HomeMy WebLinkAbout5C 2018 2nd Quarter Investment Report
4646 Dakota Street SE
Prior Lake, MN 55372
CITY COUNCIL AGENDA REPORT
MEETING DATE: AUGUST 6, 2018
AGENDA #: 5C
PREPARED BY: JASON ETTER, ACCOUNTING MANAGER
PRESENTED BY: CATHY ERICKSON, FINANCE DIRECTOR
AGENDA ITEM: CONSIDER APPROVAL OF 2ND QUARTER 2018 INVESTMENT REPORT
DISCUSSION: Introduction
The purpose of this agenda item is for the Council to consider approval of the in-
vestment report for the second quarter of 2018.
Current Circumstances
Staff has prepared a list of investments as of June 30, 2018. 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.
The investment software provides the ability to generate reports and charts by bro-
ker, 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.
Conclusion
The City Council should approve the quarterly investment report.
ALTERNATIVES: 1. Motion and second as part of the consent agenda to approve the 2018 2nd
Quarter Investment Report as submitted.
2. Motion and second to remove the Investment Report from the consent agenda
for additional discussion.
RECOMMENDED
MOTION:
Alternative 1.
2
INVESTMENT REPORT SUMMARY NARRATIVE
The attached “Investment Portfolio – by Security Type” identifies the various types of investments and
the brokers/banks the City of Prior Lake uses for investment purposes.
As of June 30, 2018, the balance of the investment portfolio is $32,483,672. This is an increase of
$3.7M from March 31, 2018.
The ‘weighted average yield to maturity at cost’ of the investment portfolio is currently 1.96% which is
the same as of March 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
June, the balance in the 4M money market was $7.6M.
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. The following table shows the treasury rates for the
2nd quarter of 2018 compared to the previous two years:
As rates decrease, the market value of the existing securities will increase. As of June 30, 2018, the
market value of the portfolio is less than the cost of the investments by $356K. The change in the fair
value of the securities is adjusted against interest earnings in each of the funds. This is a paper loss
for the second quarter of 2018; no actual gain is realized because the City holds the securities until
maturity.
During the second quarter of 2018, the chart below shows how rates, especially mid to long-term se-
curities, have remained flat. Current long-term rates being offered by financial institutions continues to
be very low.
-
0.50
1.00
1.50
2.00
2.50
3.00
1 mo 3 mo 6 mo 1 yr 2 yr 3 yr 5 yr 7 yr 10 yr
US Treasury Yield Curve
6/30/16 6/30/17 6/30/18
3
As the attached chart titled Investment Portfolio – Diversification, by Maturity Range indicates, approx-
imately 29% or $9.3 million matures within 1 month. Of that total, $7.6 million is in the 4M investment
pool which is currently generating the highest money market interest rates. These funds will be in-
vested as the appropriate security (type, rate, and maturity) becomes available. Staff continues to
look for opportunities to invest our short-term funds. Revision to the City’s investment policy is cur-
rently being reviewed for possible updates.
The City’s investment portfolio amount is a pool of funds identified on the monthly Treasurer’s Report.
As shown on the June Treasurer’s Report, the balance of cash and investments, is $34.5M. Of this
balance, $32.4M is investments and $2.1M is cash. Because City funds are pooled for investment
purposes, interest is allocated to each fund monthly, and is based upon each individual fund’s propor-
tionate share of the total amount. Overall, the total investment pool does not represent excess re-
serves 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 accom-
plish the goals and objectives of the City. The constraints for each of the funds are noted on the
Treasurer’s Report.
Investments for local governments are restricted to only those permitted by Minnesota Statutes. Per
the City of Prior Lake Investment Policy, the City has chosen to limit its allowable investments as fol-
lows:
1. Bonds, notes certificates of indebtedness, treasury bills or other securities
now or hereafter issued by the United States of America, its agencies and al-
lowable instrumentalities;
2. Interest bearing checking and savings accounts, or any other investments
constituting direct obligations of any bank;
3. Certificates of deposit at state and federally chartered institutions that are lim-
ited to the amount of coverage provided by the Federal Deposit Insurance
Corporation;
4. Money market accounts that are invested in above referenced government se-
curities;
-
0.25
0.50
0.75
1.00
1.25
1.50
1.75
2.00
2.25
2.50
2.75
3.00
3.25
1 mo 3 mo 6 mo 1 yr 2 yr 3 yr 5 yr 7 yr 10 yr
US Treasury Yield Curve
4/30/18 5/31/18 6/30/18
4
5. State and local securities which have at the time of investment one of the
three highest credit ratings by a nationally recognized rating agency;
6. Investments may be made only in those savings banks or savings and loan
associations the shares, or investment certificates of which are insured by the
Federal Deposit Insurance Corporation;
7. Investment products that are considered as derivatives are specifically ex-
cluded from approved investments.
The breakdown of all security types held by the City is shown graphically in the attached document
titled Investment Portfolio – Diversification, by Security Type.
The investment policy also requires that all investment maturities shall not extend beyond ten (10)
years with no more than 20% maturing beyond five (5) years.
Change
from one
6/30/2017 9/30/2017 12/31/2017 3/31/2018 6/30/2018 year prior
Market Value 9,371,136 10,905,708 7,290,033 4,285,583 8,832,074 (539,062)
1 1 1 1 1 0
0.59%0.67%0.93%1.00%1.41%0.83%
Fixed Income Assets
18,799,627 19,131,043 23,156,766 24,503,598 23,651,598 4,851,971
18,846,876 19,156,982 23,040,955 24,242,681 23,294,942 4,448,066
824 857 919 922 863 39
457 475 606 651 605 148
1.86%1.96%2.01%2.13%2.16%0.30%
Total Portfolio Value
28,170,763 30,036,751 30,446,799 28,789,181 32,483,672 4,312,909
28,218,012 30,062,690 30,330,988 28,528,264 32,127,016 3,909,004
100,992 67,330 125,748 102,208 112,312 11,320
47,249 25,938 (115,811)(260,917)(356,657) (403,906)
550 545 699 785 628 78
305 303 461 554 440 135
1.44%1.49%1.75%1.96%1.96%0.52%
BENCHMARK
90 Day T-Bill 1.03%1.06%1.39%1.73%1.93%0.90%
1.14%1.20%1.53%1.93%2.11%0.97%
1.24%1.31%1.76%2.09%2.33%1.09%
Weighted Average Yield
to Maturity @ Cost
6 Month Treasury
1 Year Treasury
Cost Value
Market Value
Accrued Interest
Unrealized Gain / Loss
WAM (1) in Days
WAM / Callable (1) in Days
Weighted Average Yield to
Maturity @ Cost
CITY OF PRIOR LAKE, MINNESOTA
Quarterly Investment Report
June 30, 2018
Local Government
Investment Pools /
Money Market
Quarterly
WAM (1) in Days
Weighted Average Yield to
Maturity
Cost Value
Market Value
WAM (1) in Days
WAM / Callable (1) in Days
City of Prior Lake - Quarterly Investment Report
YTM @
Cost Cost Value
Days to
Maturity
% of
Portfolio
Cash - 1,163,849 1 3.58%
Certificate of Deposit 1.979 11,379,000 792 35.03%
FHLB Bond 1.997 1,000,000 1,129 3.08%
FHLMC Bond 2.075 3,715,000 1,030 11.44%
FNMA Bond 1.824 1,900,000 1,129 5.85%
LGIP 1.629 7,668,225 1 23.61%
Municipal Bond 2.722 5,657,598 758 17.41%
Total / Average 1.957 32,483,672 628 100.00%
CITY OF PRIOR LAKE, MINNESOTA
Investment Portfolio - Diversification, by Security Type
June 30, 2018
Description
City of Prior Lake - Quarterly Investment Report
YTM @
Cost Cost Value
Days to
Maturity
% of
Portfolio
0-1 Month 1.419 9,322,074 2 28.70%
1-3 Months 1.538 980,000 72 3.02%
3-6 Months 1.926 984,327 151 3.03%
6-9 Months 3.887 1,360,000 225 4.19%
9-12 Months 1.617 738,000 308 2.27%
1-2 Years 2.036 3,987,720 522 12.28%
2-3 Years 2.150 7,266,848 934 22.37%
3-4 Years 1.994 4,929,703 1,227 15.18%
4-5 Years 2.367 2,915,000 1,619 8.98%
Total / Average 1.957 32,483,672 628 100.00%
CITY OF PRIOR LAKE, MINNESOTA
Investment Portfolio - Diversification, by Maturity Range
June 30, 2018
Description
City of Prior Lake - Quarterly Investment Report
DescriptionCUSIP/Ticker Transaction IDSettlement Date YTM @ Cost Face Amount/Shares Cost Value Book Value Market Value Maturity Date Days To Maturity Accrued Interest % of PortfolioCash - Northland Securities CashCASH584506/30/20120.00069,946.67 69,946.67 69,946.67 69,946.67N/A10.22Morgan Stanley CashCASH508912/31/20100.000632,589.65 632,589.65 632,589.65 632,589.65N/A11.95Oppenheimer CashMM990512/27/20110.000461,312.76 461,312.76 461,312.76 461,312.76N/A11.42Sub Total / Average0.0001,163,849.08 1,163,849.08 1,163,849.08 1,163,849.0810.003.591st Federal Bank - Harrison AR 1.05 8/20/201832023LAG42898202/19/20131.050245,000.00 245,000.00 245,000.00 244,698.65 08/20/20185177.530.76Allegiance Bank TX 2.2 11/3/202201748DAY25862911/03/20172.200245,000.00 245,000.00 245,000.00 235,202.45 11/03/20221,587398.710.76Ally Bank 1.95 10/19/202002006L6D05780310/19/20171.950149,000.00 149,000.00 149,000.00 145,954.44 10/19/2020842573.140.46Ally Bk, Midvale, UT 1.25 9/3/201902006LL685780309/01/20161.25096,000.00 96,000.00 96,000.00 94,476.48 09/03/2019430397.810.30American Exp BK FSB, UT 1.95 7/17/201902587CAF73532807/17/20141.950245,000.00 245,000.00 245,000.00 243,936.70 07/17/20193822,146.600.76Amex Centurion, Salt Lake City UT 2.2 12/11/2019 02587DWX2 2747112/11/20142.200245,000.00 245,000.00 245,000.00 243,069.40 12/11/2019529280.580.76Apex Bank 1.85 4/26/202103753XAU4917610/25/20171.850245,000.00 245,000.00 245,000.00 237,593.65 04/26/20211,03162.090.76Bank of China 1.55 9/28/201806426WRX2 3365309/28/20171.550245,000.00 245,000.00 245,000.00 244,720.70 09/28/2018902,861.130.76Bankwest SD 1.5 3/30/2023-1706652CFN6400903/30/20161.500245,000.00 245,000.00 245,000.00 233,607.50 03/30/20231,7340.000.76Barclays Bk Delaware 2.3 10/18/202206740KLD75720310/18/20172.300245,000.00 245,000.00 245,000.00 236,385.80 10/18/20221,5711,127.000.76BMW Bank NA, Utah 2.1 12/11/201805568P6L63514112/11/20132.100245,000.00 245,000.00 245,000.00 244,884.85 12/11/2018164267.820.76Bofi Fed Bk San Diego 2 7/30/201809710LCX13554606/28/20182.000245,000.00 245,000.00 245,000.00 245,014.70 07/30/20183026.850.76Capital One Bank Glen Allen VA 2.25 9/30/2020140420WD83395409/30/20152.250245,000.00 245,000.00 245,000.00 241,751.30 09/30/20208231,389.450.76Capital One NA McLean VA 1.65 9/24/201814042RAA9429709/28/20151.650245,000.00 245,000.00 245,000.00 244,830.95 09/24/2018861,096.460.76Cathay Bank 1.7 3/25/2019149159LJ21850309/25/20171.700245,000.00 245,000.00 245,000.00 243,978.35 03/25/201926857.050.76Comenity Bank 2.4 6/7/202220036DZV22749906/07/20172.400200,000.00 200,000.00 200,000.00 193,182.00 06/07/20221,438368.220.62COMENITY BK SALT LAKE CITY UT 2.6 11/24/2021 20033AJN75757011/26/20142.600245,000.00 245,000.00 245,000.00 242,221.70 11/24/20211,24369.810.76Discover Bank Greenwood DE 2 12/11/2018254671C81564912/11/20132.000245,000.00 245,000.00 245,000.00 244,897.10 12/11/2018164255.070.76Enerbank USA, UT 2.25 8/28/202029266NB485729308/28/20142.250245,000.00 245,000.00 245,000.00 241,952.20 08/28/20207901,842.530.76Farm Bur Bank 1.7 2/7/2020307660KT63515711/08/20171.700245,000.00 245,000.00 245,000.00 241,359.30 02/07/2020587251.040.76First Farmers 1.85 4/8/2021-18320165JB01283909/08/20171.850245,000.00 245,000.00 245,000.00 237,787.20 04/08/20211,013273.190.76GE Cap Bk Inc Retail 2.55 7/19/202136161TS483377807/18/20142.550150,000.00 150,000.00 150,000.00 148,444.50 07/19/20211,1151,708.150.46GE Cap Ret BK, Draper UT 2.65 3/29/202136157QXM42731403/28/20142.65096,000.00 96,000.00 96,000.00 95,233.92 03/29/20211,003655.170.30GE CAPITAL, UT 2.6 9/21/202036157QQQ3 2731409/20/20132.600150,000.00 150,000.00 150,000.00 148,533.00 09/21/20208141,089.860.46Goldman Sachs 2.4 9/6/202238148PPC53312409/06/20172.400245,000.00 245,000.00 245,000.00 237,755.35 09/06/20221,5291,868.710.76Industrial & Coml NY 2.65 2/14/202345581EAR22438702/14/20182.650245,000.00 245,000.00 245,000.00 238,818.65 02/14/20231,690284.600.76JP Morgan Chase Step 5/30/2023-1848126X3R462805/30/20172.804245,000.00 245,000.00 245,000.00 240,063.25 05/30/20231,795431.940.76KS State Bank Manhattan 2.1 5/17/202250116CBE81989911/17/20172.100245,000.00 245,000.00 245,000.00 235,964.40 05/17/20221,417183.250.76Live Oak Banking Co 2.4 3/9/2020538036DK75866503/09/20182.400245,000.00 245,000.00 245,000.00 243,863.20 03/09/2020618467.180.76Marlin Business Bk 1.95 5/17/202157116AQG65826711/17/20171.950245,000.00 245,000.00 245,000.00 238,049.35 05/17/20211,052170.160.76Mercantil Commerce Bank, FL 1.9 8/29/201858733AAP42295308/29/20131.900245,000.00 245,000.00 245,000.00 244,995.10 08/29/2018601,555.920.76Merrick Bank2.2 11/8/202259013JD713451911/08/20172.200245,000.00 245,000.00 245,000.00 235,148.55 11/08/20221,592324.880.76Morgan Stanley Bk 2.45 1/25/202161747MG963299201/25/20182.450245,000.00 245,000.00 245,000.00 242,165.35 01/25/20219402,565.450.76Nationwide Bank 1.85 2/28/202063861NAK13471011/30/20171.850245,000.00 245,000.00 245,000.00 241,736.60 02/28/20206080.000.76NBT Bank, NY 2.1 8/27/2019628779FP0723008/27/20142.100245,000.00 245,000.00 245,000.00 243,708.85 08/27/20194231,733.790.76Northwest Bank 2 4/29/202266736ABJ75875211/10/20172.000245,000.00 245,000.00 245,000.00 235,244.10 04/29/20221,3990.000.76Old Natl Bank Evansville 1.5 10/30/2018680061HD3439310/30/20171.500245,000.00 245,000.00 245,000.00 244,566.35 10/30/20181220.000.76Peoples United1.6 5/10/201971270QQW9 2733405/10/20171.600248,000.00 248,000.00 248,000.00 246,457.44 05/10/2019314554.430.76Pinnacle Bank 1.85 2/26/202172345SFT33558308/30/20171.850245,000.00 245,000.00 245,000.00 238,201.25 02/26/20219720.000.76Sallie Mae Salt Lake Cty 1.7 10/25/2019795450F265817710/25/20171.700245,000.00 245,000.00 245,000.00 242,385.85 10/25/2019482753.120.76Southern Sts Bk 2 4/20/2021843879BB25855812/20/20172.000245,000.00 245,000.00 245,000.00 238,644.70 04/20/20211,025134.250.76STATE BK INDIA NEW YORK NY 2.6 12/6/20218562843H53368212/05/20142.600245,000.00 245,000.00 245,000.00 241,146.15 12/06/20211,255436.300.76TCF Sioux Falls SD 1.6 11/8/2019872278Q822833011/08/20171.600245,000.00 245,000.00 245,000.00 241,930.15 11/08/2019496569.210.76Third Federal Savings 1.9 9/15/202088413QBQ03001209/15/20171.900245,000.00 245,000.00 245,000.00 240,019.15 09/15/20208081,364.620.76WebBank 2 9/28/2020-17947547JR73440409/28/20172.000245,000.00 245,000.00 245,000.00 240,423.40 09/28/202082126.850.76Webster 5 Cnts 1.55 9/17/2021-1794789PBV59029703/18/20161.550245,000.00 245,000.00 245,000.00 233,921.10 09/17/20211,175124.850.76CashCertificate Of DepositCITY OF PRIOR LAKE, MINNESOTAInvestment Portfolio - By Security TypeJune 30, 2018
Wells Fargo SF 1.6 5/10/2019949763GU4351105/10/20171.600245,000.00 245,000.00 245,000.00 243,485.90 05/10/2019314214.790.76WEX BANK, UT 1 7/9/201892937CDR63469707/08/20161.000245,000.00 245,000.00 245,000.00 244,943.65 07/09/201891,161.230.76Whitney BK - MS 1.65 4/22/2019966594AY91244104/20/20171.650245,000.00 245,000.00 245,000.00 243,706.40 04/22/2019296786.350.76Sub Total / Average1.97911,379,000.00 11,379,000.00 11,379,000.00 11,191,061.0879232,987.1435.09FHLB 2 4/25/2022-193130ACKK910/25/20172.000500,000.00 500,000.00 500,000.00 487,410.00 04/25/20221,3951,805.561.54FHLB Step 11/9/2020-183130ACPF511/09/20171.993500,000.00 500,000.00 500,000.00 495,830.00 11/09/20208631,062.501.54Sub Total / Average1.9971,000,000.00 1,000,000.00 1,000,000.00 983,240.001,1292,868.063.08FHLMC 2 11/30/20203134G3VF405/30/20122.0001,790,000.00 1,790,000.00 1,790,000.00 1,764,116.60 11/30/20208842,983.335.52FHLMC Step 5/22/2020-173134GBNG305/22/20172.482475,000.00 475,000.00 475,000.00 472,553.75 05/22/20206921,128.121.46FHLMC Step 7/19/2022-173134GBVF607/19/20172.240750,000.00 750,000.00 750,000.00 734,280.00 07/19/20221,4806,708.332.31FHLMC Step 8/24/2021-173134GADQ408/24/20161.815700,000.00 700,000.00 700,000.00 686,959.00 08/24/20211,1513,675.002.16Sub Total / Average2.0753,715,000.00 3,715,000.00 3,715,000.00 3,657,909.351,03014,494.7811.46FNMA Step 7/19/2021-173136G3ZZ107/19/20161.733400,000.00 400,000.00 400,000.00 389,344.00 07/19/20211,1152,236.111.23FNMA Step 7/28/2021-163136G3XY607/28/20161.7821,000,000.00 1,000,000.00 1,000,000.00 982,250.00 07/28/20211,1244,222.223.08FNMA Step 8/24/2021-173136G3V7708/24/20161.980500,000.00 500,000.00 500,000.00 490,920.00 08/24/20211,1512,625.001.54Sub Total / Average1.8241,900,000.00 1,900,000.00 1,900,000.00 1,862,514.001,1299,083.335.86League of Minnesota Cities - 4M Fund LGIPLGIP5101M11/30/20101.6106,526,568.93 6,526,568.93 6,526,568.93 6,526,568.93N/A120.12League of Minnesota Cities - 4M LGIPLGIP5204M2017A Good Faith Deposit 06/13/20171.610101,587.54 101,587.54 101,587.54 101,587.54N/A10.31League of Minnesota Cities - 4M Plus Fund LGIPLGIP5101MP11/30/20101.750484,748.52 484,748.52 484,748.52 484,748.52N/A11.49League of Minnesota Cities LGIPLGIP5204MP2017A Transfer from 4M2017A 09/21/20171.750555,320.11 555,320.11 555,320.11 555,320.11N/A11.71Sub Total / Average1.6297,668,225.10 7,668,225.10 7,668,225.10 7,668,225.1010.0023.64Ansonia CT Bds 4 2/1/2021036519PR102/01/20182.550210,000.00 218,740.20 217,551.98 215,443.20 02/01/20219473,476.670.65Desert Sands CA ISD 2.852 6/1/2021250433QJ102/01/20182.5781,165,000.00 1,175,100.55 1,173,862.90 1,159,536.15 06/01/20211,0672,676.523.59Duluth ISD 709 2.35 2/1/2019264471LE111/29/20172.350115,000.00 115,000.00 115,000.00 114,538.85 02/01/20192161,118.530.35Greene Cnty Ohio 1.75 12/1/2018394641KF002/22/20182.100250,000.00 249,327.50 249,632.75 249,492.50 12/01/2018154352.430.77Iowa Westn Comm2.8 6/1/2023462612SE302/12/20182.800195,000.00 195,000.00 195,000.00 192,523.50 06/01/20231,797439.830.60Kenosha WI2.398 9/1/20194898182S204/03/20171.648470,000.00 478,290.80 474,027.77 469,577.00 09/01/20194283,725.561.45Kentucky Assn of Cntys 2.5 2/1/2021491196YV711/30/20172.051465,000.00 471,379.80 470,212.83 458,945.70 02/01/20219474,811.461.43Metropolitan Council 1.55 9/1/2019591852UY209/01/20171.500425,000.00 425,416.50 425,244.19 420,040.25 09/01/20194282,177.531.31Minnetonka ISD 276 3 2/1/2021604195YF812/18/20172.150260,000.00 266,627.40 265,500.57 260,904.80 02/01/20219473,228.330.80Monmouth OR Bds 2.9 4/1/2023609694FZ201/30/20182.900255,000.00 255,000.00 255,000.00 252,072.60 04/01/20231,7361,828.210.79Moundsview ISD 621 3 2/1/2020620637W4610/19/20171.800300,000.00 308,013.00 305,575.51 301,050.00 02/01/20205813,725.000.93Robbinsdale ISD - MN 4.6 2/1/20197702647J205/14/20094.6001,000,000.00 1,000,000.00 1,000,000.00 1,009,810.00 02/01/201921619,038.893.08South Lyon MI 2.69 5/1/2022838736VU710/23/20172.250250,000.00 254,702.50 253,990.43 246,637.50 05/01/20221,4011,102.150.77Washington County Housing 4.25 1/1/2020-10937791KN007/01/20104.250245,000.00 245,000.00 245,000.00 249,645.20 01/01/20205505,177.330.76Sub Total / Average2.7285,605,000.00 5,657,598.25 5,645,598.93 5,600,217.2575752,878.4417.28Total / Average1.95732,431,074.18 32,483,672.43 32,471,673.11 32,127,015.86628 112,311.75100FHLB BondFHLMC BondFNMA BondLocal Government Investment PoolMunicipal Bond