Ohio Administrative Code
Title 113 - Treasurer of State
Chapter 113-40 - Collateral Requirement
Section 113-40-04 - Bank monitoring and economic monitoring
Universal Citation: OH Admin Code 113-40-04
Current through all regulations passed and filed through September 16, 2024
(A) All financial institutions (FIs) approved for a reduced collateral floor will be subject to ongoing monitoring of various individual financial criteria. If the financial standing of the FI changes, and no longer meets the required reduced collateral floor eligibility criteria as defined in rule 113-40-03 of the Administrative Code, the treasurer of state may impose a bank monitoring collateral requirement. The treasurer will use three descriptors within OPCS to identify a FI's reduced collateral monitoring status:
(1)
Non-active: The
FI has not applied, or has not been approved, for a reduced collateral
floor.
(2)
Active: The FI has been approved for a reduced
collateral floor.
(3)
Bank monitoring: The FI has an emerging individual
financial concern or a deposit business concern.
(a)
The treasurer
will notify a FI when its reduced collateral monitoring status changes from
active to bank monitoring within OPCS; OPCS will generate notifications to the
affected public unit(s).
(b)
A FI subject to a bank monitoring collateral
requirement may be subject to an increase in its reduced collateral floor
requirement, from the sum of its reduced collateral floor requirement plus ten
per cent or more, up to a maximum of one hundred two per cent. Any increase
will be reflected in the bank monitoring field in OPCS, as determined at the
sole discretion of the treasurer.
(c)
A FI subject to
an increase in its reduced collateral floor due to bank monitoring status may
be required to pledge additional collateral through one or more calls as
follows:
(i)
First collateral call will require a FI to secure all
uninsured public deposits at least equal to the sum of the reduced collateral
floor requirement plus up to ten per cent, within ninety calendar
days.
(ii)
Second collateral call will require a FI to secure all
uninsured public deposits at least equal to the sum of the reduced collateral
floor requirement plus up to twenty-five per cent, within sixty calendar
days.
(iii)
Third collateral call will require a FI to secure all
uninsured public deposits at up to one hundred two per cent, within thirty
calendar days.
(d)
The treasurer may decide to engage a FI prior to
changing its status from active to bank monitoring in order to identify any
extenuating considerations. This decision will be made at the sole discretion
of the treasurer.
(e)
The treasurer may reduce a FI's collateral floor upon a
change in its bank monitoring status from bank monitoring to active, as
determined at the sole discretion of the treasurer.
(B) All FIs approved for a reduced collateral floor will be subject to economic monitoring protocols to identify potential macroeconomic or regional economic concerns.
(1)
The treasurer will use two publicly available macroeconomic
indicators to identify a potential concerning economic trend:
(a)
The "Sahm Rule
Recession Indicator" as published by the federal reserve bank, in which a
negative trend is defined as a single instance of when the three-month moving
average of the national unemployment rate rises by one half of a percentage
point or more relative to its low during the previous twelve months;
and
(b)
The ten-year treasury constant maturity minus two-year
treasury constant maturity, in which a negative trend is defined as five
instances within a rolling thirty calendar day period of the two-year treasury
constant maturity exceeding the ten-year treasury constant maturity using the
daily treasury yield curve rates as published by the U.S. department of the
treasury, federal reserve bank, or other industry recognized market data
source.
(2)
The treasurer will monitor a regional economic
indicator, the noncurrent loans and leases to total loans and leases for Ohio
as produced by the federal deposit insurance corporation, in which a negative
trend is defined as a single five per cent rate increase which is to be
calculated by subtracting the indicator's average prior four quarters from the
indicator's current quarter and then dividing by the indicator's average prior
four quarters.
(3)
If the treasurer identifies a potential macroeconomic
or regional economic concern, then the treasurer may implement an economic
monitoring collateral requirement for all or some of the FIs approved for a
reduced collateral floor, at the sole discretion of the treasurer. A FI subject
to an economic monitoring collateral requirement may be required to pledge
additional collateral through one or more calls as follows:
(a)
First collateral
call will require a FI to secure all uninsured public deposits at least equal
to the sum of the reduced collateral floor requirement plus up to ten per cent,
within ninety calendar days.
(b)
Second collateral
call will require a FI to secure all uninsured public deposits at least equal
to the sum of the reduced collateral floor requirement plus up to twenty-five
per cent, within sixty calendar days.
(c)
Third collateral
call will require a FI to secure all uninsured public deposits at up to one
hundred two per cent, within thirty calendar days.
(4)
The treasurer may
remove an economic monitoring collateral requirement from any FI at the
treasurer's sole discretion.
Replaces: 113-40-05
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