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Home My WebLink AboutFIN 2020-06-08 Item 1A - Report - 2020 1st 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 May 27, 2020 2020 1st 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 March 31, 2020, the portfolio totaled $99.1 million comprised of $92.5 million in cash and cash equivalents and $6.6 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 a comparison of the current portfolio allocation compared to the prior year-end. Portfolio Allocation 0313112020 Operating Cash 4.864.744 6% LGIP 72,644,067 73% Money Market 16,065,371 16% Certificates of Deposit 2.060.383 2% Government Agencies 2.313.345 2% Municipal Bonds 2.265.832 2% Government Age iF 1-5c Certificates of Deposit, 3% JJ. 10 i. I41 Money — Market, 159 Portfolio Allocation 1213112019 Operating Cash 13.000.083 11% LGIP 83.231.470 70% Money Market 14.999.032 13% Certificates of Deposit 2.045.201 2% Government Agencies 4.000.918 3% Municipal Bonds 2.264.672 2% 119.641.276 Municipal Bonds, 2% _ Operating sh, 5% i% l INFORMATIONAL MEMO Page 2 INVESTMENT ACTIVITY During the first quarter of 2020 the City received $379 thousand in interest earnings from the LGIP and Money Market accounts. Longer term investments held by the City paid interest totaling $33.8 thousand and $1.7 million in investments were called in the first quarter. No new bond investments were made during this period. Due to the ongoing pandemic significantly reducing revenues, longer term investments are not currently being pursued in order to maintain liquidity. RETURN ON INVESTMENTS The current portfolio yield for the first quarter was 1.49%, Washington State LGIP and the Columbia Bank money market accounts were earning 1.38% and 1.65%, respectively. The Government agency bond investments have an average return of 1.64% and Municipal bonds currently have an average return of 3.21 %. 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 until late 2018 when several Federal Funds Rate cuts moved the 2-yr treasury note to just above 1.5% at year end 2019. During the first quarter of 2020, in response to the COVID-19 pandemic, there were significant cuts to the Fed Funds Rate bringing it near 0% currently. The chart below illustrates the return over the past 5 years. The investment portfolio will continue to be managed to take advantage of 3 investment opportunities as they arise while maintaining adequate liquidity to 25o% meet obligations. zoosc RECOMMENDATION L50% Presentation is for information only. L00% ATTACHMENTS 2020-Ql Cash and Investment Report 0 Policy Compliance & Liquidity Analysis 000% 2-Yea r Tre as u ry Nate Rate G G 4 4 4 4 O 8 4 4 4 4 G G N O 4 4 4 2 CITY OF TUKWILA Cash and Investment Details CASH & INVESTMENT REPORT March 31, 2020 (a) (c) (d) Agency / Issuer Rating Investment Purchase Maturity Term Par Book Yield to Annualized Moody's Type Date Date Yrs. Value Balance Maturity Return CASH & CASH EQUIVALENTS US Bank Operating Cash Depository various (b) 4,854,744 4,854,744 1.00% 48,547 (e) Washington State Treasurer LGIP Investment Pool various (b) 72,544,067 72,544,067 1.38% 1,000,492 (f) Columbia Bank Money Market various (b) 15,065,371 15,065,371 1.65% 248,579 (f) Total Cash & Cash Equivalents 92,464,182 92,464,182 1.40% 1,297,618 INVESTMENTS Certificates of Deposits Sound Community Bank Certificate of Deposit 3/4/2019 3/4/2021 1 2,060,383 2,060,383 2.97% 61,193 TOTAL CERTIFICATES OF DEPOSIT 2,060,383 2,060,383 2.97% 61,193 Agencies Federal Home Loan Bank US agency 08/2017 8/8/2020 0.4 2,300,000 2,313,345 1.65% 37,950 TOTAL AGENCIES 2,300,000 2,313,345 1.64% 37,950 Taxable Municipal Bonds Port Anacortes WA GO LTD Aa3 LTGO 12/2010 9/1/2020 0.4 340,000 344,604 4.49% 15,256 Douglas County Washington Sch Dist. Aaa UTGO 12/2010 12/1/2020 0.7 400,000 410,440 4.80% 19,200 Port Tacoma WA GO LTD Txbl Ref Aa2 LTGO Refunding 09/2017 12/1/2020 0.7 510,000 515,258 2.50% 12,750 Multnomah County OR GO LTD Aaa Revenue Bonds 08/2017 6/1/2021 1.2 500,000 492,525 2.28% - (g) Burien WA GO LTD Bld Am Bnds Aa2 LTGO 12/2017 6/1/2020 0.2 500,000 503,005 5.13% 25,625 TOTAL MUNICIPAL BONDS 2,250,000 2,265,832 3.21% 72,831 Total Investments 6,610,383 6,639,559 2.59% 171,974 Interest earned from matured/called investments 7,183 TOTAL CASH, CASH EQUIVALENTS & INVESTMENTS 99,074,565 99,103,741 1.49% 1,476,774 Current Portfolio Yield (a) On Callable 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 Agencies (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 CDs, (e) Represents earning credit from US Bank. City earned interest up to the amount of fees (f) Represents rate in effect for period ending this report (g) Zero coupon bonds, pays no interest until matured Money 1` Current Portfolio Allocation Municipal s% 11 CITY OF TUKWILA Policy Compliance & Liquidity Analysis CASH & INVESTMENT REPORT March 31, 2020 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 Maturities: Certificates of deposit Agencies Municipal bonds Total Investments POLICY MAXIMUM Policy Met? Portfolio A $ 92,464,182 500,000 2,640,000 910,000 2,060,383 2019 6,110,383 2020 500,000 2021 - 2022 2023 As of Report Date Available Available Available in Within 1 Year Within 5 5 - 10 Years $ 92,464,182 $ 92,464,182 6,110,383 6,110,383 500,000 500,000 $ 99,074,565 $ 98,574,565 $ 99,074,565 $ - 99% 100% 0% Portfolio POLICY Policy Amount % of Total MAXIMUM Met? $ 4,854,744 4.9% 50.0% Yes 15,065,371 15.2% 50.0% Yes 2,060,383 2.1 % 50.0% Yes 21,980,497 22.2% 77,094,067 77.8% $ 99,074,565 100.0% Portfolio POLICY Policy Amount % of Total MAXIMUM Met? 4,854,744 4.9% insured by PDPC Yes 72,544,067 73.2% 75.0% Yes 15,065,371 15.2% insured by PDPC Yes 2,060,383 2.1 % insured by PDPC Yes 2,300,000 2.3% 75.0% Yes 2,250,000 2.3% no limit specified in policy Yes 99,074,565 100.0% Years Performance Analysis 0.9 Current portfolio yield 1.49% 0.4 0.6 Benchmarks: 0.6 2 year treasury 0.23% 3.5 Local Govt Invst Pool 1.38% Yes Note: Cash and cash equivalents are available within one day and are not factored into the Total Investments weighted average maturity. 5