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2008 Banking UpdateUpcoming Changes in
Collateralization
Mark M. Farrell, KeyBank Public Sector Group
OMFOA/OACTFO Conference Spring 2008 Phone (503) 790-7543
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•Current Responsibilities and Procedures
•HB 2901’s Revisions to ORS 295
(landru.leg.state.or.us/07reg/measpdf/hb2900.dir/hb2901.en.pdf)
•New Structure Effective July 1, 2008
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Pool ManagerCollateral = 25%/110%
of Total COP’s
COP
COP
COP
DepositorsBank
State Treasury
Current System
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Current System
• Depositor must request COP
• Depositor verifies that bank is a qualified depository (www.ost.state.or.us/divisions/finance/qualifieddepositoriespublicfunds.htm)
• No notice by depositor to State Treasury of its depository banks
• Collateral traditionally based on estimated peak balances
New System
• No COP’s – reduced paperwork and administration
• Depositor verifies that bank is a qualified depository
• Depositor required to notify State Treasury of its depository banks and of local contact
• Collateral based on actual balances
Revisions to ORS 295
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Current System
• Depositor responsible for maintaining adequate collateral - potential personal liability for public officials
• Banks pledge 25% collateral (110% if required by State Treasury)
• A bank’s collateral secures its depositors only
• A bank is not responsible for another bank’s performance
New System
• Banks report public deposits quarterly to State Treasury –eliminates some personal liability for public officials
• Banks pledge 10% collateral if well capitalized, 25% if adequately capitalized, 110% if undercapitalized
• All banks’ collateral is pooled and secures all depositors of a bank incurring a loss
• To the extent the collateral pool is inadequate to cover a loss, all banks are responsible pro rata for the shortfall
Revisions to ORS 295 (cont.)
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Collateral Pool
Pool ManagerCollateral = 10%/25%/
110% of Deposits
Bank A
State Treasury
Bank CBank B
Pool ManagerCollateral = 10%/25%/
110% of Deposits
Pool ManagerCollateral = 10%/25%/
110% of Deposits
New System
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• Handouts
• Questions?
Contacts:
Mark M. FarrellSenior RelationshipManager
Public Sector Group1211 SW Fifth Avenue, Suite 400Mailcode: OR-20-21-0444Portland, OR 97204
Tel: 503.790.7543Fax: [email protected]
Mark M. FarrellSenior RelationshipManager
Public Sector Group1211 SW Fifth Avenue, Suite 400Mailcode: OR-20-21-0444Portland, OR 97204
Tel: 503.790.7543Fax: [email protected]
Mark S. HudspethSenior Vice President
Public Sector Group1211 SW Fifth Avenue, Suite 400Mailcode: OR-20-21-0444Portland, OR 97204
Tel: 503.790.7682Fax: [email protected]
Mark S. HudspethSenior Vice President
Public Sector Group1211 SW Fifth Avenue, Suite 400Mailcode: OR-20-21-0444Portland, OR 97204
Tel: 503.790.7682Fax: [email protected]
