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Mutual Savings Bank

FEDERAL DEPOSIT INSURANCE CORPORATION

IN RE: Mutual Savings Bank Milwaukee, Wisconsin

Application Pursuant to Section 24 of the Federal Deposit Insurance Act for Consent to Indirectly Engage as Principal Through a Majority-Owned Subsidiary in Investment Activities That May Not Be Permissible for a Subsidiary of a National Bank

ORDER

The Board of Directors of the Federal Deposit Insurance Corporation ("FDIC") has fully considered all available facts and information relevant to Section 24 of the Federal Deposit Insurance Act, 12 U.S.C. Section 1831, and Part 362 of the FDIC's Rules and Regulations, relating to an application by Mutual Savings Bank, Milwaukee, Wisconsin ("Mutual"), for consent to indirectly engage as principal through a wholly-owned subsidiary in an equity investment activity that may not be permissible for a subsidiary of a national bank. Mutual has requested approval to purchase, through its majority-owned subsidiary, up to 10 percent of the total outstanding shares of a particular thrift holding company stock. The application is approved subject to certain conditions.

Accordingly, it is hereby ORDERED, for the reasons set forth in the attached Statement, that the application submitted by Mutual is approved subject to the following conditions:

1. That the investment in the listed thrift holding company stock will be held indirectly through a majority-owned subsidiary; namely, First Federal Merger Corporation.

2. That this investment activity is only allowed as long as Mutual maintains and continues to meet all applicable minimum capital standards as defined in section 38 of the Federal Deposit Insurance Act.

3. That the consent granted herein is based on the facts and circumstances presented or otherwise known to the FDIC in connection with this request. Mutual shall notify the FDIC of any significant change in facts or circumstances. If the facts and circumstances change significantly, the FDIC shall have the right to alter, suspend, or withdraw its approval.

Dated at Washington, D.C., this 26th day of November, 1996.

BY ORDER OF THE BOARD OF DIRECTORS

Jerry L. Langley
Executive Secretary


FEDERAL DEPOSIT INSURANCE CORPORATION

IN RE: Mutual Savings Bank Milwaukee, Wisconsin

Application Pursuant to Section 24 of the Federal Deposit Insurance Act for Consent to Indirectly Engage as Principal Through a Majority-Owned Subsidiary in Investment Activities That May Not Be Permissible for a Subsidiary of a National Bank

STATEMENT

Pursuant to the provisions of section 24 of the Federal Deposit Insurance Act ("FDI Act"), Mutual Savings Bank, Milwaukee, Wisconsin ("Mutual"), has filed an application with the Federal Deposit Insurance Corporation ("FDIC"). Mutual has requested approval to purchase, through its majority-owned subsidiary, up to 10 percent of the total outstanding shares of a particular thrift holding company stock.

The activity of making investments in listed thrift holding company stock may not be a permissible activity for a national bank or a subsidiary of a national bank. State-chartered FDIC-insured banks may not engage as principal in an activity prohibited to nationally-chartered banks unless consent has been obtained from the FDIC. Consent may not be granted unless the bank is in compliance with applicable capital standards and the FDIC determines that the activity poses no significant risk to the deposit insurance fund.

The Wisconsin State Statute providing general authority for the proposed activity is section 214.04(28) which authorizes a savings bank to exercise any power reasonably related to or incident to the purposes of the savings bank. Section 214.04(17) authorizes a savings bank, with the poor approval of the Department of Financial Institutions, to acquire the assets of a financial institution. On October 11, 1996, the administrator of the Department of Financial Institutions approved Mutual's acquisition of the thrift holding company's listed stock.

The purchase of any equity stock entails risks related to the loss of investment, price volatility, and lack of market liquidity. However, intrinsic to the corporate charter of a thrift holding company are factors that lessen investment risk. Thrift holding companies are subject to a comprehensive and stringent regulatory structure. As such, they are required to obtain government approval to operate and to maintain regulatory minimum capitalization. They are also subject to periodic supervisory examination and enforcement jurisdiction.

Although in the case in which thrift holding company assets are primarily, if not exclusively, centered in the subsidiary thrift, the risk inherent from investing in the thrift holding company stock is directly reliant on the financial condition of the subsidiary thrift. However, thrift holding companies may be invested in entities other than thrifts, which are authorized to engage in activities not permissible for a thrift. The potential for additional risk from those other activities warrants the limitation of the bank's investment in any single thrift holding company, or related entities, to preclude a concentration represented by the investment in relation to Mutual's Tier I capital.

As of June 30, 1996, Mutual had total assets of $1,194,627,000. Mutual is well- capitalized and remains well-capitalized after the deduction of the proposed investment from its capital accounts. Its financial condition and management are well regarded. Mutual's Investment Policy is generally conservative and adequately addresses guidelines for investment strategies. The investment activity being proposed provides for acceptable diversification.

Approval to purchase the specific requested amount of the listed stock of one thrift holding company is granted subject to certain limiting conditions. The stock will be held indirectly by a majority-owned subsidiary and Mutual will continue to meet all applicable minimum capital standards as defined in section 38 of the FDI Act.

For the reasons outlined above, including the imposition of conditions, the Board of Directors has concluded that Mutual's indirect investment in up to 10 percent of the outstanding shares of a particular thrift holding company stock does not, under the terms and arrangements proposed by Mutual, pose a significant risk to the Bank Insurance Fund and, therefore, approval of the application is warranted.

THE BOARD OF DIRECTORS
FEDERAL DEPOSIT INSURANCE CORPORATION



Last Updated 03/24/2011 Legal@fdic.gov