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05. Treasurer's Report ! ::\ I l,~~ I . City Hall 10300 Torre Avenue Cupertino, CA 95014-3255 Telephone: (408) 777-3220 FAX: (408) 777-3366 ITV CUPEIQ1NO DEP AR1MENT OF ADMINISTRATIVE SERVICES SUMMARY Agenda Item No. S- Meeting Date: June 6, 2006 SUBJECT AND ISSUE Accept the Treasurer's Investment Report for April 2006. BACKGROUND Enclosed is the Treasurer's Investment Report for the month ended April 30, 2006. The report includes all funds in control of the City. The market value of the City's portfolio totaled $45.9 million at the end of April, with a maturity or face value of $46.4 million. As interest rates continue to rise, the market value of the portfolio continues to be lower than maturity value, as the longer-term fixed interest rate securities in the portfolio are being valued at a lower price by the market. This difference between market and maturity value is an unrealized paper loss at this specific date. The Local Agency Investment Fund (LAIF) yielded 4.31 % for April, an improvement from 4.14% in the previous month and 2.72% a year ago. The City's portfolio as a whole yielded 4.01 % in April up from 3.85% the previous month and 2.71 % a year ago. During April, four medium to long-term Federal Agency securities and a bank certificate of deposit were purchased. However, as mentioned in last months report, after an April Audit Committee review of the portfolio, staff changed directions in May and sold four recently purchased securities to shorten the average maturity of the portfolio, in light of the continuing rise in interest rates and growing signs of inflation. By placing the money into LAIF and money market funds, the move improves overall investment performance by reducing unrealized losses and by putting more money into accounts that can better follow the rise in interest rates. This will more than offset the upfront loss taken upon the sale of the securities. The City's cash and investment holdings rose $1.6 million in April due to annual utility ITanchise fee and quarterly property tax remittances. Printed on Recycled Paper s-/ The investments of the City of Cupertino are in full compliance with our City investment policy and/or State law, and are tiered to provide the City with sufficient cash flows to pay its obligations over the next six months. RECOMMENDATION Accept the Treasurer's Investment Report for April 2006. Submitted by: ,~~ L David R. Woo Deputy Treasurer Approved for submission: ~ David W. Knapp City Manager Approved by: ~-1µ (l (1~ arol A. Atwood City Treasurer s-:<... City of Cupertino April 30, 2006 I ACTIVITY DATE t-uUPuN ADJUoTED MATURITY MARKEf UNREALIZED , DESCRIPTION RATE COST VALUE VALUE PRuFIT/LUSS SECURITIES MATURED SECURITIES PURCHASED 04/19/06 04/17/08 callable 5.30% 1.000,000 04/20/06 04/20/11 FHLMC callable 5.75% 1,000.000 04/27/06 10/27/09 FHLB callable 5.55% 750,000 04/21/06 04/07/11 FNMA callable 5.75% 750,000 04/05/06 10/05/07 Mercantile Bank of Michigan 5.00% 97.000 CURRENT PORTFOLIO CASH 04/30/06 Wells Fargo - Workers Comp Checking 17.091 17,091 17.091 0 04/30/06 Wells Fargo - Regular Checking 706,005 706,005 706.005 0 723,096 723,096 723,096 0 LAlF LAI> - Stale PoOl 4,"% , , , , , , u CERTIFICATES OF DEPOSIT 03/30/06 03/30/07 Western Siena National Bank 5.00% 95,000 95.000 94,753 (247) 03/29/06 03/29/07 First National Bank of Scottsboro 4.90% 99,000 99.000 98.676 (324) 02103/06 05/01/07 Mountain National Bank 4.60% 98,824 99,000 98.331 (493) 01/27/06 07/27/07 Lehman Bros Bank 4.60% 97,000 97,000 96.179 (821) 02/03/06 08/03/07 Business Bank of Fox River 4.60% 99.000 99,000 98,151 (849) 03/24/04 09/24/07 Signature Bank Nat'l Assn 2.70% 99,000 99.000 95,532 (3,468) 03/28/06 09/28/07 Venture Bank 5.00% 97,000 97,000 96,585 (415) 04/05/06 10/05/07 Mercantile Bank of Michigan 5.00% 97.000 97,000 96.579 (421) 02/03/06 02104/08 PrimeSouth Bank 4.65% 97.000 97.000 95.889 (1,111) 02/10/06 02lll/08 Florida ComtnWlity Bank 4.75% 99,000 99,000 98,018 (982) 03/17/04 03/17/08 American Trust Fed Savings Bank 3.00% 99,000 99.000 94,874 (4,126) 03/19/04 03/19/08 PlantersflTSt Cordell GA 3.05% 98,000 98.000 94.033 (3,967) 03/24/04 03/24/08 Badger State Bank 3.00% 99,000 99,000 94,832 (4.168) 03/24/04 03/24/08 Wilmot State Bank 3.00% 99.000 99.000 94.832 (4.168) 03/26/04 03/26/08 Privatebank & Trust 3.20% 99.000 99,000 95,176 (3.824) 03/30/06 03/28/08 First Georgia Banking Company 5.05% 99.000 99,000 98,474 (526) 04/07/04 04/07/08 Cole Taylor Bank, step coupon 2.49% 97,000 97,000 94,896 (2.104) 03/26/04 09/26/08 Southcoast Communtiy Bank 3.20% 98.000 98,000 93.282 (4.718) 03/17/04 03/17/09 Peoples State Bank 3.40% 99.000 99.000 93,759 (5.241) 03/24/04 03/24/09 Washita State Bank 3.35% 99.000 99.000 93.592 (5,408) 12130/05 12/30/09 Meridian Bank 4.80% 99,000 99,000 96.934 (2.066) 12/28/05 12/28/10 Nat'l Bank of New York City 4.90% 97,000 97,000 94,697 (2,303) 2,159,824 2,160,000 2,108,074 (51,750) MONEY MARKEf FUNDS 04/30/06 Wells Fargo Government 4.62% 3.055,448 3,055,448 3.055,448 3,055,448 3,055,448 3,055,448 0 S'-3 City of Cupertino April 30, 2006 AcTIVITY DATE COU1'UN ADJUSTED MATuKfJY MARKET UN I I DESCRIPTION RATE COST VALUE VALUE PRuFITiLU>S I AGENCY NOTES 07/21/03 07/21/06 FHLB callable 2.20% 500,000 500.000 496.720 (3,280) 08/07/03 08/07/06 FHLB callable. step coupon 2.75% 500.000 500,000 496.720 (3,280) 08/11/03 08/11/06 FHLB callable 2.50% 2,400,000 2,400,000 2,382.000 (18,000) 03/08/04 12/26/06 FHLMC callable 2.30% 796,524 800,000 785.104 (11,420) 07/09/93 04/15/07 FHLMC mortgage-backed 6.74% 36.087 34,699 34,640 (1,447) 04/30/04 04/30/07 FHLMC callable 3.30% 499.992 500.000 490.850 (9.142) --T2/22/03 06/22/07 FNMÂ 3.30% 1.000,000 1.000,000 979.380 (20,620) -'04/18/05 10/18/07 FHLB adjustable rate 4.33% 1,500,000 1,500,000 1.498.245 (1.755) 04/14/04 12/03/07 FNMA callable 2.50% 994.263 1,000.000 960,000 (34,263) 12/13/05 12/28/07 FFCB 4.75% 1.000,798 1,000.000 993.440 (7.358) 04123/04 01/23/08 FHLB cállable 3.15% 1,492.965 1,500,000 1.450.785 (42.180) 02/25/04 02/25/08 FHLMC 3.13% 1.000.000 1,000.000 965.420 (34.580) 04/19/06 04/17/08 FHLMC callable 5.30% 1,000,000 1.000.000 999,420 (580) 11/21/05 ·06/23/08 FFCB 5.79% 1.022.811 1,000,000 1,012.700 (10,1 II) 01/12/04 08/06/08 FHLB callable, step coupon 3.50% 999.068 1,000.000 980,630 (18.438) 04/29/04 10/29/08 FHLB callable, step coupon 3.50% 300,000 300.000 291.468 (8,532) 12/15/03 12/15/08 FHLMC callable, step coupon 4.00% I,ÕOO,OOO 1.000,000 985,260 (14,740) 12/30/03 12/30/08 FHLMC cal1able, step coupon 4.75% 1,000.000 1.000.000 989.850 (10,150) 03/16/04 03/16/09 FNMA callable 4.01% 1,600.000 1.600,000 1.550,496 (49,504) 03/30/04 03/30/09 FHLB callable, step coupon 4.00% 600.000 600.000 593.250 (6,750) 04/30/04 04/30/09 FHLB callable, step coupon 3.13% 1.000.000 1.000.000 989,690 (10,310) 04/27/06 10/27/09 FULB callable 5.55% 750.000 750.000 750.000 0 12/28/05 12/28/09 FHLB callable 5.04% 915.000 915,000 905.283 (9.717) 11/30/05 04/07/10 PFCB callable 3.70% 953.802 1,000.000 945,310 (8,492) 11/21/05 07/12/10 FHLMC 4.13% 977.343 1,000.000 958,440 (18.903) 12/15/05 12/15/10 FHLMC callable 5.04% 1.000,000 1,000.000 985,680 (14.320) 02/01/06 02/01/11 FFCB callable 5.25% 250,000 250.000 246,952 (3,048) 04/21/06 04/07/11 FNMA callable 5.75% 747,985 750,000 746.955 (1.030) 04/20/06 04/20/11 FHLMC callable 5.75% 1,000,000 1.000.000 998,200 (1,800) 26,836,639 26,899,699 26,462,888 (373,751) US GOVERNMENT SECURITIES 03/31/05 08/31/06 US Treasury Note 2.38% 982,812 1,000.000 991,720 8,908 982.812 1,000,000 991,720 8,908 10tal Manage:l Portfolio 46,316,"" 46,397,307 45,900,Z90 '".,''' Average Yield 4.01% Average Length to Maturity (in years) 1.47 TRUST & AGENCY PORTFOLIO CERTIFICATES OF DEPOSIT: 07/27/01 I 04/30/06 I Cupertino Nat! (Kester Trust) 2.93% 43,217 43.217 43.217 0 I I Total Trust & Agency Portfolio 4>,Z17 4J,<1I 43;II'T u BOND RESERVE PORTFOLIO Bond Reserve Acct #078793 Ambac Assurance Security Bond I I I Bond Payment Acct #078794 Wells Fargo Treasury Plus Money M 4.02% 13,030 13,030 13,030 0 Total Bond Reserve Portfoli B,O]O B,OJO I3;03Il 0 s-L/ 4.50% 4.00% 3.50% . 3.00% 2.50% 2.00% - 1.50% 1.00% Agency Notes 58% 4/05 5/05 Investments by Type Managed Portfolio - April 2006 US Treasuries 2% Cash 2% CD's 4% IRate of Return Comparison 6/05 BIOS 4/06 9/05 10/05 11/05 12/05 1106 2/06 3/06 7/05 6- - S- COMPLIANCE WITH INVESTMENT POLICY City of Cupertino April 30, 2006 Category Treasury Issues US Agencies Medium TennCorporate BondslNotes LAIF M(mey Market Funds Maximum Maturities Per Issuer Max Bankers Acceptances Commercial Paper Negotiable Certificates of Deposit Repurchase Agreements Reverse Repurchase agreements Standard ¡No limit iNolimit -, -- --- 30% with A rating ,$4Qmillion .20% I i Up to 5 years m. :10% (except LAIF) . :180 days & 40% 270 days & 25% 30% i 365 days m rprohibited . Complies . Complies ,Complies 'Complies !Complies Complies , Complies Complies ¡Complies i Complies , C0111plies Complies Comment 5-?'