Page 406 - City of Westlake FY20 Budget

Section 11 Municipal Policies
Municipal Investment Policy

X. DIVERSIFICATION AND MATURITY LIMITATIONS
It is the policy of the Town to diversify its investment portfolio. Invested funds shall be
diversified to minimize risk or loss resulting from over-concentration of assets in a specific
maturity, specific issuer, or specific class of securities. Diversification strategies shall be
established and periodically reviewed.

XI. SAFEKEEPING AND COLLATERALIZATION
The laws of the State and prudent treasury management require that all purchased
securities be bought on a delivery versus payment (DVP) basis and be held in safekeeping
by either an approved, independent third party financial institution or the Town's
designated depository.

Securities Owned by the Town - All safekeeping arrangements shall be approved by the
Investment Officer and an agreement of the terms executed in writing. The safekeeping
bank may not be within the same holding company as the bank from which the securities
are purchased. The custodian shall be required to issue original safekeeping receipts to the
Town listing each specific security, rate, description, maturity, CUSIP number, and other
pertinent information.

Collateral - Collateralization shall be required on all bank time and demand deposits for
principal and accrued interest amounts over the FDIC insurance coverage of $100,000 (by
tax identification number). To anticipate market changes and provide a level of additional
security for all funds, collateral with a market value equal to 102% of the total deposits are
required. The pledging bank will be made contractually liable for monitoring and
maintaining the collateral levels at all times. All collateral will be held by an independent
third-party bank outside the holding company of the bank, pledged to the Town.

Authorized collateral will include only:
• Obligations of the US Government, its agencies and instrumentalities to include
mortgage backed securities which pass the bank test,
• Municipal obligations rated at least A by two nationally recognized rating agencies.
• The custodian shall be required to provide original safekeeping receipts clearly
marked that the security is pledged to the Town.

XII. REPORTING
The Investment Officer shall submit quarterly reports to the Council containing sufficient
information to permit an informed outside reader to evaluate the performance of the
investment program and in full compliance with the Act. At a minimum, the report shall
contain:
• Beginning and ending market value of the portfolio by market sector and total
portfolio
• Beginning and ending book value of the portfolio by market sector and total portfolio

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