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HomeMy WebLinkAboutItem 4.10 CT Invest Report 98-99 ~ - '''r''" .' .~, ... . CITY CLERK File # O[3][2J[flJ..[3J[Q] AGENDA STATEMENT CITY COUNCIL MEETING DATE: (April 20, 1999) SUBJECT: City Treasurer's Investment Report For 3rd Quarter 1998/99 0!1Report Prepared by Paul S. Rankin, Assistant City Manager ATTACHMENTS: Quarterly Investment Report (March 31, 1999) Section I - Primary Investment Portfolio Section II - Listing of Supplemental Monies Under City Possession and/or Control RECOMMENDATION: ~ Receive Report DESCRIPTION: The attached Investment Report details the City's investments as of March 31, 1999, in accordance with the Local Agency Investment Guidelines established by the State Treasurer. Section I of the Report focuses on the principal investment portfolio. Section II details funds held by Trustees and miscellaneous operating accounts. The focus of the discussion in this report will be upon activity in the Primary Investment Portfolio. Changes in the investment portfolio and investment activity for the third quarter of Fiscal Year 1998/99 . are discussed in the staffreport below. INVESTMENT ACTIVITY IN THIRD QUARTER FlSCAL YEAR 1998/99 During the Third Quarter one security in the amount of $2,000,000 matured and two securities in the amount of $2,500,000 were removed from the portfolio due to early bond calls by the issuers. The following Tables provide details on activity related to these investments: INVESTMENTS WHICH WERE CALLED OR MATURED JANUARY - MARCH 1999 ORIGINAL CALL INTEREST TYPE AMOUNT MATURITY DATE RATE Matured Federal Securities FHLB $2,000,000 1/11/99 N/A 5.460% Called Federal Securities FHLB $1,500,000 1/29/01 1/29/99 5.630% FHLB $1,000,000 3/12/01 3/12/99 5.750% As noted above FHLB exercised its rights to "call" the bond prior to the stated maturity date. The City received the full principal amount, as well as accrued interest through the date of the calls. However, this results in the need to reinvest the funds at current market rates. . ------------------------------------------------------------------------------------------------------------- COPIES TO: 0(( ITEM NO.-A..1O K% IG/cc.mtgs/forms/form.as.doc .~~.. . ... The proceeds from these investments, along with other available funds, were used to purchase three new securities during the period, as summarized in the table below: TYPE Federal Securities FNMA FHLMC FNMA INVESTMENTS PURCHASED THIRD QUARTER FlSCAL YEAR 1998/99 CALL INTEREST DATE RATE . AMOUNT MATURITY $1,000,000 $1,000,000 $1,000,000 3/12/02 1/13/04 2/19/04 3/12/01 4/13/99 5/19/99 5.410% 6.000% 6.000% All of these securities were purchased at face value and had call options, which means that they can be called by the issuer prior to the stated maturity dates. If the security is called prior to the stated maturity date, the City receives the full face amount plus any accrued interest. The federal securities listed above are allowed under the City's current investment policy. The purchases extend the City portfolio in order to ladder the schedule of maturities. In the previous quarterly report the average maturity of all Government and Agency Securities was approximately 1.55 years. It is important to note that this relates solely to the portion of the portfolio which has investments with a stated term. The City maintains adequate funds in more liquid investments, which are deemed sufficient to meet cash flow needs. In the most recent quarter, the average maturity for the Federal Security portion of the portfolio increased to approximately 2.52 years as new federal securities with extended maturities were purchased. DETAILED LISTING OF PRIMARY PORTFOLIO Government and Agency Securities represent approximately 27% of the Primary Portfolio. A detailed listing of each security is provided in Item 1. The market value of Federal Secwities can fluctuate daily and values have been provided as reported by Union Bank of California as of March 31, 1999. The City portfolio assumes that the investments will be held to maturity and there is not an active attempt made to trade existing securities. The City has staggered the maturity dates within the portfolio and it is not anticipated that these funds will need to be called by the City prior to maturity. . The Morgan Stanley Dean Witter US Government Securities Mutual Fund Investment represents approximately 5.1 % of the City's total portfolio. The book value reported is based upon the "market value" as of June 30, 1998, as required by the Governmental Accounting Standards Board. During the first three quarters of the 1998-99 Fiscal Year the City received nearly $72,613 in dividends from this investment, resulting in an annualized yield of approximately 5.919%. The market value of this investment fluctuates on a daily basis and as of March 31,1999 was approximately $12,555 less than the recorded 6/30/98 market value. The mutual fund may be redeemed without sales charges beginning in October of 1999. COMPOSITION OF PORTFOLIO - SOURCE OF FUNDS Over the past two years the source of the funds comprising the City's portfolio have changed dramatically. For example, the City is administering significant infrastructure programs which require the collection of impact fees. These funds are restricted in their use and a proportionate share of all interest earnings are . posted at year end to these funds. In the monthly Financial reports Staff has focused on highlighting revenues and expenses associated with the City General Fund. However, in examining the investment portfolio it is appropriate to consider the nature and intended use of the funds which make up the portfolio. -;J...- .. ,,,,.,. -,': To provide an overview of the portfolio, the table shown below breaks out the total investment balance as of March 31, 1999 by source. Comparison information is also shown for the previous quarter. As shown . below, the percentage of the portfolio represented by the unrestricted General Fund category, has decreased since the last report. Over one-third of the March 31 st cash balances represented restricted Impact Fee Funds. It is important to keep in mind that this type of report is merely a snapshot on a particular day. Revenues as well as expenditures are not processed in equal monthly installments. PORTFOLIO COMPOSITION BY SOURCE OF FUNDS General Fund Current Quarter 3/31/99 Balance $17,684,746 % Total 55.5% Prior Quarter 12/31/98 Balance $30.278,508 % Total 68.2% Restricted - Special Revenue Funds (I.e. Gas Tax, Special Taxes) $2,095,731 6.6% $2.354,783 5.3% Restricted ~ Assessment District Funds (i.e. Landscape Maint & Debt Service) $352,724 1.1% $450,804 1.0% Restricted ~ Impact Fees $10,844,613 34.1% $10,624,260 23.9% Internal Service / Replacement Funds TOTAL $864,671 $31,842,485 2.7% 100.0% $664,520 $44.372,875 1.5% 100.0% . CHANGES IN THE TOTAL PORTFOLIO YIELD FROM THE PREVIOUS REPORT The total amount shown as invested in the Primary Investment Portfolio is nearly $12,530,390 less than the amount shown at December 31, 1999. The amount invested in Federal Securities and Certificates of Deposit decreased by approximately $1,485,390, while the City's combined investment in liquid investments including both the Local Agency Investment Fund (LAlF) and Pacific Horizons decreased by $11,045,000. The decrease primarily reflects the use of funds needed to call all outstanding COPs on the Civic Center, which were retired on February 1, 1999. Overall, the combined fate for the total portfolio decreased slightly from 5.513% at December 31, 1998 to 5.399% at March 31, 1999. The decrease was attributable to the maturity and call of three federal securities with higher rates during the quarter. Due to market changes opportunities for investment produced a lower yield. This was also the case for the LAIF operated by the State Treasurer. The quarterly average for the City's LAlF investment was 5.19% as of March 31, 1999, which was lower than the 5.513 % rate recorded for the quarter ending December 31, 1998. LAlF is a liquid investment, and the current LAIF rate remains very favorable compared to rates offered on investments, which have less flexibility. The City Treasurer believes that the schedule of investments, including the dates of maturity, contain adequate cash flow liquidity to meet anticipated expenditures over the next six months. The investments . and the schedule of investments are in compliance with the City's investment policy and all applicable laws and regulations. -'3-- . . . . '.. . ..' .' . / t{ ~ CITY OF DUBLIN QUARTERLY INVESTMENT REPORT SECTION I PRIMARY INVESTMENT PORTFOLIO ;J.b(~ . CITY OF DUBLIN DETAILED LISTING OF INVESTMENTS INCLUDING RATE OF RETURN AS OF MARCH 31, 1999 COUPON MATURITY VALUE AT INTEREST BOOK MARKET INVESTMENT DATE MATURITY RATE YIELD VALUE VALUE (') FEDERAL SECURITIES FNMA (No Call Date) 4/11199 1,000,000.00 6.430% 6.460% 1,005,780.00 1,000,3 I 0.00 FHLB (Callable 4/6/99) 4/6/00 1,000,000.00 5.750% 5.750% 997,190.00 1,000,000.00 FNMA (Callable 11/8/99) 1118/00 1,000,000.00 6.220% 6.220% 1,003.750.00 1,006,090.00 FHLB (Callable 6/29/99) 12/29/00 1,000,000.00 5.100% 5.100% 1,000,000.00 995,3 I 0.00 FHLB (Callable 6/29/99) 6/29/01 500,000.00 6.250% 6.150% 501,015.00 500,625.00 FNMA (Callable 3/11101) 3/12102 1,000,000.00 5.410% 5.410% 1,000,000.00 996,090.00 FHLB (Callable 11126/98) 6/18/02 1,000,000.00 5.435% 5.435% 1,000,000.00 992,810.00 FHLMC (Callable 4/13/99) 1113104 1,000,000.00 6.000% 6.000% 1,000,000.00 992,660.00 FNMA (Callable 5/19/99) 2/19/04 1,000,000.00 6.000% 6.000% 1,000,000.00 994,840.00 TOTAL FEDERAL SECURITIES $8,500,000.00 5.824% $8,507,735.00 $8,478,735.00 CERTIFICATES OF DEPOSIT - FDIC INSURED First Republic Trust & Loan 31712000 95,000.00 5.500% 5.500% 95,000.00 95,000.00 Sanwa Bank 12/9/99 99.000.00 5.600% 5.600% 99,000.00 99,00. TOTAL CERTIFICATES OF DEPOSIT $194,000.00 5.551% $194,000.00 $194,00 . MUTUAL FUNDS B of A Pacific Horizons Money Market 5,000.00 4.680% $5,000.00 $5,000.00 Government Fund Morgan Stanley Dean Witter U.S. Govt Securities See Note I 5.9-19% (2) $1,635,749.56 $1,623,194.46 POOLED PUBLIC AGENCY INVESTMENTS State of CA.- Local Agency Investment Fund (LAIF) $2 I ,500,000.00 5.190% (3) $21,500,000.00 $2 I .500,000.00 TOTAL INVESTED PORTFOLIO 5.399% 531,842,484.56 531,800,929.46 NOTES: (I) A Mutual Fund investment does not have a stated date ofrnaturity and shares may be sold at any time. The share price at the time ofa sale may be either higher or lower than the original cost. The current City investment strategy assumes that approximately 51 million will be held through July 1, 1999 and the remainder through October 1, 1999 to avoid any deferred sales charge. (Original purchase cost was 51,699,995). The Book Value reflects the market value on June 30, 1998, as required by current governmental accounting rules. (2) Interest Rate shown is based on dividends received this fiscal year to date, which are annualized and then divided by the original investment. (3) Interest Rate shown is the monthly average as of March 31, 1999. (4) Market Value shown for the Federal Securities is as of March 3 I, 1999. . ITEM 1 :jifb () . CITY OF DUBLIN SUMMARY OF INVESTMENT PORTFOLIO COMPARISON BY INVESTMENT TYPE AS OF MARCH 31,1999 Federal National Mongage Assn (FNMA) SUB .TOTAL GOVT/AGENCY MARKET "10 OF MATURITY FACE VALUE BOOK VALUE VALUE PORTFOLIO YEARS 3.500,000.00 3,498,205.00 3,488,745.00 41.2% 2.04 1,000,000.00 1,000,000.00 992,660.00 11.8% 4.79 4,000.000.00 4,009.530.00 3,997,330.00 47.1% 2.37 8,500,000.00 8,507,735.00 8,478,735.00 (I) 26.7% 2.52 194,000.00 194,000.00 194,000.00 0.6% 0.81 1,635,749.56 1,635,749.56 1,623,194.46 (%) 5.1% 5(3) TYPE OF INSTRUMENT Federal Home Loan Bank (FHLB) Federal Home Loan Mongage Corp (FHLMC) .ertificates of Deposit ~ FDIC Insured Mutual Funds. Morgan Stanley Dean Witter U.S. Govt Securities (4) B of A Pacific Horizons Money Market Government Fund 5,000.00 5,000.00 5,000.00 0.0% N/A LAIF 21,500,000.00 21,500,000.00 21,500,000.00 67.6% N/A GRAND TOTAL 531,834,749.56 531,842,484.56 531,800,929.46 100.0% NOTES: (1) The City intends to hold the investments until maturity or until market values equal or exceed their face value. Market Value sho\\ll is as of March 31, 1999. (2) Market value is based upon the shares invested at share price as of March 31, 1999. tfthe shares were liquidated a deferred sales charge would apply. Face Value is shown as the value recorded in the General Ledger based on the market value 6/30/98. (3) As a mutual Fund shares can typically be liquidated at any time. The weighted average maturity slated in this chan was calculated by Dean Winer based upon all investment instruments owned by the U.S. Government Securities Mutual fund as of June 30, 1998. This figure represents the duration factor for the Fund and it was reduced from the figure reported for 1997. .(4) The current City investment strategy assumes that approximately $1 million will be held through July 1, 1999 and the remainder through October I. 1999 to avoid any deferred sales charge. ITEM 2 f ~.6 > CITY OF DUBLIN QUARTERLY INVESTMENT REPORT SECTION II LISTING OF SUPPLEMENTAL MONIES UNDER CITY POSSESSION AND/OR CONTROL . OPERATING FUNDS . SPECIAL FUNDS HELD BY TRUSTEES . . . . City of Dublin Report of Operating Funds On Hand As of March 31,1999 5ctb In accordance with the California Government Code, the City Treasurer must disclose on a quarterly basis all monies in its possession. Monies considered invested, and not immediately necessary for current operations, are presented in a separate listing as part of the quarterly report. In the case of Operating Funds in bank accounts, the amount presented relates to the balance reported by the Financial Institution. IT IS IMPORTANT TO NOTE THAT THIS AMOUNT MAY REFLECT FUNDS REQUIRED TO COVER PAYMENTS ALREADY ISSUED AND CHECKS WHICH HAVE NOT CLEARED AS OF THE LAST DAY OF THE QUARTER. Therefore, these balances will fluctuate throughout the year. These funds are not subject to a specified maturity and the par value would be equivalent to the amount stated. Miscellaneous Cash Balance 03/31/99 . Non-Categorized - Cash Petty Cash - City Petty Cash - Recreation Cash Register - (4 Locations) Subtotal $200.00 $200.00 $275.00 $675.00 OPERATING CASH BALANCES ~ FINANCIAL INSTITUTIONS Balance 03/31/99 Annualized Rate of Interest BANK OF AMERICA- Collateralized Public Money Deposits In Accordance With California Government Code $320,920.46 See Note 1 Cal Fed~ Regular Savings Account: FDIC Insured $ 2,009.41 2.00% Grand Total Amount Cash Balances: $322.929.87 Note 1: The City operating account is a corporate checking account, which includes monthly interest earnings which are at a ,'ariable rate. 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