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Home My WebLink AboutFS 2011-05-03 Item 2A - Report - 2011 First Quarter Investment Report City of Tukwila Jim Haggerton, Mayor INFORMATIONAL MEMORANDUM TO: Mayor Haggerton Finance and Safety Committee FROM: Peggy McCarthy, Deputy Finance Director DATE: April 27, 2011 SUBJECT: First Quarter 2011 Cash Investment Report ISSUE Finance Policy and Procedure 03 -17, Investment Policy, calls for quarterly investment reports to the Council Finance and Safety Committee. The report is to contain an inventory of investments and a summary of performance. The March 31, 2011 Investment Report is included with this memorandum and is discussed below. BACKGROUND Investment decisions are guided by the three investing objectives 1) the preserving principal 2) earning a reasonable return and 3) ensuring sufficient liquidity to meet the City's operating needs. To achieve these objectives, investments are diversified by type, by financial institution, and by maturities. To ensure sufficient liquidity exists to meet the City's operating needs, cash requirements needed for special circumstances, such as capital projects, is considered as well as the normal variations in the monthly cash flow cycles. The City has established a minimum operating liquidity threshold that is equal to the largest monthly decline in combined cash and investment balances over the most recent thirty -six month period, or $7 million, then doubled this amount to $14 million to provide a cushion, or safety net, for unforeseen circumstances. In addition, funding requirements for known special needs such as capital projects are added to this threshold. DISCUSSION Portfolio Activitv, Components Characteristics. During the first quarter of 2011, the following activity took place. Maturities/Redemptions $5,000,000 certificate of deposit, yielding .99 36 month term Purchases $3,000,000 certificate of deposit, yielding 1.4 36 month term $1,000,000 Fannie Mae -US Agency, yielding 1.5 callable 2/22/12 with 3.25% step up, maturity 2/22/16 $1,500,000 Freddie Mac -US Agency, yielding 1.75 callable 3/23/12, maturity 9/23/14 $500,000 Federal Home Loan Bank -US Agency, yielding 1.35 various calls, 12/30/13 maturity $185,000 Educational Service District Municipal bond, yielding 1 12/1/2011 maturity 1 INFORMATIONAL MEMO Page 2 At March 31, 2010, the portfolio was in compliance with all parameters and limitations set forth in the investment policy including investment mix, investment maturities and diversification of financial institutions. Funds available within one day and invested in the US Bank checking account, the state investment pool and the money market accounts totaled $28.6 million representing 60% of the portfolio. Certificate of deposits constituted $12.4 million or 26% of the portfolio with $5.2 million of this amount maturing in the second quarter of 2011. Funds available within one year or less represented 72% of the portfolio; 92% of the portfolio was available within five -years or less. In 2010, the financial institution with the largest holding of City investments was the Washington State Treasurer's Office. However because the new banking services contract with US Bank provides an earning credit of .5 funds were moved during the first quarter 2011 from the Washington State Treasurer's Office local government investment pool, with a yield during March 2011 of .23 to US Bank. US Bank held $13.6 million of City funds at March 31, 2011 representing the largest investment with one financial institution. Portfolio Performance. The weighted average portfolio yield increased slightly from .96% at the end of the fourth quarter 2010 to 1.08% at the end of the first quarter 2011. Estimated annual investment earnings calculated based on the portfolio components at March 31, 2011 totaled $516,186. Fund Cash Investment Balances. The largest balances at March 31, 2011 occurred in the 104 Arterial Street fund with $10.3 million, the 502 Self Insurance fund with $5.9 million, the 401 Water Fund with $4.9 million and the 301 Land Acquisition Park Development Fund with $4.8 million. City -wide cash and investment balances increased from their December 31, 2010 level Of $46,931,966 to a March 31, 2011 level of $47,791,612, representing an increase of $859,646. Investment Environment and Strategies. Interest rates rose slightly in the first quarter 2011. The $5 million in certificates of deposits maturing in the second quarter 2011 will be invested in the Columbia Bank money market fund and serve as an additional set aside for the Southcenter Access Project (Mickitat). The yield on this money market fund was .11% higher than the local government investment pool at March 31, 2011. RECOMMENDATION Presentation is for information only. ATTACHMENTS Cash and Investment Report as of March 31, 2011 Policy Compliance Liquidity Analysis as of March 31, 2011 Cash and Investment Balances by Fund at March 31, 2011 Yield curve and Treasury Rates at March 31, 2011 and December 31, 2010 H:llnvst120111Q1 201111nfoMemo Invstmnt Rprt 3- 31- 11.docx 2 CITY OF TUKWILA CASH INVESTMENT REPORT March 31, 2011 (a) Purchase Maturity Term Par Book Balance Yield to Annualized Aqency Issuer Rating Investment Tyoe Date Date Yrs Value Purchase Price Maturity Return (C) CASH CASH EQUIVALENTS US Bank Depository Various (b) 10,187,709 10,187,709 0.50% 50,939 Washington State Treasurer LGIP Investment Pool Various (b) 8,125,344 8,125,344 0.23% 18,688 Regal Bank Money market Various (b) 250,000 250,000 1.10% 2,750 Columbia Bank Money market Various (b) 10,008,137 10,008,137 0.34% 34,028 Total Cash Cash Equivalents 28,571,190 28,571,190 0.37% 106,405 INVESTMENTS Certificates of Deposit First Savings Bank Certificate of Deposit 05/01/2009 05/01/2011 2.0 2,000,000 2,088,970 2.31% 46,200 Northwest Sound Community Bank Certificate of Deposit 05/20/2009 04/21/2011 1.9 1,500,000 1,565,289 2.22% 33,330 Charter Bank Certificate of Deposit 05/26/2009 05/26/2011 2.0 1,500,000 1,555,735 1.98% 29,700 US Bank Certificate of Deposit 02/15/2010 02/15/2013 3.0 3,450,000 3,450,000 1.44% 49,680 Sterling Bank Certificate of Deposit 02/16/2010 08/16/2011 1.5 250,000 253,372 1.20% 3,000 Sound Community Bank Certificate of Deposit 03/04/2011 03/04/2014 3.0 3,000,000 3,003,107 1.40% 42,000 Sound Community Bank Certificate of Deposit 11/15/2010 05/15/2012 1.5 503,414 504,990 0.75% 3,776 CERTIFICATES OF DEPOSIT TOTAL 2.5 12,203,414 12,421,462 1.70% 207,686 Agencies Fannie Mae US agency 02/2212011 02/22/2016 5.0 1,000,000 1,000,000 1.50% (e) 15,000 Freddie Mac US agency 03/23/2011 09/23/2014 3.5 1,500,000 1,500,000 1.75% 26,250 Federal Home Loan Bank US agency 03/30/2011 12/30/2013 2.8 500,000 500,000 1.35% 6,750 TOTAL AGENCIES 3.9 3,000,000 3,000,000 1.60% 48,000 Taxable Municipal Bonds City of Marysville, sinking Al LTGO Refunding 11/23/2010 12/01/2017 5.5 535,000 602,531 3.37% 20,305 2014 -2017, ave 5.5 years Washington State Aa3 Lodging Tax Bonds 11/30/2010 07/01/2016 5.6 500,000 507,969 3.60% 18,287 Convention Center Facility A+ UW Biomedical Center AA1 Revenue Bonds 12/14/2010 07/01/2017 6.6 500,000 506,932 4.05% 20,531 AA+ UW Biomedical Center AA1 Revenue Bonds 12/14/2010 07/01/2019 8.6 500,000 506,248 4.70% 23,794 AA+ Douglas County, ESD, Aa1 UTGO 12/23/2010 12/01/2020 8.9 1,135,000 1,157,359 4.55% 52,660 sinking 2018 -2020, ave 9 yrs Aa3 Port of Anacortes Al LTGO 12/17/2010 09/01/2020 9.7 340,000 326,742 5.00% 16,337 Educational Servic District 03/23/2011 12/01/2011 0.7 185,000 191,179 1.00% 1,912 TOTAL MUNICIPAL BONDS 7.2 3,695,000 3,798,960 4.05% 153,825 Total Investments 3.6 18,898,414 19,220,422 2.13% 409,511 TOTAL CASH, CASH EQUIVALENTS INVESTMENTS 1.5 47,469,604 47,791,612 .1 1.08% 515,915 Current Portfolio Tield (a) On calleable bonds, term is calculated to final maturity even though call date may occur first; term of liquid investments is one day; on sinking fund bonds, average maturity is used to calculate term. (b) No fixed maturity, funds are available within one day. (c) Annualized return based on purchase price and yield to maturity. (d) Estimated market value at 12 -31 -10 was $102,535 less than purchase price. (e) Steps up to 3.25% on 2 -22 -12 if not called. 3 CITY OF TUKWILA CASH INVESTMENT REPORT Policy Compliance Liquidity Analysis March 31, 2011 As of Report Date Available Available Available Portfolio Within 1 Year Within 5 5 10 Years Liquidity Analysis Maturity Diversification Amount Years Funds immediately available 28,571,190 28,571,190 28,571,190 Investments Maturing in 2011: Second quarter 2011 5,209,994 Third quarter 2011 253,372 Fourth quarter 2011 191,179 Fixed Maturities of 1 year or less 5,654,545 5,654,545 5,654,545 Fixed maturities of 1 -3 years 7,458,097 7,458,097 Fixed maturities of 3 -5 years 2,500,000 2,500,000 Fixed maturities of 5 -7 years 1,617,432 1,617,432 Fixed maturities of 7 -10 years 1,990,349 1,990,349 Fixed Maturities of 1 -10 years 13,565,878 TOTALS 47,791,612 34,225,735 $44,183,831 $3,607,781 72% 92% Investment Policy Parameters POLICY LIMIT PORTFOLIO Policy Met? Funds available within 1 year 30.0% min 72% Yes Funds available within 5 years 80.0% min 92% Yes Funds available in 10 years or more 20.0% max 11% Yes Liquidity Requirements and Funds Available for Investing: Funds immediately available 28,571,190 Restrictions designations: Southcenter Parkway Project 4,331,034 Klickitat Project 10 Operating liquidity (h) 14,000,000 Liquidity threshold 28,331,034 Funds available for longer term investing 240,156 (h) Represents largest one month decline in portfolio balance over the most recent 36 month period doubled; or the equivalent of a 100% cushion c Portfolio POLICY Policy Financial Institution Diversification Amount of Total MAXIMUM Met? US Bank 13,637,709 28.5% 50.0% Yes Washington State Treasurer 8,125,344 17.0% 75.0% Yes Columbia Bank 10,008,137 20.9% 50.0% Yes Sound Community Bank 5,073,386 10.6% 50.0% Yes Other financial institutions 10,947,037 22.9% 50.0% Yes Total 47,791,612 100.0% Portfolio POLICY Policy Investment Mix Amount of Total MAXIMUM Met? Depository 10,187,709.12 21.3% insured by PDPC State Investment Pool 8,125,344 17.0% 75.0% Yes Money market 10,258,137 21.5% insured by PDPC Certificate of Deposit 12,421,462 26.0% insured by PDPC US Agency 3,000,000 6.3% 75.0% Yes Municipal Bonds 3,798,960 7.9% no limit specified in policy Total 47,791,612 100.0% Weiahted Averaoe Maturites: Years Performance Analvsis Certificates of deposit 2.5 Current portfolio yield 1.08% Agency bonds 3.9 Benchmarks: Municipal bonds 7.2 6 month treasury 0.17% Total Investments 3.6 2 year treasury 0.78% Total Portfolio 1.5 Local Govt Invst Pool 0.23% POLICY MAXIMUM 3.5 Policy Met? Yes Note: Cash and cash equivalents are available within one day and are factored into the Total Portfolio weighted average maturity. 4 CITY OF TUKWILA CASH INVESTMENT REPORT March 31, 2011 Cash Investment Balances By Fund and Fund Group General 000 GENERAL 1,660,218 1,127,775 2,787,994 General Total 1,660,218 1,127,775 2,787,994 2,772 876 Special Revenue 101 HOTEUMOTEL TAX 591,624 104,353 695,976 103 STREET 471,853 198,270 670,123 104 ARTERIAL STREET 7,834,837 2,442,148 10,276,985 105 CONTINGENCY 807,374 82,973 890,346 107 FIRE EQUIP. CUM. RESERVE 804,457 804,457 109 DRUG SEIZURE FUND 272,965 10,372 283,337 Special Revenue Total 10,783,110 2,838,114 13,621,224 k 73, ail 332'Y Debt Service 208 LIMITED TAX G.O. BONDS 2000 70 70 209 LIMITED TAX G.O. BONDS 2003 236 236 210 LIMITED TAX G.O. REFUNDING 2003 356 356 211 LIMITED TAX G.O. REFUNDING 2008 7,941 7,941 214 LTGO 2010 Series A 37 37 215 LTGO 2010 Series B 17 17 216 VALLEY COM Refunding bonds 2010 814 814 Debt Service Total 9,470 9,470 k';i5,895 Capital Project 301 LAND ACQ. REC. PARK DEVLPMNT 1,743,730 3,044,070 4,787,800 302 FACILITY REPLACEMENT 2,051,032 2,051,032 303 GENERAL GOVERNMNT IMPROVEMENTS 1,310,446 1,310,446 304 FIRE IMPACT FEES 165,331 165,331 Capital Project Total 5,270,540 3,044,070 8,314,610 8 4'5fi 737 Enterprise 400 UTILITY ON ACCT (overpayments) 21,000 21,000 401 WATER 953,592 3,970,999 4,924,592 402 SEWER 1,572,094 208,400 1,780,494 411 FOSTER GOLF COURSE (274,854) (274,854) 412 SURFACE WATER 3,401,619 104,200 3,505,819 Enterprise Total 5,673,452 4,283,599 9,957,051 Internal Service 501 EQUIPMENT RENTAL 1,781,074 2,191,179 3,972,253 502 INSURANCE 426,097 5,527,286 5,953,383 503 INSURANCE LEOFF 1 1,498,248 208,400 1,706,648 Internal Service Total 3,705,419 7,926,864 11,632,283 11;270,018; Fiduciary 611 FIREMEN'S PENSION 1,430,674 1,430,674 640 AGENCY FUND 38,306 38,306 Fiduciary Total 1,468,980 1,468,980 1:;437,566 Grand Total $28,571,189, $19,220,423 47;791,612 46,931,966 5 CITY OF TUKWILA CASH INVESTMENT REPORT Treasury Rates and Yield Curves March 31, 2011 Rates at March 31, 2011 Rates at December 31, 2010 Closing Current Closing Current Yield Yield Yield: Yield Term Term t 3mo 0.09% 0.09% 3mo 0.11% 0.12% 6m� t� ii 0 19% 1 Yr 0.26% 0.26% 1 Yr 0.27% 0.27% k .78 i) 7�3% .FYI,. aY ��.•64 °0 3% 3Yr 1.25% 1.25% 3Yr 1.05% 1.01% x r 5Yr 2D °l° w SYrY fl6 °o 2 01 10Yr 3.44% 3.42% 10Yr 3.36% 3.31% 30Y.'r fv 4 42 %t p4 37 s Yield Curve at 4.5 4 f March 31, 2011 3.5 3 2 15.. 2/28/2011 Today. f` 0 -5-, 0 a Yield Curve at 4.5 December 31, 2010 3 2. A 11/30/2010 Today O ry 'S 5 y 0 6