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Public Deposits - PDPA

CBA's work related to PDPA has been directed toward ensuring only taxpaying

institutions may accept public deposits.

2016: CBA is working to ensure county treasurers know banks are accepting public deposits.

CBA currently working to quell idea of pooled collateral (risk) for depository banks.

2014: CBA closely monitors HB14-1103 to ensure no amendments impact PDPA.

2012: CBA closely monitors HB12-1005 ensuring credit unions cannot accept public deposits.

PDPA - 11-10.5-102. Legislative declaration. (1) The general assembly hereby declares that the purpose of this article is to serve the taxpayers and the citizens of Colorado by establishing standards and procedures to ensure the preservation and protection of all public funds held on deposit by a bank that are either not insured by or are in excess of the insured limits of federal deposit insurance, and to ensure the expedited repayment of such funds in the event of default and subsequent liquidation of a bank which holds such deposits.


Current law states that institutions accepting public deposits must:

A. Must be FDIC insured ($250,000)

B. Approved by the Division of Banking

C. Comply with all regulations and reporting requirements


In addition, any institution must have and maintain a minimum level of total capital to risk-weighted assets in excess of 8%. When that ratio falls to 5% or below, the eligible public depository shall submit a plan and time-frame for eliminating its public deposits.


Higher than minimum capital ratios may be required for:

1. A newly chartered bank;

2. A bank receiving special supervisory attention;

3. A bank which has, or is expected to have, losses resulting in capital inadequacy;

4. A bank having a high proportion of off-balance sheet risks,

5. A bank that is growing rapidly, either internally or through acquisitions; or

6. A bank that may be adversely affected by the activities or condition of its holding company, affiliate(s), or other persons or institutions including chain banking organizations.


A bank's designation and certification as an eligible public depository may be revoked, suspended, or placed under restriction for any one of the following:

A. Failure to maintain adequate capital standards.

B. Failure to provide information requested by any employee of the Division of Banking for purposes of monitoring the safety of public deposits.

C. Failure to meet reporting requirements established under the Public Deposit Protection Act or Public Deposit Protection Act Banking Board Rules, Policies, Procedures, or Orders.

D. Failure to comply with any other provision of the Public Deposit Protection Act, Public Deposit Protection Act Banking Board Rules, Policies, Procedures, or Orders.


A depository shall not accept any additional uninsured public deposits or renew any uninsured public deposits beyond the original maturity dates:

1. If the depository’s total capital to risk-weighted asset ratio is below 6 percent; or

2. If the depository has received a final report of examination or other notice that the depository has been assigned a composite CAMELS rating of 5.


A depository shall eliminate all public deposits in an orderly manner, under a plan and a time-frame approved by the Banking Board:

1.If the depository’s total capital to risk-weighted asset ratio is equal to or less than 5 percent; or

2. If the depository has received a final report of examination or other notice that the depository has been assigned a composite CAMELS rating of 5.




The obligation or instrument is characterized by attributes of: safety, liquidity, and soundness shall be marketable or convertible into cash market value verified at least monthly.


Any security assigned a rating of AAA to BBB by Standard & Poor’s or Fitch’s Investors Services or any security assigned a rating of AAA to BAA by Moody’s Investors Service. The following are approved as eligible collateral:

A. U.S. Treasury Bills; Treasury Notes;Treasury Bonds;

B. Farm Credit System wide Debentures,

C. Federal Home Loan Bank Debentures

D. Federal National Mortgage Association Debentures

E. Federal Home Loan Mortgage Corporation

F. Government National Mortgage Association…

Public unit defined in Section 11-10.5-103(13), C.R.S., and "political subdivision is defined in Section 11-10.5-103(10), C.R.S.

1. Obligations of any public unit or any political subdivision in Colorado,

2. Revenue bonds, except industrial development revenue bonds,

3. Obligations of any public unit or political subdivision of another state, which obligations shall be readily convertible into cash, and which obligations are rated at least "A" quality by one or more nationally-recognized organizations that regularly rate such obligations.

4. Revenue bonds of any public unit or political subdivision of another state, except private activity bonds or industrial development revenue bonds.

Promissory notes secured by first lien mortgages that are:

A. Open-end and closed-end loans, including reverse mortgages, secured by real estate as evidenced by mortgages

B. Nonfarm property containing 1-to-4 dwelling units (including vacation homes) or more than four dwelling units if each is separated from other units by dividing walls that extend from ground to roof (e.g., row houses, townhouses, or the like);

C. Mobile homes (i) that qualify as the purchase or holding of real property, and (ii) where the loan to purchase the mobile home is secured by that mobile home as evidenced by a mortgage

D. Individual condominium dwelling units

Home equity lines of credit, loans secured for 1-to-4 family residential property construction and land development purposes, and loans secured by vacant lots in established single-family residential sections or in areas set aside primarily for 1-to-4 family homes may not be pledged as eligible collateral. In no event shall any eligible public depository's pledged collateral portfolio consist of more than 50% of the above described promissory notes.


Other Approved Eligible Collateral Instruments and Obligations

1.Money market funds, the portfolios of which consist entirely of United States Government-issued or United States

2. Government Agency-issued or Instrumentality-issued short-term securities with maximum maturities of thirteen months

3. Government National Mortgage Association, Federal National Mortgage Association and Federal Home Loan Mortgage Corporation conduit collateralized mortgage obligations except that interest only and principal only collateralized mortgage obligations shall not be pledged

4. Commercial paper rated at least "A1" or "P1" in quality at the time of pledging by Moody's and Standard & Poor's

Acceptances of banks and negotiable certificates of deposit of banks chartered in the United States if, at the time the security is purchased, the issuing bank or its parent holding company has obtained a long-term deposit or debt rating of at least "A" in quality by one or more nationally-recognized organizations which regularly rate such obligations, but any investment in acceptances of banks or negotiable certificates of deposit shall be limited to that issued by financial institutions organized and operating within the United States, and having a net worth in excess of two hundred fifty million dollars

5. Surety bonds


 Where collateral is held

Any federal reserve bank, or any branch thereof, any depository trust company, or any bank acting as custodian of eligible collateral, approved by the Banking Board must comply with:

1. The Public Deposit Protection Act, and all Banking Board Rules, Policies, Procedures, and Orders;

2. The Banking Board's safekeeping procedures (This includes, but is not limited to, issuing Joint Custody Receipts or other documentation required by the Division of Banking to evidence the Banking Board's security interest in the pledged collateral.);

3. Provide any information requested by the Banking Board,

4. Allow State Bank Examiners to conduct on-site examinations to determine compliance with the Act and corresponding Banking Board Rules, Policies, Procedures, and Orders.


Eligible collateral

Eligible collateral obligations or instruments shall not be in default in any respect. If, in the Colorado Division of Banking's opinion, a previously-pledged instrument is not safe and sound, the instrument shall no longer be deemed eligible collateral


Amount of collateral

A. Risk-weighted Capital equal to or greater than 8% pledge 102% of uninsured public deposits

B. Risk-weighted Capital less than 8% equal but or greater than 7% pledge 120% of uninsured public deposits

C. Risk-weighted Capital less than 7% but equal or greater than 6% pledge 140% of uninsured public deposits

D. Risk-weighted Capital less than 6% pledge 160% of uninsured public deposits


Regardless of Capital a CAMELS rating of 4 shall pledge in excess of 120% Camels rating of 5 pledge 160% and not accept any further public deposits and establish a plan to eliminate all public funds in an orderly manner approved by the Banking Board.


Reporting and examinations

1. Depositories must report all public deposits and the highest single day aggregate balance of public funds.

2. They also must have an independent exam/audit of PDPA compliance as well as:

3. Onsite exam from the Division of Banking


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