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HomeMy WebLinkAboutInvestment Report - May 2015City of Palm Desert S ♦♦ ¢ SS �•e�9 3�0�� ECONOMIC COMMENTARY The U.S. economy shrank by 0.7% in the first quarter of 2015. 2015 may be a replay of prior years when a weak first quarter was followed by stronger second and third quarters. In 2014, for example, Gross Domestic Product (GDP) shrank by 2.1 % in the first quarter, only to rebound to 4.6% in the second quarter, and end the year at 2.4%. Such an economic pick-up may be happening now. In April, U.S. housing starts rose to their highest level since 2007. In May, nonfarm payrolls increased by 280,000, along with stronger hourly earnings, making a September interest rate increase still possible. Hiring in retail, leisure and hospitality, health care, and business and professional services drove the increase. Government hiring was also the strongest that it has been in two years. The labor participation rate, however, is only 62.9% -- the lowest figure since the 1970s. U.S. economic growth may be constrained by the financial health of its two largest trading partners -- Canada and Mexico. Canada reported a 0.6% economic contraction in the first quarter. Mexico, during the same time period, reported its slowest economic growth in a year. The City received $6 million of property taxes in May. The Palm Desert RDA Successor Agency paid $16.5 million of debt service in June. Yaa(s. owmaa, C'C'M.✓. a' City Treasurer Certified California Municipal Treasurer PORTFOLIO STATISTICS 2015 a4 LIQL)ILQI IVICII RCL, 1 CQI11 City Treasurer Paul S. Gibson, C.C.M.T. Deputy City Treasurer Thomas Metz, J.D., M.B.A. Investment obiectives The treasurer shall invest all public monies in a manner that ensures safety of principal; sufficient liquidity to finance the City's expenditures; and the highest yield possible after the previous two objectives have been met. Thousands of Dollars Month -End Book Value $ 202,346 $ 197,164 $ 195,497 $ 201,332 $ 202,484 $ 193,017 Month -End Market Value $ 202,345 $ 197,164 $ 195,497 $ 201,358 $ 202,508 $ 193,039 Paper Gain (Loss) $ (1) $ - $ - $ 26 $ 24 $ 22 Prior Year Book Variance $ (22,508) $ (21,335) $ (21,888) $ (18,833) $ (10,826) $ (15,643) Interest Earnings (W/O Cash, $ 64 $ 58 $ 65 $ 64 $ 68 $ 67 Yield -To -Maturity 0.40% 0.39% 0.41 % 0.43% 0.42% 0.42% Weighted Maturity (Days) 75 69 70 104 105 107 Effective Duration 0.12 0.10 0.10 0.13 0.14 0.14 All data as of May 31, 2015 PORTFOLIO CHARACTERISTICS May 2015 Dollars in Thousands Maturities Market Value < 1 M $ 161,536 < 2M - < 3M - < 6M - < 1 Y 6,479 < 2Y - < 3Y - < 4Y - < 5Y 1,813 Total: $ 169,828 Ratin s Market Value AAA or Aaa $ 86,470 A 6,479 Unrated 99,534 Total: $ 192,483 Assets Market Value County Pool 77,821 LAIF 49,999 WF/LAIF Bond Proceeds 25,066 City Loan to RDA 22,655 Commercial Paper 6,479 CAMP 4,842 WF Heritage MMF 3,808 Loan Receivable - EIP 1,813 Total: $ 192,483 Month City Yield LAIF Yield Variance Jun14 0.31 0.23 0.08 Jul 0.31 0.24 0.07 Aug 0.32 0.26 0.06 Sep 0.41 0.25 0.16 Oct 0.42 0.26 0.15 Nov 0.43 0.26 0.17 Dec 0.42 0.27 0.15 Jan15 0.42 0.26 0.15 Feb 0.43 0.27 0.16 Mar 0.41 0.28 0.13 April 0.39 0.28 0.10 May 0.40 0.29 0.11 Maturities Distribution 100 95 80 o. 2 60 0 r- 40 0 a 20 0 0 0 4 0 0 0 1 0 <1M <2M <3M <6M <1Y <2Y <3Y <4Y <5Y Credit Quality AAA or Aaa 51% A 3% Unrated 52% Asset Allocation ALAIF 26% County Pool 40% WF/LAIF Bond Proceeds 13% Loan Receivable - vcit Loan to EIP 1% WFHeritage Commercial RDA MMF CAMP Paper 12% 2% 3% 3% Performance 0.45 0.30 d } 0.15 0.00 _ Jun14 Jul Aug Sep Oct Nov Dec Jan15 Feb Mar April May 9LAIF Yield GCity Vield CITY OF PALM DESERT TREASURER'S OFFICE PAGE 2 OF 3 STATEMENT OF COMPLIANCE May 2015 The investment of the City of Palm Desert securities portfolio is governed by California Government Code Section 53601 and by the Palm Desert Statement of Investment Policy. The City investment policy is more conservative than State law. The Palm Desert Audit, Finance, and Investment Committee, and the Palm Desert City Council review the City investment policy annually. For the month ended May 31, 2015, the City investment portfolio was in compliance with all applicable state and local laws and regulations. The City Treasurer's Office continued to pursue conservative and prudent investment strategies, based upon the stated objectives of safety, liquidity, and yield. Barring unforeseen events, the City Treasury should have sufficient cash to finance City expenditures for the next six months. In addition, portions of the City investment portfolio could be liquidated in order to meet any significant, unexpected cash requirements. Union Bank Custody Services provided market value prices for securities in the City investment portfolio. All balances are bank balances. Respectfully submitted, Ywds owtim, cc.my. City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS California Government Code City Investment Policy CA Govt Maximum Maximum Minimum Maximum Maximum Minimum % of City Code Investment Category Maturity Limit Quality Maturity Limit Quality Portfolio 53601(a) Palm Desert Bonds 5 Years No Limit - 53633 Demand Deposits No Limit No Limit No Limit No Limit - 53601(b) U.S. Treasuries 5 Years No Limit 5 Years No Limit - 53601(c) CA State Debt 5 Years No Limit Not Authorized 53601(d) CA Local Agency Debt 5 Years No Limit Not Authorized 53601(e) Federal Agencies 5 Years No Limit 5 Years No Limit - 53601(f) Bankers's Acceptances 180 Days 40% 180 Days 40% A-1 or P-1 - 53601(g) Commercial Paper 270 Days 25% A-1/P-1 270 Days 25% A-1 or P-1 3.4% 53601(h) Negotiable CDs 5 Years 30% 5 Years 30% AA- or Aa3 - 53601(i) Repos 1 Year No Limit 30 Days 20% - 53601(I) Reverse Repos 92 Days 20% Not Authorized 53601(j) Medium -Term Notes 5 Years 30% A 5 Years 30% A - 53601(k) Money Market Funds 90 Days 20% AAA & Aaa 90 Days 20% AAA & Aaa 2.0% 53601(I) Trust Indenture Debt Not Authorized 53601(m) Secured Bank Deposits 5 Years No Limit Not Authorized 53601(k) Local Government Investment Pools 90 Days No Limit AAA & Aaa or Advisor 90 Days 50% (1) AAA & Aaa 1 or Advisor 43.0% 53601(n) Mortgage -Backed Securities 5 Years 20% A (Issuer) & AA (Security) Not Authorized 16429.1(b) L.A.I.F. No Limit $50MM/Acct No Limit $50MM/Acct 39.0% (2) 87.3% Footnotes: (1) Maximum concentration limit for local agency investment pools, excluding bond proceeds. (2) Total does not include the cash, City Loan to RDA, and Loan Receivable - EIP. CITY PORTFOLIO CONCENTRATION LIMITS May 2015 % of Investments Book Value Portfolio RIVERSIDE COUNTY TREASURER $ 77,820,815.37 45.40% LOCAL AGENCY INVESTMENT FUND 49,999,499.36 29.17% WF/L.A.I.F. BOND PROCEEDS 25,066,271.13 14.62% WF ADVANTAGE HERITAGE MMF 3,807,672.09 2.22% CALIFORNIA ASSET MANAGEMENT PROGRAM 4,841,977.50 2.82% TOTAL BEFORE CASH $ 161,536,235.45 94.25% PLUS: CASH $ 9,861,651.53 5.75% GRAND TOTAL $ 171,397,886.98 (1) 100.00% FOOTNOTE: (1) In the City of Palm Desert Comprehensive Annual Financial Report ("CAFR"), both the City of Palm Desert ("City") and the City's external auditor define total investments as demand deposits, investments in various instruments, and investments held in local government investment pools. 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