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09. Treasurer's Budget Report City Hall 10300 Torre Avenue Cupertino, CA 95014-3255 Telephone: (408) 777-3220 FAX: (408)777-3366 I F CUPEIUINO DEPARTMENT OF ADMINISTRATIVE SERVICES SUMMARY Agenda Item No. 9 Meeting Date: July 18, 2006 SUBJECT AND ISSUE Accept the Treasurer's Investment Report for May 2006. BACKGROUND Enclosed is the Treasurer's Investment Report for the month ended May 31,2006. The report includes all funds in control of the City. The market value of the City's portfolio totaled $49.7 million at the end of May, with a maturity or face value of $50.2 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 City's portfolio as a whole yielded 4.10% in May up from 4.01 % the previous month and 2.71 % a year ago. The Local Agency Investment Fund (LAIF) yielded 4.56% for the same time period, up from 4.31 % in the previous month and 2.86% a year ago. As mentioned in previous reports, staff sold four securities in May 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 up front loss taken upon the sale of the securities. No fixed rate or fixed term investment purchases have occurred since then. The City's cash and investment holdings rose $3.8 million in May mainly due to semi- annual sales tax and vehicle license fee remittances. 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. q -( Printed on Recycied Paper RECOMMENDATION Accept the Treasurer's Investment Report for May 2006. Submitted by: Approved for submission: ~ David W. Knapp City Manager David R. Woo Deputy Treasurer Approved by: ~ a at-w 0 crd2 Carol A. Atwood City Treasurer q-J- City of Cupertino May 31, 2006 ACTIVITY DATE COUPON ADJUSTED MATURITY MARKET l!!':!~~~L1ZEI _ U..~ __ ....------.--- -----.--.... -.--..-..------- ..- PURCHASE MATURITY DESCRIPTION RATE COST VALUE VALUE PROFIT/LOSS 1----- -_...-~. __m.~_______ . -..... "-... ___.__n. SECURITIES SOLD - -------...- --_.. .~~- - '- -_..~ - _hh _ ~_ ....m___ -- 04/ [ 9/06 04/17/08 FHLMC callable 5.30% 1.000,000 1,000,000 997,790 $2,210 real ]os ~_.,' . _-_0------ 04/27/06 10/27/09 FHLB callab[e 5.55% 750,000 1 750,000 748,230 $] ,770 reallos ..n".." .~~ - .' "-.. 02/01/06 02/01111 FFCB callable 5.25% 250,000 250,000 245,[56 $4,844 real ]os __h_. .... '~_T~_r____ ...----- 04/20/06 04/20/11 FHLMC callable 5.75% 1,000,000 1,000,000 992,000 $8,000 real ]os .- - ~ - m - .... -. -- I-----~ - $] 6,824 total .-_.. __.._..0. .._.c_.co -- -----..--- SECURITIES PURCHASED ___.....u _,_~~_ ---~._.. .,--.---- ----- . -- . - u_ __ -- ----------- - - -----t _m_______1 -- ---..-. ---- - --.. .. - _. __n_.n --.- I ---.... _..__., u.. --.... -- ----- CITY PORTFOLIO _n___ .- -,------ ---- _.~- - - -- .......----- f-- ------..-.. . CASH j 1----- --- .--..-- - - ~ .,on -.... --------.. --. 1-_ I 05/?_!/0~ Wells Fargo. Workers Comp Checking 15,525 15,525 15,525 0 -- '.'" -. ..-- -t 05/31/06 Wells Fargo. Regular Checking 802,489 802,489 802,489 0 -- ______. r._ ~ ,. .-- -- 05/31/06 Wells Fargo - Investment Checkinl 3_57% 112,046 112,046 112,046 0 ...--. -- -----~----- - - __.__ __mm_m 930,060 930,060 930,060 0 -- ------ . ~ . -- - ......-- ----. i ~.._- _0 .._._~____ -- -~ n. ..n..._u LAW - -05/31/06 ---..-.-..... --- -- ..-- LAW - State Pool 456% 14,259,064 14,259,064 14,259,064 0 ---. ---.-.- .". ~ __ n --.-- --.-.- -.-- - ~.o.. - . - l- I- . no. n__..__._ CERTWICATES OF DEPOSIT .. - _______r~ .~____ ----- _ '_0'. __n .--.-.--- ---_.~_.. I--- ---- -- ... .-. ----.-.... _, -0-- 03/30/06 03/30/07 Western Sierra National Bank 5_00% 95,000 95,000 94,722 (278) u_ _.. __~ .__~n ___ . ----4_-9"0% i n___._n_ _._._ -- 03/29/06 03/29/07 First National Bank of Scottsboro 99,000 99,000 98,671 (329) ~ ~ _.. .---.-.---1------ _____n__.__... . -- - 02/03/06 05/01/07 Mountain Nationa] Bank 4.60% 98,839 99,000 98.345 (494) -----. ..-.-- ...-.- 01/27/06 07/27/07 Lehman Bros Bank 4.60% 97,000 97,000 96.132 (868) __.n______ ~ -....-.------.--- -----. u____. ------- - 02/03/06 08/03/07 Business Bank of Fox River 4_60% 99,000 99.000 n -~~~~~~t- _ (901) mn 03/24/04-j --.-----------.--- .----.-.- I 09/24/07 Signature Bank Nat'1 Assn 2.70% 99,000 99.000 I (3,373) _...n. 1--- u..__n__.___ --- _n .. -----~j I 03/28/06 , 09/28107 Venture Bank ( 5.00% 97.000 [ 97.000 96.484 L- (5]6) , I ___ o~io~/~~I- JO/~~(07IMerCantile-Bank (;fMichiga~- ----- m- o.- - r 97.00~ .-.--.---- _ tm _5.00% 97,000 (525) 96,475 _____.___n - ---- --------1-- -- .---...- 02/03/~1 02/04/0~ ~~rime~outh Bank 4.65% 97.~~~ I 97.000 95.791 I (1,209) ---,-~ 02/10/06 02/11/08 Florida Conununity Bank 4.75% :::~~~l---;;;~~~:- 97.908 (1,092) ___.._ ___0' ~ ~ ..-..-.- . .-- 03/17/04 03/17/08 American Trust Fed Savings Bank 3.00% 94,905 (4,095) ~- -----~~~...~- _n 03/19104 03/19/08 Plantersfirst Cordell GA i 3.05% 98,000 I 98,000 94.055 (3,945) I ~-- -- ..-. ,--------...-. .-. n _______ 03/24/04 03/24/08 Badger State Bank 3_00% 99,000 99.000 94,862 (4,138) . - ~..- - .-..-- - - .u..' 03/24/04 03/24/08 Wilmot State Bank 3.00% 99,000 99,000 94,861 (4,139) ---- ~ -- . ..-. -. -----~ 03/26/04 03/26/08 Privatebank & Trust 3.20% 99,000 99,000 95.188 (3,812) -....- __.n ._0 . ~n __n__ -- u._ 03/30/06 , 03/28/08 First Georgia Banking Company 5.05% 99,000 99.000 98,330 (670) --- ------ -. .. -.-.- -. 04/07/04 04/07/08 Cole Taylor Bank. step C?!:pou 2.49% 97,000 97.000 94,992 (2,008) -.---.- .., -------'- 03/26/04 09/26/08 South coast Conununtiy Bank 3_20% 98,000 98,000 93,238 (4,762) ____._m______ --- .--.- . -.---.-- 03/17/04 03/17/09 Peoples Stale Bank 3.40% 99,000 99,000 93,670 (5,330) --.-. ---- -.--.- ---- _n .... 03/24/04 03/24/09 Wash ita State Bank 3.350/0 99,000 99,000 93,506 (5,494) _n _ _____ . n.._ n._. .._ . .-..-. -..- .. 12/30/05 12/30/09 Meridian Bank 4_80% 99,000 99,000 96,654 (2.346) -.----....----- -- __ __'~.O' ____. __._.. n 12/28/05 12/28/[0 Nat'l Bank of New York City 4.90% 97,000 97,000 94,375 (2.625) --.- m -- -- __..u.. ---- ..-- _. .-. --- __. n_ .--....-- 2,159,839 2,160,000 2,106,890 (52,949) .-..- -- . u.__. --. -_..~- - ~-" . rr__ _.u_ --.--. , -- ---- ..---------- MONEY MARKET FUNDS --- -....-- __. ro_~__ --__".0 . 05/31/06 Wells Fargo Government 4_86% 8,009,115 8,009,115 8,009,] 15 ___n~' _m .-... -- I 8,009,115 8,009,115 8,009,115 0 q-3 City of Cupertino May 31,2006 ACTIVITY DATE PURCHASE MATURITY AGENCY NOTES DESCRIPTION COUPON ADJUSTED MATURITY RATE COST VALUE MARKET UNREALIZEI: V AWE PROFIT/LOSS HC _c _~~~ f- 07/21/03 Oml/06 08/07/03 08/07/06 n.. _n___.....___n_ en n_____ 08/11/03 08/11106 03/08/04 12/26/06 _n . .__~._~,~_ 07/09/93 04/15/07 04/30/04 04/30/07 12/22/03 06/22/07 04/18/05 10/18/07 04/14/04 12/03/07 ]2/13/05 12/28/07 04/23/04 0] /23/08 02/25104 02/25/08 n___._ n ._ 11/21/05 06/23/08 01/12/04 08/06/08 .__...,-,---" 04/29/04 10/29/08 _c_____ __ 12/15/03 l 12/15/08 FHLMC callable, step coupon l ------...-. , ~-~- 12/30/03 12/30/08 FHLMC callable, step coupon 03/16/04 03/16/09 FNMA callable _n_.. . .. __T 03/30/04 03/30/09 FHLB callable, step coupon __~______ ____ c_c__ccc_ 04/30/04 04/30/09 FHLB callab]e,~~ c~upon 12/28/05 12/28/09 FHLB callable ---------- 11130/05 04/07/10 FFeB callab]e -.--.. ---..- 11121105 07/12/10 FHLMC _._~__, ..._ _.__."." n~ 12/15/05 12/15/10 FHLMC callable .u_...., ,.._. 04/21/06 04/07/11 FNMA callable FHLB callable FHLB callable. step coupon FHLB callable FHLMC callable FHLMC series 1231 FHLMC callable FNMA FHLB adjustable rate FNMA callable FFCB .__ _ __ c__cc___c_c_nc__ FHLB callable FHLMC FFCB . ______u__ FHLB callable, step coupon _ ~ --..- FHLB callable, step coupon 2.20% 500,000 - 2.75% 500,000 2.50% 2.400,000 2.30% 796,973 6.42% 31,957 ~~~ u__ 3.30% 499,992 ---- - -- - . ~,.- ,.-. - .". ----.. 3.30% I ,000,000 4.67% 1,500,000 ____ ~_~..~... __" - .n 2.50% 994,569 4.75% 1,000,758 3.15% 1,493,310 _ _ .1_____+ 3.13%, 1,000,000 ....".----..-1. 5.79% ],021,910 3.50% 999,]03 . ---.-----. ~ 3_50% __n____~_O,OO~_e-_ 4.000/0 1,000,000 "..__.. __n______ 4.75% 1,000,000 I .......--.--- 4.01% 1,600,000 ________.._ ._n 4.00% 600,000 ~:~~~ 1,;~~:~~H ",. ...--_. 3.70% 954,798 _0. n.__u 4.13% 977,801 .. ~-- 5.04% 1,000,000 . ~.. 5.75% 748,020 500,000 497,970 _ ~_. _n 'Cn ...__.____ 500.000 497,815 2,400.000 2,387,256 ~~ .. ----- ---- -.- 800,000 786,344 -- .---.----- -- 30,728 30,662 c. ___.__'-- 500,000 490,810 1,000,000 979.060 1,500,000 1,498.515 1,000,000 959,380 ....n...____.___ 1,000.000 991 ,250 __ ._h... cO _ 1,500,000 1,448,910 ____u.... ,n ~___ 1,000,000 963,890 _.___.._.._n_ 1,000,000 1.009,020 i,~-~~:~~~--- -- ~~~~~~~ t 1,000,000 i -----98-j-,690 1 1,000,000 ! 985,950-1- 1,600,000 1.545,008 600,000 592,500 1,000,000 990,630 915,000 902,135 .-..--- 1,000,000 942,500 __n _ ] ,000,000 954.690 ] ,000,000 981,600 _.__" 'T 750,000 745,080 - m_'_ _______ 23,834,190 23,895,728 23,435,045 US GOVERNMENT SECURITIES -,_....- 03/31/05 08/31/06 US Treasury Note _ _c .. ____ Total Managed Portfolio 50,175,080 - -- . ..- -.---- - ------..------- ------- -" Average Yield 4,10% i Average Len~tll-!-~~~~!~rit~iill yeais} ____ ------1- __ 1-09 h -- . _ ~-~:~~~_ _~ ____ ____ __-----: ----- _ -=- ~... _J'.,~,,&AGENCY~~TFOL..O_-I---I ~=:_=:.- -~:~- CE~;~'~T ~~~~;"E<<<;"" ".t1(K..", T~t) 2~,,,i- 43~ 17 43~ 17 -- 4,j~j Total Trust & Agency Portfolio 43,217 43,217 cc ..____.__.__ 2.38% 982.812 982,812 -- -. BOND RESERVE PORTFOLIO - .. Bond Reserve Acct #078793 Ambac Assurance Security Bond c mc_. _ __. huh__ _nC___ ___ Bond Payment Acct #07879 Wells Fargo Treasury Plus Money 4.03% ____.._. .....___._u .__.___ c Total Bond Reserve Portfolio I 12,991 12,991 1,000,000 1,000,000 993,630 993,630 50,253,967 49,733,804 43,217 -----. -- .! i - _n -. 1 12,991 12,991 I 12,991 12,991 (2,030) (2,185) (12,744) (10,629) (1,295) (9,182) (20,940) C'd'_"__~ (1,485) -- ..-...- , (35,189) (9,508) (44,400) (36,110) ( 12,890) ( 19,723) (9,000) ----- (16,310) ---'- (14,050) (54,992) (7.500) (9,370) (] 2.865) (12.298) (23 .111 ) (18,400) (2,940) (399,145) 10,818 10,818 (44J,276) o o - ~ o o 9-L( 5.00% 4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 5105 6105 Agency Notes 47% I Rate of Return Comparison I 7105 10105 11105 12105 1106 8105 9105 Investments by Type Managed Portfolio. May 2006 US Treasuries 2% --LAlF ___ Cupertino 2106 CD's 4% Money Market 16% 3106 4106 5106 Cash 2% 1-S- COMPLIANCE WITH INVESTMENT POLICY City of Cupertino May 31,2006 ; , Category Standard Treasury Issues US Agencies Medium Term Corporate Bonds/Notes LAIF Money Market Funds Maximum Maturities Per Issuer Max Bankers Acceptances Commercial Paper Negotiable Certificates of Deposit Repurchase Agreements Reverse Repurchase agreements No limit No limit ..........- ,30% with A rating , $40 million ,20% . Up to 5 years 10% (except LAIF) 180 days & 40% 270 days & 25% 30% 365 days Prohibited Complies Complies : Complies Complies . Complies Complies Complies Complies Complies . Complies . Complies Complies Comment 1--&