My CFO has asked if we can used securities as a pledge to an individual account. I know you can use those as collateral for deposits made by local and state governments as well as the federal government but cannot find information regarding individual accounts. Can you give us some guidance on this?

Thank you rlcarey. Two more quick questions - if we are able to proceed in doing this, is there a cap on the fee that we can pass to the customer for using securities as a pledge? Also, are there any disclosure requirements? We had a particularly large deposit made yesterday and the customer is wanting us to figure out how to secure his funds and it exceeds the FDIC's limit.

All of that is going to be State law issues. Also, you might need to get with your external accountants as to how to enter this as a contingent liability on your balance sheet and any impact on some of your ratios.

I have never seen this done except as required to secure public fund deposits in some States.

Okay thank you!

I should mention that if you are a National Bank - this would not be allowed unless it involved public fund deposits.