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HomeMy WebLinkAboutItem 4.04 CT InvestRpt 1997-98 (2) ~ CITY CLERKn File # rn~~-!3l1OJ . AGENDA STATEMENT CITY COUNCIL MEETING DATE: (July 21,1998) SUBJECT: City Treasurer's Investment Report For 4th Quarter 97/98 M-Report Prepared by: Paul S. Rankin, Assistant City Manager EXHIBITS ATTACHED: Quarterly Investment Report (June 30, 1998) 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 June 30, 1998, 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 fourth quarter of Fiscal Year 1997/98 are discussed in the staff report below. INVESTMENT ACTIVITY IN FOURTH QUARTER FISCAL YEAR 1997/98 .During the Fourth Quarter one security in the amount of $500,000 matured and one security in the amount of $500,000 was removed from the portfolio due to an early bond call by the issuer. The following Table provides details on activity related to these investments: INVESTMENTS WHICH WERE CALLED OR MATURED APRIL - JUNE 1998 ORIGINAL I CALL INTEREST TYPE AMOUNT MATURITY DATE RATE Matured Federal Securities FNMA $500,000 5/13/98 N/A 5.482% Called Federal Securities FFCB $500,000 12/18/98 6/18/98 5.850% As noted above the Federal Farm Credit Bureau (FFCB) 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. The proceeds from these investments, along with other available funds, were used to purchase two new securities during the period, as summarized in the table below: . G:\INVSMNTS\JUNE98\AGNDSTMT.DOC COPIES TO: ITEM NO. 4.4 TYPE Federal Securities FHLB FHLB INVESTMENTS PURCHASED FOURTH QUARTER FISCAL YEAR 1997/98 CALL INTEREST DATE RATE AMOUNT MATURITY $1,000,000 $1,000,000 4/6/00 5/26/00 4/6/99 5/26/00 5.750% 6.000% . Both 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 ord~r to ladder the schedule of maturities. In the previous quarterly report the average maturity of all Government and Agency Securities was approximately 1.47 years. Even with the longer maturities on these two investments, the average maturity for the Federal Security portion of the portfolio decreased to approximately 1.35 years. This is due to the fact that the portfolio is weighted heavily towards having funds available in February 1999 to provide for the retirement of all outstanding Civic Center COP's. DETAILED LISTING OF PRIMARY PORTFOLIO Government and Agency Securities represent approximately 45% of the Primary Portfolio. A detailed listing of each security is provided in Exhibit 1. The market value of Federal Securities can fluctuate daily and values have been provided as reported by Union Bank of California as of June 30, 1998. The City portfolio assumes that the investments will be held to maturity and there is not an active attempt made to trade existing securities. Due to a change in the required governmental accounting rules, the Fiscal Year 1997/98 year end audit will need to account for differences in market values as "Unrealized Gains / Losses". This entry will be presented as part of the Comprehensive Annual Financial Report, which is prepared in conjunction with the Annual Audit. 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. . During the past year Dean Witter was purchased by Morgan Stanley and the Mutual Fund held by the City is now named Morgan Stanley Dean Witter US Government Securities. This Investment represents approximately 4.5% of the City's total portfolio. The book value reported is based upon the original cost of shares. The City is receiving its dividend shares on a monthly basis. During the 1997-98 Fiscal Year the City received nearly $99,030 in dividends from this investment, resulting in an annualized yield of approximately 5.825%. The market value of this investment fluctuates on a daily basis and as of June 30, 1998 was approximately $64,246 less than the original purchase price. Since the investment was made in 1994, the City has collected over $500,000 in dividends which would offset the change in market value. CHANGES IN THE TOTAL PORTFOLIO YIELD FROM THE PREVIOUS REPORT The total amount shown as invested in the Primary Investment Portfolio is nearly $3,311,341 more than the amount shown at March 31, 1998. The amount invested in Federal Securities and Certificates of Deposit increased by approximately $1,001,341, while the City's investment in the Local Agency Investment Fund (LAIF) increased by $2,310,000. The increase reflects the receipt of sales tax revenues, impact fee deposits and other development related revenue during the quarter. Overall, the combined rate for the total portfolio decreased slightly from 5.696% at March 31, 1998 to . 5.686% at June 30, 1998. The decrease resulted from a slightly lower overall yield on the City's investments in LAIF and Federal Securities. Thp quarterly average for the City's LAIF investment was 5.672% as of June 30, 1998, which was slightly . lower than the 5.715% rate recorded for the quarter ending March 31, 1998. LAIF is a liquid investment, and the current LAIF rate remains very favorable compared to rates offered on investments which have less flexibility. The balance in the LAIF account will increase in the coming months, as this investment . offers the safety of a professionally managed account and a competitive rate of return, for the short-term investment of proceeds to be used for the early retirement of the Civic Center Certificates of Participation. 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. . . . . . CITY OF DUBLIN QUARTERLY INVESTMENT REPORT SECTION I PRIMARY INVESTMENT. PORTFOLIO CITY OF DUBLIN DETAILED LISTING OF INVESTMENTS INCLUDING RATE OF RETURN FOR THE QUARTER ENDED JUNE 30, 1998 . COUPON MATURITY VALUE AT INTEREST BOOK MARKET INVESTMENT DATE MA TURITY RATE YIELD VALUE VALUE (4) FEDERAL SECURITIES FHLMC (Callable 9/9/94) 9/9/98 500,000.00 4.950% 5.020% 499,917.97 499,530.00 FNMA (Callable 10/15/96) 10/15/98 1,000,000.00 4.875% 4.889% 999,937.50 997,660.00 U.S. Treasury Note 10/31/98 1,000,000.00 4.750% 5.101% 998,468.76 997,660.00 FHLB (Callable 11/3/94) 11/3/98 1,000,000.00 5.110% 5.110% 1,000,000.00 998,590.00 FNMA (Callable 12/10/96) 12/10/98 1,000,000.00 5.310% 5.311% 999,953.12 998,910.00 SLMA (Callable 12/18/97) 12/18/98 500,000.00 5.800% 5.800% 500,000.00 500,625.00 FNMA (Callable 12/30/96) 12/30/98 500,000.00 5.890% 5.890% 500,000.00 500,935.00 FHLB (Callable 1/12/95) 1/ll/99 2,000,000.00 5.460% 5.460% 2,000,000.00 1,999,380.00 FNMA (Callable 2/12/96) 2/12/99 400,000.00 5.550% 5.564% 399,962.50 399,500.00 FNMA (No Call Date) 4/11/99 1,000,000.00 6.430% 6.460% 999,790.00 1,005,780.00 FHLB (Callable 4/6/99) 4/6/00 1,000,000.00 5.750% 5.750% 1,000,000.00 997,190.00 FHLB (Callable 11/26/98) 5/26/00 1,000,000.00 6.000% 6.000% 1,000,000.00 999,530.00 FNMA (No Call Date) 11/8/00 1,000,000.00 6.220% 6.220% 1,000,000.00 1,003,750.00 FHLB (No Call Date) 10/20/00 1,000,000.00 6.250% 6.250% 1,000,000.00 1,000,470.00 FHLB (No Call Date) 10/20/00 1,000,000.00 6.240% 6.2400/0 1,000,000.00 1,000,470.00 FHLB (Callable 1/29/99) 1/29/01 1,500,000.00 5.630% 5.710% 1,497,062.50 1,489,920.00 FHLB (Callable 3/12/99) 3/12/01 1,000,000.00 5.750% 5.750% 1,000,000.00 996,090.00 FHLB (Callable 6/29/99) 6/29/01 500,000.00 6.250% 6.250% 500,000.00 501,015.00 TOTAL FEDERAL SECURITIES $16,900,000.00 5.697% $16,895,092.35 $16,887,005.. CERTIFICATES OF DEPOSIT - FDIC INSURED Fremont Investment & Loan 7/30/98 99,000.00 5.560% 5.560% 99,000.00 99,000.00 Standard Pacific Savings 7/30/98 99,000.00 5.200% 5.200% 99,000.00 99,000.00 First Republic Trust & Loan 9/14/98 95,000.00 5.250% 5.250% 95,000.00 95,000.00 People's Bank of California 9/14/98 98,000.00 5.250% 5.250% 98,000.00 98,000.00 Home Savings of America 10/28/98 99,000.00 5.600% 5.600% 99,000.00 99,000.00 Glendale Federal Bank 12/9/98 99,000.00 5.600% 5.600% 99,000.00 99,000.00 Sanwa Bank 12/9/99 99,000.00 5.600% 5.600% 99,000.00 99,000.00 TOTAL CERTIFICATES OF DEPOSIT $688,000.00 5.439% $688,000.00 $688,000.00 MUTUAL FUND Dean Witter U.S. Government Securities See Note 1 5.825% (2) $1,699,995.50 $1,635,749.56 POOLED PUBLIC AGENCY INVESTMENTS State ofCA.- Local Agency Investment Fund (LAIF) $18,200,000.00 5.672% (3) $18,200,000.00 $18,200,000.00 TOTAL INVESTED PORTFOLIO 5.686% $37,483,087.85 $37,410,754.56 NOTES: (1) A Mutual Fund investment does not have a stated date of maturity and shares may be sold at any time. The share price at the time of a sale may be either higher or lower than the original cost. The current City investment strategy assumes that approximately $1 million will be held through July 1, 1999 and $699,995 through October 1, 1999 to avoid any deferred sales charge. (2) Interest Rate shown is based on dividends received this fiscal year to date, which are annualized and then divided by the original investmen. (3) Interest Rate shown is the quarterly average as ofJune 30, 1998. (4) Market Value shown is as of June 30, 1998. EXHIBIT 1 City of Dublin Summary Comparison of Investment Portfolio by Type For the Quarter Ended June 30, 1998 LAIF 48% Federal Securities 45% Dean Witter Mutual Fund 5% Certificates of Deposit 2% MARKET %OF MATURITY TYPE OF INSTRUMENT FACE VALUE BOOK VALUE VALUE PORTFOLIO YEARS U.S. Treasury Notes $1,000,000.00 $998,468.76 $997,660.00 5.9% 0.34 .tudent Loan Marketing Assn (SLMA) 500,000.00 500,000.00 500,625.00 3.0% 0.47 ederal Home Loan Bank (FHLB) 10,000,000.00 9,997,062.50 9,982,655.00 59.2% 1.78 Fed Home Loan Mortgage Corp (FHLMC) 500,000.00 499,917.97 499,530.00 3.0% 0.19 Federal National Mortgage Assn (FNMA) 4,900,000.00 4,899,643.12 4,906,535.00 29.0% 0.89 SUB -TOTAL GOVT/AGENCY 16,900,000.00 16,895,092.35 16,887,005.00 (I) 45.1% 1.35 Certificates of Deposit - FDIC Insured 688,000.00 688,000.00 688,000.00 1.8% 0.40 Mutual Funds - Dean Witter U.S. Govt Securities (..) 1,699,995.50 1,699,995.50 1,635,749.56 (2) 4.5% 5.0 (3) LAIF ] 8,200,000.00 18,200,000.00 18,200,000.00 48.5% N/A GRAND TOTAL $37,487,995.50 $37,483,087.85 $37,410,754.56 100.0% NOTES: (1) The City intends to hold the investments until maturity or until market values equal or exceed the current book value (Amortized Cost). Market Value shown is as ofJune 30,1998. (2) Market value is based upon the shares invested at share price as of June 30, 1998. If the shares were liquidated a deferred sales charge would apply. Book Value is shown as the cost at the time the original shares were purchased. e) As a mutual Fund shares can typically be liquidated at any time. The weighted average maturity stated in this chart was calculated by Dean Witter based upon all investment instruments owned by the U.S. Government Securities Mutual Fund as of December 31, 1997. lbis figure represents the duration factor for the Fund and it was reduced from the figure reported for 1997. (4) The CUlTent City investment strategy assumes that approximately $1 million will be held through July 1, 1999 and $699,995 through October 1, 1999 to avoid any deferred sales charge. EXHIBIT 2 . 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 June 30, 1998 . 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 inunediately 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 6/30/98 Non-Catel!orized - Cash Petty Cash - City Petty Cash - Recreation Cash Register - ( 4 Locations) Subtotal $200.00 $200.00 $250.00 $650.00 . OPERATING CASH BALANCES. FINANCIAL INSTITUTIONS Balance 6/30/98 Annualized Rate of Interest BANK OF AMERICA. Collateralized Public Money Deposits In Accordance With California Government Code $116,002.66 See Note 1 First Nationwide Bank- Regular Savings Account: FDIC Insured $ 10.45 2.00% Grand Total Amount Cash Balances: $116.013.11 Note 1: The City operating account is a corporate checking account, which includes monthly interest earnings which are at a variable rate. The interest earnings are credited against account charges and fees required to maintain the accounts. 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