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09 - Investment Report Final 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: February 27, 2013 Subject: Investment Report for the Month of January 2013 Summary Attached is the Investment Report for the month of January 2013 . As required by the District’s Statement of Investment Policy, the Investment Report delineates all investment activity during the month. Staff Recommendation Approve the Investment Report for the month of January 2013 . 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 January 31 , 2013 . The District’s investments are in compliance with the Statement of Investment Policy adopted by the Board at the July 26, 2012 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 pa r 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 District’s investment portfolio as of January 31, 2013 , was 0.537 %. The yield to mat urity of the portfolio was 0.537 %. The District’s weighted average interest rate was 23 basis points (0.237 %) above the daily effectiv e yield of LAIF, which was 0.300 % as of January 31, 2013 . The weighted Board of Directors February 27 , 2013 Page 2 of 3 average number of days to maturity for the District’s total portfolio was 719 days (1.97 years). The average duration of the underlying securities in LAIF as of January 31, 2013 , which is the most current information available, was 226 day s. 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 January 31, 2013 was 54.69 %. During the month of January 2013, the District had 3 securities called. The proceeds from the calls were transferred to the sweep account held by the District’s custodian. This resulted in a temporary non -compliance of the portfolio w hereby the investments in a money market mutual fund exceeded 10.00% in any one fund and 20.00% in total . As of January 31, 2013 , the District had 2 3.60 % of its portfolio in the sweep account with the Bank of New York. Two new securities have been purcha sed and will settle in February 2013, and Staff is actively seeking to place one additional investment . Once these replacement investments are settled , the balance in the sweep account will be reduced to below 10.00% of the portfolio. As of January 31, 2 013, 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. Financial Review The portfolio was budgeted to earn an average rate of 0.900% for the year ending June 31 , 2013. Through January 31, 2013 , the portfolio has earned a weighted average interest rate of 0.8 17 %. Staff anticipates that the District will be close to budget with its estimated investment earnings. Public Notice Process Copies of this report are on file and will be included with the entire agenda packet for the February 27 , 2013 Board of Directors regular meeting at District Headquarters (628 W. 19 th Street) and on the District’s website at www.cmsdca.gov . Alternative Actions 1. Refer the matter back to staff Board of Directors January 24 , 2013 Page 3 of 3 Attachments Treasurer’s Report of Pooled Cash and Investments as of January 31, 2013 DepositsOutstanding Bank Balance In Transits Checks Book Balance Active Accounts: Bank of America 277,158.34 $ 25,283.41 221,441.50 81,000.25 $ Total Active Accounts277,158.34 25,283.41 221,441.50 81,000.25 Market Value Increase Decrease Cost Investments: Local Agency Investment Fund5,491,443.80 $ - - 5,491,443.80 $ Money Market/Sweep Account4,164,312.04 - - 4,164,312.04 Federal Agency Securities7,991,945.00 - (8,055.00) 8,000,000.00 Total Investments17,647,700.84 - (8,055.00) 17,655,755.84 Total Pooled Cash & Investments17,924,859.18 $ 25,283.41 $ 213,386.50 $ 17,736,756.09 $ 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 January 31, 2013 Costa Mesa Sanitary District Pooled Cash and Investments by Fund January 31, 2013 Solid Waste Fund: Operating Reserve 801,000.00 $ Unreserved 5,106,517.80 Liquid Waste Fund: Operating Reserve 371,000.00 Reserved for Earthquakes/Emergencies 1,000,000.00 Reserved for Capital Outlay 2,774,665.00 Unreserved 2,099,072.91 Sewer Construction Fund 100,000.00 Facilities Revolving Fund 100,195.32 Asset Replacement Fund 244,013.31 Asset Management Fund 5,140,291.75 Total Pooled Cash & Investments 17,736,756.09 $ Treasurer Date Marcus D. Davis January 31, 2013 2/18/13 1 Total investments outstanding as of December 31, 20 12 18,282,902.68 $ Additions:Gain on sale of investment 1,250.00 Investment purchases - Deductions:Investments called (3,000,000.00) Net increase (decrease) in Sweep Account 3,019,000.29 Net increase (decrease) in LAIF (647,397.13) Total investments outstanding as of January 31, 201 3 17,655,755.84 $ 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 January 31, 2013 2 Interest CUSIP PurchaseMaturityCouponInvestmentEarned at Number Investment Date Date Rate Cost 01/31/13 n/aLocal Agency Investment Fundn/an/a0.300%5,491,44 3.80 $ n/a**n/aBank of New York-Sweep Acctn/an/a0.000%4,164,312 .04 n/a 3133EAPB8Federal Farm Credit Bank05/02/1205/02/171.230%1,000,000.00 3,040.83 3136G0GX3Federal National Mortgage Assn05/30/1208/2 4/161.000%1,000,000.00 4,361.11 3135G0MA8Federal National Mortgage Assn06/28/1206/2 8/171.200%1,000,000.00 1,100.00 3134G3ZR4Federal Home Loan Mortgage08/07/1208/07/17 1.000%1,000,000.00 4,833.33 3136G0L58Federal National Mortgage Assn10/18/1210/1 8/171.000%1,000,000.00 2,861.11 3135G0RQ8Federal National Mortgage Assn11/15/1211/1 5/171.000%1,000,000.00 2,111.11 313381LC7Federal Home Loan Mortgage12/28/1212/28/17 0.950%1,000,000.00 870.83 3136G17A1Federal National Mortgage Assn12/31/1212/3 0/150.450%1,000,000.00 387.50 Totals 17,655,755.84 $ 19,565.82 $ **Represents the LAIF daily rate at 1/31/13 Comments COSTA MESA SANITARY DISTRICT Investment and Investment Earnings January 31, 2013 3 Current %of Market Value 01/31/13 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 11.25%Unlimited FNMA 28.35%Unlimited FFCB 5.68%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)31.12%40,000,000 Shares of Benefical Interest0.00%20%Money Market/Mutual Funds (Sweep Acct)23.60%10% per fund (2)Total 100.00%% of portfolio maturing under one year 54.69%no les s than 20%% of portfolio maturing over one year45.31%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 January 31, 2013 Description 4 PurchaseMaturityCouponInvestment% ofMarket% of Description Broker/Dealer Date Date Rate Cost Portfolio Value Portfolio Comments State Treasurer's PoolLAIFn/aContinuous0.300%**5,49 1,443.80 $ 5,491,443.80 $ POOL Total State Treasurer's Pool 5,491,443.80 31.10%5,491,443.80 31.12%Money Market Mutual FundBank of New Yorkn/aContinuo us0.000%4,164,312.04 4,164,312.04 SWEEP Total Money Market Mutual Fund 4,164,312.04 23.59%4,164,312.04 23.60%Federal Home Loan MortgageE.J. De La Rosa08/07/1208 /07/171.000%1,000,000.00 991,875.00 FHLMC Federal Home Loan MortgageE.J. De La Rosa12/28/1212 /28/170.950%1,000,000.00 993,800.00 FHLMC Total Federal Home Loan Mortgage 2,000,000.00 11.33%1,985,675.00 11.25%Federal National Mortgage AssociationUnion Banc05/3 0/1208/24/161.000%1,000,000.00 1,002,510.00 FNMA Federal National Mortgage AssociationUnion Banc06/2 8/1206/28/171.200%1,000,000.00 1,003,210.00 FNMA Federal National Mortgage AssociationE.J. De La Ros a10/18/1210/18/171.000%1,000,000.00 998,830.00 FNMA Federal National Mortgage AssociationE.J. De La Ros a11/15/1211/15/171.000%1,000,000.00 999,570.00 FNMA Federal National Mortgage AssociationUnion Banc12/3 1/1212/30/150.450%1,000,000.00 999,710.00 FNMA Total Federal National Mortgage Association 5,000,000.00 28.32%5,003,830.00 28.35%Federal Farm Credit BankE.J. De La Rosa05/02/1205/0 2/171.230%1,000,000.00 1,002,440.00 FFCB Total Federal Farm Credit Bank 1,000,000.00 5.66%1,002,440.00 5.68%Total Investments 17,655,755.84 $ 100.00%17,647,700.84 $ 100.00%**Represents the LAIF daily rate at 1/31/13 COSTA MESA SANITARY DISTRICT Schedule of Investments by Instrument Type January 31, 2013 5 InvestmentPurchaseMaturityDays toCouponYield toInve stment Broker/Dealer Type Date Date Maturity Rate Maturity Cost Local Agency Investment FundPool 10.300%**0.300%5,491,443.80 $ Bank of New YorkSweep 10.000%0.000%4,164,312.04 E.J. De La RosaFFCB05/02/1205/02/171,5831.230%1.230 %1,000,000.00 UnionBancFNMA05/30/1208/24/161,3321.000%1.000%1,000 ,000.00 UnionBancFNMA06/28/1206/28/171,6401.200%1.200%1,000 ,000.00 E.J. De La RosaFHLM08/07/1208/07/171,6801.000%1.000 %1,000,000.00 E.J. De La RosaFNMA10/18/1210/18/171,7521.000%1.000 %1,000,000.00 E.J. De La RosaFNMA11/15/1211/15/171,7801.000%1.000 %1,000,000.00 E.J. De La RosaFHLM12/28/1212/28/171,8230.950%0.950 %1,000,000.00 UnionBancFNMA12/31/1212/30/151,0940.450%0.450%1,000 ,000.00 Total Investment Portfolio 17,655,755.84 $ Total Portfolio Weighted Avg Interest Rate0.537%Weighted Avg Yield to Maturity0.537%Weighted Avg Days to Maturity719 Days1.97 Years **Represents the LAIF daily rate at 1/31/13 COSTA MESA SANITARY DISTRICT Investment Portfolio January 31, 2013 6 Net PurchaseMaturityIntuitionInvestment CouponInvestme ntMarketAccruedGain/(Loss)Date Date Broker/Dealer Type Par Rate Cost Value Interest If Sold n/aContinuousLAIFPOOL5,491,443.80 $ 0.300%**5,491,443.80 5,491,443.80 - - n/aContinuousBank of New YorkSWEEP4,164,312.04 0.000%4,164,312.04 4,164,312.04 - - 05/02/1205/02/17E.J. De La RosaFFCB1,000,000.00 1.230%1,000,000.00 1,002,440.00 3,040.83 2,440.00 05/30/1708/24/16UnionBancFNMA1,000,000.00 1.000%1,000,000.00 1,002,510.00 4,361.11 2,510.00 06/28/1206/28/17UnionBancFNMA1,000,000.00 1.200%1,000,000.00 1,003,210.00 1,100.00 3,210.00 08/07/1208/07/17E.J. De La RosaFHLM1,000,000.00 1.000%1,000,000.00 991,875.00 4,833.33 (8,125.00) 10/18/1210/18/17E.J. De La RosaFNMA1,000,000.00 1.000%1,000,000.00 998,830.00 2,861.11 (1,170.00) 11/15/1211/15/17E.J. De La RosaFNMA1,000,000.00 1.000%1,000,000.00 999,570.00 2,111.11 (430.00) 12/28/1212/28/17E.J. De La RosaFHLM1,000,000.00 0.950%1,000,000.00 993,800.00 870.83 (6,200.00) 12/31/1212/30/15UnionBancFNMA1,000,000.00 0.450%1,000,000.00 999,710.00 387.50 (290.00) Total Investments 17,655,755.84 $ 17,655,755.84 17,647,700.84 19,565.82 (8,055.00) **Represents the LAIF daily rate at 1/31/13 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 January 31, 2013 7 Type ofPurchaseMaturityCouponInvestment Investment Date Date Rate Par Value Cost FFCB05/02/1205/02/171.230%1,000,000.00 1,000,000.00 Callable 5/2/13 w/5 days notice and anytime a fter FNMA05/30/1208/24/161.000%1,000,000.00 1,000,000.00 Callable 5/30/13 w/10 days notice, thereafter 8,11,2,5 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, thereafter 3, 6, 9 Totals 8,000,000.00 $ 8,000,000.00 $ COSTA MESA SANITARY DISTRICT Call Schedule January 31, 2013 Call Features 8 Cost 50,136.76 In Thousands 1 - 180 Days9,655 $ 181 - 365 Days- 1 - 2 Years- ##########6,562.50 2 - 3 Years - COSTA MESA SANITARY DISTRICT MATURITIES DISTRIBUTION January 31, 2013 30%40%50%60%70%54.69%33.98%6,562.50 2 - 3 Years - ##########3 - 4 Years2,000 4 - 5 Years6,000 TOTAL 17,655 $ 0%10%20%30%1 -180 Days 181 -365 Days 1 -2 Years 2 -3 Years 3 -4 Years 4 -5 Years 000000 0.00%0.00%0.00%11.33% 9 Costa Mesa Sanitary District Portfolio Interest Rate Information as of January 31, 2013 0.20%0.40%0.60%0.80%1.00%1.20%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