Kentucky Revised Statutes Title XXV. Business and Financial Institutions § 286.3-330.Assets may be pledged or surety bonds provided as collateral security; security not required if deposit insured

(1) A bank may, subject to statutory or charter limitations, pledge a portion of its assets or provide surety bonds as may be required by law as collateral security for government deposits made with it by or under the authority of the United States or for any other deposit required by law to be secured.

(2) Notwithstanding any law requiring security for deposits in the form of collateral, surety bond, or in any other form, security for deposits shall not be required to the extent the deposit is an insured deposit as defined in 12 U.S.C. sec. 1813, as amended.

(3) If a bank proposes to sell its assets and transfer its deposit liability to another bank and the purchasing bank is unwilling to accept a sufficient amount of the assets to cover the liability to depositors and other creditors, the selling bank may, with the consent of the commissioner, pledge all or a part of its remaining or unacceptable assets to secure a loan for an amount sufficient to cover the remaining liability to the depositors and other creditors.