The URL can be used to link to this page

Home My WebLink About5G 2013 4th Qtr Investment Report O� P ��+P ti � v � 4646 Dakota Street SE Prior Lake, MN 55372 ' � t INNESp� P CITY COUNCIL AGENDA REPORT MEETING DATE: FEBRUARY 25, 2013 AGENDA #: 5G PREPARED BY: JERILYN ERICKSON, FINANCE DIRECTOR PRESENTED BY: JERILYN ERICKSON AGENDA ITEM: CONSIDER APPROVAL OF 4 QUARTER 2012 INVESTMENT REPORT DISCUSSION: Introduction The purpose of this agenda item is for the Council to consider approval of the in- vestment report for the fourth quarter. Current Circumstances Staff has prepared a list of investments as of December 31, 2012. 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. Staff implemented new investment software during 2012. Prior to this implementa- tion, all of the investments were tracked on an Excel spreadsheet which had its limitations for extracting various data. The software provides the ability to gener- ate reports and charts by broker, security type, maturities, etc. The software also enables staff to track interest earned on an accrual basis versus a cash basis as well as changes in market value. Staff has included a number of new reports/charts with this quarterly report. If Council members have questions please feel free to contact me at 952-447- 9841 for more information. Conclusion The City Council should approve the quarterly investment report. ALTERNATIVES: 1. A motion as part of the consent agenda to approve the 2012 4th Quarter In- vestment Report as submitted. 2. Take no action and provide the staff with specific direction. RECOMMENDED Alternative 1. MOTION: INVESTMENT REPORT SUMMARY NARRATIVE The attached "Investment Portfolio - Detail, by Broker" identifies the various types of investments and the brokers/banks the City of Prior Lake uses for investment purposes. As of December 31, 2012, the balance of the investment portfolio is $26,397,029. This is an increase of $835,000 from September 30, 2012 primarily due to the receipt of the second half tax settlement. About $4.65M in bond payments were made during fourth quarter which includes $760k that was paid using escrowed funds. In previous reports, the weighted average return was reported. This was a simple calculation based only on the current rates for each security. The new investment software is capable of calculating the `weighted average yield to maturity at cost' of the investment portfolio. It is currently 1.92% which is slightly down from 1.97% as of September 30. The yield will fluctuate due in part to the balances that are in the short term money market accounts and the very low rate that is paid on money market funds. At the end of December the balance in the 4M money market was $5.7M. Bond issuers continue to take advantage of calling their bonds early and issuing refunding bonds at lower interest rates. Approximately $3.7M in bonds was called during fourth quarter. When these securities are called, there may not be an immediate investment option available so the funds are invested short-term until a future settlement. It continues to be challenging to find competitive rates for short-term investments---30 to 120-day ma- turities. These short-term securities are necessary to meet cash flow needs for payments to vendors (including construction contracts) and payroll. Current short-term rates being offered by financial insti- tutions continue to be very low. The following table shows the current money market rate for the 4M Fund and treasury rates: 4M Fund 3 4MP 1 mo mo 6 mo 1 r 2 r 3 r 5 r 7 r 10 r Current Rates 02/14/13 0.05 0.10 0.11 0.13 0.16 0.27 0.42 0.86 1.37 2.00 During the fourth quarter of 2012, the short-term rates have slightly declined. Longer term rates (two- to ten-year maturities) have increased from 2 to 14 basis points since September. The following table illustrates the chanqes that have occurred in the treasury rates and the 4M Fund account during the past twenty-four months: 4M Fund 4MP 1 mo 3 mo 6 mo 1 r 2 r 3 r 5 r 7 r 10 r Change from 3 mos a o - 0.04 0.05 0.03 0.01 0.02 0.05 0.10 0.14 0.13 Change from 6 mos a o - 0.02 0.04 0.05 0.05 0.08 0.05 - 0.07 0.11 Change from 1 r a o - 0.01 0.03 0.05 0.04 - - 0.11 0.17 0.11 Change from 2 rs a o 0.01 0.05 0.07 0.08 0.13 0.36 0.66 1.29 1.53 1.52 , 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 gov- ernment. 2. U.S. Government Securities which are guaranteed or insured by the federal government i.e., FHLB, FNMA, FHLMC 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+P1" 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 Corpo- ration or bankers acceptances of United States banks. Also allowable, but of higher risk, 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. In addition to the "Investment Portfolio — Detail, by Broker" report, charts and tables showing the di- versification by Broker and Security Type have been included for your reference. 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 month- ly 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. The constraints for each of the funds are noted on the Treasurer's Report. CITY OF PRIOR LAKE, MINNESOTA oF p "`OR Investment Portfolio - Detail, by Broker +� � December 31, 2012 V o, interest Purchase Maturity Broker Investment Cost Rate Date Date league of Minnewta Cities Liquid Asset Fund 5,699,303 0.05% Morgan Stanley - Smith Barney CITBank-UTCD 96,000 3.15°6 1/22/2009 1/22/2013 CompassBankCD 245,000 O.SSh 6/12/2012 6/7/2013 BankofChinaCD 245,000 O.Sp,6 7/5/2012 7/5/2013 AllyBank-UTCD 750,000 1.45% 9/17/2010 9/17/2013 Bank of India - NY CD 245,000 0.50% 11/21/2012 11/20/2013 American Ezpress Bank, FSB CD 149,000 2.80°� 11/25/2009 11/25/2013 AmericanEzpressCenturionBankCD 149,000 2.80% 11/25/2009 11/25/2013 Bank of Baroda - NY CD 245,000 0.50°.G 11/30/2012 11/29/2013 EverbanklacksonvilleFLCD 245,000 0.50% 11/29/2012 11/29/2013 Discover Bank - DE CD 240,000 2.65% 12/9/2009 12/9/2013 BMW Bank of North America - UT CD 150,000 2.70°6 12/11/2009 12/11/2013 American Express Bank, FSB CD 96,000 4.75% 12/24/2008 12/24/2013 AmericanExpressCenturionBankCD 96,000 4.75% 12/24/2008 12/24/2013 MorganStanleyBank-UTCD 96,000 4.25% 12/26/2008 12/26/2013 GEMoneyBank-UTCD 96,000 4.10°6 12/30/2008 12/30/2013 StateBankoflndiaCD 245,000 1.50% 3/24/2011 3/24/2014 GECapitalFinanciallnc-UTCD 150,000 1.35°5 6/24/2011 6/24/2014 SovereignBankCD 245,000 0.85% 7/5/2012 7/7/2014 DoralBankCD 245,000 0.75� 7/9/2012 7/9/2014 Banco Popular of Puerto Rico CD 245,000 1.20% 8/24/2011 S/25/2014 Citibank,NA-NVCD 96,000 3.00°b 12/9/2009 12/9/2014 CITBank-UTCD 150,000 1.45°6 8/24/2011 8/24/2015 SafraNationalBankCD 245,000 1.25°6 7/17/2012 7/18/2016 AllyBank-UTCD 96,000 1.75°6 S/24/2011 8/24/2016 GoldmanSachsBankUSA-NYCD 350,000 1.SSb S/24/2011 8/24/2016 FIRSTBANK CD SANTURCE PR CD 245,000 1.15% 30/26/2012 10/26/2016 Barclays Bank- DE CD 245,000 1.90°6 1/19/2012 1/19/2017 Goldman5achsBankUSA-NYCD 96,000 1.65% 2/29/2012 2/28/2017 WorldFinancialJumboCD 200,000 1.80% 5/31/2012 5/31/2017 GE CAP BK INC RETAIL CD 96,000 1.80°6 7/13/2012 7/13/2017 SALLIE MAE BK CD Murray UT CD 245,000 1.5076 30/24/2012 10/24/2017 FHLMCBond 920,000 2.67% 1/17/2012 7/17/2019 FHLMCBond 1,500,000 2.21% 3/6/2012 9/6/2019 FHLMC Bond 495,000 2.SSh 2/13/2012 11/13/2020 FHI.B Bond 350,000 2.59h 5/18/2012 5/18/2022 FHLB Bond 300,000 2.46°6 11/9/2012 11/9/2022 FHLB Bond 1,000,000 1.SOh 12/19/2012 12/19/2022 Subtotal: 10,102,000 New Market State Bank Compound CD 254,162 1.85°6 9/9/2010 9/9/2013 Northland Securities SaintFrancislSD- MN Bond 500,000 4.40`.G 4/16/2009 4/1/2017 Aurore ISD - MN Bond 500,000 4.65% 2/12/2009 2/1/2018 StillwaterlSD - MN Bond 500,000 4.75°6 2/17/2009 3/1/2018 RobbinsdalelSD - MN Bond 1,000,000 4.60°6 5/14/2009 2/1/2019 Washington County Housing Bond 245,000 4.25°6 7/1/2010 1/1/2020 FHLMCBond 1,790,000 2.00% 5/30/2012 11/30/2020 FHLMC Bond 515,000 2.00°.6 6/18/2012 12/18/2020 FHLB Bond 545,000 2.09°h 8/9/2012 11/9/2021 FHLB Bond 345,000 2.19% 12/20/2012 12/19/2022 Northland Securities Money Market 4,440 0.00°,6 Subtotal 5,944,440 Welis Fargo Advisors FHLMCBond 1,250,000 2.67°6 1/17/2012 7/17/2019 FHLMC Bond 1,147,125 2.03% 6/18/2012 12/18/2020 FHLB Bond 1,999,500 2.97% 12/28/2012 12/28/2022 MoneyMarket 500 0.02°6 Subtotal 4,397,125 Investment Portfolio Total 26,397,029 1.61% (weighted average) City of Prior Lake - Quarterly Investment Report 09/30/2012-12/31/2012 CITY OF PRIOR LAKE, MINNESOTA ot '' Investment Portfolio - Diversification, by Broker (Portfolio) � � � �r: � December 31, 2012 � .,,, `;. � sot Portfolio Holdings Distribution by Portfolio Name NorthWnd Securities 22.52 � . . _. _ . Nevr Market Bank _ _ __... ___ _ � b �; 0.96 56 �, ."^� � �. �' _ _ ,_ . _ Wetls Fargo Advisors ��' � 16.67 % 1 Mprea� SUnlr, - Smith Barney , � t. �� ,. � . 38.2b 5c � ' �� "' � __League ot Minnesota Citles ___ _ -�, �.,��' �, 21.59 % YTM @ Days to % of Description C ost Cost Value Maturity Portfolio League of Minnesota Cities 0.050 5,699,302 1 21.59% Morgan Stanley - Smith Barney 1.904 10,102,000 1,699 38.26% New Market Bank 1.850 254,162 252 0.96% Northland Securities 3.204 5,944,440 2,555 22.52% WeIIs Fargo Advisors 2.639 4,397,125 3,097 16.67% Total / Average 1.919 26,397,029 1,745 300.00% City of Prior Lake - Quarterly Investment Report 09/30/2012-12/31/2012 CITY OF PRIOR LAKE, MINNESOTA o , F 'RIq� Investment Portfolio - Diversification, by Security Type � � December 31, 2012 v � '��.1:� r sa PortEolio Holdings Distribution by Security Type "°'�.� � � � . _ , . .. _ _ Lxal Governmmt Investment Poot 21.59 4 _. - FMLMC Bond . __,_MOnet riarkM 28.86 A 0.02 % � � ,,.--"`� ' ,, , �� 14unitipal Bond i'� � 10.4Q % PMLB Bontl ��`� � ° _ _ _ _ _ Certificate O! Deposit _. 17.20 � 20.97 ?� _,._� - CompouodCD 0.%% YTM @ Days to % of Description Cost Cost Value Maturity Portfolio Certificate of Deposit 1.635 5,537,000 717 20.97% Compound CD 1.850 254,162 252 0.96% FHLB Bond 2.419 4,539,500 3,576 17.20% FHLMC Bond 2.273 7,617,125 2,662 28.86% LGIP 0.050 5,699,302 1 21.59% Money Market 0.002 4,940 1 0.02% Municipal Bond 4.569 2,745,000 2,003 10.40% Total / Average 1.919 ' 26,397,029 1,745 100.00% City of Prior Lake - Quarterly Investment Report 09/30/2012-12/31/2012