Admission To Collateral Pool

(1) Application by Public Depository. (a) Applications for Participation. To be considered for admission to the collateral pool, a Tennessee bank, as defined in T.C.A. § 45-12-102, or a Tennessee savings institution, as defined below, shall submit a completed Application Package to the Board. The Application Package shall include a completed application form and required supplemental information and documents. For purposes of these rules, a “Tennessee savings institution” means any savings association as defined in 12 U.S.C. § 1813 and which has branches located in the State of Tennessee authorized to accept federally insured deposits. (b) Application Form. The State Treasurer shall prescribe an appropriate form which solicits from applicants the following information: 1. The legal name of the financial institution; 2. The address of principal offices of the institution; 3. The institution’s transit routing number; 4. The institution’s FDIC insurance certificate number; 5. The institution’s tax identification number; 6. The date the institution was chartered; 7. The date the institution commenced operations in Tennessee; 8. A list of the applicants three (3) senior officers, including a resume of their experience and qualifications; 9. A list of public depositors by account held by the applicant at the end of the preceding calendar year; 10. For the twelve (12) months preceding the date of application, the average monthly balance of public deposits held for each month; 11. The legal name and address of the principal offices of all trustee custodians proposed to safekeep eligible collateral pledged to the pool; 12. For the eight (8) quarters immediately preceding the date of application, a schedule of financial information, as determined by the Board, to be taken from the institution’s Report of Condition to the FDIC or from the institution’s Thrift Financial Report to the OTS (collectively referred to as call report). (c) Supplemental Information and Documents Required. The Application Package shall include the following executed documents: BANK COLLATERAL POOL CHAPTER 1700-04-01 1. Copies of the Depository Pledge Agreement; and 2. Copies of the Contingent Liability Agreement. (d) Completion of Application Form. The application form shall be executed by the president or chief executive officer of the applicant and the individual responsible for preparing the application and contain all the prescribed information to be considered complete. The applicant may withdraw the application at any time prior to the Board taking final action on the application. (2) Admission Criteria. (a) Admission Criteria. In order to be admitted to the collateral pool, each applicant must meet or exceed the standards established by the Board, which include, but are not limited to benchmark levels and financial standards. (b) Benchmark Levels. Any applicant requesting participation in the collateral pool shall meet the benchmark levels established by the Board to determine an applicant’s eligibility to participate in the collateral pool. In addition to the benchmark levels established by the Board pursuant to this Paragraph, the Board may consider, in its sole discretion, any private source of information that is available to the Board at the time that it considers the applicant’s participation in the collateral pool to evaluate the applicant’s performance. (c) Evaluation of Financial Ratios. The Board may consider any one, all, or any combination of the benchmarks established by the Board which are derived from and calculated by using the following ratios taken from the schedule submitted by the applicant pursuant to rule 1700-04-01-.03(1)(b)12. The ratios will be analyzed against the benchmarks: 1. Capital Adequacy Ratios: (i) Primary Capital to Assets. Total Equity Capital Total Assets (ii) Total Capital to Assets. Subordinated Notes & Debentures Limited Life Preferred Stock Total Equity Capital Total Assets (iii) (I) For banks, Regulatory (Tier 1) Capital Calculated in accordance with 12 CFR Part 225; 12 CFR Part 208; or 12 CFR 325, as applicable to the applicant. (II) For savings institutions, Core (Tier 1) Capital Calculated in accordance with 12 CFR Part 567.5(a), as applicable to the applicant. (III) For public depositors adopting the Community Bank Leverage Ratio Framework, Leverage Ratio (Tier 1) Capital BANK COLLATERAL POOL CHAPTER 1700-04-01 Calculated in accordance with 12 CFR Part 3; 12 CFR Part 217; and 12 CFR Part 324. (iv) (I) For banks, Regulatory (Tier II) Capital Calculated in accordance with 12 CFR Part 225; 12 CFR Part 208; or 12 CFR Part 352, as applicable to the applicant. (II) For savings institutions, Supplemental (Tier II) Capital Calculated in accordance with 12 CFR Part 567(b), as applicable to the applicant. Savings institutions must pass the three (3) risk-based capital requirements set forth in 12 CFR 567.2(a)(1). (III) For public depositors adopting the Community Bank Leverage Ratio Framework the Tier II capital ratio will not be considered for admission or collateral pledge levels. 2. Asset Quality Ratios: (i) Loan Loss Allowance to Non-Performing Loans. Allowance for Loan Losses Total Loans Past Due 90 Days Total Non-Accrual Loans (ii) Loans 90 Plus Days to Total Loans. Total Non-Accrual Assets Total Loans Past Due 90 Days Total Loans (iii) Non-Performing Assets to Total Assets. Total Loans Past Due 90 Days Total Non-Accrual Loans Other Real Estate Owned Total Assets 3. Earnings Ratio: Return on Average Assets (Annualized) Net Income (Annualized) Average Assets 4. Liquidity Ratio: Loans to Total Assets Total Loans Total Assets (d) Evaluation of Other Factors. The Board may further consider such other information bearing on the applicant’s appropriateness for participation in the pool as in the opinion of the Board may be relevant including, but not limited to, the applicant’s mode of conducting and managing its affairs, the action of its directors, the investment of the BANK COLLATERAL POOL CHAPTER 1700-04-01 applicant’s funds, the safety and prudence of the applicant’s management, and any administrative proceeding or court action initiated against the applicant. (3) Consideration of Application. (a) Consideration by the State Treasurer. Upon receipt of an Application Package, the State Treasurer shall review the contents of the Application Package to ensure completeness. In the event that an Application package is found to be incomplete, the State Treasurer shall notify the applicant of the deficiency and provide the applicant with sixty (60) calendar days in which to cure the deficiency. If the deficiency is not cured within this time, the State Treasurer shall return the Application Package to the applicant. Upon determining that an Application Package is complete, the State Treasurer shall notify the Chairman that applications are ready for consideration by the Board. (b) Consideration by the Board. The Board shall consider each completed application submitted by an applicant for participation in the collateral pool. The Board, upon majority vote, may delay action upon any application until the next succeeding meeting of the Board. Provided, however, the Board may not delay action on any application more than one (1) time. An applicant receiving the requisite number of votes for admission shall be admitted to the pool. (c) Notice to Applicant. The Secretary of the Board shall notify an applicant in writing of any action taken by the Board or by the Treasurer within ten (10) calendar days of such action. (4) Appeal of Admission Determination. Any applicant denied admission to the collateral pool may make a written request for reconsideration to the Board by following the appeal procedure in rule 1700-04-01-.13.