The URL can be used to link to this page

Home My WebLink AboutFIN 2019-11-25 Item 2B - Report - 2019 3rd Quarter Investment ReportTO: FROM: BY: CC: DATE: SUBJECT ISSUE City of Tukwila Allan Ekberg, Mayor INFORMATIONAL MEMORANDUM Finance Committee Vicky Carlsen, Finance Director Aaron Williams, Fiscal Coordinator Mayor Ekberg November 25, 2019 2019 3rd Quarter Cash & Investment Report The Quarterly Cash & Investment Report is provided to the Finance Committee in accordance with the City's Investment Policy. SUMMARY OF INVESTMENT POLICY It is the policy of the City of Tukwila to invest public funds in a manner that will provide maximum security with the highest investment return while meeting the daily cash flow demands of the City while conforming to all state and local statutes governing the investment of public funds. INVESTMENT HOLDINGS As of September 30, 2019, the portfolio totaled $62.5 million comprised of $47.8 million in cash and cash equivalents and $14.7 million in longer term investments. The attached "Cash and Investment Report" provides additional details on the cash and investment holdings of the City. Portfolio Allocation 4913012019 Operating Cash LGIP Money Market Certificates of Deposit Government Agencies Municipal Bonds 9.440.983 16% 23.455.958 37% 14.922.058 24% 2.030.132 3% 9.387.528 15% 3.330.255 5% 62.666.912 Portfolio Allocation 12f3112018 Operating Cash LGIP Money Market Certificates of Deposit Government Agencies Municipal Bonds 19.861.884 24% 23.030.920 28% 14.642.046 18% 3.638.311 4% 15.716.262 19% 5.860.630 7% 82.650.051 LAinirinal Governmen Agencies, 15' Certificates of Deposit, a% Money Market, 2 Operating LGIP. 97% 11 INFORMATIONAL MEMO Page 2 INVESTMENT ACTIVITY Year-to-date the city received $705k in interest earnings from the LGIP and Money Market accounts. Longer term investments held by the City paid interest totaling $315k and a combined $9 million in investments either matured or were called in 2019. No new bond investments were made during this time period. Investment income for 2019 is budgeted at $848k, which the City has already exceeded for the year. The portfolio is projected to earn approximately $1.4 million for the year, nearly double the budget for this line item. Additional detail of investment activity is provided below: Investment Activity Interest Earnings ,Jan -Sep LGIP month interest 426-038.43 ,Jan -Sep Money Market interest 280.012_43 705,050.86 Investment Earnings 1!2l2019 WA St Biomed Revenue Bond 12_202_50 V23l2019 Farmer Mac 7.000.00 V30/2019 Federal Home Loan Bank 6.460.00 2l4/2019 Farmer Mac 18.125.00 2j2K019 Federal Home Loan Bank 18.975.00 3iV2019 Port Anacortes WA G0 7.627.90 3.+2KO19 Federal Farm Credit Bank 14.500.00 5/V2019 Seattle WA G0 7.600.00 5/V2019 Port of Seattle WA Revenue 70.000.00 6 9/2019 Federal Farm Credit Bank 20.700.00 6.+3/2019 Douglas Cnty Bch Dist BAB 18.720.00 6±3 2019 Auburn WA G0 BAB 6.742_50 6.+3.2019 Port Tacoma WA G0 6.375.00 6.+3.2019 Burien WA G0 BAB 12_812_50 6.+27.2019 Federal Farm Credit Bank 8.600.00 7.+1/2019 VJA St Biomed Revenue Bond 12_202_50 7.+1/2019 Federal Home Loan Bank 14.366-00 7.+23/2019 Farmer Mac 7.000.00 8/2?2019 Farmer Mac 18.125.00 8±28 2019 Federal Home Loan Bank 18.976-00 9.+3.2019 Port Anacortes WA G0 7.627.90 314,625.80 12 INFORMATIONAL MEMO Page 3 During the next quarter (2019-Q4) there will be four bond investments maturing and two that will be called. Details of called and matured investments are listed below, with bolded lines showing upcoming maturities. Called Investements '1/2019 Port of Seattle WA Revenue 2,000,000 1112612019 Federal Farm Credit Bank 2,000,000 121112019 Douglas Cnty Sch Dist BAB (partial call] 380,000 Investment Maturities 1 f30!2019 Federal Home Loan Bank 1.000.000 3.!20!2019 Federal Farm Credit Bank 2.000.000 T1'2019 WA St Biomed Revenue Bond 500.000 7/23'2019 Farmer Mac 1.000.000 8/2/2019 Farmer Mac 2,500,000 101912019 FNMA O% 2,400,000 111112019 Seattle WA GO 380,000 1112112019 Federal Farm Credit Bank 1,000,000 121212019 Auburn Wa BAB 300,000 The cash flow projections from investments and interest earnings are shown below. 12 month Cash Flaw Projection Bond Investments 500,40Q Y Oyu G q1° ' a � > e 13 INFORMATIONAL MEMO Page 4 In addition to the Bond investments, the City has one certificate of deposit investment that was acquired in March of 2019 (24 Mo CD at 2.97%). Additional certificate of deposit activity is listed below: Certificates of deposit Interest Earnings Jan -Jun Bank of Washington $250k CID 1.732.76 Jan -Mar SOLInd Community Bank $3M CID 11.364.50 Mar -Sep SOLInd Community Bank $2M CID 30.131.64 Matured Certificates of Deposit 31412019 Sound Community Bank (3.299.675.56) 6±9/2019 Bank of Washington (260.000.00) RETURN ON INVESTMENTS The current portfolio yield on September 30, 2019 was 2.44%. Over the past 12+ months the returns from the cash accounts held with LGIP and Columbia Bank had been steadily increasing, but with recent Federal Reserve rate cuts those returns have decreased slightly. Government agency bond investments, many of which were purchased in 2017, have an average return of 1.33%. Municipal bonds currently have an average return of 3.21 %. The chart below illustrates the cash flows from bond investment income over the next 12 months. 12 month Cash Flow Projection Bond Interest Earnings 80,000 70,000 60,000 50,000 40,000 30,001) 20,000 10,000 rl O p� t S>� 5 P Q 14 INFORMATIONAL MEMO Page 5 POLICY COMPLIANCE AND LIQUIDITY ANALYSIS The portfolio profile is well within the range of all investment policy parameters. Over the next six -months more than $4 million in bond investments will mature, many of which are intended to meet the cash flow needs of Public Safety Plan construction. See "Policy Compliance & Liquidity Analysis" attachment for additional detail. The portfolio benchmark is the 2-year treasury rate, which is closely tied to the changes in the Federal Reserve Fed Funds Rate. Since mid-2019 the Federal Reserve has cut rates three times, twice in the third quarter. The City has been exceeding this investment benchmark due primarily to maintaining higher amounts of cash in money market and LGIP pool investments. The investment portfolio will continue to be managed to take advantage of investment opportunities as they arise while maintaining adequate liquidity to meet obligations. RECOMMENDATION Presentation is for information only. ATTACHMENTS 2019-Q3 Cash and Investment Report Policy Compliance & Liquidity Analysis 15 16 CITY OF TUKWILA Cash and Investment Details CASH & INVESTMENT REPORT September 30, 2019 (a) (c) (d) Agency / Issuer Rating Investment Purchase Maturity Term Par Book Yeild to Annualized Moodys Type Date Date Yrs Value Balance Maturity Return CASH & CASH EQUIVALENTS US Bank Operating Cash Depository various (b) 9,440,983 9,440,983 1.00% 94,410 (e) Washington State Treasurer LGIP Investment Pool various (b) 23,455,958 23,455,958 2.46% 577,177 (f) Columbia Bank Money Market various (b) 14,922,058 14,922,058 2.61% 389,466 (f) Total Cash & Cash Equivalents 47,818,999 47,818,999 2.22% 1,061,052 INVESTMENTS Certificates of Deposits Sound Community Bank Certificatet of Deposit 3/4/2019 3/4/2021 1.7 2,000,000 2,030,132 2.97% 45,221 (g) TOTAL CERTIFICATES OF DEPOSIT 2,000,000 2,030,132 2.23% 45,221 Agencies FNMA US agency 08/2017 10/9/2019 0.3 2,400,000 2,398,759 0.05% - (h) Federal Farm Credit Bank US agency 12/2016 12/27/2019 0.5 1,000,000 999,629 1.70% 17,000 Federal Home Loan Bank US agency 06/2017 6/29/2020 1.0 1,700,000 1,699,286 1.69% 28,730 Federal Home Loan Bank US agency 08/2017 8/8/2020 1.1 2,300,000 2,296,621 1.65% 37,950 Federal Farm Credit Bank US agency 09/2017 5/9/2022 2.9 2,000,000 1,993,232 2.07% 41,400 TOTAL AGENCIES 9,400,000 9,387,528 1.33% 125,080 Taxable Municipal Bonds Seattle WA GO LTD Aaa LTGO Refunding 06/2017 11/1/2019 0.3 380,000 380,752 4.00% 15,200 Auburn WA GO LTD Build America AA+ LTGO 06/2017 12/1/2019 0.4 300,000 301,140 4.50% 13,485 Port Anacortes WA GO LTD Aa3 LTGO 12/2010 9/1/2020 1.2 340,000 346,824 4.49% 15,256 Douglas County Washington Sch Dist Aaa UTGO 12/2010 12/1/2020 1.4 780,000 795,811 4.80% 37,440 Port Tacoma WA GO LTD Txbl Ref Aa2 LTGO Refunding 09/2017 12/1/2020 1.4 510,000 513,708 2.50% 12,750 Multnomah County OR GO LTD Aaa Revenue Bonds 08/2017 6/1/2021 2.0 500,000 481,175 2.28% - (h) Burien WA GO LTD Bid Am Bnds Aa2 LTGO 12/2017 6/1/2020 ' 1.0 500,000 510,845 5.13% 12,813 TOTAL MUNICIPAL BONDS Total Investments Interest earned from maturned/called investments 3,310,000 3,330,255 3.210% 106,943 14,710,000 14,747,914 1.88 % 277,244 178,407 TOTAL CASH, CASH EQUIVALENTS & INVESTMENTS 62,528,999 62,566,912 2.42% 1,516,704 T- Current Portfolio Yeild (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) Yeild to Maturity represents avaerage rate for the year for various investment vehicles. (d) Annualized Return represents actual earnings for the fircal year for bonds. (e) Represents earning credit from US Bank. City eams interest up to the amount of fees. (f) Represents rate in effect for period ending this report. (g) Prior $3M CD matured March 2019; Reinvested $2M March 2019 w/annualized return reflecting 9 months interest earnings. (h) Zero coupon bonds, pays no interest until matured. Current Portfolio Allocation Municipal Bonds, 5% Cash, 15% Agencies, 15%_ _.- CDs, Morn LGIP, 37% 17 in CITY OF TUKWILA Policy Compliance & Liquidity Analysis CASH & INVESTMENT REPORT September 30, 2019 Liquidity Analysis & Maturity Diversification Funds immediately available - US Bank, State LGIP, Money market Fixed Maturity Investments, maturing in: 0-90 days after Report Date 91-180 days after Report Date 181-270 days after Report Date 271-360 days after Report Date Investments maturing in 1 year or less Investments maturing in 1-2 years Investments maturing in 2-3 years Investments maturing in 3-4 years Investments maturing in 5-10 years Investments maturing in more than 1 year and less than 10 years. TOTALS Financial Institution Diversification US Bank Columbia Bank Sound Community Bank Investments in Financial Institutions Investments in US Government and other non -financial institutions Total Investment Mix Depository State Investment Pool Money market Certificate of Deposit US Agency Municipal Bonds Total Weiahted Averaae Maturites: Certificates of deposit Agencies Municipal bonds Total Investments POLICY MAXIMUM Policy Met? As of Report Date Available Available in Portfolio Within 1 Year Available 5 - 10 Years $ 47,818,999 $ 47,818,999 $ 47,818,999 4,080,000 2,200,000 2,640,000 2019 8,920,000 2020 3,790,000 2021 2,000,000 2022 - 2023 1.7I:I11111111 $ 62,528,999 8,920,000 8,920,000 3,790,000 2,000,000 $ 56,738,999 $ 62,528,999 $ - 91% 100% 0% Portfolio POLICY Policy Amount % of Total MAXIMUM Met? $ 9,440,983 15.1 % 50.0% Yes 14,922,058 23.9% 50.0% Yes 2,030,132 3.2% 50.0% Yes 26,393,172 42.2% 36,165,958 57.8% $ 62,559,130 100.0% Portfolio POLICY Policy Amount % of Total MAXIMUM Met? 9,440,983 15.1 % insured by PDPC Yes 23,455,958 37.5% 75.0% Yes 14,922,058 23.9% insured by PDPC Yes 2,030,132 3.2% insured by PDPC Yes 9,400,000 15.0% 75.0% Yes 3,310,000 5.3% no limit specified in policy Yes 62,559,130 100.0% Years Performance Analysis 1.4 Current portfolio yield 2.42% 0.9 0.9 Benchmarks: 1.0 2 year treasury 1.63% 3.5 Local Govt Invst Pool 2.20% Yes Note: Cash and cash equivalents are available within one day and are not factored into the Total Investments weighted average maturity. 19