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2010 01 13 IAB
.o , P.O. Box 1504 LA QuiNTA, CALIFORNIA 92247-1504 78-495 CAtto-. TAMPICO (760) 777-7000 LA QUINIA, CALIFORNIA 92253 FAX (760) 777-7101 AGENDA INVESTMENT ADVISORY BOARD Caucus Room 78-495 Calle Tampico- La Quinta, CA 92253 January 13, 2010 - 4:00 P.M. CALL TO ORDER a. Pledge of Allegiance b. Roll Call II PUBLIC COMMENT - (This is the time set aside for public comment on any matter not scheduled on the agenda.) III CONFIRMATION OF AGENDA IV CONSENT CALENDAR A. Approval of Minutes of Meeting on December 9, 2009 for the Investment Advisory Board. V BUSINESS SESSION A. Transmittal of Treasury Report for November 2009 B. Continued Consideration of the Fiscal Year 2009-2010 Work Plan C. Revision of 2009-2010 Investment Policy - Corporate Notes VI CORRESPONDENCE AND WRITTEN MATERIAL A. Month End Cash Report and other selected Financial Data - December 2009 B. Pooled Money Investment Board Reports - October 2009 VII BOARD MEMBER ITEMS VIII ADJOURNMENT PUBLIC NOTICES The La Quints Caucus Room is handicapped accessible. If special equipment is needed for the hearing impaired, please call the Finance Department at 777-7150, twenty-four (24) hours in advance of the meeting and accommodations will be made. Any writings or documents provided to a majority of the Investment Advisory Board regarding any item on this agenda will be made available for public inspection at the City Clerk counter at City Hall located at 78-495 Calle Tampico, La Quinta, CA 92253, during normal business hours. INVESTMENT ADVISORY BOARD MEETING December 9, 2009 CALL TO ORDER Regular meeting of the La Quinta Investment Advisory Board was called to order at the hour of 4:00 p.m. by Vice Chairman Park, followed by the Pledge of Allegiance. PRESENT: Board Members Olander, Moulin, Park and Rassi ABSENT: Board Member Ross OTHERS PRESENT: John Falconer, Finance Director, Vianka Orrantia, Senior Secretary and Bryan Gruber, Lance Soll & Lunghard LLC, Audit Manager IL PUBLIC COMMENTS — None. III Confirmation of Agenda Mr. Falconer requested that the three handouts be added to the agenda: Interim Revision of the 2009-2010 Investment Policy prepared by Board Member Moulin and a letter from Board Member Olander addressed to the Mayor to be added for discussion under Board Member items; and an email follow-up to Pam Milliron, LAIF Administrator at the request of Chairman Ross and Board Member Moulin to be added for discussion under "Correspondence and Written Material," Item B. IV CONSENT CALENDAR A. Approval of Minutes of Meeting on November 4, 2009 for the Investment Advisory Board. Board Member Moulin requested that the following correction be made to page 5, first sentence; Board Members Park and Slander Moulin volunteered to I...1 In response to Board Member Moulin, Mr. Falconer confirmed that the first paragraph on page 2, fourth sentence, "the current TLGP risk weighted factor declined from 20% to 0%," was correct. V 1M MOTION: It was moved Board Members Rassi/Olander to approve the minutes of November 4, 2009 as amended. Motion carried unanimously. Mr. Falconer requested that Correspondence and Written Material Item A be discussed in order to meet the schedule of the presentation by the auditor. Board concurred. BUSINESS SESSION A. Transmittal of Treasury Report for October 2009 Mr. Falconer presented and reviewed the staff report advising the Board that page 2 reflects a slight decrease in cash by $4 million due to a two month payment of police services, a semi-annual debt service payment of $500,043 and $909,000 of various capital projects payments. Mr. Falconer further advised that page 7 reflects a decrease in the portfolio due to a maturity of a Treasury Bill and the current need for cash in the month of October. The report also reflects a slight decline in the yields by three basis points finishing the month at .50%. Mr. Falconer advised that pages 5 & 6 the unrealized gain and loss, the report currently reflects an unrealized gain. MOTION - It was moved by Board Members Moulin/Olander to approve, receive and file the Treasury Reports for October 2009. Motion carried unanimously. B. Continued Consideration of the Fiscal Year 2009-2010 Work Plan Motion - It was moved by Board Members Olander/Moulin to continue the discussion of the 2009-2010 Work Plan. Motion carried unanimously. CORRESPONDENCE AND WRITTEN MATERIAL A. City of La Quinta FY 2008-2009 Audited Financial Statements Mr. Bryan Gruber of Lance Soil, & Lunghard, LLP, Audit Managers presented the Audited Financial Statement. Mr. Gruber advised 2 that he would review the audited financial statements, the audit process and the city's cash and investments as presented in the financial statements. Mr. Gruber advised that the audit is conducted in two phases, : an interim audit which occurs during the fiscal year, and a subsequent interim audit phase after the end of the fiscal year. Mr. Gruber also advised that the audit's focus during the fiscal year is on internal controls, processes of the City, and a test of internal controls; in addition, an audit of cash and investments consisting of reconciliations of cash and investments, procedures and controls over purchases and sales of investments along with compliance with the investment policy. At the end of the fiscal year, the audit's focus is on balances and amounts reported in the financial statements, cash and investments include independent third party confirmation and testing of the reconciliations. In response to Board Member Moulin, Mr. Gruber advised that cash balances are confirmed 100%. Mr. Gruber advised that at the conclusion of the audit there are three letters issued, . one One of the letters is an independent audit report, which is included in the financial statements; the letter expresses an unqualified opinion on the financial statements, (which is the best opinion an entity can receive in a financial audit), in addition, there are two communication letters: a management letter, and an audit letter which describes the process of the audit and/or describes any issues as a result of the audit. Mr. Gruber further advised that there was one material audit adjustment related to payables and one immaterial audit variance that was not booked due to immateriality but related to the fair value of cash and investments at June 30, 2009. Mr. Gruber further advised that the GASB 31 adjustment was the fair value adjustment that was not recorded, which was approximately $70,000. Mr. Gruber also advised that this year the City implemented Governmental Standard Board Statement 45 which related to the accounting and reporting of post -employment benefits other than pensions, a footnote disclosure and other amounts were reported in the financial statements. 3 In response to Board Member Moulin, Mr. Gruber advised pension benefits are similar in nature to post employment health care benefits. Mr. Falconer advised that Note 15 gives an explanation of the pension benefits and summarized the reason for the payment. Mr. Gruber touched on a few of the highlights of the financial statement as follows: The government wide net assets increased from the prior year by 3% with the City's general fund reporting unreserved fund balance at approximately $46 million, which is approximately 133% annual of the Annual General Fund Budget. Page 41 — Note 3 reporting of cash and investments governed by GASB Statement 40; which is designed to provide a comprehensive overview of the City's cash and investments and discuss how the City is managing its risk as related to its investment portfolio. The City reported approximately $193 million in cash and investments, which is a 2% decrease in comparison to this time last year. The table provided in the note reflects the range of maturities of the investment portfolio, which 94% of the investments are short-term. The City's investments as of June 30 were rated by the rating agencies within the parameters of the City's investment policy. Mr. Gruber advised that GASB 40 requires a separate note disclosure for any investments with any one issuer that exceeds 5%, which the City did not have as of June 30, 2009nor did the City have custodial credit risk to report. In response to Board Member Moulin, Mr. Falconer advised that the asterisk referenced on page 42 is referring to five-year investments, which is required by state law. Board Member Moulin stated that this might be something that will need to be reviewed next year. In response to Board Member Park, Mr. Falconer explained the assumptions used to in the long-term financial plan. In response to Board Member Moulin, Mr. Gruber advised that he was not aware of any Governmental Accounting Standards similar to those of the Financial Accounting Standards 168. 0 Mr. Falconer asked the Board if they wanted to review the audit letters which could be included in next months agenda. It was the conclusion of the Board not to review the audit letters. The Board thanked Mr. Gruber for his presentation. B. Month -End Cash Report and other selected Financial Data — August 2009 Mr. Falconer presented and reviewed the Month -End Cash report advising the Board that page 3 reflects the current LAIF rates at .59% with the City at .50%. Mr. Falconer also advised that page 4 reflects the recent bill results with the three-month bill at .03% and the six-month at .15%. He further advised that the notes report will be included in next months report, due to the investment of the two year notes. In response to Board Member Rassi, Mr. Falconer advised that he contacted Pam Millirin from LAIF and she advised that the reason for the decrease in the loans were due to the issuance of government obligation bonds earlier in the year, which decreased the amount of the loans to 9%. Noted and Filed C. Pooled Money Investment Board Reports — September 2009 Noted and Filed D. October 27, 2009 Joint Meeting Minutes with the City Council Noted and Filed VII BOARD MEMBER ITEMS Board Member Olander presented his letter to the Board advising that the letter was sent to the Mayor and the City Council for their consideration in allowing him to continue to serve on the board. Upon his appointment in June, Board Member Olander stated he was not made aware that he had to reside within the city in order to serve on the Board, he further stated had he known prior to his appointment he would not have reapplied to the Board. Board Member Olander asked the Board for their support, with Board Members Rassi and Park 67 volunteering to write a letter to the Mayor and City Council on Board Member Olander's behalf. Board Member Moulin advised the Board that he and Chairman Ross met with Mr. Falconer regarding increasing the limit in TLGP Corporate Notes to 20% of the portfolio. Board Member Moulin requested that this item be placed on the January agenda for the Board's consideration and approval. ►VIII WARKIDIF TJTLMWIHI MOTION - It was moved by Board Members Rassi/Olander to adjourn the meeting at 4:45 p.m. Motion carried unanimously. Submitt Vianka Orrantia, Senior Secretary P INVESTMENT ADVISORY BOARD Business Session: A Meeting Date: January 13, 2010 ITEM TITLE: Transmittal of Treasury Report for November 30, 2009 BACKGROUND: Attached please find the Treasury Report November 30, 2009 RECOMMENDATION: Review, Receive and File the Treasury Report for November 30, 2009 AW44A M John M. Falconer, Finance Director MEMORANDUM TO: La Quinta City Council FROM: John M. Falconer, Finance Director/Treasurer SUBJECT: Treasurer's Report for November 30, 2009 DATE: December 30, 2009 Attached is the Treasurer's Report for the month ending November 30, 2009. The report is submitted to the City Council each month after a reconciliation of accounts is accomplished by the Finance Department. The following table summarizes the changes in investment types for the month: Investment Beginning Purchased Notes Sold/Matured Other Endin Chan e LAW $ 49,956,194 $ (1,850,000) $ 48,106,194 (1,850,000) Certificates of Deposit US Treasuries (2) 1,209,000 100,958.667 25,000,000 (23,000,000) 16,581 1,209,000 102,975,248 0 2,016,581 US Gov't Sponsored Enterprises (2) 0 0 0 0 0 Commercial Paper (2) Corporate Notes - 15,274,701 0 (11,703) 15,262,998 (11.703) Mutual Funds Subtotal $ 167,398,562 $ 25,000,000 1 $ 24.850,000 0 $ 4,878 0 $ 167,553,440 0 $ 154,878 Cash 3) 1 fill $ 2,312,186 $ 566,593 2,312,186 Total $ 169,144,155 $ 25,000,000 $ 27,162,186 $ 4,878 $ 166,986.84 $$ 2,157,308 I certify that this report accurately reflects all pooled investments and is in compliance with the California Government Code: and is in conformity with the City Investment Policy. As Treasurer of the City of La Quints, I hereby certify that sufficient investment liquidity and anticipated revenues are available to meet the pools expenditure requirements for the next six months. The City of La Quinta used the Bureau of the Public Debt, U.S. Bank Monthly Statement and the Bank of New York Monthly Custodian Report to determine the fair market value of investments at month end. AA/1 �G✓� / 2-1 30/2-oD Date John M. Falconer Finance Director/Treasurer Footnote (1) The amount reported represents the net increase (decrease) of deposits and withdrawals from the previous month. (2) The amount reported in the other column represents the amortization of premium/discount for the month an US Treasury, Commercial Paper and Agency investments. (3) The cash account may reflect a negative balance. This negative balance will be offset with transfers from other investments before warrants are presented for payment by the payee at the bank. 2 Treasurer's Commentary For the Month of November 2009 Cash Balances — The portfolio size decreased by $2.2 million to end the month at $166.99 million. The major reason for the decrease was that expenditures were more than revenues which included $329,000 for Capital Projects. Investment Activity — The average maturity of the portfolio increased by 62 days to 152 days at the end of November. The Treasurer follows a buy and hold investment policy and three (3) U.S. Treasury Securities were purchased in November. Two of the U.S. Treasury Securities mature in two (2) years and the other Security matures in one (1) day. The sweep account earned $7 in interest income for the month of November and the bank fees for the month were $ 1,773 which resulted in a net decrease of $1,766 in real savings. Portfolio Performance — The overall portfolio performance increased by three (3) basis points from the prior month and ended at .53% for the month, with the pooled cash investments yielding .56%. The portfolio yield should continue to stay at these levels for the near future. At this time last year, the portfolio was yielding 2.36% which reflects the current interest rate environment. Looking Ahead While the liquidity crisis impacting financial and business institutions has somewhat waned, the Treasurer is still concentrating on safety first and foremost. In the short term, the Treasurer will be maintaining LAIF balances at the maximum allowable percentage because its rate declines slower in a declining rate environment. The Treasurer will not be investing in non-TLGP corporate notes, non-TLGP commercial paper or GSE's due to the current economic conditions affecting the financial markets; but instead will be investing in short term (up to two year) U.S. Treasury Bills. 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Mit - , 111 ! 18 O�G'^"d Sr XZm bNee T' I� �8g�e tlt� AP �~ �~ Stg '�, W58I e p 10 ng§& �o 2A a s $:fin < _ _ o t E u q E City of to Ouinta ComparaUve Rates of Interest November 30, 2009 Average I I Treasury, BilhuNcle I I Three AuVsl2006 4.94% 5.01% 4.97% 411 4.97% 4.95% Sept 2006 4.98% 5.01% 4.99% 53 5.00% 5,02% Oct 2006 5.00% 502% 5.01% 61 4.96% 5.10% Nov 2006 5,04% 503% 503% 62 4.94% 5.13% Dec 20M 5,08% 5.04% 5,06% 80 4.90% 5.13% Jan 2007 6,18% 5.12% 5.16% 64 4.98% 5,16% Feb 2007 5.19% 5,13% 5.11% 45 4.95% 5.18% Mar2007 5.21% 5.03% 5.15% 67 4.88% 521% Apt 2001 5.20% 5.14% 5.15% 42 484% 522% May 2001 5.20% 5.05% 5A6% 32 4.81% 525% June 2007 5.19% 4,88% 5,10% 85 4.81% 525% FY 01/OB July 2007 521% 490% 5A2% 129 4.80% 5.26% August 2007 6.17% 4B5% 5.08% 109 4.59% 525% Sept M07 6,16% 486% 5.06% 129 4,00% 5.23% Oct 2001 5,11% 4B5% 5.02% 116 3,95% 5.14% Nov 2007 6.03% 4B3% 4.96% 99 3,34% 496% Dec 2007 4.96% 343% AA5% 123 3,39% 4.80% Jan 2008 4.58% 3.33% 4,22% 96 2.31% 4,62% Feb 2008 4.12% 3.24% 385% 86 2,02% 4,16% Mar 2008 4,07% 283% 367% 74 1.50% 3.78% Apr 2008 3.45% 3.27% 341% 82 1.70% 340% May 2008 3,14% 327% 3.17% 63 1.92% 307% June 2008 3.09% 1.94% 2.86% 80 2.14% 2,89% FV OSM9 July 2008 2.99% 193% 217% 62 170% 1,88% 229% 275% 2.18% 279% AuWst2008 3.16% 192% 2.88% 51 1.69% 1.89% 2A4% 2.38% 2.08% 278% Sept 2008 2,81% 192% 264% 37 1.42% 139% 1.96% 200% 2,13% 2.77% Oct 2008 2,66% 2.61% 2,61% 29 090% 140% 1.72% 1.50% 207% 2.71% Nov 2008 2.38% 2.36% 2.36% 64 OA5% 0.49% 1.04% 125% 1A5% 257% Dec 2008 1,60% 0.18% 142% 116 005% 025% 0.59% ON% 0.97% 235% Jan 2009 1,36% 0,18% 1.23% 82 OA5% 0.35% 043% ON% 0,31% 2,05% Feb 2009 123% 0.18% 1.11% 75 030% 0.50% 061% 088% 0.48% 187% Mar2009 1,26% 0.18% 1,13% 69 020% 0.42% 0,70% 0.88% 037% 182% Apr2009 0,94% 0.18% 0.85% 54 031% 0.33% 0,59% OBB% 028% 161% May 2009 0.92% 0.18% 0.84% 80 0.18% 0.30% O5M% OBB% 023% 1.53% June 2009 065% 029% 0.80% 111 020% 0.35% 055% 1.13% 026% 138% FY09110 July 2009 069% 0,30% 0,65% 111 0,19% 0.28% OAM 100% 028% 1.04% August 2009 064% 0.30% 061% 92 0.16% 026% O46% 1.0% 024% 093% Sept2009 0.56% 0.31% 053% 112 0.12% 0.19% 0.41% 1.00% 0,19% 075% 002009 0.52% 0.31% 050% 90 008% 0.19% 0.38% 100% 0.19% ON% MI 0 O O 11 INVESTMENT ADVISORY BOARD Business Session: B Meeting Date: January 13, 2010 ITEM TITLE: Continued Consideration of the Fiscal Year 2009/2010 Work Plan BACKGROUND: As part of the work plan, the Investment Advisory Board is asked to review the Investment Policy and make any recommendations for the City Council's consideration in June of each year. The Board had previously asked for an update on the CDAR's program. Attached are two prior staff reports on the CDAR's program as well as an update to the program and a current rate sheet from Palm Desert National Bank. Staff did review the California Municipal Treasurers Association (CMTA) website and did not see a presentation published on the CDAR's program for the 2009 Conference. In addition, Chairman Ross will present an update on the alternatives to LAIF at the meeting. RECOMMENDATION: Continued consideration of this item with a recommendation to the City Council of any changes to the Fiscal Year 2009/2010 Investment Policy. r� +dz-sr-,� Falconer, Finance Director rage 1 or i John Falconer From: Jacalyn Laughner blaughner@PDNB.com] Sent: Thursday, January 07, 2010 12:00 PM To: John Falconer Subject: CDAR Rates Good Afternoon John, Per your request I have included the current rates for the MARS Program. Eric Harvey is the Business Administrator responsible for CDAR Investments. Please feel free to contact him or myself with any questions. His contact information is: Eric Harvey 760-674-1612 eharvey@pdnb.com 4 Wk CD .06000% 13 Wk CD .15000% 26 Wk CD .20000% 52 Wk CD .40000% 2 Yr CD 1.40000% Thank you, Jacalyn Laughner Vice President Operations/BSA Officer Palm Desert National Bank 73-745 El Pasco Palm Desert, CA 92260 760-674-1427 ]laughner(@pdnb.com www.pdnb.com Confidentiality Notice.- This e-mail message, together with any documents, files and/or e-mail messages attached to it, is the property of Palm Desert National Bank and is intended for only the person or entity to which it is addressed, and may contain information that is legally privileged, confidential and restricted from disclosure. If you are not the intended recipient, or responsible for delivery to that person, you are hereby notified that any dissemination or copying of this communication is strictly prohibited. If such is the case, please delete this message without saving. If you have received this electronic transmission in error, please notify the sender by reply transmission so that we may correct our records. Thank you. 2 1/7/2010 N � d m m c Q O u m E O v W. N m adi c y 0 v m N > N c of w m Y ` �- E aLNi umi ,w u d E a c m� y� E aL� cU •d o� v m CI D. N d U� - r N N -O v 0 d u c m > �+ ... c J Y1 L N C L LL C c m N L J o J N v y p m p N C v v N v v a°i m. o oN o 0 3 a QO N b C E v M y T In >. v `m �' v N' -o E N v •` -� E En E v p Q a A v °' v m� m o. m E o= o m a o J m v ' E rNo of ai . N a G aEi m mm u v s » d E m M m� LL D tJ � -n E .N V> 0 0 m � � N �L v v p U m Ln in 3 c i u N m N my v y. U N N O U O m L C m .Y u 00.- N QO O 4 L u< E aL E N C N s_ E R O d O E o d CJ E o OCn L N CD ,C C7 C-;) Ci Q ILL Yl t U C3 d C c C C N a - E- � 2�v J _ O $$ N E b F `^ tfit ; 3 if; ply. t ps n O Z N tt U U o 7�- a o E2� ' a N - mc- - E 4, m i 9 mfit N Q E vN N L" E E V T oy aA fic E iO� £� po; a N s N h a o a FUvEK .��s c;^o ry .= w vi SSS w �� r�i w�` Z i INVESTMENT ADVISORY BOARD Business Session: D Meeting Date: February 14, 2007 TITLE: Consideration of Fiscal Year 2007/08 Investment Policies Investment & Work Plan Items BACKGROUND: Staff met with Palm Desert National Bank regarding the CDAR's program. Specific questions discussed were FDIC coverage (see attached), audit confirmations wiring funds and monthly statements (see attached). It appears from discussions with Palm Desert National that audit confirmations should be sent directly to the financial institutions that are held on June 30' of each year. In addition, no individual CD would be directly held at Palm Desert National if they were selected to place funds in the CDAR's program. One area that will need additional discussions is the requirement that funds be wired on Wednesday, one day before they are disbursed to purchase the CD's on Thursday. Funds appear to be at risk for that day if they are not properly collateralized by the bank since they would exceed the $100,000 FDIC limit. In addition, interest would be lost for that one day if the bank holds the funds in a ledger account. Interest would be earned if the City opened an account with the bank. RECOMMENDATION: Continued consideration of this item with a recommendation to the City Council of any changes to the Fiscal Year 2007/08 Investment Policy. AJ4ohnM. Falconer, Finance Director 5 John Falconer From: Susan Cavano [scavano@PDNB.com] Sent: Tuesday, January 23, 2007 6:26 PM To: John Falconer Subject: Emailing: index <<index.url>> Hi John: Thanks for coming in today. It was a pleasure meeting with you! I'm sending you a link that should answer your FDIC questions. # 18 addresses your question of how long it takes to collect on FDIC insurance. Answers to your other questions: 1. If the City opens an interest bearing account with us (our Treasury Plus pays a great rate) we will pay you interest on the deposit through the day we invest and you will start earning on the CDARS account the next day. 2. Audit Confirmations - I spoke with Rhonda Swanson, our CFO. It's a little sticky because Promentory would have no way of verifying the authenticity of the request since we hold your account records here, however, we could make arrangements in advance with them. Rhonda understands why you would want the confirmations to go directly to Promentory and said we would work out the details. I hope this answers your questions. Please let me know if I can be of further help! Susan Shortcut to: http://www.fdic.gov/deposit/deposits/deposit/faqs/index.html Susan I Cavano Vice President Director of Operations ® PD-I\B Patin Desert National Bark 71 745 El Paseo Palm Desert CA 92260 Direct TellFax: 760.674.1487 scavanoapdnb.com ruin.: uepusit insurance?.overage rrequenuy t\sKeu t1uesuuus . asc . U. - I 0 t Home > Deposit Insurance > Are My Deposits Insured? > Deposit Insurance coverage Frequently Asked Questions Deposit Insurance Coverage Frequently Asked Questions • Common Questions and Answers • Single Accounts • Self -Directed Retirement Accounts • Joint Accounts • Revocable Trust Accounts • Irrevocable Trust Accounts • Employee Benefit Plan Accounts • Corporation. Partnership and Unincorporated Association Accounts • Government Accounts Common Questions and Answers 1. What is the FDIC? The FDIC - short for the Federal Deposit Insurance Corporation - is an independent agency of the United States government. The FDIC was created by Congress in 1933 to make the savings of millions of Americans secure. The FDIC protects depositors against the loss of their insured deposits if an FDIC -insured bank or savings association fails. FDIC insurance is backed by the full faith and credit of the United States government. 2. What is the Purpose of FDIC Deposit Insurance? The FDIC protects depositors' funds in the unlikely event of the financial failure of their bank or savings institution. FDIC deposit insurance covers the balance of each depositor's account, dollar -for -dollar, up to the insurance limit, including principal and any accrued interest through the date of the insured bank's closing. 3. What is the FDIC insurance amount? The basic insurance amount is $100,000 per depositor, per insured bank. This includes principal and accrued interest up to a total of $100,000. For example: Jane Smith has a CD in her name alone with an original balance of $98,000. Jane has interest earned of $ 3,000. Jane's account now totals $101,000. But, Jane is only insured up to $100,000 and $1,000 is uninsured. 4. Whose deposits does the FDIC insure? Any person or entity can have FDIC insurance on a deposit. A depositor does not have to be a citizen, or even a resident of the United States. 5. Does FDIC insurance protect creditors and shareholders? FDIC insurance only protects depositors, although some depositors may also be creditors or shareholders of an insured bank. 6. What does FDIC insure? FDIC insures all types of deposits received by a financial institution in its usual course of business. For example, savings and checking accounts, NOW accounts, Christmas club accounts, and time deposits (including certificates of deposit, "CDs") are all subject to FDIC insurance coverage. Cashiers' checks, officers' checks, expense checks, loan disbursement checks, interest checks, outstanding drafts, negotiable instruments and money orders drawn on the institution are also considered deposits, and so are also protected by FDIC. Collectively, these types of instruments are referred to as "official checks." For example, a cashier's check is a type of official check. 7 http://www.fdic.gov/deposit/deposits/deposit/fags/index.html 1/24/2007 vi)iu: uepostt insurance coverage rrequentiy ,vsxea yuesttons ragc c yr Y Certified checks, letters of credit, and travelers' checks, for which an insured depository institution is primarily liable, also are insured when issued in exchange for money or its equivalent, or for a charge against a deposit account. What is not insured by the FDIC? The FDIC does not insure the money individuals invest in stocks, bonds, municipal bonds, or other securities; mutual funds, (including money market mutual funds, and mutual funds that invest in stocks, bonds and other securities); annuities (which are contracts underwritten by insurance companies that guarantee income in exchange for a lump sum or periodic payment); or insurance products such as automobile and life insurance even if these products were purchased at an insured bank or through an affiliated broker/dealerfinsurance agent that is offering these products on behalf of a bank. The FDIC does not insure U.S. Treasury bills, bonds, or notes, but these are backed by the full faith and credit of the U.S. Government. Also, the FDIC insurance doesn't cover valuables in safe deposit boxes. These contents, however, may be covered either by the bank's private insurance or the box holder's personal homeowners insurance. Furthermore, the FDIC does not insure against loss of funds due to robberies and other thefts. Stolen funds may be covered by what's called a bank's Hazard and Casualty insurance, which is a policy a bank purchases to protect itself from fire, flood, earthquake, robbery, and physical damage. In those rare instances where a bank employee may tamper with a customers account, the bank's blanket bond insurance (also called fidelity bonds) may cover the loss and the funds would be returned to the customer. Consumer protection laws such as the Electronic Funds Transfer Act offer protections if a third party somehow gains access to a customer's account. 8. What types of financial institutions are insured by the FDIC? The FDIC insures deposits in most, but not all, banks and savings associations. All FDIC -insured institutions must display an official sign at each teller window or teller station. 9. Can insurance coverage be increased by depositing funds with different insured banks? Deposits with each FDIC -insured bank are insured separately from any deposits held at another insured bank. If an insured bank has branch offices, the main office and all branch offices are considered one insured bank. A depositor cannot increase insurance coverage by placing deposits at different branches of the same insured bank. Similarly, deposits held with the Internet division of an insured bank are considered the same as funds deposited with the "brick and mortar" part of the bank, even if the Internet division uses a different name. Financial institutions that may be owned by the same holding company, but that are separately chartered, are separately insured. Separately chartered banks have different FDIC Certificate numbers. 10. Can insurance coverage be increased by dividing my deposits into several different accounts at the same insured bank? Deposit insurance coverage can be increased only if the accounts are held in different categories of ownership. These categories include the four most common consumer ownership categories: single accounts, self -directed retirement accounts, joint accounts, and revocable trust accounts; and the less common ownership categories: irrevocable trust accounts, employee benefit plan accounts, corporation, partnership and unincorporated association accounts, and public unit accounts. 11. Can insurance coverage be increased by using a different co -owner's Social Security number on each account or changing the way the owners' names are listed on the accounts? Using different Social Security numbers, rearranging the order of names listed on accounts or substituting "and" for "or" in joint account titles does not affect the amount of insurance coverage available to account owners. 12. Can insurance coverage be increased by dividing my funds and depositing them into several different accounts? Federal deposit insurance is not determined on a per -account basis. A depositor cannot increase FDIC insurance by dividing funds owned in the same ownership category among different accounts. The type of deposit instrument - whether checking, savings, or CD - has no bearing on 8 http://www.fdic.gov/deposit/deposits/deposit/faqs/index.html 1/24/2007 ruin: ueposrt insurance t;overage rrequentty ttsKea Questions rage i or 4 the amount of insurance coverage. 13. How does the FDIC determine ownership of funds? The FDIC relies on the "deposit account records" of the insured depository institution to determine how funds are insured. The FDIC may request supplemental documentation such as articles of incorporation, copies of a trust, and affidavits to identify relationships between owners and beneficiaries. These documents may be used by the FDIC to confirm that the funds are actually owned in the manner indicated in the bank's account records and to determine whether the account qualifies for insurance coverage. 14. What are "deposit account records?" The "deposit account records" of an insured depository institution are account ledgers, signature cards, certificates of deposit, passbooks, and certain computer records. However, account statements, deposit slips, items deposited, and cancelled checks are not considered deposit account records for purposes of calculating deposit insurance. 15. What is the deposit insurance coverage after a depositor dies? The FDIC will insure a deceased person's accounts as if he or she were still alive for six months after the death of a deposit owner. During this "grace period," the insurance coverage of the deposit owner's accounts will not change unless the accounts are restructured by those authorized to do so. The FDIC applies the grace period only if its application would increase, rather than decrease, deposit insurance coverage. For example: A and B own a qualifying joint account of $100,000 for which they each have a right of survivorship. B also has a single (or individual) account of $100,000 at the same FDIC - insured institution. If A dies, for six months after A's death the FDIC will still insure the A and B account as a joint account, even though B, as A's survivor, has inherited A's ownership interest in the account. After the grace period, B's increased ownership interest in the joint account would be added to his or her single account and insured to a limit of $100,000. 16. What happens when banks merge? If an account owner has deposits in Bank A and Bank B and Bank A merges into Bank B, deposits of Bank A continue to be insured separately from the deposits of Bank B for at least six months after the date of the merger. CD's from Bank A, the assumed bank, are separately insured until the earliest maturity date after the end of the six month grace period. 17. What happens when a bank fails? The FDIC would either transfer the insured depositor's account to another FDIC insured bank, or give the insured depositor a check equal to their account balance. This includes the principal and interest accrued through the date of the bank's closing, up to the insurance limit. 18. If a bank fails, what is the timeframe for payout of the funds that are insured if the bank cannot be acquired by another financial institution? Federal law requires the FDIC to make payments of insured deposits "as soon as possible" upon the failure of an insured institution. While every bank failure is unique, there are standard policies and procedures that the FDIC follows in making deposit insurance payments. It is the FDIC's goal to make deposit insurance payments within one business day of the failure of the insured institution. Typically, a bank that has failed will be closed on a Friday. The FDIC will then work the weekend to complete deposit insurance determinations for most deposits and be prepared on Monday to either transfer the insured portion of a deposit to another FDIC insured institution or provide deposit insurance payment checks. (Note: Some deposits that require supplemental documentation from the depositors, such as accounts linked to a living trust agreement or funds placed by a deposit broker, may take a little longer. The timing of the completion of the deposit insurance determination is based solely on the depositor providing the documentation needed by the FDIC to determine insurance coverage.) 19. What happens to customers with uninsured deposits? Customers who have uninsured deposits may recover a portion of their uninsured funds, but there is no guarantee that they will recover any more than the insured amount. The amount of uninsured funds they may receive, if any, is based on the sale of the failed bank's assets. Depending on the quality and value of these assets, it may take several years to sell all the assets. As assets are sold, uninsured depositors receive periodic payment on their uninsured deposit claim. 9 http://www.fdic.gov/deposit/deposits/deposit/fags/index.html 1/24/2007 rll1C: Veposit Insurance Coverage Frequently Asked Questions Fage 4 of 4 20. What happens to my direct deposits when a bank fails? If a failed bank is acquired by another bank, all direct deposits, including Social Security checks or paychecks delivered electronically, will be automatically deposited into their account at the assuming bank. If the FDIC cannot find an acquirer for the failed bank, the FDIC will attempt to arrange with another local bank to temporarily process any direct deposits. This will allow the depositor time to make new arrangements for direct deposits as well as automatic withdrawals (such as automatic payments to utilities or insurance companies) with another bank. 21. How can 1 access my safe deposit box when a bank fails? If the FDIC finds a new owner for a bank where the customer has a safe deposit box, the customer will be able to conduct business as usual. If the FDIC cannot find a buyer for the failed bank, we will mail instructions to the customer that will explain how the customer can remove the contents in their box. 22. What happens to loans a depositor has at the failed bank? The customer remains liable for any payments due on a loan or credit card. The customer would continue making payments as they did before the bank failed until they are instructed to do otherwise in writing by the acquiring bank or the FDIC. If a depositors bank fails and the depositor has both a loan and uninsured deposits at the bank, the depositor may "set off" (deduct) the loan balance from the uninsured balance. The depositor may only deduct the loan balance against the uninsured balance'tf the loan and the deposit are titled exactly the same. As an example, if the depositor has a loan in their name only and a deposit that is owned jointly with another person, then the right of set off does not exist. 23. How can I access the FDIC's deposit insurance products? Go to www.fdie.gov and click on Deposit Insurance in the upper left-hand corner, then scroll down and click on Are My Deposits Insured? You will now be at the web page that contains all of the FDIC's deposit insurance resource materials. All of our deposit insurance products are free. The best way to obtain free copies of all these resources is through our online order form . Go to www2.fdic.gov/depositinsuranceregister. Here you can place small or large orders for all deposit insurance products. Fill in the required information, select the number of copies, and press the "Submit Order" button. Please allow four to six weeks for shipping. You can also contact the FDIC Call Center toll -free at 1-877-275-3342 and request copies. Return to top Last Updated 05/2212006 Customer Assistance Home Contact Us Search Help SiteMap Form Freedom of Information Act (FOIA) Service Center Website Policies USA.gov 10 http://www.fdic.gov/deposit/deposits/deposit/faqs/index.html 1 /24/2007 Palm Desert National Bank 73-745 El Paseo Palm Desert, CA 92260 Date Page Subject: CDARS Customer Statement 01/18/07 1 of 3 Below is a summary of your certificate(s) of deposit, which we are holding for you as your custodian. These certificate(s) of deposit have been issued through CDARS by one or more FDIC -insured depository institutions. Should you have any questions, please contact us at 760 340 1145, or send an email to solutions@pdnb.com. Summary of Accounts Reflecting Placements Through CDARS Account ID Effective Date Interest Rate Maturity Date UVWIINW 07/20/06 4.65% TOTAL 01 /18/07 Opening Balance $1,000,000.00 $1,000,000.00 Ending Balance $0.00 $0.00 CDARS is a service mark of Promontory Interfinancial Network, LLC. Date 01/18/07 Page 2 of 3 ACCOUNT OVERVIEW Account ID: Effective Date: 07/20/06 Product Name: 26-WEEK PERSONAL CD Maturity Date: 01/18/07 Interest Rate: 4.65% YTD Interest Paid: $23,455.59 Account Balance: $0.00 Int Earned Since Last Stmt: $2,214.05 The Annual Percentage Yield Earned is 4.76%. CD Issued by Alva State Bank & Trust Company YTD Interest Paid: $2.257.60 12130106 OPENING BALANCE $96,250.00 Int Earned Since Last Stmt: $213.10 01/18/07 Interest Payment 2,257.60 O1/18/07 Maturity Payout - Funds To Be Reinvested -98,507.60 01/18/07 ENDING BALANCE $0.00 CD Issued by Associated Bank, NA YTD Interest Paid: $803.35 12/30/06 OPENING BALANCE $34,250.00 Int Earned Since Last Stmt: $75.83 01/18/07 Interest Payment 803.35 01/18/07 Maturity Payout - Funds To Be Reinvested -35,053.35 01118107 ENDING BALANCE $0.00 CD Issued by Bank of American Fork YTD Interest Paid: $1,466.78 12130106 OPENING BALANCE $62,534.35 Int Earned Since Last Stmt: $138.45 01/18/07 Interest Payment 1,466.78 01/18/07 Maturity Payout - Funds To Be Reinvested -64,001.13 01118107 ENDING BALANCE $0.00 CD Issued by Bath Savings Institution YTD Interest Paid: $2,257.60 12130106 OPENING BALANCE $96,250.00 Int Earned Since Last Stmt: $213.10 01/18/07 Interest Payment 2,257.60 01/18/07 Maturity Payout - Funds To Be Reinvested -98,507.60 01118107 ENDING BALANCE $0.00 CD Issued by BB&T YTD Interest Paid: $918.12 12130106 OPENING BALANCE $39,142.87 Int Earned Since Last Stmt: $86.67 01/18/07 Interest Payment 918.12 01/18/07 Maturity Payout - Funds To Be Reinvested -40,060.99 01/18/07 ENDING BALANCE $0.00 CD Issued by Colonial Bank NA YTD Interest Paid: $247.51 12/30/06 OPENING BALANCE $10,552.17 Int Earned Since Last Stmt: $23.37 01/18/07 Interest Payment 247.51 01/18/07 Maturity Payout - Funds To Be Reinvested -10,799.68 01118107 ENDING BALANCE $0.00 CD Issued by Community National Bank YTD Interest Paid: $2,257.60 12130106 OPENING BALANCE $96,250.00 Int Earned Since Last Stmt: $213.10 01/18/07 Interest Payment 2,257.60 01/18/07 Maturity Payout - Funds To Be Reinvested -98.507.60 01118107 ENDING BALANCE $0.00 CD Issued by Enterprise Natl Bank of Palm Beach YTD Interest Paid: $87.96 12130106 OPENING BALANCE $3,750.00 Int Earned Since Last Stmt: $8.31 CDARS is a service mark of Promontory Interrmancial Network, LLC. 12 Date 01/18/07 Page 3 of 3 01/18/07 Interest Payment 87.96 01/18/07 Maturity Payout - Funds To Be Reinvested -3,837.96 01/18/07 ENDING BALANCE $0.00 CD Issued by First National Bank YTD Interest Paid: $2,257.60 12130106 OPENING BALANCE $96,250.00 Int Earned Since Last Stmt: $213.10 01/18/07 Interest Payment 2,257.60 01/18/07 Maturity Payout - Funds To Be Reinvested -98,507.60 OV18107 ENDING BALANCE $0.00 CD Issued by First National Bank of Chester County YTD Interest Paid: $2,257.60 12130106 OPENING BALANCE $96,250.00 Int Earned Since Last Stmt: $213.10 01/18/07 Interest Payment 2,257.60 01/18/07 Maturity Payout - Funds To Be Reinvested -98,507.60 01118107 ENDING BALANCE $0.00 CD Issued by First National Bank Of Arizona YTD Interest Paid: $2,257.60 12130106 OPENING BALANCE $96,250.00 Int Earned Since Last Stmt: $213.10 01/18/07 Interest Payment 2,257.60 01/18/07 Maturity Payout - Funds To Be Reinvested -98,507.60 01/18/07 ENDING BALANCE $0.00 CD Issued by First United Bank and Trust Company YTD Interest Paid: $1,871.07 12/30/06 OPENING BALANCE $79,770.61 Int Earned Since Last Stmt: $176.62 01/18/07 Interest Payment 1,871.07 01/18/07 Maturity Payout - Funds To Be Reinvested -81,641.68 01118107 ENDING BALANCE $0.00 CD Issued by Heartland Bank and Trust Company YTD Interest Paid: $2,257.60 12130/06 OPENING BALANCE $96,250.00 Int Earned Since Last Stmt: $213.10 01/18/07 Interest Payment 2.257.60 01/18/07 Maturity Payout - Funds To Be Reinvested -98.507.60 01118107 ENDING BALANCE $0.00 CD Issued by United Bank, Inc. YTD Interest Paid: $2,257.60 12130106 OPENING BALANCE $96,250.00 Int Earned Since Last Stmt: $213.10 01/18/07 Interest Payment 2,257.60 01/18/07 Maturity Payout - Funds To Be Reinvested -98,507.60 01/18/07 ENDING BALANCE $0.00 Thank you for your business. CDARS is a servke mark of Promontory InteMnanclal Network, LLC. 13 Palm Desert National Bank 73-745 El Paseo Palm Desert, CA 92260 Date 01/02/07 Account Page 1 of 1 Subject: Maturity Notice Below is a summary of your certificate(s) of deposit that have been placed through CDARS with one or more FDIC -insured depository institutions that will mature on January 18, 2007. You had requested that the interest be sent to you and that the principal be resubmitted for deposit at maturity. Please call us prior to 12:00 noon ET on the business day before maturity to establish the terms before we resubmit your funds. If, however, you have previously entered into a written agreement with us regarding your resubmitted funds, the terms of your new order will be established according to the terms of that agreement. If you have any questions, please contact us at 760 340 1145, or send an email to solutions@pdnb.com. Account Number g Interest Payment Frequency At Maturity Original Principal Amount 1,000,000.00 Interest Disbursement Type Check Principal Balance 1,000,000.00 Anticipated Interest 23,455.59 Anticipated Payout At Maturity 1,023,455.59 Anticipated Amount Withheld 0.00 Maturity Date 01/18/07 Interest Rate 4.65% Maturity Disbursement Type Reinvest Annual Percentage Yield 4.76% Your certificate(s) of deposit were issued by the following FDIC -insured depository institution(s): Principal Anticipated Anticipated Anticipated Payout Balance Interest Amt Withheld at Maturity Bath Savings Institution 96,250.00 2,257.60 0.00 98,507.60 Heartland Bank and Trust Company 96,250.00 2,257.60 0.00 98,507.60 First National Bank of Chester County 96,250.00 2,257.60 0.00 98,507.60 Bank of American Fork 62,534.35 1.466.78 0.00 64,001.13 United Bank, Inc. 96,250.00 2,257.60 0.00 98,507.60 Alva State Bank & Trust Company 96,250.00 2,257.60 0.00 98,507.60 First United Bank and Trust Company 79,770.61 1,871.07 0.00 81,641.68 Community National Bank 96,250.00 2,257.60 0.00 98,507.60 Associated Bank, NA 34,250.00 803.35 0.00 35,053.35 Enterprise Nat] Bank of Palm Beach 3,750.00 87.96 0.00 3,837.96 BBBT 39,142.87 918.12 0.00 40,060.99 Colonial Bank NA 10,552.17 247.51 0.00 10,799.68 First National Bank 96.250.00 2,257.60 0.00 98,507.60 First National Bank Of Arizona 96,250.00 2,257.60 0.00 98,507.60 1,000,000.00 23,455.59 0.00 1,023,455.59 Anticipated interest and withholding are estimated amounts and assume that the entire principal remains on deposit until maturity. Because interest on your certificate(s) of deposit accrues daily, early or partial withdrawals, reinvestments, or other factors may affect the actual interest and amount withheld for taxes at maturity. Thank you for your business. CDARS is a service mark of Promontory InteTnancial Network, U.C. 14 Palm Desert National Bank 73-745 El Paseo Palm Desert, CA 92260 Date 01/18/07 Account Page 1 of 1 Subject: New Account Notice Thank you for purchasing certificate(s) of deposit through Palm Desert National Bank. These deposit(s) have been placed by us, as your agent and custodian, through CDARS with one or more FDIC -insured depository Institutions. Per your request, the funds will be resubmitted for deposit at maturity. Please advise us if you wish to amend these instructions. If any of the following information is incorrect, or if you have any questions, please contact us at 760 340 1145, or send an email to solutions@pdnb.com. Account Number Principal Balance 1,000,000.00 Effective Date 01/18/07 Interest Rate Maturity Date 07/19/07 Annual Percentage Yield Interest Payment Frequency At Maturity Interest Disbursement Instructions Check Maturity Disbursement Instructions Reinvest Your certificate(s) of deposit were issued by the following FDIC -insured depository institution(s): BNC National Bank Heartland Bank and Trust Company Alva State Bank & Trust Company VIRGINIA COMMERCE BANK Benchmark Bank Amalgamated Bank The Bank of Georgia Homestead Bank Pinnacle Bank American Trust Bank Northside Bank Phoenix, AZ 96,750.00 Bloomington, IL 96,750.00 Alva, OK 96,750.00 Chantilly, VA 96,750.00 Plano, TX 96,750.00 New York City, NY 96,750.00 Peachtree City, GA 96.750.00 Suwanee, GA 96,750.00 Bentonville, AR 96,750.00 Roswell, GA 96,750.00 Adairsville, GA 32,500.00 1,000,000.00 Below is the depository institution(s) where you do not wish your funds placed, as you indicated at the time you re -submitted your funds to us for placement through CDARS. DESERT COMMERCIAL BANK Thank you for your business. COARS is a service mark of Promontory Interfinancial Network, LLC. Palm Desert, CA 15 INVESTMENT ADVISORY BOARD Meeting Date: November 8, 2006 TITLE: Correspondence & Written Material Item C Assembly Bill 2011 — Certificate of Deposit Account Registry Service (CDARS) BACKGROUND: On January 1, 2007, AB 2011 goes into effect that will create a new investment vehicle — Certificate of Deposit Account Registry Service (CDARS). This investment vehicle allows for the issuance of Certificate of Deposits over $100,000 to be given FDIC coverage. Attached, please find the Assembly Bill and other information on the subject. In addition, the Board is invited to a luncheon that will be held on November 20, 2006 at noon at City Hall where bankers from Palm Desert National Bank and El Paseo Bank will further discuss this program. If you are interested in attending the luncheon, please contact Vianka by November 17'h for a reservation. RECOMMENDATION: item only. John M. Falconer, rinance Director 16 Assembly Bill No. 2011 CHAPTER459 An act to add Sections 53601.8 and 53635.8 to the Government Code, relating to local agency. investments. [Approved by Govemor September 25, 2006. Filed with Secretary of State September 25, 2006.1 LEGISLATIVE COUNSEL'S DIGEST AB 2011, Vargas. Local agency investments. Existing law prescribes the instruments in, and criteria by, which local agencies, as defined, may invest surplus funds. This bill would authorize, until January 1, 2012, the investment of up to 30% of those funds in certificates of deposit at a commercial bank, savings batik, savings and loan association, or credit union that uses a private sector entity that assists in the placement of certificates of deposit under specified conditions. The people of the State of California do enact as follows: SECTION 1. Section 53601.8 is added to the Government Code, to read: 53601.8. Notwithstanding Section 53601 or any other provision of this code, a local agency, at its discretion, may invest a portion of its surplus funds in certificates of deposit at a commercial bank, savings bank, savings and loan association, or credit union that uses a private sector entity that assists in the placement of certificates of deposit, provided that o the purchases of certificates of deposit pursuant to this section, Section 53635.8, and subdivision (h) of Section 53601 do not, in total, exceed 30 percent of the agency's funds that may be invested for this purpose. The following conditions shall apply: (a) The local agency shall choose a nationally or state chartered commercial bank, savings bank, savings and loan association, or credit union in this state to invest the funds, which shall be known as the "selected" depository institution. (b) The selected depository institution may submit the funds to a private sector entity that assists in the placement of certificates of deposit with one or more commercial banks, savings banks, savings and loan associations, or credit unions that are located in the United States, for the local agency's account. (c) The full amount of the principal and the interest that may be accrued during the maximum term of each certificate of deposit shall at all times be 93 17 Ch. 459 —2— insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration. (d) The selected depository institution shall serve as a custodian for each certificate of deposit that is issued with the placement service for the local agency's account. (e) At the same time the local agency's funds are deposited and the certificates of deposit are issued, the selected depository institution shall receive an amount of deposits from other commercial banks, savings banks, savings and loan associations, or credit unions that, in total, are equal to, or greater than, the full amount of the principal that the local agency initially deposited through the selected depository institution for investment. (f) A local agency may not invest surplus funds with a selected depository institution for placement as certificates of deposit pursuant to this section on or after January 1, 2012. A local agency's surplus funds, invested pursuant to this section before January 1, 2012, may remain invested in certificates of deposit issued through a private sector entity for the full term of each certificate of deposit. (g) Notwithstanding subdivisions (a) to (0, inclusive, no credit union may act as a selected depository institution under this section or Section 53635.8 unless both of the following conditions are satisfied: (1) The credit union offers federal depository insurance through the National Credit Union Administration. (2) The credit union is in possession of written guidance or other written communication from the National Credit Union Administration authorizing participation of federally -insured credit unions in one or more certificate of deposit placement services and affirming that the moneys held by those credit unions while participating in a deposit placement service will at all times be insured by the federal government. (h) It is the intent of the Legislature that nothing in this section shall restrict competition among private sector entities that provide placement services pursuant to this section. SEC. 2 Section 53635.8 is added to the Government Code, to read: 53635.8. Notwithstanding Section 53601 or any other provision of this code, a local agency, at its discretion, may invest a portion of its surplus funds in certificates of deposit at a commercial bank, savings bank, savings and loan association, or credit union that uses a private sector entity that assists in the placement of certificates of deposit, provided that the purchases of certificates of deposit pursuant to this section, Section 53601.8, and subdivision (h) of Section 53601 do not, in total, exceed 30 percent of the agency's funds that may be invested for this purpose. The following conditions shall apply: (a) The local agency shall choose a nationally or state chartered commercial bank, savings bank, savings and loan association, or credit union in this state to invest the funds, which shall be known as the "selected" depository institution. 93 -3 — Ch. 459 (b) The selected depository institution may submit the funds to a private sector entity that assists in the placement of certificates of deposit with one or more commercial banks, savings banks (savings and loan associations), or credit unions that are located in the United States, for the local agency's account. (c) The full amount of the principal and the interest that may be accrued during the maximum term of each certificate of deposit shall at all tunes be insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration. (d) The selected depository institution shall serve as a custodian for each certificate of deposit that is issued with the placement service for the local agency's account. (e) At the same time the local agency's funds are deposited and the certificates of deposit are issued, the selected depository institution shall receive an amount of deposits from other commercial banks, savings banks, savings and loan associations, or credit unions that, in total, are equal to, or greater than, the full amount of the principal that the local agency initially deposited through the selected depository institution for investment. (f) A local agency may not invest surplus funds with a selected depository institution for placement as certificates of deposit pursuant to this section on or after January 1, 2012. A local agency's surplus funds, invested pursuant to this section before January 1, 2012, may remain invested in certificates of deposit issued through a private sector entity for the full term of each certificate of deposit. (g) Notwithstanding subdivisions (a) to (f), inclusive, no credit union may act as a selected depository institution under this section or Section 53601.8 unless both of the following conditions are satisfied: (1) The credit union offers federal depository insurance through the National Credit Union Administration. (2) The credit union is in possession of written guidance or other written communication from the National Credit Union Administration authorizing participation of federally -insured credit unions in one or more certificate of deposit placement services and affirming that the moneys held by those credit unions while participating in a deposit placement service will at all times be insured by the federal government. (h) It is the intent of the Legislature that nothing in this section shall restrict competition among private sector entities that provide placement services pursuant to this section. 93 19 1 US" L V. ' 70 SENATE LOCAL GOVERNMENT COMMITTEE Senator Christine Kehoe, Chair BILL NO: AB 2011 AUTHOR: Vargas VERSION: 6/5/06 Weinberger HEARING: 6/7/06 FISCAL: No CONSULTANT: INVESTMENT OF SURPLUS FUNDS Background and Existing Law Since 1913, state law has authorized local officials to invest a portion of their temporarily idle funds in a variety of financial instruments. Originally, state law limited the instruments to government bonds, but over time the laws governing local agency investments have been amended to keep pace with changing investment opportunities and current market offerings. As part of its oversight function, the Legislature limits the maturity lengths on many of these newer instruments, as well as the percentage of funds that a local agency can invest in a particular type of instrument. California law allows local officials to deposit money in state or national banks, savings associations, federal associations, credit unions, or federally insured industrial loan companies in the State of California. These public deposits, which include funds placed into certificates of deposit (CDs), are subject to restrictions, including: The depository institution must have received an overall rating of at least "satisfactory" in its most recent evaluation by a Federal supervisory agency. A local treasurer and a depository institution must enter into a contract for the deposit of public funds, which must include specified elements. Public deposits must be insured by the Federal Deposit Insurance Corporation (FDIC) or, to the extent not insured, collateralized with certain types of securities in specified amounts. FDIC insurance usually covers only $100,000 per depositor per institution. As a result, to secure large public deposits, depository institutions must hold significant amounts of collateral. Small community banks argue that these collateralization requirements limit their capacity AB 2011 --- 6/5/06 -- Page 2 http://info.sen.ca.gov/pub/bill/asm/ab_2001-2050/ab_2011_cfa_20060601_111547_sen_c... 10/20/2006 20 An /vi i Hssemmy om - fsui analysis to accept large public deposits. Yage 2 014 A A new financial mechanism - introduced in 2003 - allows for FDIC coverage of deposits of greater than $100,000 when they are invested through a "deposit placement service." These deposits go into single bank and then are distributed by the CD placement service into certificates of deposit issued by other participating banks. The CDs are in increments of less than $100,000 to ensure that both principal and interest are eligible for full FDIC insurance. Network members provide simultaneous reciprocal deposits on a dollar -for -dollar basis, so that the equivalent of the original deposit comes back to the bank that received the original deposit. Proposed Law Assembly Bill 2011 allows a local agency to invest a portion of its surplus funds in certificates of deposit issued through a private sector deposit placement service, subject to the following conditions: No more than 30% of the agency's surplus funds can be invested in any combination of certificates of deposit issued through a private sector deposit placement service and negotiated certificates of deposit. Public funds must be invested in a deposit placement service through an "originating bank," which must be a nationally or state chartered bank or savings and loan association in California that is a member of a placement service. The originating bank must submit the funds for placement as certificates of deposit (CDs) issued by one or more members of the placement service located in the United States, for the local agency's account. The full amount of principal, and the interest that may accrue during the maximum term of each CD that is issued through the placement service must be insured by the Federal Deposit Insurance Corporation (FDIC). The originating bank shall serve as a custodian for AB 2011 --- 6/5/06 -- Page 3 each CD that is issued through the placement service for the local agency's account. At the same time that the local agency's funds are deposited and certificates of deposit are issued, the originating bank must receive, from other members of the placement service, reciprocal deposits that are equal to, http://info.sen.ca.gov/pub/bilUasm/ab_2001-2050/ab_2011_cfa_20060601_111547_sen_c... 10/20/2006 21 n or greater than, the full amount of the principal that the local agency initially deposited through the originating bank. Comments 1. Get with the times AB 2011 gives local governments the option of depositing funds in a new financial mechanism that provides FDIC insurance coverage for deposits greater than $100,000. By providing an alternative to collateralization requirements for large public deposits, the bill allows more public funds to be placed into small regional banks, thereby increasing local lending resources. Local agencies will benefit from easy placement of deposits in one local institution with which they have a relationship. 2. All we are saying While this innovative deposit mechanism deserves to be given a chance, CD placement services are relatively untested. Only one national network, the Certificate of Deposit Account Registry Service (CDARS) established by Promontory Interfinancial Network, LLC currently offers this service, although competitors are reportedly developing similar services. In California, there is no public sector experience with CD placement services. The availability of deposit placement services will significantly alter the use of collateralized deposits in California. Given the importance of ensuring the safety of public funds, legislators should exercise their oversight duties. The Committee may wish to consider an amendment that either: Sunsets the ability to place deposits into CD placement services on January 1, 2012. or , Requires the State Department of Financial Institutions to report: to the Legislature, by January 1, 2012, assessing the outcomes of investing public deposits in CD placement services. AB 2011 --- 6/5/06 -- Page 4 3. Investment or deposit ? Separate articles in state law govern the "investment" of local governments' surplus funds and the "deposit" of those funds. While distinct, these two articles have many parallel provisions. AB 2011 authorizes the use of deposit placement services in the article that governs investments. However, the use of a certificate of deposit placement program is an alternative to the use of collateralized deposits, which are governed by the article relating to deposits. The Committee may wish to consider an amendment adding parallel language to the article governing deposits of local governments' surplus funds. http://info.sen.ca.gov/pub/bill/asnVab_2001-2050/ab_2011_cfa_20060601_111547_sen_c... 10/20/2006 22 Assembly Actions Assembly Local Government Committee: 7-0 Assembly Banking and Finance Committee: 9-0 Assembly Floor: 75-0 Support and Opposition (6/1/06) Support California Independent Bankers, California Bankers Association, California Association of Joint Powers Agencies, 1st Centennial Bank, Bank of Alameda, Broadway Federal Bank, Community Bank of the Bay, Community West Bank, EverTrust Bank, City of Indian Wells, Mechanics Bank, Monterey County Bank, Neighborhood National Bank, Pacific Valley Bank, Palm Desert National Bank, Valley Community Bank, Opposition Unknown. http://info.sen.ca.gov/pub/bill/asnVab-2001-2050/ab-201 1cfa 20060601 111547 sen c... 10/20/2006 23 CDARS rage t o1 s CDARS: An easy way to beat $100,000 FDIC limit By Laura, Bruce • Bankrate.com Sian up for a rate alert vVell tell you when rates When Joan Delaney's elderly father began losing his sight and hearing, he your target. decided to sell his house and downsize his lifestyle. The sale, along with a Sian up now! It's sin - lifetime of smart financial management, left him with a sizeable amount of money to Invest. Given his advanced age, the stock market was out; certificates of deposit were in. Delaney was put in charge of depositing the money in various banks so that it would all be FDIC insured. "He was always saying, 'Don't put more than $100,000 in any one bank,"' Delaney remembers. "But it's time consuming running from bank to bank. I was trucking Dad around to the banks to sign power of attorney cards. And back when CD rates were high he wanted things moved from one bank to another." The law changed in April 2006 to allow certain retirement accounts to be covered up to $250,000 by the Federal Deposit Insurance Corporation, the $100,000 limit still applies to ordinary accounts. In addition, there's a program that might have solved Delaney's problem. It allows you to keep up to $25 million -- should you be so fortunate -- invested in CDs at one bank, and have it all covered by FDIC insurance. It's called the Certificate of Deposit Account Registry Service or CDARS, pronounced cedars. Here's how it works. Sally Jones has $130,000 she wants put in CDs in bank A. Bank A gives her CDs worth $95,000 -- leaving a little room for interest -- and sends Sally's remaining $35,000 to a company that knows bank B will issue Sally a CD for the remaining $35,000. In return, bank B buys $35,000 in CDs for its customers from bank A. The company in the middle is Promontory Interfinanciai Network. It acts as a sort of clearinghouse; matching deposits from one institution with another so funds that a bank places with CDARS essentially remain on the bank's balance sheet. "Prior to CDARS, if you wanted to insure more than $100,000, you had to do it through (different categories of legal ownership.) Now you can title it any way you want and we can cover it through the CDARS program," says Russell Pemberton, vice president at Pulaski Bank. Your bank sets the interest rate for the CDs bought through other banks. If Sally wants her excess money to buy a two-year CD and her bank, bank A, is paying 2 percent on that maturity, then bank B will issue the CD at 2 percent even if they're paying more or less. "From the customer's perspective it's invisible," says Promontory's President 24 http://www.bankrate.comfbrm/news/sav/20030820al.asp 10/20/2006 i,Lruc,3 rage / 01 s Mark Jacobsen. "If I'm paying more for your customer's money and you're paying less for mine, we swap the difference at present value. Say the difference is $250, you'd give me the $250 up front and then it's like we're issuing CDs at the same rate." One drawback to the convenience of CDARS is that you can miss out on higher rates offered by banks other than your own. If you're willing to do a little extra legwork, you could get around that by finding a bank in the CDARS network that you believe consistently offers higher rates and open an account with them specifically for CDs. Another factor is that banks pay a fee to join the network and then pay transaction fees. Some banks pass those costs on to CD buyers by reducing the interest rate, says Angela Baker, treasury officer at Allegiant Bank. "We set CD rates every Tuesday and we've built in those transaction fees for CDARS. We reduce the baseline interest rate by 15 basis points across all maturities." Pemberton, who says his bank's customers have bought $5 million to $6 million in CDs through the CDARS program the past three months, says customers are willing to pay for the convenience. "We price CDARS (interest rate) a little bit less than one of our weekly CD specials. The value with CDARS is the extended FDIC coverage. You're going to pay a little something for that. People have been very receptive; they understand the value." Adding to CDARS value is the convenience factor of one consolidated statement from your bank detailing your CDs. But while you know exactly where your money is, the other banks don't know you by anything other than an account number. The only institution, other than your own bank, that sees your personal information is the Bank of New York, which handles the CD transactions for all the banks in the CDARS network, according to Jacobsen. Eventually, you should be able to place a CDARS order any business day, but for now, orders are placed once a week. The minimum order is $10,000. In other words, you'd need $100,000 on deposit in your bank and at least $10,000 for deposit in another bank within the network. There are approximately 500 banks currently in the network, primarily community and regional banks. Promontory is run by three former banking regulators who, according to Jacobsen, former chief of staff of the Office of the Comptroller of the Currency and also of the FDIC, wanted to help smaller banks compete on the national level. "It's done by developing the notion of synthetic size. It's a way to help banks work together, work more effectively. Most of these institutions don't have direct access to the capital markets. They have higher cost of funds, and more of a need to raise funds locally. When a Bank of America borrows it gets money (at a very low rate.) Most of our banks can't even fathom http://www.bankrate.comfbmVnews/sav/20030820al.asp 10/20/2006 25 l 1L 0 1 ¢lsO J Vl J that." loan Delaney says the CDARS program may mean CD investors will be better informed about protecting their money through FDIC insurance. "Every time I would go to a bank and move things around I would specifically ask about FDIC insurance. They never said anything to me like, 'Are you aware that cumulatively you have more than $100,000 in this bank and you're not insured?' "After all, they give better rates on jumbo CDs. I wouldn't say they lie. It's just if you don't ask the right questions, they don't volunteer." Check the CDARS_ Web site for a list of banks participating in the CDARS program. - Posted: Aug. 20, 2003 Foreign denominated How to -ladder a_CD Sayings gioss_ary CDs carr�r risk portfolio News &.Advice I Compare Rates I Calculators Mortgage. I Home Equity I Auto I Investing I Checking & Savings I Credit Cards I Debt Management I College Finance I Taxes I Persona About. eankrate I Privacy I Online -Media Kit I Partnerships I Investor Relations I Pres$Broadcast I Contact Us NASDAQ: RATE I RSs Feeds I Order, Rate Data I Bankrate Canada " Mortgage rate may include points. See rate tables for details. Click here. ' To see the definition of overnight averages click -here. Bankrate.com ®, Copyright © 2006 Bankrate, Inc., All Rights Reserved, Terms _of.Use. http://www.bankrate.com/brm/news/sav/20030820al.asp 10/20/2006 26 membership central By Bridget McCrea WANT TO KNOW MORE? To learn more about the CDARS program, visit Promontory Finan- cial Network online at www.promnetwork. co m, or call (866) 776-6426. As Seen in March 2006 ' "'li�cde s�c�tnc�ic�ti�t : ,Willi r Better Together Community banks pool resources to meet customer deposit demand 1Barely an hour after being interviewed for this article, Kevin McGuire got a phone call from a large customer wanting to make a $17 million deposit. With the help of Promontory Interfinancial Net- work's Certificate of Deposit Account Registry Service (CDARS), this CEO of Palm Desert National Bank was able to pro- vide that customer with all the FDIC coverage needed, while at the same time bumping his bank's assets over $300 million. Palm Desert National, with three loca- tions, 70 employees and an additional 105 staffers who handle the bank's electronic banking division (which manages 17,000 ATMs nationwide) got involved with CDARS in June 2003. The program pro- vides financial institutions with a network of more than 1,000 banks. Through the network, those member banks can offer their customers up to $20 million in FDIC insurance as a means to obtain funding; attract, grow and retain cus- tomer relationships; increase net interest margins; and diversify finding sources. The program is well suited for the country clubs and homeowner's associations, and other high -dollar -volume customers that Palm Desert National serves. So far, 20 cus- tomers have run $42 million in deposits through the program, which the bank pro- motes through newspaper ads featuring messages like "Don't put all of your eggs in one basket" He anticipates a time in the near future when the state of California approves the use of CDARS by its municipalities. "We think that could be a phenomenal source of deposits for our bank," says McGuire, "and for other independent banks in our region" Spreading the Wealth Last year, Arlington, Va.-based Promontory formed a cooperative alliance with ICBA to tell its members about the CDARS service. Under the temrs of the arrangement, ICBA members are periodically eligible for favor- able pricing. `Ib offer CDARS, a bank must belong to the network, which today comprises over 1,000 institutions in all 50 states plus the District of Columbia and Puerto Rico. A CD placement service, CDARS kicks into gear when a customer makes a deposit through a single member bank. Using a computerized matching service, those funds are sliced up into CDs of less than $100,000, thus ensuring that both principal and inter- est are eligible for full FDIC insurance protection. Those individual deposits are then placed with other network banks. The FDIC has stated that deposits placed through CDARS meet the "pass through" insuranre rnverave onidelinec 27 Phil Battey, vice president of pub- lic affairs for Promontory, says the CDARS program has grown signifi- cantly since inception, having started with just a handful of banks whose deposits were eligible for $260,000 of insurance coverage. "We're signing on one new bank every business day," says Battey. He expects growth to eventually plateau to about 4,000 total banks (slightly fewer than half of the community banks operating in die United States). To participate, banks pay a one- time implementation fee that ranges from $2,000 (for a bank with less than $100 million in as- sets) to $35,000 (for one with $50 billion or more). Banks also pay a transaction fee that ranges from 2.5 basis points (for a 4-week CD) to 24 basis points (for a 3-year CD). CDARS is especially valuable for independent banks like American Bank of Texas, N.A., in Marble Falls, Texas. Mark Few, executive vice president, says the 118-em- ployee bank has funneled about $7 million in deposits through CDARS since signing up for it in March 2004. "We wanted a prod- uct that we could offer our high -net -worth customers," says Few, whose bank has $300 million in assets. "We learned about CDARS through some banking circles and decided to investigate. After looking at the mechanics of it, we gave it a shot" And while those deposits are dis- persed among multiple banks nationwide, the customer accesses one centralized reporting system through the local community bank that took the original deposit. Early on, Few says adapting to CDARS' reporting style posed a slight challenge for American Bank, which had to start classifying those deposits separately on its gen- eral ledger. "Getting through the initial start-up phase and learning the ropes of the accounting process was a bit tricky," says Few, who re- lied on Promontory to Help walk his staff through the intricacies of the program. "Once we got our arms around it, it wasn't a big deal." American Bank, which promotes the CDARS through its Web site and on banners hung in its six branches, offers the program to all of its customers, particularly those with bank balances or deposits that exceed $100,000. Whereas such customers in the past may have taken their assets to a larger com- petitor, they can now rest easy, knowing that their independent bank can handle larger deposits. "We've been able to place those deposits for them," says Few, "in- stead of losing them to another bank or financial service company outside of the banking industry." Reducing Paper Shuffle At United Community Bank in Perham, Minn., CDARS fills a dif- ferent need. With two locations, 45 employees and $150 million in as- sets, die bank relies on the program to help it manage deposits from po- litical jurisdictions. When such deposits exceed the FDIC deposit threshold, the bank must pledge marketable securities, which trans- lates into added work for the institution (such as having pledge agreements signed, listing and noti- fying safe -keeping agents and calling bonds). "It creates a pretty significant pa- per shuffle," says Charlie Cavanaugh, bank president. In July 2005, looking to stem that paper flow, the bank signed up for CDARS. Just a few months into it, the bank has already signed up sev- eral public funds, the city and school system for the program. Pri- vate customers are also interested, says Cavanaugh, who calls the pro- gram "very user friendly" for banks. McGuire agrees, saying the pro - grain is of particular value to community banks that can't com- pete with larger banks solely on size. "Because we can offer CDARS;' he says, "we no longer have to worry about customers tak- ing money from us and going to Bank of America or Wells Fargo because they're too big to fail" E3 Bridget McCrea is a free-lance writer in Dunedin, Fla. REPRINTED WITH PERMISSION FROM INDEPENDENT BANKER • COPYRIGHT BY ICBA 91 CDARS: One -Way Information rage t or a GLJAKS: vne-vvay inrvrmauvn CDARS One -Way Sell Volume Remaining One Placement Date Product Term One -Way Sall Rate Volume 01/1012007 4 Wk CD 6,17000% S1' 01/10/2007 13 Wk CD 5.19000% 01110/2007 26 Wk CD 5.20000% 01/10/2007 52WkCC) 6.12000% S OV102007 2YrCD 5.00000% ovior 007 3 Yr CD 6.00D00% 01/102007 5 Yr CD 4,9WW% • Remaining One -Way Sell Volume current as of Wed Jan 1014:27:44 EST 2007 Order Placement Umlta Order placement limits applying to customer and to each Relationship Institution, specific to each Order Date and Pros co Term, ce es w under Placement and Product Disclosure on the Main Menu page of the CDARS Application. At this time. a customemlimed C through CDARS is limited to a total of $30,DW.000 at any time, of which no more than $2,000,000 may be In any combination of-tht,_�_; Privacy Policy 17ermsAnd Condj[QI141 ContaCt.,IJg Copyright 2003.2006. Promontory Interfmancial Network, LLC e L P,,,O p p lacementOrders.dO 1 htts:/Icdars. rotnnetwork.com/order/bat�.order.view.oneway•p /10/200729 i P.,Im nux,l N:Nlonal8mk January 8, 2007 Mr. John M. Falconer Finance Director (:ity of La Quinta 78-495 Calle Tampico La Quinta, (:a. 92253 VIA FAX: 760-777-7105 lfnllking nraAc l•(Isy. Dear John: Attached is Palm Desert National Bank's (Bank) current rate sheet on funds to be placed in the Certificate of Deposit Account Registry Service (CDARS) program. These rates are net to you of any fees the Bank will be required to pay for placement of your funds in The program. Also, please be advised that a commitment to place funds in the CDARS program must be done by 10 AM (PST) each Wednesday with settlement the next day on Thursday. Prior to acceptance of the initial deposit, there is an agreement that will need to be completed for this activity. Susan Cavano, Vice President, will assist you with the completion of this document. We appreciate the opportunity to provide this service to you. if you have any questions, please contact Susan at 674-1487 or me at 674-1405. Very truly yours, Randal D. Miller Presidem/ COO pkra� MIC P 'B D[,, ' Palm Desert National Bank MUNICIPAL CDARS INTEREST RATES as of January S, 2007 BALANCE TO OII'1'AIN ANNUAL PERCENTAGE YIELD/MAXIMUM ?Ynac Ccrtifirares nfl>cjwsit" ^ — 26wclkx� —J^ —_ �_ ^ $5U 53 wC As — — SSC o •UIfS .�r��- $5 5��ars_...�.—. —.—.. —.—. RAIN. pFRCENTAGE I YIELD (APY) 4. r'11 is Annual Percentage Yield (APY) assumes interest ronnins on delimit until maturity. A withdrawal of interest or principal will reduce earnings. 1;g1ances shown above arc the minimum balances required to obtain the d sdosed Anuftal Pcrccntsge Yield. 11ces may reduce the catnings on the account. A pcnahy may be Imposed for early withdrawal bcforc maturity. Interest Rates and Annual Percentage Yields are current as of January 8, 2007. I.,or current rate and yield information please contact us at (760) 340-1145. Ntunbcr MAC! 31 John Falconer From: Chad Dickson [cdickson@PDNB.com] Sent: Monday, February 04, 2008 4:55 PM To: John Falconer Subject: CDARS Rates with Palm Desert National Bank Attachments: CDARS Rates-08.x1s Dear John, Attached are the interest rates for the CDARS Program. If you should have any questions please feel free to email or call meat 760-674-1000 or Jerry at 760-674-1006. Thank you for your interest with Palm Desert National Bank. Sincerely, Chad W. Dickson Banking Service Rep. Palm Desert National Bank 47-000 Washington St. La Quinta, CA 92253 2/5/2008 32 ALM DESERT NATIONAL BANK INTEREST RATES -DARS ACCOUNTS FFECTIVE FEBRUARY 1, 2008 vV Ic CALCULATED ON THE MINIMUM INITIAL DEPOSIT Bank Rate Source of On Non - Account Maximum Bank Rate CDARS CDARS Annualized CDARS Terms Per Customer Per Rate Sheet Accounts Fee Fee Rate 4 WEEKS 1,280,000 28 Days 1.75 0.023 0.293 1.458% 13 WEEKS 1,280,000 91 Days 2.05 0.060 0.240 1.810% 26 WEEKS 1,280,000 182 Days 3.25 0.095 0.190 3.060% 52 WEEKS 1,280,000 1 Year 3.25 0.125 0.126 3.125% TWO YEARS 470,000 2 years 3.25 0:180 0.090 3.160% THREE YEARS*" 450,000 (2 year rate +.40) 3.65 0.240 0.080 3.570% KZC? INVESTMENT ADVISORY BOARD Business Session: C Meeting Date: January 13, 2010 ITEM TITLE: Revision of 2009/2010 Investment Policy — Corporate Notes BACKGROUND: The 2009/2010 Investment Policy has a 10% maximum allocation with a 3 year maturity limit and a $5,000,000 maximum per issuer for corporate notes including the Temporary Liquidity Guarantee Program (TLGP). At the last board meeting staff was asked to bring this item back, which staff concurs, to increase the 10% limit to 20%. The State limitation is 30% of the portfolio. RECOMMENDATION: Recommend increasing the Corporate Note limitation from 10% to 20% for City Council Consideration. MAAM John M. Falconer, Finance Director INVESTMENT ADVISORY BOARD Correspondence & Written Material Item A Meeting Date: January 13, 2010 TITLE: Month End Cash Report for December 2009 and Other selected Financial Data BACKGROUND: This cash report is not a complete Treasury Report (exclude petty cash, deferred compensation and fiscal agent balances, but would report in a timely fashion selected cash balances. RECOMMENDATION: Information item only. John M. Falconer, Finance Director m N O M O M N M m N n m Q O O O O O M O � N f0 n N N N v N N ry Y c y O O O O O N m M O m N Q d N m Z E O o O 0 . m O O O O � N 0 0 0 0 0 0 o D o m y m m o, o 0 0 0 o 0 n �` O> O O O O O _p O m O O O O O O Q N y> C O O O m m—rn s m w ^ m M 0 n W W. OM nm m m - Om m ,mN m vie oimm� N M UU n n n m O m O O O O O m M M O M m W W O O O O QLL W W O O O m M n M m N_ K� e n W m M ry N N N N W l0 N O O O O o 0 0 o N e ' U g Q 6 m n o0� n m M m M N N m N n M w0 0 M m m LL 0 O O 0. O O O m K O m M O O O O m a n c^ 0 M M lL O n O m M m M O O fn0 M _O m N M M M O a `m try+ N m ro � LL ry O M � O M m o mNW � m n 3 � Nm m O N m u) N t0 m m n n m m m M n CJd m H n Om O O n � j U N ry M O N W m V N v N N Z L m O H m 0 `c m O Y o a N « M 0 O 000 W � j u m o ¢ A m a m m u a m o 0� a m s g m 2 O o E E L o « m ia�• C C a a y L m 60 > O p;u T G O rtl O D U� W Q 5 Q W I Q In O Z O -Oi LL E Q h Q N K Bill Lockyer, State Treasurer 1% Inside the State Treasurer's Office PMIA Performance Report C�Datly tee Yietil (l arter tox Date Yrelil.. xMaturity. intda`,s`j 12/17/2009 0.56 0.62 225 12/18/2009 0.56 0.62 227 12/19/2009 0.56 0.62 227 12/20/2009 0.56 0.62 227 12/21/2009 0.561 0.62 223 12/22/2009 0.551 0.62 223 12/23/2009 0.551 0.61 220 12/24/2009 0.551 0.61 222 12/25/2009 0.55 0.61 222 12/26/2009 0.55 0.61 222 12/27/2009 0.55 0.61 222 12/28/2009 0.54 0.61 219 12/29/2009 0.55 0.61 227 12/30/2009 0.55 0.61 226 LAIF Performance Report Quarter ending 9/30/2009 Apportionment Rate: Earnings Ratio: Fair Value Factor: Daily: Quarter To Date: Average Life: 0.90% .00002459481708038 1.001560611 0.62% 0.90% 234 PMIA Average Monthly Effective Yields Nov 2009 0.611% Oct 2009 0.646% Sept 2009 0.750% Pooled Money Investment Account Portfolio Composition $67.8 Billion 11 /30/09 Corporate Bonds 0.28% Commercial Paper 9.33% Now Accounts 2.68% Time Depc 7.42% Loans 18.16% Treasuries 32.52% CDs/BNs yci wic; 7.96% 20.31% Mortgages 1.34% 3 Recent Bill Auction Results rage i or i Treasury®irectr !i (. 1nR,11,1 4.. Dons'-' tlS..Dal..& I.I Ic Lates: 0.ut[. Lt e° , cIl .:-I n < ieo Pu 's Recent Bill Auction Results security Sszae namtlry Discount xnvestmem Price eusly Temf Did, Dale Rate. K, Rdle°b Per st. 13-WEEK 01-01-2010 04-03-2010 0,080 a 081 99.979778 911795U33 26-WEEK 01-02-2010 02-08-2010 0,180 0.133 99.9U9000 91229511W9 4-WFEK 12-31r2009 01-28-201.0 0010 D. D10 99.999222 91D959] 13-WEEK 12-31 2 09 04A1-2030 0,110 0,112 99.112191 91P95U13 2I-WEEK 12-31 2009 02-01-2010 0,200 0.203 99,898889 9112911cs ). DAY 12 30-2009 02 04-2010 0,000 0000 100 00000O 912795585 4-WEEK 1224-2009 0l 212030 0.005 O.005 99?99611 9127tru94 13-WEEK 1234-2009 03-212D10 0.020 0. a21 99.982306 912295T84 26-YJEEK 1234-2009 06-24-2030 0170 0. 123 99.914056 912295LN1 4-WEEK 12-1J-2009 US-14-2010 0.00c 0.000 tOD.8000U0 91Y 295H06 13.WEEK 12-12-2009 OY 302010 9.040 0.041 99.989889 912,95116 26-MEEK 2-1J-1009 Oc 12 -2010 0,160 0. 162 99.919111 912J%UUJ 52 WEEK i 2 7 009 12-16-2010 0 410 0.412 99.585444 912195UKS 4-DAv 12-1D-2009 2 4-2009 0.020 0.071 99 999222 91Z]95Y39 l9-DAY 12-1D-2009 12-t9-;009 0D80 110E 19.995D0 912295Y42 4-WEEK 12-10-2009 01-02-d010 0.on 0.000 100.000000 912J950.2A 11W6EK i2-1-1D-2009 03-11-2010 OD50 0.OSI 9298236/ 91219968 W 26-EEK 120-2009 06-10-10 0 0.165 41. 382 95.916583 912295ui, 4 WEEK Ib03-M9 12-31-d009 0.085 0-085 99 A1D01 Ii 2➢95P60 13 WEEK 12-03 2009 03-04 2010 0D60 0.061. "1984833 912195T50 26-WFFK 12-03-2009 06-03 2010 0.150 0 152 99,W4162 1011$1158 4-WEE,K 11-27 2009 12-24-2009 0.060 0,061 99-995500 91l )950.52 13-IN, EK 11-22-2001 02-20-2010 Oe4o 0-041 99990000 912195T43 26 WEEK 11-22-1009 05 21 M. 0.14U 0,142 99!929631 912295U58 4WEEK 11-19 2009 12-17-2OU9 0.050 0,051 99916111 912795569 13WEEK 11-19-2009 02-is 2010 0065 0.066 99,981569 912➢95T35 26 -WEEK 3149-2009 0520-2010 0.165 U.151 99916583 912195UKO 52-WEEK ]1 d9-2009 11-O 2010 0.315 0,320 99.681500 912795UIB 4-WEEK IY 32-2009 t210-2009 O.UtO 0.051 99.595J33 91219SK31 13-WEEK 11 12-2009 02-11-2010 0.065 0.066 99.9835E9 912195T21 26-WEEK 11-12-2009 05 13-2010 0.1t5 0. 167 99.916583 912195UQ2 4-WEEK 11 05 2009 12 03-2009 0.035 0.035 99.952228 912/95Q61 13-WLLK 11 05 1009 02-04-2010 0.060 0.061 99.984833 912195585 26-WEEK 11 05 2009 05 06 2010 0.110 0, 173 99.1114856 912195U41 300-UAY 10-30 2009 08 26 2010 0. 315 0.320 99./31500 912195U82 4WEFK 10 29 2009 11 21 2009 0,045 0.016 90.99611, 912195Q53 42-MY 10 29 2009 12-10 2009 0.060 0.061 11,993000 912MR31 13-WIr. 10 29 2009 01-28-201.0 0. 015 0.41E 94 181042 9129552:' 26 WEEK 10-29-2009 04 29 2010 0. 185 0.IRA 99 906412 912795UP4 4-WFFK 10-22 2009 11-19-2009 0.045 0.046 99.59E AO 912195551 Effective with the 11/1/98 auction, all bills are auctioned using the single -priced method. Rem Or It, ln n. 01.n 4. I I-vWGoitii. ,e I 1 i v,Y,iti, [atit. I �'.I * i (<I I 1„I^ v i )1'r11 us. 11,101, W Di na t v, I, I r 1 , ..,.... V http://www.treasurydirect.gov/RI/OFBills 1 /5/2010 Recent Note, Bond, and TIPS Auction Results rage i or i TreasuryDirect I'IUIHU 1 1;11111T9 -I I ATT,,11TN t , D5l I d HII Il ' 111e 1 All( TIP11 I,T, .1 4 Itol ,zne, a� l e.n Itx9 W: Recent Note, Bond, and TIPS Auction Results Security Term Type uyue Mu\urlty Interest Yield Prico CUSIP Date Date Ra1P % % Par SI DU 2-YEAR NOTE 12-31-2009 12-31.2011 1,000 1.089 99,874397 912828MLI S'YEAR NOTE 17-31-2009 12-31-2014 2.625 2.665 99.813909 912828ME2 7 YES NOTE 12 31-2009 12-31-2016 3,250 3. 345 99.411474 91282RM09 3 YEAR NOTE 12 15-]009 12-LS 2012 1.125 1,223 99.712191 912828MF3 9-YEAR 11-MONTH NOTE 12 d5 2009 31-1S-2019 3.325 3 448 99.387238 912828LY4 29 YEAR 11-MONTH BOND -2 12-15-2009 11-15i 039 4.325 4.520 97 627644 912810003 2-YEAR NOTE 11 ]0 2009 11-30BIT 0750 0.802 99.897034 912828MM9 5-YEAR NOTE 11-004009 11-30-2014 2. 111 11]5 19.264325 111.28,,1 TYEAR NOTE 11-30 ZITS 11-30-2016 2.250 2.835 99 463248 912828MA5 3-YYAR NOTE 11-16-2009 11-15-2012 1.D5 1.104 99.915148 9128201J(6 10 -YEAR NOTE IS-16 2009 I1-U52019 3.375 3.410 99.203098 9i2820LY4 30-YEAR BOND 11-16-2009 I1-1-2039 4.375 4A69 98.454984 91261UQD3 2-YEAR NOTE 11-02-1009 10-31-2011 1.00E 1.020 99.160585 912828LT5 5 YEAR NOTE 11-02-2009 10 It 2014 2.325 2.388 99.936982 912628152 2-YEAR NOTE 11-02-2009 30-31-2016 3,125 3,141 95699963 9/2828102 4-YEAR 6-MONTH TIPS 10-30 2009 04-15-2014 1.25E 0 169 104.115658 "WTTN111 3-11AR NOTE 10-15-2009 10-15 2012 1 111 1445 99.>95510 9128201H9 9-YEAR 9-MONTH TIPS 1.0-15-2009 W-15-2019 18]5 L510 t04-28060T 91282811, 9-YEAR 10-MONTH NOTE 10 15 2009 08-15-2019 3.625 3-210 103.1 ]0013 912818,It 29-YEAR 10 MONTH BOND 10 15 -2009 08-15-2D39 4.500 4,009 108.490231 912810QC5 2 YEAR NOTE 09-30-2009 09-30-1D31 1.1100 1 034 99.93182E 9US281w6 S NEAR NOTE 09 30 2019 09 10 SUIT 2.3]5 2420 99.555732 912828LQ1 2 YEAR NOTE 09-30 2009 09'30'M16 SAES 3.005 99 968642 9128281/3 3-YEAR NOTE 09-15-2009 09-1S-2012 197Y 1481 99-672523 012828LMO 9-YEAR 14 MONTH NOTE 09-15 2009 08 15-2019 3 625 3.51E 100951636 1/12828132 29-YEAR 11-MONTH BOND 09 15 2009 68 IS 2039 4.50E 4.238 104,412534 9II8IEQC5 2-YEAR NOTE 08 IT ISO 08 31-2011 100E 1.119 99 765292 912828LVO 5-YEAR NOTE 06-31-2009 08 31 2014 2,375 2 494 99 443852 912828LN4 7-YEAR NOTE 08-31-2009 0831-2016 3000 3.092 99.4Z4898 912626LLI _YEAR NOTE 08-12-2009 00-15-2012 1 750 1780 99.912806 912826LH1 lU-YEAR NOTE 08-17-2009 00-15-2019 3 625 3.734 99.097347 912828LJI 30-YEAR BOND 08- 7-2009 Ca- 15-2039 4.500 4.541 99.331306 912610QC5 2-YEAR NOTE 0)-]34009 62-314011 1.000 1U80 99.842137 912t126LG3 5-YEAR NOTE 02 31-2009 02-31 2014 2.E 5 2.689 99. 102444 912820101 2-YFAR NOTE 01 2009 07-33-2016 3.250 3369 99,20Q2 912628L00 In YEAR 6.MONTH TTP5 07-11-2009 01-15-2029 2.511E 2-392 101.340316 11281OP75 3-YEAR NOTE 07 15 2009 02-153012 1,500 1,519 99.944485 912828184 9-YEAR 10-MONTH NOTE 02-15-2009 05-15-2019 3.1.29 3. 365 91.998]R 912828NQ2 10 YEAR TIPS 07 15 2009 02-15-2019 1.625 1A20 99592335 912828LA6 29-YEAR 10 MONTH BOND 07 15 2009 05-15 2039 1.250 1 303 99.104142 932810QB2 Denotes TIPS bond; all other TIPS without asterisks are notes F rerdorn cf1 folmaf,n At I laly & G,jy1a111 I v111,11 R i Iq o No1ll', W'bl ( v1.,U,rm 1_D , n 111s1ETs I onto l IPSp D.S.01 nl,f11 1, 1 c,, 11k, 0,•1.1 5 http://www.treasurydirect.gov/RI/OFNtebnd 1 /5/2010 FRB: Commercial Paper Rates and Outstandmgs rase i vi j Federal Reserve Release Commercial Paper:, ele Rase I About I Announcements Out_staud ngs Volume_ statistics I Year-end I Maturity Distribution I Data Download Program (D1P Data as of January 4, 2010 Commercial Paper Rates and Outstanding Derived from data supplied by The Depository Trust & Clearing Corporation Posted January 5, 2010 nicnnnn4 rafpe [Term]nontnancial AA A2/P2 nonfinanctal AA financial AA asset -backed 1-day 0.11 0.21 0.13 0.28 7-day 0.08 0.21 0.10 0.45 15-day 0.10 0.22 0.11 0.35 30-day 0.16 0.26 0.13 0.35 60-day 0.11 0.25 0.14 0.30 90-day n.a. n.a. 0.15 0.24 Trade data insufficient to support calculation of the 90-day AA nonfinancial and 90-day A2/P2 nonfinancial rates for January 4, 2010. Yield curve Monev market basis — — — AA nnnrinanci:d .... A21112 nonfinanci;d --- An tinanciai Percent 0.75 0.50 0.25 0.00 1 7 15 30 60 90 Days to Maturity 6 http://www.federalreserve.gov/Releases/CP/ 1/5/2010 FRB: Commercial Paper Rates and vutstandmgs 1 aroma.. v , Discount rate spread Thirty -day A2.1P2 less AA nonfinancial commercial paper (do spry ,ct 5-cbry movie :+�'� Basis points 800 700 600 500 400 300 200 100 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 Discount rate history ininy-uay cununcicrai paper IL au,y i — — — AA nonfln:mci;il -- ---- A21P2 nonfinancial. —_— AA firirmci:al 2001 2002 2003 2004 2005 2006 2007 2008 k=V Outstandings Weekly (Wednesday), seasonally adjusted 7 6 5 4 3 2 x u 7 http://www.federalreserve.gov/Releases/CP/ 1 /5/2010 FRB: Commercial Paper Rates and Outstandings rage -) or 1210 1110 1010 910 810 710 610 510 410 Billions of dollars Billions of dollars —� 280 2001 2002 2003 2004 2005 2006 2007 2008 2009 240 200 160 120 m The daily commercial paper release will usually be available before 11:00am EST. However, the Federal Reserve Board makes no guarantee regarding the timing of the daily commercial paper release. When the Federal Reserve Board is closed on a business day, rates for the previous business day will be available through the Federal Reserve Board's Data Download Program (DDP). This policy is subject to change at any time without notice. Release I About I Announcements I Outstandings I Volume statistics I Year-end Maturity Distribution I Data Download Program (DDP) Home I Statistical releases Accessibility_ � Contact Us Last update: January 5, 2010 8 http://www.federalreserve.gov/Releases/CP/ 1 /5/2010 FRB: H.15--Selected Interest Rates, Web -Only Ually upaate--uecemoer �) i, /uu7 r asc i yr Federal Reserve Statistical Release tv" H.15 Selected Interest Rates (Daily) Ski, to tomcm Release Date: December 31, 2009 Wccklv release dates I Historical. data I Data Do%t load Program (DDP) I About I Announcements Daily update Other formats: Screen reader I ASCII ���'Data Download Program The weekly release is posted on Monday. Daily updates of the weekly release are posted Tuesday through Friday on this site. If Monday is a holiday, the weekly release will be posted on Tuesday after the holiday and the daily update will not be posted on that Tuesday. FEDERAL RESERVE STATISTICAL RELEASE H.15 DAILY UPDATE: WEB RELEASE ONLY SELECTED INTEREST RATES For use at 4:15 p.m. Eastern Time Yields in percent per annum December 31, 2009 2009 2009 2009 Instruments Dec Dec Dec 28 29 30 Federal funds (effective) 1 2 3 0.12 0.12 0.11 Commercial Paper 3 4 5 6 Nonfinancial 1-month n.a. n.a. n.a. 2-month n.a. n.a. n.a. 3-month n.a. n.a. n.a. Financial 1-month 0.13 0.14 0.11 2-month 0.22 0.14 0.13 3-month 0.25 0.20 0.14 3-month nonfinancial or financial posted by CPFF 7 Without surcharge 1.17 1.18 1.17 With surcharge 2.17 2.18 2.17 CDs (secondary market) 3 8 1-month 0.17 0.17 0.16 3-month 0.22 0.21 0.21 6-month 0.32 0.31 0.31 Eurodollar deposits (London) 3 9 1-month 0.32 0.32 0.32 3-month 0.45 0.45 0.45 6-month 0.65 0.65 0.65 Bank prime loan 2 3 10 3.25 3.25 3.25 Discount window primary credit 2 11 0.50 0.50 0.50 U.S. government securities Treasury bills (secondary market) 3 4 4-week 0.02 0.02 0.02 3-month 0.11 0.10 0.05 6-month 0.20 0.20 0.19 1-year 0.44 0.44 0.42 Treasury constant maturities Nominal 12 1-month 0.03 0.02 0.02 3-month 0.11 0.10 0.05 6-month 0.20 0.20 0.19 1-year 0.47 0.47 0.45 2-year 1.09 1.09 1.08 3-year 1.63 1.64 1.65 5-year 2.62 2.62 2.61 7-year 3.34 3.33 3.34 10-year 3.85 3.82 3.80 20-year 4.61 4.57 4.54 30-year 4.69 4.64 4.61 http://www.federalreserve.gov/Releases/H 15/update/ 1/5/2010 9 FRB: H.15--Selected Interest Rates, Web -Only Uaily Update--uecemoer.si, zu" rdre z ur � Inflation indexed 13 5-year 0.54 0.52 0.50 7-year 0.99 0.96 0.95 10-year 1.50 1.46 1.44 20-year 2.12 2.07 2.02 Inflation -indexed long-term average 14 2.10 2.05 2.00 Interest rate swaps 15 1-year 0.64 0.66 0.66 2-year 1.37 1.40 1.38 3-year 2.01 2.05 2.02 4-year 2.54 2.57 2.54 5-year 2.95 2.98 2.94 7-year 3.52 3.53 3.48 10-year 3.98 3.98 3.93 30-year 4.57 4.56 4.49 Corporate bonds Moody's seasoned Aaa 16 5.40 5.34 5.30 Bea 6.49 6.41 6.36 State & local bonds 17 Conventional mortgages 18 n.a. Not available ------------------ Footnotes 1. The daily effective federal funds rate is a weighted average of rates on brokered trades. 2. weekly figures are averages of 7 calendar days ending on Wednesday of the current week; monthly figures include each calendar day in the month. 3. Annualized using a 360-day year or bank interest. 4. On a discount basis. 5. Interest rates interpolated from data on certain commercial paper trades settled by The Depository Trust Company. The trades represent sales of commercial paper by dealers or direct issuers to investors (that is, the offer side). The 1-, 2-, and 3-month rates are equivalent to the 30-, 60-, and 90-day dates reported on the Board's Commercial Paper web page (www.federalreserve.gov/releases/cp/). 6. Financial paper that is insured by the FDIC's Temporary Liquidity Guarantee Program is not excluded from relevant indexes, nor is any financial or nonfinancial commercial paper that may be directly or indirectly affected by one or more of the Federal Reserve's liquidity facilities. Thus the rates published after September 19, 2008, likely reflect the direct or indirect effects of the new temporary programs and, accordingly, likely are not comparable for some purposes to rates published prior to that period. 7. CPFF refers to the Federal Reserve's Commercial Paper Funding Facility. The rates are identical under the CPFF for financial and nonfinancial commercial paper. An issuer of commercial paper into the CPFF may avoid the surcharge by providing a collateral arrangement or indorsement that is acceptable to the Federal Reserve Bank of New York. Source: Federal Reserve Bank of New York. 8. An average of dealer bid rates on nationally traded certificates of deposit. 9. Bid rates for Eurodollar deposits collected around 9:30 a.m. Eastern time. 10. Rate posted by a majority of top 25 (by assets in domestic offices) insured U.S.-chartered commercial banks. Prime is one of several base rates used by banks to price short-term business loans. 11. The rate charged for discounts made and advances extended under the Federal Reserve's primary credit discount window program, which became effective January 9, 2003. This rate replaces that for adjustment credit, which was discontinued after January 8, 2003. For further information, see www.federalreserve.gov/boarddocs/press/bcreg/2002/200210312/default.htm. The rate reported is that for the Federal Reserve Bank of New York. Historical series for the rate on adjustment credit as well as the rate on primary credit are available at www.federalreserve.gov/releases/hl5/data.htm. 12. Yields on actively traded non -inflation -indexed issues adjusted to constant maturities. The 30-year Treasury constant maturity series was discontinued on February 18, 2002, and reintroduced on February 9, 2006. From February 18, 2002, to February 9, 2006, the U.S. Treasury published a 90 http://www.federalreserve.gov/Releases/Hl 5/update/ 1/5/2010 FRB: H.15--Selected Interest Rates, Web -Only Daily Update --December 31, Luuy rage.) of .7 factor for adjusting the daily nominal 20-year constant maturity in order to estimate a 30-year nominal rate. The historical adjustment factor can be found at www.treas.gov/offices/domestic-finance/debt-management/interest-rate/ltcompositeindex_historical.shtml. Source: U.S. Treasury. 13. Yields on Treasury inflation protected securities (TIPS) adjusted to constant maturities. Source: U.S. Treasury. Additional information on both nominal and inflation -indexed yields may be found at www.treas.gov/offices/domestic-finance/debt-management/interest-rate/index.html. 14. Based on the unweighted average bid yields for all TIPS with remaining terms to maturity of more than 10 years. 15. International Swaps and Derivatives Association (ISDA(R)) mid -market par swap rates. Rates are for a Fixed Rate Payer in return for receiving three month LIBOR, and are based on rates collected at 11:00 a.m. Eastern time by Garban Intercapital plc and published on Reuters Page ISDAFIX(R)1. ISDAFIX is a registered service mark of ISDA. Source: Reuters Limited. 16. Moody's Aaa rates through December 6, 2001, are averages of Aaa utility and Aaa industrial bond rates. As of December 7, 2001, these rates are averages of Aaa industrial bonds only. 17. Bond Buyer Index, general obligation, 20 years to maturity, mixed quality; Thursday quotations. 18. Contract interest rates on commitments for fixed-rate first mortgages. Source: Primary Mortgage Market Survey(R) data provided by Freddie Mac. ---------------------------------------------------------------------------------------------------- Note: weekly and monthly figures on this release, as well as annual figures available on the Board's historical H.15 web site (see below), are averages of business days unless otherwise noted. Current and historical H.15 data are available on the Federal Reserve Board's web site (www.federalreserve.gov/). For information about individual copies or subscriptions, contact Publications Services at the Federal Reserve Board (phone 202-452-3244, fax 202-728-5886). For paid electronic access to current and historical data, call STAT-USA at 1-800-782-8872 or 202-482-1986. Description of the Treasury Nominal and Inflation -Indexed Constant Maturity Series Yields on Treasury nominal securities at "constant maturity" are interpolated by the U.S. Treasury from the daily yield curve for non -inflation -indexed Treasury securities. This curve, which relates the yield on a security to its time to maturity, is based on the closing market bid yields on actively traded Treasury securities in the over-the-counter market. These market yields are calculated from composites of quotations obtained by the Federal Reserve Bank of New York. The constant maturity yield values are read from the yield curve at fixed maturities, currently 1, 3, and 6 months and 1, 2, 3, 5, 7, 10, 20, and 30 years. This method provides a yield for a 10-year maturity, for example, even if no outstanding security has exactly 10 years remaining to maturity. Similarly, yields on inflation -indexed securities at "constant maturity" are interpolated from the daily yield curve for Treasury inflation protected securities in the over-the-counter market. The inflation -indexed constant maturity yields are read from this yield curve at fixed maturities, currently 5, 7, 10, and 20 years. Weekly release dates I Historical data I Data Download Program (DDP)..I About I Announcements Daily update Other formats: Screen reader I ASCII. Statistical releases t ome I Economic researeb and dam Acccssibdm I Contact Us Last update: December 31, 2009 11 http://www.federalreserve.gov/Releases/Hl5/update/ 1/5/2010 City of La Quints Cash Flow Budget to Actual November 30, 2009 Cash Basis Budget Actual Awnual/ Adjusted Total Variance Account 11109 11/09 Adjustment 11/09 Over Under Notes Property Tax/ Tax Increment 187,691 - (187.691) Rec'd Supplemental PmperN Tax in Ocrober Transient Occupancy Tax 311,941 267,314 267,314 (44,627) Sales Tax 449,400 308,200 308.200 (141,200) Decline In Sales Tax due 0 ecornmy SilverRock Golf 171717 338.703 338,703 166.986 Golf rounds higher than budgeted Library 238 (238) Riverside Co Transportation Commission Olhereevenues 773,802 741081 741,081 32721 Revenues 1,894,789 1,655,298 1,655,298 239,491 Expenditures Salaries & Fringe Beliefs 903,448 783.223 783,223 (120,225) Other expenditures 1,892.391 1.884.105 1,884,105 8,286 2,795.839 2,667.328 2.667.328 (128.511) Subtotal 317,359 346,535 346,535 29,177 Redevelopment Agency Debt Service(Pdndpal/Interest/Pass Through) 223.044 223044 223044 540.403 569579 569579 29,177 Subtotal 328,854 326,854 328 ll 4 Capital Projects Total Expenditures 3,665,096 3,565.761 3,565,761 91 Net RevenuesflExpendltures 1,770,307 1,910,463 1,910,483 338,E NOTE 1: Expenditures are budgeted at 8.34% per month Difference between actual and budget (Underspenp DEPARTMENT Overspent Notes GENERAL GOVERNMENT (119,802) CITY CLERK (6,318) COMMUNITY SERVICES 66,168 FINANCE (26,607) BUILDING & SAFETY (37,076) PUBLIC SAFETY (148,912) PLANNING (82,370) PUBLIC WORKS: 24,852 379769 SUBTOTAL -GENERAL FUND Library Gas Tax FederalAssistance JAG Grant Sled' (Cops) Revenue - Indian Gaming Lighting & Landscaping RCTC Development Agreement CV Violent Crime Task Force AB 939 (12,740) Quimby Infrastructure - ProposifonlB - SouthCoaslAirQuality _ (2,219) Transportation Parks & Recreation - Civic Center 1,598 Library Development Community Center - Street Facility - Park Facility - Fire Protection - Arts In Public Places (2,147) Interest Allocation Equipment Replacement (53,660) Information Technology (33.023) Park Maintenance Facility (31,603) SilverRock Golf 69,174 SilverRock Reserve LQ Public Safety Officer (167) Finance Authority (1,316) Capital Improvement - Total 445, 872 12 INVESTMENT ADVISORY BOARD Meeting Date: January 13, 2010 TITLE: Pooled Money Investment Board Report for October 2009 BACKGROUND: Correspondence & Written Material Item B The Pooled Money Investment Board Report for October 2009 is included in the agenda packet. RECOMMENDATION: Receive & File 4 r� - JxA�� John M. Falconer, Finance Director POOLED MONEY INVESTMENT ACCOUNT SUMMARY OF INVESTMENT DATA A COMPARISON OF OCTOBER 2009 WITH OCTOBER 2008 (DOLLARS IN THOUSANDS) OCTOBER 2009 OCTOBER 2008 CHANGE Average Daily Portfolio $ 60,918,502 $ 61,664,368 $ -745,866 Accrued Earnings $ 33,438 $ 141,878 $ -108,440 Effective Yield 0.646 % 2.709 % -2.063 % Average Life -Month End (in Days) 263 241 +12 Total Security Transactions Amount $ 25,864,993 $ 36,406,085 $ -10,541,092 Number 526 743 -217 Total Time Deposit Transactions Amount $ 4,227,100 $ 6,797,900 $ -2,570,800 Number 177 237 -60 Average Workday Investment Activity $ 1,367,822 $ 1,963,817 $ -595,996 Prescribed Demand Account Balances For Services $ 965,133 $ 866,017 $ +99,116 For Uncollected Funds $ 83,790 $ 106,114 $ -22,324 NOW Account Average Balance $ 1,699,258 $ 0 $ +1,699,258 1 BILL LOCKYER TREASURER STATE OF CALIFORNIA INVESTMENT DIVISION SELECTED INVESTMENT DATA ANALYSIS OF THE POOLED MONEY INVESTMENT ACCOUNT PORTFOLIO (000 OMITTED) October 31, 2009 DIFFERENCE IN PERCENT OF PERCENT OF PORTFOLIO FROM TYPE OF SECURITY AMOUNT PORTFOLIO PRIOR MONTH Government Bills $ 15,987,136 25.26 -1.30 Bonds 0 0.00 0 Notes 7,167,399 11.32 +2.72 Strips 0 0.00 0 Total Government $ 23,154,535 36.58 +1.42 Federal Agency Debentures $ 5,340,552 8.44 -0.20 Certificates of Deposit 3,775,067 5.96 -0.58 Bank Notes 0 0.00 0 Bankers' Acceptances 0 0.00 0 Repurchases 0 0.00 0 Federal Agency Discount Notes 6,738,690 10.64 -2.82 Time Deposits 5,124,400 8.10 -0.48 GNMAs 113 0.00 0 Commercial Paper 6,702,173 10.59 -0.11 FHLMC/Remics 927,035 1.46 -0.07 Corporate Bonds 188,888 0.30 -0.05 AB 55 Loans 486,638 0.77 -2.93 GF Loans 10,417,400 16.46 +10.76 NOW Accounts 147,000 0.23 -4.93 Other 300,000 0.47 -0.01 Reversed Repurchases 0 0.00 0 Total (All Types) $ 63,302,491 100.00 INVESTMENT ACTIVITY OCTOBER2009 SEPTEMBER2009 NUMBER AMOUNT NUMBER AMOUNT Pooled Money 526 $ 25,864,993 585 $ 28,698,114 Other 11 169,778 16 129,503 Time Deposits 177 4,227,100 115 2,675,000 Totals 714 $ 30,261,871 716 $ 31,502,617 PMIA Monthly Average Effective Yield 0.646 0.750 Year to Date Yield Last Day of Month 0.837 0.902 2 Pooled Money Investment Account Portfolio Composition $63.3 Billion 10/31 /09 Loans Corporate Bor 0.30% Commercial Paper 10.59% NOW Accounts 0.23% Time Depos 8.10% Agencies 19.55% Treasuries 36.58% ies BOARD MEMBER ITEMS Page 1 of 1 Subj: TLGP Notes Date: 01/11/10 5:43:56 P.M. Pacific Standard Time From: donbarm@aol.com To: ifalconerMia-ouinta.org CC: ted(a)theodoreross.com John, 1 had the following in mind when 1 submitted my discussion item at the IAB's December 2009 meeting: Add to the last paragraph of section X 8: `I qur!p 11 y "except that corporate notes issued under the Temporary Lai Guarantee Program or otherwise backed by the United States government shall be limited to 20% of the portfolio and the maximum aggregate investment for such notes shall not exceed $10 million face amount for each issuer." Change the table in section X and Appendix A to conform with above. I suggest we leave the existing provisions for non -guaranteed corporate notes in tact. What do you think? Don 01/11/2010 AOL: Donbarm