DFI-Bkg 3.05(3)(b)(b) Any unguaranteed portion of the estimated residual value relied upon by the bank to yield a full return on a net, full-payout lease may not exceed 25% of the original cost of the property to the lessor. The amount of any estimated value guaranteed by a manufacturer, lessee or a third party which is not an affiliate of the bank may exceed 25% of the original cost of the property where the bank has determined, and can provide, full supporting documentation that the guarantor has the resources to meet the guarantee.

DFI-Bkg 3.05(3)(d)(d) In all net, full-payout leases, 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 primarily depends on the creditworthiness of the lessee and any guarantor of the residual value, and not on the residual market value of the leased item.

DFI-Bkg 3.05 NoteNote: In operating under this rule it is anticipated that banks will estimate the total cost of financing the property over the term of the lease to reflect, among other factors, the term of the lease, the modes of financing available to the lessor, the credit rating of each lessor and lessee involved in the transaction and prevailing rates in the money and capital markets. Where the calculation of the cost of financing according to this formula is not reasonably determinable, a lease may be considered to have met the test for recovering the cost financing if the bank’s yield from the lease is equivalent to what the yield would be on a similar loan. In all cases, 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 primarily depends on the creditworthiness of the lessee and any guarantor of the residual value, and not on the residual market value of the leased item.

DFI-Bkg 3.05 HistoryHistory: Cr. Register, July, 1983, No. 331, eff. 8-1-83; r. and recr. (1), (2) and (3), r. (4) and (5), Register, March, 1996, No. 483, eff. 4-1-96; correction in (1) (k) made under s. 13.93 (2m) (b) 7., Stats., Register October 2001 No. 550; CR 23-039: am. (1) (b) (intro.), 1., 2., (c) (intro.), 1. to 4., (d) (intro.), 1., (e) (intro.), 1., (f) (intro.), 1., (g), (2) (a) (intro.), 1., (3) (a) (intro.), 1., 2., (b) Register March 2024 No. 819, eff. 4-1-24.

DFI-Bkg 3.06(1)(1) Authority. A bank may purchase for its own account shares of investment companies registered with the securities and exchange commission or a privately offered fund sponsored by an affiliated commercial bank if the investment company shares meet all of the following requirements:

DFI-Bkg 3.06(2)(2) Government securities. Banks may purchase and hold investment company shares without limitation if the portfolio of the fund consists entirely of investments in government securities in which a bank could invest directly without limitation.

DFI-Bkg 3.06(3)(3) Municipal securities. Shares of investment companies whose portfolios contain investments which are subject to limitation under s. 221.0320 (3), Stats., may be held in an amount not to exceed 25% of the capital and surplus of the bank. In addition, a bank’s pro rata share of any security held in the portfolio of one or more investment companies whose shares are held by the bank may not, in aggregate or in combination with the bank’s direct holdings of the security, exceed the limitations of s. 221.0320 (3), Stats.

DFI-Bkg 3.06(4)(4) Other securities. Shares of investment companies whose portfolios contain investments other than government securities or municipal securities, may be held in an amount not to exceed 20% of the capital stock and surplus of the bank. In addition, a bank’s pro rata share of any security held in the portfolio of one or more investment company whose shares are held by the bank may not, in aggregate or in combination with the bank’s direct holdings of the security, exceed the investment limitations for the security as provided for in s. 221.0320 (4) to (6), Stats., and other relevant statutes and regulations.

DFI-Bkg 3.06(5)(5) Futures, forwards, options, repurchase agreements and securities lending. Certain investment companies use futures, forward placement and options contracts as well as repurchase agreements and securities lending arrangements as part of their portfolio management strategy. A bank may purchase and hold the shares of such investment companies if these instruments are used in a manner that would be considered acceptable for use in a bank’s own investment portfolio.

DFI-Bkg 3.06(6)(6) Review of investment portfolios. The bank shall review the investment portfolio of each investment company in which it holds shares on a quarterly basis to make certain that the composition of each portfolio meets the requirements of this section.

DFI-Bkg 3.06(7)(7) Accounting. The bank shall follow the instructions approved by the administrator of the division of banking for use by the banks for the preparation of reports of condition and income to account for investments made in shares of investment companies.

DFI-Bkg 3.06(8)(8) Approval of board of directors. The bank’s investment policy, as formally approved by its board of directors, shall specifically provide for investments made under this section. Prior approval of the board must be obtained for initial investments in specific investment companies and recorded in the board’s minutes. Procedures, standards and controls for implementation of such investments must be established.

DFI-Bkg 3.06 HistoryHistory: Cr. Register, March, 1985, No. 351, eff. 4-1-85; r. and recr. Register, January, 1988, No. 385, eff. 2-1-88; corrections in (1) (c), (3) and (4) made under s. 13.93 (2m) (b) 7., Stats., Register October 2001 No. 550; CR 23-039: am. (1) (intro.), (a), (b) Register March 2024 No. 819, eff. 4-1-24.

DFI-Bkg 3.07(2)(2) A savings and loan association seeking to convert into a state chartered bank shall pay the administrator of the division of banking a fee of $2,000 plus the actual costs incurred by the administrator of the division of banking in investigating the proposed reorganization.

DFI-Bkg 3.07(4)(4) Upon the filing of the articles as provided by ch. 221, Stats., and upon the approval of the administrator of the division of banking, the savings and loan association shall be deemed to be converted and thereupon all assets, real and personal, of the converted savings and loan association shall be vested in and become the property of the new bank, subject to all the liabilities of the savings and loan association not converted.

DFI-Bkg 3.08(1)(a)(a) “Actuarial method” means the method of allocating payments made on a debt between the amount financed and the finance charge pursuant to which a payment is applied first to the accumulated finance charge and any remainder is subtracted from, or any deficiency is added to, the unpaid balance of the amount financed.