceptive devices prohibited. In the offer, sale or purchase of securities issued incident to its conversion, no savings bank, or any director, officer, attorney, agent or employee of the savings bank may:

DFI-SB 21.15(1) (1) Defraud. Employ any device, scheme, or artifice to defraud;

DFI-SB 21.15(2) (2) Misstate facts. Obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or

DFI-SB 21.15(3) (3) Fraudulent practices. Engage in any act, transaction, practice or course of business which operates or would operate as a fraud or deceit upon a purchaser or seller.

DFI-SB 21.15 History History: Cr. Register, February, 1994, No. 458, eff. 3-1-94.

DFI-SB 21.16 DFI-SB 21.16 Acquisition of the securities of converted savings banks.

DFI-SB 21.16(1) (1) Definitions. In this section:

DFI-SB 21.16(1)(a) (a) “Acquire” includes every type of acquisition, whether effected by purchase, exchange, operation of law or otherwise.

DFI-SB 21.16(1)(b) (b) “Offer” does not include:

DFI-SB 21.16(1)(b)1. 1. Inquiries directed solely to the officers of a savings bank, and not intended to be communicated to stockholders, designed to elicit an indication of officers’ 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

DFI-SB 21.16(1)(b)2. 2. Nonbinding 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.

DFI-SB 21.16(1)(c) (c) “Person” includes an individual, a group acting in concert, a corporation, a partnership, a savings bank, a joint stock company, a trust, an unincorporated organization, a syndicate or any other group formed for the purpose of acquiring, holding or disposing of securities of a savings bank.

DFI-SB 21.16(1)(d) (d) “Security” includes nontransferable subscription rights issued under a plan of conversion and a “security” as defined in 15 USC 78c (a) (10).

DFI-SB 21.16(2) (2) Prohibited transfers. Except as provided in sub. (5), prior to the completion of a conversion, no person may transfer or receive, or enter into any agreement to transfer or receive, the legal or beneficial ownership of conversion subscription rights, or the underlying securities to or from another. Violations of this subsection by:

DFI-SB 21.16(2)(a) (a) An eligible account holder or supplemental eligible account holder shall void the person’s subscription rights transferred in violation of sub. (1) (intro.) and forfeit up to $10,000 of any consideration received for them shall be surrendered to the division for the school fund.

DFI-SB 21.16(2)(b) (b) Any person who acquires securities in violation of sub. (1) (intro.) shall surrender the securities but not to exceed $10,000 of value, valued as of their date of issuance, to the division for the school fund.

DFI-SB 21.16(3) (3) Prohibition of offers and certain acquisitions. Except as provided in sub. (5), prior to the completion of a conversion, no person may do any of the following in excess of the maximum purchase limitations established in the plan of conversion: offer or announce an offer for any security of the savings bank issued in connection with the conversion or knowingly acquire securities of the savings bank issued in connection with the conversion.

DFI-SB 21.16(4) (4) Prohibition on offers and acquisitions of stock for 5 years following conversion. Except as provided in sub. (5):

DFI-SB 21.16(4)(a) (a) For 5 years following the date of the completion 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 a savings bank converted under this chapter without requesting in writing and, receiving the prior written approval of the division if the requester has made a sufficient written justification to the division demonstrating the need for the division’s approval. When any person, directly or indirectly, acquires beneficial ownership of more than 10% of any class of any equity security of a savings bank converted under this chapter without the prior written approval of the division, the securities beneficially owned by the 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 any matter submitted to the stockholders for a vote.

DFI-SB 21.16(4)(b) (b) A conversion shall be deemed complete on the date all of the conversion stock was sold.

DFI-SB 21.16(4)(c) (c) An acquisition of shares shall be presumed to have been made if the acquirer entered into a binding written agreement for the transfer of shares. An offer shall be deemed made when communicated.

DFI-SB 21.16(5) (5) Exceptions.

DFI-SB 21.16(5)(a) (a) Subsections (2) and (3) shall not apply to a transfer, agreement, understanding to transfer, offer, or announcement of an offer or intent to make an offer which:

DFI-SB 21.16(5)(a)1. 1. Pertains only to securities to be purchased under s. DFI-SB 21.10 (5) or 21.11 (6) or (7); and

DFI-SB 21.16(5)(a)2. 2. Has the prior written approval of the division after the requester has made a sufficient written justification to the division demonstrating the basis for the division’s approval.

DFI-SB 21.16(5)(b) (b) Subsections (3) and (4) shall not apply to any offer to facilitate a public resale made exclusively to the savings bank or to people who are selling the stock on the savings bank’s behalf, such as an underwriter.

DFI-SB 21.16(5)(c) (c) Unless made applicable by the division by prior notice in writing, sub. (4) does 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 same class of securities.

DFI-SB 21.16(5)(d) (d) Subsection (4) does not apply to any offer to acquire or acquisition of beneficial ownership of more than 10% of the common stock of an institution by a corporation whose ownership is or will be substantially the same as the ownership of the savings bank if the offer or acquisition is made more than one year following the date of completion of the conversion.

DFI-SB 21.16(5)(e) (e) Subsections (2) and (4) do not apply to the acquisition of securities of the savings bank or its holding company by any one or more employee benefit plans of the savings bank or its holding company, provided that, the plan or plans do not have beneficial ownership in the aggregate of more than 25% of any class of equity security of the savings bank or its holding company.

DFI-SB 21.16(6) (6) Criteria for approval. The division may deny an application involving an offer or acquisition of any security or proxies to vote securities of a savings bank submitted under sub. (4) (a) if he or she finds that the proposed acquisition:

DFI-SB 21.16(6)(a) (a) Would frustrate the purposes of this chapter;

DFI-SB 21.16(6)(b) (b) Would be manipulative or deceptive;

DFI-SB 21.16(6)(c) (c) Would subvert the fairness of the conversion;

DFI-SB 21.16(6)(d) (d) Would be likely to result in injury to the savings bank;

DFI-SB 21.16(6)(e) (e) Would not be consistent with economical home financing;

DFI-SB 21.16(6)(f) (f) Would otherwise violate a law or rule; or

DFI-SB 21.16(6)(g) (g) Would not contribute to the prudent deployment of the savings bank’s conversion proceeds.

DFI-SB 21.16 History History: Cr. Register, February, 1994, No. 458, eff. 3-1-94.

DFI-SB 21.17 DFI-SB 21.17 Priority of rules. This chapter supersedes all inconsistent articles of incorporation and bylaws of a mutual savings bank converting to the stock form.

DFI-SB 21.17 History History: Cr. Register, February, 1994, No. 458, eff. 3-1-94.

DFI-SB 21.21 DFI-SB 21.21 Information prior to approval of plan of conversion.

DFI-SB 21.21(1) (1) Confidentiality of initial deliberation. A savings bank considering converting under this chapter and its directors, officers and employees shall keep the consideration in strict confidence and shall only discuss the potential conversion if necessary to prepare information for filing an application for conversion. If this confidence is breached, the division may require remedial measures including:

DFI-SB 21.21(1)(a) (a) A public statement by the savings bank that its board of directors is currently considering converting.

DFI-SB 21.21(1)(b) (b) Providing for an eligibility record date which shall be prior to the adoption of the plan as to assure the equitability of the conversion.

DFI-SB 21.21(1)(c) (c) Limitation of the subscription rights of any person violating or aiding the violation of this subsection.

DFI-SB 21.21(1)(d) (d) Any other actions the division may deem appropriate and necessary to assure the fairness and equitability of the conversion.

DFI-SB 21.21(2) (2) Public statement. If it should become essential as a result of rumors prior to the adoption of a plan of conversion by the savings bank’s board of directors, a public statement under sub. (1) (a) may be made by the savings bank.

DFI-SB 21.21(3) (3) Actions after board approves conversion. Promptly after the adoption of a plan of conversion by not less than two-thirds of its board of directors: