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17 - Investment Report Costa Mesa Sanitary District …an Independent Special District Protecting our community’s health and the environment by providing solid waste and sewer collection services. www.cmsdca.gov Memorandum To: Board of Directors Via: Scott Carroll, General Manager From: Marc Davis, Treasurer Date: January 23, 2014 Subject: Investment Report for the Month of December 2013 Summary Attached is the Investment Report for the month of December 2013. As required by the District’s Statement of Investment Policy, the Investment Report delineates all investment activity during the month. Staff Recommendation That the Board of Directors approves the Investment Report for the month of December 2 013. Analysis This report lists the types of securities held in the District’s portfolio, the institutions from which the securities were purchased, maturity dates and interest rates as of December 31 , 2013 . The District’s investments are in compliance with the Statement of Investment Policy adopted by the Board at the June 27, 2013 regular meeting, as well as the California Government Code. The market values in this report were provided by our third party custodian, Bank of New York, except for the Local Agency Investment Fund (LAIF). The market value of LAIF was provided by the State Treasurer’s Office. It does not represent the value of the underlying securities within the pool, but rather the par or cost amount, which is the amount the District is entitled to withdraw. This reporting practice is consistent with industry standard practices for similar funds. The weighted average stated rate of return (current yield) for the Distr ict’s investment portfolio as of December 31, 2013, was 0.833%. The yield to maturity of the portfolio was 0.833 %. The District’s weighted average interest rate was 57 basis points (0.5 70 %) above the daily effective yield of LAIF, which was 0.263% as of December 31, 2013. The ITEM NO. 17 Board of Directors January 23, 2014 Page 2 of 2 weighted average number of days to maturity for the District’s total portfolio was 1,0 23 days (2.8 0 years). The average duration of the underlying securities in LAIF as of December 31 , 2013 was 2 09 days. The District’s investment portfolio is in compliance with its liquidity limitations, which requires that a minimum of 20.00% of the portfolio must mature within one year. The percentage of the portfolio maturing in less than one year as of December 31 , 20 13 was 26.08 %. As of December 31 , 2013, the District has adequate operating reserves necessary to meet its obligations for the next six months. Strategic Plan Element & Goal This item supports achieving Strategic Element No. 7.0, Finances, by ensuring the short and long -term fiscal health of the District. Legal Review Legal review is not required. Environmental Review The preparation of an investment report is an administrative action and not a project under CEQA or the District’s CEQA guidelines. Financial Review The portfolio was budgeted to earn an average rate of 0.900% for the year ending Ju ne 31 , 201 4 . Through December 31 , 2013 the portfolio has earned a weighted average interest rate of 0.800 %. Interest rates are starting to creep up, so s taff anticipates that the weighted average interest for the portfolio will also increase slightly throughout the year. Public Notice Process Copies of this report are on file and will be included with the entire agenda packet for the January 23, 2014 Boa rd of Directors regular meeting at District Headquarters (6 31 W. 19 th Street) and on the District’s website at www.cmsdca.gov . Alternative Actions 1. Refer the matter back to staff Attachment A: Treasurer’s Report of Pooled Cash and Investments as of December 31 , 2013 DepositsOutstanding Bank Balance In Transits Checks Book Balance Active Accounts: Bank of America 4,133,694.08 $ - 195,326.81 3,938,367.27 $ Total Active Accounts4,133,694.08 - 195,326.81 3,938,367.27 Market Value Increase Decrease Cost Investments: Local Agency Investment Fund4,237,224.40 $ - - 4,237,224.40 $ Money Market/Sweep Account67,725.88 - - 67,725.88 Federal Agency Securities11,997,968.00 - (202,032.00) 12,200,000.00 Total Investments16,302,918.28 - (202,032.00) 16,504,950.28 Total Pooled Cash & Investments20,436,612.36 $ -$ (6,705.19)$ 20,443,317.55 $ Market Adjustment C O S T A M E S A S A N I T A R Y D I S T R I C T Treasurer's Report of Pooled Cash and Investments December 31, 2013 Costa Mesa Sanitary District Pooled Cash and Investments by Fund December 31, 2013 Solid Waste Fund: Operating Reserve 801,000.00 $ Unreserved: Designated for working capital 1,494,000.00 Undesignated 3,954,748.44 Liquid Waste Fund: Operating Reserve 371,000.00 Reserved for Earthquakes/Emergencies 1,000,000.00 Reserved for Capital Outlay 2,536,707.02 Unreserved: Designated for working capital 2,467,300.00 Undesignated 77,359.82 Sewer Construction Fund 100,000.00 Facilities Revolving Fund 270,347.16 Asset Replacement Fund 457,112.16 Asset Management Fund 6,913,742.95 Total Pooled Cash & Investments 20,443,317.55 $ Treasurer Date Marcus D. Davis 1/14/14 1 Total investments outstanding as of November 30, 20 13 16,603,699.98 $ Additions:Gain on sale of investment - Investment purchases - Deductions:Investments called - Net increase (decrease) in Sweep Account 26,250.30 Net increase (decrease) in LAIF (125,000.00) Total investments outstanding as of December 31, 20 13 16,504,950.28 $ C O S T A M E S A S A N I T A R Y D I S T R I C T Investment Activity Summary December 31, 2013 2 Interest CUSIP PurchaseMaturityCouponInvestmentEarned at Number Investment Date Date Rate Cost 12/31/13 n/aLocal Agency Investment Fundn/an/a0.263%4,237,22 4.40 $ n/a**n/aBank of New York-Sweep Acctn/an/a0.000%67,725.88 n/a 3135G0MA8Federal National Mortgage Assn06/28/1206/2 8/171.200%1,000,000.00 100.00 3134G3ZR4Federal Home Loan Mortgage08/07/1208/07/17 1.000%1,000,000.00 4,000.00 3136G0L58Federal National Mortgage Assn10/18/1210/1 8/171.000%1,000,000.00 2,027.77 3135G0RQ8Federal National Mortgage Assn11/15/1211/1 5/171.000%1,000,000.00 1,277.77 313381LC7Federal Home Loan Mortgage12/28/1212/28/17 0.950%1,000,000.00 79.16 3136G17A1Federal National Mortgage Assn12/31/1212/3 0/150.450%1,000,000.00 12.50 3133823B7Federal Home Loan Mortgage02/22/1302/22/18 1.150%1,000,000.00 4,120.83 3133826D0Federal Home Loan Mortgage02/28/1302/28/18 1.100%1,000,000.00 3,758.33 313382HR7Federal Home Loan Mortgage03/27/1303/27/18 1.130%1,000,000.00 2,950.55 3136G1L31Federal National Mortgage Assn05/15/1305/1 5/170.700%1,000,000.00 894.44 3133ECQW7Federal Farm Credit Bank06/04/1306/04/181.250%1,000,000.00 937.50 3134G47G7Federal Home Loan Mortgage06/26/1306/26/18 1.400%1,000,000.00 194.44 3136G1VJ5Federal National Mortgage Assn09/27/1303/2 7/171.500%200,000.00 783.33 Totals 16,504,950.28 $ 21,136.62 $ **Represents the LAIF daily rate at 12/31/13 Comments COSTA MESA SANITARY DISTRICT Investment and Investment Earnings December 31, 2013 3 Current %of Market Value 12/31/13 Maximum %U.S. Treasury Bills0.00%Unlimited U.S. Treasury Notes0.00%Unlimited Federal Agency Issues:FICB 0.00%Unlimited FLB 0.00%Unlimited FHLB 0.00%Unlimited FHLMC 36.05%Unlimited FNMA 31.60%Unlimited FFCB 5.95%Unlimited Other *0.00%Unlimited Banker's Acceptances0.00%25% (1)Certificates of Deposit0.00%25%Negotiable Certificates of Deposits0.00%25% (1)Commercial Paper0.00%25% (1)Medium Term Corporate Notes0.00%20% (1)LAIF (Local Agency Investment Fund)25.99%40,000,000 Shares of Benefical Interest0.00%20%Money Market/Mutual Funds (Sweep Acct)0.42%10% per fund (2)Total 100.00%% of portfolio maturing under one year 26.08%no les s than 20%% of portfolio maturing over one year73.92%100.00%(1) Further limited to 10% in any single issuer (2) Also limited to 20% in total.*These securities are not considered for purchases: SBA, GNMA, TVA and SALLIEMAE COSTA MESA SANITARY DISTRICT Summary of Policy Limitations December 31, 2013 Description 4 PurchaseMaturityCouponInvestment% ofMarket% of Description Broker/Dealer Date Date Rate Cost Portfolio Value Portfolio Comments State Treasurer's PoolLAIFn/aContinuous0.263%**4,23 7,224.40 $ 4,237,224.40 $ POOL Total State Treasurer's Pool 4,237,224.40 25.67%4,237,224.40 25.99%Money Market Mutual FundBank of New Yorkn/aContinuo us0.000%67,725.88 67,725.88 SWEEP Total Money Market Mutual Fund 67,725.88 0.41%67,725.88 0.42%Federal Home Loan MortgageE.J. De La Rosa08/07/1208 /07/171.000%1,000,000.00 987,040.00 FHLMC Federal Home Loan MortgageE.J. De La Rosa12/28/1212 /28/170.950%1,000,000.00 977,050.00 FHLMC Federal Home Loan MortgageE.J. De La Rosa02/22/1302 /22/181.150%1,000,000.00 980,280.00 FHLMC Federal Home Loan MortgageE.J. De La Rosa02/28/1302 /28/181.100%1,000,000.00 980,510.00 FHLMC Federal Home Loan MortgageE.J. De La Rosa03/27/1303 /27/181.130%1,000,000.00 972,730.00 FHLMC Federal Home Loan MortgageE.J. De La Rosa06/26/1306 /26/181.400%1,000,000.00 979,590.00 FHLMC Total Federal Home Loan Mortgage 6,000,000.00 36.35%5,877,200.00 36.05%Federal National Mortgage AssociationUnion Banc06/2 8/1206/28/171.200%1,000,000.00 996,700.00 FNMA Federal National Mortgage AssociationE.J. De La Ros a10/18/1210/18/171.000%1,000,000.00 985,640.00 FNMA Federal National Mortgage AssociationE.J. De La Ros a11/15/1211/15/171.000%1,000,000.00 983,750.00 FNMA Federal National Mortgage AssociationUnion Banc12/3 1/1212/30/150.450%1,000,000.00 999,640.00 FNMA Federal National Mortgage AssociationUnion Banc05/1 5/1305/15/170.700%1,000,000.00 985,180.00 FNMA Federal National Mortgage AssociationUnion Banc09/2 7/1303/27/171.500%200,000.00 200,578.00 FNMA Total Federal National Mortgage Association 5,200,000.00 31.51%5,151,488.00 31.60%Federal Farm Credit BankE.J. De La Rosa06/04/1306/0 4/181.250%1,000,000.00 969,280.00 FFCB Total Federal National Mortgage Association 1,000,000.00 6.06%969,280.00 5.95%Total Investments 16,504,950.28 $ 100.00%16,302,918.28 $ 100.00%**Represents the LAIF daily rate at 12/31/13 COSTA MESA SANITARY DISTRICT Schedule of Investments by Instrument Type December 31, 2013 5 InvestmentPurchaseMaturityDays toCouponYield toInve stment Broker/Dealer Type Date Date Maturity Rate Maturity Cost Local Agency Investment FundPool 10.263%**0.263%4,237,224.40 $ Bank of New YorkSweep 10.000%0.000%67,725.88 UnionBancFNMA06/28/1206/28/171,2751.200%1.200%1,000 ,000.00 E.J. De La RosaFHLMC08/07/1208/07/171,3151.000%1.00 0%1,000,000.00 E.J. De La RosaFNMA10/18/1210/18/171,3871.000%1.000 %1,000,000.00 E.J. De La RosaFNMA11/15/1211/15/171,4151.000%1.000 %1,000,000.00 E.J. De La RosaFHLMC12/28/1212/28/171,4580.950%0.95 0%1,000,000.00 UnionBancFNMA12/31/1212/30/157290.450%0.450%1,000,0 00.00 E.J. De La RosaFHLMC02/22/1302/22/181,5141.150%1.15 0%1,000,000.00 E.J. De La RosaFHLMC02/28/1302/28/181,5201.100%1.10 0%1,000,000.00 E.J. De La RosaFHLMC03/27/1303/27/181,5471.130%1.13 0%1,000,000.00 UnionBancFNMA05/15/1305/15/171,2310.700%0.700%1,000 ,000.00 E.J. De La RosaFFCB06/04/1306/04/181,6161.250%1.250 %1,000,000.00 E.J. De La RosaFHLMC06/26/1306/26/181,6381.400%1.40 0%1,000,000.00 UnionBancFNMA09/27/1303/27/171,1821.500%1.500%200,0 00.00 Total Investment Portfolio 16,504,950.28 $ Total Portfolio Weighted Avg Interest Rate0.833%Weighted Avg Yield to Maturity0.833%Weighted Avg Days to Maturity1,023 Days2.80 Years **Represents the LAIF daily rate at 12/31/13 COSTA MESA SANITARY DISTRICT Investment Portfolio December 31, 2013 6 Net PurchaseMaturityIntuitionInvestment CouponInvestme ntMarketAccruedGain/(Loss)Date Date Broker/Dealer Type Par Rate Cost Value Interest If Sold n/aContinuousLAIFPOOL4,237,224.40 $ 0.263%**4,237,224.40 4,237,224.40 - - n/aContinuousBank of New YorkSWEEP67,725.88 0.000%67,725.88 67,725.88 - - 06/28/1206/28/17UnionBancFNMA1,000,000.00 1.200%1,000,000.00 996,700.00 100.00 (3,300.00) 08/07/1208/07/17E.J. De La RosaFHLMC1,000,000.00 1.000%1,000,000.00 987,040.00 4,000.00 (12,960.00) 10/18/1210/18/17E.J. De La RosaFNMA1,000,000.00 1.000%1,000,000.00 985,640.00 2,027.77 (14,360.00) 11/15/1211/15/17E.J. De La RosaFNMA1,000,000.00 1.000%1,000,000.00 983,750.00 1,277.77 (16,250.00) 12/28/1212/28/17E.J. De La RosaFHLMC1,000,000.00 0.950%1,000,000.00 977,050.00 79.16 (22,950.00) 12/31/1212/30/15UnionBancFNMA1,000,000.00 0.450%1,000,000.00 999,640.00 12.50 (360.00) 02/22/1302/22/18E.J. De La RosaFHLMC1,000,000.00 1.150%1,000,000.00 980,280.00 4,120.83 (19,720.00) 02/28/1302/28/18E.J. De La RosaFHLMC1,000,000.00 1.100%1,000,000.00 980,510.00 3,758.33 (19,490.00) 03/27/1303/27/18E.J. De La RosaFHLMC1,000,000.00 1.130%1,000,000.00 972,730.00 2,950.55 (27,270.00) 05/15/1305/15/17UnionBancFNMA1,000,000.00 0.700%1,000,000.00 985,180.00 937.50 (14,820.00) 06/04/1306/04/18E.J. De La RosaFFCB1,000,000.00 1.250%1,000,000.00 969,280.00 937.50 (30,720.00) 06/26/1306/26/18E.J. De La RosaFHLMC1,000,000.00 1.400%1,000,000.00 979,590.00 194.44 (20,410.00) 09/27/1303/27/17UnionBancFNMA200,000.00 1.500%200,000.00 200,578.00 783.33 578.00 Total Investments 16,504,950.28 $ 16,504,950.28 16,302,918.28 21,179.68 (202,032.00) **Represents the LAIF daily rate at 12/31/13 C O S T A M E S A S A N I T A R Y D I S T R I C T For all Maturities with Market Values December 31, 2013 7 Type ofPurchaseMaturityCouponInvestment Investment Date Date Rate Par Value Cost FNMA06/28/1206/28/171.200%1,000,000.00 1,000,000.00 Callable 6/28/13 w/10 days notice, monthly th ereafter FHLMC08/07/1208/07/171.000%1,000,000.00 1,000,000.00 Callable 8/7/14 w/5 days notice, thereafter 1 1,2,5,8 FNMA10/18/1210/18/171.000%1,000,000.00 1,000,000.00 Callable 5/15/13 w/10 days notice, thereafter 8,11,2,5 FNMA11/15/1211/15/171.000%1,000,000.00 1,000,000.00 Callable 5/15/13 w/10 days notice, thereafter 8,11,2,5 FHLMC12/28/1212/28/170.950%1,000,000.00 1,000,000.00 Callable 12/28/13 w/5 days notice, monthly th ereafter FNMA12/30/1212/31/150.450%1,000,000.00 1,000,000.00 Callable 12/30/13, w/10 days notice, thereaft er 3, 6, 9 FHLMC02/22/1302/22/181.150%1,000,000.00 1,000,000.00 Callable 8/22/13, w/5 days notice, thereafter 8,11,2,5 FHLMC02/28/1302/28/181.100%1,000,000.00 1,000,000.00 Callable 2/28/14, w/5 days notice, annually t hereafter FHLMC03/27/1303/27/181.130%1,000,000.00 1,000,000.00 Callable 3/27/15, w/5 days notice, thereafter 3,6,9,12 FNMA05/15/1305/15/170.700%1,000,000.00 1,000,000.00 Callable 5/15/14 w/10 days notice, qtrly ther eafter FFCB06/04/1306/04/181.250%1,000,000.00 1,000,000.00 Callable 9/4/13 w/5 days notice, anytime ther eafter FHLMC06/26/1306/26/181.400%1,000,000.00 1,000,000.00 Callable 3/26/15 w/5 days notice, thereafter 3,6,9,12 FNMA09/27/1303/27/171.500%200,000.00 200,000.00 Callable 3/27/14 w/10 days notice, qtrly thereafte r Totals 12,200,000.00 $ 12,200,000.00 $ COSTA MESA SANITARY DISTRICT Call Schedule December 31, 2013 Call Features 8 Cost 50,136.76 In Thousands 1 - 180 Days4,305 $ 181 - 365 Days- 1 - 2 Years1,000 ##########6,562.50 2 - 3 Years - COSTA MESA SANITARY DISTRICT MATURITIES DISTRIBUTION December 31, 2013 30%40%50%60%70%37.56%30.29%6,562.50 2 - 3 Years - ##########3 - 4 Years6,200 4 - 5 Years5,000 TOTAL 16,505 $ 0%10%20%30%1 -180 Days 181 -365 Days 1 -2 Years 2 -3 Years 3 -4 Years 4 -5 Years 000000 26.08%0.00%6.06%0.00% 9 Costa Mesa Sanitary District Portfolio Interest Rate Information as of December 31, 2013 0.20%0.40%0.60%0.80%1.00%1.20%1.40%1.60%1.80%2.00%3 month T-Bill 6 month T-Bill 2 year T-Note 3 year T-Note 5 year T-Note CMSD-monthly LAIF-monthly OC Pool-monthly 0.00%10