Finding Text
2025-002. Deposits in Excess of FDIC & Pledged Securities Coverage. Criteria: All public funds on deposit at a financial institution should be safeguarded by either FDIC insurance or collateral pledged by the financial institution. Condition: I noted the following deficiency in bank collateral for funds on deposit as of June 30, 2025: Deposit Insured Deficient Washington Savings Bank $ 315,670 $ 250,000 $ (65,670) Questioned Costs: None noted. Effect: Authority’s funds in excess of the insured amount are vulnerable. Cause: The Authority did not monitor the balances of its accounts closely enough to ensure adequate protection of all funds. Recommendation: I recommend that the Authority periodically contact the bank to ensure all funds are fully secured. Management’s Response: These CDs were originally opened in 2008 and 2013 at two different financial institutions. When First National Bank closed in 2022, Washington Savings Bank acquired one of the CDs (No. 217488). Since that time, the combined balance at Washington Savings Bank has exceeded the $250,000 FDIC insurance limit. This had not previously been raised as a concern in prior audits. Washington Savings Bank has advised they cannot retroactively establish a collateral agreement but could put one in place going forward. However, rather than implementing a new collateral agreement, my preference would be to close both CDs at Washington Savings Bank. The funds could then be applied toward the remaining costs of the elevator modernization project while also resolving the FDIC coverage issue moving forward. Additionally, these funds have remained in place for over 10 years, and I would not anticipate HUD preferring that they continue to sit unused. We already have a collateral agreement in place with First Mid Bank, which ensures compliance with those accounts.