HomeMy WebLinkAbout08/16/2011 10A 2nd Quarter 2011 Treasury Report BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No. (D A
For Meeting Of 8 -16 -2011
ITEM TITLE: City of Yakima — 2 Quarter 2011 Treasury Report
SUBMITTED BY: Rita DeBord, Finance Director
CONTACT PERSON/TELEPHONE: Rita DeBord, Finance Director / 575 -6070
Tara Lewis, Financial Services Officer / 576 -6639
SUMMARY EXPLANATION:
The Treasury Report for the second Quarter of 2011 consists of the following: (
• Investment Portfolio - Summary
• Investment Portfolio - Detailed Inventory by Agency
• Investment Portfolio — Detail of Activity
• . Report of Cash Balances
• Schedule of Outstanding General Obligation & Revenue Bonds
• LID Cash Balances, & LID Bonds & Notes Payable
® • (1) Refer to page 4 for a description of Treasurer's Reports.
Continued on next page...
Resolution Ordinance Other (Specify) Report
Contract Mail to (name and address):
Phone:
Funding Source
APPROVED FOR SUBMITTAL:
City Manager
STAFF RECOMMENDATION: Accept Report
BOARD /COMMISSION RECOMMENDATION: N/A
COUNCIL ACTION:
0 .
The City's Investment Portfolio
The City's investment activities are governed by State regulations and the City of Yakima's
Investment Policy, as revised 3/24/09.
Snapshot of the Portfolio
The City's Investment Portfolio can be divided into two general buckets:
1) A Liquidity Portfolio of overnight investments.
2) A Security. Portfolio of investments in various securities with maturities out to five years.
The effective yield on the City's entire Investment Portfolio for the quarter ending 6/30/11 was
1.28 %; approximately level with the first quarter which was at 1.27% and up slightly from the
.99% earned in the fourth quarter of 2010. It should be noted that the yields being obtained
currently are due mostly to Agencies exercising the call feature in their bonds to take advantage
of lower shorter term rates. Short term investment rates are significantly lower than the average
yields being realized currently. (The short term Local Government Investment Pool managed by
the State is currently yielding 0.16% versus yield -to -call rates between 1.0% and 2.0% on 5
year Agency Callable bonds.) The strategy rests on the expectation that 5 year securities will be
called due to a higher coupon rate than the current market interest rates. This is what the City is
experiencing without exception. The risk associated with such a strategy is that if the rates
rebound suddenly, the bonds will not be called and the bonds will go to maturity at a rate lower
than market._ Such a spike in rates is considered a remote possibility in our current economic
environment. However, due to this risk, the City is quite cautious in the use of Agency Callable
securities.
The Liquidity Portfolio is invested predominately with the State of Washington Investment Pool •
and was 25% of the total portfolio as of 6/30/11. The yield continues to be very low at
approximately 15.6 basis points (i.e. 0.156 %). As funds have been needed for operations,
draws from the pool have not been replaced due to the cost of transferring funds relative to the
low interest rates. Higher cash balances are being maintained in the City's general accounts to
offset banking fees since the credit given for such balances is at a higher rate than the State
Pool is paying. Such cash balances are presented on page 4 of the financial report section of
this report. These cash balances are not included as part of the Liquidity Portfolio.
The Security Portfolio currently comprises 75% of the total with an average yield of 1.67 %,
compared to 1.63% in the first quarter of 2011 and 1.46% in the fourth quarter of 2010. The
Portfolio is made up of predominately US Government Agency callable securities. A legacy
$10,000 investment in a FNMA Mortgage Backed Security ( "MBS ") was sold at par during the
quarter. Even though the yield was higher than market, accounting for the security was more
costly than the net earnings of approximately $15 per month. Average yields on the Security
Portfolio have stabilized as bonds with higher returns have already been called during the fall
and early winter. The current portfolio is earning slightly higher than . current short term market
rates, due primarily to the call feature on many of the longer term securities held in the portfolio.,
Investment Composition Strategy
The City looks to maintain an Investment Portfolio with a Liquidity Portfolio sufficient to cover
cash flow needs and provide a cushion for unusual and emergency expenditures.
The Security Portfolio contains predominately callable US government agency securities.
Callable agency securities serve three purposes:
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Page 2 of 4 2nd Qtr 2011 Treasury Rpt u
(1) The City earns a higher coupon (yield) than it would have earned from a non - callable
security with the same maturity date and same issuer;
(2) The actual experienced maturity of a callable security is usually shorter than its stated
maturity due to its inherent call features. Calls on existing securities allow for a certain amount
of investment flexibility which can lead to higher current interest income much sooner than if the
securities were non - callable;
(3) By buying US Agency callable securities, the City's security investments have the direct or
implied backing of the US Government and as such, any of the City's securities could be sold
immediately at current market prices for cash if the need arose.
The City owns securities issued by US government- backed entities such as the Federal Home
Loan Bank ( "FHLB "), Freddie Mac ( "FHLMC "), Fannie Mae ( "FNMA "), and Federal Farm Credit
.( "FFCB "). While the public stock of FHLMC and FNMA are currently suffering, they"do have
lines of credit with, investment by, and the support of the US Treasury. The City's risk of loss
due to credit exposure from any of these agencies is thought to be miniscule.
The City does not invest in any Structured Investment Vehicles (SIV's), Collaterized Mortgage
Obligations (CMO's), or Collateralized Debt Obligations (CDO's). • These types of investments,
along with certain asset - backed Commercial Paper have much higher price and demand
volatility. The City has not purchased these types of instruments.
Page 3 of 4 2nd Qtr 2011 Treasury Rpt
0 Description of Treasurer's Reports
• Investment Portfolio - Summary
This report shows a summary of investments by type including the percentage of each
category relative to the total portfolio. A summary of activity shows by category the
balances at the beginning of the reporting period, activity that occurred during the
quarter and ending balances as of the report date.
• Investment Portfolio — Detailed Inventory by Agency
. This report lists all of the City's major security investments excluding funds in the State
of Washington Investment pool as of the report date.
• Investment Portfolio — Detail of Activity
This report contains detailed lists of security purchases, maturities and calls during the
reporting period.
• Report of Cash Balances
A list of cash balances in each of the City's major bank accounts.
• Schedules of General Obligation & Revenue Bonds Payable
This report indicates principal payments made during the reporting period, and the
current balances of the City's bonded debt.
• LID Cash Balances, LID Bonds &Notes Payable, LID Guaranty Fund
A Local Improvement District is an instrument utilized by citizens to fund specific local
community improvements.. This report identifies outstanding obligations relative to Local
Improvement Districts' bonds and notes payable. Once a Local Improvement District
bond or note is issued, there is a required minimum reserve which the City must
maintain so long as the bond or note is outstanding. This report also compares the
current Local Improvement Districts outstanding debt to the required reserve balance.
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Page 4 of 4 2nd Qtr 2011 Treasury Rpt
City of Yakima
Investment Portfolio - Summary
June 30, 2011
Percent of Average Average
Investment Category Par Book Quantity Portfolio Yield Q2 '11 Yield Q1 '11
Local Government Investment Pool (LGIP) $ 13,077,765 $ 13,077,765 1 25% 0.16% 0.23%
Federal Agency Coupon Bonds - Callable 38,235,000 38,235,661 22 75% 1.67% 1.63%
Totals $ 51,312,765 $ 51,313,426 23 100% 1.28% 1.27%
Book Balance Purchases Interest Maturities, Calls Book Balance
Summary of Activity 4/1/2011 & Deposits Reinvested & Withdrawals 6/30/2011
Local Government Investment Pool (LGIP) $ 15,571,087 $ 7,500,000 $ 6,678 $ 10,000,000 $ 13,077,765
Federal Agency Coupon - Callable 28,950,140 18,635,146 - 9,349,625 38,235,661
Federal Nat'l Mortgage Assoc. -1986 Non - callable 8,333 - - 8,333 -
Totals $ 44,529,560 $ 26,135,146 $ 6,678 $ 19,357,958 $ 51,313,426
Page 1 of 6 TSO Q2 2011.xlsx
• •
City �una • ' •
. •
• Investment Portfolio`�ifiventory by A g enc y
June 30, 2011
• Expected Call Most •
Agency Fund Inv# Face Value . Price Coupon Step Yield Maturity . Settle • Next Call Type Likely Call
Federal Farm Credit Bank
FFCB 896 1403 $ 2,370,000 $ 2,368,815 1.770 1.750 7/8/14 7/19/10 7/8/11 Amer • 7/8/11
FFCB • 896 . 1406 1,500,000 1,500,000 1.750 1.750 8/4/14 8/4/10 - 8/4/11 Qtry 8/4/11
' FFCB 896 1426 1,000,000 998,500 2.540 2.693 3/30/16 3/31/11 3/30/12 Amer 3/30/12 •
FFCB Totals and Average 4,870,000 4,867,315 • 1.943
. Federal Home Loan Bank
FHLB 896 1411 250,000 249,875 1.720 1.731 5/26/15 8/26/10 7 days Amer 8/28/11
• FHLB 896 .1412 • 1,500,000 1,499,625 1.450 1.456 9/2/14 9/2/10 7 days Amer 9/2/11
FHLB 896 1424 2,000,000 2,000,000 1.550 1.550 12/3/14 12/3/10 9/3/11 Qtry . 9/3/11
FHLB 896 1431 4,000,000 4,000,000 2.400 2.400 6/13/16 6/13/11 8/13/11 Monthly 8/13/11
- FHLB 896 1432 1,000,000 999,750 2.000 2.101 9/14/15 6/14/11 9/14/11 lx 9/14/11
FHLB 896 1434 1,000,000 1,000,500 2.000 1.799 12/30/15 6/30/11 9/30/11 Amer 9/30/11
FHLB Totals and Average 9,750,000 9,749,750 1.971
Federal Home Loan Mortgage Corporation .
FHLMC 896 1418 2,000,000 1,999,000 0.800 0.810 11/4/13 11/04/10 8/4/11 lx 8/4/11
FHLMC 896 1420 2,000,000 1,996,500 1.700 1.830 11/16/15 11/16/10 8/16/11 Monthly 8/16/11
FHLMC 896 1428 2,000,000 2,002,880 2.000 1.422 2/26/15 05/26/11 8/26/11 Qtry 8/26/11
FHLMC 896 1429 1,000,000 1,000,500 2.000 1.949 12/1/15 06/01/11 6/1/12 lx 6/1/12 .
FHLMC 896 ' 1435 2,000,000 2,000,000 2.125 2.125 6/16/16 ' 06/16/11 12/16/11 Qtry 12/16/11
FHLMC Totals and Average 9,000,000 8,998,880 1.591
• Federal National Management Association
FNMA 896 1400 ' ' 2,000,000 2,000,000 1.750 Step 1.750 7/27/15 7/27/10 7/27/11 Qtry ' 7/27/15
• FNMA 896 ' 1419 2,000,000 2,000,000 1.000 1.000 11/26/13 . 11/26/10 8/23/11 .. Qtry • 8/23/11
FNMA 896 .1423 2,000,000 1,990,000 1.125 . Step 1.125 10/29/15 11/22/10 10/29/11 Qtry 10/29/11
FNMA 896 1425 1,000,000 998,200 2.000 2.500 2/10/15 3/31/11 , 8/10/11 ' lx 8/10/11
FNMA 896 1427 1,000,000 997,500 2.050 2.304 • 4/20/15 4/20/11 4/20/12 lx . 4/20/12
FNMA 896 1430 2,000,000 2,001,000 2.250 2.199 6/6/16 6/6/11 ' 6/6/12 lx 6/6/12
FNMA 896 1433 ' 1,615,000 1,627,436 2.250 1.463 6/6/16 6/10/11 6/6/12 lx 6/6/12
FNMA . 896 1436 - 3,000,000 3,005,580 2.000 0.503 2/25/16 6/16/11 • 8/25/11 Qtry 8/25/11
• . FNMA Totals and Average 14,615,000 14,619,716 • 1.425
'Grand Totals $ 38,235,000 $ 38,235,661 1.669 Average Expected Yield I
Coupon Steps
Inv # To: 2010 2011 2012 2013 2014 2015
1400 Jul27 NA 1.750% NA 2.250% 3.000% 4.000% '
•
1423 Oct 29 NA NA 1.125% 1.625% 2.500% 3.500%
Page 2 of 6 TSO Q2 2011.xlsx
City of Yakima
Investment Portfolio - Detail of Activity
For the Quarter Ended June 30, 2011
Coupon Beginning Calls and Ending Date of
Agency Fund Inv# Rate Face Value Purchases Maturities Face Value Activity
Federal Farm Credit Bureau
FFCB 896 1403 1.750 $ 2,370,000 $ - $ - $ 2,370,000
FFCB 896 1406 1.750 1,500,000 1,500,000
FFCB 896 1426 2.540 1,000,000 1,000,000
FFCB Totals 4,870,000 - - 4,870,000
• Federal Home Loan Bank
FHLB 896 1411 1.720 250,000 250,000
FHLB 896 1412 1.450 3,000,000 (1,500,000) 1,500,000 6/15/11
FHLB 896 1421 1.250 5,000,000 (5,000,000) - 4/13/11
FHLB 896 1422 2.125 2,000,000 (2,000,000) - 4/14/11
FHLB 896 1424 1.550 2,000,000 2,000,000
FHLB 896 1431 2.400 4,000,000 4,000,000 6/13/11
FHLB 896 1432 2.000 1,000,000 1,000,000 6/14/11
FHLB 896 1434 2.000 1,000,000 1,000,000 6/30/11
FHLB Totals 12,250,000 6,000,000 (8,500,000) 9,750,000
Federal Home Loan Mortgage Corporation
411
FHLMC 896 1418 0.800 2,000,000 2,000,000
FHLMC 896 1420 1.700 2,000,000 2,000,000
FHLMC 896 1428 2.000 2,000,000 2,000,000 5/26/11
FHLMC 896 1429 2.000 1,000,000 1,000,000 6/1/11
FHLMC 896 1435 2.125 2,000,000 2,000,000 6/11/11
FHLMC Totals 4,000,000 5,000,000 - 9,000,000
Federal National Management Association
FNMA 896 1399 2.000 470,000 (470,000) - 4/14/11
FNMA 896 1400 1.750 2,000,000 2,000,000
FNMA 896 1405 1.875 380,000 (380,000) - 5/4/11
FNMA 896 1419 1.000 2,000,000 2,000,000
FNMA . 896 1423 1.125 2,000,000 2,000,000
FNMA 896 1425 2.000 1,000,000 1,000,000
FNMA 896 1427 2.050 1,000,000 1,000,000
FNMA 896 1430 2.250 2,000,000 2,000,000
FNMA 896 1433 2.250 1,615,000 1,615,000
FNMA 896 1436 2.000 3,000,000 3,000,000
FNMA Totals 7,850,000 7,615,000 (850,000) 14,615,000
Grand Totals - $ 28,970,000. $ 18,615,000 $ (9,350,000) $ 38,235,000
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Page 3 of 6 TSO Q2 2011.xlsx
0 City of Yakima
Investment Portfolio - Detail of Activity
•
For the Quarter Ended June 30, 2011
Key Bank $ 6,977,717
Bank of New York (Fiscal Agent)(1) -
U.S. Bank (Housing loan repayments) 271,074
Yakima Federal Savings and Loan Association (Housing) 169,084
Bank of America (Claims Control) 1,919,674
U. S. Bank (Payroll Control) 14,405
U.S. Bank Electronic 845,076
Inmate Trust - Key Bank 8,058
Inmate Welfare - Key Bank 9,736
® Municipal Court - Key Bank 123,563
Petty Cash (2) 3,475
Police - Special Investigations(2) 7,500
Change Funds (3) 3,780
Travel Advance 5,000
Total Cash On Hand and
In Bank Accounts 6/30/11 10,358.141
1 Balance is zero as all coupons and principal has been paid to bond holders.
2 Represents impressed amounts. Cash on hand plus receipts for paid items equals this amount
per Resolution R2011 -58
3 Change for customers established by Resolution R2011-58
Page 4 of 6 TSO Q2 2011.xlsx
City of Yakima
Bond Schedule - by Project Group
For the Quarter Ended June 30, 2011
Final Amount Current Redeemed
Date Issued Payment Description Note Issued Balance Due This Quarter
General Obligation Bonds
5/8/2007 6/1/2012 PFD Convention Center I Unrefunded portion of 2002 issue $1,280,000 $235,000 $225,000
9/7/2004 11/1/2019 PFD Convention Center II Refunded 1996 issue 4,175,000 3,125,000
5/8/2007 5/1/2026 PFD Convention Center III Partial refunding of 2002 issue 4,910,000 4,870,000 10,000
8/28/2009 12/1/2018 PFD Capitol Theatre Tax exempt portion 2,055,000 1,700,000
8/28/2009 12/1/2024 PFD Capitol Theatre Build America Bonds (Taxable) 1,755,000 1,755,000
8/28/2009 12/1/2032 PFD Capitol Theatre Build America Bonds (Taxable) 3,225,000 3,225,000
6/17/2003 12/1/2023 Sundome Expansion Deferred Interest- Maturity $2.5M 1,430,528 1,055,687
6/17/2003 12/1/2013 Law and Justice Center Refunded1994 issue 4,155,000 1,455,000
9/7/2004 12/1/2014 Fire Station Refunded 1995 issue (voted issue) 2,300,000 1,080,000
8/28/2008 12/1/2021 Fire Apparatus Ladder Truck 760,000 655,000
5/8/2007 5/1/2022 Fire Station Remodel Facility 815,000 645,000 45,000
8/28/2008 12/1/2019 Infrastructure Projects Ped crossing, street, infrastructure 2,190,000 1,810,000
5/8/2007 5/1/2022 Downtown Futures Renovate downtown improvements 1,490,000 1,175,000 85,000
5/8/2007 5/1/2017 River Road River Road improvements 1,765,000 1,150,000 165,000
12/1/2005 12/1/2015 Parks and Recreation Parks improvements 755,000 . 415,000
Subtotal General Obligation Bonds $33,060,528 $24,350,687 $530,000
Revenue Bonds
12/2/2003 11/1/2014 Wastewater $7,390,000 $2,585,000 $0
12/2/2003 11/1/2023 Wastewater 10,155,000 10,155,000
6/5/2008 11/1/2027 Wastewater 5,440,000 4,975,000
6/5/2008 11/1/2011 Water/Wastewater Refunded 1998/1991 issue 1,516,049 525,000
6/5/2008 11/1/2018 Water Refunded 1998 issue 1,883,951 1,555,000
9/4/2004 9/1/1934 Irrigation 5,215,000 4,580,000
Subtotal Revenue Bonds $31,600,000 $24,375,000 $0
Grand Total $64,660,528 $48,725,687 $530,0001
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Page 5of 6 III • TS4011.xlsx
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CITY OF YAKIMA
LID Schedule
For the Quarter Ended June 30, 2011
LID CASH BALANCES LID BONDS AND NOTES PAYABLE
LID Current LID Original LID Bond /Note Amount New LID LID Bond /Note
District District Bond Beginning Quarter Bonds /Notes Districts Ending Quarter Investment Of
No. Cash Balance Assessment Balance Paid Added Balance
1056 - S 7th, 8th, 9th $ 192 $ 218,481 $ 67,000 $ 17,000 $ - $ 50,000 Equipment Rental
1057 - N 84th & Hawthorne (4,829) 179,550 77,500 5,500 - 72,000 Equipment Rental
1058 - N 95th, 94th Place 270 160,869 63,000 5,000 - 58,000 Equipment Rental
1060 - 85th and Kail 2,744 375,881 202,961 22,961 - 180,000 Equipment Rental
1061- Simpson Lane 10,095 497,728 409,000 25,000 _ - 384,000 Equipment Rental
Totals $ 8,472 $ 1,475,260 $ 819,461 $ 75,461 $ - $ 744,000
Cash Reserve Requirement:
Bonds and Notes Payable to Equipment Rental Fund $ 744,000
x 10%
. 10% of Outstanding Balance 74,400
Guaranty Fund #221 Cash Balance 79,998
Amount above (below) targeted minimum $ 5,598
Page 6 of 6 TSO Q2 2011.xlsx