2021 Illinois Compiled Statutes
Chapter 205 - FINANCIAL REGULATION
205 ILCS 205/ - Savings Bank Act.
Article 5 - Capital

(205 ILCS 205/Art. 5 heading)

(205 ILCS 205/5001) (from Ch. 17, par. 7305-1)

Sec. 5001. Minimum capital.

(a) A savings bank may be organized to exercise the powers conferred by this Act with minimum capital, surplus, and reserves for operating expenses as determined by the Commissioner. In no case may the Commissioner establish requirements for insured savings banks at a level less than that required for insurance of accounts. For any savings bank other than those resulting from conversion from an existing financial institution to one operating under this Act, the Commissioner must establish capital requirements no less stringent than those required of banks chartered under the Illinois Banking Act.

(b) No savings bank may commence business until it has capital as required by the Federal Deposit Insurance Corporation.

(c) Each depository institution converting to a savings bank, before declaration of a dividend on its capital stock, must maintain the minimum capital standards as required by the Federal Deposit Insurance Corporation.

(Source: P.A. 100-201, eff. 8-18-17.)

(205 ILCS 205/5002) (from Ch. 17, par. 7305-2)

Sec. 5002. Types of capital; personal property.

(a) The capital of a stock savings bank shall be represented by capital stock and noncumulative perpetual preferred stock as authorized by the articles of incorporation, related paid-in surplus, retained earnings, and other forms of capital deemed to be qualifying capital by the insurance corporation providing insurance of the savings bank's deposits.

(b) The capital of a mutual savings bank shall be represented by retained earnings and other forms of capital deemed to be qualifying capital by the insurance corporation providing insurance of the savings bank's deposits.

(c) All shares and capital accounts shall be personal property and transferable as provided in this Act and the bylaws of the savings bank.

(Source: P.A. 86-1213.)

(205 ILCS 205/5003) (from Ch. 17, par. 7305-3)

Sec. 5003. Capital stock; nature. Capital stock shall constitute a secondary reserve out of which losses shall be paid after all other available reserves have been exhausted and shall have a par value of $1 each or a greater amount as the articles of incorporation may prescribe. The shares shall be:

• (1) Nonwithdrawable, except as provided in Section 5005, until all liabilities of the savings bank have been satisfied in full, including payment of the withdrawal value of all deposit accounts.
• (2) Entitled to dividends only as provided in Section 5008.
• (3) Issued only upon cash payment of not less than the par value thereof; in connection with a merger, sale of all assets, or conversion; or as stock dividends as provided in Section 5008.

(Source: P.A. 86-1213.)

(205 ILCS 205/5004) (from Ch. 17, par. 7305-4)

Sec. 5004. Capital stock; authorization of issuance. A savings bank may provide for the issuance of capital stock, either by its original articles of incorporation or by an amendment thereto in accordance with rules and regulations promulgated by the Commissioner.

(Source: P.A. 86-1213.)

(205 ILCS 205/5005) (from Ch. 17, par. 7305-5)

Sec. 5005. Retirement or reduction of capital stock.

(a) The board of directors of a savings bank operating with capital stock may propose an amendment to the articles of incorporation providing for the retirement of all of the capital stock and a detailed plan for effectuating the amendment. The resulting capital of the savings bank shall be not less than the minimum initial capital that the savings bank, if it were being organized, would be required to have by the Commissioner under this Act. The proposal shall be submitted to the Commissioner for his approval.

(b) If the Commissioner approves the proposal, the savings bank's board of directors may request in writing an appraisal of the value of the capital stock, and the Commissioner then shall cause an appraisal to be made at the expense of the savings bank.

(c) The proposal then shall be submitted to the shareholders at an annual or special meeting. It shall be adopted upon receiving in the affirmative the votes of the holders of two-thirds or more of the outstanding shares of capital stock. The proposal takes effect upon completion of the procedure provided in this Act for the amendment of articles of incorporation.

(d) A savings bank may amend its articles of incorporation in accordance with the procedure provided in this Act for those amendments to reduce its capital stock, but in no event to an amount that is less than the minimum capital stock that the savings bank would be required by this Act to issue if it were newly authorized to issue capital stock.

(Source: P.A. 86-1213.)

(205 ILCS 205/5006) (from Ch. 17, par. 7305-6)

Sec. 5006. Who may hold capital. Capital stock of a savings bank may be held:

• (1) By any individual in his own right, regardless of age or marital status, or by 2 or more individuals.
• (2) By a fiduciary when authorized by law.
• (3) By a government or governmental instrumentality when authorized by law.
• (4) By any corporation or other person when not prohibited by law.

(Source: P.A. 86-1213.)

(205 ILCS 205/5007) (from Ch. 17, par. 7305-7)

Sec. 5007. Capital Maintenance.

(a) Each savings bank shall maintain total capital of not less than 3% of total assets. This standard is the minimum acceptable for a savings bank whose overall financial condition is fundamentally sound and that is well managed. When the Commissioner determines that the financial condition or history, management, or earnings prospects are not adequate, the Commissioner may determine that a higher minimum capital level is required for the savings bank.

(b) A savings bank shall maintain total capital necessary to ensure the continuation of insurance of its deposit accounts by the insurance corporation.

(c) The board of directors may establish and maintain special reserves, as they may deem advisable, to provide for losses or liabilities. Losses may be charged to those reserves as the board of directors may determine.

(d) Any savings bank with total capital less than 3% of total assets shall be deemed to be operating in an unsafe and unsound condition and shall be subject to the imposition of restrictions, sanctions, or penalties as provided for under this Act.

(Source: P.A. 86-1213.)

(205 ILCS 205/5008) (from Ch. 17, par. 7305-8)

Sec. 5008. Dividends.

(a) Subject to the restrictions set forth in this Section and the savings bank's bylaws, the board of directors from time to time may declare dividends on capital stock subject to the following restrictions:

• (1) No dividends may be declared when the total capital of the savings bank is less than that required by Section 5007 of this Act.
• (2) The board of directors may quarterly, semiannually, or annually declare a dividend on capital stock of so much of the net profits of the savings bank that they shall determine expedient, except that until the paid-in surplus of the savings bank shall equal its capital stock, no dividend shall be declared unless there has been transferred to paid-in surplus not less than 10% of the net profits of the preceding half year in the case of quarterly or semiannual dividends, or not less than 10% of the net profits for the preceding 2 half year periods in the case of annual dividends. A stock dividend may be declared out of retained earnings at any time.

(b) The written approval of the Commissioner shall be required by a savings bank having total capital of less than 6% of total assets before any dividends on capital stock that exceed 50% of the savings bank's net profits of that year may be declared by a savings bank in any year. A savings bank may not declare dividends in excess of the savings bank's net profits in any year without the approval of the Commissioner.

(c) For the purpose of this Article the term "net profit" means the remainder of all earnings from current operations plus actual recoveries on loans, investments, and other assets after deducting all current expenses, including dividends or interest on deposit accounts, additions to reserves as required by the Commissioner, actual losses, accrued dividends on preferred stock, if any, and all State and federal taxes.

(Source: P.A. 89-74, eff. 6-30-95; 89-320, eff. 1-1-96.)

(205 ILCS 205/5009) (from Ch. 17, par. 7305-9)

Sec. 5009. Loans or discounts on capital stock. A savings bank may not make a loan or discount on the security of or be the purchaser or holder of the shares of its own capital stock or preferred stock or on the security of its own debentures or evidences of its debt that are convertible to capital stock or are junior or subordinate in rights of payment to deposit or other liabilities of the savings bank, unless the security or purchase shall be necessary to prevent loss on a debt previously contracted in good faith; and the stock or evidence of indebtedness acquired or purchased shall, within 6 months from the time of its acquisition, be sold or disposed of at public or private sale.

(Source: P.A. 86-1213.)