Loading...
HomeMy WebLinkAboutInvestment Reports December 2009 and January 2010CITY OF PALM DESERT FINANCE DEPARTMENT INTEROFFICE MEMORANDUM TO: RACHELLE KLASSEN, CITY CLERK FROM: NIAMH ORTEGA, RECORDING SECRETARY\ \\ DATE: FEBRUARY 24, 2010 SUBJECT: COMPLIANCE ANALYSIS AND INVESTMENT REPORTS Please find attached the Compliance Analysis and Investment Reports for were presented and approved at the recent meetings of the Audit, Investment and Finance Committee for the months of December 2009 and January 2010. Please include the report on the upcoming agenda for review and acceptance by City Council. Also included are the minutes of the December and January meetings for acceptance by the City Council. Please feel free to contact me at Ext. 382 if you have any questions. Thank you. nmo Attachment (as noted) CITY COUNCIL ACTION APPROVED DFNIFD RECEIVED CFi le, OTIER eCe(Veg-/t BYRDA 5 --C 3-11- Clo MEETING DATE O!V 2/ l - / Q AV ES: betson / leiiiiSon( Kelly, ' c:11 Fui er--/-y NOES. AJ«�� VERIFIED aY_-_�� � ABSENT: A:Clie Original on file with City Clerk's Office ABSTAIN• N Al e- �- VERIFIED BY: �K 1r- Original on File with City Clerk's Office G:\FINANCE\NIAMH ORTEGA\INVESTMENT COMMITTEE\MEMOS\RKLASSENINVREPORT.WPD City of Palm Desert City and Redevelopment Agency Portfolios COMPLIANCE ANALYSIS AND INVESTMENT REPORT December 2009 Paul S. Gibson, C.C.M.T., Treasurer Thomas W. Jeffrey, J.D., M.B.A., Deputy City Treasurer Treasurer's Commentary The Federal Open Market Committee (FOMC) will meet next on January 26-27. No change in interest rates is expected. The FOMC plans to end its "quantitative easing program" by the end of March 2010. This program was designed to keep mortgage rates low, and to finance the U.S. Government fiscal deficit. The Fed bought mortgage securities from the banks, and the banks, in turn, either bought U.S. Government debt or placed the cash back at the Fed. This program was used to buy 80% of $1.5 trillion in new U.S. Government debt. Foreign investors bought the remaining 20%. In 2010, the U.S. Treasury will need to finance $2 trillion in short-term debt, plus an estimated $1.5 trillion in additional deficit spending. This amounts to nearly 30% of U.S. Gross Domestic Product. The Fed will again have to "print money" to purchase most of this debt. Foreign investors may become increasingly hesitant to buy Treasuries unless they are compensated for increased risk of sovereign default. The Russian and Indian central banks, for example, have reportedly stopped buying U.S. Treasury bills, and have started buying large amounts of gold. As the Federal stimulus recedes, asset values that have benefited from it may recede as well. A double -dip recession may be possible in early 2011 if large tax increases are introduced in the second half of 2010. Small businesses, which are the main engines of hiring, would be hit particularly hard by any tax increases. Pau4S. Qi c. c. k r City Treasurer Dollars in Thousands PORTFOLIO STATISTICS DEC-09 NOV-09 OCT-09 SEP-09 AUG-09 JUL-09 CITY Month -End Book Value*** $ 202,229 $ 201,381 $ 239,207 $ 232,393 $ 228,398 $ 226,460 Month -End Market Value*** $ 203,250 $ 202,521 $ 240,435 $ 233,526 $ 229,602 $ 227,587 Paper Gain (Loss) $ 1,021 $ 1,140 $ 1,228 $ 1,133 $ 1,204 $ 1,127 Prior Year Book Variance $ 3,176 $ (12,226) $ 21,577 $ 21,716 $ 7,960 $ 3,786 Interest Earnings $ 314 $ 315 $ 326 $ 322 $ 332 $ 356 Yield -To -Maturity 1.82% 1.93% 1.69% 1.74% 1.79% 1.90% Weighted Maturity (Days) 230 255 246 253 282 297 Effective Duration 0.15 0.17 0.17 0.18 0.20 0.22 RDA Month -End Book Value *** $ 256,271 $ 261,734 $ 226,007 $ 265,942 $ 275,874 $ 284,220 Month -End Market Value *** $ 256,897 $ 262,477 $ 226,811 $ 266,805 $ 276,824 $ 285,231 Paper Gain (Loss) $ 626 $ 743 $ 804 $ 863 $ 950 $ 1,011 Prior Year Book Variance $ 4,419 $ 17,060 $ (19,093) $ 8,557 $ (8,260) $ (4,767) Interest Earnings $ 262 $ 257 $ 186 $ 227 $ 277 $ 308 Yield -To -Maturity 1.21 % 1.21% 0.96% 0.95% 1.19% 1.31% Weighted Maturity (Days) 188 185 214 192 226 236 Effective Duration 0.16 0.17 0.21 0.19 0.20 0.20 *** Omits SLGSs. City of Palm Desert -- Portfolio Characteristics December 31, 2009 Dollars in Thousands Ageing Interval Market Value < 1M $ 111,581 < 2M - < 3M - < 6M 6,114 < 1YR 19,614 < 2YR 10,407 < 3YR - < 4YR < 5YR > 5YR Total: $ 147,716 General Fund Ageing 1 7 0 100 80 60 40 20 0 76 0 0 4 - 0 0 0 0 13 7 <1M <2M <3M <6M < < < < < > 1YR 2YR 3YR 4YR 5YR 5YR Ratings * Market Value AAA $ 66,777 AA 20,732 A 7,061 Unrated ** 107,928 Total: $ 202,498 Sector Market Value MMF $ 32,607 Agencies 10,244 MTNs 27,793 CAMP 3,536 RDA Loan 22,655 GMRA 100,143 LAIF 5,520 CP Total: $ 202,498 Month City Yield LAIF Yield Variance Jan09 2.55 2.05 0.51 Feb 2.36 1.87 0.50 Mar 2.17 1.82 0.35 Apr 2.09 1.61 0.49 May 2.04 1.53 0.51 Jun 2.03 1.38 0.65 Jul 1.90 1.04 0.86 Aug 1.79 0.93 0.87 Sep 1.74 0.76 0.98 Oct 1.69 0.65 1.05 Nov 1.93 0.61 1.32 Dec 1.82 0.57 1.26 Credit Quality AAAAA 33% 10% A 4% Unrated ** 53° Asset Allocation RDA Loan 11% MMF 16% MTNs 14% LAI F 3% GMRA 49% Performance 1 7 rd Jan09Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec * Standard and Poors ** LAIF, and City Loan to RDA Page 2 City of Palm Desert Portfolio Holdings December 31, 2009 Market Ratings Par Value Medium -Term Notes $ 3,795,000 $ 3,000,000 $ 2,035,000 $ 1,891,000 $ 2,000,000 $ 3,965,000 $ 2,000,000 $ 4,000,000 $ 2,000,000 $ 2,020,000 I $ 26,706,000 Issuer BANK OF AMERICA BANK OF AMERICA GENERAL ELECTRIC GENERAL ELECTRIC GENERAL ELECTRIC GENERAL ELECTRIC WACHOVIA WELLS FARGO BANK WELLS FARGO BANK WELLS FARGO BANK Coupon' Maturity I Cost I YTM 5.38 4.25 4.88 6.88 6.13 4.88 7.80 6.38 4.63 4.20 8/15/11 10/1/10 10/21/10 11/15/10 2/22/11 10/21/10 8/18/10 8/1/11 8/9/10 1/15/10 $ 3,870,382 $ 3,022,483 $ 2,024,105 $ 1,908,658 $ 2,009,091 $ 4,014,928 $ 2,032,177 $ 4,069,633 $ 1,994,898 $ 2,019,436 4.05 3.20 5.63 5.65 5.67 3.23 5.02 5.13 5.09 4.96 Price I Value 104.98 $ 102.56 $ 103.41 $ 105.41 $ 105.67 $ 103.41 $ 104.35 $ 106.53 $ 102.56 $ 100.09 $ 3,983,896 3,076,677 2,104,485 1,993,375 2,113,396 4,100, 385 2,086,944 4,261,316 2,051,170 2,021,759 Moody's ' S&P A2 A2 Aa2 Aa2 Aa2 Aa2 Al Al Al Al A A AA+ AA+ AA+ AA+ AA AA AA AA Subtotal Agencies -- Coupon $ 3,000,000 FED FARM CREDIT BANK $ 3,000,000 FED FARM CREDIT BANK $ 2,062,000 FED HOME LOAN MTG CORP $ 2,000,000 FED NAT MTG ASSOC I $ 10,062,000 Subtotal Local Agency Investment Fraud $ 5,519,992 L.A.I.F. $ 5,519,992 4.78 4.78 4.13 4.25 $ 26,965,791 4.57 5/3/10 $ 5/3/10 $ 7/12/10 $ 8/15/10 $ $ 27,793,404 3,001,583 4.61 101.53 $ 3,001,583 4.61 101.53 $ 2,061,211 5.47 102.00 $ 1,985,908 5.47 102.44 $ $ 10,050,286 4.96 3,045,938 3,045,938 2,103,240 2,048,750 $ 10,243,865 0.00 1/1/10 $ 5,519,992 0.57 100.00 $ 5,519,992 Aaa Aaa Aaa Aaa AAA AAA AAA AAA Subtotal $ 5,519,992 0.57 $ 5,519,992 Local Agency Investment Fraud $ 3,528,502 C.A.M.P. $ 7,326 C.A.M.P. (DESERT WILLOW) $ 3,535,828 Subtotal 0.00 1/1/10 $ 0.00 1/1/10 $ 3,528,502 0.25 100.00 $ 3,528,502 7,326 0.25 100.00 $ 7,326 $ 3,535,828 0.25 $ 3,535,828 U AAA U AAA Money Market Fund $ 32,606,825 WF ADVANTAGE GOVT MMF 0.00 1/1/10 $ 32,606,825 0.01 100.00 $ 32,606,825 $ 32,606,825 Subtotal $ 32,606,825 0.01 $ 32,606,825 Aaa AAA Government Managed Rate Account $ 100,143,009 UNION BANK I $ 100,143,009 Subtotal 0.00 1/1/10 $ 100,143,009 1.77 100.00 $ 100,143,009 $ 100,143,009 1.77 $ 100,143,009 Loan to RDA $ 22,655,000 CITY OF PALM DESERT 0.00 1/1/39 $ 22,655,000 0.57 100.00 $ 22,655,000 I $ 22,655,000 Subtotal $ 22,655,000 0.57 $ 22,655,000 1 "U" = Unrated Page 3 City of Palm Desert Portfolio Holdings December 31, 2009 Market Ratings IPar Value I Issuer I Coupon' Maturity I Cost I YTM Total Investments $ 201,228,654 $ 201,476,730 1.82 Price I Value $ 202,497,922 Cash $ 510,866 CITY MAIN CHKG 0.00 1/1/10 $ 510,866 0.00 100.00 $ $ 139,266 DESERT WILLOW CHKG 0.00 1/1/10 $ 139,266 0.00 100.00 $ $ 101,874 RECREATIONAL FAC CHKG 0.00 1/1/10 $ 101,874 0.00 100.00 $ $ 752,006 Subtotal 510,866 139,266 101,874 $ 752,006 $ 752,006 Moody's ' S&P U U U U U U Total Investments and Cash $ 201,980,660 $ 202,228,736 Corporate Issuers % of Portfolio (Market Value) BANK OF AMERICA 3.47% GENERAL ELECTRIC 5.07% WACHOVIA 1.03% WELLS FARGO BANK 4.10% Agency Issuers FED FARM CREDIT BANK FED HOME LOAN MTG CORP FED NAT MTG ASSOC % of Portfolio (Market Value) 3.00% 1.03% 1.01 % $ 203,249,928 "U" = Unrated Page 4 Dollars in Thousands Ageing Interval <1M < 2M < 3M < 6M < 1YR < 2YR < 3YR < 4YR < 5YR > 5YR Total: Palm Desert Redevelopment Agency -- Portfolio Characteristics December 31, 2009 Market Value $ 88,725 14,173 4,224 2,015 $ 109,137 Portfolio Ageing w/o SLGSs 0 a 100 80 60 40 20 0 81 13 0 0 0 4 0 0 0 2 <1M <2M <3M <6M < < < < < > 1YR 2YR 3YR 4YR 5YR 5YR Quality * Market Value AAA $ 74,643 AA 105,759 A - Unrated ** 75,074 Total: $ 255,476 Sector Market Value MMF $ 57,871 Agencies 14,634 MTNs 16,625 CAMP 2,209 LAIF 5,204 EIP 2,015 LAIF/Bond Proceeds 87,048 GMRA 69,870 Total: $ 255,476 Month RDA Yield LAIF Yield Variance Jan09 1.26 2.05 -0.79 Feb 1.29 1.87 -0.58 Mar 1.07 1.82 -0.75 Apr 1.05 1.61 -0.56 May 1.06 1.53 -0.47 Jun 1.30 1.38 -0.08 Jul 1.31 1.04 0.27 Aug 1.19 0.93 0.26 Sep 0.95 0.76 0.19 Oct 0.96 0.65 0.32 Nov 1.21 0.61 0.59 Dec 1.21 0.57 0.64 Credit Quality AAA 29% A 0% Unrated ** 29% AA 42% Asset Allocation 1 Agencies 6% MMF 23% MTNs LAIF 6% 2% CAMP 1 /o EIP 1% GMRA 27% LAIF/Bond Proceeds 34% /Performance 2.1 1.4 0.7 0.0 JanO9Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec LAIF Yield ®RDA Yield * Standard and Poors ** LAIF Page 5 Palm Desert Redevelopment Agency Portfolio Holdings December 31, 2009 Market Ratings IPar Value I Issuer I Coupon I Maturity I Cost I YTM Medium -Term Notes $ 3,000,000 $ 13,625,000 WELLS FARGO BANK 4.20 1/15/10 $ 13,631,130 3.00 100.09 $ 13,636,867 Price I Value WAL-MART $ 16,625,000 Subtotal Agencies -- Coupons $ 4,900,000 FED FARM CREDIT BANK $ 2,000,000 FED HOME LOAN BANK $ 2,000,000 FED HOME LOAN BANK $ 2,000,000 FED HOME LOAN MTG CORP $ 3,734,000 FED HOME LOAN MTG CORP I $ 14,634,000 Subtotal 1 Local Government Investment Pool $ 5,182,126 L.A.I.F. $ 22,026 L.A.I.F. (HOUSING) 0.00 4.13 7/1/10 $ 3,017,477 2.91 101.97 $ 3,058,989 4.90 4.88 4.88 6.88 6.88 $ 5,204,151 Subtotal 0.00 Local Government Investment Pool $ 17,602,468 L.A.I.F. / WELLS FARGO $ 4,790,535 L.A.I.F. / WELLS FARGO $ 25,175,995 L.A.I.F. / WELLS FARGO $ 10,531,455 L.A.I.F. / WELLS FARGO $ 12,484,433 L.A.I.F. / WELLS FARGO $ 16,463,540 L.A.I.F. / WELLS FARGO 0.00 0.00 0.00 0.00 0.00 0.00 $ 87,048,426 Subtotal Local Government Investment Pool $ 98,243 C.A.M.P. $ 2,110,749 C.A.M.P. (HOUSING) 0.00 0.00 $ 16,648,608 2.98 $ 16,695,856 4,908,506 4.65 103.09 $ 1,986,211 5.49 104.91 $ 1,986,028 5.50 104.91 $ 2,016,584 5.54 104.53 $ 3,765,019 5.54 104.53 $ 5,051,594 2,098,125 2,098,125 2,090,625 3,903,197 Moody's ' S&P Aa2 Al Aaa Aaa Aaa Aaa Aaa AA AA AAA AAA AAA AAA AAA $ 14,662,348 5.23 $ 15,241,666 5,182,126 0.57 100.00 $ 5,182,126 U U 22,026 0.57 100.00 $ 22,026 $ 5,204,151 0.57 $ 5,204,151 17,602,468 4,790,535 25,175,995 10,531,455 12,484,433 16,463,540 0.57 0.57 0.57 0.57 0.57 0.57 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 17,602,468 4,790,535 25,175,995 10,531,455 12,484,433 16,463,540 $ 87,048,426 0.57 $ 87,048,426 $ 2,208,992 Subtotal U U U U U U AA AA AA AA AA AA 98,243 0.25 100.00 $ 98,243 2,110,749 0.25 100.00 $ 2,110,749 $ 2,208,992 0.25 $ 2,208,992 U AAA U AAA AAA U U Money Market Fund $ 57,870,815 WF ADVANTAGE GOVT MMF I $ 57,870,815 Subtotal Government Managed Rate Account $ 69,870,018 UNION BANK I $ 69,870,018 Subtotal 0.00 1/1/10 $ 57,870,815 0.01 100.00 $ 57,870,815 $ 57,870,815 0.01 $ 57,870,815 0.00 1/1/10 $ 69,870,018 1.77 100.00 $ 69,870,018 $ 69,870,018 1.77 $ 69,870,018 Aaa "U" = Unrated Page 6 Palm Desert Redevelopment Agency Portfolio Holdings December 31, 2009 Market Ratings Par Value Issuer I Coupon I Maturity I Cost I YTM Municipal Bonds $ 2,015,000 ENERGY INDEP PROGRAM 3.00 9/2/29 $ Price I Value 2,015,000 3.00 100.00 $ 2,015,000 Moody's ! S&P AA $ 2,015,000 Subtotal $ 2,015,000 3.00 $ 2,015,000 Total Investments $ 255,476,402 Cash $ 322,218 $ 419,962 $ 255,528,357 1.21 $ 256,154,924 HOUSING AUTH CHKG 0.00 1/1/10 $ HOUSING AUTH TRUST 0.00 1/1/10 $ 322,218 0.00 100.00 $ 322,218 U U 419,962 0.00 100.00 $ 419,962 $ 742,180 Subtotal $ 742,180 $ 742,180 . Total Investments and Cash $ 256,218,582 $ 256,270,537 Corporate Issuers % of Portfolio (Market Value) WAL-MART 1.19% WELLS FARGO BANK 5.31% Agency Issuers FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP % of Portfolio (Market Value) 1.97% 1.63% 2.33% $ 256,897,104 "U" = Unrated Page 7 STATEMENT OF COMPLIANCE The investment portfolios of the City of Palm Desert ("City") and the Palm Desert Redevelopment Agency ("RDA") are governed by federal, state, and local law. The City Treasurer's "Statement of Investment Policy" is more restrictive than the California Government Code. The Palm Desert Audit, Investment, and Finance Committee and the Palm Desert City Council review the Statement of Investment Policy annually. For the month ended December 31, 2009, the City and the RDA investment portfolios were in compliance with all applicable federal, state, and local laws and regulations. The City Treasury continued to pursue conservative and prudent investment strategies, based upon the stated objectives of safety, liquidity, and yield (in order of priority). Barring unforeseen events, the City Treasury should have sufficient cash to finance the operations of the City of Palm Desert and the Palm Desert Redevelopment Agency over the next six months. In addition, portions of either the City or the RDA portfolio could be liquidated in order to meet any significant, unexpected cash requirements. Interactive Data Corporation provided the data that was used to calculate the market value of all securities in the City and the RDA investment portfolios. State and Local Government Series securities are held in escrow accounts, and are therefore not included in this report as assets. All balances are bank balances. Respectfully Submitted on January 26, 2010, PaabS. 6i1,101,4 C. C. Al. r City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS CA Govt Code California Government Code I City Investment Policy Investment Category Maximum Maximum Quality Maximum Maximum Quality Maturity Limit S&P/Mdys Maturity Limit S&P/Mdys % of City Portfolio % of RDA Portfolio 53601(a) Palm Desert Bonds 5 Years No Limit 0.0% 0.8% 53632(c) Savings Accounts No Limit No Limit No Limit No Limit 49.7% 27.3% 53601(b) U.S. Treasuries 5 Years No Limit 5 Years No Limit 0.0% 0.0% 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 30% 6% 5.0% 5.7% 53601(f) Bankers's Acceptances 180 Days 40% 180 Days 40% A-1 & P-1 - - 53601(g) Commercial Paper 270 Days 25% A-1+ or P-1 270 Days 25% A-1+ or P-1 0.0% 0.0% 53601(h) Negotiable CDs 5 Years 30% 5 Years 30% AA- or Aa3 - - 53601(i) Repos 1 Year No Limit 30 Days 20% AAA & Aaa - - 53601(i) Reverse Repos 92 Days 20% Not Authorized 53601(j) Medium -Term Notes 5 Years 30% A 5 Years 30% A 13.4% 6.5% 53601(k) Mutual Funds 90 Days 20% AAA & Aaa 90 Days 20% (2) AAA & Aaa 16.2% 22.7% 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 20% AAA & Aaa or Advisor 90 Days 20% (2) AAA & Aaa or Advisor 1.8% 0.9% 53601(n) Mortgage -Backed Securities 5 Years 20% A (Issuer) & AA (Security) Not Authorized 16429.1(b) LAIF No Limit No Limit 2.7% 36.1% (1) The City (2) The City (3) Maximum loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. Energy Independence Program has been approved by the Palm Desert City Council. limit for mutual funds and local government investment pools, excluding bond proceeds. 88.7% 100.0% Certified California Municipal Treasurer Page 8 City of Palm Desert City and Redevelopment Agency Portfolios COMPLIANCE ANALYSIS AND INVESTMENT REPORT January 2010 Paul S. Gibson, C.C.M.T., Treasurer Thomas W. Jeffrey, J.D., M.B.A., Deputy City Treasurer Treasurer's Commentary The U.S. Government has launched a series of initiatives designed to tighten monetary policy gradually, and to increase investment in securities markets. While the FOMC left the Federal Funds Rate unchanged at its January 27 meeting, it subsequently raised the Discount Rate (lending rate to member banks) in an effort to wean banks off government credit. Separately, the SEC voted to restructure money market funds by shortening portfolio maturities; increasing the amount of daily cash equivalents held; and empowering governing boards to suspend redemptions during emergencies. U.S. Gross Domestic Product (GDP) grew by 5.7% in 4Q09. Approximately 3.4% (60%) of this was due to inventory rebuilding, and another 2.0% (35%) was due to consumer spending. Consumer spending fell by 0.8% from 3Q09 due largely to the end of "cash for clunkers." Some economists believe that a 5.7% growth rate may not be sustainable once inventory rebuilding slows, and the government stimulus fades. The global economic recovery may be hampered by events unfolding in China and in Europe. Some economists believe that a credit bubble may be building in China due to a long period of easy credit. In Europe, a number of EU members have high levels of sovereign debt relative to GDP, with Greece thought to be at the greatest risk of sovereign default. Germany and France however, cannot avoid a Greek default since their banks hold large amounts of Greek debt. Although a EU/IMF bailout is likely, the national austerity measures that follow may slow the European economic recovery. Pas 6'4 on, C C,t r City Treasurer Dollars in Thousands PORTFOLIO STATISTICS JAN-10 DEC-09 NOV-09 OCT-09 SEP-09 AUG-09 CITY Month -End Book Value*** $ 218,094 $ 202,229 $ 201,381 $ 239,207 $ 232,393 $ 228,398 Month -End Market Value*** $ 219,068 $ 203,250 $ 202,521 $ 240,435 $ 233,526 $ 229,602 Paper Gain (Loss) $ 974 $ 1,021 $ 1,140 $ 1,228 $ 1,133 $ 1,204 Prior Year Book Variance $ 5,356 $ 3,176 $ (12,226) $ 21,577 $ 21,716 $ 7,960 Interest Earnings $ 221 $ 314 $ 315 $ 326 $ 322 $ 332 Yield -To -Maturity 1.31% 1.82% 1.93% 1.69% 1.74% 1.79% Weighted Maturity (Days) 419 230 255 246 253 282 Effective Duration 0.35 0.15 0.17 0.17 0.18 0.20 RDA Month -End Book Value *** $ 287,243 $ 256,271 $ 261,734 $ 226,007 $ 265,942 $ 275,874 Month -End Market Value *** $ 287,788 $ 256,897 $ 262,477 $ 226,811 $ 266,805 $ 276,824 Paper Gain (Loss) $ 545 $ 626 $ 743 $ 804 $ 863 $ 950 Prior Year Book Variance $ 5,970 $ 4,419 $ 17,060 $ (19,093) $ 8,557 $ (8,260) Interest Earnings $ 183 $ 262 $ 257 $ 186 $ 227 $ 277 Yield -To -Maturity 0.72% 1.21% 1.21% 0.96% 0.95% 1.19% Weighted Maturity (Days) 236 188 185 214 192 226 Effective Duration 0.38 0.16 0.17 0.21 0.19 0.20 Omits SLGSs. Dollars in Thousands Ageing Interval <1M < 2M < 3M < 6M < 1YR < 2YR < 3YR < 4YR < 5YR > 5YR Total: City of Palm Desert -- Portfolio Characteristics January 31, 2010 Market Value $ 63,846 3,000 8,170 23,509 31,738 32,929 $ 163,192 Ratings * AAA AA A Unrated ** Total: Market Value $ 125,985 21,769 7,073 62,200 $ 217,027 Sector Market Value MMF $ 32,593 Agencies 70,503 MTNs 28,844 CAMP 22,887 RDA Loan 22,655 LAIF 39,545 Total: $ 217,027 Month City Yield LAIF Yield Variance Feb09 2.36 1.87 0.50 Mar 2.17 1.82 0.35 Apr 2.09 1.61 0.49 May 2.04 1.53 0.51 Jun 2.03 1.38 0.65 Jul 1.90 1.04 0.86 Aug 1.79 0.93 0.87 Sep 1.74 0.76 0.98 Oct 1.69 0.65 1.05 Nov 1.93 0.61 1.32 Dec 1.82 0.57 1.26 Jan10 1.31 0.56 0.76 <1M <2M <3M <6M < < < < < > 1YR 2YR 3YR 4YR 5YR 5YR Credit Quality AAA 58% Unrated ** 29% AA A 10% 3% Asset Allocation Agencies 33% LAIF 18% MTNs 13% RDA Loan 10% Feb09Ma Ap May Jun Jul Aug Sep Oct Nov DecJanlo 2 * Standard and Poors ** LAIF, and City Loan to RDA Page 2 City of Palm Desert Portfolio Holdings January 31, 2010 Market Ratings Par Value 1 Medium -Term Notes $ 3,795,000 $ 3,000,000 $ 2,035,000 $ 1,891,000 $ 2,000,000 $ 3,965,000 $ 3,000,000 $ 2,000,000 $ 4,000,000 $ 2,000,000 Issuer BANK OF AMERICA BANK OF AMERICA GENERAL ELECTRIC GENERAL ELECTRIC GENERAL ELECTRIC GENERAL ELECTRIC TOYOTA WACHOVIA WELLS FARGO BANK WELLS FARGO BANK Coupon] Maturity I Cost I YTM 5.38 4.25 4.88 6.88 6.13 4.88 4.35 7.80 6.38 4.63 8/15/11 10/1/10 10/21/10 11/15/10 2/22/11 10/21/10 12/15/10 8/18/10 8/1/11 8/9/10 $ 3,866,510 $ 3,019,984 $ 2,025,232 $ 1,906,971 $ 2,008,427 $ 4,009,763 $ 3,101,979 $ 2,027,925 $ 4,065,968 $ 1,995,600 4.05 3.20 5.63 5.65 5.67 3.23 0.44 5.02 5.13 5.09 Price I Value 105.57 102.26 103.08 105.05 105.64 103.08 103.43 103.81 106.54 102.22 Moody's I S&P $ 4,006,526 A2 A $ 3,067,791 A2 A $ 2,097,647 Aa2 AA+ $ 1,986,528 Aa2 AA+ $ 2,112,820 Aa2 AA+ $ 4,087,063 Aa2 AA+ $ 3,102,912 Aa1 AA $ 2,076,198 Al AA $ 4,261,780 Al AA $ 2,044,468 Al AA $ 27,686,000 Subtotal $ 28,028,359 4.08 $ 28,843,732 Agencies -- Coupon $ 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 2,062,000 3,000,000 3,000,000 2,000,000 3,000,000 FED FARM CREDIT BANK FED FARM CREDIT BANK FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP FED HOME LOAN MTG CORP FED HOME LOAN MTG CORP FED NAT MTG ASSOC FED NAT MTG ASSOC 4.78 5/3/10 $ 4.78 5/3/10 $ 3.50 10/3/11 $ 1.63 7/27/11 $ 0.44 10/7/10 $ 1.63 3/16/11 $ 4.13 7/12/10 $ 1.63 4/26/11 $ 4.13 2/24/11 $ 4.25 8/15/10 $ 1.75 12/28/12 $ 3,001,194 3,001,194 3,125,524 3,035,204 3,002,442 3,038,125 2,063,362 3,036,309 3,114,618 1,987,796 2,995,572 4.61 4.61 0.97 1.18 0.32 0.41 5.47 0.60 0.52 5.47 1.91 101.19 101.19 104.28 101.25 100.03 101.22 101.78 101.31 103.72 102.28 99.97 $ 3,035,625 Aaa AAA $ 3,035,625 Aaa AAA $ 3,128,438 Aaa AAA $ 3,037,500 Aaa AAA $ 3,000,938 Aaa AAA $ 3,036,563 Aaa AAA $ 2,098,729 Aaa AAA $ 3,039,375 Aaa AAA $ 3,111,563 Aaa AAA $ 2,045,625 Aaa AAA $ 2,999,063 Aaa AAA $ 31,062,000 Subtotal $ 31,401,339 2.16 $ 31,569,042 Agencies -- Callable 3,000,000 3,000,000 15,000,000 2,980,000 3,000,000 3,000,000 6,000,000 FED HOME LOAN BANK FED HOME LOAN BANK FED HOME LOAN BANK FED HOME LOAN BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP FED NAT MTG ASSOC 1.00 10/28/11 $ 1.38 6/11/12 $ 1.38 6/28/12 $ 1.88 11/19/12 $ 1.85 12/21/12 $ 1.25 1/26/12 $ 1.75 12/28/12 $ 3,000,000 2,994,118 14,970,577 2,986,411 3,000,922 3,000,000 5,991,506 1.00 2.01 1.82 1.61 1.82 1.25 1.90 100.03 99.84 99.81 99.72 99.78 100.10 99.97 $ 3,000,938 $ 2,995,313 $ 14,971,875 $ 2,971,619 $ 2,993,438 $ 3,002,958 $ 5,998,125 Aaa Aaa Aaa Aaa Aaa Aaa Aaa AAA AAA AAA AAA AAA AAA AAA $ 35,980,000 Subtotal $ 35,943,533 1.71 $ 35,934,264 Agencies -- Discount $ 3,000,000 FED HOME LOAN BANK 0.00 4/13/10 $ 2,999,440 0.07 99.99 $ 2,999,700 Aaa AAA $ 3,000,000 Subtotal $ 2,999,440 0.07 $ 2,999,700 "U" = Unrated Page 3 City of Palm Desert Portfolio Holdings January 31, 2010 Market Ratings IPar Value I Issuer I Coupon I Maturity I Cost I YTM Local Agency Investment Fund $ 39,545,341 L.A.I.F. 0.00 2/1/10 $ Price I Value 39,545,341 0.56 100.00 $ 39,545,341 Moody's ' S&P $ 39,545,341 Subtotal $ 39,545,341 0.56 $ 39,545,341 Local Agency Investment Fund $ 22,879,202 C.A.M.P. 0.00 $ 7,327 C.A.M.P. (DESERT WILLOW) 0.00 2/1/10 $ 2/1/10 $ 22,879,202 0.22 100.00 $ 22,879,202 U AAA 7,327 0.22 100.00 $ 7,327 AAA $ 22,886,530 Subtotal $ 22,886,530 0.22 $ 22,886,530 Money Market Fund $ 32,593,087 WF ADVANTAGE GOVT MMF 0.00 2/1/10 $ 32,593,087 0.00 100.00 $ 32,593,087 Aaa AAA $ 32,593,087 Subtotal $ 32,593,087 0.00 $ 32,593,087 Loan to RDA $ 22,655,000 CITY OF PALM DESERT 0.00 2/1/40 $ 22,655,000 0.56 100.00 $ 22,655,000 $ 22,655,000 Subtotal $ 22,655,000 0.56 100.00 $ 22,655,000 Total Investments $ 215,407,957 Cash $ 1,421,222 $ 499,751 $ 120,022 CITY MAIN CHKG DESERT WILLOW CHKG RECREATIONAL FAC CHKG 0.00 0.00 0.00 $ 216,052,628 1.31 $ 217,026,696 2/1/10 $ 2/1/10 $ 2/1/10 $ 1,421,222 0.00 100.00 $ 499,751 0.00 100.00 $ 120,022 0.00 100.00 $ 1,421,222 499,751 120,022 U U U U U U $ 2,040,995 Subtotal $ 2,040,995 $ 2,040,995 Total Investments and Cash $ 217,448,952 $ 218,093,623 $ 219,067,691 "U" = Unrated Page 4 City of Palm Desert Portfolio Holdings January 31, 2010 Market Ratings IPar Value I Issuer I Coupon I Maturity I Cost I YTM Corporate Issuers % of Portfolio (Markert Value) BANK OF AMERICA 3.23% GENERAL ELECTRIC 4.69% TOYOTA 1.42% WACHOVIA 0.95% WELLS FARGO BANK 2.88% Agency Issuers FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP FED NAT MTG ASSOC % of Portfolio (Market Value) 4.20% 17.81 5.14% 5.04% Price I Value Moody's I S&P "U" = Unrated Page 5 Palm Desert Redevelopment Agency -- Portfolio Characteristics January 31, 2010 Dollars in Thousands Ageinc Interval Market Value < 1 M $ 79,990 < 2M < 3M - < 6M 3,051 < 1YR 14,017 < 2YR 31,573 < 3YR 3,850 < 4YR < 5YR > 5YR 3,151 Total: $ 135,632 Quality * Market Value AAA $ 138,310 AA 98,901 A 10,155 Unrated ** 39,731 Total: $ 287,097 Sector Market Value MMF $ 59,731 Agencies 36,187 MTNs 16,303 CAMP 42,392 LAIF 39,731 EIP 3,151 LAIF/Bond Proceeds 89,602 Total: $ 287,097 Month RDA Yield LAIF Yield Variance Feb09 1.29 1.87 -0.58 Mar 1.07 1.82 -0.75 Apr 1.05 1.61 -0.56 May 1.06 1.53 -0.47 Jun 1.30 1.38 -0.08 Jul 1.31 1.04 0.27 Aug 1.19 0.93 0.26 Sep 0.95 0.76 0.19 Oct 0.96 0.65 0.32 Nov 1.21 0.61 0.59 Dec 1.21 0.57 0.64 Jan 0.72 0.56 0.16 <1M<2M<3M<6M < < < < < > 1YR 2YR 3YR 4YR 5YR 5YR Asset Allocation MTNs Agencies 6% CAMP 12% - 15% MMF 21% LAIF/Bond Proceeds 31% LAIF 14% EIP 1% Performance I F -73 eb09Mar Ap May Jun Jul Aug Sep Oct Nov Dec Jan LAIF Yield 0RDA Yield * Standard and Poors ** LAIF Page 6 IPar Value Palm Desert Redevelopment Agency Portfolio Holdings January 31, 2010 Market Ratings Medium -Term Notes 3,000,000 3,450,000 3,000,000 3,000,000 3,000,000 Issuer 'Coupon' Maturity 1 Cost 1 YTM ABBOTT LABS BEAR STEARNS (JPM) JP MORGAN CHASE JP MORGAN CHASE WAL-MART 3.75 6.95 3.13 5.60 4.13 3/15/11 8/10/12 12/1/11 6/1/11 7/1/10 $ 3,105,502 $ 3,883,735 $ 3,121,612 $ 3,188,448 $ 3,014,565 0.60 1.83 0.69 0.85 2.91 Price Value 103.25 $ 111.60 $ 104.15 $ 106.10 $ 101.70 $ 3,097,593 3,850,307 3,121,612 3,182,982 3,050,982 Moody's ' S&P Al Aa3 Aa3 Aa3 Aa2 AA A+ A+ A+ AA $ 15,450,000 Subtotal $ 16,313,862 1.39 $ 16,303,476 Agencies -- Coupon $ 4,900,000 $ 2,000,000 $ 2,000,000 $ 2,890,000 $ 3,000,000 $ 3,000,000 $ 2,000,000 $ 3,734,000 $ 2,940,000 $ 9,000,000 FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN BANK FED HOME LOAN BANK FED HOME LOAN BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP FED HOME LOAN MTG CORP FED NATIONAL MTG ASSOC FED NATIONAL MTG ASSOC 4.90 4.88 4.88 2.88 0.50 1.13 6.88 6.88 1.75 1.00 9/22/10 3/11/11 3/11/11 3/11/11 11/29/10 12/9/11 9/15/10 9/15/10 3/23/11 11/23/11 $ 4,907,528 $ 1,987,173 $ 1,987,002 $ 2,966,136 $ 3,005,177 $ 3,010,721 $ 2,014,625 $ 3,761,355 $ 2,982,085 $ 9,009,652 4.65 5.49 5.50 0.49 0.36 0.96 5.54 5.54 0.43 1.00 102.91 104.81 104.81 102.56 100.06 100.25 104.16 104.16 101.41 100.28 $ 5,042,406 $ 2,096,250 $ 2,096,250 $ 2,964,056 $ 3,001,875 $ 3,007,500 $ 2,083,125 $ 3,889,194 $ 2,981,344 $ 9,025,313 Aaa AAA Aaa AAA Aaa AAA Aaa AAA Aaa AAA Aaa AAA Aaa AAA Aaa AAA Aaa AAA Aaa AAA $ 35,464,000 Subtotal $ 35,631,455 2.59 $ 36,187,313 Local Government Investment Pool $ 39,708,598 L.A.I.F. $ 22,059 L.A.I.F. (HOUSING) 0.00 2/1/10 $ 39,708,598 0.56 100.00 $ 39,708,598 U U 0.00 2/1/10 $ 22,059 0.56 100.00 $ 22,059 $ 39,730,658 Subtotal $ 39,730,658 0.56 $ 39,730,658 Local Government Investment Pool 17,629,313 4,797,836 25,214,364 10,358,920 15,112,739 16,488,631 L.A.I.F. / WELLS FARGO L.A.I.F. / WELLS FARGO L.A.I.F. / WELLS FARGO L.A.I.F. / WELLS FARGO L.A.I.F. / WELLS FARGO L.A.I.F. / WELLS FARGO 0.00 0.00 0.00 0.00 0.00 0.00 2/1/10 2/1/10 2/1/10 2/1/10 2/1/10 2/1/10 $ 17,629,313 $ 4,797,836 $ 25,214,364 $ 10,358,920 $ 15,112,739 $ 16,488,631 0.56 0.56 0.56 0.56 0.56 0.56 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 17,629,313 4,797,836 25,214,364 10,358,920 15,112, 739 16,488,631 U AA U AA U AA U AA U AA U AA $ 89,601,804 Subtotal $ 89,601,804 0.56 $ 89,601,804 Local Government Investment Pool $ 40,281,191 C.A.M.P. $ 2,111,137 C.A.M.P. (HOUSING) 0.00 2/1/10 $ 40,281,191 0.22 100.00 $ 40,281,191 U 0.00 2/1/10 $ 2,111,137 0.22 100.00 $ 2,111,137 AAA AAA $ 42,392,328 Subtotal $ 42,392,328 0.22 $ 42,392,328 "U" = Unrated Page 7 Palm Desert Redevelopment Agency Portfolio Holdings January 31, 2010 Market Ratings Par Value Issuer 'Coupon' Maturity I Cost 1 YTM Price I Value Moody's ' S&P Money Market Fund $ 59,730,952 WF ADVANTAGE GOVT MMF 0.00 2/1/10 $ 59,730,952 0.00 100.00 $ 59,730,952 Aaa AAA $ 59,730,952 Subtotal $ 59,730,952 0.00 $ 59,730,952 Municipal Bonds $ 3,151,000 CITY OF PALM DESERT 3.00 9/2/29 $ 3,151, 000 3.00 100.00 $ 3,151,000 AA $ 3,151,000 Subtotal $ 3,151,000 3.00 $ 3,151,000 Total Investments $ 285,520,741 Cash $ 286,110 $ 404,387 $ 286,552,058 0.72 $ 287,097,530 HOUSING AUTH CHKG 0.00 2/1/10 $ HOUSING AUTH TRUST 0.00 2/1/10 $ 286,110 0.00 100.00 $ 286,110 U U 404,387 0.00 100.00 $ 404,387 $ 690,497 Subtotal $ 690,497 $ 690,497 Total Investments and Cash $ 286,211,239 $ 287,242,556 Corporate Issuers ABBOTT LABS BEAR STEARNS (JPM) JP MORGAN CHASE WAL-MART % of Portfolio (Market Value) 1.08% 1.34% 2.19% 1.06% $ 287,788,028 "U" = Unrated Page 8 Palm Desert Redevelopment Agency Portfolio Holdings January 31, 2010 Market Ratings Par Value Issuer 1 Coupon' Maturity 1 Cost 1 YTM Agency Issuers FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP FED NATIONAL MTG ASSOC % of Portfolio (Market Value) 1.75% 4.57% 2.08% 4.17% Price Value Moody's 1 S&P "U" = Unrated Page 9 STATEMENT OF COMPLIANCE The investment portfolios of the City of Palm Desert ("City") and the Palm Desert Redevelopment Agency ("RDA") are governed by federal, state, and local law. The City Treasurer's "Statement of Investment Policy" is more restrictive than the California Government Code. The Palm Desert Audit, Investment, and Finance Committee and the Palm Desert City Council review the Statement of Investment Policy annually. For the month ended January 31, 2010, the City and the RDA investment portfolios were in compliance with all applicable federal, state, and local laws and regulations. The City Treasury continued to pursue conservative and prudent investment strategies, based upon the stated objectives of safety, liquidity, and yield (in order of priority). Barring unforeseen events, the City Treasury should have sufficient cash to finance the operations of the City of Palm Desert and the Palm Desert Redevelopment Agency over the next six months. In addition, portions of either the City or the RDA portfolio could be liquidated in order to meet any significant, unexpected cash requirements. Interactive Data Corporation provided the data that was used to calculate the market value of all securities in the City and the RDA investment portfolios. State and Local Government Series securities are held in escrow accounts, and are therefore not included in this report as assets. All balances are bank balances. Respectfully Submitted on February 23, 2010, Pis Qz;b1011.4 CCA'f r. City Treasurer CA Govt Code Investment Category SUMMARY OF AUTHORIZED INVESTMENTS ICalifornia Government Code I City Investment Policy Maximum Maximum Quality Maximum Maximum Quality % of City % of RDA Maturity Limit S&P/Mdys Maturity Limit S&P/Mdys Portfolio Portfolio 53601(a) Palm Desert Bonds 5 Years No Limit 0.0% 1.1% 53632(c) Savings Accounts No Limit No Limit No Limit No Limit 53601(b) U.S. Treasuries 5 Years No Limit 5 Years No Limit 0.0% 0.0% 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 30% 6% 32.6% 12.4% 53601(f) Bankers'sAcceptances 180 Days 40% 180 Days 40% A-1 & P-1 - - 53601(g) Commercial Paper 270 Days 25% A-1+ or P-1 270 Days 25% A-1+ or P-1 0.0% 0.0% 53601(h) Negotiable CDs 5 Years 30% 5 Years 30% AA- or Aa3 - - 53601(i) Repos 1 Year No Limit 30 Days 20% AAA & Aaa - - 53601(i) Reverse Repos 92 Days 20% Not Authorized 53601(j) Medium -Term Notes 5 Years 30% A 5 Years 30% A 13.0% 5.7% 53601(k) Mutual Funds 90 Days 20% AAA & Aaa 90 Days 20% (2) AAA & Aaa 15.1% 20.8% 53601(1) Trust Indenture Debt Not Authorized 53601(m) Secured Bank Deposits 5 Years No Limit Not Authorized 53601(k) Local Government Investment Pools 90 Days 20% AAA & Aaa or Advisor 90 Days 20% (2) AAA & Aaa or Advisor 10.6% 14.8% 53601(n) Mortgage -Backed Securities 5 Years 20% A (Issuer) & AA (Security) Not Authorized 16429.1(b) LAIF No Limit No Limit 18.3% 45.1% (1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. (2) The City Energy Independence Program has been approved by the Palm Desert City Council. (3) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds. 89.5% 100.0% * Certified California Municipal Treasurer Page 10