HomeMy WebLinkAbout5G - 3rd Quarter Investment Report
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4646 Dakota Street S.E.
Prior Lake, MN 55372-1714
MEETING DATE:
AGENDA #:
PREPARED BY:
AGENDA ITEM:
DISCUSSION:
ALTERNATIVES
RECOMMENDED
MOTION:
Reviewed by: I
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Frank BO~;J' ity
ATTACH+NTS:
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CITY COUNCIL AGENDA REPORT
OCTOBER 19, 2009
5G
Jerilyn Erickson, Finance Director
CONSIDER APPROVAL OF 2009 3RD QUARTER INVESTMENT REPORT
Introduction
The purpose of this agenda item is for the council to consider approval of the
investment report for this quarter.
Current Circumstances
Staff has prepared a list of investments as of September 30, 2009. An
Investment Report Summary Narrative provides some supplementary
information with respect to the investments currently held and the allowable
forms of investments permitted by Minnesota Statute.
If council members have questions please feel free to contact me at 952-447-
9841 for more information.
1. A motion as part of the consent agenda to approve the 2009 3rd Quarter
Investment Report as submitted.
2. Take no action and provide the staff with specific direction.
Alternative 1. A motion as part of the consent agenda to approve the 2009 3rd
Quarter Investment Report as submitted.
1. 2009 3rd Quarter Investment Report Summary
2. Investment Report Summary Narrative
www.cityofpriorlake.com
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City of Prior lake
Investment Summary
As of 09/30/2009
Interest Purchase Matu rity
Broker Investment Cost Rate Date Date
League 4M Fund:
Liquid Asset Fund 2,514,320.96 0.330%
New Market Bank:
Certificate of Deposit 245,000.00 0.750% 07/15/09 11/12/09
Northland Securities:
Waite Park G.O. bonds 183,051.00 5.600% 12/21/01 12/01/10
FNMA govt. agency 199,700.00 3.000% 02/26/09 02/26/11
FHLMC gOY!. agency 299,550.00 3.000% 03/12/09 03/12/11
FNMA govt. agency 500,000.00 4.000% 07/08/09 07/08/11
Waite Park G.O. bonds 170,721.00 5.750% 12/21/01 12/01/11
FNMA govt. agency 800,000.00 3.000% OS/21/09 OS/21/12
Waite Park G.O. bonds 159,606.00 5.850% 12/21/01 12/01/12
FNMA gOY!. agency 497,500.00 3.450% 05/13/09 04/08/16
S!. Francis MN ISD OPEB 500,000.00 4.400% 4/16/09 04/01/17
Aurora MN ISD OPEB 500,000.00 4.650% 02/12/09 02/01/18
Stillwater MN ISD OPEB 500,000.00 4.750% 02/17/09 03/01/18
FHLMC gOY!. agency 500,000.00 4.000% 03/27/08 03/15/18
FHLMC govt agency 500,000.00 4.000% 4/10/08 04/15/18
Robbinsdale OPEB 1,000,000.00 4.600% 05/14/09 02/01/19
Subtotal 6,310,128.00
Prior Lake State Bank:
Certificate of Deposit 245,000.00 1.000% 07/08/09 10/07/09
Morgan Stanley Smith Barney:
Citibank NA NV CD 145,000.00 1.750% 01/07/09 10/07/09
RBS Citizens NA RI CD 245,000.00 1.200% 02/18/09 11/18/09
Bank of America NA NC CD 245,000.00 1.200% 02/19/09 11/19/09
FICO zero gOY!. agency 389,600.00 3.750% 03/21/03 12/06/09
Citibank NA NV CD 96,000.00 2.300% 01/07/09 01/07/10
FNMA govt. agency 250,000.00 2.800% 03/25/09 03/25/10
Bank Vizcaya CD 96,000.00 1.300% 03/25/09 03/26/10
New South Federal Savings AL CD 96,000.00 2.350% 01/07/09 0710711 0
First Federal Bk of CA CD 96,000.00 2.750% 01/07/09 07/07/10
Western bank PR CD 96,000.00 2.500% 01/09/09 07/09/10
GMAC Bank UT CD 96,000.00 2.750% 01/02/09 01/03/11
Bank Santander PR CD 96,000.00 2.550% 01/23/09 01/24/11
Flagstar Bank FSB MI CD 96,000.00 2.650% 01/23/09 01/24/11
Shorebank IL CD 96,000.00 2.700% 01/28/09 01/28/11
First Regional Bank CA CD 96,000.00 2.350% 01/28/09 01/28/11
FICO zero govt. agency 673,760.00 4.790% 12/05/02 04/06/11
Keybank Natl Assn OH CD 96,000.00 2.600% 03/25/09 09/26/11
Doral Bank PR CD 96,000.00 2.750% 03/30/09 09/30/11
FHLB gOY!. agency 1,000,000.00 4.875% 12/20/02 11/15/11
Goldman Sachs Bank CD 96,000.00 2.850% 01/21/09 01/23/12
GE Capital Financial UT CD 96,000.00 3.000% 01/23/09 01/23/12
Sallie Mae Bank CD 96,000.00 3.050% OS/20/09 OS/21/12
FNMA govt. agency 500,000.00 3.000% OS/21/09 OS/21/12
BMW Bk of North America UT CD 96,000.00 3.600% 12/31/08 12/31/12
CIT Bank UT CD 96,000.00 3.150% 01/22/09 01/22/13
Capital One CD 96,000.00 4.400% 01/23/08 01/23/12
Capital One CD 96,000.00 4.400% 01/23/08 01/23/12
Washington Mutual CD 96,000.00 4.400% 01/23/08 01/23/12
Capmark Bank UT CD 96,000.00 3.000% 02/18/09 02/21/12
American Express Bank FSB CD 96,000.00 4.750% 12/24/08 12/24/13
American Express Centurion Bk CD 96,000.00 4.750% 12/24/08 12/24/13
Morgan Stanley Bk-UT CD 96,000.00 4.250% 12/24/08 12/26/13
GE Money Bank UT CD 96,000.00 4.100% 12/30/08 12/30/13
FHLMC govt. agency 550,000.00 4.000% 06/18/09 12/15/15
FHLB govt. agency 500,000.00 4.200% 02/25/09 02/25/16
FNMA govt. agency 1,000,000.00 4.500% 02/06/08 02/06/17
FHLB gOY!. agency 500,000.00 4.650% 02/27/09 02/27/19
Money Market 1,104,958.96 0.100%
Subtotal 9,503,318.96
Wells Fargo (formerly Wachovia Securities):
FHLB gOY!. agency 585,000.00 2.500% 07/02109 07102110
FHLMC gOY!. agency 1,000,000.00 2.250% 02/19/09 02/19/10
FHLMC gOY!. agency 499,625.00 2.125% 04/30/09 04/30/10
FNMA gOY!. agency step-up 415,000.00 2.000% 05/12/09 OS/21/10
FHLB govt. agency 1,000,000.00 2.125% 08/18/09 08/18/10
Subtotal 3,499,625.00
Investment Portfolio Total $ 22,317,392.92 2.979% (weighted average)
INVESTMENT REPORT SUMMARY NARRATIVE
The attached Investment Report Summary identifies the various types of investments and the brokerslbanks the
City of Prior Lake uses for investment purposes.
As of September 30, 2009, the balance of the investment portfolio is $22,317,392.92. This is a decrease of
$2.6M from June 30, 2009 primarily due to the payment on construction contracts and other ongoing
operational expenditures. The weighted average return of the investment portfolio is currently 2.979%, up from
2.744% at the end of second quarter 2009. What was driving that ROI downward at the end of second quarter
was the large amount that was reflected in the 4M Fund money market at the end of June. A portion of those
funds were invested in other securities in which the settlement took place in July. In addition, money market
funds have been drawn upon to meet cash flow needs throughout third quarter.
It continues to be challenging to find competitive rates for short-term investments---30 to 120-day maturities.
These short-term securities are necessary to meet cash flow needs for payments to vendors (including
construction contracts) and payroll over the next few months until we receive the second half tax settlement.
Current short-term rates being offered by financial institutions are very low. The following table shows the
current money market rate for the 4M Fund and treasury rates:
4M Fund
(4MP) 1 mo 3 mo 6 mo
1 vr
2 vr
3 vr
5 yr
7 yr
10 vr
Current Rates
(10/09/09)
0.29
0.04
0.07
0.16
0.38
0.98
1.50
2.36
2.98
3.40
In an effort to achieve greater returns for short-term securities, I was able to secure short-term certificates of
deposit with two of the local banks, Prior Lake State Bank and New Market Bank. Deposits up to $250,000 in
these banks are insured by the Federal Deposit Insurance Corporation (FDIC). The 4M Fund has had the most
competitive rates for short-term investments.
During the third quarter of 2009, all rates generally crept downward. The following table illustrates the
changes that have occurred in the treasurY rates during the past twenty-one months:
4M Fund
(4MP) 1 mo 3mo 6mo 1 yr 2 vr 3 vr 5 vr 7 vr 10 vr
Change from 3
months ago (0.11 ) (0.05) (0.17) (0.16) (0.16) (0.19) (0.23) (0.26) (0.22)
Change from 6
months ago (0.23) (0.11 ) (0.07) (0.25) (0.17) 0.14 0.30 0.64 0.65 0.60
Change from 1
year ago (2.02) (0.96) (0.78) ( 1.42) (1.38) (1.05) (0.83) (0.67) (0.45) (0.54)
Change from
12/31/07 (4.39) (2.70) (3.22) (3.31) (2.94) (2.10) (1.62) (1.14) (0.77) (0.73)
Bonds continue to be called. During the third quarter of 2009, an additional $2.0M in bonds was called. Since
December, 2008, approximately $15 million in bonds, or 70% of the 12/31/08 portfolio, have been called. In
addition, another $.5M has been called in October. Bond issuers are taking advantage of calling their bonds
early and issuing refunding bonds at lower interest rates. We called certain general obligation improvement
bonds which were eligible to be called and issued refunding bonds to realize a savings in interest costs, as well.
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Investments for local governments are restricted to only those permitted by Minnesota Statutes. They are
identified as follows:
1. U.S. Treasury Bills and Notes which are direct obligations of the federal government.
2. U.S. Government Securities which are guaranteed or insured by the federal
government i.e., FHLB, FNMA, FHLMC agencies or authorities such as TV A.
3. State and Local Government bonds that are rated "A" or better.
4. Bankers' Acceptances of a United States Bank.
5. Commercial Paper that is rated "AI +PI" and matures in 270 days or less.
6. Repurchase Agreements/Certificate of Deposits with banks having capitalization
exceeding $10,000,000.
Also allowable, but of higher risks, are guaranteed investment contracts (GIC's) and mortgage-backed securities
(CMO's) which because of their sophisticated nature and inherent risk, Prior Lake does not participate in.
The City's investment portfolio amount is a pool of funds identified on the monthly Treasurer's Report.
Because City funds are pooled for investment purposes, interest is allocated to each fund on a monthly basis,
and is based upon each individual fund's proportionate share of the total amount. Overall, the total investment
pool does not represent excess reserves but rather available financial resources. In most instances these funds
were established and restricted for specific and designated purposes by either Minnesota Statutes or City Code
to accomplish the goals and objectives of the City of Prior Lake.
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09\2009 2nd Quarter In...eetment Report.doc