6-245 - Pledge of assets; rediscount; exception to requirement of security
6-245. Pledge of assets; rediscount; exception to requirement of security
A. A bank may pledge, mortgage or otherwise hypothecate its assets:
1. To qualify the bank to act as a fiscal agent for any governmental entity.
2. To secure deposits which are required by law to be secured.
3. To secure borrowings from one business day to the next from another bank.
4. To secure borrowings from a federal reserve bank or any federal agency.
5. To secure other obligations, exclusive of deposits, provided the aggregate value of the assets as carried on the books of the bank encumbered for purposes other than those specified in paragraphs 1 through 4 of this subsection shall not exceed the capital account of the bank except with the approval of the superintendent.
B. The provisions of subsection A shall not prohibit or limit the sale or rediscount of commercial paper or securities with endorsement, guarantee or agreement to repurchase.
C. Whenever by the law of this state a bank is required to provide security for deposits in the form of collateral, surety bond or any other form, such security is not required to the extent such deposits are insured by the federal deposit insurance corporation. For the purposes of this subsection, acceptable security for deposits includes:
1. Certificates of deposit insured by an agent or instrumentality of the United States.
2. Interest bearing savings deposits in banks and savings and loan associations doing business in this state whose accounts are federally insured.
3. United States government obligations.
4. Municipal bonds and bonds issued by a state, county or school district.
5. Obligations for which the payment of principal and interest is guaranteed by the United States or by an agency or instrumentality of the United States.
6. Registered warrants if offered as security for monies of the county by which they are issued.
7. First mortgages and trust deeds together with the promissory notes or other evidences of indebtedness described in the instruments on improved, otherwise unencumbered real estate located in this state if no single mortgage or trust deed represents more than ten per cent of the total collateral security and the promissory note or other evidence of indebtedness secured by the mortgage or trust deed has been in existence for at least three years and no default with respect to the promissory note or other evidence of indebtedness has occurred during its existence.