MISSISSIPPI LEGISLATURE

2000 Regular Session

To: Business and Financial Institutions

By: Senator(s) Mettetal, Jackson

AN ACT TO AMEND SECTION 27-105-5, MISSISSIPPI CODE OF 1972, TO PROVIDE QUALIFICATIONS FOR A FINANCIAL INSTITUTION TO QUALIFY AS A PUBLIC FUNDS DEPOSITORY AND GUARANTY POOL MEMBER; TO CREATE A NEW SECTION TO BE CODIFIED AS SECTION 27-105-6, MISSISSIPPI CODE OF 1972, TO ESTABLISH WITHIN THE STATE TREASURY A PUBLIC FUNDS GUARANTY POOL TO CONSIST OF QUALIFIED PUBLIC FUNDS DEPOSITORIES TO BE ADMINISTERED BY A GUARANTY POOL BOARD AND THE STATE TREASURER; TO PROVIDE FOR THE MEMBERSHIP OF THE GUARANTY POOL BOARD AND TO PROVIDE FURTHER QUALIFICATIONS REQUIRED FOR FINANCIAL INSTITUTIONS TO PARTICIPATE IN THE GUARANTY POOL; TO AMEND SECTION 27-105-25, MISSISSIPPI CODE OF 1972, TO REQUIRE THE STATE TREASURER TO PROVIDE COVERAGE OF THE REMAINING LOSS BY ASSESSMENT AGAINST THE OTHER PUBLIC FUNDS GUARANTY POOL MEMBERS WHEN A LOSS TO THE PUBLIC DEPOSITORS IS NOT COVERED BY DEPOSIT INSURANCE OR PROCEEDS OF A SALE OF SECURITIES; TO AMEND SECTION 27-105-315, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT ANY FINANCIAL INSTITUTION WHOSE ACCOUNTS ARE INSURED BY THE FDIC MAY QUALIFY AS A COUNTY DEPOSITORY IF SUCH INSTITUTION QUALIFIES AS A PUBLIC FUNDS DEPOSITORY OR GUARANTY POOL MEMBER; TO AMEND SECTION 27-105-317, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT A COUNTY DEPOSITORY MUST BE ISSUED A COMMISSION BEFORE RECEIPT OF COUNTY DEPOSITS; TO AMEND SECTIONS 27-105-9, 27-105-13, 27-105-35, 27-105-329, 27-105-331, 27-105-333, 27-105-349, 27-105-353, 27-105-355 AND 27-105-359, MISSISSIPPI CODE OF 1972, IN CONFORMITY THERETO; TO REPEAL SECTION 27-105-319, MISSISSIPPI CODE OF 1972, WHICH PROVIDES THE FORM OF THE COMMISSION FOR A COUNTY DEPOSITORY; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. Section 27-105-5, Mississippi Code of 1972, is amended as follows:

27-105-5. Qualification as public funds depository; State Treasurer authority.

(1) Any financial institution maintaining a deposit-taking facility in this state whose accounts are insured by the Federal Deposit Insurance Corporation or any successors to that insurance corporation, may qualify as a public funds depository by submitting an application to the State Treasurer as provided by Section 27-105-9, if the institution has a primary capital to total assets ratio of five and one-half percent (5-1/2%) or more. That ratio shall be determined not later than December 1 in each calendar year by the State Treasurer on the basis of balance sheets of applying institutions at June 30 of the same calendar year, and an institution shall not be a qualified depository and shall not receive any public funds unless its ratio has been certified annually by the Treasurer as meeting the prescribed requirement. Each applicant shall furnish to the State Treasurer such financial statements, balance sheets or other documentation, sworn to by a duly elected officer, on such date or dates and on such forms as the State Treasurer may require. Any knowing or willful misstatement of fact on those forms shall subject the officer swearing to them to the penalty of perjury, and the financial institution of which he is an officer shall not be eligible to serve as a depository for a period of one (1) year beginning with the date on which the State Treasurer certifies that such a misstatement has been made. When so approved by the State Treasurer, the institution shall place on deposit with the State Treasurer qualified bonds, notes and liquid securities in an aggregate amount at least equal to one hundred five percent (105%) of the average daily balance of funds on deposit in the aggregate by the State of Mississippi or any agency or department of the state or by any county, municipality or other governmental unit in excess of that portion of accounts insured by the Federal Deposit Insurance Corporation, or any successor thereto * * *.

(2) Any financial institution maintaining a deposit-taking facility in this state whose accounts are insured by the Federal Deposit Insurance Corporation or any successors to that insurance corporation and which has been in existence for three (3) or more years may qualify as a public funds depository and public funds guaranty pool member under Section 27-105-6 by submitting an application to the State Treasurer as provided by Section 27-105-9, if the institution has a primary capital to total assets ratio of six and one-half percent (6-1/2%) or more and otherwise meets the requirements of Section 27-105-6. That ratio shall be determined not later than December 1 in each calendar year by the State Treasurer on the basis of balance sheets of applying institutions at June 30 of the same calendar year, and an institution shall not be a member of the public funds guaranty pool unless its ratio has been certified annually by the Treasurer as meeting the prescribed requirement. Each applicant shall furnish to the State Treasurer such financial statements, balance sheets or other documentation, sworn to by a duly elected officer, on such date or dates and on such forms as the State Treasurer may require. Any knowing or willful misstatement of fact on those forms shall subject the officer swearing to them to the penalty of perjury and the financial institution of which he is an officer shall not be eligible to serve as a depository for a period of one (1) year beginning with the date on which the State Treasurer certifies that such a misstatement has been made. When so approved by the State Treasurer, the institution shall meet its security requirement of one hundred five percent (105%) by placing on deposit with the State Treasurer qualified bonds, notes and liquid securities in an aggregate amount at least equal to fifty-two and one-half percent (52-1/2%) of the average daily balance of funds on deposit in the aggregate by the State of Mississippi or any agency or department of the state or by any county, municipality or other governmental unit in excess of that portion of accounts insured by the Federal Deposit Insurance Corporation, or any successor thereto, and executing a guarantee equal to the balance of fifty-two and one-half percent (52-1/2%) of the average daily balance of funds on deposit in the aggregate by the State of Mississippi or any agency or department of the state or by any county, municipality or other governmental unit in excess of that portion of accounts insured by the Federal Deposit Insurance Corporation, or any successor thereto.

(3) The term "qualified bonds, notes and liquid securities" as used in this section shall mean:

(a) All securities that are direct obligations of the United States Treasury or any other obligations fully guaranteed by the United States government.

(b) Bonds, notes and other obligations of the Federal Home Loan Bank, Federal National Mortgage Association, Federal Land Banks, Banks for Cooperatives, and Federal Intermediate Credit Banks, the Government National Mortgage Association, the Federal Housing Administration, the Farmers Home Administration, the Farm Credit System Financial Assistance Corporation, the United States Postal Service, the Federal Financing Bank, the Student Loan Marketing Association, the Small Business Administration, the General Services Administration, the Washington Metropolitan Area Transit Authority, the Maritime Administration, the Export-Import Bank, the International Bank for Reconstruction and Development, the Inter-American Development Bank, the Asian Development Bank, loan participations that carry the guarantee of the Commodity Credit Corporation, an instrumentality of the United States Department of Agriculture or other similar agencies approved by the State Treasurer.

(c) Obligations of the Tennessee Valley Authority.

(d) Legal obligation or revenue bonds of the State of Mississippi, its agencies, or any political subdivision of the state, or any municipality located in the State of Mississippi, or the Yazoo Mississippi Delta and the Mississippi Levee Districts, or the Mississippi Higher Education Assistance Corporation or its successors, or any body corporate and politic created under the laws of the State of Mississippi.

(e) General obligations issued by any state or by a county, parish or municipality of any state, the full faith and credit of which are pledged to the payment of principal and interest, that are rated "A" or better by any recognized national rating agency engaged in the business of rating bonds.

(f) Surety bonds of any surety company authorized to do business in the State of Mississippi.

(g) All bonds authorized as security for state funds under items (c), (d) and (e), inclusive, shall be investment quality, and any bonds under * * * items (c), (d), (e) and (f), inclusive, which are rated substandard by any of the appropriate supervisory authorities having jurisdiction over the depository or by any recognized national rating agency engaged in the business of rating bonds, shall not be eligible for pledging as security to the State of Mississippi by any qualified state depository.

No bonds shall be accepted as security for more than their stated par value or market value, whichever is lower, except bonds and obligations of the State of Mississippi and Mississippi State Highway bonds or notes, which may be accepted as security at par value or market value, whichever is greater.

The bonds, notes and liquid securities to be placed on deposit shall secure both deposits and the accrued interest thereon.

Money shall be drawn from the depositories so as to leave in each as near as practicable, its equitable proportion of state funds.

The State Treasurer is authorized and empowered to:

(i) Deposit for safekeeping in the vaults of any of the state or national banks located within this state that are members of the Federal Deposit Insurance Corporation and that have appropriate safekeeping facilities approved by the State Depository Commission, any federal reserve bank, any federal reserve branch bank, or any bank that is a member of the Federal Reserve System and is located in a city where there is a federal reserve bank or a federal reserve branch bank, the securities placed with him by financial institutions qualifying as state depositories; or

(ii) Accept, in lieu of the securities themselves, safekeeping trust receipts issued to the State Treasurer by the authorized safekeeping banks listed in subparagraph (i) above; the safekeeping trust receipts shall describe the securities and show that the securities are held for safekeeping for the account of the State Treasurer or other governmental unit. The securities so deposited shall not be commingled in any manner with the assets of the safekeeping bank.

The safekeeping banks listed in subparagraph (i) above are authorized to issue to the State Treasurer their safekeeping trust receipts based on safekeeping trust receipts issued to them by any of their correspondent banks that are members of the Federal Reserve System and are located in any federal reserve city and that have physical custody of the pledged securities.

In no event shall the State Treasurer deposit for safekeeping with any depository securities placed by the depository with the State Treasurer in qualifying as a public funds depository, nor shall he accept a safekeeping trust receipt by or from a depository covering securities it owns in order to secure state funds on deposit with it.

(4) In fulfilling the requirements of this Section 27-105-5, the State Treasurer shall:

(a) Maintain perpetual inventory of pledged collateral and perform monthly market valuations and quality ratings.

(b) Monitor and confirm, as often as deemed necessary by the Treasurer, the pledged collateral held by third party custodians.

(c) Perfect an interest in pledged collateral by having pledged securities moved into an account established in the Treasurer's name. This action shall be taken at the discretion of the Treasurer.

(d) Review the reports of each qualified public funds depository for material changes in capital accounts or changes in name, address or type of institution, record the average daily balances of public deposits held; and monitor the collateral-pledging levels and required collateral based on the average daily balances.

(e) Compare public deposit information reported by qualified public funds depositories and public depositors. That comparison shall be conducted for qualified public depositories based on established financial condition criteria of record on September 30.

(f) Verify the reports of any qualified public funds depository relating to public deposits it holds when necessary to protect the integrity of the public deposits program.

(g) Confirm public deposits, to the extent possible under current law, when needed.

(h) Require at his or her discretion the filing of any information or forms required under this chapter to be by electronic data transmission. Those filings of information or forms shall have the same enforceability as a signed writing.

(5) A qualified public funds depository shall:

(a) Within fifteen (15) days after the end of each calendar month or when requested by the Treasurer, submit to the Treasurer a written report, under oath, indicating the average daily balance of all public deposits held by it during the reported month, required collateral, a detailed schedule of all securities pledged as collateral, selected financial information, and any other information that the Treasurer determines necessary to administer this chapter.

(b) Provide to each public depositor annually, not later than thirty (30) days following the public depositor's fiscal year end, the following information on all open accounts identified as a "public deposit" for that public depositor as of its fiscal year end, to be used for confirmation purposes: the federal employer identification number of the public funds depository, the name on the deposit account record, the federal employer identification number on the deposit account record, and the account number, account type and actual account balance on deposit. Any discrepancy found in the confirmation process shall be reconciled within sixty (60) days of the public depositor's fiscal year end.

(c) Submit to the Treasurer annually, not later than sixty (60) days of the public depositor's fiscal year end, a report of all public deposits held for the credit of all public depositors at the close of business on each public depositor's fiscal year end. The annual report shall consist of public deposit information in a report format prescribed by the Treasurer. The manner of required filing may be as a signed writing or electronic data transmission, at the discretion of the Treasurer.

(6) Public depositors shall comply with the following requirements:

(a) A public depositor shall ensure that the name of the public depositor and its tax identification number are on the account or certificate provided to the public depositor by the qualified public depository in a manner sufficient to disclose the identity of the public depositor;

(b) Not later than thirty (30) days following its fiscal year end, a public depositor shall notify the State Treasurer of its official name, address, federal tax identification number, and provide a listing of all accounts that it had with qualified public depositories, including the deposit balance in those accounts, as of its fiscal year end. A public entity established during the year shall furnish its official name, address and federal tax identification number to the State Treasurer before making any public deposit.

(7) Any information contained in a report of a qualified public funds depository required under Section 27-105-5 or 27-105-6 shall be considered confidential and exempt from disclosure and not subject to dissemination to anyone other than the State Treasurer and the State Auditor under the provisions of this chapter.

(8) The State Treasurer is empowered to assume responsibility as successor pledgee as agent on behalf of any county, municipality or other governmental unit of any and all collateral pledged before July 1, 2001, to that county, municipality or governmental unit by that public funds depository. Upon assuming responsibility as successor pledgee as provided in this subsection (8), the State Treasurer is empowered to sign such documents on behalf of any such county, municipality or governmental unit as may be required by a trustee custodian, including, but not limited to any documentation necessary to change the pledgee from the county, municipality or governmental unit as pledgee to the State Treasurer as agent.

(9) As used in this section and Section 27-105-6, the following terms shall have the meanings set forth below:

(a) The term "primary capital" means the sum of common stockholders' equity capital, including common stock and related surplus, undivided profits, disclosed capital reserves that represent a segregation of undivided profits, and foreign currency translation adjustments, less net unrealized holding losses on profits, and foreign currency translation adjustments, less net unrealized holding losses on available-for-sale equity securities with readily determinable fair values; noncumulative perpetual preferred stock, including any related surplus; and minority interests in the equity capital accounts of consolidated subsidiaries; the allowance for loan and lease losses; cumulative perpetual preferred stock, long-term preferred stock (original maturity of at least twenty (20) years) and any related surplus; perpetual preferred stock (and any related surplus) where the dividend is reset periodically based, in whole or in part, on the bank's current credit standing, regardless of whether the dividends are cumulative or noncumulative; hybrid capital instruments, including mandatory convertible debt securities; term subordinated debt and intermediate-term preferred stock (original average maturity of five (5) years or more) and any related surplus; and net unrealized holding gains on equity securities.

(b) The term "assets classified loss" means:

(i) When measured as of the date of examination of the financial institution, those assets that have been determined by an evaluation made by a state or federal examiner as of that date to be a loss; and

(ii) When measured as of any other date, those assets:

(A) That have been determined: 1. by an evaluation made by a state or federal examiner at the most recent examination of the financial institution to be a loss, or 2. by evaluations made by the financial institution since its most recent examination to be a loss; and

(B) That have not been charged off from the financial institution's books or collected.

(c) The term "intangible assets" means those assets that would be required to be reported in the item for intangible assets in a Federal Deposit Insurance Corporation (FDIC) banking institution's "Reports of Condition and Income" (Call Reports), regardless of whether the institution is insured by the FDIC.

(d) The term "mandatory convertible debt" means a subordinated debt instrument meeting the requirements of the Federal Deposit Insurance Corporation that requires the issuer to convert the instrument into common or perpetual preferred stock by a date at or before the maturity of the debt instrument. The maturity of these instruments must be twelve (12) years or less.

(e) The term "mortgage servicing rights" means those assets (net of any related valuation allowances) that result from contracts to service loans secured by real estate (that have been securitized or are owned by others) for which the benefits of servicing are expected to more than adequately compensate the servicer for performing the servicing.

(f) The term "perpetual preferred stock" means a preferred stock that does not have a stated maturity date or that cannot be redeemed at the option of the holder and that has no other provisions that will require future redemption of the issue. It includes those issues of preferred stock that automatically convert into common stock at a stated date. It excludes those issues, the rate on which increases, or can increase, in such a manner that would effectively require the issuer to redeem the issue.

(g) The term "total assets" means the average of total assets of any financial institution that are or would be included in a Federal Deposit Insurance Corporation (FDIC) banking institution's "Reports of Condition and Income" (Call Reports), regardless of whether the institution is insured by the FDIC, plus the allowance for loan and lease losses, minus assets classified loss and minus intangible assets other than mortgage servicing rights.

(h) The term "average daily balance" means the average daily balance of public deposits of each governmental unit held during the reported month. The average daily balances must be determined by totaling, by account, the daily balance held by the depositor and then dividing the total by the number of calendar days in the month. Deposit insurance is then deducted from each public depositor's balance and the resulting amounts are totaled to obtain the average daily balance.

(i) The term "public funds" means funds in which the entire beneficial interest is owned by a governmental unit or funds held in the name of a public official of a governmental unit charged with the duty to receive or administer funds and acting in such official capacity.

(j) The term "governmental unit" means the State of Mississippi, any board, commission, department, office or other agency of the State of Mississippi, any county, any incorporated city, town or village, any school district, any utility district, any community college, any institution of higher learning, or any municipal airport authority or regional airport authority in the state.

SECTION 2. The following provision shall be codified as Section 27-105-6, Mississippi Code of 1972:

27-105-6. Further qualification as public funds depository participating in public funds guaranty pool.

(1) There is established within the State Treasury a public funds guaranty pool to consist of qualified public funds depositories commissioned under Section 27-105-5(2) to be administered by a Guaranty Pool Board and the State Treasurer.

(2) There is established a nine-member Guaranty Pool Board to administer the guaranty pool and to review and recommend criteria to be used by the State Treasurer in order to protect public deposits and the depositories in the program.

(3) Any financial institution qualifying as a guaranty pool member shall guarantee public fund deposits against loss caused by the default or insolvency of other guaranty pool members and shall execute under oath an agreement of contingent liability in addition to a public deposit pledge agreement.

(4) In addition to maintaining the capital requirements of Section 27-105-5, a guaranty pool member shall meet and maintain, on a quarterly basis, at least two (2) of the following ratios:

(a) A ratio of loans past due ninety (90) days or more to total loans of less than two percent (2%);

(b) An annualized return on average assets of more than seventy-five one hundredths of one percent (0.75%); and

(c) A total loans to total assets ratio not exceeding eighty percent (80%).

Failure of a guaranty pool member to meet the capital ratio and at least two (2) of the above three (3) ratios shall subject the member to subsection (9) of this section.

(5) In fulfilling the requirements of this section, the Treasurer has the power to:

(a) Order discontinuance of participation in the guaranty pool program by a qualified public depository upon failure of the financial institution to meet the above requirements of subsection (4) of this section;

(b) Appoint a nine-member Guaranty Pool Board;

(c) Establish goals and objectives and provide other data as may be necessary to assist the Guaranty Pool Board established under subsection (2) in developing standards for the program;

(d) Perform financial analysis of any qualified public funds depository as needed.

(6) The Guaranty Pool Board shall consist of:

(a) One (1) representative of financial institutions with assets of One Billion Dollars ($1,000,000,000.00) or more chosen by the State Treasurer from a list of two (2) bankers nominated by the Mississippi Bankers Association;

(b) One (1) representative of financial institutions with assets of Three Hundred Million Dollars ($300,000,000.00) but less than One Billion Dollars ($1,000,000,000.00) chosen by the State Treasurer from a list of two (2) bankers nominated by the Mississippi Bankers Association;

(c) One (1) representative of financial institutions with assets of less than Three Hundred Million Dollars ($300,000,000.00) chosen by the State Treasurer from a list of two (2) bankers nominated by the Mississippi Bankers Association;

(d) Two (2) representatives of banks at large chosen by the State Treasurer from a list of four (4) bankers nominated by the Mississippi Bankers Association;

(e) One (1) member chosen by the State Treasurer from a list of two (2) supervisors nominated by the Mississippi Supervisors Association;

(f) One (1) member chosen by the State Treasurer from a list of two (2) municipal officials nominated by the Mississippi Municipal League; and

(g) The Commissioner of Banking and Consumer Finance and the State Treasurer.

The Guaranty Pool Board shall determine the effective date of the public funds guaranty pool, which date shall be no earlier than July 1, 2001, and so notify the State Treasurer. All nominees of the Mississippi Bankers Association shall be employed by a financial institution that is a member of the public funds guaranty pool.

Initially, three (3) of the five (5) representatives of financial institutions shall be appointed for a term of one (1) year. The remaining members other than the Commissioner of Banking and Consumer Finance and State Treasurer, who shall be permanent members, shall be appointed for a term of two (2) years. Upon expiration of these terms, members shall be appointed thereafter for two-year terms. Any member is eligible for reappointment and shall serve until a successor qualifies. If a vacancy occurs in the position of any appointed member, a new member shall be appointed in the same manner as the member's predecessor for the remainder of the unexpired term. A member of the board shall receive no compensation for service on the board.

The Guaranty Pool Board shall elect a chair and vice chair and shall also designate a secretary who need not be a member of the Guaranty Pool Board. The secretary shall keep a record of the proceedings of the Guaranty Pool Board and shall be the custodian of all printed materials filed with or by the advisory committee. Notwithstanding the existence of vacancies on the Guaranty Pool Board, a majority of the members constitutes a quorum. The Guaranty Pool Board shall not take official action in the absence of a quorum.

In addition to the requirements of subsection (4) of this section, the Guaranty Pool Board, by a two-thirds (2/3) supermajority vote of the entire Guaranty Pool Board, may establish additional criteria for qualification as a guaranty pool member, including promulgating additional ratios, requiring stricter ratios than provided under subsection (4), or requiring additional collateral; however, any additional criteria shall be uniformly applied to all participants, although higher collateral pledge levels may be based on different financial criteria. Any reduction in previously approved criteria shall likewise be subject to a two-thirds (2/3) supermajority vote of the entire Guaranty Pool Board. Any additional criteria will become effective at the quarter next after the Guaranty Pool Board votes. The Guaranty Pool Board is authorized to promulgate regulations in order to more fully carry out its obligations under this paragraph.

(7) A public funds guaranty pool member shall submit to the State Treasurer not later than the date required to be filed with its primary federal regulatory agency:

(a) A copy of the quarterly Consolidated Reports of Condition and Income, and any amended reports, required by the Federal Deposit Insurance Act, 12 USCS Section 1811 et seq., if the depository is a bank; or

(b) A copy of the Thrift Financial Report, and any amended reports, required to be filed with the Office of Thrift Supervision if the depository is a savings and loan association.

(8) A public funds guaranty pool member may effect a voluntary withdrawal from the guaranty pool by giving written notice to the State Treasurer. Notice of withdrawal shall be mailed or delivered in sufficient time to be received by the State Treasurer at least one hundred eighty (180) days before the effective date of withdrawal. On the effective date of withdrawal, the guaranty pool member shall pledge and place on deposit with the State Treasurer securities equal to one hundred five percent (105%) of the outstanding balances of public funds held less the amount of funds insured by the Federal Deposit Insurance Corporation.

The contingent liability for any loss before the effective date of withdrawal of the depository withdrawing from the guaranty pool shall continue after the effective date of the withdrawal for a period of six (6) months.

(9) A public funds guaranty pool member failing to meet the requirements for membership in subsection (4) of this section or as modified by the Guaranty Pool Board under its authority at subsection (6) is required to withdraw from the guaranty pool. The State Treasurer shall notify the public funds guaranty pool member of the effective date of the withdrawal not less than thirty (30) days before that effective date. Not later than the effective date of withdrawal, the withdrawing pool member must pledge and place on deposit with the State Treasurer securities equal to one hundred five percent (105%) of the outstanding balances of public funds held less the amount of funds insured by the Federal Deposit Insurance Corporation or pay over those funds to the public depositor.

The contingent liability for any loss before the effective date of withdrawal of the depository withdrawing from the guaranty pool shall continue for a period of one (1) year after the effective date of the withdrawal.

SECTION 3. Section 27-105-9, Mississippi Code of 1972, is amended as follows:

27-105-9. Application for keeping state funds; pro rata allocation.

The State Treasurer shall give notice of the provisions of this article once a month to each eligible bank and financial institution in the state having an amount of state funds less than the amount authorized to be allocated to the bank or financial institution under Section 27-105-33 and this section, and shall receive such applications as they or any of them may make for the privilege of keeping any part of public funds on forms to be furnished by the Treasurer, and shall place the state funds with the institutions applying for them if the depository application has been duly approved by the Treasurer.

The Treasurer, when considering the various depository applications, shall review the financial statement of the applying depository and become satisfied regarding its liquidity and capital ratio so as to assure the safety of all public funds, and likewise to give the equitable apportionment of the state funds throughout the state.

State funds required for current operation, as determined under Section 27-105-33, shall be deposited in one or more demand accounts. State funds not required for current operation, as determined under Section 27-105-33, shall be deposited in one or more interest-bearing accounts or time certificates of deposit, or otherwise invested under Section 27-105-33. When any depository holding state demand accounts receives an order from the Treasurer or his designee to transfer collected funds out of those accounts to any interest-bearing accounts or time certificates of deposit in the depository or any other depository under the provisions of this chapter, the transfer shall be made immediately or as soon thereafter as practicable. If the Treasurer finds that any depository is not transferring funds as * * * provided above, the depository shall be disqualified from holding or receiving any state demand accounts for a period of time not to exceed one (1) year.

All funds allocated to approved depositories under the provisions of subsection (b) of Section 27-105-33 shall be allocated to qualified depositories of the state on a pro rata basis determined as follows:

(a) Each qualified depository shall be assigned a numerator, which shall be the sum of (i) thirty-five percent (35%) of that portion of its Mississippi-based deposits that does not exceed Two Hundred Fifty Million Dollars ($250,000,000.00), plus (ii) twenty-five percent (25%) of that portion of its Mississippi-based deposits that exceed Two Hundred Fifty Million Dollars ($250,000,000.00) but does not exceed Five Hundred Million Dollars ($500,000,000.00), plus (iii) fifteen percent (15%) of that portion of its Mississippi-based deposits that exceeds Five Hundred Million Dollars ($500,000,000.00).

(b) Each such numerator shall be divided by a denominator, which shall be the sum of (i) thirty-five percent (35%) of the first Two Hundred Fifty Million Dollars ($250,000,000.00) or portion thereof of the Mississippi-based deposits of each qualified depository, plus (ii) twenty-five percent (25%) of the next Two Hundred Fifty Million Dollars ($250,000,000.00) or portion thereof of the Mississippi-based deposits of each qualified depository, plus (iii) fifteen percent (15%) of the Mississippi-based deposits of each qualified depository in excess of Five Hundred Million Dollars ($500,000,000.00), being the sum of the numerators of all depositories. The resulting percentage shall be the pro rata share of the depository in funds allocated under Section 27-105-33(b).

(c) All such computations shall be determined annually by December 1 on the basis of the deposits held by the depositories at deposit facilities located in the State of Mississippi as reported in the Federal Deposit Insurance Corporation's Market Share Report -- Deposits of All FDIC-Insured Institutions Operating in Mississippi on June 30 of each year. For the purposes of this section, "Mississippi-based deposits" means the total deposits held at deposit facilities located in the State of Mississippi on June 30 as reported annually by the Federal Deposit Insurance Corporation in the above-referenced report.

State funds allocated to each approved depository shall not be more than four percent (4%) of the depository's Mississippi-based deposits. Interest-bearing time certificates of deposit and other interest-bearing deposits, either general or special, made under Section 27-105-33, may be treated as not coming within this percentage if, in the discretion of the Treasurer, the best interest of the state can be served to increase its earnings and decrease its expenses in the handling of the state funds; however, any and all depositories must first qualify and be approved by the Treasurer to receive demand deposits subject to withdrawal or transfer by check of the Treasurer when properly presented and so demanded. For the purposes of this section, the term "paid-in and earned capital funds" means the sum of common stock, perpetual preferred stock, surplus, undivided profits and capital reserves as these amounts are or would be reflected in a Federal Deposit Insurance Corporation (FDIC) banking institution's "Reports of Condition and Income" (Call Reports), regardless of whether the institution is insured by the FDIC.

The state depository contract shall be for one (1) year, but may be renewed from year to year upon proper review and approval of the Treasurer. Each applicant shall furnish to the Treasurer a financial statement sworn to by a duly elected officer, and on such date or dates as the Treasurer may provide.

SECTION 4. Section 27-105-13, Mississippi Code of 1972, is amended as follows:

27-105-13. Commission form.

The State Depository Commission shall design and stipulate the wording of the form of commission to be issued to each and every duly approved depository for public funds and the * * * form of commission, when so approved, shall be spread on the minutes of the State Depository Commission showing its approval, and the * * * form of commission shall recite the terms and conditions of the depository contract based on the law and the regulations. The State Depository Commission is * * * authorized to amend and/or rewrite the form of commission to be used from time to time as the need arises. The form of commission, when issued to a duly qualified and approved depository, shall be signed by the Secretary of the State Depository Commission and a copy of the approvals shall be kept for a period of three (3) years before being destroyed.

SECTION 5. Section 27-105-25, Mississippi Code of 1972, is amended as follows:

27-105-25. Failure to pay treasurer's check.

(1) In the event of the failure of any public funds depository to pay any check lawfully issued by the State of Mississippi or any agency or department of the state or any county, municipality or other governmental unit on any funds on deposit belonging to the State of Mississippi or any agency or department of the state or any county, municipality or other governmental unit in the depository, the State Treasurer is * * * empowered to sell such securities as are placed with him by the depository, or so much of them as is necessary to cover back into the * * * Treasury of the State of Mississippi or any agency or department of the state or any county, municipality or other governmental unit the amount of state funds on deposit with the depository with accrued interest thereon in excess of applicable deposit insurance, and the sale of the securities shall be made by the State Treasurer at the best price that he can obtain at either public or private sale, and in the event of the failure of the depository to pay any * * * check when the depository has placed as security surety bonds, the Treasurer shall notify the Attorney General and that officer shall take such immediate action as he may deem most expedient for covering back into the Treasury of the State of Mississippi or any agency or department of the state or any county, municipality or other governmental unit all state money on deposit in the depository. In addition, the Attorney General is authorized to employ counsel, if necessary, to more speedily enforce the payment and expense of that collection, including counsel fees, to be charged against the depository, and, in addition thereto, the depository will be liable for damages at the rate of one percent (1%) per month for any delay in paying over any state funds when demanded, and the bond of any depository shall be liable for those expenses and damages.

(2) If the loss to the State of Mississippi or any agency or department of the state or any county, municipality or other governmental unit (hereinafter "public depositors") of the depository that is also a public funds guaranty pool member is not covered by deposit insurance or the proceeds of the sale of securities, the State Treasurer shall provide coverage of the remaining loss by assessment against the other public funds guaranty pool members. The assessment shall be determined by multiplying the total amount of the loss to all public depositors by a percentage that represents the share of public fund deposits held by the depository divided by the total public deposits held by all public funds guaranty pool members, excluding the public deposits of the defaulting depository, as determined by the State Treasurer from the average of the six (6) most recent month-end reports of the public funds guaranty pool members provided under Section 27-105-6. Each public funds guaranty pool member shall pay its assessment to the State Treasurer within seven (7) business days after it receives notice of the assessment. If a public funds guaranty pool member fails to pay its assessment when due, the State Treasurer shall satisfy the assessment by selling securities pledged by any depository failing to pay the assessment.

(3) The State Treasurer shall distribute the funds to the public depositors of the public funds depository in default according to their validated claims.

(4) Public depositors receiving payment under the provisions of this section shall assign to the State Treasurer any interest they may have in funds that may subsequently be made available to the depository in default, if the depository in default or its receiver provides funds to the State Treasurer, the State Treasurer shall distribute the funds, plus all accrued interest that has accumulated from the investment of the funds, if any, to the public funds guaranty pool members that paid assessments on the same pro rata basis as the assessments were paid.

SECTION 6. Section 27-105-35, Mississippi Code of 1972, is amended as follows:

27-105-35. Commission meetings and duties.

The state depository commission, composed of the Governor, Attorney General, and State Treasurer, shall meet annually in the month of February, and more often, if necessary, on call of any member of the commission. The commission shall keep a full and correct record of its proceedings, and is * * * authorized and required to:

(a) Approve, upon proper application, the depositories for the State of Mississippi that are qualified to receive and hold, subject to demand, the public funds of the state or any subdivision of the state;

(b) Approve the bonds and securities pledged by the depositories to secure public funds deposits and to approve the exchange or substitution of bonds and securities pledged in lieu of the bonds and securities formerly pledged. * * * The bonds and securities so pledged and held shall be such as are specifically authorized by law for security of public funds deposits;

(c) Approve and fix the margin of security to be maintained by public funds depositories, but in no instance shall the security be less than is specifically required by law;

(d) Approve surety bonds, issued by solvent insurance companies authorized to do business in Mississippi, filed by the depositories to secure public funds deposits, and to approve lawful substitutions in lieu thereof; and

(e) Approve the return and release of excess bonds and securities or surety bonds, due to the withdrawal of public funds from the depositories.

The State Treasurer may be authorized by the commission to:

(i) Receive, transfer, exchange and/or substitute bonds and securities pledged by the depositories to secure public funds deposits; and to accept bonds and securities pledged by the depositories as security for public funds deposits in lieu of any surety bond so held by the commission. * * * However, * * * no bond or security shall be received or accepted as security for public funds deposits unless specifically authorized by law and the marginal requirements of the State Depository Commission.

(ii) Return and release excess bonds and securities and/or surety bonds that are excess over the marginal requirements due to withdrawal of public funds deposits; and

(iii) Make a detailed report of all matters and transactions relating to the depository bonds and securities at such times and as often as may be required by the State Depository Commission * * *. Exchanges and substitutions of bonds and securities shall not be made but once for each depository during any consecutive three-month period; * * * however, * * * called or matured bonds and securities may be exchanged, substituted or released if marginal requirements are maintained, at the pleasure of the State Treasurer and the depository.

SECTION 7. Section 27-105-315, Mississippi Code of 1972, is amended as follows:

27-105-315. Qualification as depository * * *.

(1) Any financial institution in a county, or in an adjoining county where there is no financial institution in the county qualifying, whose accounts are insured by the Federal Deposit Insurance Corporation or any successors to that insurance corporation may qualify as a county depository, if the institution qualifies as a public funds depository under Section 27-105-5 or a public funds guaranty pool member under Sections 27-105-5 and 27-105-6. The qualified financial institution shall secure those deposits by placing qualified securities on deposit with the State Treasurer as provided in Section 27-105-5.

(2) Notwithstanding the foregoing, any financial institution not meeting the prescribed ratio requirement whose accounts are insured by the Federal Deposit Insurance Corporation * * * or any successors to that insurance corporation, may receive county funds in an amount not exceeding the amount that is insured by that insurance corporation and may qualify as a county depository to the extent of that insurance.

SECTION 8. Section 27-105-317, Mississippi Code of 1972, is amended as follows:

27-105-317. Commission of depository * * *.

A county depository must be issued a commission under Section 27-105-11 before receipt of county deposits.

SECTION 9. Section 27-105-329, Mississippi Code of 1972, is amended as follows:

27-105-329. Failure to pay county warrants * * *.

In the event of the failure of any county depository to pay any county warrant lawfully issued on any funds on deposit belonging to the county in the depository, the county is * * * empowered to order the State Treasurer to sell such securities as are placed with the State Treasurer by the depository, or call on the public funds guaranty pool if the depository is a member, or so much of them as may be necessary to cover back into the county treasury the amount of county funds on deposit with the depository, with accrued interest thereon, as provided in Section 27-105-25. In the event of the failure of the county depository to pay any warrant when the depository has placed as security surety bonds, the clerk or holder of the warrant shall notify the president of the board of supervisors and he shall take such immediate action as he may deem best and most expedient for covering back into the Treasury all county money on deposit in the depository, and the board of supervisors is authorized to employ counsel, if necessary, to more speedily enforce the payment. The expenses of the collection, including the counsel fee, shall be charged against the depository, and, in addition thereto, the depository shall be liable for damages at the rate of one percent (1%) per month for any delay in paying over any county funds when lawfully demanded, and the bond of any depository shall be liable for those expenses and damages.

SECTION 10. Section 27-105-331, Mississippi Code of 1972, is amended as follows:

27-105-331. Acquisition of closed depository securities.

The State Treasurer, on behalf of any county in the State of Mississippi that has acquired bonds or other securities as the result of the closing of the depository or depositories of the county, is authorized and empowered in his discretion to sell, trade, refinance or agree to the refinancing of any or all of those bonds now held or owned by it and by any subdivision or taxing district of the county. The State Treasurer is further authorized and empowered, in his discretion, in refinancing any of those bonds, to agree to a reduction of the principal sum and likewise to agree to a reduction of the interest rate thereon. The State Treasurer is authorized and empowered, in his discretion, to sell any of those bonds at or for the best price obtainable, or to trade those bonds for other bonds, when in the judgment of the State Treasurer the best interests of the county would be advanced thereby, and he is further authorized to handle and negotiate any matured interest coupons on any of those bonds in the same manner as he is authorized in this section to deal with the bonds.

All of the proceeds of the sale, refinancing, trading, or collection of any of those bonds shall be accounted for by the State Treasurer and placed to the credit of the subdivisions or funds of the counties entitled to those proceeds.

SECTION 11. Section 27-105-333, Mississippi Code of 1972, is amended as follows:

27-105-333. Alternative method of selecting depositories.

In any county in this state where no depository or depositories were selected and qualified, as provided by law, on or before the first Monday of January 1932, or in which the depository or depositories are not selected and qualified annually thereafter on or before the first Monday in January, the board of supervisors of the county shall, at the January meeting of the board or any regular meeting or special meeting thereafter called for that purpose, select and designate a depository or depositories into which the tax collector or tax collectors of the county shall deposit all tax collections and other public funds collected after the first Monday in January 1932, when collected, and in which the same shall thereafter be distributed, at the time and in the manner as now required by law, to the several funds or accounts in which the same properly belong, as provided by law herein.

Any depository so selected by the board of supervisors shall be within the State of Mississippi and may hold the deposits at such rate of interest as may be agreed upon with the board of supervisors or, in the discretion of the board of supervisors, without liability for interest unless it is required to be paid under the provisions of Section 27-105-303, but the * * * depository shall secure the * * * deposits by pledging with the State Treasurer such securities in such amounts and upon such conditions as are now required by law of depositories that qualify as such by bidding for them.

SECTION 12. Section 27-105-349, Mississippi Code of 1972, is amended as follows:

27-105-349. County withdrawal of bonds pledged or filed as security.

The State Treasurer is authorized and empowered * * * to allow county depositories of county funds or county district funds of every kind and character to withdraw any bonds pledged or filed or deposited as security for those deposits:

(a) When in the opinion of the State Treasurer the deposits become reduced to such an extent as to justify the withdrawal;

(b) Or to withdraw any such bonds or corporate surety bonds, and substitute in lieu thereof other bonds or corporate surety bonds, as the case may be.

 * * * All such bonds shall be such as are authorized by law to be pledged or filed as security for those deposits, or if a corporate surety bond, it must be made by a surety company authorized to do business in this state; and in addition, all such deposits shall be fully secured and covered as required by Section 27-105-5.

SECTION 13. Section 27-105-353, Mississippi Code of 1972, is amended as follows:

27-105-353. * * * Method of selecting municipal depositories.

The board of mayor and aldermen or other municipal authorities of each and every city, town or village in the state are * * * required to select a depository in the manner provided by law for the selection of county depositories. Before being selected, a depository must be certified by the State Treasurer as meeting the capital ratio requirement specified in Section 27-105-5 or 27-105-6 * * *. An institution shall not be a qualified depository and shall not receive any municipal funds unless its ratio has been certified annually by the State Treasurer as meeting the prescribed requirement. Notwithstanding the foregoing, any financial institution not meeting the prescribed ratio requirement whose accounts are insured by the Federal Deposit Insurance Corporation or * * * or any successors to that insurance corporation may receive municipal funds in an amount not exceeding the amount that is insured by that insurance corporation and may qualify as a municipal depository to the extent of that insurance.

SECTION 14. Section 27-105-355, Mississippi Code of 1972, is amended as follows:

27-105-355. Security on bond.

Each depository shall enter into bond, or deposit securities with the State Treasurer as required of county depositories; the bond or security to be approved by the State Treasurer.

SECTION 15. Section 27-105-359, Mississippi Code of 1972, is amended as follows:

27-105-359. Municipal withdrawal of bonds pledged or filed as security.

The State Treasurer is authorized and empowered * * * to allow municipal depositories of municipal funds of every kind and character to withdraw any bonds, including corporate surety bonds, pledged or filed or deposited as security for those deposits:

(a) When in the opinion of the State Treasurer the deposits become reduced to such an extent as to justify the withdrawal;

(b) Or to withdraw any such bonds or corporate surety bonds, and substitute in lieu thereof other bonds or corporate surety bonds, as the case may be.

 * * * All such bonds shall be such as are authorized by law to be pledged or filed as security for those deposits, or if a corporate surety bond, it must be made by a surety company authorized to do business in this state; and in addition, all such deposits shall be fully secured and covered as required by Section 27-105-5.

SECTION 16. Section 27-105-319, which provides the form of the commission for a county depository, is * * * repealed.

SECTION 17. Section 1 and Sections 3 through 16 of this act shall take effect and be in force from and after July 1, 2001. Section 2 of this act shall take effect and be in force from and after the passage of this act.