Mortgage Pass-Through Securities issued by:

a. Federal National Mortgage Association (FNMA or Fannie Mae)

b. Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac)

c. Government National Mortgage Association (GNMA or Ginnie Mae).

With pass-through securities, investors receive pro rata principal and interest cash flows associated with an underlying pool of mortgages. The maximum stated maturity of any mortgage pass-through security may not exceed 30 years. In analyzing mortgage pass-through securities for purchase, the President/CEO, or Vice President of Finance, or Senior Accountant, or Finance Manager is to use the security’s remaining average life. To be considered for purchase, the remaining average life must not exceed 10 years. No single mortgage pass-through security may account for more than 10.00% of the whole investment portfolio, while all investments in mortgage pass-through securities combined may not exceed 45.00% of the whole investment portfolio.

Prior to purchasing any security with an embedded option or a remaining maturity greater than 3 years, or any other security whose features may render it less familiar, relatively more complex, or potentially volatile, the President/CEO, or Vice President of Finance, or Senior Accountant, or Finance Manager shall analyze the price sensitivity of the instrument on the basis of certain assumed interest rate shifts. Specifically, the President/CEO, or Vice President of Finance, or Senior Accountant, or Finance Manager analysis should demonstrate the impact of an immediate and sustained parallel shift in interest rates of +/- 300 basis points. The price sensitivity of the marketable portfolio (% change in the market price) may not exceed 17% in response to either one of the interest rate shifts

Limits for Authorized Investments

Investment Type / Parameter / Maximum Limit / Additional Information
A.U.S. Treasury Securities
% of Net Worth / 400%
Per issue / $ 1M
Maturity / 10 years
B.U.S. Government Agency Securities
Bullet / % of Net Worth / 400%
Per issue / $ 1M
Maturity / 10 years
Callable Option / % of Net Worth / 200% / Reinvestment Risk
Per issue / $ 1M
Max Final Maturity / 10 years
Step up Option / % of Net Worth / 200% / Reinvestment Risk
Per issue / $ 1M
Max Final Maturity / 10 years
C.Corporate Credit Union Shares, Deposits or Investment
Insured Deposits / % of Net Worth / Unlimited
Maturity / 7 years
Paid-in and Membership Capital / Member paid-in capital and membership capital in one Corporate Credit Union / 2% of assets / Measured at the time of investment or adjustment
NCUA Regs 703.14(b)
Paid-in and Membership Capital / Member paid-in capital and membership capital in all Corporate Credit Unions / 4% of assets / Measured at the time of investment or adjustment
NCUA Regs 703.14(b)
D.Bank and Credit Union Deposits
Federally Insured FI / Unlimited
Insured / Up to the insured limit
Maturity / 7 years
E.Credit Union Service Organizations (CUSOs)
Investment in single CUSO not wholly owned / % of paid-in and unimpaired capital and surplus / 1% / NCUA Regs 712.2(a) limit for Federal Credit Unions. Credit Union to verify any regulations applicable to their unique circumstances.
Aggregate investment in CUSOs / % of paid-in and unimpaired capital and surplus / 1% / NCUA Regs 712.2(a) limit for Federal Credit Unions. Credit Union to verify any regulations applicable to their unique circumstances.
Loans to single CUSO not wholly owned / % of paid-in and unimpaired capital and surplus / 1% / NCUA Regs 712.2(a) limit for Federal Credit Unions. Credit Union to verify any regulations applicable to their unique circumstances.
Aggregate Loans to CUSOs / % of paid-in and unimpaired capital and surplus / 1% / NCUA Regs 712.2(a) limit for Federal Credit Unions. Credit Union to verify any regulations applicable to their unique circumstances.
F.Mortgage Backed Securities (MBS)
GSE issued only / % of Net Worth / 200%
Base case average life / 5 years
± 300 bp average life / 7-8 years
± 300 bp price change / 17%
G.Small Business Administration (SBA Pools)
% of Net Worth / 400% / Variable Rate
Per Issue / $ 1M
Maturity / 10 years