Illinois Compiled Statutes
205 ILCS 205/ - Savings Bank Act.
Article 6 - Investments

(205 ILCS 205/Art. 6 heading)

(205 ILCS 205/6001) (from Ch. 17, par. 7306-1)
Sec. 6001. General provisions.
(a) No savings bank shall make any loan or investment
authorized by this Article unless the savings bank first has
determined that the type, amount, purpose, and repayment provisions
of the loan or investment in relation to the borrower's or issuer's
resources and credit standing support the reasonable belief that
the loan or investment will be financially sound and will be repaid
according to its terms and that the loan or investment is not
otherwise unlawful.
(b) Each loan or investment that a savings bank makes or
purchases, whether wholly or in part, must be adequately
underwritten, reviewed periodically, and reserved against as
necessary in accordance with its payment performance, all in
accordance with the regulations and directives of the Commissioner.
(c) Every appraisal or reappraisal of property that a
savings bank is required to make shall be made as follows:
(d) If appraisals of real estate securing a savings bank's
loans are obtained as part of an examination by the Commissioner,
the cost of those appraisals shall promptly be paid by the savings
bank directly to the appraiser or appraisers.
(e) Any violation of this Article shall
constitute an unsafe or unsound practice. Any person who knowingly
violates any provision of this Article shall be subject to
enforcement action or civil money penalties as provided for in this
Act.
(f) For purposes of this Article, "underwriting" shall mean the process
of compiling information to support a determination as to whether an
investment or extension of credit shall be made by a savings bank. It
shall include, but not be limited to, evaluating a borrower's
creditworthiness, determination of the value of the underlying collateral,
market factors, and the appropriateness of the investment or loan for the
savings bank. Underwriting as used herein does not include the agreement to
purchase unsold portions of public offerings of stocks or bonds as commonly
used in corporate securities issuances and sales.
(g) For purposes of this Section, the following definitions shall apply:
(Source: P.A. 102-687, eff. 12-17-21.)

(205 ILCS 205/6002) (from Ch. 17, par. 7306-2)
Sec. 6002. Investment in loans.
(a) Subject to the regulations of the
Commissioner, a savings bank may loan funds as follows:
(b) For purposes of this Section, "real estate" includes a manufactured home as defined in subdivision (53) of Section 9-102 of the Uniform Commercial Code which is real property as defined in Section 5-35 of the Conveyance and Encumbrance of Manufactured Homes as Real Property and Severance Act.
(Source: P.A. 98-749, eff. 7-16-14.)

(205 ILCS 205/6003) (from Ch. 17, par. 7306-3)
Sec. 6003.
Other investments.
A savings bank may invest funds as
provided in this Section:
(Source: P.A. 89-317, eff. 8-11-95; 90-665, eff. 7-30-98.)

(205 ILCS 205/6004) (from Ch. 17, par. 7306-4)
Sec. 6004.
Calculation of interest; postpayments and prepayments.
(a) In any contract or loan that is secured by a mortgage,
deed of trust, or conveyance in the nature of a mortgage for the
purpose of purchase or refinance of residential real estate, the
interest that is computed, calculated, charged, or collected
pursuant to the contract or loan, or pursuant to any regulation
or rule promulgated under this Act, may not be computed,
calculated, charged or collected for any period of time occurring
after the date on which the total indebtedness, with the exception
of late payment penalties, is paid in full.
(b) For purposes of this Section, a prepayment means
the payment of the total indebtedness, with the exception of late
payment penalties if incurred or charged, on any date before the
date specified in the contract or loan agreement on which the total
indebtedness shall be paid in full, or before the date on which all
payments, if timely made, shall have been made. In the event of
a prepayment of the indebtedness that is made on a date after the
date on which interest on the indebtedness was last computed,
calculated, charged, or collected but before the next date on which
interest on the indebtedness was to be calculated, computed,
charged, or collected, the lender may calculate, charge, and collect
interest on the indebtedness for the period that elapsed between
the date on which the prepayment is made and the date on which
interest on the indebtedness was last computed, calculated, charged,
or collected at a rate equal to 1/360 of the annual rate for each
day which so elapsed, which rate shall be applied to the
indebtedness outstanding as of the date of prepayment. The lender
shall refund to the borrower any interest charged or collected
that exceeds that which the lender may charge or collect under
this subsection.

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

(205 ILCS 205/6005) (from Ch. 17, par. 7306-5)
Sec. 6005.
General loan contract provisions.
Each loan and any agreement for securing the loan shall be
evidenced by one or more written instruments, consistent with sound
lending practices in the locality. Whenever recordation of an
instrument is necessary to establish priority over the claim of any
third party, the instrument shall be recorded.

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

(205 ILCS 205/6006) (from Ch. 17, par. 7306-6)
Sec. 6006.
Modification agreements.
A savings bank, at any time, may enter into a written
agreement with a borrower to modify, in any manner not
inconsistent with the provisions of this Act, the terms of a loan
as to the amount, time or method of the payments to be made, the
interest rate, and any other provision of the loan contract, and the
loan contract and the security instrument shall not be prejudiced
by the making of any modification, even if a modification
was not provided for in the loan contract.

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

(205 ILCS 205/6007) (from Ch. 17, par. 7306-7)
Sec. 6007. Sale, assignment, and servicing of loans and contracts.
(a) Any savings bank may sell any loan or a participating
interest in a loan at any time in the usual and regular course of
business. Loans sold may be sold with or without recourse except
as may otherwise be provided by regulations of the Secretary.
The Secretary may, by regulation, adopt limitations upon the
sale of loans. The provisions of this subsection (a) do not apply
to the sale of loans to agencies of the United States, the State
of Illinois, or other government sponsored agencies as may be
approved by the Secretary.
(b) A savings bank may contract to service a loan or a
participating interest in a loan, but a contract therefor shall conform
to any pertinent regulations prescribed by the Secretary and
shall require sufficient compensation to reimburse the savings bank
for all expenses incurred under the contract.
(c) A savings bank may sell and assign, with or without
recourse, any master's certificate of sale, defaulted loan, or
defaulted real estate contract to any person eligible to purchase
it for an amount not less than the fair cash market value
thereof.

(Source: P.A. 97-492, eff. 1-1-12.)

(205 ILCS 205/6008) (from Ch. 17, par. 7306-8)
Sec. 6008. Purchase of real estate at forced sale. A savings bank may
purchase at any sheriff's or other judicial sale, either public or private,
any real estate upon which the savings bank has any mortgage, lien or other
encumbrance, or in which the savings bank has any other interest. The
savings bank thereafter may repair, insure, improve, sell, convey, lease,
preserve, mortgage, exchange, or otherwise dispose of real estate so
acquired in the best interests of the savings bank. For purposes of this Section, "real estate" includes a manufactured home as defined in subdivision (53) of Section 9-102 of the Uniform Commercial Code which is real property as defined in Section 5-35 of the Conveyance and Encumbrance of Manufactured Homes as Real Property and Severance Act.

(Source: P.A. 98-749, eff. 7-16-14.)

(205 ILCS 205/6009) (from Ch. 17, par. 7306-9)
Sec. 6009. Purchase of real estate for office and rental purposes.
(a) A savings bank may acquire and hold real estate in fee
simple or leaseholds on which a building or buildings exist or are
to be erected suitable for the transaction of the savings bank's
business, and from portions of which not required for the savings
bank's own use, revenue may be derived; or may own all or part of
the capital stock, shares, or interest in any corporation,
limited liability company, association, or trust engaged solely in holding all or part of that
real estate. However, the amount so invested under this Section and item (7)
of Section 6003 may not exceed a savings bank's total capital unless the
Secretary, upon a
proper showing, approves a larger amount consistent with the needs
of the savings bank's business and its immediate future expansion.
(b) Unless prior written approval of the Secretary is
obtained, no savings bank may purchase, lease, or otherwise acquire
a site for an office building or interest in real estate from any
officer, director, employee, or stockholder holding more than 10%
of the aggregate capital stock of the savings bank, or any firm,
corporation, entity, or family in which any officer, director,
employee, or stockholder holding more than 10% of the aggregate
capital stock of a savings bank has any direct or indirect
interest.
(c) An acquisition prohibited by this Section includes the
purchase, lease, or acquisition of property in which any of the
persons described in this Section held any interest for a period
of 10 years preceding the purchase, lease, or acquisition, but does
not include the acquisition of an option for a site or real
estate where the option is assignable and exercised by the savings
bank in its own name and for its own benefit.

(Source: P.A. 97-492, eff. 1-1-12.)

(205 ILCS 205/6010) (from Ch. 17, par. 7306-10)
Sec. 6010.
Prohibited loans.
No savings bank may make a loan to any
person owning 10% or more of its capital stock, any affiliated person,
agent, or attorney of the savings bank, either individually or as an agent
or partner of another, except in accordance with laws and regulations
applicable to similar transactions to which banks are subject.

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

(205 ILCS 205/6011) (from Ch. 17, par. 7306-11)
Sec. 6011.
Effect of unauthorized investments.
(a) Every loan or other investment made in violation of this
Act shall be due and payable according to its terms, and the
obligation thereof shall not be impaired.
(b) Every director or officer of a savings bank who shall knowingly
participate in or assent to, or who shall knowingly
permit any of the officers or agents of the savings bank to make,
investments not authorized by this Act shall be liable
individually for all damage that the savings bank may sustain in
consequence of the investments, in addition to any criminal
penalties prescribed by this Act.
(c) The Commissioner may require every director or officer
of a savings bank who shall knowingly participate in or
assent to, or who shall knowingly permit any of the officers or
agents of the savings bank to make, investments not authorized by
this Act to deposit with the savings bank an indemnity bond,
insurance, or collateral of a kind and amount sufficient to
indemnify the savings bank against damages that the savings bank
may sustain in consequence of the investments. The amount
considered sufficient to indemnify the savings bank shall, in the
case of an unauthorized investment, be the difference between the
book value and the market value of the investment at the time the
Commissioner makes his determination that the investment is
unauthorized. The amount considered sufficient to indemnify the
savings bank, in the case of an unauthorized loan, shall be the
difference between the book value of the loan and the amount that
could have been made under the provisions of this Act. Whenever
an unauthorized investment has been sold or disposed of without
recourse, the Commissioner shall release all or part of the
indemnity after deducting any loss. Whenever the balance of an
unauthorized loan has been reduced to an amount that would permit
the loan to be made under the provisions of this Act, the
indemnity shall be released, provided that the Commissioner in
making the determination may require an independent appraisal of
the security.

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

(205 ILCS 205/6012) (from Ch. 17, par. 7306-12)
Sec. 6012.
Acknowledgments.
No acknowledgment of a deed, mortgage, or
other instrument shall be invalid because the acknowledgment was taken
before an officer authorized by the laws of this State to acknowledge
conveyances who is also a member, director, employee, or officer of a
savings bank that is a party to the deed, mortgage, or other instrument.

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

(205 ILCS 205/6013) (from Ch. 17, par. 7306-13)
Sec. 6013.
Loans to one borrower.
(a) Except as provided in subsection (c), the total loans and extensions
of credit, both direct and
indirect, by a savings bank to any person, other than a municipal
corporation for money borrowed, outstanding at one time shall not
exceed 25% of the savings bank's total capital plus general loan
loss reserves.
(b) Except as provided in subsection (c), the total loans and extensions
of credit, both direct and
indirect, by a savings bank to any person outstanding at one time
and at least 100% secured by readily marketable collateral having
a market value, as determined by reliable and continuously
available price quotations, shall not exceed 10% of the savings
bank's total capital plus general loan loss reserves. This limitation
shall be separate from and
in addition to the limitation contained in subsection (a).
(c) If the limit under subsection (a) or (b) on total loans to one
borrower is less than $500,000, a savings bank that meets its minimum capital
requirement under this Act may have loan and extensions of credit, both direct
and indirect, outstanding to any person at one time not to exceed $500,000.
With
the prior written approval of the Commissioner, a savings bank that has capital
in excess of 6% of assets may make loans and extensions of credit to one
borrower for the development of residential housing properties, located or to
be located in this State, not to exceed 30% of the savings bank's total capital
plus general loan loss reserves.
(d) For purposes of this Section, the term "person" shall be
deemed to include an individual, firm, corporation, business trust,
partnership, trust, estate, association, joint venture, pool,
syndicate, sole proprietorship, unincorporated association, any
political subdivision, or any similar entity or organization.
(e) For the purposes of this Section any loan or extension
of credit granted to one person, the proceeds of which are used for
the direct benefit of a second person, shall be deemed a loan or
extension of credit to the second person as well as the first
person. In addition, a loan or extension of credit to one person
shall be deemed a loan or extension of credit to others when a common
enterprise exists between the first person and such other persons.
(f) For the purposes of this Section, the total liabilities
of a firm, partnership, pool, syndicate, or joint venture shall include the
liabilities of the members of the entity.
(g) For the purposes of this Section, the term "readily
marketable collateral" means financial instruments or bullion
that are salable under ordinary circumstances with reasonable
promptness at a fair market value on an auction or a similarly
available daily bid-and-ask price market. "Financial instruments"
include stocks, bonds, notes, debentures traded on a national
exchange or over the counter, commercial paper, negotiable
certificates of deposit, bankers' acceptances, and shares in money
market or mutual funds.
(h) Each savings bank shall institute adequate procedures to
ensure that collateral fully secures the outstanding loan or
extension of credit at all times.
(i) If collateral values fall below 100% of the outstanding
loan or extension of credit to the extent that the loan or
extension of credit no longer is in conformance with subsection (b)
and exceeds the 25% limitation of subsection (a), the
loan must be brought into conformance with this Section within 5
business days except where judicial proceedings or other similar
extraordinary occurrences prevent the savings bank from taking
action.
(j) This Section shall not apply to loans or extensions of
credit to the United States of America or its agencies or this
State or its agencies or to any loan, investment, or extension of credit made
pursuant to Section 6003 of this Act.
(k) This Section does not apply to the obligations as endorser, whether
with or without recourse, or as guarantor, whether conditional or
unconditional, of negotiable or nonnegotiable installment consumer paper of the
person transferring the same if the bank's files or the knowledge of its
officers of the financial condition of each maker of those obligations is
reasonably adequate and if an officer of the bank, designated for that purpose
by the board of directors of the bank, certifies that the responsibility of
each maker of the obligations has been evaluated and that the bank is relying
primarily upon each maker for the payment of the obligations. The
certification
shall be in writing and shall be retained as part of the records of the bank.
(l) The Commissioner may prescribe rules to carry out the purposes of this
Section and to establish limits or requirements other than those specified in
this Section for particular types of loans and extensions of credit.

(Source: P.A. 92-483, eff. 8-23-01; 92-700, eff. 7-19-02.)

(205 ILCS 205/6014) (from Ch. 17, par. 7306-14)
Sec. 6014.
Commissioner's regulations.
(a) The Commissioner shall promulgate rules and regulations
to determine permissible levels of investment and permissible
concentrations of assets for savings banks applicable to all lending
and investment authority granted by this Article 6. The rules
and regulations shall give due regard to capital adequacy,
operating income, underwriting standards, risk inherent in the
investment or loan, and competitive parity with other financial
institutions.
(b) Violations of any of the provisions of this Article 6
shall constitute an unsafe and unsound practice and may subject the
savings bank, its directors, officers, or agents to enforcement
actions, civil money penalties, or other sanctions as provided in
this Act.

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