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04/16/2019 06D 2019 1st Quarter Treasury ReportITEM TITLE: SUBMITTED BY: BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEM ENT 1 Item No. 6.D. For Meeting of: April 16, 2019 2019 1st Quarter Treasury Report Steve Groom, Director of Finance & Budget SUMMARY EXPLANATION: The Treasury Report for the first quarter of 2019 is attached and consists of the following: 1. First Quarter Treasurer's Report Cash and Investments Longterm Debt I nterfund Borrowings 2. Monthly Transactions summary Investment Committee Review ITEM BUDGETED: NA STRATEGIC PRIORITY: Public Trust and Accountability APPROVED FOR SUBMITTAL: City Manager STAFF RECOMMENDATION: Accept report. BOARD/COMMITTEE RECOMMENDATION: ATTACHMENTS: Description Upload Date D Q1 2019 Treasury Report 4/3/2019 0 Q1 2019 Investment Transactions Summary 4/3/2019 Type Cover Memo Cover Memo 2 Date: April 2, 2019 To: Mayor and City Council Cliff Moore, City Manager From: Steve Groom, Finance Director Jennifer Morris, Financial Services Officer Re: 2019 — 1st Quarter Treasury Report The City's investment activities are governed by State regulations and the City of Yakima's Investment Policy. The city's updated investment policy was updated and approved by City Council on March 5, 2019. All investments are in full compliance with the City's Investment Policy, State Statues and City Municipal Code. The City of Yakima holds between $70 million and $93 million in cash and investments, varying seasonally. Total Cash and Investments at Quarter -end total $89.7 million: $10.6 million in depository banks, $26.4 million in the State Pool, and $52.6 million invested. The City's Investment Portfolio Calls or Maturities. During last quarter no investments matured. Increasingly, replacing larger pieces with increments of $1,000,000 per maturity date will begin to smooth out reinvestment risk resulting in one maturity per month. Divestitures. During last quarter, one security was sold (to increase safety by reducing the large % of one issuer replacing with 5 issuers in $1M pieces, to increase liquidity by replacing a zero- coupon security with more traditional coupon bonds, and to increase diversification by maturity date and reduce the interest rate risk of having $7M mature in one month): • $5,248,000 RFCSP (1.574% yield) maturity July 15, 2020 Purchases. The City's Investment Portfolio increased by the following purchases: • $1,000,000 FHLB (2.15% yield) to mature February 27, 2020 • $1,000,000 USB (2.723% yield) to mature January 24, 2022 • $1,000,000 MSFT (2.575% yield) to mature February 26, 2022 • $1,000,000 FHLMC (2.72% yield) to mature March 27, 2023 • $1,000,000 WMT (2.730% yield) to mature June 26, 2023 • $1,000,000 FHLMC (2.700% yield) to mature March 2024 Execution of each investment transaction contemplated ongoing cash flows from city operations, debt obligations, liquid and maturing securities, and contingencies to meet the City's future cash flow requirements. 3 FINANCE The City's Investment Portfolio consists of three general tiers which coincide with the primary considerations of prudent investing: 1) The Safety portion of the Portfolio consists of funds invested in the Local Government Investment Pool (LGIP, or State Pool) managed by the State Treasurer, available same- day. This allows for seasonal fluctuations, primarily the April/October inflows of Property Tax and the outflows of debt service and capital projects. 2) The Liquidity portion of the Portfolio consist of demand deposit (essentially checking) accounts at banks which are qualified public depositaries, protected above FDIC -insured balances through the actions of the Washington State Public Deposit Protection Commission (PDPC). Depository account levels continue to be maintained at adequate levels to ensure availability. 3) The Yield portion of the Portfolio consists of a diversified portfolio of Agencies, Treasuries and/or other authorized investments with staggered maturities of up to five years. Based on analysis of historical cash reserves and budgetary planning, this segment will not be subject to seasonal spending and continues to be safely invested long-term. Current Rates. As of March 31, 2019, the yield curve is slightly inverted, due to market uncertainty; the difference between the 1 -month Treasury at 2.43% and the 5 -year Treasury at 2.31 % is a mere 8 basis points. The 30 -day yield of the State Pool was at 2.499%. Economic Outlook. The Federal Reserve has raised the rate 25 basis points four times since late 2015. In 2018 the Feds raised the rate 4 times to 2.25%, the highest it has been since October of 2008, but has since signaled there will be no further rate increases during 2019. As of this printing, the bond market has been experiencing a slight erosion of rates. Strategy Notes. The City of Yakima's investments are not typically actively traded, meaning that no attempt to "buy low and sell high" or "time the market" is made. Investments purchased with the intent of providing investment income are intended to be held to maturity, relying on following a prudent course of action for income rather than predicting market direction. Debt Activit All debt payments were paid out as scheduled. A comprehensive city-wide debt report is part of the annual Budget document and is available online for clarity and transparency. Interfund Borrowings and Investments Ordinance 2013-011, authorizes the Director of Finance and Budget to execute temporary interfund loans to be subsequently reviewed and approved by Council Resolution. Public Safety Communications, Fund 151. Currently the fund is making interest -only payments, the principal payment of $150,000 was made in 2018. The Millsite Project, Fund 323. Interest payments will be made until such time as financing is secured or the loan is otherwise repaid. 2 City of Yakima Cash and Investment Summary March 31, 2019 Description Cash Balances on Hand in Banks Local Government Investment Pool (LGIP) Investment Portfolio Other Investments Total Investments Total Cash and Investments Current 3/31/2019 $ 10,628,760 26,428,425 52,602,000 Prior Quarter 12/31/2018 $ 9,297,534 $ 32,751,940 50,544,848 Prior Year 3/31/2018 13,566,399 7,221,253 51,348,000 458,247 79,030,425 83,296,788 59,027,500 $ 89,659,185 $ 92,594,322 $ 72,593,899 Summary of Investment Activity Beg Balance 12/31/2018 Purchases & Deposits Interest Reinvested Maturities, Calls & Withdrawals End Balance 3/31/2019 Local Government Investment Pool (LGIP) Investment Portfolio Other Investments $ 32,751,940 51,850,000 $ - $ 6,000,000 176,485 $ (6,500,000) (5,248,000) $ 26,428,425 52,602,000 Total Investments $ 84,601,940 $ 6,000,000 $ 176,485 $ (11,748,000) $ 79,030,425 Page 1 of 8 TSO Q1 2019 City of Yakima Distribution of Cash and Investments as of 3/31/2019 Investment Portfolio, 50,544,848 , 54% Page 2 of 8 Depository Banks, $10,628,760 , 11% Local Government Investment Pool, $32,751,940 , 35% City of Yakima Investment Portfolio - Inventory by Agency March 31, 2019 Expected Days to Call Agency Inv# CUSIP Face Value Price Coupon Yield Settle Maturity Maturity Market Type Moodys S&P Fitch FFCB 1489 3133EGAW5 3,000,000 2,996,247 1.250 1.290 6/3/16 8/19/19 141 2,987,175 Amer Aaa AA+ AAA FICO 1485 31771KAA5 2,119,000 1,999,702 1.460 1.460 10/2/15 9/26/19 179 2,092,743 NC Aaa AA+ AA+ RFCSP 1503 76116FAA5 3,139,000 3,037,265 1.990 1.990 02/14/18 10/15/19 198 3,096,928 NC Aaa AA+ AAA RFCSP 1505 76116FAA5 2,160,000 2,099,535 2.479 2.479 08/17/18 10/15/19 198 2,131,050 NC Aaa AA+ AAA FHLB 1506 3130AA3R7 1,000,000 988,149 1.375 2.680 12/10/18 11/15/19 229 993,714 Amer Aaa AA+ AA+ FHLB 1511 3130ADMS8 1,000,000 996,400 2.150 2.545 3/11/19 2/14/20 320 997,120 Qtry Aaa AA+ AA+ FNMA 1488 3136G3QK4 3,000,000 2,999,970 1.500 1.500 6/3/16 5/22/20 418 2,969,433 Qrty Aaa AA+ AAA FNMA 1494 3136G4GK3 2,010,000 1,995,172 1.350 1.560 12/14/16 7/28/20 485 1,984,459 Qrty Aaa AA+ AAA RFCSP 1493 76116FAE7 3,203,000 2,999,859 1.716 1.716 12/14/16 10/15/20 564 3,088,121 NC Aaa AA+ AAA RFCSP 1502 76116FAE7 2,122,000 1,999,174 2.250 2.250 02/14/18 10/15/20 564 2,045,892 NC Aaa AA+ AAA RFCSP 1495 76116FAG2 2,137,000 1,995,637 1.821 1.821 04/06/17 1/15/21 656 2,046,560 NC Aaa AA+ AAA RFCSP 1499 76116FAG2 1,000,000 945,156 1.730 1.730 10/06/17 1/15/21 656 957,679 NC Aaa AA+ AAA RFCSP 1500 76116FAG2 2,667,000 2,499,062 2.200 2.200 01/25/18 1/15/21 656 2,554,130 NC Aaa AA+ AAA FFCB 1496 3133EGRN7 2,015,000 1,994,713 1.470 1.740 4/6/17 2/17/21 689 1,984,382 1C -NC Aaa AA+ AAA FNMA 1490 3136G3SJ5 2,000,000 1,995,048 1.500 1.552 6/30/16 6/30/21 822 1,967,142 Qrty Aaa AA+ AAA FNMA 1501 3136G4RD7 1,000,000 997,351 2.300 2.380 2/14/18 7/30/21 852 999,972 Qrty Aaa AA+ AAA FHLB 1492 3130A9Z61 2,030,000 1,994,020 1.500 1.880 12/14/16 11/9/21 954 1,985,575 Amer Aaa AA+ AA+ FNMA 1491 3136G3SW6 2,000,000 1,997,896 1.500 1.520 6/30/16 12/30/21 1,005 1,959,800 Qrty Aaa AA+ AAA USB 1515 91159HHP8 1,000,000 997,300 2.625 2.723 3/18/19 1/24/22 1,030 1,001,234 1C -NC Al A+ AA - MSFT 1512 594918BW3 1,000,000 996,920 2.400 2.575 3/15/19 2/6/22 1,043 1,000,055 NC Aaa AAA AA+ FFCB 1498 3133EHYQ0 3,000,000 2,993,640 1.950 2.000 10/6/17 3/14/22 1,079 2,974,251 Amer Aaa AA+ AAA FHLB 1509 313383WD9 1,000,000 1,013,146 3.125 2.750 12/19/18 9/9/22 1,258 1,028,645 Amer Aaa AA+ AA+ FHLMC 1510 3134GS6F7 1,000,000 1,000,000 2.720 2.720 3/27/19 3/27/23 1,457 1,002,058 1C -NC Aaa AA+ AAA FFCB 1504 3133EJKK4 4,000,000 3,990,400 2.970 3.023 6/14/18 4/10/23 1,471 4,000,372 Amer Aaa AA+ AAA WMT 1513 931142EK5 1,000,000 1,026,800 3.400 2.730 3/15/19 6/26/23 1,548 1,032,206 NC Aa2 AA AA FAMCA 1508 3132X0600 1,000,000 1,010,972 3.050 2.801 12/19/18 9/19/23 1,633 1,030,479 NC Aaa AA+ AAA FHLB 1507 3130AFK87 1,000,000 1,003,225 3.100 2.933 12/28/18 12/28/23 1,733 1,008,773 Amer Aaa AA+ AA+ FHLMC 1514 3134GS6W0 1,000,000 1,000,000 2.700 2.700 3/27/19 3/27/24 1,823 1,002,100 1C -NC Aaa AA+ AAA Subtotal 52,602,000 51,562,761 51,922,049 LGIP LGIP NA 26,428,425 26,428,425 2.499 2.499 NA NA 1 26,428,425 NC (Grand Totals $79,030,425 $77,991,186 2.18% 505 $78,350,474 Page 3 of 8 TSO Q1 2019 City of Yakima Investment Portfolio by Issuer at 3/31/2019 FNMA, 10,010,000, 13% FFCB, 12,015,000, 15% Page 4 of 8 FHLB, 6,030,000,8% FICO, 2,119,000, 3% FHLMC, 2,000,000, 3% FAMCA, 1,000,000, 1% MSFT, 1,000,000, 1% USB, 1,000,000, 1% WMT, 1,000,000, 1% RFCSP, 16,428,000, 21% LGIP, 26,428,425, 33% $6,000,000 5,000,000 $4,000,000 $3,000,000 $2,000,000 1,000,000 s0 City of Yakima Investment Portfolio Maturity Distribution m m of of 0 of m 0 0 0 0 0 0 N N (V fV N N (V (V fV N tip V S1 C 04 G 40 C 04 V _p w q d 0 0) W ¢ 0 0) LL q 0 o u (v (V N N N 00 00 m N (V W N N N (V fV M 40 as (0 (0 r t N N N fV 0 n 4 Page 5 of 8 9 City of Yakima Investment Portfolio - Detail of Activity March 31, 2019 Agency Inv# Beginning Additions and Calls and Ending Face Value Purchases Maturities Face Value Farmer Mac FAMCA 1508 1,000,000 1,000,000 FAMCA Total 1,000,000 1,000,000 Federal Farm Credit Bureau FFCB FFCB FFCB FFCB 1489 1496 1498 1504 3,000,000 2,015,000 3,000,000 4,000,000 3,000,000 2,015,000 3,000,000 4,000,000 FFCB Total 12, 015, 000 12, 015, 000 Federal Home Loan Bank FHLB 1492 FHLB FHLB FHLB FHLB 1506 1507 1509 1511 2,030,000 1,000,000 1,000,000 1,000,000 1,000,000 2,030,000 1,000,000 1,000,000 1,000,000 1,000,000 FHLB Total 5,030,000 Resolution Funding Corporation RFCSP 1493 3,203,000 RFCSP 1495 2,137,000 RFCSP 1497 5,248,000 RFCSP 1499 1,000,000 RFCSP 1500 2,667,000 RFCSP 1502 2,122,000 RFCSP 1503 3,139,000 RFCSP 1505 2,160,000 1,000,000 6,030,000 (5,248,000) 3,203,000 2,137, 000 1,000,000 2,667,000 2,122, 000 3,139, 000 2,160, 000 RFCSP Total 21,676,000 (5,248,000) 16,428,000 Federal Home Loan Mortgage Corporation FHLMC 1510 FHLMC 1514 1,000,000 1,000,000 1,000,000 1,000,000 FHLMC Total Federal National Management Association FNMA 1488 3.000.000 2,000,000 2,000,000 FN MA FN MA FN MA FN MA 1490 2,000,000 1491 2,000,000 1494 2,010,000 1501 1,000,000 3,000,000 2,000,000 2,000,000 2,010,000 1,000,000 FNMA Total 10, 010, 000 10, 010, 000 Financing Corporation FICO 1485 2,119,000 2,119, 000 FICO Total 2,119, 000 2,119, 000 Corporate Notes MSFT 1512 WMT 1513 USB 1514 FICO Total Subtotal 51, 850, 000 Other Investments LGIP (State Pool) LGIP 32,751,940 1,000,000 1,000,000 1,000,000 3,000,000 6,000,000 (5,248,000) 1,000,000 1,000,000 1,000,000 3,000,000 52, 602, 000 176,485 (6,500,000) 26,428,425 Other Investment Totals 32, 751, 940 176,485 (6,500,000) 26,428,425 Grand Totals $ 84,601,940 $ 6,176,485 $ (11,748,000) $ 79,030,425 Page 6 of 8 TSO Q1 2019 City of Yakima Bonded Debt Schedule - by Project Group March 31, 2019 Date Issued Maturity Description Note Amount of Issue Current Balance General Obligation Bonds 9/7/2004 11/1/2019 5/8/2007 5/1/2026 8/28/2009 12/1/2018 8/28/2009 12/1/2032 6/17/2003 12/1/2023 8/28/2008 12/1/2021 5/8/2007 5/1/2022 8/28/2008 12/1/2019 5/8/2007 5/1/2022 6/20/2013 6/20/2028 6/9/2014 6/1/2024 6/17/2014 12/1/2034 12/22/2015 12/1/2035 9/24/2018 12/1/2035 9/24/2018 7/1/2035 PFD Convention Center II PFD Convention Center III PFD Capitol Theatre PFD Capitol Theatre Sundome Expansion Fire Apparatus Fire Station Infrastructure Projects Downtown Futures Street Project Demonstration (Refunded) Street Resurfacing Project Comm Center Move Soccer Complex Soccer Complex (Refunded) 2018 Aquatic Center YMCA Refunded 1996 issue Partial refunding of 2002 issue Tax exempt portion Build America Bonds (Taxable) Deferred Interest -Maturity $2.5M Ladder Truck Remodel Facility Ped crossing, street, infrastructure Renovate downtown improvements Various City street improvements Streets improvements City portion of County GO Bonds City portion of SOZO Sports Complex City portion of SOZO Sports Complex City portion of Aquatic Center $ 4,175,000 $ 4,910,000 2,055,000 4,980,000 1,430,528 760,000 815,000 2,190,000 1,490,000 3,500,000 13,140,000 1,716,500 5,000,000 4,440,127 8,009,873 335,000 3,110,000 4,980,000 317,934 205,000 270,000 230,000 490,000 3,351,672 8,640,000 1,465,000 4,440,127 8,009,873 Subtotal General Obligation Bonds $ 58,612,028 $ 35,844,606 Certificate of Participation - State of Washington 8/22/2013 8/22/2013 6/1/2011 3/19/2013 9/28/2017 6/1/2019 6/1/2019 12/1/2020 7/1/2023 6/1/2027 Police Vehicles Fire Air Packs Fire Apparatus Fire Apparatus Energy Project 74 Take-home vehicles 70 Air Packs Two trucks purchased One truck LED Street Lighting $ 4,173,190 $ 459,602 576,847 310,414 2,189,736 769,792 84,779 131,948 173,521 2,052,534 Subtotal Certificates of Participation $ 7,709,790 $ 3,212,575 Revenue Bonds 5/31/2012 6/5/2008 6/5/2008 9/4/2004 11/1/2023 Wastewater 11/1/2027 Wastewater 11/1/2018 Water 9/1/2034 Irrigation Refunded 2003 $10,155,000 issue Refunded 1998 issue $ 9,400,000 $ 5,440,000 1,883,951 5,215,000 5,185,000 3,070,000 220,000 3,530,000 Subtotal Revenue Bonds $ 21,938,951 $ 12,005,000 Grand Total $ 88,260,769 $ 51,062,181 Page 7 of 8 TSO Q1 2019 City of Yakima Interfund Borrowing March 31, 2019 Original Beginning Ending Description Balance Balance Issued Retired Balance Local Improvement District Bonds/Notes $ 1,432,509 $ 99,643 $ Fund 153 - Public Safety Communications Fund 332 - Fire Capital Fund 323 - Millsite Project 450,000 300,000 640,000 500,000 - $ 15,833 $ 83,810 Equipment Rental Reserve 300,000 Equipment Rental Reserve - General Fund 500,000 REET Fund 151 - Public Safety Communications - Interfund Loan The Public Safety Communications Fund borrowed from the Equipment Replacement and Reserve Fund to provide working capital while they recover from the excess cash outflow caused by the move to the new Communications Center last year. In 2018 a payment of $150,000 principal payment was made leaving a balance of $300.000. Fund 332 - Fire Capital The Fire Capital fund borrowed $640,000 cash at the end of 2016 from Equipment Rental to finance the down payment on two fire apparatus that were under construction. The Fire Department took delivery of the apparatus and final payment was made in August 2017. The first loan was refinanced through the General Fund in January and a second loan of $460,000 was added in August, then extinguished in December 2018 by the General Fund. Fund 323 - Millsite (LIFT) The Millsite project borrowed $500,000 from REET until such time as official financing can be secured. At that time the loan from REET will be repaid. A Statement of Official Intent for the reimbursement has been executed to meet bond requirements. Page 8 of 8 TSO Q1 2019 12 DATE: April 3, 2019 TO: Mayor and City Council Cliff Moore, City Manager FROM: Steve Groom, Finance Director RE: March 2019 Investment Transactions This monthly report of all investment transactions to the city legislative authority complies with RCW 35.39.032 ("The responsible official or committee shall make a monthly report of all investment transactions to the city legislative authority"). There were no Investment Transactions during the month of January or February. The investment transactions for the month of March were: Divestiture: • $5,248,000 RFCSP (1.574% yield) sold on March 13, 2019 Purchases: • $1,000,000 FHLB (2.545% yield) to mature February 27, 2020 • $1,000,000 Microsoft (2.511 % yield) to mature February 6, 2022 • $1,000,000 USBancorp (2.723% yield) to mature January 24, 2022 • $1,000,000 FHLMC (2.720% yield) to mature March 27, 2023 • $1,000,000 Walmart (2.732% yield) to mature June 26, 2023 • $1,000,000 FHLMC (2.70% yield) to mature March 27, 2024 What these six investments accomplished: 1. Reduced our re -investment risk by splitting up two large maturities of $6 million and $5.2 million into six $1 million maturity dates, 2. Improved our average yield, re -investing the funds that previously earned 1.57% into investments that yield 2.51 % - 2.73%, and 3. Improved our diversification both by issuer and by maturity dates. The summary page from the Investment Committee review of each transaction is attached. Each investments is in full compliance with the City's Investment Policy, State Statues and City Municipal Code. Each transaction considered ongoing cash flows from city operations, debt obligations, liquid and maturing securities, and contingencies to meet the City's future cash flow requirements. 13 Alio °sok 51,000.000 Watm a r t . 51.004J.ON 05.Bdricorp, 51,000,000 FAMCA. $1.000.0(10 FHI $2.000.0(X: ['ICC) Srp, 52.119,000 3?4, Pit , $6,ilt(1„000 , FNMA , $10,(11(1,00n r-gt WilVICK) 16% REECORP , 516,428.000 . 21% City of Ya<ima I)*t*t c. kti:t.,:•.ty tearo ano Arr.o,nt,, City of Ya<ima Diversification by Issuer i(2IP 524,:19/,b19 327, 14 FINANCE Date: March 8, 2019 Committee Review of Investment Rationale Investment # 20194510 is a 4 -year Federal Home Loan Mortgage Corp (Freddie Mac or FHLMC) Agency new issue, S&P AA+, Fitch AAA, face value $1,000,000, maturity date Mar 27, 2023, 2.720% coupon purchased at 100.00 to yield 2.720%. This trade settles March 27, 2019 with Great Pacific Securities, US Bank Safekeeping. This investment is part of the replacement of a $3,192,000 1.41% FICO medium term note that matured December 27, 2018. Liquidity: current Key Bank checking account balance is $4,238,770, target balance is $3 Million. Current invested yield segment of portfolio is $51,850,000; target balance of portfolio is $60,000,000 for Treasuries and Agencies. Current LGIP available balance is $24,793,757; target minimum is $3,000,000. Safety: This purchase is a debt issue of FHLMC, one of the Federal Government - Sponsored Enterprises (GSEs, commonly referred to as "Agencies”). Yield. Yield is 2.72%. This investment improves yield by 131 basis points over the investment it replaces and by 23 basis points over LGIP. Comparab e yields are: LG IP current 30 -day yield 3 -yr. FFCB noncall (bullet) 5 -yr. FFCB 1 x cafl 3- and 5 -year Treasury 2.4898% 2.5500()/0 2.8000°k 2,4900% www.secureaccess.wa.m Broker list Broker list www.treasury.gov The yield curve is currently extremely flat, with very little spread between 1 -year and 5 - year rates. The FOMC has signaled a willingness to slow on three rate increases expected for 2019 so rates are extremely uncertain at present. However, there is both very low unemployment and low inflation suggesting recession is unlikely. Callability. This is a one-time callable investment (3/27/2020). Diversification. This is the only piece held by this issuer and is 1.9% of total portfolio. This purchase adds a maturity date previously not covered to city's laddered portfolio. investment Committee review: Finance Director: City Manager: Date Date 15 •FINANCE Comm Date: March 8, 2019 ittee Review of Investment Rationale Investment # 2019-1511 is al -year Federal Home Loan Bank (FHLB) Agency new issue, S&P AA+, Moody's Aaa, face value $1,000,000, maturity date Feb 27, 2020, 2.160% coupon purchased at 99.64 to yield 2.645%. This trade settles March 11, 2019 with Great Pacific Securities, US Bank Safekeeping. This investment is part of the replacement of a $3,192,000 1.41% FICO medium term note that matured December 27, 2018. Liquidity: current Key Bank checking account balance is $4,238,770, target balance is $3 Million. Current invested yield segment of portfolio is $52,850,000, target balance of portfolio is $60,000,000 for Treasuries arid Agencies. Current LGIP available balance is $24,793,757; target minimum is $3,000,000. Safety; This purchase is a debt issue of FHLB, one of the Federal Government - Sponsored Enterprises ((:3SEs, commonly referred to as "'Agencies"). Yield. Yield is n459/6 This investment improves yield by 113 basis points over the investment it replaces and by 6 basis points over LGIP. Comparable yields are: EGIP current 30 -day yield 3 -yr. FFCB nonce!' (bullet) 5 -yr. FFCB 1 x call 3- and 5 -year Treasury 2A898% .secureacc,ess.wa. ,o'v 2.5500% Broker list 2.8000% Broker list 2.4900% reasury.gov The yield curve is currently extrerriely flat, with very little spread between 1 -year and 5 - year rates. The FOMC has signaled a willingness to slow on three rate increases expected for 2019 so rates are extremely uncertain at present. However, there is both very low unemployment and low inflation suggesting recession is unlikely. Callability. This is a quarterly callable investment (5/14, 5114, 8/14, 11/14). Diversification. This is purchase brings this issuer to 11.2% of total portfolio. This purchase adds a maturity date previously not covered to city's laddered portfolio. investment Committee review: Finance Director: City Manager: Date Date 16 16 FINANCE Committee Review of Divestment Rationale Date: March 12, 2019 Investment # 1497 is a 3 -year Resolution Funding Corp (RFCSP) Agency face value $5,248,000, maturity date July 15, 2020, purchased June 2017 to yield 1.548%. This position is being divested to: 1) Increase Safety by reducing the city's 40% holding in one issuer to 34% 2) Increase Diversification by maturity date by reducing a $7M spike maturing 7/2020, a large bet on reinvestment he 3) Increase Diversification by issuer by replacing with 5 different maturities 4) Increase Liquidity by replacing this zero-coupon investment with securities that receive bi-monthly coupon payments. 6) Increase Yield by allowing reinvestment at current market rates increasing yield by 1% or more in an environment that will allow reinvestment at 2.50-2:70% LGIP current 30 -day yield FFCB rioncall (bullet) 5 -yr. FFCB 1 x call 3- and 5 -year Treasury 24898% . 0 2.5500 /0 2 A900% investment Committee review: Finance Director: City Manager: www.secureaccess.wa.ggy Broker list Broker list .treasury.gov Date Date ,17 17 FINANCE Committee Review of Investment Rationale Date: March 13, 2019 Investment # 2019-1512 is a 3 -year Microsoft (MSFT) Corporate, AAA/Aaa/AA+, face value $1,000,000, maturity date Feb 6, 2022, 2.400% coupon purchased on the secondary market at 99.692 to yield 2.511%. This trade settles March 15, 2019 with Great Pacific Securities, US Bank Safekeeping. This investment is part of the replacement of a $5,248,000 1.31°/o Resolution Funding Corp medium term note divested March 13, 2019. Liquidity: current Key Bank checking account balance is $5,395,711, target balance is $3 Million. US Bank checking balance is $7,516,950. Current invested yield segment of portfolio is $52,850,000; target balance of portfolio is $60,000,000 for Treasuries and Agencies. Current LGIP available balance is $24,793,757; target minimum is $3,000,000. Safety: This debt issue of Microsoft Corp is rated AAA/Aaa/AA+. Yield. Yield is 2.511%. This investment improves yield by 120 basis points over the investment it replaces and by 2 basis points over LGIP. Comparable yields are: LGIP current 30 -day yield 3 -yr. FAMCA nc (bullet) 5 -yr. FHLMC 1 x call 3- and 5 -year Treasury 2.4894% 2.4760% 2.7000% 2.4900% www.secureaccess.wa.gov Broker list Broker list www.treasury.gov The yield curve is currently extremely flat, with very little spread between 1 -year and 5 - year rates. The FOMC has signaled a willingness to slow on three rate increases expected for 2019 so rates are extremely uncertain at present. However, there is both very low unemployment and low inflation suggesting recession is unlikely. Caliability. This is a noncallable investment (bullet). Diversification. This purchase is the only holding of this issuer, 1.32% of total portfolio. This purchase adds a maturity date previously not covered to city's laddered portfolio. Investment Committee review: Finance Director: City Manager: Date Date Committee Review of Investment Rationale Date: March 13, 2019 18 FINANCE Investment # 2019-1513 is a 4 -year WalMart (WMT) Corporate, AA21Aa/AA, face value $1,000,000, maturity date June 26, 2023, 3.400% coupon purchased on the secondary market at 102.680 to yield 2.7316%. This trade settles March 15, 2019 with Great Pacific Securities, US Bank Safekeeping. This investment is part of the replacement of a $5,248,000 1.31% Resolution Funding Corp medium term note divested March 13, 2019. Liquidity: current Key Bank checking account balance is $5,395,711, target balance is $3 Million. US Bank checking balance is $7,516,950. Current invested yield segment of portfolio is $50,602,000; target balance of portfolio is $60,000,000 for Treasuries and Agencies. Current LGIP available balance is $24,793,757; target minimum is $3,000,000. Safety: This debt issue of Walmart Inc. is rated AA/Aa2/AA. Yield. Yield is 2.7316%. This investment improves yield by 142 basis points over the investment it replaces and by 24 basis points over LGIP. Comparable yields are: LGIP current 30 -day yield 3 -yr. FAMCA nc (bullet) 5 -yr. FHLMC 1 x call 5 -year Treasury 2.4894% 2.4760% 2.7000% 2.5000% www. secu reaccess.wa.• ov Broker list Broker list 1 www.treasu . • ov The yield curve is currently extremely flat, with very little spread between 1 -year and 5 - year rates. The FOMC has signaled a willingness to slow on three rate increases expected for 2019 so rates are extremely uncertain at present. However, there is both very low unemployment and low inflation suggesting recession is unlikely. Callability. This is a noncallable investment (bullet). Diversification. This purchase is the only holding of this issuer, 1.32% of total portfolio. This purchase adds a maturity date previously not covered to city's laddered portfolio. Investment Committee review: Finance Director: City Manager: Date Date 19 FINANCE Committee Review of Investment Rationale Date: March 14, 2019 Investment # 2019-1514 is a 5 -year Federal Home Loan Mortgage Corp (Freddie Mac or FHLMC) Agency new issue, S&P AA+, Fitch AAA, face value $1,000,000, maturity date Mar 27, 2024, 2.700% coupon purchased at 100.00 to yield 2.700%. This trade settles March 27, 2019 with Great Pacific Securities, US Bank Safekeeping. This investment is part of the replacement of a $3,192,000 1.41% FICO medium term note that matured December 27, 2018. Liquidity: current Key Bank checking account balance is $5,065,845, target balance is $3 Million. US Bank checking balance is $7,524,218. Current invested yield segment of portfolio is $51,602,000; target balance of portfolio is $60,000,000 for Treasuries and Agencies. Current LGIP available balance is $24,793,757; target minimum is $3,000,000. Safety: This purchase is a debt issue of FHLMC, one of the Federal Government - Sponsored Enterprises (GSEs, commonly referred to as "Agencies"). Yield. Yield is 2.70%. This investment improves yield by 129 basis points over the investment it replaces and by 21 basis points over LGIP. Comparable yields are: LGIP current 30 -day yield 2.4898% 3 -yr. FFCB noncall (bullet) 2.5500% 5 -yr. FFCB 1 x call 2.8000% 2.4200% 5 -year Treasury www.secureaccess. a. ov Broker list Broker list www,treasury.qov The yield curve is currently extremely flat, with very little spread between 1 -year and 5 - year rates. The FOMC has signaled a willingness to slow on three rate increases expected for 2019 so rates are extremely uncertain at present. However, there is both very low unemployment and low inflation suggesting recession is unlikely. Callability. This is a one-time callable investment (3/27/2020). Diversification. This purchase brings this issuer to 1.9% of total portfolio. This purchase adds a maturity date previously not covered to city's laddered portfolio. Investment Committee review: '• Finance Director: Date • City Manager: Date Committee Review of Investment Rationale Date: March 14, 2019 20 FINANCE Investment # 2019-1515 is a 2 -year USBancorp (USB) Corporate, AA-/A+/A1, face value $1,000,000, maturity date January 24, 2022, 2.625% coupon purchased on the secondary market at 99.730 to yield 2.723%. This trade settles March 18, 2019 with Great Pacific Securities, US Bank Safekeeping. This investment is part of the replacement of a $5,248,000 1.31% Resolution Funding Corp medium term note divested March 13, 2019. Liquidity: current Key Bank checking account balance is $5,395,711, target balance is $3 Million. US Bank checking balance is $7,516,950. Current invested yield segment of portfolio is $52,602,000, target balance of portfolio is $60,000,000 for Treasuries and Agencies. Current LGIP available balance is $24,793,757; target minimum is $3,000,000. Safety: This debt issue of USBancorp Inc. is rated AA-/A+/A1. Yield. Yield is 2.7234%. This investment improves yield by 146 basis points over the investment it replaces and by 24 basis points over LGIP. Comparable yields are: LGIP current 30 -day yield 2 -yr. FFCB nc (bullet) 2.4894% 2.5500% 2.7000% 2 -yr. FHLMC 1 x call 1 2 -year Treasury 1 2.4500% www.secureaccess .gov , Broker list Broker list www.treasury.gov The yield curve is currently extremely flat, with very little spread between 1 -year and 5 - year rates. The FOMC has signaled a willingness to slow on rate increases expected for 2019 so rates are extremely uncertain at present. However, there is both very low unemployment and low inflation suggesting recession is unlikely. Callability. This is a 1X callable investment (12/23/2021). Diversification. This purchase is the only holding of this issuer, 1.32% of total portfolio. This purchase adds a maturity date previously not covered to city's laddered portfolio. Investment Committee review: Finance Director: City Manager: Date Date 3/26 44 67