FIN 2017-05-02 Item 2B - Report - 2016 4th Quarter Investment Report

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ice] FROM: BY: DATE: SUBJECT City of Tukwila Allan Ekberg, Mayor Mayor Ekberg Finance and Safety Committee Peggy McCarthy, Finance Director Vicky Carlsen, Deputy Finance Director April 12, 2017 Fourth Quarter 2016 Cash & Investment Report ISSUE The fourth quarter Investment Report is included with this memorandum and is discussed below. BACKGROUND City funds are invested to earn a sufficient liquidity to meet the City's are diversified by type, by financial Investment Policy. DISCUSSION reasonable return while preserving principal and allowing operating needs. To achieve these objectives investments institution, and by maturities in compliance with the City Portfolio Components As of December 31, 2016, the portfolio totaled $93.3 million comprised of $82.9 million in cash and cash equivalents and $10.55 in longer term investments. The portfolio balance increased by $1.9 million from a June 30, 2016 balance of $54.5 million. Details on individual fund activity is provided below in the Fund Cash Investment Balances section. In July, the Washington State Convention Center $500,000 par bond matured. This had been a longer term investment with an interest rate of 3.6%. On September 21 st, a Federal Farm Credit Bank agency investment of $1 million was called. The City purchased an agency in late December to replace the investment that matured in September. We continue to look for investments where the interest rate exceeds the rate the City receives with US Bank. Portfolio Performance The portfolio weighted average yield on December 31, 2016, was .47%. Considering the portfolio's weighted average maturity was 0.4 years, and the yield on the cash & cash equivalent accounts was .24%, the portfolio yield of 0.47% is still favorable. The total yield has been sustained by the 4.71% average yield on the municipal bond investments, the .93% yield on the certificate of deposits, the 0.66% yield on the agencies, and the .45% earnings credit on the US Bank depository account. Investment income received through the end of December 2016 for all investments is $440,605 against an annual budget of $227,322. Not included in the portfolio is interest earned from the operating and capital loans to the MPD. The operating loan is being repaid on a monthly basis and will be paid in full by May 2023. Interest earned on the loan through December 2016 is $15,765. The capital loan is being repaid semi- 5