6-245

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.