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Home My WebLink AboutInvestment Reports December 2010 and January 2011 - Joint ConsiderationCITY OF PALM DESERT FINANCE DEPARTMENT INTEROFFICE MEMORANDUM TO: RACHELLE KLASSEN, CITY CLERK FROM: NIAMH ORTEGA, RECORDING SECRETARY DATE: MARCH 15, 2011 SUBJECT: COMPLIANCE ANALYSIS AND INVESTMENT REPORTS Please find attached the Compliance Analysis and Investment Reports which were presented and approved at the recent meetings of the Audit, Investment and Finance Committee for the months of December 2010 and January 2011. Please include the report on the upcoming agenda for review and acceptance by City Council. Also included are the Minutes of the December 2010 and January 2011 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 —DENIED RECEIVED P OTHER MEETING DATE AYESf NOES: AI L'n e ABSENT: Nh di - ABSTAIN: VERIFIED BY. --- Original on File with City Clerk's Office BY RDA 5 L CIN- AIRED BY ILI �yinal on file with City C lcrk's Office G:\FINANCE\NIAMH ORTEGA\INVESTMENT COMM ITTEE\MEMOS\RKLASS ENINVREPORT.WPD City of Palm Desert City and Redevelopment Agency Portfolios COMPLIANCE ANALYSIS AND INVESTMENT REPORT December 31, 2010 Paul S. Gibson, C.C.M.T., Treasurer Thomas W. Jeffrey, J.D., M.B.A., Deputy City Treasurer Treasurer's Commentary The Federal Market Open Committee (FOMC) will meet next on January 25-26. No change in policy is expected. Inflationary pressure in the food and energy sectors (which are not included in the Consumer Price Index) was evident during the December -January period, both on a global and a domestic scale. Drought in South America and flooding in Australia contributed to commodities shortages. Precious metals prices rose in response to increased Asian demand. Banks are reportedly expanding their loans to businesses and to consumers for the first time since the credit crisis started. Consumers are also showing more willingness to incur debt. Unemployment remains stubbornly high. Treasury Secretary Geithner warned lawmakers that the U.S. Government would reach its legal borrowing limit as early as March 31. He urged Congress to raise the limit "well before the threat of default becomes imminent." The U.S. national debt is approximately $14 trillion. The City recently submitted paperwork to transfer $8.3 million of bond proceeds (PA #3, Series 2003 and PA #4, Series 2001) from Wells Fargo Corporate Trust Services to LAIF for investment, in order to enhance portfolio yield. This completes the process of transferring bond proceeds to LAIF. Pis tjc.c.Af 7- City Treasurer PORTFOLIO STATISTICS Dollars in Thousands DEC-10 NOV-10 OCT-10 SEP-10 AUG-10 JUL-10 CITY Month -End Book Value"' $ 186,911 $ 190,254 $ 192,696 $ 195,728 $ 206,273 $ 197,878 Month -End Market Value*** $ 187,160 $ 190,546 $ 193,077 $ 196,176 $ 206,833 $ 198,453 Paper Gain (Loss) $ 249 $ 292 $ 381 $ 448 $ 560 $ 575 Prior Year Book Variance $ (15,318) $ (11,127) $ (46,511) $ (36,665) $ (22,125) $ (28,582) Interest Earnings 130 112 136 155 166 173 Yield -To -Maturity 0.72% 0.75% 0.78% 0.96% 0.93% 1.12% Weighted Maturity (Days) 146 217 255 311 295 351 Effective Duration 0.09 0.10 0.13 0.15 0.17 0.21 RDA Month -End Book Value *** $ 230,513 $ 233,601 $ 242,873 $ 257,899 $ 276,345 $ 298,512 Month -End Market Value *** $ 230,876 $ 234,003 $ 243,401 $ 258,372 $ 276,806 $ 299,018 Paper Gain (Loss) $ 363 $ 402 $ 528 $ 473 $ 461 $ 506 Prior Year Book Variance $ (25,758) $ (28,133) $ 16,866 $ (8,043) $ 471 $ 14,305 Interest Earnings 116 98 116 166 193 195 Yield -To -Maturity 0.60% 0.59% 0.60% 0.59% 0.79% 0.76% Weighted Maturity (Days) 297 293 305 296 367 339 Effective Duration 0.45 0.47 0.47 0.47 0.51 0.49 *** Omits SLGSs. City of Palm Desert -- Portfolio Characteristics December 31, 2010 Dollars in Thousands Ageing Interval Market Value < 1M $ 101,832 < 2M 5,051 < 3M 3,013 < 6M 3,018 < 1YR 14,159 < 2YR 6,030 < 3YR - < 4YR - < 5YR - > 5YR - Total: $ 133,103 Ratings * Market Value AAA $ 29,437 AA 6,143 A 3,901 Unrated "" 147,117 Total: $ 186,598 Sector Market Value MMF $ 4,217 Agencies 21,157 MTNs 10,044 CAMP 4,063 LAIF 99,099 RDA Loan 22,655 LAIF/Bond Proceeds 25,363 Total: $ 186,598 Month City Yield LAIF Yield Variance Janl1 1.31 0.56 0.76 Feb 1.41 0.58 0.83 Mar 1.43 0.55 0.88 Apr 1.41 0.59 0.83 May 1.25 0.56 0.69 Jun 1.16 0.53 0.63 Jul 1.12 0.53 0.59 Aug 0.93 0.51 0.41 Sep 0.96 0.50 0.46 Oct 0.78 0.48 0.30 Nov 0.75 0.45 0.30 Dec 0.72 0.46 0.26 General Fund Ageing 100 80 0 60 tE 40 0 o. 20 0 177 4 2 2 11 5 0 0 0 0 1 M 2M 3M 6M 1 YR 2YR 3YR 4YR 5YR 5YR Credit Quality AA A 3% 2% AAA 16% Unrated 79% Asset Allocation CAMP LAIF 2% 54% MTNs 5% Agencies RDA Loan 11% 12% MMF LAIF/Bond 2% Proceeds 14% Performance 1.5 1.0 0.5 0.0 Janl febMarAprMayJun Jul AugSepOctNovDec ® o Standard and Poors LAIF, and City Loan to RDA Page 2 City of Palm Desert Portfolio Holdings December 31, 2010 Market I Ratings Par Value I Issuer I Couponi Maturity I Cost I YTM I Price I Value I Moody's I S&P Medium -Term Notes $ 3,795,000 BANK OF AMERICA 5.38 8/15/11 $ 3,823,914 4.05 102.80 $ 3,901,123 A2 A $ 2,000,000 GENERAL ELECTRIC 6.13 2/22/11 $ 2,001,128 5.67 100.73 $ 2,014,654 Aa2 AA+ $ 4,000,000 WELLS FARGO BANK 6.38 8/1/11 $ 4,025,654 5.13 103.21 $ 4,128,288 Al AA $ 9,795,000 Subtotal $ 9,850,696 4.03 $ 10,044,065 Agencies -- Coupon $ 3,000,000 FED FARM CREDIT BANK 3.50 10/3/11 $ 3,056,715 0.97 102.31 $ 3,069,375 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 1.63 7/27/11 $ 3,013,530 1.18 100.72 $ 3,021,563 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 1.63 3/16/11 $ 3,007,060 0.41 100.31 $ 3,009,375 Aaa AAA $ 3,000,000 FED'HOME LOAN BANK 1.10 8/28/12 $ 2,999,510 1.11 100.88 $ 3,026,250 Aaa AAA $ 3,000,000 FED HOME LOAN MTG CORP 1.63 4/26/11 $ 3,009,383 0.60 100.44 $ 3,013,125 Aaa AAA $ 3,000,000 FED HOME LOAN MTG CORP 4.13 2/24/11 $ 3,015,861 0.52 100.53 $ 3,015,938 Aaa AAA $ 18,000,000 Subtotal $ 18,102,059 0.96 $ 18,155,625 Agencies -- Callable $ 3,000,000 FED HOME LOAN MTG CORP 1.25 1/26/12 $ 3,000,000 1.25 100.04 $ 3,001,305 Aaa AAA $ 3,000,000 Subtotal $ 3,000,000 1.25 $ 3,001,305 Local Agency Investment Fund $ 49,999,209 L.A.I.F. 0.00 1/1/11 $ 49,999,209 0.46 100.00 $ 49,999,209 U U $ 49,100,149 L.A.I.F. 0.00 1/1/11 $ 49,100,149 0.46 100.00 $ 49,100,149 $ 99,099,358 Subtotal $ 99,099,358 0.46 $ 99,099,358 Local Agency Investment Fund $ 25,363,000 WELLS FARGO / L.A.I.F. 0.00 1/1/11 $ 25,363,000 0.46 100.00 $ 25,363,000 U U $ 25,363,000 Subtotal $ 25,363,000 0.46 $ 25,363,000 Local Agency Investment Fund $ 4,055,543 C.A.M.P. 0.00 1/1/11 $ 4,055,543 0.18 100.00 $ 4,055,543 U AAA $ 7,746 C.A.M.P. (DESERT WILLOW) 0.00 1/1111 $ 7,746 0.18 100.00 $ 7,746 U AAA $ 4,063,288 Subtotal $ 4,063,288 0.18 $ 4,063,288 Money Market Fund $ 4,216,565 WF ADVANTAGE GOUT MMF 0.00 1/1/11 $ 4,216,565 0.02 100.00 $ 4,216,565 Aaa AAA $ 4,216,565 Subtotal $ 4,216,565 0.02 $ 4,216,565 City Loan to RDA $ 22,655,000 CITY OF PALM DESERT 0.00 1/11/41 $ 22,655,000 0.46 100.00 $ 22,655,000 U U $ 22,655,000 Subtotal $ 22,655,000 0.46 $ 22,655,000 "U" = Unrated Page 3 City of Palm Desert Portfolio Holdings December 31, 2010 Market Ratings Par Value Issuer I Couponj Maturity I Cost I YTM I Price I Value Moody's I S&P Total Investments $ 186,192,211 $ 186,349,966 0.78 $ 186,598,206 Cash $ 178,930 CITY MAIN CHKG 0.00 1/1/11 $ 178,930 0.00 100.00 $ 178,930 U U $ 319,256 DESERT WILLOW CHKG 0.00 1/1/11 $ 319,256 0.00 100.00 $ 319,256 U U $ 63,161 RECREATIONAL FAC CHKG 0.00 1/1/11 $ 63,161 0.00 100.00 $ 63,161 U U $ 561,347 Subtotal $ 561,347 0.00 $ 561,347 Total Investments and Cash $ 186,753,558 $ 186,911,314 $ 187,159,554 irporate Issuers BANK OF AMERICA GENERAL ELECTRIC WELLS FARGO BANK Agency Issuers FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP % of Portfolio ;Market Value) 2.08% 1.08% 2.21 % % of Portfolio ;Market Value) 1.64% 4.84% 4.82% "U" = Unrated Page 4 Palm Desert Redevelopment Agency -- Portfolio Characteristics December 31, 2010 Dollars in Thousands Aneing Interval Market Value < 1 M $ 28,970 < 2M - < 3M 12,949 < 6M 3,076 < 1 YR 15,149 < 2YR 26,449 < 3YR - < 4YR < 5YR - > 5YR 3,151 Total: $ 89,744 c ualit Market Value AAA $ 104,591 AA 3,021 A 9,903 Unrated "" 112,217 Total: $ 229,732 Sector Market Value MMF $ 58,269 Agencies 44,610 MTNs 12,923 CAMP 1,713 LAIF 28,895 EIP 3,151 LAIF/Bond Proceeds 80,171 Total: $ 229,732 Month RDA Yield LAIF Yield Variance Jan11 0.72 0.56 0.16 Feb 0.69 0.58 0.12 1 Mar 0.70 0.55 0.15 Apr 0.74 0.59 0.15 May 0.69 0.56 0.13 Jun 0.78 0.53 0.25 Jul 0.76 0.53 0.23 Aug 0.79 0.51 0.28 Sep 0.59 0.50 0.09 Oct 0.60 0.48 0.12 Nov 0.59 0.45 0.14 Dec 0.60 0.46 0.14 Portfolio Ageing w/o SLGSs 100 80 0 60 IIE 40 0 0. 20 0 1 M 2M 3M 6M 1 YR 2YR 3YR 4YR 5YR 5YR Credit Quality AA 1% A % AAA 46% Unrated 0449% Asset Allocation Agencies MTNs 19% 6% CAMP 1% MMF LAIF 25% 13% EIP 1% LAIF/Bond Proceeds 35% Standard and Poors '* LAIF Page 5 Palm Desert Redevelopment Agency Portfolio Holdings December 31, 2010 Market Ratings Par Value Issuer I Coupon I Maturity I Cost I YTM Price I Value Moodv's I S&P Medium -Term Notes $ 3,000,000 ABBOTT LABS 3.75 3/15/11 $ 3,019,325 0.60 100.69 $ 3,020,751 Al AA $ 3,450,000 BEAR STEARNS (JPM) 6.95 8/10/12 $ 3,726,274 1.83 109.10 $ 3,763,936 Aa3 A+ $ 3,000,000 JP MORGAN CHASE 3.13 12/1/11 $ 3,060,806 0.69 102.49 $ 3,074,682 Aa3 A+ $ 39000,000 JP MORGAN CHASE 5.60 6/1/11 $ 3,058,890 0.85 102.14 $ 3,064,071 Aa3 A+ $ 12,450,000 Subtotal $ 12,865,294 1.04 $ 12,923,440 Agencies -- Coupon $ 2,000,000 FED HOME LOAN BANK 4.88 3/11111 $ 1,997,755 5.49 100.88 $ 2,017,500 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,997,725 5.50 100.88 $ 2,017,500 Aaa AAA $ 2,890,000 FED HOME LOAN BANK 2.88 3/11/11 $ 2,903,324 0.49 100.50 $ 2,904,450 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 1.13 12/9/11 $ 3,005,425 0.96 100.69 $ 3,020,625 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 1.10 8/28/12 $ 1,999,673 1.11 100.88 $ 2,017,500 Aaa AAA $ 2,500,000 FED HOME LOAN BANK 1.10 8/28/12 $ 2,499,592 1.11 100.88 $ 2,521,875 Aaa AAA $ 2,500,000 FED HOME LOAN BANK 1.10 8/28112 $ 2,499,598 1.11 100.88 $ 2,521,875 Aaa AAA $ 2,500,000 FED HOME LOAN BANK 1.38 10/29/12 $ 2,507,854 1.20 101.41 $ 2,535,156 Aaa AAA $ 4,900,000 FED HOME LOAN BANK 1.75 12/14/12 $ 4,937,967 1.40 101.97 $ 4,996,469 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 1.10 8/28/12 $ 2,999,517 1.11 100.88 $ 3,026,250 Aaa AAA $ 2,940,000 FED NATIONAL MTG ASSOC 1.75 3/23/11 $ 2,948,376 0.43 100.34 $ 2,950,106 Aaa AAA $ 9,000,000 FED NATIONAL MTG ASSOC 1.00 11/23/11 $ 9,004,767 1.00 100.56 $ 9,050,625 Aaa AAA $ 2,500,000 FEDNATIONAL MTG ASSOC 1.13 7/30/12 $ 2,502,024 1.08 100.88 $ 2,521,875 Aaa AAA $ 41,730,000 Subtotal $ 41,803,598 1.44 $ 42,101,806 Agencies -- Callable $ 2,500,000 FED HOME LOAN MTG CORP 1.20 6/15/12 $ 2,502,183 1.08 100.33 $ 2,508,360 Aaa AAA $ 2,500,000 Subtotal $ 2,502,183 1.08 $ 2,508,360 Local Government Investment Pool $ 28,894,449 L.A.I.F. 0.00 1/1/11 $ 28,894,449 0.46 100.00 $ 28,894,449 U U $ - L.A.I.F. (HOUSING) 0.00 1/1/11 $ - 0.46 100.00 $ - U U $ 28,894,449 Subtotal $ 28,894,449 0.46 $ 28,894,449 Local Government Investment Pool $ 17,223,950 WELLS FARGO / L.A.I.F. 0.00 1/1/11 $ 17,223,950 0.46 100.00 $ 17,223,950 U U $ 4,817,302 WELLS FARGO / L.A.I.F. 0.00 1/1/11 $ 4,817,302 0.46 100.00 $ 4,817,302 U U $ 24,705,912 WELLS FARGO / L.A.I.F. 0.00 1/1/11 $ 24,705,912 0.46 100.00 $ 24,705,912 U U $ 1,694,460 WELLS FARGO / L.A.I.F. 0.00 1/1/11 $ 1,694,460 0.46 100.00 $ 1,694,460 U U $ 15,174,053 WELLS FARGO / L.A.I.F. 0.00 1/1/11 $ 15,174,053 0.46 100.00 $ 15,174,053 U U $ 16,555,528 WELLS FARGO / L.A.I.F. 0.00 1/1/11 $ 16,555,528 0.46 100.00 $ 16,555,528 U U $ 80,171,205 Subtotal $ 80,171,205 0.46 $ 80,171,205 "U" = Unrated Page 6 Palm Desert Redevelopment Agency Portfolio Holdings December 31, 2010 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's I S&P Local Government Investment Pool $ 76,070 C.A.M.P. 0.00 1/1/11 $ 76,070 0.18 100.00 $ 76,070 U AAA $ 1,636,879 C.A.M.P. (HOUSING) 0.00 1/1/11 $ 1,636,879 0.18 100.00 $ 1,636,879 U AAA $ 1,712,948 Subtotal $ 1,712,948 0.18 $ 1,712,948 Money Market Fund $ 58,268,799 WF ADVANTAGE GOVT MMF 0.00 1/1/11 $ 58,268,799 0.02 100.00 $ 58,268,799 Aaa AAA $ 58,268,799 Subtotal $ 58,268,799 0.02 $ 58,268,799 Municipal Bonds $ 3,151,000 CITY OF PALM DESERT 3.00 9/2/29 $ 3,151,000 3.00 0.00 $ 3,151,000 U U $ 3,151,000 Subtotal $ 3,151,000 3.00 $ 3,151,000 Total Investments $ 228,878,401 $ 229,369,477 0.60 $ 229,732,008 -Cash $ 739,944 HOUSING AUTH CHKG 0.00 1/1111 $ 739,944 0.00 100.00 $ 739,944 U U $ 403,760 HOUSING AUTH TRUST 0.00 1/1/11 $ 403,760 0.00 100.00 $ 403,760 U U $ 1,143,704 Subtotal $ 1,143,704 $ 1,143,704 Total Investments and Cash $ 230,022,105 $ 230,513,180 $ 230,875,711 Corporate Issuers ABBOTT LABS BEAR STEARNS (JPM) JP MORGAN CHASE % of Portfolio ;Market Value) 1.31 % 1.63% 2.66% "U" = Unrated Page 7 Palm Desert Redevelopment Agency Portfolio Holdings December 31, 2010 Market Ratings Par Value Issuer Coupon I Maturity I Cost I YTM Price I Value MoodVs I S&P % of Portfolio Agency Issuers (Market Value) FED HOME LOAN BANK 11.95% FED NATIONAL MTG ASSOC 6.29% FED HOME LOAN MTG CORP 1.09% "U" = Unrated Page 8 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, 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 January 25, 2010, PauLS. (idr om C. C. A l' T. City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS California Government Code City Investment Policy CA Govt Maximum Maximum Quality Maximum Maximum Quality % of City % of RDA Code Investment Category Maturity Limit S&P/Md s Maturity Limit S&P/Md s Portfolio Portfolio 53601 a Palm Desert Bonds 5 Years No Limit - 1.4% 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 - - 53601 c) CA State Debt 5 Years No Limit Not Authorized 53601(d) CA Local Agency Debt 5 Years No Limit Not Authorized 53601 a Federal Agencies 5 Years No Limit 5 Years 30% 6% 11.3% 19.3% 53601 Bankers's Acceptances 180 Days 40% 180 Days 40% A-1 & P-1 - - 53601 Commercial Paper 270 Days 25% A-1+ or P-1 270 Days 25% A-1+ or P-1 - - 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 Re os 92 Days 20% Not Authorized 53601 ' Medium -Term Notes 5 Years 30% A 5 Years 30% 1 A 5.3% 5.6% 53601 k Mutual Funds 90 Days 20% AAA & Aaa 90 Days 20% (2) 1 AAA & Aaal 2.3% 1 25.4% 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 2.2% 0.8% 53601(n) Mortgage -Backed Securities 5 Years 20% A (Issuer) & AA (Securityl Not Authorized 16429.1 b LAW No Limit I No Limit 66.8% 47.6% (1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. 87.8% 100.0% (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. Certified California Municipal Treasurer Page 9 City of Palm Desert City and Redevelopment Agency Portfolios COMPLIANCE ANALYSIS AND INVESTMENT REPORT January 31, 2011 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) met on January 26, and reported that although the U.S. economic recovery was continuing, it was not sufficient to improve labor market conditions. The housing market remained depressed. Inflation was "trending downward." Separately, Chairman Bernanke claimed QE2 as a success, despite rising interest rates and commodity prices, since it "contributed to a stronger stock market." The underlying theory being that if financial assets rise in value, then U.S. consumers will feel wealthy, and spend heavily. QE2 cash has also driven up commodity food prices by 15% around the world, contributing to political unrest in poorer countries (Chriss Street and Company). The U.S. Treasury Yield Curve steepened, reflecting a market perception that the Federal Reserve is underestimating inflationary pressures, and is acting too slowly to tame them. U.S. companies are reportedly stockpiling rubber tires, cotton clothing, and other goods in an effort to insulate themselves from inflation. Steelmakers have increased prices six times, for a total increase of 20% to 30%, since November on flat -rolled steel, which is used in everything from cars to toasters, in order to offset the higher costs of raw materials. So far, U.S. manufacturers have largely been able to avoid cost pass- throughs to consumers, due to labor productivity gains. ,In January, the City received approximately $6.4 million in property taxes, and the RDA received approximately $37 million in property taxes. Dollars in Thousands CITY Month -End Book Value"'''* Month -End Market Value*** Paper Gain (Loss) Prior Year Book Variance Interest Earnings Yield -To -Maturity Weighted Maturity (Days) Effective Duration RDA Month -End Book Value *** Month -End Market Value *** Paper Gain (Loss) Prior Year Book Variance Interest Earnings Yield -To -Maturity Weighted Maturity (Days) Effective Duration Pis �jaao�, c.C.Al. 7- City Treasurer PORTFOLIO STATISTICS JAN-11 DEC-10 NOV-10 OCT-10 SEP-10 AUG-10 $ 191,620 $ 186,911 $ 190,254 $ 192,696 $ 195,728 $ 206,273 $ 191,842 $ 187,160 $ 190,546 $ 193,077 $ 196,176 $ 206,833 $ 222 $ 249 $ 292 $ 381 $ 448 $ 560 $ (26,474) $ (15,318) $ (11,127) $ (46,511) $ (36,665) $ (22,125) 115 130 112 136 155 166 0.66% 0.72% 0.75% 0.78% 0.96% 0.93% 131 146 217 255 311 295 0.07 0.09 0.10 0.13 0.15 0.17 $ 270,539 $ 230,513 $ 233,601 $ 242,873 $ 257,899 $ 276,345 $ 270,899 $ 230,876 $ 234,003 $ 243,401 $ 258,372 $ 276,806 $ 360 $ 363 $ 402 $ 528 $ 473 $ 461 $ (16,704) $ (25,758) $ (28,133) $ 16,866 $ (8,043) $ 471 135 116 98 116 166 193 0.68% 0.60% 0.59% 0.60% 0.59% 0.79% 253 297 293 305 296 367 0.36 0.45 0.47 0.47 0.47 0.51 *** Omits SLGSs. City of Palm Desert -- Portfolio Characteristics January 31, 2011 Dollars in Thousands Ageing Interval Market Value < 1 M $ 116,002 < 2M 3,009 < 3M 3,013 < 6M 3,022 < 1 YR 11,099 < 2YR 3,026 < 3YR - < 4YR - < 5YR - > 5YR - Total: $ 139,171 Ratings * Market Value AAA $ 82,884 AA 6,119 A 3,891 Unrated "* 97,902 Total: $ 190,796 Sector Market Value MMF $ 4,187 Agencies 18,134 MTNs 10,010 CAMP 60,563 LAIF 50,000 RDA Loan 22,655 LAIF/Bond Proceeds 25,247 Total: $ 190,796 Month City Yield LAIF Yield Variance Febl1 1.41 0.58 0.83 Mar 1.43 0.55 0.88 Apr 1.41 0.59 0.83 May 1.25 0.56 0.69 Jun 1.16 0.53 0.63 Jul 1.12 0.53 0.59 Aug 0.93 0.51 0.41 Sep 0.96 0.50 0.46 Oct 0.78 0.48 0.30 Nov 0.75 0.45 0.30 Dec 0.72 0.46 0.26 Janl1 0.66 0.54 0.12 General Fund Ageing 100 80 0 60 t 40 0 a 20 0 i Credit Quality Asset Allocation Performance 1.5 1.0 32 d >- 0.5 1 M 2M 3M 6M 1 YR 2YR 3YR 4YR 5YR 5YR AAA AA 43% 3% A Unrated "* 2% 52% CAMP LAIF 32% 26% MTNs 5% Agencies RDA Loan 10% MMF LAIF/Bond 12% 2% Proceeds 13% 0.0 �I'BNI MI gill 'I 111A i'Q,'�,:1 rR91 Feb1 MarAprMayJun Jul AugSepOctNovDedanl 1 ® 0 Standard and Poors " LAIF, and City Loan to RDA Page 2 City of Palm Desert Portfolio Holdings January 31, 2011 Market Ratings Par Value Issuer Coupon I Maturity Cost YTM I Price I Value Moody's S&P Medium -Term Notes $ 3,795,000 BANK OF AMERICA 5.38 8/15/11 $ 3,820,041 4.05 102.53 $ 3,891,116 A2 A $ 2,000,000 GENERAL ELECTRIC 6.13 2/22/11 $ 2,000,465 5.67 100.30 $ 2,006,062 Aa2 AA+ $ 4,000,000 WELLS FARGO BANK 6.38 8/1/11 $ 4,021,989 5.13 102.82 $ 4,112,680 Al AA $ 9,795,000 Subtotal $ 9,842,495 4.82 $ 10,009,858 Agencies -- Coupon $ 3,000,000 FED FARM CREDIT BANK 3.50 10/3/11 $ 3,050,460 0.97 102.13 $ 3,063,786 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 1.63 7/27/11 $ 3,011,560 1.18 100.68 $ 3,020,517 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 1.63 3/16/11 $ 3,004,236 0.41 100.19 $ 3,005,601 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 1.10 8/28/12 $ 2,999,535 1.11 100.89 $ 3,026,760 Aaa AAA $ 3,000,000 FED HOME LOAN MTG CORP 1.63 4/26/11 $ 3,006,935 0.60 100.34 $ 3,010,155 Aaa AAA $ 3,000,000 FED HOME LOAN MTG CORP 4.13 2/24111 $ 3,006,883 0.52 100.24 $ 3,007,182 Aaa AAA $ 18,000,000 Subtotal $ 18,079,609 0.80 $ 18,134,001 -Local Agency Investment Fund $ 50,000,000 L.A.I.F. 0.00 2/1/11 $ 50,000,000 0.54 100.00 $ 50,000,000 U U $ 50,000,000 Subtotal $ 50,000,000 0.54 $ 50,000,000 Local Agency Investment Fund $ 25,247,352 L.A.I.F. BOND PROCEEDS 0.00 2/1/11 $ 25,247,352 0.54 100.00 $ 25,247,352 U U $ 25,247,352 Subtotal $ 25,247,352 0.54 $ 25,247,352 Local Agency Investment Fund $ 60,555,152 C.A.M.P. 0.00 2/1/11 $ 60,555,152 0.17 100.00 $ 60,555,152 U AAA $ 7,747 C.A.M.P. (DESERT WILLOW) 0.00 2/1/11 $ 7,747 0.17 100.00 $ 7,747 U AAA $ 60,562,898 Subtotal $ 60,562,898 0.17 $ 60,562,898 Money Market Fund $ 4,186,601 WF ADVANTAGE GOVT MMF 0.00 2/1/11 $ 4,186,601 0.00 100.00 $ 4,186,601 Aaa AAA $ 4,186,601 Subtotal $ 4,186,601 0.00 $ 4,186,601 City Loan to RDA $ 22,655,000 CITY OF PALM DESERT 0.00 1/1/41 $ 22,655,000 0.54 100.00 $ 22,655,000 U U $ 22,655,000 Subtotal $ 22,655,000 0.54 $ 22,655,000 Total Investments $ 190,446,851 $ 190,573,955 0.66 $ 190,795,710 "U" = Unrated Page 3 Par Value Issuer Coup( Cash $ 420,241 CITY MAIN CHKG 0.00 $ 461,871 DESERT WILLOW CHKG 0.00 $ 164,008 RECREATIONAL FAC CHKG 0.00 $ 1,046,119 Subtotal Total Investments and Cash $ 191,492,971 City of Palm Desert Portfolio Holdings January 31, 2011 Market Ratings Cost I YTM I Price I Value Moodv's S&P 2/1/11 $ 420,241 0.00 100.00 $ 420,241 2/1/11 $ 461,871 0.00 100.00 $ 461,871 2/1/11 $ 164,008 0.00 100.00 $ 164,008 $ 1,046,119 0.00 $ 1,046,119 $ 191,620,074 % of Portfolio Corporate Issuers (Market Value) BANK OF AMERICA 2.03% GENERAL ELECTRIC 1.05% WELLS FARGO BANK 2.14% % of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 1.60% FED HOME LOAN BANK 4.72% FED HOME LOAN MTG CORP 3.14% $ 191,841,830 U U U U U U "U" = Unrated Page 4 Dollars in Thousands Aneinq Interval < 1M < 2M < 3M < 6M < 1YR < 2YR < 3YR < 4YR < 5YR > 5YR Total: Palm Desert Redevelopment Agency -- Portfolio Characteristics January 31, 2011 Market Value $ 67,310 12,910 3,064 15,146 26,414 3,151 $ 127,995 ualit Market Value AAA $ 41,647 AA 3,012 A 9,879 Unrated "* 215,162 Total: $ 269,700 Sector Market Value MMF $ 4,609 Agencies 44,591 MTNs 12,892 CAMP 37,037 LAIF 31,911 EIP 3,151 LAIF/Bond Proceeds 135,509 Total: $ 269,700 Month RDA Yield LAIF Yield Variance Febl1 0.69 0.58 0.12 Mar 0.70 0.55 0.15 Apr 0.74 0.59 0.15 May 0.69 0.56 0.13 Jun 0.78 0.53 0.25 Jul 0.76 0.53 0.23 Aug 0.79 0.51 0.28 Sep 0.59 0.50 0.09 Oct 0.60 0.48 0.12 Nov 0.59 0.45 0.14 Dec 0.60 0.46 0.14 Janl1 0.68 0.54 0.14 Portfolio Ageing w/o SLGSs 100 - 80 0 60 40 0 a 20 X 10 12 21 0 2 n 0 0 0 2 r i e i-r 1 M 2M 3M 6M 1 YR 2YR 3YR 4YR 5YR 5YR Credit Quality A 4% AA 1% Unrated AAA 80% 15% Performance 0.8 0.0 Febl Mar Apr MayJun Jul Aug Sep Oct Nov Dedan11 OLAIFYield ORDAYield Standard and Poors " LAIF Page 5 Palm Desert Redevelopment Agency Portfolio Holdings January 31, 2011 Market Ratings Par Value Issuer Coupon I Maturity Cost YTM I Price Value Moody's I S&P Medium -Term Notes $ 3,000,000 ABBOTT LABS 3.75 3/15/11 $ 3,011,490 0.60 100.42 $ 3,012,492 Al AA $ 3,450,000 BEAR STEARNS (JPM) 6.95 8/10/12 $ 3,711,959 1.83 108.90 $ 3,757,091 Aa3 A+ $ 3,000,000 JP MORGAN CHASE 3.13 12/1/11 $ 3,055,278 0.69 102.33 $ 3,070,023 Aa3 A+ $ 3,000,000 JP MORGAN CHASE 5.60 6/1/11 $ 3,047,112 0.85 101.74 $ 3,052,248 Aa3 A+ $ 12,450,000 $ 12,825,839 1.04 $ 12,891,854 Agencies -- Coupon $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,998,717 5.49 100.52 $ 2,010,378 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,998,700 5.50 100.52 $ 2,010,378 Aaa AAA $ 2,890,000 FED HOME LOAN BANK 2.88 3/11/11 $ 2,897,614 0.49 100.29 $ 2,898,419 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 1.13 12/9/11 $ 3,004,943 0.96 100.68 $ 3,020,292 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 1.10 8/28/12 $ 1,999,690 1.11 100.89 $ 2,017,840 Aaa AAA $ 2,500,000 FED HOME LOAN BANK 1.10 8128/12 $ 2,499,612 1.11 100.89 $ 2,522,300 Aaa AAA $ 2,500,000 FED HOME LOAN BANK 1.10 8/28/12 $ 2,499,618 1.11 100.89 $ 2,522,300 Aaa AAA $ 2,500,000 FED HOME LOAN BANK 1.38 10/29/12 $ 2,507,496 1.20 101.43 $ 2,535,825 Aaa AAA $ 4,900,000 FED HOME LOAN BANK 1.75 12/14/12 $ 4,936,347 1.40 102.01 $ 4,998,725 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 1.10 8/28/12 $ 2,999,542 1.11 100.89 $ 3,026,760 Aaa AAA $ 2,940,000 FED NATIONAL MTG ASSOC 1.75 3/23/11 $ 2,945,312 0.43 100.22 $ 2,946,574 Aaa AAA $ 9,000,000 FED NATIONAL MTG ASSOC 1.00 11/23/11 $ 9,004,323 1.00 100.56 $ 9,050,463 Aaa AAA $ 2,500,000 FED NATIONAL MTG ASSOC 1.13 7/30/12 $ 2,501,918 1.08 100.92 $ 2,522,965 Aaa AAA $ 41,730,000 Subtotal $ 41,793,831 1.44 $ 42,083,219 Agencies -- Callable $ 2,500,000 FED HOME LOAN MTG CORP 1.20 6/15/12 $ 2,502,058 1.08 100.28 $ 2,507,123 Aaa AAA $ 2,500,000 Subtotal $ 2,502,058 1.08 $ 2,507,123 Local Government Investment Pool $ $ 30,274,106 1,637,000 L.A.I.F. L.A.I.F. (HOUSING) 0.00 0.00 2/1/11 2/1/11 $ $ 30,274,106 1,637,000 0.54 0.54 100.00 100.00 $ $ 30,274,106 1,637,000 U U U U $ 31,911,106 Subtotal $ 31,911,106 0.54 $ 31,911,106 Local Government Investment Pool $ 17,243,733 L.A.I.F. BOND PROCEEDS 0.00 2/1/11 $ 17,243,733 0.54 100.00 $ 17,243,733 U U $ 4,822,835 L.A.I.F. BOND PROCEEDS 0.00 2/1/11 $ 4,822,835 0.54 100.00 $ 4,822,835 U U $ 24,734,289 L.A.I.F. BOND PROCEEDS 0.00 2/1/11 $ 24,734,289 0.54 100.00 $ 24,734,289 U U $ 1,696,406 L.A.I.F. BOND PROCEEDS 0.00 2/1/11 $ 1,696,406 0.54 100.00 $ 1,696,406 U U $ 15,191,482 L.A.I.F. BOND PROCEEDS 0.00 2/1/11 $ 15,191,482 0.54 100.00 $ 15,191,482 U U $ 16,574,544 L.A.I.F. BOND PROCEEDS 0.00 2/1/11 $ 16,574,544 0.54 100.00 $ 16,574,544 U U $ 5,227,000 L.A.I.F. BOND PROCEEDS 0.00 2/1/11 $ 5,227,000 0.54 100.00 $ 5,227,000 U U $ 3,039,000 L.A.I.F. BOND PROCEEDS 0.00 2/1/11 $ 3,039,000 0.54 100.00 $ 3,039,000 U U $ 30,464,000 L.A.I.F. BOND PROCEEDS 0.00 2/1/11 $ 30,464,000 0.54 100.00 $ 30,464,000 U U "U" = Unrated Page 6 Palm Desert Redevelopment Agency Portfolio Holdings January 31, 2011 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Local Government Investment Pool (continued) $ 16,516,000 L.A.I.F. BOND PROCEEDS 0.00 2/1/11 $ 16,516,000 0.54 100.00 $ 16,516,000 U U $ 135,509,290 Subtotal $ 135,509,290 0.54 $ 135,509,290 Local Government Investment Pool $ 37,037,162 C.A.M.P. 0.00 2/1/11 $ 37,037,162 0.17 100.00 $ 37,037,162 U AAA $ 131 C.A.M.P. (HOUSING) 0.00 2/1/11 $ 131 0.17 100.00 $ 131 U AAA $ 37,037,292 Subtotal $ 37,037,292 0.17 $ 37,037,292 Money Market Fund $ 4,608,743 WF ADVANTAGE GOVT MMF 0.00 2/1/11 $ 4,608,743 0.00 100.00 $ 4,608,743 Aaa AAA $ 4,608,743 Subtotal $ 4,608,743 0.00 $ 4,608,743 Municipal Bonds $ 3,151,000 CITY OF PALM DESERT 0.00 9/2/29 $ 3,151,000 3.00 100.00 $ 3,151,000 U U $ 3,151,000 Subtotal $ 3,151,000 3.00 $ 3,151,000 Total Investments $ 268,897,431 $ 269,339,159 0.68 $ 269,699,626 Cash $ 793,521 HOUSING AUTH CHKG 0.00 2/1/11 $ 793,521 0.00 100.00 $ 793,521 U U $ 405,989 HOUSING AUTH TRUST 0.00 2/1/11 $ 405,989 0.00 100.00 $ 405,989 U U $ 1,199,510 Subtotal $ 1,199,510 0.00 $ 1,199,510 Total Investments and Cash $ 270,096,941 $ 270,538,670 $ 270,899,136 % of Portfolio Corporate Issuers (Market Value) ABBOTT LABS 1.11 % BEAR STEARNS (JPM) 1.39% JP MORGAN CHASE 2.26% "U" = Unrated Page 7 Palm Desert Redevelopment Agency Portfolio Holdings January 31, 2011 Market I Ratings Par Value Issuer I Coupon I Maturity I Cost I YTM I Price I Value I Moodv's I S&P % of Portfolio Agency Issuers (Market Value) FED HOME LOAN BANK 10.17% FED NATIONAL MTG ASSOC 5.36% FED HOME LOAN MTG CORP 0.93% "U" = Unrated Page 8 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, 2011, 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 22, 2010, iva ccLS. 4,7duo- , C. C. At T. City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS California Government Code City Investment Policy CA Govt Maximum Maximum Quality Maximum Maximum Quality % of City % of RDA Code Investment Category Maturity Limit S&P/Md s Maturity Limit S&P/Md s Portfolio Portfolio 53601 a Palm Desert Bonds 5 Years No Limit - 1.2% 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 - - 53601(c) CA State Debt 5 Years No Limit Not Authorized 53601 d) CA Local Agency Debt 5 Years No Limit Not Authorized 53601 a Federal Agencies 5 Years No Limit 5 Years 30% 6% 9.5% 16.5% 53601 Bankers's Acceptances 180 Days 40% 180 Days 40% A-1 & P-1 - - 53601 Commercial Paper 270 Days 25% A-1+ or P-1 270 Days 25% A-1+ or P-1 - - 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 Re os 92 Days 20% Not Authorized 53601 ' Medium -Term Notes 5 Years 30% A 5 Years 30% 1 A 15.2% 1 4.8% 53601 k Mutual Funds 90 Days 20% AAA & Aaa 90 Days 20% (2) 1 AAA & Aaal 2.2% 1 1.7% 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 Da s 20% (2) AAA & Aaa 1 or Advisor 1 31.8% 13.8% 53601(n) Mortgage -Backed Securities 5 Years 20% A (Issuer) & 1AA (Security Not Authorized 16429.1 b) LAIF No Limit I I No Limit 39.5% (1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. 88.1 % 100.0% (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. Certified California Municipal Treasurer Page 9