R628.  Money Management Council, Administration.
R628-11.  Maximum Amount of Uninsured Public Funds Allowed to Be Held by Any Qualified Depository.
R628-11-1.  Authority.
	This rule is issued pursuant to Section 51-7-18.1.

R628-11-2.  Scope.
	This rule applies to all qualified depository institutions at which uninsured public funds may be held.

R628-11-3.  Purpose.
	This rule establishes a formula for determining the maximum amount of uninsured public funds that can safely be held by any qualified depository.  The rule defines capital for each class of qualified depository institution, establishes a formula for calculating the maximum amount of uninsured public funds which can be held at a qualified depository institution, establishes a schedule for reduction of uninsured public deposits based on risk to public treasurers and establishes the frequency of public funds allotment adjustments.

R628-11-4.  Definitions.
	For the purposes of this rule:
	A.  "Tier one capital" means:
	(1)  For a federally insured commercial bank, thrift institution, industrial loan corporation or a savings and loan association, the same as defined in the Federal Deposit Insurance Act in CFR Chapter III Section 325.2 or the Office of Thrift Supervision in CFR Chapter V Section 565.2;
	(2)  For a federally insured credit union, the sum of undivided earnings, regular reserves, appropriations of undivided earnings referred to as "other reserves", and net income not already included in undivided earnings.
	B.  "Deposits" means:  balances due to persons having an account at the qualified depository institution whether in the form of a transaction account, savings account, share account, or certificate of deposit and repurchase agreements other than qualifying repurchase agreements.
	C.  "Out of State" means: in reference to a depository institution or depository institution holding company, an institution or company whose home state is not Utah.
	D.  "Maximum amount" means: the amount of deposits in excess of the federal deposit insurance limit.
	E.  "Qualified depository" means:  a Utah depository institution as defined in Subsection 7-1-103(36) or a out of state depository institution as defined in Subsection 7-1-103(25) which may conduct business in this state under Section 7-1-702, whose deposits are insured by an agency of the Federal Government and which has been certified by the Commissioner of Financial Institutions as having met the requirements to receive uninsured public funds.
	F.  "Transaction account" means:  a deposit, account, or other contractual arrangement in which a depositor, account holder, or other customer is permitted, directly or indirectly, to make withdrawals by check or other negotiable instrument, a payment order of withdrawal, a telephone transfer or other electronic transfer or by any other means or device to make payments or transfer to third persons.  This term includes demand deposits, NOW accounts, savings deposits subject to automatic transfers, and share draft accounts.
	G.  "Utah depository institution" means:  a depository institution which is organized under the laws of, and whose home office is located in, this state or which is organized under the laws of the United States and whose home office is located in this state.

R628-11-5.  General Rule.
	A.  Maximum Insured Public Funds
	Any qualified depository may accept, receive, and hold deposits of public funds without limitation, if the total amount of deposits from each public treasurer does not exceed the applicable federal depository insurance limit.
	B.  Maximum Deposits in Excess of the Federal Insurance Limits For Qualified Utah Depository Institutions
	(1)  For all qualified Utah depository institutions which receive a qualified opinion issued by an independent certified public accountant upon completion of an annual audit performed in accordance with generally accepted auditing standards, and for all qualified Utah depository institutions which do not have an audit conducted by an independent certified public accountant, the maximum amount of uninsured public funds which may be held shall be according to the following schedule:

	TABLE 1

 Ratio of Tier one Capital    Uninsured Public
 to Total Assets              Funds Allotment

 5.0% or more                  One    X    Capital
 4.00% to 4.99%                .5     X    Capital
 Less than 4.00%               None
	
	(2)  A qualified Utah depository institution which receives an unqualified opinion issued by an independent certified public accountant upon completion of an annual audit performed in accordance with generally accepted auditing standards, may submit the audit report within 100 days of the date of the audit to the Department of Financial Institutions for review and the Commissioner of Financial Institutions must authorize that the ratios of Tier one capital to total assets applicable to the institution submitting the audit for determining the maximum amount of uninsured public funds allowed may be according to the following schedule:

	TABLE 2

 Ratio of Tier one Capital    Uninsured Public
 to Total Assets              Funds Allotment

 5% or more                    1.5     X    Capital
 4.00% to 4.99%                 .75    X    Capital
 Less than 4.00%               None
	
	C.  A qualified out-of-state depository institution will be treated as a qualified Utah depository subject to all the provisions of this section in determining its uninsured public funds allotment except that the uninsured public funds allotment will be reduced by multiplying by a factor of total deposits outstanding at Utah branches of the institution divided by the total deposits at the institution.  Nothing in R628-11 shall prohibit an out-of-state depository institution from qualifying as a permitted out-of-state depository in accordance with R628-10.

R628-11-6.  Responsibility to Monitor Balances.
	Deposits in qualified depositories which are limited by R628-11-5(B) to the amount of federal deposit insurance must be monitored on a daily basis to assure that no public treasurer has deposit balances in excess of the federal insurance limit.  The public treasurer making deposits and the qualified depository accepting deposits shall both be responsible to assure that the depositor's combined balance of all accounts stays within the federal insurance limit.

R628-11-7.  Collateralization of Excess Uninsured Public Funds.
	Pursuant to Section 51-7-18.1(5), the Money Management Council may require a qualified depository to pledge collateral security for deposits of uninsured public funds which exceed the uninsured public funds allotment established by this rule.  Any pledging of collateral security required by the Money Management Council shall be in accordance with the provisions of the Money Management Act and the rules of the Money Management Council.

R628-11-8.  Frequency of Adjustment to the Uninsured Public Funds Allotment.
	A.  The uninsured public funds allotment for each qualified depository shall be established quarterly by the Council, based on the reports of condition filed with the Commissioner as of the close of the preceding quarter.  The uninsured public funds allotments shall be established in accordance with the following:

	TABLE 3

     Report of Condition       Effective Date
     As Of:                    of Allotment

     December    31            April     1
     March       31            July      1
     June        30            October   1
     September   30            January   1
	
	B.  The Money Management Council may make interim adjustments in a qualified depository's uninsured public funds allotment if material changes in a qualified depository's financial condition have occurred or if there is a formal enforcement action by the federal or state regulator. These interim adjustments may include but are not limited to:
	(1)  reducing a qualified depository's uninsured public funds allotment to the amount of public funds held by the institution at the time of the Council's review of either the formal enforcement action or the review of the material changes in the qualified depositories financial condition;
	(2)  reducing a qualified depository's uninsured public funds allotment to zero if there is not sufficient collateral to cover uninsured public funds.
	C.  Any qualified depository that becomes subject to a formal enforcement action by any federal regulator shall notify the Council within twenty-four hours of the publication of the action taken by a federal regulator.  Failure of a qualified depository to comply with this requirement to notify the Council may result in action taken by the Council to require collateralization of uninsured public funds in accordance with Section 51-7-18.1(5) and Section R628-11-7.
	D.  When a formal enforcement action has been modified or terminated by a federal regulator, the qualified depository shall notify the Council within twenty-four hours of the publication of the modification or termination of any action.

R628-11-9.  Right to Petition the Council for Review.
	A qualified depository may petition the Money Management Council in writing for review and reconsideration of its allotment within 10 business days of written notice of the establishment or modification of its uninsured public funds allotment.  The Money Management Council shall rule on any petition for review and reconsideration at its next regularly scheduled meeting.

R628-11-10.  Notification of Public Treasurers.
	Within 10 business days of the close of each calendar quarter, the Money Management Council shall cause a list of qualified depository institutions and the currently effective uninsured public funds allotment to be prepared and mailed to all public treasurers.

KEY:  financial institutions, banking law
Date of Enactment or Last Substantive Amendment:  January 12, 2011
Notice of Continuation:  October 9, 2015
Authorizing, and Implemented or Interpreted Law:  51-7-18.1(2)