2013 Kentucky Revised Statutes CHAPTER 41 - DEPARTMENT OF THE TREASURY 41.240 Pledge of securities required of depositories -- Qualifications for a reduced pledge -- Eligible securities and other obligations.
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41.240 Pledge of securities required of depositories -- Qualifications for a
reduced pledge -- Eligible securities and other obligations.
(1)
(a)
(b)
(2)
(a)
(b)
Before any bank shall be named as a state depository to receive public
funds, it shall either pledge or provide to the State Treasurer, as
collateral, securities or other obligations having an aggregate current face
value or current quoted market value at least equal to the deposits 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, 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 cashier of each depository bank
shall submit to the Treasurer and the State Investment Commission a
statement subscribed and sworn to by him showing:
1.
The face value or current quoted market value of the securities or
other obligations pledged or provided as of the time the securities or
other obligations are offered as collateral; and
2.
The value of surety bonds provided as of the time such surety
bonds are provided as collateral.
The valuation of all pledged or provided collateral and the face amount of
all surety bonds provided as collateral shall be reported to the State
Treasurer and State Investment Commission upon receipt of deposit and
within ten (10) days of the close of each quarter after the quarter
beginning December 31. 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 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.
No deposit of state collected demand and time funds shall collectively
exceed at any time the depository's sum of capital, reserves, undivided
profits and surplus or ten percent (10%) of the total deposits of any
particular depository, whichever is less. Deposits will be valued at the end
of each business day.
As an alternative to paragraph (1)(a) of this section, a Kentucky
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 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.
Valuation of all pledged or provided collateral and the face amount of
(3)
(4)
(5)
surety bonds provided shall be reported to the State Treasurer and the
State Investment Commission upon receipt of the state deposit and within
ten (10) days of the close of each quarter after the quarter beginning
December 31.
(c) 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.
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.
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 first, second, and third classes 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; and
(g) Surety bonds issued by sureties rated in one (1) of the three (3) highest
categories by a nationally recognized rating agency.
The State Treasurer shall accept letters of credit issued by federal home loan
banks as collateral under this section.
Effective:June 21, 2001
History: Amended 2001 Ky. Acts ch. 112, sec. 3, effective June 21, 2001. -Amended 1998 Ky. Acts ch. 554, sec. 1, effective July 15, 1998. -- Amended
1996 Ky. Acts ch. 362, sec. 6, effective July 15, 1996. -- Amended 1982 Ky.
Acts ch. 382, sec. 3, effective July 15, 1982. -- Amended 1978 Ky. Acts ch. 155,
sec. 82, effective June 17, 1978. -- Amended 1972 Ky. Acts ch. 118, sec. 1. -Amended 1952 Ky. Acts ch. 221, sec. 1, effective June 19, 1952. -- Recodified
1942 Ky. Acts ch. 208, sec. 1, effective October 1, 1942, from Ky. Stat.
sec. 4693.
Legislative Research Commission Note (10/5/90). Pursuant to KRS 7.136(1),
KRS Chapter 13A has been substituted for the prior reference to KRS Chapter
13 in this statute. The sections in KRS Chapter 13 were repealed by 1984 Ky.
Acts ch. 417, 36 and KRS Chapter 13A was created in that same chapter of
the 1984 Ky. Acts.
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