Attachment 1 - 3.04 Investment Policy — Camarillo City Council, September 25, 2024

City of Camarillo

CITY COUNCIL POLICY

Section: Finance Date Adopted: February 15, 1989 Last Amended: August 25, 2021
Subject: Investment Policy

Number: 3.04 Page 1 of 15

PURPOSE

To establish a policy for managi ng the City’s monetary investme nts. This policy also applies to the funds for which the City provides financial management services.

POLICY

Authorized officials in positi ons of trust will act with care a nd prudence when making decisions regarding management and investment of public funds. Investments will be made in accordance with provisions of California Government Code, the Municipal Code, and this policy. The City’s investment objectives are to safeg uard principal, ensure liquidity to meet cash flow needs, and obtain an appropriate rate of return.

A. Internal Control

Internal control will be established and documented in writing. The controls will be designed to prevent loss of public funds arising from fraud, em ployee error, misrepresentation by third par ties, and imprudent actions by em ployees and officers of the City. Controls deemed most important include:

1. Separation of duties.

2. Separation of transaction author ity from accounting and recordkeeping.

3. Custodial safekeeping.

4. Clear delegati on of authority.

5. Specific limitations regarding securities loss and remedial action.

6. Maintain control of wire transfers.

7. Minimize number of author ized investment officials.

8. Document transactions and strategies.

9. Maintain a code of ethics standard.

Adopted 3.4, February 15, 1989
Amended 12/9/98; 4/28/99; 7/12/00; 6/27/01 Policy 3.04 Amended 3.04, 6/11/03; 6/12/04; 6/22/05; 7/26/06; 6/27/07;12/12/07; 11/15/17; 9/26/18; 9/9/20; 8/25/21 Page 2 of 15 The City’s investment procedur es manual will establish and main tain an internal control structure designed to ensure the assets managed under t he scope of this policy are protected from loss, theft, or misuse. The internal control structure will provide reasonable assurance these objectives are met.

B. Prudence

Pursuant to California Govern ment Code, Section 53600.3, all persons authorized to make investment decisions on behalf of the City are trustees and therefore fiduciaries subject to the Prudent Investor Standard.

The Treasurer and other authoriz ed persons responsible for managing City funds acting in accordance with writt en procedures and this investmen t policy and exercising due diligence shall be relieved of personal responsibility for an individual security’s credit risk or market price changes provided that th e Treasurer or other authorized persons acted in good faith. Deviations from expectations of a security’s credit or market risk should be reported to the governing body in a timely fashion and appropriate action should be taken to control adverse developments.

C. Ethics and Conflicts of Interest

The City promotes a culture of honesty and ethical behavior. Officers and employees responsible for investi ng funds will refrain from per sonal business activity that conflicts with their ability to make impartial investment decisions.

D. Safety

The City will ensure the safety of its invested funds by limiting risk associated with credit and interest rates. Risks are mitigated through diversification of the portfolio and monitoring of investments, depositories, and security dealers.

E. Liquidity

The City's investment portfolio will be structured to meet anti cipated cash flow needs.

F. Return

The objective of investment performance is to earn a total rate of return over a market cycle which approximates the return on a market index of Treasury and Federal Agency securities of commensurate risk and duration.

G. Maturity

The investment portfolio will be structured to provide sufficient funds to meet cash flow needs. A bond ladder strategy may be used for a portion o f the City’s funds where it is appropriate. The aver age maturity of the investmen t portfolio will not exceed three years, and no investment will have a maturity of more than five years from its date of purchase.

The City may invest funds through banks, savings and loans, au thorized investment advisers, broker/dealers, as well as the State of California.

The City’s investments are gover ned by California Government Co de, Sections 53600 et seq. Within the investments permitted by the Code, the City seeks to further restrict eligible inves tments to the guidelines listed below. In the event a discrepancy is found between this policy and the Code, the more restrictive parameters will take precedence. P ercentage holding limits list ed in this section apply at the time the security is purchased.

Any investment currently held at the time the policy is adopted which does not meet the new policy guidelines can be held until maturity, and shall be exempt from the current policy. At the time of the investment’s maturity or liquidation, such funds shall be reinvested only as provided in the current policy.

An appropriate risk level shall be maintained by primarily purchasing securities that are of high quality, liquid, and marketable. The portfolio shal l be diversified by security type and institution to avoid incurring unreasonable a nd avoidable risks regarding specific security types or individual issuers.

Authorized investments are:

1. State of California Local Agency Investment Fund (LAIF). The City may invest up to the maximum amount permitted by LAIF. LAIF’s inve stments in instruments prohibited by or not specified in the City’s pol icy do not exclude the investment in LAIF i tself from the City’s list of a llowable investments, provided LAIF’s r eports allow the Treasurer to ade quately judge the risk inherent in LAIF’s portfolio.

2. United States Treasury notes, bonds, bills, or certificates of indebtedness, and for which the full faith and credit of the United States ar e pledged for the payment of principal and inte rest. There are no limits on t he dollar amount or percentage that the City may invest in U.S. Treasuries.

3. Insured demand deposits, as defi ned by Section 5102 of the F inancial Code, in national or state-chartered banks or state or federal associations.

4. Certificates of deposit, as defined by Section 5102 of the F inancial Code, issued by a national or state-c hartered bank or a state or fede ral association, provided the total will not exceed 15% of the total portfolio.

5. Federal agency or United Stat es government sponsored enterpr ises, provided the total issues will not exceed 75%, nor will one iss uer exceed 20%, of the total portfolio. P urchases are limited to the foll owing senior issues:

b. Government National Mortgage A ssociation (GNMA) “Ginnie Mae”.

c. Federal Home Loan Mortgage Corpor ation (FHLMC) “Freddie Mac”.

d. Federal Home Loan Bank (FHLB).

e. Federal Farm Credit Banks (FFCB).

f. Federal Agricultural Mortgage Corporation (FAMC) “Farmer Mac”.

g. Tennessee Valley Authority (TVA).

6. Government or U.S. Treasury money market funds rated “AAA” b y two nationally recognized rating organizations. The total investme nt will not exceed 5% of the total portfolio.

7. Supranational Securities, pro vided they are US dollar denomi nated senior unsecured unsubordinated obligati ons issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, International Finance Corporati on, or Inter-American Developmen t Bank.

The securities must be rated in a rating category of “AAA” or i ts equivalent or better by at least one Nationally Recognized Statistical Rat ing Organization (NRSRO). No more than 10% of the total portfolio may be invested in these securities and no more than 5% of the portfol io may be invested in any single issuer.

8. Municipal Securities that are obligations of the City, the State of California, and any local agency within the St ate of California. Municipal securities must be rated in a rating category of “A” or its equivalent or better by at least one NRSRO. The exposure to these securities shall not exceed 2 0%, nor will any single issuer exceed 5% of the portfolio.

9. Negotiable Certificates of Deposit (NCDs), issued by a natio nally or state- chartered bank, a savings associat ion or a federal association, a state or federal credit union, or a federa lly-licensed or state-licensed branch of a foreign bank. The amount of the NCD insured up to the FDIC limit does not require any credit ratings. Any amount above the FDIC insured l imit must be issued by institutions which have short-term obligations rated “A-1” or its equivalent or better by at least one NRSRO; or long-term obliga tions rated in a rating category of “A” or its equivalent or better by at least one NRSRO.

The exposure to these securities shall not exceed 20%, nor will any single issuer exceed 5% of the portfolio.

10. Commercial Paper, provided t hat the securities are issued by an entity that meets all of the following conditions in either paragraph (a) or (b) and other requirements specified below:

i. A corporation organized and oper ating in the United States with assets more than $1 billion.

ii. The securities are rated “A-1” or its equivalent or better by at least one NRSRO.

iii. If the issuer has other debt obligations, they must be rat ed in a rating category of “A” or its equivalent or better by at leas t one NRSRO.

b. Securities issued by other entities:

i. The issuer is organized within the United States as a specia l purpose corporation, trust, or limited liability company.

ii. The securities must have program-wide credit enhancements including, but not limited to, overcollateralization, letters o f credit, or a surety bond.

iii. The securities are rated “A-1” or its equivalent or better by at least one NRSRO.

The City may purchase no more than 10% of the outstanding Comme rcial Paper of any single issuer. No more than 10% of the portfolio m ay be invested in Commercial Paper. No more than 5% of the portfolio may be invested in any single issuer. The maximum maturity does not ex ceed 270 days.

11. Corporate Medium Term Notes (MTNS) issued by a corporation organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the Unit ed States.

The securities shall be rated in a rating category of “AA” or its equivalent or better by at least one NRSRO. No more than 10% of the total portfolio may be invested in MTNs and no more than 5% of the portfolio shall be invested in any single issuer.

12. Asset-backed Securities, Agency mortgage-backed mortgage pa ss-through securities and Agency collateralized mortgage obligations from issuers not defined in section 2 and 5 of the authorized investment section of this policy.

The securities shall be rated in a rating category of “AA” or its equivalent or better by a NRSRO. No more than 10% of the total portfolio may b e invested in these securities and no more than 5% of the portfol io shall be invested in any single Asset-Backed or Commercial Mortgage secu rity issuer.

1. Investments not specifically i dentified by this policy witho ut the prior approval of the City Council are prohibited.

2. Trading securities for the so le purpose of speculating or taking an unhedged position on the future direction of interest rates is prohibited.

3. In accordance with Government Code, Section 53601.6 investme nt in inverse floaters, range notes, or mortgage derived interest-onl y strips is prohibited.

4. Investment in any security t hat could result in a zero interest accrual if held to maturity is prohibited.

5. Purchasing or selling securi ties on margin is prohibited.

6. The use of reverse repurchas e agreements, securities lending, or any other form of borrowing or leverage is prohibited.

7. The purchase of foreign curr ency denominated securities is prohibited.

8. The purchase of futures and options is prohibited.

J. Collateralizat ion Requirements

Uninsured time deposits with banks and savings and loans will be collateralized in the manner prescribed by law for depositories accepting municip al investment funds. The collateral for cert ificates of deposits will be an amount equal to a minimum of 150% of the face value of the deposited funds in the securities that are classified as a mortgage and 110% of the face value of the deposited funds for all other classes of security (California Government Code Sections 53651 and 53652).

K. Safekeeping of Sec urities and Certificates of Deposit (CD)

1. Securities. The City will cont ract with a bank or trust com pany for the safekeeping of securities. The third party custodian must prov ide written safekeeping documentation.

2. Certificates of Deposit. T he City will hold its own CDs.

L. Risk Management and Diversification

1. Mitigating Credit Risk in the Portfolio is addressing the r isk that a security or a portfolio will lose some or all of its value due to a real or perceived change in the ability of the issuer to repay its debt. The Cit y will mitigate credit risk by adopting the following strategies:

Adopted 3.4, February 15, 1989
Amended 12/9/98; 4/28/99; 7/12/00; 6/27/01 Policy 3.04 Amended 3.04, 6/11/03; 6/12/04; 6/22/05; 7/26/06; 6/27/07;12/12/07; 11/15/17; 9/26/18; 9/9/20; 8/25/21 Page 7 of 15 a. The diversification requireme nts included in the “Authorize d Investments” section of this policy are designed to mitigate credit risk in the portfolio.

b. No more than 5% of the total portfolio may be deposited wit h or invested in securities issued by any single issuer unless other wise specified in this policy.

c. The City may elect to sell a security prior to its maturity and record a capital gain or loss in order to manage the quality, liquidity or yield of the portfolio in response to market conditions or City’s risk preferences.

d. If securities owned by the City are downgraded by an NRSRO to a level below the quality required by this investment policy, it will be the City’s policy to review the credit situation and make a determination as to whether to se ll or retain such securities i n the portfolio.

i. If a security is downgraded, t he Treasurer will use discret ion in determining whether to sell or hold the security based on its current maturity, the economic outlook for the issuer, and other relevant factors.

ii. If a decision is made to ret ain a downgraded security in t he portfolio, its presence in the portfolio will be monitored and reported monthly to the Council.

2. Mitigating Market Risk in the Portfolio is addressing the ri sk that the portfolio value will fluctuate due to changes in the general level of interest rates. The City recognizes that, over time, longer-term portfolios have th e potential to achieve higher returns. On the o ther hand, longer-term portfoli os have higher volatility of return. The City will mitigate market risk by providing adequate liquidity for short-term cash needs, and by purchasing longer-term investments only with funds that are not needed for current cas h flow purposes.

a. The City further recognizes t hat certain types of securities, including variable rate securities, secur ities with principal pay downs p rior to maturity, and securities with embedded options, will affect the market risk profile of the portfolio diffe rently in different interest r a t e environments. The City, therefore, adopts the following strategies to control and mitigate its exposure to market risk:

i. The City will maintain a minimum of six months of budgeted operating expenditures in short term investments to provide sufficient liquidity for expected disbursements.

Adopted 3.4, February 15, 1989
Amended 12/9/98; 4/28/99; 7/12/00; 6/27/01 Policy 3.04 Amended 3.04, 6/11/03; 6/12/04; 6/22/05; 7/26/06; 6/27/07;12/12/07; 11/15/17; 9/26/18; 9/9/20; 8/25/21 Page 8 of 15 ii. The maximum percent of callable securities (does not includ e “make whole call” securities as defined in the Glossary) in the portfolio will be 20%.

iii. The maximum stated final matur ity of individual securities in the portfolio will be five (5) years, except as otherwise stated in this policy.

iv. The duration of the portfolio w ill generally be approximately equal to the duration (typically, plus or minus 20%) of a Benchmark, an index selected by the City bas ed on the City’s investment objectives, constraints, and risk tolerances.

M. LAIF, Investment Pools and Mutual Funds

The City shall conduct a thorough investigation of any pool or mutual fund prior to making an investment, and on a continual basis thereafter. The Treasurer shall develop a questionnaire to deter mine whether the City shall inv est in this option.

The questionnaire will address the following general questions:

a. A description of eligible inv estment securities, and a writt en statement of investment policy and objectives.

b. A description of interest calculations and how it is distrib uted, and how gains and losses are treated.

c. A description of how the securities are safeguarded (includi ng the settlement processes), and how often the securities are priced and the program audited.

d. A description of who may inve st in the program, how often, w hat size deposit and withdrawal are allowed.

e. A schedule for receiving stat ements and portfolio listings.

f. Are reserves, retained earnings , etc. utilized by the pool/fund?

g. A fee schedule, and when and how is it assessed.

h. Is the pool/fund eligible for bond proceeds and/or will it a ccept such proceeds?

N. Investment Transactions

1. To the extent practicable, t he Treasurer shall endeavor to c omplete investment transactions using a c ompetitive bid process wheneve r possible. The City Council will determine which financial insti tutions are authorized to provide investment s ervices to the City. It shall be the City’s policy to purchase securities only from authorized institutions and firms.

2. All transactions must be approved in writing by two authoriz ed signatories and will be conducted on a delivery-versus-payment basis.

3. A preformatted form will be used for all wire transfers.

4. Wire transfers between broker s and/or security dealers are prohibited.

5. Wire transfers directly betw een the State of California (LAIF) and the City’s safekeeping bank are permitted.

O. Investment Services

All providers of Investment Services must be approved by Counc il and must have an office in the State of California.

1. Investment Advisers. External investment advisers must be r egistered under the Investment Advisers Act of 1940.

2. Broker/Dealers. Broker/deal ers must qualify under the Secur ities and Exchange Commission Rule 15C3-1, and annually provide the City Treasurer with an audi ted financial statement and documents ver ifying compliance with Rule 15C3-1.

P. Notice of Policy

The City will include a copy of this investment policy and the resolution when opening an account and annually provide a copy to all current investment advisers and broker/dealers. Receipt of the policy and confirmation that the policy has been reviewed by persons approved to advise the City, will be acknowledged in writing.

Q. Reporting

The Director of Finance will pr epare a monthly Investment Repor t, including a management summary of the status o f the investment portfolio an d all security transactions made during the past month. Investments will be re ported at fair market value as of the closing business day of each month. This report will be approved and signed by the City Manager and submitted to the In vestment Committee and City Council within thirty (30) days following the end of the month.

For financial reporting purposes, the City values its investme nts annually in accordance within the fair value hierarchy established by Gener ally Accepted Accounting Principles and is stated in the cash and investment footnote of the Annual Comprehensive Financial Repo rt (ACFR). The hierarchy cat egorizes inputs to valuation techniques into three levels based on the relative availability of market pricing information. The hierarchy gives the highest pri ority to unadjusted quotes in active market for identical assets and the lowest priority to unobservable input.

This Investment Policy will be reviewed annually by the Invest ment Committee and the City Council. The review will take place no later than Sep tember 30 of each fiscal year.

S. Glossary of Investment Terms

1. Agencies. Shorthand market ter minology for any obligation is sued by a government-sponsored entity (GSE) or a federally related instit ution. Most obligations of GSEs are not guaranteed by the full faith and credit of the US government. Examples are:

a. FAMC. The Federal Agricultural Mortgage Corporation, also known as “Farmer Mac”, is a stockholder-owned, publicly traded compan y that was chartered by the United States federal government in 1988 to serve as a secondary market in agricultural loans such as mortgages for agricultural real estate and rural housing.

b. FFCB. The Federal Farm Credit Bank System provides credit an d liquidity in the agricultural industry. FFCB issues discount notes and bonds.

c. FHLB. The Federal Home Loan Bank provides credit and liquidi ty in the housing market. FHLB issues discount notes and bonds.

d. FHLMC. Like FHLB, the Federal Home Loan Mortgage Corporation provides credit and liquidity in the housing market. FHLMC, als o known as “FreddieMac” issues discount notes, bonds and mortgage pass-through securities.

e. FNMA. Like FHLB and FreddieMac, the Federal National Mortgag e Association was established to provide credit and liquidity in the housing market. FNMA, also known as “FannieMae,” issues discount notes, bonds and mortgage pass-through securities.

f. GNMA. The Government Nationa l Mortgage Association, also known as “GinnieMae,” issues mortgage pass-through securities, which are guaranteed by the full faith and credit of the US Government.

g. TVA. The Tennessee Valley Author ity provides flood control a nd power and promotes development i n portions of the Tennessee, Ohio, and Mississippi River valleys. TVA currently issues disco unt notes and bonds.

2. Asset Backed Securities. Securities supported by pools of in stallment loans or leases or by pools of revolving lines of credit.

3. Authorized Institution. A bank , broker dealer or registered investor advisor that has been approved by the City to conduct business with.

4. Benchmark. A comparison security or portfolio. A performance benchmark is a partial market index, which reflects the mix of securities allowed under a specific investment policy.

5. Bid. The price at which a buy er offers to buy a security.

6. Broker. A broker brings buy ers and sellers together for a tr ansaction for which the broker receives a commission. A broker does not sell securities from his own position.

7. Callable. A callable securi ty gives the issuer the option to call it from the investor prior to its maturity. The main cause of a call is a decline in interest rates. If interest rates decline since an issuer issues securit ies, it will likely call its current securities and re issue them at a lower rate of interest.

Callable securities have reinvestment risk as the investor may receive its principal back when interest rates are lower than when the investment was initially made.

8. Certificate of Deposit (CD). A time deposit with a specific maturity evidenced by a certificate. Large denomination CDs may be marketable.

9. Collateral. Securities or cash pledged by a borrower to secu re repayment of a loan or repurchase agreement. Also, securities pledged by a financial institution to secure deposits of public monies.

10. Collateralized Mortgage Obligat ions (CMO). Classes of bond s that redistribute the cash flows of mortgage securities (and whole l oans) to create securities that have different levels of prepayment risk, as compared to the underlying mortgage securities.

11. Commercial Paper. An unsecured, short-term debt instrument issued by corporations, typically used for the financing of payroll, acco unts payable, inventories, and meeting other short-term liabilities.

12. Corporate Medium Term Notes. Unsecured, investment-grade senior debt securities of major corporations which are sold in relatively s mall amounts on either a continuous or an intermittent basis. MTNs are highly flexible debt instruments that can be structured to respond to market opportunities or to investor preferences.

13. Coupon. The rate of return a t which interest is paid on a bond.

14. Credit Risk. The risk that p rincipal and/or interest on an investment will not be paid in a timely manner due to changes in the condition of the issuer.

15. Dealer. A dealer acts as a principal in security transactio ns, selling securities from and buying securities for his own position.

16. Discount. The difference between the par value of a bond an d the cost of the bond, when the cost is below par. Some short-term securities, such as T-bills and banker’s acceptances, are known as discount securit ies. They sell at a discount from par, and return the par value to the in vestor at maturity without additional interest. Other securities, which h ave fixed coupons, trade at a discount when the coupon rate is lower than the current market rate for securities of that maturity and/or quality.

17. Diversification. Dividing in vestment funds among a variety of investments to avoid excessive exposure to any one source of risk.

18. Duration. The weighted average time to maturity of a bond w here the weights are the present values of the future cash flows. Duration measures the price sensitivity of a bond to changes in interest rates. ( See modified duration).

19. Fair Value Measurement and A pplication (GASB 72). This acc ounting statement addresses the accounti ng and financial reporting issu es related to fair value measurements. The definition of fair value is the p r i c e t h a t would be received to sell an asset between market participants at the measurement date. The fair value hierarchy prioritizes the inpu ts used to measure fair value into three broad Levels (Levels 1, 2 and 3), moving from quoted prices in active markets in Level 1 to unobservable inpu ts in Level

3. The City’s investments are ty pically categorized using level 2 fair value inputs.

a. Level 1 inputs are observabl e, quoted prices for identical assets or liabilities in active markets.

b. Level 2 inputs are quoted prices for similar assets or liab ilities in active markets; quoted prices for identical or similar assets in markets that are not active; and inputs other than quoted prices e.g. interest rates and yield curves.

c. Level 3 inputs are unobservabl e inputs for the asset or liability. These should be based on the best information available at the time of valuation. The reporti ng entity’s own data should be adjusted i f information is reasonably available without undue cost and effo rt. (These investments are typically not held by the City and would be a rare occurrence in the City’s investment portfolio).

20. Laddering. This is an investm ent strategy whereby an investor staggers the maturity of the bonds in their portfolio so they mature at regu lar intervals and the income or proceeds can be used by the investor for proj ects, expenses, or reinvestment.

21. Leverage. Borrowing funds in order to invest in securities that have the potential to pay earnings at a rate higher than the cost of borrowing.

22. Liquidity. The speed and ease with which an asset can be co nverted to cash.

23. Local Agency Investment Fund (LAIF). A voluntary investment fund open to government entities and certain non-profit organizations in California that is managed by the State Treasurer’s Office.

24. Local Government Investment P ool. Investment pools that range from the State Treasurer’s Office Local A gency Investment Fund (LAIF) to county pools, to Joint Powers Authorities (JPAs). These funds are not subject to the same SEC rules applicable to money market mutual funds.

25. Local Agency. Any city or county, including a charter city or county, or special district.

26. Make Whole Call. A type of c all provision on a bond that al lows the issuer to pay off the remaining debt early. Unlike a call option, with a make whole call provision, the issuer makes a lump sum payment that equals the net present value (NPV) of future coupon payments that will not be paid because of the call. With this ty pe of call, an investor is com pensated, or "made whole."

27. Margin. The difference between the market value of a security and the loan a broker makes using that security as collateral.

28. Market Risk. The risk that the value of securities will fluctuate with changes in overall market conditions or interest rates.

29. Market Value. The price at w hich a security can be traded.

30. Maturity. The final date upon which the principal of a secu rity becomes due and payable.

31. Modified Duration. The percent change in price for a 100 ba sis point change in yields. Modified duration is the best single measure of a po rtfolio’s or security’s exposure to market risk.

32. Money Market. The market in which short-term debt instrume nts (T-bills and discount notes) are issued and traded.

33. Mortgage Pass-Through Securities. A securitized participati on in the interest and principal cash flows from a specified pool of mort gages.

Principal and interest payments made on the mortgages are passed through to the holder of the security.

34. Municipal Securities. Securities issued by state and local agencies to finance capital and operating expenses.

35. Mutual Fund. An entity which pools the funds of investors and invests those funds in a set of securities spec ifically defined in the fund’s prospectus.

Mutual funds can be invested in various types of domestic and/o r international stocks, bonds, and money market instruments, as set forth in the individual fund’s prospectus. For most large institutional investors, the costs associated with investing in mutual funds are higher than the investor can obtain through an individually managed portfolio.

36. Nationally Recognized Statist ical Rating Organization (NRSR O). A credit rating agency that the Securities and Exchange Commission in th e United States uses for regulatory purposes. Credit rating agencies pro vide assessments of an investment's risk. The issuers of investments, especially debt securities, pay credit rating agencies to provide them with ratings. The three most prominent NRSROs are Fitch, S&P, and Moody's.

37. Negotiable CD. A short-term d ebt instrument that pays inte rest and is issued by a bank, savings or federal association, state or fede ral credit union, or state-licensed branch of a foreign bank. Negotiable CDs are traded in a secondary market and are payable upon order to the bearer or initial depositor (investor).

38. Prudence. Pursuant to Califor nia Government Code, Section 53600.3, all persons authorized to make investment decisions on behalf of the City are trustees and therefore fiduciaries subject to the Prudent Investor Standard.

The standard states “all governi ng bodies of local agencies or persons authorized to make investment decisions on behalf of those local agencies investing public funds pursuant to this chapter are trustees an d therefore fiduciaries subject to the prudent investor standard. When inve sting, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, inc luding, but not limited to, t he general economic conditions and the antic ipated needs of the City, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the City. Wit hin the limitations of this section and co nsidering individual investments as part of an overall strategy, investments may be acquired as authorized by law.”

39. Repurchase Agreement. Short-term purchases of securities wi th a simultaneous agreement to sell the securities back at a higher price. From the seller’s point of view, the same transaction is a reverse r epurchase agreement.

40. Safekeeping. A service to bank customers whereby securities are held by the bank in the customer’s name.

41. Supranational. A S upranational is a multi-national organiz ation whereby member states transcend national boundaries or interests to sha re in the decision making to promote econom ic development in the member countries.

42. Total Portfolio. A measure of total investible assets of t he City including currency, deposits, and securities.

43. Total Rate of Return. A meas ure of a portfolio’s performance over time. It is the internal rate of return, which equates the beginning value of the portfolio with the ending value; it includes interest earnings, realized and unrealized gains, and losses in the portfolio.

44. Treasury Notes. All securities issued with initial maturit ies of two to ten years are called Treasury notes, and pay interest semi-annually.

45. Volatility. The rate at which security prices change with changes in general economic conditions or the general level of interest rates.

Camarillo City CouncilSeptember 25, 2024

Camarillo City Council
September 25, 2024