HomeMy WebLinkAboutFY 2024 Annual Investment ReportCity of Euless
T H E
Annual
Investment Report
Fiscal Year 2023-2024
201 North Ector Drive, Euless, Texas 76039 www.eulesstx.gov
Investment Committee Meeting
1/28/2025
* Compliance Summary - Legislative Requirements
Introduction
Investment Strategy Compliance
* Annual Review, Fiscal Year 2024
I. Portfolio Summary
II. Performance Summary
III. Interest Income Summary
IV. Collateral Review
V. Broker Selection Process
VI. Summary
* Certification
* Minutes from 8/19/2024
* 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 2023-24.
2
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
260
Cable PEG Fund
201
Hotel -Motel Tax Fund
265
Glade Parks PID #2 Fund
202
Juvenile Case Fund
270
Midtown PID Fund
210
'/z¢ Sales Tax Operations Fund
275
Midtown TIRZ #4 Fund
220
Crime Control & Prevention District Fund
501
Water & Wastewater Fund
221
Police Seized Asset Fund
504
Service Center Fund
223
PID Financial Crimes Recovery 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
232
Local Drug Seizure Fund
540
TSGC Operations Fund
240
Car Rental Tax Fund
601
Equipment Replacement Fund
243
American Rescue Plan Fund
610
Health Insurance Fund
245
Glade Parks PID Fund
615
Risk Management/Worker's Comp Fund
250
Glade Parks TIRZ #3 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
'/2o 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
325
Police Facility 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 '/2¢ 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.
l
Janina Jewell
Director of Finance
(4_�U/
Jackie Theriot
Assistant Director of Finance
I. PORTFOLIO SUMMARY
The City's investment portfolio at the end of the fiscal year, September 30, 2024, 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 $ 62,556,496
31 %
1.56%
1.85%
Gov't Pools & Escrows $138,979,674
69%
3.55%
3.39%
$201,536,170
100.00%
The Distribution by Instrument table shows approximately 69% of the City funds are
invested in overnight investment pools and escrows, while the remaining 31 % is invested in
government agencies and CD's. As of the date of this report, the weighted average yield on
the portfolio was 5.11%. When compared to prior quarter levels, the yield on the portfolio
has begun to decline due to Fed rate cuts. The portfolio composition below demonstrates
the diversity within the portfolio.
FAMCA
1'
FHLB
5%
FNMA
4%
FHL]
15%
4%
Portfolio Composition
as of September 30, 2024
TexPool
23%
TexasClass
23%
TexStar
23%
4
I. PORTFOLIO SUMMARY (CONTINUED)
The City's investment portfolio at the end of the fiscal year, September 30, 2024, is
summarized by maturity as shown below.
Distribution by Maturity
# of months
$ Cost
% of Portfolio
Overnight
$138,979,674
69%
< 1 mo
$ 2,000,000
1 %
up to 6 mos
$ 8,456,496
4%
6 to 9 mos
$ 5,480,000
3%
9 to 12 mos
$ 4,480,000
2%
12 to 18 mos
$ 14,720,000
7%
18 to 24 mos
$ 7,960,000
4%
> 24 mos
$ 19,460,000
10%
$ 201,536,170
100.0%
The Distribution by Maturity table reflects the degree of liquidity in the City's portfolio.
Currently, access to 69% of the portfolio is available within 24 hours, with an
additional 5% 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 5% of the portfolio matures within one year. The
City has 7% of the portfolio invested from 12 - 18 months, with 4% invested in the 18-
24 month range. The remaining 10% is invested in the greater than 24 month range.
The weighted average maturity on the portfolio is currently 163.86 days.
Investment Maturity Distribution
as of September 30, 2024
> 24 mos
$19.5
18 to 24 mosr$8.0
12 to 18 mos
W $14.7
9 to 12 mos
$4.5
6 to 9 mos
$5.5
up to 6 mos
$8.5
<1mo
I $2.0
Overnight
$139.0
................................................................................................................................................................
$0.0 $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 $140.0 $160.0
Shown in millions
I
I. PORTFOLIO SUMMARY (CONTINUED)
The City's investment portfolio at the end of the fiscal year, September 30, 2024, 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
Distribution by Institution
$ Cost
% of Portfolio
$
8,000,000
4%
$
9,000,000
5%
$
13,976,496
7%
$
12,580,000
6%
$
9,000,000
5%
$
10,000,000
5%
$
46,741,384
23%
$
45,150,149
22%
$
47,088,141
23%
$ 201,536,170
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, 2024
TexStar $47.1
TexasCLASS $45.2
TexPool 2$46.7
Vining/Stifel MM" $10.0
Samco $9.0
FNS $12.6
Hilltop $14.0
FHN $9.0
Duncan Ole $8.0
$0.0 $10.0 $20.0 $30.0 $40.0 $50.0
Shown in millions
6
Investments at June 30, 2024
Investment Purchases/Dividends
Investment Maturities
City of Euless
Pooled Portfolio Summary
for Fiscal Year Ending
September 30, 2024
Cost
Principal Only
$ 203,580,348
$ 37,837,434
$ (39,881,612)
Investments at September 30, 2024 $ 201,536,170
Janina Jewell
Director of Finance
Jackie Theriot
Assistant Director of Finance
Book
Value
$ 203,535,359
$ 201,504,832
Market
Value
$ 203,495,158
$ 201,830,725
Summary of Investments by Fund
The following is a summary of cash and investments held by each fund at June 30, 2024 and September 30, 2024. The changes include all
investment purchases, maturities, revenues, expenses, and transfers that occurred during the fourth quarter of FY2024.
Cash & Investment
Cash & Investment
Increase/
at Market Value
at Market Value
(Decrease)
6/30/2024
9/30/2024
In Fund
101
General Fund
24,139,414
20,368,738
(3,770,676) Operating expenses
102
General Fund Emergency
498,655
499,465
810
103
General Fund Contingency
997,944
1,000,000
2,056
201
Hotel -Motel Tax Fund
2,348,425
2,535,166
186,741
202
Juvenile Case Fund
243,005
252,928
9,923
210
'/20 Sales Tax Operations Fund
5,439,241
6,212,424
773,183 tax revenue
211
Yz¢ Sales Tax Debt Reserve Fund
401,125
401,125
-
220
Crime Control & Prevention District F
620,547
787,884
167,338
221
Police Seized Asset Fund
199,330
192,119
(7,211)
223
PD Financial Crimes Recovery Fund
92,439
93,630
1,191
225
PD Narcotics Task Force Fund
90,432
122,698
32,266
230
Police Drug DEA Awards Fund
253,980
256,594
2,614
231
Police Drug State Awards Fund
244,354
247,410
3,055
232
Local Drug Seizure Fund
125,000
125,000
-
235
Public Safety Grant Fund
-
-
236
Police Grant Fund
-
237
Texas Transportation Grant Fund
(10,129)
(5,696)
4,433
240
Car Rental Tax Fund
8,761,437
15,863,672
7,102,234 Motor vehicle tax collection
240-R Car Rental Reserve Fund
4,000,812
4,028,902
28,090
243
American Rescue Plan Fund
10,085,968
5,947,284
(4,138,684) transfer out
245
Glade Parks PID Fund
750,000
750,000
250
Glade Parks TIRZ #3 Fund
6,112,730
6,031,276
(81,454)
260
Cable PEG Fund
634,787
650,638
15,851
265
Glade Parks PID #2 Fund
-
-
-
270
Midtown PID Fund
33,610
7,229
(26,381)
275
Midtown TIRZ #4 Fund
1,163,639
1,130,020
(33,619)
301
Developer's Escrow Fund
2,354,791
2,884,810
530,019 Capital outlay
305
Streets CIP Fund
9,582,586
9,674,112
91,525
310
''/20 Sales Tax CIP Fund
2,839,663
2,916,989
77,326
320
General CIP Fund
18,346,527
17,663,965
(682,563) project expense
321
Redevelopment CIP Fund
1,142,658
1,156,645
13,987
322
Midtown Development CIP
74,043
61,170
(12,873)
323
Midtown Development Reserves Fun
1,004,715
1,003,947
(767)
325
Police Facility CIP
26,309,006
25,412,283
(896,723) project expense
330
Car Rental CIP Fund
241,808
228,573
(13,236)
401
Debt Service/General Obligation Fun
2,587,623
1,682,724
(904,899) Debt service payments
402
Star Center Debt Service Fund
734,545
136,235
(598,311) Debt service payments
403
Glade Parks Debt Service Fund
415,974
33,110
(382,864) Debt service payments
404
Midtown Development Debt Service 1
1,611,808
1,120,324
(491,484) Debt service payments
410
EDC Debt Service Fund
235,382
24,397
(210,984) Debt service payments
501
Water & Wastewater Fund
8,538,694
8,260,547
(278,147) Operating expenses
502
Water & Wastewater-CIP Fund
6,718,190
7,722,152
1,003,962 Capital outlay
503
Water & Wastewater Debt Reserve F
715,087
715,087
-
504
Service Center Fund
422,825
378,238
(44,587)
505
Water Impact Fees Fund
2,846,149
2,864,817
18,669
506
Water & Wastewater -Debt Service R
1,401,362
615,928
(785,434) Debt service payments
507
Water & Wastewater -Emergency Fur
500,000
500,000
508
Wastewater Impact Fees Fund
767,203
678,771
(88,432)
509
W/WW Rate Stabilization Fund
4,591,997
4,501,647
(90,349)
510
Drainage Utility Fund
305,415
337,017
31,601
511
Drainage CIP Fund
919,829
851,247
(68,582)
520
Recreation Classes Fund
773,001
798,051
25,049
521
Arbor Daze Fund
593
593
0
530
Parks @ Texas Star Operations Fun(
892,507
960,093
67,587
532
PATS Debt Reserve Fund
438,482
444,121
5,639
540
TSGC Operations Fund
1,328,129
2,227,267
899,138 Transfer in
541
TSGC Debt Service Fund
(63,786)
62,381
126,167
542
TSGC Debt Reserve Fund
790,013
776,917
(13,097)
543
TSGC CIP Fund
131,121
111,649
(19,472)
552
PATS CIP Fund
157,034
158,972
1,938
601
Equipment Replacement Fund
24,175,689
25,109,829
934,140 Transfer in
610
Health Insurance Fund
7,638,293
8,033,590
395,298 Ins receivable/stop loss credits
615
Risk Management/Worker's Comp F(
2,888,498
3,168,920
280,422 Receivable contractor damages
701
Payroll Clearing Fund
755,586
848,804
93,218
705
Star Center Escrow Fund
1,439,473
1,439,494
21
TOTAL
203,779,260
203,063,921
(715,339)
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 FY2024. The monthly data below shows the continued utilization of City
funds through investments.
Consolidated
Invested
Percentage
FY2023
Cash
Balance
Invested
October
$
801,855
$
154,650,055
99%
November
$
696,018
$
157,570,216
100%
December
$
(90,341)
$
163,464,132
100%
January
$
1,091,761
$
173,542,788
99%
February
$
1,918,936
$
178,333,466
99%
March
$
485,916
$
164,119,013
100%
April
$
117,179
$
165,731,792
100%
May
$
565,218
$
167,244,153
100%
June
$
326,218
$
168,647,087
100%
July
$
354,790
$
168,820,787
100%
August
$
490,515
$
165,018,816
100%
September
$
(867,834)
$
187,522,393
100%
Average
$
490,853
$
167,888,725
100%
Consolidated
Invested
Percentage
FY2024
Cash
Balance
Invested
October
$
877,082
$
187,969,814
100%
November
$
737,755
$
190,433,269
100%
December
$
709,748
$
201,046,385
100%
January
$
(1,985,978)
$
215,054,592
101%
February
$
371,307
$
214,698,628
100%
March
$
(363,275)
$
199,681,870
100%
April
$
670,718
$
201,734,179
100%
May
$
356,421
$
202,342,748
100%
June
$
290,608
$
203,580,348
100%
July
$
1,077,864
$
202,992,629
99%
August
$
593,590
$
201,104,210
100%
September
$
1,301,817
$
201,536,170
99%
Average
$
386,471
$
201,847,904
100%
This graph shows how the City's funds continue to be invested, always in pursuit of 100%.
105.00%
a? 100.00%
95.00%
c
m
i 90.00%
a
85.00%
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Fiscal Year
Cash management performance - effectiveness of the cash management program has
been measured utilizing actual figures for FY2024 as shown below:
Average
City's
Number
Estimated
90-day
Invested
Days in
Interest
Month
T-bill Yield
Balance
Month
Earnings
October
5.33%
$ 187,969,814
31
$850,911
November
5.25%
$ 190,433,269
30
$821,733
December
5.20%
$ 201,046,385
31
$887,909
January
5.22%
$ 215,054,592
31
$953,428
February
5.25%
$ 214,698,628
29
$895,558
March
5.23%
$ 199,681,870
31
$886,970
April
5.25%
$ 201,734,179
30
$870,497
May
5.25%
$ 202,342,748
31
$902,227
June
5.22%
$ 203,580,348
30
$873,443
July
5.15%
$ 202,992,629
31
$887,884
August
4.98%
$ 201,104,210
31
$850,588
September
4.52%
$ 201,536,170
30
$748,721
Estimated earnings at benchmark yields
$10,429,869
Actual FY2024 interest income (un-audited)
$10,286,315
Earnings over benchmark
($143,554)
Annual Average
5.15%
$ 201,847,904
$10,395,167
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 vield
Portfolio Yld
Difference
October
5.33%
4.93%
-40
November
5.25%
5.03%
-22
December
5.20%
5.12%
-8
January
5.22%
5.18%
-4
February
5.25%
5.19%
-6
March
5.23%
5.20%
-3
April
5.25%
5.21 %
-4
May
5.25%
5.23%
-2
June
5.22%
5.24%
2
July
5.15%
5.24%
9
August
4.98%
5.22%
24
September
4.52%
5.11 %
59
Average
5.15%
5.16%
0
The Fed has been trying to lower inflation and cool an overheated job market for a while.
Price pressures have eased and the labor market has cooled. The economy is still
expanding largely thanks to consumption. Monetary policy has tightened significantly over
the past year as the fed funds rate has held steady, while service goods prices
decelerated. That tightening coupled with the labor market softening sooner and faster than
previously expected and consumers facing challenges with moderating wage growth and
dwindling savings, the Fed decided it was time to dial back from the restrictive policy
stance. The Fed cut rates by 50 basis points in September, with more cuts to come. This
was the first cut in 14 months.
10
III. INVESTMENT INTEREST INCOME SUMMARY
FY20 Audit
$1,423,661
FY21 Audit
$165,992
FY22 Audit
$812,687
FY23 Audit
$6,177,907
FY24 Unaudited
$10,286,315
FY24 Budgeted
$3,336,131
Investment Interest Income Summary
$12,000,000
m $10,000,000
W
r.
$8,000,000
W
$6,000,000
a�
$4,000,000
$2,000,000
$0
Aim-
FY20 Audit
FY21 Audit FY22 Audit FY23 Audit FY24 FY24 Budgeted
Unaudited
Investment interest income increased over the budgeted level for fiscal year 2024. When
compared to prior year, investment earnings has increased substantially due to previous rate
hikes throughout the year. The rate hikes are in hopes of returning the inflation rate to the 2%
goal. The Fed has begun to cut rates and is expected to continue throughout the coming year.
The City's average yield is one basis point above the 90 day T-Bill yield. It will continue to be
above until investments get called or matured and are reinvested at a lower market rate.
I
Investment Interest Income By Fund
For Fiscal Year Ending September 2024
# Fund
FY 23 FY 23 Actual
FY 24
Budget Audited
Budget
101 General
$38,402 $776,630
$112,404
201 Hotel/Motel
3,307 93,038
27,755
202 Juvenile Case Fund
503 8,641
6,251
210 1/2 Cent Sales Tax -Operations
12,653 152,704
28,432
211 1/2 Cent Sales Tax -Reserve
220 Crime Control & Prevention District
221 Police Seized Asset Funds
225 PD Narcotics Task Force Fund
230 Police Druq DEA Awards
231 Police Drug State Awards
240 Car Rental Tax
245 Glade Parks PID
250 Glade Parks TIRZ
260 Cable PEG Fund
270 Midtown PID
301 Developer's Escrow
305 Streets CIP
310 1/2 Cent Sales Tax - CIP
320 General Capital Projects
321 Redevelopment CIP Fund
322 Midtown Development CIP
323 Midtown Development Reserves
325 Police Facility CIP
330 Car Rental CIP
401 GO Debt Service
402 Star Center Debt
403 Glade Parks Debt Service
404 Midtown Development Debt Service
410 1/2 Cent Sales Tax Debt Service
501 Water and Wastewater
502 Water and Wastewater CIP
503 Water and Wastewater Reserve
504 Service Center Fund
505 Water Impact Fees
508 Wastewater Impact Fees
509 W/WW Rate Stabilization
510 Drainage
511 Drainage CIP
520 Recreation Classes
521 Arbor Daze
530 Parks At Texas Star
531 PATS Debt Service
532 PATS Reserve
540 Texas Star Golf Course
541 TSGC Debt Service
542 TSGC Reserve
543 TSGC CIP Fund
550 Parks At Texas Star
552 TSSC CIP
601 Equipment Replacement
610 Health Insurance
615 Risk Mgmt/Worker's Comp
Total
0
2,178
435
0
755
581
27,106
0
5,151
1,029
641
2,454
175,481
17,149
318,863
51,725
0
0
0
2,759
4,043
1,601
556
3,668
275
14,226
11,963
0
0
4,261
1,429
21,000
549
2,030
616
0
1,044
0
545
803
28
2,397
315
0
243
33,203
20,000
2,982
$788,949
0
64,455
9,524
0
11,204
9,819
1,168,749
0
186,532
28,287
5,625
87,218
319,750
167,950
574,089
73,689
0
0
78,668
35,176
98,246
18,139
8,789
97,212
5,607
483,211
167,790
0
0
117,965
34,013
66,805
10,676
43,367
21,310
1
23,159
0
17,250
50,898
2,263
37,806
9,625
0
6,152
720,511
190,654
94,710
$6,177,907
0
21,181
9,826
0
8,369
7,360
352,750
0
137,686
21,602
5,143
2,454
332,754
26,919
371,795
73,531
0
0
858,969
2,759
98,256
14,886
5,494
72,019
3,725
14,226
5,826
0
0
4,261
1,429
21,000
7,207
2,030
6,000
0
1,044
0
2,000
30,000
28
10,000
315
0
243
489,775
68,008
70,419
$3, 336,131
FY 24 Actual
(Unaudited)
$1,276,816
128,229
11,309
266,579
0
26,877
10,201
480
12,499
11,934
1,302,552
0
277,141
31,570
2,413
132,269
519,084
172,648
1,001,632
67,264
0
0
1,351,445
28,457
134,369
21,008
9,904
121,051
7,178
674,782
353,568
0
0
145,132
37,869
199,987
13,253
49,372
33,403
1
38,069
0
21,836
78,289
3,021
41,042
6,143
0
7,554
1,163,705
356,099
138,281
$10,286,315
Diff FY24
Bud. -Act.
$1,164,412
$100,474
$5,058
$238,147
$0
$5,696
$375
$480
$4,130
$4,574
$949,802
$0
$139,455
$9,968
($2,730)
$129,815
$186,330
$145,729
$629,837
($6,267)
$0
$0
$492,476
$25,698
$36,113
$6,122
$4,410
$49,032
$3,453
$660,556
$347,742
$0
$0
$140,871
$36,440
$178,987
$6,046
$47,342
$27,403
$1
$37,025
$0
$19,836
$48,289
$2,993
$31,042
$5,828
$0
$7,311
$673,930
$288,091
$67,862
$6,950,184
Note that investment 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 investment earnings for the end of the fiscal year have
exceeded budgeted expectations due to conservative budgeting because expected rate reductions occurred later than
expected.
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.
■
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 09/30/24
Safekeeping Pledged Sec. Security Market Value Inv. Value
Location Description Market Value (w/FDIC Ins.) (a) Mat'v (P & 1)
Produced By:
Director of Finance
$1,666,747 $1,916,747 $1,584,096
Bank of New Payroll $6,264
York Mellon various bonds $1,666,747 Operating $1,434,128
Insurance $143,704
Reviewed by:
Assistant Director of Finance
� - �01111
Difference
Over/(Under)
$332,652
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 28, 2025 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, 2024. 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 I , �
Ross Fairclo
Financial Services Manager
15
Minutes — 08/19/2024 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 present included Diana Ayala, Budget/Treasury Manager.
Jewell presented the Third Quarter Investment Report for Fiscal Year 2024. 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, 2024. She noted that these
strategies had not changed from prior period where 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. Jewell stated that the presented
investment portfolio followed those strategies for the third quarter of Fiscal Year 2024.
Jewell referred the committee to page 3 where she noted significant increases and decreases in fund
investments since March 31, 2024. She specifically noted most of the change occurred because of the receipt
of motor vehicle rental tax collections and sales tax collections. Overall there was an increase of $4.5 million.
The total market value of cash and investments was stated to be $203,779,260.
On page 4 Jewell pointed out the portfolio shows its diversity in investment types on this page. She noted
that the weighted average yield on the portfolio was 5.24% and was up 4 basis points from the last quarter.
On page 5 she noted the diversity of the portfolio by maturity and specifically cited that two quarters ago
staff was advised to go out longer in investments to try and lock down some higher rates due to the
probability of rates decreasing. She noted that since receiving those instructions the amount invested for
less than one year had gone from 86% to 83% last quarter and now to 78% this quarter. She also noted that
the weighted average maturity on the portfolio went from 129.98 days to 156.14 last quarter and to 186.49
this quarter. 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, 2024, was $203,495,158 which, if investments had been liquidated, the City would have to
show a loss of $40,201.
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 1 basis points under the 90 Day T-Bill benchmark for the quarter
but ended June at 2 points above the benchmark 90 Day T-Bill. This page also showed that cash was 100%
invested for the quarter. Jewell noted on page 9 that the City was fully collateralized as of June 30, 2024.
I
Jewell then noted that the report was certified by City Investment Officers. Ms. Getchell made a motion to
approve the quarterly investment report. The Mayor seconded the motion and the vote was unanimous in
favor.
Minutes for the May 14, 2024, Investment Committee Meeting were presented. Ms. Getchell motioned to
approve the minutes and the Mayor seconded the motion. The committee approved unanimously.
Ms. Jewell commented on the economic outlook including that the Fed was still expected to decrease rates
in September and that the expected decrease was already priced in the market. She also noted that nation-
wide there was a 6.8% drop in housing starts and a 4% drop in building permits.
Mayor Martin motioned for committee meeting adjournment which was seconded by Ms. Getchell. The
committee approved unanimously. 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, 2024
Inv. CUSIP
Maturity/
Par
Market Value
Market Value
Change in
Book Value
Book Value
Change in
Type Number
Call Date
Value
09/30/2024
06/30/2024
Market Value
09/30/2024
06/30/2024
Book Value
OPERATING FUNDS:
FNMA 3135GAGL9
10/17/2024
1,000,000
1,000,160
998,693
1,467
1,000,000
1,000,000
-
FNMA 3135GAHP9
11/15/2024
1,000,000
1,000,431
998,626
1,805
1,000,000
1,000,000
-
FHLB 3130AVYV8
05/09/2025
1,000,000
1,000,566
998,509
2,057
1,000,000
1,000,000
-
CD 06063HQX4
12/13/2024
240,000
240,186
239,827
358
240,000
240,000
-
FHLMC 3134GY4F6
11/26/2024
1,000,000
1,000,549
998,701
1,848
1,000,000
1,000,000
-
FHLMC 3134GYD25
01/27/2025
1,000,000
1,000,610
998,683
1,927
1,000,000
1,000,000
-
FHLMC 3134GYDE9
01/27/2025
1,000,000
1,000,740
999,117
1,623
1,000,000
1,000,000
-
FHLMC 3134GYEZ1
01/27/2026
1,000,000
1,000,242
995,970
4,272
1,000,000
1,000,000
-
FHLMC 3134GYFA5
01/28/2026
1,000,000
1,000,330
996,180
4,150
1,000,000
1,000,000
-
FHLMC 3134GYJH6
02/28/2025
1,000,000
1,002,635
998,882
3,753
1,000,000
1,000,000
-
FHLB 3130AUND2
08/O1/2025
1,000,000
1,000,760
997,332
3,428
1,000,000
1,000,000
-
FHLMC 3134GYHC9
02/09/2026
1,000,000
1,000,499
996,700
3,799
1,000,000
1,000,000
-
FAMCA 31422XX23
02/23/2026
1,000,000
1,017,747
1,004,054
13,693
1,000,000
1,000,000
-
CD 70212YBM3
09/17/2025
240,000
242,046
239,116
2,929
240,000
240,000
-
CD 337158BP3
12/16/2024
240,000
240,210
239,827
383
240,000
240,000
-
FHLMC 3134GYTQ5
06/05/2026
1,000,000
1,000,757
996,080
4,677
1,000,000
1,000,000
-
CD 33847GBG6
05/14/2025
240,000
241,703
240,282
1,421
240,000
240,000
-
FHLB 3130AXRX8
11/14/2025
1,000,000
1,000,910
999,642
1,268
1,000,000
1,000,000
-
CD 61768EF57
11/17/2025
240,000
243,459
240,464
2,995
240,000
240,000
-
CD 130162BG4
11/21/2025
240,000
243,976
241,069
2,907
240,000
240,000
-
CD 05580AW3
05/18/2026
240,000
244,683
240,523
4,160
240,000
240,000
-
CD 6169ODHA9
11/16/2026
240,000
246,312
240,868
5,444
240,000
240,000
-
FHLMC 3134H1LA9
12/04/2026
1,000,000
1,000,896
999,000
1,896
1,000,000
1,000,000
-
FHLB 3130AXYK8
12/04/2026
1,000,000
1,000,880
997,210
3,670
1,000,000
1,000,000
-
FFCB 3133EPX83
10/02/2024
1,000,000
1,000,000
998,823
1,177
1,000,000
1,000,000
-
FHLB 3130AYLKO
07/11/2025
1,000,000
1,000,092
996,600
3,492
1,000,000
1,000,000
-
FNMA 3135GAM32
10/17/2025
1,000,000
1,000,209
997,630
2,579
1,000,000
1,000,000
-
FHLB 3130AYKL9
10/23/2026
1,000,000
1,000,198
994,470
5,728
1,000,000
1,000,000
-
FAMCA 31424WFC1
01/22/2027
1,000,000
1,000,923
993,500
7,423
1,000,000
1,000,000
-
FNMA 3135GAMDO
O1/25/2027
1,000,000
1,000,530
998,362
2,168
1,000,000
1,000,000
-
FHLB 3130AYFW1
10/08/2027
1,000,000
1,000,250
998,786
1,464
1,000,000
1,000,000
-
FHLB 3130AYTN6
02/06/2025
1,000,000
1,000,286
997,731
2,555
1,000,000
1,000,000
-
FHLB 3130AYU61
11/07/2025
1,000,000
1,000,243
997,404
2,839
1,000,000
1,000,000
-
FHLB 3130AYTA4
02/06/2026
1,000,000
1,000,440
997,034
3,406
1,000,000
1,000,000
-
FNMA 3135GAND9
02/05/2027
1,000,000
1,001,339
995,548
5,791
1,000,000
1,000,000
-
FHLB 3130BOCUl
03/04/2025
1,000,000
1,000,876
998,451
2,425
1,000,000
1,000,000
-
FNMA 3135GAQB0
03/13/2026
1,000,000
1,002,170
997,040
5,130
1,000,000
1,000,000
-
FNMA 3135GAPW5
02/26/2027
1,000,000
1,002,557
998,940
3,617
1,000,000
1,000,000
-
FNMA 3135GAQD6
03/16/2027
1,000,000
1,005,213
996,465
8,748
1,000,000
1,000,000
-
FHLB 3130B15Y9
04/30/2026
1,000,000
1,005,282
1,000,578
4,704
1,000,000
1,000,000
-
FHLMC 3134H1A29
10/02/2026
1,000,000
1,003,326
1,000,630
2,696
1,000,000
1,000,000
-
FHLB 3130BOTC3
10/09/2026
1,000,000
1,008,851
997,534
11,317
1,000,000
1,000,000
-
FHLB 3130BORE1
04/27/2027
1,000,000
1,008,363
996,610
11,753
1,000,000
1,000,000
-
FHLB 3130BOQ77
10/08/2027
1,000,000
1,008,365
995,800
12,565
1,000,000
1,000,000
-
CD 87164DXA3
08/15/2025
240,000
242,167
239,705
2,463
240,000
240,000
-
CD 82869AFY6
11/14/2025
240,000
242,911
240,000
2,911
240,000
240,000
-
FHLB 3130BlAHO
02/03/2026
1,000,000
1,002,586
999,872
2,714
1,000,000
1,000,000
-
FHLB 3130BlALl
05/06/2026
1,000,000
1,002,874
1,000,260
2,614
1,000,000
1,000,000
-
CD 06051XDQ2
05/18/2026
240,000
244,121
239,883
4,238
240,000
240,000
-
FHLB 3130B1CV7
08/13/2026
1,000,000
1,007,986
999,506
8,480
1,000,000
1,000,000
-
FHLB 3130AQEX7
12/30/2024
1,000,000
991,231
979,060
12,171
945,158
933,489
11,669
FAMCA 31424WJV5
08/O1/2025
1,000,000
1,008,264
1,001,350
6,914
1,000,000
1,000,000
-
FFCB 3133ERGA3
06/04/2026
1,000,000
1,019,940
1,004,221
15,719
1,000,000
1,000,000
-
CD 38150VUZO
06/11/2026
240,000
244,631
240,278
4,352
240,000
240,000
-
CD 465076UPO
06/12/2026
240,000
244,641
240,278
4,363
240,000
240,000
-
CD 32026U5XO
12/14/2026
240,000
245,505
240,720
4,785
240,000
240,000
-
CD 23204HPM4
06/11/2027
240,000
246,970
240,574
6,396
240,000
240,000
-
CD 34520LBD4
06/14/2027
240,000
246,990
240,589
6,401
240,000
240,000
-
Purchases
FFCB 3133ERMK4
01/26/2026
1,000,000
1,009,991
-
1,009,991
1,000,000
-
1,000,000
FHLB 3130B23V5
07/22/2026
1,000,000
1,002,909
-
1,002,909
1,000,000
-
1,000,000
FFCB 3133ERPJ4
08/13/2025
1,000,000
1,001,049
-
1,001,049
1,000,000
-
1,000,000
FFCB 3133ERPC9
08/12/2026
1,000,000
1,001,698
-
1,001,698
1,000,000
-
1,000,000
FHLB 313OB2CK9
02/12/2027
1,000,000
1,000,210
-
1,000,210
1,000,000
-
1,000,000
Maturities
FHLMC 3134GYCY6
07/12/2024
1,000,000
-
999,926
(999,926)
-
1,000,000
(1,000,000)
FHLB 3130AWP79
07/19/2024
1,000,000
-
999,943
(999,943)
-
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, 2024
Inv. CUSIP
Maturity/
Par
Market Value Market Value
Change in
Type Number
Call Date
Value
09/30/2024 06/30/2024
Market Value
FHLMC 3134GYBU5
07/26/2024
1,000,000
- 999,790
(999,790)
FHLB 3130AWPQ7
07/24/2026
1,000,000
- 1,000,130
(1,000,130)
FHLMC 3134GX6V1
11/25/2024
1,000,000
- 998,838
(998,838)
CD 15987UAVO
09/23/2024
240,000
- 239,961
(239,961)
FHLMC 3134GY7J5
09/27/2024
1,000,000
- 999,438
(999,438)
FHLMC 3134GYA69
09/27/2024
1,000,000
- 998,806
(998,806)
FHLMC 3134GYTM4
06/06/2025
1,000,000
- 998,820
(998,820)
FHLB 3130AXA73
09/25/2026
1,000,000
- 1,000,044
(1,000,044)
FHLMC 3134GYAB8
12/30/2024
1,000,000
- 999,000
(999,000)
FHLMC 3134GYC34
12/30/2024
1,000,000
- 998,400
(998,400)
Book Value Book Value
Change in
09/30/2024 06/30/2024
Book Value
- 1,000,000
(1,000,000)
- 1,000,000
(1,000,000)
- 1,000,000
(1,000,000)
- 240,000
(240,000)
- 1,000,000
(1,000,000)
- 1,000,000
(1,000,000)
- 1,000,000
(1,000,000)
- 1,000,000
(1,000,000)
- 1,000,000
(1,000,000)
- 996,449
(996,449)
Par total does not
Total Operating: include maturities $ 50,840,000 $ 51,027,473 $ 56,982,685 $ (5,955,212) $ 50,785,158 $ 57,009,938 $ (6,224,780)
20
APPENDIX A
City of Euless
Change in Portfolio Values by Asset and Investment Fund
For the Quarter Ending September 30, 2024
Inv.
CUSIP
Maturity/
Par
Market Value
Market Value
Change in
Book Value
Book Value
Change in
Type
Number
Call Date
Value
09/30/2024
06/30/2024
Market Value
09/30/2024
06/30/2024
Book Value
CIP FUNDS
FHLB
3130BOD48
03/04/2026
1,000,000
1,002,467
997,670
4,797
1,000,000
1,000,000
-
CD
95763PNS6
06/16/2025
240,000
241,551
239,549
2,003
240,000
240,000
-
FHLB
313OB17F8
04/30/2025
2,000,000
2,009,032
1,998,284
10,748
2,000,000
2,000,000
-
FHLB
3130BIE60
05/13/2025
2,000,000
2,009,808
1,998,402
11,406
2,000,000
2,000,000
-
FFCB
3133ERHH7
12/14/2026
1,000,000
1,026,290
1,001,670
24,620
1,000,000
1,000,000
-
Purchases
FFCB
3133ERPX3
11/19/2025
1,000,000
1,003,269
-
1,003,269
1,000,000
-
1,000,000
Maturities
FHLB
3130AUFVI
07/26/2024
1,000,000
-
999,756
(999,756)
-
1,000,000
(1,000,000)
FHLMC
3134GY4B5
08/26/2024
1,000,000
-
999,060
(999,060)
-
1,000,000
(1,000,000)
CD
084601YR8
09/17/2024
240,000
-
239,836
(239,836)
-
240,000
(240,000)
CD
69478QGYO
09/23/2024
240,000
-
239,987
(239,987)
-
240,000
(240,000)
Par total does not
Total CIP:
include matunhes $
7,240,000
$ 7,292,417
$ 8,714,214
$ (1,421,797)
$ 7,240,000
$ 8,720,000
$ (1,480,000)
RESERVE FUNDS:
FHLB
3130AXZK7
12/04/2026
1,000,000
1,000,811
996,980
3,831
1,000,000
1,000,000
-
FHLB
3130BOYH6
04/19/2029
1,000,000
1,028,419
1,002,333
26,086
1,000,000
1,000,000
-
FHLB
3130B1DZ7
02/10/2026
1,000,000
1,002,466
999,229
3,237
1,000,000
1,000,000
-
Purchases
FHLB
313OB2PZ2
09/12/2028
1,000,000
499,465
-
499,465
500,000
-
500,000
FHLB
3130132UW3
06/10/2027
500,000
1,000,000
-
1,000,000
1,000,000
-
1,000,000
Maturities
FHLB
3130AY2Q8
12/18/2026
1,000,000
-
999,701
(999,701)
-
1,000,000
(1,000,000)
FHLMC
3134GYTXO
03/12/2026
1,000,000
-
998,150
(998,150)
-
1,000,000
(1,000,000)
FHLMC
3134GYKP6
03/14/2025
1,000,000
-
999,846
(999,846)
-
1,000,000
(1,000,000)
FHLB
3130AWG95
06/26/2026
500,000
-
498,655
(498,655)
-
500,000
(500,000)
FHLB
3130AUA87
12/27/2024
1,000,000
-
997,944
(997,944)
-
1,000,000
(1,000,000)
Par total does not
Total Reserve:
includematurmes $
4,500,000
$ 4,531,161
$ 7,492,838
$ (2,961,677)
$ 4,500,000
$ 7,500,000
$ (3,000,000)
OVERNIGHT INVESTMENTP:
Beginning Bal
Ending Bal
Texpool
Balance
42,748,222
46,741,383
46,741,384
42,748,222
3,993,162
46,741,384
42,748,222
3,993,162
Purchases
10,269,879
Maturities
6,276,718
TexasCLASS
Balance
44,081,821
45,150,150
45,150,149
44,081,821
1,068,328
45,150,149
44,081,821
1,068,328
Purchases
9,165,164
Maturities
8,096,836
Texstar
Balance
43,475,377
47,088,140
47,088,141
43,475,377
3,612,764
47,088,141
43,475,377
3,612,764
Purchases
10,902,391
Maturities
7,289,628
B ofT
Balance
-
-
(0)
-
(0)
(0)
-
(0)
Purchases
-
Maturities
-
US Bank
Balance
-
-
-
-
-
-
-
-
Purchases
-
Maturities
-
Total Overnight:
$
138,979,673
$ 138,979,673
$ 130,305,419
$ 8,674,254
$ 138,979,673
$ 130,305,419
$ 8,674,254
Par total does not
Total Portfolio include matunties $ 201,559,673 $ 201,830,726 $ 203,495,158 $ (1,664,432) $ 201,504,832 $ 203,535,358 $ (2,030,526)
21
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24
CITY OF EULESS
FINANCE POLICY
DATE: June 26, 1990 PREPARED BY:Finance Department
REV: January 23, 2024 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.
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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
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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.
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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.
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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 The City of Euless will follow 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
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
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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/dealer
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
business organization has accepted discretionary investment authority. The investment
officer of the City may not acquire or otherwise obtain any authorized investment described
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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. COLLATERAL IZATION, SAFEKEEPING AND CUSTODY
A. COLLATE RALIZATI ON 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
not be wired or paid until verification has been made that the security was received by the
Custodian.
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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.
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The City's list of six brokers currently includes FHN Financial, Hilltop Securities, Stifel,
SouthState 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 2025 includes:
FHN Financial - Buddy Saragusa
Hilltop Securities - Gilbert Ramon
Stifel - Mike Smith
SouthState Duncan Williams - Patrick Boyer/Doug Boyer
Samco Capital Markets - Robert Phillips
Financial Northeastern Securities, Inc. - Steven Azzato
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