HomeMy Public PortalAboutA 2015-02-03LPFAThis Agenda contains a, brief general description of each item to be considered. Copies of the Staff
reports or other written documentation relating to each item of business referred to on the Agenda are on
file in the Office of the City Clerk and are available for public inspection. A person who has a question
concerning any of the agenda items may call the City Manager at (310) 603 -0220, ext. 200.
Procedures for Addressing the Council
IN ORDER TO EXPEDITE CITY COUNCIL BUSINESS, WE ASK THAT ALL PERSONS WISHING TO
ADDRESS THE COUNCIL FILL OUT A FORM PROVIDED AT THE DOOR, AND TO TURN IT IN TO
THE CITY CLERK PRIOR TO THE START OF THE MEETING. FAILURE TO FILL OUT SUCH A FORM
WILL PROHIBIT YOU FROM ADDRESSING THE COUNCIL IN THE ABSENCE OF THE UNANIMOUS
CONSENT OF THE COUNCIL.
AGENDA ITEMS ON FILE FOR CONSIDERATION
AT THE REGULAR MEETING OF
THE LYNWOOD PUBLIC FINANCING AUTHORITY
TO BE HELD ON FEBRUARY 3, 2015
6:00 P.M.
COUNCIL CHAMBERS
11330 BULLIS ROAD, LYNWOOD, CA 90262
MARIA T. SANTILLAWBEAS
VICE PRESIDENT
AIDE CASTRO
MEMBER
CHIEF ADMINISTRATIVE OFFICER
J. ARNOLDO BELTRAN
SECRETARY
MARIA QUINONEZ
1. CALL TO ORDER
2. ROLL CALL OF MEMBERS
Salvador Alatorre
Aide Castro
Edwin Hernandez
Maria T. Santillan -Beas
Jose Luis Solache
JOSE LUIS SOLACHE
PRESIDENT
Of
JAN 2 9 2015
CITY OF LYNWOOD
QWN;S_
SALVADOR ALATORRE
MEMBER
EDWIN HERNANDEZ
MEMBER
FINANCE DIRECTOR
AMANDA HALL
CITY TREASURER
YOLANDA RODRIGUEZ - GONZALEZ
AUTHORITY COUNSEL
DAVID A. GARCIA
OPENING CEREMONIES
3. CERTIFICATION OF AGENDA POSTING BY SECRETARY
4. GOVERNMENT CODE SECTION 54954.3
• Members of the City Council are also members of Lynwood Public Financing
Authority, which is concurrently convening with the City Council this evening and
each Council Member is Paid an Additional Stipend of $100 for Attending the
Lynwood Public Financing Authority Meeting
PUBLIC ORAL COMMUNICATIONS
(Regarding Agenda Items Only)
NON - AGENDA PUBLIC ORAL COMMUNICATIONS
THIS PORTION PROVIDES AN OPPORTUNITY FOR THE PUBLIC TO ADDRESS THE
LYNWOOD PUBLIC FINANCING AUTHORITY ON ITEMS WITHIN THE JURISDICTION OF THE
LYNWOOD PUBLIC FINANCING AUTHORITY AND NOT LISTED ON THE AGENDA. IF AN
ITEM IS NOT ON THE AGENDA, THERE SHOULD BE NO SUBSTANTIAL DISCUSSION OF
THE ISSUE BY THE LYNWOOD PUBLIC FINANCING AUTHORITY, BUT LYNWOOD PUBLIC
FINANCING AUTHORITY MEMBERS MAY REFER THE MATTER TO THE STAFF OR
SCHEDULE SUBSTANTIVE DISCUSSION FOR A FUTURE MEETING.
(The Ralph M. Brown Act, Government Code Section 54954.2 (a).)
CONSENT CALENDAR
All matters listed under the Consent Calendar will be acted upon by one motion affirming
the action recommended on the agenda. There will be no separate discussion on these
items prior to voting unless members of the Authority or staff request specific items be
removed from the Consent Calendar for separate action.
5. MINUTES OF PREVIOUS MEETINGS:
Regular Meeting — November 4, 2014
6. TREASURER'S QUARTERLY INVESTMENT REPORT
Comments:
The purpose of this item is to have the Honorable President and Members of the Lynwood
Public Finance Authority review the Treasurer's Quarterly Investment Report as required
by State Statutes. (CT)
Recommendation:
It is recommended that the President and Members of the Lynwood Public Finance
Authority receive and file the attached Quarterly Investment Report. The information
provided in this report highlights the investment activity for the 2nd quarter ending
December 31, 2014.
7. TREASURER'S INVESTMENT POLICY STATEMENT
Comments:
The investment policies and practices of the Lynwood Public Finance Authority of the City
of Lynwood are based on state laws and principles of prudent money management. This
statement is intended to provide guidelines for the prudent investment of idle and surplus
cash, while meeting the short and long -term cash flow demands and it is submitted
annually for City review. (CT) _
Recommendation:
It is recommended that the President and Members of the Lynwood Public Finance
Authority adopt the attached resolution entitled: "A RESOLUTION OF THE LYNWOOD
PUBLIC FINANCE AUTHORITY OF THE CITY OF LYNWOOD APPROVING THE
TREASURER'S INVESTMENT POLICY STATEMENT ".
ADJOURNMENT
THE LYNWOOD PUBLIC FINANCING AUTHORITY MEETINGS WILL BE POSTED AS
NEEDED. THE NEXT MEETING WILL BE HELD IN THE COUNCIL CHAMBERS OF CITY HALL,
11330 BULLIS ROAD, CITY OF LYNWOOD, CALIFORNIA.
Q OY YN
AGENDA STAFF REPORT
DATE: February 3, 2015
TO: Honorable President and Members of the Lynwood Public
Finance Authority
APPROVED BY: J. Arnoldo Beltran, Chief Administrative Officer
PREPARED BY: Maria Quinonez, Secretary
Alicia Duarte, Executive Assistan to the City Clerk
SUBJECT: Lynwood Public Finance Authority Minutes
Recommendation:
Staff recommends the Lynwood Public Finance Authority approve the following
minutes:
• November 4, 2014
Background: N/A
Discussion & Analysis: N/A
Fiscal Impact: N/A
Coordinated With: N/A
MEM
6
LYNWOOD PUBLIC FINANCE AUTHORITY
REGULAR MEETING
November 4, 2014
The Lynwood Public Finance Authority of the City of Lynwood met in a regular meeting
in the Council Chambers, 11330 Bullis Road on the above date at 6:35 p.m.
President Castro presiding.
Members Alatorre, Santillan -Beas, Solache, Hernandez and Castro were present.
Also present were Chief Administrative Officer Beltran, Authority Counsel Garcia,
Secretary Quinonez and City Treasurer Rodriguez.
Secretary Quinonez announced that the Agenda had been duly posted in accordance
with the Brown Act.
Item #4. GOVERNMENT CODE'SECTION 54954.3
City Clerk Quinonez announced as required by Government Code Section 54954.3, that
Members of the City Council are also Members of the Lynwood Public Finance
Authority, which is concurrently convening with the City Council and each Council
Member is paid an additional stipend of $100 for attending the Lynwood Public Finance
Authority Meeting.
PUBLIC ORAL COMMUNICATIONS
(Regarding Agenda Items Only)
NONE
NONE AGENDA PUBLIC ORAL COMMUNICATIONS
NONE
CONSENT CALENDAR
It was moved by Council Member Alatorre, seconded by Mayor Castro to approve the
consent calendar and receive and file staff reports.
AYES: COUNCIL MEMBERS ALATORRE, SANTILLAN -BEAS, SOLACHE,
HERNANDEZ AND CASTRO
NOES: NONE
ABSTAIN: NONE
ABSENT: NONE
1
Item #5. MINUTES OF PREVIOUS MINUTES
Regular Meeting — January 21, 2014
Regular Meeting — February 4, 2014
Regular Meeting — May 6, 2014
Regular Meeting — August 5, 2014
Item #6. TREASURER'S QUARTERLY INVESTMENT REPORT
Report received and filed.
CLOSED SESSION
NONE
ADJOURNMENT
Having no further discussion, it was moved by Member Solache, seconded by Member
Santillan -Beas, and carried to adjourn the regular meeting of the Lynwood Public
Finance Authority meeting at 6:37 p.m.
Aide Castro, President Maria Quinonez, Authority Secretary
OFD N
O
DATE:
TO:
AGENDA STAFF REPORT
February 3, 2015
Honorable President and Members of the Public Finance Authority
APPROVED BY: J. Arnoldo Beltran, City Manager
PREPARED BY: Yolanda Rodriguez, City Treasurer
Sheila Harding, Deputy City Treasurer
SUBJECT: Treasurer's Quarterly Investment Report
Recommendation:
It is recommended that the President and Members of the Lynwood Public Finance
Authority receive and files the attached Quarterly Investment Report. The following
information provided in this report highlights the investment activity for the 2nd quarter
ending December 31, 2014.
Background:
Due to the crisis caused by the Orange County investment pool, the State Legislature in
1995 enacted SB564 and SB866. These laws were enacted as State Statutes to impose
certain mandates regarding investments with public funds. The statutes have imposed
the following mandates:
1. Annual adoption of an Investment Policy that incorporates changes mandated
by the State.
2. Quarterly Investment Reports presented to the Legislative Body or Board
Members.
3. Restriction on the use of certain investment instruments.
The purpose of the Treasurer's report is to update the City Council and the public of the
status of the City's cash balances and investments. This report includes reconciliation
between cash and investment balances, a schedule of all investments, and a report
providing information on all investment types, costs, interest rates, maturity dates and
current market value.
AGENDA
!TEED
(P
The market value of securities fluctuates, depending on how interest rates perform.
When interest rates decrease, the market value of the securities in the City's portfolio
will likely increase and when the interest rates increase, the market value of the
securities will likely decrease. The City's practice is to buy and hold investments until
maturity so changes in the market price do not affect the City's investment principal.
Short-term excess cash is primarily invested in the Local Agency Investment Fund
(LAIF) administered by the State Treasurer. LAIF is a high quality investment available
in terms of safety, liquidity and yield. The City's cash and investment portfolio is
sufficiently liquid to meet expected expenditures for the coming six months.
The majority of property tax revenues are received from the County in December and
April. The vast majority of cash held by the City is deposited into the Local Agency
Investment Fund and can be withdrawn at any time.
There are eight petty cash funds totaling $3,300.00 currently being used by various
departments. There are two change funds totaling $640.00; Water Billing $600.00 and
Recreation $40.00.
The total amount of Non Sufficient Funds (NSF) from customers for the 2nd quarter
reporting is $10,827.68 of which, $5,474.26 has been collected. The remaining balance
of Non Sufficient Funds for the 2nd quarter outstanding is $5,353.42.
The market valuation is provided by FTN Main Street Capital Advisors and all of the
investments are in compliance with California Government Code Sections 53600 et seq.
and the City's investment policy.
Reports prepared by FTN Main Street Capital Advisors are as follows:
• Portfolio Summary
• Investment Policy Compliance Report
• Historical Earnings & Book Rate
• Portfolio Summary - Management
• Portfolio Details — Investments Report
• Inventory by Maturity Report
• Credit Rating Report
• Interest Earnings Summary
• Interest Earnings Report
• Monthly Economic & Market Update Report
Fiscal Impact:
The action recommended in this report will not have a fiscal impact on the City.
CITY OF LYNWOOD
QUARTERLY REPORT
December 31, 2014
MASTER SUMMARY
AVERAGE
BOOK PERCENTAGE ( %) DAYS TO
DESCRIPTION VALUE PORTFOLIO MATURITY
INVESTMENTS* 27,265,426.93 100%
CERTIFICATE OF DEPOSIT /TIME DEPOSIT/
MONEY MARKET /CUSTODY HOLDINGS 6,915,597.19
CHECKING ACCOUNT
9,260,276.88
TOTAL AVERAGES $ 16,175,874.07
TOTAL INVESTMENTS & AVERAGES $ 43,441,301.00
Yolanodriguez 1 certify that this report accurately reflects all pooled
City T asurer investment policy statements adopted by the City Council
on August 15, 1995. A copy of this policy is available at
the office of the City Clerk. The Investment Program herein
shown provides sufficient cash flow liquidy to meet 3 to 6
months estimated expenditures.
*See Report Prepared by Main Street Capital Advisors
December 2014
CITY OF LYNWOOD
QUARTERLY INVESTMENT REPORT
December 31, 2014
Schedule of City Cash & Investments: This schedule provides information on the cash and
investments managed by the City.
Money Market /Certificate of Deposit (CD)
JP Morgan Chase - Section 108 MMA
JP Morgan Chase - Money Market Account
JP Morgan Chase - Parking Enforcement
US Bank - Certificate of Deposit
US Bank - Fagade Improvement
US Bank - City of Lynwood
Total
Demand Deposits
General Account
US Bank
- Economic Development
US Bank
- Housing Authority A
US Bank
- Housing Authority B
US Bank
- City HCDA
US Bank
- City Home Program
US Bank
-Taxable Tabs
US Bank
- Lyn Tr. Center Unf Wrkr
US Bank
- Money Market Account
US Bank
- US Dept. of HUD /Section 108
US Bank
- RORF Successor Agency
US Bank
- Lynwood Disaster Relief Fund
US Bank
- Settlement Remittance Fund
Total
$
$ 4,793,600.26
$
77,295.82
$
Quarterly
Interest Credit
18,000.09
Balance
104.79
Interest
34,144.00
F/Y to Date
$
3,848,941.21
$
481.53
$
963.01
$
1,857,379.88
$
232.37
$
464.72
$
1,064,814.34
$
130.01
$
219.74
$
81,839.91
$
20.42
$
128.56
58,086.52
$
0.71
$
1.42
$
4,535.33
$
19.34
$
19.89
$
6,915,597.19
$
884.38
$
1,797.34
$ 4,793,600.26
$
77,295.82
$
9,717.41
$
18,000.09
$
104.79
$
34,144.00
$
1,834,809.45
$
2,791.24
$
49,028.48
$
170,048.96
$
1,672,735.27
$
5,000.00
$
593,001.11
$
9,260,276.88
Money Market Fund - A Money Market fund is a type of mutual fund that invest in short term debt securities of agenies
of the U.S. Government banks, corporations and U.S. Treasury Bills. Some advantages of a money market fund
over savings and CDs are high liquidity, low risk, and competive yields. The City currently has a total of five MMA
accounts within the City's investment portfolio.
Certificate of Deposit - A Certificate of Deposit or CD, is a time deposit. They are similar to savings
accounts in that they are insured and relatively risk free. They are different from savings accounts in that
they usually are for a fixed term and a fixed interest rae. CDs are inteded to be held until maturity, at which
time, the money may be withdrawn together with the accrued interest. The City currently has one CD
within the City's investment portfolio
Demand Deposits - Also known as "cash in the bank ", this is the balance of the City's checking account with
US Bank, from which virtually all obligations are paid.
CITY OF LYNWOOD
QUARTERLY REPORT
December 31, 2014
LAIF Daily .23 %- Quarter.23%
Interest Date
Issuer Investment Balance Received Received
State of California LAIF $ 17,002,577.62 13,146.91 10/15/2014
Local Agency Investment Fund (LAIF):
The Local Agency Investment Fund is managed by the State Treasurer's Office Investment Division through the Pooled Money
Investment Account (PIMA). The LAIF allows cities, counties and special districts to place money in a major portfolio and to use
the expertise of their Investment Division staff, with no additional cost to taxpayers. Participating agencies can withdraw their funds
from the LAIF at any time. The State Treasurer invests money safely and prudently while minimizing the service costs and maximizing
the service costs and maximizing the investment yields. These investments help manage cash flow and enhance financial security.
The interest earned from the LAIF is distribued quarterly. (See Chart Below) ,
Treasuries
0.
Mortgages
Agencies
CDs /BNs
Time Deposits
Now Account 0.
Commercial Paper
Corporate Bond: 0.
Loans
Pooled Money Investment Account
Portfolio Composition
60.3 Billion
12/31/2014
0 0.2 0.4 0.6
!mber 2014
0.8 1
47.45%
17%
6.98%
16.51%
I
8.35%
00
JW-
9.07%
00%
11.47%
0 0.2 0.4 0.6
!mber 2014
0.8 1
INVESTMENTS
*Money Market Funds
LAIF
Corporate Notes
Federal Agency
Treasury Coupon Securities
Federal Agency - Callable
CD -FDIC
TOTAL
*Money Market Fund held at Goldman Sach
CITY OF LYNWOOD
QUARTERLY REPORT
31- Dec -14
PORTFOLIO SUMMARY
PAR
VALUE
MARKET BOOK
VALUE VALUE
$ 164,849.31 $ 164,849.31 $ 164,849.31
$ 17,002,577.62 $ 17,002,577.62 $ 17,002,577.62
$ 1,000,000.00 $ 999,600.00 $ 1,000,756.65
$ 2,000,000.00 $ 1,999,440.00 $ 1,996,782.52
$ 1,500,000.00 $ 1,494,293.75 $ 1,488,694.88
$ 1,000,000.00 $ 992,500.00 $ 999,902.75
$ 4,598,000.00 $ 4,613,687.10 $ 4,596,272.32
$ 27,265,426.93 $ 27,266,947.78 $ 27,249,836.05
Schedule of City Cash & Investments: This schedule provides information on the cash and investments
managed by the City.
Time Deposit /MM /Certificate of Deposit
Interest
Balance
Maturity Date
JP Morgan Chase (Section 108)
$
3,848,941.21
N/A
JP Morgan Chase - Money Market Account
$
1,857,379.88
N/A
JP Morgan Chase - Parking Enforcement
$
1,064,814.34
N/A
US BANK - CD
$
81,839.91
March -14
US Bank - Fagade Improvement
$
58,086.52
N/A
US Bank - City of Lynwood
$
4,535.33
N/A
TOTAL
$
6,915,597.19
Corporate Checking Accounts
Balance
General Account
$
4,793,600.26
US Bank - City HCDA
$
104.79
US Bank - City Home Program
$
34,144.00
US Bank - Economic Development
$
77,295.82
US Bank - Housing Authority A
$
9,717.41
US Bank - Housing Authority B
$
18,000.09
US Bank - Lyn Tr. Center Unf Wrkr
$
2,791.24
US Bank - City of Lynwood
$
49,028.48
US Bank - RORF Successor Agency
$
1,672,735.27
US Bank - Taxable Tabs Housing Proj.
$
1,834,809.45
US Bank - US Dept. of HUD /Section 108
$
170,048.96
US Bank - Lynwood Disaster Relief Fund
$
5,000.00
US Bank - Settlement Remittance Fund
$
593,001.11
TOTAL
$
9,260,276.88
December 2014
Interest
$
481.53
$
232.37
$
219.74
$
20.42
$
0.71
$
19.34
S
974.11
CITY OF LYNWOOD
QUARTERLY REPORT
31- Dec -14
BALANCES PER MONTH
2014
Jan - Mar Apr-June JuIV - Sept Oct - Dec
Investments Managed by Main Street
$
26,162,479.32
$
27,265,426.93
$ 29,228,247.54
$ 23,622,158.05
Cash & Investments
$
16,573,499.69
$
16,175,874.07
$ 13,735,651.60
$ 16,246,590.14
Per Treasurer's Reports
$
42,735,979.01
$
43,441,301.00
$ 42,963,899.14
$ 39,868,748.19
BALANCES PER STATEMENT
DEMAND DEPOSIT ACCOUNTS
*Debits & Credits may include funds transferred to and from Laif
'Oct-14
Balances
per Statement
Beginning
Credits
Debits
Ending
US Bank -
General Account*
$
1,826,290.19
$
3,865,284.06
$
3,846,650.10
$
1,844,924.15
US Bank -
Economic Development
$
77,003.99
2,108.04
7,343.22
$
71,768.81
US Bank -
RORF - Successor Agency
$
2,038,140.63
$
1,757.11
$
344,052.04
$
1,695,845.70
Nov -14
Balances
per Statement
Beginning
Credits
Debits
Endin
US Bank -
General Account*
$
1,844,924.15
$
4,815,782.00
$
4,157,023.32
$
2,503,682.83
US Bank -
Economic Development
$
71,768.81
$
-
$
-
$
71,768.81
US Bank -
RORF - Successor Agency
$
1,695,845.70
$
-
$
3,875.91
$
1,691,969.79
Dec -14
Balances
per Statement
Beginning
Credits
Debits
Ending
US Bank -
General Account
$
2,503,682.83
$
6,443,063.10
$
4,153,145.67
$
4,793,600.26
US Bank -
Economic Development
$
71,768.81
$
527.01
$
-
$
72,295.82
US Bank -
RORF - Successor Agency
$
1,691,969.79
$
-
$
19,234.52
$
1,672,735.27
*Debits & Credits may include funds transferred to and from Laif
CITY OF LYNWOOD
BOND REPORT
31- Dec -14
December 2014
PURCHASE
PAR
MARKET
TRUSTEE ACCOUNTS
DATE
VALUE
VALUE
Lynwood Public Financing Authority
Oct -99
$1,310,000.00
0.00
Tax Allocation Bonds, Series 1999, Alameda
U S Bank Coporate Trust Services
Lynwood Public Financing Authority
Aug -03
$8,630,000.00
1,438,664.76
Lease Revenue Refunding Bonds 2003 A
US Bank Coporate Trust Services
Lynwood Public Financing Authority
Oct -99
$10,235,000.00
0.00
Tax Allocation Bonds, Series 1999,Series A
U S Bank Corporate Trust Services
Lynwood Public Financing Authority
Oct -99
$3,425,000.00
0.00
Tax Allocation Bonds, Series B
U S Bank Corporate Trust Services
Lynwood Public Financing Authority
Oct -99
$3,760,000.00
0.00
Lease Revenue Bonds, Series 1999
US Bank Corporate Trust Services
Lynwood Utility Authority
Nov -03
$6,930,000.00
0.00
Series 03 COI ACCOUNT
BNY Trust Company
Lynwood Utility Authority
May -09
$9,755,000.00
377,697.01
Enterprise Refunding Revenue Bond, 2008 Series A
BNY Trust Company
Lynwood Untility Authority
Nov -08
$5,732,000.00
573,500.00
Enterprise Revenue Bond 2009 Series A
BNY Trust Company
Lynwood Public Finance Authority
Lease Revenue Bond, Civic Center Series 2010A
Aug -10
$9,000,000.00
5,136,835.48
US Bank Corporate Trust Services
Lynwood Redevelopment Agency
Mar -11
$18,480,000.00
18,496,462.52
Tax Allocation Bonds, Series 2011, Series A
Fiscal Agent Activities
US Bank Corporate Trust Services
Lynwood Redevelopment Agency
Mar -11
$5,660,000.00
554,571.30
Tax Allocation Bonds, Series 2011, Series B
Fiscal Agent Activities
US Bank Corporate Trust Services
December 2014
FTN FINANCIAL. Portfolio Summary
MAIN STtt iFF ADVISORS 12/31/2014 City of Lynwood
*
CD -FDIC
16.9%
M M F 0.6%
Coro 3.7%
Per Book.Value
5.5%
I%
*Book Value is Amortized
80%
70%
60%
50%
40%
30%
20%
10%
0%
0-1y
Per Book Value
1.20%
1.10%
1.00%
0.90%
0.80%
0.70%
0.60%
0.50%
0.40%
0.30%
1 -2Y 2 -3Y 3 -4Y 4 -5Y
Aaa
Aa3
A2
NR -FDIC
CDs
N R -LAI F
0% 25% 50% 75%
NR: Not Rated
Issuer
% Portfolio
Market Value
$27,266,948
$27,287,578
Book Value
$27,249,836
$27,241,528
Variance
$17,112
$46,050
Par Value
$27,265,427
$27,258,749
Net Asset Value
$100.063
$100.169
Purchase Yield
0.59%
0.57%
Years to Maturity
0.87
0.83
Modified Duration
0.84
0.81
*Book Value is Amortized
80%
70%
60%
50%
40%
30%
20%
10%
0%
0-1y
Per Book Value
1.20%
1.10%
1.00%
0.90%
0.80%
0.70%
0.60%
0.50%
0.40%
0.30%
1 -2Y 2 -3Y 3 -4Y 4 -5Y
Aaa
Aa3
A2
NR -FDIC
CDs
N R -LAI F
0% 25% 50% 75%
NR: Not Rated
Issuer
% Portfolio
LAI F
62.4%
FNMA
7.3%
U.S. Treasury
5.5%
FHLMC
3.7%
John Deere
0.9%
US Bank
0.9%
Compass Bank
0.9%
General Electric Bank
0.9%
Goldman Sachs Bank
0.9%
Caterpillar
0.9%
Wells Fargo
0.9%
Ally Bank -
0.9%
American Express Bk FSB
0.9%
Bank of Baroda
0.9%
Capital One Bank
0.9%
IPer Book Value
r FTN FINANCIAL. Investment Policy Compliance
MAIN S'rRwrADVISORS 12/31/2014 City of Lynwood
..»... ,. Fk. ....,.
..,
.., r.. ¢.. ... ,....�
�...:
.. ,.:. ,
Weighted Average Maturity
Weighted Average Maturity (WAM) must be less than 2.5 years
Yes: 0.87 Yrs
Liquidity
At least 30% of the portfolio must have maturities of 1 year or less
Yes: -. 70.3%
U.S. Treasuries
No sector limit, no issuer limit, maximum maturity 5 years
Yes: 5.5 %
U.S. Federal Agencies
50% sector limit, no issuer limit (FHLB, FFCB, FNMA, FHLMC), maximum maturity 5 years
Yes: 11.0%
30% sector limit, issuer limit no greater than FDIC insured limit (currently $250,000), max maturity 5 years,
Negotiable Certificates of Deposit
Yes: 16.9%
issued by national /state charter banks or savings and loan associations
Non - Negotiable Certificates of
25% sector limit, no issuer limit, issued by national /state charter banks or savings and loan associations,
Yes: 0.0%
Deposit
collateralized according to State Code
25% sector limit, 2% per issuer, maximum maturity 270 days, rated A -1+ S &P /P -1 Moody's, issued by a
o
Commercial Paper
Yes: 0.0%
domestic corporation w/ at least $500 million of assets and A- (S &P) /A3 ( Moody's) long term debt
LAIF
No sector limit, issuer limit is $40 million
Yes: $17.0
(Million)
30% sectors limit, 2% issuer limit (includes CP in aggregate), maximum maturity 5 years, rated at least A-
Corporate Medium Term Notes
Yes: 3.7%
by S &P, Aa3 by Moody's, or A- by Fitch
Money Market Mutual Funds
Sector limit 20 %, issuer limit 10 %, Aaa (S &P) and AAA ( Moody's)
Yes: 0.6%
Collateralized Bank Deposits
No sector limit, collateralized according to State Code,
Yes: -0.0%
FTN FINANCIAL. Historical Earnings and Book Rate of Return Performance
Li MAIN STReEr Amisops 12/31/2014 City of Lynwood
Fiscal Year-to-Date Earnings
$160
$140 - m FY 2013
QFY 2014 Ica
$120
PiFY 2015
$100 -
-0
$80 -
V)
0
$60 -
ra
$40 -
$20
$0
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Fii-cil,i.1,Y.-T�D','($OQ'Oiy�,','�"",k;5�
, --,- ?I -I -- CP,
L'T
,, --.
Se
,,Gct""
.0
Dec:
) 46
Mar.'`
_FY 2013. 5t,
11.3
$23.2
$33.4
$54.7
-
$63.9
$72.7
$88.2
$98.6
$109.8
$125.3
$135.8
$145.8
FY'
$10.1
$24.6
$34.1
$51.3
$61.1
$70.7
$87.2
$96.6
$107.6
$123.5
$133.8
$144.8
FY
$12.2
$25.2
$38.6
$60.4
$73.8
$87.6
0.70%
0.60%
0.50%
0.40%
0.30%
0.20%
0.10%
0.00%
Jul
Book Rate of Return vs Benchmark
--q--Portfolio
--21--Benchmark
Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Benchmark: 60% LAI F's Monthly Distribution Rate and 24 Month Moving Average of 40% of the 1-3 Year Agency Index (building from July 2011)
12
Se
,,Gct""
''.""'No'-M!,
Mar.'`
0.44%
0.46%
0.48%
0.58%
0.58%
0.58%
0.30%
0.31%
0.31%
0.33%
0.33%
0.34%
0.14%
0.15%
0.17%
0.25%
0.25%
0.24%
Benchmark: 60% LAI F's Monthly Distribution Rate and 24 Month Moving Average of 40% of the 1-3 Year Agency Index (building from July 2011)
12
Lynwood - Portfolio Management
Portfolio Management
Portfolio Summary
December 31. 2014
Par
Market
Book
45
y
luiv.
investments Value
Value
Value
Portfolio
io
Term
Maturity
360E uiv^
9
365 E 9
Money Market Funds 184.849.31
184,849.31
164,849.31
O.6D
1
1
0.O1D
D.D10
LAIF 17,002.577.62
17.002,577.62
17.0102.577.62
62.4D
1
1
0283
0287
Corporate Notes 1.001),DDOAO
999,600.00
1,000,758.65
3.67
1,023
932
1.301
1.319
Federal Agency 2.000,000.00
1,999,440.00
1,998,782.52
7.33
1,435
8711
1.013
1.027
Treasury Coupon Securities 1.500,000.110
1.494,293.75
1488,694.80
5.46
1,397
1.109
1.183
1200
Federal Agency Callable 1.000,000.00
992,50a7.00
999,90275
3.67
1,461
1,137
1.174
1.191
CD -FDIC 4,598,090.00
4,613,687.10
4,596,27132
16.87
1,082
688
1.130
1.145
27,265,426.93
27,266,947.78
27,249.836.05
100.00%
456
317
0.585
0.593
Investments
Cash and Accrued Interest
Accrued Interest at Purchase
1,068.65
1.068.65
Subtotal
1,068.85
1,068.65
Total Cash and Investments 27,265,426,93
27,268,016.43
27,250,904.70
456
317
0.585
0.593
Total Earnings December 31 Month Ending
Fiscal Year To Date
Current Year 13,832.13
87,645.08
Average Daily Balance 27,204,839.36
29,904,210.62
Effective Rate of Return 0.60%
0.58%
1 -14 -15
FTN Financial Main Street Advisors, Rick Phillips
Reporting period 12!01!2014- 1213112014 Portfolio LYN%&'
Data Updated: SET PMM. 011141201511 :16 AP
Run Date 011142915 -11:18 PM (PRF PtAt) 7.3.0
ReportYer.7.3.5
15
Lynwood - Portfolio Management
Federal Agency
0.875
0.976
0.990
Portfolio Management
10/14/2016
500,108.17
3137EADS5
10061
FHLMC
Page 1
08/29/2013
500,000.00
501,865.00
3135GONV1
Portfolio Details - Investments
FNMA
02/08/2018
10/29/2012
500,000.00
500,900.00
3135GOTG8
10057
FNMA
1,996,782.52
December 31, 2014
500,000.00
494,270.00
3135GOYT4
10067
FNMA
03/12/2014
500,000.00
502,405.00
Average
Purchase
Subtotal and Average
2,367,648.29
Stated
YTM
YTM Days to Maturity
CUSIP
Investment # Issuer
Balance
Date Par Value
Market Value
Book Value
Rate
360
365 Maturity Date
Money Market Funds
01/30/2014
500,000.00
493,593.75
912828C24
10068
U.S. Treasury
03/2412014
500,000.00
500,350.00
9000
10011
Goldman Sach Govt MMF
1.250
164,849.31
164,849.31
164,849.31
0.010
0.010
0.010
1
1.131
1,500,000.00
Subtotal and Average
227,021.82
164,849.31
164,849.31
164,849.31
1,137
0.010
0.010
1
LAIF
12/29/2014
500,000.00
497,500.00
3135GOWA7
10058
FNMA
05/25/2018
03/28/2013
500,000.00
9001
10000
LAIF
Subtotal and Average
17,002,577.62
17,002,577.62
17,002,577.62
0.267
0.263
0.267
1
Subtotal and Average
17,002,577.62
17,002,577.62
17,002,677.62
17,002,577.62
0.263
0.267
1
Corporate Notes
10071
Ally Bank
Report Ver. 7.3.5 17
06/11/2014
248,000.00
248,000.00
149121-6/)8
10074
Caterpillar
08/20/2014 250,000.00
248,970.00
249,890.19
1.250
1.250
1.267
960 08/18/2017
24422ERN1
10086
John Deere
12/29/2014 250,000.00
250,680.00
251,029.91
1.400
1.193
1.210
804 03/15/2017
90331HMH3
10080
US Bank
09/12/2014 250,000.00
250,152.50
250,033.71
1.375
1.351
1.370
984 09/11/2017
94974BGBO
10078
Wells Fargo
09/0912014 250,000.00
249,797.50
249,802.84
1.400
1.411
1.430
981 09/08/2017
Subtotal and Average
774,016.00
1,000,000.00
999,600.00
1,000,756.65
1.301
1.319
932
Federal Agency
0.875
0.976
0.990
652
10/14/2016
500,108.17
3137EADS5
10061
FHLMC
270
08/29/2013
500,000.00
501,865.00
3135GONV1
10054
FNMA
02/08/2018
10/29/2012
500,000.00
500,900.00
3135GOTG8
10057
FNMA
1,996,782.52
02/19/2013
500,000.00
494,270.00
3135GOYT4
10067
FNMA
03/12/2014
500,000.00
502,405.00
492,949.22
0.625
Subtotal and Average
2,367,648.29
1,064
2,000,000.00
1,999,440.00
Treasury Coupon Securities
1.673
1.696
1,519
02/28/2019
499,647.61
912828UA6
10066
U.S. Treasury
745
01/30/2014
500,000.00
493,593.75
912828C24
10068
U.S. Treasury
03/2412014
500,000.00
500,350.00
912828A91
10070
U.S. Treasury
1.250
04/30/2014
500,000.00
500,350.00
12/29/2017
499,902.75
Subtotal and Average
1,488,549.85
1.131
1,500,000.00
1,494,293.75
Federal Agency Callable
1.174
1.191
1,137
3134G5TW5
10085
FHLMC
12/29/2014
500,000.00
497,500.00
3135GOWA7
10058
FNMA
05/25/2018
03/28/2013
500,000.00
495,000.00
1.100
893
Subtotal and Average
548,288.68
1,000,000.00
992,500.00
CD -FDIC
AP
20033AJL1
10063
Comenity Capital Bank
11/28/2014
248,000.00
248,000.00
02006LFB4
10071
Ally Bank
Report Ver. 7.3.5 17
06/11/2014
248,000.00
248,000.00
Data Updated: SET_PMM: 01/14/2015 11:16
Run Date: 01/14/2015 - 11:16
498,991.20
0.875
0.976
0.990
652
10/14/2016
500,108.17
0.500
0.464
0.471
270
09/28/2015
498,139.37
0.875
0.985
0.998
1,134
02/08/2018
499, 543.78
1.625
1.627
1.649
1,426
11/27/2018
1,996,782.52
1.013
1.027
870
492,949.22
0.625
1.106
1.121
1,064
11/30/2017
496,098.05
1.500
1.673
1.696
1,519
02/28/2019
499,647.61
0.750
0.774
0.785
745
01/15/2017
1,488,694.88
1.183
1.200
1,109
500, 000.00
1.250
1.233
1.250
1,093
12/29/2017
499,902.75
1.125
1.116
1.131
1,182
03/28/2018
999, 902.75
1.174
1.191
1,137
247,637.93
1.700
1.720
1.744
1,240
05/25/2018
248,000.00
1.100
1.085
1.100
893
06/12/2017
Portfolio LYNW
AP
PM (PRF_PM2)
7.3.0
Report Ver. 7.3.5 17
Lynwood - Portfolio Management
Portfolio Management
Portfolio Details - Investments
December 31, 2014
Page 2
CUSIP
Average
Investment # Issuer Balance
Purchase
Date
Par Value
Market Value
Book Value
Stated
Rate
YTM
360
YTM Days to Maturity
365 Maturity Date
CD -FDIC
02587DLLO
10053
American Express Centurion
10/18/2012
245,000.00
245,000.00
245,000.00
0.850
0.838
0.850
19 01/20/2015
02587CCR9
10082
American Express Bk FSB
11/13/2014
248,000.00
252,551.52
248,000.00
2.150
2.122
2.151
1,777 11/13/2019
06740KGZ4
10072
Barclays Bank
07/03/2014
245,000.00
245,000.00
244,697.61
1.150
1.019
1.033
914 07/03/2017
20451PAD8
10036
Compass Bank
06/29/2012
250,000.00
251,060.88
250,000.00
1.150
1.134
1.150
179 06/2912015
06426RS95
10076
Bank of China
08/28/2014
245,000.00
245,518.13
245,000.00
0.650
0.641
0.650
238 08/27/2015
06062AXA2
10081
Bank of Baroda
11114/2014
248,000.00
248,297.45
248,000.00
0.550
0.542
0.550
316 11/13/2015
17284CBW3
10059
Cit Bank
04/17/2013
150,000.00
149,579.21
150,000.00
0.900
0.888
0.901
837 04/17/2017
140420RAO
10084
Capital One Bank
11/26/2014
248,000.00
248,000.00
248,000.00
1.050
1.037
1.051
697 11/28/2016
2546714QO
10075
Discover Bank
08/21/2014
245,000.00
247,380.71
244,570.22
1.750
1.777
1.802
1,327 08/20/2018
29976DNQ9
10050
Everbank
09/19/2012
245,000.00
245,516.02
245,000.00
0.900
0.888
0.901
622 09114/2016
3616OXG27
10037
General Electric Bank
06/29/2012
250,000.00
252,439.60
250,000.00
1.350
1.332
1.351
545 06/29/2016
38143APB5
10032
Goldman Sachs Bank
04/04/2012
250,000.00
250,000.00
250,000.00
1.050
1.036
1.050
95 04/06/2015
59013JBB4
10077
Merick Bank
08/29/2014
248,000.00
248,303.16
248,000.00
0.850
0.840
0.851
606 08/29/2016
700654AUO
10079
Park National Bank
09/22/2014
248,000.00
248,528.34
247,893.20
0.900
0.914
0.927
627 09/19/2016
74267GUA3
10062
PrivateBank & Trust
10/18/2013
247,000.00
247,000.00
246,785.30
0.700
0.643
0.652
277 10/05/2015
856284Y73
10073
State Bank of India
08/01/2014
245,000.00
245,000.00
244,688.06
1.200
1.234
1.252
942 07/31/2017
795450PA7
10044
Salllie Mae Bank
08/22/2012
245,000.00
248,512.08
245,000.00
1.700
1.678
1.701
964 08/22/2017
Subtotal and Average 4,796,737.10
4,598,000.00
4,613,687.10
4,596,272.32
1.130
1.145
686
Total and Average 27,204,839.36
27,265,426.93
27,266,947.78
27,249,836.05
0.585
0.593
317
Portfolio LYNW
Data Updated: SET PMM: 01/14/2015 11:16 AP
Run Date: 01/14/2015 - 11:16 PM (PRF_PM2) 7.3.0
18
Lynwood - Maturity Report
Inventory by Maturity Report
December 31, 2014
Data Updated: SET-MAT: 01/14/2015 11:22
Run Dale: 01/14/2015 - 11:22
Portfolio LYNW
AP
IM (PRF_IM) 7.1.1
Report Ver. 7.3.5
19
Sec.
Purchase
Book
Current
Maturity
Maturity
Total
Par
YTM
Days to
CUSIP
Investment#
Fund
Type
Issuer
Date
Value
Rate
Date
Amount
Days
Value
360
365
Maturity
9001
10000
LYNL
PA2
LAIF
07/01/2014
17,002,577.62
0.267
17,002,577.62
1
17,002,577.62
0.263
0.267
1
9000
10011
LYN
PA1
Goldman Sach Govt MMF
07/01/2014
164,849.31
0.010
164,849.31
1
164,849.31
0.010
0.010
1'
02587DLLO
10053
LYN
MC2
American Express Centurionl0
/18/2012
245,000.00
0.850
01/20/2015
245,000.00
824
245,000.00
0.838
0.850
19
38143APB5
10032
LYN
MC2
Goldman Sachs Bank
04/04/2012
250,000.00
1.050
04/06/2015
250,000.00
1,097
250,000.00
1.036
1.050
95
20451PAD8
10036
LYN
MC2
Compass Bank
06/29/2012
250,000.00
1.150
06/29/2015
250,000.00
1,095
250,000.00
1.134
1.150
179
06426RS95
10076
LYN
MC2
Bank of China
08/28/2014
245,000.00
0.650
08/27/2015
245,000.00
364
245,000.00
0.641
0.650
238
3135GONV1
10054
LYN
FAC
FNMA
10/29/2012
500,108.17
0.500
09/28/2015
500,000.00
1,064
500,000.00
0.464
0.471
270
74267GUA3
10062
LYN
MC2
PrivateBank & Trust
10/18/2013
246,785.30
0.700
10/05/2015
247,000.00
717
247,000.00
0.643
0.652
277
06062AXA2
10081
LYN
MC2
Bank of Baroda
11/14/2014
248,000.00
0.550
11/13/2015
248,000.00
364
248,000.00
0.542
0.550
316
3616OXG27
10037
LYN
MC2
General Electric Bank
06/29/2012
250,000.00
1.350
06/29/2016
250,000.00
1,461
250,000.00
1.332
1.351
545
59013,1664
10077
LYN
MC2
Merick Bank
08/29/2014
248,000.00
0.850
08/29/2016
248,000.00
731
248,000.00
0.640
0.851
606
29976DNQ9
10050
LYN
MC2
Everbank
09/19/2012
245,000.00
0.900
09/14/2016
245,000.00
1,456
245,000.00
0.888
0.901
622
700654AUO
10079
LYN
MC2
Park National Bank
09/2212014
247,893.20
0.900
09/19/2016
246,000.00
728
248,000.00
0.914
0.927
627
3137EADS5
10061
LYN
FAC
FHLMC
08/29/2013
498,991.20
0.875
10/14/2016
500,000.00
1,142
500,000.00
0.976
0.990
652
140420RAO
10084
LYN
MC2
Capital One Bank
11/26/2014
248,000.00
1.050
11/28/2016
248,000.00
733
248,000.00
1.037
1.051
697
912828A91
10070
LYN
TRC
U.S. Treasury
04/30/2014
499,647.61
0.750
01/15/2017
500,000.00
991
500,000.00
0.774
0.785
745
24422ERN1
10086
LYN
MTN
John Deere
12/29/2014
251,029.91
1.400
03/15/2017
250,000.00
807
250,000.00
1.193
1.210
804
17284CBW3
10059
LYN
MC2
Cit Bank
04/17/2013
150,000.00
0.900
04117/2017
150,000.00
1,461
150,000.00
0.888
0.901
837
02006LFB4
10071
LYN
MC2
Ally Bank
06/11/2014
248,000.00
1.100
06/12/2017
248,000.00
1,097
248,000.00
1.085
1.100
893
06740KGZ4
10072
LYN
MC2
Barclays Bank
07/03/2014
244,697.61
1.150
07/03/2017
245,000.00
1,096
245,000.00
1.019
1.033
914
856284Y73
10073
LYN
MC2
State Bank of India
08/01/2014
244,688.06
1.200
07/31/2017
245,000.00
1,095
245,000.00
1.234
1.252
942
14912L6D8
10074
LYN
MTN
Caterpillar
08/2012014
249,890.19
1.250
08/1812017
250,000.00
1,094
250,000.00
1.250
1.267
960
795450PA7
10044
LYN
MC2
Salllie Mae Bank
08/2212012
245,000.00
1.700
08/22/2017
245,000.00
1,826
245,000.00
1.678
1.701
964
94974BGBO
10078
LYN
MTN
Wells Fargo
09/09/2014
249,802.84
1.400
0910812017
250,000.00
1,095
250,000.00
1.411
1.430
981
90331HMH3
10080
LYN
MTN
US Bank
09/12/2014
250,033.71
1.375
09/11/2017
250,000.00
1,095
250,000.00
1.351
1.370
984
912828UA6
10066
LYN
TRC
U.S. Treasury
01/30/2014
492,949.22
0.625
11/30/2017
500,000.00
1,400
500,000.00
1.106
1.121
1,064
3134G5TW5
10085
LYN
MC1
FHLMC
12/29/2014
500,000.00
1.250
12/29/2017
500,000.00
1,096
500,000.00
1.233
1.250
1,093
3135GOTG8
10057
LYN
FAC
FNMA
02119/2013
498,139.37
0.875
02/08/2018
500,000.00
1,815
500,000.00
0.985
0.998
1,134
3135GOWA7
10058
LYN
MC1
FNMA
03/28/2013
499,902.75
1.125
03/28/2018
500,000.00
1,826
500,000.00
1.116
1.131
1,182
20033AJL1
10083
LYN
MC2
Comenity Capital Bank
11/28/2014
247,637.93
1.700
05/25/2018
248,000.00
1,274
248,000.00
1.720
1.744
1,240
2546714QO
10075
LYN
MC2
Discover Bank
08/2112014
244,570.22
1.750
08/20/2018
245,000.00
1,460
245,000.00
1.777
1.802
1,327
3135GOYT4
10067
LYN
FAC
FNMA
03/12/2014
499,543.78
1.625
11/27/2018
500,000.00
1,721
500,000.00
1.627
1.649
1,426
912828024
10068
LYN
TRC
U.S. Treasury
03/24/2014
496,098.05
1.500
02/28/2019
500,000.00
1,802
500,000.00
1.673
1.696
1,519
02587CCR9
10082
LYN
MC2
American Express Bk FSB
11/13/2014
248,000.00
2.150
11/13/2019
248,000.00
1,826
248,000.00
2.122
2.151
1,777
Subtotal and Average
27,249,836.05
27,265,426.93
27,265,426.93
0.585
0.593
316
Data Updated: SET-MAT: 01/14/2015 11:22
Run Dale: 01/14/2015 - 11:22
Portfolio LYNW
AP
IM (PRF_IM) 7.1.1
Report Ver. 7.3.5
19
Lynwood - Maturity Report
Inventory by Maturity Report
Page 2
Sec. Purchase Book Current Maturity Maturity Total Par YTM Days to
CUSIP Investment# Fund Type Issuer Date Value Rate Date Amount Days Value 360 365 Maturity
Net Maturities and Average 27,249,836.05 27,265,426.93 27,265,426.93 0.585 0.593 316
Data Updated: SET—MAT: 01/14/2015 11:22
Run Date: 01/14/2015 -11:22
Portfolio LYNW
AP
IM (PRF_IM) 7.1.1
Report Ver. 7.3.5
20
Lynwood - Credit Rating
Credit Rating Report
December 31, 2014
Sorted by Moody's - Investment Number
Data Updated: SET CRE: 01/14/2015 11:18
Run Date: 01114/2015 - 11:19
Portfolio LYNW
AP
CR (PRF_CR) 7.2.0
Report Ver. 7.3.5
21
Purchase
Book
Market
Moody's
S&P
Purchase
Maturity
Days To
Stated
% of
Investment#
Issuer
Security#
Principal
Value
Value
Rating
Rating
Date
Date
Maturity
Rate
YTM
Total
10011
GSGF
9000
164,849.31
164,849.31
164,849.31
Aaa
AAA
07/01/2014
1
0.010
0.010
0.60
10054
FNMA
3135GONV1
500,425.00
500,108.17
500,900.00
Aaa
AA+
10129/2012
09/28/2015
270
0.500
0.471
1.84
10057
FNMA
3135GOTG8
497,020.00
498,139.37
494,270.00
Aaa
AA+
02/19/2013
02/08/2016
1,134
0.875
0.998
1.83
10058
FNMA
3135GOWA7
499,850.00
499,902.75
495,000.00
Aaa
AA+
03/28/2013
03/28/2018
1,182
1.125
1.131
1.83
10061
FHLMC
3137EADS5
498,235.00
498,991.20
501,865.00
Aaa
AA+
08/29/2013
10/14/2016
652
0.875
0.990
1.83
10066
USTR
912828UA6
490,722.66
492,949.22
493,593.75
Aaa
AA+
01/30/2014
11/30/2017
1,064
0.625
1.121
1.81
10067
FNMA
3135GOYT4
499,450.00
499,543.78
502,405.00
Aaa
AA+
03112/2014
11/27/2018
1,426
1.625
1.649
1.83
10068
USTR
912828C24
495,371.09
496,098.05
500,350.00
Aaa
AA+
03/24/2014
02/28/2019
1,519
1.500
1.696
1.82
10070
USTR
912828A91
499,531.25
499,647.61
500,350.00
Aaa
AA+
04/30/2014
, 01/15/2017
745
0.750
0.785
1.83
10085
FHLMC
3134G5TW5
500,000.00
500,000.00
497,500.00
Aaa
AA+
12/29/2014
12/29/2017
1,093
1.250
1.250
1.83
SubTotal for Aaa
4,645,454.31
4,650,229.46
4,651,083.06
973
0.979
1.081
17.05
10080
USB
90331HMH3
250,037.50
250,033.71
250,152.50
Aa3
AA-
09/12/2014
09/11/2017
984
1.375
1.370
0.92
SubTotal for Aa3
250,037.50
250,033.71
250,152.50
984
1.375
1.370
0.92
10074
CAT
14912L6D8
249,875.00
249,890.19
248,970.00
A2
A
08/20/2014
08/18/2017
960
1.250
1.267
0.92
10078
WF
94974BGBO
249,780.00
249,802.84
249,797.50
A2
A+
09/09/2014
09/08/2017
981
1.400
1.430
0.92
10086
DE
24422ERN1
251,032.50
251,029.91
250,680.00
A2
A
12/29/2014
03/15/2017
804
1.400
1.210
0.92
SubTotal for A2
750,687.50
750,722.94
749,447.50
915
1.350
1.302
2.76
10000
LAIF
9001
17,002,577.62
17,002,577.62
17,002,577.62
None
None
07/01/2014
1
0.267
0.267
62.40
10032
GOLD
38143APB5
250,000.00
250,000.00
250,000.00
None
None
04/04/2012
04/06/2015
95
1.050
1.050
0.92
10036
BBVASM
20451 PADS
250,000.00
250,000.00
251,060.88
None
None
06/29/2012
06/29/2015
179
1.150
1.150
0.92
10037
GECAP
3616OXG27
250,000.00
250,000.00
252,439.60
None
None
06/29/2012
06/29/2016
545
1.350
1.351
0.92
10044-
SLMA
795450PA7
245,000.00
245,000.00
248,512.08
None
None
08/22/2012
08/22/2017
964
1.700
1.701
0.90
10050
FIRALL
29976DNQ9
245,000.00
245,000.00
245,516.02
None
None
09/19/2012
09/14/2016
622
0.900
0.901
0.90
10053
AXP
02587DLLO
245,000.00
245,000.00
245,000.00
None
None
10/18/2012
01/20/2015
19
0.850
0.850
0.90
10059
CITBAK
17284CBW3
150,000.00
150,000.00
149,579.21
None
None
04/17/2013
04/1712017
837
0.900
0.901
0.55
10062
PVTB
74267GUA3
246,444.25
246,785.30
247,000.00
None
None
10118/2013
10/05/2015
277
0.700
0.652
0.91
10071
ALLY
02006LFB4
248,000.00
248,000.00
248,000.00
None
None
06/1112014
06/12/2017
893
1.100
1.100
0.91
10072
BACR
06740KGZ4
244,637.40
244,697.61
245,000.00
None
None
07/03/2014
07/03/2017
914
1.150
1.033
0.90
10073
SBIIN
856284Y73
244,637.40
244,688.06
245,000.00
None
None
08/01/2014
07/31/2017
942
1.200
1.252
0.90
10075
DISC
2546714QO
244,527.15
244,570.22
247,380.71
None
None
08/21/2014
08/20/2018
1,327
1.750
1.802
0.90
10076
BCHINA
06426RS95
245,000.00
245,000.00
245,518.13
None
None
08/28/2014
08/27/2015
238
0.650
0.650
0.90
10077
MERICK
59013.1884
248,000.00
248,000.00
248,303.16
None
None
08/29/2014
08/29/2016
606
0.850
0.851
0.91
10079
PRK
700654AUO
247,876.00
247,893.20
248,526.34
None
None
09/22/2014
09/19/2016
627
0.900
0.927
0.91
Data Updated: SET CRE: 01/14/2015 11:18
Run Date: 01114/2015 - 11:19
Portfolio LYNW
AP
CR (PRF_CR) 7.2.0
Report Ver. 7.3.5
21
Lynwood - Credit Rating
Credit Rating Report
Sorted by Moody's - Investment Number
Page 2
SubTotal for No Specified Rating
Data Updated: SET _CRE: 01/14/2015 11:18
Run Date: 01/14/2015 -11:19
21,598,327.82 21,598,849.94 21,616,264.72
147 0.454 0.454 79.29
Portfolio LYNW
AP
CR (PRF_CR) 7.2.0
Report Ver. 7.3.5
22
Purchase
Book
Market
Moody's
S&P
Purchase
Maturity
Days To
Stated
% of
Investment#
Issuer
Security#
Principal
Value
Value
Rating
Rating
Date
Date
Maturity
Rate
YTM
Total
10081
BOBIN
06062AXA2
248,000.00
248,000.00
248,297.45
None
None
11/1412014
11/13/2015
316
0.550
0.550
0.91
10082
AXPFSB
02587CCR9
248,000.00
248,000.00
252,551.52
None
None
11/13/2014
11/13/2019
1,777
2.150
2.151
0.91
10083
ADS
20033AJL1
247,628.00
247,637.93
248,000.00
None
None
11128/2014
05/25/2018
1,240
1.700
1.744
0.91
10084
COF
140420RAO
248,000.00
248,000.00
248,000.00
None
None
11/26/2014
11/28/2016
697
1.050
1.051
0.91
SubTotal for No Specified Rating
Data Updated: SET _CRE: 01/14/2015 11:18
Run Date: 01/14/2015 -11:19
21,598,327.82 21,598,849.94 21,616,264.72
147 0.454 0.454 79.29
Portfolio LYNW
AP
CR (PRF_CR) 7.2.0
Report Ver. 7.3.5
22
Lynwood - Portfolio Management
Pass Through Securities:
Portfolio Management
Page 1
Interest Collected
Interest Earnings Summary
0.00
Plus Accrued Interest at End of Period
December 31, 2014
0.00
Less Accrued Interest at Beginning of Period
December 31 Month Ending
Fiscal Year To Date
CD /Coupon /Discount Investments:
( 0.00)
( 0.00)
Interest Collected
8,171.64
40,806.36
Plus Accrued Interest at End of Period
24,494.35
24,494.27
Less Accrued Interest at Beginning of Period
( 23,716.97)
( 16,644.27)
Less Accrued Interest at Purchase During Period
( 0.00)
( 0.00)
Interest Earned during Period
8,949.02
48,656.36
Adjusted by Premiums and Discounts
527.49
3,089.51
Adjusted by Capital Gains or Losses
595.89
2,496.60
Earnings during Periods
10,072.40
54,242.47
Pass Through Securities:
Interest Collected
0.00
0.00
Plus Accrued Interest at End of Period
0.00
0.00
Less Accrued Interest at Beginning of Period
( 0.00)
( 0.00)
Less Accrued Interest at Purchase During Period
( 0.00)
( 0.00)
Interest Earned during Period
0.00
0.00
Adjusted by Premiums and Discounts
0.00
0.00
Adjusted by Capital Gains or Losses
0.00
0.00
Earnings during Periods
0.00
0.00
Cash /Checking Accounts:
Interest Collected
1.33
22,814.50
Plus Accrued Interest at End of Period
41,570.25
41,570.25
Less Accrued Interest at Beginning of Period
( 37,811.85)
( 30,982.14)
Interest Earned during Period
3,759.73
33,402.61
Total Interest Earned during Period 12,708.75 82,058.97
Total Adjustments from Premiums and Discounts 527.49 3,089.51
Total Capital Gains or Losses 595.89 2,496.60
Total Earnings during Period 13,832.13 87,645.08
Portfolio LYNW
Data Updated: SET PMM: 01/14/2015 11:16 AP
Run Date: 01/14/2015 - 11:16 PM (PRF_PM6) 7.3.0
Report Ver. 7.3.5
25
Lynwood - Interest Reports
Interest Earnings
Sorted by Fund - Fund
December 1, 2014 - December 31, 2014
Yield on Beginning Book Value
CUSIP
Investment #
Fund
Security
Type
Ending
Par Value
Beginning
Book Value
Ending
Book Value
Maturity
Date
CurrentAnnualized
Rate Yield
Interest
Earned
Adjusted Interest Earnings
Amortization/ Adjusted Interest
Accretion Earnings
Fund: Lynwood
3135GOWA7
10058
LYN
MC1
500,000.00
499,900.25
499,902.75
03/28/2018
1.125
1.110
468.75
2.50
471.25
3135GOYT4
10067
LYN
FAC
500,000.00
499,534.04
499,543.78
11/27/2018
1.625
1.619
677.08
9.74
686.82
3135GOTG8
10057
LYN
FAC
500,000.00
498,089.40
496,139.37
02/08/2018
0.875
0.980
364.59
49.97
414.56
3135GONV1
10054
LYN
FAC
500,000.00
500,120.33
500,106.17
09/28/2015
0.500
0.462
208.33
-12.16
196.17
3137EADS5
10061
LYN
FAC
500,000.00
498,944.14
498,991.20
10/14/2016
0.875
0.971
364.56
47.06
411.64
3137EADD8
10034
LYN
FAC
0.00
499,914.68
0.00
04/17/2015
0.500
0.553
159.72
14.43
174.15
3134G5TW5
10085
LYN
MC1
500,000.00
0.00
500,000.00
12/29/2017
1.250
0.845
34.72
0.00
34.72
795450PA7
10044
LYN
MC2
245,000.00
245,000.00
245,000.00
08/22/2017
1.700
1.700
353.74
0.00
353.74
912828C24
10068
LYN
TRC
500,000.00
496,018.42
496,098.05
02/28/2019
1.500
1.714
642.26
79.63
721.89
912828A91
10070
LYN
TRC
500,000.00
499,632.95
499,647.61
01/15/2017
0.750
0.779
315.90
14.66
330.56
9128281JA6
10066
LYN
TRC
500,000.00
492,743.79
492,949.22
11/30/2017
0.625
1.127
266.14
205.43
471.57
9000
10011
LYN
PA1
164,849.31
186,171.85
164,849.31
0.010
0.012
1.93
0.00
1.93
38143APB5
10032
LYN
MC2
250,000.00
250,000.00
250,000.00
04/06/2015
1.050
1.050
222.94
0.00
222.94
94974BGBO
10078
LYN
MTN
250,000.00
249,796.72
249,802.84
09/08/2017
1.400
1.404
291.67
6.12
297.79
2546714QO
10075
LYN
MC2
245,000.00
244,560.18
244,570.22
08/20/2018
1.750
1.801
364.14
10.04
374.18
20451PAD8
10036
LYN
MC2
250,000.00
250,000.00
250,000.00
06/29/2015
1.150
1.150
244.18
0.00
244.18
3616OXG27
10037
LYN
MC2
250,000.00
250,000.00
250,000.00
06/29/2016
1.350
1.350
286.64
0.00
286.64
7865BOU40
10039
LYN
MC2
0.00
221,958.65
0.0012/29/2014
0.700
0.943
119.21
41.35
160.56
02006LFB4
10071
LYN
MC2
248,000.00
248,000.00
248,000.00
06/12/2017
1.100
1.100
231.69
0.00
231.69
06426RS95
10076
LYN
MC2
245,000.00
245,000.00
245,000.00
08/27/2015
0.650
0.650
135.25
0.00
135.25
29976DNQ9
10050
LYN
MC2
245,000.00
245,000.00
245,000.00
09/1412016
0.900
0.900
187.27
0.00
167.27
02587DLLO
10053
LYN
MC2
245,000.00
245,000.00
245,000.00
01/20/2015
0.850
0.850
176.87
0.00
176.87
17284CBW3
10059
LYN
MC2
150,000.00
150,000.00
150,000.00
04117/2017
0.900
0.900
114.66
0.00
114.66
06062AXA2
10081
LYN
MC2
248,000.00
248,000.00
248,000.00
11/13/2015
0.550
0.550
115.85
0.00
115.85
74267GUA3
10062
LYN
MC2
247,000.00
246,761.27
246,785.30
10/0512015
0.700
0.815
146.84
24.03
170.87
06740KGZ4
10072
LYN
MC2
245,000.00
244,687.36
244,697.61
07/03/2017
1.150
1.201
239.29
10.25
249.54
856284Y73
10073
LYN
MC2
245,000.00
244,677.60
244,688.06
07/31/2017
1.200
1.251
249.70
10.26
259.96
14912L6D8
10074
LYN
MTN
250,000.00
249,886.71
249,890.19
08/18/2017
1.250
1.243
260.41
3.46
263.89
59013JBB4
10077
LYN
MC2
248,000.00
248,000.00
248,000.00
08129/2016
0.850
0.850
179.04
0.00
179.04
Data Updated: SET _INT: 01/14/2015 11:20
Run Date: 01/1412015 - 11:20
Portfolio LYNW
AP
IE (PRF_IE) 7.2.0
Report Ver. 7.3.5
26
Lynwood - Interest Reports
Interest Earnings Page 2
December 1, 2014 - December 31, 2014
Adjusted Interest Earnings
Security Ending Beginning Ending Maturity CurrentAnnualized Interest Amortization/ Adjusted Interest
CUSIP Investment # Fund Type Par Value Book Value Book Value Date Rate Yield Earned Accretion Earnings
Fund: Lynwood
700654AUO
10079
LYN
MC2
248,000.00
247,887.92
247,893.20 09/19/2016
0.900
0.925
189.57
5.28
194.85
90331HMH3
10080
LYN
MTN
250,000.00
250,034.75
250,033.71 09/11/2017
1.375
1.344
286.46
-1.04
285.42
02587CCR9
10082
LYN
MC2
248,000.00
248,000.00
248,000.00 11/13/2019
2.150
2.150
452.85
0.00
452.85
20033AJL1
10083
LYN
MC2
248,000.00
247,628.88
247,637.93 05/2512018
1.700
1.746
358.07
9.05
367.12
140420RAO
10084
LYN
MC2
248,000.00
248,000.00
248,000.00 11128/2016
1.050
1.050
221.16
0.00
221.16
24422ERN1
10086
LYN
MTN
250,000.00
0.00
251,029.91 03/15/2017
1.400
0.817
19.45
-2.59
16.86
Subtotal
10,262,849.31
10,238,950.09
10,247,258.43
1.098
8,950.95
527.49
9,478.44
Fund: Lynwood
LAW
9001
10000
LYNL
PA2
17,002,577.62
17,002,577.62
17,002,577.62
0.267
0.260
3,757.80
0.00
3,757.80
Subtotal
17,002,577.62
17,002,577.62
17,002,577.62
0.260
3,757.80
0.00
3,757.80
Total
27,265,426.93
27,241,527.71
27,249,836.05
0.574
12,708.75
527.49
13,236.24
Portfolio LYNW
Data Updated: SET _INT: 01/14/2015 11:20 AP
Run Date: 01/14/2015 - 11:20 1 (PRF_IE) 7.2.0
Report Ver. 7.3.5
27
FTN FINANCIAL.
MAIN STREET ADVISORS
A SubsAiry tf Fait Tercnessm BaukNatioua1 Assod,;Uon
Quarterly Economic and Market Update
December 2014
33
FTN FINANCIAL.
MAIN STREET ADVISORS
A S'n6,eW" .> a� F,n Irymm� Wi Nnnwd A.mmv,
Economic and Market Update
12/31/2014
Quarterly Changes
*Estimates for the current quarter /month, some data are lagged
Sources: FTN Main Street and Bloomberg
34
.,9I30I�20A
GDP YOY% Change*
2.3%
2.7%
-0.4%
GDP QOQ% Change*
2.5%
5.0%
-2.5%
U.S, Payrolls Qtrly Change*
866,000
717,000
149,000
Unemployment Rate*
5.6%
5.9%
-0.3%
Labor Force Participation*
62,7%
62,7%
0.0%
Effective Fed Funds Rate
0.06%
0,07%
-0.01%
1st Project Fed Funds Hike
Oct 2015
Sep 2015
+1 Month
3 Month T -Bill
0,041%
0,018%
0,023%
2 Year T -Note
0.666%
0.569%
0.097%
3 Year T -Note
1.071%
1,039%
0,032%
5 Year T -Note
1,654%
1,757%
- 0.103%
10 Year T -Note
2,172%
2.490%
- 0,318%
U.S. Fed Debt Avg Yield*
2,022%
2.037%
-0.02%
30 Year Mortgage Rate
3.99%
4,120%
-0.13%
1 -5 Yr Agency Spread
0,09%
0,07%
0,02%
1 -5 Yr Corporate Spread
0,64%
0,54%
0,10%
Dow Jones
17,823
17,043
4,578%
S &P 500
2,059
1,972
4,391%
Consumer Price Index YOY*
1.3%
1.7%
-0.4%
U.S. Avg Regular Unleaded
$2,24
$3.33
-$1,09
Retail SalesYOY*
6.1%
4.6%
1.5%
Case - Shiller Home Prices YOY*
4.20%
4,82%
-0,62%
Gold (per ounce)
$1,184.37
$1,208.15
- $23.78
Dollar Index
90.27
85.94
4.33
Consumer Confidence
92.60
89.00
3.60
*Estimates for the current quarter /month, some data are lagged
Sources: FTN Main Street and Bloomberg
34
FTN FINANCIAL.
MAIN STREET ADVISORS
Economic and Market Update
12/31/2014
A Sob Ww, d Fhb Tm�.wr tlau� Naavi Ar<u��wn
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FTN FINANCIAL. Economic and Market Update
MMN STREET ADVISORS 12/31/2014
n soew:,..a r.,r tN.,,a w,e vor,„wnme�+nb.
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Source: Bureau of Labor Statistics
Unemployment Rates
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6
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36
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36
FTN FINANCIAL. Economic and Market Update
MAIN STREET ADVISORS 12/31/2014
Source: U.S. Treasury
42
FTN FINANCIAL. Economic and Market Update
MAIN STREET ADVISORS 12/31/2014
A Sus+W+n d flnt l'n�uux tlwk Nan "m.d Axmcxiion
Source: Bloomberg
Maturity
3M
9/30/14
0.02
12131/14
0.04
• '
0.02
6M
0.03
0.12
0.09
1Y
0.10
0.22
0.12
2Y
0.57
0.67
0.10
3Y
1.04
1.07
0.03
5Y
1.76
1.65
-0.10
10Y
2.49
2.17
-0.32
30Y
3.20
2.75
-0.45
43
FTN FINANCIAL.
Na STREET AD�SOdRS
Economic and Market Update
12/31/2014
Source: Bloomberg
44
FTN FINANCIAL. Economic and Market Update
MAIN STREET ADVISORS 12/31/2014
A 5- ..—a-I Tmw.n. W.tIWRSNAxoomb.
s� rsv
'BofA /Merrill Index (option adjusted spread vs. Treasury)
Agency (GVPO)
Source: Bank of America Merrill Lynch Indicies
. i of " -Ni — — vi
'BofA /Merrill Index (option adjusted spread vs. Treasury)
Corporate A -AAA (CV10)
45
F'TN FINANCIAL. Economic and Market Update
M � S�sr�nD VISORS 12/31/2014
Selected Sector QuarterlyTotal Returns
20
15 14.2
11.1
10 9.3 9.4 10.1
c
4.7 4.9 4.9
5
a 1.9 3.0
0.0 0.1 0.2
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-
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(10)
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\�G GaQ �� �a`
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Source: Bloomberg
46
F'I'N FINANCIAL.
"N STREET ADVISORS
Economic and Market Update
12/31/2014
Sources: Bloomberg, FTN Main Street
48
5 Year Treasury Note Yield
1.80 -
Stronger than
Weaker than expected job growth
Fed expects to
expected job
move rates
qrowth
hi her in 2015
1.70
r
'JI
1.60
International
concerns bump
a)
rates lower
a)
1.50
Continued lower
Low inflation
global economic
growth concerns
End of QE Declining oil prices
keeping the Fed
dovish
and Ebola 1-,, 't
push yields lower
1.40
1.30
. . . . . . v
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Sources: Bloomberg, FTN Main Street
48
FTN FINANCIAL,
MAIN STREET ADVISORS
�5.wd 4 r —w nea..d —
Economic and Market Update
12/31/2014
Sources: Bloomberg, FTN Main Street
49
Dow Jones Industrial Index
18,000
'}
17,500
i
Emerging markets
Fed expects to be
concern due to /
patient moving
lower oil and strong
rates higher
dollar
17,000
�Strong
GDP and
z
zor
lower oil
i \
16,500
Continued lower
global economic
growth concerns
and Ebola
16,000
O O N d O
b O
M N O N
\
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Sources: Bloomberg, FTN Main Street
49
Revised 1/9/2014
AGENDA STAFF REPORT
tit
DATE: February 3, 2015
TO: Honorable President and Members of the Public Finance Authority
APPROVED BY: J. Arnoldo Beltran, Chief Administrative Officer3'`/V10__
PREPARED BY: Yolanda Rodriguez Gonzalez ti'A0) /,&
Sheila Harding, Deputy City Treasurer
SUBJECT: TREASURER'S INVESTMENT POLICY STATEMENT
RECOMMENDATION
It is recommended that the President and Members of the Lynwood Public Finance
Authority adopt the attached resolution entitled: "A RESOLUTION OF THE LYNWOOD
PUBLIC FINANCE AUTHORITY OF THE CITY OF LYNWOOD APPROVING THE
TREASURER'S INVESTMENT POLICY STATEMENT ".
BACKGROUND
The investment policies and practices of the City of Lynwood are based on state laws
and principles of prudent money management. This statement is intended to provide
guidelines for the prudent investment of idle and surplus cash, while meeting the short
and long -term cash flow demands and it is submitted annually for City review. The
primary goals of these policies are:
To assure compliance with all federal, state, and local laws governing the
investment of monies under the control of the Treasurer.
2. To protect the principal and asset holdings of the City's portfolio.
3. To ensure that adequate liquidity is provided for the prompt and efficient handling
of City disbursements.
4. To generate the maximum amount of investment income within the parameters of
these investment policies and guidelines for suitable investments.
Em
7
INVESTMENT POLICY
PURPOSE
The purpose of this Statement of Investment Policy ( "Policy ") is to establish guidelines
for the prudent investment of the City of Lynwood's idle cash or reserve cash and
outlines the policies essential to ensure the safety and financial strength of the City's
investment portfolio.
This policy is based on the principles of prudent money management and conforms to all
applicable Federal and State Laws governing the investment of public funds under the
control of the Treasurer.
1.0 POLICY:
Annually, in accordance with California Government Code (CGC) Section 53646,
the Treasurer will render to the City Council a Statement of Investment Policy for
consideration and approval at a public meeting. Any investments currently held
at that time that do not meet the guidelines of this policy, as changed from time to
time by the City Council, shall be exempt from the requirements of this policy.
However, at the investment maturity or liquidation, such funds shall be reinvested
only as provided by this policy, which offer guidance to brokers and any external
investment advisors on the investment of City funds. This investment policy
applies to all investment activities of the City, except for the Employees
Retirement and Deferred compensation funds are excluded because it is
separately managed by a third party administrator. This policy applies to all City
funds, except for bond proceeds that are managed by trustees. Trustees must
comply with the provision of bond's indenture agreements.
2.0 SCOPE:
Policy statements outlined in this document apply to the City's pooled funds, as
well as other financial assets under the City Treasurer's control unless exempted
by resolution or by statute. These funds are accounted for in the City of Lynwood
Comprehensive Annual Financial Report (CAFR), and include:
1. General Fund
2. Special Revenue Funds
3. Capital Project Funds
4. Enterprise Funds
5. Trust and Agency Funds
6. Retirement Pension Funds
7. Internal Service Funds
8. Any new fund created by the City Council unless specifically exempted
3.0 PRUDENCE:
The standard of prudence to be used by investment officials shall be the "prudent
investor" standard (CGC Section 53600.3) and shall be applied in the context of
managing an overall portfolio which states that:
2
INVESTMENT POLICY
"a trustee shall act with care, skill, prudence, and diligence under the
circumstances then prevailing, including, but not limited to, the general economic
conditions and the anticipated needs of the agency, that a prudent person acting
in a like capacity and familiarity with those matters would use in the conduct of
funds of a like character and with like aims to safeguard the principal and
maintain the liquidity needs of the City ".
At the time of purchase, it is the City's intent to hold all investments until maturity
to ensure the return of all invested principal. However, it is recognized that
market prices of securities will vary depending on economic and interest rate
condition at any point in time.
The City Treasurer, and other individuals who may be designated to manage the
City's investment portfolio, when acting within the intent and scope of this
investment policy and other authorized written procedures, and when exercising
due diligence, are relieved of personal liability for the individual security's credit
risk or market price change of a security or other investment, provided that
deviations from expectations are reported to the City of Lynwood in a timely
manner and that appropriate action is taken to mitigate unforeseen adverse
conditions.
4.0 OBJECTIVES:
Within the overriding requirement of compliance with all Federal, State and local
laws governing the investment of moneys under the control of the Treasurer, and
as specified in CGC Section 53600.5, when investing, reinvesting, purchasing,
acquiring, exchanging, selling or managing public funds, the primary objective of
a trustee shall be to safeguard the principal of the funds under its control. The
secondary objective shall be to meet the liquidity needs of the depositor. The
third objective shall be to achieve a return on the funds under its control.
Taking into account the City's daily and periodic cash flow needs, the City
desires to invest all temporarily idle funds as close to 100% as is reasonably
possible. At least 30% of the overall investment portfolio will be comprised of
investments maturing in one year or less. No single investment shall be
purchased with a term to maturity at the date of purchase that exceeds 5 years,
except as special circumstances dictate and with the expressed approval of the
City Treasurer.
The basic goal of the City's investment policy is to ensure safety and availability
of temporarily idle funds when they are needed. The primary objectives, in
priority order, of the investment activities shall be:
Safety: Safety of principal is the foremost objective of the investment
program. Each investment transaction must seek to ensure that capital
losses are avoided, whether from securities default, broker - dealer default,
or erosion of market value. The City will endeavor to preserve principal
by mitigating both credit risk and market risk, as specified below.
Credit risk, which is defined as the risk of loss due to insolvency or other
failure of the issuer of a security, must be mitigated by purchasing
investment grade securities and by diversifying the investment portfolio so
3
INVESTMENT POLICY
that the failure of any one issuer does not unduly harm the City's capital
base and cash flow.
Market risk, which is defined as market value fluctuations, must be
mitigated by limiting the average maturity of the City's investment portfolio
to one year, limiting the maximum maturity of any one security to five
years, structuring the portfolio to take into account historic and current
cash flow analysis, eliminating the need to sell securities for the sole
purpose of short term speculation.
Liquidity: Because the City operates its own water utility and bills
monthly for utility services, cash flow is generated on a daily basis.
Historical cash flow trends must be compared to current cash flow
requirements on an ongoing basis to ensure that the City's investment
portfolio will remain sufficiently liquid to enable the City to meet all
reasonable anticipated operating requirements.
Return on the Investment: The investment portfolio shall be designed
and managed with the objective of attaining a market rate of return
throughout budgetary and economic cycles, taking into account the
investment objectives, authorized investments and the cash flow needs of
the City.
5.0 DELEGATION OF AUTHORITY:
In accordance with Section 53607 of the Government Code, the City of Lynwood
management responsibility for the investment program is hereby delegated to the
Treasurer, who shall be responsible for all transactions undertaken and shall
establish a system of control to regulate the activities of subordinate officials, and
their procedures in the absence of the Treasurer. Under the provision of CGC
Section 53600.3, the Treasurer is a trustee and a fiduciary subject to the prudent
investor standard. The City may delegate to the City Treasurer the authority to
invest or reinvest City funds for a one -year period.
The Treasurer may delegate all, or a portion of his /her investment authority to a
Deputy City Treasurer. Prior to the delegation of the investment authority to a
Deputy City Treasurer, the Treasurer shall notify the City council and request
confirmation of the delegation. Delegation of investment authority will not
remove or abridge the Treasurer's investment responsibility.
The City may engage the services of one or more external investment managers
to assist in the management of the City's investment portfolio in a manner
consistent with the City's objectives. Such ,external managers may be granted
discretion to purchase and sell investment securities in accordance with this
Investment Policy.
The Treasurer shall establish written investment policy procedures for the
operation of the investment program consistent with this policy. The procedures
should include reference to: safekeeping, wire transfer agreements, banking
service contracts and collateral /depository agreements. Such procedures shall
include explicit delegation of authority to persons responsible for investment
transactions. No person may engage in an investment transaction except as
4
6.0
7.0
8.0
INVESTMENT POLICY
provided under the terms of this policy and the procedures established by the
Treasurer.
ETHICS:
Elected officials, City officers, employees and any other individual involved in the
investment operations are prohibited from personal business activity that could
conflict with proper execution of the investment program, or which could impair
their ability to make impartial investment decisions, or which could give the
appearance thereof. Furthermore, these same individuals shall disclose any
material financial interest in financial institutions that conduct business within
their jurisdiction, and they shall further disclose any large personal
financial /investment positions that could be related to the performance of the
City. The Treasurer shall immediately disclose any financial interest which is
subject to disclosure under the California Political Reform Act or would constitute
a conflict of interest under Government Code Section 1090 to the City Manager.
All other City Investment Officials shall immediately disclose any financial interest
which is subject to disclosure under the California Political Reform Act or would
constitute a conflict of interest under Government Code Section 1090 to the City
Manager.
AUTHORIZED DEALERS AND INSTITUTIONS:
The City may conduct investment transactions only with banks, savings and
loans associations, and registered broker / dealers. Any investments other than
those purchased directly from a issuer must be purchased from (i) an individual
or entity licensed by the State as a broker - dealer, as defined in Section 25004 of
the Corporations Code, and which is a member of the Financial Industry
Regulatory Authority, (FINRA) or (ii) from a member of a federally - regulated
securities exchange, or (iii) a national or state charted bank; or (iv) a federal or
state association (as defined by Section 5102 of the Financial Code); or (v) a
brokerage firm designated as a primary government dealer by the Federal
Reserve Bank.
The City Treasurer, either directly or through an authorized party, must
investigate and evaluate all financial institutions, on an annual basis, that desire
to do business with the City in order to determine whether they are adequately
capitalized and whether they make markets in securities that are appropriate to
the City's needs. This may be accomplished by the following: a financial
institution to complete and return an appropriate questionnaire, audited financial
statements and proof of Financial Industry Regulatory Authority (FINRA)
registration and good standing.
Nothing in this section precludes the City from engaging the services of a
Registered Investment Advisory firm to assist the City, on a discretionary basis,
with the investment of the City's portfolio.
AUTHORIZED AND SUITABLE INVESTMENTS:
Investments must be made in accordance with the "prudent investor rule" that is
cited under the heading "Prudence."
5
INVESTMENT POLICY
The City is subject to California Government Code, Sections 53600 et seq.
within the context of these limitations, the following investments are authorized,
subject to the restrictions noted below:
a. United States treasury bills, notes, and bonds or similar instruments for
which the full faith and credit of the United States is pledged for payment
of principal and interest. There is no limitation on the percentage of the
City's surplus funds that can be invested in these instruments. The
maximum maturity period may not exceed 5 years.
b. Obligation issued by banks for cooperatives, federal land banks, federal
intermediate credit banks, the Federal Home Loan Board (FHLB), Federal
Home Loan Mortgage Corporation (FHLMC), Federal Farm Credit Bank
(FFCB), and the Federal National Mortgage Association (FNMA).
Although there is no percentage limitation on investments in these
obligations, the "prudent investor rule" applies to obligations issued by
any of these agencies, because U.S. Government backing is implied
rather than guaranteed. The maximum maturity period may not exceed 5
years.
c. Commercial paper rated "P -1" by Moody's Investor Services or "A -1" by
Standard & Poor's, and issued by a domestic corporation having assets in
excess of $500,000,000 and has a long -term debt rating of "A2" or higher
by Moody's or "A" or higher rating by S &P. The purchase of eligible
commercial paper may not exceed 270 days maturity nor represent more
than 5% of the outstanding paper of an issuing corporation. The
Purchase of commercial paper not to exceed 25% of the City's surplus
funds.
d. FDIC Insured Certificates of Deposit issued by a nationally or state -
chartered bank, or a state of federal savings and loan association, or by a
state - licensed branch of a foreign bank. The invested amount per
institution shall not exceed the current FDIC insured limit (currently
$250,000). Purchases of eligible FDIC insured certificates of deposit
shall not exceed five years to maturity.
e. Negotiable certificates of deposit issued by a national or state - charted
bank or a state or federal saving and loan association. Negotiable
certificates of deposit may not exceed 30% of the City's total portfolio.
Certificates purchased from a bank may not exceed 30% of the City's
total portfolio. Certificates purchased from a bank may not exceed the
shareholder's equity in the bank. Certificates over $500,000 purchased
from savings and loan associations may not exceed the net worth of the
association. The maximum maturity_ period may not exceed 5 years.
State of California Local Agency Investment Fund (LAIF) Funds may be
invested in LAIF; a State of California managed investment pool, up to the
maximum dollar amounts per separate legal entity in conformance with
the account balance limits authorized by the State Treasurer. Annual
review of LAIF's Pool Money Investment Board Annual Report will be
conducted to continue to ensure LAIF's investment policy, standards, and
rate of return are compatible with the City's risk tolerance. Limits:
Maximum concentration $40 million combined limit for all accounts.
INVESTMENT POLICY
g. Funds held under the terms of a Trust Indenture or other contract or debt
issuance agreement may be invested according to the provisions of those
indentures' agreements.
h. The City may invest in non - negotiable time deposits that are collateralized
as required by the California Government Code, and that are maintained
in banks and savings and loans associations that meet the requirement
for accepting deposits of public funds. Because time deposits are not
liquid, no more than 25% of the City's temporarily idle funds may be
invested in this category. A maximum maturity period may not exceed
one year
Medium term corporate notes with a maximum maturity of 5 years may be
purchased. Securities eligible for investment must be rated "AT' or higher
by Moody's or "A" or higher rating by S &P. Medium term notes may not
exceed 30% of the market value of the City's portfolio, and not more than
2% of the market value of the portfolio may be invested in notes issued by
any one corporation. Commercial paper holdings must be included when
calculating this 2% limitation. The maximum maturity period may not
exceed 5 years.
9.0 UNAUTHORIZED INVESTMENTS:
State and Federal laws notwithstanding, any investment not specifically
described herein including, but not limited to, reverse repurchase agreements,
derivatives, options, futures, zero coupon bonds, inverse floaters, range notes,
first mortgages or trust deeds, collateralized mortgage obligations, (CMO's),
limited partnerships, real estate investments, trusts (REIT's), open -end mutual
funds with a weighted average maturity greater than 180 days, unregulated
and /or uninsured investment pools, common stock, preferred stock, commodities,
precious metals, securities with high price volatility, limited marketability (less
than three active bidders), securities that may default on interest payments and
any other speculative investment deemed inappropriate under the Prudent Invest
standard are strictly prohibited.
10.0 REVIEW OF INVESTMENT PORTFOLIO
The securities held by the City of Lynwood must be in compliance with Section
8.0 Authorized and Suitable Investments at the time of purchase. The Quarterly
Investment report will identify any securities that do not comply. The Treasurer
shall report any instances of noncompliance identified through the review of the
portfolio to the City Council.
11.0 COLLATERAL REQUIREMENTS:
Collateral for Certificates of Deposit (CD) and Negotiated Certificates of Deposit
(NCD) must comply with Government Code, Chapter 4, Bank Deposit law
Section 16500 et seq. and the Savings and Loan and Credit Union Deposit Law
Government Code Section 16600 et seq.
7
INVESTMENT POLICY
.In order to reduce market risk and provide a level of security for all funds, the
market value of securities that underlay Certificates of Deposit shall be valued at
110% of the market value of principal and accrued interest. Repurchase
Agreements shall be valued at 102% of the market value of principal and accrued
interest.
In conformity with the provisions of the Federal Bankruptcy Code that provide for
the liquidation of securities held as collateral, the only securities acceptable as
collateral are certificates of deposit, commercial paper, eligible bankers
acceptances, and medium term notes or securities that are the direct obligation
of, or are fully guaranteed as to principal and interest by the United States or any
City of the United States.
An independent third party with whom the City has a current custodial agreement
will always hold collateral.
The right of collateral substitution is granted with prior approval of the City
Treasurer.
12.0 SAFEKEEPING AND CUSTODY
All securities owned by the City shall be held in safekeeping by the City's
custodial bank or by a third party bank trust department, acting as agent for the
City under the terms of a custody agreement or master repurchase agreement.
All security transactions, including collateral for repurchase agreements, entered
into by the City shall be conducted on a delivery- versus - payment (DVP) basis
through the City's safekeeping agent. Securities held in custody for the City shall
be independently audited on an annual basis to verify investment holdings.
13.0 DIVERSIFICATION:
The Treasurer shall maintain a diversified portfolio to minimize the risk of loss
resulting from over concentration of assets in a specific maturity, issuer, or
security type. With the exception of U.S. Treasury securities, Federal agencies,
and LAIF, no more than 50% of the City's total investment portfolio will be
invested in with a single institution. Additionally, no more than 2 %, calculated at
the time of purchase, of the portfolio shall be invested in one name or with one
credit counterparty.
14.0 MAXIMUM MATURITIES:
To the extent possible the portfolio will attempt to match its investments with
anticipated cash flow requirements. Matching maturities with cash flow dates will
reduce the need to sell securities prior to maturity, thus reducing a potential
realized loss. The portfolio will not directly invest in securities maturing more
than five (5) years from the date of purchase pursuant to Government Code
Section 53601. (Excluding LAIF). The weighted average maturity of the portfolio
shall not exceed 3 years.
Reserve funds may be invested in securities exceeding one year if the maturity of
such investments is made to coincide as nearly as practicable with the expected
use of the funds. No portion of the portfolio may exceed five years.
INVESTMENT POLICY
15.0 INTERNAL CONTROL:
The Treasurer is responsible for establishing and maintaining an internal control
structure designed to ensure that the City's assets are protected from loss, theft
or misuse. The internal control structure shall be designed to provide reasonable
assurance that those objectives are met. The concept of reasonable assurance
recognizes that the cost of a control should not exceed the benefits to be derived
and that the valuation of costs and benefits requires estimates and judgments by
management. Internal control procedures shall address:
• Separation of duties.
• Control of collusion.
• Custodial safekeeping.
• Avoidance of physical delivery of securities.
• Written confirmation of transfers for investments and wire transfers.
• Written procedures for placing investment transactions.
• Delegation of authority to investment officials.
16.0 PERFORMANCE STANDARDS:
The investment portfolio shall be designed with the objective of obtaining a
market rate of return throughout budgetary and economic cycles, commensurate
with investment risk constraints and cash flow needs:
a. Investment Strategy: The portfolio's basic investment strategy is to buy
and hold investments until maturity. However the Treasurer may sell a
security due to adverse changes in credit risk or, due to unexpected cash
flow needs, or to improve the quality, yield, or target duration of the
portfolio.
b. Market Yield (Benchmark): The City portfolio is managed with the
objective of obtaining a market rate of return, commensurate with
identified risk constraints and cash flow characteristics. The appropriate
benchmarks will be periodically reviewed by the City Treasurer.
17.0 REPORTING:
In compliance with Government code Section 53607 and 53646, the Treasurer
shall provide the City Council quarterly investment reports, which provide a clear
picture of the status of the current investment portfolio.
The Quarterly Investment Report will include the following information: portfolio
statistics, portfolio performance, compliance reporting requirements, and
investment trading:
Portfolio Statistics
Classification of the investment, the percentage of the total portfolio which
each type of investment represents, issuer, CUSIP, purchase date, rating of
A"
INVESTMENT POLICY
security, date of maturity, par and dollar amount invested on all securities
and investments.
• Current market value and the source of the market value.
• Weighted average maturity of the investment portfolio.
• Maturity aging by type of investment.
• Unrealized gain or loss resulting from appreciation or depreciation in the
market value of securities.
Compliance Reporting Requirements
• Cash management projection: Statement denoting the ability of the City to
meet its expected obligations over the next six months.
• Statement of compliance with the Policy: Reasons for and number of
violations or exceptions to the investment policy during the quarter being
reported on, as well as prior violations or exceptions which have not yet
been corrected.
Investment Trading Activity
• All investment transactions occurring during the quarter whether or not the
transaction has been fully settled.
• A description of any security purchased during the quarter with a maturity
exceeding five years.
• A description of any security downgraded below the minimum acceptable
ratings level (below prime for short term ratings, or below investment grade
for long term ratings).
18.0 INVESTMENT POLICY ADOPTION:
The Treasurer shall annually render to the City Council a Statement of
Investment policy as required in Section 53646(a) of the Government Code. The
City's investment policy shall be adopted by resolution of the City Council and
shall be reviewed annually; any modification made thereto must be approved by
the legislative body.
18.0 GLOSSARY
Definitions of investment - related terms are listed on Exhibit A.
10
Revised 1/9/2014
RESOLUTION NO.
A RESOLUTION OF THE PUBLIC FINANCE AUTHORITY OF THE CITY OF
LYNWOOD APPROVING THE TREASURER'S STATEMENT OF INVESTMENT
POLICY
WHEREAS, the Treasurer is responsible for the City of Lynwood's cash flow
whereby funds are transferred from various accounts to meet operating obligations; and
WHEREAS, the Treasurer is also responsible for the investment of idle cash; and
WHEREAS, the Treasurer has prepared guidelines for a prudent investment
policy; and
WHEREAS, the policy contains certain investment criteria; and
WHEREAS, the basic premise of the policy is to ensure the safety of funds and
assure that the Lynwood City Council's cash needs are met.
NOW, THEREFORE, the Public Finance Authority does hereby find, proclaim,
order and resolve as follows:
Section 1. That the Treasurer's Statement of Investment Policy attached hereto
as Exhibit "A" is hereby approved.
Section 2. This resolution shall go into effect immediately upon its adoption
PASSED, APPROVED and ADOPTED this day of 2015.
ATTEST:
Maria Quinonez, Secretary
APPROVED AS TO FORM:
David A. Garcia, Authority Counsel
Jose Luis Solache, President
APPROVED AS TO CONTENT:
J. Arnoldo Beltran, Chief Administrative Officer
INVESTMENT POLICY
EXHIBIT A
GLOSSARY
ACCRETION: Adjustment of the difference between the price of a bond bought at an
original discount and the par value of the bond.
AGENCIES: Federal agency securities and /or Government - sponsored enterprises
(GSEs), also known as U.S. Government instrumentalities. Securities issued by
Government National Mortgage Association (GNMA) are considered true agency
securities, backed by the full faith and credit of the U.S. Government. GSEs are
financial intermediaries established by the federal government to fund loans to certain
groups of borrowers, for example homeowners, farmers and students and are privately
owned corporations with a public purpose. The most common GSEs are Federal Farm
Credit System Banks, Federal Home Loan Banks, Federal Home Loan Mortgage
Association, and Federal National Mortgage Association.
AMORTIZATION: Accounting procedure that gradually reduces the cost value of a
limited life or intangible asset through periodic charges to income. For fixed assets, the
term used is "depreciation ". It is common practice to amortize any premium over par
value paid in the purchase of preferred stock or bond investments.
APPRECIATION: Increase in the value of an asset such as a stock bond, commodity or
real estate.
ASKED PRICE: The price a broker /dealer offers to sell securities.
ASSET BACKED: A type of security that is secured by receivables, such as credit card
and auto loans. These securities typically pay principal and interest monthly.
BANKERS' ACCEPTANCE (BA): A draft or bill or exchange accepted by a bank or
trust company. The accepting institution guarantees payment of the bill, as well as the
issuer. This money market instrument is used to finance international trade.
BASIS POINT: One - hundredth of one percent (i.e., 0.01%).
BENCHMARK: A comparative base for measuring the performance or risk tolerance of
the investment portfolio. A benchmark should represent a close correlation to the level
of risk and the average duration of the portfolio's investment.
BID PRICE: The price a broker /dealer offers to purchase securities.
BOND: A financial obligation for which the issuers promises to pay the bondholder a
specified stream of future cash flows, including periodic interest payments and a
principal repayment.
BOOK RATE OF RETURN: A measure of a portfolio's performance over time. It is the
internal rate of return which equates the beginning value of the portfolio with the ending
value, and includes interest earnings and realized gains and losses on the portfolio.
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INVESTMENT POLICY
BOOK VALUE: The value at which a debt security is shown on the holder's balance
sheet. Book value is acquisition cost less amortization of premium or accretion of
discount.
BROKER: A broker acts as an intermediary between a buyer and seller for a
commission and does not trade for his /her own risk and account or inventory.
CALLABLE SECURITIES: A security that can be redeemed by the issuer before the
scheduled maturity date.
CASH FLOW: An analysis of all changes that affect the cash account during a specified
period.
CERTIFICATE OF DEPOSIT (CD): A time deposit with a specific maturity evidenced by
a certificate. Large- denomination CD's are typically negotiable.
COLLATERAL: Securities, evidence of deposit or other property which a borrower
pledges to secure repayment of a loan. Also refers to securities pledged by a bank to
secure deposits of public monies.
COLLATERALIZED MORTGAGE OBLIGATION (CMO): A type of mortgage- backed
security that creates separate pools of pass- through rates for different classes of
bondholders with varying maturities, called tranches. The repayments from the pool of
pass- through securities are used to retire the bonds in the order specified by the bonds'
prospectus.
COMMERCIAL PAPER: Short-term, unsecured, negotiable promissory notes of
corporations.
COMMERCIAL RECEIVABLES: Business debt owed to a creditor which may be used
as collateral for asset backed securities. These receivables include equipment leases,
building leases, and other business loans.
COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR): The official annual
financial report for the City. It includes combined statements and basic financial
statements for each individual fund and account group prepared in conformity with
Generally Accepted Accounting Principles (GAAP).
CONDUIT FINANCING: A financing in which a governmental agency issues debt and
the proceeds of the issue are loaned to a nongovernmental borrower who then applies
the proceeds for a project financing or (if permitted by federal tax laws for a qualified
501(c)(3) bond) for working capital purposes.
CONSUMER RECEIVABLES: Consumer debt owed to a creditor which may be used
as collateral for asset backed securities. These receivables include credit card, auto,
and home equity loans.
CORPORATE NOTE: Debt instrument issued by a private corporation.
COUPON: The annual rate at which a bond pays interest.
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INVESTMENT POLICY
CREDIT ANALYSIS: An analysis of the economic and financial conditions to determine
creditworthiness or the ability to meet debt obligations.
CREDIT RATINGS: A grade given to a debt instrument that indicates its credit quality.
Private independent rating services such as Standard & Poor's, Moody's and Fitch
provide these evaluations of the issuer's financial strength, or its ability to pay principal
and interest in a timely fashion. High graded credit ratings are as follows:
Mood 's
Standard & Poor's
Fitch
Long
Term
Short
Term
Long
Term
Short
Term
Long
Term
Short
Term
Aaa
P1
AAA
A1+
AAA
A1+
Aa 1
AA+
AA+
Aa3
AAA-
A
Al
A+
Al
A+
A2
A
A
P2
A2
A2
Baal
BBB+
BBB+
CREDIT RISK: The risk that an obligation will not be paid and a loss will result due to a
failure of the issuer of a security.
CUSIP: Stands for Committee on Uniform Securities Identification Procedures. A
CUSIP number identifies most securities, including: stocks of all registered U.S. and
Canadian companies, and U.S. government and municipal bonds. The CUSIP system —
owned by the American Bankers Association and operated by Standard & Poor's-
facilitates the clearing and settlement process of securities. The number consists of nine
characters (including letters and numbers) that uniquely identify a company or issuer
and the type of security.
CURRENT YIELD: The annual interest on an investment divided by the current market
value. Since the calculation relies on the current market value rather than the investor's
cost, current yield is unrelated to the actual return the investor will earn if the security is
held to maturity.
CUSTODIAN: A bank or other financial institution that keeps custody of stock
certificates and other assets.
DEALER: A dealer, as opposed to a broker, acts as a principal in all transactions,
buying and selling for his /her own risk and account or inventory.
DEBENTURES: A bond secured only by the general credit of the issuers.
DEFEASED BOND ISSUES: Issues that have sufficient money to retire outstanding
debt when due, so that the agency is released from the contracts and covenants in the
bond documents.
DELIVERY VERSUS PAYMENT (DVP): Delivery of securities with a simultaneous
exchange of money for the securities.
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INVESTMENT POLICY
DERIVATIVE: A financial instrument that is based on, or derived from, some underlying
asset, reference date, or index.
DIRECT ISSUER: Issuer markets its own paper directly to the investor without use of an
intermediary.
DISCOUNT: The difference between the cost of a security and its value at maturity
when quoted at lower than face value.
DIVERSIFICATION: Dividing investment funds among a variety of securities offering
independent returns and risk profiles.
DURATION: A measure of the timing of the cash flows, such as the interest payments
and the principal repayment, to be received from a given fixed - income security. This
calculation is based on three variables: term to maturity, coupon rate, and yield to
maturity. Duration measures the price sensitivity of a bond to changes in interest rates.
EARNED INCOME YIELD THIS PERIOD (annualized): The Total net Earnings this
period divided by Average Daily Portfolio Balance and the number of days in the period,
multiplied by 365 (or 360 depending on the profile setting), and then multiplied by 100.
FACE VALUE: The principal amount owed on a debt instrument. It is the amount on
which interest is computed and represents the amount that the issuer promises to pay at
maturity.
FAIR VALUE: The amount at which a security could be exchanged between willing
parties, other than in a forced or liquidation sale. If a market price is available, the fair
value is equal to the market value.
FANNIE MAE: Trade name for the Federal National Mortgage Association (FNMA), a
U.S. Government sponsored enterprise.
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC): A federal agency that
provides insurance on bank deposits, guaranteeing deposits to a set limit per account,
currently $100,000.
FEDERAL FARM CREDIT BANK (FFCB): Government - sponsored enterprise that
consolidates the financing activities of the Federal Land Banks, the Federal Intermediate
Credit Banks and the Banks for Cooperatives. Its securities do not carry direct U.S.
government guarantees.
FEDERAL FUNDS RATE: The rate of interest at which Federal funds are traded. This
rate is considered to be the most sensitive indicator of the direction of interest rates, as it
is currently pegged by the Federal Reserve through open- market operations.
FEDERAL GOVERNMENT AGENCY SECURITIES: Federal Agency or United States
government- sponsored enterprise obligations, participations, or other instruments,
including those issued by or fully guaranteed as to principal and interest by federal
agencies or United States government- sponsored enterprises.
FEDERAL HOME LOAN BANKS (FHLB): Government sponsored enterprise (currently
made up of 12 regional banks) that regulates and lends funds and provides
correspondent banking services to member commercial banks, thrift institutions, credit
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INVESTMENT POLICY
unions and insurance companies. Although the banks operate under federal charter
with government supervision, the securities are not guaranteed by the U. S.
Government.
FEDERAL HOME LOAN MORTGAGE CORPORATION ( FHLMC): Government
sponsored enterprise that helps maintain the availability of mortgage credit for residential
housing. FHLMC finances these operations by marketing guaranteed mortgage
certificates and mortgage participation certificates. Its discount notes and bonds do not
carry direct U.S. government guarantees.
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA): Government sponsored
enterprise that is the largest single provider of residential mortgage funds in the United
States. FNMA is a private stockholder -owned corporation. The corporation's purchases
include a variety of adjustable mortgages and second loans, in addition to fixed -rate
mortgages. FNMA's securities are also highly liquid and are widely accepted. FNMA
securities do not carry direct U.S. Government guarantees.
FEDERAL OPEN MARKET COMMITTEE (FOMC): A committee of the Federal
Reserve Board, which establishes monetary policy and executes it through temporary
and permanent changes to the supply of bank reserves.
FEDERAL RESERVE SYSTEM: The central bank of the U.S. which consists of a seven
member Board of Governors, 12 regional banks and about 5,700 commercial banks that
are members.
FED WIRE: A wire transmission service established by the Federal Reserve Bank to
facilitate the transfer of funds through debits and credits of funds between participants
within the Fed system.
FREDDIE MAC: Trade name for the Federal Home Loan Mortgage Corporation
( FHLMC), a U.S. government sponsored enterprise.
FITCH INDIVIUAL BANK RATINGS: Individual Ratings are assigned to banks that are
legal entities. These ratings, which are internationally comparable, attempt to assess
how a bank would be viewed if it were entirely independent and could not rely on
external support. These ratings are designed to assess a bank's exposure to, appetite
for, and management of risk, and thus represent the agency's view on the likelihood that
it would run into significant financial difficulties such that it would require support. The
ratings are as follows:
A. A very strong bank - Characteristics may include outstanding profitability and
balance sheet integrity, franchise, management, operating environment or
prospects.
B. A strong bank - There are no major concerns regarding the bank.
Characteristics may include strong profitability and balance sheet integrity,
franchise, management, operating environment or prospects.
C. An adequate bank, which, however, possesses one or more troublesome
aspects. There may be some concerns regarding its profitability and balance
sheet integrity, franchise, management, operating environment or prospects.
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INVESTMENT POLICY
D. A bank that has weaknesses of internal and /or external origin. There are
concerns regarding its profitability and balance sheet integrity, franchise,
management, operating environment or prospects. Banks in emerging
markets are necessarily faced with a greater number of potential
deficiencies of external origin.
E. A bank with very serious problems, which either requires or is likely to
require external support.
F. A bank that has either defaulted or, in Fitch Ratings' opinion, would have
defaulted if it had not received external support. Examples of such support
include state or local government support, (deposit) insurance funds,
acquisition by some other corporate entity or an injection of new funds from
its shareholders or equivalent.
Note: Gradations may be used among the ratings A to E: i.e. A/B, B /C, C /D, and D /E.
No gradations apply to the F rating.
GINNIE MAE: Trade name for the Government National Mortgage Association (GNMA),
a direct obligation bearing the full faith and credit of the U.S. Government.
GOVERNMENT ACCOUNTING STANDARDS BOARD (GASB): A standard - setting
body, associated with the Financial Accounting Foundation, which prescribes standard
accounting practices for governmental units.
GUARANTEED INVESTMENT CONTRACTS (GICS): An agreement acknowledging
receipt of funds, for deposit, specifying terms for withdrawal, and guaranteeing a rate of
interest to be paid.
INACTIVE DEPOSITS: Funds not immediately needed for disbursement.
INTEREST RATE: The annual yield earned on an investment, expressed as a
percentage.
INTEREST RATE RISK: The risk of gain or loss in market values of securities due to
changes in interest -rate levels. For example, rising interest rates will cause the market
value of portfolio securities to decline.
INVESTMENT AGREEMENTS: A contract providing for the lending of issuer funds to a
financial institution which agrees to repay the funds with interest under predetermined
specifications.
INVESTMENT GRADE (LONG TERM RATINGS): The minimum, high quality ratings
for long term debt such as corporate notes. Investment Grade ratings are as follows:
A3 (Moody's), A- (S &P), and A- (Fitch).
INVESTMENT PORTFOLIO: A collection of securities held by a bank, individual,
institution or government agency for investment purposes.
LIQUIDITY: A liquid asset is one that can be converted easily and rapidly into cash with
minimum risk of principal.
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INVESTMENT POLICY
LOCAL AGENCY INVESTMENT FUND (LAIF): An investment pool sponsored by the
State of California and administered /managed by the State Treasurer. Local
government units, with consent of the governing body of that agency, may voluntarily
deposit surplus funds for the purpose of investment. Interest earned is distributed by the
State Controller to the participating governmental agencies on a quarterly basis.
LOCAL AGENCY INVESTMENT POOL: A pooled investment vehicle sponsored by a
local agency or a group of local agencies for use by other local agencies.
MARK TO MARKET: Current value of securities at today's market price.
MARKET RISK: The risk that the value of securities will fluctuate with changes in
overall market conditions or interest rates. Systematic risk of a security that is common
to all securities of the same general class (stocks, bonds, notes, money market
instruments) and cannot be eliminated by diversification (which may be used to eliminate
non - systematic risk).
MARKET VALUE: The price at which a security is currently being sold in the market.
See FAIR VALUE.
MASTER REPURCHASE AGREEMENT: A written contract covering all future
transactions between the parties to repurchase agreements and reverse repurchase
agreements that establish each party's rights in the transactions. A master agreement
will often specify, among other things, the right of the buyer - lender to liquidate the
underlying securities in the event of default by the seller- borrower.
MATURITY: The date that the principal or stated value of a debt instrument becomes
due and payable.
MEDIUM -TERM NOTES (MTNs): Unsecured, investment -grade senior debt securities
of major corporations which are sold in relatively small amounts either on a continuous
or an intermittent basis. MTNs are highly flexible debt instruments that can be structured
to respond to market opportunities or to investor preferences.
MODIFIED DURATION: The percent change in price for a 100 basis point change in
yields. This is a measure of a portfolio's or security's exposure to market risk.
MONEY MARKET: The market in which short term debt instruments (Treasury Bills,
Discount Notes, Commercial Paper, Banker's Acceptances and Negotiable Certificates
of Deposit) are issued and traded.
MORTGAGED BACKED SECURITIES: A type of security that is secured by a
mortgage or collection of mortgages. These securities typically pay principal and
interest monthly.
MUNICIPAL BONDS: Debt obligations issued by states and local governments and
their agencies, including cities, counties, government retirement plans, school districts,
state universities, sewer districts, municipally owned utilities and authorities running
bridges, airports and other transportation facilities.
MUTUAL FUND: An entity that pools money and can invest in a variety of securities
which are specifically defined in the fund's prospectus.
iE:3
INVESTMENT POLICY
NEGOTIABLE CERTIFICATE OF DEPOSIT: A large denomination certificate of
deposit which can be sold in the open market prior to maturity.
NET PORTFOLIO YIELD: Calculation in which the 365 -day basis equals the annualized
percentage of the sum of all Net Earning during the period divided by the sum of all
Average Daily Portfolio Balances.
NEW ISSUE: Term used when a security is originally "brought" to market.
NOTE: A written promise to pay a specified amount to a certain entity on demand or on
a specified date.
OPEN MARKET OPERATIONS: Purchases and sales of government and certain other
securities in the open market by the New York Federal Reserve Bank as directed by the
FOMC in order to influence the volume of money and credit in the economy. Purchases
inject reserves into the bank system and stimulate growth of money and credit: Sales
have the opposite effect. Open market operations are the Federal Reserve's most
important and most flexible monetary policy tool.
PAR VALUE: The amount of principal which must be paid at maturity. Also referred to
as the face amount of a bond. See FACE VALUE.
PORTFOLIO: The collection of securities held by an individual or institution.
PREMIUM: The difference between the par value of a bond and the cost of the bond,
when the cost is above par.
PRIMARY DEALER: A group of government securities dealers who submit daily reports
of market activity and positions and monthly financial statements to the Federal Reserve
Bank of New York and are subject to its informal oversight. These dealers are
authorized to buy and sell government securities in direct dealing with the Federal
Reserve Bank of New York in its execution of market operations to carry out U.S.
monetary policy. Such dealers must be qualified in terms of reputation, capacity, and
adequacy of staff and facilities.
PRIME (SHORT TERM RATING): High quality ratings for short term debt such as
commercial paper. Prime ratings are as follows: P1 (Moody's), Al (S &P), and F1
(Fitch).
PRINCIPAL: The face value or par value of a debt instrument, or the amount of capital
invested in a given security.
PROSPECTUS: A legal document that must be provided to any prospective purchaser
of a new securities offering registered with the Securities and Exchange Commission
that typically includes information on the issuer, the issuer's business, the proposed use
of proceeds, the experience of the issuer's management, and certain certified financial
statements (also known as an "official statement ").
PRUDENT INVESTOR STANDARD: A standard of conduct for fiduciaries. Investments
shall be made with judgment and care - -under circumstances then prevailing, which
persons of prudence, discretion and intelligence exercise in the management of their
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INVESTMENT POLICY
own affairs, not for speculation, but for investment, considering the probable safety of
their capital as well as the probable income to be derived.
PUBLIC DEPOSITS: A bank that is qualified under California law to accept a deposit of
public funds.
PURCHASE DATE: The date in which a security is purchased for settlement on that or
a later date. Also known as the "trade date ".
RATE OF RETURN: 1) The yield which can be attained on a security based on its
purchase price or its current market price. 2) Income earned on an investment,
expressed as a percentage of the cost of the investment.
REALIZED GAIN (OR LOSS): Gain or loss resulting from the sale or disposal of a
security.
REGIONAL DEALER: A financial intermediary that buys and sells securities for the
benefit of its customers without maintaining substantial inventories of securities and that
is not a primary dealer.
REPURCHASE AGREEMENT (RP or REPO): A transaction in which a counterparty or
the holder of securities (e.g. investment dealer) sells these securities to an investor (e.g.
the City) with a simultaneous agreement to repurchase them at a fixed date. The
security "buyer" (e.g. the City) in effect lends the "seller" money for the period of the
agreement, and the terms of the agreement are structured to compensate the "buyer" for
this. Dealers use RP extensively to finance their positions. Exception: When the Fed is
said to be doing RP, it is lending money, which is, increasing bank reserves.
REVERSE REPURCHASE AGREEMENT (REVERSE REPO): The opposite of a
repurchase agreement. A reverse repo is a transaction in which the City sells securities
to a counterparty (e.g. investment dealer) and agrees to repurchase the securities from
the counterparty at a fixed date. The counterparty in effect lends the seller (e.g. the City)
money for the period of the agreement with terms of the agreement structured to
compensate the buyer.
RISK: Degree of uncertainty of return on an asset.
SAFEKEEPING: A service which banks offer to clients for a fee, where physical
securities are held in the bank's vault for protection and book -entry securities are on
record with the Federal Reserve Bank or Depository Trust Company in the bank's name
for the benefit of the client. As agent for the client, the safekeeping bank settles
securities transactions, collects coupon payments, and redeems securities at maturity or
on call date, if called.
SECURITIES AND EXCHANGE COMMISSION (SEC): Agency created by Congress to
protect investors in securities transactions by administering securities legislation.
SEC RULE 15C3 -1: See UNIFORM NET CAPITAL RULE.
SECONDARY MARKET: A market for the repurchase and resale of outstanding issues
following the initial distribution.
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INVESTMENT POLICY
SECURITIES: Investment instruments such as notes, bonds, stocks, money market
instruments and other instruments of indebtedness or equity.
SETTLEMENT DATE: The date on which a trade is cleared by delivery of securities
against funds.
SPREAD: The difference between two figures or percentages. It may be the difference
between the bid (price at which a prospective buyer offers to pay) and asked (price at
which an owner offers to sell) prices of a quote, or between the amount paid when
bought and the amount received when sold.
STRUCTURED NOTE: A complex, fixed income instrument, which pays interest, based
on a formula tied to other interest rates, commodities or indices. Examples include
"inverse floating rate" notes which have coupons that increase when other interest rates
are falling, and which fall when other interest rates are rising and "dual index floaters ",
which pay interest based on the relationship between two other interest rates, for
example, the yield on the ten -year Treasury note minus the Libor rate. Issuers of such
notes lock in a reduced cost of borrowing by purchasing interest rate swap agreements.
STUDENT LOAN MARKET ASSOCIATION (SLMA): Government - sponsored
enterprise that purchases student loans from originating financial institutions and
provides financing to state student loan agencies. It provides a national secondary
market for federally- sponsored student loans and credit to participants in the post
secondary education lending sector.
SUBORDINATED DEBT: Debt over which senior debt has priority. In the event of a
bankruptcy, subordinated debt holders receive payment only after senior debt holders
are paid in full.
TIME DEPOSIT: A deposit with a California bank or savings and loan association for a
specific amount and with a specific maturity date and interest rate. Deposits of up to
$100,000 are insured by FDIC. Deposits over $100,000 are collateralized above the
insurance with either government securities (at 110% of par value), first trust deeds (at
150% of par value), or letters of credit (at 105% of par value).
TOTAL RATE OF RETURN: A measure of a portfolio's performance over time. It is the
internal rate of return which equates the beginning value of the portfolio with the ending
value, and includes interest earnings and realized and unrealized gains and losses on
the portfolio. For bonds held to maturity, total return is the yield to maturity.
TRUSTEE OR TRUST COMPANY OR TRUST DEPARTMENT OF A BANK: A
financial institution with trust powers which acts in a fiduciary capacity for the benefit of
the bondholders in enforcing the terms of the bond contract.
UNDERWRITER: A dealer which purchases a new issue of municipal securities for
resale.
UNIFORM NET CAPITAL RULE: Securities and Exchange Commission requirement
that member firms as well as nonmember broker /dealers in securities maintain a
maximum ratio of indebtedness to liquid capital of 15 to 1; also called net capital rule and
net capital ratio. Indebtedness covers all money owed to a firm, including margin loans
and commitments to purchase securities, one reason new public issues are spread
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INVESTMENT POLICY
among members of underwriting syndicates. Liquid capital includes cash and assets
easily converted into cash.
U.S. GOVERNMENT AGENCY SECURITIES: Securities issued by U.S. government
agencies, most of which are secured only by the credit worthiness of the particular
agency. See AGENCIES.
U.S. TREASURY OBLIGATIONS: Securities issued by the U.S. Treasury and backed
by the full faith and credit of the United States. Treasuries are the benchmark for
interest rates on all other securities in the U.S. The Treasury issues both discounted
securities and fixed coupon notes and bonds. The income from Treasury securities is
exempt from state and local, but not federal, taxes.
TREASURY BILLS: Securities issued at a discount with initial maturities of one
year or less. The Treasury currently issues three -month and six -month Treasury
bills at regular weekly auctions. It also issues very short-term "cash
management" bills as needed to smooth out cash flows.
TREASURY NOTES: Intermediate -term coupon- bearing securities with initial
maturities of one year to ten years.
TREASURY BOND: Long -term coupon- bearing securities with initial maturities
of ten years or longer.
UNREALIZED GAIN (OR LOSS): Gain or loss that has not become actual. It becomes
a realized gain (or loss) when the security in which there is a gain or loss is actually sold.
See REALIZED GAIN (OR LOSS).
VOLATILITY: Characteristic of a security, commodity or market to rise or fall sharply in
price within a short -term period.
WEIGHTED AVERAGE MATURITY: The average maturity of all the securities that
comprise a portfolio that is typically expressed in days or years.
WEIGHTED AVERAGE YIELD AT THE END OF PERIOD: The summation of each
investment's period -end scheduled book value multiplied by its ending sub - period yield
and divided by the total scheduled book value. Investments maturing on or before the
end date of the report period will not affect the weighted average yield.
WHEN ISSUED (WI): Short form of "when, as, and if issued." WI refers to a
transaction made conditionally because a security, although authorized, has not yet
been issued with the exception of new Treasury, Agency, and Corporate issuances to
settle within 21 days.
YIELD: The annual rate of return on an investment expressed as a percentage of the
investment. See CURRENT YIELD; YIELD TO MATURITY.
YIELD CURVE: Graph showing the relationship at a given point in time between yields
and maturity for bonds that are identical in every way except maturity.
YIELD TO MATURITY: Concept used to determine the rate of return if an investment is
held to maturity. It takes into account purchase price, redemption value, time to
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INVESTMENT POLICY
maturity, coupon yield, and the time between interest payments. It is the rate of income
return on an investment, minus any premium or plus any discount, with the adjustment
spread over the period from the date of purchase to the date of maturity of the bond,
expressed as a percentage.
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