Page 433 - FortWorthFY22AdoptedBudget

XI. Collateralization

Time and Demand Pledged Collateral
All time and demand deposits shall be secured above FDIC coverage by pledged
collateral. In order to anticipate market changes and provide a level of security for
all funds, collateral will be maintained and monitored by the pledging depository
at 102% of market value of principal and accrued interest on the deposits. The bank
shall monitor and maintain the margins on a daily basis. All collateral shall be
subject to inspection and audit by the City or its auditors. To allow for compliance
verification by the City, monthly reports of pledged collateral shall include, at a
minimum, information for each security that identifies its (i) type, (ii) CUSIP
number, and (iii) face value.

Collateral pledged to secure deposits shall be held by an independent financial
institution outside the holding company of the depository, approved by the
Investment Officer(s), in accordance with a safekeeping agreement executed under
the terms of the Financial Institutions Resource and Recover Enforcement Act
(FIRREA).

City Owned Collateral
Each counter party to a repurchase transaction is required to execute the Bond Market
Master Repurchase Agreement and to provide collateral, at a 102% margin, that must
be held by an independent third party custodian approved by the Investment Officer(s).
The Master Agreement must be fully executed before any transaction is initiated.
Collateral will be evidenced by safekeeping reports/receipts clearly denoting City
ownership from the safekeeping agent and include information as to each position
(security type, CUSIP number, face and market value).

Authorized Collateral
As authorized by the Public Funds Collateral Act and further restricted by this
policy, acceptable collateral for time and demand deposits and repurchase
agreements shall include only:

Obligations of the U.S. Government, its agencies and instrumentalities,
including mortgage-backed securities and CMO that pass the bank test,
and Obligations of any U.S. state, city, county or authority rated at least
A by two nationally recognized statistical rating organizations.

XII. Diversification

The City recognizes that investment risks can result from issuer defaults, market
price changes, or various technical complications leading to temporary illiquidity.
Risk is controlled through portfolio diversification. The strategies for
diversification are dependent upon market conditions and cash flow needs and

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