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Home My WebLink About4.03 CT InvestmentRpt 97-98 CITY CLERK File # Df3]fZlrn-~K2J . AGENDA STATEMENT CITY COUNCIL MEETING DATE: (January 20,1998) ~ N\\~ity Treasurer's Investment Report For 2nd Quarter 97/98 V.l,eport Prepared by: Paul S. Rankin, Assistant City Manager Quarterly Investment Report (December 31, 1997) Section I - Primary Investment Portfolio Section II - Listing of Supplemental Monies Under City Possession and/or Control SUBJECT: EXHIBITS ATTACHED: RECOMMENDATION: Receive Report DESCRIPTION: The attached Investment Report details the City's investments as of December 31, 1997, 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 1997/98 are discussed in the staff report below. . INVESTMENT ACTIVITY IN SECOND QUARTER FISCAL YEAR 1997/98 During the Second Quarter three securities in the amount of $2,500,000 were removed from the portfolio due to early bond calls. In addition, two Certificates of Deposits in the amount of $198,000 matured during the Quarter. The following Table provides details on activity related to these investments: INVESTMENTS WIDCD WERE CALLED OR MATURED OCTOBER - DECEMBER 1997 .. ORIGINAL CALL INTEREST TYPE AMOUNT MATURITY DATE RATE Called Federal Securities FIll..B $500,000 12/29/98 9/29/97 5.950% FFCB $1,000,000 3/19/99 9/19/97 6.570% FHLB $1,000,000 7/3/00 10/3/97 6.500% Matured Certificates of Deposit Home. Savings of America $99,000 10/1/97 N/A 5.450% Sanwa Bank of California $99,000 12/7/97 N/A 5.600% As noted above FHLB and FFCB exercised their rights to "call" the securities prior to the stated maturity dates. 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 four new securities and two new certificates of deposits during the period, as summarized in the table below: ------------------------------------------------------------------- G:\INVSMNTS\DEC97\AGNDSTMT.DOC COPIES TO: ITEMNO.J. j INVESTMENTS PURCHASED SECOND QUARTER FISCAL YEAR 1997/98 CALL INTEREST TYPE AMOUNT MATURITY DATE RATE Federal Securities FHLB $1,000,000 10/20/2000 10/20/98 6.250% FHLB $1,000,000 10/20/2000 10/20/98 6.240% FNMA $1,000,000 11/8/2000 11/8/99 6.220% FHLB $500,000 6/29/2001 First callable 6.250% on 6/29/99- Then only on interest pay dates Certificates of Deposit Home Savings of America $99,000 10/28/98 N/A 5.600% Glendale Federal Bank $99,000 12/9/98 N/A 5.600% Sanwa Bank $99,000 12/9/99 N/A 5.600% All of the investments listed above were purchased at face value. All of the Federal Securities purchased during the quarter 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 and certificates of deposit 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. Three Certificates of Deposits (CDs) were purchased during the quarter for $99,000 each, at an interest rate of 5.60%. The maturity for the Sanwa Bank CD was extended to two years in order to achieve a better yield than what was offered for a one year investment. All of the CDs pay monthly interest and are fully insured by the FDIC. In the previous quarterly report the average maturity of all Government and Agency Securities was approximately 1.30 years. The average maturity for the first quarter increased to approximately 1.36 years as a result of the new investments made during the quarter. DETAILED LISTING OF PRIMARY PORTFOLIO Government and Agency Securities represent the largest portion of the Primary Portfolio. A detailed listing of each security is provided along with a summary by type of investment. 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, 1997. 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 and it is not anticipated that these funds will need to be called upon by the City prior to their stated maturity dates. The Dean Witter Mutual Fund Investment represents approximately 5.3% 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 first six months of the Fiscal Year the City received nearly $50,997 in dividends from this investment, resulting in an annualized yield of approximately 6.000%. The market value of this investment fluctuates on a daily basis. - ;1.- . . . CHANGES IN THE TOTAL PORTFOLIO YIELD FROM THE PREVIOUS REPORT The total amount shown as invested in the Primary Investment Portfolio is nearly $3,077,025 more than the amount shown at September 30, 1997. The amount invested in Federal Securities increased by approximately $1,002,025, while the City's investment in the Local Agency Investment Fund (LAIF) increased by $2,075,000. The increase reflects the receipt of property tax revenues in the month of December. Overall, the combined rate for the total portfolio increased slightly from 5.697% at September 30, 1997 to 5.718% at December 31, 1997. The increase resulted from a slightly higher overall yield on the City's investments in LAIF and Federal Securities. The quarterly average for the City's LAIF investment was 5.721 % as of December 31, 1997, which was slightly higher than the 5.692% rate recorded for the quarter ending September 30, 1997. LAIF is a liquid investment, and the current LAIF rate remains very favorable compared to rates offered on investments which have less flexibility. It should be noted that Staff has encountered recent declines in interest rates in recent weeks. Although this may impact interest earnings, the primary objective in placing public investments must remain the security of the investment. Staff believes that the current portfolio is responsive to the objectives as stated in the City's Investment Policy. 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. -3- . . . /odlo CITY OF DUBLIN QUARTERLY INVESTMENT REPORT SECTION I PRIMARY INVESTMENT PORTFOLIO ~~t, CITY OF DUBLIN DETAILED LISTING OF INVESTMENTS INCLUDING RATE OF RETURN FOR THE QUARTER ENDED DECEMBER 31, 1997 . COUPON MATURITY VALUE AT INTEREST BOOK MARKET INVESTMENT DATE. MATURITY RATE YIELD VALUE VALUE FEDERAL SECURITIES Flll.MC (Callable 2/26/97) 2/26/98 $500,000.00 5.100010 5.100% $500,000.00 $499,530.00 FNMA (Callable 5/13/96) 5/13/98 500,000.00 5.250% 5.482% 500,000.00 498,830.00 Flll.MC (Callable 919194) 9/9198 500,000.00 4.950% 5.020% 499,972.63 497,185.00 FNMA (Callable 10/15196) 10/15198 1,000,000.00 4.875% 4.889% 999,994.82 991,870.00 U.S. Treaswy Note 10/31/98 1,000,000.00 4.750% 5.101% 1,000,000.02 992,810.00 Fm..B (Callable 11/3/94) 11/3/98 1,000,000.00 5.110% 5.110% 1,000,000.00 994,530.00 FNMA (Callable 12/10/96) 12/10/98 1,000,000.00 5.3]0% 5.311% 999,984.39 995,310.00 SLMA (Callable ]2/18/97) 12/18/98 500,000.00 5.8000/0 5.800% 500,000.00 499,765.00 FFCB(Callablel2/18/9~ 12/18/98 500,000.00 5.850% 5.850% 500,000.00 500,080.00 Flll.MC(Callable 12/24/97) 12/24/98 1,000,000.00 6.000% 6.000% 1,000,000.00 1,000,310.00 FNMA (Callable ]2130/96) ]2/30/98 500,000.00 5.890% 5.890% 500,000.00 499,455.00 Fm..B (Callable 1/12/95) 1/11/99 2,000,000.00 5.460% 5.460% 2,000,000.00 ],991,560.00 FNMA (Callable 2/12/96) 2/12/99 400,000.00 5.550% 5.564% 399,983.35 398,624.00 Fm..B (Callable 2/12/98) 2/12/99 1,000,000.00 6.125% 6.125% 1,000,000.00 999,840.00 FNMA (No Call Date) 4/11/99 1,000,000.00 6.430% 6.460% 999,650.00 ],007,810.00 . FNMA (No Call Dale) ] 1/8/00 1,000,000.00 6.220% 6.220% 1,000,000.00 ],001,720.00 FHLB (No Call Date) 10/20/00 1,000,000.00 6250% 6.250% 1,000,000.00 999,220.00 FHLB (No Call Dale) 10/20/00 1,000,000.00 6.240% 6.240% 1,000,000.00 999,060.00 FHLB (Callable 6/29/99) 6/29/0] 500,000.00 6.250% 6.250% 500,000.00 499,920.00 TOTAL FEDERAL SECURITIES $15,900,000.00 5.695% $15,899,58521 $15,867,42. CERTIFICATES OF DEPOSIT - FDIC INSURED World Savings 1/29/98 $100,000.00 6.010% 6.010% $100,000.00 $100,000.00 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 1219/98 99,000.00 5.600% 5.600% 99,000.00 99,000.00 Sanwa Bank 1219/99 99,000.00 5.600% 5.600% 99,000.00 99,000.00 TOTAL CERTIFICATES OF DEPOSIT $788,000.00 5.511% $788,000.00 $788,000.00 MUTUAL FUND Dean Witter U.S. Government Securities See Note 1 6.000% (2) $1,699,995.50 $1,632,16239 POOLED PUBLIC AGENCY INVESTMENTS State of CA.. Local Agency Investment Fund (LAlF) $13,925,000.00 5.721% (3) $13,925,000.00 $13,925,000.00 TOTAL INVESTED PORTFOLIO 5.718% $32,312,580.71 $32,212,591.39 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 ofa sale may be either higher or lower than the original cost The current City investment strategy asswnes 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 of December 31, 1997. EXHIBIT 1 :3 fa City of Dublin Summary Comparison of Investment Portfolio by Type For the Quarter Ended December 31, 1997 . LAIF 43% Federal Securities 50% Dean Witter Mutual Fund 5% Certificates of Deposit 2% MARKET -;. OF MA TIJRITY TYPE OF INSTRUMENT FACE VALUE BOOK VALUE VALUE PORTFOLIO YEARS U.S. Treasury Notes $1,000,000.00 $1,000,000.02 $992,810.00 6.3% 0.83 Student Loan Marketing Assn (SLMA) 500,000.00 500,000.00 499,765.00 3.1% 0.96 . Federal Farm Credit Bureau (FFCB) 500,000.00 500,000.00 500,080.00 3.1% 0.96 Federal Home Loan Bank (FHLB) 6,500,000.00 6,500,000.00 6,484,130.00 40.9"10 1.75 Fed Home Loan Mortgage Corp (FHLMC) 2,000,000.00 1,999,972.63 1,997,025.00 12.6% 0.70 Federal National Mortgage Assn (FNMA) 5,400,000.00 5,399,612.56 5,393,619.00 34.0% 1.30 SUB -TOTAL GOVT/AGENCY 15,900,000.00 15,899,585.21 15,867,429.00 (I) 49.2% 1.36 Cemfic:ates of Deposit - FDIC Insured 788,000.00 788,000.00 788,000.00 2.4% 0.79 Mutual Funds - Dean Witter U.S. Gort Securities (4) 1,699,995.50 1,699,995.50 1,632,162.39 (1) 5.3% 5.4 (3) LAIF 13,925,000.00 13,925,000.00 13,925,000.00 43.1% N/A GRAND TOTAL $32,312,995.50 $32,312,580.71 $32,212,591.39 100.0% NOTES: . (1) The City intends to hold the investments until maturity or until market values equal or exceed the current book value (Amortized Cost). (2) Market value is based upon the shares invested at share price as of December 31, 1997. 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. (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. Govenunent Securities Mutual Fund as of December 31, 1996. This figure represents the duration factor for the Fund and it was reduced from the figure reported for 1996. (4) 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. EXHIBIT 2 .1/4 fa . CITY OF DUBLIN QUARTERLY INVESTMENT REPORT SECTION II . LISTING OF SUPPLEMENTAL : MONIES UNDER CITY POSSESSION AND/OR CONTROL · OPERATINGFUNDS · SPECIAL FUNDS HELD BY TRUSTEES . . '. . City of Dublin Report of Operating Funds On Hand As of December 31; 1997 -5 ~ b 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 IMPORTANT TO NOTE THAT THIS AMOUNT MAY REFLECT FUNDS REQUIRED TO COVER PAYMENTS ALREADY ISSUED AND CHECKS WHICH HA VB 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 12/31/97 N on-Catee:orized - Cash Petty Cash - City Petty Cash - Recreation Cash Register - ( 4 Locations) Subtotal $200.00 $200.00 $250.00 $650.00 OPERATING CASD BALANCES - FINANCIAL INSTITUTIONS Balance 12/31/97 Annualized Rate of Interest BANK OF AMERlCA- Collateralized Public Money Deposits bi Accordance With California Government Code $154,335.78 See Note 1 First Nationwide Bank- Regular Savings Account: FDIC Insured $ 1,998.34 2.00% Grand Total Amount Cash Balances: $156.334.12 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. All interest earnings in excess of account charges are paid to the City on a monthly basis. 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