FIN 2017-09-19 COMPLETE AGENDA PACKET

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City of Tukwila Allan Ekberg, Mayor INFORMATIONAL MEMORANDUM TO: Mayor Ekberg Finance and Safety Committee FROM: Peggy McCarthy, Finance Director BY: Vicky Carlsen, Deputy Finance Director DATE: September 13, 2017 SUBJECT: Second Quarter 2017 Cash & Investment Report ISSUE The second quarter Investment Report is included with this memorandum and is discussed below. BACKGROUND City funds are invested to earn a reasonable return while preserving principal and allowing sufficient liquidity to meet the City's operating needs. To achieve these objectives investments are diversified by type, by financial institution, and by maturities in compliance with the City Investment Policy. DISCUSSION Portfolio Components As of June 30, 2017, the portfolio totaled $96.708 million comprised of $82.504 million in cash and cash equivalents and $14.205 million in longer term investments. The portfolio balance increased by $3.442 million from a March 31, 2017 balance of $93.332 million. Details on individual fund activity is provided below in the Fund Cash & Investment Balances section. In June, our 13 -month Bank of Washington CD, with an interest rate of 0.7% matured. It was replaced with a 2 -year CD with an interest rate of 1.40%. In June, two bonds were purchased. A City of Auburn Build America Bond, with a principal amount of $300 thousand and an interest rate of 1.65% was purchased and placed in the Equipment Rental fund, and a City of Seattle bond, with a principal amount of $380 thousand and an interest rate of 1.45% was purchased and was also placed in the Equipment Rental fund. No agencies or bonds matured or were called during the second quarter of the year. 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 June 30, 2017, was 0.78%. Considering the portfolio's weighted average maturity was 0.4 years, and the yields on the cash & cash equivalent accounts was 0.72%, the portfolio yield of 0.78% is still favorable. The total yield has been sustained by the 4.13% average yield on the municipal bond investments, the 1.49% average yield on the agencies, the 1.40% yield on the certificate of deposits Investment income received through the end of June 2017 for all investments is $207,877 against an annual budget of $270,809. It should be noted that a significant portion of investment interest is received from agencies and municipal bonds, which is received twice a year rather than monthly.