a f e security for alabama funds enhancement young boozer, state treasurer

A F E

Security for Alabama Funds Enhancement

Young Boozer, State Treasurer

History

•That Fateful Call

•The Headlines

•We have a problem

•Get a solution

The Process

•Pledging Statute•Under Pledged•Over Pledged

•Bank Group Organized

•Other States

•Best Result

The Solution

•SAFE

•Enacted 2001

•Going Strong

SAFE: DescriptionStatute: Title 41, Chapter 14A, Code of Alabama (effective January 1, 2001)

Participants• Board of Directors• SAFE Staff• Alabama Banks• Alabama Public Depositors• Custodian

SAFE Program Rules

Monthly Reporting by Banks

SAFE Board of DirectorsState Treasurer Young Boozer, Chair

Lucinda CockrellCPA and Sumter County Administrator

Robert Davis President and CEO, RBC Centura Bank

Ken GivensChief Financial Officer, Aliant Bank

John HarrisonSuperintendent of the Alabama Department of Banking

Penny SmithDeputy Finance Director and Treasurer for the city of Auburn

Alvis StoreyPresident, Merchants & Farmers Bank of Greene County

Kimberlea WilsonSenior Vice President, Regions Financial Corporation

SAFE: Program Benefits

•Cost/Time Savings

•Increased Efficiency

•Improved Liquidity

•Improved Security

•Triple “Insurance” Coverage

SAFE: Key Definitions

Covered Public Entities Various governmental units of the state,

counties, municipalities and other government entities or officials

Funds owned by a covered public entity are considered public funds.

SAFE: Key Definitions

Public Deposits Monies of any covered public entity or

covered public official deposited in a bank, such as demand deposit accounts,

savings accounts and certificates of deposit

SAFE: Key Definitions

Qualified Public Depository or QPDAny bank that has met all SAFE Program

requirements has been designated by the Treasurer to receive and hold public

deposits

By law, a bank must be a QPD to have public deposits.

What defines a QPD?

•Is organized and exists in the U.S.

•Is authorized to conduct the business of making loans and taking deposits in the State of Alabama

•Has FDIC insurance

•Executes necessary SAFE Program forms

What is a Public Entity?

• A state and its political subdivisions

• Counties and their agencies

• Municipalities and their agencies

• Public corporations

• Improvement authorities

Public Depositor Responsibilities SAFE Rules 892-X-1-.09

• Deposit monies in QPD• Declare monies are public deposits

• Verify annual account information received from bank as of September 30

• Contact bank if no statement is received or information is incorrect

• If bank defaults, submit claim form to SAFE

Public Deposits Not in SAFE

• Act 2009-471 amended §41-14A-3 to allow public depositors to place funds in QPDs that are not covered by SAFE

• Deposits are managed by an Alabama bank that distributes the deposits among several banks and each bank deposit is within FDIC limits

What happens when… ?

A bank is SOLD• It re-opens on Monday under its new

name.

• There is no affect on public deposits.

• It has 90 days to update SAFE documents.

What happens when… ?

A bank FAILS• FDIC manages bank affairs

• Public depositor files a SAFE claim form within 120 days for deposits not covered under FDIC (§ 41-14A-9)

SAFE Stats

• 164 participating Alabama banks

• 4 non-participating banks: • Oakworth Capital (Birmingham) • Bank of Ozarks (Mobile)• Beal Bank (Irondale)• First Progressive Bank (Brewton)

• Net Collateral Pool $7.9 Billion

Summary Report (as of 12.31.10)

Avg. Public Deposit Pool (in millions)

$10,291

Less FDIC $2,361Net Avg. Public Deposits (in millions)

$7,928

Total Public Entities 5,931Total # of QPDs 164Coverage Ratio - Net Avg. Deposits

115.88%Coverage Ratio - Total Actual Deposits

87.28%

Questions?www.treasury.alabama.gov

Click SAFE