2023 Arizona Revised Statutes › Title 35 - Public Finances › § 35-312 - Eligible depositories; collateral

35-312.
Eligible depositories;  collateral
A. Any eligible depository that receives an investment or any deposit of treasury monies of more than the amount insured by an instrumentality of the United States shall collateralize those deposits with any of the following:
1. Securities listed in section 35-313,  subsection A,  paragraphs 1 and 3.
2. State treasurer's warrant notes.
3. The safekeeping receipt of a federal reserve bank or any bank located in a reserve city,  or any bank authorized to do business in this state,  whose combined capital,  surplus and outstanding capital notes and debentures on the date of the safekeeping receipt are $100, 000, 000 or more,  evidencing the deposit therein of any securities or instruments described in this section. A safekeeping receipt does not qualify as security if issued by a bank to secure its own public deposits unless issued directly through its trust department. The safekeeping receipt shall show on its face that it is issued for the account of the state treasurer and shall be delivered to the state treasurer.
4. Letters of credit issued by a federal home loan bank if:
(a) The letter of credit has been delivered pursuant to this section or chapter 10,  article 1 of this title to the statewide collateral pool administrator.
(b) The letter of credit meets the required conditions of:
(i) Being irrevocable.
(ii) Being issued,  presentable and payable at a federal home loan bank in United States dollars. Presentation may be made by the beneficiary submitting the original letter of credit,  including any amendments,  and the demand in writing,  by overnight delivery.
(iii) If the letter of credit is for purposes of chapter 10,  article 1 of this title,  containing a statement that identifies the statewide collateral pool administrator as the beneficiary.
(iv) Containing an issue date and a date of expiration.
(c) For the purposes of chapter 10,  article 1 of this title,  the eligible depository,  if notified by the statewide collateral pool administrator,  may not use new letters of credit issued by a federal home loan bank if that federal home loan bank fails to pay a draw request as provided for in the letters of credit or fails to properly complete a confirmation of the letters of credit.
B. The securities,  warrants or safekeeping receipt for those items shall be accepted at market value equal to one hundred two percent of the deposit liability to the state treasurer,  and,  if at any time their market value becomes less than one hundred two percent of the deposit liability to the state treasurer,  additional items required to guarantee deposits shall be deposited immediately with the state treasurer by the eligible depository. When items pledged as collateral mature or are called for redemption,  the cash received for the item shall be held in place of the items until the eligible depository has obtained a written release or provided substitute securities,  instruments or warrants.
C. The deposit of securities,  warrants or a safekeeping receipt must be such that the eligible depository will promptly pay to the state treasurer monies in its custody on lawful demand and will,  when required by law,  pay the monies to the state treasurer.
D. The securities,  warrants or safekeeping receipt of an eligible depository shall be deposited with the state treasurer,  and the state treasurer is the custodian of those items. The state treasurer may then deposit with the eligible depository monies then in the state treasurer's possession in accordance with this article.
E. Eligible depositories shall report to the state treasurer monthly and on demand the par and market value of any pledged collateral and the total deposits of the state treasurer.