The Georgia Bankers Association (GBA) administers the Georgia State Pledging Pool Program for the state of Georgia. The Pledging Pool concept is a terrific alternative to the dedicated pledging method many financial institutions use.
Through the dedicated method of collateralizing, we found that financial institutions often collateralize their public funds by administering each fund separately and reporting on changes accordingly. The GBA program pools the securities, administers the record-keeping and audits the records regularly, thereby ensuring the bank, your public depositor and the State of Georgia that you are in compliance.
The benefits of using the Georgia State Pledging Pool include:
- With the direct method, it is not uncommon for fluctuations in deposit balances of individual accounts to lead to either under pledging or significant over pledging. The pooled collateral against a bank’s entire portfolio of public deposits provides a more efficient use of collateral and less cost and paper shuffling to adjust pledges.
- Two more sets of eyes overlooking the pledging process (GBASI and the State Treasurer) to make sure pledging is at the right level.
- Reduced staff time and cost for various regular administration, audits and reporting.
There are a few other things about the Georgia State Pledging Pool you need to know:
- A bank must be eligible to be a state depository to participate. Generally that means the bank is at least adequately capitalized.
- If your bank establishes a pool, each public depositor decides whether to participate, not the bank, but with so many depositors participating now, we don’t hear about any pushback. They simply sign a form we provide you to authorize their participation.
- Participants provide us a monthly report that tracks their aggregate public deposits and the value of the securities pledged.
- There are minimal setup fees that vary based on the number of public depositors in a bank’s pool. The only other expenses to the bank are monthly recordkeeping fees, which are $10 per public depositor and $5 per collateral transaction.
GBA has administered the program for the Office of the State Treasurer since 1999. The current banks using the pool have almost 1,600 public depositors covered. Everyone seems genuinely pleased with the results. We hope you’ll consider becoming our newest bank participant.
Georgia State Pledging Pool Public Depositors