A bank or savings and loan association, upon the deposit of state funds by the State Treasurer, must secure these deposits by deposit insurance, surety bonds, collateral securities, or letters of credit to protect the State against loss in the event of insolvency or liquidation of the institution or for any other cause. To the extent that these deposits exceed the amount of insurance coverage provided by the Federal Deposit Insurance Corporation, the bank or savings and loan association, at the time of deposit, shall:

1. (1) furnish an indemnity bond in a responsible surety company authorized to do business in this State; or

2. (2) pledge as collateral:

   1. (a) obligations of the United States;
   2. (b) obligations fully guaranteed both as to principal and interest by the United States;
   3. (c) general obligations of this State or any political subdivision of this State; or
   4. (d) obligations of the Federal National Mortgage Association, the Federal Home Loan Bank, Federal Farm Credit Bank, or the Federal Home Loan Mortgage Corporation; or
3. (3) provide an irrevocable letter of credit issued by the Federal National Mortgage Association, the Federal Home Loan Bank, Federal Farm Credit Bank, or the Federal Home Loan Mortgage Corporation, in which the State Treasurer is named as beneficiary and the letter of credit otherwise meets the criteria established and prescribed by the State Treasurer. The State Treasurer shall exercise prudence in accepting collateral securities or other forms of deposit security.