Page 313 - City of Colleyville FY22 Adopted Budget

The written agreement will specify the acceptable collateral, require
independent custodian of the collateral, only allow substitution of collateral of
equal or greater value than the collateral being substituted, and require City
approval before release of collateral.

A clearly marked evidence of pledge must be supplied to the City and retained
by the Investment Officers. A monthly collateral report provided by the
custodian shall be reviewed by the Investment Officers to assure that the
market value of the pledged securities is adequate.

For financial institution deposits, the market value of securities pledged as
collateral for deposits must at all times be equal to or greater than 105% of
the par value of the deposit plus accrued interest less the amount insured by
the Federal Deposit Insurance Corporation (FDIC), or its successors. The
depository shall be liable for monitoring and maintaining the collateral and
collateral margins at all times. The Public Funds Collateral Act defines the
eligible pledge securities - subject to the City’s sole right to accept or reject
any proposed security as collateral.

Letters of credit pledged as collateral shall at all times be equal to the total
value of the deposits plus accrued interest less the applicable level of FDIC
insurance.

If the value of the securities pledged falls below the required collateral level,
the financial institution must pledge additional securities no later than the end
of the next succeeding business day.

Selection of Primary Depository

A Primary Depository shall be selected through the City's banking services
procurement process, which shall include a formal request for application. In
selecting a Primary Depository, the services available, service costs, and
credit-worthiness of institutions shall be considered, and the Investment
Officers, shall conduct a comprehensive review of prospective depositories'
credit characteristics and financial history.

Arbitrage

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