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Home My WebLink AboutFIN 2020-02-10 Item 1D - Report - 2019 4th 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 February 10, 2020 2019 4th 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 December 31, 2019, the portfolio totaled $119.5 million comprised of $111.2 million in cash and cash equivalents and $8.3 million in longer term investments. The attached "Cash and Investment Report" provides additional details on the cash and investment holdings of the City. Below is comparison of the Portfolio allocation at year-end 2019 compared to the prior year-end. Portfolio Allocation 12/3112019 Operating Cash LGIP Money Market Certificates of Deposit Government Agencies Municipal Bonds 13,000,083 11 % 83,231,470 70% 14,999.032 13% 2,045.201 2% 4,000,918 3% 2,264,672 2% 119, 641,276 Portfolio Allocation 12131/2018 Operating Cash LGIP Money Market Certificates of Deposit Government Agencies Municipal Bonds 19,861,884 24% 23,030,920 28% 14,642,046 18% 3,538,311 4% 16.716,262 19% 6,860,630 7% 82,650,051 Government Certificates of _Agencies, 3% Deoosit. 2% Money Market, 13%_ Municipal Operating _ Bonds, 21Y. _ Cash,11% 97 INFORMATIONAL MEMO Page 2 INVESTMENT ACTIVITY During 2019 the City received $1.14 million in interest earnings from the LGIP and Money Market accounts. Longer term investments held by the City paid interest totaling $429k and a combined $15.5 million in investments either matured or were called in 2019. No new bond investments were made during this time period. The 2019 annual budget for interest income is $848k; Citywide this was exceeded by over $757k. Conservative budgeting combined with higher than expected interest rates helped accomplish this positive variance. In addition, funds on hand related to the Public Safety Plan projects (unspent bond proceeds) earned over $415k during 2019. RETURN ON INVESTMENTS The annual portfolio yield for 2019 was 1.34%, which appears slightly skewed due to the addition of proceeds from debt issued in the fourth quarter. Washington State LGIP and the Columbia Bank money market accounts are currently earning 1.77% and 1.89%, respectively. The bond proceeds have been kept in cash or LGIP since the PSP projects are all in the construction phase. The Government agency bond investments have an average return of 1.67% and Municipal bonds currently have an average return of 3.22%. POLICY COMPLIANCE AND LIQUIDITY ANALYSIS The portfolio profile is well within the range of all investment policy parameters. During 2020 we will maintain liquidity 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. This rate steadily climbed over the past few years but recent cuts to the federal funds rate has moved the current 2-year treasury note to just above 1.5%. The chart below illustrates the return over the past 5 years. The investment portfolio will continue to be managed to take advantage of investment opportunities as they arise ' °0c' while maintaining adequate liquidity to 2.509', meet obligations. 1005; RECOMMENDATION Presentation is for information only. __00% ATTACHMENTS 0.50% 2019-Q4 Cash and Investment Report Policy Compliance & Liquidity Analysis 0.00 2-Year Treasury Note Rate tf1 :n L'l '.D :tl tD tO M1 F M1 W D:i O U. 01 Ct Qt L7 ri � rl .-1 .-i .--1 rl r-I 1 •-1 .-1 N • 1 ri 4 O O O O G O O O G O O O G a O O Q O G (Yl L]' C rJ (1'j ID Ol t`J «7 :D Ql N P(7 lJ5 Ql N (1'1 Li Ol N CITY OF TUKWILA Cash and Investment Details CASH & INVESTMENT REPORT December 31, 2019 (a) (c) (d) Rating Investment Purchase Maturity Term Par Book Yeild to Annual Agency / Issuer Moodys Type Dale Date Yrs Value Balance Maturity Return CASH & CASH EQUIVALENTS US Bank Operating Cash Depository various (b) 13,000,083 13,000,083 0.80 % 79,010 (e) Washington Stale Treasurer LGIP Investment Pool various (b) 83,231,470 83,231,470 1.77 % 700,551 (f) Columbia Bank Money Market various (b) 14,999,032 14,999,032 1.89% 356,987 (f) Total Cash & Cash Equivalents 111,230,585 111,230,585 1.02% 1,136,548 INVESTMENTS Certificates of Deposits Sound Community Bank Certificatet of Deposit 3/4/2019 3/4/2021 1.1 2,045.201 2,045,201 2.97% 45,201 (g) TOTAL CERTIFICATES OF DEPOSIT 2,045,201 2,045,201 2.21 % 45,201 Agencies Federal Home Loan Bank US agency 06/2017 6/29/2020 0.4 1,700,000 1,700,774 1.69% 28,730 Federal Home Loan Bank US agency 08/2017 8/8/2020 0.5 2,300,000 2,300,145 1.65% 37,950 TOTAL AGENCIES 4,000,000 4,000,918 1.67% 66,680 Taxable Municipal Bonds Port Anacortes WA GO LTD Aa3 LTGO 12/2010 9/1/2020 0.6 340,000 345,426 4.49% 15,256 Douglas County Washington Sch Dist Aaa UTGO 12/2010 12/1/2020 0.8 400,000 411,664 4.80% 19,200 Port Tacoma WA GO LTD Txbl Ref Aa2 LTGO Refunding 09/2017 12/1/2020 0.8 510,000 513,902 2.50% 12,750 Multnomah County OR GO LTD Aaa Revenue Bonds 08/2017 6/1/2021 1.3 500,000 487,120 2.28% - (h) Burien WA GO LTD Bid Am Bnds Aa2 LTGO 12/2017 6/1/2020 ` 0.3 500,000 506,460 5.13% 25,625 TOTAL MUNICIPAL BONDS 2,250,000 2,264,572 3.22 % 72,831 Total Investments 8,295,201 8,310,691 2.22% 184,712 Interest earned from malurned/called investments 284,187 TOTAL CASH CASH EQUIVALENTS & INVESTMENTS 119,525,786 119,541,276 1.34% 1,605,446 Annual Portfolio Yelld (i) (a) On Calleable bonds, term is calculated to final maturity even though call date may occur Current Portfolio Allocation first; term of liquid investments is one day; on sinking fund bonds, average maturity is used Municipal Bonds, to calculate term. z% (b) No fixed maturity, funds are available within one day. Cash, 11% (c) Yeild to Maturity represents avaerage rate for the year for various investment vehicles. Agencies, 3% (d) Annualized Return represents actual earnings for the fircal year for bonds. � e Represents earning credit from US Bank. Cit earned interest u to the amount of fees. O P 9 Y P cos, z% (f) Represents rate in effect for period ending this report. i (g) CD matured March 2019; prior CD paid lower rate causing Annualized return to be Mone;Market, lower than CD rate. 13% (h) Zero coupon bonds, pays no interest until matured. (i) Annual Portfolio Yeild is calculated by annual return divided by current portfolio value -LGIP, 70% 100 CITY OF TUKWILA Policy Compliance & Liquidity Analysis CASH & INVESTMENT REPORT December 31, 2019 As of Report Date Available Available in Portfolio Within 1 Year Available 5 - 10 Years Liquidity Analysis & Maturity Diversification Amount Within 5 Years Funds immediately available - US Bank, State LGIP, Money market $ 111,230,585 $111,230,585 $ 111,230,585 Fixed Maturity Investments, maturing in: 0-90 days after Report Date - 91-180 days after Report Date 2,200,000 181-270 days after Report Date 2,640,000 271-360 days after Report Date 910,000 Investments maturing in 1 year or less 2019 5,750,000 5,750,000 5,750,000 Investments maturing in 1-2 years 2020 2,545,201 2,545,201 Investments maturing in 2-3 years 2021 - - Investments maturing in 3-4 years 2022 Investments maturing in 5-10 years 2023 - Investments maturing in more than 1 year 2,545,201 and less than 10 years. TOTALS $ 119,525,786 $116,980,585 $ 119,525,786 $ - 98% 100% 0% Portfolio POLICY Policy Financial Institution Diversification Amount % of Total MAXIMUM Met? US Bank $ 13,000,083 10.9% 50.0% Yes Columbia Bank 14,999,032 12.5% 50.0% Yes Bank of Washington - 0.0% 50.0% Yes Sound Community Bank 2,045,201 1.7% 50.0% Yes Investments in Financial Institutions 30,044,316 25.1% Investments in US Government and other non -financial institutions 89,481,470 74.9% Total $ 119,525,786 100.0% Portfolio POLICY Policy Investment Mix Amount % of Total MAXIMUM Met? Depository 13,000,083 10.9% insured by PDPC Yes State Investment Pool 83,231,470 69.6% 75.0% Yes Money market 14,999,032 12.5% insured by PDPC Yes Certificate of Deposit 2,045,201 1.7% insured by PDPC Yes US Agency 4,000,000 3.3% 75.0% Yes Municipal Bonds 2,250,000 1.9% no limit specified in policy Yes Total 119, 525, 786 100.0% Weighted Average Maturites: Years Performance Analysis Certificates of deposit 1.2 Current portfolio yield 1.34% Agencies 0.6 Municipal bonds 0.9 Benchmarks: Total Investments 0.8 2 year treasury 1.58% POLICY MAXIMUM 3.5 Local Govt Invst Pool 1.77% Policy Met? Yes Note: Cash and cash equivalents are available within one day and arenot factored into the Total Investments weighted average maturity. 101