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HomeMy WebLinkAbout4.05 CT Invest Rpt 1998-99 v . CITY CLERK File # ~[2]f?5l-[3][Q AGENDA STATEMENT CITY COUNCIL MEETING DATE: (January 19,1999) SUBJECT: City Treasurer's Investment Report For 2nd Quarter 1998/99 ~ Report Prepared by: Paul S. Rankin, Assistant City Manager Quarterly Investment Report (December 31, 1998) Section I - Primary Investment Portfolio Section IT - Listing of Supplemental Monies Under City /"'I . _r/ Possession and/or Control (~ Receive Report EXHIBITS A TT ACHED: RECOMMENDATION: DESCRIPTION: The attached Investment Report details the City's investments as of December 31, 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 second quarter of Fiscal Year 1998/99 are discussed in the staff report below. . INVESTMENT ACTIVITY IN SECOND QUARTER FISCAL YEAR 1998/99 During the Second Quarter maturing investments totaled $4,698,000 and consisted of five federal securities and two certificates of deposit. The large amount of maturing investments at this time related to the City establishing a portfolio, with funds maturing in close proximity to the call of the 1993 Outstanding Certificates of Participation. In addition, four federal securities in the amount of $3,400,000 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 SEPTEMBER - DECEMBER 1998 ORIGINAL CALL INTEREST TYPE AMOUNT MATURITY DATE RATE Matured Federal Securities FNMA $1,000,000 10/15/98 N/A 4.875% U.S. Treasury Note $1,000,000 10/31/98 N/A 5.101 % FHLB $1,000,000 11/3/98 N/A 5.110% FNMA $1,000,000 12/10/98 N/A 5.311% SLMA $500,000 12/18/99 N/A 5.800% Matured Certificates of Deposit Home Savings of America $99,000 10/1/98 N/A 5.600% Glendale Federal Bank/Cal Fed $99,000 12/9/98 N/A 5.600% . I ITEM NO. 4.,1 COPIES TO: INVESTMENTS WHICH WERE CALLED SEPTEMBER - DECEMBER 1998 ORIGINAL CALL INTEREST MATURITY DATE RATE 2/12/99 10/28/98 5.550% 5/26/00 11/4/98 6.000% 10/20/00 10/20/98 6.250% 10/20/00 10/20/98 6.240% TYPE AMOUNT $400,000 $1,000,000 $1,000,000 $1,000,000 FNMA FHLB FHLB FHLB , . NEW SHORT-TERM MONEY MARKET INVESTMENT FUND During the last quarter, the City reached the $30 million maximum amount allowed for investments by a governmental entity at Local Agency Investment Fund (LAIF) operated by the State Treasurer's Office. In order to have a short term investment available Staff established a money market investment with Bank of America. The account is operated by Pacific Horizon Funds, which are managed by Bank of America. This account is an efficient short term investment vehicle, which will assist Staff in managing fluctuations in cash flow while improving the interest received. As a money market investment, the Pacific Horizons investment strives to achieve a constant share price of $1.00. The fund maintains an average maturity of 90 days and does not invest in securities with maturities of more than 13 months. All of the investments held by the fund are securities issued by the U.S. Government and its authorized agencies. This form of investment is authorized under the City's current investment policy. This short-term investment is substantially different than the Morgan Stanley Mutual Fund investment, which holds longer term investments and does not have a goal of retaining a constant share price. The monthly rate of return for this investment was 4.840% as of December 31, 1998. The City also purchased two additional federal securities with the terms summarized below: . INVESTMENTS PURCHASED SECOND QUARTER FISCAL YEAR 1998/99 CALL INTEREST DATE RATE TYPE Federal Securities FHLB FHLB AMOUNT $1,000,000 $1,000,000 MATURITY 6/28/2002 12/29/2000 9/28/99 6/29/99 5.435% 5.100% 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. Although the purchase of the second investment was dated December 29, 1998 and the purchase was ordered in December, due to holiday schedules the trade actually settled on January 4, 1999. In the previous quarterly report the average maturity of all Government and Agency Securities was approximately 1.16 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 1.55 years as new federal securities were purchased. . . . . DET AILED LISTING OF PRIMARY PORTFOLIO Government and Agency Securities represent approximately 20% 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 December 31, 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. 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 3.7% 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 two quarters of the 1998-99 Fiscal Year the City received nearly $49,524 in dividends from this investment, resulting in an annualized yield of approximately 6.055%. The market value of this investment fluctuates on a daily basis and as of December 31, 1998 was approximately $14,348 more than the recorded 6/30/98 market value. The mutual fund may be redeemed without sales charges beginning in October of1999. 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. To provide an overview of the portfolio, the table shown below breaks out the total investment balance as of December 31, 1998 by source. 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 12/31/98 Balance $30,278,508 General Fund % Total 68.2% Restricted - Special Revenue Funds (I.e. Gas Tax, Special Taxes: EMS, Measure B.) $2,354,783 5.3% Restricted - Assessment District Funds (I.e. Landscape Maint & Debt Service.) $450,804 1.0% Restricted - Impact Fees $10,624,260 23.9% Internal Service / Replacement Funds TOTAL $664,520 $44,372,875 1.5% 100.0% As previously discussed the General Fund also includes funds anticipated to be used for calling all outstanding COP's on February 1, 1999. Approximately 30% of the funds are held for restricted uses. This percentage will increase once General Fund monies are expended on the COP pay-off. . CHANGES IN THE TOTAL PORTFOLIO YIELD FROM THE PREVIOUS REPORT The total amount shown as invested in the Primary Investment Portfolio is nearly $5,008,115 more than the amount shown at September 30, 1998. The amount invested in Federal Securities and Certificates of Deposit decreased by approximately $7,091,885, while the City's combined investment in liquid investments including both the Local Agency Investment Fund (LAIF) and Pacific Horizons increased by $12,100,000. The increase reflects the receipt of sales and property tax revenues, impact fee deposits and other development related revenue during the quarter. This also reflects the fact that the portfolio was structured to provide maturities in close proximity to the need for general fund monies to be used to call all outstanding COPs. Overall, the combined rate for the total portfolio decreased slightly from 5.691 % at September 30, 1998 to 5.513% at December 31, 1998. The decrease was attributable to the maturity and call of several 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 LAIF investment was 5.475% as of December 31,1998, which was lower than the 5.649% rate recorded for the quarter ending September 30, 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 decrease significantly during the next quarter with 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. . . c :. . . CITY OF DUBLIN QUARTERLY INVESTMENT REPORT SECTION I PRIMARY INVESTMENT PORTFOLIO . CITY OF DUBLIN DETAILED LISTING OF INVESTMENTS INCLUDING RATE OF RETURN AS OF DECEMBER 31,1998 INVESTMENT MATURITY DATE VALUE AT MATURITY COUPON INTEREST RATE YIELD BOOK VALUE MARKET VALUE (') FEDERAL SECURITIES FHLB (Callable 1/12/95) 1/11/99 2,000,000.00 5.460% 5.460% 1,999,380.00 2,000,000.00 FNMA (No Call Date) 4/11/99 1,000,000.00 6.430% 6.460% 1,005,780.00 1,003,440.00 FHLB (Callable 4/6/99) 4/6/00 1,000,000.00 5.750% 5.750% 997,190.00 1,001,560.00 FNMA (Callable 11/8/99) 11/8/00 1,000,000.00 6.220% 6.220% 1,003,750.00 1,009,840.00 FHLB (Callable 6/29/99) 12/29/00 1,000,000.00 5.100% 5.100% 1,000,000.00 1,000,000.00 FHLB (Callable 1/29/99) 1/29/01 1,500,000.00 5.630% 5.710% 1,489,920.00 1,498,590.00 FHLB (Callable 3/12/99) 3/12/01 1,000,000.00 5.750% 5.750% 996,090.00 1,000,940.00 FHLB (Callable 6/29/99) 6/29/01 500,000.00 6.250% 6.250% 501,015.00 502,500.00 FHLB (Callable 9/28/99) 6/28/02 1,000,000.00 5.435% 5.435% 1,000,000.00 996,560.00 TOTAL FEDERAL SECURITIES $10,000,000.00 5.223% $9,993,125.00 $10,013,430.00 CERTIFICATES OF DEPOSIT - FDIC INSURED First Republic Trust & Loan 3/7/2000 95,000.00 5.500% 5.500% 95,000.00 Sanwa Bank 12/9/99 99,000.00 5.600% 5.600% 99,000.00 TOTAL CERTIFICATES OF DEPOSIT $194,000.00 5.551% $194,000.00 MUTUAL FUNDS B of A Pacific Horizons Money Market 2,550,000.00 4.840% $2,550,000.00 $2.550,000.00 Government Fund Morgan Stanley Dean Witter U.S. Govt Securities See Note I 6.055% (2) $1,635,749.56 $1,650,098.24 POOLED PUBLIC AGENCY INVESTMENTS State of CA.- Local Agency Investment Fund (LAIF) $30,000,000.00 5.475% (3) $30,000,000.00 $30,000,000.00 TOTAL INVESTED PORTFOLIO 5.403% $44,372,874.56 544,407,528.24 NOTES: (I) 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 ofa 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 I, 1999 and the remainder through October 1, 1999 to avoid any deferred sales charge. (Original purchase cost was $1,699,995). 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 quarterly average as of December 31, 1998. (4) Market Value shown for the Federal Securities is as of December 31, 1998. . EXHIBIT 1 . CITY OF DUBLIN SUMMARY OF INVESTMENT PORTFOLIO COMPARISON BY INVESTMENT TYPE AS OF DECEMBER 31, 1998 MARKET %OF MATURITY TYPE OF INSTRUMENT FACE VALUE BOOK VALUE VALUE PORTFOLIO YEARS Federal Home Loan Bank (FHLB) 8,000,000.00 7,983,595.00 8,000,150.00 80.0% 1.62 Federal National Mortgage Assn (FNMA) 2,000,000.00 2,009,530.00 2,013,280.00 20.0% 1.07 SUB -TOTAL GOVT/AGENCY 10,000,000.00 9,993,125.00 10,013,430,00 (1) 22.5% 1.55 Certificates of Deposit - FDIC Insured 194,000.00 194,000.00 194,000.00 0.4% 1.06 Mutual Funds - Morgan Stanley Dean Witter U.S. Govt Securities (4) 1,635,749.56 1,635,749.56 1,650,098.24 (2) 3.7% 5(3) B of A Pacific Horizons Money Market . Government Fund 2,550,000.00 2,550,000.00 2,550,000.00 5.7% N/A LAIF 30,000,000.00 30,000,000.00 30,000,000.00 73.4% N/A GRAND TOTAL $44,379,749.56 $44,372,874.56 $44,407,528.24 100.0% NOTES: (1) The City intends to hold the investments until maturity or until market values equal or exceed their face value. Market Value shown is as of October 31,1998. (2) Market value is based upon the shares invested at share price as of December 31,1998. If the 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 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 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 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 December 31,1998 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 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 IMPORT ANT TO NOTE THAT THIS AMOUNT MA Y 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 12/31/98 Non-Cateeorized - 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 12/31/98 Annualized Rate of Interest BANK OF AMERICA- Collateralized Public Money Deposits In Accordance With California Government Code $111,226.51 See Note 1 Cal Fed- Regular Savings Account: FDIC Insured $ 1,999.52 2.00% Grand Total Amount Cash Balances: $113.226.03 Note 1: The City operating account is a cOIporate 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. All interest earnings in excess of account charges are paid to the City on a monthly basis. . v:l fil fil ~ v:l S ~ ;;.. == Q ...:l fil == v:l Q Z :;J ~ ~ ..... 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