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PowerPoint PresentationInvestments New Clerk Academy
PFM Asset Management LLC
(407) 648-2208 pfm.com
May 24, 2017
Table of Contents
Investment Options and Strategies
Sample Account Analysis Statement
Chapter 218.415, Florida Statutes
Chapter 218.415, Florida Statute
(1) SCOPE – The investment policy shall apply to funds under the control of the unit of local government in excess of those required to meet current expenses. The investment policy shall not apply to pension funds, including those funds in chapters 175 and 185, or funds related to the issuance of debt where there are other existing policies or indentures in effect for such funds.
© PFM 5© 2017 PFM 55
Chapter 218.415, Florida Statute
(2) INVESTMENT OBJECTIVES – The investment policy shall describe the investment objectives of the unit of local government. Investment objectives shall include safety of capital, liquidity of funds, and investment income, in that order.
© PFM 6© 2017 PFM 66
Chapter 218.415, Florida Statute
(3) PERFORMANCE MEASUREMENT – The investment policy shall specify performance measures as are appropriate for the nature and size of the public funds within the custody of the unit of local government.
© PFM 7© 2017 PFM 77
Chapter 218.415, Florida Statute
(4) PRUDENCE AND ETHICAL STANDARDS – The investment policy shall describe the level of prudence and ethical standards to be followed by the unit of local government in carrying out its investment activities with respect to funds described in this section. The unit of local government shall adopt the Prudent Person Rule, which states that: "Investments should 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 probable income to be derived from the investment."
© PFM 8© 2017 PFM 88
Chapter 218.415, Florida Statute
(5) LISTING OF AUTHORIZED INVESTMENTS – The investment policy shall list investments authorized by the governing body of the unit of local government, subject to the provisions of subsection (16). Investments not listed in the investment policy are prohibited. If the policy authorizes investments in derivative products, the policy must require that the unit of local government's officials responsible for making investment decisions or chief financial officer have developed sufficient understanding of the derivative products and have the expertise to manage them. For purposes of this subsection, a "derivative" is defined as a financial instrument the value of which depends on, or is derived from, the value of one or more underlying assets or index or asset values. If the policy authorizes investments in reverse repurchase agreements or other forms of leverage, the policy must limit the investments to transactions in which the proceeds are intended to provide liquidity and for which the unit of local government has sufficient resources and expertise.
© PFM 9© 2017 PFM 99
Table of Permitted Investments
U.S. Treasury
N/A See Section VIII. B.GNMA 40% Other U.S. Government Guaranteed
(e.g. AID, GTC) 10%
75% 40%4
N/A See Section VIII. B.Federal Agency/GSE other than those above 10%
Supranationals where U.S. is a shareholder and voting
member 10% 5%
(A-1/P-1, AAA/Aaa, or equivalent by any two Rating Agencies)
See Section VIII. B.
Corporates 30%3 5%
(A-1/P-1, A-/A3 or equivalent by any two Rating Agencies)
See Section VIII. B.
(SP-1/MIG 1, A-/A3, or equivalent by any two Rating Agencies)
See Section VIII. B.
Agency Mortgage-Backed Securities (MBS) 25% 40%4 N/A See Section VIII. B.5
Asset-Backed Securities (ABS) 25% 5% Highest ST or LT Rating
(A-1+/P-1, AAA/Aaa, or equivalent by any two Rating Agencies)
See Section VIII. B.5
Sector Sector
Table of Permitted Investments
Non-Negotiable Certificate of Deposits and Savings Accounts 50% None, if fully
collateralized None, if fully collateralized. 2 Years
Prime Commercial Paper (CP) 30%3 5% Highest ST Rating Category
(A-1/P-1, or equivalent by any two Rating Agencies)
270 Days
Counterparty (or if the counterparty is not rated by an
NRSRO, then the counterparty’s parent) must be rated in the Highest ST Rating
Category (A-1/P-1, or equivalent by any
two Rating Agencies) If the counterparty is a Federal
Reserve Bank, no rating is required
90 Days
Highest Fund Rating by all NRSROs who rate the fund
(AAAm/Aaa-mf, or equivalent by any two Rating Agencies)
N/A
Highest Fund Quality and Volatility Rating Categories by all NRSROs,(AAAm/AAAf, S1,
or equivalent by any Two Rating Agencies)
N/A
Chapter 218.415, Florida Statute
(6) MATURITY AND LIQUIDITY REQUIREMENTS – The investment policy shall require that the investment portfolio is structured in such manner as to provide sufficient liquidity to pay obligations as they come due. To that end, the investment policy should direct that, to the extent possible, an attempt will be made to match investment maturities with known cash needs and anticipated cash-flow requirements.
© PFM 12© 2017 PFM 1212
Chapter 218.415, Florida Statute
(7) PORTFOLIO COMPOSITION – The investment policy shall establish guidelines for investments and limits on security issues, issuers, and maturities. Such guidelines shall be commensurate with the nature and size of the public funds within the custody of the unit of local government.
© PFM 13© 2017 PFM 1313
Chapter 218.415, Florida Statute
(8) RISK AND DIVERSIFICATION – The investment policy shall provide for appropriate diversification of the investment portfolio. Investments held should be diversified to the extent practicable to control the risk of loss resulting from overconcentration of assets in a specific maturity, issuer, instrument, dealer, or bank through which financial instruments are bought and sold. Diversification strategies within the established guidelines shall be reviewed and revised periodically, as deemed necessary by the appropriate management staff.
© PFM 14© 2017 PFM 1414
Chapter 218.415, Florida Statute
(9) AUTHORIZED INVESTMENT INSTITUTIONS AND DEALERS – The investment policy should specify the authorized securities dealers, issuers, and banks from whom the unit of local government may purchase securities.
© PFM 15© 2017 PFM 1515
Chapter 218.415, Florida Statute
(10) THIRD-PARTY CUSTODIAL AGREEMENTS – The investment policy shall provide appropriate arrangements for the holding of assets of the unit of local government. Securities should be held with a third party; and all securities purchased by, and all collateral obtained by, the unit of local government should be properly designated as an asset of the unit of local government. No withdrawal of securities, in whole or in part, shall be made from safekeeping, except by an authorized staff member of the unit of local government. Securities transactions between a broker-dealer and the custodian involving purchase or sale of securities by transfer of money or securities must be made on a "delivery vs. payment" basis, if applicable, to ensure that the custodian will have the security or money, as appropriate, in hand at the conclusion of the transaction.
© PFM 16© 2017 PFM 1616
Chapter 218.415, Florida Statute
(11) MASTER REPURCHASE AGREEMENT – The investment policy shall require all approved institutions and dealers transacting repurchase agreements to execute and perform as stated in the Master Repurchase Agreement. All repurchase agreement transactions shall adhere to the requirements of the Master Repurchase Agreement.
© PFM 17© 2017 PFM 1717
Chapter 218.415, Florida Statute
(12) BID REQUIREMENT – The investment policy shall require that the unit of local government's staff determine the approximate maturity date based on cash-flow needs and market conditions, analyze and select one or more optimal types of investment, and competitively bid the security in question when feasible and appropriate. Except as otherwise required by law, the bid deemed to best meet the investment objectives specified in subsection (2) must be selected.
© PFM 18© 2017 PFM 1818
Chapter 218.415, Florida Statute
(13) INTERNAL CONTROLS – The investment policy shall provide for a system of internal controls and operational procedures. The unit of local government's officials responsible for making investment decisions or chief financial officer shall establish a system of internal controls which shall be in writing and made a part of the governmental entity's operational procedures. The investment policy shall provide for review of such controls by independent auditors as part of any financial audit periodically required of the unit of local government. The internal controls should be designed to prevent losses of funds which might arise from fraud, employee error, misrepresentation by third parties, or imprudent actions by employees of the unit of local government.
© PFM 19© 2017 PFM 1919
Chapter 218.415, Florida Statute
(14) CONTINUING EDUCATION – The investment policy shall provide for the continuing education of the unit of local government's officials responsible for making investment decisions or chief financial officer. Such officials must annually complete 8 hours of continuing education in subjects or courses of study related to investment practices and products.
© PFM 20© 2017 PFM 2020
Chapter 218.415, Florida Statute
(15) REPORTING – The investment policy shall provide for appropriate annual or more frequent reporting of investment activities. To that end, the governmental entity's officials responsible for making investment decisions or chief financial officer shall prepare periodic reports for submission to the legislative and governing body of the unit of local government, which shall include securities in the portfolio by class or type, book value, income earned, and market value as of the report date. Such reports shall be available to the public.
© PFM 21© 2017 PFM 2121
Chapter 218.415, Florida Statute
(16) AUTHORIZED INVESTMENTS; WRITTEN INVESTMENT POLICIES – Those units of local government electing to adopt a written investment policy as provided in subsections (1)-(15) may by resolution invest and reinvest any surplus public funds in their control or possession in:
(a) The Local Government Surplus Funds Trust Fund or any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperation Act of 1969, as provided in s. 163.01.
(b) Securities and Exchange Commission registered money market funds with the highest credit quality rating from a nationally recognized rating agency.
(c) Interest-bearing time deposits or savings accounts in qualified public depositories as defined in s. 280.02.
Direct obligations of the United States Treasury.
(e) Federal agencies and instrumentalities.
(f) Rated or unrated bonds, notes, or instruments backed by the full faith and credit of the government of Israel.
© PFM 22© 2017 PFM 2222
Chapter 218.415, Florida Statute
(16) AUTHORIZED INVESTMENTS; WRITTEN INVESTMENT POLICIES – Those units of local government electing to adopt a written investment policy as provided in subsections (1)-(15) may by resolution invest and reinvest any surplus public funds in their control or possession in:
(g) Securities of, or other interests in, any open-end or closed-end management-type investment company or investment trust registered under the Investment Company Act of 1940, 15 U.S.C. ss. 80a-1 et seq., as amended from time to time, provided that the portfolio of such investment company or investment trust is limited to obligations of the United States Government or any agency or instrumentality thereof and to repurchase agreements fully collateralized by such United States Government obligations, and provided that such investment company or investment trust takes delivery of such collateral either directly or through an authorized custodian.
(h) Other investments authorized by law or by ordinance for a county or a municipality.
(i) Other investments authorized by law or by resolution for a school district or a special district.
© PFM 23© 2017 PFM 2323
Chapter 218.415, Florida Statute
(17) AUTHORIZED INVESTMENTS; NO WRITTEN INVESTMENT POLICY – Those units of local government electing not to adopt a written investment policy in accordance with investment policies developed as provided in subsections (1)-(15) may invest or reinvest any surplus public funds in their control or possession in:
(a) The Local Government Surplus Funds Trust Fund, or any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperation Act of 1969, as provided in s. 163.01.
(b) Securities and Exchange Commission registered money market funds with the highest credit quality rating from a nationally recognized rating agency.
(c) Interest-bearing time deposits or savings accounts in qualified public depositories, as defined in s. 280.02.
(d) Direct obligations of the U.S. Treasury.
The securities listed in paragraphs (c) and (d) shall be invested to provide sufficient liquidity to pay obligations as they come due.
© PFM 24© 2017 PFM 2424
Chapter 218.415, Florida Statute
(18) SECURITIES; DISPOSITION –
(a) Every security purchased under this section on behalf of the governing body of a unit of local government must be properly earmarked and:
1. If registered with the issuer or its agents, must be immediately placed for safekeeping in a location that protects the governing body's interest in the security;
2. If in book entry form, must be held for the credit of the governing body by a depository chartered by the Federal Government, the state, or any other state or territory of the United States which has a branch or principal place of business in this state as defined in s. 658.12, or by a national association organized and existing under the laws of the United States which is authorized to accept and execute trusts and which is doing business in this state, and must be kept by the depository in an account separate and apart from the assets of the financial institution; or
3. If physically issued to the holder but not registered with the issuer or its agents, must be immediately placed for safekeeping in a secured vault.
(b) The unit of local government's governing body may also receive bank trust receipts in return for investment of surplus funds in securities. Any trust receipts received must enumerate the various securities held, together with the specific number of each security held. The actual securities on which the trust receipts are issued may be held by any bank depository chartered by the Federal Government, this state, or any other state or territory of the United States which has a branch or principal place of business in this state as defined in s. 658.12, or by a national association organized and existing under the laws of the United States which is authorized to accept and execute trusts and which is doing business in this state.
© PFM 25© 2017 PFM 2525
Chapter 218.415, Florida Statute
(19) SALE OF SECURITIES – When the invested funds are needed in whole or in part for the purposes originally intended or for more optimal investments, the unit of local government's governing body may sell such investments at the then-prevailing market price and place the proceeds into the proper account or fund of the unit of local government.
© PFM 26© 2017 PFM 2626
Chapter 218.415, Florida Statute
(20) PREEXISTING CONTRACT – Any public funds subject to a contract or agreement existing on October 1, 2000, may not be invested contrary to such contract or agreement.
© PFM 27© 2017 PFM 2727
Chapter 218.415, Florida Statute
(21) PREEMPTION – Any provision of any special act, municipal charter, or other law which prohibits or restricts a local governmental entity from complying with this section or any rules adopted under this section is void to the extent of the conflict.
© PFM 28© 2017 PFM 2828
Chapter 218.415, Florida Statute
(22) AUDITS – Certified public accountants conducting audits of units of local government pursuant to s. 218.39 shall report, as part of the audit, whether or not the unit of local government has complied with this section.
© PFM 29© 2017 PFM 2929
Chapter 218.415, Florida Statute
(23) AUTHORIZED DEPOSITS – In addition to the investments authorized for local governments in subsections (16) and (17) and notwithstanding any other provisions of law, a unit of local government may deposit any portion of surplus public funds in its control or possession in accordance with the following conditions:
(a) The funds are initially deposited in a qualified public depository, as defined in s. 280.02, selected by the unit of local government.
(b) The selected depository arranges for depositing the funds in financial deposit instruments insured by the Federal Deposit Insurance Corporation in one or more federally insured banks or savings and loan associations, wherever located, for the account of the unit of local government.
(c) The full amount of the principal and accrued interest of each financial deposit instrument is insured by the Federal Deposit Insurance Corporation.
(d) The selected depository acts as custodian for the unit of local government with respect to each financial deposit instrument issued for its account.
© PFM 30© 2017 PFM 3030
Investment Options and Strategies
Inverse Relationship of Bond Prices & Yields
Interest Rates
Market Values
Duration & Interest Rate Sensitivity
It Can Get Complicated
Duration & Interest Rate Sensitivity
0%
2%
4%
6%
8%
10%
12%
Total Return Components of BofA Merrill Lynch 1-5 Year U.S.
Treasury Index Income Return Price Return
9.9%
6.8%
4.4%
0.8%
Source: Bloomberg, BofA Merrill Lynch Indices, as of 12/31/16.
Lower Yields = Less Income & Smaller Buffer
Presenter
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
Source: Bloomberg
Historical Quarterly Total Returns
Periodic market value losses are not uncommon as rates move up and down
© PFM 36© 2017 PFM 3636
Starting rates 3% 4.75
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
10.00
Dec '86 Dec '88 Dec '90 Dec '92 Dec '94 Dec '96 Dec '98 Dec '00 Dec '02 Dec '04 Dec '06 Dec '08 Dec '10 Dec '12 Dec '14 Dec '16
Source: Bloomberg
© PFM 37© 2017 PFM 3737
2/94-2/95 6/99-5/00 6/04-6/06 12/15-Present Starting Fed Funds Target Rate 3.00% 4.75% 1.00% 0.25%
Ending Fed Funds Target Rate 6.00% 6.50% 5.25% ?
Change in Target Rate 3.00% 1.75% 4.25% ?
Duration of Tightening Cycle 12 months 11 months 24 months ?
Total Number of Hikes 7 6 17 2
Starting Slope of Yield Curve 148 Basis Points
27 Basis Points
190 Basis Points
124 Basis Points
108 Basis Points
90 Basis Points
148 Basis Points
* PFM Calculated Spread Source: Bloomberg, Federal Reserve, BofA Merrill Lynch Indices Starting slope is the difference between the 2 year and 10 year Treasury Note. Corporate Spreads Are Investment Grade
Historical Tightening Cycles
Presentation Notes
94-95 Large Banks NAFTA 99-00 Glass Stegal Repeal .COM Boom 04-06 R/E Boom 15-? Populism, anti establishment, protectionism, anti-immigration
© PFM 38© 2017 PFM 3838Source: BofA Merrill Lynch 1-3 Year Indices
Sector Excess Returns in Periods of Rising Rates
-0.40%
-0.20%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
Presentation Notes
Spreads should outperform 99-00 was flat (.com bust, elevated treasury yields)
© PFM 39© 2017 PFM 3939
Bullet Barbell Ladder
Presentation Notes
There are numerous ways to achieve a specific target maturity. The optimal structure will depend on the shape of the yield curve
© PFM 40© 2017 PFM 4040
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
Source: Bloomberg
June 2004
June 2006
Treasury Yield Curve at Beginning and End of 2004 to 2006 Tightening Cycle
362 basis point
Po rtf
ol io
Yield Difference
Return Difference
Presentation Notes
There are numerous ways to achieve a specific target maturity. The optimal structure will depend on the shape of the yield curve
© PFM 42© 2017 PFM 4242
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
Source: BofA Merrill Lynch Corporate Indices
Returns by Credit Quality in Tightening Cycles
Presenter
Av er
ag e
D ur
at io
Sector Allocation
Issuer/Industry Selection
Duration Management
Yield Curve Placement
Which of the following is the most important element of portfolio management?
© PFM 45© 2017 PFM 4545
SECTOR ALLOCATION
© PFM 46© 2017 PFM 4646
U.S. Treasury
MBS (0 to 5 Years) Supranationals
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
1-5 Year Bank of America Merrill Lynch Indices
Source: BofA Merrill Lynch Indexes, as of 12/31/16. Size represents relative market value.
Duration (Years)
Yi el
Presenter
$0
$500
$1,000
$1,500
$2,000
$2,500
Dec '15 Mar '16 Jun '16 Sep '16 Dec '16
Assets in Money Market Funds Prime MMF Govt MMF
+ $1.0 trillion
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
1 2 3 4 5 6 7 8 9 10 11 12 Maturity in Months
Money Market Yield Curves
Money Market Reform Takes Hold
Presenter
YTD 1 Year 3 Years 5 Years
1-3 Year Indices
Agency 1.28% 1.27% 1.04% 0.90%
Supranational AAA 1.53% 1.46% 1.16% 1.08%
-25
0
25
50
75
100
125
150
175
200
Source: Bloomberg, through 6/30/16. OAS is option-adjusted spread.
Supranational Yield Advantage (bps)
Presentation Notes
1-3 Year AAA US Supranational Index GS1S 1-5 Year AAA-AA Foreign Government & Supranational Index GS2V
© PFM 49© 2017 PFM 4949
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
1997-2016 Average 0.77%
Source: BofA ML 0-3 Year ABS Index. 2016 YTD as of November 30, 2016.
Asset-Backed Securities Excess Returns
Chapter 280, Florida Statutes
Public Depositors
Any unit of Florida government, from the state and its agencies to cities,
counties, universities, school districts, special districts, and any other
governmental unit must comply with Chapter 280, Florida Statutes ("F.S.")
when placing any public funds on deposit in a bank or savings association.
Source: http://www.myfloridacfo.com/division/treasury/collateralmanagement/PublicDepositors.htm
280.03 Public deposits to be secured; prohibitions; exemptions.
(1) (a) All public deposits shall be secured as provided in this chapter when public
depositors comply with the requirements of this chapter.
(b) Public deposits shall be made in a qualified public depository unless exempted
by law.
(2) Public funds shall not be deposited directly or indirectly in negotiable certificates of
deposit.
History.—s. 3, ch. 81-285; s. 8, ch. 83-122; s. 2, ch. 85-259; s. 55, ch. 86-152; s. 4, ch. 86-236; s. 2, ch. 87-409; s. 6,
ch. 90-357; s. 2, ch. 93-75; s. 5, ch. 96-216; s. 17, ch. 97-30; s. 12, ch. 98-409; s. 3, ch. 2005-126; s. 2, ch. 2014-145.
http://www.flsenate.gov/Laws/Statutes/2015/Chapter280
280.03 Public deposits to be secured; prohibitions; exemptions.
(3) The following are exempt from the requirements of, and protection under, this chapter:
(a) Public deposits deposited in a bank or savings association by a trust department or trust
company which are fully secured under trust business laws.
(b) Moneys of the System Trust Fund, as defined in s. 121.021(36).
(c) Public deposits held outside the country.
(d) Wire transfers and transfers of funds solely for the purpose of paying registrars and paying
agents.
(e) Public deposits that are fully secured by a collateral requirement under federal regulations.
(f) Public deposits made in accordance with s. 17.57(7) or s. 218.415(23).
History.—s. 3, ch. 81-285; s. 8, ch. 83-122; s. 2, ch. 85-259; s. 55, ch. 86-152; s. 4, ch. 86-236; s. 2, ch. 87-409; s. 6, ch. 90-357; s.
2, ch. 93-75; s. 5, ch. 96-216; s. 17, ch. 97-30; s. 12, ch. 98-409; s. 3, ch. 2005-126; s. 2, ch. 2014-145.
1. Depositing funds with a non-Qualified Public Depository (QPD)
2. Failure to fill out a Public Deposit and Acknowledgement form at the time of opening a
deposit account
3. Failure to submit an annual report to Florida’s Chief Financial Officer by close of business
on November 30th each year
© PFM 55© 2017 PFM 5555
What is a QPD?
A QPD is defined as a bank or savings association that has:
Federal Deposit Insurance Corporation (FDIC) deposit insurance,
Meets the requirements of Chapter 280, Florida Statutes, and
Been designated by this office (Florida’s Chief Financial Officer) as a
QPD.
Source: http://www.myfloridacfo.com/division/treasury/collateralmanagement/QualifiedPublicDepositories.htm
Qualified Public Depository (QPD)
http://www.myfloridacfo.com/division/treasury/collateralmanagement/documents/ListofActiveQP
Ds.pdf
© PFM 57© 2017 PFM 5757
Public Deposit and Acknowledgement Form
Complete form for every deposit account qualified under Chapter 280, Florida
Statutes
The completed forms are valid indefinitely, but must be replaced if
1. the QPD name changes, or
2. the deposit account number changes.
These forms are NOT to be filed with the Florida’s Chief Financial Officer’s office
unless a QPD fails and a claim for reimbursement of funds is necessary.
If not submitted, deposits are only protected up to $250k by FDIC
Source: http://www.myfloridacfo.com/division/treasury/collateralmanagement/QualifiedPublicDepositories.htm
Public Depositor Annual Report to Florida’s Chief Financial Officer
Verifies that the entity has:
1. Performed an annual confirmation of all open public deposit accounts as of the close
of business on September 30 for each year.
2. Confirmed that a current Public Deposit Identification and Acknowledgement Form
has been completed for each public deposit account
Source: http://www.myfloridacfo.com/division/treasury/collateralmanagement/QualifiedPublicDepositories.htm
Sample Account Analysis Statement
What does an Account Analysis Statement tell you?
1. How much am I keeping on average at the bank?
2. What is the current Earnings Credit Rate (ECR)?
3. Are the average balance maintained at the bank and the ECR enough to cover monthly
service fees?
4. Do I earn interest on the excess balances not needed to cover monthly service fees?
Only applicable if answer to question 3 is yes.
5. (a) What services am I using, (b) volumes and (c) per unit cost?
6. Are they passing thru the FDIC assessment fee, or something similar?
© PFM 61© 2017 PFM 6161
Sample Account Analysis Statement1
1
2
3
1. This is a sample account analysis. Location of information varies from one bank to another.
© PFM 62© 2017 PFM 6262
Sample Account Analysis Statement1
4
1. This is a sample account analysis. Location of information varies from one bank to another.
© PFM 63© 2017 PFM 6363
Sample Account Analysis Statement1
6
1. This is a sample account analysis. Location of information varies from one bank to another.
5 (b) 5 (c)
© PFM 64© 2017 PFM 6464
Disclosure This material is based on information obtained from sources generally believed to be reliable and available to the
public, however PFM Asset Management LLC cannot guarantee its accuracy, completeness or suitability. This material is for general information purposes only and is not intended to provide specific advice or a specific recommendation. All statements as to what will or may happen under certain circumstances are based on
assumptions, some but not all of which are noted in the presentation. Assumptions may or may not be proven correct as actual events occur, and results may depend on events outside of your or our control. Changes in assumptions may have a material effect on results. Past performance does not necessarily reflect and is not a guaranty of future results. The information contained in this presentation is not an offer to purchase or sell any
securities.
Investments
It Can Get Complicated
Slide Number 34
Slide Number 35
Slide Number 36
Slide Number 37
Slide Number 38
Slide Number 39
Slide Number 40
Slide Number 41
Slide Number 42
Slide Number 43
Which of the following is the most important element of portfolio management?
Slide Number 45
Slide Number 46
Slide Number 47
Slide Number 48
Slide Number 49
3 Pitfalls of Local Governments
What is a QPD?
Qualified Public Depository (QPD)
Public Depositor Annual Report to Florida’s Chief Financial Officer
Sample Account Analysis Statement
Sample Account Analysis Statement1
Sample Account Analysis Statement1
Sample Account Analysis Statement1
PFM Asset Management LLC
(407) 648-2208 pfm.com
May 24, 2017
Table of Contents
Investment Options and Strategies
Sample Account Analysis Statement
Chapter 218.415, Florida Statutes
Chapter 218.415, Florida Statute
(1) SCOPE – The investment policy shall apply to funds under the control of the unit of local government in excess of those required to meet current expenses. The investment policy shall not apply to pension funds, including those funds in chapters 175 and 185, or funds related to the issuance of debt where there are other existing policies or indentures in effect for such funds.
© PFM 5© 2017 PFM 55
Chapter 218.415, Florida Statute
(2) INVESTMENT OBJECTIVES – The investment policy shall describe the investment objectives of the unit of local government. Investment objectives shall include safety of capital, liquidity of funds, and investment income, in that order.
© PFM 6© 2017 PFM 66
Chapter 218.415, Florida Statute
(3) PERFORMANCE MEASUREMENT – The investment policy shall specify performance measures as are appropriate for the nature and size of the public funds within the custody of the unit of local government.
© PFM 7© 2017 PFM 77
Chapter 218.415, Florida Statute
(4) PRUDENCE AND ETHICAL STANDARDS – The investment policy shall describe the level of prudence and ethical standards to be followed by the unit of local government in carrying out its investment activities with respect to funds described in this section. The unit of local government shall adopt the Prudent Person Rule, which states that: "Investments should 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 probable income to be derived from the investment."
© PFM 8© 2017 PFM 88
Chapter 218.415, Florida Statute
(5) LISTING OF AUTHORIZED INVESTMENTS – The investment policy shall list investments authorized by the governing body of the unit of local government, subject to the provisions of subsection (16). Investments not listed in the investment policy are prohibited. If the policy authorizes investments in derivative products, the policy must require that the unit of local government's officials responsible for making investment decisions or chief financial officer have developed sufficient understanding of the derivative products and have the expertise to manage them. For purposes of this subsection, a "derivative" is defined as a financial instrument the value of which depends on, or is derived from, the value of one or more underlying assets or index or asset values. If the policy authorizes investments in reverse repurchase agreements or other forms of leverage, the policy must limit the investments to transactions in which the proceeds are intended to provide liquidity and for which the unit of local government has sufficient resources and expertise.
© PFM 9© 2017 PFM 99
Table of Permitted Investments
U.S. Treasury
N/A See Section VIII. B.GNMA 40% Other U.S. Government Guaranteed
(e.g. AID, GTC) 10%
75% 40%4
N/A See Section VIII. B.Federal Agency/GSE other than those above 10%
Supranationals where U.S. is a shareholder and voting
member 10% 5%
(A-1/P-1, AAA/Aaa, or equivalent by any two Rating Agencies)
See Section VIII. B.
Corporates 30%3 5%
(A-1/P-1, A-/A3 or equivalent by any two Rating Agencies)
See Section VIII. B.
(SP-1/MIG 1, A-/A3, or equivalent by any two Rating Agencies)
See Section VIII. B.
Agency Mortgage-Backed Securities (MBS) 25% 40%4 N/A See Section VIII. B.5
Asset-Backed Securities (ABS) 25% 5% Highest ST or LT Rating
(A-1+/P-1, AAA/Aaa, or equivalent by any two Rating Agencies)
See Section VIII. B.5
Sector Sector
Table of Permitted Investments
Non-Negotiable Certificate of Deposits and Savings Accounts 50% None, if fully
collateralized None, if fully collateralized. 2 Years
Prime Commercial Paper (CP) 30%3 5% Highest ST Rating Category
(A-1/P-1, or equivalent by any two Rating Agencies)
270 Days
Counterparty (or if the counterparty is not rated by an
NRSRO, then the counterparty’s parent) must be rated in the Highest ST Rating
Category (A-1/P-1, or equivalent by any
two Rating Agencies) If the counterparty is a Federal
Reserve Bank, no rating is required
90 Days
Highest Fund Rating by all NRSROs who rate the fund
(AAAm/Aaa-mf, or equivalent by any two Rating Agencies)
N/A
Highest Fund Quality and Volatility Rating Categories by all NRSROs,(AAAm/AAAf, S1,
or equivalent by any Two Rating Agencies)
N/A
Chapter 218.415, Florida Statute
(6) MATURITY AND LIQUIDITY REQUIREMENTS – The investment policy shall require that the investment portfolio is structured in such manner as to provide sufficient liquidity to pay obligations as they come due. To that end, the investment policy should direct that, to the extent possible, an attempt will be made to match investment maturities with known cash needs and anticipated cash-flow requirements.
© PFM 12© 2017 PFM 1212
Chapter 218.415, Florida Statute
(7) PORTFOLIO COMPOSITION – The investment policy shall establish guidelines for investments and limits on security issues, issuers, and maturities. Such guidelines shall be commensurate with the nature and size of the public funds within the custody of the unit of local government.
© PFM 13© 2017 PFM 1313
Chapter 218.415, Florida Statute
(8) RISK AND DIVERSIFICATION – The investment policy shall provide for appropriate diversification of the investment portfolio. Investments held should be diversified to the extent practicable to control the risk of loss resulting from overconcentration of assets in a specific maturity, issuer, instrument, dealer, or bank through which financial instruments are bought and sold. Diversification strategies within the established guidelines shall be reviewed and revised periodically, as deemed necessary by the appropriate management staff.
© PFM 14© 2017 PFM 1414
Chapter 218.415, Florida Statute
(9) AUTHORIZED INVESTMENT INSTITUTIONS AND DEALERS – The investment policy should specify the authorized securities dealers, issuers, and banks from whom the unit of local government may purchase securities.
© PFM 15© 2017 PFM 1515
Chapter 218.415, Florida Statute
(10) THIRD-PARTY CUSTODIAL AGREEMENTS – The investment policy shall provide appropriate arrangements for the holding of assets of the unit of local government. Securities should be held with a third party; and all securities purchased by, and all collateral obtained by, the unit of local government should be properly designated as an asset of the unit of local government. No withdrawal of securities, in whole or in part, shall be made from safekeeping, except by an authorized staff member of the unit of local government. Securities transactions between a broker-dealer and the custodian involving purchase or sale of securities by transfer of money or securities must be made on a "delivery vs. payment" basis, if applicable, to ensure that the custodian will have the security or money, as appropriate, in hand at the conclusion of the transaction.
© PFM 16© 2017 PFM 1616
Chapter 218.415, Florida Statute
(11) MASTER REPURCHASE AGREEMENT – The investment policy shall require all approved institutions and dealers transacting repurchase agreements to execute and perform as stated in the Master Repurchase Agreement. All repurchase agreement transactions shall adhere to the requirements of the Master Repurchase Agreement.
© PFM 17© 2017 PFM 1717
Chapter 218.415, Florida Statute
(12) BID REQUIREMENT – The investment policy shall require that the unit of local government's staff determine the approximate maturity date based on cash-flow needs and market conditions, analyze and select one or more optimal types of investment, and competitively bid the security in question when feasible and appropriate. Except as otherwise required by law, the bid deemed to best meet the investment objectives specified in subsection (2) must be selected.
© PFM 18© 2017 PFM 1818
Chapter 218.415, Florida Statute
(13) INTERNAL CONTROLS – The investment policy shall provide for a system of internal controls and operational procedures. The unit of local government's officials responsible for making investment decisions or chief financial officer shall establish a system of internal controls which shall be in writing and made a part of the governmental entity's operational procedures. The investment policy shall provide for review of such controls by independent auditors as part of any financial audit periodically required of the unit of local government. The internal controls should be designed to prevent losses of funds which might arise from fraud, employee error, misrepresentation by third parties, or imprudent actions by employees of the unit of local government.
© PFM 19© 2017 PFM 1919
Chapter 218.415, Florida Statute
(14) CONTINUING EDUCATION – The investment policy shall provide for the continuing education of the unit of local government's officials responsible for making investment decisions or chief financial officer. Such officials must annually complete 8 hours of continuing education in subjects or courses of study related to investment practices and products.
© PFM 20© 2017 PFM 2020
Chapter 218.415, Florida Statute
(15) REPORTING – The investment policy shall provide for appropriate annual or more frequent reporting of investment activities. To that end, the governmental entity's officials responsible for making investment decisions or chief financial officer shall prepare periodic reports for submission to the legislative and governing body of the unit of local government, which shall include securities in the portfolio by class or type, book value, income earned, and market value as of the report date. Such reports shall be available to the public.
© PFM 21© 2017 PFM 2121
Chapter 218.415, Florida Statute
(16) AUTHORIZED INVESTMENTS; WRITTEN INVESTMENT POLICIES – Those units of local government electing to adopt a written investment policy as provided in subsections (1)-(15) may by resolution invest and reinvest any surplus public funds in their control or possession in:
(a) The Local Government Surplus Funds Trust Fund or any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperation Act of 1969, as provided in s. 163.01.
(b) Securities and Exchange Commission registered money market funds with the highest credit quality rating from a nationally recognized rating agency.
(c) Interest-bearing time deposits or savings accounts in qualified public depositories as defined in s. 280.02.
Direct obligations of the United States Treasury.
(e) Federal agencies and instrumentalities.
(f) Rated or unrated bonds, notes, or instruments backed by the full faith and credit of the government of Israel.
© PFM 22© 2017 PFM 2222
Chapter 218.415, Florida Statute
(16) AUTHORIZED INVESTMENTS; WRITTEN INVESTMENT POLICIES – Those units of local government electing to adopt a written investment policy as provided in subsections (1)-(15) may by resolution invest and reinvest any surplus public funds in their control or possession in:
(g) Securities of, or other interests in, any open-end or closed-end management-type investment company or investment trust registered under the Investment Company Act of 1940, 15 U.S.C. ss. 80a-1 et seq., as amended from time to time, provided that the portfolio of such investment company or investment trust is limited to obligations of the United States Government or any agency or instrumentality thereof and to repurchase agreements fully collateralized by such United States Government obligations, and provided that such investment company or investment trust takes delivery of such collateral either directly or through an authorized custodian.
(h) Other investments authorized by law or by ordinance for a county or a municipality.
(i) Other investments authorized by law or by resolution for a school district or a special district.
© PFM 23© 2017 PFM 2323
Chapter 218.415, Florida Statute
(17) AUTHORIZED INVESTMENTS; NO WRITTEN INVESTMENT POLICY – Those units of local government electing not to adopt a written investment policy in accordance with investment policies developed as provided in subsections (1)-(15) may invest or reinvest any surplus public funds in their control or possession in:
(a) The Local Government Surplus Funds Trust Fund, or any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperation Act of 1969, as provided in s. 163.01.
(b) Securities and Exchange Commission registered money market funds with the highest credit quality rating from a nationally recognized rating agency.
(c) Interest-bearing time deposits or savings accounts in qualified public depositories, as defined in s. 280.02.
(d) Direct obligations of the U.S. Treasury.
The securities listed in paragraphs (c) and (d) shall be invested to provide sufficient liquidity to pay obligations as they come due.
© PFM 24© 2017 PFM 2424
Chapter 218.415, Florida Statute
(18) SECURITIES; DISPOSITION –
(a) Every security purchased under this section on behalf of the governing body of a unit of local government must be properly earmarked and:
1. If registered with the issuer or its agents, must be immediately placed for safekeeping in a location that protects the governing body's interest in the security;
2. If in book entry form, must be held for the credit of the governing body by a depository chartered by the Federal Government, the state, or any other state or territory of the United States which has a branch or principal place of business in this state as defined in s. 658.12, or by a national association organized and existing under the laws of the United States which is authorized to accept and execute trusts and which is doing business in this state, and must be kept by the depository in an account separate and apart from the assets of the financial institution; or
3. If physically issued to the holder but not registered with the issuer or its agents, must be immediately placed for safekeeping in a secured vault.
(b) The unit of local government's governing body may also receive bank trust receipts in return for investment of surplus funds in securities. Any trust receipts received must enumerate the various securities held, together with the specific number of each security held. The actual securities on which the trust receipts are issued may be held by any bank depository chartered by the Federal Government, this state, or any other state or territory of the United States which has a branch or principal place of business in this state as defined in s. 658.12, or by a national association organized and existing under the laws of the United States which is authorized to accept and execute trusts and which is doing business in this state.
© PFM 25© 2017 PFM 2525
Chapter 218.415, Florida Statute
(19) SALE OF SECURITIES – When the invested funds are needed in whole or in part for the purposes originally intended or for more optimal investments, the unit of local government's governing body may sell such investments at the then-prevailing market price and place the proceeds into the proper account or fund of the unit of local government.
© PFM 26© 2017 PFM 2626
Chapter 218.415, Florida Statute
(20) PREEXISTING CONTRACT – Any public funds subject to a contract or agreement existing on October 1, 2000, may not be invested contrary to such contract or agreement.
© PFM 27© 2017 PFM 2727
Chapter 218.415, Florida Statute
(21) PREEMPTION – Any provision of any special act, municipal charter, or other law which prohibits or restricts a local governmental entity from complying with this section or any rules adopted under this section is void to the extent of the conflict.
© PFM 28© 2017 PFM 2828
Chapter 218.415, Florida Statute
(22) AUDITS – Certified public accountants conducting audits of units of local government pursuant to s. 218.39 shall report, as part of the audit, whether or not the unit of local government has complied with this section.
© PFM 29© 2017 PFM 2929
Chapter 218.415, Florida Statute
(23) AUTHORIZED DEPOSITS – In addition to the investments authorized for local governments in subsections (16) and (17) and notwithstanding any other provisions of law, a unit of local government may deposit any portion of surplus public funds in its control or possession in accordance with the following conditions:
(a) The funds are initially deposited in a qualified public depository, as defined in s. 280.02, selected by the unit of local government.
(b) The selected depository arranges for depositing the funds in financial deposit instruments insured by the Federal Deposit Insurance Corporation in one or more federally insured banks or savings and loan associations, wherever located, for the account of the unit of local government.
(c) The full amount of the principal and accrued interest of each financial deposit instrument is insured by the Federal Deposit Insurance Corporation.
(d) The selected depository acts as custodian for the unit of local government with respect to each financial deposit instrument issued for its account.
© PFM 30© 2017 PFM 3030
Investment Options and Strategies
Inverse Relationship of Bond Prices & Yields
Interest Rates
Market Values
Duration & Interest Rate Sensitivity
It Can Get Complicated
Duration & Interest Rate Sensitivity
0%
2%
4%
6%
8%
10%
12%
Total Return Components of BofA Merrill Lynch 1-5 Year U.S.
Treasury Index Income Return Price Return
9.9%
6.8%
4.4%
0.8%
Source: Bloomberg, BofA Merrill Lynch Indices, as of 12/31/16.
Lower Yields = Less Income & Smaller Buffer
Presenter
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
Source: Bloomberg
Historical Quarterly Total Returns
Periodic market value losses are not uncommon as rates move up and down
© PFM 36© 2017 PFM 3636
Starting rates 3% 4.75
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
10.00
Dec '86 Dec '88 Dec '90 Dec '92 Dec '94 Dec '96 Dec '98 Dec '00 Dec '02 Dec '04 Dec '06 Dec '08 Dec '10 Dec '12 Dec '14 Dec '16
Source: Bloomberg
© PFM 37© 2017 PFM 3737
2/94-2/95 6/99-5/00 6/04-6/06 12/15-Present Starting Fed Funds Target Rate 3.00% 4.75% 1.00% 0.25%
Ending Fed Funds Target Rate 6.00% 6.50% 5.25% ?
Change in Target Rate 3.00% 1.75% 4.25% ?
Duration of Tightening Cycle 12 months 11 months 24 months ?
Total Number of Hikes 7 6 17 2
Starting Slope of Yield Curve 148 Basis Points
27 Basis Points
190 Basis Points
124 Basis Points
108 Basis Points
90 Basis Points
148 Basis Points
* PFM Calculated Spread Source: Bloomberg, Federal Reserve, BofA Merrill Lynch Indices Starting slope is the difference between the 2 year and 10 year Treasury Note. Corporate Spreads Are Investment Grade
Historical Tightening Cycles
Presentation Notes
94-95 Large Banks NAFTA 99-00 Glass Stegal Repeal .COM Boom 04-06 R/E Boom 15-? Populism, anti establishment, protectionism, anti-immigration
© PFM 38© 2017 PFM 3838Source: BofA Merrill Lynch 1-3 Year Indices
Sector Excess Returns in Periods of Rising Rates
-0.40%
-0.20%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
Presentation Notes
Spreads should outperform 99-00 was flat (.com bust, elevated treasury yields)
© PFM 39© 2017 PFM 3939
Bullet Barbell Ladder
Presentation Notes
There are numerous ways to achieve a specific target maturity. The optimal structure will depend on the shape of the yield curve
© PFM 40© 2017 PFM 4040
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
Source: Bloomberg
June 2004
June 2006
Treasury Yield Curve at Beginning and End of 2004 to 2006 Tightening Cycle
362 basis point
Po rtf
ol io
Yield Difference
Return Difference
Presentation Notes
There are numerous ways to achieve a specific target maturity. The optimal structure will depend on the shape of the yield curve
© PFM 42© 2017 PFM 4242
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
Source: BofA Merrill Lynch Corporate Indices
Returns by Credit Quality in Tightening Cycles
Presenter
Av er
ag e
D ur
at io
Sector Allocation
Issuer/Industry Selection
Duration Management
Yield Curve Placement
Which of the following is the most important element of portfolio management?
© PFM 45© 2017 PFM 4545
SECTOR ALLOCATION
© PFM 46© 2017 PFM 4646
U.S. Treasury
MBS (0 to 5 Years) Supranationals
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
1-5 Year Bank of America Merrill Lynch Indices
Source: BofA Merrill Lynch Indexes, as of 12/31/16. Size represents relative market value.
Duration (Years)
Yi el
Presenter
$0
$500
$1,000
$1,500
$2,000
$2,500
Dec '15 Mar '16 Jun '16 Sep '16 Dec '16
Assets in Money Market Funds Prime MMF Govt MMF
+ $1.0 trillion
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
1 2 3 4 5 6 7 8 9 10 11 12 Maturity in Months
Money Market Yield Curves
Money Market Reform Takes Hold
Presenter
YTD 1 Year 3 Years 5 Years
1-3 Year Indices
Agency 1.28% 1.27% 1.04% 0.90%
Supranational AAA 1.53% 1.46% 1.16% 1.08%
-25
0
25
50
75
100
125
150
175
200
Source: Bloomberg, through 6/30/16. OAS is option-adjusted spread.
Supranational Yield Advantage (bps)
Presentation Notes
1-3 Year AAA US Supranational Index GS1S 1-5 Year AAA-AA Foreign Government & Supranational Index GS2V
© PFM 49© 2017 PFM 4949
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
1997-2016 Average 0.77%
Source: BofA ML 0-3 Year ABS Index. 2016 YTD as of November 30, 2016.
Asset-Backed Securities Excess Returns
Chapter 280, Florida Statutes
Public Depositors
Any unit of Florida government, from the state and its agencies to cities,
counties, universities, school districts, special districts, and any other
governmental unit must comply with Chapter 280, Florida Statutes ("F.S.")
when placing any public funds on deposit in a bank or savings association.
Source: http://www.myfloridacfo.com/division/treasury/collateralmanagement/PublicDepositors.htm
280.03 Public deposits to be secured; prohibitions; exemptions.
(1) (a) All public deposits shall be secured as provided in this chapter when public
depositors comply with the requirements of this chapter.
(b) Public deposits shall be made in a qualified public depository unless exempted
by law.
(2) Public funds shall not be deposited directly or indirectly in negotiable certificates of
deposit.
History.—s. 3, ch. 81-285; s. 8, ch. 83-122; s. 2, ch. 85-259; s. 55, ch. 86-152; s. 4, ch. 86-236; s. 2, ch. 87-409; s. 6,
ch. 90-357; s. 2, ch. 93-75; s. 5, ch. 96-216; s. 17, ch. 97-30; s. 12, ch. 98-409; s. 3, ch. 2005-126; s. 2, ch. 2014-145.
http://www.flsenate.gov/Laws/Statutes/2015/Chapter280
280.03 Public deposits to be secured; prohibitions; exemptions.
(3) The following are exempt from the requirements of, and protection under, this chapter:
(a) Public deposits deposited in a bank or savings association by a trust department or trust
company which are fully secured under trust business laws.
(b) Moneys of the System Trust Fund, as defined in s. 121.021(36).
(c) Public deposits held outside the country.
(d) Wire transfers and transfers of funds solely for the purpose of paying registrars and paying
agents.
(e) Public deposits that are fully secured by a collateral requirement under federal regulations.
(f) Public deposits made in accordance with s. 17.57(7) or s. 218.415(23).
History.—s. 3, ch. 81-285; s. 8, ch. 83-122; s. 2, ch. 85-259; s. 55, ch. 86-152; s. 4, ch. 86-236; s. 2, ch. 87-409; s. 6, ch. 90-357; s.
2, ch. 93-75; s. 5, ch. 96-216; s. 17, ch. 97-30; s. 12, ch. 98-409; s. 3, ch. 2005-126; s. 2, ch. 2014-145.
1. Depositing funds with a non-Qualified Public Depository (QPD)
2. Failure to fill out a Public Deposit and Acknowledgement form at the time of opening a
deposit account
3. Failure to submit an annual report to Florida’s Chief Financial Officer by close of business
on November 30th each year
© PFM 55© 2017 PFM 5555
What is a QPD?
A QPD is defined as a bank or savings association that has:
Federal Deposit Insurance Corporation (FDIC) deposit insurance,
Meets the requirements of Chapter 280, Florida Statutes, and
Been designated by this office (Florida’s Chief Financial Officer) as a
QPD.
Source: http://www.myfloridacfo.com/division/treasury/collateralmanagement/QualifiedPublicDepositories.htm
Qualified Public Depository (QPD)
http://www.myfloridacfo.com/division/treasury/collateralmanagement/documents/ListofActiveQP
Ds.pdf
© PFM 57© 2017 PFM 5757
Public Deposit and Acknowledgement Form
Complete form for every deposit account qualified under Chapter 280, Florida
Statutes
The completed forms are valid indefinitely, but must be replaced if
1. the QPD name changes, or
2. the deposit account number changes.
These forms are NOT to be filed with the Florida’s Chief Financial Officer’s office
unless a QPD fails and a claim for reimbursement of funds is necessary.
If not submitted, deposits are only protected up to $250k by FDIC
Source: http://www.myfloridacfo.com/division/treasury/collateralmanagement/QualifiedPublicDepositories.htm
Public Depositor Annual Report to Florida’s Chief Financial Officer
Verifies that the entity has:
1. Performed an annual confirmation of all open public deposit accounts as of the close
of business on September 30 for each year.
2. Confirmed that a current Public Deposit Identification and Acknowledgement Form
has been completed for each public deposit account
Source: http://www.myfloridacfo.com/division/treasury/collateralmanagement/QualifiedPublicDepositories.htm
Sample Account Analysis Statement
What does an Account Analysis Statement tell you?
1. How much am I keeping on average at the bank?
2. What is the current Earnings Credit Rate (ECR)?
3. Are the average balance maintained at the bank and the ECR enough to cover monthly
service fees?
4. Do I earn interest on the excess balances not needed to cover monthly service fees?
Only applicable if answer to question 3 is yes.
5. (a) What services am I using, (b) volumes and (c) per unit cost?
6. Are they passing thru the FDIC assessment fee, or something similar?
© PFM 61© 2017 PFM 6161
Sample Account Analysis Statement1
1
2
3
1. This is a sample account analysis. Location of information varies from one bank to another.
© PFM 62© 2017 PFM 6262
Sample Account Analysis Statement1
4
1. This is a sample account analysis. Location of information varies from one bank to another.
© PFM 63© 2017 PFM 6363
Sample Account Analysis Statement1
6
1. This is a sample account analysis. Location of information varies from one bank to another.
5 (b) 5 (c)
© PFM 64© 2017 PFM 6464
Disclosure This material is based on information obtained from sources generally believed to be reliable and available to the
public, however PFM Asset Management LLC cannot guarantee its accuracy, completeness or suitability. This material is for general information purposes only and is not intended to provide specific advice or a specific recommendation. All statements as to what will or may happen under certain circumstances are based on
assumptions, some but not all of which are noted in the presentation. Assumptions may or may not be proven correct as actual events occur, and results may depend on events outside of your or our control. Changes in assumptions may have a material effect on results. Past performance does not necessarily reflect and is not a guaranty of future results. The information contained in this presentation is not an offer to purchase or sell any
securities.
Investments
It Can Get Complicated
Slide Number 34
Slide Number 35
Slide Number 36
Slide Number 37
Slide Number 38
Slide Number 39
Slide Number 40
Slide Number 41
Slide Number 42
Slide Number 43
Which of the following is the most important element of portfolio management?
Slide Number 45
Slide Number 46
Slide Number 47
Slide Number 48
Slide Number 49
3 Pitfalls of Local Governments
What is a QPD?
Qualified Public Depository (QPD)
Public Depositor Annual Report to Florida’s Chief Financial Officer
Sample Account Analysis Statement
Sample Account Analysis Statement1
Sample Account Analysis Statement1
Sample Account Analysis Statement1
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