7-3-1317. Deposit security. (1) Unless a bank designated as a depository elects to deposit securities with the treasurer as provided in subsection (2), it shall give good and sufficient bonds, with sureties to be approved by the commission, conditioned for the safekeeping and payment of the municipal funds deposited with the bank and the interest on the deposit. Any bonds of a depository must be in the aggregate equal to the amount designated by the commission as the maximum of municipal funds that may at any time be kept by the depository. All surety bonds given by a bank in accordance with the provisions of this subsection must continue in force so long as funds of the municipality deposited in the bank are unpaid. This section may not impair the rights and remedies of the municipality on the bonds under the laws of the state.

(2) In lieu of the surety bonds specified in subsection (1), a bank designated as a depository of municipal funds may deposit with the treasurer bonds of the class and kind in which, by the provisions of 7-3-1322, the sinking fund of the municipality may be invested. Deposited bonds must be in an amount equal to the amount of municipal funds permitted at any time to be deposited with the bank, must be approved by the commission, and must be accompanied by proper assignment, to the end that the bank depositing and assigning the bonds will safely keep and pay over to the treasurer or the treasurer's order, on demand and free of exchange, all money at any time deposited in the bank with interest on the money at the rate agreed upon and that in case of default on the part of the bank, the commission may sell the bonds or so much of the bonds as may be necessary to realize the full amount of the funds deposited. The bank is entitled to interest on the securities deposited with the treasurer, when paid, and to the return of the securities at the termination of the trust so long as the bank is not in default. With the approval of the commission, a bank may at any time substitute other similar securities of equal value for those deposited.

(3) Bonds and other securities given by banks in accordance with this part must be entered in a record to be kept for that purpose by the director of finance and deposited with the treasurer for safekeeping. The record of the bonds and securities kept by the director of finance or copies of the record certified by that officer are competent and prima facie evidence of the contents and tenor of the bonds and securities.