Investments Account Objectives & Investment Policy and Guidelines
The Board of Directors of the SVIA (“Board”) has charged the Subcommittee on Finance with overseeing the investment of the operating and reserve funds of the Association. The Subcommittee will monitor and review this policy as necessary and, at minimum, annually after audited financial statements are issued.
Primary Objectives
- To maintain sufficient liquidity so that the SVIA has reasonable resources available to fulfill its mission
- To seek to preserve capital while providing a reasonable rate of return
- To ensure that all SVIA depository funds are backed by the full faith and credit of the U.S. Government
- To maintain a diversified group of financial institutions for cash management and depository account services
Account Strategy
Operating Accounts – Operating Accounts will hold the SVIA’s core liquidity assets. The Board will seek to maintain sufficient assets in Operating Accounts to cover expenses without having to access assets in the Reserve Accounts. Operating Account assets will be kept in FDIC-insured, demand deposit accounts (primarily interest bearing) and affiliated money market accounts subject to the SVIA’s account
Objectives and Investment Policy and Guidelines
A minimum of 65% of SVIA cash and investment balances placements at the time the deposits are made, should be budgeted to satisfy the SVIA’s core liquidity needs. Any recommended change of this core liquidity target will be subject to approval by the Board.
Reserve Accounts – Reserve Accounts will hold the SVIA’s non-core liquidity assets. Account deposit and investment balances will be reviewed at least quarterly by the Subcommittee. Any investment and deposit changes will be made based on recommendations by the Subcommittee with subsequent approval by the Board.
A maximum of 35% of SVIA cash and investment balances at the time the deposits are made, will be budgeted to be held in Reserve Accounts. Any recommended change of this non-core liquidity target balance will be subject to approval by the Board. Deposits to the Reserve Accounts in excess of 35% of the SVIA’s cash and investment balances are subject to approval by the Board.
Investment Guidelines
Permitted Investments: Demand and time bank deposits, U.S. Government & Agency securities and money market accounts (MMAs)
Credit Quality: MMAs must be FDIC-insured or rated AAA-m or equivalent by a National Recognized Statistical Rating Organization (NRSROs). Bank deposits must collectively be under FDIC-insured exposure thresholds per institution.
Liquidity: Assets must be reasonably accessible at all times. Reasonable early withdraw/liquidation penalties for time deposits are permitted.
Maturity: Operating Account – 100% / 1-day liquidity. Reserve Account – Maximum 1-year maturity per time deposit/debt security, weighted average maturity for the Reserve Account will not exceed 270 days or 74%
Diversification: Maximum of 50% of Reserve Account deposited per financial institution at the time the deposits are made, no limit per U.S. Government/Agency securities
Compliance: Compliance with these policies will be determined at the time of placement. Fluctuations in the level of cash held may cause the holdings to be temporarily out of compliance with the guidelines. Further, the Subcommittee will review holdings at least quarterly to review compliance and evaluate Association needs and holdings.
See Exhibit A for a listing of the SVIA’s current bank accounts and approved investments
Exhibit A
Current Accounts:
- Capital One—Business Monster Money Market (.21%) 08/07/2015 with $100,000
- Cardinal Bank – Certificate of Deposit 08/07/2016 WITH $125,000 (0.648%)
- Fidelity – Money Market Account Closed/Terminated in June 2014
- PNC – Lockbox Account
- PNC –Money Market Account for Lockbox
- PNC – Money Market Account
- Merrill Lynch – Checking Account Used for SVIA Operations Terminated March 24, 2015
- Premara Bank –Checking Account Used for SVIA Operations Opened October 2014
- United – Money Market Account
- Synchrony – Certificate of Deposit 9/21/2016 with $200,000
