Protection of Public Deposits - GFOA-CT · 2009-02-24 · governing public deposits, and sections...

Protection of Public Protection of Public

Deposits Deposits

Connecticut Government Finance Officers Association Connecticut Government Finance Officers Association Quarterly MeetingQuarterly Meeting

February 5, 2009February 5, 2009

Rocky Hill MarriottRocky Hill Marriott

Tony Conway, Assistant Director, Department of Tony Conway, Assistant Director, Department of BankingBanking

AgendaAgenda

•• IntroductionIntroduction

•• Review of Statutes and Regulations Review of Statutes and Regulations

•• DOB Public Deposit Reporting DOB Public Deposit Reporting

Requirements and MonitoringRequirements and Monitoring

•• Useful Sources of Information on Banks and Useful Sources of Information on Banks and

Credit UnionsCredit Unions

•• Questions and CommentsQuestions and Comments

IntroductionIntroduction

DOB OrganizationDOB Organization

•• Protection of Public Deposits oversight is Protection of Public Deposits oversight is

performed by the Financial Institutions Division performed by the Financial Institutions Division

(FID).(FID).

•• Other Divisions provide oversight for Securities Other Divisions provide oversight for Securities

and Consumer Credit.and Consumer Credit.

Relevant Statutes and RegulationsRelevant Statutes and Regulations

•• Connecticut General Statutes Sections 36aConnecticut General Statutes Sections 36a--330 330

to 36ato 36a--338338

•• Regulations of Connecticut State Agencies Regulations of Connecticut State Agencies

Sections 36aSections 36a--332 to 36a332 to 36a--333333

Protection of Public DepositsProtection of Public Deposits

What is a Public Deposit?What is a Public Deposit?

•• PART IIIPART III

•• PROTECTION OF PUBLIC DEPOSITSPROTECTION OF PUBLIC DEPOSITS

•• Connecticut General StatutesConnecticut General Statutes

•• Sec. 36aSec. 36a--330. (Formerly Sec. 36330. (Formerly Sec. 36--382). 382).

•• (4) (4) ““Public depositPublic deposit”” means (A) moneys of this state or of means (A) moneys of this state or of any governmental subdivision of this state or any commission, any governmental subdivision of this state or any commission, committee, board or officer thereof, any housing authority or committee, board or officer thereof, any housing authority or any court of this state and (B) moneys held by the Judicial any court of this state and (B) moneys held by the Judicial Department in a fiduciary capacity;Department in a fiduciary capacity;


What is a Qualified Public Depository?What is a Qualified Public Depository?

•• Connecticut General Statutes, as amended by section 1 of public Connecticut General Statutes, as amended by section 1 of public act 08act 08--3939

•• (5) (5) ““Qualified public depositoryQualified public depository”” or or ““depositorydepository”” means a bank, means a bank, Connecticut credit union, federal credit union or an outConnecticut credit union, federal credit union or an out--ofof--state bank that state bank that maintains in this state a branch, as defined in section 36amaintains in this state a branch, as defined in section 36a--410, which receives 410, which receives or holds public deposits and (i) segregates eligible collateral or holds public deposits and (i) segregates eligible collateral for public for public deposits as described in section 36adeposits as described in section 36a--333, or (ii) arranges for a letter of credit 333, or (ii) arranges for a letter of credit to be issued in accordance with section 36ato be issued in accordance with section 36a--337.337.

•• (1967, P.A. 517, S. 1; P.A. 77(1967, P.A. 517, S. 1; P.A. 77--614, S. 156, 587, 610; P.A. 78614, S. 156, 587, 610; P.A. 78--303, S. 85, 303, S. 85, 136; P.A. 80136; P.A. 80--482, S. 259, 345, 348; P.A. 81482, S. 259, 345, 348; P.A. 81--193, S. 11, 16; P.A. 83193, S. 11, 16; P.A. 83--331, S. 3; 331, S. 3; P.A. 84P.A. 84--510, S. 1, 5; P.A. 87510, S. 1, 5; P.A. 87--9, S. 2, 3; P.A. 919, S. 2, 3; P.A. 91--245, S. 1; P.A. 92245, S. 1; P.A. 92--12, S. 78; 12, S. 78; P.A. 94P.A. 94--122, S. 155, 340; P.A. 95122, S. 155, 340; P.A. 95--155, S. 22, 29; P.A. 08155, S. 22, 29; P.A. 08--39, S. 1.)39, S. 1.)


What is a Qualified Public Depository?What is a Qualified Public Depository?

•• Regs. Sec. 36aRegs. Sec. 36a--332332--2. Requirements for qualification as qualified public 2. Requirements for qualification as qualified public depositorydepository

•• In order to qualify as a qualified public depository, a financiaIn order to qualify as a qualified public depository, a financial institution l institution shall:shall:

•• (1) Have its principal office in Connecticut, except in the cas(1) Have its principal office in Connecticut, except in the case of an e of an outout--ofof--state bank that maintains in this state a branch as defined in sstate bank that maintains in this state a branch as defined in section ection 36a36a--410 of the Connecticut General Statutes.410 of the Connecticut General Statutes.

•• (2) In the case of a Connecticut credit union, comply with the (2) In the case of a Connecticut credit union, comply with the net net worth requirement of section 36aworth requirement of section 36a--441a of the Connecticut General Statutes.441a of the Connecticut General Statutes.

•• (3) In the case of a federal credit union, comply with the net (3) In the case of a federal credit union, comply with the net worth worth requirement of 12 CFR 702.requirement of 12 CFR 702.

•• (4) Have assets which shall at all times exceed its liabilities(4) Have assets which shall at all times exceed its liabilities..

•• (Effective July 31, 2006)(Effective July 31, 2006)


•• Sec. 36aSec. 36a--336. (Formerly Sec. 36336. (Formerly Sec. 36--389). Public deposits in 389). Public deposits in qualified public depository or outqualified public depository or out--ofof--state bank.state bank. No public No public deposit shall be made except in a qualified public depository ordeposit shall be made except in a qualified public depository orin an outin an out--ofof--state bank if (1) the deposit is permitted by a statute state bank if (1) the deposit is permitted by a statute of this state and (2) such outof this state and (2) such out--ofof--state bank provides eligible state bank provides eligible collateral for such deposit in excess of the Federal Deposit collateral for such deposit in excess of the Federal Deposit Insurance Corporation insurance limit in an amount satisfactory Insurance Corporation insurance limit in an amount satisfactory to the public depositor but in any event affording protection atto the public depositor but in any event affording protection atleast equal to that provided under sections 36aleast equal to that provided under sections 36a--330 to 36a330 to 36a--338, 338, inclusive.inclusive.

•• (1967, P.A. 517, S. 8; P.A. 81(1967, P.A. 517, S. 8; P.A. 81--193, S. 14, 16; P.A. 92193, S. 14, 16; P.A. 92--12, S. 12, S. 80; P.A. 9480; P.A. 94--7, S. 3; 947, S. 3; 94--122, S. 160, 340.)122, S. 160, 340.)


Other Requirements of a Qualified Public Depository?Other Requirements of a Qualified Public Depository?

•• Sec. 36aSec. 36a--332332--8. Total capital8. Total capital

•• (a) For purposes of sections 36a(a) For purposes of sections 36a--332332--1 to 36a1 to 36a--332332--7, inclusive, and sections 36a7, inclusive, and sections 36a--333333--1 and 36a1 and 36a--333333--2 of the Regulations 2 of the Regulations of Connecticut State Agencies, in the case of a bank or an outof Connecticut State Agencies, in the case of a bank or an out--ofof--state bank that maintains in this state a branch as defined in state bank that maintains in this state a branch as defined in section 36asection 36a--410 of the Connecticut General Statutes, 410 of the Connecticut General Statutes, ““total capitaltotal capital”” shall be determined in accordance with applicable federal shall be determined in accordance with applicable federal regulations concerning regulations concerning ““qualifying total capitalqualifying total capital”” or or ““total capitaltotal capital”” as the case may be. For purposes of this subsection, as the case may be. For purposes of this subsection, ““federal federal regulationsregulations”” means the capital guidelines adopted by the Federal Deposit Insmeans the capital guidelines adopted by the Federal Deposit Insurance Corporation, 12 C.F.R. Part 325, Appendix A; urance Corporation, 12 C.F.R. Part 325, Appendix A; the Office of the Comptroller of the Currency, 12 C.F.R. Part 3,the Office of the Comptroller of the Currency, 12 C.F.R. Part 3, Appendix A; the Board of Governors of the Federal Reserve Appendix A; the Board of Governors of the Federal Reserve System, 12 C.F.R. Part 208, Appendix A; or the Office of Thrift System, 12 C.F.R. Part 208, Appendix A; or the Office of Thrift Supervision, 12 C.F.R. Part 567, as from time to time amended.Supervision, 12 C.F.R. Part 567, as from time to time amended.

•• (Effective January 30, 1996)(Effective January 30, 1996)

•• (b) For purposes of sections 36a(b) For purposes of sections 36a--332332--1 to 36a1 to 36a--332332--7, inclusive, of the Regulations of Connecticut State Agencies, 7, inclusive, of the Regulations of Connecticut State Agencies, in the in the case of a Connecticut credit union and a federal credit union, case of a Connecticut credit union and a federal credit union, ““total capitaltotal capital”” means the total of all reserves plus undivided means the total of all reserves plus undivided earnings.earnings.


•• Protection of Public DepositsProtection of Public Deposits

•• Sec. 36aSec. 36a--333333--1. Risk1. Risk--based capital ratiobased capital ratio

•• (a) In the case of a bank or an out(a) In the case of a bank or an out--ofof--state bank that maintains in this state a branch as defined in sstate bank that maintains in this state a branch as defined in section 36aection 36a--410 of the 410 of the Connecticut General Statutes, Connecticut General Statutes, ““riskrisk--based capital ratiobased capital ratio”” shall be determined in accordance with applicable federal regulshall be determined in accordance with applicable federal regulations ations concerning concerning ““qualifying riskqualifying risk--based capital ratiobased capital ratio”” or or ““riskrisk--based capital ratiobased capital ratio”” as the case may be. For purposes of this subsection, as the case may be. For purposes of this subsection, ““federal regulationsfederal regulations”” means capital guidelines adopted by the Federal Deposit Insuranmeans capital guidelines adopted by the Federal Deposit Insurance Corporation, 12 C.F.R. Part 325, ce Corporation, 12 C.F.R. Part 325, Appendix A; the Office of the Comptroller of the Currency, 12 C.Appendix A; the Office of the Comptroller of the Currency, 12 C.F.R. Part 3, Appendix A; the Board of Governors of the Federal F.R. Part 3, Appendix A; the Board of Governors of the Federal Reserve System, 12 C.F.R. Part 208, Appendix A; or the Office ofReserve System, 12 C.F.R. Part 208, Appendix A; or the Office of Thrift Supervision, 12 C.F.R. Part 567, as from time to time Thrift Supervision, 12 C.F.R. Part 567, as from time to time amended.amended.



•• Sec. 36aSec. 36a--332332--5. Requirements for the transfer of eligible collateral5. Requirements for the transfer of eligible collateral

•• (a) Prior to the transfer of eligible collateral to a financial(a) Prior to the transfer of eligible collateral to a financial institution serving as trustee or the designation of collateralinstitution serving as trustee or the designation of collateralalready in the custody of such financial institution as eligiblealready in the custody of such financial institution as eligible collateral, the qualified public depository shall receive writtcollateral, the qualified public depository shall receive written en confirmation in the form of a certified notice from such financiconfirmation in the form of a certified notice from such financial institution that it is in compliance with section 36aal institution that it is in compliance with section 36a--332332--4 of the 4 of the Regulations of Connecticut State Agencies and forward a copy of Regulations of Connecticut State Agencies and forward a copy of the confirmation to the commissioner.the confirmation to the commissioner.

•• (b) Each qualified public depository shall enter into a written(b) Each qualified public depository shall enter into a written trust agreement with the financial institution, federal trust agreement with the financial institution, federal reserve bank or federal home loan bank serving as trustee. Suchreserve bank or federal home loan bank serving as trustee. Such agreement shall identify that the collateral to be transferred agreement shall identify that the collateral to be transferred or or designated is eligible collateral subject to the requirements ofdesignated is eligible collateral subject to the requirements of part III of chapter 665a of the Connecticut General Statutes, part III of chapter 665a of the Connecticut General Statutes, governing public deposits, and sections 36agoverning public deposits, and sections 36a--332332--1 to 36a1 to 36a--332332--8, inclusive, and sections 36a8, inclusive, and sections 36a--333333--1 and 36a1 and 36a--333333--2 of the 2 of the Regulations of Connecticut State Agencies.Regulations of Connecticut State Agencies.

•• (c) Each transfer or designation of eligible collateral shall b(c) Each transfer or designation of eligible collateral shall be accompanied by a certified statement from the qualified e accompanied by a certified statement from the qualified public depository showing the par value or original face amount,public depository showing the par value or original face amount, current par value, description and interest rate, CUSIP number,current par value, description and interest rate, CUSIP number,maturity date, market value and security rating, where applicablmaturity date, market value and security rating, where applicable, of the eligible collateral being transferred or designated ane, of the eligible collateral being transferred or designated and the d the name of the financial institution, federal reserve bank or federname of the financial institution, federal reserve bank or federal home loan bank serving as trustee receiving or holding such al home loan bank serving as trustee receiving or holding such collateral. A copy of the certified statement shall be maintaincollateral. A copy of the certified statement shall be maintained on file with the qualified public depository.ed on file with the qualified public depository.


•• Sec. 36aSec. 36a--332332--6. Valuation of eligible collateral6. Valuation of eligible collateral

•• When the market value of eligible collateral is not readily deteWhen the market value of eligible collateral is not readily determinable, its value shall be based on a written appraisal rminable, its value shall be based on a written appraisal performed by an independent certified appraiser knowledgeable inperformed by an independent certified appraiser knowledgeable in the valuation of the type of collateral.the valuation of the type of collateral.

•• (Effective April 24, 1995(Effective April 24, 1995



•• Regs. Sec. 36aRegs. Sec. 36a--332332--3. Other terms and conditions3. Other terms and conditions

•• (a) No qualified public depository shall maintain eligible coll(a) No qualified public depository shall maintain eligible collateral in its own trust department unless such depository is ateral in its own trust department unless such depository is authorized under law to exercise fiduciary powers in this state.authorized under law to exercise fiduciary powers in this state.

•• (b) Concurrent with receipt of a public deposit, a qualified pu(b) Concurrent with receipt of a public deposit, a qualified public depository shall transfer eligible collateral to secure blic depository shall transfer eligible collateral to secure such public deposit in accordance with section 36asuch public deposit in accordance with section 36a--333 of the Connecticut General Statutes.333 of the Connecticut General Statutes.

•• (c) A qualified public depository shall maintain records includ(c) A qualified public depository shall maintain records including but not limited to a full report of all public deposits by ing but not limited to a full report of all public deposits by depositor name and location, account name, account number, amoundepositor name and location, account name, account number, amount and Federal Employer Identification Number (FEIN).t and Federal Employer Identification Number (FEIN).

•• (d) A qualified public depository shall not charge costs, fees (d) A qualified public depository shall not charge costs, fees or expenses incidental to the transfer or maintenance of or expenses incidental to the transfer or maintenance of eligible collateral against the required amount of eligible colleligible collateral against the required amount of eligible collateral.ateral.

•• (e) Each qualified public depository shall permit the commissio(e) Each qualified public depository shall permit the commissioner or any authorized employee of the department of ner or any authorized employee of the department of banking to inspect, verify and review all documents, reports, rebanking to inspect, verify and review all documents, reports, records and all other financial information deemed necessary to cords and all other financial information deemed necessary to verify compliance with part III of chapter 665a of the Connecticverify compliance with part III of chapter 665a of the Connecticut General Statutes and these regulations.ut General Statutes and these regulations.

•• (f) If during any calendar quarter after the issuance of its ca(f) If during any calendar quarter after the issuance of its call report, the qualified public depository determines that ll report, the qualified public depository determines that pursuant to section 36apursuant to section 36a--333 of the Connecticut General Statutes, it is required to incre333 of the Connecticut General Statutes, it is required to increase the amount of eligible collateral ase the amount of eligible collateral maintained by it, it shall immediately increase such collateral maintained by it, it shall immediately increase such collateral to the amount required and shall immediately thereafter give writo the amount required and shall immediately thereafter give written tten notification of its action to the commissioner and to its publicnotification of its action to the commissioner and to its public depositors. Such notification shall include, but not be limitedepositors. Such notification shall include, but not be limited to, d to, the depositorythe depository’’s current risks current risk--based capital ratio and the amount, nature and value of the addibased capital ratio and the amount, nature and value of the additional eligible collateral segregated tional eligible collateral segregated and designated therefor in accordance with part III of chapter 6and designated therefor in accordance with part III of chapter 665a of the Connecticut General Statutes and these regulations.65a of the Connecticut General Statutes and these regulations.

•• (g) Any qualified public depository that ceases to be a qualifi(g) Any qualified public depository that ceases to be a qualified public depository or no longer wishes to be a qualified ed public depository or no longer wishes to be a qualified public depository shall no longer receive public deposits and shpublic depository shall no longer receive public deposits and shall give immediate notice to the commissioner, who shall all give immediate notice to the commissioner, who shall thereupon instruct such qualified public depository of the procethereupon instruct such qualified public depository of the procedures to be followed with respect to the return of public deposidures to be followed with respect to the return of public deposits ts and eligible collateral.and eligible collateral.

•• (Effective April 24, 1995)(Effective April 24, 1995)


Trustee RequirementsTrustee Requirements

•• Sec. 36aSec. 36a--332332--4. Requirements for financial institutions to serve as 4. Requirements for financial institutions to serve as trustee for segregated eligible collateraltrustee for segregated eligible collateral

•• No financial institution shall accept a transfer of eligible colNo financial institution shall accept a transfer of eligible collateral from lateral from a qualified public depository pursuant to subsection (b) of secta qualified public depository pursuant to subsection (b) of section 36aion 36a--333 of 333 of the Connecticut General Statutes unless such financial institutithe Connecticut General Statutes unless such financial institution (1) is on (1) is authorized under law to exercise fiduciary powers in this state,authorized under law to exercise fiduciary powers in this state, (2) meets the (2) meets the requirements of section 36arequirements of section 36a--332332--2 of the Regulations of Connecticut State 2 of the Regulations of Connecticut State Agencies, as applicable, and (3) is federally insured or receiveAgencies, as applicable, and (3) is federally insured or receives the approval of s the approval of the commissioner. If a financial institution ceases to meet sucthe commissioner. If a financial institution ceases to meet such requirements, h requirements, it shall give immediate notice to the qualified public depositorit shall give immediate notice to the qualified public depository and the y and the commissioner who shall thereupon instruct such institution with commissioner who shall thereupon instruct such institution with respect to respect to the disposition of eligible collateral.the disposition of eligible collateral.



What are the Powers of the Commissioner?What are the Powers of the Commissioner?

•• Sec. 36aSec. 36a--332. (Formerly Sec. 36332. (Formerly Sec. 36--385). Powers of commissioner.385). Powers of commissioner. (a) The commissioner has the power (1) (a) The commissioner has the power (1) to require any qualified public depository to furnish such inforto require any qualified public depository to furnish such information as the commissioner shall request. Any mation as the commissioner shall request. Any public depository which refuses or neglects to give any informatpublic depository which refuses or neglects to give any information so requested shall no longer be a qualified ion so requested shall no longer be a qualified public depository and shall be excluded from the right to receivpublic depository and shall be excluded from the right to receive public deposits; (2) to take such action as the e public deposits; (2) to take such action as the commissioner deems best for the protection, collection, compromicommissioner deems best for the protection, collection, compromise or settlement of any claim arising in case se or settlement of any claim arising in case of loss; and (3) to fix the official date on which any loss shalof loss; and (3) to fix the official date on which any loss shall be deemed to have occurred taking into l be deemed to have occurred taking into consideration the orders, rules and regulations of any supervisoconsideration the orders, rules and regulations of any supervisory authority as they affect the failure or inability ry authority as they affect the failure or inability of a qualified public depository to repay public deposits in fulof a qualified public depository to repay public deposits in full.l.

•• (b) The commissioner shall adopt regulations, in accordance wit(b) The commissioner shall adopt regulations, in accordance with the provisions of chapter 54, to h the provisions of chapter 54, to administer the provisions of sections 36aadminister the provisions of sections 36a--330 to 36a330 to 36a--338, inclusive. Such regulations shall establish (1) 338, inclusive. Such regulations shall establish (1) requirements for the qualification of financial institutions as requirements for the qualification of financial institutions as qualified public depositories, (2) other terms and qualified public depositories, (2) other terms and conditions consistent with sections 36aconditions consistent with sections 36a--330 to 36a330 to 36a--338, inclusive, under which public deposits may be received 338, inclusive, under which public deposits may be received and held, (3) requirements for financial institutions eligible tand held, (3) requirements for financial institutions eligible to serve as trustees for segregated eligible collateral o serve as trustees for segregated eligible collateral under subsection (b) of section 36aunder subsection (b) of section 36a--333, (4) requirements for the transfer of eligible collateral fr333, (4) requirements for the transfer of eligible collateral from a qualified om a qualified public depository to a financial institution serving as trustee public depository to a financial institution serving as trustee for such collateral under subsection (b) of section for such collateral under subsection (b) of section 36a36a--333, (5) provisions governing the valuation of eligible collater333, (5) provisions governing the valuation of eligible collateral when the market value of such collateral is al when the market value of such collateral is not readily determinable, and (6) such other provisions as the cnot readily determinable, and (6) such other provisions as the commissioner deems necessary to carry out the ommissioner deems necessary to carry out the requirements of sections 36arequirements of sections 36a--330 to 36a330 to 36a--338, inclusive.338, inclusive.


•• What are the Collateral Requirements?What are the Collateral Requirements?

•• Sec. 36aSec. 36a--333. (Formerly Sec. 36333. (Formerly Sec. 36--386). Collateral 386). Collateral

requirements.requirements. (a) To secure public deposits, each (a) To secure public deposits, each

qualified public depository shall at all times maintain, qualified public depository shall at all times maintain,

segregated from its other assets as provided in segregated from its other assets as provided in

subsection (b) of this section, eligible collateral in an subsection (b) of this section, eligible collateral in an

amount at least equal to the following percentage of amount at least equal to the following percentage of

public deposits held by the depository: public deposits held by the depository: ……


•• Sec. 36aSec. 36a--333. (Formerly Sec. 36333. (Formerly Sec. 36--386). Collateral requirements.386). Collateral requirements. : :

•• …… (1) For any qualified public depository having a risk(1) For any qualified public depository having a risk--based capital ratio of ten per cent or greater, a sum based capital ratio of ten per cent or greater, a sum equal to ten per cent of all public deposits held by the depositequal to ten per cent of all public deposits held by the depository; (2) for any qualified public depository having ory; (2) for any qualified public depository having a riska risk--based capital ratio of less than ten per cent but greater than obased capital ratio of less than ten per cent but greater than or equal to eight per cent, a sum equal to r equal to eight per cent, a sum equal to twentytwenty--five per cent of all public deposits held by the depository; (3)five per cent of all public deposits held by the depository; (3) for any qualified public depository having for any qualified public depository having a riska risk--based capital ratio of less than eight per cent but greater thanbased capital ratio of less than eight per cent but greater than or equal to three per cent, a sum equal to or equal to three per cent, a sum equal to one hundred per cent of all public deposits held by the depositoone hundred per cent of all public deposits held by the depository; (4) for any qualified public depository ry; (4) for any qualified public depository having a riskhaving a risk--based capital ratio of less than three per cent, and, notwithstabased capital ratio of less than three per cent, and, notwithstanding the provisions of subdivisions nding the provisions of subdivisions (1) to (3), inclusive, of this subsection, for any qualified pub(1) to (3), inclusive, of this subsection, for any qualified public depository which has been conducting business lic depository which has been conducting business in this state for a period of less than two years except for a qin this state for a period of less than two years except for a qualified public depository that is a successor ualified public depository that is a successor institution to a qualified public depository which conducted businstitution to a qualified public depository which conducted business in this state for two years or more, a sum iness in this state for two years or more, a sum equal to one hundred and twenty per cent of all public deposits equal to one hundred and twenty per cent of all public deposits held by the depository; provided, the qualified held by the depository; provided, the qualified public depository and the public depositor may agree on an amounpublic depository and the public depositor may agree on an amount of eligible collateral to be maintained by t of eligible collateral to be maintained by the depository that is greater than the minimum amounts requiredthe depository that is greater than the minimum amounts required under subdivisions (1) to (4), inclusive, of under subdivisions (1) to (4), inclusive, of this subsection; (5) notwithstanding the riskthis subsection; (5) notwithstanding the risk--based capital ratio provisions of subdivisions (1) to (3), inclubased capital ratio provisions of subdivisions (1) to (3), inclusive, sive, of this subsection, for any qualified public depository that is of this subsection, for any qualified public depository that is an uninsured bank, a sum equal to one hundred an uninsured bank, a sum equal to one hundred twenty per cent of all public deposits held by the depository; atwenty per cent of all public deposits held by the depository; and (6) notwithstanding the risknd (6) notwithstanding the risk--based capital based capital ratio provisions of subdivisions (1) to (3), inclusive, of this ratio provisions of subdivisions (1) to (3), inclusive, of this subsection, for any qualified public depository that subsection, for any qualified public depository that is subject to an order to cease and desist, or has entered into is subject to an order to cease and desist, or has entered into a stipulation and agreement, or a letter of a stipulation and agreement, or a letter of understanding and agreement with a bank or credit union supervisunderstanding and agreement with a bank or credit union supervisor, a sum equal to one hundred twenty per or, a sum equal to one hundred twenty per cent of all public deposits held by the depository, provided, thcent of all public deposits held by the depository, provided, the qualified public depository and the public e qualified public depository and the public depositor may agree on an amount of eligible collateral to be madepositor may agree on an amount of eligible collateral to be maintained by the depository that is greater than intained by the depository that is greater than the minimum amounts required under subdivisions (1) to (6), inclthe minimum amounts required under subdivisions (1) to (6), inclusive, of this subsection. usive, of this subsection.


•• Sec. 36aSec. 36a--333. (Formerly Sec. 36333. (Formerly Sec. 36--386). Collateral requirements.386). Collateral requirements.

•• …… For purposes of this subsection, the amount of all public deposFor purposes of this subsection, the amount of all public deposits held by the depository shall its held by the depository shall be determined based on either the public deposits reported on thbe determined based on either the public deposits reported on the most recent written report filed e most recent written report filed with the commissioner pursuant to section 36awith the commissioner pursuant to section 36a--338 or the average of the public deposits reported 338 or the average of the public deposits reported on the four such most recent written reports, whichever amount ion the four such most recent written reports, whichever amount is greater. For purposes of this s greater. For purposes of this subsection, the depositorysubsection, the depository’’s risks risk--based capital ratio shall be determined, in accordance with based capital ratio shall be determined, in accordance with applicable federal regulations and regulations adopted by the coapplicable federal regulations and regulations adopted by the commissioner in accordance with mmissioner in accordance with chapter 54, based on the most recent quarterly call report, provchapter 54, based on the most recent quarterly call report, provided (A) if, during any calendar ided (A) if, during any calendar quarter after the issuance of such report, the depository experiquarter after the issuance of such report, the depository experiences a decline in its riskences a decline in its risk--based based capital ratio to a level that would require the depository to macapital ratio to a level that would require the depository to maintain a higher amount of eligible intain a higher amount of eligible collateral under subdivisions (1) to (4), inclusive, of this subcollateral under subdivisions (1) to (4), inclusive, of this subsection, the depository shall increase section, the depository shall increase the amount of eligible collateral maintained by it to the minimuthe amount of eligible collateral maintained by it to the minimum required under subdivisions (1) m required under subdivisions (1) to (4), inclusive, of this subsection based on such lower riskto (4), inclusive, of this subsection based on such lower risk--based capital ratio and shall notify the based capital ratio and shall notify the commissioner of its actions; and (B) if, during any calendar quacommissioner of its actions; and (B) if, during any calendar quarter after the issuance of such rter after the issuance of such report, the commissioner reasonably determines that the depositoreport, the commissioner reasonably determines that the depositoryry’’s risks risk--based capital ratio is based capital ratio is likely to decline to a level that would require the depository tlikely to decline to a level that would require the depository to maintain a higher amount of o maintain a higher amount of eligible collateral under subdivisions (1) to (4), inclusive, ofeligible collateral under subdivisions (1) to (4), inclusive, of this subsection, the commissioner may this subsection, the commissioner may require that the depository increase the amount of eligible collrequire that the depository increase the amount of eligible collateral maintained by it to the ateral maintained by it to the minimum required under subdivisions (1) to (4), inclusive, of thminimum required under subdivisions (1) to (4), inclusive, of this subsection based on the is subsection based on the commissionercommissioner’’s determination of such lower risks determination of such lower risk--based capital ratio.based capital ratio.


•• Sec. 36aSec. 36a--333. (Formerly Sec. 36333. (Formerly Sec. 36--386). Collateral requirements.386). Collateral requirements.

•• (b) Each qualified public depository having a risk(b) Each qualified public depository having a risk--based capital ratio of eight per cent or greater shall transfer based capital ratio of eight per cent or greater shall transfer eligible collateral eligible collateral maintained under subsection (a) of this section to its own trustmaintained under subsection (a) of this section to its own trust department, provided such trust department is located in this sdepartment, provided such trust department is located in this state tate unless the commissioner approves otherwise, to the trust departmunless the commissioner approves otherwise, to the trust department of another financial institution, provided such eligible ent of another financial institution, provided such eligible collateral shall be maintained in such other financial instituticollateral shall be maintained in such other financial institutionon’’s trust department located in this state unless the commissioners trust department located in this state unless the commissionerapproves otherwise, or to a federal reserve bank or federal homeapproves otherwise, or to a federal reserve bank or federal home loan bank. Each qualified public depository having a riskloan bank. Each qualified public depository having a risk--based based capital ratio of less than eight per cent shall transfer eligiblcapital ratio of less than eight per cent shall transfer eligible collateral maintained under subsection (a) of this section to e collateral maintained under subsection (a) of this section to the trust the trust department of a financial institution that is not owned or contrdepartment of a financial institution that is not owned or controlled by the depository or by a holding company owning or olled by the depository or by a holding company owning or controlling the depository, provided such eligible collateral shcontrolling the depository, provided such eligible collateral shall be maintained in such other financial institutionall be maintained in such other financial institution’’s trust s trust department located in this state unless the commissioner approvedepartment located in this state unless the commissioner approves otherwise, or to a federal reserve bank or federal home loan s otherwise, or to a federal reserve bank or federal home loan bank. Such transfers of eligible collateral shall be made in a bank. Such transfers of eligible collateral shall be made in a manner prescribed by the commissioner. Eligible collateral shalmanner prescribed by the commissioner. Eligible collateral shall be l be valued at market value or as determined by the commissioner if mvalued at market value or as determined by the commissioner if market value is not readily determinable, and the value of such arket value is not readily determinable, and the value of such eligible collateral shall be determined and adjusted on a quarteeligible collateral shall be determined and adjusted on a quarterly basis. Without the requirement of any further action, the rly basis. Without the requirement of any further action, the commissioner shall have, for the benefit of public depositors, acommissioner shall have, for the benefit of public depositors, a perfected security interest in all such eligible collateral helperfected security interest in all such eligible collateral held in such d in such segregated trust accounts, granted pursuant to and in accordancesegregated trust accounts, granted pursuant to and in accordance with the terms of the agreement between the public depositor with the terms of the agreement between the public depositor and the qualified public depository. Such security interest shaand the qualified public depository. Such security interest shall have priority over all other perfected security interests andll have priority over all other perfected security interests and liens.liens.

•• (c) The depository shall have the right to make substitutions o(c) The depository shall have the right to make substitutions of eligible collateral at any time without notice. The f eligible collateral at any time without notice. The depository shall have the right to reduce the amount of eligibledepository shall have the right to reduce the amount of eligible collateral maintained under subsection (a) of this section provcollateral maintained under subsection (a) of this section provided ided such reduction shall be determined based on the amount of all pusuch reduction shall be determined based on the amount of all public deposits held by the depository and the depositoryblic deposits held by the depository and the depository’’s risks risk--based capital ratio as determined in accordance with said subsecbased capital ratio as determined in accordance with said subsection (a). The depository shall provide written notice to its pution (a). The depository shall provide written notice to its public blic depositors of any such reduction in the amount of eligible colladepositors of any such reduction in the amount of eligible collateral maintained under subsection (a) of this section.teral maintained under subsection (a) of this section.

•• (d) The income from the assets which constitute segregated elig(d) The income from the assets which constitute segregated eligible collateral shall belong to the depository without ible collateral shall belong to the depository without restriction.restriction.

•• (e) Eligible collateral pledged to secure public deposits under(e) Eligible collateral pledged to secure public deposits under subsection (a) of this section shall have a minimum market subsection (a) of this section shall have a minimum market value as expressed in the following collateral ratios:value as expressed in the following collateral ratios:

Form of Eligible CollateralForm of Eligible Collateral

Collateral Ratio Collateral Ratio -- Form of Eligible (Market value Collateral Pledged divided by Form of Eligible (Market value Collateral Pledged divided by public deposit plus accrued interest)public deposit plus accrued interest)

•• 1. United States Treasury bills, notes and bonds1. United States Treasury bills, notes and bonds

A. Maturing in less than one year102%A. Maturing in less than one year102%

B. Maturing in one to five years105%B. Maturing in one to five years105%

C. Maturing in more than five years110%C. Maturing in more than five years110%

D. ZeroD. Zero--coupon treasury securities with maturities exceeding ten years12coupon treasury securities with maturities exceeding ten years120%0%

•• 2. Actively traded United States government agency securities2. Actively traded United States government agency securities

A. Maturing in less than one year103%A. Maturing in less than one year103%

B. Maturing in one to five years107%B. Maturing in one to five years107%

C. Maturing in more than five years115%C. Maturing in more than five years115%

•• 3. United States government agency variable rate securities103%3. United States government agency variable rate securities103%


Collateral Ratio Form of Eligible (Market value Collateral PledgCollateral Ratio Form of Eligible (Market value Collateral Pledged divided by ed divided by public deposit plus accrued interest)public deposit plus accrued interest)

•• 4. Government National Mortgage Association mortgage pass4. Government National Mortgage Association mortgage pass--through or through or participation certificates or similar securitiesparticipation certificates or similar securities

A. Current issues115%A. Current issues115%

B. Older issues120%B. Older issues120%

C. Issues for which prices are not quoted125%C. Issues for which prices are not quoted125%

•• 5. Other United States government securities125%5. Other United States government securities125%

•• 6. Other mortgage pass6. Other mortgage pass--through or participation certificates or similar through or participation certificates or similar securities125%securities125%

•• 7. One7. One--toto--four family residential mortgages125%four family residential mortgages125%


Collateral Ratio Form of Eligible (Market value Collateral PledgCollateral Ratio Form of Eligible (Market value Collateral Pledged divided by ed divided by public deposit plus accrued interest)public deposit plus accrued interest)

•• 8. State and municipal bonds8. State and municipal bonds

A. General obligation bondsA. General obligation bonds

i. Maturing in less than one year102%i. Maturing in less than one year102%

ii. Maturing in one to five years107%ii. Maturing in one to five years107%

iii. Maturing in more than five years110%iii. Maturing in more than five years110%

B. Revenue bondsB. Revenue bonds

i. Maturing in less than one year105i. Maturing in less than one year105--110110

%ii. Maturing in one to five years110%ii. Maturing in one to five years110--120%120%

iii. Maturing in more than five years120iii. Maturing in more than five years120--130%130%


•• Sec. 36aSec. 36a--337. (Formerly Sec. 36337. (Formerly Sec. 36--390). Securing of public deposits. Private insurance in 390). Securing of public deposits. Private insurance in lieu of eligible collateral.lieu of eligible collateral. (a) All qualified public depositories shall have power to secu(a) All qualified public depositories shall have power to secure public re public deposits in accordance with sections 36adeposits in accordance with sections 36a--330 to 36a330 to 36a--338, inclusive. Except as provided in said 338, inclusive. Except as provided in said sections, no bond or other security shall be required of or givesections, no bond or other security shall be required of or given by any qualified public depository n by any qualified public depository for any public deposit.for any public deposit.

•• (b) In lieu of eligible collateral required under section 36a(b) In lieu of eligible collateral required under section 36a--333, at least to the extent 333, at least to the extent provided by said section, not more than fifty per cent of the puprovided by said section, not more than fifty per cent of the public deposits held by any qualified blic deposits held by any qualified public depository may be secured solely by a private insurance ppublic depository may be secured solely by a private insurance policy purchased by the depository, olicy purchased by the depository, the depositor, or any other third party. Any private insurance the depositor, or any other third party. Any private insurance policy used to secure public policy used to secure public deposits shall be issued by an insurance company licensed to do deposits shall be issued by an insurance company licensed to do business in Connecticut.business in Connecticut.

•• (c) In lieu of eligible collateral required under section 36a(c) In lieu of eligible collateral required under section 36a--333, public deposits held by any 333, public deposits held by any qualified public depository may be secured solely by an irrevocaqualified public depository may be secured solely by an irrevocable letter of credit issued by the ble letter of credit issued by the Federal Home Loan Bank of Boston, provided such federal home loaFederal Home Loan Bank of Boston, provided such federal home loan bank has a rating of the n bank has a rating of the highest rating level from a rating service recognized by the comhighest rating level from a rating service recognized by the commissioner and provided further missioner and provided further the amount of the letter of credit, as a percentage of the publithe amount of the letter of credit, as a percentage of the public deposits, is no less than the c deposits, is no less than the amount required by section 36aamount required by section 36a--333 for eligible collateral for the particular depository.333 for eligible collateral for the particular depository.

•• (1967, P.A. 517, S. 9; P.A. 91(1967, P.A. 517, S. 9; P.A. 91--177; 91177; 91--245, S. 7; P.A. 94245, S. 7; P.A. 94--122, S. 161, 340; P.A. 08122, S. 161, 340; P.A. 08--39, S. 3.)39, S. 3.)


What happens upon loss?What happens upon loss?

•• Sec. 36aSec. 36a--334. (Formerly Sec. 36334. (Formerly Sec. 36--387). Procedure upon loss.387). Procedure upon loss. When the commissioner determines that a When the commissioner determines that a loss has occurred, the commissioner shall as soon as possible maloss has occurred, the commissioner shall as soon as possible make payment to the proper public officers of all ke payment to the proper public officers of all public deposits subject to such loss, pursuant to the following public deposits subject to such loss, pursuant to the following procedure: (1) For the purposes of determining procedure: (1) For the purposes of determining the sums to be paid, the commissioner or receiver shall, within the sums to be paid, the commissioner or receiver shall, within twenty days after issuance of a restraining order twenty days after issuance of a restraining order or taking possession of any qualified public depository, ascertaor taking possession of any qualified public depository, ascertain the amount of public deposits held by the in the amount of public deposits held by the depository as disclosed by its records and the amount thereof codepository as disclosed by its records and the amount thereof covered by deposit insurance and certify the vered by deposit insurance and certify the amounts to each public depositor having public funds on deposit amounts to each public depositor having public funds on deposit in the depository; (2) within ten days after in the depository; (2) within ten days after receipt of such certification, each such public depositor shall receipt of such certification, each such public depositor shall furnish to the commissioner verified statements of furnish to the commissioner verified statements of its deposits in the depository as disclosed by its records plus its deposits in the depository as disclosed by its records plus information concerning any letters of credit issued information concerning any letters of credit issued to the public depositor pursuant to section 36ato the public depositor pursuant to section 36a--337; (3) upon receipt of such certificate and statements, the 337; (3) upon receipt of such certificate and statements, the commissioner shall ascertain and fix the amount of such public dcommissioner shall ascertain and fix the amount of such public deposits, net after deduction of any deposit eposits, net after deduction of any deposit insurance and any amount received or to be received by the publiinsurance and any amount received or to be received by the public depositor pursuant to a letter of credit c depositor pursuant to a letter of credit issued in accordance with section 36aissued in accordance with section 36a--337, and assess the same against the depository in which the los337, and assess the same against the depository in which the loss s occurred; (4) the assessment made by the commissioner shall be poccurred; (4) the assessment made by the commissioner shall be payable on the second business day following ayable on the second business day following demand, and in case of the failure of the qualified public deposdemand, and in case of the failure of the qualified public depository so to pay, the commissioner shall itory so to pay, the commissioner shall immediately take possession of the eligible collateral, if any, immediately take possession of the eligible collateral, if any, segregated by the depository pursuant to sections segregated by the depository pursuant to sections 36a36a--330 to 36a330 to 36a--338, inclusive, and liquidate the same for the purpose of paying338, inclusive, and liquidate the same for the purpose of paying such assessment; (5) upon such assessment; (5) upon receipt of the assessment, the commissioner shall reimburse the receipt of the assessment, the commissioner shall reimburse the public depositors of the depository in which public depositors of the depository in which the loss occurred to the extent of the depositorythe loss occurred to the extent of the depository’’s net deposit liability to them.s net deposit liability to them.

•• (1967, P.A. 517, S. 6; P.A. 77(1967, P.A. 517, S. 6; P.A. 77--614, S. 158, 610; P.A. 87614, S. 158, 610; P.A. 87--9, S. 2, 3; P.A. 919, S. 2, 3; P.A. 91--245, S. 5; P.A. 92245, S. 5; P.A. 92--12, S. 79; 12, S. 79; P.A. 94P.A. 94--122, S. 159, 340; P.A. 08122, S. 159, 340; P.A. 08--39, S. 2.)39, S. 2.)


•• Sec. 36aSec. 36a--335. (Formerly Sec. 36335. (Formerly Sec. 36--388). Subrogation of 388). Subrogation of commissioner to depositorcommissioner to depositor’’s rights.s rights. Upon payment to any Upon payment to any public depositor, the commissioner shall be subrogated to all ofpublic depositor, the commissioner shall be subrogated to all ofsuch depositorsuch depositor’’s right, title and interest against the depository in s right, title and interest against the depository in which the loss occurred and shall share in any distribution of iwhich the loss occurred and shall share in any distribution of its ts assets ratably with other depositors. Any sums received from assets ratably with other depositors. Any sums received from any distribution shall be paid to the public depositors to the any distribution shall be paid to the public depositors to the extent of any unpaid net deposit liability. If the commissionerextent of any unpaid net deposit liability. If the commissionerincurs expense in enforcing any such claim, the amount thereof incurs expense in enforcing any such claim, the amount thereof shall be paid as a liquidation expense of the depository in whicshall be paid as a liquidation expense of the depository in which h the loss occurred.the loss occurred.

(1967, P.A. 517, S. 7; P.A. 77(1967, P.A. 517, S. 7; P.A. 77--614, S. 159, 610; P.A. 91614, S. 159, 610; P.A. 91--245, S. 6.)245, S. 6.)


What is required to be reported to the Commissioner?What is required to be reported to the Commissioner?

•• Sec. 36aSec. 36a--338. (Formerly Sec. 36338. (Formerly Sec. 36--391). Report of public depository.391). Report of public depository. On each call On each call report date, each qualified public depository shall file with threport date, each qualified public depository shall file with the commissioner a written e commissioner a written report, certified under oath, indicating its riskreport, certified under oath, indicating its risk--based capital ratio and total capital, as based capital ratio and total capital, as determined in accordance with applicable federal regulations anddetermined in accordance with applicable federal regulations and regulations adopted regulations adopted by the commissioner in accordance with chapter 54, the total amoby the commissioner in accordance with chapter 54, the total amount of public unt of public deposits held by it and the amount and nature of the eligible codeposits held by it and the amount and nature of the eligible collateral segregated and llateral segregated and designated to secure the public deposits in accordance with sectdesignated to secure the public deposits in accordance with sections 36aions 36a--330 to 36a330 to 36a--338, inclusive, and the amount and the name of the issuer of any338, inclusive, and the amount and the name of the issuer of any letter of credit issued letter of credit issued pursuant to section 36apursuant to section 36a--337. Each depository shall furnish a copy of its most recent 337. Each depository shall furnish a copy of its most recent report to any public depositor having public funds on deposit inreport to any public depositor having public funds on deposit in the depository, upon the depository, upon request of the depositor. Any public depository which refuses orequest of the depositor. Any public depository which refuses or neglects to furnish r neglects to furnish any report or give any information as required by this section sany report or give any information as required by this section shall no longer be a hall no longer be a qualified public depository and shall be excluded from the rightqualified public depository and shall be excluded from the right to receive public to receive public deposits.deposits.

•• (1967, P.A. 517, S. 10; P.A. 77(1967, P.A. 517, S. 10; P.A. 77--614, S. 160, 610; P.A. 87614, S. 160, 610; P.A. 87--9, S. 2, 3; P.A. 919, S. 2, 3; P.A. 91--245, 245, S. 8; P.A. 94S. 8; P.A. 94--122, S. 162, 340; P.A. 08122, S. 162, 340; P.A. 08--39, S. 4.)39, S. 4.)


What is required to be reported to the Commissioner?What is required to be reported to the Commissioner?

•• Regs. Sec. 36aRegs. Sec. 36a--332332--7. Reports to commissioner7. Reports to commissioner

•• Each qualified public depository shall file with the commissioneEach qualified public depository shall file with the commissioner the following:r the following:

•• (a) Call reports for each of the quarters ending March thirty(a) Call reports for each of the quarters ending March thirty--first, June thirtieth, first, June thirtieth, September thirtieth and December thirtySeptember thirtieth and December thirty--first. Each report shall be submitted to the first. Each report shall be submitted to the commissioner not later than thirty days after the date ending thcommissioner not later than thirty days after the date ending the quarter covered by the report.e quarter covered by the report.

•• (b) Written reports, certified under oath, for each of the quar(b) Written reports, certified under oath, for each of the quarters ending March thirtyters ending March thirty--first, June thirtieth, September thirtieth and December thirtyfirst, June thirtieth, September thirtieth and December thirty--first, indicating its total capital, riskfirst, indicating its total capital, risk--based capital ratio, public deposits, the interest or other pecubased capital ratio, public deposits, the interest or other pecuniary consideration such depository niary consideration such depository allows for or upon such deposit or payment and the amount, naturallows for or upon such deposit or payment and the amount, nature and value of the eligible e and value of the eligible collateral segregated and designated therefor in accordance withcollateral segregated and designated therefor in accordance with part III of chapter 665a of the part III of chapter 665a of the Connecticut General Statutes and sections 36aConnecticut General Statutes and sections 36a--332332--1 to 36a1 to 36a--332332--8, inclusive, and sections 36a8, inclusive, and sections 36a--333333--1 and 36a1 and 36a--333333--2 of the Regulations of Connecticut State Agencies. Each report2 of the Regulations of Connecticut State Agencies. Each report shall be filed shall be filed not later than thirty days after the date ending the quarter covnot later than thirty days after the date ending the quarter covered by the report. Each qualified ered by the report. Each qualified public depository shall retain a copy of such reports for a peripublic depository shall retain a copy of such reports for a period of seven years.od of seven years.


Sources of InformationSources of Information

•• www.ct.gov/dobwww.ct.gov/dob Statutes and Regulations, Statutes and Regulations,

Deposits, Financial Institution Information and Deposits, Financial Institution Information and

Data, Department ContactsData, Department Contacts

•• www.fdic.govwww.fdic.gov Call reports for BanksCall reports for Banks

•• www.ncua.govwww.ncua.gov Financial Performance and Financial Performance and

Ratios for Credit UnionsRatios for Credit Unions

Contact DetailsContact Details

•• Phone Phone –– 860860--240240--81828182

•• EE--mail mail –– [email protected]@ct.gov

•• Website Website –– www.ct.gov/dobwww.ct.gov/dob

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