§ 19-3-519 - State Treasury Certificate of Deposit Investment Program. - Arkansas Statutes

19-3-519. State Treasury Certificate of Deposit Investment Program.

(a) From time to time the State Board of Finance sets aside an amount to be invested in one hundred eighty-day or longer certificates of deposit. Hereinafter, this will be referred to as the State Treasury Certificate of Deposit Investment Program.

(b) Participating institutions shall be institutions choosing to participate in the program as follows:

(1) National banks which have their principal office in Arkansas or are legally operating branches in Arkansas;

(2) Banks chartered in the State of Arkansas;

(3) Banks chartered by other states which are legally operating branches in Arkansas;

(4) Savings and loan associations or savings banks chartered by the United States which have their principal office in Arkansas or are legally operating branches in Arkansas; and

(5) Savings and loan associations chartered by the State of Arkansas.

(c) Institutions which have their principal office in Arkansas shall designate a representative at the principal office responsible for transacting business with the Treasurer of State. Institutions which do not have their principal office in Arkansas shall designate a principal branch and a representative at the principal branch responsible for transacting business with the Treasurer of State.

(d) Semiannually, or as required by the board, each participating institution shall compute and report to the Treasurer of State its Arkansas deposits, Arkansas loans, the loan to deposit ratio for Arkansas loans and deposits, and its capital base. Each participating institution shall report to the board information required by them to determine the institution's suitability for State Treasury deposits.

(e) (1) "Arkansas loans" means the sum of:

(A) Loans made to individual borrowers residing in the State of Arkansas;

(B) Loans made to corporations or other legal entities doing business in Arkansas for which an address within Arkansas is used for transacting business;

(C) Bonds issued or loans made to the State of Arkansas or its instrumentalities;

(D) Bonds issued or loans made to political subdivisions of the State of Arkansas; and

(E) Bonds issued by Arkansas corporations.

(2) "Arkansas deposits" means deposits received by banks and credited to accounts whose accountholders have as their principal place of business or permanent home addresses in Arkansas.

(f) The board shall promulgate regulations establishing the minimum capital requirements for any institution wishing to receive deposits from the Treasurer of State.

(g) (1) The Treasurer of State shall establish procedures to be reviewed and approved by the board establishing guidelines for the deposit and allocation of certificates of deposit among participating institutions.

(2) The deposit of funds shall be allocated between participating institutions such that institutions enumerated in subdivisions (b)(1)-(3) of this section make up one (1) group, hereinafter referred to as the bank group, and institutions enumerated in subdivisions (b)(4) and (5) of this section make up the other group, hereinafter referred to as the savings and loan group.

(3) Funds shall be allocated between the two (2) groups in a proportion to be set as needed by the board for an equitable allocation using each group's aggregate Arkansas deposits as a base for the allocation.

(4) The allocation among individual participating institutions shall be prorated on the basis of their Arkansas loans and Arkansas deposits in each respective group provided that the board may promulgate regulations establishing a threshold loan to deposit ratio preference.

(5) In the event that institutions in the savings and loan group do not accept for investment all of the pro rata part of these funds, then the excess shall be offered pro rata to institutions in the bank group. Conversely, if institutions in the bank group do not accept all of their pro rata share of the funds, then the excess shall be offered pro rata to the savings and loan group.

(6) To the extent that funds cannot be placed with any institution in either group, these funds may be invested as otherwise authorized by 19-3-518.

(h) Interest on funds invested under this section shall be paid by participating institutions at such rates as the board shall, from time to time, prescribe. However, these rates shall not exceed the maximum rate, if any, that banks are permitted to pay on time certificates of deposit for the same period of time by regulations of the Federal Reserve System or the Federal Deposit Insurance Corporation.

(i) Moneys required for each such purchase shall be withdrawn from the Cash Account and paid over to the issuer of the certificate of deposit, and the principal amount of the certificate shall be credited to the Certificate of Deposit Account.

(j) The certificates of deposit shall be secured to such extent and in such manner as may be provided by law and otherwise as the Treasurer of State may require.