Res 082-2021 Investment Policy Update 2021 08/03/2021 Resolution No. 82-2021
Resolution reviewing and approving the updated investment policy for
the City of Wichita Falls
WHEREAS, this policy updates the existing investment policy, and
WHEREAS, the City of Wichita Falls has received a Certificate of Distinction
certifying this policies compliance with the Texas Public Funds Investment Act.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF WICHITA FALLS, TEXAS, THAT:
The attached Investment Policy for the City of Wichita Falls, is hereby adopted.
PASSED AND APPROVED this the 3rd day of August, 2021 .
MAYOR
ATTEST:
Cit Clerk
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City of Wichita Falls
Investment Policy
Last updated: 07.19.21
Contents
Introduction 5
Policy Statement 5
Policy Objectives 5
Investment Strategy 5
Scope& General Strategy 5
General Operating Funds 6
Bond Operating Funds 6
Debt Service Funds 6
Special and Trust Funds 6
Investment Officer 6
Conflicts of Interest& Ethics Disclosure 6
Investment Training 6
Diversification, Cash Flow& Portfolio Management 6
Standard of Care 7
Prudence 7
Investment Policy Certification 7
Authorized Investments 7
U.S.Treasury Securities 7
Federal Agencies 8
Municipal Bonds 8
Certificates of Deposit and Share Certificates 9
Repurchase Agreements 10
Bankers' Acceptances 10
Commercial Paper 10
Mutual Funds 10
Public Investment Pool 11
Competitive Bidding 11
Bidders List 11
Safekeeping and Collateralization 11
Evaluation and Reporting 12
Internal Controls 12
Securities Dealers/Transactions• 13
Exceptions to Policy 14
EXHIBIT B - PROHIBITED INVESTMENTS 15
EXHIBIT C- BROKER/DEALER CERTIFICATION FORM 16
City of Wichita Falls, Texas
Investment Policy
Introduction
The purpose of this policy is to set forth specific policy and strategy guidelines for the City's investments.This policy
shall guide the City in its investment activity pursuant to all applicable laws.Decision making,reporting,and portfolio
guidelines are outlined here,as are the objectives,standard of care,and investment strategies.The City will prioritize
the safety of principle and assets,liquidity and then yield. All investment activity will be guided by this policy. The
policy will be reviewed annually by the City Council,City Manager,and the Investment Officer. '
Date of last review:07.19.21.
Policy Statement
The City of Wichita Falls,through this investment policy,will implement and maintain standards for all investment
activity that will prioritize:2
1. Safety of principal
2. Liquidity
3. Yield
Policy Objectives
The objectives of the City of Wichita Falls(the City) Investment Policy shall be:
• To set forth methods, means,and goals of financial investment and debt management operation for the City.
• To insure the financial security and optimum liquidity of the City's funds at all times.
• To assist the City in achieving the maximum total investment of the City's funds in a prudent manner at all times.
• To assist the City in achieving the maximum interest yield on the City's funds at all times through methods
allowed under Federal and State Law and in accordance with the current City's Bank Depository Contract.
Investment Strategy
The City maintains portfolios which utilize the following investment strategy considerations designed to address the
unique characteristics of the fund groups represented in the portfolios.
Scope& General Strategy
The City's investment portfolio shall consist of a variety of securities which may include any or all of the
authorized investments listed in Authorized Investments of this Policy. The City will maintain separate
portfolios or one commingled portfolio which will utilize the specific investment strategy considerations list
for each fund type below.
It shall be the general practice of the City to utilize an investment strategy based on the Standard of Care,
of this Policy,which also defines yield objectives,as well as the Public Funds Investment Act,Chapter 2256
of the Texas Government Code (the Act). It is the City's intent to hold purchased securities to the stated
maturity date and to have invested in such a manner to ensure both the safety and liquidity of such
transaction.
The City will maintain a diversified investment portfolio with the intention of experiencing minimal volatility
during economic cycles. In the event, however,the need arises to sell securities before the stated maturity
date, said securities shall be analyzed to determine the appropriate time to liquidate said securities and
minimize any potential real or book value loss to the City. In the event that an investment's rating is
decreased,all prudent measures will be taken to determine if the quality of the investment remains within
the investment standards of the City. If it does not, all prudent measures will be taken to liquidate the
investment 3
1In Compliance State of Texas, Public Funds Investment Act, with PFIA Sec. 2256.005.
2In accordance with the State of Texas,Public Funds Investment Act, 22556.005(b)(2) and 2256.005(b)(3).
3 PFIA 2256.021
General Operating Funds
The City's investment strategy for General Operating Funds shall be made to ensure that anticipated cash
flows are matched with adequate investment liquidity.
Bond Operating Funds
The City shall utilize an investment policy for Bond Operating Funds to generate a dependable revenue
stream for the appropriate debt service funds consistent with the City's Investment Policy and state law.
Debt Service Funds
The City shall utilize as the primary objective for the investment of Debt Service Funds adequate liquidity
to cover the debt service obligation of the City on required payment dates. Investments shall not have a
stated final maturity date which exceeds the appropriate debt service payment date.
Special and Trust Funds
The City shall invest Special and Trust Funds in accordance with state law and the City's Investment Policy
to the maximum ability that such investments may benefit the City directly,or utilize said funds in a method
that such funds may benefit the City indirectly.
Investment Officer
In accordance with PFIA 2256.005 (f),the City of Wichita Falls Chief Financial Officer is the Investment Officer (10)
and is responsible for establishing operating policies,which will ensure that investments are maintained in a proper
and prudent maturity distribution, represent sound extensions of credit, and are appropriate investments with
regard to regulatory and legal requirements. The 10 will be accountable to the City Manager. Ultimate responsibility
for management of the investment portfolio rests with the 10. It is expected that the 10 may wish to delegate one
or more of the specific investment objectives. Sales from the portfolio must be approved by the 10 and the City
Manager.
At least bi-annually,the City Council shall be provided with information regarding securities,purchases,and sales of
the previous period to determine their adherence to the Investment Policy and applicable laws and regulations.
Investment strategies should be formulated with special regard to the City's liquidity needs,cash flow requirements,
the projected economic environment,and policy guidelines as established by the Investment Policy.
Summary information must be provided to the City Council on the composition, size, quality, maturity, yield, and
current market valuations for the Investment Portfolio. Implementation of this policy is the responsibility of the
Investment Officer.
Conflicts of Interest& Ethics Disclosure
In accordance with this policy,the IO will file a disclosure statement with the Texas Ethics Commission and
the governing body if:
The officer has a personal business relationship with a business organization offering to engage in an
investment transaction with the City (as defined in 2256.005 (i)(1-3)); or the officer is related within the
second degree by affinity or consanguinity,as determined under Chapter 573 of the Texas Government Code,
to an individual seeking to transact investment business with the City.'
Investment Training
Investment training is required for the treasurer,CFO, and the investment officer(s)of a local government.
Training must be received from an independent source,approved by the City's governing body or investment
committee, and must include education in investment controls, security risks, strategy risks, market risks,
diversification of investment portfolio,and compliance with PFIA.Ten hours of training must be completed
within 12 months of taking office or assuming duties. Thereafter, ten hours of training must be completed
every two years.5
Diversification, Cash Flow&Portfolio Management
The 10 shall be required to diversify maturities. The 10, to the extent possible, will attempt to
match investments with anticipated cash flow requirements. Matching maturities with cash flow
dates will reduce the need to sell securities prior to maturity, thus reducing market risk. Unless
4 PFIA 2256.005(i)
PFIA 2256.008
matched to specific requirements, the 10 may not invest more than 30% of the portfolio for a
period greater than two (2)years.
Standard of Care
The City's investments shall be made with judgment and care under circumstances then prevailing that persons of
prudence, discretion, and intelligence exercise in the management of their own affairs, not for speculation, but for
investment, considering the probable safety of their capital as well as the probable income to be derived and
optimum liquidity required for operations in the City. Safety shall be the first priority,adequate liquidity the second,
and yield,the third priority. Individual investments shall be made in a manner consistent with this Policy.
The standard of prudence to be used in the investment function shall be the"prudent person"standard and shall be
applied in the context of managing the overall portfolio. This standard states:
"Investments shall be made with judgment and care, under circumstances then prevailing,which persons
of prudence, discretion, and intelligence exercise in the management of their own affairs, not for
speculation, but for investment, considering the probable safety of their capital as well as the expected
income to be derived."
Investment Policy Certification
All investment activity under this policy requires that investments shall only be made with the business organizations
(including money market mutual funds and local government investment pools)that have provided the City with a
written instrument,executed by a qualified representative of the firm,acknowledging that the business organization
has:
a. received and reviewed the City's Investment Policy; and
b. implemented reasonable procedures and controls in an effort to preclude investment
transactions conducted between the entity and the organization that is not authorized by the
entity's Investment Policy,except to the extent that this authorization is dependent on an analysis
of the makeup of the City's entire portfolio or requires an interpretation of subjective investment
standards.'
Authorized Investments
In accordance with authorizing federal and state laws, the City's Depository Contract, and appropriate approved
collateral provisions,the City may utilize the following types of investments for the City's funds:
• U.S.Treasury Securities
• Federal Agencies
• Municipal Bonds
• Certificates of Deposit and Share Certificates
• Repurchase Agreements
• Bankers' Acceptances
• Commercial Paper
• Mutual Funds
• Public Investment Pools
The City may invest in only these investments authorized by the Act,Sec. 2256.009.The City may not invest in any
investments unauthorized by the Act,Sec. 2256.009(b)(1-4).
U.S. Treasury Securities
U.S. Treasury securities are direct obligations of the United States Government. U.S. Treasury
obligations are the highest quality and are the most liquid and marketable of investment
6 PFIA 2256.005(k-I)
securities. Investments in this category will include Treasury bills, Treasury notes, and Treasury
bonds. U.S.Treasury bills are sold on a discount basis and have initial maturities of three months,
six months, and one year. U.S. Treasury notes and Treasury bonds are coupon-bearing
instruments with initial maturities from two to ten years for notes and ten to thirty years for
bonds.
The average life of the U.S. Treasury securities portfolio will not exceed 2.5 years and no individual security will
exceed 5 years in maturity. Treasuries may comprise up to 100%of the Investment Portfolio.
Federal Agencies
After U.S.Treasury securities, Federal agency securities are generally regarded as the next highest quality investment
suitable for the portfolio.
Federal agency obligations are usually acceptable for pledging and other collateral requirements. Agencies generally
offer a rate of return slightly higher than direct U.S. Treasury securities. The spread difference in yield will be
effected by the general level of interest rate, markets, and economic conditions at any given time. Consideration
should be given to the spread relationship existing when portfolio investment decisions are made.
Securities included in this category are debt issuance by the Federal Farm Credit System (Farm Credits), Federal
Home Loan Bank (FHLB), the Federal National Mortgage Association (FNMA), the Student Loan Marketing
Association (SLMA), the Federal Home Loan Mortgage Corporation (FHLMC or "Freddie Mac"), the Government
National Mortgage Association (GNMA or"Ginnie Mae"),and Small Business Administration (SBA).
The average life of the U.S. agency section of the portfolio will not exceed 2.5 years and no individual security will
exceed 5 years in maturity. U.S. agencies may comprise up to 100%of the Investment Portfolio
Municipal Bonds
Any direct obligations of the State of Texas or its agencies and instrumentalities, the 10 shall
consider prudent diversification of investment holdings per obligor. Compliance with all legal
and regulatory guidelines shall be adhered to in the purchase and holding of securities. Taxable
municipal obligation purchases may be made but are subject to the same credit, maturity, and
geographic distribution requirements that may be applicable as dictated by the Investment
Policy.
Credit information will be maintained sufficiently for management of the City to exercise an informed judgment in
determining whether the securities should be purchased and to enable regulators to determine that each security
purchased meets all statutory and regulatory requirements. Credit information sufficient for the 10 and City
Manager to comply with all statutory and regulatory requirements relating to the approval of each investment shall
be provided. The City shall retain all records relating to transactions in its investment portfolio as may be required
by statute or regulation.
Additional consideration will be given to the increased yield spread of taxable municipals over all other taxable
investment alternatives.
Various political subdivisions of state and local government issue debt through municipal securities generally under
two categories: general obligation (G.O.)and revenue bonds.
G.O. bonds are issued for a variety of public financing needs. They are generally regarded as the most credit worthy
of municipal securities as they are backed by the taxing authority of the issuing governmental entity.
Revenue bonds are issued to finance specific projects(i.e.water and/or sewer revenues)and depend on the revenue
or fee generated from the projects for repayment of principal and interest.
Bonds with a minimum Moody's Investors Service of A or Standard & Poor's Service rating of A shall be considered
as eligible portfolio investments. An exception may be made for local,well-known credit issues where the cost of
obtaining a credit rating by the issuing body is prohibitive.
Geographical distribution of municipals is an effective method of diversifying the City's overall credit risk and
maximizing income potential.
The City will consider the following credit information on general obligation municipals to be purchased:
1) Relationship of debt burden to property valuation.
2) Reasonableness of debt burden on a per capita basis.
3) Sinking fund provisions.
4) Historical trends of debt.
5) Future debt service requirements.
6) Assessed valuation, including basis of assessment.
7) Relationship of tax burden to property valuation.
8) Tax collection record.
9) Recent trends in tax rates.
10) Economic background.
11) Debt paying ability.
12) Population trends.
The City will consider the following credit information on revenue municipals to be purchased:
1) The number of times gross revenue covers debt service(coverage).
2) The segregation of revenue funds from general funds.
3) The flow of revenues to specific reserve accounts.
4) Special covenants that may limit default remedies.
The average maturity of this section of the portfolio will be no greater than two years and comprise no more than
25%of the Investment Portfolio.
Certificates of Deposit and Share Certificates
A certificate of deposit or share certificate is an authorized investment if the certificate is issued by a depository
institution that has its main office or a branch office in the state of Texas,and is guaranteed or insured by the Federal
Deposit Insurance Corporation or its successor or the National Credit Union Share Insurance Fund or its successor,
or secured by obligations described in the Act, including mortgage-backed securities directly issued by a federal
agency or instrumentality that have a market value of not less than the principal amount of the certificates, but
excluding those mortgage-backed securities of the nature described by the Act;or secured in any other manner and
amount provided by law for deposits of the investing entity.
Total collateralized Certificates of Deposits may comprise 100%of the Investment Portfolio. The average maturity
of this section of the portfolio will be no greater than two years.
In addition to the authority to invest funds in certificates of deposit under The Act, Sec. Sec. 2256.010,
Subsection (a), an investment in certificates of deposit made in accordance with the following conditions
is an authorized investment under this subchapter:
(1) the funds are invested by an investing entity through a depository institution that has its main
office or a branch office in this state and that is selected by the investing entity;
(2) the depository institution selected by the investing entity under Subdivision (1) arranges for the
deposit of the funds in certificates of deposit in one or more federally insured depository
institutions,wherever located,for the account of the investing entity;
(3) the full amount of the principal and accrued interest of each of the certificates of deposit is
insured by the United States or an instrumentality of the United States;
(4) the depository institution selected by the investing entity under Subdivision (1)acts as custodian
for the investing entity with respect to the certificates of deposit issued for the account of the
investing entity; and
(5) at the same time that the funds are deposited and the certificates of deposit are issued for the
account of the investing entity,the depository institution selected by the investing entity under
Subdivision (1) receives an amount of deposits from customers of other federally insured
depository institutions, wherever located, that is equal to or greater than the amount of the
funds invested by the investing entity through the depository institution selected under
Subdivision (1). (The Act, Sec. 2256.010)
Repurchase Agreements
Fully collateralized repurchase agreements are authorized under the Act,Sec.2256.011,if the repurchase agreement
has a defined termination date; is secured by obligations described by the Act; and requires the securities being
purchased by the entity to be pledged to the entity, held in the entity's name, and deposited at the time the
investment is made with a third party selected and approved by the entity; and is placed through a primary
government securities dealer,as defined by the Federal Reserve,or a financial institution doing business in the State
of Texas.
"Repurchase agreement"means a simultaneous agreement to buy,hold for a specified time,and sell back at a future
date,obligations described by the Act at a market value at the time the funds are dispersed of not less than 102%of
the principal amount of the funds dispersed. The term of the repurchase agreements may not exceed 180 days.
Notwithstanding any other law, the term of any reverse security repurchase agreement may not exceed 90 days
after the date the reverse security repurchase agreement is delivered. Money received by an entity under the terms
of a reverse security repurchase agreement shall be used to acquire additional authorized investments,but the term
of authorized investments acquired must mature not later than the expiration date stated in the reverse security
repurchase agreement.Total investment in repurchase and reverse repurchase agreements may not exceed 25%of
the Investment Portfolio.
Bankers'Acceptances
Bankers'Acceptances are an authorized investment under the Act,which has a stated maturity of 270 days or fewer
from the date of its issuance; will be, in accordance with its terms, liquidated in full at maturity; is eligible for
collateral for borrowing from a Federal Reserve Bank; is accepted by a bank organized and existing under the laws
of the United States or any state, if the short-term obligations of the bank, or of a bank holding company of which
the bank is the largest subsidiary,are rated not less than A-1+or P-1 or an equivalent rating of at least one nationally
recognized credit rating agency (The Act, Sec. 2256.012). Such individual transactions shall not exceed 5% of the
total City's Investment Portfolio, and all such endorsing banks shall come only from a list of entities who are
constantly monitored as to financial solvency. Total Bankers' Acceptances may not exceed 15% of the Investment
Portfolio.
Commercial Paper
The City may invest in Commercial Paper.The paper must have a stated maturity of 365 days or less from the date
of issuance and a rating of A-1+or P-1 or higher. If an equivalent rating system is used,the rating must be completed
by at least two nationally recognized credit rating agencies or one nationally recognized credit rating agency and be
fully secured by an irrevocable letter of credit issued by a bank organized and existing under the laws of the United
States or any state (The Act,Sec. 2256.013). Such transactions shall not exceed 15%of the total City's Investment
Portfolio with no more than 5% in any one name, and all such providers of letters of credit shall come only from a
list of entities who are constantly monitored as to financial solvency.
Mutual Funds
No-load money market mutual funds regulated by the Securities and Exchange Commission, which has a dollar-
weighted average stated maturity of 90 days or fewer, and include in its investment objectives the maintenance of
a stable net asset value of$1 for each share (The Act,Sec.2256.014).
A no-load mutual fund is an authorized investment under this Subchapter if:
• It is registered with the Securities and Exchange Commission;
• The average weighted maturity is less than two years;
• It is invested exclusively in obligations approved by the Act;
• It is continuously rated as to investment quality, by at least one nationally recognized investment
firm of not less than AAA or its equivalent;
• It conforms to the requirements set forth in the Act, relating to the eligibility of investment pools
to receive and invest funds of investing entities.
The City is not authorized to invest,in aggregate,more than 80%of its monthly average fund balance,excluding
bond proceeds,reserves and other funds held for debt service,in money market mutual funds as set forth herein
above, or mutual funds as herein set forth above, either separately or collectively. The City may not invest, in
aggregate, more than 15%of its monthly average fund balance, excluding bond proceeds, reserves, and other
funds held for debt service, in mutual funds as herein above described.The City may not invest any portion of
bond proceeds, reserves and funds held for debt service, in mutual funds herein described above; or invest its
funds or funds under its control, including bond proceeds and reserves and other funds held for debt service, in
any one mutual fund as herein set out above in an amount that exceeds 10%of the total assets of the mutual
fund.
Public Investment Pool
The City may invest in a public investment pool meeting the requirements of the Act.The Act,Sect. 2256.016, "An
entity may invest its funds and funds under its control through an eligible investment pool if the governing body of
the entity by rule, order, ordinance, or resolution, as appropriate, authorizes investment in the particular pool. An
investment pool shall invest the funds it receives from entities in authorized investments permitted by this
subchapter.An investment pool may invest its funds in money market mutual funds to the extent permitted by and
consistent with this subchapter and the investment policies and objectives adopted by the investment pool".
Investment in this type of pool may not exceed 90%of the Investment Portfolio.
Competitive Bidding
All individual security purchases and sales must include at least three competitive bids or offers. Competitive bidding
requirements do not apply to the purchase or sale of money market mutual funds,local government investment pools,
or when-issued securities,which are deemed to be made at prevailing market rates.
Bidders List
In accordance with PFIA 2256.025,the City will establish and review,at least annually,a list of qualified brokers that
are authorized to engage in investment transactions with the City.This list will be maintained by the City's Financial
Advisors and made available upon request.
Safekeeping and Collateralization
The laws of the State and prudent treasury management require that all purchased securities be bought on a delivery
versus payment basis and be held in safekeeping by either the City,an independent third party financial institution,
or the City's designated depository.
All safekeeping arrangements shall be designated by the 10 and an agreement of the terms executed in writing.
Securities and collateral will be held by a third party custodian designated by the City and in the City's name. The
third-party custodian shall be required to issue safekeeping receipts to the City listing each specific security, rate,
description, maturity, cusip number, and other pertinent information. Each safekeeping receipt will be clearly
marked that the security is held for the City or pledged to the City.
Collateralization shall be required on two types of investments certificates of deposits over the FDIC insurance
coverage of$250,000 and repurchase agreements.
PFIA 2256.005(b)(4)(E)
In order to anticipate market changes and provide a level of additional security for all funds, the collateralization
level required will be 102%of the market value of the principal and accrued interest.
Evaluation and Reporting
The 10 shall submit quarterly reports to the City Council containing sufficient information to permit an informed
outside reader to evaluate the investment program.' At a minimum,this report shall:
• describe in detail the investment position of the entity on the date of the report;
• be prepared jointly by all investment officers of the entity;
• be signed by each investment officer of the entity;
• contain a summary statement of each pooled fund group that states the;
• beginning market value for the reporting period;
• ending market value for the period;
• fully accrued interest for the reporting period;
• the account or fund or pooled group fund in the City for which each individual investment
was acquired; and
• the compliance of the investment strategy expressed in the City's investment policy; and
The Act.
For investments outside of the investment pools,the report may also contain:
• book value and market value of each separately invested asset at the end of the reporting
period by the type of asset and fund type invested;
• the maturity date of each separately invested asset that has a maturity date;
• If the City invests in other than money market mutual funds, investment pools or accounts
offered by its depository bank in the form of certificates of deposit,or money market accounts
or similar accounts, the reports prepared by the investment officers under this section shall
be formally reviewed at least annually by an independent auditor,and the result of the review
shall be reported to the governing body by that auditor.
• Beginning and ending market value of the portfolio and total portfolio,
• Beginning and ending carrying (Book) value of the portfolio by market sector and total
portfolio, if applicable,
• Transactions which change market and book value, detail reporting on each asset (book,
market, and maturity dates at a minimum),
• Overall current yield of the portfolio, and
• Overall weighted average maturity of the portfolio, and maximum maturities in the portfolio.
Investments are audited in conjunction with the City's Annual Financial Audit. If investments are outside
of money market mutual funds, investment pools or accounts offered by its depository bank in the form
of certificates of deposit, or money market accounts or similar accounts these investments are subject to
a compliance audit of management controls and adherence to this investment policy.'
$The Act,Sec. 2256.022
9 PFIA 2256.055(m)
Investments which may become ineligible after purchase,which were eligible at the time of purchase,will
not be required to be liquidated until such investment reaches its date of maturity.'
Securities Dealers/Transactions
The City has employed Sentry Management, Inc. (SMI) to provide professional investment advice for the City's
investment portfolio and other related investment areas such as asset/liability and interest rate risk analysis. SMI is
registered with the Securities and Exchange Commission as a registered investment adviser and municipal advisor.
SMI may be employed on a set fee basis only,and may not act as a dealer.
The 10 and City Manager recognize the importance of receiving objective,professional advice in management of the
investment portfolio, however it is explicitly understood the City, through the 10, does not delegate responsibility
for the portfolio to SMI. All acquisitions and/or sales of securities will be directly at the discretion of the City.
SMI places dealers in competition on purchases and sales and maintains records of each transaction. Transactions
are done on a "best execution" basis which precludes limiting any individual dealer's securities' volume with the
City. Setting maximum volume quotas could force the City to purchase or sell securities at less than the best price
and would not be in the best interest of the City.
Further,SMI may not execute a transaction for the City without specific authorization from the City.
The City may have transactions with any Federal Reserve Reporting Government Dealer (Primary Dealer). The
Federal Reserve requires all Primary Dealers to maintain large capital and be financially solvent.
In addition to Primary Dealers,the City may have security transactions with the dealers listed on Exhibit A. Current
financial information is maintained by SMI on the dealers listed on Exhibit A and is made available to the City.
Additionally, the City will maintain information on each dealer listed. The City may purchase or sell any of the
approved investments listed in the Investment Policy from or to any of the approved securities dealers.
It shall be the City Manager's and the 10's responsibility to review the dealers' financial condition. Considerations
of each dealer will be the dealer's capital and financial strength and general reputation with other financial
institutions and investment dealers. Whenever available and possible,the City will consider information from state
or federal securities regulators and securities industry self-regulatory organizations,such as the National Association
of Securities Dealers, concerning any formal enforcement actions against the dealer, its affiliates or associated
personnel.
In the event that Sentry Management is not involved in a transaction,the City will be responsible for the following:
Every dealer with whom the City transacts business will be offered a copy of this Investment Policy to assure that
they are familiar with the goals and objectives of the investment program. The broker/dealer will be required to
return a signed copy of the Certification Form certifying that the policy has been received and reviewed.
To further insulate the City from dealer exposure,the City will permit delivery-versus-payment settlement only on
security transactions. Further, all securities will be held in safekeeping at the City's primary depository bank or
another third party bank.
All personal securities transactions by the 10 with the City's approved securities dealers are prohibited unless specific
City Manager approval is received prior to the transaction. Periodic review of personal transactions with approved
securities dealers will be performed by the City Manager.
All of the City's records are available for unannounced,on-site inspection at SMI offices by any representative of the
City.
10 PFIA 2256.017
All investment management activities are to be conducted in accordance with the State of Texas, Public Funds
Investment Act, 2256.005 (b)(3). Contracts with investment and financial advisors will be reviewed at least every
three years,and put out to bid a minimum of once every 5 years from adoption of this policy.
Exceptions to Policy
This policy is intended to be flexible to deal with rapidly changing conditions in the City's economic environment and
the global bond and money markets. Therefore, this policy can be amended by a review of the City Manager and
10,and/or a majority vote of the City Council. If amended in substance by the City Manager and 10,the changes will
be presented to the City Council at the next regularly scheduled meeting.
This policy shall be reviewed by the City Council,City Manager, 10 at least annually.
EXHIBIT B - PROHIBITED INVESTMENTS
Per 1995 Public Funds Investment Act
10's INTEREST ONLY STRIPPED SECURITIES WITH UNDERLYING MORTGAGE-BACKED SECURITY
COLLATERAL.
PO's PRINCIPAL ONLY STRIPPED SECURITIES WITH UNDERLYING MORTGAGE-BACKED SECURITY
COLLATERAL.
CMO's COLLATERALIZED MORTGAGE OBLIGATIONS WITH A MATURITY GREATER THAN TEN (10)YEARS.
CMO's COLLATERALIZED MORTGAGE OBLIGATIONS,WHICH HAVE AN INVERSE FLOATING RATE(COUPON).
EXHIBIT C - BROKER/DEALER CERTIFICATION FORM
As required by Texas Government Code 2256.005(k)
City of Wichita Falls
The City acknowledges that the only means the firm has to preclude "imprudent" investment activities arising out
of transactions between the firm and the City is to confirm that all provisions of the City's investment policy are
followed in investment transactions conducted between the firm and the City, and, the second paragraph below
should read accordingly.
I,as a registered principal for the firm , do hereby certify that I, and the
officer covering this account, , have received and both have thoroughly
reviewed the investment policy of the City.
We acknowledge that this firm has implemented reasonable internal procedures and controls in an effort to preclude
imprudent investments between this firm and the City arising from transactions between the City and the firm.
Signature
NAME: G. Murphy Davis,CFA
TITLE: Chairman
DATE:
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(41.1 for developing an investment policy that meets the requirements of the Public Funds K'
I Investment Act and the standards for prudent public investing established by the
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Government Treasurers'Organization of Texas. �jli))
(( "1 L..---_ - ��_ 1.191).
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Government Treasurers'Organization of Texas Investment Policy Review Committee
((( 1 Pridnt':::1 For the two-year period ending July 31,2023 '• 1
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