2023 Annual Comprehensive Report

Interest Rate Risk In accordance with the formal approved City of Greensboro’s Charter, Article III, Section 4.71, the Investment Manager (Assistant Treasurer) prepares a memo describing investment transactions in detail as they are purchased. This memo is sent to the Mayor, the City Manager and the Finance Director (Treasurer) for signature approval and then returned to the Investment Manager. Although the investment policy has not been formally approved by the City Council, the City has an investment policy guideline, an internally approved Finance Department document that follows North Carolina General Statute 159-30. As a means of limiting the City’s exposure to declines in fair market values from rising interest rates, the City limits the weighted average maturity of its investments to less than 2.0 years. Also, the City purchases securities in a structured ladder with stated maturity dates to limit interest rate risk. The State Treasurer’s STIF is unrated and had a weighted average maturity of 0.7 years at June 30, 2023. The State Treasurer’s BIF is unrated and had an average maturity of 8.70 years at June 30, 2023. Credit Risk North Carolina General Statute 159-30 limits investments in U.S. Governmental Agencies and commercial paper to those with top ratings issued by NRSRS. The City has no formal investment policy regarding credit risk, however in practice, it follows NCGS 159-30, and in effect the City limits its investment types to those with top ratings issued by NRSRS. As of June 30, 2023, the City had investments in the NCCMT Government Portfolio, which is rated AAAm by Standard and Poor’s, and in U. S. Government Agencies, all of which were rated AAA by Standard and Poor’s. Investments in commercial paper by the City are rated either A1/P1 by Standard and Poor’s or Moody’s Investors Service. The State Treasurer’s STIF is unrated and authorized under NC General Statute 147-69.1. The State Treasurer’s STIF is invested in highly liquid fixed income securities consisting primarily of short to intermediate term treasuries, agencies, and money market instruments. The BIF is unrated and authorized under NC General Statute 147-69.1 and 147-69.2. The State Treasurer’s BIF is invested in high quality debt securities eligible under G.S. 147-69.2(b)(1)-(6). Custodial Credit Risk For an investment, the custodial risk is the risk that in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City has no formal policy on custodial credit risk, but the City utilizes a separate third party custodial trust agent for all book-entry transactions, all of which are held in the City’s name. Concentration of Credit Risk The City’s investment policy does not restrict the level of investment in money markets or federal agencies, but it restricts investment in commercial paper or bankers’ acceptances of a single issuer to no more than 10% of the total investment portfolio. As of June 30, 2023, the City owned the following investments, which exceed 5% of the City’s total investments, along with the percentage noted for each compared to the total portfolio:

11.43% 27.82% 7.49% 19.82% 21.39%

Federal National Mortgage Association

Federal Home Loan Bank

Federal Home Loan Mortgage Corporation

Federal Farm Credit Bank NCCMT Government Portfolio

At June 30, 2023, the City’s OPEB Trust had $34,243,114 invested in the State Treasurer’s Local Government Other Post Employment Benefits (OPEB) Trust; additionally at June 30, 2023 the City’s LEOSSA Trust had $8,971,031 invested in the State Treasurer’s Local Government Law Enforcement Officer’s Special Separation Allowance (LEOSSA) Trust. Both of the State Treasurer’s OPEB and LEOSSA Trust are pursuant to G.S. 159-30.1. The State Treasurer’s OPEB Trust and LEOSSA Trust may invest in public equities and both long-term and short-term fixed income obligations as determined by the State Treasurer pursuant to the General Statutes. An additional $5,000 in demand deposits are held in the City’s LEOSSA Trust for liquidity purposes.

40o