The URL can be used to link to this page

Home My WebLink AboutInvestment Reports - February & March 2009CITY OF PALM DESERT FINANCE DEPARTMENT INTEROFFICE MEMORANDUM TO: RACHELLE KLASSEN, CITY CLERK FROM: NIAMH ORTEGA, RECORDING SECRETARY'�\�-Z DATE: APRIL 28, 2009 SUBJECT: COMPLIANCE ANALYSIS AND INVESTMENT REPORTS Please find attached the Compliance Analysis and Investment Reports for were presented and approved at the March and April meetings of the Audit, Investment and Finance Committee for the months of February and March 2009. Please include the report on the upcoming agenda for review and acceptance by 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 RECEIVE[) F Fi 'e OTHER MF,F.TING DATE AYES: �7e��nn Fer-r—�is� i Er+�4 eljj,:51n+e4i, NOES- nnf ABSENT: to c) n P. ABSTAIN - VERIFIED BY: Original on File with City Clerk's Office � i BY R uA Oi g/ N .� _ 7 _ Original on Mils A-!t "y Ciark'S O?qC? GARNANCE\NIAMH ORTEGA\INVESTMENT COMM ITTEE\MEMOS\RKLASSEN I NVREPORT.WPD City of Palm Desert City and Redevelopment Agency Portfolios COMPLIANCE ANALYSIS AND INVESTMENT REPORT February 2009 Paul S. Gibson, C.C.M.T., Treasurer Thomas W. Jeffrey, J.D., M.B.A., Deputy City Treasurer Treasurer's Commentary The next Federal Open Market Committee meeting is scheduled for April 28-29. No action is expected. The U.S. economy plunged by 6.2% during 4Q2008 -- its worst performance since 1982. NYU Business Professor Nouriel Roubini, who predicted the current financial crisis, has put the chance of a severe U-shaped recession at 67%, and a more severe L-shaped recession at 33%. Roubini contends that most U.S. financial institutions are insolvent. A growing number of authorities, including Alan Greenspan, James Baker, and Paul Krugman, believe that the Obama Administration should formally nationalize large troubled banks. They argue that bank debt guarantees, TARP funding, and credit wraps constitute "soft nationalization". The Geithner Plan of a public -private buyout of toxic assets is not seen as being viable. Treasury Secretary Geithner has been slow to respond to the financial crisis because 19 of the 20 top positions in the U.S. Treasury are still open. In other words, Geithner has no staff. The U.S. Treasury agreed to exchange up to $25 billion of TARP money that it had provided to Citigroup for as much as a 36% equity stake in the bank. This was Citigroup's third bailout in five months, and was done to improve its capital ratios. The move has been characterized as "a nationalization to avoid a nationalization". Citigroup bond prices fell sharply afterwards. Pis 47d)j&�,v, c.C..Al. r City Treasurer PORTFOLIO STATISTICS Dollars in Thousands FEB-09 JAN-09 DEC-08 NOV-08 OCT-08 SEP-08 CITY Month -End Book Value*** $ 209,948 $ 212,738 $ 199,053 $ 213,607 $ 217,630 $ 211,223 Month -End Market Value*** $ 208,721 $ 213,002 $ 199,922 $ 213,168 $ 216,626 $ 224,865 Paper Gain (Loss) $ (1,227) $ 264 $ 869 $ (439) $ (1,004) $ 13,642 Prior Year Book Variance $ (27,297) $ (18,677) $ (38,071) $ (27,138) $ (26,483) $ (23,021) Interest Earnings $ 408 $ 430 $ 471 $ 529 $ 575 $ 647 Yield -To -Maturity 2.36% 2.55% 2.87% 3.04% 3.27% 3.70% Weighted Maturity (Days) 438 454 490 463 470 489 Effective Duration 0.40 0.47 0.54 0.53 0.55 0.58 RDA Month -End Book Value *** $ 270,416 $ 281,273 $ 251,852 $ 244,674 $ 245,100 $ 257,385 Month -End Market Value *** $ 271,497 $ 282,566 $ 253,288 $ 245,564 $ 245,429 $ 257,654 Paper Gain (Loss) $ 1,081 $ 1,293 $ 1,436 $ 890 $ 329 $ 269 Prior Year Book Variance $ (9,283) $ (4,674) $ 877 $ (5,516) $ (5,663) $ (16,289) Interest Earnings $ 283 $ 268 $ 287 $ 304 $ 325 $ 718 Yield -To -Maturity 1.29% 1.25% 1 A0% 1.51 % 1.60% 3.18% Weighted Maturity (Days) 235 226 256 272 272 259 Effective Duration 0.18 0.19 0.24 0.26 0.28 0.29 *** Omits SLGSs. Dollars in Thousands Aqeinq Interval < 1 M < 2M < 3M < 6M < 1YR < 2YR < 3YR < 4YR < 5YR > 5YR Total: Ratin s AAA AA A Unrated Total: Sector MMF Agencies MTNs CAMP RDA Loan GMRA LAIF CP Total: Month Mar08 Apr May Jun Jul Aug Sep Oct Nov Dec Jan09 Feb City of Palm Desert -- Portfolio Characteristics February 28, 2009 Market Value $ 70,703 7,172 31,580 31,997 7,449 $ 148,901 Market Value $ 108,820 50,232 2,074 41,752 $ 202,878 Market Value $ 34,467 25,891 52,306 48,462 22,655 19,083 14 $ 202,878 Citv Yield LAIF Yield 4.05 3.78 3.98 3.40 3.88 3.07 3.75 2.89 3.69 2.88 3.65 2.78 3.70 2.77 3.27 2.71 3.04 2.57 2.87 2.35 2.55 2.05 2.36 1.87 ............ ...................... General Fund AgeingN 100 80 c 60 47 40 0 21 21 a 20 0 0 r1 n n rn 0 0 0 0 <1M <2M <3M <6M < < < < < > 1YR 2YR 3YR 4YR 5YR 5YR Credit Quality AAA 53% Unrated 21% A AA 1% 25% Asset AllocationM MTNs 26% Agencies " CAMP 13% 23% MMF 17% GMRA RDA Loan 9% 11 % Variance Performance 0.27 0.58 0.81 4.2 0.86 3.6 0.82 0.87 m 3.0 0.93 2.4 0.56 0.47 1.8 0.52 Mar08 Apr May Jun Jul Aug Sep Oct Nov Dec Jan09 Feb 0.51 0.50 ®...tE ■: Standard and Poors "" LAIF, and City Loan to RDA Page 2 City of Palm Desert Portfolio Holdings February 28, 2009 Market Ratings Par Value Issuer lCouponj Maturity I Cost I YTM I Price I Value Moody'si S&P Medium -Term Notes $ 3,795,000 BANK OF AMERICA 5.38 8/15/11 $ 3,909,106 4.05 90.42 $ 3,431,295 Aa2 AA- $ 3,000,000 BANK OF AMERICA 4.25 10/1/10 $ 3,047,463 3.20 94.18 $ 2,825,334 Aa2 AA- $ 15,270,000 CITIGROUP 4.13 2/22/10 $ 15,161,234 4.91 96.07 $ 14,287,757 Aa1 AA $ 2,035,000 CITIGROUP 4.13 2/22/10 $ 2,020,505 4.91 96.07 $ 1,904,099 Aa1 AA $ 1,000,000 CITIGROUP 4.63 8/3/10 $ 992,617 5.10 96.75 $ 917,676 Aa1 AA $ 4,000,000 CITIGROUP 4.63 8/3/10 $ 3,970,469 5.10 96.75 $ 3,670,704 Aa1 AA $ 2,035,000 GENERAL ELECTRIC 4.88 10/21/10 $ 2,012,835 5.63 100.89 $ 2,053,142 Aaa AAA $ 1,891,000 GENERAL ELECTRIC 6.88 11/15/10 $ 1,925,528 5.65 103.49 $ 1,957,085 Aaa AAA $ 2,000,000 GENERAL ELECTRIC 6.13 2/22/11 $ 2,015,727 5.67 102.36 $ 2,047,138 Aaa AAA $ 3,965,000 GENERAL ELECTRIC 4.88 10/21/10 $ 4,066,578 3.23 100.89 $ 4,000,348 Aaa AAA $ 2,000,000 WACHOVIA 7.80 8/18/10 $ 2,074,703 5.02 103.69 $ 2,073,730 Aa3 A+ $ 2,000,000 WAL-MART 6.88 8/10/09 $ 2,015,605 4.93 102.23 $ 2,044,560 Aa2 AA $ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,051,194 2.90 102.23 $ 3,066,840 Aa2 AA $ 4,000,000 WELLS FARGO BANK 6.38 8/1/11 $ 4,106,282 5.13 100.44 $ 4,017,672 Aa1 AA- $ 2,000,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,987,876 5.09 99.55 $ 1,991,080 Aa1 AA- $ 2,020,000 WELLS FARGO BANK 4.20 1/15/10 $ 2,007,359 4.96 99.87 $ 2,017,457 Aa1 AA- $ 54,011,000 Subtotal $ 54,365,080 4.65 $ 52,305,916 Federal Agencies -- Coupon $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,005,476 4.61 104.00 $ 3,120,000 Aaa AAA $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,005,476 4.61 104.00 $ 3,120,000 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.38 9/11/09 $ 2,992,863 5.59 101.84 $ 3,055,314 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 3.50 11/3/09 $ 1,969,309 5.96 101.66 $ 2,033,126 Aaa AAA $ 2,033,000 FED HOME LOAN MTG CORP 4.25 7/15/09 $ 2,028,728 4.87 101.34 $ 2,060,319 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,036,347 4.87 102.31 $ 2,096,383 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.13 11/18/09 $ 1,990,238 4.88 102.17 $ 2,043,424 Aaa AAA $ 2,062,000 FED HOME LOAN MTG CORP 4.13 7/12/10 $ 2,039,704 5.47 103.88 $ 2,141,903 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,026,365 5.50 102.31 $ 2,096,383 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.63 10/28/09 $ 1,996,937 4.88 102.28 $ 2,045,626 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.25 8/15/10 $ 1,967,036 5.47 103.94 $ 2,078,750 Aaa AAA $ 25,193,000 Subtotal $ 25,058,478 5.13 $ 25,891,228 Local Agency Investment Pool $ 14,246 L.A.I.F. 0.00 3/1/09 $ 14,246 1.87 100.00 $ 14,246 U U $ 14,246 Subtotal $ 14,246 1.87 $ 14,246 Local Agency Investment Pool $ 48,404,614 C.A.M.P. 0.00 3/1/09 $ 48,404,614 1.02 100.00 $ 48,404,614 U AAA $ 57,118 C.A.M.P. (DESERT WILLOW) 0.00 3/1/09 $ 57,118 1.02 100.00 $ 57,118 U AAA $ 48,461,733 Subtotal $ 48,461,733 1.02 $ 48,461,733 "U" = Unrated Page 3 City of Palm Desert Portfolio Holdings February 28, 2009 Market Ratings Par Value Issuer lCouponj Maturity I Cost I YTM I Price I Value I Moody'sl S&P Money Market Fund $ 34,466,519 WF TREASURY PLUS 0.00 3/1/09 $ 34,466,519 0.12 100.00 $ 34,466,519 Aaa AAA $ 34,466,519 Subtotal $ 34,466,519 0.12 $ 34,466,519 1 Government Managed Rate Account $ 19,082,946 UNION BANK 0.00 3/1/09 $ 19,082,946 0.27 100.00 $ 19,082,946 U U $ 19,082,946 Subtotal $ 19,082,946 0.27 $ 19,082,946 City of Palm Desert $ 22,655,000 CITY OF PALM DESERT 0.00 3/1/39 $ 22,655,000 1.87 100.00 $ 22,655,000 U U $ 22,655,000 Subtotal $ 22,655,000 1.87 $ 22,655,000 Total Investments $ 203,884,443 $ 204,104,001 2.36 $ 202,877,587 Cash $ 4,587,042 CITY MAIN CHKG 0.00 3/1/09 $ 4,587,042 0.00 100.00 $ 4,587,042 U U $ 946,726 DESERT WILLOW CHKG 0.00 3/1/09 $ 946,726 0.00 100.00 $ 946,726 U U $ 309,731 RECREATIONAL FAC CHKG 0.00 3/1/09 $ 309,731 0.00 100.00 $ 309,731 U U $ - ART, FOOD & WINE CHKG 0.00 3/1/09 $ - 0.00 100.00 $ - U U $ - MONTEREY 170 CHKG 0.00 3/1/09 $ - 0.00 100.00 $ - U U $ 5,843,499 Subtotal $ 5,843,499 $ 5,843,499 Total Investments and Cash $ 209,727,942 $ 209,947,500 $ 208,721,087 "U" = Unrated Page 4 City of Palm Desert Portfolio Holdings February 28, 2009 Par Value I Issuer lCouponj Maturity I Cost % of Portfolio Corporate Issuers (Market Value) BANK OF AMERICA 3.00% CITIGROUP 9.96% GENERAL ELECTRIC 4.82% WACHOVIA 0.99% WAL-MART 2.45% WELLS FARGO BANK 3.85% % of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 2.99% FED HOME LOAN BANK 2.44% FED HOME LOAN MTG CORP 5.00% FED NATIONAL MTG ASSOC 1.98% Market Ratings YTM I Price I Value I Moody'sl S&P "U" = Unrated Page 5 Palm Desert Redevelopment Agency -- Portfolio Characteristics February 28, 2009 Dollars in Thousands Ageing Interval Market Value _ Portfolio Ageing w/o SLGSs < 1 M $ 63,103� < 2M - < 3M - 100 < 6M 7,133 , , gp < 1YR 24,537 70 56 < 2YR 14,394 60 050 < 3YR 4,253 0 30 22 < 4YR - a. 20 6 n 13 < 5YR _ 10 0 0 I"I 0 1 1 n 0 0 0 > 5YR - < 1 M < 2M < 3M < 6M < < < < < > Total: $ 113,420 1YR 2YR 3YR 4YR 5YR 5YR Quality * Market Value Credit Quality AAA $ 238,379 AAA AA 23,752 0 88% A 7,126 Unrated ** 1,096 A 3% AA Total: $ 270,353 9% 9% Sector MMF Agencies MTNs CAMP GMRA LAIF CP Treasuries Total: Month Mar08 Apr May Jun Jul Aug Sep Oct Nov Dec Jan09 Feb Market Value Asset Allocation $ 154,810 30,563 30,878 MMF 53,006 58% 1,064 32 $ 270,353 CAMP 20% Agencies 11% Ivi I Ns 11% RDA Yield LAIF Yield Variance Performance 3.36 3.78 -0.42 3.35 3.40 -0.05 3.14 3.07 0.06 4.2 3.09 2.89 0.20 3.4 3.08 2.79 0.29 3.05 2.78 0.27 32 2.6 - m 3.18 2.77 0.41 } 1.8 1.60 2.71 -1.11 1.51 2.57 -1.06 1.0 1.40 2.35 -0.95 Mar08 Apr May Jun Jul Aug Sep Oct Nov Dec Jan09 Feb 1.26 2.05 -0.79 1.29 1.87 -0.58 M LAIF Yield O RDA Yield * Standard and Poors ** LAIF Page 6 Palm Desert Redevelopment Agency Portfolio Holdings February 28, 2009 Market Ratings Par Value Issuer Coupon Maturity Cost YTM I Price Value Moody's I S&P Medium -Term Notes $ 4,000,000 CITIGROUP 6.20 3/15/09 $ 4,001,554 5.13 99.98 $ 3,999,188 Aa1 AA- $ 4,070,000 JP MORGAN CHASE 3.50 3/15/09 $ 4,067,595 5.12 100.01 $ 4,070,383 Aa3 A+ $ 3,055,000 JP MORGAN CHASE 3.50 3/15/09 $ 3,053,195 5.12 100.01 $ 3,055,287 Aa3 A+ $ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,026,431 4.76 102.23 $ 3,066,840 Aa2 AA $ 3,000,000 WAL-MART 4.13 7/1/10 $ 3,046,606 2.91 102.61 $ 3,078,399 Aa2 AA $ 13,625,000 WELLS FARGO BANK 4.20 1/15/10 $ 13,762,496 3.00 99.87 $ 13,607,846 Aa1 AA- $ 30,750,000 Subtotal $ 30,957,878 3.93 $ 30,877,943 Federal Agencies -- Coupon $ 2,000,000 FED FARM CREDIT BANK 6.45 10/7/09 $ 2,017,031 4.88 103.30 $ 2,066,096 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 4.75 8/3/09 $ 1,999,075 4.87 101.75 $ 2,035,000 Aaa AAA $ 4,900,000 FED FARM CREDIT BANK 4.90 9/22/10 $ 4,918,282 4.65 105.06 $ 5,148,063 Aaa AAA $ 4,500,000 FED HOME LOAN BANK 4.38 9/11/09 $ 4,489,294 5.59 101.84 $ 4,582,971 Aaa AAA $ 2,005,000 FED HOME LOAN BANK 3.88 7/24/09 $ 1,997,648 4.89 101.28 $ 2,030,690 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,976,591 5.49 106.31 $ 2,126,250 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,976,279 5.50 106.31 $ 2,126,250 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 2,036,172 5.54 107.56 $ 2,151,250 Aaa AAA $ 3,734,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 3,801,656 5.54 107.56 $ 4,016,384 Aaa AAA $ 4,155,000 FED NATIONAL MTG ASSOC 6.63 9/15/09 $ 4,190,164 4.89 103.00 $ 4,279,650 Aaa AAA $ 29,294,000 Subtotal $ 29,402,193 5.16 $ 30,562,603 Local Government Investment Pool $ 21,791 L.A.I.F. 0.00 3/1/09 $ 21,791 1.87 100.00 $ 21,791 U U $ 9,956 L.A.I.F. (HOUSING) 0.00 3/1/09 $ 9,956 1.87 100.00 $ 9,956 U U $ 31,747 Subtotal $ 31,747 1.87 $ 31,747 Local Government Investment Pool $ 50,903,558 C.A.M.P. 0.00 3/1/09 $ 50,903,558 1.02 100.00 $ 50,903,558 U AAA $ 2,102,182 C.A.M.P. (HOUSING) 0.00 3/1/09 $ 2,102,182 1.02 100.00 $ 2,102,182 U AAA $ 53,005,740 Subtotal $ 53,005,740 1.02 $ 53,005,740 Government Managed Rate Account $ 1,064,209 UNION BANK 0.00 3/1/09 $ 1,064,209 0.27 100.00 $ 1,064,209 U U $ 1,064,209 Subtotal $ 1,064,209 0.27 $ 1,064,209 Money Market Fund $ 154,811,073 WF TREASURY PLUS 0.00 3/1/09 $ 154,811,073 0.12 100.00 $ 154,811,073 Aaa AAA $ 154,811,073 Subtotal $ 154,811,073 0.12 $ 154,811,073 "U" = Unrated Page 7 Palm Desert Redevelopment Agency Portfolio Holdings February 28, 2009 Par Value I Issuer Total Investments $ 268,956,769 Cash $ 749,390 HOUSING AUTH CHKG $ 394,164 HOUSING AUTH TRUST $ 1,143,554 Subtotal Total Investments and Cash $ 270,100,323 Market Coupon I Maturity Cost YTM I Price Value $ 269,272,840 1.29 $ 270,353,316 0.00 3/1/09 $ 749,390 0.00 100.00 $ 749,390 0.00 3/1 /09 $ 394,164 0.00 100.00 $ 394,164 $ 1,143,554 $ 1,143,554 $ 270,416,394 $ 271,496,870 % of Portfolio Corporate Issuers (Market Value) CITIGROUP 1.47% JP MORGAN CHASE 2.62% WAL-MART 2.26% WELLS FARGO BANK 5.01% % of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 3.41% FED HOME LOAN BANK 4.00% FED HOME LOAN MTG CORP 2.27% FED NATIONAL MTG ASSOC 1.58% Ratings Moody's I S&P U U U U "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 February 28, 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. Bloomberg L.P. and Interactive Data Corporation provided the data and the analytical tools that were 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 March 24, 2009, PauLS. tj6NO-v,, C. C. Af T: * City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS I California Government Code I City Investment Policy CA Govt Maximum Maximum Quality Maximum Maximum Quality % of City % of RDA Code Investment Category Maturity Limit S&P/Mdys Maturity Limit S&P/Mdys Portfolio Portfolio 53601(a) Palm Desert Bonds 5 Years No Limit Not Authorized (1) 53632(c) Savings Accounts No Limit No Limit No Limit No Limit 9.4% 0.4% 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% 12.3% 10.9% 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 Q) Medium -Term Notes 5 Years 0 30% A 5 Years 30 0/o A .0/0 266 .0/o 115 53601(k) Mutual Funds 90 Days 20% AAA & Aaa 90 Days 20% (2) 1 AAA & Aaa 16.9% 57.5% 53601(I) Trust Indenture Debt Not Authorized 53601(m) Secured Bank Deposits 5 Years No Limit Not Authorized 53601(k) Local Government AAA & Aaa AAA & AaaI Investment Pools 90 Days 20% or Advisor 90 Days I 20% (2 ) I or Advisor 1 23.7% 19.7% 53601(n) Mortgage -Backed 5 Years 20% A (Issuer) & Not Authorized Securities AA (Security 16429.1(b) LAW No Limit I No Limit I 0.0% I 0.0% (1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. 88.9% 100.0% (2) 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 March 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 April 28-29. No action is expected. The FOMC is focused on stabilizing the housing market, and avoiding a prolonged period of deflation that would be difficult to break. To that end, the FOMC has committed to buy $300 billion of long-term U.S. Treasuries in an effort to lower long-term interest rates, and stimulate a home refinancing wave. Nobel Prizing -winning economist Paul Krugman has noted that despite the Obama Administration's recent show of optimism, things are still getting worse. Industrial production has hit a 10-year low; housing starts are extremely weak; foreclosures are surging again; commercial real estate continues to deteriorate; and credit card losses continue to mount. The most that can be said is that there are scattered signs that things are getting worse more slowly. Krugman expects unemployment to keep rising through 2010. In "V-shaped" economic recoveries, employment comes roaring back due to pent-up demand. Krugman believes that a "V-shaped" recovery is unlikely due to the amount of debt that has built up. In the corporate sector, it appears increasingly likely that General Motors and Chrysler will be compelled to file bankruptcy, due to insufficient concessions from the UAW and the bondholders. General Electric and Berkshire Hathaway recently had ;heir credit ratings downgraded from "AAA" to "AA". The largest U.S. commercial banks appear headed for "A" credit ratings. Pis C. c.R r City Treasurer PORTFOLIO STATISTICS Dollars in Thousands Mar-09 FEB-09 JAN-09 DEC-08 NOV-08 OCT-08 CITY Month -End Book Value""' $ 216,674 $ 219,469 $ 212,738 $ 199,053 $ 213,607 $ 217,630 Month -End Market Value— $ 216,589 $ 218,243 $ 213,002 $ 199,922 $ 213,168 $ 216,626 Paper Gain (Loss) $ (85) $ (1,226) $ 264 $ 869 $ (439) $ (1,004) Prior Year Book Variance $ (15,800) $ (7,452) $ (18,677) $ (38,071) $ (27,138) $ (26,483) Interest Earnings $ 460 $ 443 $ 430 $ 471 $ 529 $ 575 Yield -To -Maturity 2.43% 2.34% 2.55% 2.87% 3.04% 3.27% Weighted Maturity (Days) 324 419 454 490 463 470 Effective Duration 0.36 0.42 0.47 0.54 0.53 0.55 RDA Month -End Book Value """ $ 268,377 $ 270,416 $ 281,273 $ 251,852 $ 244,674 $ 245,100 Month -End Market Value """ $ 269,503 $ 271,497 $ 282,566 $ 253,288 $ 245,564 $ 245,429 Paper Gain (Loss) $ 1,126 $ 1,081 $ 1,293 $ 1,436 $ 890 $ 329 Prior Year Book Variance $ (7,168) $ (9,283) $ (4,674) $ 877 $ (5,516) $ (5,663) Interest Earnings $ 259,174 $ 283 $ 268 $ 287 $ 304 $ 325 Yield -To -Maturity 1.07% 1.29% 1.25% 1.40% 1.51 % 1.60% Weighted Maturity (Days) 205 235 226 256 272 272 Effective Duration 0.17 0.18 0.19 0.24 0.26 0.28 """ Omits SLGSs. City of Palm Desert -- Portfolio Characteristics March 31, 2009 Dollars in Thousands Aaeina Interval Market Value ...... .............. < 1 M $ 103,246 General Fund Ageing < 2M - < 3M - 100 < 6M 10,227 80 < 1 YR 28,524 57 < 2YR 31,997 2 60 < 3YR 7,449 40 <4YR - a° 20 16 18 < 5YR - 0 0 F1 Fj I I I ^ 0 0 0 0 r� > 5YR - Total: $ 181,443 < 1 M < 2M < 3M < 6M < < < < < > 1YR 2YR 3YR 4YR 5YR 5YR Ratings * Market Value Credit Quality AAA $ 149,801 AAA AA 14,998 Unrated "` 71% A 16,307 14% Unrated *` 30,114 A Total: $ 211,220 8% 7% Sector Market Value Asset Allocation` MMF $ 32,606 MTNs CAMP 15% 23% Agencies 25,871 MTNs 31,305 CAMP 38,496 Agencies RDA Loan 12% 11 RDA Loan 22,655 G M RA 30,173 GMRA ^5° LAIF 30,114 0 14% CP - LAIF Total: $ 211,220 14% Month Citv Yield LAIF Yield Variance Performance Apr08 3.98 3.40 0.58 May 3.88 3.07 0.81 4.4 Jun 3.75 2.89 0.86 Jul 3.69 2.88 0.82 3.7 Aug 3.65 2.78 0.87 Sep 3.70 2.77 0.93 3.0 Oct 3.27 2.71 0.56 } 2.3 Nov 3.04 2.57 0.47 Dec 2.87 2.35 0.52 1.6 Jan09 2.55 2.05 0.51 Apr08 May Jun Jul Aug Sep Oct Nov Dec Jan09 Feb Mar Feb 2.36 1.87 0.50 Mar 2.17 1.82 0.35 •" E "'j •i "' Standard and Poors *" LAIF, and City Loan to RDA Page 2 City of Palm Desert Portfolio Holdings March 31, 2009 Market Ratings Par Value Issuer l Couponj Maturity I Cost I YTM I Price I Value Moody'sS&P Medium -Term Notes $ 3,795,000 BANK OF AMERICA 5.38 8/15/11 $ 3,905,233 4.05 93.19 $ 3,536,523 Al A $ 3,000,000 BANK OF AMERICA 4.25 10/1/10 $ 3,044,965 3.20 95.25 $ 2,857,602 Al A $ 2,035,000 GENERAL ELECTRIC 4.88 10/21/10 $ 2,013,962 5.63 99.40 $ 2,022,861 Aa2 AA+ $ 1,891,000 GENERAL ELECTRIC 6.88 11/15/10 $ 1,923,841 5.65 101.45 $ 1,918,486 Aa2 AA+ $ 2,000,000 GENERAL ELECTRIC 6.13 2/22/11 $ 2,015,063 5.67 101.10 $ 2,022,010 Aa2 AA+ $ 3,965,000 GENERAL ELECTRIC 4.88 10/21/10 $ 4,061,413 3.23 99.40 $ 3,941,349 Aa2 AA+ $ 2,000,000 WACHOVIA 7.80 8/18/10 $ 2,070,450 5.02 99.59 $ 1,991,796 Al AA $ 2,000,000 WAL-MART 6.88 8/10/09 $ 2,012,660 4.93 101.87 $ 2,037,348 Aa2 AA $ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,041,535 2.90 101.87 $ 3,056,022 Aa2 AA $ 4,000,000 WELLS FARGO BANK 6.38 8/1/11 $ 4,102,617 5.13 98.14 $ 3,925,680 Al AA $ 2,000,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,988,578 5.09 98.75 $ 1,974,976 Al AA $ 2,020,000 WELLS FARGO BANK 4.20 1/15/10 $ 2,008,567 4.96 100.03 $ 2,020,646 Al AA $ 31,706,000 Subtotal $ 32,188,884 4.43 $ 31,305,299 Federal Agencies -- Coupon $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,005,087 4.61 104.00 $ 3,120,000 Aaa AAA $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,005,087 4.61 104.00 $ 3,120,000 Aaa AAA '$ 3,000,000 FED HOME LOAN BANK 4.38 9/11/09 $ 2,993,990 5.59 101.66 $ 3,049,689 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 3.50 11/3/09 $ 1,973,114 5.96 101.47 $ 2,029,376 Aaa AAA $ 2,033,000 FED HOME LOAN MTG CORP 4.25 7/15/09 $ 2,029,684 4.87 101.09 $ 2,055,237 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,037,684 4.87 102.16 $ 2,093,183 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.13 11/18/09 $ 1,991,377 4.88 101.95 $ 2,039,088 Aaa AAA $ 2,062,000 FED HOME LOAN MTG CORP 4.13 7/12/10 $ 2,041,855 5.47 104.09 $ 2,146,414 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,028,756 5.50 102.16 $ 2,093,183 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.63 10/28/09 $ 1,997,324 4.88 102.03 $ 2,040,626 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.25 8/15/10 $ 1,968,923 5.47 104.22 $ 2,084,376 Aaa AAA $ 25,193,000 Subtotal $ 25,072,880 5.13 $ 25,871,171 Local Agency Investment Pool $ 30,114,246 L.A.I.F. 0.00 4/1/09 $ 30,114,246 1.82 100.00 $ 30,114,246 U U $ 30,114,246 Subtotal $ 30,114,246 1.82 $ 30,114,246 Local Agency Investment Pool $ 38,439,226 C.A.M.P. 0.00 4/1/09 $ 38,439,226 0.89 100.00 $ 38,439,226 U AAA $ 57,162 C.A.M.P. (DESERT WILLOW) 0.00 4/1/09 $ 57,162 0.89 100.00 $ 57,162 U AAA $ 38,496,388 Subtotal $ 38,496,388 0.89 $ 38,496,388 Money Market Fund $ 32,603,988 WF TREASURY PLUS 0.00 4/1/09 $ 32,603,988 0.08 100.00 $ 32,603,988 Aaa AAA $ 32,603,988 Subtotal $ 32,603,988 0.08 $ 32,603,988 "U" = Unrated Page 3 City of Palm Desert Portfolio Holdings March 31, 2009 Market Ratings Par Value Issuer Coupons Maturity Cost YTM I Price Value I Moody'sS&P Government Managed Rate Account $ 30,173,498 UNION BANK 0.00 4/1/09 $ 30,173,498 1.77 100.00 $ 30,173,498 U U $ 30,173,498 Subtotal $ 30,173,498 1.77 $ 30,173,498 City of Palm Desert $ 22,655,000 CITY OF PALM DESERT 0.00 4/1/39 $ 22,655,000 1.82 100.00 $ 22,655,000 U U $ 22,655,000 Subtotal $ 22,655,000 1.82 $ 22,655,000 Total Investments $ 210,942,120 $ 211,304,884 2.17 $ 211,219,589 Cash $ 3,452,438 CITY MAIN CHKG 0.00 4/1/09 $ 3,452,438 0.00 100.00 $ 3,452,438 U U $ 1,496,980 DESERT WILLOW CHKG 0.00 4/1/09 $ 1,496,980 0.00 100.00 $ 1,496,980 U U $ 420,003 RECREATIONAL FAC CHKG 0.00 4/1/09 $ 420,003 0.00 100.00 $ 420,003 U U $ - ART, FOOD & WINE CHKG 0.00 4/1/09 $ - 0.00 100.00 $ - U U $ - MONTEREY 170 CHKG 0.00 4/1/09 $ - 0.00 100.00 $ - U U $ 5,369,421 Subtotal $ 5,369,421 $ 5,369,421 Total Investments and Cash $ 216,311,540 $ 216,674,305 $ 216,589,010 % of Portfolio Corporate Issuer (Market Value) BANK OF AMERICA 2.95% GENERAL ELECTRIC 4.57% WACHOVIA 0.92% WAL-MART 2.35% WELLS FARGO BANK 3.66% "U" = Unrated Page 4 IPar Value Issuer Agency Issuer City of Palm Desert Portfolio Holdings March 31, 2009 Coupon] Maturity FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP FED NATIONAL MTG ASSOC Cost % of Portfolio (Market Value) 2.88% 2.35% 4.81 % 1.90% Market Ratings YTM I Price I Value Moody'sI S&P "U" = Unrated Page 5 Palm Desert Redevelopment Agency -- Portfolio Characteristics March 31, 2009 Dollars in Thousands Acieino Interval Market Value < 1 M $ 49,946 < 2M - < 3M - < 6M 15,995 < 1YR 15,674 < 2YR 18,647 < 3YR - < 4YR - < 5YR - > 5YR - Total: $ 100,262 Portfolio Ageing w/o SLGSs� 100 90 80 70 0 60 50 p 50 - 40 00 30 16 16 19 a. 20 n 10 0 0 n n I I 0 0 0 0 0 < 1 M <2M <3M <6M < < < < < > 1YR 2YR 3YR 4YR 5YR 5YR � e Quality * Market Value Credit QualityN AAA $ 236,898 A AAA AA 19,780 0% 89% A - Unrated * 11,740 UnratedAA '" Total: $ 268,418 4% 7% 7% Sector Market Value Asset Allocation MMF $ 166,301 Agencies 30,554 MMF MTNs 19,780 63% CAMP 40,043 Agencies LAIF 11,740 LAIF 11 % CP - 4% CAMP MTNs Treasuries - 15% 7% Total: $ 268,418 Month RDA Yield LAIF Yield Variance PerformanceN Apr08 3.35 3.40 -0.05 May 3.14 3.07 0.06 3.6 Jun 3.09 2.89 0.20 Jul 3.08 2.79 0.29 2.9 Aug 3.05 2.78 0.27 Sep 3.18 2.77 0.41 c 2.2 d Oct 1.60 2.71 -1.11 1.5 = Nov 1.51 2.57 -1.06 Dec 1.40 2.35 -0.95 0.8 Jan09 1.26 2.05 -0.79 Apr08 May Jun Jul Aug Sep Oct Nov Dec Jan09 Feb Mar Feb 1.29 1.87 -0.58 Mar 1.07 1.82 -0.75 ■LAIF Yield INRDA Yield Standard and Poors LAIF Page 6 Palm Desert Redevelopment Agency Portfolio Holdings March 31, 2009 Market Par Value Issuer jCouponj Maturity I Cost YTM I Price I Value Medium -Term Notes Ratings Moody's I S&P $ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,021,444 4.76 101.87 $ 3,056,022 Aa2 AA $ 3,000,000 WAL-MART 4.13 7/1/10 $ 3,043,694 2.91 103.14 $ 3,094,155 Aa2 AA $ 13,625,000 WELLS FARGO BANK 4.20 1/15/10 $ 13,749,359 3.00 100.03 $ 13,629,360 Al AA $ 19,625,000 Subtotal $ 19,814,497 3.26 $ 19,779,537 Federal Agencies -- Coupon $ 2,000,000 FED FARM CREDIT BANK 6.45 10/7/09 $ 2,014,666 4.88 102.88 $ 2,057,510 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 4.75 8/3/09 $ 1,999,257 4.87 101.47 $ 2,029,376 Aaa AAA $ 4,900,000 FED FARM CREDIT BANK 4.90 9/22/10 $ 4,917,304 4.65 105.38 $ 5,163,375 Aaa AAA $ 4,500,000 FED HOME LOAN BANK 4.38 9/11/09 $ 4,490,985 5.59 101.66 $ 4,574,534 Aaa AAA $ 2,005,000 FED HOME LOAN BANK 3.88 7/24/09 $ 1,999,190 4.89 101.03 $ 2,025,678 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,977,553 5.49 106.59 $ 2,131,876 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,977,254 5.50 106.59 $ 2,131,876 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 2,034,213 5.54 107.72 $ 2,154,376 Aaa AAA $ 3,734,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 3,797,992 5.54 107.72 $ 4,022,220 Aaa AAA $ 4,155,000 FED NATIONAL MTG ASSOC 6.63 9/15/09 $ 4,184,727 4.89 102.59 $ 4,262,772 Aaa AAA $ 29,294,000 Subtotal $ 29,393,142 5.16 $ 30,553,592 Local Government Investment Pool $ 11,717,956 L.A.I.F. 0.00 4/1/09 $ 11,717,956 1.82 100.00 $ 11,717,956 U U $ 21,791 L.A.I.F. (HOUSING) 0.00 4/1/09 $ 21,791 1.82 100.00 $ 21,791 U U $ 11,739,747 Subtotal $ 11,739,747 1.82 $ 11,739,747 Local Government Invesment Pool $ 37,939,431 C.A.M.P. 0.00 4/1/09 $ 37,939,431 0.89 100.00 $ 37,939,431 U AAA $ 2,103,778 C.A.M.P. (HOUSING) 0.00 4/1/09 $ 2,103,778 0.89 100.00 $ 2,103,778 U AAA $ 40,043,208 Subtotal $ 40,043,208 0.89 $ 40,043,208 Money Market Fund $ 166,302,400 WF TREASURY PLUS 0.00 4/1/09 $ 166,302,400 0.08 100.00 $ 166,302,400 Aaa AAA $ 166,302,400 Subtotal $ 166,302,400 0.08 $ 166,302,400 Total Investments $ 267,004,356 $ 267,292,994 1.07 $ 268,418,485 Cash $ 685,375 HOUSING AUTH CHKG 0.00 4/1/09 $ 685,375 0.00 100.00 $ 685,375 U U $ 398,768 HOUSING AUTH TRUST 0.00 4/1/09 $ 398,768 0.00 100.00 $ 398,768 U U $ 1,084,143 Subtotal $ 1,084,143 $ 1,084,143 "U" = Unrated Page 7 Palm Desert Redevelopment Agency Portfolio Holdings March 31, 2009 Market Par Value I Issuer lCouponj Maturity I Cost I YTM I Price I Value Total Investments and Cash $ 268,088,499 $ 268,377,137 $ 269,502,628 % of Portfolio Corporate Issuer (Market Value) WAL-MART 2.28% WELLS FARGO BANK 5.06% % of Portfolio Agency Issuer (Market Value) FED FARM CREDIT BANK 3.43% FED HOME LOAN BANK 4.03% FED HOME LOAN MTG CORP 2.29% FED NATIONAL MTG ASSOC 1.58% Ratings Moody's I S&P "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 March 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. Bloomberg L.P. and Interactive Data Corporation provided the data and the analytical tools that were 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 April 28, 2009, Pis ijd"v, C.C,Af r City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS I California Government Code I City Investment Policy CA Govt Maximum Maximum Quality Maximum Maximum Quality % of City % of RDA Code Investment Category Maturity Limit S&P/Mdys Maturity Limit S&P/Mdys Portfolio Portfolio 53601(a) Palm Desert Bonds 5 Years No Limit Not Authorized (1) 53632(c) Savings Accounts No Limit No Limit No Limit No Limit 14.3% 0.0% 53601(b) U.S. Treasuries 5 Years No Limit 5 Years No Limit l ' 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% 11.9% 11.0% 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 536010) Medium -Term Notes 5 Years 30% A 5 Years 30% A 15.2% 7.4% 53601(k) Mutual Funds 90 Days 20% AAA & Aaa _ 90 Days 20%(2) IAAA&Aaal 15.4% 62.2% 53601(I) Trust Indenture Debt Not Authorized 53601(m) Secured Bank Deposits 5 Years No Limit Not Authorized 53601(k) ( Local Government l l AAA & Aaa AAA & Aaa Investment Pools 90 Days 20% or Advisor 90 Days I 20% (2) I or Advisor l 18.2% l 15.0% 53601(n) I Mortgage -Backed I 5 Years 20% A (Issuer) & Not Authorized Securities l I AA (Security 16429.1(b)l LAW No Limit I No Limit 14.3% 4.4% (1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. ' 89.3% l 100.0% (2) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds. Certified California Municipal Treasurer Page 9