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2020-02-18 CC Agenda Packet - ITEM #D14 - PRESENTATION - Investment PortfolioCity of EI Segundo Investment Portfolio Report December, 2019 Presented By: City Treasurer's Office February 18, 2020 Security Type Reserve Portfolio Government Municipal Bonds Corp. Bonds UPFA's CD's Union Bank Trust Rre we no re. LAI F Immediate LAIF Sr. Housing LAI F - LAUUA LAI F Subtotal Total Irwested Trust Acct. Cash Chase Bank - Cash Total Portfolio December Portfolio summary C • 71 1958405585.17 55 388, 771.50 1055195248.62 3, 231, 005.50 23,90Z 267.61 62, 881, 878.40 25670,175.54 95017,230.31 1,759,538.25 62,147.46 10, 838, 916.02 76,398, 969.96 811.52 7, 51 5, 938.35 83,907, 719.83 25670,175.54 95017,230.31 1,759,538.25 62,147.46 10, 838, 916.02 76,969, 069.'18 811.52 7,51 5, 938.35 84,485, 819.05 1.00 2.040A 1.00 Market Market value WAM % field % of Total 195 94 280.00 2.85 2.080A 23.609A 5,418, 594.05 3.62 2.330A 6.41% 10, 667, 475.69 2.23 2.470A 12.630A 3, 257, 772.50 1.07 2.1 90A 3.86° 24,173, 855.38 2.66 2. 2 BOA 28.61% 63,459, 977.62 2.65 2.250A 75.11% 25670,175.54 95017,230.31 1,759,538.25 62,147.46 10, 838, 916.02 76,969, 069.'18 811.52 7,51 5, 938.35 84,485, 819.05 1.00 2.040A 1.00 2.040A 1.00 2.04° 1.00 2.04° 2.18 1.00 1.00 20°/6 0.00° 0.45° 2 20°/6 3.16° 10.67% 2.0BOA 0.07° 12.830A 91.10°/0 0.00° 8.90° 100.00% Interest Income * Note: the monthly fluctuation is because interest on most bonds is paid semi-annually, with LAIF paid quarterly, and some investments paid monthly. Interest Month Invested Cost Received % Yield October 78,648,139 159,988.29 2.44% November 76,397,643 107,458.60 1.69% December 76,390,970 206,989.38 3.25% Avg/Total * 77,145,584 474,436.27 2.46% * Note: the monthly fluctuation is because interest on most bonds is paid semi-annually, with LAIF paid quarterly, and some investments paid monthly. Compliance Partial List of Allowable Investment Instruments for Local Agencies Obligations Negotiable Certificates of Deposit Medium Term Notes Collateralized Bank Deposits Local Agency In,vestment Fund (LAIF) SUPRA Nationals Commercial Paper Joint Powers Authority Pool 5 years 30% None Ma)dmum Y City of EI In Investment Type 12.63% Ma)amum Specified to of Minimum Quality Segundo Compliance Y Maturity Requirements Portfolio Investments YIN Local Agency 5 years 10% None 6.41% Y Bonds U. S Treasury 5 years None None 0.00% Y Obligations US Agency 5 years None None 23.60% Y Obligations Negotiable Certificates of Deposit Medium Term Notes Collateralized Bank Deposits Local Agency In,vestment Fund (LAIF) SUPRA Nationals Commercial Paper Joint Powers Authority Pool 5 years 30% None 28.61% Y 5 years 15% "A" Rating 12.63% Y 5 years None None 0.00% Y NIA None None 12.83% Y 5 years 10% "A A A" Rating 3.86% Y 5 years 10% "A -1/A" Rating 0.00% Y NIA 30% Multiple 3.16% Y Additional Compliance Investment Type: Medium Term Notes, Su ranationals, CD's & Commercial Paper - As of: December 31, 2019 IADB-INTER AMERICAN DEV 3% 3% Ma)amum Minimum Y Y City of EI In TOTAL Investment Type Issuer % of Quality S&P Segundo Compliance MARKET VALUE BANK "A -11A" Rating Portfolio Requirements Rating Investments YIN Supranational Obl. Medium Term Notes TOTAL 15% "A" Rating Y 12.63% Y 10,667,476 Medium Term Notes AMAZON.COM 3% "A" Rating AA- 0.60% Y 509,950 Medium Term Notes AMERICAN HONDA FINANCE 3% "A" Rating A 0.59% Y 500,260 Medium Term Notes APPLE INC 3% "A" Rating AA+ 0.60% Y 508,530 Medium Term Notes BANK OF AMERICA 3% "A" Rating A- 0.59% Y 500,470 Medium Term Notes BANK OF NEW YORK MELLON 3% "A" Rating A 0.60% Y 503,460 Medium Term Notes CATERPILLAR FINANCIAL SVCS 3% "A" Ratinq A 0.60% Y 506,465 Medium Term Notes CISCO SYSTEMS 3% "A" Ratinq AA- 1.19% Y 1,002,960 Medium Term Notes COCA COLA CO. 3% "A" Rating A+ 0.59% Y 496,575 Medium Term Notes ESTEE LAUDER CO INC 3% "A" Rating A+ 0.59% Y 501,340 Medium Term Notes IBM CORPORATION 3% "A" Rating A 0.51% Y 432,861 Medium Term Notes JOHNS HOPKINS HEALTH SYS 3% "A" Rating AA- 0.17% Y 147,559 Medium Term Notes NEW YORK LIFE GLOBAL 3% "A" Ratinq AA+ 0.60% Y 504,485 Medium Term Notes ORACLE CORPORATION 3% "A" Ratinq A+ 1.19% Y 1,009,400 Medium Term Notes PACCAR FINANCIAL CORP 3% "A" Rating A+ 0.60% Y 508,755 Medium Term Notes TOYOTA MOTOR CREDIT CORP 3% "A" Rating AA- 0.61% Y 511,795 Medium Term Notes UNITED PARCEL SERVICE 3% "A" Rating A 0.60% Y 502,860 Medium Term Notes WAL-MART STORES INC 3% "A" Rating AA 0.60% Y 508,750 Medium Term Notes WALT DISNEY CO 3% "A" Rating A 0.59% Y 499,945 Medium Term Notes WELLS FARGO & COMPANY 3% "A" Rating A- 1.20% Y 1,011,055 Supranational Obl. TOTAL 10% "AAA" Rating 3.86% Y 3,257,773 Supranational Obl. IADB-INTER AMERICAN DEV 3% 3% "A" Rating AAA "A" Rating AA 0.61% 0.61% Y Y 511,865 513,420 Commercial Paper TOTAL 10% 5% "AAA" Rating AAA 3.2fi% Y Commercial Paper BANK "A -11A" Rating A-1+ 0.00% Y - 2,755,993 Supranational Obl. IBRD -INTERNATIONAL BANK 28.61% Y 24,173,855 Joint Powers Auth. Pool TOTAL 30% 5% "AAA" Rating AAA 0.59% Y JPAP CAMP FOR RECON & DEV 3.16% Y 2,670,176 501,780 Municipal Bonds TOT41 10% "A" Rating 6.41% Y 5,418,594 Municipal Bonds CONNECIICUT STATE 3% "A" Rating A 0.60% Y 507,255 Municipal Bonds GOODRICH MICH 3% "A" Rating AA 0.36% Y 306,480 Municipal Bonds HOUSTON, TX 3% "A" Rating AA 1.18% Y 994,850 Municipal Bonds LA QUINTA CA REDEV 3% "A" Ratinq AA- 1.21% Y 1,025,610 Municipal Bonds LAS VEGAS, NEV 3% "A" Rating AA 0.67% Y 563,034 Municipal Bonds NEW YORK. NY 3% "A" Ratina AA 1.18% Y 996.080 Municipal Bonds Municipal Bonds OREGON ST DEPT ADMIN TULSA CNTY, OKLA IVDP 3% 3% "A" Rating AAA "A" Rating AA 0.61% 0.61% Y Y 511,865 513,420 Commercial Paper TOTAL 10% "A -11A" Rating 0.00% Y - Commercial Paper 3% "A -11A" Rating A-1+ 0.00% Y - CD'S TOTAL 30% 28.61% Y 24,173,855 Joint Powers Auth. Pool TOTAL 30% 3.16% Y 2,670,176 JPAP CAMP 30% 3.16% Y 2,670,176 US Treasury Yield Curve US Treasury Bonds Yield Curve as of 12/31/19 (+2113) 3.00 2.80 2.60 2.40 CH 2.20 m 2.00 1 C'1 t.zszs ♦� * 1.83 1.75 of 1.80 1.63 1.62 1.59 1.59 1.60 592 1.60 1.48 1.56 1.58 1.56 55 1. 1.40 1.10 /1,.44 1.42 1.20 1.00 IMO 3 Mo 6 Mo 1 Yr 2 Yr 3 Yr X9/30/2019 —0— 12/31/2019 2/13/2020 1.69 1 1.55 1.43 5 Yr 0 m 2^50 2.00 1.50 1.00 0.50 New Investment Yields vs. Treasury Yield Curve 1.85 • 1.75 63 1.62 1.59 9 t 1.58 0.00 1 2 Duration 3 2.010 1.95 1.93 •+ i 1.80 • 1.85 1.75 i � 1.75 86 1.69 �•0 -- 1.75 11 t 1 SF = 1 SS 4 5 112/31/2019 --0--9/30/2019 • YTM @ Cost 25,000,000 20,000, 000 15,000, 000 8 10,00c),000 5,QOg00O 0 Cash Flow Analysis Rolling 13 Month Cash Flow Analysis Total Receipts (Total Disbursements Dec -18 Jan -19 Feb -19 Mar -19 Apr -19 May -19 Jun -19 Jul -19 Aug -19 Sep -19 Oct -19 Nov -19 Dec -15 10,000,000 8,(100,000 6,000,000 4,000,000 2,000,000 D ( 2,000,000) (4,D00,000) ( 6,000,000) (8,000,000) (10,00D,000) (12,000,000) Net Change in Cash Rolling 13 Month Net Change in Cash +FY -2018/2019 . I -FY-2019/2020 DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Current Activity • From October 1— December 31— Purchased 7 CD's for $1,715,000, 1 Agency Bond for $500,000, and 2 Corporate Bonds for $1,000,000. We had 2 Agency Bonds for $1,250,000, 2 Corporate Bonds for $1,000,000, one SUPRA for $500,000, and 4 CD's for $980,000 mature. We had 1 Corporate Bond for $500,000, and 1 Agency Bond for $500,000 called. • Since December 31St, we have not made any purchases. We have transferred $10,500,000 to LAIF during this time. We had 1 Agency Bond for $1,000,000 called during this time. • Net Change in rate on invested vs. matured Securities for FY2020 is + 0.103%. (Purchases yield of 1.878% vs. Matured yield of 1.775%). • Net Change in investments for FY2020 is ($1,515,000). • We are actively managing bank balances, LAIF, CAMP and short term investments to maximize interest income. 2.3 . 2.1 +� L 1.9 1.8 1.7 1.6 2019 Economic Indicators Average CDP Projections 2020 December projection 2021 2022 Longer run I�— September projection Unemployment A. 3. 3. 3. 3. 3. 0111803/18 05/18 07118 0911311!18 0111903f1 9 0511 9 07119 09/191111 Month .5 .0 .5 .0 1.5 1.0 0.5 0.0 Jan Feb Mar Inflation Fates by Month X2018#2019 Apr May Jun Jul Aug Sep Oct Nov Dec 3.00 2.50 2.00 1.50 1.00 0.50 WC Average Fed Funds Rate Projections Current Rate 2019 2020 December projection 2021 2022 Langer run September projection $9000000000 $8000000000 $7000000000 $6000000000 $50,000,000 $40,000,000 $3000000000 $2000000000 $10,000,000 Portfolio Investments Jan -1 Jan -14 Jan -15 Jan -16 Jan -17 Jan -1 Jan -19 Jan -0 Invested Amount —Cash —Total Union Bank Trust Account Balances Amount # of Investments January 31, 2013 $ 18, 518, 693 42 December 31, 2019 $ 63,460,789 156 Change in investments $ 44, 942, 097 114 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% US Treasury `field Curare - over the years I m o 3mo f m o 1 yr- 2 yr 3 yr 5 yr Jan -1 Jan -15 Jan -17 X19 -Dec --41---LAIF rate -2013 to 2019 Interest Income Interest I ncome Avg balance Yield FY13 $ 2191941 $ 32, 585, 615 0.67% FY14 $ 2821692 $ 44, 525, 908 0.63% FY15 $ 3311173 $ 53, 683, 363 0.62% FY16 $ 5011319 $ 60, 541,162 0.83% FY17 $ 7631218 $ 73, 749, 036 1.03% FY18 $ 15195y281 $ 77, 697, 875 1.54% FY19 $ 1, 787, 606 $ 80, 378, 666 2.22% Securities � Maturity Par Value ofInvestments by Maturity $2,000,000.00 _ $0.00 ■ 1/81/2018 ■ 12/31/2019 Portfolio Asset Allocation then and now INVESTMENTS BY SECURITY TYPE 1/31/13 Cash GoVt Immediate, Obligations, $6,071,696.22 $10,913,404 CD's, $7,605,28 $5,957,844.88 LAI F Immediate, $12,533,580.07 JF. - Senior Housing, $207,404.56 INVESTMENTS BY SECURITY TYPE 12/31/19 Corporate Bonds, Cash Immediate, $10,667,476_ $7,516,750 SUPRA's, 3,257,77? Municipal Bonds, 5,418,594 GoVt Obligatio 19,942,280 enior Housing, ,759,538 L47 P - PAP, 570,176 Treasury Accomplishments • Modernized Banking Structure — Spring 2013 • Developed Long-term Cash Flow Forecast • Implemented Internal Controls — EFT Transactions • Created Quarterly Cash Management & Investment Report — April 2014 -Present • Implemented New Portfolio Management Software • Created Daily Liquidity Target • Defined Investment Process • Expanded Investment Into New Asset Classes — SUPRA, Municipal, CAM P • Modernized Investment Policy —April 2016, Updated June 2018 • Certification of Investment Policy —April 2016 • Education of Treasury Team — GIOA, CMTA, CDIAC, CSMFO, CFIP, CTP