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HomeMy WebLinkAboutInvestment Reports May - June 2012 - Joint ConsiderationCITY OF PALM DESERT FINANCE DEPARTMENT INTEROFFICE MEMORANDUM TO: RACHELLE KLASSEN, CITY CLERK FROM: NIAMH ORTEGA, RECORDING SECRETARY"��'L� DATE: JULY 27, 2012 SUBJECT: COMPLIANCE ANALYSIS AND INVESTMENT REPORTS Please find attached the Compliance Analysis and Investment Reports which were presented and approved at the recent meeting of the Audit, Investment and Finance Committee for the months of May and June 2012. Please include the reports on the upcoming agenda for review and acceptance by City Council. Also included are the Minutes of the May and June 2012 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) BY SA -RDA ON 8.533.2012% VERIFIED BY 12DK 4�n7 — Original on file with City Clerks Office CITY COUNCIL ACTION API ROVF.DDENWID RECEIVED -fS OTHER MEETING DATE • a 3-aola AYES: UnrSn-Vi6e,r'!y-r t4oMki kran1 fl1 &AerjeL AIDf1+e ABSENT: kZo t ABSTAIN: UOAI VERIFIED BY: e2kl Original on File with City Ierk's Office G \FINANCE\NIAMH ORTEGAUNVESTMENT COMM ITTEEWEMOS\RKLASSENINVREPORT ,WPD CITY PORTFOLIO CONCENTRATION LIMITS May 2012 Investments CALIFORNIA ASSET MANAGEMENT PROGRAM CITY LOAN TO RDA WF/L.A.I.F. BOND PROCEEDS FEDERAL AGENCY -- COUPON LOCAL AGENCY INVESTMENT FUND WELLS FARGO CORPORATE TRUST CORPORATE MEDIUM -TERM NOTES RIVERSIDE COUNTY TREASURER TOTAL BEFORE CASH PLUS: CASH GRAND TOTAL % of Book Value Portfolio $ 2,401,437.33 1.10% 13,554,999.95 6.22% 25,365,368.23 11.63% 2,999,928.58 1.38% 48,860, 375.57 22.40% 4,164,012.45 1.91 % 8, 737, 571.82 4.01 % 104,955,573.66 48.13% 211,039,267.59 96.77% $ 7,046,917.56 3.23% $ 218,086,185.15 (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. The concentration percentages shown above were calculated based on that definition. xea, k vex, J/,ruPean,t "�xt ECONOMIC COMMENTARY The euro crisis has intensified. Greece is struggling with a new three -party coalition government, bank runs, and a loss of trade credit insurance. Spain is struggling with a collapsed real estate market, ailing banks, bank runs, and 10-year sovereign bond yields of 7%. Italy's interest rates are also rising. France and Germany have divergent, competing views on an economic solution. In a largely symbolic move, the Federal Reserve announced that it will continue to sell short-term U.S. Treasuries, and buy long-term Treasuries through December. This will lower long-term interest rates slightly. The U.S. economy continues to lose momentum as layoffs rise, factory output falls, and consumers cut spending amid rising uncertainty. Muted economic growth is expected for the rest of 2012. Japan and China announced that they will directly trade the yen and the yuan. This eliminates the need to first swap into U.S. dollars as an intermediate step. The City investment portfolio increased by $7.9 million in May due principally to the receipt of $6.5 million in property tax and $1.2 million in sales tax. On June 5, the Palm Desert RDA Successor Agency ("RDA S.A.") received approximately $20.5 million from the Riverside County Redevelopment Property Tax Trust Fund ("RPTTF"). On June 12, RDA S.A. used this money to pay approximately $28 million in debt service and pass-throughs. ✓'aut S. oke", C'C'.✓ y. -1, City Treasurer " Certified California Municipal Treasurer PORTFOLIO STATISTICS 2012 ital MarKets i eam City Treasurer Paul S. Gibson, C.C.M.T. Deputy City Treasurer Thomas W. Jeffrey, J.D., M.B.A. Investment Objectives 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 $ 218,086 $ 210,198 $ 210,603 $ 212,467 $ 230,400 $ 207,034 Month -End Market Value $ 218,101 $ 210,229 $ 210,643 $ 212,494 $ 230,415 $ 207,034 Paper Gain (Loss) $ 15 $ 31 $ 40 $ 27 $ 15 $ - Prior Year Book Variance $ (1,596) $ 3,543 $ 3,948 $ 17,031 $ 38,780 $ 20,123 Interest Earnings $ 76 $ 72 $ 74 $ 68 $ 68 $ 64 Yield -To -Maturity 0.43% 0.42% 0.45% 0.41% 0.40% 0.37% Weighted Maturity (Days) 38 39 39 39 39 16 Effective Duration 0.05 0.06 0.06 0.07 0.07 0.05 All data as of May 31, 2012 Dollars in Thousands Maturities Market Value < 1 M $ 185,713 < 2M - < 3M 3,009 < 6M - < 1Y - < 2Y 8,765 < 3Y - < 4Y - < 5Y - Total: $ 197,487 Ratings Market Value AAA or Aaa $ 114,508 AA or Aa 4,702 A 4,063 Unrated 87,781 Total: $ 211,054 Assets Market Value County Pool 104,956 LAW 48,860 WF/LAIF Bond Proceeds 25,365 City Loan to RDA 13,555 MTN 8,746 CAMP 2,401 WF/Bond Proceeds 4,164 Agencies 3,007 Total: $ 211,054 Month Jun11 Jul Aug Sep Oct Nov Dec Jan12 Feb Mar Apr May City Yield 0.72 0.67 0.49 0.49 0.43 0.44 0.37 0.40 0.41 0.45 0.42 0.43 LAW Yield 0.45 0.38 0.41 0.41 0.39 0.40 0.38 0.39 0.39 0.38 0.37 0.36 PORTFOLIO CHARACTERISTICS May 2012 Variance 0.27 0.29 0.08 0.08 0.05 0.04 -0.01 0.01 0.02 0.07 0.05 0.07 / Maturities Distribution 100 94-.__......_.._.__._...__.______..._,_._._.._..__. 80 2 60 �o 0 40 IL 20 2 0 0 4 0 0 0 0 0 <1M <2M <3M <6M <1Y <2Y <3Y <4Y <5Y Credit Quality AAA or Aaa 54% Unrated 42% AA or Aa A 2% 2% J Asset Allocation County Pool LAIF 50% Aft23% WF/LAIF Bond Agencies R Proceeds 2% 12% WF/Bond CAMPMTN City Loan to Proceeds 1% 4% RDA 2% 6% CITY OF PALM DESERT TREASURER'S OFFICE PAGE 2 OF 3 STATEMENT OF COMPLIANCE May 2012 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, 2012, 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. Interactive Data Services provided the market value prices for securities in the City investment portfolio. All balances are bank balances. Respectfully submitted, Ymds omvaa, eemj: 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 T- 53633 Demand Deposits No Limit No Limit No Limit No Limit 3.2% 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 1.4% 53601(f) Bankers's Acceptances 180 Days 40% 180 Days 40% A-1 or P-1 - 53601(g) Commercial Paper 270 Days 25% A-11P-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% - 53601(l) Reverse Repos 92 Days 20% Not Authorized 53601(j) Medium -Term Notes 5 Years 30% A 5 Years 30% A 4.0% 53601(k) Money Market Funds 90 Days 20% AAA & Aaa 90 Days 20% AAA & Aaa 1.9% 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 49.20/( 53601(n) Mortgage -Backed Securities 5 Years 20% A (Issuer) & AA (Security) Not Authorized 16429.1(b) L.A.I.F. No Limit I $50MM/Acct No Limit $50MM/Acct 34.0% (2)1 93.8% Footnotes: (1) Maximum concentration limit for local agency investment pools, excluding bond proceeds. (2) Total does not include the City Loan to RDA. CITY OF PALM DESERT TREASURER'S OFFICE PAGE 3 OF 3 I.L W (D N E W E N _ 7 N J m fA Q 2 a.Q M 0 Rf O t _ 0 oa U a A 0 a N Ion M M M O O t N O ID O o (D o ID N M M M O m V O O O O O O O C D .- - D CON I M ---00--M-I- c N a M Obi N O N V �O (D n 6 O N 6 N N M v rn M m M o (n (n o u) o o m m v Lo v D M o cO r. I N �2 (fi M w m 7 N V O M Q1 N O u�"1 O 10ID o V D) M O M o O (D o v m M o� � w N V O N G1 O N 0 H N Z U) W c7 w O w 0 Ow Z Z m w ~ w Q? W w UO OU v~i O Of ' Q a } > of m Z Z Z } UO w O Z Lu z O OU Z 0 w Q W Q H .N+ w C _ L Q " qJ U < E n0 Q lL J (n 0 ? J G L) S J U Ui 3 w O w 0> w w U > W C CO M - IN 10 r O R co <p CO O O co N _T U N Y Y c m _ 1] .N.. 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N cn O O N ; � O con m 3 0- H d fD AJ N d 7 C7 y cnCD N y �. 7 CD cn C C N 7 a N O N G7 N 7 Q' O. 7 (1 cn C- O � 7 N A x y W O N o m 3 a w o y f0 cn K � o O O1 N A co m O v o m cn a N n V co Ili OD tC N o C:' (O '0'� O ay O O y CD W N � � y 7 r -cc N v = 21 n o o y CD m CD lD CD fu 7 a< 0 � 0 O 0 ,a Dy t C1 a N 3 w m f� H 0) Q D) C O) m A y GI D m w a O N N tG 7 v CO Cr N N fD Q Ol 7 x Q N N 7 N 0 o d N o U Gry 67 N Sm n � O. m (D x � a� N H a 3 °= N 0 �7e y N w T ID N t0 O A W N O Q! � W 0) to cn O A O N OD W A W A cn m OI fO co O A tO PD m � o CA w c co O ��l plo of w w IJ OD coo OWD -0o O C- o CO)O 7 O CD =�' ZZ Y O Cl)3 C N 3 CD (D 7 Of 0 m CA N V co A cn r c � D v T _N O N O O w O OD _N O O W c c 0 � r c D r < D 10 0 CC z A 0 z m to m m z a -n T1 z 2 o v is an O _O N N Ci m co qLn � 1 O (0 0 aD b) m N CT Os 01 tN0 CO O � O cm co 0) CA N CA T m w Co O (n a* 00 0 Ln OD o I o it is m oND N O c0 fA c 0 n d D D a U) < m 'm too z D m m 9 m z v 0 c A O N O N W I W o IO V V W w O O V V W _W G O V V 0 CA tj l ow m ro a H c m �m A CD C 0 0 0 O 0 0 C— 0 V 0 CD ^ 0• O 3 D (A 3 _ NN3 p (A 3 3 N 0 0 m 0 N O_ N N O W co = c Cl) H N n 0 0 � rn En Y/ to N O O CD O W (n U) d # N IV D 2 2 m O O Ln Ln m 3 d Q 0 a 7 n c c 1D x m c m u n z w O A N O d N 0=1 t0 O W O CD N 0 N � 0 0 � O N O O N N lD A c L Q Q C Z G (,) � o00 d �c fu P wco 9 C N CQ = OOf O A N .a IV CD O ^ 3 N CD W A 0 fAT Of O co » N V 0 f0 W N d co o a c a o eo w Ch w o co o m x 0 f0 W Ncc d a) p A y A a 3 �c a m O d nw O O O w O O O N M m t0 m N v 1N {WL wr t '^ VUJ/ U N r N Q ( O Q M 0 0 J_ a0 a° U N M U� � n N N o r� r-� n o � N O o OD �n N M f0 N N � M N ti h OD N 1D `0 a > n m n a c7 d V) 0 ri � OODD N CO �2 0 N 7 n m N 0 O n N > r- O w f- O W d OD o n M t0 00 O O U ry o IL 0 1 L w O d a w •.N.M.N.N,� b ECONOMIC COMMENTARY The world is not in recession, but global growth is slowing. The U.S. economy has been hurt by continued cutbacks in federal, state, and local government spending, and by sluggish export markets. The Chinese economy is decelerating due to slowing exports, and to prior policy tightening. Europe has declining economic growth, with several countries in recession. The global slowdown has lessened inflationary pressure, however, with commodity prices falling over the last few months. The U.S. economy has been on a downward trajectory for the past two quarters, with second-quarter growth estimated at 1.5%. U.S. manufacturing shrank in June for the first time in three years as orders plummeted. The 10-year U.S. Treasury Note fell to an all-time low of 1.44% due to buying by "safe haven" investors. Vice President Biden characterized the current U.S. economic environment as a "depression." Separately, the U.S. Supreme Court upheld the 2010 Affordable Care Act ("Obamacare") as a tax. The Act contains at least 20 new or higher taxes that may generate close to $1.7 trillion of tax revenue over the next 10 years, with the burden falling largely on the middle class. The Canadian economy has slowed from a quarterly growth rate of near 3% to 1.9% over the last two quarters. Consumer spending is being constrained by a historically high debt load. The Canadian job market and banking system remain strong, however, at this point in time. ya4d'K OW0aa, C�C'..h l . a' City Treasurer Certified California Municipal Treasurer PORTFOLIO STATISTICS 2012 a..aNItaI inaKnew 11V0111 City Treasurer Paul S. Gibson, C.C.M.T. Deputy City Treasurer Thomas W. Jeffrey, J.D., M.B.A. Investment Objectives 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 $ 216,803 $ 218,086 $ 210,198 $ 210,603 $ 212,467 $ 230,400 Month -End Market Value $ 216,813 $ 218,101 $ 210,229 $ 210,643 $ 212,494 $ 230,415 Paper Gain (Loss) $ 10 $ 15 $ 31 $ 40 $ 27 $ 15 Prior Year Book Variance $ (6,478) $ (1,596) $ 3,543 $ 3,948 $ 17,031 $ 38,780 Interest Earnings $ 75 $ 76 $ 72 $ 74 $ 68 $ 68 Yield -To -Maturity 0.43% 0.43% 0.42% 0.45% 0.41 % 0.40% Weighted Maturity (Days) 40 38 39 39 39 39 Effective Duration 0.05 0.05 0.06 0.06 0.07 0.07 All data as of June 30, 2012 Dollars in Thousands Maturities Market Value < 1 M $ 176,950 < 2M 3,004 < 3M - < 6M - < 1Y - < 2Y 8,739 < 3Y - < 4Y - < 5Y - Total: $ 188,693 Ratings AAA or Aaa AA or Aa A Unrated Total Market Value S 114,482 4,702 4,042 PORTFOLIO CHARACTERISTICS June 2012 Maturities Distribution 100 94 80 0 0 60 0 rE 40 0 a 20 0 <1M <2M <3M <6M <1Y <2Y <3Y <4Y <5Y Credit Quality AAA or Aaa 57% Unrated 39% AA or Aa A 2% 2% j Assets Market Value Asset Allocation County Pool 104,945 County Pool LAIF 40,091 52% WF/LAIF Bond Proceeds 25,365 City Loan to RDA 13,555 MTN 8,739 LAI F 20% CAMP 2,402 WF/LAIF Bond Proceeds WF/Bond Proceeds 4,136 Agencies 13% Agencies 3,004 1%WF/Bond City Loan to 1% 4% Total: $ 202,238 Proceeds CAMP MTN RDA ' 2% 7% Month City Yield LAW Yield Variance Ju111 0.67 0.38 0.29 Aug 0.49 0.41 0.08 Sep 0.49 0.41 0.08 Oct 0.43 0.39 0.05 Nov 0.44 0.40 0.04 Dec 0.37 0.38 -0.01 Jan12 0.40 0.39 0.01 Feb 0.41 0.39 0.02 Mar 0.45 0.38 0.07 Apr 0.42 0.37 0.05 May 0.43 0.36 0.07 Jun 0.43 0.36 0.08 0.0 Jultt Aug Sep Oct Nov Dec Jan12 Feb Mar Apr May OLAIF Yield 00ty Yield CITY OF PALM DESERT TREASURER'S OFFICE PAGE 2 OF 3 STATEMENT OF COMPLIANCE June 2012 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 June 30, 2012, 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. Interactive Data Services provided the market value prices for securities in the City investment portfolio. All balances are bank balances. Respectfully submitted, .raa(s ovion, eemy. 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 1.5% 53601(f) Bankers's Acceptances 180 Days 40% 180 Days 40% A-1 or P-1 - 53601() Commercial Paper 270 Days 25% A-1/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% - 53601(I) Reverse Repos 92 Days 20% Not Authorized 53601(j) Medium -Term Notes 5 Years 30% A 5 Years 30% A 1.4% 53601(k) Money Market Funds 90 Days 20% AAA & Aaa 90 Days 20% AAA & Aaa 1.9% 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 49.5% 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 30.2% (2)1 84.5% Footnotes: (1) Maximum concentration limit for local agency investment pools, excluding bond proceeds. (2) Total does not include the City Loan to RDA. CITY OF PALM DESERT TREASURER'S OFFICE PAGE 3 OF 3 CITY PORTFOLIO CONCENTRATION LIMITS June 2012 Investments CALIFORNIA ASSET MANAGEMENT PROGRAM CITY LOAN TO RDA WF/L.A.I.F. BOND PROCEEDS FEDERAL AGENCY -- COUPON LOCAL AGENCY INVESTMENT FUND WELLS FARGO CORPORATE TRUST CORPORATE MEDIUM -TERM NOTES RIVERSIDE COUNTY TREASURER TOTAL BEFORE CASH PLUS: CASH GRAND TOTAL % of Book Value Portfolio $ 2,401,906.76 1.11 % 13,554,999.95 6.25% 25,365,368.23 11.70% 2,999,953.21 1.38% 40,091,375.57 18.49% 4,136, 262.42 1.91 % 8,732,239.69 4.03% 104,955,573.66 48.41 % $ 202,237,679.49 93.28% $ 14,564,915.85 6.72% $ 216,802,595.34 (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. The concentration percentages shown above were calculated based on that definition. r W 0 cn W d E N r _ 0 � N J m N O Q L p r� a o = oot� o o a. c� a N CL M vOi v o N co o IDu0i I M N C) c? 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