County Bank Accounts

The county legislative body is authorized to adopt a resolution to contract with a bank or banks making the highest and best bid or bids to pay interest on daily balances of the county’s funds.   The county legislative body may also appoint a finance committee composed of the county mayor, the county trustee and three of its members.  T.C.A. § 5-8-201(a)(1).

Prior to contracting with any bank, the trustee is required to take bids from banks and then file an analysis of the bids with the county clerk who shall provide a copy of the trustee’s report to each member of the county legislative body on or before its next meeting.  The trustee’s report shall recommend the bank making the highest and best bid or bids to pay interest on daily balances of the county’s funds.  T.C.A. § 5-8-201(a)(2).

The finance committee is vested with the authority to formulate, make and sign a contract on behalf of the county with a bank upon the terms and conditions specified in the bid.  The contract must be approved by the county mayor, and attested by the county clerk, with the county seal attached.  Such contract is binding on the county.  T.C.A. § 5-8-202.

If the county finance committee does not contract with a bank or other financial institution, the county trustee may contract with a bank or banks or other financial institutions for deposit, safekeeping, and earning of interest on daily balances of the county’s funds, according to the same terms as are required by T.C.A. § 5-8-202 for the county finance committee.  Additionally, the county trustee is authorized to enter into such agreements with banks and other financial institutions as necessary for the maintenance of collateral to secure the daily balances of the county’s funds on deposit with banks or other financial institutions.  T.C.A. § 5-8-201(c).

At least once every four years and not less than once every term of office, the county trustee is required to evaluate whether the county’s contract with the bank should be rebid.  The trustee is required to obtain proposals from at least two banks or other financial institutions and then prepare a written evaluation of the proposals.  The evaluation must be preserved for a period of not less than three years.  T.C.A. § 5-8-201(d).

Collateralization of County Funds.  Pursuant to T.C.A. § 5-8-201(b), the county shall require any financial institution that becomes a depository of the county’s funds to secure the funds as provided in a collateral pool created under Title 9, Chapter 4, Part 5, or in the same manner and under the same conditions as state deposits under Title 9, Chapter 4, Parts 1 and 4.  See Op. Tenn. Atty. Gen. 09-146 (August 3, 2009).