Information Item. Date: June 4, 2014

Transcription

1 Information Item Date: June 4, 2014 To: Mayor and City Council From: Gigi Decavalles-Hughes, Director of Finance/City Treasurer Subject: City Monthly Cash and Investment Report for March 2014 Introduction In compliance with the City Charter, State law, and the City s Investment Policy, the attached monthly report provides information concerning City investments and cash held and/or managed by the Director of Finance/City Treasurer as of March 31, Discussion The March 2014 Cash and Investment Report provides an updated review of the City s investment portfolio and cash position. The value of cash and investments held in the pooled portfolio is $656.8 million. It remained relatively flat in March showing only a $1.9 million increase from the prior month (0.3%). The pooled portfolio yield-to-maturity of 0.69% is one basis point higher than last month and thirteen basis points higher than in March Net investment earnings were $0.1 million. Fiscal year-to-date earnings are 21% less than for the same period last year. The extended low interest rate environment continues to limit investment returns. Additionally, a significant portion of new investments continue to be made in securities with very short maturities and low yields pending final resolution of RDA dissolution. In addition to the pooled portfolio, the City s total cash holdings as of March 31, 2014 included $20.3 million in debt proceeds held in trust with various fiscal agents, $27.8 million in other funds held in trust, and $28,352 in petty cash/change funds for a total balance of $704.9 million. In compliance with Governmental Accounting Standards, the Monthly Cash and Investment Report provides the fair market value of all investments held by the City, 1

2 with certain exceptions, as of the last day of the month. The fair market value may be greater or less than the original purchase price (book/reported value) of the investments due to fluctuations in the market resulting in either an unrealized gain or loss for financial disclosure purposes only. Since it is the City s policy to hold most securities to maturity, these fluctuations in market value do not affect the redemption value of the securities or the overall yield to maturity of the portfolio. The book values of investments shown in this report are exclusive of amortization/accretion of premiums/discounts. As of March 31, 2014, the market value of the City s portfolio was approximately $2.1 million less than the book value. Attached is a summary of investment activity as well as a detailed report of public monies held by the City Treasurer as of March 31, Prepared by: Attachments: David Carr, Assistant City Treasurer 1 Investment Highlights 2 Investment Report 2

3 ATTACHMENT 1 Investment Highlights March 31, 2014 Millions Portfolio Size Current Year Prior Year $700 $650 $600 $550 $500 $450 $400 $350 $300 Apr May June July Aug Sep Oct Nov Dec Jan Feb Mar As of March 31, 2014, the portfolio size is $656.8 million, $1.9 million more than in the prior month and $36.3 million more than one year earlier. Yield to Maturity 1.00% 0.80% 0.60% 0.40% 0.20% % Current Year Prior Year Apr May June July Aug Sep Oct Nov Dec Jan Feb Mar As of March 31, yield to maturity is 0.70%. Up two basis points from the prior month and up fourteen basis points from one year earlier. 3

4 Fiscal Year-to-Date Interest Earnings (Cumulative by Month) Millions $5 $4 $3 $2 $1 Current Year Prior Year $0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May June Fiscal year-to-date earnings are down 21% from one year earlier. Unrealized Gain/(Loss) Millions Mar Apr May June July Aug Sep Oct Nov Dec Jan Feb Mar $0.0 ($1.0) ($2.0) ($3.0) ($4.0) ($5.0) ($6.0) As of March 31, 2014, the market value is about $2.1 million less than the unamortized book value (purchase price). 4

5 ATTACHMENT 2 Investment Report March 31, 2014 Prepared by: Gigi Decavalles-Hughes, Director of Finance/City Treasurer David R. Carr, Assistant City Treasurer 5

6 Cash Receipts, Disbursements and Cash Balances March 31, 2014 Petty Cash/Change Funds $28, Pooled Portfolio Wells Fargo Bank (1) $62,660, Bank of New York (BNY) Corporate Bonds $69,324, Treasury Bills $ Federal Agencies Securities $475,334, Total Bank of New York $544,658, State of California Local Agency Investment Fund - City $49,471, Total Pooled Portfolio $656,790, Restricted Cash/Investments Held in Trust/Debt Proceeds Union Bank - Redevelopment Agency Term Loan $12,249, Union Bank-Earthquake Recovery Redevelopment 2006 Tax Allocation Refunding Bonds Series A & B $8.28 Union Bank-Civic Center Parking Project 2004 Lease Revenue Bonds $2,827, Union Bank-RDA 2011 Tax Allocation Bonds $2,262, BNY-Library Improvement Project 2012 Refunding $13, BNY-Ocean Park Redevelopment Project 2002 Refunding $1,845, BNY-Parking Authority Lease Revenue Bonds 2002 Refunding $1.00 BNY-Public Safety Facility Bonds 2009 Refunding $1,076, U.S. Bank-Wastewater Enterprise Revenue Bonds-2012 Refunding $1.19 U.S. Bank-Wastewater Enterprise Revenue Bonds-2005 Refunding $2.00 Total Restricted Cash/Investments Held in Trust $20,274, Other Restricted Funds/Funds Held in Trust Cemetery Perpetual Care Fund (3) $9,944, Mausoleum Perpetual Care Fund (3) $1,140, Santa Monica Redevelopment Successor Agency RPTTF-Wells Fargo $5,149, Wells Fargo Bank - HUD Depository Account (4) $2,042, U.S. Bank-W.E. O'Neil Retention Escrow Account $558, First Republic Bank - Keysor Marston Escrow $1,055, Wells Fargo Bank - High Place West Escrow $814, Wells Fargo Bank -RDA Successor Agency - OP Special Fund $5,353, Union Bank - Housing Authority Custodial Account $ Union Bank - W.E. O'Neil Direct Owner Costs PGW Escrow $1,478, Union Bank - Morley Direct Owner Costs Civic Escrow $59, Wells Fargo Bank - Public Agency Family Self Sufficiency Program (2) $170, Total Other Funds Held in Trust $27,768, GRAND TOTAL $704,862,

7 Cash Receipts, Disbursements and Cash Balances March 31, 2014 (1) These are the actual bank account balances as of 3/31/2014. They only reflect checks and warrants that have been presented for payment and deposits received by the bank. The balance on deposit per the City books would reflect reductions for all checks and warrants issued and an increase for all deposits transmitted. Housing Authority and Parking Authority Funds are included in totals. (2) The City of Santa Monica Housing Authority administers the Family Self Sufficiency Program. An escrow account is set up for each family in the program. The Housing Authority maintains and releases the escrow funds as required by HUD regulations. (3) The Cemetery Perpetual Care Funds and the Mausoleum Perpetual Care Funds are held in trust by Charles Schwab & Company, Inc. and administered by the investment firm RNC Genter Capital Management Company. Market value is shown since a large portion of the portfolio is in equities. (4) HUD Depository account is used to receive monthly housing assistance payments from HUD. Pursuant to Section 711d of the City Charter, I submit the following: Cash and Investments - Feb 28, ,932, Receipts 42,252, Disbursements (40,394,310.29) Cash and Investments - March 31, ,790, Pooled portfolio only. Excludes certain investments held in trust by third parties such as bond proceeds, perpetual care funds, and other escrow accounts. Also excludes payroll account. Gigi Decavalles-Hughes Director of Finance/City Treasurer 7

8 Monthly Cash and Investment Report Overview As of March 31, 2014, total City cash and investments (including cash held for the Successor Agency to the Redevelopment Agency) were $704.9 million, a $2 million increase from the prior month. Total cash and investments are categorized as follows: Definitions Petty Cash/Change Funds $ 28, Pooled Investment Portfolio $ 656,790, Restricted Cash/Investment Held in Trust $ 20,274, Other Funds Held in Trust $ 27,768, Total $ 704,862, Basis Point One hundredth of one percent (.01%) Book (Reported) Value The price paid for the security at purchase Bullets A security with a fixed coupon or interest rate that cannot be redeemed by the issuer before the maturity date Callable Securities A security that can be redeemed by the issuer before the maturity date Duration A measure of the timing of the cash flows, such as the interest payments and the principal repayment, to be received from a security. The duration of a security is a useful indicator of its price volatility for given changes in interest rates. Market Value The price at which a security is currently trading and could be presumably bought or sold Par Value The full face value of the security Rebalancing Strategy whereby low yielding securities are sold at a loss with the proceeds used to purchase higher yielding securities Corporation guarantees repayment of certain bonds issued by financial institutions Unrealized Gain/Loss Difference between the current market value and purchase price (book value) of a security Yield to Maturity The rate of return of a security held to maturity when both interest payments and the investor s gain or loss (premium paid or discount taken) on the security is taken into account. 8 March 31, 2014

9 Monthly Cash and Investment Report Pooled Investment Portfolio As of March 31, 2014, the portfolio size (unamortized book value/purchase price) of City pooled cash and investments is $656.8 million, $1.9 million more than in the prior month. Since the City holds most investments to maturity, variations in portfolio book value are typically due to receipt and expenditure patterns during the month rather than any realized gains or losses on securities. Additionally, the City does not amortize premiums or accrete discounts except for financial reporting purposes on the last day of each fiscal year. Nine investments were made during the month ($36.0 million), three investments matured ($11.2 million), and six investments were called ($16.5 million). No investments were sold. The State Local Agency Investment Fund (LAIF) account balance was essentially unchanged in March. Cash held at Wells Fargo Bank was $62.7 million as of month-end. Funds on deposit with Wells Fargo earn a net %, earnings from which are used as a credit against monthly banking expenses. Details of the main portfolio follow. Portfolio Composition Portfolio Composition The portfolio is appropriately diversified and is in compliance with the City s Investment Policy and applicable provisions of the State Government Code. The largest sector of the portfolio is Federal Agency Securities (72.4%). The remaining 27.6% includes the State Local Agency Investment Fund (7.5%); corporate bonds (10.6%), and cash (9.5%). This portfolio mix allows the City to maintain its primary investment objectives of safety and liquidity while attaining a rate of return consistent with the City s Investment Policy and Investment Plan. Corporates 10.6% Cash/Sweep 9.5% LAIF City 7.5% Fed. Agency Bullets 33.7% Callable Agencies 38.7% 9 March 31, 2014

10 Monthly Cash and Investment Report Portfolio Comparison The chart to the right shows the overall structure of the portfolio by type of investment compared to last month. There were no significant changes in March. A large portion of the portfolio has been kept very liquid reflecting continuing uncertainty regarding the impact of RDA dissolution on cash flow needs. In late October, the City, RDA Successor Agency, and the State Department of Finance entered in a settlement agreement, which will reduce some of the uncertainty over the next several months and eventually allow for increased investment of funds. However, the City continues to hold a significant portion of the remainder of the portfolio in short term funds as interest rates remain near historic lows. The bond market, financial and economic conditions, and portfolio structure are continuously evaluated when making investment decisions. Portfolio Comparison Cash Treasury Bills LAIF-City Corp Callable Agencies Federal Agency Bullets $0 $50 $100 $150 $200 $250 $300 Mar-14 Feb-14 Millions Rebalancing of Portfolio No portfolio rebalancing occurred in March due to the low interest rate environment. As noted in previous reports, rebalancing opportunities will be evaluated when rates begin to show a consistent pattern of increase. 10 March 31, 2014

11 Portfolio Management Portfolio Details - Investments March 31, 2014 Page 1 CUSIP Investment # Federal Agency Coupon Issuer Average Balance Purchase Date Par Value Market Value Book Value Stated Rate Term YTM Days to 365 Maturity 3134G2CL Fed Home Loan Mortgage Corp 05/20/2011 5,000,00 5,004,90 5,042, , /29/ KKQ Federal Farm Credit Bank 05/19/2011 5,000,00 5,005,80 5,012, , /12/ PTZ Farmer Mac 04/10/2013 3,000,00 3,000,75 3,000, /10/ XWE Federal Home Loan Bank 11/04/2010 4,000,00 4,019,32 4,237, , /13/ A04L Federal Home Loan Bank 10/28/ ,000,00 10,000,60 10,000, /23/ N Federal Home Loan Bank 06/06/2012 3,000,00 3,002,31 3,000, /27/ G0BJ Federal National Mort Assoc 05/21/2013 3,128,00 3,135, ,161, /27/ SK Federal Home Loan Bank 07/25/2012 2,500,00 2,502,05 2,504, /02/ ECLH Federal Farm Credit Bank 04/30/ ,000,00 20,005,40 20,002, /15/ ECLH Federal Farm Credit Bank 04/30/ ,000,00 20,005,40 20,002, /15/ QC Federal Home Loan Bank 01/21/2014 4,000,00 4,001,44 4,001, /22/ EACU Fed Home Loan Mortgage Corp 01/23/2012 5,000,00 5,013,80 5,064, /30/ UA Federal Home Loan Bank 08/15/2013 3,000,00 3,001,08 2,999, /08/ G0BY Federal National Mort Assoc 07/19/2011 4,000,00 4,013,24 3,997, , /28/ ZC Federal Home Loan Bank 09/12/2013 5,000,00 5,001,90 5,000, /12/ EA6W Federal Farm Credit Bank 01/17/2013 2,500,00 2,502, ,500, /05/ EACY Fed Home Loan Mortgage Corp 02/04/2014 3,000,00 3,008,31 3,019, /25/ G3H Fed Home Loan Mortgage Corp 11/06/2012 5,000,00 5,001,85 5,003, /05/ EADA Fed Home Loan Mortgage Corp 12/21/2011 2,500,00 2,506,25 2,497, , /29/ A0JV Federal Home Loan Bank 01/07/ ,000,00 10,002,40 10,000, /06/ A0LE Federal Home Loan Bank 02/04/2014 4,000,00 4,000,28 4,000, /09/ H Federal Home Loan Bank 07/11/2013 3,000,00 3,002,61 2,998, /16/ A0QU Federal Home Loan Bank 01/23/2014 3,000,00 2,998,83 2,998, /23/ A0TW Federal Home Loan Bank 02/04/2014 4,000,00 3,998,32 3,998, /03/ YQ Federal Home Loan Bank 01/21/2014 1,000,00 1,001,91 1,002, /13/ ECG Federal Farm Credit Bank 01/21/2014 1,060,00 1,060, ,061, /25/ G0HG Federal National Mort Assoc 11/06/2012 2,500,00 2,505, ,502, /16/ XS Federal Home Loan Bank 01/07/2013 2,500,00 2,501,05 2,512, /30/ KLE Federal Farm Credit Bank 05/18/2011 2,500,00 2,539,40 2,501, , /18/ ER Federal Home Loan Bank 05/15/2013 3,000,00 3,008,52 3,015, /12/ ER Federal Home Loan Bank 12/23/2013 3,000,00 3,008,52 3,011, /12/ ECTV Federal Farm Credit Bank 07/02/2013 3,500,00 3,503,57 3,500, /02/ ECHV Federal Farm Credit Bank 03/21/2013 5,000,00 5,005,50 4,997, /30/ PT Federal Home Loan Bank 09/19/2011 2,500,00 2,518,60 2,500, , /30/ VZ Federal Home Loan Bank 01/30/2012 5,000,00 5,021, ,000, , /30/ EDC Federal Farm Credit Bank 01/03/2014 3,870,00 3,868, ,865, /19/2015 Maturity Date Portfolio INVT CC Run Date: 05/15/ :04 PM (PRF_PM2) Report Ver b

12 Portfolio Management Portfolio Details - Investments March 31, 2014 Page 2 CUSIP Investment # Federal Agency Coupon Issuer Average Balance Purchase Date Par Value Market Value Book Value Stated Rate Term YTM Days to 365 Maturity 3134G4HZ Fed Home Loan Mortgage Corp 01/07/2014 3,000,00 3,004,62 3,007, /28/ FP Federal Home Loan Bank 02/24/2012 3,000,00 3,012,54 3,000, , /24/ J4J Federal Farm Credit Bank 12/07/2010 2,000,00 2,046,14 2,000, , /07/ EA3E Federal Farm Credit Bank 10/04/2012 5,000,00 5,000,25 5,000, , /04/ G0WW Federal National Mort Assoc 05/20/2013 3,000,00 2,993,46 3,000, , /20/ G0LD Federal National Mort Assoc 05/29/2012 5,000,00 5,004,75 5,000, , /23/ BB Federal Home Loan Bank 06/03/2013 3,000,00 2,990,43 3,000, , /03/ G4W Fed Home Loan Mortgage Corp 03/17/2014 4,000,00 3,994,92 4,000, /17/ A0ZZ Federal Home Loan Bank 03/20/2014 3,000,00 2,991,12 3,000, /20/ R Federal Home Loan Bank 05/15/2013 3,000,00 2,987,76 2,990, , /24/ A1BK Federal Home Loan Bank 03/24/2014 5,000,00 4,981,75 5,000, /24/ G4RT Fed Home Loan Mortgage Corp 12/27/2013 3,000,00 2,995,95 3,000, /27/ G0MX Federal National Mort Assoc 07/26/2012 5,000,00 5,002,10 5,000, , /26/ G0MX Federal National Mort Assoc 01/31/2013 2,500,00 2,501,05 2,502, , /26/ G4TE Fed Home Loan Mortgage Corp 01/28/2014 2,000,00 2,000,66 1,998, /28/ VK Federal Home Loan Bank 02/08/2013 2,000,00 1,996,92 1,998, , /29/ G4ET Fed Home Loan Mortgage Corp 08/29/2013 2,500,00 2,504,05 2,494, , /08/ G4E Fed Home Loan Mortgage Corp 08/15/2013 3,000,00 3,006,42 3,000, , /15/ G4UU Fed Home Loan Mortgage Corp 02/26/2014 5,000,00 4,992,15 5,000, /26/ G1UX Federal National Mort Assoc 09/26/2013 2,500,00 2,508, ,500, , /26/ EA5W Federal Farm Credit Bank 10/24/2012 5,000,00 4,975,10 5,000, , /24/ G0WS Federal National Mort Assoc 05/15/2013 3,000,00 2,980,59 3,000, , /15/ CM Federal Home Loan Bank 06/20/2013 3,000,00 2,981,13 3,000, , /20/ A0KW Federal Home Loan Bank 01/23/2014 2,500,00 2,500,45 2,500, , ,028 01/23/ PN Farmer Mac 07/05/2013 2,000,00 2,010,12 2,000, , ,031 01/26/ A0RU Federal Home Loan Bank 02/13/2014 2,500,00 2,500, ,500, , ,049 02/13/ A0RK Federal Home Loan Bank 02/13/2014 3,000,00 3,001,32 3,000, , ,049 02/13/ G3NT Fed Home Loan Mortgage Corp 08/08/2013 2,500,00 2,501, ,499, , ,063 02/27/ G4FD Fed Home Loan Mortgage Corp 09/10/2013 5,000,00 5,016,85 5,000, , ,074 03/10/ G0BD Federal National Mort Assoc 04/24/2012 5,000,00 5,004,00 5,000, , ,119 04/24/ ECKV Federal Farm Credit Bank 04/05/2013 3,000,00 2,963,28 3,000, , ,161 06/05/ PD Federal Home Loan Bank 06/28/2013 2,500,00 2,510, ,498, , ,165 06/09/ A0YE Federal Home Loan Bank 03/12/2014 4,000,00 3,976,28 4,000, , ,168 06/12/ G1NQ Federal National Mort Assoc 06/19/2013 4,000,00 3,983,96 4,000, , ,175 06/19/ G4MP Fed Home Loan Mortgage Corp 12/20/2013 2,700,00 2,692,98 2,700, , ,176 06/20/ EADH Fed Home Loan Mortgage Corp 05/29/2013 3,000,00 2,989,11 3,009, , ,185 06/29/2017 Maturity Date Portfolio INVT CC Run Date: 05/15/ :04 PM (PRF_PM2)

13 Portfolio Management Portfolio Details - Investments March 31, 2014 Page 3 CUSIP Investment # Federal Agency Coupon Issuer Average Balance Purchase Date Par Value Market Value Book Value Stated Rate Term YTM Days to 365 Maturity 3137EADH Fed Home Loan Mortgage Corp 06/27/2013 2,500,00 2,490, ,474, , ,185 06/29/ EA4H Federal Farm Credit Bank 04/04/2013 5,000,00 4,933,75 4,999, , ,197 07/11/ G3ZH Fed Home Loan Mortgage Corp 06/06/2013 4,000,00 3,984,52 4,000, , ,211 07/25/ EADJ Fed Home Loan Mortgage Corp 01/31/2013 2,500,00 2,488,75 2,509, , ,214 07/28/ EADJ Fed Home Loan Mortgage Corp 12/17/2013 5,000,00 4,977,50 4,992, , ,214 07/28/ G4TS Fed Home Loan Mortgage Corp 01/28/2014 5,000,00 5,028,35 5,000, , ,214 07/28/ G3B Fed Home Loan Mortgage Corp 08/15/2012 2,000,00 1,979,50 1,998, , ,232 08/15/ G0PP Federal National Mort Assoc 02/12/2014 2,500,00 2,483, ,492, , ,268 09/20/ G0G Federal National Mort Assoc 09/27/2012 5,000,00 4,945,70 5,000, , ,275 09/27/ EA3J Federal Farm Credit Bank 10/10/2012 5,000,00 4,888,35 5,000, , ,288 10/10/ G03Y Federal National Mort Assoc 11/21/2012 5,000,00 4,959, ,000, , ,330 11/21/ G05Q Federal National Mort Assoc 11/27/2012 5,000,00 4,964,15 5,000, , ,336 11/27/ G44N Fed Home Loan Mortgage Corp 05/28/2013 3,000,00 2,931,96 3,000, , ,337 11/28/ A0ZX Federal Home Loan Bank 03/19/2014 4,000,00 3,972,44 4,000, , ,358 12/19/ A Federal Home Loan Bank 02/22/2013 5,000,00 4,923,65 5,000, , ,423 02/22/ A0XC Federal Home Loan Bank 02/26/2014 4,000,00 3,968,04 4,000, , ,427 02/26/ A0VV Federal Home Loan Bank 02/28/2014 5,000,00 4,991,30 5,000, , ,429 02/28/ G1DA Federal National Mort Assoc 02/28/2013 5,000,00 4,964,75 5,000, , ,429 02/28/ G37H Fed Home Loan Mortgage Corp 04/25/2013 5,000,00 4,908,70 5,000, , ,485 04/25/ PYT Farmer Mac 05/02/2013 3,000,00 2,922,27 3,000, , ,492 05/02/ G0XA Federal National Mort Assoc 05/21/2013 3,000,00 2,948,49 3,000, , ,511 05/21/ Z Federal Home Loan Bank 05/22/2013 5,000,00 4,918,25 5,000, , ,512 05/22/ DT Federal Home Loan Bank 11/12/2013 4,000,00 3,943,24 3,960, , ,529 06/08/ EN Federal Home Loan Bank 06/20/2013 5,000,00 4,920, ,000, , ,541 06/20/ C Federal Home Loan Bank 06/25/2013 2,500,00 2,435, ,412, , ,541 06/20/ G47M Fed Home Loan Mortgage Corp 06/26/2013 3,000,00 2,976,93 2,999, , ,547 06/26/ EDCR Federal Farm Credit Bank 12/27/2013 2,000,00 2,006,46 2,000, , ,548 06/27/ GK Federal Home Loan Bank 06/27/2013 3,800,00 3,729, ,800, , ,548 06/27/ A02E Federal Home Loan Bank 09/25/2013 3,000,00 2,999,49 3,000, , ,638 09/25/ G4L Fed Home Loan Mortgage Corp 11/26/2013 5,000,00 4,961,05 5,000, , ,700 11/26/ G4LG Fed Home Loan Mortgage Corp 11/27/2013 4,000,00 3,998,48 4,000, , ,701 11/27/ G4RZ Fed Home Loan Mortgage Corp 12/26/2013 5,000,00 5,008,85 5,000, , ,730 12/26/ G4QX Fed Home Loan Mortgage Corp 01/08/2014 5,000,00 5,009,30 4,994, , ,731 12/27/ A0J Federal Home Loan Bank 01/17/2014 2,000,00 1,985,58 2,000, , ,752 01/17/ P4H Farmer Mac 01/30/2014 5,000,00 4,973,20 5,000, , ,765 01/30/ A0WK Federal Home Loan Bank 02/20/2014 5,000,00 4,993,70 5,000, , ,786 02/20/2019 Maturity Date Portfolio INVT CC Run Date: 05/15/ :04 PM (PRF_PM2)

14 Portfolio Management Portfolio Details - Investments March 31, 2014 Page 4 CUSIP Investment # Federal Agency Coupon Issuer Average Balance Purchase Date Par Value Market Value Book Value Stated Rate Term YTM Days to 365 Maturity 3134G4VE Fed Home Loan Mortgage Corp 02/27/2014 3,000,00 2,982,69 3,000, , ,793 02/27/ G4VM Fed Home Loan Mortgage Corp 03/11/2014 5,000,00 4,980,20 5,000, , ,805 03/11/ G4WL Fed Home Loan Mortgage Corp 03/19/2014 4,000,00 3,967,92 4,000, , ,813 03/19/ A12S Federal Home Loan Bank 03/20/2014 2,000,00 1,995,72 2,000, , ,814 03/20/ G4Y Fed Home Loan Mortgage Corp 03/27/2014 5,000,00 4,980,10 5,000, , ,821 03/27/2019 Federal Agency Discount Subtotal and Average 442,095, ,058,00 450,804, ,347, , VY Fed Home Loan Mortgage Corp 08/29/2013 3,000,00 2,999,94 2,998, /24/ XB Fed Home Loan Mortgage Corp 08/29/2013 4,000,00 3,999,84 3,996, /21/ YV Federal Home Loan Bank 01/03/ ,000,00 9,999,00 9,994, /02/ ZM Federal Home Loan Bank 01/21/2014 6,000,00 5,999,28 5,997, /18/2014 Local Agency Investment Funds Subtotal and Average 23,308, ,000,00 22,998,06 22,986, SYS Local Agency Investment Fund 49,471, ,471, ,471, Columbia Money Market Fund Subtotal and Average 49,471, ,471, ,471, ,471, SYS Columbia Money Market Reserves 09/15/ Local Agency Investment Funds - RDA Subtotal and Average SYS LAIF - RDA 03/17/ Corporate Bonds Subtotal and Average AA Stanford University 02/11/2014 2,000,00 2,005,84 2,035, /01/ PAA Google 05/22/2012 1,245,00 1,246, ,264, /19/ PAB Yale University 04/10/2012 1,178,00 1,193, ,246, /15/ GZ IBM Corp 11/14/2012 5,000,00 5,017,35 5,052, /31/ P5N Toyota Motor Credit Corp 07/19/2013 2,000,00 2,012,38 2,021, /17/ HD IBM Corp 12/23/2013 2,278,00 2,288, ,294, /11/ BFE Wells Fargo & Compnay 01/31/2013 2,000,00 2,023,28 2,032, /01/ P6J Toyota Motor Credit Corp 07/19/2013 2,000,00 2,011,42 2,009, /17/2015 Maturity Date Portfolio INVT CC Run Date: 05/15/ :04 PM (PRF_PM2)

15 Portfolio Management Portfolio Details - Investments March 31, 2014 Page 5 CUSIP Investment # Corporate Bonds Issuer Average Balance Purchase Date Par Value Market Value Book Value Stated Rate Term YTM Days to 365 Maturity 94985H5F Wells Fargo Bank 07/29/2013 2,500,00 2,508, ,499, /20/ AG Microsoft 05/10/2012 5,000,00 5,087,90 5,170, , /25/ BG Berkshire Hathaway 02/11/2013 2,000,00 2,009,96 2,005, , /11/ AH Apple Inc. 05/06/2013 3,000,00 2,990,07 3,002, , /03/ AY Johnson & Johnson 02/12/2013 2,000,00 2,063,82 2,105, , /15/ TAL Toyota Motor Credit Corp 05/28/2013 3,000,00 3,011,31 3,008, , /17/ BFL Wells Fargo & Compnay 07/29/2013 3,000,00 3,025,17 2,997, , /20/ BB Berkshire Hathaway 08/20/2012 3,000,00 3,099,69 3,132, , /15/ DV Procter & Gamble 07/05/2013 1,985,00 2,013, ,011, , /15/ APH UnionBanc Investments 02/24/2014 4,000,00 4,055,84 4,068, /26/ DD Pfizer Inc 02/24/2014 4,000,00 3,985,88 4,012, , ,020 01/15/ YAE M 12/10/2013 2,500,00 2,489,80 2,495, , ,182 06/26/ YAE M 12/10/2013 2,500,00 2,489,80 2,495, , ,182 06/26/ WBK New York Life 01/23/2013 2,855,00 2,822, ,872, , ,308 10/30/ AP Microsoft 04/30/2013 2,500,00 2,464, ,505, , ,324 11/15/ AJ Apple Inc. 05/06/2013 2,500,00 2,423, ,505, , ,493 05/03/ AJ Apple Inc. 05/17/2013 2,500,00 2,423, ,478, , ,493 05/03/ BG Johnson & Johnson 12/05/2013 2,000,00 1,988,24 2,000, , ,709 12/05/2018 Subtotal and Average 69,344, ,541,00 68,752, ,324, , Maturity Date Total and Average 584,220, ,070, ,027, ,130, , Portfolio INVT CC Run Date: 05/15/ :04 PM (PRF_PM2)

16 Portfolio Management Activity By Type March 1, 2014 through March 31, 2014 Page 1 CUSIP Investment # Issuer Stated Rate Transaction Date Purchases or Deposits Redemptions or Withdrawals Balance Federal Agency Coupon 3130A0YE4 3130A0ZX1 3130A0ZZ6 3130A12S6 3130A1BK3 3134G3RK8 3134G3QH6 3134G3NS5 3134G3QH6 3134G4VM7 3134G4W G4WL8 3134G4Y AVZ2 3136G1TR0 3136G1V G1VG Federal Home Loan Bank /12/2014 4,000, Federal Home Loan Bank /19/2014 4,000, Federal Home Loan Bank /20/2014 3,000, Federal Home Loan Bank /20/2014 2,000, Federal Home Loan Bank /24/2014 5,000, Fed Home Loan Mortgage Corp /14/2014 4,994, Fed Home Loan Mortgage Corp /05/2014 2,500, Fed Home Loan Mortgage Corp /21/2014 2,996, Fed Home Loan Mortgage Corp /05/2014 2,509, Fed Home Loan Mortgage Corp /11/2014 5,000, Fed Home Loan Mortgage Corp /17/2014 4,000, Fed Home Loan Mortgage Corp /19/2014 4,000, Fed Home Loan Mortgage Corp /27/2014 5,000, Federal National Mort Assoc /13/2014 3,175, Federal National Mort Assoc /13/2014 2,000, Federal National Mort Assoc /27/2014 2,500, Federal National Mort Assoc /27/2014 2,000,00 Federal Agency Discount TU7 Subtotal 36,000, Federal National Mort Assoc /03/2014 4,997, ,675, ,347, Subtotal Local Agency Investment Funds (Monthly Summary) Subtotal Columbia Money Market Fund (Monthly Summary) Subtotal Local Agency Investment Funds - RDA (Monthly Summary) 4,997, ,986, ,471, Corporate Bonds Subtotal Subtotal Total 36,000,00 27,672, ,324, ,130, Portfolio INVT CC Run Date: 05/15/ :04 PM (PRF_PM3) Report Ver b

17 Monthly Cash and Investment Report Portfolio Yield Portfolio Yield The portfolio yield-to-maturity was 0.7% as of March 31, 2014, two basis points higher than last 1.0% month and fourteen basis points higher than in March of last year. The extended record low 0.8% interest rate environment continues to hamper portfolio returns as rates remain at historically low 0.6% levels. Additionally, as noted earlier, a significant amount of the portfolio is being held in very liquid investments with short maturities pending final resolution of the impact of RDA dissolution. The chart compares the month-end portfolio yield to 0.4% 0.2% the twelve-month moving averages of the twoyear Constant Maturing Treasury security yield 0.0% (CMT) and State Local Agency Investment Fund October November December January February March (LAIF) yield. The yield-to-maturity does not include the impact of the earnings allowance earned on deposits with Wells Fargo Bank. As Portfolio LAIF 2 Year T-Note noted earlier, these deposits earned a net % in March. However, this allowance is not payable to the City in cash and can only be used to offset bank fees. Therefore, this allowance is not included in the yield-to-maturity calculation. Overall, interest rates in the two to five year maturity range rose sharply in March. The two year CMT month-end rate rose eleven basis points to 0.44%, the highest level since June 2011, just one basis point less than the highest level in the last three years. The twelve month moving average rose one basis point to 0.32%. Rates are still expected to remain relatively low into 2015 unless there are significant improvements in the national unemployment rate and other economic factors before then. The twelve month moving average LAIF yield fell to another record low rate of 0.25% in March and has not shown a monthly increase for over six years. The month-end LAIF rate was 0.23%. The Federal Open Market Committee (Fed) left the target Fed Funds rate unchanged at a range of 0% to 0.25% at its March meeting. The Fed noted that growth in economic activity slowed during the winter months, in part reflecting 17 March 31, 2014

18 Monthly Cash and Investment Report adverse weather conditions. Labor market indicators were mixed but on balance showed further improvement. The unemployment rate, however, remained elevated (6.7%). Household business investment spending continues to improve. However, the continued recovery in the housing market has slowed. First quarter GDP showed a very small 0.1% increase. Most recent economic projections predict annualized growth in the 2.5-3% range through The stock market, as measured by the Dow Jones Industrial Average continued to be strong, realizing a gain in March of nearly 1%. The City s portfolio yield-to-maturity has decreased significantly over the last five years as interest rates have reached historic lows, resulting in many investments being called and reinvested at lower rates. Overall, the yield will likely remain relatively flat over the next few months unless some unanticipated uptick in rates occurs and the RDA situation is completely resolved. Net investment income in March was $0.1 million. Fiscal year-to-date revenues on a cash basis are down 22% from the same period a year ago reflecting the continuing impact of the historically low interest rate environment. Maturity Distribution The weighted average days to maturity of the portfolio as of March 31, 2014 is 753 days (2.06 years). This calculation is for invested funds only and does not reflect the City s primary liquidity funds being held in cash at Wells Fargo Bank. As noted earlier, there are fiscal benefits to this strategy under the current interest rate environment. The City continues to maintain high liquidity in the portfolio pending the final impact of RDA dissolution. Over 52% of the portfolio continues to be held in maturities of 2 years or less (including cash balances). 2-3 Years 16.2% 1-2 Years 9.1% Portfolio Maturities 0-1 Year 26.4% 3-4 Years 16.6% 4+ Years 14.7% LAIF 7.5% Cash/ Sweep 9.5% 18 March 31, 2014

19 Monthly Cash and Investment Report As interest rates have started to advance, fewer bonds have been called. However, the interest rate environment is still extremely low compared to historical standards and continues to be volatile. Based on this and pending the final outcome of Redevelopment dissolution including the State Controller s audit, the portfolio s average days to maturity will likely continue to vary over the next several months. While most investments are still being made in shorter term securities, some investments in longer term securities are being made to take advantage of a steepening yield curve. As noted earlier, interest rates are still expected to remain relatively low into early Millions $250 $200 $150 $100 $50 $0 Cash/ Sweep Maturity Distribution LAIF 0-1 Year 1-2 Years 2-3 Years 3-4 Years 4+ Years Unrealized Gains/Losses The Governmental Accounting Standards Board Statement No. 31 (GASB 31) requires public agencies to report all investments, with certain exceptions, at current fair market value rather than at the original purchase price. Current fair market value is defined in GASB 31 as the amount at which a financial instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation state. The current fair market value and unrealized gain/loss of a security do not affect its redemption value or yield if held to maturity. There is an inverse relationship between the price of the bond and the market interest rate. The City s practice is to purchase most securities with the intent to hold them to maturity. Book values are exclusive of interest realized to date on investments. Also, the book value shown is the purchase price and is exclusive of any amortization of premiums or accretion of discounts. As of March 31, 2014, the market value and the book value of the City s pooled investments (excluding cash) are: Market Value $ 592,027, Book Value (purchase price) 594,130, Unrealized Gain/ (Loss) $ (2,103,648.39) 19 March 31, 2014

20 Monthly Cash and Investment Report Compliance California State law and the City s Investment Policy set certain legal standards for allowable investments that can be included in the City s portfolio. Additionally, there are certain maximum limits for classes of investments, as well as minimum credit quality requirements. In testing for compliance, the City considers all funds under the direct control and invested directly by the City. Bond and loan proceeds, as well as the Cemetery and Mausoleum Perpetual Care Funds are excluded. The following tables summarize portfolio compliance as of March 31, All investments were in compliance with State law and the City s Investment Policy at the time of purchase and continue to be in compliance. State law requires that any investment subject to a credit downgrade subsequent to the time of purchase shall be reviewed for possible sale within a reasonable amount of time after the downgrade. As noted in prior reports, the City s investment portfolio includes two bonds issued by Berkshire Hathaway Company (BRK) with a total book value of $5,138,160 that were slightly downgraded in May 2013 from AA+ to AA. The revised rating of AA is still within the second highest category of bond ratings (defined as high quality with a very strong capacity to meet financial commitments ). Additionally, total holdings in BRK represent a minor (less than 1%) portion of the City portfolio. Based on this, staff continues to recommend holding these securities at this time. Further detail regarding City compliance with State law and City investment guidelines is presented as follows: Credit Ratings - Corporate Medium Term Notes Standard & Poors/ In Compliance Fitch Moodys (Yes/No) Best Quality AAA Aaa Yes AA+ Aa1 Yes High Quality AA Aa2 Yes AA- Aa3 Yes A+ A1 Yes Upper Medium Grade A A2 Yes A- A3 Yes BBB+ Baa1 No Medium Grade BBB Baa2 No BBB- Baa3 No 20 March 31, 2014

21 Monthly Cash and Investment Report Portfolio Allocation as of 3/31/14 Legal/ In Pooled % of Policy Compliance Portfolio (1) (3) Portfolio Limit (Yes/No) Federal Agency Securities Federal Home Loan Bank $175,433, % 50.0% Yes Federal National Mortgage Association 65,156, % 50.0% Yes Federal Home Loan Mortgage Corporation 131,301, % 50.0% Yes Farmer Mac 13,000,00 2.0% 50.0% Yes Federal Farm Credit Bank 90,442, % 50.0% Yes Total Federal Agency Securities $475,334, % n/a Yes Treasury Bills $ 0.0% n/a Yes Corporate Bonds $69,324, % 30.0% Yes Money Market Mutual Funds Columbia Money Market Reserves Advisor Class 0.0% 10.0% Yes BlackrockT-Find Cash Management Sweep 0.0% 10.0% Yes Total-Money Market Mutual Funds $ 0.0% 20.0% Yes State Local Agency Investment Fund-City $49,471, % $50 million Yes Cash (2) $62,660, % None Yes Total (Book Value) $656,790, % Notes: (1) Excludes bond proceeds, funds held in trust for others, petty cash accounts, and other funds which are not entirely under City ownership and control (2) City's general bank accounts held at Wells Fargo Bank. Does not include balance of HUD depository account ($2,042,638.63), Successor Agency account ($5,159,589.76), or other cash accounts that are restricted as to use. (3) Value used to test compliance is reported value (book value plus unrealized purchased interest). 21 March 31, 2014

22 Monthly Cash and Investment Report In Pooled Credit Compliance Security Portfolio Rating* (Yes/No) Corporate Google 1.25% maturing 5/19/14 $1,264, AA Yes Stanford University 3.625% maturing 5/01/14 $2,035, AA Yes Yale University 2.9% maturing 10/15/14 $1,246, AAA Yes IBM.875% maturing 10/31/14 $5,052,25 AA- Yes Toyota Motor Credit Corp. 1.25% maturing 11/17/14 $2,021,28 AA- Yes IBM 0.75% maturing 5/11/15 $2,294, AA- Yes Wells Fargo and Company 1.5% maturing 7/1/15 $2,032,48 A+ Yes Toyota Motor Credit Corp % maturing 7/17/15 $2,009,72 AA- Yes Wells Fargo Bank 0.75% maturing 7/20/15 $2,499, AA- Yes Microsoft 1.625% maturing 9/25/15 $5,170,60 AAA Yes Berkshire Hathaway 0.8%maturing 2/11/16 $2,005,62 AA Yes Apple Inc. 0.45% maturing 5/3/16 $3,002,43 AA+ Yes Johnson & Johnson 2.15% maturing 5/15/16 $2,105,04 AAA Yes Toyota Motor Credit Corp. 0.8% maturing 5/17/16 $3,008,19 AA- Yes Wells Fargo and Company 1.25% maturing 7/20/16 $2,997,12 A+ Yes Berkshire Hathaway 2.2% maturing 8/15/16 $3,132,54 AA Yes Proctor & Gamble 1.45% matujring 8/15/16 $2,011, AA- Yes UnionBanc Investments 1.5% maturing 9/26/16 $4,068,80 AA- Yes Pfizer, Inc. 0.9% maturing 1/15/17 $4,012,70 AA- Yes 3M Corp. 1% maturing 6/26/17 $4,991,40 AA- Yes New York Life 1.3% maturing 10/30/17 $2,872, AA+ Yes Microsoft 0.875% maturing 11/15/17 $2,505,00 AAA Yes Apple Inc. 1% maturing 5/3/18 $4,984, AA+ Yes Johnson & Johnson 1.65% maturing 12/05/2018 $2,000,08 AA+ Yes * Per Standard and Poors City Portfolio as of 3/31/14 (Book Value) 22 March 31, 2014

23 Monthly Cash and Investment Report Certification In compliance with California Government Code Section as amended February 1, 1996, I hereby certify that sufficient investment liquidity and anticipated revenues are available to meet the City s budgeted expenditure requirements for the next six months. Gigi Decavalles-Hughes, Director of Finance/City Treasurer 23 March 31, 2014