Virginia Law

Pursuant to the power granted under § 2.2-4405 of the Code of Virginia, the Treasury Board may establish criteria to become a qualified public depository and compliance requirements for continued eligibility.

1. To become a qualified public depository, the minimum qualifications are that a bank:

a. Meet the requirements of a qualified public depository as defined in § 2.2-4401 of the Code of Virginia.

b. Have an average or above rating from the Treasury Board's designated rating service for the most recent eight calendar quarters.

c. Cannot be under a formal federal or state bank regulatory enforcement action that would impair its ability to serve as a qualified public depository, to be determined on a case-by-case basis. Banks will be required to disclose to the Treasury Board any such formal enforcement actions currently in force.

2. For continued eligibility, compliance requirements are:

a. Sufficient collateralization, pooled method. If a qualified public depository using the pooled method of collateralization is undercollateralized three months in a rolling 12-month period, the Treasury Board may take action, including the following, as it deems appropriate:

(1) Increase the depository's collateral requirement.

(2) Prohibit the depository from opening any new public deposit accounts.

(3) Restrict the types of securities the depository may pledge as collateral.

b. Sufficient collateralization, dedicated method. If a qualified public depository using the dedicated method of collateralization is undercollateralized for weekly reporting, it may be penalized accordingly.

c. Timely monitoring and collateralization of public deposit balances. Failing to monitor public deposit balances daily and pledge additional collateral when necessary may result in the Treasury Board taking action, including the actions outlined in subdivisions 2 a (1), 2 a (2), and 2 a (3) of this section.

d. Timely reporting. If a qualified public depository reports late or otherwise fails to report when required, the Treasury Board may take action as it deems necessary.

e. Rating from Treasury Board's designated rating service.

(1) Pooled method: If the depository's rating should fall below average, the collateral requirement will increase to at least 100% of public deposits, net of Federal Deposit Insurance Corporation coverage, until the rating is again average or above for two consecutive quarters. If the depository's rating should fall into the rating service's lowest rating tier, the Treasury Board may restrict the types of securities the depository may pledge as eligible collateral, or require securities be valued at less than 100%, or both.

(2) Dedicated method: If the depository's rating should fall from one category to another, the collateral requirement will be increased accordingly.