DFI-SB 17.06DFI-SB 17.06 Audit of trust department. At least once during each calendar year, the savings bank’s trust department shall be audited by certified public accountants in a manner consistent with s. 214.76, Stats. A copy of the report of the audit shall be promptly filed with the division. Trust department audits may be made as part of the audits required by s. 214.76, Stats.

DFI-SB 17.07DFI-SB 17.07 Segregation of assets; prohibited deposits. Savings banks exercising any of the powers enumerated in this chapter shall segregate all assets held in any fiduciary capacity from the general assets of the savings bank. No savings bank may receive in its trust department deposits of current funds subject to check or the deposit of checks, drafts, bills of exchange, or other items for collection or exchange purposes.

DFI-SB 17.07 NoteNote: This section parallels 12 USC 1464 (n) (3) and (4) and s. DFI-SL 17.07 and is intended to prohibit operating a check clearing exchange through a trust account.

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 17.09(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 17.10(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;