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FY2019 3rd QTR Investment Report CITY OF IOWA CITY QUARTERLY INVESTMENT REPORT January 1, 2019 to March 31, 2019 Finance Department Prepared by: Brian Cover Senior Accountant OVERVIEW The City of Iowa City’s investment objectives are safety, liquidity and yield. The primary objective of the City of Iowa City’s investment activities is the preservation of capital and the protection of investment principal. The City’s investment portfolio remains sufficiently liquid to enable the City to meet operating requirements that cash management procedures anticipate. Investments purchased by the City of Iowa City for the third quarter of this fiscal year had an average return of 2.684%. Rates on new investment purchases in our operating cash portfolio for the third quarter were 110 basis points higher than investments purchased at this time last year. The increase is due to the higher interest rates of the new investments. In investing public funds, the City’s cash management portfolio is designed with the objective of regularly exceeding the average return on the six month U.S. Treasury Bill. The Treasury Bill is considered a benchmark for riskless investment transactions and therefore comprises a minimum standard for the portfolio’s rate of return. Since the city’s investments are mostly between the six month and twelve month range, the yield curve for the twelve month U.S. Treasury Bill has been added to the chart. The rolling average return on the six month U.S. Treasury Bill for the prior 365 days was 2.325% and the twelve month return was 2.471%. The investment program seeks to achieve returns above this threshold, consistent with risk limitations and prudent investment principles. The rate of return on the City’s entire portfolio for the quarter was 2.377%. Treasury bills and fed funds are competing investments in the money market. The federal funds rate is highly influential and often has a direct effect on the U.S. economy, because it serves as a base for interest rates offered by various financial and credit institutions to businesses and consumers. The federal funds rate is the interest rate at which banks lend to each other. In the March 20th meeting of the Federal Open Market Committee, the decision was made to maintain the target range for the federal funds rate at 2.50 percent. The Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. City of Iowa City Investments by Fund Type March 31, 2019 OPERATING 86% EQUIPMENT RESERVE 3% HEALTH INSURANCE RESERVE 3% LANDFILL RESERVE 2% LANDFILL CLOSURE 2% SEWER RESERVE 2% GO BOND PROCEEDS 1%WATER RESERVE 1% PARKING OPERATIONS 0% 3/31/19 3/31/18 FUND INVESTMENT INVESTMENT TYPE AMOUNT AMOUNT OPERATING 169,644,667$ 179,284,252$ EQUIPMENT RESERVE 6,000,000$ 6,000,000$ HEALTH INSURANCE RESERVE 6,000,000$ 4,000,000$ LANDFILL RESERVE 4,000,000$ 4,000,000$ LANDFILL CLOSURE 4,000,000$ -$ SEWER RESERVE 3,510,000$ 5,125,000$ GO BOND PROCEEDS 2,364,540$ 7,093,624$ WATER RESERVE 2,000,000$ 2,500,000$ PARKING OPERATIONS 602,843$ 602,843$ PARKING RESERVE -$ 2,000,000$ TOTAL 198,122,050$ 210,605,719$ City of Iowa City Investments by Institution March 31, 2019 MIDWESTONE BANK 31% PIPER JAFFRAY & CO 22% IOWA PUBLIC AGENCY INVESTMENT TRUST 18% GREAT WESTERN BANK 15% CEDAR RAPIDS BANK & TRUST 6% UICCU 3% HILLS BANK & TRUST 3% BANKER'S TRUST 1%US BANK 1%TWO RIVERS BANK 0% 3/31/19 3/31/18 INSTITUTION INVESTMENT INVESTMENT DEPOSITORY NAME AMOUNT AMOUNT LIMIT MIDWESTONE BANK 60,731,436$ 74,387,504$ 100,000,000$ PIPER JAFFRAY & CO 43,070,000$ 27,500,000$ N/A IOWA PUBLIC AGENCY INVESTMENT TRUST 36,695,072$ 50,878,602$ N/A GREAT WESTERN BANK 29,298,179$ -$ 100,000,000$ CEDAR RAPIDS BANK & TRUST 11,000,000$ 21,000,000$ 50,000,000$ U OF I COMMUNITY CREDIT UNION 6,600,000$ 7,600,000$ 50,000,000$ HILLS BANK & TRUST 6,099,054$ 6,098,562$ 25,000,000$ BANKER'S TRUST 2,025,466$ 636,105$ 20,000,000$ US BANK 2,000,000$ 49,072$ 65,000,000$ TWO RIVERS BANK 602,843$ 12,602,843$ 15,000,000$ CBI BANK & TRUST -$ 6,500,000$ 15,000,000$ FARMERS & MERCHANTS SAVINGS BANK -$ 250,000$ 15,000,000$ NXT BANK -$ 2,000,000$ 10,000,000$ WELLS FARGO SECURITIES -$ 500,000$ N/A WELLS FARGO BANK -$ 603,030$ 50,000,000$ TOTAL 198,122,050$ 210,605,719$