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Home My WebLink AboutFS 2014-09-16 Item 2C - Report - 2014 Second Quarter Investment ReportTO: City of Tukwila Jim Haggerton, Mayor INFORMATIONAL MEMORANDUM Mayor Haggerton Finance and Safety Committee FROM: Peggy McCarthy, Finance Director BY: Vicky Carlsen, Deputy Finance Director DATE: September 10, 2014 SUBJECT: Second Quarter 2014 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 At June 30, 2014, the portfolio totaled $47.1 million comprised of $37.2 million in cash and cash equivalents and $10.0 in longer term investments. The portfolio balance increased by $2.4 million from March 31, 2014 balance of $44.7 million. A major reason for the increase in funds is because property tax collections for the first half of the year were received in 2nd quarter while general fund expenditures are spread fairly evenly throughout the year. In April, the City purchased a Federal Home Loan Mortgage Corp agency investment in the amount of $2 million. It was purchased on April 10, 2014 and will mature on March 4, 2017. This investment has a .85% yield to maturity. In June, the City purchased a second agency investment of $1 million from Fannie Mae with a maturity date of December 20, 2014 and a yield to maturity of 1.30 %. Both investments increase the percentage of the City's longer -term investments and increase portfolio yield because of the higher interest rates on both agencies. Since these are both longer - term investments, they were placed in the contingency fund where the likelihood of accessing the available cash in the next few years is remote. The purchase of agencies also increases the diversity of the portfolio. Portfolio Performance The portfolio weighted average yield at year end was .46 %. Considering the portfolio's weighted average maturity was 1.1 years, and the yield on the cash & cash equivalent accounts was .08 %, the portfolio yield of 0.46% is still quite favorable. The yield has been sustained by the 4.22% average yield on the municipal bond investments, the .59% yield on the certificate of deposits, the .67% yield on the agencies, and the .45% earnings credit on the US Bank depository account. 23 INFORMATIONAL MEMO Page 2 Investment income through 2nd quarter 2014 for cash equivalents and certificates of deposits is $40,660 plus $75,200 of accrued municipal bond interest for a total of $115,860 against a prorated budget of $131,078. 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 the second quarter of 2014 is $10,207. The capital loan is being repaid semi - annually and will be paid in full by December 2022. Accrued interest for the first quarter of 2014 is $7,884. Attached to the investment report are amortization schedules for both loans to the MPD. Policy Compliance and Liquidity Analysis As of the end of the 2nd quarter, the portfolio profile is well within the range of all the investment policy parameters. There is currently a healthy mix of investments with a range of maturity dates. Current investments allow for adequate cash flow requirements. Fund Cash & Investment Balances The general fund balance shows an increase of $300 thousand from March 31, 2014 revenue on budget and expenditures under budget for the first half of the year. Both the general fund and contingency funds show significant increases from March 2013 to March 2014. This is due to the sale of LID bonds that occurred in November 2013 then transferring a portion of the bond proceeds into the contingency fund. Changes in other governmental funds is due primarily due to the timing of when capital project expenditures are occurring. Both the insurance and LEOFF I insurance funds show a reduction in cash and investments. Claims have been higher than anticipated in the insurance fund and the LEOFF I insurance fund is not currently funded in order to intentionally reduce fund balance. Investment Environment Short term interest rates continue to remain low and are expected to remain low through 2015. Unemployment rates continue to fall but the labor market remains slack. The Federal intends to maintain a zero - interest -rate policy until the economy strengthens. The portfolio will be managed to take advantage of investment opportunities as they arise. RECOMMENDATION Presentation is for information only. ATTACHMENTS Cash and Investment Report Policy Compliance & Liquidity Analysis Cash and Investment Balances by Fund Treasury Rates and Yield Curves Amortization Schedule — MPD Operating Loan Amortization Schedule — MPD Capital Loan 24 Agency /Issuer CITY OF TUKWILA CASH & INVESTMENT REPORT June 30, 2014 (a) (c) (d) Rating Purchase Maturity Term Par Book Yield to Annualized Moodys Investment Type Date Date Yrs Value Balance Maturity Return CASH & CASH EQUIVALENTS US Bank Depository Various (b) $17,134,544 $17,134,544 (e) 12,888 0.45% Washington State Treasurer LGIP Investment Pool Various (b) 5,930,789 5,930,789 (f) 0.08% 2,990 Columbia Bank Money market Various (b) 14,100,596 14,100,596 (f) 13,286 0.18% Total Cash & Cash Equivalents 37,165,929 37,165,929 0.08% 29,163 INVESTMENTS Certificates of Deposit Sound Community Bank Certificate of Deposit 3/4/2011 3/4/2017 6.0 3,000,000 3,134,494 0.85% 17,402 Regal Bank Certificate of Deposit 6/20/2012 12/20/2014 2.5 250,000 250,000 1.30% 1,621 CERTIFICATES OF DEPOSIT -- TOTAL 5.7 3,250,000 3,384,494 0.59% 19,022 Agencies Federal Home Loan Mtg Corp US agency 4/10/2014 5/13/2016 2.1 2,000,000 2,002,911 0.50% (a) 10,000 (FHLMCI FNMA US agency 6/6/2014 8/23/2017 3.2 1,000,000 998,400 1.00% 10,008 TOTAL AGENCIES 2.5 3,000,000 3,001,311 0.67% 20,008 Taxable Municipal Bonds City of Marysville, sinking Al LTGO Refunding 11/23/2010 12/1/2017 5.5 535,000 573,252 3.37% 19,319 2014 -2017, ave 5.5 years Washington State Convention Aa3 Lodging Tax Bonds 11/30/2010 7/1/2016 5.6 500,000 503,625 3.60% 18,130 Center Facility UW Biomedical Center Aal Revenue Bonds 12/14/2010 7/1/2017 6.6 500,000 503,724 4.05% 20,401 UW Biomedical Center Aal Revenue Bonds 12/14/2010 7/1/2019 8.6 500,000 504,038 4.70% 23,690 Douglas County, ESD, sinking Aal UTGO 12/23/2010 12/1/2020 8.9 1,135,000 1,149,825 4.55% 52,317 2018 -2020, ave 9 yrs Port of Anacortes Al LTGO 12/17/2010 9/1/2020 9.7 340,000 330,855 5.00% 16,543 TOTAL MUNICIPAL BONDS 7.6 3,510,000 3,565,320 4.22% 150,400 Total Investments 5.4 9,760,000 9,951,125 1.90% 189,430 TOTAL CASH, CASH EQUIVALENTS & INVESTMENTS 1.1 $ 46,925,929 $ 47,117,054 1 0.46% I $ 218,593 (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) Yield to Maturity represents average rate for the year for various investment vehicles. (d) Annualized Return represents actual earnings for the fiscal year for bonds. (e) Represents earning credit from US Bank. City earns interest up to the amount of fees. (f) Represents rate in effect for period ending this report. (g) Annualized Return represents actual earnings through current reporting period Current Portfolio Yield Percent of Cash & Investment Portfolio Municipal Bonds 8% Money Market 32% CDs.- 8% LGIP 13% Cash 39% 25 CITY OF TUKWILA Policy Compliance & Liquidity Analysis CASH & INVESTMENT REPORT June 30, 2014 Liquidity Analysis & Maturity Diversification Funds immediately available Fixed Maturity Investments, maturing in: 0 -90 days after Report Date 91 -180 days after Report Date Investments maturing in 1 year or less Investments maturing in 1 -3 years Investments maturing in 3 -5 years Investments maturing in 5 -7 years Investments maturing in 7 -10 years Investments maturing in more than 1 year and less than 10 years. TOTALS As of Report Date Available Available Available in Portfolio Within 1 Year Within 5 5 - 10 Years Amount Years $ 37,165,929 250,000 250,000 5,641,030 2,075,376 1,984,719 9,701,125 $ 47,117,054 $ 37,165,929 $ 37,165,929 250,000 250,000 5,641,030 2,075,376 $ 37,415,929 $ 45,132,336 79% 96% 1,984,719 $ 1,984,719 5% Liquidity Requirements and Funds Available for Investing: Funds immediately available $ 37,165,929 Restrictions & designations: Operating liquidity (a) 14,000,000 Liquidity threshold 14,000,000 Funds available for longer term investing $ 23,165,929 (a) Represents largest one month decline in portfolio balance over the most recent 36 month period doubled; or the equivalent of a 100% cushion. Portfolio POLICY Policy Financial Institution Diversification Amount % of Total MAXIMUM Met? US Bank $ 17,134,544 36.4% 50.0% Yes Washington State Treasurer 5,930,789 12.6% 75.0% Yes Columbia Bank 14,100,596 29.9% 50.0% Yes Sound Community Bank 3,134,494 6.7% 50.0% Yes Other financial institutions 6,816,631 14.5% 50.0% Yes Total $ 47,117,054 100.0% Portfolio POLICY Policy Investment Mix Amount % of Total MAXIMUM Met? Depository 17,134,544 36.4% insured by PDPC Yes State Investment Pool 5,930,789 12.6% 75.0% Yes Money market 14,100,596 29.9% insured by PDPC Yes Certificate of Deposit 3,384,494 7.2% insured by PDPC Yes US Agency 3,001,311 6.4% 75.0% Yes Municipal Bonds 3,565,320 7.6% no limit specified in policy Yes Total 47,117,054 100.0% Weighted Average Maturites: Certificates of deposit Municipal bonds Total Investments Total Portfolio POLICY MAXIMUM Policy Met? Years 5.7 7.6 5.4 1.1 3.5 Yes Note: Cash and cash equivalents are available within one day and are factored into the Total Portfolio weighted average maturity. 26 Performance Analysis Current portfolio yield 0.46% Benchmarks: 6 month treasury 0.07% 2 year treasury 0.47% Local Govt Invst Pool (f) 0.08% CITY OF TUKWILA Cash & Investment Balances By Fund and Fund Group CASH & INVESTMENT REPORT June 30, 2014 Balances Fund Grou. 06/30/14 General General Total Special Revenue 000 GENERAL Special Revenue Total Debt Service Debt Service Total Capital Project 101 HOTEL /MOTEL TAX 103 STREET 104 ARTERIAL STREET 105 CONTINGENCY 107 FIRE EQUIP. CUM. RESERVE 109 DRUG SEIZURE FUND Capital Project Total Enterprise Enterprise Total Internal Service Internal Service Total Grand Total 206 L.I. GUARANTEE 207 LIMITED TAX G.O. BONDS 1999 13,248 118,267 208 LIMITED TAX G.O. BONDS 2000 70 133,945 209 LIMITED TAX G.O. BONDS 2003 1 3,020,451 3,828,526 (3,914) 210 LIMITED TAX G.O. REFUNDING 2003 244,320 247 469,496 71,715 211 LIMITED TAX G.O. REFUNDING 2008 406,416 218 705,717 (74,699) 212 LTGO SCORE BONDS 291,688 1,390 30,891 213 LTGO SCORE BLD AMER BONDS - - 115,995 214 LTGO 2010 Series A 296,039 108,557 369,525 215 LTGO 2010 Series B 4,612 66,508 216 VALLEY COM Refunding bonds 2010 106,434 12,954 14 814 217 LIMITED TAX GO BONDS REFUNDING 274,214 1 101,738 - 218 LTGO 2013 233 LID #33 81,316 2,369,574 3,148,430 5,688,409 14,132 245,314 301 LAND ACQ, REC & PARK DEVLPMNT 1,236,430 1,099,701 1,633,257 4,845,418 4,216,052 302 FACILITY REPLACEMENT 1,904,720 2,088,543 2,018,535 2,044,018 2,073,625 303 GENERAL GOVERNMNT IMPROVEMENTS 570,592 637,101 433,693 751,794 363,610 304 FIRE IMPACT FEES 454,321 402,514 317,677 168,919 145,423 4,166,063 4,227,860 4,403,163 7,810,149 6,798,708 400 UTILITY ON ACCT (overpayments) 22,106 27,857 17,122 13,664 13,184 401 WATER 5,376,215 5,655,077 3,982,420 4,377,038 5,046,356 402 SEWER 3,335,265 2,316,037 1,238,090 1,209,792 1,622,088 404 WATER/SEWER REVENUE BONDS 135,566 405 BOND RESERVE 393,547 411 FOSTER GOLF COURSE 622,681 458,643 114,058 (169,408) 142,065 412 SURFACE WATER 2,361,899 2,985,279 2,683,138 2,575,702 1,966,145 11,718,166 11,442,893 8,034,828 8,006,789 9,318,951 501 EQUIPMENT RENTAL 4,650,880 4,474,197 3,804,498 3,803,723 3,604,004 502 INSURANCE 5,238,745 6,239,565 6,198,009 6,048,103 5,424,728 503 INSURANCE - LEOFF I 735,138 1,666,674 1,904,047 1,725,536 1,528,676 10,624,763 12,380,436 11,906,554 11,577,363 10,557,408 45,226,266 40,526,154 40,994,970 47,065,787 40,553,577 6,987,822 6,987,822 495,322 1,450,893 1,582,095 5,763,258 68,308 9,359,877 669,147 Balances Balances Balances Balances 6/30/13 6/30/12 6/30/11 6/30/10 $ 4,149,258 4,149,258 660,126 1,051,963 911,325 1,461,857 945,694 146,312 5,177,278 $ 4,903,893 4,903,893 440,145 938,114 2,055,132 1,458, 686 943,850 222,196 6,058,123 $ 7,197,080 7,197,080 497,927 733,893 8,906,680 1,457, 270 884,605 (20,100) 12,460,275 $ 5,314,837 5,314,837 927,777 464,298 4,978,370 887,293 802,518 258,103 8,318,359 Funds not included in the Grand Total are the fiduciary funds and the MPD. However, these balances ($2,121,880) are included in the investment balances. 27 CITY OF TUKWILA Treasury Rates and Yield Curves CASH & INVESTMENT REPORT June 30, 2014 Rates at June 30, 2014 Term Closing Yield 6/30/2014 Rate % Change Change 3mo 0.04% 0.00% 0% - 0.03% -43% 0.11% -0.04% -36% 1Yr 0.11% 23% 3Yr 0.88% 0.22% 25% 3Yr 0.66% 0.21% 13% 10Yr 2.53% 0.01% 0% 10Yr 2.52% 6mo 0.07% 1Yr Rates at June 28, 2013 Term Closing Yield 6/28/2013 3mo 0.04% 6mo 0.10% 2Yr 0.47% 0.15% 2Yr 0.36% 5Yr 1.62% 5Yr 1.41% 30Yr 3.34% Source: US Department of the Treasury 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% - 0.18% -5% 30Yr 3.52% Comparison of Treasury Rates 3 mo 6 mo 1 yr 2 yr 3 yr 5 yr 10 yr 30 yr ▪ 6/30/2014 - 4F-6/28/2013 28 Period (Date) Beg Bal MPD Operating Loan - through end of 2014 only Accumulated Funding Payments Interest End Bal Interest Principal Pmt Interest Pmt 10/1/2011 11/1/2011 12/1/2011 1/1/2012 2/1/2012 3/1/2012 4/1/2012 5/1/2012 6/1/2012 7/1/2012 8/1/2012 9/1/2012 10/1/2012 11/1/2012 12/1/2012 1/1/2013 2/1/2013 3/1/2013 4/1/2013 5/1/2013 6/1/2013 7/1/2013 8/1/2013 9/1/2013 10/1/2013 11/1/2013 12/1/2013 1/1/2014 2/1/2014 3/1/2014 4/1/2014 5/1/2014 6/1/2014 7/1/2014 8/1/2014 9/1/2014 10/1/2014 11/1/2014 12/1/2014 191, 612.82 191, 932.18 192,252.07 192,572.49 192,893.44 193,214.93 418, 911.95 419,610.14 420,309.49 421, 010.01 421, 711.69 422,414.54 857,547.41 858,976.66 860,408.28 1,112,258.96 1,114,112.73 1,115,969.58 1,117,829.53 1,100,000.00 1,091,711.85 1,083,409.89 1,075,094.10 1,066,764.44 1,058,420.90 1,050_063.46_ 1,041,692.08 1,033,306.76 1,024,907.45 1,016,494.15 1,008,066.83 999,625.46 991,170.02 982,700.49 974,216.85 965,719.06 957,207.11 948,680.98 $ 191,294 $ - $ 319 319.35 319.89 320.42 320.95 321.49 225, 000.00 697.02 698.19 699.35 700.52 701.68 702.85 433, 706.00 1,426.87 1,429.25 1,431.63 250,000.00 - 1,850.68 1,853.76 1,856.85 1,859.95 19, 692.58 1,863.05 10,121.48 1,833.33 10,121.48 1,819.52 10,121.48 1,805.68 10,121.48 1,791.82 10,121.48 1,777.94 10,121.48 1,764.03 - _ - -_ -- __10_121.48 1,750.11_ - 10,121.48 1,736.15 10,121.48 1,722.18 10,121.48 1,708.18 10,121.48 1,694.16 10,121.48 1,680.11 10,121.48 1,666.04 10,121.48 1,651.95 10,121.48 1,637.83 10,121.48 1,623.69 10,121.48 1,609.53 10,121.48 1,595.35 10,121.48 1,581.13 $ 191,613 191,932.18 192,252.07 192,572.49 192,893.44 193,214.93 418,911.95 419,610.14 420, 309.49 421,010.01 421,711.69 422,414.54 857,547.41 858,976.66 860,408.28 1,112,258.96 1,114,112.73 1,115, 969.58 1,117, 829.53 1,100, 000.00 1,091,711.85 1,083,409.89 $ 319 638.18 958.07 1,278.49 1,599.44 1,920.93 2,617.95 3,316.14 4,015.49 4,716.01 5,417.69 6,120.54 7,547.41 8,976.66 10,408.28 12,258.96 14,112.73 15,969.58 17,829.53 19,692.58 21, 525.91 23,345.43 1,075,094.10 25,151.12 1,066,764.44 26,942.94 1,058,420.90 28,720.88 1,050,063.46 30,484.92 1 _041,692.08 _ _32,235.02 - 1,03306.76 ,3 33,971718 1,024,907.45 35,693.35 1,016,494.15 37,401.53 1,008,066.83 39,095.69 999,625.46 40,775.80 991,170.02 42,441.84 982,700.49 44,093.79 974,216.85 45,731.63 965,719.06 47,355.32 957,207.11 48,964.85 948,680.98 50,560.20 940,140.63 52,141.33 19,692.58 8,288.15 1,833.33 8,301.96 1,819.52 8,315.80 8,329.66 8,343.54 8,357.45 8_371.37 8,385.33 8,399.30 8,413.30 8,427.32 8,441.37 8,455.44 8,469.53 8,483.65 8,497.79 8,511.95 8,526.13 8,540.34 1,805.68 1,791.82 1,777.94 1,764.03 1,750.11 750.11 1,736.15 1,722.18 1,708.18 1,694.16 1,680.11 1,666.04 1,651.95 1,637.83 1,623.69 1,609.53 1,595.35 1,581.14 Prior rrent 29 PAYMENT BEGINNING DUE DATE BALANCE Capital Loan to MPD Repayment Schedule PRINCIPAL INTEREST PAYMENT RATE INTEREST PAYMENT ENDING 2/1/2013 6/1/2013 1,000,000.00 _12/1 /2013 _ _ 249,268.33 _ 6/1/2014 901,009.43 12/1/2014 852,328.26 6/1/2015 803,221.13 12/1/2015 753,684.31 6/1/2016 703,714.05 12/1/2016 6/1/2017 12/1/2017 6/1/2018 12/1/2018 6/1/2019 12/1/2019 6/1/2020 12/1/2020 6/1/2021 12/1/2021 6/1/2022 12/1/2022 30 657,176.98 609,976.75 562,103.92 513,548.90 464,301.97 414,353.27 366,075.34 316,831.85 266,603.49 215,370.56 163,112.97 109,810.23 55,441.43 Amount loaned to the MPD (50,731.67) 0.02 __(48,258_.90) _____0.02_ (48,681.17) 0.02 (49,107.13) 0.02 (49,536.82) 0.02 (49,970.26) (46,537.07) (47,200.23) (47,872.83) (48,555.02) (49,246.93) (49,948.70) (48,277.93) (49,243.49) (50,228.36) (51,232.93) (52,257.59) (53,302.74) (54,368.80) (55,441.43) 0.02 0.03 0.03 0.03 0.03 0.03 0.03 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 1,000,000.00 (5,833.33) 949,268.33 _ (8,306.10)_ _ 901,009.43 (7,883.83) 852,328.26 (7,457.87) (7,028.18) (6,594.74) (10,027.93) (9,364.77) (8,692.17) (8,009.98) (7,318.07) (6,616.30) (8,287.07) (7,321.51) (6,336.64) (5,332.07) (4,307.41) (3,262.26) (2,196.20) (1,108.83) (131,285.26) 803,221.13 753,684.31 703,714.05 657,176.98 609,976.75 562,103.92 513,548.90 464,301.97 414,353.27 366, 075.34 316,831.85 266,603.49 215,370.56 163,112.97 109,810.23 55,441.43 0.00 Prior Current