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10 - Investment Report for the Month of February 2013 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.cm sdca.gov Memorandum ITEM NO. 10 To: Board of Directors Via: Scott Carroll, General Manager From: Marc Davis, Treasurer Date: March 28 , 2013 Subject: Investment Report for the Month of February 2013 Summary Attached is the Investment Repor t for the month of February 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 a pprove the Investment Report for the month of February 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 February 28 , 2013 . The District’s investme nts 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 Yo rk, 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 a mount 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 February 28 , 201 3 , was 0.666 %. The yield to mat urity of the portfolio was Board of Directors March 28 , 2013 Page 2 of 3 0.666 %. The District’s weighted average interest rate was 38 basis points (0.380 %) above the daily effectiv e yield of LAIF, which was 0.286 % as of February 28 , 2013 . The weighted average number o f days to maturity for the District’s total portfolio was 914 days (2.50 years). The average duration of the underlying securities in LAIF as of February 28 , 2013 , which is the most current information available, was 217 days. The District’s investment p ortfolio 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 February 28 , 2013 was 42.38 %. 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 whereby the investments in a mo ney market mutual fund exceeded 10.00% in any one fund and 20.00% in total. As of February 28 , 2013 , the District had 12.52 % of its portfolio in the sweep account with the Bank of New York. Two new securities were purchased and settle d in February 2013 . A third replacement security has been purchased and will settle in March 2013 . Once th is last replacement investment is settled , the balance in the sweep account will be reduced to below 10.00% of the portfolio. As of February 28 , 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. Leg al 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 28 , 2013. Through February 28 , 2013 , the portfolio has earned a weighted average interest rate of 0.797 %. Staf f 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 March 28 , 2013 Board of Directors regular me eting 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 March 28 , 2013 Page 3 of 3 Attachments Attachment A: Treasurer’s Report of Pooled Cash and Investments as of February 28 , 2013 DepositsOutstanding Bank Balance In Transits Checks Book Balance Active Accounts: Bank of America 356,130.61 $ 26,350.40 220,951.84 161,529.17 $ Total Active Accounts356,130.61 26,350.40 220,951.84 161,529.17 Market Value Increase Decrease Cost Investments: Local Agency Investment Fund5,181,443.80 $ - - 5,181,443.80 $ Money Market/Sweep Account2,174,337.47 - - 2,174,337.47 Federal Agency Securities10,010,810.00 - 10,810.00 10,000,000.00 Total Investments17,366,591.27 - 10,810.00 17,355,781.27 Total Pooled Cash & Investments17,722,721.88 $ 26,350.40 $ 231,761.84 $ 17,517,310.44 $ 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 February 28, 2013 Costa Mesa Sanitary District Pooled Cash and Investments by Fund February 28, 2013 Solid Waste Fund: Operating Reserve 801,000.00 $ Unreserved 4,724,858.14 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 2,260,188.92 Sewer Construction Fund 100,000.00 Facilities Revolving Fund 101,293.32 Asset Replacement Fund 244,013.31 Asset Management Fund 5,140,291.75 Total Pooled Cash & Investments 17,517,310.44 $ Treasurer Date Marcus D. Davis February 28, 2013 3/19/13 1 Total investments outstanding as of January 31, 201 3 17,655,755.84 $ Additions:Gain on sale of investment - Investment purchases 2,000,000.00 Deductions:Investments called - Net increase (decrease) in Sweep Account (1,989,974.57) Net increase (decrease) in LAIF (310,000.00) Total investments outstanding as of February 28, 20 13 17,355,781.27 $ 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 February 28, 2013 2 Interest CUSIP PurchaseMaturityCouponInvestmentEarned at Number Investment Date Date Rate Cost 02/28/13 n/aLocal Agency Investment Fundn/an/a0.286%5,181,44 3.80 $ n/a**n/aBank of New York-Sweep Acctn/an/a0.000%2,174,337 .47 n/a 3133EAPB8Federal Farm Credit Bank05/02/1205/02/171.230%1,000,000.00 4,065.83 3136G0GX3Federal National Mortgage Assn05/30/1208/2 4/161.000%1,000,000.00 194.44 3135G0MA8Federal National Mortgage Assn06/28/1206/2 8/171.200%1,000,000.00 2,100.00 3134G3ZR4Federal Home Loan Mortgage08/07/1208/07/17 1.000%1,000,000.00 666.66 3136G0L58Federal National Mortgage Assn10/18/1210/1 8/171.000%1,000,000.00 3,694.44 3135G0RQ8Federal National Mortgage Assn11/15/1211/1 5/171.000%1,000,000.00 2,944.44 313381LC7Federal Home Loan Mortgage12/28/1212/28/17 0.950%1,000,000.00 1,662.50 3136G17A1Federal National Mortgage Assn12/31/1212/3 0/150.450%1,000,000.00 762.50 3133823B7Federal Home Loan Mortgage02/22/1302/22/18 1.150%1,000,000.00 287.50 3133826D0Federal Home Loan Mortgage02/28/1302/28/18 1.100%1,000,000.00 - Totals 17,355,781.27 $ 16,378.31 $ **Represents the LAIF daily rate at 2/28/13 Comments COSTA MESA SANITARY DISTRICT Investment and Investment Earnings February 28, 2013 3 Current %of Market Value 02/28/13 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 23.03%Unlimited FNMA 28.84%Unlimited FFCB 5.77%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)29.84%40,000,000 Shares of Benefical Interest0.00%20%Money Market/Mutual Funds (Sweep Acct)12.52%10% per fund (2)Total 100.00%% of portfolio maturing under one year 42.38%no les s than 20%% of portfolio maturing over one year57.62%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 February 28, 2013 Description 4 PurchaseMaturityCouponInvestment% ofMarket% of Description Broker/Dealer Date Date Rate Cost Portfolio Value Portfolio Comments State Treasurer's PoolLAIFn/aContinuous0.286%**5,18 1,443.80 $ 5,181,443.80 $ POOL Total State Treasurer's Pool 5,181,443.80 29.85%5,181,443.80 29.84%Money Market Mutual FundBank of New Yorkn/aContinuo us0.000%2,174,337.47 2,174,337.47 SWEEP Total Money Market Mutual Fund 2,174,337.47 12.53%2,174,337.47 12.52%Federal Home Loan MortgageE.J. De La Rosa08/07/1208 /07/171.000%1,000,000.00 996,050.00 FHLMC Federal Home Loan MortgageE.J. De La Rosa12/28/1212 /28/170.950%1,000,000.00 997,400.00 FHLMC Federal Home Loan MortgageE.J. De La Rosa02/22/1302 /22/181.150%1,000,000.00 1,002,380.00 FHLMC Federal Home Loan MortgageE.J. De La Rosa02/28/1302 /28/181.100%1,000,000.00 1,004,080.00 FHLMC Total Federal Home Loan Mortgage 4,000,000.00 23.05%3,999,910.00 23.03%Federal National Mortgage AssociationUnion Banc05/3 0/1208/24/161.000%1,000,000.00 1,001,680.00 FNMA Federal National Mortgage AssociationUnion Banc06/2 8/1206/28/171.200%1,000,000.00 1,002,920.00 FNMA Federal National Mortgage AssociationE.J. De La Ros a10/18/1210/18/171.000%1,000,000.00 1,003,320.00 FNMA Federal National Mortgage AssociationE.J. De La Ros a11/15/1211/15/171.000%1,000,000.00 1,001,230.00 FNMA Federal National Mortgage AssociationUnion Banc12/3 1/1212/30/150.450%1,000,000.00 1,000,110.00 FNMA Total Federal National Mortgage Association 5,000,000.00 28.81%5,009,260.00 28.84%Federal Farm Credit BankE.J. De La Rosa05/02/1205/0 2/171.230%1,000,000.00 1,001,640.00 FFCB Total Federal Farm Credit Bank 1,000,000.00 5.76%1,001,640.00 5.77%Total Investments 17,355,781.27 $ 100.00%17,366,591.27 $ 100.00%**Represents the LAIF daily rate at 2/28/13 COSTA MESA SANITARY DISTRICT Schedule of Investments by Instrument Type February 28, 2013 5 InvestmentPurchaseMaturityDays toCouponYield toInve stment Broker/Dealer Type Date Date Maturity Rate Maturity Cost Local Agency Investment FundPool 10.286%**0.286%5,181,443.80 $ Bank of New YorkSweep 10.000%0.000%2,174,337.47 E.J. De La RosaFFCB05/02/1205/02/171,5241.230%1.230 %1,000,000.00 UnionBancFNMA05/30/1208/24/161,2731.000%1.000%1,000 ,000.00 UnionBancFNMA06/28/1206/28/171,5811.200%1.200%1,000 ,000.00 E.J. De La RosaFHLM08/07/1208/07/171,6211.000%1.000 %1,000,000.00 E.J. De La RosaFNMA10/18/1210/18/171,6931.000%1.000 %1,000,000.00 E.J. De La RosaFNMA11/15/1211/15/171,7211.000%1.000 %1,000,000.00 E.J. De La RosaFHLM12/28/1212/28/171,7640.950%0.950 %1,000,000.00 UnionBancFNMA12/31/1212/30/151,0350.450%0.450%1,000 ,000.00 E.J. De La RosaFHLM02/22/1302/22/181,8201.150%1.150 %1,000,000.00 E.J. De La RosaFHLM02/28/1302/28/181,8261.100%1.100 %1,000,000.00 Total Investment Portfolio 17,355,781.27 $ Total Portfolio Weighted Avg Interest Rate0.666%Weighted Avg Yield to Maturity0.666%Weighted Avg Days to Maturity914 Days2.50 Years **Represents the LAIF daily rate at 2/28/13 COSTA MESA SANITARY DISTRICT Investment Portfolio February 28, 2013 6 Net PurchaseMaturityIntuitionInvestment CouponInvestme ntMarketAccruedGain/(Loss)Date Date Broker/Dealer Type Par Rate Cost Value Interest If Sold n/aContinuousLAIFPOOL5,181,443.80 $ 0.286%**5,181,443.80 5,181,443.80 - - n/aContinuousBank of New YorkSWEEP2,174,337.47 0.000%2,174,337.47 2,174,337.47 - - 05/02/1205/02/17E.J. De La RosaFFCB1,000,000.00 1.230%1,000,000.00 1,001,640.00 4,065.83 1,640.00 05/30/1708/24/16UnionBancFNMA1,000,000.00 1.000%1,000,000.00 1,001,680.00 194.44 1,680.00 06/28/1206/28/17UnionBancFNMA1,000,000.00 1.200%1,000,000.00 1,002,920.00 2,100.00 2,920.00 08/07/1208/07/17E.J. De La RosaFHLM1,000,000.00 1.000%1,000,000.00 996,050.00 666.66 (3,950.00) 10/18/1210/18/17E.J. De La RosaFNMA1,000,000.00 1.000%1,000,000.00 1,003,320.00 3,694.44 3,320.00 11/15/1211/15/17E.J. De La RosaFNMA1,000,000.00 1.000%1,000,000.00 1,001,230.00 2,944.44 1,230.00 12/28/1212/28/17E.J. De La RosaFHLM1,000,000.00 0.950%1,000,000.00 997,400.00 1,662.50 (2,600.00) 12/31/1212/30/15UnionBancFNMA1,000,000.00 0.450%1,000,000.00 1,000,110.00 762.50 110.00 02/22/1302/22/18E.J. De La RosaFHLM1,000,000.00 1.150%1,000,000.00 1,002,380.00 287.50 2,380.00 02/28/1302/28/18E.J. De La RosaFHLM1,000,000.00 1.100%1,000,000.00 1,004,080.00 - 4,080.00 Total Investments 17,355,781.27 $ 17,355,781.27 17,366,591.27 16,378.31 10,810.00 **Represents the LAIF daily rate at 2/28/13 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 February 28, 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, 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 therea fter Totals 10,000,000.00 $ 10,000,000.00 $ COSTA MESA SANITARY DISTRICT Call Schedule February 28, 2013 Call Features 8 Cost 50,136.76 In Thousands 1 - 180 Days7,355 $ 181 - 365 Days- 1 - 2 Years- ##########6,562.50 2 - 3 Years - COSTA MESA SANITARY DISTRICT MATURITIES DISTRIBUTION February 28, 2013 30%40%50%60%70%42.38%46.10%6,562.50 2 - 3 Years - ##########3 - 4 Years2,000 4 - 5 Years8,000 TOTAL 17,355 $ 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%11.52% 9 Costa Mesa Sanitary District Portfolio Interest Rate Information as of February 28, 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