2017-049 - City's Statement of Investment Policy

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COLLATERAL/SECURITY FOR DEPOSIT OF PUBLIC FUNDS: Money must be deposited in state or national banks, state or federal savings associations or state or federal credit unions in the State of California. It may be in inactive deposits, active deposits or interest-bearing active deposits. The deposits cannot exceed the amount of the bank's or savings and loan's paid up capital and surplus. The bank or savings and loan must secure the active and inactive deposits with eligible securities having a market value of one -hundred, ten percent (110%) of the total amount of the deposits. State law also allows as an eligible security, first trust deeds having a value of one -hundred, fifty percent (150%) of the total amount of the deposits. A third class of collateral is letters of credit drawn on the Federal Home Loan Bank (FHLB). The Treasurer may waive, at his discretion, security for that portion of a deposit which is insured pursuant to federal law. Currently, the first two -hundred, fifty -thousand dollars ($250,000) of a deposit is federally insured. It is to the City's advantage to waive this collateral requirement for the first $250,000 because we receive a higher interest rate. QUALIFIED DEALERS AND INSTITUTIONS: The City shall transact business only with banks, savings and loans and registered investment securities dealers. The purchase by the City of any investment other than those purchased directly from the issuer, shall be purchased either from an institution licensed by the State as a Broker -Dealer, as defined in Section 25004 of the Corporations Code and registered with Financial Industry Regulatory Authority (FINRA), or a member of a Federally regulated securities exchange, a National or State -Chartered Bank, a Federal or State Association (as defined by Section 5102 of the Financial Code), or a brokerage firm designated as a Primary Government Dealer by the Federal Reserve Bank, and who is registered with FINRA. The City's investment staff shall investigate all institutions which wish to do business with the City as a Qualified City of Santa Ana Broker -Dealer, in order to determine if they are adequately capitalized, make markets in securities appropriate to the City's needs, and agree to abide by the conditions set forth in the City of Santa Ana Annual Statement of Investment Policy. This will be done by having the Financial Institutions complete and return the appropriate City of Santa Ana Broker -Dealer Questionnaire, along with their most current FINRA Report and Audited Financial Statement (available within one -hundred, twenty (120) days of the Institution's fiscal year-end). The Treasury and Customer Services Manager shall maintain a list of Financial Institutions authorized to provide investment services to the City, along with their FINRA Report. Financial Institutions previously certified as Qualified City of Santa Ana Broker -Dealers shall complete and return the appropriate City of Santa Ana Broker -Dealer Questionnaire bi-annually, but shall be subject to the Audited Financial Statement and FINRA annual reporting requirements. However, if the