1. A depository that is a bank shall pledge the required collateral securities to the treasurer of state by depositing before January 31 of each year the collateral securities in restricted accounts of the treasurer of state, including but not limited to pledge-custody accounts, at a federal reserve bank, a trust department of another commercial bank, or with another financial institution which has been designated by the treasurer of state that is not owned or controlled directly or indirectly by the same depository or holding company. The bank shall deliver to the treasurer of state a security agreement which provides the treasurer of state with a valid and perfected security interest in the required collateral. The market value of the required collateral shall be at least ten percent of the average amount of the excess of total public funds over total federally insured public funds on deposit in the bank during the preceding year. The average amount of the excess shall be determined by adding the amounts of excess if any for all public funds deposit accounts as they existed on the date in each calendar quarter used in preparing the report of condition and income for submission to the federal government, adding the subtotals for the four calendar quarters, and dividing that total by four. The calculation of the minimum market value of required collateral shall be made before January 31 of each year.
2. The treasurer of state shall adopt the following rules pursuant to chapter 17A:
a. Providing for valuation of collateral if the market value of a security is not readily determinable.
b. Establishing reporting requirements.
c. Establishing procedures for substituting different securities consistent with subsection 3.
d. Establishing administrative procedures necessary to implement this chapter and other rules as may be necessary to accomplish the purposes of this chapter.
e. Designating financial institutions eligible to be custodian of pledged collateral.
f. Establishing fee schedules to cover costs incurred for opening and closing accounts and substitution of collateral.
3. The securities used to secure public deposits shall be acceptable to the treasurer of state and shall be one or more of the following:
a. Direct obligations of, or obligations that are insured or fully guaranteed as to principal and interest by, the United States of America or an agency or instrumentality of the United States of America.
b. Public bonds or obligations of this state or a political subdivision of this state.
c. Public bonds or obligations of another state or a political subdivision of another state whose bonds are rated within the two highest classifications of prime as established by at least one of the standard rating services approved by the superintendent of banking pursuant to chapter 17A.
d. To the extent of the guarantee, loans, obligations, or nontransferable letters of credit upon which the payment of principal and interest is fully secured or guaranteed by the United States of America or an agency or instrumentality of the United States of America.
e. First lien mortgages which are valued according to practices acceptable to the treasurer of state.
f. Corporate bonds rated within the two highest classifications of prime as established by at least one of the standard rating services approved by the superintendent of banking pursuant to chapter 17A.
g. A bond of a surety company approved by the United States treasury department.
h. Investments in an open-end management investment company registered with the federal securities and exchange commission under the federal Investment Company Act of 1940, 15 U.S.C. § 80(a), which is operated in accordance with 17 C.F.R. § 270.2a-7.
Direct obligations of, or obligations that are insured or fully guaranteed as to principal and interest by, the United States of America, which may be used to secure public deposits under paragraph "a", include investments in an investment company or investment trust registered under the federal Investment Company Act of 1940, 15 U.S.C. § 80(a), the portfolio of which is limited to the United States government obligations described in paragraph "a", if the investment company or investment trust takes delivery of the collateral either directly or through an authorized custodian.
4. A bank may borrow collateral used for a pledge if the collateral is free of any liens, security interests, claims, or encumbrances.
92 Acts, ch 1156, §36
Referred to in § 12C.1, 12C.23
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