HomeMy WebLinkAboutFY 2018 Annual Investment Report City
,c.,Ess
' 1 ,.
r
r5'
_ .. ..
....
.,. .t.
..
. .
.4 . ,
: . 'i
1. . /-,
R s
At. Arlik
' !Ill lir- ' irWITI111 ' 1.10.'%.. •: .. . 1
-icesoiliff BOWL ii... . `;.!-Y'. 4
i . • ' -
Annual Investment Report
Fiscal Year 2017- 18
201 N. Ector Drive, Euless, TX 76039 www.eulesstx.gov
Investment Committee Meeting
1 /22/2019
* Compliance Summary - Legislative Requirements
Introduction
Investment Strategy Compliance
* Annual Review, Fiscal Year 2018
I. Portfolio Summary
II. Performance Summary
III. Interest Income Summary
IV. Collateral Review
V. Broker Selection Process
VI. Summary
* Certification
* Minutes from 9/4/2018
* 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
2
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 in the form of government securities which are pledged to
the City of Euless and safekept by the Federal Reserve Bank; 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 2017-18.
3
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 270 Midtown PID Fund
201 Hotel-Motel Tax Fund 275 Midtown TIRZ#4 Fund
202 Juvenile Case Fund 501 Water&Wastewater Fund
210 1/2 Cent Sales Tax Operations Fund 504 Service Center Fund
220 Crime Control&Prevention District Fund 510 Drainage Utility Fund
221 Police Seized Asset Fund 520 Recreation Classes Fund
230 Police Drug DEA Awards Fund 521 Arbor Daze Fund
231 Police Drug State Awards Fund 530 Softball World Operations Fund
240 Car Rental Tax Fund 540 Golf Course Operations Fund
245 Glade Parks PID Fund 550 Parks at Texas Star Operations Fund
250 Glade Parks TIRZ Fund 601 Equipment Replacement Fund
260 Cable PEG Fund 610 Health Insurance Fund
265 Glade Parks PID#2 Fund 615 Risk Management/Worker's Comp 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 date. These funds
include:
301 Developer's Escrow Fund 330 Car Rental CIP Fund
305 Streets CIP Fund 502 Water&Wastewater CIP Fund
310 1/2 Cent Sales Tax CIP Fund 505 Water Impact Fees Fund
320 General Capital Projects Fund 508 Wastewater Impact Fees Fund
321 Redevelopment Fund 511 Drainage CIP Fund
322 Midtown Development CIP 543 TSGC CIP Fund
552 TSSC CIP Fund
-Debt Service Funds should assure adequate liquidity to cover the debt service obligation on the required payment
date. These funds include:
401 Debt Service/General Obligation Fund 410 1/2 Cent 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&Wastewater Rate Stabilization Reserve Fund
211 1/2 Cent Sales Tax Debt Reserve Fund 532 TSSC 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.
Janina Jewell
Director of Finance
Jackie Theriot
Assistant Director of Finance
4
I. PORTFOLIO SUMMARY
The City's investment portfolio at the end of the fiscal year, September 30, 2018, is
summarized by instrument as shown below.
Distribution by Instrument
% of Average Avg. Yield
Instrument $ Cost Portfolio Yield Prior Qtr.
Agencies & CD $ 40,964,929 42.85% 0.89% 0.79%
Gov't Pools & Escrows $ 54,646,142 57.15% 1.13% 1.04%
$ 95,611,071 100.00%
The Distribution by Instrument table shows approximately 57% of the City funds are
invested in overnight investment pools and escrows, while the remaining 43% is invested in
government agencies and a CD. As of the date of this report, the weighted average yield
on the portfolio was 2.02%. When compared to prior quarter levels, the yield on the
portfolio has continued to increase slowly. The portfolio composition below demonstrates
the diversity within the portfolio.
Portfolio Composition
as of September 30, 2018
FAMCA
1%
FNMA
FHLMC 2%
3%
Escrows
4%
TexPool
FHLB 27%
25% Other
57%
44
TexStar
26%
FFCB
12%
5
I. PORTFOLIO SUMMARY (CONTINUED)
The City's investment portfolio at the end of the fiscal year, September 30, 2018, is
summarized by maturity as shown below.
Distribution by Maturity
# of months $ Cost % of Portfolio
Overnight $ 54,646,142 57.2%
< 1 mo $ 1,498,313 1.6%
up to 6 mos $ 17,980,382 18.8%
6 to 9 mos $ 8,496,950 8.9%
9 to 12 mos $ 4,535,671 4.7%
12 to 18 mos $ 8,453,613 _ 8.8%
$ 95,611,071 100.0%
The Distribution by Maturity table reflects the degree of liquidity in the City's
portfolio. Currently, access to 57% of the portfolio is available within 24 hours, with
an additional 20% 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 14% of the portfolio matures within one
year. The City has 9% of the portfolio invested from 12 - 18 months. Currently, the
City does not hold investments longer than 18 months. The weighted average
maturity on the portfolio is currently 94.19 days.
Investment Maturity Distribution
as of September 30, 2018
18 to 24 mos
12 to 18 mos $8.5
9 to 12 mos $4.5
6 to 9 mos $8.5
up to 6 mos $18.0
< 1mo I $1.5
Overnight $54.6
$0.0 $9.0 $18.0 $27.0 $36.0 $45.0 $54.0
Shown in millions
6
I. PORTFOLIO SUMMARY (CONTINUED)
The City's investment portfolio at the end of the fiscal year, September 30, 2018, is
summarized by institution as shown below.
Distribution by Institution
Institution $ Cost % of Portfolio
Duncan Williams $ 5,979,766 6.2%
FTN Financial $ 6,976,863 7.3%
Hilltop Securities $ 7,998,080 8.4%
Mutual Securities $ 7,996,660 8.4%
Samco Capital $ 5,999,500 6.3%
Vining Sparks $ 5,973,060 6.2%
TexPool $ 26,025,384 27.2%
TexStar $ 24,658,114 25.8%
Escrows & CD $ 4,003,644 4.2%
$ 95,611,071 100.0%
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, 2018
Escrows & CD 1 $4.0
TexStar $24.6
TexPool $26.0
Vining - $6.0
Samco 1 $6.0
Mutual $8.0
Hilltop $8.0
FTN ; $7.0
Duncan $6.0
$0.0 $7.0 $14.0 $21.0 $28.0
Shown in millions
7
City of Euless
Pooled Portfolio Summary
for Quarter Ending
September 30, 2018
Cost Book Market
Principal Only Value Value
Investments at June 30, 2018 $ 97,808,651 $ 97,749,046 $ 97,771,313
Investment Purchases/Dividends $ 23,369,434
Investment Maturities $ (25,567,013)
Investments at September 30, 2018 * $ 95,611,072 $ 95,480,245 $ 95,570,220
Janina Jewell
Director of Finance
Jackie Theriot
Assistant Director of Finance
* Hard coded data on this summary creates rounding differences.
8
Summary of Investments by Fund
The following is a summary of cash and investments held by each fund at June 30,2018 and September 30,2018. The changes include all
investment purchases,maturities,revenues,expenses,and transfers that occurred during the fourth quarter of FY2018.
Cash&Investment Cash&Investment Increase/
at Market Value at Market Value (Decrease)
6/30/2018 9/30/2018 In Fund
101 General Fund 15,223,043 13,474,758 (1,748,285) Operating expenses
102 General Fund Emergency 494,920 495,490 570
103 General Fund Contingency 498,750 498,086 (665)
201 Hotel-Motel Tax Fund 452,972 537,919 84,947 Operating revenues
202 Juvenile Case Fund 275,526 276,045 519
210 1/2 Cent Operations Fund 1,334,147 1,782,156 448,009 Operating revenues
211 1/2 Cent Debt Reserve 108,094 98,336 (9,757)
220 CCPD 845,736 967,389 121,652 Operating revenues
221 Police Seized Asset Fund 292,773 291,958 (815)
230 Police Drug DEA Awards 417,233 338,057 (79,177)
231 Police Drug State Awards 179,724 181,054 1,329
235 Public Safety Grant Fund (111,232) (70,777) 40,455
236 Police Grant Fund - - -
237 Texas Transportation Grant (5,236) (4,777) 459
240 Car Rental Tax Fund 5,667,812 9,089,434 3,421,622 Motor vehicle tax collection
240-R Car Rental Reserve Fund 1,990,633 1,993,613 2,980
245 Glade Parks PID 750,000 750,000 -
250 Glade Parks TIRZ#3 724,580 678,217 (46,363)
260 Cable PEG Fund 631,756 661,291 29,535
265 Glade Parks PID#2 - - -
270 Midtown PID 74,417 72,252 (2,165)
275 Midtown TIRZ#4 - - -
301 Developer's Escrow Fund 2,235,033 2,261,019 25,986
305 Streets CIP 9,650,023 9,623,987 (26,036)
310 1/2 Cent Sales Tax CIP 2,399,162 2,375,045 (24,118)
320 General CIP Fund 1,355,108 1,561,778 206,670
321 Redevelopment CIP Fund 1,652,332 1,438,739 (213,593) Capital outlay
322 Midtown Development CIP 2,197,593 601,043 (1,596,550) Capital outlay
323 Midtown Development Reserves 1,003,108 1,001,984 (1,124)
330 Car Rental CIP Fund 2,085,190 2,131,003 45,812
401 Debt Service/General 3,008,807 1,385,349 (1,623,458) Debt service payments
402 Star Center Debt Service 656,723 131,797 (524,927) Debt service payments
403 Glade Parks Debt Service 406,133 799 (405,334) Debt service payments
404 Midtown Development Debt Service 992,349 385,976 (606,373) Debt service payments
410 EDC Debt Service 29,017 2,280 (26,737) Debt service payments
501 Water&Wastewater Fund 7,431,595 8,183,472 751,876 Operating Revenues
502 Water&Wastewater-CIP 7,712,457 7,367,376 (345,081) Capital outlay
503 Water&Wastewater Bond Reserve 682,366 682,366 -
504 Service Center Fund 511,223 544,097 32,874
505 Water Impact Fees 2,119,092 2,167,501 48,409 Impact fees-development/Heritage
506 Water&Wastewater-Debt Service 902,487 335,671 (566,815) Debt service payments
507 Water&Wastewater-Emergency 500,000 500,000 -
508 Wastewater Impact Fees 784,337 728,176 (56,161)
509 W/WW Rate Stabilization 3,656,154 3,583,117 (73,037)
510 Drainage Utility 226,866 261,462 34,596
511 Drainage CIP 1,278,716 1,259,096 (19,619)
520 Recreation Classes Fund 456,893 426,922 (29,971)
521 Arbor Daze Fund 53,602 53,771 169
530 Softball World Operations (354,267) (369,975) (15,709)
532 TSSC Debt Reserve 547,392 557,427 10,035
540 TSGC Operations 271,197 117,866 (153,331) Operating expenses
541 TSGC Debt (33,119) 55,479 88,598 Transfer for debt service payment:
542 TSGC Debt Reserve 1,036,475 1,046,408 9,933
543 TSGC CIP Fund 271,674 194,474 (77,200) Capital outlay
550 Parks @ Texas Star 481,594 536,810 55,215
552 TSSC CIP 16,246 16,251 5
601 Equipment Replacement 3,360,409 3,812,389 451,980 Debt proceeds
610 Health Insurance Fund 4,191,674 4,507,270 315,596 Premiums
615 Risk Management Fund 2,350,678 2,480,467 129,790 Transfer from other funds
701 Payroll Clearing Fund 544,627 577,337 32,711
705 Star Center Escrow 1,426,693 1,427,488 795
TOTAL 97,943,287 96,064,016
9
II. PERFORMANCE SUMMARY
Cash and Investment Balances - Full utilization of funds and minimization of idle cash is
necessary to pursue additional interest income revenues for the City. The average percent
of invested funds is 99% for FY2018. The monthly data below shows the continued
utilization of City funds through investments.
Consolidated Invested Percentage
FY2017 Cash Balance Invested
October $ 2,027,780 $ 81,485,060 98%
November $ (520,242) $ 82,837,659 101%
December $ (334,996) $ 83,827,193 100%
January $ 999,690 $ 89,650,953 99%
February $ 251,912 $ 91,880,291 100%
March $ (875,287) $ 80,966,247 101%
April $ (351,116) $ 79,235,914 100%
May $ 1,072,456 $ 79,981,669 99%
June $ (251,619) $ 79,904,706 100%
July $ 658,528 $ 78,474,378 99%
August $ 77,966 $ 76,921,247 100%
September $ 1,107,261 $ 75,036,144 99%
Average $ 321,861 $ 81,683,455 100%
Consolidated Invested Percentage
FY2018 Cash Balance Invested
October $ 974,775 $ 76,027,761 99%
November $ 134,970 $ 76,953,272 100%
December $ 284,007 $ 80,173,117 100%
January $ 976,677 $ 88,983,418 99%
February $ 163,361 $ 91,625,315 100%
March $ 396,261 $ 80,600,314 100%
April $ 1,025,759 $ 92,891,806 99%
May $ 453,758 $ 96,275,093 100%
June $ 171,974 $ 97,808,649 100%
July $ 1,753,285 $ 97,338,229 98%
August $ 126,294 $ 95,705,977 100%
September $ 493,796 $ 95,611,071 99%
Average $ 579,576 $ 89,166,169 99%
This graph shows how the City's funds continue to be invested, always in pursuit of 100%.
105.00%
1:1=====1:131=1=1:14=============
w 100.00% =�-
Cl)
c
> MIME ININIIM
� 95.00%
Min El
c ■w� ww�
2 90.00%
CD _MEM _
85.00% 1r.rr1
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Fiscal Year
10
Cash management performance - effectiveness of the cash management program has
been measured utilizing actual figures for FY2018 as shown below:
Average City's Number Estimated
90-day Invested Days in Interest
Month T-bill Yield Balance Month Earnings
October 1.13% $ 76,027,761 31 $72,966
November 1.25% $ 76,953,272 30 $79,062
December 1.37% $ 80,173,117 31 $93,286
January 1.44% $ 88,983,418 31 $108,828
February 1.63% $ 91,625,315 28 $114,569
March 1.70% $ 80,600,314 31 $116,374
April 1.84% $ 92,891,806 30 $140,483
May 1.89% $ 96,275,093 31 $154,541
June 1.89% $ 97,808,649 30 $151,938
July 1.99% $ 97,338,229 31 $164,515
August 2.07% $ 95,705,977 31 $168,259
September 2.15% $ 95,611,071 30 $168,957
Estimated earnings at benchmark yields $1,533,778
Actual FY2018 interest income (un-audited) $1,349,182
Earnings under benchmark ($184,596)
Annual Average 1.70% $ 89,166,169 $1,515,825
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 1.13% 1.05% -8
November 1.25% 1.09% -16
December 1.37% 1.16% -21
January 1.44% 1.27% -17
February 1.63% 1.34% -29
March 1.70% 1.50% -20
April 1.84% 1.63% -21
May 1.89% 1.74% -15
June 1.89% 1.83% -6
July 1.99% 1.91% -8
August 2.07% 1.94% -13
September 2.15% 2.02% -13
Average 1.70% 1.54% -16
During FY2018, the Federal Reserve had four rate hikes of 0.25% each in December
2017, March 2018, June 2018 and September 2018. The Federal Open Market Committee
continues to analyze whether to continue with the rate hikes. Some feel it will be another 3
hikes in FY2019 while others say only 2 hikes. The average yield on the City's portfolio has
increased from month-to-month. However, the benchmark 90-day T-bill rate continues to
surpass the City's portfolio rate. The portfolio's average for the year was 16 basis points
below the average annual T-Bill rate.
11
III. INTEREST INCOME SUMMARY
FY14 Audit $104,437
FY15 Audit $167,649
FY16 Audit $376,405
FY17 Audit $610,219
FY18 Unaudited $1,349,182
FY18 Budgeted $373,450
Interest Income Summary I
$1,600,000
$1,400,000 -
m
bio $1,200,000 -
cd
$1,000,000 -
$800,000 -
t) $600,000 -
$400,000 -
$200,000 -
$0
FY14 Audit FY15 Audit FY16 Audit FY17 Audit FY18 FY18 Budgeted
Unaudited
Interest income exceeded the budgeted level for fiscal year 2018. When compared to prior year,
interest earnings have more than doubled. This increase can be attributed to the Fed rate hikes
throughtout the year, investment of new debt proceeds, more funds to investment in, and the
reinvestment of proceeds from maturing securities into slightly higher yield investments.
12
Interest Income By Fund
For Fiscal Year Ending September 2018
# Fund FY 17 FY 17 Actual FY 18 FY 18 Actual Diff FY18
Budget Audited Budget (Unaudited) Bud.-Act.
101 General $35,000 $140,239 $140,000 $256,724 $116,724
201 Hotel/Motel 70 3,969 1,500 8,254 $6,754
202 Juvenile Case Fund 200 1,569 800 3,644 $2,844
210 1/2 Cent Sales Tax-Operations 3,000 9,131 3,500 17,281 $13,781
211 1/2 Cent Sales Tax-Reserve 50 354 50 672 $622
220 Crime Control&Prevention District 1,000 6,230 3,200 13,639 $10,439
221 Police Seized Asset Funds 1,000 2,445 1,250 4,358 $3,108
230 Police Drug DEA Awards 500 2,319 1,000 5,259 $4,259
231 Police Drug State Awards 200 1,039 400 2,237 $1,837
240 Car Rental Tax 15,000 57,029 35,000 137,758 $102,758
245 Glade Parks PID 0 0 0 0 $0
250 Glade Parks TIRZ 0 606 0 6,936 $6,936
260 Cable PEG Fund 0 3,777 2,400 9,327 $6,927
301 Developer's Escrow 0 19,386 5,000 36,792 $31,792
305 Streets CIP 3,654 5,903 2,500 94,316 $91,816
310 1/2 Cent Sales Tax-CIP 0 15,283 5,000 37,460 $32,460
320 General Capital Projects 0 8,997 5,000 20,251 $15,251
321 Redevelopment CIP Fund 2,188 1,303 16,223 26,218 $9,995
322 Midtown Development CIP 0 0 0 0 $0
323 Midtown Development Reserves 0 0 0 0 $0
325 Police Facility CIP 8 0 0 0 $0
330 Car Rental CIP 0 22,495 6,000 33,363 $27,363
401 GO Debt Service 750 13,712 6,000 36,975 $30,975
402 Star Center Debt 300 1,935 400 4,519 $4,119
403 Glade Parks Debt Service 0 0 0 0 $0
404 Midtown Development Debt Service 8,500 67,951 35,000 65,638 $30,638
410 1/2 Cent Sales Tax Debt Service 0 97 0 21 $21
501 Water and Wastewater 12,000 63,126 30,000 146,144 $116,144
502 Water and Wastewater CIP 16,862 28,654 16,057 88,166 $72,109
503 Water and Wastewater Reserve 0 0 0 0 $0
504 Service Center Fund 40 0 0 0 $0
505 Water Impact Fees 0 11,747 7,800 31,643 $23,843
508 Wastewater Impact Fees 0 4,129 1,500 10,793 $9,293
509 W/WW Rate Stabilization 2,000 13,896 3,500 44,530 $41,030
510 Drainage 80 1,777 850 2,836 $1,986
511 Drainage CIP 0 9,076 7,000 19,457 $12,457
520 Recreation Classes 200 1,993 400 5,303 $4,903
521 Arbor Daze 0 40 0 259 $259
530 Softball World 0 0 0 0 $0
531 Softball World Debt 0 0 0 0 $0
532 TSSC Reserve 400 3,398 600 7,665 $7,065
540 Golf Course 0 1,153 0 2,009 $2,009
541 TSGC Debt Service 20 211 20 392 $372
542 Golf Course Reserve 1,500 6,961 3,500 14,886 $11,386
543 TSGC CIP Fund 0 1,611 1,500 3,443 $1,943
550 Parks At Texas Star 200 3,322 1,500 6,989 $5,489
552 TSSC CIP 2,000 7,711 2,000 997 ($1,003)
601 Equipment Replacement 3,000 25,596 11,000 52,486 $41,486
610 Health Insurance 8,000 24,779 8,000 56,996 $48,996
615 Risk Mgmt/Worker's Comp 2,200 15,270 8,000 32,546 $24,546
Total $119,922 $610,219 $373,450 $1,349,182 $975,732
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 the
budgeted expectations due to higher reinvestment rates.
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.
13
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, but generally
consists of types of securities in which the City would invest. 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).
City of Euless
Collateral Analysis for
Cash &C.D. Investments
as of 09/30/18
Pledging Safekeeping Pledged Sec. Security Market Value Inv. Value Difference
Institution Location Description Par Value (w/FDIC Ins.) Cad- Mat'y(P & I) Over/(Under)
Frost Bank Federal Reserve $2,498,000 $2,725,263 $995,903 $1,729,360
Bank US Treas Note Payroll $10,957
8/31/2019 $498,000 Operating $817,591
Federal Reserve Insurance $167,355
Bank US Treas Note
8/31/2019 $2,000,000
Bank of Texas FDIC FDIC $0 $250,000 $41,000 $209,000
,.Qa.,e0;t419,/,‘A.Adia
Produced By:
Director of Finance
Reviewed by:
Assistant Director of Finance
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.
14
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's investment portfolio.
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 22, 2019 to discuss the Annual
Investment Report. Once the annual report is approved by the committee, it will be
forwarded to the City Council.
//1e44.1a_
Janina Jewell Jackie Theriot
Director of Finance Assistant Director of Finance
15
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, 2018. This report meets all requirements specified by the Public Funds Investment Act
and the Policy of the City of Euless.
Investment Officers
r . ,',4e4.0:teagicAveig
Janina Jewell
Director of Finance
Jackie Theriot
Assistant Director of Finance
�/t�L
� 111
Diana L Ayala
Budget and Treasury Manager
-R 0-1n__ d own
Scr
Ross Fairclo
Accountant II
16
Minutes —09/4/2018 6:30 pm Investment Committee Meeting
Members: Linda Martin, Mayor
Loretta Getchell, City Manager
Bob Freeman, Deputy City Manager
Janina Jewell, Director of Finance
Committee members present included Mayor Martin, Loretta Getchell, Bob Freeman, and Janina Jewell.
Non-committee present included Chris Barker,Assistant City Manager and Diana Ayala, Budget/Treasury
Manager.
Jewell presented the Third Quarter Investment Report for Fiscal Year 2018. 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, 2018. 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. Jewell stated that the presented investment portfolio
was in compliance with those strategies for the third quarter of Fiscal Year 2018.
Jewell then referred the committee to page 3 where she noted significant increases and decreases in fund
investments since March 31, 2018. She specifically noted that the decrease in the General Fund was due
to operating expenses and transfers to other funds, the increase in the Car Rental Fund was from rental
receipts,Street CIP's significant increase was from the March bond sale,significant Midtown development
was occurring so we were seeing decreases in their fund balance,Water and Wastewater CIP also had an
increase in fund balance from the bond sale proceeds and the Water and Wastewater Stabilization Fund
experienced an increase from the annual TRA settle up. Overall there was a $17M increase since the last
quarter mainly due to bond sale ($12.5M), TRA settle up ($1.6M), and car rental receipts ($3.2M). The
total market value of cash and investments was stated to be $97,943,287.
On page 4 Jewell pointed out that the portfolio was very liquid with 58% being invested in pools and 42%
in agencies. The portfolio shows its diversity in investment types on this page. She noted that the
weighted average yield on the portfolio was 1.83%and was up 33 basis points from the last quarter which
was 1.5%. On page 5 she noted the diversity of the portfolio by maturity and specifically cited that 94%
of the portfolio had a maturity of less than one year. The liquidity strategy was followed to meet cash
flow requirements for construction projects, payroll, debt service, and other operating expenses. The
WAM on the portfolio was 99.67 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 investment
portfolio as of June 30, 2018, of$97,771,313, which, if investments had been liquidated, the City would
have to show a gain of$22,267.
17
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 14 basis points under the 90 Day T-Bill benchmark. She noted
that this is common in an increasing market. 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, 2018.
Jewell then noted that the report was certified by City Investment Officers. Ms. Getchell made a motion
to approve the quarterly investment report. Mayor Martin seconded the motion and the vote was
unanimous.
Minutes for the June 12, 2018, Investment Committee Meeting were presented. Mr. Freeman motioned
to approve. Mayor Martin seconded the motion and the committee approved unanimously.
Ms. Jewell commented briefly on the economic outlook and the meeting was adjourned at 6:37 pm by a
motion from Mayor Martin and a second from Ms. Getchell. All voted in favor.
18
APPENDICES
City of Euless
Change in Portfolio Values by Asset and Investment Fund
For the Quarter Ending September 30,2018
Inv. CUSIP Maturity/ Par Market Value Market Value Change in Book Value Book Value Change in
Type Number Call Date Value 09/30/2018 06/30/2018 Market Value 09/30/2018 06/30/2018 Book Value
OPERATING FUNDS:
FHLMC 3134G9AC1 10/26/2018 500,000 499,825 498,810 1,015 496,627 496,310 316
FFCB 3133E11651 11/02/2018 1,000,000 999,550 997,580 1,970 1,000,000 1,000,000 -
FHLB 3130ACU69 11/15/2018 1,000,000 999,510 997,800 1,710 1,000,000 1,000,000 -
FHLMC 3134G8LV9 11/23/2018 1,000,000 998,630 995,700 2,930 986,695 984,959 1,736
FHLB 3130ACYC2 12/04/2018 1,000,000 999,320 997,900 1,420 1,000,000 1,000,000 -
FNMA 3135G0ZE6 06/20/2019 500,000 497,270 497,150 120 500,000 500,000 -
FHLB 3130ADBE1 01/02/2019 1,000,000 999,100 997,500 1,600 998,890 998,890 -
FHLB 3133782M2 03/08/2019 1,000,000 996,650 994,750 1,900 991,644 990,884 760
FFCB 3133EJAT6 03/29/2019 1,000,000 997,600 997,200 400 1,000,000 1,000,000 -
FHLMC 3137EADG1 05/30/2019 1,000,000 995,240 994,540 700 995,808 995,485 323
FHLB 3130ADMQ2 02/07/2019 1,000,000 998,760 997,700 1,060 999,100 999,100 -
FFCB 3133EJCW7 02/15/2019 1,000,000 998,400 998,100 300 1,000,000 1,000,000 -
FHLB 3130ADPW6 02/21/2019 1,000,000 998,860 998,100 760 1,000,000 1,000,000 -
FHLB 3130ADQE5 02/26/2019 1,000,000 998,740 998,300 440 998,530 998,530 -
FHLB 3130ADRY0 03/05/2019 1,000,000 1,000,930 998,100 2,830 998,500 998,500 -
FFCB 3133EJBZ1 05/08/2019 1,000,000 997,180 997,500 (320) 996,675 996,295 380
FHLB 3130AE6P0 04/26/2019 1,000,000 999,000 999,840 (840) 1,000,000 1,000,000 -
FHLB 3130AE6P0-2 04/26/2019 1,000,000 999,000 999,840 (840) 1,000,000 1,000,000 -
FFCB 3133EJKH1 07/11/2019 1,000,000 997,430 998,020 (590) 1,000,000 1,000,000 -
FHLB 3130AEAG5 05/03/2019 1,000,000 998,500 999,740 (1,240) 1,000,000 1,000,000 -
FHLB 313378QK0 03/08/2019 1,000,000 997,980 997,350 630 993,250 992,440 810
FFCB 3133EJPY9 05/21/2019 1,000,000 998,690 1,000,470 (1,780) 1,000,000 1,000,000 -
FHLB 3130AEDY3 12/13/2019 1,000,000 996,270 1,002,460 (6,190) 997,116 997,116 -
FFCB 3133EJSU4 12/26/2019 1,000,000 997,640 1,003,330 (5,690) 1,000,150 1,000,150 -
Purchases
FFCB 3133EJTS8 10/03/2019 1,000,000 997,980 - 997,980 1,000,000 - 1,000,000
FHLB 3130AENV8 07/23/2019 1,000,000 998,520 - 998,520 1,000,000 - 1,000,000
FHLB 3130AEPT1 07/30/2019 1,000,000 1,000,000 - 1,000,000 1,000,000 - 1,000,000
FHLB 3130A54A4 10/28/2019 1,000,000 987,330 - 987,330 962,965 - 962,965
FHLB 3130ACLX0 10/30/2019 1,000,000 989,030 - 989,030 966,024 - 966,024
FHLB 3130ADMS8 02/14/2020 1,000,000 991,460 - 991,460 978,287 - 978,287 1
Maturities
FNMA 3135G0L43 07/13/2018 500,000 - 499,850 (499,850) - 496,151 (496,151)
FHLB 3130ABVJ2 07/24/2018 1,000,000 - 999,800 (999,800) - 1,000,000 (1,000,000)
FAMCA 3132X0F55 07/25/2018 1,000,000 - 999,800 (999,800) - 1,000,000 (1,000,000)
FHLMC 3134G9X51 07/27/2018 1,000,000 - 999,400 (999,400) - 996,980 (996,980)
FHLMC 3134GABQ6 08/15/2018 1,000,000 - 999,500 (999,500) - 996,200 (996,200)
FHLB 3130ACJX3-2 09/28/2018 1,000,000 - 998,200 (998,200) - 992,581 (992,581)
Par total does not
Total Operating: include maturities $ 29,000,000 $28,924,395 $28,454,330 $ 470,065 $28,860,259 $28,430,571 $ 429,688
20
City of Euless
Change in Portfolio Values by Asset and Investment Fund
For the Quarter Ending September 30,2018
Inv. CUSIP Maturity/ Par Market Value Market Value Change in Book Value Book Value Change in
Type Number Call Date Value 09/30/2018 06/30/2018 Market Value 09/30/2018 06/30/2018 Book Value
CIP FUNDS
FHLB 3130ACMK7 10/16/2018 1,000,000 1,000,000 998,100 1,900 1,000,000 1,000,000 -
FFCB 3133EHX81 11/27/2018 1,000,000 999,120 998,000 1,120 1,000,000 1,000,000 -
FHLB 3130ADUL4 03/19/2019 1,000,000 998,800 998,900 (100) 1,000,000 1,000,000 -
FHLB 3130ADVE9 03/21/2019 1,000,000 998,710 999,460 (750) 999,400 999,400 -
FFCB 3133EJLN7 04/17/2019 1,000,000 998,500 998,470 30 1,000,000 1,000,000 -
FFCB 3133EJPU7 10/21/2019 1,000,000 998,100 1,000,650 (2,550) 1,000,000 1,000,000 -
Purchases
FHLB 3136G4KQ5 01/17/2020 1,000,000 986,100 - 986,100 959,169 - 959,169
Maturities
FHLB 3130ACJX3 09/28/2018 1,000,000 - 998,200 (998,200) - 1,000,000 (1,000,000)
Par total does not
Total CIP: include maturities $ 7,000,000 $ 6,979,330 $ 6,991,780 $ (12,450) $ 6,958,569 $ 6,999,400 $ (40,831)
RESERVE FUNDS:
FHLB 3130AC5H3 02/28/2019 1,000,000 996,390 994,360 2,030 1,000,000 1,000,000 -
FHLB 3130ABZZ2 08/28/2019 500,000 495,490 494,920 570 500,000 500,000 -
FFCB 3133EFWX1 01/28/2019 1,000,000 996,740 995,790 950 988,596 987,125 1,471
FHLB 3130ADUB6 12/19/2019 500,000 498,086 498,750 (665) 500,000 500,000 -
FHLB 313383VN8 09/13/2019 1,000,000 993,900 994,790 (890) 985,679 984,347 1,332
FAMCA 3132X0X63 06/07/2019 1,000,000 998,760 999,810 (1,050) 1,000,000 1,000,000 -
B of T-C 949763-RU-2 07/29/2019 41,000 40,988 40,980 8 41,000 41,000 -
Purchases
Maturities
FAMCA 3132X0SU6 08/15/2018 1,000,000 - 999,200 (999,200) - 1,000,000 (1,000,000)
Par total does not
Total Reserve: include maturities $ 5,041,000 $ 5,020,353 $ 6,018,600 $ (998,246) $ 5,015,275 $ 6,012,472 $ (997,196)
OVERNIGHT INVESTMENTS:
Beginning Bal Ending Bal
Texpool Balance 26,655,854 26,025,384 26,025,385 26,655,854 (630,469) 26,025,385 26,655,855 (630,470)
Purchases 8,308,420
Maturities 8,938,890
Texstar Balance 25,522,168 24,658,114 24,658,114 25,522,168 (864,054) 24,658,114 25,522,169 (864,054)
Purchases 8,088,506
Maturities 8,952,560
Escrows Balance 4,128,580 3,962,643 3,962,643 4,128,580 (165,937) 3,962,643 4,128,580 (165,937)
Purchases 18,084
Maturities 184,021
B of T Balance - - - - - - - -
Purchases -
Maturities -
Total Overnight: $ 54,646,140 $ 54,646,142 $ 56,306,602 $ (1,660,460) $ 54,646,142 $ 56,306,603 $ (1,660,461)
Par total does not
Total Portfolio include maturities $ 95,687,140 $95,570,220 $97,771,312 $ (2,201,091) $95,480,245 $97,749,046 $ (2,268,800)
21
O n V O n V 000 CONNW N n N N )O N_ n CO V co N
C CD V N CO V O O O CD V CD N. CO O CD lO CO N Of
V) O) V n N OD O O ' O O O V O W n e- n s- N V V s- W CD CO E-
O E M O 7 7 IA 7 O O O N L6 W 7 a l() (O O 7 7 O l0
U y N CO O) O IA 0 O O O d) d) OD GO 7 7 7 7 7 7 CO
CO p N ,- n n n LO O O O CO CO O) CO c M
Hw M CO- ,- N E- U) ri N N
C
O
49 49 49
CO CO N N N N Cl) N N N N N
J 0 0 0 0 J 0 0 0 0 0 0
0 0 0 0 O O NO o O O FO LSO O OI O O O F O
LL 0 0 (6 (6 (6 (6 (O (li N O N M N N N O l0 /0 /C (0 l0 (O
> > > > > > > > > > > >
E
E
2
a`
V, (R
o o o m is
C O C N O CO n n
U)
U 1.6ai
.u8
nNCD CD CO 7
N M -v
. H
N Opt Z OQ 0)0 Z Opt 0 N N Cl)
N r C_ LL C_ LL C_ O O O G d d N N y
N O Z(2.)• > > > 0 N y y >al0 'al0 0 N N N
co— W W W W F F F F F 1—
o
O O O co LO N O O O
a M7 co to
a OU) CD CO � N- ' ' ' n
jN OVD 6d@
U U
Q .°2c j
a
tn. to
Zig Zii3 Zig Zig Zig Zig 0
pV N- ON
NQ N N
V co co V C CD
U aNN N _ _ _ N
0 0 0 0 0 0 0
v M 2 3 n n c00
MN N N N N N N
N
N OD n V O n V O O O O N O OD N n N CO LO N n CO V co at
N y CD V N CO V O O O M n O cr M O CDLII CO LO CO
IE t j V N N OD O O ' O O O M M E- O er n E- N V V ,- W CD CO '4
Ln L N y C M6 7 7 IA 7 O O O N- OD (D N n In CD CD ,- 7 7 O O)
y 7 >O N (O O) O 10 O O O O OD OD OD M O) V V 7 7 7 - to
a p N ,- n n n 1O O O O d) d) d) d) O M
W a t U o C M M N M M M
O d N N
O O 7 m
Z.• O ER M (R
U 0 N (O N- V 0 n V O O O O O O O n N N IO N N- M 7 CO O
L LL u) V N O) V O O O O O O O Al- CO O CO IO CO 'O
U 7 n N W O u) ' O O O O O O O O) n N 7 7 O) OD CO O
co N M O V V (O V O O O O O O O N lO CO- CO V V O )n
N CD O O (O O O O O O O O O sa V V V V V V
O) N N ,- n n n (O O O O O O O O E- V
a> M M .- N .- M .- .- .- N- N- Mei
N N
69 d3 di
O O O M n N- O OD
O O O O n W CD N
N
U 49 O O O co co co a)
a d
a
u
VMM7MNE D 7
0a
▪ c
CO CD
- 1 U U U U U 7
006 Z Z Z Z 5 Z
0 N
O
''''' 0
O 0-, a, O O N N
0 CO CO O CO O n 7
O F O N M N M
m 0 O n h O O N
O O O O
N co co OD co co co OD
N N M M O O n CC
a
O N CO N
3' N- N- n Cr, CO C CD
> O O O O O O O
CL
co
a
v
a s 0) Q 0) Q s V) >co F a X a Lo U m 0) Q a`�i 0) Q w rn 0. in
>
g > 0 O) > 0 O) N H Z a 7 J Y > 0 0 N > > 0 O) N > > O)
0
< co < co O) W W )O 0 7 £ Q co
0 Q CO < U O)
0Z 0 o0 Om < < CD < a _ 0
M M M M M M M VJ C 0
M M M M M M CO N C C C
_N a a "00 •CU
A > 5_ .5 R
0 0 ° 2
—~ Q Q Q N N N O m m m m m ¢ m O p0_ y
CO CO CO CO CO X U 0 J J J J J U CO X
O) N N N N U LI
LL 2 2 S 2 Z 2 N Q) N
H H H H H H W LL LL LL LL LL LL LL W H F
22
N V V 0 N. V V CO V O 0 0 0 - 0 CO CO CO
y a, M C▪ C') C N O C N M C) C) C) COC) N O O
D N O O C) W O N M CC
U co N- N V co CO M V
y co 7 N O O CO 7 M O O 0 0 0 0 0 0 Cr) r
ON j CO N N N M O 7 O O Cp.. O O O O Lf)
C CO N CO' N N V N- .- .- .- - N
F N
D U) U) U) U) U) U) U) co U) to
O O W O
_ _
0) 0 0 0 0 y O O O O _ O
2 0 0 0 0 0N N N N CO N N co
C 0 0 0 0 0 0 O O O
N N
LL M> > > > > >
E
E
0
d
UN UN UN Uj Uj Uj Uj U3
O O O O 1))
O u-5
O 00 N oi
U W LO W
_y
O ._, M
CO CO CO CO CO CO CO 69
0 0)0 .g0 0) 0.g 00 C 7
N ..+ E E = C E = C 7
N C (n > S > 2
co 0 CO O)
0 0 r 0
N
y v0) O ' O .— r M
` 2 N LO N .— N. N— CO
0 0 U N. CO N O
0 ? 7 7 M
Q d
Uj Uj Uj Uj Uj Uj Uj 69. 69 U! U! 69 U! U3
0 0 0 0 0 0 0 0
cO O N O O O O O
0
0 ,) LO LO N 0 O N N LO
0 CO N CO 0 0 N N N
O a O
0
0 0 0 0 0 0 0 0 0
F �, N N CO O N N N O O
C m
} 2
W
d >_
.) N 7 7 0 N. 7 7 CO 7 N 0 0 0 0 0 0 CO M
y 2 A ?T CO N N W 7 N CO N 0 0 W 0 0 0 r
0 7 N c M N Cr) CO 0 CO N- N CO 0 0 0 7 .- 0 0 CO O
3 CJ v O co r; v ri 7 cc v cc 0 0 0? co 0 o co
W 2 s 0 > M 7 LO 0 O CO 7 M 0 W 0 0 W W 0 0 Cr) CO
C .0 0 o C 7 N N N M 0 N- 7 O O O) O O O Cr) LO
P. a
CO' N CO' N N 7 .- N
T O m N
r 3 Ui U3
0 )) N
c LL N 7 7 0 N. 7 7 co 7 O O O O O O O O N
0 N-
N co CO N W O coc .— N COco O 0 O O 0 0 0 0 0 0 0 O V
O CO N- N 7 M 7 C) 7 O O O O O O O O L()
N C co 7 N 0 CO CO 7 M 0 0 0 0 0 0 0 0 0 N-
O_
IL To 7 N N N co O N— N O 0 0 O O O O N
c7 N c7 N N 7 .- .- .- .- .- .- .- Lf)
N
Ui UN
O N 0 0 7 0 0 O W
Co O O O CO CO O O O
C 69 W O O W W O O W
d N O) O 0 O) O 0 O O)
d
N 0 O O N O CO N
>.'7...), M CD CO 7 N N 7 N
@ (pN M N N 7 CO N
F 2 a
N- N. N.
C 0 M U U Ln U U U
0 OZ Z N Z Z Z
7 7 co
0 0 0
co co co co co co co co
0 M 7 N NN N N N W
N N N N N
C ❑ II: r N. N. W N W W
2 0 0 0 0 0 0 O O
O N. r CO N. r r r CO
Ln
L
C 0 W 7 N W N O CO
@ - N N M
o 0
L..)=
O O O O O O .O O
N
O
a - 0) 0. 0) 0. 0) 0. J > W x 0 Nn -) -)
> j -) C (I) C (/0) C 00) O m O O < O 0 0
U Z Lo 0 N 7 7 N 0 0
CO CO CO CO CO CO CO CO
CO CO CO CO CO CO CO CO
0
C• n U U
c >' 00 00 00 m m m 3 3 3 Q Q
— ~ 0 0 0 x x x 0 0 0 < 0 0 2 2 0 0 0 F
O 0 0 0 0 0 N N N Z S < S S < S 1 0
I— I— I— I— I— I— W W W LL LL LL W W W W W i-
23
23
co
a)
-c
m
L 0
o O
o Cl)
L
2 Q
a) u) u)
co 0 N O E -
_1 O — L L .co_
E � =9 0 aa)) 5 Z
>' CO 3a
o L LU L � ,U
E4= co
U. U0H 2T0it
,o gU —, c6 o_ vo
�' y J O C u)
I < 000 5 — m
E ,co uu01— 2Io �
VlN 0 C c
Vl i 0. � cB c6
v) c a >. u) m m c
a, c Q o a)
Lu o u) a) •o " J Y
U
o E 0-
i ~ CO O V) O
V ao Z I 0) H ov
E
E L co
\ itr^
vI
a) --
co
Q co co ° 0
• U z E
UUU > � v)
O 0
O o U) cn
0_ 0_ co X
a)
O O ~ ~
U' U' p i— 00 O
Y
0 0 C x X C
o J J m H m
L O L O
(6 0 ,_ a5 o 1-
a)• ocoiii a
a � co
1— I-
24
CITY OF EULESS
FINANCE POLICY
DATE: June 26, 1990 PREPARED BY:Finance Department
REV: January 23, 2018 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 comprehensive annual 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.
1. 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 compliment 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
27
established by the 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
28
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:
1. 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 issued by a broker or depository
institution that has its main office or branch in the State of Texas and is:
a. guaranteed or insured by the Federal Deposit Insurance Corporation or its
successor or the National Credit Union Share Insurance Fund or its successor;
b. secured by obligations that are described in the Tex. Gov't. Code Sec. 2256.009(a)
that has a market vaue of not less that the principal amount of the certificates but
excluding those mortgage backed securities as described by Tex. Gov't Code Sec.
2256.009(b); or
c. secured in accordinance with Chapter 2257 or in any other manner and amount
provided by law for deposits of the City of Euless
3. Fully collateralized* repurchase agreements having a defined termination date.
("Repurchase agreement" means a simultaneous agreement to buy, hold for a specified
time, and sell back at a future date obligations described by Section V. A. of this Policy,
at a market value at the time the funds are disbursed of not less than the principal
amount of the funds disbursed. The term refers to direct security repurchase
agreement and a reverse security repurchase agreement.) These investments must be
in accordance with a master repurchase agreement approved by the Investment
Committee;*(see definition of collateral, Section VII).
4. Investment Pools as authorized by Texas Government Code 2256. 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. A public funds
investment pool that uses amortized cost or fair value accounting must mark its
portfolio to market daily and, to the extent reasonably possible, stabilize at a $1 net
asset value, when rounded and expressed to two decimal places. In addition, a public
funds investment pool that uses amortized cost shall report yield to its investors in
accordance with regulations of the Federal Securities and Exchange Commission. The
pool must provide to the investment officer or authorized representative of the entity an
offering circular or other similar disclosure instrument that contains, at a minimum, the
following information:
a. the types of investments in which money is allowed to be invested;
b. the maximum average dollar-weighted maturity allowed, based on the stated
maturity date, of the pool;
c. the maximum stated maturity date any investment security within the portfolio
has;
30
d. the objectives of the pool;
e. the size of the pool;
f. the names of the members of the advisory board of the pool and the dates
their terms expire;
g. the custodian bank that will safekeep the pool's assets;
h. whether the intent of the pool is to maintain a net asset value of one dollar and
the risk of market price fluctuation;
i. whether the only source of payment is the assets of the pool at market value or
whether there is a secondary source of payment, such as insurance or
guarantees, and a description of the secodary source of payment;
j. the name and address of the independent auditor of the pool;
k. the requirements to be satisfied for an entity to deposit funds in and withdraw
funds from the pool and any deadlines or other operating policies required for
the entity to invest funds in and withdraw funds from the pool;
I. the performance history of the pool, including yield, average dollar weighted
maturities, and expense ratios; and
m. the pool's policy regarding holding deposits in cash.
To maintain eligibility to receive funds from and invest funds on behalf of an entity
under this chapter, an investment pool must furnish to the investment officer or
other authorized representative of the entity:
a. investment transaction confirmations; and
b. a monthly report that contains, at a minimum, the following information:
1. the types and percentage breakdown of securities in which the pool is
invested;
2. the current average dollar-weighted maturity, based on the stated
maturity date, of the pool;
3. the current percentage of the pool's portfolio in investments that have
stated maturites of more than one year;
4. the book value versus the market value of the pool's portfolio, using
amortized cost valuation;
5. the size of the pool;
6. the number of participants in the pool;
7. the custodian bank that is safekeeping the assets of the pool;
8. a listing of daily transaction activity of the entity participating in the pool
9. the yield and expense ratio of the pool, including a statement regarding
how yield is calculated;
10.the portfolio managers of the pool; and
11.any changes or addenda to the offering circular.
5. No load money market mutual fund, registered with and regulated by the Securities
Exchange Commission, which complies with federal Secruities 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
Securites Exchange Act of 1934 or the Investment Advisor Act of 1940.
31
6. 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 Contigency, Water & Wastewater
Emergency, and the Car Rental Tax Reserve Funds may be invested in maturities not
exceeding five (5) years.
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:
1. 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.
32
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. *(see definition of collateral, Section VII)
5. The investment officer will obtain at least three competitive bids from approved brokers
on our broker/dealer list before making an investment transaction. 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 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" dealears 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
33
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 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 orgaization 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, collateralization 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 indepenent 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.
34
2. Eligible securities that are compliant with Government Code Chapter 2257 Collateral for
Public Funds Section 2257.002.
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. The original copy of all safekeeping receipts shall be delivered to the City.
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;
35
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.
36
Broker/Dealer Review and Approval
The City list of seven brokers currently it includes First Tennessee, Hilltop Securities, Vining
Sparks, Duncan Williams, Samco Capital, Mutual Securities, 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, it is recommend that the committee approve the
following list of broker dealers. We have deleted Mutual Securities and added Great Pacific
Securites in order to follow our broker. Mutual Securities failed to reach out to the City once
our broker left the firm. The recommended broker/dealer list for 2019 includes:
Hilltop Securities - Linda Callaway
Vining Sparks - Mike Smith
Duncan Williams - Patrick Boyer/Doug Boyer
Samco Capital Markets - Robert Phillips
First Tennessee - Zach Brewer
Great Pacific Securities - Michael Swan
Financial Northeastern Securities, Inc. - Samuel E. Vaughan
37
Economic News