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OREGON STATE TREASURY

 

DIVISION 40

PUBLIC FUNDS COLLATERALIZATION RULES

170-040-0020

Expenses of Administration Paid by Depositories

For the services, duties and activities of the Office of the State Treasurer (OST) performed under ORS Chapter 295, the OST shall charge depositories for the costs incurred by the OST based on a fixed fee plus a pro rata share of the remaining costs according to the amount of public funds deposits held by a depository. Each depository shall pay any fee amounts owed to OST by the time and in accord with the terms set forth in an invoice received from OST. If the invoice amount exceeds $200, payment shall be made by electronic funds transfer (EFT) in the manner and to the account designated by OST in its invoice. If, for some reason, a depository is unable to make payment by EFT and chooses to remit by check, a penalty, not to exceed five (5) percent of the amount of the payment with a maximum penalty of $50, may be assessed to the depository.

Stat. Auth.: ORS 293.525 & 295.106
Stats. Implemented: ORS 293.525 & 295.106
Hist.: OST 2-2008, f. 6-27-08, cert. ef. 7-1-08; OST 1-2009, f. & cert. ef. 4-10-09; OST 1-2013, f. & cert. ef. 4-2-13

170-040-0030

Approval of Loan Repayment Obligations Pledged by Depositories

(1) Loan repayment obligations owed by a county, city, school district, port district or other public body in the State of Oregon may be pledged by a depository as collateral only after the depository has received written approval from the Office of the State Treasurer (OST). However, the OST will not accept requests for and approve such loans as collateral, unless and until written notice is provided to depositories that, from a date designated in the notice, OST will begin to accept such requests and evaluate the acceptability of such loans as collateral. In the event OST approves such loans as collateral, the loans will be valued at seventy-five percent of their outstanding principal amount for purposes of calculating whether adequate collateral has been pledged by a depository with its custodian, as required under ORS Chapter 295.

(2) After receipt of the notice described above, the depository shall submit a written request to the OST containing the following information:

(a) The name of the payment obligor under the loan;

(b) The original principal balance of the loan;

(c) The current unpaid principal balance of the loan;

(d) The maturity date for the loan;

(e) Whether the loan may be repaid prior to maturity;

(f) The credit rating (if applicable) of the general obligations of the obligor;

(g) The credit enhancement (such as insurance), if any, for the loan;

(h) Whether an event of default has ever occurred under the loan; and

(i) Whether the obligor has defaulted with respect to the payment of principal or interest on any of its loans or similar obligations within the preceding 10 years or during the period of its existence if that is less than 10 years.

(3) The OST will permit a loan to be pledged as security only if:

(a) The public body has not been in default with respect to the payment of principal or interest on any of its loans within the preceding 10 years or during the period of its existence if that is less than 10 years;

(b) If rated by a rating agency, the public body’s general obligations have a credit rating of AA or Aa;

(c) If the loan is credit enhanced, the provider of the credit enhancement has a credit rating of, AA or Aa;

(d) If the above referenced ratings are not available, OST determines, based on the information submitted to it, that the loan is of sufficiently high credit quality that it may be pledged as collateral; and

(e) The unpaid principal amount of the loans pledged does not exceed 30% of the depository’s collateral.

Stat. Auth.:
Stats. Implemented: ORS 295.001(19)(f)
Hist.: OST 2-2008, f. 6-27-08, cert. ef. 7-1-08; OST 1-2013, f. & cert. ef. 4-2-13

170-040-0040

Approval of Bond Anticipation Notes Pledged by Depositories

(1) Bond anticipation notes issued, sold or assumed by an authority under ORS 441.560 may be pledged as collateral by a depository only after the depository has received written approval from the Office of the State Treasurer (OST). However, the OST will not accept requests for and approve such bond anticipation notes as collateral, unless and until written notice is provided to depositories that, from a date designated in the notice, OST will begin to accept such requests and evaluate the acceptability of such notes as collateral.

(2) After receipt of the notice described above, the depository shall submit a written request to the OST containing the following information:

(a) The name of the note issuer;

(b) The original principal balance of the note;

(c) The current unpaid principal balance of the note;

(d) The maturity date of the note;

(e) Whether the note may be repaid prior to maturity;

(f) The credit rating (if applicable) of the issuer;

(g) The credit enhancement (such as insurance), if any, of the note;

(h) Whether an event of default has ever occurred under the note; and

(i) Whether the issuer has defaulted with respect to the payment of principal or interest on any of its notes or similar obligations within the preceding 10 years or during the period of its existence if that is less than 10 years.

(3) The OST will permit a note to be pledged as security only if:

(a) The issuer has not been in default with respect to the payment of principal or interest on any of its obligations within the preceding 10 years or during the period of its existence if that is less than 10 years;

(b) If rated by a rating agency, the issuer’s general obligations have a credit rating of AA or Aa;

(c) If the note is credit enhanced, the provider of the credit enhancement has a credit rating of AA or Aa; or

(d) OST determines, based on the information submitted to it, that the note is of sufficiently high credit quality that it may be pledged as collateral.

(4) If the OST determines that there is an insufficient market in bond anticipation notes issued, sold or assumed by an authority under ORS 441.560 to provide for the efficient trading and liquidation of such bond anticipation notes, OST will value bond anticipation notes issued, sold or assumed by an authority under 441.560 at seventy-five percent of their outstanding principal amount for purposes of calculating whether adequate collateral has been pledged by a depository with its custodian, as required under ORS Chapter 295.

Stat. Auth.:
Stats. Implemented: ORS 295.001(19)(g)
Hist.: OST 2-2008, f. 6-27-08, cert. ef. 7-1-08; OST 1-2013, f. & cert. ef. 4-2-13

170-040-0050

Public Officials’ Notification of Depositories

Each public official shall maintain on file with the Office of the State Treasurer the name and address of each depository in which the public official deposits public funds and shall update such information at least annually or within three business days after the effective date of a change in any depository.

Stat. Auth.:
Stats. Implemented: ORS 295.006(2)(3)
Hist.: OST 2-2008, f. 6-27-08, cert. ef. 7-1-08; OST 1-2013, f. & cert. ef. 4-2-13

170-040-0060

Accounts in Financial Institutions Outside Oregon

The Office of the State Treasurer may establish demand deposit accounts in financial institutions outside this state for the purpose of accepting deposits of funds related to the state investments in geographical areas respectively serviced by the institutions. Such accounts shall be deposited only in financial institutions that are well-capitalized according to the classifications of its primary federal regulatory authority.

Stat. Auth.:
Stats. Implemented: ORS 295.205(2)
Hist.: OST 2-2008, f. 6-27-08, cert. ef. 7-1-08

170-040-0070

Approval for a Depository to Hold Excess Public Funds

The Office of the State Treasurer may approve the request of a depository to hold public funds in excess of the limits provided in ORS 295.048(1)(a) through (c), only if:

(1) The depository deposits collateral valued at 100% of the amount of such excess public funds deposits; and

(2) The depository demonstrates to the satisfaction of the State Treasurer that allowing such excess deposits provides benefits to one or more depositors, does not jeopardize public funds, and that the depository has a plan for the orderly elimination of such excess deposits within 90 days.

Stat. Auth.:
Stats. Implemented: ORS 295.048(4)
Hist.: OST 2-2008, f. 6-27-08, cert. ef. 7-1-08; OST 1-2013, f. & cert. ef. 4-2-13

170-040-0080

Custodian Must Meet Statutory Requirements

(1) A depository may designate the Federal Home Loan Bank (“FHLB”) or any insured institution or trust company that has been approved by the State Treasurer and otherwise meets the criteria of ORS 295.001(6)(b) (an “approved institution”) only if, and so long as, the FHLB or approved institution demonstrates to the satisfaction of the State Treasurer that it complies with the duties of a custodian required under 295.001 to 295.108 (the “statutory requirements”).

(2) If the State Treasurer determines that an approved institution has failed to comply with the statutory requirements, the State Treasurer shall revoke the prior approval granted under ORS 295.001(6)(b)(C) and remove the institution from the organizations that the State Treasurer has approved to serve as custodians.

(3) If the State Treasurer determines that the FHLB or an approved institution has failed to comply with the statutory requirements, it will issue a notice to all depositories informing the depositories of the State Treasurer’s determination. After the State Treasurer has issued such notice, a depository may not use the FHLB or approved institution subject to the notice as its custodian and, as soon as practicable, shall enter into an agreement with a successor custodian and transfer all securities held by the FHLB or formerly approved institution to the successor custodian.

(4) If the State Treasurer later determines that the FHLB or an insured institution or trust company is eligible to serve as a custodian because it has demonstrated to the satisfaction of the State Treasurer that it is capable of fulfilling the statutory requirements, the State Treasurer will issue a notice informing depositories of its determination and that the FHLB or insured institution or trust company subject to the notice is eligible to serve as a custodian, provided the insured institution or trust company has also been approved by the State Treasurer under ORS 295.001(6)(b)(C).

(5) The State Treasurer will not designate an insured institution or trust company to serve as a custodian under ORS 295.001(6)(b)(C) unless it demonstrates to the satisfaction of the State Treasurer that it is capable of fulfilling the statutory requirements of a custodian.

Stat. Auth.:
Stats. Implemented: ORS 295.001(6)
Hist.: OST 2-2008, f. 6-27-08, cert. ef. 7-1-08; OST 1-2013, f. & cert. ef. 4-2-13

170-040-0090

Weekly Reporting Requirement for Depositories at 110% Collateralization

Depositories ordered to collateralize their public funds deposits at 110% by the State Treasurer are required to submit a new Treasurer Report weekly. The weekly reporting requirement shall remain in effect until such time as the depository no longer holds public funds deposits over the FDIC limit or the State Treasurer removes the 110% collateralization requirement.

Stat. Auth.: ORS 295.018(1) & 295.061(3)
Stats. Implemented: ORS 295
Hist.: OST 5-2008(Temp), f. & cert. 10-2-08 thru 3-30-09; OST 6-2008, f. & cert. ef. 11-28-08; OST 1-2013, f. & cert. ef. 4-2-13

170-040-0100

Reporting Requirement for Depositories with Decreased Net Worth and/or Capitalization Level

A depository that files reports with the State Treasurer according to ORS 295.061(1) is required to submit a new Treasurer Report to the State Treasurer within three business days of:

(1) The date on which the depository’s net worth is reduced by an amount greater than 10 percent of the amount shown on its most recent Treasurer Report.

(2) The date on which a depository ceases to be well capitalized and becomes adequately capitalized or undercapitalized, or ceases to be adequately capitalized and becomes undercapitalized.

Stat. Auth.: ORS 295.061(2)(a) & 295.061(2)(b)
Stats. Implemented: ORS 295
Hist.: OST 6-2008, f. & cert. ef. 11-28-08; OST 1-2013, f. & cert. ef. 4-2-13

170-040-0110

Monthly Reporting Requirement for Depositories at Increased Collateralization Level

Depositories ordered to collateralize their public funds deposits at an increased level, but less than 110%, by the State Treasurer are required to submit a new Treasurer Report monthly. The monthly reporting requirement shall remain in effect until such time as the depository no longer holds public funds deposits over deposit insurance limits or the State Treasurer removes the increased collateralization requirement. The monthly report is in addition to the quarterly Treasurer Report that is statutorily required.

Stat. Auth.: ORS 295.018(1)(b) & 295.061(1)
Stats. Implemented: ORS 295
Hist.: OST 4-2009(Temp), f. & cert. ef. 10-13-09 thru 3-31-10; OST 6-2009, f. & cert. ef. 11-19-09; OST 1-2013, f. & cert. ef. 4-2-13

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