Skip Header
U.S. flag

An official website of the United States government

Decisions on Bank Applications

Left Navigation Investments & Activities

Northwest Savings Bank


RE: Northwest Savings Bank Amery, Wisconsin

Application Pursuant to Section 24(d) of the Federal Deposit Insurance Act to Indirectly Continue An Activity That May Not be Permissible for a National Bank


Pursuant to the provisions of section 24 of the Federal Deposit Insurance Act, an application has been filed with the Federal Deposit Insurance Corporation by Northwest Savings Bank, Amery, Wisconsin ("Northwest"). Northwest requests the FDIC's consent to continue engaging, through its wholly-owned subsidiary, in certain real estate activities.

Northwest filed an application to continue real estate activity through its wholly-owned subsidiary, Amery Service Agency, Inc. ("ASA"), pursuant to Section 362.4 (d) (4) (iii) of the FDIC's Rules and Regulations. Specifically, Northwest seeks authorization to hold 19 residential lots through ASA until the sale of the lots is successfully completed. The residential lots are part of the Pondhurst Condominium Association established by ASA. In addition, Northwest has applied to hold a 7.5 acre parcel of property (contiguous to the residential lots) until such time as it may be divested.

ASA's property holdings are currently subject to a divestiture requirement imposed by the Board of Governors of the Federal Reserve System ("FRS") in connection with a holding company application, discussed further below.

Subsidiaries of state chartered, FDIC-insured banks may not engage as principal in an activity prohibited to subsidiaries of nationally chartered banks unless they obtain the consent of 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.

ASA was organized as a Wisconsin corporation in 1970. ASA acquired the subject property for investment purposes in 1982. ASA divided the property into two parcels. One of the two parcels has further been subdivided into 64 residential lots. As of December 1, 1994, 45 lots had been sold and 19 lots remained. There is no book value associated with this portion of the project. Management of Northwest estimates that sale of the lots will generate approximately $200,000 in sales revenue,, which would represent Northwest's profit on the project. While ASA has developed the property for sale (providing water, power, and curbs), no further significant development activities are anticipated, and no construction activity is contemplated. ASA currently holds the second of the two parcels, 7.5 acres of vacant land adjacent to the residential lots, at a current book value of $15,163. There are no known environmental or other risks associated with these two parcels of real estate.

Northwest converted from a state mutual savings bank to a stock savings bank in October of 1994. In connection with this mutual to stock conversion, the FRS approved an application to form a bank holding company subject to the condition that ASA divest itself of its holdings in the Pondhurst Project within two years, or by August 10, 1996.

Northwest, which meets the definition of "well capitalized" within the meaning of Part 325 of the FDIC's Rules and Regulations, is in compliance with applicable capital standards. Northwest's annual return on assets was 1.050, and its loan loss record has been good. The total book value of ASA's real estate in the subject properties represents 0.20 of Northwest's Tier 1 capital. Management has been considered adequate.

Northwest has now applied to market and sale the subject property in an orderly fashion. The activity will require only nominal financial and managerial resources. The State Authority has not objected to the retention of this investment and continuance of the activity.

Having found that the activity in question involves the retention of an investment that did not require FDIC review or consent at inception, but does now because of statutory revision; that the real estate investment is nominal in relation to capital and total assets and will be limited to those parcels currently held; that the institution's financial condition and management are adequate; that the State authority does not object to the investment; that retention of the investment does not pose any significant safety or soundness risks; and that the bank is in compliance with applicable capital standard, the FDIC concludes that ASA's retention of the property for a period not to exceed five years, does not pose a significant risk to the Savings Association Insurance Fund and therefore may be and hereby is approved subject to the following restrictions.

The applicant shall notify the FDIC of any significant change in facts or circumstances. The FDIC's action is conditioned on its ability to alter, suspend, or withdraw its approval in the event the facts and circumstances presented in the application change significantly. In addition, transactions between Northwest and ASA that would be covered transactions for purposes of Sections 23A and 23B of the Federal Reserve Act, 12 U.S.C. §§ 371c and 371c-1, if ASA were an affiliate of Northwest under Sections 23A and 23B, shall not exceed the amount limitations and shall be made in accordance with the other restrictions of Sections 23A and 23B to the same extent as though ASA were an affiliate of Northwest. This approval is limited to the remaining real estate parcels held, and this activity shall continue to be conducted through ASA. Furthermore, the FDIC advises the applicant that Northwest's parent holding company continues to be subject to its divestiture agreement with the FRS.

Finally, the FDIC specifically notes that its consent action is unique to this case, that it was significantly influenced by acquisition pre-section 24 and that its view of a de novo request for such activity might well be different.