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4 SECTION IV: BROKER/DEALER QUESTIONNAIRE BROKER/DEALER QUESTIONNAIRE AND CERTIFICATION 1. Name of Firm: ____Securities America, Inc.__________________________ 2. Physical Address of Trading Office: 27 Reed Boulevard, Mill Valley, CA 94941__________________________________ Physical Address of Corporate Headquarters:_ 12325 Port Grace Blvd, La Vista, NE 68128___________________________ 3. Telephone of Trading Office: (415) 771-9421__________________ Telephone of Corporate Headquarters: (800) 747-6111___________ 4. Broker's Representative(s) to the City (attach resume(s)): Name: _Douglas C. Robinson______________________________________ Title: __Branch Manager/Registered Principal__________________________ Telephone: (415) 771-9421 5. Manager/Partner-in-charge (attach resume): Name: _Douglas C. Robinson______________________________________ Title: __Branch Manager/Registered Principal__________________________ Telephone: (415) 771-9421 6. Please indicate the staffing level for your office (firm): Management: ___10+_ Trading: __5__(California trade desk) Branch Office: 1 Sales: __10+_ Operations/Clearing: __10+_ 7. Which of the above personnel have read the City's Investment Policy? __ Douglas C. Robinson __________________________________________ 8. Which instruments are offered regularly by your local office? (Must equal 100%) __20__% U.S. Treasuries __0__% Repos __0__% BA's __0__% Reverse Repos __5__% Commercial Paper __0__% CMO’s __30_% CD’s __0__% Derivatives 5 _____% Mutual Funds ___*_% Stocks/Equities __45_% Agencies (specify): _____% Other (specify): _______FHLB, FHLMC, FFCB, FNMA, IBDR_______________________________ ______*OPEB portfolios have allocations in equities _______________________ 9. References -- Please identify your most directly comparable public sector clients in our geographical area. Entity_City of Palm Springs______ Entity__ City of Indian Wells ___ Contact _Thomas Hays__________ Contact __ Kevin McCarthy ____ Telephone (760) 323-8223 ______ Telephone (760) 776-0235 ____ Client Since _1994_____________ Client Since _1997___________ 10. Has your firm been subject to any litigation, arbitration, or regulatory proceedings, either pending, adjudicated, or settled, that involved allegations of improper, fraudulent, disreputable or unfair activities related to the sale of securities to or the purchase of securities from institutional clients? If so, explain. ____No_______________________________________________________ _____________________________________________________________ _____________________________________________________________ _____________________________________________________________ 11. Has your firm or your local office, or representatives assigned to this account, been subject to a regulatory or state/ federal agency investigation for alleged improper, fraudulent, disreputable or unfair activities related to the sale of securities or money market instruments that resulted in a suspension or censure? If so, explain. ____No_______________________________________________________ _____________________________________________________________ _____________________________________________________________ _____________________________________________________________ 12. Are you aware of any current or pending complaints that are unreported to FINRA against you or your firm? If so, explain. ____No_______________________________________________________ _____________________________________________________________ 13. Explain your clearing and safekeeping procedures, custody and delivery process. ____Clearing is provided by Pershing, a subsidiary of BNY. Trades are settled through DTC 443 or Fed Book entry ABA# 021000018, BK OF NYC/PERSHING _____________________________________________________________ 6 Custody and safekeeping is available at Pershing, but the City will wish to have positions delivery DVP to designated custodian. _____________________________________________________________ Who audits these fiduciary responsibilities? __FINRA and SEC_______________________________________________ Latest Audit Report Date __Dec 2018______________________ 14. Describe the method your firm would use to establish capital trading limits for the City of La Quinta. __The City would not have a trading limit. _ _______________________________________________________ 15. Is your firm a member in the Securities Investor Protection Corporation (SIPC). insurance program? Yes__X__ No_____ If yes, explain primary and excess coverage and carriers. _Securities America’s clearing firm, Pershing, provides coverage in excess of SIPC per-client loss limit of $1.9 million for cash awaiting reinvestment— within the aggregate loss limit of $1 billion through underwriters at Lloyd's and other commercial insurers____________________________________ _____________________________________________________________ 16. Does your firm regularly report to the Market Reports Division of the Federal Reserve Bank of New York as a “primary dealer”? Yes_______ No ___X____ 17. Is your firm owned by a holding company? Yes__X___ No________ 18. Does your firm comply with the Federal Reserve Bank’s capital adequacy quidelines? Yes___X_____ No_________ 19. Does your firm offer investment training to clients? Yes__X__ No_____ 20. Does your firm have professional liability insurance? Yes__X___ No_______ If yes, please provide the insurance carrier, limits and expiration date. ___Everest Indemnity Insurance Co. $5mm/occurrence, $30mm aggregate, exp. 9/19/2019________________________________________________ _____________________________________________________________ 21. Is your firm a member of the Financial Industry Regulatory Authority (FINRA)? List your FINRA/NASD Registration Number and attach current FINRA broker check report. __Yes, CRD# 1173495 ___________________________________________________________ 22. Do you have any relatives who work at the City of La Quinta? 7 Yes______ No__X____ If yes, please provide their full name, position and department. _____________________________________________________________ 23. Is your firm currently licensed as a broker/dealer by the State of California? Do you maintain an office in California? ____Yes______________________________________________________ _____________________________________________________________ 24. Do you maintain an office in La Quinta or Riverside County? Yes____ No__X___ 25. Please enclose the following: Latest audited financial statements; Samples of reports, transaction confirmations and any other research/publications the City would receive if you were approved; Samples of research reports and/or publications that your firm regularly provides to clients; and Complete schedule of fees and charges for transactions. SECTION V: ACKNOWLEDGEMENT and CERTIFICATION My firm will notify the City immediately, by telephone, and, in writing, in the event of a material adverse change in its financial condition, or of any violation of Municipal Securities Rulemaking Board Rule G-37. ***CERTIFICATION*** I hereby certify that I have personally read the Investment Policy of the City of La Quinta and the California Government Codes pertaining to the investments of the City. We have implemented reasonable procedures and a system of controls designed to prevent 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, we authorize the City of La Quinta to conduct any and all background checks. Under penalties of perjury, I Certify that the responses to this questionnaire are true and accurate to the best of my knowledge and that I am authorized to execute this request for information. 8 Firm Name:__Securities America, Inc. _____________________________ Broker Representative Signature: _______________________ Print Name: _Douglas C. Robinson_ Date: ___3/18/19___________________________________________________ Title: __Branch Manager_________________________________________ Sales Manager and/or Managing Partner Signature: ________________________ Print Name:_Douglas C. Robinson Date: __3/18/19____________________________________________________ Title: __Registered Principal______________________________________ *This form must be signed by a registered principal or an individual with signing authority on behalf of the firm. Douglas C. Robinson Independent Registered Investment Advisor Doug Robinson is a Branch Manager and Registered Principal with Securities America, Inc., specializing in institutional fixed income management and OPEB trust asset allocation strategies. Doug is a frequent guest speaker and long-time member of the California Municipal Treasurers Association. With over thirty years in the investment industry, he is the editor of robinsoncapital.com, an educational web site providing investors with information on institutional fixed income, OPEB and supplemental pension mitigation strategies and portfolio management. Doug is also the principal of RCM Robinson Capital Management, an SEC registered investment advisory and management firm. Doug received his Bachelor of Science degree in Economics from University of Missouri-Columbia and is co-author of “Boom or Bust - Understanding and Profiting from a Changing Consumer Economy”. Doug also serves as board member to the California State Treasurer's Office, Local Investment Advisor Board (LIAB) which provides oversight to the Local Agency Investment Fund (LAIF), managing $22.3 billion as of February 2019. www.robinsoncapital.com/fi_main.htm RCM Robinson Capital Management LLC Securities America, Inc. 27 Reed Boulevard Mill Valley, CA 94941 doug@robinsoncapital.com Phone: 415-771-9421 Fax: 415-762-1980 The information contained herein is based on sources and data believed reliable, but is not guaranteed. Advisory services offered through RCM Robinson Capital Management LLC, SEC Registered Investment Advisor. Securities offered through Securities America, Inc., Member FINRA/SIPC. Douglas C. Robinson, Registered Representative. BrokerCheck ReportDOUGLAS CROSBY ROBINSONSection TitleReport SummaryBroker QualificationsRegistration and Employment HistoryCRD# 117349512 - 34 - 5Page(s) About BrokerCheck®BrokerCheck offers information on all current, and many former, registered securities brokers, and all current and formerregistered securities firms. FINRA strongly encourages investors to use BrokerCheck to check the background ofsecurities brokers and brokerage firms before deciding to conduct, or continue to conduct, business with them.āWhat is included in a BrokerCheck report?āBrokerCheck reports for individual brokers include information such as employment history, professionalqualifications, disciplinary actions, criminal convictions, civil judgments and arbitration awards. BrokerCheckreports for brokerage firms include information on a firm’s profile, history, and operations, as well as many of thesame disclosure events mentioned above.āPlease note that the information contained in a BrokerCheck report may include pending actions orallegations that may be contested, unresolved or unproven. In the end, these actions or allegations may beresolved in favor of the broker or brokerage firm, or concluded through a negotiated settlement with no admissionor finding of wrongdoing.āWhere did this information come from?āThe information contained in BrokerCheck comes from FINRA’s Central Registration Depository, orCRD® and is a combination of:Rinformation FINRA and/or the Securities and Exchange Commission (SEC) require brokers andbrokerage firms to submit as part of the registration and licensing process, andRinformation that regulators report regarding disciplinary actions or allegations against firms or brokers.āHow current is this information?āGenerally, active brokerage firms and brokers are required to update their professional and disciplinaryinformation in CRD within 30 days. Under most circumstances, information reported by brokerage firms, brokersand regulators is available in BrokerCheck the next business day.āWhat if I want to check the background of an investment adviser firm or investment adviserrepresentative?āTo check the background of an investment adviser firm or representative, you can search for the firm orindividual in BrokerCheck. If your search is successful, click on the link provided to view the available licensingand registration information in the SEC's Investment Adviser Public Disclosure (IAPD) website athttps://www.adviserinfo.sec.gov. In the alternative, you may search the IAPD website directly or contact your statesecurities regulator at http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/P455414.āAre there other resources I can use to check the background of investment professionals?āFINRA recommends that you learn as much as possible about an investment professional before decidingto work with them. Your state securities regulator can help you research brokers and investment adviserrepresentatives doing business in your state.āThank you for using FINRA BrokerCheck.For more information aboutFINRA, visit www.finra.org.Using this site/information meansthat you accept the FINRABrokerCheck Terms andConditions. A complete list ofTerms and Conditions can befound atFor additional information aboutthe contents of this report, pleaserefer to the User Guidance orwww.finra.org/brokercheck. Itprovides a glossary of terms and alist of frequently asked questions,as well as additional resources.brokercheck.finra.org DOUGLAS C. ROBINSONCRD# 1173495Currently employed by and registered with thefollowing Firm(s):SECURITIES AMERICA, INC.12325 PORT GRACE BLVD.LAVISTA, NE 68128CRD# 10205Registered with this firm since: 12/08/2016SECURITIES AMERICA, INC.27 Reed BoulevardMill Valley, CA 94941CRD# 10205Registered with this firm since: 12/08/2016Report Summary for this BrokerThis report summary provides an overview of the broker's professional background and conduct. Additionalinformation can be found in the detailed report.Disclosure EventsAll individuals registered to sell securities or provideinvestment advice are required to disclose customercomplaints and arbitrations, regulatory actions,employment terminations, bankruptcy filings, andcriminal or civil judicial proceedings.Are there events disclosed about this broker?NoInvestment Adviser RepresentativeInformationhttps://www.adviserinfo.sec.govThe information below represents the individual'srecord as a broker. For details on this individual'srecord as an investment adviser representative,visit the SEC's Investment Adviser PublicDisclosure website atBroker QualificationsThis broker is registered with:1 Self-Regulatory Organization2 U.S. states and territoriesThis broker has passed:1 Principal/Supervisory Exam2 General Industry/Product Exams1 State Securities Law ExamRegistration HistoryThis broker was previously registered with thefollowing securities firm(s):FOOTHILL SECURITIES, INC.CRD# 1027Mill Valley, CA12/2008 - 12/2016EPLANNING SECURITIES, INC.CRD# 46000SAN FRANCISCO, CA11/2006 - 12/2008SUTTER SECURITIES INCORPORATEDCRD# 30770SAN FRANCISCO, CA04/2006 - 04/2008www.finra.org/brokercheckUser Guidance1©2019 FINRA. All rights reserved. Report about DOUGLAS C. ROBINSON. www.finra.org/brokercheckUser GuidanceBroker QualificationsRegistrationsThis section provides the self-regulatory organizations (SROs) and U.S. states/territories the broker is currentlyregistered and licensed with, the category of each license, and the date on which it became effective. This section alsoprovides, for every brokerage firm with which the broker is currently employed, the address of each branch where thebroker works.This individual is currently registered with 1 SRO and is licensed in 2 U.S. states and territories through his orher employer.Employment 1 of 1Firm Name:Main Office Address:Firm CRD#:SECURITIES AMERICA, INC.1020512325 PORT GRACE BLVD.LAVISTA, NE 68128SRO Category Status DateFINRAGeneral Securities PrincipalAPPROVED12/08/2016FINRAGeneral Securities RepresentativeAPPROVED12/08/2016FINRAOperations ProfessionalAPPROVED12/08/2016U.S. State/TerritoryCategory Status DateCalifornia AgentAPPROVED12/08/2016New Mexico AgentAPPROVED10/16/2017Branch Office LocationsSECURITIES AMERICA, INC.27 Reed BoulevardMill Valley, CA 949412©2019 FINRA. All rights reserved. Report about DOUGLAS C. ROBINSON. www.finra.org/brokercheckUser GuidanceBroker QualificationsIndustry Exams this Broker has PassedThis individual has passed 1 principal/supervisory exam, 2 general industry/product exams, and 1 statesecurities law exam.This section includes all securities industry exams that the broker has passed. Under limited circumstances, a brokermay attain a registration after receiving an exam waiver based on exams the broker has passed and/or qualifying workexperience. Any exam waivers that the broker has received are not included below.Exam Category DatePrincipal/Supervisory ExamsGeneral Securities Principal Examination02/05/1996Series 24Exam Category DateGeneral Industry/Product ExamsSecurities Industry Essentials Examination10/01/2018SIEGeneral Securities Representative Examination08/20/1983Series 7Exam Category DateState Securities Law ExamsUniform Securities Agent State Law Examination05/09/1989Series 63Additional information about the above exams or other exams FINRA administers to brokers and other securitiesprofessionals can be found at www.finra.org/brokerqualifications/registeredrep/.3©2019 FINRA. All rights reserved. Report about DOUGLAS C. ROBINSON. www.finra.org/brokercheckUser GuidanceRegistration and Employment HistoryRegistration HistoryRegistration Dates Firm Name CRD# Branch LocationThe broker previously was registered with the following firms:12/2008 - 12/2016 FOOTHILL SECURITIES, INC. 1027 Mill Valley, CA11/2006 - 12/2008 EPLANNING SECURITIES, INC. 46000 SAN FRANCISCO, CA04/2006 - 04/2008 SUTTER SECURITIES INCORPORATED 30770 SAN FRANCISCO, CA11/1995 - 04/2006 SECURITIES AMERICA, INC. 10205 SAN FRANCISCO, CA04/1994 - 12/1995 DEAN WITTER REYNOLDS INC. 7556 PURCHASE, NY07/1993 - 04/1994 SMITH BARNEY SHEARSON INC. 7059 NEW YORK, NY02/1993 - 07/1993 LEHMAN BROTHERS INC. 7506 NEW YORK, NY11/1991 - 03/1993 SUTRO & CO. INCORPORATED 801 SAN FRANCISCO, CA09/1990 - 11/1991 KEMPER SECURITIES GROUP, INC. 19616 ST. LOUIS, MO05/1988 - 09/1990 PAINEWEBBER INCORPORATED 8174 WEEHAWKEN, NJ08/1990 - 09/1990BATEMAN EICHLER, HILL RICHARDS,INCORPORATED7608/1985 - 03/1988 DEAN WITTER REYNOLDS INC. 755608/1983 - 08/1985MERRILL LYNCH, PIERCE, FENNER & SMITHINCORPORATED7691Employment HistoryEmployment Dates Employer Name Employer LocationThis section provides up to 10 years of an individual broker's employment history as reported by the individual broker onthe most recently filed Form U4.Please note that the broker is required to provide this information only while registered with FINRA or a nationalsecurities exchange and the information is not updated via Form U4 after the broker ceases to be registered.Therefore, an employment end date of "Present" may not reflect the broker's current employment status.12/2016 - Present SECURITIES AMERICA, INC. Mill Valley, CA02/2005 - Present RCM ROBINSON CAPITAL MANAGEMENT LLC MILL VALLEY, CA12/2008 - 12/2016 FOOTHILL SECURITIES, INC. SANTA CLARA, CA4©2019 FINRA. All rights reserved. Report about DOUGLAS C. ROBINSON. www.finra.org/brokercheckUser GuidanceRegistration and Employment HistoryOther Business ActivitiesThis section includes information, if any, as provided by the broker regarding other business activities the broker iscurrently engaged in either as a proprietor, partner, officer, director, employee, trustee, agent or otherwise. This sectiondoes not include non-investment related activity that is exclusively charitable, civic, religious or fraternal and isrecognized as tax exempt.LOCAL INVESTMENT ADVISOR BOARD (LIAB)POSITION: Board member NATURE: Board member to the California State Treasurer's Office, Local Investment AdvisorBoard (LIAB) INVESTMENT RELATED: No NUMBER OF HOURS: 1 SECURITIES TRADING HOURS: 1 START DATE:07/08/2015ADDRESS: 915 Capitol Mall, Room 110, Sacramento CA 95814DESCRIPTION: Board members meet twice annually. No investment advice is given by board members.RCM ROBINSON CAPITAL MANAGEMENT LLCPOSITION: Principal NATURE: RCM ROBINSON CAPITAL MANAGEMENT, LLC-IRIA-ADVISORY-START DATE 3/2005LOCATED AT 27 Reed BLVD, MILL VALLEY, CA 94941 INVESTMENT RELATED: Yes NUMBER OF HOURS: nullSECURITIES TRADING HOURS: null START DATE: 03/01/2005ADDRESS: 27 Reed Blvd., Mill Valley CA 94941, United StatesDESCRIPTION: Investment advisory5©2019 FINRA. All rights reserved. Report about DOUGLAS C. ROBINSON. www.finra.org/brokercheckUser GuidanceEnd of ReportThis page is intentionally left blank.6©2019 FINRA. All rights reserved. Report about DOUGLAS C. ROBINSON. Institutional Client and Referral List of Douglas C. Robinson Account Contact Phone Number Account Opened Portfolio Size in Millions Apple Valley Fire Protection District Mark Shaker 760-247-7618 Oct-08 3 OPEB Advisory client City of Brisbane Stuart Schillinger 415-467-1843 May-94 40 City of Burbank Debbie Kukta 818-238-5880 Jul-13 400 State of California Treasurer's Office Bill Dowell 916-653-3147 Referral 81,000 City of Campbell John Formale 408-866-2112 Jul-17 30 City of Citrus Heights Ronda Rivera 916-727-4776 Nov-07 11 Advisory client Dublin San Ramon Services Dist.Mayette Bailey 925-875-2274 Aug-98 75 El Dorado Irrigation District Tony Pasquarello 530-642-4019 Mar-96 80 City of Emeryville Susan Hsieh 510-596-4328 Oct-00 70 City of Folsom John Donohue 916-355-7334 Aug-94 75 City of Foster City Edmund Suen 650-286-3265 Apr-15 80 City of Galt Shaun Farrell 209-745-2961 May-99 30 City of Glendale Rafi Manoukian 818-548-2066 Jul-00 420 City of Healdsburg Heather Ippoliti 707.431.3570 Feb-92 70 Advisory client City of Indian Wells Kevin McCarthy 760-776-0235 Aug-97 90 City of La Verne Nathan Statham 909-596-8720 Nov-94 35 Monte Vista Water District Ray Harton 909-267-2110 Jul-06 25 City of Madera Tim Przybyla 559-661-5453 Jul-14 72 City of Monrovia Buffy Bullis 626-932-5510 Feb-95 28 City of Morro Bay Jen Callaway 805-772-6217 Jul-06 12 Nevada Irrigation District Marvin Davis 530-271-6855 Aug-14 75 City of Palm Springs Thomas Hays 619-323-8221 Aug-94 70 City of Palos Verdes Estates Victoria Lozzi 310-378-0383 Jun-95 12 City of Pasadena Vic Erganian 626-744-4422 Nov-95 280 City of Pomona Onyx Jones 909-620-2353 Jul-94 80 City of Redding Allyn Clark 530-225-4199 Sep-13 140 Cit of Salinas Matt Pressey 831-758-7420 Jul-13 70 City of Santa Barbara Robert Samario 805-564-5528 Feb-96 130 Santa Clara Valley Water District Charlene Sun 408-630-2657 Jul-18 480 South Lake Tahoe David Olivo 530-541-1910 Aug-05 20 OPEB Advisory client City of Thousand Oaks Jane Adelmann 805-449-2221 Nov-01 240 Vallejo Sanitation and Flood Control DistrictMary Morris 707-644-8949 Dec-16 50 Town of Windsor Jeneen Peterson 707-838-5354 Aug-06 75 Advisory client City of West Sacramento Paul Blumberg 916-617-4572 Mar-14 75 Advisory services offered through RCM Robinson Capital Management LLC, an SEC registered investment advisory firm. Securities offered through Douglas C. Robinson, Registered Representative, Securities America, Inc., Member FINRA/SIPC. RCM Robinson Capital Management LLC and Securities America, Inc. are separate and unaffiliated. SECURITIES AMERICA, INC. (an indirect wholly-owned subsidiary of Ladenburg Thalmann Financial Services Inc.) STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2018 E IS NER Å M P ER EisnerAmper LLP 750 Third Avenue New York, NY 10017 T 212.949.8700 F 212.891.4100 www. e is ne ram per. com REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM· The Board of Directors and Shareholder of Securities America, Inc Opinion on the Financial Statem ent We have audited the accompanying statement of financial condition of Securities America, Inc. (the "Company"), a wholly-owned subsidiary of Ladenburg Thalmann Financial Services Inc., as of December 31, 2018 and the related notes (collectively referred to as the "financial statement"). ln our opinion, the financial statement presents fairly, in all material respects, the financial position of the Company as of December 31, 2018, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion This financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statement based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statement, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statement. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that our audit provides a reasonable basis for our opinion. We have served as the Company's auditor since 2011. EISNER.A.MPER LLP New York, New York March 1, 2019 ..... SECURITIES AMERICA, INC. See notes to the statement of financial condition 3 Statement of Financial Condition December 31, 2018 ASSETS Cash and cash equivalents $ 19,246,933 Securities owned, at fair value 1,075,500 Due from clearing brokers, net 10,417,998 Commissions receivable 14,262,496 Financial advisors’ balances and other receivables, net of allowance of $408,000 4,077,489 Notes receivable – financial advisors, net of allowance of $72,000 88,877 Due from affiliate 6,584,446 Intangible assets, net 6,816,141 Deferred tax asset 450,615 Goodwill 32,812,687 Prepaid expenses and other assets 7,597,576 Contract acquisition costs, net 12,479,822 $ 115,910,580 LIABILITIES Commissions payable $ 20,240,365 Securities sold, not yet purchased, at fair value 196,418 Accrued compensation 7,463,879 Accrued expenses and other liabilities 2,389,939 Due to affiliate 1,694,708 Deferred income 1,940,025 Contingent consideration payable, at fair value 566,177 34,491,511 Commitment and Contingency (Note I) SHAREHOLDER'S EQUITY Common stock, $1 par value; authorized 200 shares, issued and outstanding 100 shares 100 Capital in excess of par value 110,576,050 Accumulated deficit (29,157,081) 81,419,069 $ 115,910,580 SECURITIES AMERICA, INC. Notes to Statement of Financial Conditions December 31, 2018 4 NOTE A - DESCRIPTION OF BUSINESS Securities America, Inc. (the "Company") is a wholly-owned subsidiary of Securities America Financial Corporation ("SAFC"), which is wholly-owned by Ladenburg Thalmann Financial Services Inc. ("LTS"). LTS is a public company whose stock trades on the NYSE under the symbol LTS. Securities America Advisors, Inc. ("SAA") is a registered investment advisory firm wholly-owned by SAFC. On November 4, 2011, LTS purchased 100% of the outstanding common stock of SAFC from Ameriprise Financial, Inc. ("Ameriprise"). The Company is a registered broker-dealer in securities under the Securities Exchange Act of 1934 and a member of the Financial Industry Regulatory Authority, Inc. ("FINRA"). The Company provides securities distribution and brokerage services and also offers other financial products, including variable annuity insurance products, through a network of independent contractor brokers and insurance agents. The Company executes and clears trades through two unaffiliated brokerage firms: National Financial Services LLC and Pershing LLC (“the clearing brokers”). NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [1] Use of estimates: In preparing financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP"), management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management believes that the estimates utilized in preparing its financial statements are reasonable and prudent. Actual results could differ from those estimates. [2] Cash equivalents: The Company considers all highly liquid investments with a maturity of three months or less when acquired to be cash equivalents. Cash equivalents at December 31, 2018 consists of money market funds which are carried at fair value of $14,056,267. [3] Financial instruments: Substantially all the Company's financial instruments are carried at fair value or amounts approximating fair value. See Note H. [4] Securities transactions: Securities transactions of the Company are recorded on a trade-date basis. Securities owned and securities sold, not yet purchased, are valued at fair value with the resulting difference between cost and fair value included in interest and dividends in the statement of operations. [5] Intangible assets: Intangible assets are being amortized over their estimated useful lives generally on a straight-line basis. Intangible assets are tested for recoverability whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company assesses the recoverability of its intangible assets by determining whether the unamortized balance can be recovered over the assets' remaining life through undiscounted estimated future cash flows. SECURITIES AMERICA, INC. Notes to Statement of Financial Conditions December 31, 2018 5 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) [5] Intangible assets: (continued) If such cash flows indicate that the unamortized amounts will not be recovered, an adjustment will be made to reduce such amounts to fair value based on estimated future cash flows discounted at a rate commensurate with the risk associated with achieving such cash flows. Future cash flows are based on trends of historical performance and the Company’s estimate of future performance, giving consideration to existing and anticipated competitive and economic conditions. [6] Goodwill: Goodwill is not subject to amortization and is tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset may be impaired. As the Company has only one reporting unit, the impairment test consists of a comparison of the fair value of the Company with the carrying amount of its net assets, including goodwill. Fair value is typically based upon estimated future cash flows discounted at a rate commensurate with the risk involved or market-based comparables. If the carrying amount of the Company's net assets exceeds the fair value of the Company, then an analysis will be performed to compare the implied fair value of goodwill with the carrying amount of goodwill. An impairment loss will be recognized in an amount equal to the excess of the carrying amount over the implied fair value. After an impairment loss is recognized, the adjusted carrying amount of goodwill is its new accounting basis. Accounting guidance on the testing of goodwill for impairment allows entities the option of performing a qualitative assessment to determine the likelihood of goodwill impairment and whether it is necessary to perform such two-step quantitative impairment test. The Company's quantitative assessment indicated that there was no impairment of goodwill in 2018. In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, an amendment to simplify the subsequent quantitative measurement of goodwill by eliminating step two from the goodwill impairment test. As amended, an entity will recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. An entity still has the option to perform the qualitative test for a reporting unit to determine if the quantitative impairment test is necessary. This amendment is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019 and applies prospectively. Early adoption is permitted, including in an interim period, for impairment tests performed after January 1, 2017. The Company has not elected to early adopt ASU 2017-04. The adoption of this guidance is not expected to have a material impact on the Company’s financial statements. [7] Income taxes: The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under the asset and liability method, the effect on deferred tax assets and liabilities from a change in tax rates is recognized in operations in the period that includes the enactment date. SECURITIES AMERICA, INC. Notes to Statement of Financial Conditions December 31, 2018 6 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) [7] Income taxes: (continued) On December 22, 2017, the U.S. government enacted comprehensive tax reform commonly referred to as the Tax Cuts and Jobs Act (“TCJA”). Under GAAP, the effects of changes in tax rates and laws are recognized in the period which the new legislation is enacted. Among other things, the TCJA (1) reduces the U.S. statutory corporate income tax rate from 34% to 21% effective January 1, 2018, (2) eliminates the corporate alternative minimum tax, and (3) changes the rules related to uses and limitations of net operating loss carryforwards beginning after December 31, 2017. In response to the TCJA, the SEC staff issued Staff Accounting Bulletin (“SAB”) 118, which provided guidance on accounting for the tax effects of TCJA. The purpose of SAB 118 was to address any uncertainty or diversity of view in applying GAAP in the reporting period in which the TCJA was enacted. In addition, SAB 118 provides a measurement period that should not extend beyond one year from the TCJA enactment date for companies to complete the accounting under GAAP. During the year ended December 31, 2018, the Company finalized the accounting for the tax effects of TCJA with no material changes to the provisional estimate recorded in prior periods. [8] Revenue from contracts with customers: The Company adopted ASC 606, effective January 1, 2018, using the modified retrospective method by recognizing the cumulative effect of initially applying ASC 606 as an adjustment to the opening balance of shareholder’s equity and other affected accounts at January 1, 2018. Performance Obligations Revenue from contracts with customers is recognized when, or as, the Company satisfies its performance obligations by transferring promised goods or services to customers. A good or service is transferred to a customer when, or as, the customer obtains control of that good or service. A performance obligation may be satisfied over time or at a point in time. Revenue from a performance obligation satisfied at a point in time is recognized at the point in time that the Company determines the customer obtains control over the promised good or service. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled in exchange for those promised goods or services. The following provides detailed information on the recognition of the Company's revenue from contracts with customers: Broker-Dealer Commissions The Company earns commissions by executing client transactions in stocks, mutual funds, variable annuities and other financial products and services as well as from trailing commissions which are variable. Commissions revenue is recognized on trade date when the performance obligation is satisfied. Commissions revenue is paid on settlement date, which is generally two business days after trade date for equities securities and corporate bond transactions and one business day for government securities and commodities transactions. The Company records a receivable on the trade date and receives a payment on settlement date. For trailing commissions, the performance obligation is satisfied at the time of the execution of the transactions but the amount to be received for trailing commissions is uncertain, as it is dependent on the value of the investments at future points in time as well as the length of time the investor holds the investments, both of which are highly susceptible to variable factors outside the Company’s influence. The Company does not believe that it can overcome this constraint until the market value of the investment and the investor activities are known, which are usually monthly or quarterly. The Company’s Statement of Operations reflects trailing commissions for services performed and performance obligations satisfied in previous periods. SECURITIES AMERICA, INC. Notes to Statement of Financial Conditions December 31, 2018 7 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) [8] Revenue from contracts with customers: (continued) Service Fees Service fees primarily include 1) amounts charged to independent financial advisors for processing of securities trades and for providing administrative and compliance services; 2) fees earned for arranging the cash sweep program between the customers and the third-party banks, in which customers’ cash deposits in their brokerage accounts at the customers’ direction are swept into interest-bearing FDIC-insured deposit accounts at various third-party banks. Costs to Obtain a Contract with a Customer The Company capitalizes the incremental costs of obtaining a contract with a customer (independent financial advisor) if the costs (1) relate directly to an existing contract or anticipated contract, (2) generate or enhance resources that will be used to satisfy performance obligations in the future, and (3) are expected to be recovered. These costs are included in contract acquisition costs, net, in the statements of financial condition and will be amortized over the estimated customer relationship period. The Company uses an amortization method that is consistent with the pattern of transfer of goods or services to its customers. Any costs that are not incremental costs of obtaining a contract with a customer, such as costs of onboarding, training and support of independent financial advisors, would not qualify for capitalization. The Company pays fees to third-party recruiters and bonuses to employees for recruiting independent financial advisors, and thereby bring their customers’ accounts to the Company, which generates ongoing commissions revenue and monthly service fee revenue to the Company and advisory fee revenue to its affiliates. The balance of contract acquisition costs, net, was $12,479,822 as of December 31, 2018, an increase of $1,592,401 compared to the adoption date of January 1, 2018. There were no impairments or changes to underlying assumptions related to contract acquisition costs, net, for the period. Practical Expedients The following practical expedients available under the modified retrospective method were applied upon adoption of ASC 606: We applied the practical expedient outlined under ASC 606-10-65-1(h) and did not restate contracts that were completed contracts as of the date of initial application, i.e. January 1, 2018. We applied the practical expedient outlined under ASC 606-10-65-1(f)(4) and did not separately evaluate the effects of contract modifications. Instead, we reflect the aggregate effect of all the modifications that occurred before the initial application date, i.e. January 1, 2018. We applied the practical expedient outlined under ASC 606-10-10-4 that allows for the accounting for incremental costs of obtaining contracts at a portfolio level in order to determine the amortization period. We applied the practical expedient outlined under ASC 340-40-25-4 and did not capitalize the incremental costs to obtain a contract if the amortization period for the asset is one year or less. SECURITIES AMERICA, INC. Notes to Statement of Financial Conditions December 31, 2018 8 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) [8] Revenue from contracts with customers: (continued) Impacts on Financial Statements on January 1, 2018 The following table summarizes the impacts of ASC 606 adoption on the Company’s statement of financial condition as of January 1, 2018. Statement of Financial Condition As Reported Adjustments Adjusted December 31, 2017 Costs to Obtain or Fulfill a Contract January 1, 2018 ASSETS Cash and cash equivalents 19,463,801$ -$ 19,463,801$ Securities owned, at fair value 158,936 - 158,936 Due from clearing brokers, net 7,877,671 - 7,877,671 Commissions receivable 12,911,001 - 12,911,001 Financial advisors' balances and other receivables, net 3,884,956 - 3,884,956 Notes receivable - financial advisors, net 192,642 (26,692) 165,950 Due from affiliate 7,164,075 (5,258,698) 1,905,377 Intangible assets, net 7,676,661 - 7,676,661 Deferred tax asset 2,812,394 (1,784,900) 1,027,494 Goodwill 32,689,985 - 32,689,985 Prepaid expenses and other assets 3,903,175 - 3,903,175 Contract acquisition costs, net - 10,887,421 10,887,421 98,735,297$ 3,817,132$ 102,552,429$ LIABILITIES Commissions payable 18,528,344$ -$ 18,528,344$ Securities sold, but not yet purchased, at fair value 132,003 - 132,003 Accrued compensation 7,089,143 - 7,089,143 Accrued expenses and other liabilities 3,123,854 (1,209,997) 1,913,857 Deferred income 1,342,372 - 1,342,372 Contingent consideration payable, at fair value 660,771 - 660,771 30,876,487$ (1,209,997)$ 29,666,490$ STOCKHOLDER'S EQUITY Common stock 100$ -$ 100$ Capital in excess of par value 114,956,256 - 114,956,256 Accumulated deficit (47,097,546) 5,027,128 (42,070,418) 67,858,810$ 5,027,128$ 72,885,938$ 98,735,297$ 3,817,132$ 102,552,429$ SECURITIES AMERICA, INC. Notes to Statement of Financial Conditions December 31, 2018 9 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) [8] Revenue from contracts with customers: (continued) The following table compares the reported statement of financial condition as of December 31, 2018, to the pro-forma amounts had the previous accounting standards been in effect. As Reported Balances Without the Adoption of Topic 606 Effect of Change Higher/(Lower) ASSETS Cash and cash equivalents 19,246,933$ 19,246,933$ -$ Securities owned, at fair value 1,075,500 1,075,500 - Due from clearing brokers, net 10,417,998 10,417,998 - Commissions receivable 14,262,496 14,262,496 - Financial advisors' balances and other receivables, net 4,077,489 4,077,489 - Notes receivable - financial advisors, net 88,877 115,569 (26,692) Due from affiliate 6,584,446 11,843,144 (5,258,698) Intangible assets, net 6,816,141 6,816,141 - Deferred tax asset 450,615 2,235,515 (1,784,900) Goodwill 32,812,687 32,812,687 - Prepaid expenses and other assets 10,297,576 10,297,576 - Contract acquisition costs, net 12,479,822 - 12,479,822 118,610,580$ 113,201,048$ 5,409,532$ LIABILITIES Commissions payable 20,240,365$ 20,240,365$ -$ Securities sold, but not yet purchased, at fair value 196,418 196,418 - Accrued compensation 7,463,879 7,463,879 - Accrued expenses and other liabilities 5,089,939 5,983,531 (893,592) Due to affiliate 1,694,708 1,694,708 - Deferred income 1,940,025 1,940,025 - Contingent consideration payable, at fair value 566,177 566,177 - 37,191,511$ 38,085,103$ (893,592)$ STOCKHOLDER'S EQUITY Common stock 100$ 100$ -$ Capital in excess of par value 110,576,050 110,576,050 - Accumulated deficit (29,157,081) (35,460,205) 6,303,124 81,419,069$ 75,115,945$ 6,303,124$ 118,610,580$ 113,201,048$ 5,409,532$ As of December 31, 2018 Statement of Financial Condition SECURITIES AMERICA, INC. Notes to Statement of Financial Conditions December 31, 2018 10 NOTE C - RELATED PARTY TRANSACTIONS The Company periodically advances excess funds to its affiliates or has amounts payable to affiliates for goods or services acquired through the affiliates. The Company has a revenue and expense sharing arrangement with SAA and is allocated revenue and overhead expense from its parent, SAFC. Amounts due to and from affiliates of the Company are settled periodically. Amounts due from affiliate as of December 31, 2018 represents the balance due from SAFC. Amounts due to affiliate represents the balance due to SAA. NOTE D – INCOME TAXES The Company files consolidated federal and certain combined state and local income tax returns with LTS. For financial reporting purposes, the Company determines its income tax provision on a separate company basis pursuant to a tax sharing agreement. Taxes currently payable by the Company on a separate basis will be paid to LTS. Deferred tax amounts are comprised of the following at December 31, 2018: Deferred tax assets: Allowances for receivables $ 125,770 Accrued liabilities 2,093,904 Federal benefit of unrecognized tax benefit 26,128 State net operating loss carry forwards 115,683 Securities 98,367 Intangible assets 489,652 Share-based compensation 857,039 Valuation allowance (53,149) Total deferred tax assets 3,753,394 Deferred tax liability: Goodwill (1,021,886) Contract acquisition costs (2,280,893) Total deferred tax liability (3,302,779) Net deferred tax asset $ 450,615 In assessing the Company’s ability to recover its deferred tax assets, the Company evaluates whether it is more likely than not that some portion or the entire deferred tax asset will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in those periods in which temporary differences become deductible and/or net operating losses can be utilized. The Company considers all positive and negative evidence when determining the amount of the net deferred tax assets that are more likely than not to be realized. This evidence includes, but is not limited to, historical earnings, scheduled reversal of taxable temporary differences, tax planning strategies and projected future taxable income. At December 31, 2018, the valuation allowance amounted to $53,149 related to state net operating loss carry-forwards. During 2018, such valuation allowance increased by $7,539. SECURITIES AMERICA, INC. Notes to Statement of Financial Conditions December 31, 2018 11 NOTE D – INCOME TAXES (CONTINUED) At December 31, 2018, the Company had state net operating loss carry-forwards of $2,485,022, which expire through 2031. Income tax benefits are recognized for a tax position when, in management’s judgment, it is more likely than not that the position will be sustained upon examination by a taxing authority. For a tax position that meets the more- likely-than-not recognition threshold, the tax benefit is measured as the largest amount that is judged to have a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority. The Company recognizes interest and penalties related to income taxes as a component of the income tax provision. At December 31, 2018, the Company had unrecognized state tax benefits of $143,688, including interest and penalties of $28,069 and $19,270, respectively, which increased by $5,781 during 2018. NOTE E - INTANGIBLE ASSETS AND GOODWILL Intangible assets subject to amortization as of December 31, 2018 consist of: Estimated Gross Carrying Value Life Balance Balance in Years January 1, 2018 Additions December 31, 2018 Brokerage relationships 7-15 $ 11,616,027 $ 461,000 $ 12,077,027 Non-compete covenants 3-5 1,433,000 - 1,433,000 $ 13,049,027 $ 461,000 $ 13,510,027 Accumulated Amortization Net Balance Amortization Balance Carrying January 1, 2018 Expense December 31, 2018 Amount Brokerage relationships $ 4,195,744 $ 1,131,712 $ 5,327,456 $ 6,749,571 Non-compete covenants 1,176,622 189,808 1,366,430 66,570 $ 5,372,366 $ 1,321,520 $ 6,693,886 $ 6,816,141 Changes to goodwill during the year ended December 31, 2018 are as follows: Balance as of January 1, 2018 $ 32,689,985 Acquisition of Kestler Financial Group 122,702 Balance as of December 31, 2018 $ 32,812,687 NOTE F - NET CAPITAL AND OTHER REGULATORY REQUIREMENTS The Company is subject to the SEC's Uniform Net Capital Rule (“Rule 15c3-1” or the “Rule”) of the Securities Exchange Act of 1934 and is required to maintain minimum net capital, as defined in the Rule. The Company uses the alternative method, as permitted by the Rule, which requires that the Company maintain minimum net capital equal to $250,000. Net capital may fluctuate on a daily basis. As of December 31, 2018, the Company had net capital of $9,164,402, which was $8,914,402 in excess of the required net capital of $250,000. The Company claims an exemption from the provisions of the SEC Rule 15c3-3 pursuant to paragraph (k)(2)(ii) and (k)(2)(i). SECURITIES AMERICA, INC. Notes to Statement of Financial Conditions December 31, 2018 12 NOTE G - COMMITMENTS AND CONTINGENCIES SEC examination reports provided to Securities America Advisors, Inc., an affiliate of the Company, in August 2016, asserted that the firm had acted inconsistently with its fiduciary duty (including the requirement to seek best execution) in recommending and selecting mutual fund share classes that paid 12b-1 fees where lower cost share classes also were available in those same funds. The SEC also asserted that the firm’s disclosures of potential conflicts of interest and compensation related to the mutual fund share classes that paid 12b-1 fees were insufficient. On April 6, 2018, the SEC issued an order against Securities America Advisors, Inc on consent that includes a cease and desist order and imposes remedial sanctions of disgorgement, prejudgment interest, and a fine; the combined total amount is $5,828,449 which has previously been reserved. In October 2018, Securities America Advisors, Inc received approval of its plan for distribution of the funds. Securities America Advisors, Inc. is paying out the funds pursuant to the terms of the order. Two arbitration claims were filed against Securities America, Inc. in June and September 2018, and one complaint was filed against Securities America, Inc. and Securities America Advisors, Inc. in the United States District Court for the Southern District of New York in February 2019, by a total of 14 customers asserting that a former registered representative of the Company defrauded them through, among other things, the use of improper wire transfers and false account documents. The customers asserted, among other claims, claims for fraud, negligence, §10(b) violations, failure to supervise, respondeat superior, breach of fiduciary and other duties. In November and December 2018, settlements were reached resolving the two arbitration claims; the amounts paid in connection with those two claims were not material. The Company is reviewing the circumstances of the complaint, which asserts a total of $18,000,000 in compensatory damages, as it seeks to resolve the matter. An arbitration claim was filed against Securities America, Inc and a former registered representative in December 2018, asserting that the former representative engaged in unsuitable investments. The customer alleged, among other claims, common law fraud, breach of contract, negligent supervision and violation of the California Securities Act. The Company is reviewing the matter, which asserts unspecified compensatory damages, as it seeks to defend and/or resolve the matter. In the ordinary course of business, in addition to the above disclosed matters, the Company and/or its affiliate are defendants in other litigation, arbitration and regulatory proceedings and may be subject to unasserted claims primarily in connection with their activities as securities broker-dealers or as a result of services provided in connection with securities offerings. Such litigation and claims may involve substantial or indeterminate amounts and are in varying stages of legal proceedings. As of December 31, 2018, the Company believes current accruals amounting to $646,875 are adequate and no further accruals are required. The Company's estimates, by their nature, are based on judgment and currently available information and involve a variety of factors, including, but not limited to, the type and nature of the litigation, claim or proceeding, the progress of the matter, the advice of legal counsel, the Company's defenses, potential recoveries from other parties, and its experience in similar cases or proceedings as well as its assessment of matters, including settlements, involving other defendants in similar or related cases or proceedings. However, it is possible that the ultimate resolution of aforementioned complaints, if unfavorable, may be material to the Company's results of operations. NOTE H - FAIR VALUE OF ASSETS AND LIABILITIES Authoritative accounting guidance defines fair value, establishes a framework for measuring fair value, and establishes a fair value hierarchy, which prioritizes the inputs to valuation techniques. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability, or in the absence of a principal market, the most advantageous market. Valuation techniques that are consistent with the market or income approach are used to measure fair value. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. SECURITIES AMERICA, INC. Notes to Statement of Financial Conditions December 31, 2018 13 NOTE H - FAIR VALUE OF ASSETS AND LIABILITIES (CONTINUED) Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories: Level 1 - Quoted prices in active markets for identical assets or liabilities. Level 2 - Inputs other than quoted prices in active markets that are directly or indirectly observable for the asset or liability. Level 3 - Unobservable inputs for the asset or liability where there is little or no market data, which requires the reporting entity to develop its own assumptions. When available, the fair value of securities is based on quoted prices in active markets. If quoted prices are not available, fair values are obtained from nationally recognized pricing services or other model-based valuation techniques, such as the present value of cash flows. The following table presents the balances of assets and liabilities measured at fair value on a recurring basis: Level 1 Level 2 Level 3 Total Assets: Cash $ 5,190,665 $ - $ - $ 5,190,665 Money market investments 14,056,268 - - 14,056,268 Mutual fund investments 1,075,500 - - 1,075,500 Total assets at fair value $ 20,322,433 $ - - $ 20,322,433 Liabilities: Contingent consideration payable $ -$ -$ 566,177 $ 566,177 Securities sold, not yet purchased 128,640 67,778 - 196,418 Total liabilities at fair value $ 128,640 $ 67,778 $ 566,177 $ 762,595 Set forth below are changes in the carrying value of the contingent consideration related to acquisitions: Fair value at December 31, 2017 $ 660,771 Fair value from 2018 acquisitions 315,000 Payments (445,548) Change in fair value 35,954 Fair value at December 31, 2018 $ 566,177 There were no transfers between levels during 2018. SECURITIES AMERICA, INC. Notes to Statement of Financial Conditions December 31, 2018 14 NOTE H - FAIR VALUE OF ASSETS AND LIABILITIES (CONTINUED) The following table presents carrying values and estimated fair values at December 31, 2018, of financial assets and liabilities, excluding financial instruments that are carried at fair value on a recurring basis, and their classification within the fair value hierarchy. Such instruments are carried at amounts that approximate fair value due to their short-term nature and generally negligible credit risk. Carrying Value Level 1 Level 2 Level 3 Total Estimated Fair Value Assets Due from clearing brokers, net $10,417,998 - $10,417,998 - $10,417,998 Commissions receivable 14,262,496 - 14,262,496 - 14,262,496 Financial advisors’ balances and other receivables 4,077,489 - 4,077,489 - 4,077,489 Notes receivable 88,877 - 88,877 - 88,877 Due from affiliate 6,584,446 - 6,584,446 - 6,584,446 TOTALS $35,431,306 -$35,431,306 - $ 35,431,306 Liabilities Commissions payable $ 20,240,365 - $ 20,240,365 - $20,240,365 Accrued compensation 7,463,879 - 7,463,879 - 7,463,879 Due to affiliate 1,694,708 - 1,694,708 - 1,694,708 Accrued expenses and other liabilities 2,389,939 - 2,389,939 - 2,389,939 TOTALS $ 31,788,891 - $ 31,788,891 - $ 31,788,891 NOTE I - OFF-BALANCE-SHEET RISK AND CONCENTRATIONS OF CREDIT RISK The Company uses two third-party clearing brokers. Cash and financial instruments held at the Company's clearing brokers collateralize amounts due to the clearing brokers, if any, and may serve to satisfy regulatory requirements. The Company is subject to credit risk should these brokers be unable to fulfill their obligations. The Company attempts to minimize these credit risks by monitoring the creditworthiness of its clearing brokers. At December 31, 2018, the amount due from clearing broker reflected in the accompanying statement of financial condition includes cash, commissions and other receivables which are due from these two clearing brokers. Commissions receivable are due from a large number of mutual funds and insurance companies. These receivables are uncollateralized. The Company has agreed to indemnify the clearing brokers for losses that they may sustain from customer accounts introduced by the Company. At December 31, 2018, there were no amounts to be indemnified to the clearing brokers for customer accounts. The Company maintains cash and cash equivalents in bank accounts which, at times, may exceed federally insured limits. The Company has not experienced and does not expect to experience any losses in such accounts. NOTE J – CLEARING CREDITS During 2018, the Company recorded a reduction of brokerage, software, communication and clearance fees, representing its allocable portion of certain clearing credits and rebates from its clearing brokers. One of such clearing brokers has also agreed to provide additional credits through the period ending in March 31, 2024 for which the estimated allocable portion to the Company, $15,892,508, will be recognized ratably over the respective annual period. SECURITIES AMERICA, INC. 8-26602 10205 X 16 17 18 19 12325 PORT GRACE BLVD. LAVISTA NE 68128 01/01/19 26 David Vaughan, Jr (402) 399-9111 ext. 3101 40 X 41 42 03/31/19 FORM FOCUS REPORT X-17A-5 (FINANCIAL AND OPERATIONAL COMBINED UNIFORM SINGLE REPORT) PART IIA 12 (Please read instructions before preparing Form) This report is being filed pursuant to (Check Applicable Block(s)): 1) Rule 17a-5(a)2) Rule 17a-5(b)3) Rule 17a-11 4) Special request by designated examining authority 5) Other NAME OF BROKER-DEALER SEC. FILE NO. ADDRESS OF PRINCIPAL PLACE OF BUSINESS (Do not use P.O. Box No.)FIRM ID NO. FOR PERIOD BEGINNING (MM/DD/YY) (No. and Street) AND ENDING (MM/DD/YY) (City)(State)(Zip Code) NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT(Area code) - Telephone No. NAME(S) OF SUBSIDIARIES OR AFFILIATES CONSOLIDATED IN THIS REPORT YES NO EXECUTION: The registrant/broker or dealer submitting this Form and its attachments and the person(s) by whom it is executed represent hereby that all information contained therein is true, correct and complete. It is understood that all required items, statements, and schedules are considered integral parts of this Form and that the submisson of any amendment represents that all unamended items, statements and schedules remain true, correct and complete as previously submitted. Dated the day of 20 Manual Signatures of: 1) Principal Executive Officer or Managing Partner 2) Principal Financial Officer or Partner 3) Principal Operations Officer or Partner ATTENTION - Intentional misstatements or omissions of facts constitute Federal Criminal Violations. (See 18 U.S.C. 1001 and 15 U.S.C. 78:f (a) ) FINRA UNITED STATES SECURITIES AND EXCHANGE COMMISSION OFFICIAL USE CHECK HERE IF RESPONDENT IS FILING AN AUDITED REPORT DOES RESPONDENT CARRY ITS OWN CUSTOMER ACCOUNTS ? 13 14 15 20 21 22 23 24 30 31 32 33 34 35 36 37 38 39 25 2019-04-23 04:50PM EDT Status: Accepted 14,447,670 X 17,378,478 12,159,245 150,000 2,760,153 103,017 SECURITIES AMERICA, INC. 6,343,510 60,423,491 03/31/19 8-26602 6,343,510 74,871,161 113,765,564 2,863,170 17,378,478 12,309,245 66,767,00146,998,563 at market value affiliates, subsidiaries and under lease agreements, at cost-net and amortization......................... of accumulated depreciation .............................................. .............................................. $$ market $ associated partnerships ....................... Page 1 leasehold improvements and rights ........................... ........................ 9. Investment in and receivables from 10. Property, furniture, equipment, 11. Other assets 12. Total Assets ................................... ......................... as of (MM/DD/YY) SEC FILE NO. Consolidated Unconsolidated ASSETS ............... 130 $$ STATEMENT OF FINANCIAL CONDITION FOR NONCARRYING, NONCLEARING AND ....................... ................................ ..................... $ $ $ ............................... ............................ ............................. .......................... $ securities accounts, at market value: $securities securities securities securities Allowable Non-Allowable Total $ and partners' individual and capital 1. Cash 7. Secured demand notes: 2. Receivables from brokers or dealers: 3. Receivables from non-customers 4. Securities and spot commodities owned, at market value: 5. Securities and/or other investments not readily marketable: 8. Memberships in exchanges: 6. Securities borrowed under subordination agreements N 3 PART IIA BROKER OR DEALER CERTAIN OTHER BROKERS OR DEALERS FINANCIAL AND OPERATIONAL COMBINED UNIFORM SINGLE REPORT Market value of collateral: $ OMIT PENNIES A. Owned, at B. Owned, at cost C. Contributed for use of the company, A. Exempted B. Other A. Exempted B. Other A. Exempted securities B. Debt securities C. Options D. Other securities E. Spot commodities A. At cost B. At estimated fair value A. Clearance account B. Other 890 850 860 880 810 830 550 600 610 418 419 420 424 430 440 470 460 490 535 540 480 190 ...................... 170 180 160 150 640 630 650 200 355 660 680 735 740 670 900 920 930 940 910 295 300 750 100 99 98 198 199 2019-04-23 04:50PM EDT Status: Accepted SECURITIES AMERICA, INC.03/31/19 141,740 31,785,381 31,927,121 100 190,989,960 (109,151,617) 81,838,443 81,838,443 113,765,564 ............... ................ Total PART IIA $ ..................... ........................... ......................... ............................... BROKER OR DEALER .......................... LIABILITIES AND OWNERSHIP EQUITY NONCLEARING AND CERTAIN OTHER BROKERS OR DEALERS STATEMENT OF FINANCIAL CONDITION FOR NONCARRYING, as of FINANCIAL AND OPERATIONAL COMBINED UNIFORM SINGLE REPORT ......................... .......................... ........................ ................... $ $ ................................. $ $ $ $ $ OMIT PENNIES ) ................................................................... .................................................................... ..................................................................... .............................................................. .................................................................. ........................................................................... ........................................................... ......................................................... ............................................. $ Liabilities Ownership Equity Page 2 collateral agreements of ...... use of company, at market value of ...... qualified for net capital purposes 20. TOTAL LIABILITIES from outsiders B. Securities borrowings, at market value C. Pursuant to secured demand note 2. Includes equity subordination (15c3-1(d)) 2. includes equity subordination (15c3-1(d)) 1. from outsiders D. Exchange memberships contributed for E. Accounts and other borrowings not of general creditors: expenses and other at market value 16. Securities sold not yet purchased, 17. Accounts payable, accrued liabilities, 18. Notes and mortgages payable: 19. Liabilities subordinated to claims 14. Payable to brokers or dealers: 15. Payable to non-customers 13. Bank loans payable B. Other A. Clearance account B. Secured A. Unsecured A. Cash borrowings: 1. from outsiders 23. Corporation: 21. Sole proprietorship 22. Partnership (limited partners) B. Common stock C. Additional paid-in capital D. Retained earnings A. Preferred stock G. Less capital stock in treasury F. Total 24. TOTAL OWNERSHIP EQUITY 25. TOTAL LIABILITIES AND OWNERSHIP EQUITY ....................... 1470 1540 1610 1620 1685 1690 1710 1720 1730 1740 1760 1750 1560 1700 1020 1010 1000 990 980 970 1770 1791 1792 1793 1794 1795 1796 1800 1780 1810 ( $ $ $ $ $ $ 1410 1420 1430 1440 14501230 1220 1211 1255 1360 1385 1390 1205 1210 1045 1400 13551155 13051115 13151114 A.I.Non-A.I. LiabilitiesLiabilities E. Accumulated other comprehensive income .............................................1797 2019-04-23 04:50PM EDT Status: Accepted 03/31/19SECURITIES AMERICA, INC. 81,838,443 66,810,269 15,028,174 81,838,443 81,838,443 191,262 14,836,912 68,928 122,334 66,767,001 43,268 3600 3590 3736 3650 3730 3734 3733 3735 3670 3660 Page 3 3490 3500 3520 3525 3530 3620 3630 3640 3740 3750 ) ) ) OMIT PENNIES ( ( 3480$ 3540 ............... 3610 $ $ $ $ ................................................. .......................................... ............................................ ................................................. ............................................. ......................................... ............................... ................................ .............................................. .............................................. ............................................... .......................................... ..................................... ................................................ ............................................. ....................................................................... $ $...................... ................................. ..................................... ................................. proprietary capital charges pursuant to 15c3-1(f)) : A. Total non-allowable assets from C. Commodity futures contracts and spot commodities- Statement of Financial Condition (Notes B and C) B. Secured demand note deficiency 4. Other securities 3. Options 2. Debt securities 1. Exempted securities 4. Add: 6. Deductions and/or charges: 7. Other additions and/or allowable credits (List) 9. Haircuts on securities (computed, where appliicable, 2. Deduct ownership equity not allowable for Net Capital 3. Total ownership equity qualified for Net Capital 5. Total capital and allowable subordinated liabilities 10. Net Capital 8. Net Capital before haircuts on securities positions 1. Total ownership equity from Statement of Financial Condition as of COMPUTATION OF NET CAPITAL FINANCIAL AND OPERATIONAL COMBINED UNIFORM SINGLE REPORT PART IIA BROKER OR DEALER ( A. Liabilities subordinated to claims of general creditors allowable in computation of net capital B. Other (deductions) or allowable credits (List) D. Other deductions and/or charges C. Trading and investment securities: B. Subordinated securities borrowings A. Contractual securities commitments D. Undue concentration E. Other (List) 2019-04-23 04:50PM EDT Status: Accepted SECURITIES AMERICA, INC.03/31/19 250,000 14,586,912 14,536,912 250,000 Page 4 PART IIA BROKER OR DEALER as of FINANCIAL AND OPERATIONAL COMBINED UNIFORM SINGLE REPORT 3880 COMPUTATION OF ALTERNATE NET CAPITAL REQUIREMENT requirement of subsidiaries computed in accordance with Note (A) to Rule 15c3-3 prepared as of the date of net capital computation including both brokers or dealers and consolidated subsidiaries' debits 5% of combined aggregate debit items or 120% of minimum net capital requirement Part B 22. 2% of combined aggregate debit items as shown in Formula for Reserve Requirements pursuant 23. Minimum dollar net capital requirement of reporting broker or dealer and minimum net capital 24. Net capital requirement (greater of line 22 or 23) 25. Excess net capital (line 10 less 24) 26. Net capital in excess of the greater of: ................................. ............................................... ........................................................ NOTES: non-allowable assets. (C) For reports filed pursuant to paragraph (d) of Rule 17a-5, respondent should provide a list of material (A) The minimum net capital requirement should be computed by adding the minimum dollar net capital requirement of the reporting broker dealer and, for each subsidiary to be consolidated, the greater of: .........................................3870 .......................3920$ $ $ $ $ 3760 3910 1. Minimum dollar net capital requirement, or 2. 6-2/3% of aggregate indebtedness or 4% of aggregate debits if alternative method is used. (B) Do not deduct the value of securities borrowed under subordination agreements or secured demand notes covered by subordination agreements not in satisfactory form and the market values of the memberships in exchanges contributed for use of company (contra to item 1740) and partners' securities which were included in non-allowable assets. COMPUTATION OF BASIC NET CAPITAL REQUIREMENT Part A % % of subsidiaries computed in accordance with Note (A) equivalent value is paid or credited COMPUTATION OF AGGREGATE INDEBTEDNESS 11. Minimum net capital required (6-2/3% of line 19) 12. Minimum dollar net capital requirement of reporting broker or dealer and minimum net capital requirement 13. Net capital requirement (greater of line 11 or 12) 17. Add: 14. Excess net capital (line 10 less 13) 15. Net capital less greater of 10% of line 19 or 120% of line 12 16. Total A.I. liabilities from Statement of Financial Condition 19. Total aggregate indebtedness 20. Percentage of aggregate indebtedness to net capital (line 19 divided by line 10) 21. Percentage of debt to debt-equity total computed in accordance with Rule 15c-3-1(d) ............................................... ........................................... .......................................... $ $ $ ......................................... ................................... ..................................... .......................... ...................... ............................................... ........................................................ ......................................... $ $ $ $ A. Drafts for immediate credit B. Market value of securities borrowed for which no C. Other unrecorded amounts (List)$ $........................................................... 3800 3810 3820 3860 3756 3760 3758 3780 3790 3830 3840 3850 2019-04-23 04:50PM EDT Status: Accepted SECURITIES AMERICA, INC. 2,498,259 90,476 464,619 3,053,354 70,226,937 79,948,240 313,604 2,768,516 83,030,360 3,960,627 886,000 3,074,627 1,378,701 3 13,710,696 86,990,987 01/01/19 03/31/19 3,074,627 REVENUE STATEMENT OF INCOME (LOSS) or STATEMENT OF COMPREHENSIVE INCOME (as defined in §210.1-02 of Regulation S-X), as applicable BROKER OR DEALER MONTHLY INCOME 4070 18. Provision for Federal income taxes (for parent only) 4238 25. Income (current month only) before provision for Federal income taxes ........................................... ................. 3935 3938 3939 3940 3945 3949 3950 3952 3955 3970 3990 3975 3995 4030 4120 4115 4140 4075 4195 4100 4200 4210 4220 4222 4230 4211 .................................................... ............................ ....................................................................... ............................................................. ...................................................................... .................................................... .................................................... .................... ......................................................................... ........................................................................ ............................ ................................................................... ............................................... .............................................. ............................................ ...................................................................... .................................................................. ..................................... ............................................................. ........................................................... .................................................... ................. ....................................................................... ........................ .............................................. ............................. FINANCIAL AND OPERATIONAL COMBINED UNIFORM SINGLE REPORT PART IIA Number of months included in this statement 3931 For the period (MMDDYY) from 3932 to 3933 $ $ $ $ $ Page 5 a. Includes interest on accounts subject to subordination agreements a. [RESERVED] a. After Federal income taxes of a. Commissions on transactions in exchange listed equity securities executed on an exchange b. Commissions on listed option transactions c. All other securities commissions d. Total securities commissions a. From market making in options on a national securities exchange b. From all other trading c. Total gain (loss) EXPENSES NET INCOME/COMPREHENSIVE INCOME 14. Regulatory fees and expenses 15. Other expenses 16. Total expenses 17. Net Income (loss) before Federal income taxes and items below (Item 9 less Item 16) 19. Equity in earnings (losses) of unconsolidated subsidiaries not included above 20. [RESERVED] 21. [RESERVED] 22. Net income (loss) after Federal income taxes 12. Commissions paid to other brokers-dealers 13. Interest expense 11. Other employee compensation and benefits 10. Salaries and other employment costs for general partners and voting stockholder officers 1. Commissions: 2. Gains or losses on firm securities trading accounts 5. Revenue from sale of investment company shares 6. Commodities revenue 7. Fees for account supervision, investment advisory and administrative services 8. Other revenue 9. Total revenue 4. Profits (losses) from underwriting and selling groups 3. Gains or losses on firm securities investment accounts 23. Other Comprehensive income (loss).....................................................4226 a. After Federal income taxes of ...........................................4227 24. Comprehensive income (loss).........................................................4228 $ $ 2019-04-23 04:50PM EDT Status: Accepted SECURITIES AMERICA, INC. 03/31/1901/01/19 64,747 2,720,000 81,838,443 81,419,069 3,074,627 Page 6 BROKER OR DEALER For the period (MMDDYY) from to FINANCIAL AND OPERATIONAL COMBINED UNIFORM SINGLE REPORT PART IIA 3. Balance, beginning of period 4300 4310 )4272 )4262 1. Balance, beginning of period 4320 STATEMENT OF CHANGES IN OWNERSHIP EQUITY (SOLE PROPRIETORSHIP, PARTNERSHIP OR CORPORATION) STATEMENT OF CHANGES IN LIABILITIES SUBORDINATED TO CLAIMS OF GENERAL CREDITORS 2. Balance, end of period (from item 1800) 4. Balance, end of period (from item 3520)4330 ............................................................... ..................................................................... ........................................................ ............................................................... ......................................................................... ......................................................................... ........................................................ $ $ OMIT PENNIES ........................... ............................$ $ $ $ 4290 4270 4260 4250 4240 A. Net income (loss) B. Additions (includes non-conforming capital of C. Deductions (includes non-conforming capital of A. Increases B. Decreases 2019-04-23 04:50PM EDT Status: Accepted 03/31/19 National Financial Services, LLC; Pershing, LLC X SECURITIES AMERICA, INC. YES YES YES YES YES YES 05/24/19 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 6,000,000 IN IN IN IN IN IN 1 1 1 1 1 1 Securities America Financial Corp Securities America Financial Corp Securities America Financial Corp Securities America Financial Corp Securities America Financial Corp Securities America Financial Corp 04/26/19 06/26/19 07/29/19 08/27/19 09/24/19 TOTAL Ownership Equity and Subordinated Liabilities maturing or proposed to be withdrawn within the next six months and accruals, (as defined below), which have not been deducted in the computation of Net Capital. C. (k) (2) (ii) - All customer transactions cleared through another broker-dealer on a fully disclosed basis. 25. If an exemption from Rule 15c3-3 is claimed, identify below the section upon which such exemption is based : Name(s) of Clearing Firm(s) - Please separate multiple names with a semi-colon A. (k) (1) - Limited business (mutual funds and/or variable annuities only) .................................. 4550$ B. (k) (2) (i) - "Special Account for the Exclusive Benefit of customers" maintained 4560.............................. D. (k) (3) - Exempted by order of the Commission 4580.......................................................... 45704335 Name of Lender or Contributor $ FINANCIAL AND OPERATIONAL COMBINED UNIFORM SINGLE REPORT PART IIA Exemptive Provision Under Rule 15c3-3 BROKER OR DEALER as of Type of Proposed Expect to Renew (Yes or No) 4605 4615 4625 4635 4645 4655 4665 4675 4685 4695 4604 4614 4624 4634 4644 4654 4664 4674 4684 4694 (MMDDYY) Withdrawal or Maturity Date 4603 4613 4623 4633 4643 4653 4663 4673 4683 4693 4699 OMIT PENNIES Amount to be with- drawn (cash amount and/or Net Capital Value of Securities) 4692 4682 4672 4662 4652 4642 4632 4622 4612 4602 Insider or Outsider ? (In or Out) Detail listing must include the total of items maturing during the six month period following the report date, regardless of whether or not the capital contribution is expected to be renewed. The schedule must also include proposed capital withdrawals scheduled within the six month period following the report date including the proposed redemption of stock and payments of liabilities secured by fixed assets (which are considered allowable assets in the capital computation pursuant to Rule 15c3-1(c) (2) (iv)), which could be required by the lender on demand or in less than six months. Page 7 4601 4611 4621 4631 4641 4651 4661 4671 4681 4691 Withdrawal or Accrual (See below for code to enter) Instructions: WITHDRAWAL CODE: DESCRIPTION 1. Equity Capital 2. Subordinated Liabilities 3. Accruals 4. 15c3-1(c) (2) (iv) Liabilities 4600 4610 4620 4630 4640 4650 4660 4670 4680 4690 2019-04-23 04:50PM EDT Status: Accepted Trade Ticket Douglas C. Robinson # 1245 03/11/2019 Securities, America, Inc. Branch Manager/Reg. Principal 27 Reed Boulevard Mill Valley CA 94941 City of California Jane Smith P.O. Box 2743 California CA 92263 To confirm the following transaction: Purchase Account Number: Security Description: UB #673630XXXX Federal Agency Issues - Coupon (415)771-9421 Term: First Pmt Date: Coupon: Total: Commission: Accrued Interest: Principal: Purchase Price: Par Value: Maturity Date: Issue Date: Settlement Date: Trade Date of 3134GS5N1 03/27/2019 03/27/2023 2,000,000.00 0.00 2.8500000 100.0000000 03/27/2019 03/11/2019 2,000,000.00 0.00 2,000,000.00 Issuer: Freddie Mac (callable) Safekeeper: Union Bank None 09/27/2019 1461 Cert./Acct# Collateral:Fund: G General Fund CUSIP: Ext. Fund: Report Ver. 7.3.5 City of California Position Report - Portrait Investment #1245 As Of March 11, 2019 Issue Date Maturity Date Par Value Principal Accrued Interest Total 1245 G 3134GS5N1 FHLMCC Freddie Mac (callable) 2,000,000.00 100.0000000 2,000,000.00 0.00 0.00 2,000,000.00 2.8500000 SC 03/27/2019 09/27/2019 Coupon 1st Coupon Beg End Interest Period Next Call Date Call Price Market Price Market Price Date Current Par Value 0.0000000 228,000.00 0.00 2.8500000 0.00 09/27/2019 100.000000000000 2.850 Callable 9/27/19, then quarterlyComment 0.000000000000 Amortize to Date Amortization Price 360Basis 03/11/2019 03/27/2019 03/27/2019 03/27/2023 DCR UB Held to Maturity 1 Aaa AA+ Short Term Current 2.8500000Fund Cert./Acct# Moody's S&P Dealer Safekeeper Federal Agency Issues - Coupon (FAC) Month End CouponCUSIPCUSIP 2.850 Investment # Issuer Asset Class Investment Class Purchase Price Total Income Interest Received to GASB 3 Trade Date Settlement Date Commission YTM 365Yield to Maturity Yield to Call Premium/Discount 0.00 Date Due Int. Due Date Rcvd. Int. Rcvd. Total Rcvd. Cd Receipt Comment Interest Accrued Interest Schedule Interest Beginning Date: 03/27/2019 Interest Days = 1440 09/27/2019 28,500.00 / / 0.00 0.00 28,500.00 03/27/2020 28,500.00 / / 0.00 0.00 28,500.00 09/27/2020 28,500.00 / / 0.00 0.00 28,500.00 03/27/2021 28,500.00 / / 0.00 0.00 28,500.00 09/27/2021 28,500.00 / / 0.00 0.00 28,500.00 03/27/2022 28,500.00 / / 0.00 0.00 28,500.00 09/27/2022 28,500.00 / / 0.00 0.00 28,500.00 03/27/2023 28,500.00 / / 0.00 0.00 28,500.00 Option Date Option Type Option Price Par Value Redemption Value Yield to Option Options 09/27/2019 Call 100.0000000 2,000,000.00 2,000,000.00 2.8500000 Run Date: 03/11/2019 - 11:04 Page 1 Portfolio PALM AC SP (PRF_SPCP) 7.2.0 Report Ver. 7.3.5 RCM Robinson Capital Management LLC 27 Reed Boulevard Mill Valley, CA 94941 Phone: 415-771-9421 Fax: 415-762-1980 City of &DOLIRUQLD Report period February 1, 2019 – February 28, 2019 The Treasurer's investment portfolio is in compliance with the California Government Code Section 53601 and the City’s Investment Policy. *LAIF estimated apportionment rate. Retail sales U.S. retail sales fell 1.2 percent in December (report was delayed a month due to the government shutdown) and posted the largest drop in nine years amid financial market turmoil. Non-store, internet-based retailers fell 3.9 percent, the most since November 2008. Despite this, Amazon Inc. reported net sales in North America grew 20 percent in the fourth quarter 2018 compared to the final quarter in 2017. Housing starts The Commerce department reported new home construction dropped 11.2 percent in December, led by a 20 percent decline in multifamily housing, accounting for roughly one-third of the index. Housing starts were weak across all four census regions with the western states falling 26 percent. According to the National Association of Realtors, the median price for an existing home in the United States rose to $247,500, up 2.8 percent compared to January of 2018, resulting in 83 straight months of year-over-year gains. The California median home price rose to $538,690, gaining 1.97 percent over the same period and 99.21 percent since January 2011. Q4 GDP The Bureau of Economic Analysis (BEA) released the initial Q4 GDP report, combining both the first and second estimates due to the government shutdown. The U.S. economy grew at a 2.6 percent annual pace, slightly higher than the 2.3 percent consensus. Key contributors were personal consumption up 1.92 percent followed by a jump in fixed investment (spending on equipment, structures and intellectual property), which contributed 0.69 percent to the quarter. For the year, GDP rose 3.1 percent in 2018, the highest rate since 2005. Institutional Fixed Income Market Review February 28, 2019 Source: Bloomberg; rates as of market close 2/28/19. Month of February change in treasury rates (3 month through 5 year maturities) City of &DOLIRUQLDPortfolio ManagementFebruary 28, 2019Portfolio Summary% ofPortfolioBookValueInvestmentsMarketValueParValueDays toMaturityTermYTM360 Equiv.YTM365 Equiv.Managed Pool Accounts21,728,711.02 142.72 2.476121,728,711.0221,728,711.022.510Negotiable CD's - Bank3,244,695.35 9846.38 2.3625393,238,497.503,250,000.002.395Negotiable CD's - S & L249,379.47 1,4610.49 2.168999245,347.50250,000.002.198Medium Term Corporate Notes1,064,468.07 1,7802.09 3.1991,5241,079,364.001,100,000.003.243Federal Agency Issues - Coupon18,488,480.671,61836.351.51875118,121,136.9518,515,000.001.539Treasury Securities - Coupon6,085,816.201,46711.971.9315806,061,393.006,100,000.001.95750,861,550.78 100.00%Investments50,474,449.9750,943,711.02871414 2.069 2.097Cash and Accrued Interest50,862,986.55Total Cash and Investments1,435.77Subtotal1,435.7750,475,885.7450,943,711.021,435.771,435.77871414 2.069 2.097Accrued Interest at PurchaseCurrent YearFebruary 2890,288.94Fiscal Year To Date718,769.06Average Daily BalanceEffective Rate of Return53,021,060.2954,137,505.671.99%2.22%Total EarningsMonth Ending__________________________________________________ ____________________Jane Smith, Administrative Services DirectorPortfolio HEALAPReporting period 02/01/2019-02/28/2019Run Date: 03/13/2019 - 09:58PM (PRF_PM1) 7.3.0Report Ver. 7.3.5 YTM365 Page 1Par ValueBook ValueMaturityDateStatedRateMarket ValueFebruary 28, 2019Portfolio Details - InvestmentsAverageBalanceIssuerPortfolio ManagementCity of &DOLIRUQLDDays toMaturityCUSIP Investment #PurchaseDateManaged Pool Accounts2.510LAIF100121,728,711.02 21,728,711.02 2.51007/01/1998 21,728,711.02SYS100110.750MUFG Inst Money Market10020.00 0.00 0.75006/30/2013 0.00SYS164211.770Sonoma County Pool10780.000.00 1.77007/01/19940.00SYS1078121,728,711.0221,728,711.0221,728,711.0221,816,262.23Subtotal and Average2.510 1Negotiable CD's - Bank1.450BMW BANK NORTH AMERICA1659250,000.00 249,734.6709/16/20191.25009/16/2016248,272.5005580AFC31991.448ALLY BANK1660250,000.00249,796.0709/23/20191.30009/22/2016248,205.0002006LN252062.849Morgan Stanley Bank CD1673250,000.00249,600.0105/11/20202.70005/10/2018250,427.5061747MX484372.849Morgan Stanley Private Bank CD1674250,000.00249,600.0105/11/20202.70005/10/2018250,427.5061760AKY44372.859Sallie Mae Bank CD1672250,000.00249,570.7505/11/20202.70005/09/2018250,427.50795450P584372.913Synchrony Bank CD1675250,000.00249,569.5805/11/20202.70005/11/2018250,427.5087165FVM34372.087American Express Centurion Bk1666250,000.00249,512.8909/14/20201.95009/12/2017247,200.0002587DZ505632.107DISCOVER BANK1667250,000.00249,438.0309/14/20201.95009/13/2017247,502.50254673CJ35632.029COMENITY CAPITAL BANK1668250,000.00249,716.7810/05/20201.95010/03/2017247,357.5020033AXB75841.975KeyBank NA CD1669250,000.00249,613.0210/09/20201.85010/11/2017246,930.0049306SYX85882.156Goldman Sachs Bank1670250,000.00249,584.5411/23/20202.05011/22/2017247,465.0038148PTD96333.198Citibank CD1679250,000.00249,524.6210/12/20213.10010/12/2018251,922.5017312QU649563.219UBS Bank USA CD1680250,000.00249,434.3810/18/20213.10010/17/2018251,932.5090348JEE69623,244,695.353,238,497.503,250,000.003,244,548.60Subtotal and Average2.395 539Negotiable CD's - S & L2.198Third Federal Savings & Loan1671250,000.00 249,379.4711/24/20212.10011/24/2017245,347.5088413QBU1999249,379.47245,347.50250,000.00249,371.09Subtotal and Average2.198 999Medium Term Corporate Notes3.243Apple Inc16771,100,000.00 1,064,468.07 05/03/20232.40006/18/2018 1,079,364.00037833AK61,5241,064,468.071,079,364.001,100,000.001,064,103.09Subtotal and Average3.243 1,524Federal Agency Issues - Coupon1.214FNMA (callable)16583,000,000.00 2,999,585.39 02/28/20201.20008/30/2016 2,960,430.003136G33P83641.345Fed. Farm Credit Bank (c)16573,000,000.00 2,998,904.02 08/24/20201.32008/24/2016 2,945,760.003133EGSA45421.385Fed. Farm Credit Bank (c)16621,000,000.00 999,594.6711/09/20201.36011/09/2016980,100.003133EGF426191.588FNMA (callable)16551,125,000.001,122,881.9605/25/20211.50005/25/20161,095,221.253136G3MW28161.862Fed. Farm Credit Bank (c)16652,000,000.001,997,727.8806/14/20211.81006/16/20171,966,120.003133EHMT78361.623Fed. Home Loan Mtg. Corp (c)16563,000,000.002,998,398.1508/16/20211.60008/16/20162,930,760.003134G9U708991.520FNMA (callable)16611,390,000.001,389,662.8209/30/20211.51009/30/20161,347,785.703136G4DJ99441.598Fed. Farm Credit Bank (c)16632,000,000.001,995,963.3111/15/20211.52011/15/20161,945,640.003133EGG82990Portfolio HEALAPRun Date: 03/13/2019 - 09:58PM (PRF_PM2) 7.3.0Report Ver. 7.3.5 YTM365 Page 2Par ValueBook ValueMaturityDateStatedRateMarket ValueFebruary 28, 2019Portfolio Details - InvestmentsAverageBalanceIssuerPortfolio ManagementCity of &DOLIRUQLDDays toMaturityCUSIP Investment #PurchaseDateFederal Agency Issues - Coupon1.874Fed. Home Loan Bank (callable)16642,000,000.00 1,985,762.47 11/26/20211.60011/30/2016 1,949,320.003130A9Z461,00118,488,480.6718,121,136.9518,515,000.0020,561,284.91Subtotal and Average1.539 751Treasury Securities - Coupon1.381U.S. Treasury16432,000,000.00 1,998,300.83 10/31/20191.25009/02/2015 1,982,900.00912828TV22441.549U.S. Treasury16452,000,000.00 1,994,991.25 08/31/20201.37509/16/2015 1,965,620.00912828L325492.897U.S. Treasury16782,100,000.00 2,092,524.12 09/15/20212.75009/24/2018 2,112,873.009128285A49296,085,816.206,061,393.006,100,000.006,085,490.38Subtotal and Average1.957 58053,021,060.2950,943,711.022.097 41450,474,449.97 50,861,550.78Total and AveragePortfolio HEALAPRun Date: 03/13/2019 - 09:58PM (PRF_PM2) 7.3.0 City of &DOLIRUQLDInterest EarningsSorted by Issuer - Maturity DateFebruary 1, 2019 - February 28, 2019Yield on Beginning Book ValueMaturityDateCurrentRateEndingPar ValueEndingSecurityTypeFundBook ValueBeginningBook ValueAdjusted Interest EarningsAccretionAmortization/EarningsAdjusted InterestAnnualized YieldCUSIP Investment #InterestEarnedIssuer: Third Federal Savings & Loan249,379.471671 250,000.00 2.100MTN11/24/2021 402.74 17.39 420.132.196G 249,362.0888413QBU1250,000.00Subtotal249,379.472.196420.1317.39402.74249,362.08Issuer: ALLY BANK249,796.071660 250,000.00 1.300NCB09/23/2019 249.32 27.72 277.041.446G 249,768.3502006LN25250,000.00Subtotal249,796.071.446277.0427.72249.32249,768.35Issuer: American Express Centurion Bk249,512.891666 250,000.00 1.950NCB09/14/2020 373.97 24.23 398.202.081G 249,488.6602587DZ50250,000.00Subtotal249,512.892.081398.2024.23373.97249,488.66Issuer: Apple Inc1,064,468.071677 1,100,000.00 2.400MC105/03/2023 2,200.00709.69 2,909.693.566G 1,063,758.38037833AK61,100,000.00Subtotal1,064,468.073.5662,909.69709.692,200.001,063,758.38Issuer: LAIF21,728,711.021001 21,728,711.02 2.510LA141,838.19 0.00 41,838.192.510G 21,728,711.02SYS100121,728,711.02Subtotal21,728,711.022.51041,838.190.0041,838.1921,728,711.02Issuer: BMW BANK NORTH AMERICA249,734.671659 250,000.00 1.250NCB09/16/2019 239.72 37.34 277.061.446G 249,697.3305580AFC3250,000.00Subtotal249,734.671.446277.0637.34239.72249,697.33Issuer: Citibank CD249,524.621679 250,000.00 3.100NCB10/12/2021 594.52 13.93 608.453.179G 249,510.6917312QU64250,000.00Subtotal249,524.623.179608.4513.93594.52249,510.69Issuer: COMENITY CAPITAL BANK249,716.781668 250,000.00 1.950NCB10/05/2020 373.97 13.58 387.552.023G 249,703.2020033AXB7250,000.00Subtotal249,716.782.023387.5513.58373.97249,703.20Portfolio HEALAPRun Date: 03/13/2019 - 10:29IE (PRF_IE) 7.2.0Report Ver. 7.3.5 MaturityDateCurrentRateEndingPar ValueEndingSecurityTypeFundPage 2Book ValueBeginningBook ValueAdjusted Interest EarningsAccretionAmortization/EarningsAdjusted InterestFebruary 1, 2019 - February 28, 2019Interest EarningsCity of &DOLIRUQLDAnnualized YieldCUSIP Investment #InterestEarnedIssuer: DISCOVER BANK249,438.031667 250,000.00 1.950NCB09/14/2020 373.97 27.95 401.922.101G 249,410.08254673CJ3250,000.00Subtotal249,438.032.101401.9227.95373.97249,410.08Issuer: Fed. Farm Credit Bank (c)0.001654 0.00 1.120FAC02/22/2019 1,306.6767.72 1,374.391.194G 1,999,932.283133EFC702,998,904.021657 3,000,000.00 1.320FAC08/24/2020 3,300.0061.69 3,361.691.461G 2,998,842.333133EGSA4999,594.671662 1,000,000.00 1.360FAC11/09/2020 1,133.3320.00 1,153.331.504G 999,574.673133EGF421,997,727.881665 2,000,000.00 1.810FAC06/14/2021 3,016.6782.82 3,099.492.023G 1,997,645.063133EHMT71,995,963.311663 2,000,000.00 1.520FAC11/15/2021 2,533.33124.33 2,657.661.736G 1,995,838.983133EGG828,000,000.00Subtotal7,992,189.881.59911,646.56356.5611,290.009,991,833.32Issuer: Fed. Home Loan Bank (callable)1,985,762.471664 2,000,000.00 1.600FAC11/26/2021 2,666.67433.63 3,100.302.036G 1,985,328.843130A9Z462,000,000.00Subtotal1,985,762.472.0363,100.30433.632,666.671,985,328.84Issuer: Fed. Home Loan Mtg. Corp (c)2,998,398.151656 3,000,000.00 1.600FAC08/16/2021 4,000.0054.30 4,054.301.763G 2,998,343.853134G9U700.001676 0.00 3.200FAC05/15/2023 1,431.1131.12 1,462.233.325G 1,146,567.463134GSKY03,000,000.00Subtotal2,998,398.152.0135,516.5385.425,431.114,144,911.31Issuer: MUFG Inst Money Market0.001002 0.00 0.750LA150.37 0.00 50.370.375G 175,102.41SYS16420.00Subtotal0.000.37550.370.0050.37175,102.41Issuer: FNMA (callable)2,999,585.391658 3,000,000.00 1.200FAC02/28/2020 3,000.0034.84 3,034.841.319G 2,999,550.553136G33P81,122,881.961655 1,125,000.00 1.500FAC05/25/2021 1,406.2579.03 1,485.281.724G 1,122,802.933136G3MW21,389,662.821661 1,390,000.00 1.510FAC09/30/2021 1,749.0810.88 1,759.961.651G 1,389,651.943136G4DJ95,515,000.00Subtotal5,512,130.171.4856,280.08124.756,155.335,512,005.42Issuer: Goldman Sachs Bank249,584.541670 250,000.00 2.050NCB11/23/2020 393.15 18.38 411.532.150G 249,566.1638148PTD9250,000.00Subtotal249,584.542.150411.5318.38393.15249,566.16Issuer: KeyBank NA CD249,613.021669 250,000.00 1.850NCB10/09/2020 354.79 18.43 373.221.949G 249,594.5949306SYX8250,000.00Subtotal249,613.021.949373.2218.43354.79249,594.59Portfolio HEALAPRun Date: 03/13/2019 - 10:29IE (PRF_IE) 7.2.0Report Ver. 7.3.5 MaturityDateCurrentRateEndingPar ValueEndingSecurityTypeFundPage 3Book ValueBeginningBook ValueAdjusted Interest EarningsAccretionAmortization/EarningsAdjusted InterestFebruary 1, 2019 - February 28, 2019Interest EarningsCity of &DOLIRUQLDAnnualized YieldCUSIP Investment #InterestEarnedIssuer: Morgan Stanley Bank CD249,600.011673 250,000.00 2.700NCB05/11/2020 517.81 25.62 543.432.838G 249,574.3961747MX48250,000.00Subtotal249,600.012.838543.4325.62517.81249,574.39Issuer: Morgan Stanley Private Bank CD249,600.011674 250,000.00 2.700NCB05/11/2020 517.81 25.62 543.432.838G 249,574.3961760AKY4250,000.00Subtotal249,600.012.838543.4325.62517.81249,574.39Issuer: Sallie Mae Bank CD249,570.751672 250,000.00 2.700NCB05/11/2020 517.81 27.50 545.312.849G 249,543.25795450P58250,000.00Subtotal249,570.752.849545.3127.50517.81249,543.25Issuer: Synchrony Bank CD249,569.581675 250,000.00 2.700NCB05/11/2020 517.81 27.58 545.392.849G 249,542.0087165FVM3250,000.00Subtotal249,569.582.849545.3927.58517.81249,542.00Issuer: UBS Bank USA CD249,434.381680 250,000.00 3.100NCB10/18/2021 594.52 16.47 610.993.193G 249,417.9190348JEE6250,000.00Subtotal249,434.383.193610.9916.47594.52249,417.91Issuer: U.S. Treasury1,998,300.831643 2,000,000.00 1.250TRC10/31/2019 1,933.70194.99 2,128.691.389G 1,998,105.84912828TV21,994,991.251645 2,000,000.00 1.375TRC08/31/2020 2,125.83255.46 2,381.291.556G 1,994,735.79912828L322,092,524.121678 2,100,000.00 2.750TRC09/15/2021 4,466.85225.32 4,692.172.923G 2,092,298.809128285A46,100,000.00Subtotal6,085,816.201.9719,202.15675.778,526.386,085,140.4350,943,711.02Total 50,861,550.782.133 86,887.522,707.5684,179.9654,180,544.21Portfolio HEALAPRun Date: 03/13/2019 - 10:29IE (PRF_IE) 7.2.0Report Ver. 7.3.5 City of &DOLIRUQLDSorted By Investment TypeSales/Calls/Maturities: February 1, 2019 - February 15, 2019Realized Gains and LossesInvestment #Maturity DateCurrent RatePar ValueBook ValueMaturity/SaleProceedsRealizedGain/LossSale DateTotalEarningsYield 365Inv.TypePurchaseDateTermDays HeldNet EarningsTotal TotalIssuerFederal Agency Issues - Coupon27,886.911,150,000.0016763.200 05/15/20231,146,598.58 1,150,000.00 3,401.42FAC 02/15/201931,288.3305/18/20183.6481,823273Fed. Home Loan Mtg. Corp (c)27,886.911,146,598.581,150,000.003,401.4231,288.33 3.648Federal Agency Issues - Coupon Subtotals27,886.911,146,598.58 1,150,000.00 3,401.4231,288.33 3.648Total Realized Gains/LossesPortfolio HEALAPRun Date: 02/11/2019 - 13:01CG (PRF_CGR1) 7.1.1Report Ver. 7.3.5 City of Healdsburg Portfolio Management Portfolio Statistics and Performance )HEUXary , 2019 Portfolio Liquidity Portfolio Composition Aging Interval* Par Value Investment Type Market Value 0-30 Days 21,728,711 Managed Pool Accounts 21,728,711 31 Days - 1 Year 5,500,000 Medium Term Corporate 1,079,364 1 - 2 Years 8,250,000 Federal Agency Issues 18,121,137 2 - 3 Years 14,365,000 U.S. Treasury Notes 6,061,393 3 - 4 Years 0 Certificates of Deposit 3,483,845 4 - 5 Years 1,100,000 TOTAL 50,943,711 *To maturity (does not include call date) Run Date: Portfolio HEAL 3/13/2019 10:21 Managed Pool Accounts 43% Medium Term Corporate 2% Federal Agency Issues 36% U.S. Treasury Notes 12% Certificates of Deposit 7% 1.1 1.3 1.6 1.8 2.1 2.3 2.6 2.8 3.1 Feb'18 Mar'18 April'18 May'18 June'18 July'18 Aug'18 Sept'18 Oct'18 Nov'18 Dec'18 Jan'19 Feb'19 Benchmark and Portfolio Yields City Portfolio 2-Year Treasury LAIF Rate Local Agency Investment Fund (LAIF) average monthly effective yield 2 Year US Treasury notes month-end yield Portfolio yield month-end effective rate of return % YieldLocal Agency Investment Fund (LAIF) average monthly effective yield 2 Year US Treasury notes month-end yield Portfolio yield month-end effective rate of return % Yield