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
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
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
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
FEDERAL DEPOSIT INSURANCE CORPORATION
IN RE: Mutual Savings Bank
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
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
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
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