HomeMy WebLinkAbout5B - 2009 4th Quarter Investment Report
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MEETING DATE:
AGENDA #:
PREPARED BY:
AGENDA ITEM:
DISCUSSION:
ALTERNATIVES
RECOMMENDED
MOTION:
Reviewed by:
4646 Dakota Street S.E.
Prior Lake, MN 55372-1714
CITY COUNCIL AGENDA REPORT
FEBRUARY 1, 2010
5B
JERIL YN ERICKSON, FINANCE DIRECTOR
CONSIDER APPROVAL OF 2009 4TH 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 December 31, 2009. The
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 4th 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 4th
Quarter Investment Report as submitted.
1. 2009 4th Quarter Investment Report Summary
2. Investment Report Summary Narrative
www.cityofpriorlake.com
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City of Prior Lake
Investment Summary
As of 12/31/2009
Interest Purchase Maturity
Broker Investment Cost Rate Date Date
League 4M Fund:
Liquid Asset Fund 4,198,495.68 0.260%
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 govt. 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 govt. 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 govt. agency 500,000.00 4.100% 12/24/09 12/24/18
FHLMC govt. agency 2,000,000.00 4.000% 12/24/09 12/24/18
Robbinsdale OPEB 1,000,000.00 4.600% 05/14/09 02/01/19
Subtotal 7,810,128.00
Prior Lake State Bank:
Certificate of Deposit 245,610.82 0.750% 10/07/09 04/07/10
Morgan Stanley Smith Barney:
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 07/07/10
Westembank 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 govt. 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
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
United Community Bank GA CD 240,000.00 2.200% 10/07/09 04/09/12
First Bank of PR CD 240,000.00 2.300% 10/09/09 04/09/12
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
FNMA govt. agency 750,000.00 3.000% 10/29/09 10/29/12
GE Money Bank UT CD 149,000.00 2.400% 11/20/09 11/20/12
Flagstar Bank FSB MI CD 150,000.00 2.500% 11/27/09 11/27/12
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
American Express Bank FSB CD 149,000.00 2.800% 11/25/09 11/25/13
American Express Centurion Bk CD 149,000.00 2.800% 11/25/09 11/25/13
Discover Bank DE CD 240,000.00 2.650% 12/09/09 12/09/13
BMW Bk of North America UT CD 150,000.00 2.700% 12/11/09 12/11/13
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
Citibank NA NV CD 96,000.00 3.000% 12/09/09 12/09/14
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
FHLMC govt. agency 500,000.00 3.000% 12/29/09 12/29/17
FHLMC govt. agency 500,000.00 4.100% 12/24/09 12/24/18
FHLB govt. agency 500,000.00 3.000% 12/30/09 12/30/19
Money Market 3,932.66 0.260%
Subtotal 9,594,692.66
Wells Fargo Advisors (formerly Wachovia Securities)
FHLMC gov!. agency step-up 499,625.00 2.125% 04130/09 04/30/10
FNMA govt. agency step-up 415,000.00 2.000% 05/12/09 OS/21/10
Subtotal 914,625.00
Investment Portfolio Total $ 22,763,552,16 3.009% (weighted average)
2009 Investment Repprts 2:43 PM01f27f2010
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 December 31, 2009, the balance of the investment portfolio is $22,763,552.16. This is an increase of
$446k from September 30,2009 primarily due to the receipt of the second half tax settlement. About $3.8M in
bond payments were made during fourth quarter in addition to ongoing operational expenditures. The weighted
average return of the investment portfolio is currently 3.009%, which is up slightly from 2.979% at the end of
third quarter 2009.
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. 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 yr
2 yr 3 yr
0.84
5 yr 7 yr 10 yr
2.37
Current Rates
(01/22/10)
0,22 0.02 0.06 0.14 0.30
1,39
3.09 3.62
During the fourth quarter of2009, the short-term rates generally crept downward or remained relatively flat. The
longer-term rates crept slightly upward. The following table illustrates the changes that have occurred in the
treasury rates and the 4M Fund account during the past twenty-four months:
4M
Fund
(4MP) 1 mo 3mo 6mo 1 yr 2yr 3 yr 5yr 7 yr 10 yr
Change from 3
mos ago (0.07) (0.02) (0.08) 0,02 0.07 0.19 0.25 0.38 0.46 0.54
Change from 6
mos aQo (0.07) (0.13) (0.13) (0.15) (0.09) 0.03 0.06 0.15 0.20 0.32
Change from 1
yr aQo (0.50) (0.07) (0.05) (0.07) 0.10 0.38 0.70 1.14 1.52 1.60
Change from
12/31/07 (4.46) (2.72) (3.30) (3.29) (2.87) (1.91 ) (1.37) (0.76) (0.31) (0.19)
Bonds continue to be called. During the fourth quarter of 2009, an additional $2.5M in bonds was called, of
which $1.5 was called in December. In the last twelve months, approximately $17.5 million in bonds, or 80% of
the 12/31/08 portfolio, has been called. Bond issuers are taking advantage of calling their bonds early and
issuing refunding bonds at lower interest rates. In September, 2009, the City called three general obligation
improvement bonds which were eligible to be called and issued refunding bonds to realize a savings in interest
costs, as well.
Investments for local governments are restricted to only those permitted by Minnesota Statutes. They are
identified as follows:
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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., Flll.,B, FNMA, Flll.,MC agencies.
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 "A1+Pl" and matures in 270 days or less.
6. Repurchase Agreements with banks having capitalization exceeding $10,000,000.
7. Time deposits that are fully insured by the Federal Deposit Insurance Corporation or
bankers acceptances of United States banks.
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 following chart shows the amount and percentage invested in each investment type. Currently, Federal
Home Loan Mortgage Corporation (Flll.,MC) comprises twenty-two (22) percent of the portfolio ($4.8 million)
followed by Money Market Funds (18%, $4.2M), Certificates of Deposit (18%, $4.1M), and Federal National
Mortgage Association (17%, $3.9M).
Investment by Type
FICO
3%
FNMA
17%
M:lney Market Funds
18%
Certificates of
Deposit
18%
FHLB
9%
G.O. Bonds
2%
OPES Bonds
11%
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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