The State Treasurer's office administers the program that protects deposits made by public bodies in Iowa banks. In addition to federal deposit insurance, public deposits are secured by collateral pledged by banks and further protected by assessments paid by banks if collateral is insufficient to cover losses.
When a bank accepts a public deposit, it agrees to abide by the provisions of Chapter 12C of the Iowa Code, "Deposit of Public Funds" and Chapter 13 of Iowa Administrative Rules, "Deposit and Security of Public Funds in Banks." The amount of collateral required to be pledged to the state treasurer by a bank shall at all times equal or exceed the total amount by which the public fund deposits in the bank exceed the total capital of the bank.
Pledging for Public Fund Deposits:
Pledging Agreements and Forms:
- Master Custodial Agreement
- Pledge and Security Agreement (securities)
- Pledge and Security Agreement (letter of credit or insurance policy)
- Letter of Credit Form
- Exhibit A
Pledging banks must pledge securities to one of the following custodians which have executed a Master Custodial Agreement and have been approved by the treasurer of state. Pledging banks are responsible for paying for all services provided by the custodian.
- Bankers Bank - Madison, Wisconsin
- Bankers Trust Company - Des Moines, Iowa
- Commerce Bank - Kansas City, Missouri
- Country Club Bank - Prairie Village, Kansas
- Federal Home Loan Bank - Des Moines, Iowa
- First National Bank - Omaha, Nebraska
- First Horizon Bank - Memphis, Tennessee
- Midwest Independent Bank - Jefferson City, Missouri
- Northern Trust Bank - Chicago, Illinois
- Quad City Bank & Trust - Bettendorf, Iowa
- Security National Bank - Sioux City, Iowa
- UMB Bank - Kansas City, Missouri
- United Bankers' Bank - Bloomington, Minnesota
- Wells Fargo Bank - Minneapolis, Minnesota
Notice to Public Body Treasurers:
Citizens of Iowa count on their public body treasurers to safeguard public funds. This duty is becoming more challenging as new electronic methods are created to move funds and make payments.
Many third parties, such as PayPal, will offer to facilitate the collection of money through special payment services. By researching how these payment services work, we discovered that while they collect money on behalf of the public body, the funds are first deposited into a commingled checking account belonging to them, the third party, often in a bank outside the state of Iowa. Public funds held in the commingled account would not be collateralized or protected by the state sinking fund. Nor are Iowa public funds held in an account outside of this state.
If you decide to use a third-party to process receipts and make deposits, it is important you require that your collections be deposited directly into an account in the name of your public body at an Iowa financial institution. This is the only way your funds will be protected by Iowa’s state sinking fund. For more information, please see Iowa Code Chapter 12C or contact Deputy Treasurer Randi McLaughlin at Randi.McLaughlin@tos.iowa.gov.