SCOPE

This investment policy applies to activities of the Will County Treasurer with regard to investing financial assets of Class A, Class B, Class C, and Class D Funds as described in Illinois Compiled Statues.

POLICY

It is the policy of the Will County Treasurer to structure investments as to place the highest priority on the safety of principal. Secondary to this priority is the balance of investment objectives.

INVESTMENT OBJECTIVES

The following investment objectives apply to the management of the Will County Treasurer’s funds:

  1. Provide investments that conform to all federal, state, and regulatory requirements.
  2. Maintain the Public Trust by including participants in the investment process that seek to act responsibly and that avoid transactions that may impair public confidence.
  3. Implement an investment strategy that provides sufficient liquidity to meet the county’s operating, payroll, capital and statutory disbursement requirements.
  4. Structure investments to preserve principal capital and perfect the county’s interests.
  5. Establish procedures to control risk and diversity the portfolio regarding security types, maturities and financial institutions.
  6. Invest public funds to maximize overall portfolio yield while minimizing risk.

PRUDENCE STANDARDS

The standard used by the Will County Treasurer and Deputy Treasurer(s) shall be the “prudent person” standard which means the following:

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 probably safety of their capital as well as the probable income to be derived from the investment.

Investment officers acting in accordance with written procedures of this investment policy, as well as the applicable local, state and federal laws and exercising due diligence shall be relieved of personal responsibility for an individual’s security credit risk or market price changes provided deviations from expectations are reported in a timely manner and appropriate action is taken to control adverse developments.

DELEGATION OF AUTHORITY

In accordance with 55 ILCS 5/3-10005 and 5/3-11006, the County Treasurer delegates responsibility for the operation of the investment program to the Chief Investment Officer, a Deputy Treasurer, who shall act in accordance with all local, state and federal laws and the establishment of written procedures and internal controls for the operation of the investment program consistent with this investment policy.

Procedures should include reference to safekeeping, delivery vs. payment, investment accounting, wire transfer agreements, and collateral/depository agreements. Such procedures shall include explicit delegation of authority to persons responsible for investment transactions.

No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the Chief Investment Officer. The Chief Investment Officer shall be responsible for all transactions undertaken and shall establish systems of control to regulate the activities of subordinate officials.

ETHICAL STANDARDS

The Will County Treasurer and Deputy Treasurer(s) shall refrain from personal business activity that is in fact or gives the appearance of a conflict with proper execution of the investment program of which could impair their ability to make impartial investment decisions.

In addition to any other disclosures required by law, the Deputy Treasurer(s) shall disclose to the County Treasurer any material financial interests in financial institutions that conduct business with Will County and they shall further disclose any personal investments related to the performance of the investment portfolio.

In accordance with the spirit of the aforementioned, the County Treasurer shall make same said disclosure to the County Board. The County Treasurer and Deputy Treasurer(s) shall refrain from undertaking personal investment transactions with any individual or business that is a vendor of Will County.

PERMISSIBLE INVESTMENTS

The Treasurer may invest in any instrument authorized by Section 2 of the Public Funds Investment Act.

OTHER INVESTMENTS

If either or both the Public Funds Investment Act or the Counties Code at 55 ILCS 5/3-11006 is amended and one or more investments are no longer permissible, the investment will automatically be removed as a Permissible Investment. Under this circumstance, any newly ineligible investments will be allowed to mature or can be sold immediately at the Chief Investment Officer’s discretion.

If either or both the Public Funds Investment Act or the Counties Code at 55 ILCS 5/3-11006 is amended to add new investments, the new investments will automatically be added as a Permissible Investment, but not recommended for use until approved by the County Treasurer.

PERFORMANCE MEASUREMENT

The investment policy is designed to obtain a market average rate of return, taking into account investment risk constraints and cash flow needs. The Chief Investment Officer on a quarterly basis shall determine the market average rate of return by comparing the following two rate sources:

  1. For investments with a duration equal to or less than 365 days, the benchmark shall be the 90 day average of the 1-Year Treasury Note as quoted by the U.S. Treasury Department
  2. For investments with a duration greater than 365 days, the benchmark shall be the 90 day average of the 3-Year Treasury Note as quoted by the U.S. Treasury Department

REVIEWING GUIDELINES

The Will County Treasurer shall review repurchase agreement activity for compliance with Illinois law, the diversification strategy, and FDIC quarterly call reports on a periodic basis.

DIVERSIFICATION

It is the policy of the Will County Treasurer to diversify the investment portfolio. Investments shall be diversified to eliminate the risk of loss resulting from an over concentration in a specific issuer, maturity or class of security. The Treasurer shall not concentrate short-term corporate obligations in excess of 90-percent of the limit contained in Illinois law.

REPORTING

Investment reports will be prepared as required by statute or more frequently as needed. The reports include, but are not limited to a listing of individual securities held by the end of each period, a listing of investments by maturity date and institution; income earned on investment by fund.

AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS

The Will County Treasurer will maintain a list of financial institutions that have been designated as County Depositories by the Will County Board. In addition, the Treasurer also will maintain a list of approved security broker/dealers, selected by credit worthiness, authorized to provide investment services in the State of Illinois. The Treasurer shall make no public deposit except in a qualified public depository as established by state statute.

Commercial Banks – Commercial banks shall have a Tier I Risk-Based Capital Ratio (Tier I Capital divided by Total Risk-Weighted Assets) of no less than 5%. Additionally, commercial banks shall have a Texas Ratio (Non-Performing Assets plus Loans 90 Days Past Due divided by Tier I Capital plus Loan Loss Reserves) of less than 50%.

Total investments and deposits shall not exceed 75-percent of an individual commercial bank’s capital stock and surplus.

Credit Unions – Credit unions shall have a Net Worth Ratio (Total Net Worth divided by Total Assets) of no less than 7%. Additionally, credit unions shall have a Loss Coverage Ratio (Non-Performing Assets plus Loans 180 Days Past Due divided by Total Net Worth plus Allowance for Loan Loss) of less than 50%.

Total investments and deposits shall not exceed 50-percent of an individual credit union’s unimpaired capital and surplus, which shall include shares, reserves and undivided earnings.

A current audited financial statement is required to be on file for each financial institution and broker/dealer with which the County invests.

ACCEPTED COLLATERAL INSTRUMENTS

It is the policy of the Will County Treasurer to require some form of collateral to protect public deposits in a single financial institution if it were to default for some reason such as poor management or economic factor. All federally and non-federally insured institutions must fully collateralize deposits using instruments and Collateral Ratios (Market Value divided by Amount Deposited) as follows:

  • Bonds, notes, or other securities constituting direct and general obligations of the United States
  • Bonds, notes, or other securities constituting an obligations of any agency of the United States
  • Direct and general obligation bonds of any state
  • Direct and general obligation bonds of any city, town, county, school district, or other taxing body of any state, the debt service of which is payable from general ad valorem taxes
  • Letters of credit issued by the Federal Home Loan Bank of Chicago in an amount equal to 110% of that amount of funds deposited exceeding the insurance limitation provided by the Federal Deposit Insurance Corporation or National Credit Union Administration

Municipal bonds shall be registered in the name of the municipality or county or held under a custodial agreement as described in the section Safekeeping of Collateral. The bonds shall be rated at the time of purchase within the three (3) highest general classifications established by a rating service of nationally recognized expertise in the rating of bonds of states and their political subdivisions.

The Collateral Ratio required under the terms and conditions of any Repurchase Agreement that Will County shall enter into shall be one-hundred and five percent (105%). The Collateral Ratio shall apply to the market value of eligible collateral as determined by the County.

The Will County Treasurer, or his designee, shall review monthly the Collateral Ratios to the amount of funds secured. The Treasurer will request additional collateral when the ratio declines below the level required.

COLLATERAL PLEDGE SCHEDULE (BANKS)

Based upon a commercial bank’s Tier I Risk-Based Capital Ratio as described above, the commercial bank shall pledge collateral on its accounts using the following Collateral Ratio Schedule:

Tier I Risk-Based Capital Ratio

Required Collateral Pledge

10.0 % and above

102 %

9.0 – 9.9 %

104 %

8.0 – 8.9 %

104 %

7.0 – 7.9 %

106 %

6.0 – 6.9 %

106 %

5.0 – 5.9 %

108 %

4.0 – 4.9 %

108 %

3.0 – 3.9 %

110 %

0.0 – 2.9 %

110 %

COLLATERAL PLEDGE SCHEDULE (CREDIT UNIONS)

Based upon a credit union’s Net Worth Ratio as described above, the credit union shall pledge collateral on its accounts using the following Collateral Ratio Schedule:

Net Worth Ratio

Required Collateral Pledge

10.0 % and above

102 %

9.0 – 9.9 %

104 %

8.0 – 8.9 %

104 %

7.0 – 7.9 %

106 %

6.0 – 6.9 %

106 %

5.0 – 5.9 %

108 %

4.0 – 4.9 %

108 %

3.0 – 3.9 %

110 %

0.0 – 2.9 %

110 %

SAFEKEEPING OF COLLATERAL

Third-party safekeeping is required for all collateral. To accomplish this, a security can be held at the following locations:

  1. A Federal Reserve Bank or branch office
  2. Another custodial facility, generally in a trust department through book-entry at the Federal Reserve, unless physical securities are involved
  3. By an escrow agent of the pledging institution

INTERNAL CONTROL

An external auditor will perform an independent review of investment records annually. This review will provide internal control by assuring compliance with established policies and procedures.

SPECIAL USE MONEY

From time to time, Will County issues bonds for various projects. The proceeds from such bond issuances shall be invested in the manner prescribed by the County at the time the bonds are issued.

INVESTMENT POLICY ADOPTION

The investment policy shall be adopted by the Will County Treasurer in conformance with the Public Funds Investment Act, 35 ILCS 235/2.5 and be presented to the Will County Executive and the Will County Board. The policy shall be reviewed annually and the Will County Treasurer must approve any modifications.

Adopted December 1, 2017 by Will County Treasurer Steve Weber.

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