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Home My WebLink About5C 1st Qtr Investment Report O � PRIp F� � v � 4646 Dakota Street SE Prior Lake, MN 55372 `�INxeso� CITY COUNCIL AGENDA REPORT MEETING DATE: MAY 13, 2013 AGENDA #: 5C PREPARED BY: JERILYN ERICKSON, FINANCE DIRECTOR PRESENTED BY: JERILYN ERICKSON AGENDA ITEM: CONSIDER APPROVAL OF 1 QUARTER 2013 INVESTMENT REPORT DISCUSSION: Introduction The purpose of this agenda item is for the Council to consider approval of the in- vestment report for the first quarter. Current Circumstances Staff has prepared a list of investments as of March 31, 2013. The Investment Re- port 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. 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 2013 1S 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 March 31, 2013, the balance of the investment portfolio is $23,843,050. This is a decrease of $2,553,979 from December 31, 2012 primarily for operational expenditures as well as the early re- tirement of General Obligation Improvement Bond 2005C in January, 2013. The `weighted average yield to maturity at cosY of the investment portfolio is currently 2.10% which is slightly up from 1.92% as of December 31. 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 March the balance in the 4M money market was $3.2M. Bond issuers continue to take advantage of calling their bonds early and issuing refunding bonds at lower interest rates. Approximately $4.2M in bonds was called during first quarter. When these secu- rities 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 (4MP 1 mo 3 mo 6 mo 1 r 2 r 3 yr 5 r 7 r 10 r Current Rates 05/2/13 .05 0.02 0.05 0.08 0.11 0.20 0.30 0.65 1.07 1.66 During the first quarter of 2013, the short-term rates have remained essentially flat. Longer term rates (five- to ten-year maturities) have increased from 5 to 9 basis points. The following table illustrates the chanaes 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 - 0.02 0.02 - 0.02 - - 0.05 0.06 0.09 Change from 6 mos a o - 0.02 0.03 0.03 0.03 0.02 0.05 0.15 0.20 0.22 Change from 1 r a o - 0.01 - 0.04 0.05 0.08 0.15 0.27 0.37 0.36 Change from 2 rs a o - 0.01 0.02 0.06 0.16 0.55 0.93 1.47 1.66 1.60 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 oQ P '� O q� Investment Portfolio - Detail, by Broker ` V March 31, 2013 ' Interest Purchase Maturlty �; Broker � investment Cost Rate Date .:Date � League of Mlnnesota Ckies � LlquldAssetFUnd 3,205,889 0.05% � Morgan Stanley - Smkh Bamey � istiedeaiBank-HarruonARCA ?A5,000 I.OS� 2)19/2013 8(20/2018 AllyBank-UTW 150,Od0 3.A5% 9/17J2010 9/17/2033 � AIIyBank-UTCD 96,000 1.75% 8/24/2011 8/24/2016 i American Ezpress Bank, f58 CD 349,000 2.80% 11/ZS/2009 IS/25/2013 Amedcan Express Bank, FSB CD 96,000 4J5% 12/24(2008 12/24f2013 � AmericanExpressCenturionBankCD 349,000 2.80°.6 11/25/2009 11/25/2013 � American Express Centurion Bank CO 96,000 4.75% lI/24/2008 12/24/2013 j BancoPOpularofPUertoRicoCD 245,000 1.2076 8/24/2011 S/25/2014 i BankofBaroda-NVCD 245,000 0.50% 11(30f2012 il/29/2013 BankofChinaCD 245,OW 0.50°,6 7/5/2012 7/5i2013 ( Bank of lndia - NY CD 245,000 0.50°.G 13/21(2012 11/20/2013 , Barclays Bank - OE CD 245,000 1.90°,6 1/19/2012 1/19/2017 ��' ' BMWBanko(NOrthAmedca-UTW 150,000 2.70 12/17/2009 12/11/2013 I CITBank-UTCD 150,000 1.45% 8J24/2011 8/24/2015 � CITBankSLCCD %000 1.8096 3/13J2013 3/13/2024 QT Banly NA- NV CD 96,000 3.00% 12/9(2009 li/9/2014 CompassBankCD 245,000 0.55% 6/32/203] 6/7/2013 � Discover Bank - �E [D 240,000 2.65% 12/9/2009 32/9)2013 I Doral Bank W 245,000 0.75% 7/9/2012 7/9/2014 I EverbanklacksonvllleFlCD 245,000 0.5096 11/29/2012 11/29/2013 I FIRST&4NKCDSJIMURCEPRCD 245,000 1.159G 30/26/2012 10/26/2016 � GE CAP BK INC RETAII CD 96,OW 3.80% 7/13/2012 7/13/2017 GECapitalFtnancfalinc-UTCD 150,000 135% 6J24/2011 6/24/2014 GEMoneyBank-UTW 96,000 4.1056 12/30/2008 12/30/2013 Gnldman Sachs Bank USA- NY CD 96,000 1.65% 2/29/2012 2/28/2017 i Goldman Sachs Bank USA • NY CD 150,OOO 1.85% 8(24/2011 9/24/2016 I MorganStanleyBank-UTCD 96,000 4.I5% 12/26/2008 12/16/2013 Safro Nattonai Bank m 2d5,000 125% 7/17/2012 7/18/2016 SALUE MAE 8K CD Murrey UT CD 245,000 1.5056 10J24(2012 10/24/2017 Sovereign BankCO 245,000 O.BS% 7/5/2012 7/7/2014 ` i State Bank of Indla CD 245,OW 1.50% 3/24/2011 3/24/2014 � StockmanBank-MilesGtyMTW 245,000 SJS% 2/27/2013 2/27/2020 �:' WoddFinanclaUumboCD 200,000 1.80% SJ31/2012 5/31J2017 � fHLBBond 1,00�,000 150% 12j19/2012 12/19/2022 ( FHLB Bond 300,000 2.00% 11/9/2012 11/9/2022 � fHLBBond aso,000 z.00,s z/n/zoi3 z/v/zoz3 FHLB Bond i.azo,aoo z.009c s/n/zois e/n/zozs '�,, FHLB Bond 350,000 2.00% 5/18/2012 5/18/2022 ��,, Subtotal: 9,547,000 New Market State 8ank CompoundCD 254,162 1.85°6 9/9/2030 9/9j2013 � Northland Securities � '�.. SaintProncislSD-MNBond 500,000 4.4056 A/16/2009 4/1/2017 '�, AuroralSD-MNBond 500,000 4.65% 2/lI/2009 2/1/2015 St(Ilwater ISD � MN Bond 500,000 4.75% 2J17J2009 3/1/2018 RohbinsdaleiSD-MN Bond 1,000,000 4.6076 5/14/2009 2/1/2019 WashingtanCOUntyHOUSIngBond 245,000 4.25% 7/1/2030 1/1/2020 '�,, fHLMCBond i,7so,000 z.00;c s/3o/2oiz u/so/zozo '��, FHLMCBond sis,00a z.00°c s/is/zou iz/ia/zom '�, FNMABond SOO,OW 2.50% 3/27/2013 3/27/2023 � FHLB Bond 545,000 2.09% 8J9/2012 31/9/2021 FH�B Bond 345,000 2.19% 12/20/2012 12/19/2022 SuMoWI 6,440.000 '�.. Welis Fargo Advisors '�, FHLMC Bond . 1,999.500 1.00% 12/28/2012 12/28/2022 ',, FHLB Bond 1,749,375 1.75% �/22/Z013 2/22/2023 FHLB Bond 1,147,125 2.00q6 6/18/2012 12/18/2020 f Subtotal 4,396,OW , Investment Portfolio Total 23,843,050 i Ciry of Prfor Lake - Quarterly Investment Report ' € O1/31/2013- 3/31/2013 � ( GTY OF PRIOR LAKE, MINNESOTA o� `'�'O� '. investment Portfolio - Diversification, by Broker (Portfolio) v � March 31, 2013 ��N\ESO �. Portfolio Hotdings Distribution by Portfolio Name ' Nortnw�a securicfes .. .. �. 27.01 % � "-- _ New MarkN 6ank . _ . .. �... � ............ -. -, Welts Fargo Advisors ��. t.07 5� � 78.44 % ! rirxean Stantey - Smith Barnty __ ° Leaput ot Minnetota Citirs _ _ 13.4556 40.Od Sa _� _,:..- � f F i � � YTM @ Days to % of Description Cost Cost Value Maturity Portfolio League of Minnesota Cities 0.050 3,205,889 1 13.45% Morgan Stanley - Smith Barney 1.837 9,547,000 1,823 40.04% New Market Bank 1.850 254,162 162 1.079'0 Northland Securities ' 3.152 6,440,000 2,559 27.01% Wells Fargo Advisors 2.611 4,396,000 3,382 18.44% Total/ Average 2.095 23,843,050 2,046 100.00% ._s- City of Prior Lake - Quarterly Investment Report 1/31/2013-3/31/2013 � CITY OF PRIOR LAKE, MINNESOTA o` `' Investment Portfolio - Diversification, by Security Type ' � u � March 31, 2013 ��•�'Ni 5 (1tT' Partfotio Holdings Distribution by Security Type � � ; Fw�a eona . � 2.�ox ------. FHLHC Eond . __ _ _ _ __ . _ Local Government Investment Pool id.48 �i - 13.45 % flunicipal Bond > : _.__. ___�u ii.51% � FHl6 Bond _ , ' ; � 32.12 56 � ; <<' Canpound CD . _ � � � _ _ __,_ CertiBeate Ot Depostt `'� r 1.07 � - �` 25.28 % YTM @ Days to 96 of Description Cost Cost Value Maturity Portfolio Certificate of Deposit ;` 1.594 6,026,999 H00 25.28% Compound CD 1.850 254,162 162 1.07% FHLB Bond 2.477 7,658,875 3,545 32.12% fHLMC Bond 2.011 3,452,125 2,810 14.48% FNMA Bond 2.500 500,000 3,648 2.10% LGIP 0.050 3,205,889 1 13.45% Municipal Bond 4.569 2,745,000 1,913 11.51% ' Total / Average 2.095 23,843,050 2,046 100.00% � i i City of Prior Lake - Quarte�ly Investment Repo�t ' O1/31/2013-3/31/2013