HomeMy WebLinkAbout12/06/2011 04C 3rd Quarter 2011 Treasury Report •
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BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No. q e/
For Meeting of: December 6, 2011
ITEM TITLE: City of Yakima - 3rd Quarter 2011 Treasury Report
SUBMITTED BY: Rita DeBord, Director Finance and Technology
CONTACT Rita DeBord, Director Finance and Technology, 576 -6771
PERSON /TELEPHONE: Tara Lewis, Financial Services Officer, 576 -6639
SUMMARY EXPLANATION:
The Treasury Report for the third Quarter of 2011 consists of the following: (1)
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• Investment Portfolio - Summary
• Investment Portfolio - Detailed Inventory by Agency
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• 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 final page for a description of Treasurer's Reports.
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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 9/06/11.
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 normally not to exceed five years
except when conditions warrant, and then up to eight years.
The effective yield on the City's entire Investment Portfolio for the quarter ending 9/30/11 was 1.21 %, down
slightly from the second and first quarters of 1.28% and 1.27% respectively, and up slightly from the 0.99%
earned in the fourth quarter of 2010.
Short term investment rates are significantly lower than the average yields currently being realized. (The short
term Local Government Investment Pool managed by the State is currently yielding 0.13% versus yield -to -call
rates between 0.80% and 1.00% on 5 year Agency Callable bonds.) It should be noted that the yields being
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obtained currently are due primarily to our strategy of purchasing longer term, callable securities, which pay
higher rates. As expected, most of these Agencies are exercising the call feature in their bonds to take
advantage of lower shorter term rates; thus we purchase securities with higher interest rates, which turnover
more quickly.
Our current 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.
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The Liquidity Portfolio is invested predominately with the State of Washington Investment Pool and was 22% of
the total portfolio as of 9/30/11. The yield continues to be very low at approximately 13.4 basis points (Le.
0.134 %) in September. 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 78% of the total, comprised mostly of Federal Agency Callable Bonds
with an average yield of 1.50 %, compared to 1.67% in the second quarter of 2011. Agency yields continue
downward due to the call feature which enables the agency to refinance at lower rates as time passes. This
trend became noticeable in the City's investment portfolio in late 2009 and has continued steadily through the
current day. The trend is expected to continue as rates remain soft into the next several quarters. Within the
Security Portfolio is a new category termed "Other Investments." There are currently two investments in this
category: 1) a $500,000 - 5% coupon Bond issued by Grays Harbor County purchased at a premium to generate
an effective yield of 1.631% through July 2015, and 2) a $250,000 certificate of deposit (PDPC insured) yielding
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2.693% through March 2016.
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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.
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• The Security Portfolio contains predominately callable US government agency securities. Callable agency
• securities serve three purposes:
(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.
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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 •
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• stock of FHLMC and FNMA are currently suffering, they do have tines 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.
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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Resolution Ordinance Other (specify) Report
Contract: Mail to:
Contract Term: Amount: Expiration Date:
Insurance Required? No
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Funding
Source: Phone:
APPROVED FOR l2s 6 5 t_ City Manager
SUBMITTAL:
STAFF RECOMMENDATION:
Accept report.
BOARD /COMMISSION RECOMMENDATION:
ATTACHMENTS:
Click to download
❑ Treasurer Report Q3 2011
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City of Yakima
Investment Portfolio - Summary
September 30, 2011
Percent of Average Average
Investment Category Qty Par Book Portfolio Yield Q3 '11 Yield Q2 '11
Local Government Investment Pool (LGIP) 1 $ 10,087,861 $ 10,087,861 22% 0.15% 0.16%
Federal Agency Coupon Bonds - Callable 17 34,055,000 34,065,357 76 %. 1.50% 1.67%
Other Investments 2 750,000 815,490 2% 1.96%
Totals 20 $ 44,892,861 $ 44,968,708 100% 1.21% 1.28%
Book Balance Purchases Interest Maturities, Calls Book Balance
Summary of Activity 7/1/2011 & Deposits Reinvested & Withdrawals 9/30/2011
Local Government Investment Pool (LGIP) $ 13,077,765 $ 9,000,000 $ 10,096 $ 12,000,000 $ 10,087,861
Federal Agency Coupon - Callable 38,238,661 27,450,422 - 31,623,725 34,065,357
Other Investments - 815,490 - - 815,490
Totals $ 51,316,426 $ 37,265,912 $ 10,096 $ 43,623,725 $ 44,968,708
Page 1 of 6 PDFConvert .525.1.TSO_Q3_2011.xlsx
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• Ci ry c7iTakima III Investment Portfolio - Inventory by Agency
September 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 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 1,000,000 998,500 2.693
Federal Home Loan Mortgage Corporation
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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 896 1438 2,000,000 2,000,000 2.000 2.000 8/8/16 08/08/11 2/8/13 lx 2/8/13
FHLMC 896 1440 1,800,000 1,800,000 2.000 2.000 8/17/16 08/17/11 8/17/12 lx 8/17/12
FHLMC 896 1441 3,000,000 3,010,422 2.200 1.500 8/24/16 08/24/11 2/24/12 Amer 2/24/12
FHLMC Totals and Average 9,800,000 9,810,922 1.867
Federal National Management Association
FNMA 896 1423 2,000,000 1,990,000 1.125 1.125 10/29/15 11/22/10 10/29/11 Qtry 10/29/11
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 1439 1,640,000 1,640,000 2.000 2.000 8/17/16 8/17/11 8/17/12 1x 8/17/12
FNMA 896 1443 3,000,000 3,000,000 1.000 Step 1.000 9/14/16 9/14/11 9/14/12, Qtry 9/14/12
FNMA 896 1444 3,000,000 3,000,000 0.850 0.850 9/12/14 9/12/11 3/12/12 •Qtry 9/12/14
. FNMA 896 1445 4,000,000 4,000,000 1.420 1.420 9/20/16 9/20/11 9/20/13 lx 9/20/13
FNMA 896 1446 2,000,000 . 2,000,000 1.500 1.500 9/21/16 9/21/11 9/21/12 1x 9/21/12
FNMA 896 1448 1,750,000 1,750,000 1.000 1.000 9/15/15 9/9/11 9/9/13 lx 9/9/13
FNMA 896 , 1449 1,250,000 1,250,000 1.000 1.000 9/14/15 9/14/11 9/14/12 lx 9/14/12
FNMA Totals and Average 23,255,000 23,255,936 1.293
Other Investments
CNTY 896 1442 500,000 565,490 5.000 1.631 7/1/15 8/19/11 7/1/15 NC 7/1/15
YF -CD 896 14-47 250,000 250,000 2.540 2.693 3/30/16 3/31/11 3/30/12 Amer 3/30/12
FFCB Totals and Average 750,000 815,490 1.957
H Grand Totals $ 34,805,000 $ 34,880,847 1.510 Average Expected Yield I
Coupon Steps Investment # Rate up to: 2013 2013 2014 2014 2015 2015 2016 2016 •
1443 Mar & Sept 14 1.000% 1.125% 1.250% 1.500% 1.750% 2.250% 2.750% 3.500%
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City of Yakima
Investment Portfolio - Detail of Activity
For the Quarter Ended September 30, 2011
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• 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) . - 7/8/11
FFCB 896 1406 1.750 1,500,000 (1,500,000) - 8/4/11
FFCB 896 1426 2.540 1,000,000 1,000,000
FFCB Totals 4,870 000 -
(3,870,000) 1,000,000
Federal Home Loan Bank
FHLB 896 1411 1.720 250,000 (250,000) - 7/26/11
FHLB 896 1412 1.450 1,500,000 (1,500,000) - 7/7/11
FHLB 896 1424 1.550 2,000,000 (2,000,000) - 9/3/11
FHLB 896 1431 2.400 2,857,143 (2,857,143) - 7/13/11
FHLB 896 1431 2.400 1,142,857 (1,142,857) - 8/13/11
FHLB 896 1432 2.000 1,000,000 (1,000,000) - 9/14/11
FHLB 896 1434 2.000 1,000,000 (1,000,000) - 9/30/11
FHLB 896 1437 2.500 4,000,000 (4,000,000) - 7/26 & 8/26
FHLB Totals 9,750,000 4,000,000 (13,750,000) -
Federal Home Loan Mortgage Corporation
• FHLMC 896 1418 0.800 2,000,000 (2,000,000) - 8/4/11
FHLMC 896 1420 1.700 2,000,000 (2,000,000) - 8/16/11
FHLMC 896 1428 2.000 2,000,000 (2,000,000) - 8/26/11
FHLMC 896 1429 2.000 1,000,000 1,000,000
FHLMC 896 1435 2.125 2,000,000 2,000,000
FHLMC 896 1438 2.000 2,000,000 2,000,000 8/8/11 •
FHLMC 896 1440 2.000 1,800,000 1,800,000 8/17/11
FHLMC 896 1441 2.200 3,000,000 3,000,000 8/27/11
FHLMC Totals 9,000,000 6,800,000 (6,000,000) 9,800,000
Federal National Management Association
FNMA 896 1400 1.750 2,000,000 (2,000,000) - 7/27/11
FNMA 896 1419 1.000 2,000,000 (2,000,000) - 8/23/11
FNMA 896 1423 1.125 2,000,000 2,000,000
FNMA 896 1425 2.000 1,000,000 (1,000,000) - 8/10/11
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) - 8/25/11
FNMA 896 1439 2.000 1,640,000 1,640,000 8/17/11
FNMA 896 1443 1.000 3,000,000 3,000,000 9/14/11
FNMA 896 1444 0.850 3,000,000 3,000,000 9/12/11
FNMA 896 1445 1.420 4,000,000 4,000,000 9/20/11
FNMA 896 1446 1.500 2,000,000 2,000,000 9/21/11
FNMA 896 1448 1.000 1,750,000 1,750,000 9/9/11
FNMA 896. 1449 1.000 1,250,000 1,250,000 9/14/11
FNMA Totals 14,615,000 16,640,000 (8,000,000) 23,255,000
Other Investments
Grays County Bonds 896 1442 5.000 500,000 500,000 8/19/11
Yakima Federal CD' 896 1447 2.050 250,000 250,000 8/31/11
III
Other Investment Totals - 750,000 - 750,000
Grand Totals $ 38,235,000 $ 28,190,000 $ (31,620,000) $ 34,805,000
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CITY OF YAKIMA
REPORT OF CASH BALANCES
September 30, 2011
Key Bank $ 4,066,251
Bank of New York (Fiscal Agent)(1) -
U.S. Bank (Housing loan repayments) 325,251
Yakima Federal Savings and Loan Association (Housing) 169,921
Bank of America (Claims Control) 2,271,862
U. S. Bank (Payroll Control) 11,241
U.S. Bank Electronic Deposits 1,671,970
Inmate Trust - Key Bank 10,691
Inmate Welfare - Key Bank 9,526
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Municipal Court - Key Bank 215,819
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
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In Bank Accounts 9/30/11 $ 8,772,286
1 Balance is zero as all coupons and principal has been paid to bond holders.
2 Represents imprest 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
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City of Yakima
Bond Schedule - by Project Group
For the Quarter Ended September 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
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
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
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
5/8/2007 5/1/2017 River Road River Road improvements 1,765,000 1,150,000
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 $0
Revenue Bonds
12/2/2003 11/1/2014 Wastewater $7,390,000 $2,585,000
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
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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
11Grand Total $64,660,528
$48,725,687 $0
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CITY OF YAKIMA
LID Schedule
For the Quarter Ended September 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 /Notes Beginning Quarter Bonds /Notes Districts Ending Quarter Investment Of
No. Cash Balance Assessment Balance Paid Added Balance
1056 - S 7th, 8th, 9th $ (870) $ 218,481 $ 50,000 $ - $ 50,000 Equipment Rental
1057 - N 84th & Hawthorne (3,767) 179,550 72,000 - 72,000 Equipment Rental
1058 - N 95th, 94th Place 270 160,869 58,000 - 58,000 Equipment Rental
1060 - 85th and Kail 19,240 375,881 180,000 - 180,000 Equipment Rental
1061- Simpson Lane 10,095 497,728 384,000 - 384,000 Equipment Rental
Totals $ 24,968 $ 1,432,509 $ 744,000 $ - $ - $ 744,000
Cash Reserve Requirement:
Bonds and Notes Payable to Equipment Rental Fund $ 744,000
x 1O%
10% of Outstanding Balance 74,400
Guaranty Fund #221 Cash Balance 79,999
Amount above (below) targeted minimum $ 5,599
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