Sarasota County, Florida Notes to Financial Statements September 30, 2021 The County limits interest rate risk by maintaining an investment portfolio with limited volatility. The policy states that no security shall have an estimated average return of principal exceeding five years, unless the investment is an adjustable rate security. Adjustable rate securities may have a final return of principal in up to 30 years. In accordance with the County’s investment policy, the County invests in government agency mortgage backed securities and other similar investments. In management’s opinion, the credit and legal risk associated with these investments is comparable to other investments within the portfolio. The collateralized mortgage backed securities are based on cash flows from the underlying government agency guaranteed mortgages. The principal repayment portions could be sensitive to prepayment by mortgagees, which may be affected by interest rate changes. The prepayments and anticipated interest rate changes can therefore affect the fair values of the investments. Credit Risk The County’s investment policy limits credit risk by restricting the authorized investments to those illustrated in Note 1, Section D. The following table illustrates the credit quality distribution with credit exposure as a percentage of the County’s investment securities. Credit Ratings % of Investment Type S&P/Moody's/Fitch Portfolio U.S. Treasury 19.4% GNMA * 6.5% U.S. Agencies Federal Home Loan Bank AA+/Aaa/AAA 16.2% Federal Home Loan Mortgage Corporation AA+/Aaa/AAA 11.8% Federal National Mortgage Association AA+/Aaa/AAA 15.8% Federal Farm Credit Bank AA+/Aaa/AAA 5.5% FLFIT AAAf 0.9% FLSAFE AAAm <0.0% FLGIT AAAm 0.1% FLPALM AAAm 1.8% FLCLASS AAAm 12.3% Short term cash*** - 9.7% * GNMA is backed by the full faith of the U.S. Government. **Qualified Public Funds bank money market Concentration of Credit Risk The County’s investment policy establishes limitations on portfolio composition, both by investment type and dealer, in order to control concentration of credit risk. The following maximum limits are guidelines established for diversification by instrument: Sector Investment Policy Limit Repurchase Agreements 50% Certificates of Deposits 80% U.S. Agencies 75% State Investment Pools 50% Commercial Paper 25% Bankers' Acceptances 25% 101
RkJQdWJsaXNoZXIy MzM3Mjg=