HomeMy WebLinkAboutFY 2009 Annual Investment ReportCITY OF EULESS
ANNUAL INVESTMENT
REP I RT
FISCAL YEAR 2009
201 N. ECTOR DR
EULESS, TEXAS 76039
PHONE (817) 685-1626
iiiiribL.“817) 685-1459
eulesstx.gov
THE
1
CITY OF
INVESTMENT COMMITTEE MEETING
01/25/10
*Annual Review, FY 09
Introduction
I. Portfolio Summary
II. Performance Summary
III. Interest Income Summary
IV. Collateral Review
V. Broker Selection Process
VI. Summary
*Review Investment Policy
*Appendices
Appendix A - Investment Portfolio by Type of Asset
Appendix B - Investment Portfolio by Fund
Appendix C - Investment Purchases
Appendix D - Investment Maturities
Appendix E - Investment Maturities by Fund at September 30, 2009
*General Discussion and Questions
THE
C 1 T Y OF
EU
The purpose of this report is to provide a means for Council members and staff to
regularly review and monitor the City's investment performance. Attached is the
City's pooled funds portfolio for the fourth quarter of Fiscal Year 2008-09 and
information for all funds for the same period.
The City's investment policy provides the general framework for the investment of
City funds. The policy emphasizes the City's objective of safety, liquidity, and yield, in
that order. The investment policy complies with the Public Funds Investment Act in
all aspects including reporting.
The Fourth Quarter Investment Report for FY 2009 is presented in a format that has
been outlined in the investment policy. This report is for all funds and shows the
market value at 6/30/09, changes in market value, the market value at 9/30/09, and
the book value, market value, and maturity date for each investment. As required,
the report indicates compliance with the adopted investment strategies, and is signed
by each investment officer of the City as designated by the Investment policy.
INTRODUCTION
This report is written and submitted in accordance with Chapter 2256 of the Texas Government Code
entitled the "Public Funds Investment Act", which states that "at least once each year, the investment
officer of a state agency or political subdivision shall prepare a written report concerning the agency's or
subdivision's local funds investment transactions for the preceding year and describing in detail the
investment position of the agency or subdivision as of the date of the report.
The City's investment policy designates the Investment Officers as the responsible managers for the
City's investment program. The daily investment procedures are monitored by the City's Finance
department and reviewed by the investment officers. This report has been signed by each investment
officer as required by the Public Funds Investment Act and the City's investment policy.
In compliance with the City's investment policy, the Finance department fulfills four main objectives:
compliance, safety, liquidity, and yield, in that order. Compliance is maintained through regular reporting
to City management on a monthly, quarterly and annual basis. Safety is insured by 1) investing only in
securities allowed by Chapter 2256 of the Texas Government Code entitled the "Public Funds Investment
Act"; 2) using delivery vs. payment for all purchases; 3) protecting all non -government securities (cash
and bank certificates of deposit) with collateral in the form of government securities which are pledged to
the City of Euless and safekept by the Federal Reserve Bank; 4)diversifying investment purchases into
different security markets to minimize individual market risk.
Liquidity is met by matching investment terms to future operating cash needs such as payroll, accounts
payable, debt service, and capital improvement disbursements. The City also utilizes money market
funds and local government investment pools to provide daily liquidity needs. The yield or rate of return
which the City receives is measured against the 90 day treasury bill yield as set by the investment policy.
The information contained in this report will quantitatively and graphically demonstrate the achievement
of these City objectives for Fiscal Year 2008-09.
Investment Strategy Compliance
The strategy for all pooled funds is to assure that cash flows are matched with projected needs and assume
adequate liquidity and safety. This may be accomplished by purchasing high quality securities in a laddered
structure or utilizing an investment pool (See Appendix E). Furthermore the following purposes are also
considered when investing.
-Operating Funds will) be structured in such a way as to minimize volatility during economic cycles. This may be
accomplished by purchasing high quality short-term securities. The weighted average maturity on these funds
will remain within the 6 to 9 month range. These funds include:
101 General Fund
201 Hotel -Motel Tax Fund
202 Juvenile Case Fund
210 1/2 Cent Sales Tax -Operations
220 Crime Control & Prevention District
230 Police Drug - DEA Awards
231 Police Drug - State Awards
240 Car Rental Tax Fund
501 Water & Sewer Fund
510 Drainage Utility
520 Recreation Classes Fund
521 Arbor Daze Fund
530 Softball World -Operations
540 Golf Course Operations
550 Athletic Complex Operations
601 Equipment Replacement Fund
610 Health Insurance Fund
615 Risk Management Fund
-Funds for Capital Improvement Projects(CIP) and Special Purposes may purchase securities which allow for
flexibility and unanticipated project outlays by having a portion of their investments in highly liquid securities (See
Appendix E). The stated final maturity dates of securities held should not exceed the estimated project
completion date. These funds include:
301 Developer's Escrow Fund 330 Car Rental CIP
305 Streets & Drainage-CIP 502 Water & Sewer-CIP
310 1/2 Cent Sales Tax-CIP 505 Water Impact Fees Fund
320 General Capital Projects Fund 508 Wastewater Impact Fees Fund
321 Redevelopment CIP Fund 511 Drainage CIP
325 Police Facility Construction Fund 552 Athletic Complex CIP-Phase II
-Debt Service Funds should assure adequate liquidity to cover the debt service obligation on the required
payment date. These funds include:
401 Debt Service/General Obligation 506 Water/Sewer Debt Service
402 Star Center Debt Service 531 Softball World Debt Service
410 1/2 Cent Sales Tax -Debt Service 541 Golf Course Debt Service
-Emergency, Contingency, Operating and Debt Service Reserve funds will have the ability to generate a
dependable revenue stream to the appropriate fund from securities with a low degree of volatility. Such
securities will tend to hold their value during economic cycles. The stated final maturity dates of securities held
should not exceed five years (see Appendix E). These funds include:
102 General Fund -Emergency
103 General Fund -Contingency
211 1/2 Cent Sales Tax -Bond Reserve
240 Car Rental Tax Fund (2,000,000 Reserve)
503 Water & Sewer Bond Reserve
507 Water & Sewer -Emergency Fund
512 Drainage Reserve
705 Star Center Bond Reserve
Based on the above strategies, the investment portfolio reported herein is in compliance with the city's adopted
investment policy.
Vicki Rodriquez
Director fo Finance
Jackie Theriot
Assistant Director fo Finance
3
I. PORTFOLIO SUMMARY
The City's investment portfolio at the end of the fiscal year, September 30, 2009, is
summarized by instrument as shown below.
Distribution by Instrument
of Average Avg. Yield
Instrument $ Cost Portfolio Yield Prior Qtr
Agencies 36,359,798 60.88% 1.35% 2.40%
Investment Pools 22,395,506 37.50% 0.31% 0.66%
Money Market 971,697 1.63% 0.01% 0.11%
59,727,001 100.00%
The Distribution by Instrument table shows that the majority of City funds, approximately 61
are invested in government agencies, while the remaining 39% is invested in money market
funds and local government investment pools. As of the date of this report, the weighted
average yield on the portfolio was 1.28%. When compared to prior quarter levels, the yield
on the portfolio continues to decline as uncertainty in the market remains. The portfolio
composition below demonstrates the diversity within the portfolio.
Portfolio Composition
as of September 30, 2009
FMAC FNMA FGIC (MM)
5% 4 /° / 2%
FHLB
42%
FFCB
9%
Logic
0%
Texpool
21%
Texstar
17%
4
I. PORTFOLIO SUMMARY (CONTINUED)
The City's investment portfolio at the end of the fiscal year, September 30, 2009,
is summarized by maturity as shown below.
Distribution by Maturity
# of months $ Cost
Overnight $ 23,367,202
up to 6 mos $ 9,215,212
6 to 9 mos $ 5,768,786
9 to 12 mos $ 6,470,467
12 to 15 mos $ 9,399,422
15 to 24 mos $ 5,505,911
>24mos $
$59.727.001
% of Portfolio
39.1%
15.4%
9.7%
10.8%
15.7%
9.2%
0.0%
100.0%
The Distribution by Maturity table reflects the degree of liquidity in the City's
portfolio. Currently, access to over 40% of the portfolio is available within 24
hours, with an additional 15% available within 6 months. This liquidity strategy
was followed to meet cashflow requirements for construction projects, payroll,
debt service, and other operating expenses. An additional 21% of the portfolio
matures within one year. Currently, the city has 24% of the porfolio invested
between 12-24 months to take advantage of yields in this area of the curve.
Currently the city does not have anything invested further than 24 months. The
weighted average maturity on the portfolio is currently 185.30 days.
> 24 mos
15 to 24 mos
12 to 15 mos
9 to 12 mos
6 to 9 mos
up to 6 mos
Overnight
$0.0
Investment Maturity Distribution
as of September 30, 2009
$5.0 $10.0 $15.0 $20.0 $25.0
5
I. PORTFOLIO SUMMARY (CONTINUED)
The City's investment portfolio at the end of the fiscal year, September 30, 2009, is
summarized by institution as shown below.
Institution
Coastal Securities
Duncan Williams
First Southwest
Merrill Lynch
Samco Capital
Vining Sparks
Texpool
TexStar
Logic
FGIC
Distribution by Institution
$ Cost
5,035,043
6,162, 570
9,455,521
990,795
7,592,676
$ 7,123,193
12,376,718
10,018,717
70
971,697
$59.727.001
% of Portfolio
8.4%
10.3%
15.8%
1.7%
12.7%
11.9%
20.7%
16.8%
0.0%
1.6%
100.0%
The City strives to not only diversify the portfolio by the type of instruments that are
- No more than 10% in repurchase agreements
- No more than 33% in investment pools with any single institution
-No more than 33% in money market mutual funds
-No more than 33% by individual brokerage firms
The chart belows demonstrates the City's compliance with the above guidelines.
Investments by Institution
as of September 30, 2009
FGIC FGIC, $1.0
Logic
Texstar
Texpool
Vining
IMMOMMENNEMMI
Samco
Merrill
FSW
Duncan
Coastal
$0.0
Merrill, $1.0
Texstar, $10.0
Vining, $7.1
Samco, $7.6
FSW, $9.5
Duncan, $6.2
Coastal, $5.0
$4.0 $8.0 $12.0
Texpool, $12.4
$16.0
6
City of Euless
Pooled Portfolio Summary
for Quarter Ending
September 30, 2009
Cost Book Market
Principal Only Value Value
Investments at June 30, 2009 $62,933,283.32 $62,867,536.04 $63,016,502.53
Investment Purchases/Dividends 18,319,139.36
(21,525,421.95)
Investment Maturities
Investments at September 30, 2009 $59,727,000.73 $59,602,911.00 $59,751,368.00
Vicki Rodriquez
Director of Finance
Jackie Theriot
Assistant Director of Finance
Summary of Investments by Fund
The following is a summary of cash and investments held by each fund at June 30, 2009 and September 30, 2009. The changes include
all investment purchases, maturities, revenues, expenses, and year-end accruals that occurred during the fourth quarter of FY2009.
101 General Fund
102 General Fund -Emergency
103 General Fund -Contingency
201 Hotel -Motel Tax Fund
202 Juvenile Case Fund
210 1/2 Cent -Operations Fund
211 1/2 Cent -Debt Reserve
220 CCPD
230 Police Drug - DEA Awards
231 Police Drug - State Awards
240 Car Rental Tax Fund
301 Developer's Escrow Fund
305 Streets & Drainage-CIP
310 1/2 Cent Sales Tax-CIP
320 General CIP Fund
321 Redevelopment CIP Fund
325 Police Facility CIP
330 Car Rental CIP Fund
401 Debt Service/General
402 Star Center Debt Service
501 Water & Sewer Fund
502 Water & Sewer-CIP
503 Water & Sewer -Bond Reserve
504 Service Center Fund
505 Water Impact Fees
506 Water & Sewer -Debt Service
507 Water & Sewer -Emergency
508 Wastewater Impact Fees
510 Drainage Utility
511 Drainage-CIP
512 Drainage Reserve
520 Recreation Classes Fund
521 Arbor Daze Fund
530 Softball World Operations
531 Softball World CIP
540 Golf Course Operations
541 Golf Course CIP
550 Parks @ Texas Star
552 Athletic Complex CIP
601 Equipment Replacement
610 Health Insurance Fund
615 Risk Management Fund
705 Star Center Reserve Fund
TOTAL:
Cash & Investment
at Market Value
6/30/2009
9,140, 332.32
502,135.00
501, 325.00
122,682.99
(3,605.66)
395,448.62
943,431.82
123,123.16
184,087.86
160, 253.52
6,514,423.99
1,707,129.07
2,093,434.57
4,996,146.13
5, 663, 530.28
312,381.19
108,104.30
180, 930.12
1, 933, 341.41
543,777.72
4,459,896.14
2, 889, 926.99
429,775.17
294, 071.47
2,727,311.40
234,819.21
500, 000.00
728,417.03
448, 820.64
1, 939, 386.13
231,119.00
380, 959.53
29, 037.40
(507.10)
(21,135.25)
289,073.51
42,650.38
172, 993.14
768,014.89
1,950,137.53
4,045,934.08
1,201,150.26
1, 947, 521.80
61,811,786.76
Cash & Investment
at Market Value
9/30/2009
8
6,891,697.96
502, 005.00
500, 510.00
104,769.59
17,818.17
448,064.79
938,998.00
116, 563.07
173,858.33
162,681.86
9, 290, 851.11
1, 553, 875.88
2,088,130.41
3,370,035.13
5,650,137.51
309, 744.19
108,181.70
99, 589.62
875,790.30
170,019.42
5,145,641.81
2, 819, 587.49
430,152.57
286, 395.59
2,628,620.15
5,585.46
500, 000.00
672,506.08
318,801.13
1, 524, 272.15
231,119.00
345,895.24
29, 038.11
-2,608.95
2,364.84
133, 357.13
119,148.80
147, 356.32
764, 840.09
2,151, 462.49
3, 585, 700.45
1,410,987.45
1, 946, 983.49
58, 570, 528.93
Increase/
Decrease
In Fund
(2,248,634.36) Operating expenses/YE Accruals
(130.00)
(815.00)
(17,913.40)
21,423.83
52,616.17 Sales tax receipts
(4,433.82)
(6,560.09)
(10, 229.53)
2,428.34
2,776,427.12 Car rental receipts
(153,253.19) Capital outlay
(5,304.16)
(1,626,111.00) Capital outlay
(13, 392.77)
(2,637.00)
77.40
(81,340.50) Capital outlay
(1,057,551.11) Debt Service Payments
(373,758.30) Debt Service Payments
685,745.67 Operating revenue
(70,339.50) Capital outlay
377.40
(7,675.88)
(98,691.25) Transfer to Debt
(229,233.75) Debt Service Payments
(55,910.95) TRA Sewer Payment
(130,019.51) Debt Service Payments
(415,113.98) Capital outlay
(35,064.29) Operating expenses
0.71
(2,101.85)
23,500.09
(155,716.38) Operating expenses
76,498.42 Gas Royalty Payments
(25,636.82) Operating expenses
(3,174.80)
201,324.96 Transfer from other funds
(460,233.63) Insurance claims accrual
209,837.19 Operating transfers
(538.31)
(3,241,257.83)
II. PERFORMANCE SUMMARY
Cash and Investments Balances -Full utilization of funds and minimization of idle cash is necessary to
pursue additional interest income revenues for the City. The average percent of invested funds is 100%
for FY09. The monthly data below shows the continued utilization of City funds through investments.
October-07
November-07
December-07
January-08
February-08
March-08
April-08
May-08
June-08
July-08
August-08
September-08
Average
October-08
November-08
December-08
January-09
February-09
March-09
April-09
May-09
June-09
July-09
August-09
September-09
Average
Consolidated
Cash
$645,505
(304, 029)
781,650
879,365
(1,667,809)
144,921
1,008,099
496,520
763,657
305,402
(232,369)
(315,721)
208,766
Consolidated
Cash
($1,161,559)
618,165
828,226
649,094
57,594
(276, 240)
55,959
383,806
(49, 545)
536,141
155,961
(476,141)
110,122
Invested
Balance
$59,829,251
61,081,112
62,601,223
68,815,473
69,782,149
59,045,851
59, 397, 712
60,327,836
61, 765,104
60, 830, 569
61, 720, 589
61,086,813
62,190,307
Invested
Balance
$60,531,634
59,859,045
63,462,345
68,402,131
70,556,063
61,464,303
60,414,836
61,264,777
63,012,698
60,652,655
61,123, 262
59,816,906
62, 546, 721
Percentage
Invested
99%
101%
99%
99%
103%
100%
99%
100%
99%
100%
101%
101%
100%
Percentage
Invested
102%
99%
99%
99%
100%
101%
100%
100%
101%
100%
100%
101%
100%
This graph shows how a greater portion of the City's funds continue to be invested, always in pursuit of
100%.
Percent Invested
105.00%
100.00%
95.00%
90.00%
85.00%
1-----t_i r I 1 1 J 1 11- t-- ----- l r r t
1998 1999 2000
2001 2002
2003 2004 2005
Fiscal Year
1
2006 2007 2008 2009
9
Cash management performance - effectiveness of the cash management program has been
measured utilizing actual figures for FY09 as shown below:
Average City's Number Estimated
90 day Invested Days in Interest
Month TBill Yield Balance Month Earnings
October-08 0.69% $60,531,634 31 $35,473
November-08 0.19% $59,859,045 30 $9,348
December-08 0.03% $63,462,345 31 $1,617
January-09 0.13% $68,402,131 31 $7,552
February-09 0.30% $70,556,063 28 $16,238
March-09 0.22% $61,464,303 31 $11,485
April-09 0.16% $60,414,836 30 $7,945
May-09 0.18% $61,264,777 31 $9,366
June-09 0.18% $63,012,698 30 $9,322
July-09 0.18% $60,652,655 31 $9,272
August-09 0.17% $61,123,262 31 $8,825
September-09 0.12% $59,816,906 30 $5,900
Average 0.21% 62,546,721 $11,029
Estimated earnings at benchmark yields: $132,343
Actual FY09 interest income (un-audited) $1,117,293
Earnings over benchmark: $984,950
Key rate comparisons - an objective of the investment policy is for the City's average rate of
return to consistently exceed that of the three month U.S. Treasury Bill, as stated before.
Therefore, they have been presented for comparative purposes below.
Benchmark
90 day City's Avg.
Month T-bill yield Portfolio Yld Difference
October-08 0.69% 3.06% 2.37%
November-08 0.19% 3.01 % 2.82%
December-08 0.03% 2.85% 2.82%
January-09 0.13% 2.74% 2.61%
February-09 0.30% 2.46% 2.16%
March-09 0.22% 2.32% 2.10%
April-09 0.16% 2.22% 2.06%
May-09 0.18% 1.94% 1.76%
June-09 0.18% 1.57% 1.39%
July-09 0.18% 1.45% 1.27%
August-09 0.17% 1.39% 1.22%
September-09 0.12% 1.28% 1.16%
Average 0.21 % 2.19% 1.98%
During FY09, the Federal Reserve cut rates an additional three times from its previous six
times. The Fed went from a fed funds rate of 2.00% to 0 - .25% in the first quarter dropping
175 to 200 basis points from the previous fiscal year. It remained at 0 - .25% for the
remainder of the fiscal year. Continued slowdowns in the housing market, a drop in consumer
confidence, and turmoil in the global financial markets continue to place increasing concerns
on the Federal Reserve. The city's portfolio continues to decline, but fortunately it has not
declined as rapidly as the fed funds rate. This allowed the city's portfolio to surpass the
benchmark rate by an average of 198 basis points for the year. As current investments
mature and are reinvested, the city's yield will continue to decline.
10
Interest Earnings in
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$0
III. INTEREST INCOME SUMMARY
FY05 Audit
FY06 Audit
FY07 Audit
FY08 Audit
FY09 Un-audited
FY09 Budgeted
FY05 Audit
$1,278,310
$2,356,789
$3,055,445
$2,453,928
$1,117,293
$1,421,212
Interest Income Summary
FY06 Audit
FY07 Audit
FY08 Audit FY09 Un-audited
Interest income did not meet the budgeted level for fiscal year 2009. When compared to prior
year, interest earnings have decreased. This decrease can be attributed to the federal rate cuts.
As the city's investments mature the new securities are now at a lower interest rate which will
yield lower interest payments.
11
Interest Income By Fund
For Fiscal Year Ending September 2009
101 General
201 Hotel/Motel
210
211
220
230
231
240
301
305
310
320
321
325
330
401
402
501
502
503
504
505
508
510
i 511
520
1 521
530
531
540
541
Fund
Half Cent Sales Tax -Operations
Half Cent Sales Tax -Reserve
Crime Control Prevention District
Euless DEA Fund
Police State Awards
Car Rental
Developer's Escrow
Streets CIP
Half Cent Sales Tax - CIP
G.O. CIP
Redevelopment CIP Fund
Police Facility CIP
Car Rental CIP
GO Debt Service
Star Centre Debt
Water and Sewer
Water and Sewer CIP
Water and Sewer Reserve
Service Center Fund
Water Impact Fees
Wastewater Impact Fees
Drainage
Drainage Capital Projects
Recreation Classes
Arbor Daze
Softball World
Softball World Debt
Golf Course
Golf Course Debt
550 Parks At Texas Star
552 Athletic Complex Phase II - CIP
601 Equipment Replacement
610 Health Insurance
615 Risk MGMT/Worker's Comp
FY 08 FY 08 Actual
Budget Audited
$450,000 $488,038
6,250 3,922
60,000 56,520
47,500 28,155
22,500 14,226
8,750 5,827
5,000 4,311
300,000 392,891
62,500 65,003
75,000 127,630
15,000 75,190
1,500 40,578
20,249 21,524
928 928
50,000 137,159
45,000 37,949
15,000 13,047
275,000 201,714
125,000 150,644
17,500 15,517
0 3,707
100,000 115,013
45,000 31,033
25,000 27,211
20,000 47,497
11,250 8,593
4,500 2,171
6,000 3,367
0 639
11,250 18,206
75,000 61,235
7,500 6,380
38,750 33,458
50,000 43,076
75,000 138,982
37,500 32,586
Total' $2,109,427 $2,453,928
FY 09
Budget
$300,000
3,750
36,000
28,500
7,500
5,000
3,000
200,000
37,500
45,000
9,000
0
22,125
337
50,000
27,000
9,000
165,000
75,000
10,500
0
60,000
27,000
15,000
20,000
11,250
2,500
3,000
0
11,250
75,000
4,500
25,000
35,000
75,000
22,500
$1,421,212
FY 09 Actual
(Unaudited)
$231,615
930
6,425
4,525
1,039
1,192
956
151,955
33,675
61,389
128,931
76,851
12,126
337
14,425
13,121
2,952
91,187
54,992
3,316
1,109
36,633
9,579
6,505
17,856
2,124
166
370
0
4,506
9,831
1,177
14,719
21,021
77,401
22,359
$1,117,293
Diff FY09
Bud. -Act.
($68,385)
($2,820)
($29,575)
($23,975)
($6,461)
($3,808)
($2,044)
($48,045)
($3,825)
$16,389
$119,931
$76,851
($9,999)
$0
($35,575)
($13,879)
($6,048)
($73,813)
($20,008)
($7,184)
$1,109
($23,367)
($17,421)
($8,495)
($2,144)
($9,126)
($2,334)1
($2,630)1
$o
($6,744)
($65,169)
($3,323)
($10,281)
($13,979)
$2,401
($141)
($303,919)1
Note that interest earnings is being earned on all investable City funds and great efforts are pursued to meet their
budgeted levels. This report points out that the un-audited interest earnings for the end of the fiscal year did not meet
budgeted expectations due to previous rate cuts by the Fed.
Several Funds were budgeted conservatively or not at all due to the volatility of their revenues and expenditures.
However, these funds are used for investment purposes when they have funds available. These funds include Capital
Improvement Projects, DEA Funds, Grant Funds, and Debt Service Funds.
12
IV. COLLATERAL REVIEW
The first and most important objective of investing public funds is safety. One way to insure the City's assets is to have
them fully secured with "collateral". Acceptable collateral is defined in the City's investment policy, but generally consists
of types of securities the City would invest in. Bank balances are monitored daily to assure their full coverage. The
amount of collateral required by the depository bank varies with the expected level of deposits (typically correlates with
large receipts such as property taxes, franchise taxes and investment maturities).
Pledging
Institution
City of Euless
Collateral Analysis for
Cash & C.D. Investments
as of 09/30/09
Safekeeping Pledged Sec.
Location Description
First Nat'l FDIC
Bank Mid -Cities
Frost Bank
Produced By:
Director of Finance
FDIC
Federal Reserve
Bank FHLMC
4/ 1 /2018
Reviewed by:
Assistant Director of Finance
Security Market Value
Par Value (w/FDIC Ins.)
$0 $250,000
Operating
$3,129,619
$3,129,619
$3,379,619
Payroll
Operating
Insurance
Inv. Value Difference
Mat'v (P & I) Over/(Under)
$38,932 $211,068
$38,932
$524,035
$66,987
$341,395
$115,654
$2,855,583
This review is practiced on a regular basis assuring coverage. Another regular practice is reviewing each individual
instrument purchased. This assures compliance with the investment policy and consideration of the underlying security.
This separate but thorough practice has protected the City's portfolio against derivative products.
13
V. BROKER SELECTION PROCESS
This section of the report is to provide a brief explanation of the process undertaken to
select brokers with which the City invests. The broker/dealer list is reviewed annually,
and additions/deletions are made as necessary. The city currently maintains a list of
seven broker/dealers. The process is outlined below:
1. Brokers express an interest in doing business with the City's investment portfolio.
2. A questionnaire is sent to the broker which requests the necessary information for
management to review including references, capital adequacy ratios, etc.
3. The Finance Department reviews all received questionnaires, summarizes the
information and recommends the desired list of brokers with explanatory notes in
conjunction with the first quarter investment report.
4. The list is presented to the investment committee annually for their approval.
5. All brokers are notified after the selection is complete.
VI. SUMMARY
The primary objectives of compliance, safety, liquidity and yield have been achieved for
the reporting period as evidenced by this report. These objectives will continue to be
pursued for the City of Euless as provided by the investment policy. This year proved to
be another successful year for the investment program. The City of Euless, like all other
local governments, is faced with the challenge of meeting benchmark levels triggered by
the Fed's actions and meeting additional reporting requirements as stated by new
legislation. Therefore, the City's investment program will continue to seek new
techniques, instruments, etc. to enhance the return on the City's funds, as well as the
return of all City funds.
The investment committee met on January 25, 2010 and reviewed the presented data for
transmittal to the City Council.
Vicki Rodriquez
Director of Finance
Jackie Theriot
Assistant Director of Finance
14
Members:
Minutes -10/20/09 Investment Committee Meeting
Gary McKamie, City Manager
Loretta Getchell, Deputy City Manager
Vicki Rodriquez, Director of Finance
Mary Lib Saleh, Mayor
Committee members present included, Mayor Saleh, Gary McKamie, Loretta Getchell, and Vicki
Rodriquez.
The investment committee held a conference call with HighMark Capital Management, the investment
advisors for the PARS OPEB Trust. Andrew Brown and Hoddy Fritz, both representing Union Bank
and High Mark Capital Management, presented a very detailed presentation on the Investment
Program, which included the investment capabilities and services offered. The purpose of the
conference call was for the committee to review the different investment options for the trust and to
determine what type of investment strategy the city should use for these funds. Andrew discussed in
detail the different strategies which range from very conservative to a balanced moderately
aggressive approach. Based on the information provided, Loretta Getchell motioned for the
investment committee to recommend the full range of investment strategies including conservative to
moderately aggressive, in order to provide flexibility due to the volatility in the current market. Gary
McKamie seconded the motion. The motion carried.
Vicki Rodriquez presented the second and third quarter investment reports to the committee. The
committee reviewed the reports. Vicki reported that 44% of the city's portfolio is invested in local
government investment pools and money market funds, which is available on a daily basis and
provides the city with the liquidity they need to meet cash flow requirements. The remaining 56% is
invested in government agencies which are allowed under the city's investment policy. These
securities are invested using a laddered investment structure which provides additional cash flow on
a monthly basis. It was also noted that the weighted average maturity at the end of the third quarter
was 188.16 days and the average yield dropped to 1.06%.
Vicki reported that the market value of the portfolio at the end of the third quarter totaled $63,016,503
and a book value totaled $62,867,536. Even with the decline in the average yield, the city exceeded
the benchmark rate by an average of 173 basis points during the third quarter and the city remained
100% invested. After reviewing the projected interest earnings for the year, it was noted that most, if
not all funds, will fall short of their projected interest earnings for FY2009.
The minutes from the June 26, 2009 meeting were presented for approval. Mayor Saleh motioned to
approve the minutes, Loretta Getchell seconded. The minutes were approved.
Loretta Getchell motioned to approve the second and third quarter reports as presented, Mayor Saleh
seconded. The motion passed.
Prior to adjournment, the committee was joined by Mitch Barker and Don Paschal, both with PARS
Retirement Services. They were each introduced to the members of the investment committee. The
committee briefly discussed the presentation and investment strategies provided by Andrew Brown
and Hoddy Fritz. Mr. Barker and Mr. Paschal expressed their excitement about having the City of
Euless as a PARS client and reiterated their commitment to service. The committee thanked them for
taking the time to stop by and introduce themselves.
Loretta Getchell motioned to adjourned the committee meeting. Mayor Saleh seconded.
Meeting was adjourned.
15
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