All trust deposits awaiting investment or distribution that are determined to be eligible under Arkansas Code § 28-69-206 for pledging of government securities to the deposit may be secured by a blanket pledging of eligible securities to those eligible trust deposits subject to the following requirements:

1. (1)

   1. (A) The total of the pledged securities must always exceed the total of the eligible trust deposits by ten percent (10%).
   2. (B) Such trust deposits shall have a prior and preferred claim on said pledged securities;
2. (2) Any bank using blanket securities as collateral for eligible trust deposits must identify the securities being used and perfect a security interest in such securities for the benefit of the owners of the accounts for which the pledge is made;

3. (3)

   1. (A) Trust deposits that are being collateralized must be designated in the trust department's records.
   2. (B) The actual amount of collateralization need not be given.
   3. (C) These records should be maintained current at all times within the bank's trust department;

4. (4)

   1. (A) Funds held by a state bank as trustee which are awaiting investment or distribution shall not be held uninvested or undistributed any longer than is reasonable for the proper management of the account.
   2. (B) Each state bank exercising fiduciary powers shall adopt and follow written policies and procedures intended to ensure that the maximum rate of return available for trust-quality, short-term investments is obtained upon funds so held, consistent with the requirements of the governing instrument and local law.

   3. (C) Such policies and procedures shall take into consideration all relevant factors, including, but not limited to, the:

      1. (i) Anticipated return that could be obtained while the cash remains uninvested or undistributed;
      2. (ii) Cost of investing such funds; and
      3. (iii) Anticipated need for the funds;

5. (5) Funds held in trust by a state bank as trustee awaiting investment or distribution may, unless prohibited by the instrument creating the trust or by local law, be deposited in the commercial or savings or other department of the bank, provided that it shall first set aside under control of the trust department as collateral security:

   1. (A) Direct obligations of the United States;
   2. (B) Other obligations fully guaranteed by the United States as to principal and interest; or
   3. (C) General obligations of the State of Arkansas; and

6. (6)

   1. (A) The securities so deposited or securities substituted therefore as collateral shall at all times exceed the total of the eligible trust deposits by ten percent (10%), but such security shall not be required to the extent that the funds so deposited are insured by the Federal Deposit Insurance Corporation.
   2. (B) The requirements of this section are met when qualifying assets of the bank are pledged to secure a deposit in compliance with local law, and no duplicate pledge shall be required in such case.

Codification Notes: This section was promulgated as Section 47-705.1 of the State Bank Department Rules prior to codification into the Code of Arkansas Rules. This section as promulgated prior to codification into the Code of Arkansas Rules provided as follows: "(Reference A.C.A. § 23-47-705)"