41.240 Pledge of collateral required of state depositories -- Qualifications for a
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/ky/41-240A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
reduced pledge -- Eligible securities and other obligations.
(a)Before any bank shall be named as a state depository to receive public funds,
it shall either pledge or provide to the State Treasurer collateral having an
aggregate current face value or current quoted market value at least equal to
the deposits as of the last business day of each quarter in which funds are so
deposited or provide to the State Treasurer a surety bond or surety bonds in
favor of the State Treasurer in an amount at least equal to the deposits, as of
the last business day of each quarter in which funds are deposited; provided,
however, that amounts insured by the Federal Deposit Insurance Corporation
or the Federal Savings and Loan Insurance Corporation need not be so
collateralized. The president or an executive officer of each state depository
shall submit to the Treasurer and the State Investment Commission a
statement subscribed and sworn to by the president or executive officer
showing:
1. The face value or current quoted market value of the securities or other
obligations pledged as collateral; and
2. The value of surety bonds provided as of the time such surety bonds are
provided as collateral.
The aggregate valuation of all pledged or provided collateral shall be reported
to the State Treasurer and State Investment Commission by the state
depository within ten
(10)days of the close of each quarter after the date of
deposit. Such value with respect to pledged collateral other than surety bonds
shall be as of the end of the quarter or the preceding business day and, as to
surety bonds, the market values shall be obtained from a reputable bond-
pricing service. The State Treasurer and Governor may from time to time call
for additional collateral to adequately secure the deposits as aggregate face or
current market values may require, if the value of collateral is not compliant
with state law as of the report date.
(b)No deposit of state funds shall collectively exceed at any time the state
depository's sum of capital, reserves, undivided profits and surplus or ten
percent (10%) of the total deposits of the state depository, whichever is less.
For purposes of this subsection only, the value of the state deposit will be
determined as of the end of the last business day of each quarter that funds are
deposited.
(a)As an alternative to subsection (1)(a) of this section, a state depository insured
by the Federal Deposit Insurance Corporation may either pledge to the State
Treasurer, as collateral, securities or other obligations having an aggregate
face value or a current quoted market value or provide to the State Treasurer a
surety bond or surety bonds in an amount equal to eighty percent (80%) of the
value of the state deposit including demand and time accounts, if the state
depository is determined by the State Investment Commission to have very
strong credit with little or no credit risk at any maturity level and the
likelihood of short-term unexpected problems of significance is minimal or
not of a serious or long-term nature. The value of the state deposit will be
determined at the end of the business day of deposit and as of the end of
business on the last day of each quarter that funds are so deposited.
(b)Valuation of all pledged or provided collateral shall be reported to the State
Treasurer and the State Investment Commission within ten
(10)days of the
close of each quarter after the date of deposit.
(c)State depositories designated as qualified for reduced pledging shall be so
recorded in the executive journal.
(d)The State Investment Commission shall determine eligibility for the reduced
pledging option based on totally objective and quantifiable measures of
financial intermediary performance. The information for such eligibility shall
be obtained from publicly available documents. The State Investment
Commission shall promulgate the particular criteria of eligibility by
regulations issued pursuant to KRS Chapter 13A.
(3)State depositories which do not qualify or do not choose to qualify under subsection
(1)or
(2)of this section shall not receive state deposits in excess of amounts that
are insured by an instrumentality of the United States.
(4)Only the following securities and other obligations may be accepted by the State
Treasurer as collateral under this section:
(a)Bonds, notes, letters of credit, or other obligations of or issued or guaranteed
by the United States, or those for which the credit of the United States is
pledged for the payment of the principal and interest thereof, and any bonds,
notes, debentures, letters of credit, or any other obligations issued or
guaranteed by any federal governmental agency or instrumentality, presently
or in the future established by an Act of Congress, as amended or
supplemented from time to time, including, without limitation, the United
States government corporations listed in KRS 66.480(1)(c);
(b)Obligations of the Commonwealth of Kentucky including revenue bonds
issued by its statutory authorities, commissions, or agencies;
(c)Revenue bonds issued by educational institutions of the Commonwealth of
Kentucky as authorized by KRS 162.340 to 162.380;
(d)Obligations of any city of the Commonwealth of Kentucky, or any county, for
the payment of principal and interest on which the full faith and credit of the
issuing body is pledged;
(e)School improvement bonds issued in accordance with the authority granted
under KRS 162.080 to 162.100;
(f)School building revenue bonds issued in accordance with the authority
granted under KRS 162.120 to 162.300, provided that the issuance of such
bonds is approved by the Kentucky Board of Education;
(g)Surety bonds issued by sureties rated in one
(1)of the three
(3)highest
categories by a nationally recognized rating agency;
(h)Letters of credit issued by federal home loan banks; and
(i)Real property owned by the bank.