2007 02 14 IABAGENDA
INVESTMENT ADVISORY BOARD
Study Session Room
78-495 Calls Tampico- La Quints, CA 92253
February 14, 2007 — 5:30 P.M.
CALL TO ORDER
A. Pledge of Allegiance
B. Roll Call
II PUBLIC COMMENT - (This is the time set aside for public comment on any matter not
scheduled on the agenda.)
III CONFIRMATION OF AGENDA
IV CONSENT CALENDAR
A. Approval of Minutes of Meeting on January 10, 2007 for the Investment
Advisory Board.
V BUSINESS SESSION
A. Transmittal of Treasury Report for December, 2006
B. Audit Request for Proposal Member Selection
C. California Municipal Treasurer's Conference — Long Beach, CA, May 2 — 4, 2007
D. Continued Consideration of Fiscal Year 2007/08 Investment Policies & Work
Plan Items
VI CORRESPONDENCE AND WRITTEN MATERIAL
A. Month End Cash Report - January 2007
B. Pooled Money Investment Board Reports - November, 2006
Vll BOARD MEMBER ITEMS
VIII ADJOURNMENT
P.O. Box 1504 • LA QUIN IA, CALIFORNIA 92247-1504
78-495 CALLE TAMPrCO • LA QuiNTA, CALIFORNIA 92253
(760) 777-7000 •PAX (760)777-7101
INVESTMENT ADVISORY BOARD
Meeting Date: February 14, 2007
ITEM TITLE:
Transmittal of Treasury Report
for December 31, 2006
BACKGROUND:
Business Session: A
Attached please find the Treasury Report for December 31, 2006.
RECOMMENDATION:
Review, Receive and File the Treasury Report for December 31, 2006.
John M. Falconer, Finance Director
MEMORANDUM
TO: La Quinta City Council
FROM: John M. Falconer, Finance Directorfrreasurer
SUBJECT: Treasurer's Report for December 31, 2006
DATE: January31, 2007
Attached is the Treasurer's Report for the month ending December 31, 2006. The report is submitted to
the City Council each month after a reconciliation of accounts is accomplished by the Finance Department.
The following table summarizes the changes in Investment types for the month:
Investment
Be innin
Purchased
Notes
Sold/Matured
Other
Endin
Chan e
Cash (3)
$ 409,191
(1)
$ (2,563,597)
$ (2,154,406)
$ (2,563,597)
LAIF
37,130,025
3.700,000
(2,200,000)
0
38,630,025
1,500,000
US Treasuries (2)
115,835,206
33,000,000
(45,000,000)
(374,148)
103,461,058
28,985,010
(12.374.148)
(913,587)
US Gov't Sponsored Enterprises (2)
29,898,597
15,946,099
14,229,000
15,0001000
(15,000,000)
(11,000,000)
(142,587)
949,244
20,895.343
4,949,244
Commercial Paper (2)
2,917,829
3,718
2,921.547
3.718
Corporate Notes
Mutual Funds
21295718
5,776,315
1
$ 75,763,597
$ 436,227
8,072.033
$ 200,810,610
5,776,315
$ 3,622,055
Total
$ 204,432,665
$ 71.70.5
I certify that this report accurately reflects all pooled investments and is in compliance with the California
Government Code; and is in conformity with the City Investment Policy. j
As Treasurer of the City of La Quinta, I hereby certify that sufficient investment liquidity and anticipated
revenues are available to meet the pools expenditure requirements for the next six months. The City of
La Quinta used the Bureau of the Public Debt, U.S. Bank Monthly Statement and the Bank of New York
Monthly Custodian Report to determine the fair market value of investments at month end.
3 2-007
Date
John M. Falconer
Finance Directodrreasurer
Footnote
(1) The amount reported represents the net increase (decrease) of deposits and withdrawals from
the previous month.
(2) The amount- reported in the other column represents the amortization of premium/discount for the
month on US Treasury, Commercial Paper and Agency Investments.
(3) The cash account may reflect a negative balance. This negative balance will be offset with transfers from other Investments -
before warrants are presented for payment by the payee at the bank.
2
Treasurer's Commentary
For the Month of December
Cash Balances — The portfolio size decreased by $3.6 million. The major reason for this
decrease was expenditures for capital projects, including the Vista Dunes Mobile Home Park
Project, SilverRock Golf Course improvements and a settlement with Weitz Golf, and three
payrolls in the month.
Investment Activity — The Treasurer has been increasing the LAIF holdings in December to
take advantage of a 20 basis point advantage over US Treasuries. Also, bond proceeds that
were previously invested in U.S Treasury investments that matured in December were
reinvested in mutual funds to pay for increased construction activity in RDA Project Area 1
and Housing Projects. At month end, the sweep had a $2,936,360 balance and yielded
4.43% which primarily consisted of covering the outstanding warrants. While this rate is
lower than the LAIF rate of 5.13% for next day funds, the sweep account allows the City to
take advantage of earning interest on warrants that have been released but have not been
cleared by our bank. The sweep was instituted based upon the raising interest rates and
earned $ 5,861 in cash for the month. The bank fees for the month were $ 1,941 which
resulted in a net increase of $ 3,920 in real savings.
Portfolio Performance — The overall portfolio performance increased by three (3) basis points
and ended at 5.06% for the month. At the end of December, the portfolio yield was sixteen
(16) basis points over the benchmark which decreased by four (4) basis points from the
previous month to end at 4.90%. With the short average maturity of 80 days, the portfolio
yield should remain at these levels. The Treasurer will continue to invest in short term
investments based upon the yield curve. At this time last year, the portfolio was yielding
3.67% and the benchmark was at 4.20% for a 53 point difference so we have made
progress in meeting our benchmark. The Treasurer has been investing more in LAIF and has
not been investing in longer than six months Treasury securities or in will be investing in
longer than six months GSE's based upon the yield curve to take advantage of yield spreads.
Future Thoughts
The Treasurer will continue to invest in short term maturities to take advantage of the
inverted yield curve — Commercial Paper with 30 to 60 day maturities and Bond proceeds will
continue to be reinvested in six month Treasury bills as they mature. GSE's will be rolled
over for no longer than six month maturities.
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12
INVESTMENT ADVISORY BOARD Business Session: B
Meeting Date: February 14, 2007
ITEM TITLE:
Audit Request for Proposal (RFP) Member Selection
BACKGROUND:
The City Council has requested that two Investment Advisory Board Members
participate on the Audit Committee, which will consist of two Investment Advisory
Board Members, the City Manager, the City Finance Director/Treasurer, another
Coachella Valley City Finance Director and Pedro Rincon, Partner with Peterson,
Slater and Osborne of La Quinta.
RECOMMENDATION:
Select two Board Members to serve on the Audit RFP Committee.
John M. Falconer, Finance Director
INVESTMENT ADVISORY BOARD Business Session: C
Meeting Date: February 14, 2007
TITLE:
California Municipal Treasurer's Conference — Long Beach, CA
May 2 — 4, 2007
BACKGROUND:
Each year the City budgets funds for the Treasurer and two Investment Advisory Board
members to attend the Treasurer's Conference.
Staff is requesting the names of those interested in attending be given at the
Investment Advisory Board Meeting on the 14`h, in order to take advantage of the
discounted registration deadline of March 9`h.
Board Members Egbert and Rassi attended last year's conference.
RECOMMENDATION:
Select up to two Board members to attend the Treasurer's Conference.
ohn M. Falconer, Finance Director
Tuesday, May 1
Pre -Conference Workshop
9:00 a.m. — 4:30 p.m.
Revenue Collection Seminar (2 hour)
Luncheon Buffet
Cash Handling Seminar (4 hour)
This six -hour workshop developed by the Public Treasury Institute of
North America will include a comprehensive revenue collections course to
assist your local agency with capturing all available revenues. You will
learn all the tools to necessary to develop a successful collections
program, provide advice on using and selecting outside help and discuss
the legal aspects of collections. Followed by the internationally recognized
Cash Handling Seminar identified as the most practical, comprehensive
course for training proper cash handling procedures. Two guidebooks will
be distributed including the just published and newly revised Cash
Handling Workbook 2nd Edition along with a certificate of completion for
both courses following the seminar.
Wednesday, May 2
Conference Opening Session
9:00 a.m.
Opening Speaker- David Jones, Author, Trainer and Executive Director of Continuing
Education Training for Public Officials (CEPO). As Executive Director of
Continuing Education for Public Officials, he has provided topics of
interest for thousands of city, county and special district public officials.
He states "Our mission is to create leaders for local government that have
the 'Courage to Lead'." David will provide his insights into the
Treasury/Finance professionals challenging and ever changing role in
public service.
10.45 a.m.
Fraud It Can Happen To You! - Hear the latest information on fraud prevention. What are
the factors and conditions that fosters in the workplace. Learn about the
factors that influence a person to commit fraud and what types of fraud
commonly occur in the workplace. Hear real stories of how computer and
paper fraud has occurred in many local agencies. Learn how to prevent
losses by becoming informed about the latest fraud schemes and white
collar crimes
12:00 p.m.
Keynote Luncheon Speaker — Newly elected California State Treasurer Bill Lockyer, will
share with us the latest news from the Local Agency Investment Pool
(LAIF), other State Treasures Office news and what is happening in
Sacramento.
2:00 p.m.
Treasurer to Treasurer- Find out how other Treasurers manage their resources and
investment portfolios. This panel session of Treasurers from small and
large agencies will give us insight on what works for them as they juggle
the hectic pace of their respective treasury offices.
Concurrent Sessions
3:45 p.m.
"Deal or No Deal" Building Relationships with your Broker and learn how to
get the most out of your investment transaction - Learn how
work with your broker and build on that relationship to secure the best
possible investment for your agencies portfolio. Learn the "new" industry
buzz words and bond market jargon that will help you communicate and
understand what is going on in Wall Street.
3:45 p.m.
payment processing for the Government Sector- Unravel the mystery behind merchant
fees, processing lingo and what government entities should know about
accepting electronic payments. This session will cover the basics of credit
card and ACH processing. Also discussed will be the various forms of
acceptance and why a single solution may or may not be the right fit.
3:45 p.m.
Are post employment healthcare benefit costs killing you? Explore potential
mitigation strategies to more effectively manage your liability
This workshop presents fresh application ideas which will enable you to
begin discussions with your constituents. Learn which benefit promises
causes the greatest liability and when the unfunded liability will become a
credit issue. Explore methods to reduce the total defined benefit obligation
that causes the liability and discuss alternative methods to delivering
retiree healthcare benefits. Explore the impact of asset allocation strategies
on investment returns and defined benefit trusts for funding the obligation
will also be discussed
Thursday, May 3
7.45 a.m.
Business Session (Plated Breakfast) — All conference attendees will enjoy breakfast with
their CMTA colleagues during the Annual Business Meeting.
9:00 a m.
The Success Principles: How to Get from Where You Are to Where You Want to
Be —Renowned Author Jack Canfield will share key strategies from his
latest book, The Success Principles. With a roadmap in hand, he will steer
you in the direction of achieving your highest potential with this proven
approach by learning how to:
• Adapt your response to any outcome of an event
• Maximize your success and future
Access what you want through powerful contacts
.Jack Canfield will be available to meet with attendees following his
presentation
12:00 p.m.
Keynote Luncheon Speaker - John Chen Senior Economist Lehman Brothers (New York),
will provide us with the latest economic forecast for the United States and
California Economy and preview what lies ahead in 2008.
Concurrent Sessions
2:00 p.m.
Banking Services: A Treasurers Guide to Success/RFP Best Practices — Hear both
from a bankers and clients prospective on what works when looking for a
bank to serve your needs. Discover the solutions to choosing the best
banking services for your agency at the lowest possible cost.
2:00 p.m.
Is Investing on -Line right for you? — Learn the latest in cutting edge technology that is
now being used to assist Treasurers in managing their portfolios and
seeking the best possible solution to their investment needs. Also hear
about the latest on-line resources from the GFOA "Yield Advantage"
Program and what it has to offer your Treasury operations.
Concurrent Sessions (continued)
2:00 p.m.
Passing the Baton "Now What?" How to prepare your staff to succeed you! -
Learn strategies to effectively prepare a succession plan and begin the
process of finding and developing a pool of successors who can meet the
organizations current and future needs. Discover the barriers to preparing
the next set of leaders and gather successful planning steps along with a
menu of strategies to successful planning the next generation of
Treasury/Finance Leaders.
3:15 p.m.
Nuts & Bolts - This is a chance for the Government Associates and Commercial
Associates to meet independently to ask questions and have your questions
answered by your colleagues.
4: 00 p.m.
Nuts & Bolts Combined Wrap-up- This is the time for the Government and Commercial
Associates to meet as a group and discuss common issues.
Friday, May 4
9:00 a.m.
Navigating the Perils of Public Service — Discover why citizens have lost trust in their
public officials. What are the ethical warning signs? Conflicts of interest
are lurking around every comer and find out how to stay clear of those
conflicts. Learn on-line tools to help rate you and your agencies ethical
culture. Is your organization ethically fit and what do you do when you
suspect an ethical dilemma?
10.30 am.
Economic and Budget Outlook — Hear the Director of Fiscal Forecasting and Budget at the
Legislative Analyst's Office gives us an update on the State's financial
outlook for the coming year, the latest on the issuance of infrastructure
bond and insight into the Governor's and Legislature's 2007-2008 Budget.
CALIFORNIA MUNICIPAL TREASURERS ASSOCIATION
Conference Registration Form
Hyatt Regency Long Beach
May 1, 2007 Pre -Conference
May 2 — 4, 2007 Conference
You must be a current CMTA Member (Active/Government Associate/Sustaining) to register. If you need to verify that your membership is
current, please contact Debbie Michel at CMTA's Sacramento office at (916) 658-8209. If you have any questions regarding conference
registration, call Mike Reynolds at the City of Redlands at (909) 798-7544. Please use a separate form for each registrant (photocopies
accepted). (THIS FORM IS NOT VALID FOR COMMERCIAL ASSOCIATE MEMBERS.)
Name (Please print or
Title
Organization
Mailing Address City State Zip
Phone Fax E-Mail Address
Name you prefer on
Spouse/Guest Name
Is this your first CMTA Conference? (yes or no) Special dietary needs? (yes or no)
Will you be attending the Thursday evening Banquet? (yes or no)
Registration Fees
Pre -Conference Seminar [Active or Government Associates]
Pre -conference Seminar only
Pre -Conference Seminar if also attending conference
Conference
Active or Government Associate
Includes all meals, receptions & Thursday Banquet
$ 160.00
$ 150.00
Postmarked
Early (on or before 3/09//07) $ 295.00
Regular (on or before 4/02/07) $ 320.00
Late (after 4/02/07) $ 380.00
Second registrant from same organization
Early
(on or before 3/09/07)
$ 265.00
Includes all meals, receptions & Thursday Installation Banquet
Regular
(on or before 4/02/07)
$ 290.00
Late
(after 4/02/07)
$ 390.00
Daily Conference Registration I Wednesday
I Thursday
Daily Rate _x
$ 215.00
Available only if another person from your same agency has paid
full conference registration
Includes breakfast & lunch only
Additional Meals
Spouses & Guests
Wednesday Lunch
Thursday Lunch
Thursday Banquet
X $ 35.00
X $ 35.00
X $ 75.00
Total Fees
Please make checks payable to "CMTA Annual Conference". Mail to: Michael Reynolds, City Treasurer, P.O. Box 3005, Redlands, CA 92373-
1505.(A pre -addressed envelope has been included for your convenience.) Advance registrants unable to attend may receive a refund of the
registration fee less $25.00 processing fee by submitting a written request to CMTA at the same address or fax (909) 748-6411 by April 13,
2007. No refunds will be made if requested after that date. Substitute attendees will be accepted at any time.
INVESTMENT ADVISORY BOARD Business Session: D
Meeting Date: February 14, 2007
TITLE: Consideration of Fiscal Year 20ao)
Investment Policies Investment & Work Plan Items
Continued Consideration of the Fiscal Year 2006/07 Work Plan — Review of
Investment Policy
BACKGROUND:
Staff met with Palm Desert National Bank regarding the CDAR's program. Specific
questions discussed were FDIC coverage (see attached), audit confirmations wiring
funds and monthly statements (see attached).
It appears from discussions with Palm Desert National that audit confirmations
should be sent directly to the financial institutions that are held on June 30`h of
each year. In addition, no individual CD would be directly held at Palm Desert
National if they were selected to place funds in the CDAR's program.
One area that will need additional discussions is the requirement that funds be
wired on Wednesday, one day before they are disbursed to purchase the CD's on
Thursday. Funds appear to be at risk for that day if they are not properly
collateralized by the bank since they would exceed the $100,000 FDIC limit. In
addition, interest would be lost for that one day if the bank holds the funds in a
ledger account. Interest would be earned if the City opened an account with the
bank.
RECOMMENDATION:
Continued consideration of this item with a recommendation to the City Council of
any changes to the Fiscal Year 2006/07 Investment Policy.
V,�,tA e
John M. Falconer, Finance Director
John Falconer
From:
Susan Cavano [scavano@PDNB.com]
Sent:
Tuesday, January 23, 2007 5:26 PM
To:
John Falconer
Subject:
Emailing: index
<<index.url>> Hi John:
Thanks for coming in today. It was a pleasure meeting with you!
I'm sending you a link that should answer your FDIC questions. # 18 addresses your
question of how long it takes to collect on FDIC insurance.
Answers to your other questions:
1. If the City opens an interest bearing account with us (our Treasury Plus pays a great
rate) we will pay you interest on the deposit through the day we invest and you will start
earning on the CDARS account the next day.
2. Audit Confirmations - I spoke with Rhonda Swanson, our CFO. It's a little sticky
because Promentory would have no way of verifying the authenticity of the request since we
hold your account records here, however, we could make arrangements in advance with them.
Rhonda understands why you would want the confirmations to go directly to Promentory and
said we would work out the details.
I hope this answers your questions. Please let me know if I can be of further help!
Susan
Shortcut to: http://www.fdic.gov/deposit/deposits/deposit/faqs/index.html
Susan T Cavano
Vice President
Director of operations
®ional BankPD
Palm Desert Nate
73 745 El P35eo
Palm Desert, CA 92260
Direct TeVFU: 760.674.1487
scavano®pdnb.com
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FDIC: Deposit Insurance Coverage Frequently Asked Questions Page 1 of 4
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Home > Deposit Insurance > Are My Deposits Insured? > Deposit Insurance Coverage Frequently Asked Questions
Deposit Insurance Coverage Frequently Asked Questions
• Common -Quest ions and_Answers
• Single Accounts
• Self -Directed Retirement Accounts
• Joint Accounts
• Revocable Trust Accounts
• Government Accounts
Common Questions and Answers
1. What is the FDIC?
The FDIC - short for the Federal Deposit Insurance Corporation - is an independent agency of
the United States government. The FDIC was created by Congress in 1933 to make the savings
of millions of Americans secure. The FDIC protects depositors against the loss of their insured
deposits if an FDIC -insured bank or savings association fails. FDIC insurance is backed by the
full faith and credit of the United States government.
2. What is the Purpose of FDIC Deposit Insurance?
The FDIC protects depositors' funds in the unlikely event of the financial failure of their bank or
savings institution. FDIC deposit insurance covers the balance of each depositor's account,
dollar -for -dollar, up to the insurance limit, including principal and any accrued interest through the
date of the insured bank's closing.
3. What is the FDIC insurance amount?
The basic insurance amount is $100,000 per depositor, per insured bank. This includes principal
and accrued interest up to a total of $100,000. For example: Jane Smith has a CD in her name
alone with an original balance of $98,000. Jane has interest earned of $ 3,000. Jane's account
now totals $101,000. But, Jane is only insured up to $100,000 and $1,000 is uninsured.
4. Whose deposits does the FDIC insure?
Any person or entity can have FDIC insurance on a deposit. A depositor does not have to be a
citizen, or even a resident of the United States.
5. Does FDIC insurance protect creditors and shareholders?
FDIC insurance only protects depositors, although some depositors may also be creditors or
shareholders of an insured bank.
6. What does FDIC insure?
FDIC insures all types of deposits received by a financial institution in its usual course of
business. For example, savings and checking accounts, NOW accounts, Christmas club
accounts, and time deposits (including certificates of deposit, "CDs") are all subject to FDIC
insurance coverage. Cashiers' checks, officers' checks, expense checks, loan disbursement
checks, interest checks, outstanding drafts, negotiable instruments and money orders drawn on
the institution are also considered deposits, and so are also protected by FDIC. Collectively,
these types of instruments are referred to as "official checks." For example, a cashier's check is
a type of official check.
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FDIC: Deposit Insurance Coverage Frequently Asked Questions Page 2 of 4
Certified checks, letters of credit, and travelers' checks, for which an insured depository
institution is primarily liable, also are insured when issued in exchange for money or its
equivalent, or for a charge against a deposit account.
What is not insured by the FDIC?
The FDIC does not insure the money individuals invest in stocks, bonds, municipal bonds, or
other securities; mutual funds, (including money market mutual funds, and mutual funds that
invest in stocks, bonds and other securities); annuities (which are contracts underwritten by
insurance companies that guarantee income in exchange for a lump sum or periodic payment);
or insurance products such as automobile and life insurance even if these products were
purchased at an insured bank or through an affiliated broker/dealer/insurance agent that is
offering these products on behalf of a bank.
The FDIC does not insure U.S. Treasury bills, bonds, or notes, but these are backed by the full
faith and credit of the U.S. Government.
Also, the FDIC insurance doesn't cover valuables in safe deposit boxes. These contents,
however, may be covered either by the bank's private insurance or the box holder's personal
homeowner's insurance.
Furthermore, the FDIC does not insure against loss of funds due to robberies and other thefts.
Stolen funds may be covered by what's called a bank's Hazard and Casualty insurance, which is
a policy a bank purchases to protect itself from fire, flood, earthquake, robbery, and physical
damage. In those rare instances where a bank employee may tamper with a customer's account,
the bank's blanket bond insurance (also called fidelity bonds) may cover the loss and the funds
would be returned to the customer. Consumer protection laws such as the Electronic Funds
Transfer Act offer protections if a third party somehow gains access to a customer's account.
8. What types of financial institutions are insured by the FDIC?
The FDIC insures deposits in most, but not all, banks and savings associations. All FDIC -insured
institutions must display an official sign at each teller window or teller station.
9. Can insurance coverage be increased by depositing funds with different insured banks?
Deposits with each FDIC -insured bank are insured separately from any deposits held at another
insured bank. If an insured bank has branch offices, the main office and all branch offices are
considered one insured bank. A depositor cannot increase insurance coverage by placing
deposits at different branches of the same insured bank. Similarly, deposits held with the Internet
division of an insured bank are considered the same as funds deposited with the "brick and
mortar" part of the bank, even if the Internet division uses a different name. Financial institutions
that may be owned by the same holding company, but that are separately chartered, are
separately insured. Separately chartered banks have different FDIC Certificate numbers.
10. Can insurance coverage be increased by dividing my deposits Into several different
accounts at the same insured bank?
Deposit insurance coverage can be increased only if the accounts are held in different categories
of ownership. These categories include the four most common consumer ownership categories:
single accounts, self -directed retirement accounts, joint accounts, and revocable trust accounts;
and the less common ownership categories: irrevocable trust accounts, employee benefit plan
accounts, corporation, partnership and unincorporated association accounts, and public unit
accounts.
11. Can Insurance coverage be increased by using a different co -owner's Social Security
number on each account or changing the way the owners' names are listed on the
accounts?
Using different Social Security numbers, rearranging the order of names listed on accounts or
substituting "and" for "or" in joint account titles does not affect the amount of insurance coverage
available to account owners.
12. Can insurance coverage be increased by dividing my funds and depositing them Into
several different accounts?
Federal deposit insurance is not determined on a per -account basis. A depositor cannot increase
FDIC insurance by dividing funds owned in the same ownership category among different
accounts. The type of deposit instrument - whether checking, savings, or CD - has no bearing on
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FDIC: Deposit Insurance Coverage Frequently Asked Questions Page 3 of 4
the amount of insurance coverage.
13. How does the FDIC determine ownership of funds?
The FDIC relies on the "deposit account records" of the insured depository institution to
determine how funds are insured. The FDIC may request supplemental documentation such as
articles of incorporation, copies of a trust, and affidavits to identify relationships between owners
and beneficiaries. These documents may be used by the FDIC to confirm that the funds are
actually owned in the manner indicated in the bank's account records and to determine whether
the account qualifies for insurance coverage.
14. What are "deposit account records?"
The "deposit account records" of an insured depository institution are account ledgers, signature
cards, certificates of deposit, passbooks, and certain computer records. However, account
statements, deposit slips, items deposited, and cancelled checks are not considered deposit
account records for purposes of calculating deposit insurance.
15. What is the deposit insurance coverage after a depositor dies?
The FDIC will insure a deceased person's accounts as if he or she were still alive for six months
after the death of a deposit owner. During this "grace period," the insurance coverage of the
deposit owner's accounts will not change unless the accounts are restructured by those
authorized to do so. The FDIC applies the grace period only if its application would increase,
rather than decrease, deposit insurance coverage.
For example: A and B own a qualifying joint account of $100,000 for which they each have a
right of survivorship. B also has a single (or individual) account of $100,000 at the same FDIC -
insured institution. If A dies, for six months after A's death the FDIC will still insure the A and B
account as a joint account, even though B, as A's survivor, has inherited A's ownership interest in
the account. After the grace period, B's increased ownership interest in the joint account would
be added to his or her single account and insured to a limit of $100,000.
16. What happens when banks merge?
If an account owner has deposits in Bank A and Bank B and Bank A merges into Bank B,
deposits of Bank A continue to be insured separately from the deposits of Bank B for at least six
months after the date of the merger. CD's from Bank A, the assumed bank, are separately
insured until the earliest maturity date after the end of the six month grace period.
17. What happens when a bank fails?
The FDIC would either transfer the insured depositor's account to another FDIC insured bank, or
give the insured depositor a check equal to their account balance. This includes the principal and
interest accrued through the date of the bank's closing, up to the insurance limit.
18. If a bank fails, what is the timeframe for payout of the funds that are insured if the bank
cannot be acquired by another financial institution?
Federal law requires the FDIC to make payments of insured deposits "as soon as possible" upon
the failure of an insured institution. While every bank failure is unique, there are standard policies
and procedures that the FDIC follows in making deposit insurance payments. It is the FDIC's
goal to make deposit insurance payments within one business day of the failure of the insured
institution. Typically, a bank that has failed will be closed on a Friday. The FDIC will then work
the weekend to complete deposit insurance determinations for most deposits and be prepared
on Monday to either transfer the insured portion of a deposit to another FDIC insured institution
or provide deposit insurance payment checks. (Note: Some deposits that require supplemental
documentation from the depositors, such as accounts linked to a living trust agreement or funds
placed by a deposit broker, may take a little longer. The timing of the completion of the deposit
insurance determination is based solely on the depositor providing the documentation needed by
the FDIC to determine insurance coverage.)
19. What happens to customers with uninsured deposits?
Customers who have uninsured deposits may recover a portion of their uninsured funds, but
there is no guarantee that they will recover any more than the insured amount. The amount of
uninsured funds they may receive, if any, is based on the sale of the failed bank's assets.
Depending on the quality and value of these assets, it may take several years to sell all the
assets. As assets are sold, uninsured depositors receive periodic payment on their uninsured
deposit claim.
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FDIC: Deposit Insurance Coverage Frequently Asked Questions Page 4 of 4
20. What happens to my direct deposits when a bank fails?
If a failed bank is acquired by another bank, all direct deposits, including Social Security checks
or paychecks delivered electronically, will be automatically deposited into their account at the
assuming bank. If the FDIC cannot find an acquirer for the failed bank, the FDIC will attempt to
arrange with another local bank to temporarily process any direct deposits. This will allow the
depositor time to make new arrangements for direct deposits as well as automatic withdrawals
(such as automatic payments to utilities or insurance companies) with another bank.
21. How can I access my safe deposit box when a bank fails?
If the FDIC finds a new owner for a bank where the customer has a safe deposit box, the
customer will be able to conduct business as usual. If the FDIC cannot find a buyer for the failed
bank, we will mail instructions to the customer that will explain how the customer can remove the
contents in their box.
22. What happens to loans a depositor has at the failed bank?
The customer remains liable for any payments due on a loan or credit card. The customer would
continue making payments as they did before the bank failed until they are instructed to do
otherwise in writing by the acquiring bank or the FDIC.
If a depositor's bank fails and the depositor has both a loan and uninsured deposits at the bank,
the depositor may "set off' (deduct) the loan balance from the uninsured balance. The depositor
may only deduct the loan balance against the uninsured balance if the loan and the deposit are
titled exactly the same. As an example, if the depositor has a loan in their name only and a
deposit that is owned jointly with another person, then the right of set off does not exist.
23. How can I access the FDIC's deposit insurance products?
Go to www.fdic.gov and click on Deposit Insurance in the upper left-hand corner, then scroll
down and click on Are My Deposits Insured? You will now be at the web page that contains all of
the FDIC's deposit insurance resource materials. All of our deposit insurance products are free.
The best way to obtain free copies of all these resources is through our online order form . Go to
www2 fdic gov/depoositinsurancereoister. Here you can place small or large orders for all deposit
insurance products. Fill in the required information, select the number of copies, and press the
"Submit Order" button. Please allow four to six weeks for shipping. You can also contact the
FDIC Call Center toll -free at 1-877-275-3342 and request copies.
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Last Updated 05/22/2006
Customer Assistance
Home Contact Us Search Help SiteMao Forms
Freedom of Information Act (FOIA) Service Center Website Policies USA.aov
0
http://www.fdic.gov/deposit/deposits/deposit/fags/index.html 1 /24/2007
Palm Desert National Bank
73-745 El Paseo
Palm Desert, CA 92260
Date 01118/07
Page 1 of 3
Subject: CDARS Customer Statement
Below is a summary of your certificate(s) of deposit, which we are holding for you as your custodian. These
certificate(s) of deposit have been issued through CDARS by one or more FDIC -insured depository institutions.
Should you have any questions, please contact us at 760 340 1145, or send an email to solutions@pdnb.com.
Summary of Accounts Reflecting Placements Through CDARS
Account ID Effective Date Interest Rate Maturity Date Opening Balance Ending Balance
07/20/06 4.65% 01/18/07 $1,000,000.00 $0.00
TOTAL
CDARS is a service mark of Promontory Interfinancial Network, LLC.
$1,000,000.00
$0.00
rI
Date 01/18/07
Page 2 of 3
ACCOUNT OVERVIEW
Account ID:
Product Name: 26-WEEK PERSONAL CD
Effective Date:
Maturity Date:
07/20/06
01/18/07
Interest Rate: 4.65%
YTD Interest Paid:
Int Earned Since Last Stmt:
$23,455.59
$2,214.05
Account Balance: $0.00
The Annual Percentage Yield Earned is 4.76%.
CD Issued by Alva State Bank & Trust Company
YTD Interest Paid: $2,257.60
12/30/06
OPENING BALANCE
$96,250.00
2,257.60
Int Earned Since Last Stmt: $213.10
01118/07
01/18/07
Interest Payment
Maturity Payout - Funds To Be Reinvested
-98,507.60
01/18/07
ENDING BALANCE
CD Issued by Associated Bank, NA
YTD Interest Paid: $803.35
12130106
OPENING BALANCE
$34,250.00
803.35
Int Earned Since Last Stmt: $75.83
01/18/07
01/18107
Interest Payment
Maturity Payout - Funds To Be Reinvested
-35,05335
01/18/07
ENDING BALANCE
$0.00
CD Issued by Bank of American Fork
YTD Interest Paid: $1,466.78
12/30/06
OPENING BALANCE
$62,534.35
1,466.78
Int Earned Since Last Stmt: $138.45
01/18/07
01/18/07
Interest Payment
Maturity Payout - Funds To Be Reinvested
-64,00113
01118107
ENDING BALANCE
$0.00
CD issued by Bath Savings Institution
YTD Interest Paid: $2,257.60
$213.10
12130106
01/18/07
OPENING BALANCE
Interest Payment
$96,250.00
2,257.60
Int Earned Since Last Stmt:
01/18/07
Maturity Payout - Funds To Be Reinvested
-98,507.60
01118107
ENDING BALANCE
CD Issued by BBBT
YTD Interest Paid: $918.12
12/30/06
OPENING BALANCE
$39,142.87
918.12
Int Earned Since Last Stmt: $86.67
01/18/07
01/18/07
Interest Payment
Maturity Payout - Funds To Be Reinvested
-40,0660.99
01118107
ENDING BALANCE
00
CD issued by Colonial Bank NA
YTD Interest Paid: $247.51
12130/06
OPENING BALANCE
$10,552.17
247.51
Int Earned Since Last Stmt: $23.37
01/18/07
01/18/07
Interest Payment
Maturity Payout - Funds To Be Reinvested
-10,79968
01/18/07
ENDING BALANCE
$0.00
CD Issued by Community National Bank
YTD Interest Paid: $2,257.60
12/30/06
01118/07
OPENING BALANCE
Interest Payment
$96,250.00
2,257.60
Int Earned Since Last Stmt: $213.10
01/18/07
Maturity Payout - Funds To Be Reinvested
-98,507.60
01/18/07
ENDING BALANCE
CD Issued by Enterprise Natl Bank of Palm Beach
YTD Interest Paid: $87.96
12130106
OPENING BALANCE
$3,750.00
Int Earned Since Last Stmt: $8.31
CDARS is a service mark of Promontory Inlerfmanclal Network, LLC.
Date 01/18/07
Page 3 of 3
01/18/07
01/18/07
Interest Payment
Maturity Payout - Funds To Be Reinvested
87.96
-3,837.96
01118107
ENDING BALANCE
$0.00
CD Issued by First National Bank
YTD Interest Paid: $2,257.60
12/30/06
OPENING BALANCE
$96,250.00
2,257.60
Int Earned Since Last Stmt: $213.10
01/18/07
01/18/07
Interest Payment
Maturity Payout - Funds To Be Reinvested
-98,507.60
01118107
ENDING BALANCE
$0.00
CD Issued by First National Bank of Chester County
YTD Interest Paid: $2,257.60
12/30/06
OPENING BALANCE
$96,250.00
2,257.60
Int Earned Since Last Stmt: $213.10
01/18/07
01/18/07
Interest Payment
Maturity Payout - Funds To Be Reinvested
-98,507 60
01/18/07
ENDING BALANCE
CD Issued by First National Bank Of Arizona
YTD Interest Paid: $2,257.60
12130106
OPENING BALANCE
$96,250.00
2,257.60
Int Earned Since Last Stmt: $213.10
01/18/07
01/18/07
Interest Payment
Maturity Payout - Funds To Be Reinvested
-98,507.60
01118107
ENDING BALANCE
CD Issued by First United Bank and Trust
Company
YTD Interest Paid: $1,871.07
12/30/06
OPENING BALANCE
$79,770.61
1,871.07
Int Earned Since Last Stmt: $176.62
01/18/07
01/18/07
Interest Payment
Maturity Payout - Funds To Be Reinvested
-81,64168
01/18/07
ENDING BALANCE
$0.00
CD Issued by Heartland Bank and Trust Company
YTD Interest Paid: $2,257.60
12/30/06
OPENING BALANCE
$96,250.00
2,257.60
Int Earned Since Last Stmt: $213.10
01/18/07
01/18/07
Interest Payment
Maturity Payout - Funds To Be Reinvested
-98,507.60
01118107
ENDING BALANCE
CD Issued by United Bank, Inc.
YTD Interest Paid: $2,257.60
$213.10
12130106
01/18/07
OPENING BALANCE
Interest Payment
$96,250.00
2,257.60
Int Earned Since Last Stmt:
01/18/07
Maturity Payout - Funds To Be Reinvested
-98,507.60
01/18/07
ENDING BALANCE
Thank you for your business.
CDARS is a service mark of Promontory Inlerfinancial Network, LLC
Palm Desert National Bank
73-745 El Paseo
Palm Desert, CA 92260
Date 01102 07
Account
Page 1 of 1
Subject: Maturity Notice
Below is a summary of your certificate(s) of deposit that have been placed through CDARS with one or more
FDIC -insured depository Institutions that will mature on January 18, 2007. You had requested that the interest be
sent to you and that the principal be resubmitted for deposit at maturity. Please call us prior to 12:00 noon ET on the
business day before maturity to establish the terms before we resubmit your funds. If, however, you have
previously entered into a written agreement with us regarding your resubmitted funds, the terms of your new order
will be established according to the terms of that agreement. If you have any questions, please contact us at 760
340 1145, or send an email to solutions@pdnb.com.
Account Number
Interest Payment Frequency
At Maturity
Check
Original Principal Amount
1,000,000.00
Interest Disbursement Type
23,455.59
Principal Balance
Anticipated Payout At Maturity
1,000,000.00
1,023,455.59
Anticipated Interest
Anticipated Amount Withheld
Maturity Date
Maturity Disbursement Type
01/18/07
Reinvest
Interest Rate
Annual Percentage Yield
4.0.0%0
4.76%
Your certificate(s) of deposit were issued by
the following FDIC -insured depository institution(s):
Principal
Anticipated Anticipated
Anticipated Payout
Balance
Interest Amt Withheld
at Maturity
Bath Savings Institution
96250.00
96:250.00
2,257.60 0.00
2,257.60 0.00
98,507.60
98,507.60
Heartland Bank and Trust Company
First National Bank of Chester County
96250.00
2,257.60 0.00
98,507.60
Bank of American Fork
62:534.35
96250.00
1,466.78 0.00
2,257.60 0.00
64.001.13
98,507.60
United Bank, Inc.
Alva State Bank & Trust Company
96:250.00
2,257.60 0.00
98,507.60
81,641.68
First United Bank and Trust Company
79770.61
96:250.00
1,871.07 0.00
2,257.60 0.00
98,507.60
Community National Bank
Associated Bank, NA
34,250.00
803.35 0.00
35,053.35
Enterprise Natl Bank of Palm Beach
3750.00
87.96 0.00
918.12 0.00
3,837.96
40,060.99
BB&T
Colonial Bank NA
39:142.87
10,552.17
247.51 0.00
10,799.68
98,507.60
First National Bank
96,250.00
96 250.00
2,257.60 0.00
2,257.60 0.00
98 507.60
First National Bank Of Arizona
11000,000.00
23,455.59 0.00
1,023,455.59
Anticipated interest and withholding are estimated amounts
and assume that the entire principal remains on deposit
until maturity. Because interest on your certificate(s) of deposit accrues daily, early or partial withdrawals,
reinvestments, or other factors may affect the actual interest and amount withheld for taxes at
maturity.
Thank you for your business.
CDARS is a service mark of Promontory Interfinanclal Network, LLC.
0
Palm Desert National Bank
73-745 El Paseo
Palm Desert, CA 92260
Date 01/18/07
Account
Page 1 of 1
Subject: New Account Notice
Thank you for purchasing certificate(s) of deposit through Palm Desert National Bank. These deposit(s) have been
placed by us, as your agent and custodian, through WARS with one or more FDIC -insured depository institutions.
Per your request, the funds will be resubmitted for deposit at maturity. Please advise us if you wish to amend these
instructions. If any of the following information is incorrect, or if you have any questions, please contact us at 760
340 1145, or send an email to solutions@pdnb.com.
Account Number
No
Effective Date
01/18/07
Maturity Date
07/19/07
Interest Payment Frequency
At Maturity
Interest Disbursement Instructions
Check
Maturity Disbursement Instructions
Reinvest
Principal Balance 1,000,000.00
Interest Rate
Annual Percentage Yield
Your certificate(s) of deposit were issued by the following FDIC -insured depository institution(s):
BNC National Bank
Heartland Bank and Trust Company
Alva State Bank & Trust Company
VIRGINIA COMMERCE BANK
Benchmark Bank
Amalgamated Bank
The Bank of Georgia
Homestead Bank
Pinnacle Bank
American Trust Bank
Northside Bank
Phoenix, AZ
Bloomington, IL
96,750.00
96,750.00
Alva, OK
96,750.00
Chantilly, VA
96,750.00
Plano, TX
96,750.00
New York City, NY
96,750.00
Peachtree City, GA
96,750.00
Suwanee, GA
96,750.00
Bentonville, AR
96,750.00
Roswell, GA
96,750.00
32 500.00
Adairsville, GA
1,000,000.00
Below is the depository institution(s) where you do not wish your funds placed, as you indicated at the time you
re -submitted your funds to us for placement through CDARS.
DESERT COMMERCIAL BANK
Thank you for your business.
CDARS is a service mark of Promontory Inlerrmanccial Network, LLC,
Palm Desert, CA
10
City of La Quinta
Investment Policy
Executive Summary
The general purpose of this Investment Policy is to provide the rules and standards
users must follow in investing funds of the City of La Quinta.
It is the policy of the City of La Quinta to invest all public funds in a manner which
will provide a diversified portfolio with maximum security while meeting daily cash
flow demands and the highest investment return in conformity to all state and local
statutes. This Policy applies to all cash and investments of the City of La Quinta, La
Quinta Redevelopment Agency and the La Quinta Financing Authority, hereafter
referred in this document as the "City".
The primary objectives, in order of priority, of the City of La Quinta's investment
activity shall be:
Safety of principal is the foremost objective of the investment program.
Investments of the City of La Quinta shall be undertaken in a manner that
seeks to ensure the preservation of capital in the overall portfolio
The investment portfolio shall remain sufficiently liquid to meet all operating
requirements that may be reasonably anticipated.
The investment portfolio shall be designed with the objective of attaining a
market rate of return or yield throughout budgetary and economic cycles,
taking into account the investment risk constraints and liquidity needs.
Within the constraints of safety, liquidity and yield, the City will endeavor to
maintain a diversified portfolio by allocating assets between different types of
investments within policy limitations.
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 own affairs, not for speculation, but for investment, considering
the probable safety of their capital as well as the probable income to be derived.
Authority to manage the City of La Quinta's investment portfolio is derived from the
City Ordinance. Management responsibility for the investment program is delegated
to the City Treasurer, who shall establish and implement written procedures for the
operation of the City's investment program consistent with the Investment Policy.
The Treasurer shall establish and implement a system of internal controls to maintain
the safety of the portfolio. In addition, the internal control system will also insure the
timely preparation and accurate reporting of the portfolio financial information. As
part of the annual audit of the City of La Quinta's financial statements the
independent auditor reviews the adequacy of those controls and comments if
weaknesses are found.
2
CITY OF LA QUINTA
Investment Policy
Table of Contents
Section To is
Page
Executive Summary
2
1
General Purpose
4
II
Investment Policy
4
III
Scope
4
IV
Objectives
4
► Safety
► Liquidity
► Yield
► Diversified Portfolio
V
Maximum Maturities
6
VI
Prudence
6
VII
Delegation of Authority
6
VIII
Conflict of Interest
7
IX
Authorized Financial Dealers and Institutions
7
► Broker/Dealers
► Financial Institutions
X
Authorized Investments and Limitations
8
XI
Investment Pools
13
XII
Payment and Custody
14
XIII
Interest Earning Distribution Policy
14
XIV
Internal Controls and Independent Auditors
14
XV
Benchmark
16
XVI
Reporting Standards
16
XVII
Financial Assets and Investment Activity Not Subject to this Policy
17
XVIII
Investment of Bond Proceeds
17
XIX
Pr al Cottaweting Professional Portfolio Managefrrient
17
XX
Investment Advisory Board - City of La Quinta
18
XXI
Investment Policy Adoption
18
Appendices: A. Summary of Authorized Investments and Limitations
19
B. Municipal Code Ordinance 2.70 - Investment Advisory Board
20
C. Municipal Code Ordinance 3.08 - Investment of Moneys and Funds
21
D. Segregation of Major Investment Responsibilities
23
E. Listing of Approved Financial Institutions
24
F. Broker/Dealer Questionnaire and Certification
25
G. Investment Pool Questionnaire
30
H. Request for Proposal for Portfolio Manager
44
I. Permissible Investment Chart
40
J. Glossary
41
1
The City Treasuredmly use a prof sional investment manager en9 by the City
to assist the City Treasurer in managing the investment program.
Investment responsibilities carry added duties of insuring that investments are made
without improper influence or the appearance to a reasonable person of questionable or
improper influence.
The City of La Quinta Investment Policy maintains a listing of financial institutions
which are approved for investment purposes. All Broker/Dealers and financial
institutions selected by the Treasurer to provide investment services will be approved
by the City Manager subject to City Council approval.
The Treasurer will be permitted to invest only in City approved investments up to the
maximum allowable percentages or dollar limitations and, where applicable, through
the bid process requirements. Authorized investment vehicles and related maximum
portfolio positions are listed in Appendix A - Summary of Authorized Investments and
Limitations. At least two bids will be required of investments in the authorized
investment vehicles.
Collateral ization will be required for Certificates of Deposits in excess of $100,000.
Collateral will always be held by an independent third party from the institution that
sells the Certificates of Deposit to the City. Evidence of compliance with State
Collateral ization policies must be supplied to the City and retained by the City
Treasurer.
The City of La Quinta Investment Policy shall require that each individual investment
have a maximum maturity of two ftee years unless specific approval is authorized by
the City Council, except the projected annual dollar amount as detailed in Section V,
may be invested in U.S. Treasury bills, notes and bonds maturing between -2 3 and 5
years. In addition, the City's investment in the State Local Agency Investment Fund
(LAIF) is allowable as long as the average maturity does not exceed two years, unless
specific approval is authorized by the City Council, The City's investment in Money
Market Mutual funds is allowable as long as the average maturity does not exceed 60
days.
The City of La Quinta Investment Policy will use the six-month U.S. Treasury Bill as a
benchmark when measuring the performance of the investment portfolio.
The Investment Policies shall be adopted by resolution of the La Quinta City Council on
an annual basis. The Investment Policies will be adopted before the end of June of
each year.
This Executive Summary is an overall review of the City of La Quinta Investment
Policies. Reading this summary does not constitute a complete review, which can only
be accomplished by reviewing all the pages.
3
City of La Quinta
Statement of Investment Policy
July 1, 2006 through June 21, 2007
Adopted by the City Council on June 20, 2006
GENERAL PURPOSE
The general purpose of this document is to provide the rules and standards users must follow
in administering the City of La Quinta cash investments.
INVESTMENT POLICY
It is the policy of the City of La Quinta to invest public funds in a manner which will provide a
diversified portfolio with safety of principal as the primary objective while meeting daily cash
flow demands with the highest investment return. In addition, the Investment Policy will
conform to all State and local statutes governing the investment of public funds.
III SCOPE
This Investment Policy applies to all cash and investments, except as further detailed in
Section XVII of the City of La Quinta, City of La Quinta Redevelopment Agency and the City of
La Quinta Financing Authority, hereafter referred in this document as the "City". These funds
are reported in the City of La Quinta Comprehensive Annual financial Report (CAFR) and
include:
All funds within the following fund types:
► General
► Special Revenue
► Capital Projects
► Debt Service
► Enterprise
► Internal Service
► Trust and Agency
P. Any new fund types and fund(s) that may be created.
IV OBJECTIVES
The primary objective, in order of priority, of the City of La Quinta's investment activity shall
be:
1. Safety
Safety of principal is the foremost objective of the investment program.
Investments of the City of La Quinta shall be undertaken in a manner that seeks
11
to ensure the preservation of capital in the overall portfolio in accordance with
the permitted investments. The objective will be to mitigate credit risk and
interest rate risk.
A. Credit Risk
Credit Risk - is the risk of loss due to the failure of the security issuer or
backer. Credit risk may be mitigated by:
► Limiting investments to the safest types of securities;
► Pre -qualifying the financial institutions, and broker/dealers, which
the City of La Quinta will do business with; and
► Diversifying the investment portfolio so that potential losses on
individual securities will be minimized.
B. Interest Rate Risk
Interest Rate risk is the risk that the market value of securities in the
portfolio will fall due to changes in general interest rates. Interest rate
risk may be mitigated by:
► Structuring the investment portfolio so that securities mature to
meet cash requirements for ongoing operations, thereby avoiding
the need to sell securities on the open market prior to maturity;
and
► By investing operating funds primarily in shorter -term securities.
2. Liquidity
The investment portfolio shall remain sufficiently liquid to meet all operating
requirements that may be reasonably anticipated. This is accomplished by
structuring the portfolio so that sufficient liquid funds are available to meet
anticipated demands. Furthermore since all possible cash demands cannot be
anticipated the portfolio should be diversified and consist of securities with
active secondary or resale markets. Securities shall not be sold prior to maturity
with the following exceptions:
► A declining credit quality security could be sold early to minimize loss of
principal;
► Liquidity needs of the portfolio require that the security be sold.
3. Yield
The investment portfolio shall be designed with the objective of attaining a
market rate of return throughout budgetary and economic cycles, taking into
account the investment risk constraints and liquidity needs. Return on
investment is of least importance compared to the safety and liquidity objectives
described above. The core of investments are limited to relatively low risk
securities in anticipation of earning a fair return relative to the risk being
assumed
4. Diversified Portfolio
Within the constraints of safety, liquidity and yield, the City will endeavor to
maintain a diversified portfolio by allocating assets between different types of
investments within policy limitations.
V MAXIMUM MATURITIES
It is the policy of the City of La Quinta to hold securities and other investments of
cash in financial instruments until maturity, thus avoiding the risk that the market
value on investments fluctuates with overall market interest rates. The hold until
maturity policy shall not prevent the sale of a security to minimize loss of principal
when the issuer or backer suffers declining credit worthiness. The hold until
maturity policy requires that the City of La Quinta's investment portfolio is
structured so that sufficient funds are available from maturing investments and
other sources to meet anticipated cash needs. To meet anticipated cash needs, it
is essential that the Treasurer have reasonably accurate, diligently prepared cash
flow projections.
Annually, the Treasurer shall project the amount of funds not expected to be
disbursed within five years. For FY 2005/06, the amount of such funds was $8
million. Funds up to that amount may be invested in U.S. Treasury bills, notes and
bonds maturing between -2 3 and 5 years. For all other funds, investments are
limited to two three years maximum maturity, wft no 4VM than % of surplus
funs hw between two and three years at
VI PRUDENCE
The City shall follow the Uniform Prudent Investor Act as adopted by the State of
California in Probate Code Sections 16045 through 16054.
Section 16053 sets forth the terms of a prudent person which are as follows:
Investments shall be made with judgment and care - under circumstances then
prevailing - which persons of prudence, discretion, and intelligence exercise in the
professional management of their own affairs, not for speculation, but for investment,
considering the probable safety of their capital as well as the probable income to be
derived.
VII DELEGATION OF AUTHORITY
Authority to manage the City of La Quinta's investment portfolio is derived from the
City Ordinance. Management responsibility for the investment program is delegated to
the City Treasurer, who shall establish written procedures for the operation of the
investment program consistent with the Investment Policy. Procedures should include
reference to safekeeping, wire transfer agreements, banking service contracts, and
collateral/depository agreements. Such procedures shall include explicit delegation of
A
authority to persons responsible for investment transactions. No person may engage
in an investment transaction except as provided under the terms of this Investment
Policy and the procedures established by the City Treasurer. The City Treasurer shall
be responsible for all transactions undertaken and shall establish a system of controls
to regulate the activities of subordinate officials. The City Manager or Assistant City
Manager shall approve in writing all purchases and sales of investments prior to their
execution by the City Treasurer.
VIII CONFLICT OF INTEREST
Investment responsibilities carry added duties of insuring that investments are made
without improper influence or the appearance of improper influence.
Therefore, the City Manager, Assistant City Manager, and the City Treasurer shall
adhere to the State of California Code of Economic Interest and to the following:
► The City Manager, Assistant City Manager, and the City Treasurer shall not
personally or through a close relative maintain any accounts, interest, or private
dealings with any firm with which the City places investments, with the
exception of regular savings, checking and money market accounts, or other
similar transactions that are offered on a non-negotiable basis to the general
public. Such accounts shall be disclosed annually to the City Clerk in
conjunction with annual disclosure statements of economic interest.
► All persons authorized to place or approve investments shall report to the City
Clerk kinship relations with principal employees of firms with which the City
places investments.
IX AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS
The City of La Quinta Investment Policy maintains a listing of financial institutions
which are approved for direct investment purposes. In addition a list will also be
maintained of approved broker/dealers selected by credit worthiness, who maintain an
office in the State of California.
1. Broker/Dealers who desire to become bidders for direct investment transactions
must supply the City of La Quinta with the following:
► Current audited financial statements;
► Proof of National Association of Security Dealers Certification;
► Trading resolution;
► Proof of California registration;
► Resume of Financial broker; and
► Completion of the City of La Quinta Broker/Dealer questionnaire which
contains a certification of having read the City of La Quinta Investment
Policy.
The City Treasurer shall evaluate the documentation submitted by the
broker/dealer and independently verify existing reports on file for any firm and
r1
individual conducting investment related business.
The City Treasurer will also contact the following agencies during the
verification process:
► National Association of Security Dealer's Public Disclosure Report File - 1-
800-289-9999
► State of California Department of Corporations 1-916-445-3062
All Broker/Dealers selected by the City Treasurer to provide investment services
will be approved by the City Manager subject to City Council approval. The City
Attorney will perform a legal review of the trading resolution/investment
contract submitted by each Broker/Dealer.
Each securities dealer shall provide monthly and quarterly reports filed pursuant to U.S.
Treasury Department regulations. Each mutual fund shall provide a prospectus and
statement of additional information.
2. Financial Institutions will be required to meet the following criteria in order to
receive City funds for deposit or investment:
A. Insurance - Public Funds shall be deposited only in financial
institutions having accounts insured by the Federal Deposit
Insurance Corporation (FDIC)
B. Collateral - The amount of City of La Quinta deposits or
investments not insured by the FDIC -shall be 1 10% collateralized
by securities' or 150% mortgages' market values of that amount
of invested funds plus unpaid interest earnings.
C. Disclosure - Each financial institution maintaining invested funds in
excess of the FDIC insured amount shall furnish the City a copy of
the most recent Annual Call Report.
The City shall not invest in excess of the FDIC insured amount in
banking institutions which do not disclose to the city a current
listing of securities pledged for collateralization in public monies.
X AUTHORIZED INVESTMENTS AND LIMITATIONS
The City Treasurer will be permitted to invest in the investments summarized in the
Appendix A.
K. STATE OF CALIFORNIA AND CITY OF LA QUINTA LIMITATIONS
As provided in Sections 16429.1, 53601, 53601.1, and 53649 of the
Government Code, the State of California limits the investment vehicles
available to local agencies as summarized in the following paragraphs. Section
53601, as now amended, provides that unless Section 53601 specifies a
limitation on an investment's maturity, no investments with maturities
exceeding five years shall be made. The City of La Quinta Investment Policy
has specified that no investment may exceed two years, except the
projected annual dollar amount, as detailed in Section V, may be invested in
U.S. Treasury bills, notes and bonds maturing between 2 3 and 5 years, with no
more t % of atftplusi fonds invested between two and s at any
time. (/(1)v�Yc/1 �" av�,oz� 6,
State Treasurer's Local Agency Investment Fund (LAIF) - As authorized in
Government Code Section 16429.1 and by LAIF procedures, local government
agencies are each authorized to invest a maximum of $40 million per account in
this investment program administered by the California State Treasurer. The
City's investment in the State Local Agency Investment Fund (LAIF) is allowable
as long as the average maturity of its investment portfolio does not exceed two
years, unless specific approval is authorized by the City Council. The City of La
Quinta has two accounts with LAIF. The City of La Quinta Investment Policy
has a limitation of 25% of the portfolio.
U.S. Government and Related Issues - As authorized in Government Code
Sections 53601 (a) through (n) as they pertain to surplus funds, this category
includes a wide variety of government securities which include the following:
o Local government bonds or other indebtedness and State bonds or other
indebtedness. The City of La Quinta Investment Policy does not allow
investments in local and state indebtedness
• U.S. Treasury bills, notes and bonds and Government National Mortgage
Association (GNMA) securities directly issued and backed by the full faith
and credit of the U.S. Government. The City of La Quinta Investment
Policy limits investments in U.S. Treasury issues and GNMA to 100% of
the portfolio.
• U.S. Government instrumentalities and agencies commonly referred to as
government sponsored enterprises (GSEs), issuing securities not backed
as to principal and interests by the full faith and credit of the U.S.
Government. Publicly owned GSEs include Federal National Mortgage
Association (FNMA), Federal Home Loan Mortgage Corporation (FHLMC)
and Student Loan Marketing Association (SLMA). Non -publicly owned
GSEs include the Federal Home Loan Bank (FHLB), Federal Farm Credit
Bank (FFCB), Federal Land Bank (FLB) and Federal Intermediate Credit
Bank (FICB). The City of La Quinta Investment Policy allows investment
only in securities of FNMA, FHLMC, FHLB and FFCB. _
In OddlOM no more then
10% of surplus funds mr be Invested per GSS isaw and no mare than
30% of On pwtk'dio us way be ited in all OWS with 0
$10 m ism amount per pumfinse. ftV IFY the
arnouO has been determined 52% mAllon per i s
1.01
Bankers' Acceptances - As authorized in Government Code Section 53601 (f),
40% of the portfolio may be invested in Bankers' Acceptances, although no
more than 30% of the portfolio may be invested in Bankers' Acceptances with
any one commercial bank. Additionally, the maturity period cannot exceed 180
days. The City of La Quinta Investment Policy does not allow investment in
Bankers' Acceptances.
Commercial Paper - As authorized in Government Code Section 53601(g), 15%
of the portfolio may be invested in commercial paper of the highest rating (A-1
or P-1) as rated by Moody's or Standard and Poor's, with maturities not to
exceed 270 days. This percentage may be increased to 30 20% if the dollar
weighted average maturity does not exceed 31 days. There are a number of
other qualifications regarding investments in commercial paper based on the
financial strength of the corporation and the size of the investment. The City of
La Quints's Investment Policy follows The Government Code with the following
additional limitations: (1) maximum maturity per issue of 90 days and (2) a
maximum of $6 3 million per issuer, TbapoftV allawsfargw purchase of up to
$5 w0lion in Commercial Papa and up to 45 rMWIon Itt Corpoirate (Dotes from the
sam r.
Negotiable Certificates of Deposit - As authorized in Government Code Section
53601(h), 30% of the portfolio may be invested in negotiable certificates of
deposit issued by commercial banks and savings and loan associations. The
City of La Quinta Investment Policy does not allow investment in Negotiable
Certificates of Deposit.
Repurchase and Reverse Repurchase Agreements - As authorized in Government
Code Section 53601(i), these investment vehicles are agreements between the
local agency and seller for the purchase of government securities to be resold at
a specific date and for a specific amount. Repurchase agreements are generally
used for short term investments varying from one day to two weeks. There is
no legal limitation on the amount of the repurchase agreement. However, the
maturity period cannot exceed one year. The market value of securities
underlying a repurchase agreement shall be at least 102% of the
funds invested and shall be valued at least quarterly.
The City of La Quinta Investment Policy does not allow investment in
Repurchase Agreements.
The term "reverse,repurchase agreement" means the sale of securities by the
local agency pursuant to an agreement by which the local agency will
repurchase such securities on or before a specific date and for a specific
amount. As provided in Government Code Section 53635, reverse repurchase
agreements require the prior approval of the City Council. The City of La Quinta
Investment Policy does not allow investment in Reverse Repurchase
Agreements.
10
Corporate Notes - As authorized in Government Code Section 53601 (j), local
agencies may invest in corporate notes for a maximum period of five years in an
amount not to exceed 30% of the agency's portfolio. The notes must be issued
by corporations organized and operating in the United States or by depository
institutions licensed by the United States or any other state and operating in the
United States. The City of La Quinta Investment Policy allows investment in
corporate notes authorized by the Government Code with the following
limitations:
► Maturities shall conform with Section V.
► Eligible notes shall be regularly quoted and traded in the marketplace.
► Eligible notes shall be rated "AA" or "AAA" on the date of acquisition.
► Total investment shall not exceed 4-6 10% of the portfolio, and
► The maximum aggregate investment shall not exceed $6 3 million face
amount for each issureF-suet.
Diversified Management Companies - As authorized in Government Code
Section 53601(k), local agencies are authorized to invest in shares of beneficial
interest issued by diversified management companies (mutual funds) in an
amount not to exceed 20% of the agency's portfolio. There are a number of
other qualifications and restrictions regarding allowable investments in corporate
notes and shares of beneficial interest issued by mutual funds which include (1)
attaining the highest ranking or the highest letter and numerical rating provided
by not less than two of the three largest nationally recognized rating services, or
(2) having an investment advisor registered with the Securities and Exchange
Commission with not less than five years' experience investing in the securities
and obligations and with assets under management in excess of five hundred
million dollars ($500,000,000)• The City of La Quinta Investment Policy only
allows investments in mutual funds that are money market funds maintaining a
par value of $1 per share that invests in direct issues of the U.S. Treasury
and/or US Agency Securities with an average maturity of their portfolio not
exceeding 90 days and the City limits such investments to 20% of the portfolio.
Mortgage -Backed Securities - As authorized in Government code Section
53601(n), local agencies may invest in mortgage -backed securities such as
mortgage pass -through securities and collateralized mortgage obligations for a
maximum period of five years in an amount not to exceed 20% of the agency's
portfolio. Securities eligible for investment shall have a "A" or higher rating.
The City of La Quinta Investment Policy does not allow investment in Mortgage -
Backed Securities.
Financial Futures and Financial Option Contracts - As authorized in Government
Code Section 53601.1, local agencies may invest in financial futures or option
contracts in any of the above investment categories subject to the same overall
portfolio limitations.
11
The City of La Quinta Investment Policy does not allow investments in financial
futures and financial option contracts.
Certificates of Deposit - As authorized in Government Code Section 53649,
Certificates of Deposit are fixed term investments which are required to be
collateralized from 1 10% to 150% depending on the specific security pledged
as collateral in accordance with Government Code Section 53652. There are
no portfolio limits on the amount or maturity for this investment vehicle.
Collateralization will be required for Certificates of Deposits in excess of the
FDIC insured amount. The type of collateral is limited to City authorized
investments. Collateral will always be held by an independent third party from
the institution that sells the Certificates of Deposit to the City. Evidence of
compliance with State Collateral ization policies must be supplied to the City and
retained by the City Treasurer as follows:
1. Certificates of Deposits Insured by the FDIC.
The City Treasurer may waive collateralization of a deposit that is
federally insured.
2. Certificates of Deposit in excess of FDIC Limits.
The amount not federally insured shall be 1 10% collateralized securities
or 150% mortgages market value of that amount of invested funds plus
unpaid interest earnings.
The City of La Quinta Investment Policy limits the percentage of Certificates of
Deposit to 60% of the portfolio.
Cortiflostas of pexafte - Private Placement
Section SMI.S SHOWS a local agency, to west a po of its surplus funds
in certificates of deposit at a commercial bank, savings hank, savings and kroo
essomation. or credit union that uses a private entity In the
plecoment of certificates of deposit, provided that the pu of 00rW108t8s
of deposit pursuant to this section, Section 63635.8, and subdivision(h} of
Section 53601 do not, in total, exceed 30 percent of the agency's funds that
may be invested for this purpose. The f oftwing condlitions
(0 The y sha# choose a rotionally or state ~sred commercial
bank, , savings and to= as on, or creft union in this SUM to
Invest the funds, which shall be known as the "s d" depositary instit .
(b) The selected institution may submit the funds to a private sector
snifty that its In the placement of certificates of deposit with one or more
commercial banks, savings banks, savings OW IMM assail , or credit
unions that are located in the United mates, for the Weal agency's account.
t full arnowft of the principal the interest that may be acerued during
ft maxbrurm tarm of each if of deposit shall at all times be ftmaad by
the Nderal Deposit Insurance Corporation or the motional Credit lot
Adm1nistration.
id) The selected depository Institution oW serve as a custodian for each
cartiflogte of deposit that is issued with placern0flit servilos for the local
agenoy'p mount.
(e) At the some time the local agency's funds an deposited and the
certificates of deposit are issued, the selected depository Institution s
receive an amoum of deposits fmn other cormnerolal banits, savkW banks.
savings and toan associations. or credit unions that, ft total, are equal to, or
greater than, the full amount of the prhOlpal that the local agency initially
deposhed through t m selected depository investment.
if) A local agencY may not invest =plus funds with a selsoled depos+
Institution for placement as carWicates, of deposit pursusK to this section +ail
or after January 1, 2012. A local, agency's surphte funds, invested pursuant to
thle section before January 1 2012, may remain Untested in certificates of
deposit kourad through a pthrate sector ty for the full term of each
certificate of deposit.
T60 Cilty of La Ouinte Investment, Policy has a limitation of $W,fltO OW
can be oulatarvding at any time with all lratitutions and a ftee year maximum
maturity.Q
Sweep Accounts - As authorized by the City Council, a U.S. Treasury and/or
U.S. Agency Securities Money Market Sweep Account with a $50,000 target
balance may be maintained in conjunction with the checking account.
Derivatives - The City of La Quinta Investment Policy does not allow investment
in derivatives.
XI INVESTMENT POOLS
There are three (3) types of investment pools: 1) state -run pools, 2) pools that are
operated by a political subdivision where allowed by law and the political subdivision is
the trustee i.e. County Pool; and 3) pools that are operated for profit by third parties.
The City of La Quinta Investment Policy has authorized investment with the State of
California's Treasurers Office Local Agency Investment Fund commonly referred to as
LAIF. LAIF was organized in 1977 through State Legislation Section 16429.1, 2 and
3. Each LAIF account is restricted to a maximum investable limit of $40 million. In
addition, LAIF will provide quarterly market value information to the City of La Quinta.
On an annual basis the City Treasurer will submit the Investment Pool Questionnaire to
LAIF.
13
Also, prior to opening any new Investment Pool account, which would require City
Council approval, the City Treasurer will require the completion of the Investment Pool
Questionnaire.
XII PAYMENT AND CUSTODY
The City shall engage qualified third party custodians to act in a fiduciary capacity to
maintain appropriate evidence of the City's ownership of securities and other eligible
investments. Such custodians shall disburse funds, received from the City for a
purchase, to the broker, dealer or seller only after receiving evidence that the City has
legal, record ownership of the securities. Even though ownership is evidenced in book -
entry form rather than by actual certificates, this procedure is commonly accepted as
the delivery versus payment (DVP) method for the transfer of securities.
XIII INTEREST EARNING DISTRIBUTION POLICY
Interest earnings are generated from pooled investments and specific investments.
1. Pooled Investments - It is the general policy of the City to pool all available
operating cash of the City of La Quinta, La Quinta Redevelopment Agency and
La Quinta Financing Authority and allocate interest earnings, in the following
order, as follows:
A. Payment to the General Fund of an amount equal to the total annual bank
service charges as incurred by the general fund for all operating funds as
included in the annual operating budget.
B. Payment to the General Fund of a management fee equal to 5% of the
annual pooled cash fund investment earnings.
C. Payment to each fund of an amount based on the average computerized
daily cash balance included in the common portfolio for the earning
period.
2. Specific Investments - Specific investments purchased by a fund shall incur all
earnings and expenses to that particular fund.
XIV INTERNAL CONTROLS AND INDEPENDENT AUDITOR
The City Treasurer shall establish a system of internal controls to accomplish the
following objectives:
► Safeguard assets;
► The orderly and efficient conduct of its business, including adherence to
management policies;
► Prevention or detection of errors and fraud;
14
► The accuracy and completeness of accounting records; and
► Timely preparation of reliable financial information.
While no internal control system, however elaborate, can guarantee absolute assurance
that the City's assets are safeguarded, it is the intent of the City's internal control to
provide a reasonable assurance that management of the investment function meets the
City's objectives.
The internal controls shall address the following:
a. Control of collusion. Collusion is a situation where two or more employees are
working in conjunction to defraud their employer.
b. Separation of transaction authority from accounting and record keeping. By
separating the person who authorizes or performs the transaction from the
people who record or otherwise account for the transaction, a separation of
duties is achieved.
C. Custodial safekeeping. Securities purchased from any bank or dealer including
appropriate collateral (as defined by State Law) shall be placed with an
independent third party for custodial safekeeping.
d. Avoidance of physical delivery securities. Book entry securities are much easier
to transfer and account for since actual delivery of a document never takes
place. Delivered securities must be properly safeguarded against loss or
destruction. The potential for fraud and loss increases with physically delivered
securities.
e. Clear delegation of authority to subordinate staff members. Subordinate staff
members must have a clear understanding of their authority and responsibilities
to avoid improper actions. Clear delegation of authority also preserves the
internal control structure that is contingent on the various staff positions and
their respective responsibilities as outlined in the Segregation of Major
Investment Responsibilities appendices.
f. Written confirmation or telephone transactions for investments and wire
transfers. Due to the potential for error and improprieties arising from telephone
transactions, all telephone transactions shall be supported by written
communications and approved by the appropriate person. Written
communications may be via fax if on letterhead and the safekeeping institution
has a list of authorized signatures. Fax correspondence must be supported by
evidence of verbal or written follow-up.
g. Development of a wire transfer agreement with the City's bank and third party
custodian. This agreement should outline the various controls, security
provisions, and delineate responsibilities of each party making and receiving wire
transfers.
15
The System of Internal Controls developed by the City, shall be reviewed annually by
the independent auditor in connection with the annual audit of the City of La Quinta's
Financial Statements.
The independent auditor's management letter comments pertaining to cash and
investments, if any, shall be directed to the City Manager who will direct the City
Treasurer to provide a written response to the independent auditor's letter. The
management letter comments pertaining to cash and investment activities and the City
Treasurer's response shall be provided to the City's Investment Advisory Board for
their consideration. Following the completion of each annual audit, the independent
auditor shall meet with the Investment Advisory Board and discuss the auditing
procedures performed and the review of internal controls for cash and investment
activities.
XV BENCHMARK
The investment portfolio shall be designed with the objective of obtaining a rate of
return throughout budgetary and economic cycles commensurate with the investment
risk constraints and the cash flow needs of the City. Return on investment is of least
importance compared to safety and liquidity objectives.
The City of La Quinta Investment Policy will use the six-month U.S. Treasury Bill as a
benchmark when measuring the performance of the investment portfolio.
XVI REPORTING STANDARDS
SB564 section 3 requires a quarterly report to the Legislative Body of Investment
activities. The City of La Quinta Investment Advisory Board has elected to report the
investment activities to the City Council on a monthly basis through the Treasurers
Report. AB 943 requires that the December 315L and June 30`h Treasurers Reports be
sent to the California Debt and Advisory Commission within sixty days of the end of
the quarter.
The City Treasurer shall submit a monthly Treasurers Report to the City Council and
the Investment Advisory Board that includes all cash and investments under the
authority of the Treasurer.
The Treasurers Report shall summarize cash and investment activity and changes in
balances and include the following:
► A certification by City Treasurer.
► A listing of Purchases and sales/maturities of investments.
► Cash and Investments categorized by authorized investments, except for
LAIF which will be provided quarterly and show yield and maturity.
► Comparison of month end actual holdings to Investment Policy
limitations.
► Current year and prior year monthly history of cash and investments for
trend analysis.
16
► Balance Sheet.
► Distribution of cash and investment balances by fund.
► A comparison of actual and surplus funds.
No. A year to date historical cash flow analysis and projection for the next six
months.
No. A two-year list of historical interest rates.
XVII FINANCIAL ASSETS AND INVESTMENT ACTIVITY NOT SUBJECT TO THIS
POLICY
The City's Investment Policy does not apply to the following:
• Cash and Investments raised from Conduit Debt Financing;
• Funds held in trust in the City's name in pension or other post -retirement
benefit programs;
• Cash and Investments held in lieu of retention by banks or other financial
institutions for construction projects;
• Short or long term loans made to other entities by the City or Agency; and
Short term (Due to/from) or long term (Advances from/to) obligations made
either between the City and its funds or between the City and Agency.
XVIII INVESTMENT OF BOND PROCEEDS
The City's Investment Policy shall govern bond proceeds and bond reserve fund
investments. California Code Section 5922 (d) governs the investment of bond
proceeds and reserve funds in accordance with bond indenture provisions which shall
be structured in accordance with the City's Investment Policy.
Arbitraae Reauirement
The US Tax Reform Act of 1986 requires the City to perform arbitrage calculations as
required and return excess earnings to the US Treasury from investments of proceeds
of bond issues sold after the effective date of this law. This arbitrage calculations may
be contracted with an outside source to provide the necessary technical assistance to
comply with this regulation. Investable funds subject to the 1986 Tax Reform Act will
be kept segregated from other funds and records will be kept in a fashion to facilitate
the calculations. The City's investment position relative to the new arbitrage
restrictions is to continue pursuing the maximum yield on applicable investments while
ensuring the safety of capital and liquidity. It is the City's position to continue
maximization of yield and to rebate excess earnings, if necessary.
XIX N CT r "SAL PORTFOLIO MANAGE T
With the Approval of the City Council, the City may engage a professional is�uestr�ent
portfolioFnanager(e ManagOfflod firrMs) to assist the City Treasurer administer the
delegated authority to manage and invest the City's Funds. The
professional portfolio Fnanagers atanagement f m will be approved by City Council
based upon a request for proposal process as outlined in Appendix H. Before
17
engagement by the City, except as may be specifically waived or revised, the
professional portfolio managefrnani firm or advisor shall commit to adhere to the
provisions of the City of La Quinta Investment Policy. Such managers may be granted
the discretion to purchase and sell investment securities in accordance with this
Investment Policy as outlined in Appendix I. Such managers shall have: (1) an
established professional reputation for asset or investment management; (2)
knowledge and working familiarity with State and Federal laws governing and
restricting the investment of public funds; (3) substantial experience providing
investment management services to local public agencies whose investment policies
and portfolio size are similar to those of the City; and (4) professional liability (errors
and omissions) insurance and fidelity bonding in such amounts as are required by the
City. Such managers shall be registered under the Investment Advisers Act of 1940.
XX INVESTMENT ADVISORY BOARD - CITY OF LA QUINTA
The Investment Advisory Board (IAB) consists of five members of the community that
have been appointed by and report to the City Council. The IAB usually meets on a
monthly basis, but at least quarterly to (1) review at least annually the City's
Investment Policy and recommend appropriate changes; (2) review monthly Treasury
Report and note compliance with the Investment Policy and adequacy of cash and
investments for anticipated obligations; (3) receive and consider other reports provided
by the City Treasurer; (4) meet with the independent auditor after completion of the
annual audit of the City's financial statements, and receive and consider the auditor's
comments on auditing procedures, internal controls and findings for cash and
investment activities, and; (5) serve as a resource for the City Treasurer on matters
such as proposed investments, internal controls, use or change of financial institutions,
custodians, brokers and dealers.
The appendices include City of La Quinta Ordinance 2.70 entitled Investment Advisory
Board Provisions.
XXI INVESTMENT POLICY ADOPTION
On an annual basis, the Investment policies will be initially reviewed by the Investment
Advisory Board and the City Treasurer. The Investment Advisory Board will forward
the Investment policies, with any revisions, to the City Manager and City Attorney for
their review and comment. A joint meeting will be held with the Investment Advisory
Board, City Manager, City Attorney, and City Treasurer to review the Investment
policies and comments, prior to submission to the City Council for their consideration.
The Investment Policies shall be adopted by resolution of the City of La Quinta City
Council on an annual basis. The Investment Policies will be adopted before the end of
June of each year.
AB 943 requires that the Investment Policies be sent to the California Debt and
Investment Advisory Commission within sixty days of a change to the Investment
Policy.
ON
Appendix A
WILL BE UPDATED ACCORDINGLY
19
Appendix B
Chapter 2.70
INVESTMENT ADVISORY BOARD PROVISIONS
Sections:
2.70.010 General Rules Regarding Appointment.
2.70.020 Board meetings.
2.70.030 Board functions.
2.70.010 General rules regarding appointment
A. Except as set out below, see Chapter 2.06 for General Provisions.
B. The Investment Advisory Board (the"board") is a standing board composed of five (5)
members from the public that are appointed by city council. La Quinta residency is required
except for Board Members currently serving on the Board as of June 30, 2003.
C. Background in the investment field and/or related experience is preferred. Background
information will be required and potential candidates must agree to a background check and
verification.
D. On an annual basis, in conjunction with the Political Reform Act disclosure statutes, or at
any time if a change in circumstances warrants, each board member will provide the City
Council with a disclosure statement which identifies any matters that have a bearing on the
appropriateness of that member's service on the board. Such matters may include, but are not
limited to, changes in employment, changes in residence, or changes in clients.
2.70.020 Board meetings.
The Board usually will meet monthly, but this schedule may be extended to quarterly
meetings upon the concurrence of the Board and the City Council. The specific meeting dates
will be determined by the Board Members and meetings may be called for on an as needed basis.
2.70.030 Board functions.
1. The principal functions of the Board are: (1) review at least annually the City's Investment
Policy and recommend appropriate changes; (2) review monthly Treasury Report and note
compliance with the Investment Policy and adequacy of cash and investments for anticipated
obligations; (3) receive and consider other reports provided by the City Treasurer; (4) meet
with the independent auditor after completion of the annual audit of the City's financial
statements, and receive and consider the auditor's comments on auditing procedures, internal
controls, and findings for cash and investment activities, and; (5) serve as a resource for the
City Treasurer on matters such as proposed investments, internal controls, use or change of
financial institutions, custodians, brokers and dealers.
2. The Board will report to the City Council after each meeting either in person or through
correspondence at a regular City Council meeting.
20
Appendix C
Chapter 3.08
INVESTMENT OF MONEYS AND FUNDS
Sections:
3.08.010 Investment of city moneys and deposit of securities.
3.08.020 Authorized investments.
3.08.030 Sales of securities.
3.08.040 City bonds.
3.08.050 Reports.
3.08.060 Deposits of securities.
3.08.070 Trust fund administration.
3.08.010 Investment of city moneys and deposit of securities.
Pursuant to, and in accordance with, and to the extent allowed by, Sections
53607 and 53608 of the Government Code, the authority to invest and reinvest
moneys of the city, to sell or exchange securities, and to deposit them and provide
for their safekeeping, is delegated to the city treasurer. (Ord. 2 § 1 (part), 1982)
3.08.020 Authorized investments.
Pursuant to the delegation of authority in Section 3.08.010, the city treasurer is
authorized to purchase, at their original sale or after they have been issued, securities
which are permissible investments under any provision of state law relating to the
investing of general city funds, including but not limited to Sections 53601 and 53635
of the Government Code, as said sections now read or may hereafter be amended,
from moneys in his custody which are not required for the immediate necessities of the
city and as he may deem wise and expedient, and to sell or exchange for other eligible
securities and reinvest the proceeds of the securities so purchased. (Ord. 2 § 1 (part),
1982)
3.08.030 Sales of Securities.
From time to time the city treasurer shall sell the securities in which city moneys
have been invested pursuant to this chapter, so that the proceeds may, as appropriate,
be applied to the purchase for which the original purchase money may have been
designated or placed in the city treasury. (Ord.2 § I (part),
3.08.040 City bonds.
Bonds issued by the city and purchased pursuant to this chapter may be canceled
either in satisfaction of sinking fund obligations or otherwise if proper and appropriate;
provided, however, that the bonds may be held uncancelled and while so held may be
resold. (Ord. 2 § 1 (part), 1982)
3.08.050 Reports.
The city treasurer shall make a monthly report to the city council of all investments
made pursuant to the authority delegated in this chapter. (Ord. 2 § 1 (part), 1982)
21
3.08.060 Deposits of securities.
Pursuant to the delegation of authority in Section 3.08.010, the city treasurer is
authorized to deposit for safekeeping, the securities in which city moneys have been
invested pursuant to this chapter, in any institution or depository authorized by the
terms of any state law, including but not limited to Section 53608 of the Government
Code as it now reads or may hereafter be amended. In accordance with said section,
the city treasurer shall take from the institution or depository a receipt for the
securities so deposited and shall not be responsible for the securities delivered to and
receipted for by the institution or depository until they are withdrawn therefrom by the
city treasurer. (Ord. 2 § 1 (part), 1982
3.08.070 Trust fund administration.
Any departmental trust fund established by the city council pursuant to Section
36523 of the Government Code shall be administered by the city treasurer in
accordance with Section 36523 and 26524 of the Government code and any other
applicable provisions of law. (Ord. 2 § 1 (part), 1982)
22
Appendix D
SEGREGATION OF MAJOR INVESTMENT RESPONSIBILITIES
Function Responsibilities
Develop formal Investment Policy City Treasurer
Recommend modifications to Investment Policy Investment Advisory Board
Review formal Investment Policy and recommend City Manager and
City Council action City Attorney
Adopt formal Investment Policy City Council
Review Financial Institutions & Select Investments City Treasurer
Approve investments City Manager or
Assistant City Manager
Execute investment transactions City Manager or Treasurer
Confirm wires, if applicable Accounting Manager or
Financial Services Assistant
Record investment transactions in City's Accounting Manager or
accounting records Financial Services Assistant
Investment verification - match broker confirmation City Treasurer and Financial
to City investment records Services Assistant
Reconcile investment records
- to accounting records and bank statements Financial Services Assistant
Reconcile investment records
- to Treasurers Report
of investments Accounting Manager
Security of investments at City Vault
Security of investments Outside City Third Party Custodian
Review internal control procedures External Auditor
23
Appendix E
LISTING OF APPROVED FINANCIAL INSTITUTIONS
1. Banking Services
- Wells Fargo Bank, Government Services,
Los Angeles, California
2. Custodian Services
- Bank of New York, Los Angeles,
California
3. Deferred Compensation
- International City/County Management
Association Retirement Corporation
4. Broker/Dealer Services
Morgan Stanley, Los Angeles, CA
CitiGroup, San Francisco, CA
5. Government Pool State of California Local Agency
Investment Fund
City of La Quinta Account
La Quinta Redevelopment Agency
6. Bond Trustees 1991 City Hall Revenue Bonds - US Bank
1991 RDA Project Area 1 - US Bank
1992 RDA Project Area 2 - US Bank
1994 RDA Project Area 1 - US Bank
1998 RDA Project Area 1 &2 - US Bank
2001 RDA Project Area 1 - US Bank
2002 RDA Project Area 1 - US Bank
2003 RDA Project Area 1 - US Bank
Assessment Districts - US Bank
No Changes to this listing may be made without City Council approval
24
Appendix F
BROKER/DEALER QUESTIONNAIRE AND CERTIFICATION
Name of Firm:
2. Address:
3. Telephone: O
4. Broker's Representative to the City (attach resume):
Name:
Title:
Telephone: O
5. Manager/Partner-in-charge (attach resume):
Telephone:
6. List all personnel who will be trading with or quoting securities to City employees
(attach resume)
Name:
Title:
Telephone:
7. Which of the above personnel have read the City's Investment Policy?
8. Which instruments are offered regularly by your local office? (Must equal
100%)
% U.S. Treasuries
% BA's
% Commercial Paper
% CD's
% Mutual Funds
% Agencies (specify):
25
• Repos
• Reverse Repos
% CMO's
% Derivatives
• Stocks/Equities
• Other (specify):
9. References -- Please identify your most directly comparable public sector
clients in our geographical area.
Entity
Contact
Telephone ( )
Client Since
Entity
Contact
Telephone
Client Since
10. Have any of your clients ever sustained a loss on a securities transaction arising
from a misunderstanding or misrepresentation of the risk characteristics of the
instrument? If so, explain.
11
12
Has your firm or your local office ever been subject to a regulatory or state/
federal agency investigation for alleged improper, fraudulent, disreputable or
unfair activities related to the sale of securities? Have any of your employees
been so investigated? If so,
explain.
Has a client ever claimed in writing that you were responsible for an
investment loss? Yes No If yes, please provide
action taken
Has a client ever claimed in writing that your firm was responsible for an
investment loss? Yes No If yes, please provide
action taken
41-1
Do you have any current or pending complaints that are unreported to the
NASD?
Yes No If yes, please provide action taken
Does your firm have any current, or pending complaints that are unreported
to the NASD? Yes No If yes, please provide action
taken
13. Explain your clearing and safekeeping procedures, custody and delivery process.
Who audits these fiduciary responsibilities?
Latest Audit Report Date
14. How many and what percentage of your transactions failed.
Last month? % $
Last year? % $
15. Describe the method your firm would use to establish capital trading limits for the
City of La Quinta.
16. Is your firm a member in the S.I.P.C. insurance program. Yes No
If yes, explain primary and excess coverage and carriers.
17. What portfolio information, if any, do you require from your clients?
27
18. What reports and transaction confirmations or any other research publications will
the City receive?
19. Does your firm offer investment training to your clients? Yes No
20. Does your firm have professional liability insurance. Yes No
If yes, please provide the insurance carrier, limits and expiration date._
21
Please list your NASD Registration Number
22. Do you have any relatives who work at the City of La Quinta?
Yes No If yes, Name and Department
23. Do you maintain an office in California. Yes No
24. Do you maintain an office in La Quinta or Riverside County? Yes No
25. Please enclose the following:
X Latest audited financial statements.
X Samples of reports, transaction confirmations and' any other
research/publications the City will receive.
X Samples of research reports and/or publications that your firm regularly
provides to clients.
X Complete schedule of fees and charges for various transactions.
'CERTIFICATION'
*CERTIFICATION*
I hereby certify that I have personally read the Statement of Investment Policy of the City
of La Quinta, and have implemented reasonable procedures and a system of controls
designed to preclude imprudent investment activities arising out of transactions
conducted between our firm and the City of La Quinta. All sales personnel will be
routinely informed of the City's investment objectives, horizons, outlooks, strategies and
risk constraints whenever we are so advised by the City. We pledge to exercise due
diligence in informing the City of La Quinta of all foreseeable risks associated with
financial transactions conducted with our firm.
By signing this document the City of La Quinta is authorized to conduct any and all
background checks.
m
Under penalties of perjury, the responses to this questionnaire are true and accurate to
the best of my knowledge.
Broker
Date_
Sales
Date
Representative
Manager and/or
Title
Managing
Title
Partner"
`0s]
Appendix G
INVESTMENT POOL QUESTIONNAIRE
Note: This Investment Pool Questionnaire was developed by the Government Finance
Officers Association (GFOA).
Prior to entering a pool, the following questions and issues should be considered.
SECURITIES
Government pools may invest in a broader range of securities than your entity invests in.
It is important that you are aware of, and are comfortable with, the securities the pool
buys.
1. Does the pool provide a written statement of Investment Policy and objectives?
2. Does the statement contain:
a. A description of eligible investment instruments?
b. The credit standards for investments?
c. The allowable maturity range of investments?
d. The maximum allowable dollar weighted average portfolio maturity?
e. The limits of portfolio concentration permitted for each type of security?
f. The policy on reverse repurchase agreements, options, short sales and futures?
3. Are changes in the policies communicated to the pool participants?
4. Does the pool contain only the types of securities that are permitted by your
Investment Policy?
INTEREST
Interest is not reported in a standard format, so it is important that you know how
interest is quoted, calculated and distributed so that you can make comparisons with
other investment alternatives.
Interest Calculations
1. Does the pool disclose the following about yield calculations:
a. The methodology used to calculate interest? (Simple maturity, yield to maturity,
etc.)
b. The frequency of interest payments?
c. How interest is paid? (Credited to principal at the end of the month, each quarter;
mailed?)
d. How are gains/losses reported? Factored monthly or only when realized?
RX
REPORTING
1. Is the yield reported to participants of the pool monthly? (If not, how often?)
2. Are expenses of the pool deducted before quoting the yield?
3. Is the yield generally in line with the market yields for securities in which you usually
invest?
4. How often does the pool report, and does that report include the market value of
securities?
SECURITY
The following questions are designed to help you safeguard your funds from loss of
principal and loss of market value.
1. Does the pool disclose safekeeping practices?
2. Is the pool subject to audit by an independent auditor?
3. Is a copy of the audit report available to participants?
4. Who makes the portfolio decisions?
5. How does the manager monitor the credit risk of the securities in the pool?
6. Is the pool monitored by someone on the board of a separate neutral party external to
the investment function to ensure compliance with written policies?
7. Does the pool have specific policies with regards to the various investment vehicles?
a. What are the different investment alternatives?
b. What are the policies for each type of investment?
8. Does the pool mark the portfolio to its market value?
9. Does the pool disclose the following about how portfolio securities are valued:
a. The frequency with which the portfolio securities are valued?
b. The method used to value the portfolio (cost, current value, or some other
method)?
31
OPERATIONS
The answers to these questions will help you determine whether this pool meets your
operational requirements:
1. Does the pool limit eligible participants?
2. What entities are permitted to invest in the pool?
3. Does the pool allow multiple accounts and sub -accounts?
4. Is there a minimum or maximum account size?
5. Does the pool limit the number of transactions each month? What is the number
of transactions permitted each month?
6. Is there a limit on transaction amounts for withdrawals and deposits?
a. What is the minimum and maximum withdrawal amount permitted?
b. What is the minimum and maximum deposit amount permitted?
7. How much notice is required for withdrawals/deposits?
8. What is the cutoff time for deposits and withdrawals?
9. Can withdrawals be denied?
10. Are the funds 100% withdrawable at anytime?
11. What are the procedures for making deposits and withdrawals?
a. What is the paperwork required, if any?
b. What is the wiring process?
12. Can an account remain open with a zero balance?
13. Are confirmations sent following each transaction?
STATEMENTS
It is important for you and the agency's trustee (when applicable), to receive statements
monthly so the pool's records of your activity and holding are reconciled by you and your
trustee.
32
1. Are statements for each account sent to participants?
a. What are the fees?
b. How often are they passed?
c. How are they paid?
d. Are there additional fees for wiring funds (what is the fee)?
2. Are expenses deducted before quoting the yield?
QUESTIONS TO CONSIDER FOR BOND PROCEEDS
It is important to know (1) whether the pool accepts bond proceeds and (2) whether the
pool qualifies with the U.S. Department of the Treasury as an acceptable commingled
fund for arbitrage purposes.
1. Does the pool accept bond proceeds subject to arbitrage rebate?
2. Does the pool provide accounting and investment records suitable for proceeds of
bond issuance subject to arbitrage rebate?
3. Will the yield calculation reported by the pool be acceptable to the IRS or will it have
to be recalculated?
4. Will the pool accept transaction instructions from a trustee?
5. Are you allowed to have separate accounts for each bond issue so that you do not
commingle the interest earnings of funds subject to rebate with funds not subject to
regulations?
33
Appendix H
Request for Proposals
Investment Advisory Services
City of La Quinta, CA
The City of La Quinta, CA is soliciting Requests for Proposals (RFP) from interested firms
for the provision of a discretionary investment management services for City of La
Quinta, CA. The portfolio to be managed of the invested assets is estimated to be $10
million and will be invested between 0 — 5 years.
The investment of City of La Quinta, CA's funds is guided by the applicable State
statutes and the City of La Quinta, CA's investment policy. A copy of the investment
policy is attached for your information.
Questions regarding this RFP should be directed to:
Name:
John M. Falconer
Title:
Finance Director/Treasurer
City of:
La Quinta, CA
Address:
78-495 Calle Tampico
City, State
Zip Code: La Quinta, CA 92253
Phone Number:
(760)777-7150
I. CRITERIA FOR EVALUATION AND SELECTION
u Experience of the firm in providing services to public sector entities of
similar size and with similar investment objectives
u Professional experience and qualifications of the individuals assigned to the
account
u Portfolio management resources, investment philosophy and approach
u Responsiveness to the RFP, communicating an understanding of the overall
program and services required
u Reporting capabilities
■ Fees
II. SELECTION TIMETABLE
A. [Month Day, Year] Proposals due by [Time] PST.
B. [Month Day, Year] Proposals evaluated: to be determined
C. [Month Day, Year] [City of La Quinta, CA] [Board/Council] approves
selection and awards contract.
34
III. FORMAT FOR PROPOSALS
Please format your response to this RFP in the following manner:
A. Organization
1. Describe your organization, date founded, ownership and other business
affiliations. Provide number and location of affiliated offices. Specify the
number of years your organization has provided investment management
service.
2. Describe your firm's revenue sources (e.g., investment management,
institutional research, etc.) and comment on your firm's financial condition.
3. Within the past three years, have there been any significant developments
in your organization (e.g., changes in ownership, new business ventures)?
Do you expect any changes in the near future?
4. Describe any U.S. Securities and Exchange Commission (SEC) censures or
litigation involving your organization, any officer, or employee at anytime in
the last ten years.
5. Describe the firm's fiduciary liability and/or errors and omissions insurance
coverage. Include dollar amount of coverage.
B. Personnel
1. Identify the number of professionals employed by your firm by
classification.
2. Provide an organization chart showing function, positions, and titles of all
the professionals in your organization.
3. Provide biographical information on investment professionals that will be
involved in the decision -making process for our portfolio, including number
of years at your firm. Identify the person who will be the primary portfolio
manager assigned to the account.
4. Describe your firm's compensation policies for investment professionals and
address any incentive compensation programs.
C. Assets Under Management
1 . Summarize your institutional investment management asset totals by category
35
for your latest reporting period in the following table:
Number Operating Funds Number of Other Restrictive
of Clients Clients Funds
Governmental $ $
Governmental $ $
Pension
Non Governmental $ $
Pension
Corporate $ $
High Net Worth Client $ $
Endowmental/Founda $ $
tion
2. Provide the number of separate accounts whose portfolios consist of
operating funds.
3. List in the following table the percentage by market value of aggregate
assets under all governmental accounts under management for your
latest reporting period:
Type of Asset Percent by Market
Value
U.S. Treasury securities
Federal Agency obligations
Corporate securities rated AAA -AA
Corporate securities rated A
Corporate securities rated BBB or lower
Other
(specify )
4. Describe the procedures that your firm has in place to address the
potential or actual credit downgrade of an issuer and to disclose and
advise a client of the situation.
36
5. Provide data on account/asset growth over the past five years. Indicate the
number of government accounts gained and the number of government
accounts lost.
6. List your five governmental largest clients. Identify those that are
exclusively operating fund relationships and/or those that are other
relationships (e.g., bond fund, retirement fund).
7. Provide a copy of the firm's Form ADV, Parts I and II (including all
schedules).
8. Provide proof of State of California Registration, if your firm is not eligible
for SEC registration.
9. Provide a sample contract for services.
D. Philosophy/Approach
1. Describe your firm's investment philosophy for public clients, including your
firm's philosophy regarding average duration, maturity, investment types,
credit quality, and yield.
2. Describe in detail your investment process, as you would apply it to City of
La Quinta, CA's portfolio.
3. What are the primary strategies for adding value to portfolios?
4. Describe the process you would recommend for establishing the investment
objectives and constraints for this account.
5. Describe in detail your process of credit risk management, including how
you analyze credit quality, monitor credits on an ongoing basis, and report
credit to governmental accounts.
6. Describe your firm's trading methodology.
7. Describe your firm's decision -making process in terms of structure,
committees, membership, meeting frequency, responsibilities, integration of
research ideas, and portfolio management.
8. Describe your research capabilities as they would pertain to governmental
accounts. What types of analysis do you use?
9. Describe the firm's approach to managing relationships with the broker-
37
dealer community.
E. Portfolio Management
Are portfolios managed by teams or by one individual?
2. What is the average number of accounts handled per manager?
3. Which professional staff member will be the primary client contact for City -
of La Quinta, CA?
4. How frequently are you willing to meet with us?
5. Describe procedures used to ensure that portfolios comply with client
investment objectives, policies, and bond resolutions.
F. Fees Charged
1. Please include a copy of your firm's fee schedule applicable to this RFP.
2. Identify any expenses that would not be covered through this fee
structure and would be required in order to implement the firm's
program.
3. Is there a minimum annual fee?
G. Performance Reporting
Please report on all accounts under $100 million.
2. Please provide performance history for governmental accounts for the
last five years.
3. Please provide risk measurements for governmental accounts for the last
five years.
4. Indicate whether your returns are calculated and compiled in accordance
with the Association for Investment Management and Research
(AIMR/CFA Institute) standards.
5. Do your reports conform to the State of California reporting standards? Are
you willing to customize your reports to meet our specifications?
6. How will you notify us of investment transactions?
7. Are confirmation of investment transactions sent directly by the
broker/dealer to the client?
8. Do your reports include rating information on investments which is
required by GASB 40?
H. References
Provide a list of at least five (5) client references in California. References should
be public agencies with portfolio size and investment objectives similar to City of
La Quinta, CA. Include length of time managing the assets, contact name, and
phone number.
I. Insurance Requirements
Exhibit A defines the insurance requirements that will need to be met prior to the
[Board/Councill's approval of any agreement for services.
J. Submittal of proposals
1. Seven (7) copies of the proposal shall be submitted in a sealed envelope
bearing the caption RFP for (City of La Quinta, CA) and addressed to:\
City of La Quinta, CA
78-495 Calle Tampico
La Quinta, CA 92253
Attention: John M. Falconer, Finance Director/Treasurer
2. Proposal must be received no later than [Time] PST on [Month, Day,
Year].
3. Proposals should be verified before submission. The City of La Quinta,
CA shall not be responsible for errors or omissions on the part of the
respondent in preparation of a proposal. The City of La Quinta, CA
reserves the right to reject any and all proposals, to wave any
irregularities, or informalities in the proposals, and to negotiate
modifications to any proposal.
Enclosures: Investment Policy
Treasurers Report
39
Appendix I
WILL BE UPDATED ACCORDINGLY
,N
Appendix J
GLOSSARY
(Adopted from the Municipal Treasurers Association)
The purpose of this glossary is to provide the reader of the City of La Quinta investment
policies with a better understanding of financial terms used in municipal investing.
AGENCIES: Federal agency securities and/or
Government -sponsored enterprises.
ASKED: The price at which securities are offered.
BANKERS' ACCEPTANCE (BA): A draft or bill of
exchange accepted by a bank or trust company.
The accepting institution guarantees payment of
the bill, as well as the issuer.
BID: The price offered by a buyer of securities.
(When you are selling securities, you ask for a
bid.) See Offer.
BROKER: A broker brings buyers and sellers
together for a commission.
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.
COMMERCIAL PAPER: Short-term unsecured
promissory notes issued by a corporation to raise
working capital. These negotiable instruments
are purchased at a discount to par value or at par
value with interest bearing. Commercial paper is
issued by corporations such as General Motors
Acceptance Corporation, IBM, Bank America, etc.
COMPREHENSIVE ANNUAL FINANCIAL REPORT
(CAFR): The official annual report for the City of
La Quinta. It includes five combined statements
for each individual fund and account group
41
prepared in conformity with GAAP. It also
includes supporting schedules necessary to
demonstrate compliance with finance -related legal
and contractual provisions, extensive introductory
material, and a detailed Statistical Section.
CONDUIT FINANCING: A form of Financing in
which a government or a government agency
lends its name to a bond issue, although it is
acting only as a conduit between a specific project
and bond holders. The bond holders can look only
to the revenues from the project being financed
for repayment and not to the government or
agency whose name appears on the bond.
COUPON: (a) The annual rate of interest that a
bond's issuer promises to pay the bondholder on
the bond's face value. (b) A certificate attached
to a bond evidencing interest due on a payment
date.
DEALER: A dealer, as opposed to a broker, acts as
a principal in all transactions, buying and selling
for his own account.
DEBENTURE: A bond secured only by the general
credit of the issuer.
DELIVERY VERSUS PAYMENT: There are two
methods of delivery of securities: delivery versus
payment and delivery versus receipt. Delivery
versus payment is delivery of securities with an
exchange of money for the securities. Delivery
versus receipt is delivery of securities with an
exchange of a signed receipt for the securities.
DERIVATIVES: (1) Financial instruments whose
return profile is linked to, or derived from, the
movement of one or more underlying index or
security, and may include a leveraging factor, or
(2) financial contracts based upon notional
amounts whose value is derived from an
underlying index or security (interest rates, foreign
exchange rates, equities or commodities).
DISCOUNT: The difference between the cost
price of a security and its maturity when quoted
at lower than face value. A security selling
below original offering price shortly after sale also
is considered to be at a discount.
DISCOUNT SECURITIES: Non -interest bearing
money market instruments that are issued a
discount and redeemed at maturity for full face
value, e.g., U.S. Treasury Bills.
DIVERSIFICATION: Dividing investment funds
among a variety of securities offering
independent returns.
3. FLBs (Federal Land Bank Bonds) - Long-term
mortgage credit provided to farmers by Federal
Land Banks. These bonds are issued at
irregular times for various maturities ranging
from a few months to ten years. The
minimum denomination is $1,000. They carry
semi-annual coupons. Interest is calculated on
a 360-day, 30 day month basis.
3
FEDERAL CREDIT AGENCIES: Agencies of the
Federal government set up to supply credit to
various classes of institutions and individuals, 5
e.g., S&L's, small business firms, students,
farmers, farm cooperatives, and exporters.
1. FNMAs (Federal National Mortgage
Association) - Used to assist the home
mortgage market by purchasing mortgages
insured by the Federal Housing
Administration and the Farmers Home
Administration, as well as those guaranteed by
the Veterans Administration. They are issued in
various maturities and in minimum denominations
of $10,000. Principal and Interest is paid
monthly.
2. FHLBs (Federal Home Loan Bank Notes and
Bonds) - Issued by the Federal Home Loan
Bank System to help finance the housing
industry. The notes and bonds provide
liquidity and home mortgage credit to savings
and loan associations, mutual savings banks,
cooperative banks, insurance companies, and
mortgage -lending institutions. They are
issued irregularly for various maturities. The
minimum denomination is $5,000. The notes
are issued with maturities of less than one
year and interest is paid at maturity.
42
FFCBs (Federal Farm Credit Bank) - Debt
instruments used to finance the short and
intermediate term needs of farmers and the
national agricultural industry. They are issued
monthly with three- and six-month maturities.
The FFCB issues larger issues (one to ten
year) on a periodic basis. These issues are
highly liquid.
FICBs (Federal Intermediate Credit bank
Debentures) - Loans to lending institutions
used to finance the short-term and
intermediate needs of farmers, such as
seasonal production. They are usually issued
monthly in minimum denominations of $3,000
with a nine -month maturity. Interest is
payable at maturity and is calculated on a 360-
day, 30-day month basis.
6. FHLMCs (Federal Home Loan Mortgage
Corporation) - a government sponsored entity
established in 1970 to provide a secondary
market for conventional home mortgages.
Morgages are purchased solely from the
Federal home Loan Bank System member
lending institutions whose deposits are insured
by agencies of the United States Government.
They are issued for various maturities and in
minimum denominations of $10,000. Principal
and Interest is paid monthly. Other federal
agency issues are Small Business
Administration notes (SBAs), Government
National Mortgage Association notes
(GNMAs), Tennessee Valley Authority notes
(TVAs), and Student Loan Association notes
(SALLIE-MAEs).
FEDERAL DEPOSITOR INSURANCE
CORPORATION (FDIC): A federal agency that
insures bank deposits, currently up to $100,000
per deposit.
FEDERAL FUNDS RATE: The rate of interest at
which Fed funds are traded. This rate is currently
pegged by the Federal Reserve through open -
market operations.
FEDERAL HOME LOAN BANKS (FHLB):
Government sponsored wholesale banks
(currently 12 regional banks) which lend funds
and provide correspondent banking services to
member commercial banks, thrift institutions,
credit unions and insurance companies. The
mission of the FHLBs is to liquefy the housing
related assets of its members who must purchase
stock in their district Bank.
FEDERAL OPEN MARKET COMMITTEE (FOMC):
Consists of seven members of the Federal
Reserve Board and five of the twelve Federal
Reserve Bank Presidents. The President of the
New York Federal Reserve Bank is a permanent
member, while the other Presidents serve on a
rotating basis. The Committee periodically meets
to set Federal Reserve guidelines regarding
purchases and sales of Government Securities in
the open market as a means of influencing the
volume of bank credit and money.
FEDERAL RESERVE SYSTEM: The central bank of
the United States created by Congress and
consisting of a seven member Board of Governors
in Washington, D.C., 12 regional banks and about
5,700 commercial banks that are members of the
system.
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION (GNMA or Ginnie Mae): Securities
influencing the volume of bank credit guaranteed
by GNMA and issued by mortgage bankers,
commercial banks, savings and loan associations,
and other institutions. Security holder is
protected by full faith and credit of the U.S.
43
Government. Ginnie Mae securities are backed by
the FHA, VA or FMHM mortgages. The term
"passthrough" is often used to describe Ginnie
Maes.
LAIF (Local Agency Investment Fund) - A special
fund in the State Treasury which local agencies
may use to deposit funds for investment. There is
no minimum investment period and the minimum
transaction is $5,000, in multiples of $1,000
above that, with a maximum balance of
$30,000,000 for any agency. The City is
restricted to a maximum of ten transactions per
month. It offers high liquidity because deposits
can be converted to cash in 24 hours and no
interest is lost. All interest is distributed to those
agencies participating on a proportionate share
basis determined by the amounts deposited and
the length of time they are deposited. Interest is
paid quarterly. The State retains an amount for
reasonable costs of making the investments, not
to exceed one -quarter of one percent of the
earnings.
LIQUIDITY: A liquid asset is one that can be
converted easily and rapidly into cash without a
substantial loss of value. In the money market, a
security is said to be liquid if the spread between
bid and asked prices is narrow and reasonable size
can be done at those quotes.
LOCAL GOVERNMENT INVESTMENT POOL (LGIP):
The aggregate of all funds from political
subdivisions that are placed in the custody of the
State Treasurer for investment and reinvestment
MARKET VALUE: The price at which a security is
trading and could presumably be purchased or
sold.
MASTER REPURCHASE AGREEMENT: A written
contract covering all future transactions between
the parties to repurchase --reverse repurchase
agreements that establishes 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 vent of default by the seller -borrower
MATURITY: The date upon which the principal or
stated value of an investment becomes due and
payable
MONEY MARKET: The market in which short-
term debt instruments (bills, commercial paper,
bander' acceptances, etc.) are issued and traded.
OFFER: The price asked by a seller of securities.
(When you are buying securities, you ask for an
offer.) See Asked and Bid.
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.
PORTFOLIO: Collection of all cash and securities
under the direction of the City Treasurer,
including Bond Proceeds.
PRIMARY DEALER: A group of government
securities dealers who submit daily reports of
market activity and depositions and monthly
financial statements to the Federal Reserve Bank
of New York and are subject to its informal
oversight. Primary dealers include Securities and
Exchange Commission (SEC) -registered securities
broker -dealers, banks and a few unregulated
firms.
QUALIFIED PUBLIC DEPOSITORIES: A financial
institution which does not claim exemption from
the payment of any sales or compensating use or
ad valorem taxes under the laws of this state,
which has segregated for the benefit of the
commission eligible collateral having a value of
not less than its maximum liability and which has
been approved by the Public Deposit Protection
i d
Commission to hold public deposits.
RATE OF RETURN: The yield obtainable on a
security based on its purchase price or its current
market price. This may be the amortized yield to
maturity on a bond the current income return.
REPURCHASE AGREEMENT (RP OR REPO): A
repurchase agreement is a short-term investment
transaction. Banks buy temporarily idle funds
from a customer by selling U.S. Government or
other securities with a contractual agreement to
repurchase the same securities on a future date.
Repurchase agreements are typically for one to
ten days in maturity. The customer receives
interest from the bank. The interest rate reflects
both the prevailing demand for Federal funds and
the maturity of the repo. Some banks will execute
repurchase agreements for a minimum of
$100,000 to $500,000, but most banks have a
minimum of $1,000,000.
REVERSE REPURCHASE AGREEMENTS (RRP or
RevRepo) - A holder of securities sells these
securities to an investor with an agreement to
repurchase them at a fixed price on a fixed date.
The security "buyer" in effect lends the "seller"
money for the period of the agreement, and the
terms of the agreement are structured to
compensate him for this. Dealers use RRP
extensively to finance their positions. Exception:
When the Fed is said to be doing RRP, it is lending
money that is increasing bank reserves.
SAFEKEEPING: A service to customers rendered
by banks for a fee whereby securities and
valuables of all types and descriptions are held in
the bank's vaults for protection.
SECONDARY MARKET: A market made for the
purchase and sale of outstanding issues following
the initial distribution.
SECURITIES & EXCHANGE COMMISSION: Agency
created by Congress to protect investors in
securities transactions by administering securities
legislation.
SEC RULE 15C3-1: See Uniform Net Capital Rule.
STRUCTURED NOTES: Notes issued by
Government Sponsored Enterprises (FHLB,
FNMAS, SLMA, etc.) And Corporations which
have imbedded options (e.g., call features, step-
up coupons, floating rate coupons, derivative -
based returns) into their debt structure. Their
market performance is impacted by the
fluctuation of interest rates, the volatility of the
imbedded options and shifts in the Shape of the
yield curve.
SURPLUS FUNDS: Section 53601 of the
California Government Code defines surplus funds
as any money not required for immediate
necessities of the local agency. The City has
defined immediate necessities to be payment due
within one week.
TREASURY BILLS: A non -interest bearing
discount security issued by the U.S. Treasury to
finance the national debt. Most bills are issued to
mature in three months, six months or one year.
TREASURY BONDS: Long-term coupon -bearing
U.S. Treasury securities issued as direct
obligations of the U.S. Government and having
initial maturities of more than 10 years.
TREASURY NOTES: Medium -term coupon -bearing
U.S. Treasury securities issued as direct
obligations of the U.S. Government and having
initial maturities from two to 10 years.
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 among members of underwriting
45
syndicates. Liquid capital includes cash and
assets easily converted into cash.
UNIFORM PRUDENT INVESTOR ACT: The State of
California has adopted this Act. The Act contains
the following sections: duty of care,
diversification, review of assets, costs,
compliance determinations, delegation of
investments, terms of prudent investor rule, and
application.
YIELD: The rate of annual income return on an
investment, expressed as a percentage. (a)
INCOME YIELD is obtained by dividing the current
dollar income by the current market price for the
security. (b) NET YIELD or YIELD TO MATURITY is
the current income yield minus any premium
above par of plus any discount from par in
purchase price, with the adjustment spread over
the period from the date of purchase to the date
of maturity of the bond.
INVESTMENT ADVISORY BOARD Correspondence & Written
Material Item A
Meeting Date: February 14, 2007
11111111141
Month End Cash Report - January 2007
BACKGROUND:
This cash report is not a complete Treasury Report (exclude petty cash, deferred
compensation and fiscal agent balances), but would report in a timely fashion
selected cash balances.
RECOMMENDATION:
Information item only.
John M. Falconer, Finance Director
O n
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FRB: Commercial Paper Rates and Outstandmgs
rage a v. �
Federal Reserve Release
Commercial Paper'
Release I About I Announcements I Outstandings I Volume statistics I Year-end I Data Download
Pro rg am (DDP)
Data as of January 31, 2007
Commercial Paper Rates and Outstanding
Derived from data supplied by The Depository Trust Company
Posted February 1, 2007
n.coniint rataa
AA
A2/P2/F2
AA
AA
Term
nonfinancial
nonfinancial
financial
asset -backed
1-day
5.26
5.33
5.25
5.29
D-day
5.20 7F
5.31
5.25
5.28
15-day
5.23
5.31
5.23
5.27
30-day
5.18
5.33
5.24
5.27
5.24
5.26
60-day
5.17
5.32
90-day
n.a.
533
of the 90-day
5.23
AA nonfinancial
5.26
rate for January 31, 201
Trade data insufficient
to su000rt calculation
Yield curve
Mnnev market basis
— — — AA nontinuoiial
..----- A21P21F2 nonflauncial
-- AA lilmucial
--------------
1 7 15 30
Days to Maturity
UM
7
Percent
W
5.3
5.1
3
http://www.federalreserve.gov/Releases/CP/ 2/l/2007
FRB: Commercial Paper Rates and Outstandings
rases V.,
120
1M
80
60
40
20
n
2001 2002 2003 MA Ivw
Percent
6
S
4
3
2
I
2001 2002 2003 ZMI4 ZUVI ="
Outstandings
Weekly (Wednesday), seasonally adjusted
4
http://www.federalreserve.gov/Releases/CP/ 2/l/2007
FRB: Commercial Paper Rates and Outstandings
Q:IGnric of d"lln"
Billions of dollars
. u6'
1090
1040
990
940
890
840
790
740
690
640
590
540
490
I -- Nonflnancial4iglitcale)
t
el ---.— ha afloal deft x;dcl
i y
V I
YY .rl
_ Yrott fy
�1. 6
Y
r
It
P � t yxfl Y.
2001 2002 2003 20()4 G(xU
250
?10
yf' 170
130
90
2006
The daily commercial paper release will usually be available before 11:00am EST. However, the Federal
Reserve Board makes no guarantee regarding the timing of the daily commercial paper release. When
the Federal Reserve Board is closed on a business day, rates for the previous business day will be
available through the Federal Reserve Board's Data Download application. This policy is subject to
change at any time without notice.
Release I About I Announcements I Outstandings I Volume statistics I Year-end I Data Download
Program (DDP)
Home I statistical releases
Accessibility 1 ContactUs
Last update: February 1, 2007
http://www.federalreserve.gov/Releases/CP/
2/1/2007 5
Recent Bill Auction Results
a .51 ....
a
i�4j ��i'e j+ err w
Recent Bill auction Results
security
Term
28-DAY
91-DAY
182-DAY
28-DAY
91-DAY
182-DAY
28-DAY
91-DAY
182-DAY
28-DAY
91 DAY
182-DAY
28-DAY
91-DAY
182-DAY
28-DAY
91-DAY
182-DAY
28-DAY
91-DAY
182-DAY
28-DAY
91-DAY
182-DAY
28-DAY
91-DAY
182-DAY
30-DAY
14-DAY
28-DAY
91-DAY
182-DAY
27-DAY
90-DAY
181-DAY
28-DAY
91-DAY
182-DAY
1-DAY
15-DAY
Issue
Date
02-01-2007
02-01-2007
02 01-2007
01-25-2007
01-25-2007
01-25-2007
01-18-2007
01-18-2007
01-18-2007
01-11-2007
01-11-2007
01-11-2007
01-04-2007
01-04-2007
01-04-2007
12-28 2006
12-28-2006
12-28-2006
12-21-2006
12-21-2006
12-21-2006
12-14-2006
12-14-2006
12-14 2006
12-07-2006
12-07-2006
12-07-2006
12-05-2006
12-01-2006
11-30-2006
11-30-2006
11-30-2006
11-24-2006
11-24-2006
11-24-2006
11-16-2006
11-16-2006
11-16-2006
11 15-2006
11-15-2006
Maturity
Date
03-01-2007
05-03-2007
08-02-2007
02-22-2007
04-26-2007
07-2.6-2007
02-15-2007
04-19-2007
07-19-2007
02-08-2007
04-12-2007
07-12-2007
02-01-200/
04-05-2007
07-05-2007
01-25 7007
03-29-2007
06-28-2007
01-18-2007
03-22-2007
06-21-2007
01-11-2007
03-15-2007
06 14 2007
01-04-2007
03-08-200/
06-07-2007
12-15-2006
12-15-2006
12-28-2006
03-01-2007
05-31-2007
12-21-2006
02-22-2007
05-24-2007
12-14-2006
02-15-2007
05-17-2007
11-16-2006
11-30-2006
Discount
Rate °/n
4,885
5.010
4,980
4,900
4 995
4.965
4.895
4975
4 950
4 800
4.940
4 920
4.760
4.930
4 900
4,660
4.875
4900
4,740
4 825
4.885
4.760
4,800
4 865
4 760
1.870
4.840
5,195
5.215
5 170
4 905
4.935
5,160
4,940
4,940
5 150
4.955
4.955
5.190
5,170
investment
Rate %
4 972
5,145
5.180
4.987
5,129
5.164
4,982
5,108
5.148
4.885
5072
5.116
4,844
5,062
5,094
4,742
5,004
5,094
4,824
4952
5,078
4.844
4 926
5,057
4.844
4.999
5.030
5 275
5,298
5 263
5,036
5 132
5 252
5.071
5,136
5.243
5.088
5.153
5,263
5 253
Price
Per $100
99.620056
98 733583
97,482333
99.618889
98,737375
97.489917
99 619278
99,142431
97 497500
99,626667
98,751278
97.512667
99.629778
98.753806
97.522778
99.637556
98.7G7708
97,522778
99 631333
98.780347
97,530361
99.629778
98.786667
97.540472
99 629778
98 768972
97.553111
99.855694
99,797194
99.597889
98./60125
97.505083
99.613000
98 765000
97 516278
99.599444
98.747486
97.494972
99,985583
99.784583
CUSIP
912795YV7
912795ZE4
912795ZT1
912795YU9
912/95LD6
912795753
912795YT2
912795ZCB
912795ZR5
912795Y54
912795760
912795ZQ7
912795YR6
912795ZA2
912795ZP9
912795YQ8
912795YZ8
912/95ZN4
912795YPO
912795YY1
9127957M6
912795YN5
912795YX3
912795ZL8
912795YM7
912795YW5
912795ZKO
912795TW1
912795TWI
912795YL9
912795YV7
912795ZJ3
912795YKI
912795YU9
912795ZH7
912795YJ4
912795YT2
912795ZG9
912795YE5
912795YGO
Effective with the 1112198 auction, all bills are auctioned using the single -priced method.
M
http://www.treasurydirect-gov/RI/OFBills 2/l/2007
FRB: H.15--Selected Interest Rates, Web-Unty roily updme--January jr, LVV
Federal Reserve Statistical release
H.15>
Selected Interest Rates (Daily)
,Lip to tbrnent
Release Date: January 31, 2007
Weekly release dates I Historical data I Data Download Program (DIP) I About I Announcements
Daily update Other formats: Screen reader I ASCII
The weekly release is posted on Monday. Daily updates of the weekly release are p
through Friday on this site. If Monday is a holiday, the weekly release will be p
after the holiday and the daily update will not be posted on that Tuesday.
FEDERAL RESERVE STATISTICAL RELEASE
H.15 DAILY UPDATE: WEB RELEASE ONLY
SELECTED INTEREST RATES
For use at 4:15 p.m. Eastern Time
Yields in percent per annum January 31, 2007
2007 2007
Instruments Jan Jan
29 30
Federal funds (effective) 1 2 3 5.26 5.23
Commercial Paper 3 4 5
Nonfinancial
1-month 5.20 5.20
2-month n.a. 5.18
3-month n.a. n.a.
Financial
1-month 5.24 5.25
2-month 5.23 5.24
3-month 5.24 5.24
CDs (secondary market) 3 6
1-month 5.29 5.28
3-month 5.32 5.32
6-month 5.37 5.35
Eurodollar deposits (London) 3 7
1-month 5.32 5.32
3-month 5.36 5.36
6-month 5.40 5.40
Bank prime loan 2 3 8 8.25 8.25
Discount window primary credit 2 9 6.25 6.25
U.S. government securities
Treasury bills (secondary market) 3 4
4-week 4.84 4.90
3-month 5.01 5.00
6-month 4.99 4.98
Treasury constant maturities
Nominal 10
1-month 4.95 4.99
3-month 5.14 5.13
6-month 5.19 5.18
1-year 5.12 5.11
2-year 4.99 4.98
7
http://www.federalreserve.gov/Releases/H15/update/ 2/1/2007
FRB: H.15--Selected Interest Rates, Web -Only Daily
Update --January -11, wv i asp
3-year
4.93
4.90
5-Year
4.89
4.86
7-year
4.89
4.86
10-year
4.90
4.88
20-year
5.09
5.07
30-year
4.99
4.98
Inflation indexed 11
5-Year
2.52
2.47
7-year
2.53
2.49
10-year
2.50
2.46
20-Year
2.49
2.45
Inflation -indexed long-term average 12 2.46
2.43
Interest rate swaps 13
5.44
5.44
1-year
5.34
5.34
2-year
5.30
5.30
3-year
5.29
5.30
4-year
5.30
5.31
5-year
5.34
5.35
7-year
10-year
5.39
5.40
5.52
5.53
30-year
Corporate bonds
Moody's seasoned
Aaa 14
5.54
5.53
6.45
6.44
Baa
State & local bonds 15
Conventional mortgages 16
n.a. Not available.
-------------------------------------------------------------------
Footnotes
1. The daily effective federal funds rate is a weighted average of rates on broke
2. Weekly figures are averages of 7 calendar days ending on Wednesday of the curr
figures include each calendar day in the month.
3. Annualized using a 360-day year or bank interest.
4. on a discount basis.
5. Interest rates interpolated from data on certain commercial paper trades settl
Depository Trust Company. The trades represent sales of commercial paper by deale
issuers to investors (that is, the offer side). The 1-, 2-, and 3-month rates are
30-, 60-, and 90-day dates reported on the Board's Commercial Paper Web page
(www.federalreserve.gov/releases/cp/).
6. An average of dealer bid rates on nationally traded certificates of deposit.
7. Bid rates for Eurodollar deposits collected around 9:30 a.m. Eastern time.
8. Rate posted by a majority of top 25 (by assets in domestic offices) insured U.
commercial banks. Prime is one of several base rates used by banks to price short
loans.
9. The rate charged for discounts made and advances extended under the Federal Re
credit discount window program, which became effective January 9, 2003. This rate
adjustment credit, which was discontinued after January 8, 2003. For further info
www.federalreserve.gov/boarddocs/press/bcreg/2002/200210312/default.htm. The rate
for the Federal Reserve Bank of New York. Historical series for the rate on adjus 8
http://www.federalreserve.gov/Releases/H 15/update/ 2/1 /2007
FRB: H.15--Selected Interest Rates, Web-unly uauy upaate--ianumy 0I, zVV ue- -
well as the rate on primary credit are available at www.federalreserve.gov/releas
10. Yields on actively traded non -inflation -indexed issues adjusted to constant m
30-year Treasury constant maturity series was discontinued on February 18, 2002,
on February 9, 2006. From February 18, 2002, to February 9, 2006, the U.S. Treasu
factor for adjusting the daily nominal 20-year constant maturity in order to esti
nominal rate. The historical adjustment factor can be found at
www.treas.gov/offices/domestic-finance/debt-management/interest-rate/itcompositei
Source: U.S. Treasury.
11. Yields on Treasury inflation protected securities (TIPS) adjusted to constant
Source: U.S. Treasury. Additional information on both nominal and inflation -index
found at www.treas.gov/offices/domestic-finance/debt-management/interest-rate/ind
12. Based on the unweighted average bid yields for all TIPS with remaining terms
more than 10 years.
13. International Swaps and Derivatives Association (ISDA(R)) mid -market par swap
for a Fixed Rate Payer in return for receiving three month LIBOR, and are based o
at 11:00 a.m. Eastern time by Garban Intercapital plc and published on Reuters Pa
ISDAFIX is a registered service mark of ISDA. Source: Reuters Limited.
14. Moody's Aaa rates through December 6, 2001, are averages of Aaa utility and A
rates. As of December 7, 2001, these rates are averages of Aaa industrial bonds o
15. Bond Buyer Index, general obligation, 20 years to maturity, mixed quality; Th
16. Contract interest rates on commitments for fixed-rate first mortgages. Source
--- -----------------------------------------------------------------------------
Note: Weekly and monthly figures on this release, as well as annual figures avail
Board's historical H.15 web site (see below), are averages of business days unles
-------------------------------------------------------------------------
Current and historical H.15 data are available on the Federal Reserve Board's web
(www.federalreserve.gov/). For information about individual copies orgsubsscrip02io
Publications Services at the Federal Reserve Board (phone
electronic access to current and historical data, call STAT-USA at 1-800-782-8872
Description of the Treasury Nominal and Inflation -Indexed Constant Maturi
Yields on Treasury nominal securities at "constant maturity" are interpolated by
from the daily yield curve for non -inflation -indexed Treasury securities. This cu
the yield on a security to its time to maturity, is based on the closing market b
actively traded Treasury securities in the over-the-counter market. These market
calculated from composites of quotations obtained by the Federal Reserve Bank of
constant maturity yield values are read from the yield curve at fixed maturities,
and 6 months and 1, 2, 3, 5, 7, 10, 20, and 30 years. This method provides a yiel
maturity, for example, even if no outstanding security has exactly 10 years remai
Similarly, yields on inflation -indexed securities at "constant maturity" are inte
daily yield curve for Treasury inflation protected securities in the over-the-cou
inflation -indexed constant maturity yields are read from this yield curve at fixe
currently 5, 7, 10, and 20 years.
Weekly_ release dates I Historical data I Data Download Program (DDP) About Announcements
http://www.federalreserve.gov/Releases/Hl 5/update/
2/1/2007 9
FRB: H.15--Selected Interest Rates, Web -Only Dally update --January -ii, /-vv, r = as, , �•
Daily update Other formats: Screen reader I ASCH
Statistical releases
Wane I Economic research and data
Accessibitit) I Contact U-1
Last update: January 31, 2007
10
http://www.federalreserve.gov/Releases/HI5/update/ 2/l /2007
Bill Lockyer, State Treasurer
Inside the State Treasurer's Office
Local Agency Investment Fund (LAIF)
PMIA Performance Report
Dw
_
Dam
Ykw
Quarter is
DateYtetd
—AV#1896
VOWft
in days)
1/17/2007
5.16
5.15
187
1/18/2007
5.16
5.15
186
1/19/2007
5.16
5.15
189
1/20/2007
5.16
5.15
189
1/21/2007
5.16
5.15
189
1/2212007
5.16
5.15
187
1/23/2007
5.17
5.15
186
1/24/2007
5.17
5.15
185
1/25/2007
5.11
5.15
182
1/2612007
5.17
5.15
182
1/27/2007
182
1/28/2007
182
1/29/2007
A5.
A5.15
187
186
0
LAW Performance Report
Quarter ending 12/31/06
Apportionment Rate: 5.11%
Earnings Ratio: .00013991107557790
Fair Value Factor: .999444427
PMIA Average Monthly Effective Yields
December 2006 5.129%
November 2006 5.125%
October 2006 5.098%
Pooled Money Investment Account
Portfolio Composition
$67.1 Billion
12/31/06
Loans
13.65%
Corporate
Bonds
0.97%
Commercial
Paper
13.55%
Time Depo:
14.93%
Treasuries
6.36% Mortgages
1.69%
CDs/BNs
22.38%
Agencies
26.47%
11
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12
INVESTMENT ADVISORY BOARD Correspondence & Written
Material Item B
Meeting Date: February 14, 2007
TITLE:
Pooled Money Investment Board Report
for November 2006
BACKGROUND:
The Pooled Money Investment Board Report for November 2006 is included in the
agenda packet.
RECOMMENDATION:
Receive & File
I l
John M. Falconer, Finance Director
POOLED MONEY INVESTMENT ACCOUNT
SUMMARY OF INVESTMENT DATA
A COMPARISON OF NOVEMBER 2006 WITH NOVEMBER 2005
(DOLLARS IN THOUSANDS)
NOVEMBER 200611 frOVEMBER 2005 CHANGE
Average Daily Portfolio
$ 64,224,796 $
52,999,227 $
+1,225,569
Accrued Earnings
$ 228,423 $
158,379 $
+70,044
Effective Yield
5.126
3.636
+1A89
Average Life -Month End (In Days)
ill -A
Total Security Transactions
Amount
$ 25,025,221 $
Number
531
Total Time Deposit Transactions
Amount
$ 4,364,800 $
Number
193
Average Workday Investment Activity
$ 1,546,843 $
Prescribed Demand Account Balances
For Services
$ 241,889 $
For Uncollected Funds
$ 146,092 $
1
204
49I
23,634,276 $ +1,390,945
499
+32
3,478,300
$
+886,600
143
+50
1,426,978
$
+119,865
304,790
$
-62,901
169,895
$
-23,803
PHIL ANGELIDES
TREASURER
STATE OF CALIFORNIA
INVESTMENT DIVISION SELECTED INVESTMENT DATA
ANALYSIS OF THE POOLED MONEY INVESTMENT ACCOUNT PORTFOLIO
(000 OMITTED)
TYPE OF SECURITY
Government
Bills
Bonds
Notes
Strips
Total Government
Federal Agency Coupons
Certificates of Deposit
Bank Notes
Bankers' Acceptances
Repurchases
Federal Agency Discount Notes
Time Deposits
GNMAs
Commercial Paper
FHLMC/Remics
Corporate Bonds
AB 55 Loans
GF Loans
Reversed Repurchases
Total (All Types)
NOVEMBER 30, 2006
DIFFERENCE IN
PERCENTOF
PERCENT OF PORTFOLIO FROM
AMOUNT PORTFOLIO PRIOR MONTH
$ 2,651,478
0
0
0
$ 2,661,478
$ 9,683,904
10,688,275
750,028
0
0
2,911,100
8,393,495
228
8,920,456
984,676
577,798
7,809,006
2,132,200
0
$ 56,602,644
4.78
+1.51
0.00
0
-0.35
0.00
0
4.78
+1.16
17.45
+0.49
19.27
-1.67
1.35
-0.85
0.00
0
0.00
0
5.24
-2.33
16.12
+0.52
0.00
0
16.07
+1.11
1.77
0
1.04
+0,05
14.07
-0.74
3.84
+1.91
0.00
+0.35
100.00
INVESTMENT ACTIVITY
NOVEMBER 2006
OCTOBER 2006
NUMBER
AMOUNT
NUMBER
AMOUNT
Pooled Money
531
$ 25,025,221
561
$ 26,374,591
Other
30
543,621
12
130,312
Time Deposits
193
4,364,800
214
5,502,190
Totals
754
$ 29,933,642
787
$ 32,007,093
PMIA Monthly Average Effective Yield
5.125
5.098
Year to Date Yield Last Day of Month
6.004
4.976
2
Pooled Money Investment Account
Portfolio Composition
$55.5 Billion
11/30/06
Corporate Bond
1.04%
Commercial Paper
16.07%
Treasuries
4 78% Mortgages
Loans 1 770i
erne uepusi[s w.vc io
15.12%
gencies
!2.69%
BOARD MEMBER ITEMS