HomeMy WebLinkAboutFIN 2021-02-08 Item 1C - Report - 2020 4th Quarter InvestmentCity of Tukwila
Allan Ekberg, Mayor
INFORMATIONAL MEMORANDUM
TO:
FROM:
BY:
CC:
DATE:
Finance & Governance Committee
Vicky Carlsen, Finance Director
Aaron Williams, Fiscal Coordinator
Mayor Ekberg
January 28, 2021
SUBJECT: 2020 4th Quarter Cash & Investment Report
ISSUE
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, 2020, the portfolio totaled $70.3 million comprised of $67.1 million in cash and cash
equivalents and $3.1 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. The decrease in the
LGIP balance compared to year end 2019 is attributed to Public Safety Plan construction projects, which utilized
bond proceeds received in Oct 2019.
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INFORMATIONAL MEMO
Page 2
INVESTMENT ACTIVITY
During 2020 the City received $583 thousand in interest earnings from the LGIP and Money Market
accounts. Most of those interest earnings (65%) came from the first quarter, prior to the interest rate
cuts. Fourth quarter interest earnings were $28.5 thousand.
Longer term investments held by the City paid interest totaling $37.3 thousand during the third quarter
and $2.29 million in investments matured or were called. No new bond investments were made during
this period. Due to the ongoing pandemic and uncertainty in revenue impacts, longer term investments
are not currently being pursued in an effort to maintain liquidity.
RETURN ON INVESTMENTS
The current portfolio yield at year end was 0.45%, Washington State LGIP and the Columbia Bank
money market accounts were earning 0.16% and 0.26%, respectively.
Longer term investment holdings have an average return of 2.84%.
POLICY COMPLIANCE AND LIQUIDITY ANALYSIS
The portfolio profile is well within the range of all investment policy parameters.
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. In response to the COVID-19
pandemic, there were significant cuts to the Fed Funds Rate reducing the rate to 0.13% currently. 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 while maintaining
adequate liquidity to meet obligations.
RECOMMENDATION
Presentation is for information only.
ATTACHMENTS
2020-Q4 Cash and Investment Report
Policy Compliance & Liquidity Analysis
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(a)(c) (d)
Agency / Issuer Rating
Moody's
Investment
Type
Purchase
Date
Maturity
Date
Term
Yrs.
Par
Value
Book
Balance
Yield to
Maturity
Annualized
Return
CASH & CASH EQUIVALENTS
US Bank Operating Cash Depository - (b) - 10,358,248 10,358,248 0.20% 20,716 (e)
Washington State Treasurer LGIP Investment Pool - (b) - 41,690,157 41,690,157 0.16% 65,037 (f)
Columbia Bank Money Market - (b) - 15,123,022 15,123,022 0.26% 38,715 (f)
Total Cash & Cash Equivalents 67,171,426 67,171,426 0.19% 124,468
INVESTMENTS
Certificates of Deposits
Sound Community Bank Certificate of Deposit 3/4/2019 3/4/2021 0.2 2,106,948 2,106,948 2.97% 62,576
TOTAL CERTIFICATES OF DEPOSIT 2,106,948 2,106,948 2.97% 62,576
Taxable Municipal Bonds
Multnomah County OR GO LTD Aaa Revenue Bonds 08/2017 6/1/2021 0.4 500,000 499,165 2.28% - (g)
Burien WA GO LTD Bld Am Bnds Aa2 LTGO 12/2017 12/1/2025 5.0 500,000 501,030 5.13% 25,625 (h)
TOTAL MUNICIPAL BONDS 1,000,000 1,000,195 2.56% 25,625
Total Investments 3,106,948 3,107,143 2.84% 88,201
Interest earned from matured/called investments 101,710
TOTAL CASH, CASH EQUIVALENTS & INVESTMENTS 70,278,375 70,278,570 0.45% 314,380
Current Portfolio Yield
(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 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.
(h) bond callable as of 6/1/20, not called as of 12/31/20
CITY OF TUKWILA
CASH & INVESTMENT REPORT
December 31, 2020
(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.
Cash and Investment Details
Cash, 15%
LGIP, 59%
Money Market,
22%
CDs, 3%
Agencies, 0%
Municipal
Bonds, 1%
Current Portfolio Allocation
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Liquidity Analysis & Maturity Diversification
Portfolio
Amount
Available
Within 1 Year
Available
Within 5
Years
Available in
5 - 10 Years
Funds immediately available - US Bank,
State LGIP, Money market 67,171,426$ 67,171,426$ 67,171,426$
Fixed Maturity Investments, maturing in:
0-90 days after Report Date 3,016,948
91-180 days after Report Date 500,000
181-270 days after Report Date -
271-360 days after Report Date -
Investments maturing in 1 year or less 2019 3,516,948 3,516,948 3,516,948
Investments maturing in 1-2 years 2020 - -
Investments maturing in 2-3 years 2021 - -
Investments maturing in 3-4 years 2022 - -
Investments maturing in 5-10 years 2023 500,000 500,000
Investments maturing in more than 1 year
and less than 10 years.500,000
TOTALS 71,188,375$ 70,688,375$ 70,688,375$ 500,000$
99% 99% 1%
Portfolio POLICY Policy
Financial Institution Diversification Amount % of Total MAXIMUM Met?
US Bank 10,358,248$ 14.7%50.0%Yes
Columbia Bank 15,123,022 21.5%50.0%Yes
Sound Community Bank 2,106,948 3.0%50.0%Yes
Investments in Financial Institutions 27,588,218 39.3%
Investments in US Government and other
non-financial institutions 42,690,157 60.7%
Total 70,278,375$ 100.0%
Portfolio POLICY Policy
Investment Mix Amount % of Total MAXIMUM Met?
Depository 10,358,248 14.7%insured by PDPC Yes
State Investment Pool 41,690,157 59.3%75.0%Yes
Money market 15,123,022 21.5%insured by PDPC Yes
Certificate of Deposit 2,106,948 3.0%insured by PDPC Yes
US Agency - 0.0%75.0%Yes
Municipal Bonds 1,000,000 1.4%no limit specified in policy Yes
Total 70,278,375 100.0%
Weighted Average Maturities:Years Performance Analysis
Certificates of deposit 0.2 Current portfolio yield 0.45%
Agencies 0.0
Municipal bonds 1.3 Benchmarks:
Total Investments 0.7 2 year treasury 0.13%
POLICY MAXIMUM 3.5 Local Govt Invst Pool 0.16%
Policy Met? Yes
Note: Cash and cash equivalents are available within one day and are not
factored into the Total Investments weighted average maturity.
CITY OF TUKWILA
Policy Compliance & Liquidity Analysis
CASH & INVESTMENT REPORT
December 31, 2020
As of Report Date
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