(a) A depository services contract shall contain terms and conditions relating to the possession, substitution, or release of security, including:
(1) requiring the depository to execute a new bond or pledge additional securities for the deposit of municipal funds;
(2) substituting one security for another;
(3) releasing securities pledged by a depository in excess of the amount required by this chapter;
(4) the time period in which such addition, substitution, or release of security by a depository may occur; and
(5) other matters relating to the possession, substitution, or release of security the municipality considers necessary for its protection.
(b) If a depository fails for any reason to comply with the requirements governing the possession, substitution, or release of security, the governing body may select a new depository in the manner provided in this chapter.