03. Treasurer's Report . ADMINISTRATIVE SERVICES DEPARTMENT
CITY HALL
10300 TORRE AVENUE • CUPERl'INO, CA 95014-3255
C O P E RT I N O (40s) 777-3220 • FAX (408) 777-3109 '
SCfPVIMARY
. Agenda item No. ~ Meeting Date: October 7, 2008
SUBJECT AND ISSUE
Accept the Treasurer's Investment Report for August 2008.
BACKGROUND
The. market value and cost of the City's portfolio totaled $63.9 million at August 31, 2008.
The portfolio's yield rose to 2.72% in August, compared to 2.65°/a the previous month,
however it is down from 4.89% a year ago. The Local Agency Investment Fund (LAIF)
yielded 2.78% for August, down from 2.79% the previous month and 5.25% a year ago.
One million dollars in Treasury maturities, $3.2 million in money market and LAIF
monies, plus $0.8 million in net cash inflows were used to buy $4 million of Treasuries and
$1 million in Federal Farm Credit notes. Net inflows resulted from Mary Avenue Bicycle
Footbridge grant reimbursements.
Throughout this financial turmoil, staff has been following the investment policy's priority
of preserving capital over pursuing yield. Most of the fixed investment portfolio is in US
Treasuries, Federal Home Loan Bank and Federal Farrn Credit Bank bonds, with no direct
positions in Fannie Mae or Freddie Mac.
The liquid component of the portfolio is in the Wells Fargo Government Securities Money
Market Fund and LAIF. The money market fund consists of Federal Agencies, including
bonds from Fannie. and Freddie and bank repurchase agreements backed by those bonds.
The Treasury's takeover of Fannie and Freddie provides full government backing of those
bonds. The Fund does not invest in Lehman Brothers, AIG, Washington Mutual, and:-.
Wachovia.
LAIF invests in Federal Agencies, Treasuries, certificates of deposit, commercial paper,
SBA loans, mortgages, and corporate bonds. it has investments in Fannie and Freddie
mortgages/bonds and Wachovia certificates 'of deposit, but no investments in Lehman,
AiG, and Washington Mutual. Citigraup, .with FDIC backing, is acquiring Wachovia's
deposits, assets, and debt. Liquid holdings were split among LAIF and the money market
fund because of the State budget impasse but, once the budget was passed in September,
staff moved much of the liquid balance to LAIF to increase yield (0.56%) commensurate
with reasonable risk.
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Treasurer's Investment Report
October 7, 2008
Page 2 of 2
The City does have 2% or $1.5 million of its portfolio in bank CDs. Although none of these
banks has failed or come under FDIC control, a few of these banks are under severe
financial pressure, however all of the deposits remain under FDIC insurance. $1.1 million
of the CDs will mature by this November and there will be no further investments in CDs.
The City's checking, sweep and security custody accounts are with Wells Fargo, which has
remained on relatively solid footing through this credit crisis.
Staff continues to monitor the money markets and will continue to invest in accordance
with prudence and policy. Investments are in full compliance with City investment policy
and/or State law, and are tiered to provide sufficient cash flows to pay City obligations over
the next six months.
RECOMMENDATION
Accept the Treasurer's Investment Report for August 2008.
Submitted by: Approved for submission:
a~~
David Woo David W. Knapp
Deputy Treasurer ~ City Manager
Reviewed by:
f ~
Carol A. Atwood
City Treasurer
Attachments:
1. Investment Portfolio
2. Rate of Return Comparison and investments by Type
3. LAIF Performance and Portfolio Composition
4. Compliance with Investment Policy
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City of Cupertino
Investment Portfolio
August 3l, 2008
To Maruri
SECURITQS MATURED _
12/07/07 08/15/08 US Treasury Note 4.13% 3.35% 1,000,000 1,000,(!00 1,000,000 0
11/23/07 07/16/08 Pinnacle Bank, Gilroy CA 4.88% 4.88% ~ 95,000 95,000 95,000 0
SECURITIES PURCHASED _
08/18/08 08/LS/l0 FFCB callable 3.57% 3,57% 1,000,000 1,000,000 1,002,500 2,500
08/27/08 06/30/09 US Treasury Note 4.88% 2,09% 2,045,647 2,000,000 2,044,060 (1,587)
08/28/08 07/31/09 US Treasury Note 4.63% 2.13% 2,044,909 2,000,000 2,043,440 (1,469}
07/17/08 10/16/08 SpiritBank, Bristow OK 4.88% 4.88% 98,032 98,032 98,032 0
CITY PORTFOLIO
CASH _
08!31/08 Wells Fargo -Workers Comp Checking 3,804 3,804 _ 3,804__ ~ _ 0_
08/31/08 Wells Fargo -Regular Checking 1,308,097 1,308,097 1,308,097 ~ JO
08/31/08 Wells Fargo -Investment Sweep 0.38% 0.38% 84,008 84,008 84,008 W _ 0
1,395,909 1,395,909 1,395,409 0
LAIF
08/31/08 LAIF -State Pool 2.78% 2.78% 11,371,440 11,371,440 11,371,440 0
CERTIFICATES OF DEPOSIT
0326/04 09/26/08 South Coast Community Bank 3.20% 3.20% 98,000 98,000 98,027 27
07/17/08 10/16/08 SpiritBank, Bristow OK 4.88% 4.88% 98,032 98,032 98,032 0
11/23/07 11/20/08 Arizona Bank&Trust,,Chandler AZ 4.88% 4.88% 10,108 10,108 10,108 0
11/23/07 11/20/08 Banktrust, Santa Rosa Beach FL 4.88% 4.88% 94,000 44,000 94,600 0
11/23/07 1(/20/08 Colonial Bank NA, Montgomery AL 4.88% 4.88% 94,000 94,000 94,000 0
11/23/07.. 11/20/08 Covenant Bank, ClarksdaleMS 4.88% 4.88% 94,000 _ 94,000 94,000 0
11/23/07 11/20/08 Four Oaks Bank & Trust, Foat Oaks NC 4.88% 4.88% 94,000 94,000 94,000 0
11/23/07 11/20/08 Johnson Bank, Racine Wl 4.88% 4.88% 94,000 94,000 94,000 ~ 4
1183/07 11/20/08 Midwest Bank Western III., Monmouth IL 4.88% 4.88% 94,006 94,000 94,000 0
11/23/07 11/20/08 Solutions Bank, Medicine Lodge KS 4.88% 4.88% 48,892 48,892 48,892 0
11/23/07 11/20/08 The Brand Banking Co, Lawrenceville GA 4.88% 4.88% . 94,000 94,000 94,000 0
11/23/07 11!20/08 Vision Bank, Panama City FL .4.88% 4.88% 94,000 94,000 94,000 0
Yadkin Valley Bank & Trust Co, Elkin
l 1/23/07 11/20/08 NC (formerly Cardinal State Bank, 4.88% 4.88% 94,000 94,000 94,000 0
Durham NC)
03117/04- 03/17/09 Peoples Siate Bank 3.40% 3.40% 99,000 94,000 98,952 (48)
03/24/04 03/24/09 Washita State Bank, Bums Flat OK 3.35% 3.35% 99,0(10 99,000 98,929 (7I)
12/30/05 12/30/09 Meridian Bank NA, Wickenburg AZ 4.50% 4,80% 99,000 99,000 100,512 1,512
12/28/05 12/28/10 Nat'l Bank of New York City, NY 4.90% 4.90% 97,000 97,000 96,587 (413)
1,495,632 1,495,032, 1,496,039 1,007
MONEY MARKET FUNDS
08/31/08 Wells Fargo Government 2.10% 2.10% 10,267,724 10,267,724 10,267,724 0
08/31/08 WeIlsFargo 160%Treasury 1.33% 1,33% 100,000 100,000 100,(100 ~ 0
10,367,724 10,367,724 10,367,724 0
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City of Cupertino
Investment Portfolio
August 3I, 2008
To Mature
AGENCY NOTES
01/30/08 09/12/08 FFCB 4.50% 2.70% 1,000,579 1,000,000 1,000,630 51
41/28/08 l0/O1/08 FFCB discount note 2.68% 2.77% 997,692 1,000,000 998,000 308
07/30/08 10/23/08 FHLB discount note ~ 2.40% 2.41% 1,992,933 2,000,000 1,993,000 b7
07/30/08 12/19/08 FHLB discount note 2,50% 2.52% 992,362 1,OOO,Q00 992,100 (262)
06/26/08 06/26/09 FI-II.B callable 3.13% 3.13% 1,000,000 1,000,Q00 1,000,630 630
01/22/08 08/03/09 FFCB 5.25% 2.55% 1,024,229 1,000,000 1,020,000 {4,229)
06/30/08 12/30/09 FHLB callable 3.25% 3.25% !,000,000 1,000,000 1,000,940 940
05/28/08 02/26/10 FHLB callable 3.00% 3.00% 1,000,000 1,000,000 998,130 (1,870)
06/25/08 05/07/10 FFCB 4.75% 3.38% 1,022,126 1,000,000 1,028,130 6,004
0520/08 05!20/10 FFCB callable 3.34% 334% 1,000,000 ,1,000,000 I,000,000 0
05/07/08 06/11/10 FHLB 3.00% 2.98% 1,000,356 1,000,000 999,060 (1,296)
06/18/OS 06/18/10 FHI.B callable 3.35% 3.35% 1,000,000 1,000,000 998,130 (1,870)
07/28/08 07/28/LO FFCB callable 3.30% 3.30% 1,000,000 1,000,00D 2,000,940 940
08/18/08 08/18/10 FFCB callable 3.57% 3.57% 1,000,000 1,000,000 1,002,500 2,500
0527/08 08/27/]0 FHI.B callable 3.3D% 3.30% 1,000,000 1,000,000 1,000,630 630
11/19/07 11/19/10 FFCB callable 4.63% 4.63% 1,000,(100 1,000,000 1,003,440 .3,440
05/14/08 i I/19/10 FHI.B callable 3.15% 3.15% 1,000,000 1,000,000 996,880 (3,120}
05!28/08 02/28/11 FHI.B callable 3.40% 3.40% 1,000,000 1,000,000 998,440 (1,560}
19, 030,277 19,000,000 19,031,580 1,303
US TREASURY SECURITIES
/2/10/07 08/31/08 US Treasury Note 4.88% 3.34% 2,000,000 2,000,000 2,000,000 0
12/07/07 09/30/08 US Treasury Note 4.63% 3.27% 1,001,070 1,000,000 1,002,270 1,200
12/1D/07 09/30/08 US Treasury Note 4.63% 3.29% 1,00],065 1,000,000 1,002,270 1,2D5
12!07/07 10/31/08 US Treasury Note 4.88% 3.27% 1,002,578 1,000,000 1,005,080 2,502
12/10/07 10/31/08 US Treasury Note 4.88% 3.25% 1,002,631 1,000,000 1,005 U80 2,449
12/07/07 I 1/15/DB US Treasury Note 4.38% 3.31% 1,002,140 1,000,000 1,005,230 3,090
12/10/D7 11/15/08 US Treasury Note 4.38% 3.27% 1,002,229 1,000,000 1,005,230 3,001
12/10/07 12/31/08 US Treasury Note 4.75% 3.16% 2,O1D,147 2,000,000 2,019,060 8,913
12/20/07 01/31/09 US Treasury Note 4.88% 3.06% 1,007,383 1,000,000 1,011,800 4,417 _
02/19/D8 02/15/09 US Treasury Note 3.00% 1.77% 1,005,584 1,000,000 1,Q04,530 (1,054)
03/10/08 03/31/09 US Treasury Note 4.50% 1.44% 1,0(7,592 1,000,000 1,014,220 (3,372)
03/12/08 04/30/09 US Treasury Note 4.50% I.Sf% 1,019,546 1,000,000 1,015,780 (3,766)
07/17/08 05/15/09 US Treasury Note 3.88% 2,06% 1,012,632 1,000,000 1,012,270 (362)
07/24/08 OS/15/09 US Treasury Note 3.88% 2.30% I,OL0,890 1,000,(100 1,012,270 1,380
08!27108 06/30!09 US Treasury Note 4.88% 2.09% 2,045,647 2,000,000 2,444,060 (1,58'
08/28/08 07/31/09 US Treasury Note 4.63% 2.13% 2,044,909 2,000,004 2,043,440 (1,469)
20,186,042 20,000,000 20,202,590 16,548
Total Maaa ed Portfolio 63 846 425 63 630 ]OS 63 865 282 l8 857
Average Yield 2,7Z°~
Avers a Len tb to Maturity rn ears 0,54
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City of Cupertino
Investment Portfolio
August 31, 2008
o tvtaturi
TRUST PORTFOLIO (KESTER TRUST)
CASH
08/31/08 Wells institutional Money Mkt Acct 2.18% 2:1$% 47,860 47,860 47,860 0
Total Trust Portfolio 47,860 47,860 47 60 0
BOIYb RESERVE PORTFOLIO
Bond Reserve Acct Ambac Assurance Security Bond 1 1 1
Bond Payment Acct Wells Treasury Plus Money Mkt 1.39% 1.34% ~ 936 938 938 0
Total Bond Reserve Portfolio 938 938 938 0
3-5
Investments by Type
Marra ed Portfolio
. c,AiF
ts~
US Treasurics ,
32°A Cuh '
2%
Money
Market
16%
CD's
2°/.
Agency Notes
30%
Rate of Return Comparison
5.50%
5.00%
4.50°~
4.00% -+-IAIF
-~--Cupertino
3.50%
3.00%
2.50%
3-6
Bill Lockyer, State Treasurer ~ .
Inside the State Treasurer's Office
- ~ Local Agency Investment Fund (LAIF}
PMIA Performance Report LAIF Performance Report
F Yn ~ = ~ ~i4.ueira~' " Quarter ending 6/30/2008
D"a e~ , , ~te~d D,a e• e.;d , art, s ~ APPortionment Rate: 3.11
9/4/2008 2.78 2.78 226 Earnings Ratio: 0.00008483669448820
9/5/2008 2.78 2.78 226 Fair Value Factor: 0.999950219
9/6/2008 2.78 2.78 226 '
9/7/2008 2.78 2.78 226
9/8/2008 2.78 2.78 224
9/9/2008 2.78 2.78 224
9/10/2008 2.78 2.78 221
9/11/2008 2.7s 2.78 221 PMIA Average Monthly Effective Yields
9/12/2008 2.77 2.78 219
9/13/2008 2.77 2.7$ 219 AUg 2008 2.778%
9/14/2008 2.77 2.78 219 JUiy 2008 2.787%
9/1512008 2.78 2.78 211 June 2008 2.894%
9/16/2008 2.77 2.78 210 .
9/17/2008 2.76 2.78 208
Pooled Money Investment Account
Portfolio Composition
$64.7BIIlion
48131/08
Reverses
- -0.76% Treasuries
Loans 5.28% Mortgages
1.70%
19.67% -
Corporate Bands , Agencies
0.64% 27.21
Commercial Paper
13.92%
Time Deposits CDs/BNs
14.17% 18.17%
- 3-7
COMPLL~IVCE WITH INVESTMENT POLICY
City of Cupertino
Au ust 31, 2008 .
Cate o Standard Comment
Treasury Issues No limit Complies
US Agencies No limit Complies
Medium Term Corporate Bonds 30% with A rating Complies
LAIF $40 million Complies
Money Market Funds _ _ 20% _ Complies
Maximum Maturities Up to 5 yeaxs _ Co_mplies
Per Issuer Max 10% (except for Treasuries and US Agencies) Complies
Bankers Acceptances 180 days & 40% Complies
Commercial Paper 270 days & 25% Complies
Negotiable Certificates of Deposit 30% ~ _ Complies _
Repurchase Agreements 365 days ~ Complies
Reverse Repurchase agreements Prohibited Complies
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