HomeMy WebLinkAboutFY 2022 Annual Investment ReportCity of
Euless
Michael Pe7�a
"' Phpto Teacher
Annual Investment Report
fiscal Year 2021-22
201 N. Ector Drive, Euless, TX7GO39 www.eulesstx.gov
Investment Committee Meeting
1/10/2023
* Compliance Summary - Legislative Requirements
Introduction
Investment Strategy Compliance
* Annual Review, Fiscal Year 2022
I. Portfolio Summary
II. Performance Summary
III. Interest Income Summary
IV. Collateral Review
V. Broker Selection Process
VI. Summary
* Certification
* Minutes from 8/9/2022
* Appendices
Appendix A - Investment Portfolio by Fund
Appendix B - Investment Purchases
Appendix C - Investment Maturities
Appendix D - Investment Types and Institutions
* Investment Policy
* Broker / Dealers
* Economic News
O
INTRODUCTION
This report is written and submitted in accordance with Chapter 2256 of the Texas Government Code
entitled the "Public Funds Investment Act," which states that "at least once each year, the investment
officer of a state agency or political subdivision shall prepare a written report concerning the agency's or
subdivision's local funds investment transactions for the preceding year and describing in detail the
investment position of the agency or subdivision as of the date of the report."
The City's investment policy designates the Investment Officers as the responsible managers of the
City's investment program. The daily investment procedures are monitored by the City's Finance
department and reviewed by the Investment Officers. This report has been signed by each Investment
Officer as required by the Public Funds Investment Act and the City's investment policy.
In compliance with the City's investment policy, the Finance department fulfills four main objectives:
compliance, safety, liquidity, and yield, in that order. Compliance is maintained through regular reporting
to City management on a monthly, quarterly and annual basis. Safety is insured by 1) investing only in
securities allowed by Chapter 2256 of the Texas Government Code entitled the "Public Funds Investment
Act;" 2) using delivery vs. payment for all purchases; 3) protecting all non -government securities (cash
and bank certificates of deposit) with collateral including Federal Deposit Insurance Corporation (FDIC)
Insurance, Federal Savings and Loan Insurance Corporation (FSLIC) Insurance and/or eligible securities
as defined in Government Code Chapter 2257 Collateral for Public Funds Section 2257.002; and 4)
diversifying investment purchases into different security markets to minimize individual market risk.
Liquidity is met by matching investment terms to future operating cash needs such as payroll, accounts
payable, debt service, and capital improvement disbursements. The City also utilizes money market
funds and local government investment pools to provide daily liquidity needs. Per the Investment Policy,
the yield or rate of return which the City receives is measured against the 90-day treasury bill yield.
The information contained in this report will quantitatively and graphically demonstrate the achievement
of these City objectives for Fiscal Year 2021-22.
Investment Strategy Compliance
The strategy for all pooled funds is to assure that cash flows are matched with projected needs and provide
adequate liquidity and safety. This may be accomplished by purchasing high quality securities in a laddered
structure or utilizing an investment pool. Furthermore, the following purposes are also considered when investing.
-Operating Funds will be structured in such a way as to minimize volatility during economic cycles. This may be
accomplished by purchasing high quality short-term securities. The weighted average maturity on these funds will
remain within the 6 to 9 month range. These funds include:
101
General Fund
265
Glade Parks PID #2 Fund
201
Hotel -Motel Tax Fund
270
Midtown PID Fund
202
Juvenile Case Fund
275
Midtown TIRZ #4 Fund
210
'/20 Sales Tax Operations Fund
501
Water & Wastewater Fund
220
Crime Control & Prevention District Fund
504
Service Center Fund
221
Police Seized Asset Fund
510
Drainage Utility Fund
225
PID Narcotics Task Force Fund
520
Recreation Classes Fund
230
Police Drug DEA Awards Fund
521
Arbor Daze Fund
231
Police Drug State Awards Fund
530
Parks @ Texas Star Operations Fund
240
Car Rental Tax Fund
540
TSGC Operations Fund
243
American Rescue Plan Fund
601
Equipment Replacement Fund
245
Glade Parks PID Fund
610
Health Insurance Fund
250
Glade Parks TIRZ #3 Fund
615
Risk Management/Worker's Comp Fund
260
Cable PEG Fund
-Funds for Capital Improvement Projects (CIP) and Special Purposes may purchase securities which allow for
flexibility and unanticipated project outlays by having a portion of their investments in highly liquid securities. The
stated final maturity dates of securities held should not exceed the estimated project completion dates. These funds
include:
301
Developer's Escrow Fund
330
Car Rental CIP Fund
305
Streets CIP Fund
502
Water & Wastewater CIP Fund
310
'/20 Sales Tax CIP Fund
505
Water Impact Fees Fund
320
General CIP Fund
508
Wastewater Impact Fees Fund
321
Redevelopment CIP Fund
511
Drainage CIP Fund
322
Midtown Development CIP Fund
543
TSGC CIP Fund
552
TSSC CIP Fund
-Debt Service Funds should assure adequate liquidity to cover the debt service obligations on the required payment
dates. These funds include:
401 Debt Service/General Obligation Fund 410 '/20 Sales Tax Debt Service Fund
402 Star Center Debt Service Fund 506 Water & Wastewater Debt Service Fund
403 Glade Parks Debt Service Fund 541 TSGC Debt Service Fund
404 Midtown Development Debt Service Fund
-Emergency, Contingency, Operating and Debt Service Reserve funds will have the ability to generate a dependable
revenue stream to the appropriate fund from securities with a low degree of volatility. Such securities will tend to
hold their value during economic cycles. The stated final maturity dates of securities held should not exceed five
years. These funds include:
102 General Fund Emergency Fund 507 Water & Wastewater Emergency Fund
103 General Fund Contingency Fund 509 Water & WW Rate Stabilization Reserve Fund
211 '/20 Sales Tax Debt Reserve Fund 532 PATS Reserve Fund
240 Car Rental Tax Fund ($2,000,000 Reserve) 542 TSGC Reserve Fund
323 Midtown Development Reserve Fund 705 Star Center Escrow Fund
503 Water & Wastewater Debt Reserve Fund
Based on the above strategies, the investment portfolio reported herein is in compliance with the City's adopted
investment policy.
W,
Janina Jewell
Director of Finance
Jackie Theriot
Assistant Director of Finance
I. PORTFOLIO SUMMARY
The City's investment portfolio at the end of the fiscal year, September 30, 2022, is
summarized by instrument as shown below.
Distribution by Instrument
Weighted Weighted
% of Average Avg. Yield
Instrument $ Cost Portfolio Yield Prior Qtr.
Agencies & CD's $ 70,693,136 46% 0.51 % 0.38%
Gov't Pools & Escrows $ 83,712,013 54% 1.23% 0.49%
$154,405,149 100.00%
The Distribution by Instrument table shows approximately 54% of the City funds are
invested in overnight investment pools and escrows, while the remaining 46% is invested in
government agencies and CD's. As of the date of this report, the weighted average yield on
the portfolio was 1.74%. When compared to prior quarter levels, the yield on the portfolio
continues to increase. The portfolio composition below demonstrates the diversity within
the portfolio.
Portfolio Composition
as of September 30, 2022
US TREAS
FAMCA 1%
1% CD
FHLMC 3%
2%
FNMA Escrows
1% 0%
TexPool
20%
FHLB
18%
Other TexasClass
54% 18%
TexStar
16%
FFCB
20%
I. PORTFOLIO SUMMARY (CONTINUED)
The City's investment portfolio at the end of the fiscal year, September 30, 2022, is
summarized by maturity as shown below.
Distribution by Maturity
# of months
$ Cost
Overnight
$
83,712,013
< 1 mo
$
1,249,700
up to 6 mos
$
20,220,254
6 to 9 mos
$
17,492,886
9 to 12 mos
$
10,730,796
12 to 18 mos
$
16,999,500
18 to 24 mos
$
4,000,000
$154,405,149
% of Portfolio
100.0%
The Distribution by Maturity table reflects the degree of liquidity in the City's portfolio.
Currently, access to 54% of the portfolio is available within 24 hours, with an
additional 14% available within 6 months. This liquidity strategy was followed to
meet cash flow requirements for construction projects, payroll, debt service, and
other operating expenses. An additional 18% of the portfolio matures within one
year. The City has 11 % of the portfolio invested from 12 - 18 months, with remaining
3% invested in the 18-24 month range. The weighted average maturity on the
portfolio is currently 129.48 days.
Investment Maturity Distribution
as of September 30, 2022
18 to 24 mos $4.0
12 to 18 mos $17.0
9 to 12 mos $10.7
6 to 9 mos $17.5
up to 6 mos $20.2
<1mo 1 $1.2
Overnight
$83.7
$0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 $80.0 $90.0
Shown in millions
5
I. PORTFOLIO SUMMARY (CONTINUED)
The City's investment portfolio at the end of the fiscal year, September 30, 2022, is
summarized by institution as shown below.
Institution
Duncan Williams
FHN Financial
Hilltop Securities
Financial Northeastern
Samco Capital
Vining Sparks KNA Stifel
TexPool
TexasCLASS
TexStar
Escrows
Distribution by Institution
$ Cost
$ 11,999,350
$ 8,997,580
$ 11,497,356
$ 11,208,790
$ 13,991,980
$ 12,998,080
$ 31,023,037
$ 27,051,405
$ 25,239,484
$ 398,087
$154,405,149
% of Portfolio
8%
6%
8%
7%
9%
8%
20%
18%
16%
0%
100%
The City strives to not only diversify the portfolio by the type of instruments that are
purchased, but also by the institution from which they are purchased. The City uses the
following guidelines:
-No more than 10% in repurchase agreements,
-No more than 33% in investment pools with any single institution,
-No more than 33% in money market mutual funds, and
-No more than 33% by individual brokerage firms.
The chart below demonstrates the City's compliance with the above guidelines.
Investments by Institution
as of September 30, 2022
Escrows $0.4
TexStar $25.2
TexasCLASS
TexPool
Vining/ Stifel
Samco
FNS
Hilltop
FHN
Duncan
$27.1
$31.0
$13.0
$14.0
$1.2
Imm$111.5
$0.0 $8.0 $16.0 $24.0 $32.0 $40.0
Shown in millions
6
Investments at June 30, 2022
Investment Purchases/Dividends
Investment Maturities
City of Euless
Pooled Portfolio Summary
for Fiscal Year Ending
September 30, 2022
Cost
Principal Only
$ 147,279,971
$ 35,230,283
$ (28,105,106)
Investments at September 30, 2022 * $ 154,405,148
Janina Jewell
Director of Finance
Jackie Theriot
Assistant Director of Finance
* Hard coded data on this summary creates rounding differences.
Book
Value
$ 147,248,149
$ 154,374,869
Market
Value
$ 146,201,886
$ 153,155,196
Summary of Investments by Fund
The following is a summary of cash and investments held by each fund at June 30, 2022 and September 30, 2022. The changes include all
investment purchases, maturities, revenues, expenses, and transfers that occurred during the fourth quarter of FY2022.
Cash & Investment
Cash & Investment
Increase/
at Market Value
at Market Value
(Decrease)
6/30/2022
9/30/2022
In Fund
101
General Fund
24,566,121
22,252,840
(2,313,282) Operating expenses
102
General Fund Emergency
487,150
486,000
(1,150)
103
General Fund Contingency
989,600
993,400
3,800
201
Hotel -Motel Tax Fund
1,621,384
2,017,323
395,938
202
Juvenile Case Fund
191,854
189,997
(1,856)
210
%0 Sales Tax Operations Fund
5,704,532
6,216,907
512,375 Operating revenues
211
'/20 Sales Tax Debt Reserve Fund
401,125
401,125
-
220
Crime Control & Prevention District I
1,811,529
1,983,724
172,196 Operating revenues
221
Police Seized Asset Fund
227,335
223,516
(3,819)
225
PID Narcotics Task Force Fund
71,402
82,061
10,660
230
Police Drug DEA Awards Fund
281,849
249,785
(32,064)
231
Police Drug State Awards Fund
256,316
224,774
(31,542)
235
Public Safety Grant Fund
-
-
236
Police Grant Fund
237
Texas Transportation Grant Fund
(6,778)
(8,047)
(1,269)
240
Car Rental Tax Fund
9,645,083
14,496,042
4,850,959 Motor vehicle tax collection
240-R
Car Rental Reserve Fund
1,956,683
1,955,283
(1,400)
243
American Rescue Plan Fund
10,400,778
10,411,575
10,796
245
Glade Parks PID Fund
750,000
750,000
-
250
Glade Parks TIRZ #3 Fund
3,519,829
3,358,204
(161,626)
260
Cable PEG Fund
608,503
627,425
18,923
265
Glade Parks PID #2 Fund
-
-
-
270
Midtown PID Fund
259,449
102,933
(156,516)
275
Midtown TIRZ #4 Fund
671,226
781,245
110,020
301
Developer's Escrow Fund
2,314,200
2,333,694
19,494
305
Streets CIP Fund
8,747,893
7,739,682
(1,008,211) Capital outlay
310
''/zo Sales Tax CIP Fund
1,401,379
1,201,501
(199,878)
320
General CIP Fund
4,882,880
12,096,455
7,213,576 2022 Tax Notes
321
Redevelopment CIP Fund
1,114,012
1,009,143
(104,869)
322
Midtown Development CIP
1,073,611
1,073,658
48
323
Midtown Development Reserves Fur
1,001,150
1,002,227
1,078
330
Car Rental CIP Fund
1,703,650
1,673,418
(30,233)
401
Debt Service/General Obligation Fur
1,761,152
1,322,894
(438,258) Debt service payments
402
Star Center Debt Service Fund
696,414
176,757
(519,657) Debt service payments
403
Glade Parks Debt Service Fund
382,259
10,927
(371,332) Debt service payments
404
Midtown Development Debt Service
1,259,960
762,538
(497,422) Debt service payments
410
EDC Debt Service Fund
221,012
11,731
(209,281) Debt service payments
501
Water & Wastewater Fund
9,349,560
10,306,446
956,886 Operating Revenues
502
Water & Wastewater-CIP Fund
6,147,607
5,072,028
(1,075,579) Capital outlay
503
Water & Wastewater Debt Reserve 1
750,550
750,550
-
504
Service Center Fund
415,958
440,028
24,070
505
Water Impact Fees Fund
2,503,954
2,503,410
(544)
506
Water & Wastewater -Debt Service F
1,376,069
598,379
(777,689) Debt service payments
507
Water & Wastewater -Emergency Fu
500,000
500,000
508
Wastewater Impact Fees Fund
827,160
731,035
(96,125)
509
W/WW Rate Stabilization Fund
3,973,232
3,867,091
(106,141)
510
Drainage Utility Fund
231,238
239,440
8,202
511
Drainage CIP Fund
1,190,654
835,162
(355,493)
520
Recreation Classes Fund
372,368
376,554
4,186
521
Arbor Daze Fund
(16,407)
93
16,500
530
Parks @ Texas Star Operations Fur
525,394
510,958
(14,436)
532
PATS Debt Reserve Fund
330,412
349,556
19,144
540
TSGC Operations Fund
800,572
933,100
132,529
541
TSGC Debt Service Fund
(58,024)
56,964
114,988
542
TSGC Debt Reserve Fund
691,357
734,562
43,205
543
TSGC CIP Fund
183,316
184,188
872
552
PATS CIP Fund
144,574
145,266
692
601
Equipment Replacement Fund
14,999,195
15,886,682
887,487 equipment expense
610
Health Insurance Fund
5,912,723
5,885,022
(27,701)
615
Risk Management/Worker's Comp F
2,396,553
2,531,829
135,276
701
Payroll Clearing Fund
611,638
648,317
36,679
705
Star Center Escrow Fund
1,422,824
1,427,821
4,997
TOTAL
146,557,016
153,725,218
7,168,202
II. PERFORMANCE SUMMARY
Cash and Investment Balances - Full utilization of funds and minimization of idle cash is
necessary to pursue additional interest income for the City. The average percent of invested
funds is 100% for FY2022. The monthly data below shows the continued utilization of City
funds through investments.
Consolidated Invested Percentage
FY2021 Cash Balance Invested
October
$
1,308,836
$
120,303,528
99%
November
$
1,584,817
$
119,121,268
99%
December
$
701,678
$
121,562,293
99%
January
$
591,781
$
131,434,564
100%
February
$
(351,388)
$
136,018,500
100%
March
$
303,149
$
126,172,120
100%
April
$
386,464
$
130,974,475
100%
May
$
509,700
$
139,006,619
100%
June
$
473,123
$
139,611,211
100%
July
$
(71,098)
$
139,206,165
100%
August
$
472,077
$
134,612,610
100%
September
$
84,273
$
132,335,216
100%
Average
$
499,451
$
130,863,214
100%
Consolidated
Invested
Percentage
FY2022
Cash
Balance
Invested
October
$
1,152,582
$
129,350,588
99%
November
$
975,522
$
130,908,945
99%
December
$
821,298
$
135,779,513
99%
January
$
769,022
$
147,915,670
99%
February
$
1,108,146
$
153,334,908
99%
March
$
(45,598)
$
140,981,168
100%
April
$
920,871
$
140,331,816
99%
May
$
699,147
$
140,650,985
100%
June
$
263,540
$
147,279,971
100%
July
$
613,307
$
149,069,238
100%
August
$
567,292
$
146,834,324
100%
September
$
601,078
$
154,405,149
100%
Average
$
703,851
$
143,070,190
100%
This graph shows how the City's funds continue to be invested, always in pursuit of 100%.
1 11'
11 11'. �w--������=
• 1 11' � �
1 1� 1 1• 1 1 1 1 1 1 1
i
Cash management performance - effectiveness of the cash management program has
been measured utilizing actual figures for FY2022 as shown below:
Average
City's
Number
Estimated
90-day
Invested
Days in
Interest
Month
T-bill Yield
Balance
Month
Earnings
October
0.05%
$
129,350,588
31
$5,493
November
0.05%
$
130,908,945
30
$5,380
December
0.06%
$
135,779,513
31
$6,919
January
0.24%
$
147,915,670
31
$30,150
February
0.37%
$
153,334,908
28
$43,522
March
0.51%
$
140,981,168
31
$61,066
April
0.83%
$
140,331,816
30
$95,733
May
1.13%
$
140,650,985
31
$134,986
June
1.66%
$
147,279,971
30
$200,946
July
2.34%
$
149,069,238
31
$296,260
August
2.87%
$
146,834,324
31
$357,914
September
3.22%
$
154,405,149
30
$408,645
Estimated earnings at benchmark yields
$1,647,014
Actual FY2022 interest income (un-audited)
$812,687
Earnings over benchmark
($834,327)
Annual Average
1.11%
$
143,070,190
$1,588,079
Key rate comparisons - an objective of the investment policy is for the City's average rate of
return to consistently exceed that of the three-month U.S. Treasury Bill, as stated before.
Therefore, returns for both have been presented for comparative purposes below.
Benchmark
City's
Basis
90-day
Wtd Avg
Point
Month
T-bill yield
Portfolio Yld
Difference
October
0.05%
0.09%
4
November
0.05%
0.10%
5
December
0.06%
0.11 %
5
January
0.24%
0.14%
-10
February
0.37%
0.16%
-21
March
0.51 %
0.22%
-29
April
0.83%
0.34%
-49
May
1.13%
0.61 %
-52
June
1.66%
0.87%
-79
July
2.34%
1.10%
-124
August
2.87%
1.50%
-137
September
3.22%
1.74%
-148
Average
1.11 %
0.58%
-53
Fed Funds Rate had remained unchanged since March 15, 2020, at 0%-0.25%. However,
the Federal Open Market Committee began its interest rate hikes on March 16, 2022 with a
25 basis points increase, making the rate 0.25%-0.50%. They continued hiking throughout
the year for an additional 6 more hikes, bringing the rate to 4.25%-4.50% at the end of 2022.
In doing so, they are committed to lowering inflation through tightening financial conditions.
It is not just an additional hike that reaffirms their commitment but the overall shift in
consensus among a greater number of Fed governors. Fed Chairman Powell said the
economy has slowed significantly from last year's pace. The Fed is strongly committed to
returning inflation to the 2% goal. The City's average rate is way below the 90-day T-bill rate
due to the 7 rate hikes during the year. However, as our investments continue to be called
or mature, the City's portfolio average will continue to increase as we reinvest at current
market rates. The portfolio's annual weighted average yield was 53 basis points below the
average annual 90-day T-Bill rate.
10
III. INTEREST INCOME SUMMARY
FY18 Audit
$1,349,182
FY19 Audit
$2,629,198
FY20 Audit
$1,423,661
FY21 Audit
$165,992
FY22 Unaudited
$812,687
FY22 Budgeted
$195,698
Interest Income Summary
$3,000,000
$2,500,000
aA
$2,000,000
c�
W
$1,500,000
a�
$1,000,000
$500,000
$0
FYI Audit FY19 Audit FY20 Audit FY21 Audit FY22 FY22 Budgeted
Unaudited
Interest income increased over the budgeted level for fiscal year 2022. When compared to prior
year, interest earnings has increased substantially due primarily to the 7 rate hikes throughout
the year. The rate hikes are in hopes returning the inflation rate to the 2% goal. While the City's
average yield is below the 90 day T-Bill yield, it will continue to climb as investments continue to
mature and are reinvested at much higher current market rates.
I
Interest Income By Fund
For Fiscal Year Ending September 2022
# Fund FY 21 FY 21 Actual FY 22 FY 22 Actual Diff FY22
Budget Audited Budget (Unaudited) Bud. -Act.
101
General
$112,500
$62,639
$71,838
$126,233
$54,395
201
Hotel/Motel
4,000
288
400
12,497
$12,097
202
Juvenile Case Fund
1,800
104
200
1,171
$971
210
1/2 Cent Sales Tax -Operations
10,000
2,920
3,300
39,109
$35,809
211
1/2 Cent Sales Tax -Reserve
0
0
0
0
$0
220
Crime Control & Prevention District
5,000
399
462
12,524
$12,062
221
Police Seized Asset Funds
1,000
96
100
1,423
$1,323
230
Police Drug DEA Awards
1,200
159
250
1,910
$1,660
231
Police Drug State Awards
850
80
250
1,564
$1,314
240
Car Rental Tax
33,500
6,447
25,300
137,438
$112,138
245
Glade Parks PID
0
0
0
0
$0
250
Glade Parks TIRZ
2,500
746
1,000
22,563
$21,563
260
Cable PEG Fund
5,000
237
400
4,021
$3,621
270
Midtown PID
0
100
0
1,024
$1,024
301
Developer's Escrow
0
6,155
0
9,518
$9,518
305
Streets CIP
22,761
7,646
5,937
49,258
$43,321
310
1/2 Cent Sales Tax - CIP
2,621
1,290
341
6,758
$6,417
320
General Capital Projects
22,671
4,716
2,784
51,333
$48,549
321
Redevelopment CIP Fund
1,542
704
576
6,179
$5,603
322
Midtown Development CIP
0
0
0
0
$0
323
Midtown Development Reserves
0
0
0
0
$0
325
Police Facility CIP
0
0
0
0
$0
330
Car Rental CIP
0
6,311
0
6,881
$6,881
401
GO Debt Service
15,000
1,267
1,000
10,217
$9,217
402
Star Center Debt
3,000
122
450
2,362
$1,912
403
Glade Parks Debt Service
0
52
0
1,011
$1,011
404
Midtown Development Debt Service
1,000
689
1,000
12,674
$11,674
410
1/2 Cent Sales Tax Debt Service
0
3
0
1,014
$1,014
501
Water and Wastewater
40,000
14,990
20,000
76,046
$56,046
502
Water and Wastewater CIP
2,040
5,832
194
28,035
$27,841
503
Water and Wastewater Reserve
0
0
0
0
$0
504
Service Center Fund
0
0
0
0
$0
505
Water Impact Fees
0
1,015
0
16,698
$16,698
508
Wastewater Impact Fees
0
352
0
5,407
$5,407
509
W/WW Rate Stabilization
20,000
18,590
20,000
15,568
$4,432
510
Drainage
1,200
85
110
1,296
$1,186
511
Drainage CIP
0
545
0
6,358
$6,358
5201
Recreation Classes
6,000
58
2,000
2,144
$144
521
Arbor Daze
0
21
106
14
$92
530
Parks At Texas Star
2,500
224
2,500
3,241
$741
531
PATS Debt Service
0
0
0
0
$0
532
PATS Reserve
1,000
115
1,000
2,146
$1,146
540
Texas Star Golf Course
800
65
500
5,015
$4,515
541
TSGC Debt Service
0
34
0
100
$100
542
TSGC Reserve
2,500
275
2,500
4,686
$2,186
543
TSGC CIP Fund
0
84
0
1,209
$1,209
550
Parks At Texas Star
0
0
0
0
$0
552
TSSC CIP
0
62
0
961
$961
601
Equipment Replacement
20,000
12,514
20,000
88,248
$68,248
610
Health Insurance
30,000
7,032
10,000
22,634
$12,634
615
Risk M mt/Worker's Comp
10,000
929
1,200
14,199
$12,999
Total
$381,985
$165,992
$195,698
$812,687
$616,989
Note that interest earnings are being earned on all investable City funds and great efforts are pursued to meet budgeted
levels. This report points out that the unaudited interest earnings for the end of the fiscal year have exceeded budgeted
expectations due to numerous Fed rate hikes thoughtout the year.
Several funds were budgeted conservatively or not at all due to the volatility of revenues and expenditures. However,
these funds are used for investment purposes when available. These funds include Capital Improvement Projects, DEA
Funds, Grant Funds, and Debt Service Funds.
12
IV. COLLATERAL REVIEW
The first and most important objective of investing public funds is safety. One way to ensure the safety of the City's assets
is to have them fully secured with "collateral." Acceptable collateral is defined in the City's investment policy as Federal
Deposit Insurance Corporation (FDIC) Insurance, Federal Savings and Loan Insurance Corporation (FSLIC) Insurance
and/or eligible securities as defined in Government Code Chapter 2257 Collateral for Public Funds Section 2257.002.
Bank balances are monitored daily to assure full coverage. The amount of collateral required by the depository bank
varies with the expected level of deposits (typically correlates with large receipts such as property taxes, franchise taxes
and investment maturities).
Pledging
Institution
Frost Bank
City of Euless
Collateral Analysis for
Cash
as of 09/30/22
Safekeeping Pledged Sec. Security Market Value Inv. Value Difference
Location Description Market Value (w/FDIC Ins.) (a� Mat'y (P & 1) Over/(Under)
Produced By:
Director of Finance
$1,307,529 $1,557,529 $1,209,302
Bank of New Payroll $23,187
York Mellon various bonds $1,307,529 Operating $919,075
Insurance $267,040
Reviewed by:
Assistant Director of Finance
$348,228
This review is practiced on a regular basis assuring coverage. Another regular practice is reviewing each individual
instrument pledged. This assures compliance with the investment policy and consideration of the underlying security. This
separate but thorough practice has protected the City's portfolio against derivative products.
13
V. BROKER SELECTION PROCESS
This section of the report is to provide a brief explanation of the process undertaken to
select brokers with which the City invests. The broker/dealer list is reviewed annually,
and additions/deletions are made as necessary. The City currently maintains a list of six
broker/dealers. The process is outlined below:
1. Brokers express an interest in doing business with the City.
2. A questionnaire is sent to the broker which requests the necessary information for
management to review including references, capital adequacy ratios, etc.
3. The Finance Department reviews all received questionnaires, summarizes the
information and recommends the desired list of brokers with explanatory notes in
conjunction with the first quarter investment report.
4. The list is presented to the investment committee annually for their approval.
5. All brokers are notified after the selection is complete.
VI. SUMMARY
The primary objectives of compliance, safety, liquidity and yield have been achieved for
the reporting period as evidenced by this report. These objectives will continue to be
pursued for the City of Euless as provided by the investment policy. This year proved to
be another successful year for the investment program. The City of Euless, like all other
local governments, is faced with the challenge of meeting benchmark levels triggered by
the Fed's actions. The City's investment program will continue to seek new techniques,
instruments, etc. to enhance the return on the City's funds, as well as the return of all
City funds.
The investment committee will meet on January 10, 2023 to discuss the Annual
Investment Report. Once the annual report is approved by the committee, it will be
forwarded to the City Council.
Janina Jewell
Director of Finance
Jackie Theriot
Assistant Director of Finance
14
CERTIFICATION
This report has been examined and approved by the Investment Officers of the City of Euless.
Information presented in this report to the Investment Committee and City Council represents
an accurate description of the City's investment activity for the fiscal year ending September
30, 2022. This report meets all requirements specified by the Public Funds Investment Act
and the Policy of the City of Euless.
Investment Officers
Janina Jewell
Director of Finance
Jackie Theriot
Assistant Director of Finance
Diana L Ayala
Budget and Treasury Manager
M • • �
Ross Fairclo
Accounting Manager
15
Minutes — 08/09/2022 4:00 p.m. Investment Committee Meeting
Members: Linda Martin, Mayor
Loretta Getchell, City Manager
Chris Barker, Deputy City Manager
Janina Jewell, Director of Finance
Committee members present included Mayor Martin, Loretta Getchell, Chris Barker, and Janina Jewell. Non -
committee attendee City Treasurer Diana Ayala.
Jewell presented the Third Quarter Investment Report for Fiscal Year 2022. She stated it was in compliance
with Chapter 2256 of the Public Funds Investment Act. Jewell referred the committee to page 2 that showed
the City's investment strategy for the various funds of the City as of June 30, 2022. She noted that operating
funds were invested with a weighted average maturity (WAM) ranging from 6 to 9 months, capital
improvement projects (CIP) and special purpose funds were invested in accordance with drawdown
schedules of the projects and would not exceed the estimated project completion dates, debt service funds
were invested to assure adequate liquidity to cover the debt service obligations on the required payment
date, and finally that emergency, contingency, operating and debt service reserve funds could not exceed
five year investment timelines. She noted that there were no changes made that quarter to the strategy.
Jewell stated that the presented investment portfolio followed those strategies for the third quarter of Fiscal
Year 2022.
Jewell referred the committee to page 3 where she noted significant increases and decreases in fund
investments since March 31, 2022. She specifically noted changes occurred because of the spending of
property taxes collected during the previous quarter, the strong car rental tax collections, receipt of the
second tranche of the APRA funds, the inflow TIRZ funds from the taxing entities, and capital expenses.
Overall there was an increase of over $6.3 million. The total market value of cash and investments was stated
to be $146,557,016.
On page 4 Jewell pointed out that the portfolio was very liquid with 51% being invested in pools and escrows
and 49% in agencies and Certificates of Deposit. The portfolio shows its diversity in investment types on this
page. She noted that the weighted average yield on the portfolio was 0.87% and was up 65 basis points from
the last quarter. On page 5 she noted the diversity of the portfolio by maturity and specifically cited that 81%
of the portfolio maturity had a maturity of less than one year. The WAM on the portfolio was 164.97 days
which is well within the 365-day guideline in the investment policy. Page 6 noted the portfolio diversity by
institution and that no one institution had more than a third of the City's portfolio invested with them. Page
7 was noted to show the market value of the portfolio as of June 30, 2022, of $146,201,886 which, if
investments had been liquidated, the City would have to show a loss of $1,046,263.
On page 8 Jewell noted the comparison of average 90 day T-Bills for the quarter compared to the portfolio
average maturity. The portfolio averaged 60 basis points below the 90 Day T-Bill benchmark for the quarter.
This page also showed that cash was 100% invested for the quarter. Jewell noted on page 9 that the City was
over collateralized as of June 30, 2022.
0
Jewell then noted that the report was certified by City Investment Officers. The Mayor made a motion to
approve the quarterly investment report. Ms. Getchell seconded the motion and the vote was unanimous in
favor.
Minutes for the May 10, 2022, Investment Committee Meeting were presented. Ms. Getchell motioned to
approve. Mr. Barker seconded the motion and the committee approved unanimously.
Ms. Jewell commented briefly on the economy. She noted that the Fed increased the Fed Funds Target Rate
in May by 50 basis points, June another 75 basis points, and July by another 75 basis points to 2.25% to 2.5%.
She mentioned that the previous Friday's jobs numbers came out pointing to robust hiring and growth in the
labor market. She noted Mischler Financial Group stated that expectations of two more 50 basis point hikes
are expected at the next two meetings with another 25-basis point increase in December to end the year
3.5% to 3.75% which has already been worked into the market. However, they don't know that those hikes
will be enough to control inflation. Corporate earnings reports were "not as bad as expected" by the market
but US Housing data disappointed again with new home sales down 8.1% and pending home sales down
8.6%.
The meeting was adjourned at 4:11 p.m.
17
APPENDICES
18
APPENDIX A
City of Euless
Change in Portfolio Values by Asset and Investment Fund
For the Quarter Ending September 30, 2022
Inv.
CUSIP
Maturity/
Par
Market Value
Market Value
Change in
Book Value
Book Value
Change in
Type
Number
Call Date
Value
09/30/2022
06/30/2022
Market Value
09/30/2022
06/30/2022
Book Value
OPERATING FUNDS:
FFCB
3133EMMVI
01/13/2023
1,000,000
990,500
986,990
3,510
999,190
999,190
-
FFCB
3133EMML3
01/12/2023
1,000,000
990,200
988,000
2,200
998,650
998,650
-
FFCB
3133EMDA7
10/13/2022
1,000,000
999,120
994,800
4,320
1,000,700
1,000,700
-
FFCB
3133EMGX4
11/23/2022
1,000,000
995,100
992,000
3,100
1,000,000
1,000,000
-
FFCB
3133EMUU4
11/29/2022
1,000,000
994,600
998,810
(4,210)
1,000,000
1,000,000
-
FFCB
3133EMWK4
01/19/2023
1,000,000
989,500
987,700
1,800
1,000,000
1,000,000
-
FFCB
3133EMVP4
04/13/2023
1,000,000
980,300
980,000
300
998,084
998,084
-
FFCB
3133EMXM9
04/27/2023
1,000,000
978,600
978,800
(200)
998,410
998,410
-
FFCB
3133EMZP0
05/18/2023
1,000,000
976,100
977,080
(980)
998,050
998,050
-
FFCB
3133EMD58
01/02/2023
1,000,000
991,000
988,600
2,400
999,400
999,400
-
FHLB
3130AMNF5
06/09/2023
1,000,000
973,820
974,810
(990)
1,000,000
1,000,000
-
FFCB
3133EMH96
06/14/2023
1,000,000
972,800
974,300
(1,500)
1,000,000
1,000,000
-
CD
90348JQ94
01/30/2023
249,000
246,435
246,311
125
249,000
249,000
-
CD
05580AB94
07/31/2023
249,000
241,754
242,700
(946)
249,000
249,000
-
CD
538036RU0
02/13/2023
249,000
246,062
246,037
25
249,000
249,000
-
FFCB
3133EM2W1
05/17/2023
1,000,000
976,400
977,300
(900)
998,680
998,680
-
FFCB
3133EM2E1
08/10/2023
1,000,000
966,700
970,300
(3,600)
997,070
997,070
-
CD
795451AM5
08/11/2023
249,000
241,679
242,775
(1,096)
249,000
249,000
-
FFCB
3133EM4P4
04/14/2023
1,000,000
980,300
980,200
100
999,384
999,384
-
FFCB
3133EM4P4-2
04/14/2023
1,000,000
980,300
980,800
(500)
1,000,000
1,000,000
-
FAMCA
31422XMA7
09/O1/2023
1,000,000
964,100
969,820
(5,720)
1,000,000
1,000,000
CD
87165HD23
09/18/2023
249,000
240,733
242,053
(1,320)
249,000
249,000
CD
70962LAQ5
09/29/2023
249,000
240,385
241,580
(1,195)
249,000
249,000
CD
923450CQI
09/29/2023
249,000
240,161
241,281
(1,121)
249,000
249,000
US TRE,
91282CDA6
09/30/2023
1,000,000
960,898
967,441
(6,543)
998,320
998,320
FFCB
3133ENBN9
10/20/2023
1,000,000
964,020
967,420
(3,400)
999,250
999,250
-
FFCB
3133ENEW6
05/23/2023
1,000,000
977,000
978,600
(1,600)
999,250
999,250
-
CD
14042TEC7
05/24/2023
249,000
243,622
244,344
(722)
249,000
249,000
-
CD
465076SW8
06/12/2023
249,000
243,298
244,095
(797)
249,000
249,000
-
FHLB
3130APQU2
11/22/2023
1,000,000
965,450
979,350
(13,900)
1,000,000
1,000,000
-
CD
06279KU95
12/09/2022
249,000
247,655
247,207
448
249,000
249,000
-
FHLB
3130AQ7C1
06/30/2023
1,000,000
977,080
979,050
(1,970)
1,000,000
1,000,000
-
FHLB
3130APYZ2
12/08/2023
1,000,000
964,090
969,040
(4,950)
1,000,000
1,000,000
-
FHLB
3130AQ5T6
12/29/2023
1,000,000
963,810
969,780
(5,970)
1,000,000
1,000,000
-
FHLB
3130AQQ71
01/24/2023
1,000,000
990,100
990,050
50
997,610
997,610
-
FNMA
3135G05G4
07/10/2023
1,000,000
970,800
973,900
(3,100)
982,500
981,333
1,167
FFCB
3133ENLF5
01/18/2024
1,000,000
957,200
968,800
(11,600)
1,000,000
1,000,000
-
FFCB
3133ENLY4
01/25/2024
1,000,000
965,230
971,060
(5,830)
999,250
999,250
-
CD
060243HR6
02/16/2023
248,000
245,421
245,743
(322)
248,000
248,000
-
FFCB
3133ENPH7
02/22/2023
1,000,000
990,100
991,200
(1,100)
1,000,000
1,000,000
-
CD
073710E47
02/22/2023
248,000
245,322
245,743
(422)
248,000
248,000
-
US TRE,
912828592
07/31/2023
1,000,000
976,035
982,285
(6,250)
1,000,000
1,000,000
-
FAMCA
31422XTT9
08/03/2023
1,000,000
974,200
980,270
(6,070)
997,444
997,278
167
CD
052392BF3
08/16/2023
249,000
242,875
244,369
(1,494)
249,000
249,000
-
CD
70337MGR3
08/18/2023
248,000
241,800
243,338
(1,538)
248,000
248,000
-
FHLB
3130AQVV2
02/28/2024
1,000,000
968,390
974,220
(5,830)
1,000,000
1,000,000
-
FHLB
3130ARLW9
01/26/2024
1,000,000
988,620
994,800
(6,180)
1,000,000
1,000,000
-
FHLB
3130ARMV0
04/26/2024
1,000,000
991,270
996,660
(5,390)
1,000,000
1,000,000
-
FHLB
3130ARWC1
11/16/2023
1,000,000
990,090
993,700
(3,610)
1,000,000
1,000,000
-
FHLB
3130ASA33
11/24/2023
1,000,000
992,330
996,000
(3,670)
1,000,000
1,000,000
-
FHLB
3130AS4B2
02/26/2024
1,000,000
987,870
993,900
(6,030)
1,000,000
1,000,000
-
FHLB
3130ARV65
05/17/2024
1,000,000
989,330
996,210
(6,880)
1,000,000
1,000,000
-
FHLMC
3134GXUH5
05/24/2024
1,000,000
989,420
994,970
(5,550)
1,000,000
1,000,000
-
CD
66612AGP7
12/08/2022
245,000
244,216
244,657
(441)
245,000
245,000
-
CD
60685BND9
12/13/2022
245,000
244,167
244,731
(564)
245,000
245,000
-
CD
29461MAH5
03/03/2023
245,000
243,163
244,613
(1,450)
245,000
245,000
-
FHLB
3130AS4V6
03/09/2023
1,000,000
992,200
994,790
(2,590)
1,000,000
1,000,000
-
CD
48714LCE7
03/17/2023
245,000
242,991
244,633
(1,642)
245,000
245,000
-
FHLB
3130AS4W6
06/09/2023
1,000,000
995,840
997,630
(1,790)
1,000,000
1,000,000
-
FHLB
3130ASBN8
03/22/2024
1,000,000
990,820
996,190
(5,370)
1,000,000
1,000,000
-
FHLB
3130ASF79
03/28/2024
1,000,000
993,770
999,000
(5,230)
1,000,000
1,000,000
-
FHLMC
3134GXUM4
06/07/2024
1,000,000
986,860
995,430
(8,570)
1,000,000
1,000,000
-
Purchases
FHLB
3130ASQG7
01/27/2023
1,000,000
997,300
-
997,300
1,000,000
-
1,000,000
FHLB
3130ASWT2
02/28/2023
1,000,000
997,100
-
997,100
1,000,000
-
1,000,000
FHLB
3130ASW54
05/25/2023
1,000,000
994,460
-
994,460
1,000,000
-
1,000,000
FFCB
3133ENF39
08/08/2023
1,000,000
991,400
-
991,400
1,000,000
-
1,000,000
FHLB
3130ASW47
11/28/2023
1,000,000
993,100
-
993,100
1,000,000
-
1,000,000
19
APPENDIX A
City of Euless
Change in Portfolio Values by Asset and Investment Fund
For the Quarter Ending September 30, 2022
Inv.
CUSIP
Maturity/
Par
Market Value Market Value
Change in
Book Value Book Value
Change in
Type
Number
Call Date
Value
09/30/2022 06/30/2022
Market Value
09/30/2022 06/30/2022
Book Value
Maturities
CD
06251A3A6
07/29/2022
249,000
- 248,751
(248,751)
- 249,000
(249,000)
FFCB
3133EMPR7
08/02/2022
1,000,000
- 998,600
(998,600)
- 1,000,000
(1,000,000)
FFCB
3133EMPR7-2
08/02/2022
1,158,000
- 1,156,379
(1,156,379)
- 1,158,000
(1,158,000)
CD
38149MXY4
08/11/2022
249,000
- 248,651
(248,651)
- 249,000
(249,000)
FHLB
3130AJY52
08/12/2022
1,000,000
- 998,530
(998,530)
- 1,000,590
(1,000,590)
FFCB
3133EMTN2
09/16/2022
1,000,000
- 996,300
(996,300)
- 1,000,000
(1,000,000)
FFCB
3133EMLF7
09/22/2022
1,000,000
- 996,300
(996,300)
- 1,000,000
(1,000,000)
FFCB
3133EMLF7-2
09/22/2022
1,000,000
996,300
(996,300)
1,000,000
(1,000,000)
Total Operating:
Par total does —
ineludematurities
$ 53,463,000
$ 52,507,361 $ 54,328,076
$ (1,820,715)
$ 53,424,242 $ 55,079,499
$ (1,655,257)
20
APPENDIX A
City of Euless
Change in Portfolio Values by Asset and Investment Fund
For the Quarter Ending September 30, 2022
Inv.
CUSIP
Maturity/
Par
Market Value
Market Value
Change in
Book Value
Book Value
Change in
Type
Number
Call Date
Value
09/30/2022
06/30/2022
Market Value
09/30/2022
06/30/2022
Book Value
CIP FUNDS
FFCB
3133EMSE3
03/01/2023
1,000,000
995,500
982,720
12,780
1,000,000
1,000,000
-
FFCB
3133EMSTO
03/10/2023
1,000,000
984,500
983,540
960
1,000,000
1,000,000
-
FHLB
3130ANYM6
08/28/2023
1,000,000
964,300
970,060
(5,760)
995,901
995,693
208
CD
78658RFR7
10/19/2022
249,000
248,651
247,805
847
249,000
249,000
-
FFCB
3133ENAH3
01/12/2023
1,000,000
990,600
986,900
3,700
999,100
999,100
-
CD
59013KNZ5
04/28/2023
249,000
244,120
244,667
(548)
249,000
249,000
-
CD
14042RQE4
05/24/2023
249,000
243,622
244,344
(722)
249,000
249,000
-
FFCB
3133ENDK3
06/08/2023
1,000,000
975,100
977,000
(1,900)
998,800
998,800
-
FHLB
3130APQN8
11/22/2023
1,000,000
962,220
968,100
(5,880)
1,000,000
1,000,000
-
FHLB
3130ARWG2
05/25/2023
1,000,000
993,900
998,420
(4,520)
1,000,000
1,000,000
-
Purchases
FHLB
3130ATD87
06/30/2023
1,000,000
998,800
-
998,800
1,000,000
-
1,000,000
FHLB
3130ATDT1
09/29/2023
1,000,000
998,580
-
998,580
1,000,000
-
1,000,000
Maturities
FFCB
3133EMYM8
08/04/2022
1,000,000
-
998,500
(998,500)
-
1,000,000
(1,000,000)
FFCB
3133EMYK2
08/04/2022
1,000,000
-
998,400
(998,400)
-
1,000,000
(1,000,000)
Total CIP:
inclade maturities
$ 9,747,000
$ 9,599,893
$ 9,600,456
$ (563)
$ 9,740,801
$ 9,740,593
$ 208
RESERVE FUNDS:
FHLMC
3134GXGQI
12/15/2022
1,000,000
993,400
989,600
3,800
1,000,000
1,000,000
-
FFCB
3133EMSS2
03/09/2023
1,000,000
984,200
983,300
900
998,563
998,563
-
FFCB
3133EMZZ8
11/18/2022
1,000,000
995,700
991,860
3,840
999,250
999,250
-
FFCB
3133EMM25
03/23/2023
1,000,000
982,900
982,300
600
1,000,000
1,000,000
-
FFCB
3133EMM66
06/28/2023
500,000
486,000
487,150
(1,150)
500,000
500,000
-
FFCB
3133EM3S9
06/26/2023
1,000,000
971,900
973,900
(2,000)
1,000,000
1,000,000
-
FFCB
3133ENAL4
10/12/2023
1,000,000
960,700
967,100
(6,400)
1,000,000
1,000,000
-
FHLB
3130AQBY8
12/29/2023
1,000,000
961,130
967,900
(6,770)
1,000,000
1,000,000
-
Purchases
None
-
-
-
-
-
-
Maturities
None
-
-
-
-
-
-
Par total does not
Total Reserve:
include maturities
$ 7,500,000
$ 7,335,930
$ 7,343,110
$ (71180)
$ 7,497,813
$ 7,497,813
$
OVERNIGHT INVESTMENTS:
Beginning Bal
Ending Bal
25,209,769
31,023,036
Texpool Balance
31,023,037
25,209,769
5,813,268
31,023,037
25,209,769
5,813,268
Purchases
10,272,534
Maturities
4,459,267
TexasCLASS
Balance
25,195,873
27,051,407
27,051,405
25,195,873
1,855,532
27,051,405
25,195,873
1,855,532
Purchases
5,038,967
Maturities
3,183,434
Texstar
Balance
24,128,044
25,239,482
25,239,483
24,128,044
1,111,439
25,239,483
24,128,044
1,111,439
Purchases
12,917,253
Maturities
11,805,814
BofT
Balance
14,363
14,409
14,408
14,363
45
14,408
14,363
45
Purchases
45
Maturities
-
US Bank
Balance
382,196
383,679
383,679
382,196
1,483
383,679
382,196
1,483
Purchases
1,483
Maturities
-
Total Overnight:
$ 83,712,0141
$ 83,712,012
$ 74,930,244
$ 8,781,768
$ 83,712,012
$ 74,930,244
$ 8,781,768
Total Portfolio
rar total noes not
include maturities
$ 154,422,014
$ 153,155,196
$ 146,201,887
$ 6,953,310
$ 154,374,869
$ 147,248,145
$ 7,126,720
21
C
M
W
W
M
O
LO
LO
V
N
V
r
N
N
M
r
LO
oc
O
O
O
O
O
O
O
O O
O O
O O
O O
y N
E
LO 7
O)
o
N
W
o
N
r
W
m
pl
r
o
W
Lf1
O
0
O
0
O
0
O O
0 0
O O
0 0
UO
y
LO
Ln
M
O
O
O
O
N
O
O
M
LL7
O
O
O
O
O
O
O
O O
O O
O O
m
N
H oO
y
O
N
O
N
O
!A
O
N
O
N
C
N
O
N
O
N
O
O
O
O O
O O
M cl)
d
a`
o
U
N
w
w
O.
o
z C
O O
E
N
=
LL c
E
N
m
m
N (O
W
N N N
m
0
o
O
O O
O O
` m
r U
lU) C j
Q
a
0
0
0
0 0
0 0
C
p_
O
O
LOO
O
N
N
N O
W
Lo N
W O
O a'
Lh
Lh
M
M M
th 7
U
o
e
L
e o
L 0
O
Lh
O
Lh
N
M
(00
('7 M
W O
th 7
r
N
N
N y
M
(O
Ln
W
M
O)
O
LO
N
N
V
W
N
7
N
r
N
h
N
M
W
r
LO
r
L17
7
W
O
O
CD
O
O
CD
O
O
O
O O
O O
O C
O Cl
O O
O O
N L C
m ?
m C
O> Q
n
O
M
O
O
O
O
W
O
O
LO
�
CD
O
O
O
O O
O O
O O
O O
x J (�
(,) C
LO
O
L
Ln
M
O
N
N
M
W
h
M
Ln
M
CD
O
O
O O
O O
O Luat
Oa
W o o v
°°
J
Q U N
M
(O
W
M
O
LO
LL')
N
V
r
N
N
M
r
o
L17
7
O
O
O
O
O
O
O
O O
O O
O O
O O
U LL
LO
O)
N
W
N
r
W
r
W
O
O
O
O C
O O
y
O
Ln
LO
O
M
O
LO
O
O
O
O
N
O
W
W
O
M
O
LO
LO
O
O
O
O
O
O
O
O
O
O O
O O
O O
O O
O Clm—
O O
a m
N
M
N
M
h
M
O
O
O
O
O
O
O
O
O
O
O
O O
O O
O O
O O
O O
O O
a
N
L m
tU 'O
� C
N
M 7
N M
—_
m
N
N
N
N
N N
m
U ❑
N
O
N
N
Z N
M N
N P')
O
j m
N
r
N
N
W
N
N
N
LO
N
N N
W aD
O N
N N
O W
M N
W
� ❑
Ln
W
(O
N
L pm
N
r
N
W
N
ao
N N
W ao
N N
rn rn
J
a
o
0
0
0 0
0 0
C
Li
r
N
a r
r
c�i J
z
Q
CO
Q
�'
'
Q
W
ci
a
a
a
w¢
a a
M
M
M
m M
M M
U
M
M
M
M M
M M
En
m
Q
Q
Q
O.
O.
O.
(n
.m.
m
(n
m
m
m
O
m
m
m
U m
m m
F
H
F
H
F
H
F
H
F
W
LL
LL
LL
LL LL
LL LL
W
co LO M
r LO
V M (O
O O) M
N O r
M
T
W
N
W W
M (O
N r W
(O LO LO
V V
W r
O O 10
M M (O
W
N
M(([
N 0
M
(00
W
NMI
a
e
N
M
M
w
w
O O C
O O O
O O O
Lon Lon Lon
Lon Lon Lon
u)
w
fA
w
moo
C C C
0 0
(D U (D~~~
M M M
p0o
a O_ O_
J J J
m m m
y y y
O O O
N N N
m m m
D D D
H H H
N N N
F F F
x x x
N
Hm
999
H
w
u)
T W LO M r 1 'IT10 W o O) m N O r M
W N coW N r W 7 o d) LO aD
T M 7 W (D Ln Ln (O r M M N
O M M LO r N O) O M O
W M Lo W N M -ItN 'IT 'ITN
M M
W1 I w
T W Lf M r N 7 LO W O T (M N O r M
CDN W W N r W V V O) W LO W
T m-It W (O Ln Ln (cr M M (O N
O M M � M r N O) O M O
W M Lo W N M V N 'ITV N
M M
'O Y!
m o
y o c o v
y—
m m N J J a,J J) a)m J J m
>�<J) y�Q0) c�Qcn ��Q(n >Qcn
of
C LY .m
of of
N C O C
O O U
Lo -a M> u)75 m
F 0 L5 J F
� N
m N
O U)
m D F F F
22
n O O N n N n v O O M O O O v O O O N
0 d n mO 7 7 N M 1- N O
7 O O O O 0 7 0 O O
N N n (d
Q1 O a0 a0 o0 O O O O� O O O
U y N 0) n O M CO O M 0) CD 00 O CD 0)0 O CD CO
M CD CD to 0 LO O 0 7 0 0 0 0 O
i6 j M a0 1n O N O Cl O N O O O O
O C C6 M V N co
0 N
O y�
C O O O O O O O O O N N
O O O O O O O O N 8 O O O O O
LL > > > > > > > > > M 1n M 1n M 1n co co co M M 0 0 0
0 0
E . . . oo
E rn
d �
CL
c . . i i i i i i . . . . . . . . i i . . i i
0
0
U
U) d O w Z U) O U) CLZ
Z ' O ,_ 2 Z O Z 0 2
N LL N w LL LL E LL = LL
0 - co ca
U)
C C
1n rn n
(0 00 w
N
= d d i i i i i i i i i i i i i i i i NO i co
U Y L N N
2
c CL
w
0 0 0 0 0 0 0 0 0 0
c o 0 0 o 0 0 1n 1n o 0
0 co'Ln
o o 0 0 0 0 0 0 0 0 0
U
0 0 0 0 0 0 0 0 0 0 0
H p 0 0 0 o O L2 00v
._
N (0
d
d �
d
U d N 0 m d n O O 10 N n N n 10 O O O O O O O O O O O O O O O O CO
n 0)O N COw 1n 0O O O O O O O O O O
x N jp O 3 N 0
1 O wN n o0 n o0 O O O O O O CO O O OCY r
7 j U N Q1 n O M t0 O 10 O> O o0 O O O O O O vi
Z W L O M O O CDO to O 1n O O v0 O O O
W Q O y U 0 c W M 10 O N O O O N N O
10 O O O r
O LL` M V N OD
Q ii y N
U LL n O O 10 N n N n CO O O O O O O O O O O O O O O O O Cd
N d N C c N O _ P- W 1,W O O O O O O O O O O 10
N Q1 n O M CO O CO 0 0 00 O O O O O O O v"
0
M CDO CDO toN O In O 0 7 O O O
N O O
LL M a0 10 O N O O O O O co
M 10 V N CO
N
O O O O O 0 0 100 0 O O
V to O O O O 0 0 0 0 0 0
CL
H � c
U p Z Z Z Z O Z Z Z N N
to
� O O
N N N N N N N N N N
3 jp N O O O O N N
m ❑ n eo eo ao eo eo eo rn rn rn
w N N N N N N_ N N N N
L 0 O O O O N CO N N U
IL p n N 7 1n In eo 7 ch N N
IL o 0 0 0 0 0 0 0
N (� N
0_ m Q Y }�} 1N Z J J
a 0) O_ 0) O. M O_ 0) CL 0J Q M a a } } X }
(n E 7 O 0 7 O 0 7 O 0 7 O 0 7 O d
>> Q to Q co Q to Q(n
U Z m M M M M � O M M M
(NO M M M M w M M M M
O M M M M M M M M M
U) U) U)
U) CO U)
3g3� Y Y Y
C O O O y6 0 y6 N w N � F � 0 0 0 m m m m m Co Co m Q
d O. d 65 5 65 0 0 0 m c0 m
X X X X X X X X X O O O co co U) ❑ LL LL LL LL❑ M LL LL LL Q
F H F H F H F H F m m m M =) M U LL LL LL LL U LL LL LL LL F
23
zz
CL
Q
�
L
U
O
O
U
Un
�
L
cu
co
E E
O
J
O
—
"-
L
y
co L
•_
(a
pp
c�i
Z
O
L
_N
Co
U)
,
W
Co U
C
E
;E
co0
(a
ii
U-
U
H
2
0 iL
U
U
J
Q
Co
O
I
Q
0
m
Z
UL
U-
U
=
0 LL
o
m
C
U/)
�
m
m
Q
+-
Z
0
Co
c
Y
a)
O
(n
O
U)
U
�
c
32
E
O
E
O
•LUG
ca
Z
ca
LL
O
2
Y
N
a2
O
�
Ov
Un
N
N
N
(a
L
(a ca
.�
UL
UL
UL
co
iL
c/) co
>
U)
ammo
°�
2
O
Z
E�.�
O
c
Z
IL
2
2
co
LL
IL
IL
m
LL
Un m
>
0
0
0
d
Un
+
+
U)
Q
U
U
U
co
o
CZ
ca
cam
U)
0- ca
m
w
o o
U)
o
o
o�
J
J
J
�
U)
UA
Un
Un
Q
Q
Q
(u
CO
U)
a- (u
CO
�
N
�
Un
0
N 0
Un
H
H
H
D
H
H H
D
24
CITY OF EULESS
FINANCE POLICY
DATE: June 26, 1990 PREPARED BY:Finance Department
REV: January 25, 2022 REVIEWED BY:City Manager
RE: Investment Policy APPROVED BY:City Council
I. SCOPE
This investment policy applies to the investment activities of the Government of the City of
Euless, Texas. This policy serves to satisfy the statutory requirements of defining and adopting
a formal investment policy. The policy and strategy shall be reviewed annually by the Investment
Committee and any modifications must be approved by the Investment Committee and
forwarded to City Council for final approval. The City Council must adopt a written instrument
by rule, order, ordinance, or resolution stating that it has reviewed the investment policy and
investment strategies. Any changes made to either the policy or strategies will be recorded in
this written instrument. This Investment Policy, as approved, is in compliance with Chapter 2256
of the Texas Government Code, also known as "The Public Funds Investment Act."
A. FUNDS INCLUDED All financial assets of all funds, including the General Fund and any
other accounts of the City not specifically excluded in these policy guidelines are included.
These funds, as well as funds that may be created from time -to -time, shall be administered
in accordance with the provisions of these policies. All funds will be pooled for investment
purposes. The strategy developed for this pooled fund group will address the varying needs,
goals, and objectives of each fund.
B. FUNDS EXCLUDED None.
II. OBJECTIVES AND STRATEGY
A. COMPLIANCE The City must adopt rules, designate staff to manage local funds, and submit
related reports as outlined by Chapter 2256 of the Texas Government Code, also known as
the Public Funds Investment Act ("PFIA"). All investments made on behalf of the City must
comply with the Public Funds Investment Act and all federal, state, and local statutes, rules,
or regulations. In conjunction with the annual comprehensive financial audit and report, the
City will perform, or have performed, a compliance audit of management controls on
investments and adherence to the City's approved investment policy.
B. SAFETY OF PRINCIPAL The primary objective of the City's investment activity is the
preservation of capital in the overall portfolio. The objective will be to mitigate credit risk and
interest rate risk.
Credit Risk — The City of Euless will minimize credit risk, which is the risk of loss due
to the failure of the security issuer or backer, by:
a. Limiting investments to the types of securities listed in Section V of this investment
policy.
25
b. Pre -qualifying the financial institutions, broker/dealers and advisors with whom the
City of Euless will do business.
c. Diversifying the investment portfolio so that the impact of potential losses from any
type of security or from any one issuer will be minimized.
2. Interest Rate Risk —The City of Euless will minimize interest rate risk, which is the risk
that the market value of securities in the portfolio will fall due to changes in market
interest rates by:
a. Structuring the portfolio so that securities mature to meet cash requirements for
ongoing operations, avoiding the need to sell securities prior to maturity.
b. Investing operating funds primarily in shorter -term securities, money market
mutual funds, or similar investment pools.
C. LIQUIDITY The City's investment portfolio will remain sufficiently liquid to enable the City to
meet operating requirements that might be reasonably anticipated. Liquidity shall be
achieved by matching investment maturities with forecasted cash flow requirements and by
investing in securities with active secondary markets. In addition, all or a portion of the
portfolio may be invested in money market mutual funds or local government investment
pools which offer same day liquidity for short-term funds.
D. YIELD The City's cash management portfolio shall be designed with the objective of regularly
exceeding the average rate of return on three-month U.S. Treasury Bills, or the average
Federal Reserve Discount whichever is higher. The investment program shall seek to
augment returns above this threshold consistent with risk limitations identified herein and
prudent investment principles.
Funds held for future capital projects shall be invested in securities that reasonably can be
expected to produce enough income to offset inflationary construction cost increases.
E. RISK OF LOSS All participants in the investment process shall seek to act responsibly as
custodians of the public trust. Investment officials shall avoid any transaction that might
impair public confidence in the City's ability to govern effectively.
F. STRATEGY The strategy for all pooled funds is to assure that cash flows are matched with
projected needs and assume adequate liquidity and safety. This may be accomplished by
purchasing high quality securities in a laddered structure or utilizing an investment pool.
Furthermore the following purposes are also considered when investing:
1. Funds for Capital Improvement Projects or special purposes should allow for flexibility
and unanticipated project outlays by having a portion of their investments in highly
liquid securities. The stated final maturity dates of securities held should not exceed
the estimated project completion date. A weighted average maturity of 365 days or
less will be maintained and calculated by using the stated final maturity of each
security.
26
2. Funds for Debt Service should assure liquidity adequate to cover the debt service
obligation on the required payment date. Surplus funds outside the debt service dates
will remain within the investment and fiscal policies.
3. Debt Service Reserves, Operating Reserves, Emergency and Contingency funds will
have the ability to generate a dependable revenue stream to the appropriate fund from
securities with a low degree of volatility. Such securities will tend to hold their value
during economic cycles. The stated final maturity dates of securities held should not
exceed five years.
4. Operating funds will be structured in such a way as to minimize volatility during
economic cycles. This may be accomplished by purchasing high quality short-term
securities which will complement each other in a laddered maturity schedule. The
weighted average maturity on these funds will remain within the 6 to 9 month range
and calculated by using the stated final maturity date of each security.
III. INVESTMENT COMMITTEE
A. MEMBERS There is hereby created an Investment Committee, consisting of the City
Manager and/or his designee, the Deputy City Manager, the Director of Finance, and the
Mayor or Mayor's designee. The Investment Committee shall meet at least quarterly to
determine general strategies and to monitor results and shall call a special meeting of the
Investment Committee within 24 hours of notification of any significant events related to the
City's portfolio including a downgrade in the investment rating. All prudent measures will be
taken to liquidate an investment whose rating has been downgraded to less than the required
minimum rating. The Investment Committee shall be authorized to invite advisors to the
meetings as needed including, but not limited to, the City Attorney, the City Council, or
outside advisors.
B. SCOPE The Investment Committee shall include in its deliberations such topics as:
performance reports, economic outlook, portfolio diversification, maturity structure, potential
risk to the City's funds, authorized brokers and dealers, and the target rate of return on the
investment portfolio.
C. PROCEDURES The Investment Committee shall provide for minutes of its meetings. Any
two members of the Investment Committee may request a special meeting, and three
members shall constitute a quorum. The Investment Committee shall establish its own rules
of procedures.
IV. RESPONSIBILITY AND CONTROL
A. DELEGATION Management responsibility for the Investment Program is hereby delegated
to the Director of Finance, who shall establish written procedures and internal controls for the
operation of the investment program, consistent with this Investment Policy. Such
procedures shall include, but not be limited to, account management procedures, cash flow
procedures, investment transaction procedures, authorized dealer selection process,
investment portfolio reporting requirements, and explicit delegation of authority to persons
responsible for investment transactions. No person shall engage in an investment transaction
except as provided under the terms of this policy and the procedures established by the
27
Director of Finance. The Director of Finance shall be responsible for all transactions
undertaken and shall establish a system of controls to regulate the activities of the Authorized
Investment Officers and subordinate officials.
B. SUBORDINATES The Director of Finance will serve as the City's chief investment officer.
The Assistant Director of Finance, Treasurer, and the accountant responsible for cash and
debt analysis are hereby designated as Authorized Investment Officers, responsible for the
investment of the City's funds, pursuant to the Public Funds Investment Act Section 2256.005
Subsection F. Authority granted to a person to invest the funds on behalf of the City shall
remain in effect until rescinded by the City or until the person resigns from or is terminated
by the City. All authorized investment officers shall receive not less than 8 hours of
investment training relating to their investment responsibilities, as described by Section
2256.008 of the Public Funds Investment Act not less than once in a two-year period that
begins on the first day of the City's fiscal year and consists of the two consecutive fiscal years
after that date. This training must be provided by an independent source which has been
approved by the investment committee. At least one training session of not less than 10
hours of investment training related to their investment responsibilities as described by
Section 2256.008 of the PFIA must be completed by the investment officer within twelve
months of assuming their duties. The training must include, but is not limited to, education
in investment controls, security risks, strategy risks, market risks, diversification, and
compliance with the Public Funds Investment Act.
C. QUARTERLY REPORTS The Director of Finance shall prepare and submit investment
reports that are compliant with Government Code Chapter 2256 Public Funds Investment
Section 2256.023.
D. ANNUAL REPORTS Within 120 days of the end of the fiscal year, the Director of Finance
shall present a comprehensive annual report on the investment program and investment
activity. The annual report shall include twelve-month and quarterly comparison returns, and
shall suggest improvements that might be made in the investment program.
E. MONITORING OF MARKET PRICE OF INVESTMENTS The investment officer shall
determine the market value of each investment at least quarterly and at a time as close as
practicable to the closing of the reporting period for investments. Such values shall be
included on the investment reports. The following methods shall be used:
1. Certificates of deposits shall be valued at their face value plus any accrued but unpaid
interest.
2. Shares in money market mutual funds and investment pools shall be valued at par plus
any accrued but unpaid interest.
3. Other investment securities may be valued in any of the following ways:
a. the lower of two bids obtained from securities broker/dealers for such security;
b. the average of the bid and asked prices for such investment security as published in
the Wall Street Journal; or
c. the bid price published by any nationally recognized security pricing service.
F. PRUDENCE The standard of prudence to be used by the investment officers shall be
"prudent person" standard and shall be applied in the context of managing an overall portfolio.
The "prudent person" standard states that, "Investments shall be made with judgement and
care, under circumstances then prevailing, which persons of prudence, discretion and
intelligence exercise in the management of their own affairs, not for speculation, but for
investment, considering the probable safety of their capital as well as the probable income
to be derived." Investment officers acting in accordance with written procedures and the
investment policy and exercising due diligence shall be relieved of personal responsibility for
an individual security's credit risk or market price changes, provided deviations from
expectations are reported in a timely fashion and appropriate action is taken to control
adverse developments.
G. ETHICS AND CONFLICTS OF INTEREST Officers and employees involved in the
investment process shall refrain from personal business activity that could conflict with proper
execution and management of the investment program, or that could impair their ability to
make impartial investment decisions. Employees and investment officers shall disclose any
material interests in financial institutions with which they conduct business. They shall further
disclose any personal financial/investment positions that could be related to the performance
of the investment portfolio. Employees and officers shall refrain from undertaking personal
investment transactions with the same individual with whom business is conducted on behalf
of the City of Euless.
An investment officer who has a personal business relationship with a business organization
offering to engage in an investment transaction with the City shall file a statement disclosing
that personal business interest. Investment officers who are related within the second degree
by affinity or consanguinity to an individual seeking to sell an investment to the City shall also
disclose such relationship. A statement required under this section must be filed with the
Texas Ethics Commission and the City Council. For the purpose of this section, an
investment officer has personal business relationship with a business organization if:
1. The investment officer owns 10 percent or more of the voting stock or shares of the
business organization or owns $5,000 or more of the fair market value of the business
organization;
2. Funds received by the investment officer from the business organization exceed 10
percent of the investment officer's gross income for the previous year; or
3. The investment officer has acquired from the business organization during the previous
year investments with a book value of $2,500 or more for the personal account of the
investment officer.
V. AUTHORIZED AND SUITABLE INVESTMENT SECURITIES
A. ACTIVE PORTFOLIO MANAGEMENT The City intends to pursue an active versus a passive
portfolio management philosophy. That is, securities may be sold before they mature if
market conditions present an opportunity for the City to benefit from the trade.
29
B. ELIGIBLE INVESTMENTS The following investments will be permitted by this policy as
defined by state and local law where applicable:
Obligation, including letters of credit, of the United States or its agencies and
instrumentalities, including the Federal Home Loan Banks (except for mortgage pass -
through securities);
2. Fully insured or collateralized certificates of deposits as authorized and described in
Texas Government Code Section 2256.010.
3. Fully collateralized repurchase agreements having a defined termination date, are in
accordance with a master repurchase agreement approved by the Investment
Committee, and as authorized by Texas Government Code Section 2256.011.
4. Investment Pools as authorized by Texas Government Code Section 2256.016. The
pool must enter into a contract approved (by resolution) by the City Council to provide
services to the City. The pool must be continuously rated no lower than AAA or AAA-m
or at an equivalent rating by at least one nationally recognized rating service.
5. No load money market mutual fund, registered with and regulated by the Securities
Exchange Commission, which complies with Federal Securities and Exchange
Commission Rule 2a-7 as defined in Texas Government Code Sec. 2256.014. Each fund
must provide the City with a prospectus and other information required by the Securities
Exchange Act of 1934 or the Investment Advisor Act of 1940.
6. Interest bearing checking accounts that are fully collateralized at 105% of ledger balance.
7. Other such securities or obligations as approved by City Council upon recommendation
of the Investment Committee. No securities will be purchased which have a potential for
price volatility that is inappropriate for the City and incompatible with its investment
strategies. This includes, but is not limited to, certain collateralized mortgage obligations,
such as principal and interest only securities, inverse floaters, capped and mismatched
floaters, and structures notes and range notes.
C. LENGTH OF INVESTMENTS Except for monies of Reserve funds, Emergency funds,
Contingency funds and construction funds, the City of Euless shall invest in instruments
whose maturities do not exceed two (2) years at the time of purchase.
1. For the General Fund, Water & Wastewater Utility Fund, and any other operating funds,
the weighted average maturity of each fund's portfolio will remain within the 6 to 9 month
range. Assets held from bond proceeds may be invested in maturities with a final stated
maturity greater than (2) years based on estimated project completion dates.
2. Assets held in the General Obligation Interest & Sinking Fund may be invested in
maturities which provide liquidity adequate to cover the debt service payment dates.
3. Assets held in the General Emergency, General Contingency, Water & Wastewater
Emergency, and the Car Rental Tax Reserve Funds may be invested in maturities not
exceeding five (5) years.
30
4. An average remaining maturity of 365 days or less shall be maintained on bond proceeds
subject to arbitrage rebate restrictions, and the total portfolio average remaining shall not
exceed one year.
D. DIVERSIFICATION It is the policy of the City of Euless to diversify its investment portfolios.
Assets held in the common investment portfolio shall be diversified to eliminate the risk of
loss resulting from one concentration of assets in a specific maturity, a specific issuer or a
specific class of securities. Diversification strategies shall be determined and revised
periodically by the Investment Committee. In establishing specific diversification strategies,
the following general policies and constraints shall apply:
Portfolio maturities shall be staggered in a way that protects interest income from the
volatility of interest rates that avoids undue concentration of assets in a specific maturity
sector.
2. Securities shall be selected which provide for stability of income and reasonable liquidity.
In addition, the City will invest a portion of the City's portfolio in readily available funds
such as local government investment pools and money market funds to ensure that
appropriate liquidity is maintained in order to meet ongoing obligations.
3. The Investment Committee shall establish strategies and guidelines for the percentage
of the total portfolio that may be invested in securities other than repurchase agreements,
treasury bills, or insured and collateralized certificates of deposit.
4. The Investment Committee shall conduct a quarterly review of these guidelines, and shall
evaluate the probability of market and default risk in various investment sectors as part
of its considerations.
5. The investment officer will obtain at least three competitive bids from approved brokers
on our broker/dealer list before making an investment transaction except for a)
transactions with money market funds and local government investment pools (which are
deemed to be made at prevailing market rates), b) treasury and agency securities
purchased at issuance through an approved broker/dealer or financial institution, and c)
fully insured certificates of deposit placed in accordance with the conditions prescribed in
Section 2256.010(b) of the Public Funds Investment Act. In the event of a tie, the choice
will be made by a cumulative and objective manner.
E. ARBITRAGE Although steps have been taken to distribute bond issuance annually in
amounts not to exceed $5 million dollar increments, if this process does not occur, the City
of Euless will fall under arbitrage regulations.
The Tax Reform Act of 1986 provided limitations restricting the City's investing of tax-exempt
General Obligation Bond proceeds and debt service income. New arbitrage rebate
provisions require that the City compute earnings on investment from each issue of bonds
on an annual basis to determine if a rebate is required. To determine the City's arbitrage
position, the City is required to perform specific calculations relative to the actual yield earned
on the investment of the funds and the yield that could have been earned if the funds had
been invested at a rate equal to the yield on the bonds sold by the City. The rebate provision
31
states that periodically (not less than once every five years, and not later than sixty days after
maturity of the bonds), the City is required to pay the U.S. Treasury a rebate of excess
earnings based on the City being in a positive arbitrage position. The Tax Reform restrictions
require extreme precision in the monitoring and recording facets of investments as a whole,
and particularly as relates to yields and computations so as to insure compliance. Failure to
comply can dictate that the bonds become taxable, retroactively from the date of issuance.
The City's investment position relative to the new arbitrage restrictions is the continued
pursuit of maximizing yield on applicable investments while insuring the safety of capital and
liquidity. It is a fiscally sound position to continue maximization of yield and rebate excess
earnings, if necessary.
VI. SELECTION OF BANKS AND DEALERS
A. BIDDING PROCESS Periodically, a Depository shall be selected through the City's banking
services procurement process, which shall include a formal request for proposal (RFP)
issued in compliance with applicable State law. The contract can be extended as per the
RFP specifications. In selecting depositories, the credit worthiness of institutions shall be
considered, and the Director of Finance shall conduct a comprehensive review of prospective
depositories credit characteristics and financial history.
B. INSURABILITY Banks and Savings & Loan Associations seeking to establish eligibility for
the City's competitive investment program, shall submit financial statements, evidence of
federal insurance and other information as required by the Director of Finance.
C. AUTHORIZED BROKER/DEALERS A list will be maintained of "primary" dealers and
regional dealers that qualify under the Securities and Exchange Commission (SEC) Rule
15C3-1 (uniform net capital rule). All financial institutions and broker/dealers who desire to
become qualified for investment transactions must supply the audited financial statements,
proof of state registration, and a completed broker/dealer questionnaire. All brokers and
dealers must be authorized by the Investment Committee, as analyzed by this Broker
Questionnaire. Investment Officers shall not conduct business with any firm with whom
public entities have sustained losses on investments or whose name has been removed from
an approved list by the Investment Committee. At least annually, the investment committee
will review, revise and adopt a list of qualified brokers that are authorized to engage in
investment transactions with the City.
D. COMPLIANCE A written copy of the investment policy will be presented to any investment
pool or business organization offering to engage in an investment transaction with the City.
A qualified representative (as described by section 2256.002, subdivision 10 of the Texas
Government Code) of such business organization shall execute a written instrument, in a
form acceptable to both the City and the organization, certifying that they have received and
reviewed a written copy of the City's investment policy. The firm must acknowledge that it
has implemented reasonable internal procedures and controls in an effort to preclude
investment transactions conducted between the City and the organization that are not
authorized by the City's investment policy, except to the extent that this authorization is
dependent on an analysis of the makeup of the City's entire portfolio or requires an
interpretation of subjective investment standards or relates to investment transactions of the
entity that are not made through accounts or other contractual arrangements over which the
32
business organization has accepted discretionary investment authority. The investment
officer of the City may not acquire or otherwise obtain any authorized investment described
in the City's investment policy from a business organization that has not delivered such
instrument. This instrument does not, at any time, relieve the City of the responsibility of
monitoring all investment transactions to determine if they are in compliance with this policy.
VII. COLLATERALIZATION, SAFEKEEPING AND CUSTODY
A. COLLATERALIZATION OF DEPOSITS The City requires that all uninsured collected
balances plus accrued interest, if any, in depository accounts be secured in accordance with
the requirements of this Policy and Chapter 2257, Government Code ("Public Funds
Collateral Act") and the Financial Institutions Reform, Recovery, and Enforcement Act of
1989 (FIRREA). Financial institutions serving as City depositories will be required to sign a
depository agreement with the City which details securities that can serve as eligible
collateral, collateral ization ratios, standards for collateral custody and control, collateral
valuation, rights of substitution and conditions for agreement termination.
Pledged securities serving as collateral will always be held in the City's name or on behalf of
the City by an independent third party with which the City has a current custodial agreement.
Depository and custodial records shall assure the notation of the City's ownership of or
explicit claim on the securities. Collateral levels will be reviewed no less than monthly to
ensure the market value of the pledged securities is at least 105% of the deposit and
investment balances less any amount insured by FDIC or FSLIC. Eligible collateral is as
follows:
B. ELIGIBLE COLLATERAL
1. FDIC and FSLIC insurance coverage.
2. Eligible securities that are compliant with Government Code Chapter 2257 Collateral for
Public Funds.
The City's Investment Officers reserve the right to accept or reject any form of collateral or
enhancement at their sole discretion.
C. SUBJECT TO AUDIT All collateral shall be subject to inspection and audit by the Director of
Finance, or designee, as well as the City's independent auditors.
D. SAFEKEEPING AND CUSTODY Safekeeping and custody of the City's investments shall
be in accordance with applicable law and accounting standards. Investment securities will
be held by a Custodian designated by the City and will be required to issue safekeeping
receipts clearly detailing that the securities are owned by the City. Monthly safekeeping
reports detailing the City's securities held by the Custodian will be provided no less than
monthly.
E. DELIVERY VS. PAYMENT Treasury Bills, Notes and Bonds and Government Agencies'
Securities, and all other investment transactions, except investment pools and mutual funds,
shall be purchased using the delivery versus payment method (DVP). That is, funds shall
33
not be wired or paid until verification has been made that the security was received by the
Custodian.
VIII. MANAGEMENT AND INTERNAL CONTROLS
The Director of Finance, or designee, shall establish a system of internal controls which shall be
reviewed by an independent auditor. The controls shall be designed to prevent losses of public
funds arising from fraud, employee error, misrepresentation by third parties, unanticipated
changes in financial markets, or imprudent actions by employees or Investment Officers of the
City.
Controls and managerial emphasis deemed most important that shall be employed where
practical are:
A. Control of collusion;
B. Separation of duties;
C. Separation of transaction authority from Accounting and Record -keeping;
D. Custodian safekeeping receipts records management;
E. Avoidance of physical delivery securities;
F. Clear delegation of authority;
G. Documentation of investment bidding events;
H. Written confirmation of transactions for investments and wire transfers;
I. Reconcilements and comparisons of security receipts with the investment subsidiary records;
J. Compliance with investment policies;
K. Accurate and timely reports;
L. Validation of investment maturity decisions with supporting cash flow data;
M. Adequate training and development of Investment Officials;
N. Verification of all interest income and security purchase and sell computations;
O. Review of financial conditions of all brokers, dealers, and depository institutions; and
P. Staying informed about market conditions, changes and trends that require adjustments in
investment strategies.
34
The City's list of six brokers currently includes FHN Financial, Hilltop Securities, Vining Sparks
KNA Stifel, Duncan Williams, Samco Capital, and Financial Northeastern Securities.
The Public Funds Investment Act and the City's investment policy require staff to review the
broker/dealer list annually. At this time, we recommend approval of the six brokers we
currently have as they continue to fill our portfolio needs. The recommended broker/dealer list
for 2023 includes:
FHN Financial - Buddy Saragusa
Hilltop Securities - Gilbert Ramon
Vining Sparks/Stifel - Mike Smith
Duncan Williams - Patrick Boyer/Doug Boyer
Samco Capital Markets - Robert Phillips
Financial Northeastern Securities, Inc. - Steven Azzato
35
Economic News
0