Mark M' Farrell, KeyBank Public Sector Group

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2008 Banking Update Upcoming Changes in
Collateralization
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• Current Responsibilities and Procedures
• HB 2901s Revisions to ORS 295
• (landru.leg.state.or.us/07reg/measpdf/hb2900.dir/h
  b2901.en.pdf)
• New Structure Effective July 1, 2008

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Current System
State Treasury
Depositors
Bank
COP
COP
COP
Pool Manager Collateral 25/110 of Total COPs
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Revisions to ORS 295

• 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 COPs 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

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Revisions to ORS 295 (cont.)

• 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 banks collateral secures its depositors only
• A bank is not responsible for another banks
  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

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New System
State Treasury
Bank A
Bank C
Bank B
Pool Manager Collateral 10/25/ 110 of
Deposits
Pool Manager Collateral 10/25/ 110 of
Deposits
Pool Manager Collateral 10/25/ 110 of
Deposits
Collateral Pool
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• Handouts
• Questions?
• Contacts

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