CITY OF PORTLAND OFFICE OF MANAGEMENT AND FINANCE Sam Adams, Mayor Jack D. Graham, Chief Administrative Officer Richard F. Goward, Jr., Chief Financial Officer Eric H. Johansen, City Treasurer Bureau of Financial Services Public Finance and Treasury Division 1221 S.W. Fourth Ave., Rm. 120 Portland, Oregon 97204 1988 (503) 823 4220 FAX (503) 823 4209 Investment Report Treasury Division October 31 st, 2011
Table of Contents I. Purpose. i. Fund Characteristics. ii. Fund Management. II. III. IV. Investment Summary. Diversification. Benchmarking. i. Comparative Yield Analysis. ii. Benchmark Yield Analysis. iii. Treasury Yield Curve. V. Investment Advisory Committee. (IAC). VI. VII. VIII. Portfolio Holdings. Portfolio Transactions. Definitions / Terminology
I. Purpose. All investment decisions are made pursuant to the City s adopted Investment Policy and applicable Oregon Revised Statutes. The Investment Report is prepared on a monthly and quarterly basis to comply with the City of Portland s Investment Policy, Section VIII Reporting Requirements. The City s Treasury Division provides this report to the IAC, the Chief Administrative Officer and other city designee s. i. Portfolio Characteristics. The portfolio s objectives are to preserve principal while seeking maximum current income consistent with liquidity needs and the maintenance of a portfolio of high quality short term and medium term fixed income securities. The portfolio is also structured to be consistent with Oregon Revised Statutes governing the investment of public funds. The portfolio tries to achieve its objectives by investing in a diversified portfolio of U.S. dollar denominated securities. These securities consist primarily of short term and medium term U.S. Government securities, U.S. Government agency securities, securities issued by U.S. Government sponsored enterprises, commercial paper, short term corporate bonds, repurchase agreements, bankers acceptances, interest bearing deposits at qualified banks, corporate debt obligations guaranteed by the US Government or US Government agencies, municipal bonds issued by Oregon governmental entities, and the State of Oregon Local Government Investment Pool. ii. Portfolio Management. Responsibility for the management of the portfolio lies within the Public Finance and Treasury Division of the Bureau of Financial Services. Day to day investment operations are managed by the City of Portland s Treasurer and the Investment Officer. The City s Investment Policy provides authority to the City Treasurer to implement the policy and to execute investment decisions on behalf of the City. The Investment Policy provides Investment authorization to the City Treasurer and the City s Chief Administrative Officer (or designee). Current authorized employees include: Richard F. Goward Jr., Chief Financial Officer; Eric Johansen, City Treasurer; and Michael Montgomery, Investment Officer.
II. Investment Summary. INVESTMENT REPORT City of Portland, OR CASH REVIEW October 31, 2011 MARKET VALUE DEMAND DEPOSIT ACCOUNTS (DDA Deposit Only) * Wells Fargo Bank, DDA 9,140,631 US Bank, DDA 318,284 Key Bank, DDA 94,353 INVESTMENTS LGIP @ State of Oregon 23,153,813 Interest Bearing Deposits / CD' s 43,265,378 City of Portland's Portfolio held by 3rd Party Custodian US Treasury Securities 15,056,850 US Government Agency Securities 442,012,964 Commercial Paper US Corporate Securities 97,052,710 Bankers Acceptances Repurchase Agreements Corp. Debt Guaranteed by US Govt. or Agencies 89,101,033 Municipal Bonds 5,155,825 TOTAL PORTFOLIO MARKET VALUE 724,351,840 NET PORTFOLIO YIELD (mo. avg.) 0.555% WEIGHTED AVERAGE MATURITY (mo. avg.) 404 Days AVERAGE EFFECTIVE MATURITY (mo. avg.) 303 Days * Demand Deposit Accounts qualify for compensating credit, up to but not above monthly banking fees.
III. Diversification. DIVERSIFICATION ANALYSIS DURATION Term MAXimum Portfolio COMPLIANT US Treasury Inflation Protection Securities 10 yrs. 10/31/2021 No Securities Held US Treasury Securities 7 yrs. 10/31/2018 5/31/2012 US Government Agency Securities 3 yrs. 10/31/2014 10/24/2014 CD's / Time (Bank) Deposits 1 yr. 10/31/2012 No Securities Held Corp. Debt Guaranteed by US Govt. or Agencies 3 yrs. 10/31/2014 10/30/2012 Municipal Bonds 2 yrs. 10/31/2013 12/30/2011 US Corporate Securities 18 mo. 5/3/2013 11/1/2012 Commercial Paper 270 days 7/27/2012 No Securities Held Bankers Acceptances 6 mo. 5/2/2012 No Securities Held Repurchase Agreements 30 days 11/30/2011 No Securities Held INVESTMENT CLASSIFICATIONS US Treasury Securities US Government Agency Securities CD's / Time (Bank) Deposits Corporate Indebtedness (CP + US Corp. Sec.) Corp. Debt Guaranteed by US Govt. or Agencies Bankers Acceptances Repurchase Agreements Municipal Bonds State of Oregon LGIP MAXimum 100.0% Portfolio 2.1% 100.0% 61.0% 50.0% 7.3% 35.0% 13.4% 25.0% 12.3% 25.0% 0.0% 25.0% 0.0% 25.0% 43,889,508 0.7% 19,262,403 COMPLIANT
DIVERSIFICATION ANALYSIS PER ISSUER Market Value MAXimum Portfolio COMPLIANT US Treasury Securities 15,056,850 100.00% 2.08% Federal Farm Credit Bank 40,411,100 35.00% 5.58% Federal Home Loan Bank 101,771,839 35.00% 14.05% Federal Home Loan Mortgage Corp. 100,429,080 35.00% 13.86% Federal National Mortgage Assoc. 131,079,795 35.00% 18.10% Federal Agricultural Mortgage Corp. 68,321,149 35.00% 9.43% Bank of America (FDIC Guarantee) 10,189,500 5.00% 1.41% Citigroup (FDIC Guarantee) 33,889,281 5.00% 4.68% Goldman Sachs (FDIC Guarantee) 10,188,900 5.00% 1.41% U.S. Bankcorp (FDIC Guarantee) 16,666,773 5.00% 2.30% Ally Financial (FDIC Guarantee) 10,145,700 5.00% 1.40% JPMorgan (Combined) 33,450,404 5.00% 4.62% JPMorgan (FDIC Guarantee) 8,020,880 5.00% 1.11% JPMorgan (Corp.) 25,429,524 5.00% 3.51% Bank of New York Mellon (Corp) 10,417,800 5.00% 1.44% Credit Suisse USA (Corp.) 16,837,906 5.00% 2.32% General Electric Capital Corp. (Corp.) 34,016,430 5.00% 4.70% Wells Fargo (Corp.) 10,351,050 5.00% 1.43% OSBA, COP, TANS (Muni) 5,155,825 5.00% 0.71% 648,379,382
DEMAND DEPOSIT ACCOUNTS (DDA's) AND INTEREST BEARING DEPOSITS / CD's Bank of America Key Bank Umpqua Bank US Bank Wells Fargo Bank Albina Community Bank (PDC) DIVERSIFICATION ANALYSIS MAXimum Portfolio 200,000,000 70,000,000 0 94,353 30,000,000 29,990,276 200,000,000 318,284 200,000,000 22,165,691 250,000 250,000 COMPLIANT WEIGHTED AVERAGE MATURITY MAXimum Portfolio COMPLIANT 18 months 540 404 AGING REPORT Market Value MAXimum Portfolio COMPLIANT 0 2 years 602,891,660 100.0% 83.2% 2 10 years 121,460,180 50.0% 16.8%
IV. Benchmarking. The City of Portland uses a benchmark yield which is derived by blending the following published yield to maturities: 33% 2 yr. Treasury Bill [mo. avg. yield to maturity (YTM)], and 67% Merrill Lynch Premier Institutional Fund (MLPXX), Money Market Fund [mo. avg. yield to maturity (YTM)]. These representative benchmark yields were selected in an effort to obtain a comparable yield, which approximates the weighted average maturity of the City s portfolio, with emphasis on matching the credit quality of the portfolio. The benchmark is constructed such that a weighted average maturity of 270 days is considered a neutral position that equates to 50% of the portfolios maximum weighted average maturity. BENCHMARKS (mo. avg.'s) % City of Portland NET PORTFOLIO YIELD (mo. avg.) 0.555% CUSTOM COMPOSITE (MLPXX& 2YR T NOTE; mo. avg.) 0.166% WEIGHTED AVERAGE MATURITY (mo. Avg.) 404 Days SECTOR YIELDS (mo. avg.'s) % FED FUNDS (Target Rate) 0.00 0.25% 90 Day Treasury Bill 0.018% 6 Mo. Treasury Bill 0.054% CP (90 Day Paper, Avg. Yld.) 0.191% 2 YR Treasury Note 0.282% LGIP O STATE 0.500%
i. Comparative Yield Analysis. YIELD ANALYSIS CITY OF PDX LGIP 90D T BILL 2YR T NOTE 1.250% 1.125% 1.000% 0.875% 0.750% YIELD 0.625% 0.500% 0.375% 0.250% 0.125% 0.000% Oct 10 Nov 10 Dec 10 Jan 11 Feb 11 Mar 11 Apr 11 May 11 Jun 11 Jul 11 Aug 11 Sep 11 Oct 11 Oct 10 Nov 10 Dec 10 Jan 11 Feb 11 Mar 11 Apr 11 May 11 Jun 11 Jul 11 Aug 11 Sep 11 Oct 11 CITY OF PDX 0.486% 0.418% 0.428% 0.483% 0.555% 0.830% 0.679% 0.719% 1.120% 0.644% 0.654% 0.579% 0.555% LGIP 0.544% 0.500% 0.500% 0.500% 0.500% 0.500% 0.500% 0.500% 0.500% 0.500% 0.500% 0.500% 0.500% 90D T BILL 0.134% 0.142% 0.138% 0.149% 0.129% 0.098% 0.058% 0.040% 0.037% 0.039% 0.022% 0.014% 0.018% 2YR T NOTE 0.372% 0.463% 0.616% 0.612% 0.775% 0.693% 0.736% 0.551% 0.405% 0.409% 0.228% 0.207% 0.282% DATE
ii. Benchmark Yield Analysis. BENCHMARKING 1.250% 1.125% 1.000% 0.875% % YIELD 0.750% 0.625% 0.500% 0.375% 0.250% 0.125% 0.000% OCT 10 NOV 10 DEC 10 JAN 11 FEB 11 Composite Benchmark 0.283 0.294 0.340 0.348 0.388 0.349 0.336 0.256 0.205 0.186 0.130 0.134 0.166 City of Portland Portfolio 0.486 0.418 0.428 0.483 0.555 0.830 0.679 0.719 1.120 0.644 0.654 0.579 0.555 MAR 11 APR 11 TIME MAY 11 JUN 11 JUL 11 AUG 11 SEP 11 OCT 11 Composite Benchmark City of Portland Portfolio
iii. Treasury Yield Curve. TREASURY YIELD CURVE YIELD ( % ) 1.7500 1.6250 1.5000 1.3750 1.2500 1.1250 1.0000 0.8750 0.7500 0.6250 0.5000 0.3750 0.2500 0.1250 0.0000 1 MO 3 MO 6 MO 9 MO 1 YR 15 MO 18 MO 21 MO 2 YR 27 MO TIME ( MAT. ) Yield % Yield % 0.020 0.010 0.060 0.090 0.120 0.152 0.185 0.217 0.250 0.290 0.330 0.370 0.410 0.990 1.580 30 MO 33 MO 3 YR 5 YR 7 YR
V. Investment Advisory Committee. (IAC). Under Chapter 3.88 of the City Code, the City of Portland maintains an Investment Advisory Committee (IAC), which is made up of public members who serve without compensation for a period of 2 year terms (renewable). The IAC advises the city in connection with portfolio oversight, investment policies, and investment practices. At a minimum, the IAC meets three times throughout each fiscal year, which ends June 30 th. IAC Member Affiliation Employer ( Title) Term Started Term Ends Eric Johansen Staff to Committee City of Portland N/A N/A City Treasurer Vacant Public Member 1 Jul 2011 30 Jun 2013 Vacant Public Member 1 Jul 2011 30 Jun 2013 Brendan Barnicle Public Member Pacific Crest Securities 1 Nov 2010 30 Jun 2012 Sr. Research Analyst Vacant Ex Officio Member N/A N/A
VI. Portfolio Holdings at Third Party Custodian. MATURITY SETTLEMENT Unrealized DATE DATE ISSUER COUPON % PAR VALUE BOOK VALUE MARKET VALUE G/L 11/03/11 04/15/10 FED. NAT. MTG. ASSC. 1.215 $ 10,000,000 $ 10,000,181 $ 10,000,600 $ 419 11/15/11 05/10/11 CREDIT SUISSE USA INC, MTN 6.125 $ 9,360,000 $ 9,380,286 $ 9,376,661 $ (3,626) 12/01/11 12/07/09 JP MORGAN, MTN (FDIC Guaranteed) 3.125 $ 8,000,000 $ 8,013,674 $ 8,020,880 $ 7,206 12/30/11 06/01/11 OSBA -COP -TANS 0.420 $ 5,155,000 $ 5,155,000 $ 5,155,825 $ 825 01/15/12 04/19/11 CREDIT SUISSE USA INC, MTN 6.500 $ 7,377,000 $ 7,468,771 $ 7,461,245 $ (7,525) 02/01/12 05/23/11 JP MORGAN, MTN 5.350 $ 9,597,000 $ 9,715,570 $ 9,713,124 $ (2,446) 02/16/12 08/19/10 FED. NAT. MTG. ASSC. 5.000 $ 10,000,000 $ 10,132,202 $ 10,141,600 $ 9,398 03/15/12 04/04/11 FED. AGG. MTG. CORP. 2.110 $ 5,000,000 $ 5,029,887 $ 5,034,400 $ 4,513 03/30/12 07/23/10 FED. NAT. MTG. ASSC. 1.080 $ 11,603,000 $ 11,624,273 $ 11,647,672 $ 23,398 04/30/12 08/10/10 CITIGROUP, MTN (FDIC Guaranteed) 2.125 $ 10,000,000 $ 10,074,560 $ 10,095,700 $ 21,140 05/15/12 08/24/10 U.S. BANCORP, MTN (FDIC Guaranteed) 1.800 $ 16,515,000 $ 16,625,209 $ 16,666,773 $ 41,564 05/31/12 12/23/10 U.S. TREASURY NOTE 0.750 $ 15,000,000 $ 15,020,823 $ 15,056,850 $ 36,027 06/04/12 11/24/10 CITIBANK, MTN (FDIC Guaranteed) 1.875 $ 10,000,000 $ 10,077,263 $ 10,097,000 $ 19,737 06/04/12 08/16/11 CITIBANK, MTN (FDIC Guaranteed) 1.875 $ 13,565,000 $ 13,696,002 $ 13,696,581 $ 579 06/08/12 08/11/10 FED. HOME LOAN BANK 4.375 $ 7,200,000 $ 7,360,918 $ 7,378,200 $ 17,282 06/13/12 10/12/11 FED. FARM CREDIT BANK 0.240 $ 10,000,000 $ 10,004,776 $ 9,997,900 $ (6,876) 06/15/12 11/24/10 GOLDMAN SACHS, MTN (FDIC Guaranteed) 3.250 $ 10,000,000 $ 10,168,693 $ 10,188,900 $ 20,207 06/15/12 01/20/11 GE CAPITAL CORP, MTN 6.000 $ 10,000,000 $ 10,297,273 $ 10,319,700 $ 22,427 06/15/12 08/22/11 BANK OF AMERICA, MTN (FDIC Guaranteed) 3.125 $ 10,000,000 $ 10,177,639 $ 10,189,500 $ 11,861 06/22/12 06/22/11 FED. HOME LOAN BANK 0.250 $ 10,000,000 $ 10,000,000 $ 9,995,700 $ (4,300) 06/27/12 06/27/11 FED. HOME LOAN BANK 0.250 $ 10,000,000 $ 10,000,000 $ 9,998,800 $ (1,200) 07/25/12 07/14/11 FED. HOME LOAN BANK 0.350 $ 10,000,000 $ 10,000,000 $ 9,995,900 $ (4,100) 08/01/12 03/17/11 WELLS FARGO, MTN 5.500 $ 5,000,000 $ 5,174,261 $ 5,156,750 $ (17,511) 08/10/12 12/15/10 FED. AGG. MTG. CORP. 2.100 $ 10,925,000 $ 11,031,370 $ 11,086,253 $ 54,883 08/10/12 02/17/11 JP MORGAN, MTN 6.950 $ 10,000,000 $ 10,439,175 $ 10,477,600 $ 38,425 08/10/12 03/02/11 JP MORGAN, MTN 6.950 $ 5,000,000 $ 5,221,110 $ 5,238,800 $ 17,690 08/13/12 03/02/11 GE CAPITAL CORP, MTN 3.500 $ 5,000,000 $ 5,094,245 $ 5,107,550 $ 13,305 08/13/12 03/07/11 GE CAPITAL CORP, MTN 3.500 $ 8,000,000 $ 8,159,245 $ 8,172,080 $ 12,835 08/28/12 08/17/10 FED. HOME LOAN MTG. CORP. 1.000 $ 15,000,000 $ 15,040,828 $ 15,091,350 $ 50,522 09/14/12 11/10/10 FED. HOME LOAN BANK 2.000 $ 8,000,000 $ 8,102,665 $ 8,117,680 $ 15,015 09/24/12 03/28/11 FED. NAT. MTG. ASSC. 0.625 $ 10,000,000 $ 10,005,527 $ 10,037,200 $ 31,673 09/24/12 03/28/11 FED. NAT. MTG. ASSC. 0.625 $ 10,000,000 $ 10,002,884 $ 10,037,200 $ 34,316
MATURITY SETTLEMENT Unrealized DATE DATE ISSUER COUPON % PAR VALUE BOOK VALUE MARKET VALUE G/L 10/19/12 05/20/11 GE CAPITAL CORP, MTN 5.250 $ 10,000,000 $ 10,425,032 $ 10,417,100 $ (7,932) 10/23/12 06/15/11 WELLS FARGO, MTN 5.250 $ 5,000,000 $ 5,216,467 $ 5,194,300 $ (22,167) 10/30/12 06/30/11 ALLY FINANCIAL, MTN (FDIC Guaranteed) 1.750 $ 10,000,000 $ 10,134,263 $ 10,145,700 $ 11,437 11/01/12 08/04/11 BANK OF NEW YORK MELLON, MTN 4.950 $ 10,000,000 $ 10,445,466 $ 10,417,800 $ (27,666) 03/01/13 12/13/10 FED. FARM CREDIT BANK 1.700 $ 10,000,000 $ 10,108,916 $ 10,177,600 $ 68,684 03/25/13 03/25/11 FED. FARM CREDIT BANK 0.700 $ 10,000,000 $ 9,988,838 $ 10,046,000 $ 57,162 03/28/13 04/14/11 FED. HOME LOAN MTG. CORP. 0.750 $ 15,000,000 $ 14,989,762 $ 15,089,100 $ 99,338 04/18/13 04/18/11 FED. AGG. MTG. CORP. 1.000 $ 5,800,000 $ 5,799,153 $ 5,823,896 $ 24,743 04/18/13 08/15/11 FED. AGG. MTG. CORP. 1.000 $ 10,000,000 $ 10,081,147 $ 10,041,200 $ (39,947) 05/29/13 12/10/10 FED. HOME LOAN MTG. CORP. 3.500 $ 15,000,000 $ 15,609,301 $ 15,746,250 $ 136,949 05/29/13 03/11/11 FED. HOME LOAN MTG. CORP. 3.500 $ 10,000,000 $ 10,398,639 $ 10,497,500 $ 98,861 06/27/13 06/27/11 FED. HOME LOAN BANK 0.600 $ 6,870,000 $ 6,867,049 $ 6,872,679 $ 5,631 08/09/13 06/17/11 FED. NAT. MTG. ASSC. 0.500 $ 10,000,000 $ 9,985,970 $ 10,023,000 $ 37,030 08/22/13 08/22/11 FED. HOME LOAN MTG. CORP. 0.500 $ 10,000,000 $ 10,001,209 $ 9,995,800 $ (5,409) 08/23/13 08/23/11 FED. HOME LOAN BANK 0.700 $ 10,000,000 $ 10,000,000 $ 10,001,700 $ 1,700 09/06/13 06/06/11 FED. HOME LOAN MTG. CORP. 0.850 $ 14,000,000 $ 13,997,129 $ 14,042,280 $ 45,151 09/06/13 09/06/11 FED. HOME LOAN MTG. CORP. 0.450 $ 10,000,000 $ 9,997,230 $ 9,983,400 $ (13,830) 09/20/13 12/09/10 FED. NAT. MTG. ASSC. 1.000 $ 15,000,000 $ 14,959,313 $ 15,084,600 $ 125,287 09/27/13 06/27/11 FED. HOME LOAN BANK 0.750 $ 5,000,000 $ 4,996,829 $ 5,000,200 $ 3,371 09/30/13 03/10/11 FED. NAT. MTG. ASSC. 1.125 $ 13,383,000 $ 13,363,891 $ 13,569,024 $ 205,133 10/25/13 10/25/11 FED. NAT. MTG. ASSC. 0.600 $ 10,000,000 $ 9,997,029 $ 9,998,100 $ 1,071 11/08/13 12/09/10 FED. NAT. MTG. ASSC. 0.875 $ 10,000,000 $ 9,931,937 $ 10,001,100 $ 69,163 11/27/13 10/14/11 FED. HOME LOAN BANK 0.375 $ 9,000,000 $ 8,977,056 $ 8,982,180 $ 5,124 01/14/14 07/14/11 FED. HOME LOAN BANK 0.850 $ 15,000,000 $ 14,990,763 $ 15,000,600 $ 9,837 02/04/14 03/30/11 FED. AGG. MTG. CORP. 3.125 $ 10,000,000 $ 10,334,285 $ 10,528,500 $ 194,215 02/10/14 02/10/11 FED. FARM CREDIT BANK 1.375 $ 10,000,000 $ 9,995,825 $ 10,189,600 $ 193,775 03/13/14 03/04/11 FED. NAT. MTG. ASSC. 2.750 $ 10,000,000 $ 10,286,140 $ 10,533,600 $ 247,460 03/14/14 03/04/11 FED. HOME LOAN BANK 2.375 $ 10,000,000 $ 10,198,735 $ 10,428,200 $ 229,465 03/14/14 03/29/11 FED. AGG. MTG. CORP. 1.630 $ 5,000,000 $ 4,999,400 $ 5,018,600 $ 19,200 05/02/14 05/02/11 FED. AGG. MTG. CORP. 1.420 $ 10,000,000 $ 10,000,000 $ 10,153,200 $ 153,200 06/25/14 08/26/11 FED. AGG. MTG. CORP. 3.250 $ 10,000,000 $ 10,656,419 $ 10,635,100 $ (21,319) 10/24/14 10/24/11 FED. HOME LOAN MTG. CORP. 0.800 $ 10,000,000 $ 9,987,591 $ 9,983,400 $ (4,191)
MATURITY SETTLEMENT DATE DATE ISSUER COUPON % PAR VALUE BOOK VALUE MARKET VALUE 10/24/14 10/24/11 FED. NAT. MTG. ASSC. 0.850 $ 10,000,000 $ 9,986,102 10,006,100 ( ) = Callable, (CP) = Commercial Paper, (BA) = Bankers Acceptance $ 639,350,000 $ 646,001,192 648,379,382 (MTN) = Medium Term Note Unrealized G/L $ $ $ 19,998 $ 2,378,190 CITY OF PORTLAND INVESTMENT PORTFOLIO Gain / (Loss) & Interest Earnings Summary PORTFOLIO UNREALIZED GAIN / (LOSS) AT MONTH END (Securities Maturing 0 1 year) PORTFOLIO UNREALIZED GAIN / (LOSS) AT MONTH END (Securities Maturing Over 1 yr. CAFR reporting) PORTFOLIO UNREALIZED GAIN / (LOSS) AT MONTH END $ 449,733 $ 1,928,457 $ 2,378,190 PORTFOLIO INTEREST EARNED CURRENT MONTH $ 331,117 PORTFOLIO REALIZED GAIN / (L OSS) CURRENT MONTH $ 6,358 PORTFOLIO NET INTEREST EARNED CURRENT MO NTH $ 337,475 PORTFOLIO INTEREST EARNED YTD (FYE) $ 1,552,463 PORTFOLIO REALIZED GAIN / (LOSS) YTD (FYE) $ 43,829 PORTFOLIO NET INTEREST EARNED YTD (FYE) $ 1,596,291
VII. Portfolio Transactions. PURCHASES DATE ISSUER Money Market Yield / Coupon % MATURITY COST PAR 10/12/2011 FFCB 0.240 06/13/2012 $ 10,005,200 $ 10,000,000 10/14/2011 FHLB 0.375 11/27/2013 $ 8,976,510 $ 9,000,000 10/24/2011 FHLMC 0.800 10/24/2014 $ 9,987,500 $ 10,000,000 10/24/2011 FNMA 0.850 10/24/2014 $ 9,986,000 $ 10,000,000 10/25/2011 FNMA 0.600 10/25/2013 $ 9,997,000 $ 10,000,000 $ 48,952,210 $ 49,000,000 MATURITIES/CALLS/SALES GAIN/(LOSS) on Called Bond DATE ISSUER Money Market Yield / Coupon % MATURITY or Sale of $ VALUE Secutity 10/05/2011 FFCB 0.750 10/05/2011 $ 15,000,000 $ 10/05/2011 FHLB 4.875 10/05/2011 $ 6,250,000 $ 10/11/2011 FHLB 0.900 04/11/2014 $ 20,000,000 $ 10/11/2011 JP MORGAN NOTE (FDIC Guaranteed) 3.125 12/01/2011 $ 2,008,420 $ 2,608 10/12/2011 FHLMC 0.900 04/12/2013 $ 15,000,000 $ GE CAPITAL CORP 3.500 08/13/2012 $ 2,043,700 $ 3,750 $ 60,302,120 $ 6, 358
VIII. Definitions / Terminology. CD CERTIFICATE OF DEPOSIT. Short or medium term, interest bearing debt instrument offered by banks and savings and loans. Money removed before maturity is subject to a penalty. CDs are relatively low risk, low return investments, and are also known as "time deposits", because the account holder has agreed to keep the money in the account for a specified amount of time, anywhere from three months to six years. CP COMMERCIAL PAPER. Secured/asset backed or unsecured, short term promissory notes issued by corporations typically for the financing of accounts receivable, inventories, meeting short term liabilities, and securitizing assets. Maturities on commercial paper are maximum 270 days. MTN CORPORATE BONDS. Unsecured, short term and medium term promissory notes issued by corporations, typically for the financing of general corporate purposes, specific projects or acquisitions. Maturities on MTN s (medium term notes) typically range between one and thirty years in duration. MTN s can be collateralized/asset backed or uncollateralized/unsecured, so only firms with high quality debt ratings will easily find buyers without having to offer a substantial discount (higher cost) for the debt issue. DDA DEMAND DEPOSIT ACCOUNT. An account from which deposited funds can be withdrawn at any time without any notice to the depository institution. This account allows you to "demand" your money at any time, unlike a term deposit, which cannot be accessed for a predetermined period (the loan's term). Most checking and savings accounts are demand deposits, accessible by the account holder at any time. FFCB FEDERAL FARM CREDIT BUREAU. The Farm Credit System is a Government Sponsored Enterprise (GSE) created by Congress in 1916. FFCB is a nationwide system of borrower owned banks and associations which provide mortgage loans, credit and related services to farmers, rural homeowners and agricultural and rural cooperatives. These banks and associations are not authorized to accept deposits and cannot borrow from other financial institutions without the approval of their affiliated bank. Banks raise funds principally through the sale of consolidated System wide bonds and notes to the public, through the Federal Farm Credit Banks Funding Corporation. The repayment of System wide debt securities is therefore dependent upon the ability of System borrowers to repay their loans.
FHLB FEDERAL HOME LOAN BANK. The Federal Home Loan Bank, created in 1932, provides stable, on demand, low cost funding to American financial institutions for home mortgage loans, small business, rural, agricultural, and economic development lending. The 12 banks of the FHLB System are owned by over 8,100 regulated financial institutions from all 50 states, U.S. possessions, and territories. Equity in the FHLB is held by these owner/members and is not publicly traded. Institutions must purchase stock in order to become a member. In return, members obtain access to low cost funding, and also receive dividends based on their stock ownership. With their members, the FHLB System represents the largest collective source of home mortgage and community credit in the United States. The banks do not provide loans directly to individuals, only to other banks. FHLMC FEDERAL HOME LOAN MORTGAGE CORPORATION. The Federal Home Loan Mortgage Corporation (FHLMC), commonly known as Freddie Mac, is a government sponsored enterprise (GSE) of the United States federal government. The FHLMC was created in 1970 to expand the secondary market for mortgages in the US. Along with other GSEs, Freddie Mac buys mortgages on the secondary market, pools them, and sells them as mortgage backed securities to investors on the open market. This secondary mortgage market increases the supply of money available for mortgages lending and increases the money available for new home purchases. On September 7, 2008 the Federal Housing Finance Agency (FHFA) announced that Fannie Mae as being placed into conservatorship of the FHFA. FNMA FEDERAL NATIONAL MORTGAGE ASSOCIATION. The Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, is a stockholder owned corporation chartered by Congress in 1968 as a government sponsored enterprise (GSE), but founded in 1938 during the Depression. Fannie Mae does not make home loans directly to consumers, but rather functions as an intermediary in the U.S. secondary mortgage market. By purchasing and securitizing mortgages, Fannie Mae facilitates liquidity in the primary mortgage market by ensuring that funds are consistently available to the institutions that do lend money to home buyers. On September 7, 2008 the Federal Housing Finance Agency (FHFA) announced that Fannie Mae as being placed into conservatorship of the FHFA. IBDA INTEREST BEARING DEPOSIT ACCOUNT (Checking or Savings). Most checking and savings accounts are demand deposits, accessible by the account holder at any time. An interest bearing account will pay interest on the account s balance, but will typically have higher minimum balance requirements to entice investments. Rates vary and are unique to each institution. LGIP LOCAL GOVERNMENT INVESTMENT POOL, State of Oregon. Oregon's Local Government Investment Pool (LGIP) was created by Oregon Laws in 1973, Chapter 748. It is a diversified portfolio offered to eligible participants of
the State of Oregon. The Local Government Investment Pool (LGIP or the "Pool") is an alternate investment vehicle offered to participants that includes, but is not limited to, any municipality, political subdivision or public corporation of this state that by law is made the custodian of, or has control of, any public funds. The LGIP is commingled with the State's short term funds. TLGP TEMPORARY LIQUIDITY GUARANTEE PROGRAM. The FDIC has created this program to strengthen confidence and encourage liquidity in the banking system by guaranteeing newly issued senior unsecured debt of banks, thrifts, and certain holding companies, and by providing full coverage of non interest bearing deposit transaction accounts, regardless of dollar amount. The goal of the TLGP is to decrease the cost of bank funding so that bank lending to consumers and businesses will normalize. The industry funded program does not rely on the taxpayer or the deposit insurance fund to achieve its goals. All newly issued senior unsecured debt must be issued on or before June 30, 2009 to be covered. This includes promissory notes, commercial paper, inter bank funding, and any unsecured portion of the secured debt. The amount of debt covered may not exceed 125% of debt that was outstanding as of September 30, 2008 that was scheduled to mature before June 30, 2009. Coverage will only be provided for three years beyond the date that the debt was issued, even if the liability has not matured. All funds in non interest bearing transaction deposit accounts held until December 31, 2009 will be covered. US T BILLS UNITED STATES TREASURY BILL. Treasury securities are government debt instruments issued by the United States Department of the Treasury through the Bureau of the Public Debt. They are the debt financing instruments of the U.S. Federal government, and they are often referred to simply as Treasuries. Treasury bills (or T bills) mature in one year or less. Like zero coupon bonds, they do not pay interest prior to maturity; instead they are sold at a discount of the par value and mature at the stated par value. Many regard Treasury bills as the least risky investment available to U.S. investors. Regular weekly T bills are commonly issued with maturity dates of 28 days (or 4 weeks, about a month), 91 days (or 13 weeks, about 3 months), and 182 days (or 26 weeks, about 6 months). US T NOTES UNITED STATES TREASURY NOTE. Treasury securities are government debt instruments issued by the United States Department of the Treasury through the Bureau of the Public Debt. They are the debt financing instruments of the U.S. Federal government, and they are often referred to simply as Treasuries. Treasury notes (or T Notes) mature in two to ten years. They have a coupon payment every six months, and are commonly issued with maturities dates of 2, 5 or 10 years, for denominations from $100 to $1,000,000. T Notes and T Bonds are quoted on the secondary market at percentage of par in thirty seconds of a point.
US TIPS UNITED STATES TREASURY INFLATION PROTECTED SECURITIES. Treasury securities are government debt instruments issued by the United States Department of the Treasury through the Bureau of the Public Debt. They are the debt financing instruments of the U.S. Federal government, and they are often referred to simply as Treasuries. United States Treasury Inflation Protected Securities (TIPS) have been issued by the U.S. Treasury since 1997. TIPS provide investors with protection against inflation. The principal of a TIPS increases with inflation and decreases with deflation, as measured by the Consumer Price Index. (CPI Urban, Non Seasonally Adjusted with a 3 month lag). When a TIPS matures, the investor is paid the inflation adjusted principal or original principal, whichever is greater. A TIPS investor won't receive less than the original principal amount so the investor's original principal amount is protected against deflation as well. TIPS pay interest semiannually at a fixed rate. The rate is applied to the adjusted principal; so, like the principal, interest payments rise with inflation and fall with deflation. TIPS are currently issued with maturity dates of approximately 5, 10 or 20 years.