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CITY OF PLEASANTON NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 2: Cash and Investments (Continued) For investments, custodial risk is the risk that in the event of failure of a depository financial institution or a counter party (e.g., broker-dealer) to a transaction, the City will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The City’s investments, with the exception of money market funds, certificates of deposit and LAIF, are held in the name of the City for safekeeping by a third-party custodian, Bank of New York Mellon (BNYM). BNYM is a registered member of the Federal Reserve Bank. The City’s PARS Trust is held by a third-party custodian, U.S. Bank. Securities held on the City’s behalf by its third-party custodian are not at risk or commingled with other entities' securities, therefore removing the custodial risk for the City. f. External Investment Pool As of June 30, 2022, the City had $34,549,389 invested in the California Local Agency Investment Fund (LAIF), a State of California external investment pool. LAIF is part of the Pooled Money Investment Account (PMIA). The PMIA began in 1955 and oversight is provided by the Pooled Money Investment Board (PMIB) and a State in-house Investment Committee. The PMIB members are the State Treasurer, Director of Finance, and the State Controller. The LAIF determines the fair value of its investment portfolio based on market quotations for those securities where market quotations are readily available, and on amortized cost or best estimate for those securities where fair value is not readily available. At June 30, 2022, 67.77 percent of LAIF’s portfolio was invested in government guaranteed U.S. Treasuries, and 1.88 percent of LAIF’s portfolio was invested in Structured Notes and Asset-Backed Securities. These investments included the following: Structured Notes are debt securities (other than asset-backed securities) whose cash flow characteristics (coupon rate, redemption amount, or stated maturity) depend upon one or more indices and/or that have embedded forwards or options. Asset-Backed Securities, the bulk of which are mortgage-backed securities, entitle their purchasers to receive a share of the cash flows from a pool of assets such as principal and interest repayments from a pool of mortgages (such as CMS) or credit card receivables. The fair value of LAIF was calculated by applying a factor of 0.987125414 to total investments held by LAIF. The fair value of the City’s position in the pool is substantially equivalent to the value of the pool share. At June 30, 2022, these investments matured on an average of 311 days. Separate financial statements for the PMIB may be obtained from the California State Treasurer’s Office, 915 Capitol Mall, Sacramento, California 95814. 69