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Home My WebLink AboutItem C CITY OF SEAL BEACH Preliminary Investment Report 10/31/2016 Investments: Book Value Market Value LAIF City 14,024,942.82 14,024,942.82 LAIF Successor Agency 364.39 364.39 CDs and Bonds 26,152,122.89 26,204,143.27 Total Investments: 40,177,430.10 40,229,450.48 Cash,Deposits,&Accrued Interest: Bank of America-City General Account 1,026,826.36 Bank of America-Successor Agency 58,310.46 Deposit in transit 166,869.33 Less outstanding checks/ACH (189,965.78) Cash with Bank of New York 31,978.84 Total Cash & Deposits: 1,094,019.21 Total Investments, Cash, and Deposits: 41,271,449.31 In compliance with the California Government Code Section 53646 and Resolution Number 6038;the City Treasurer of Seal Beach hereby certifies that sufficient investment liquidity and anticipated revenue are available to meet the City's budgeted expenditure requirements for the next six months. Investments in this report meet the requirements of the City of Seal Beach's adopted investment policy. NOTED AND APPROVED: Respectfully submitte• 1111 , art71 Victoria L.Beatley J iD Ingram Director of Finance/City Treasurer I'. is,7O,1 rr b i anager 3 CITY OF SEAL BEACH Preliminary Investments Detail Report 10/31/2016 Years to Source of Market Issuer Settlement Date Maturity Date Interest Rate Book Value Market Value Maturity Valuation LAIF CITY: N/A N/A 0.654% 14,024,942.82 14.024,942.82 N/A LAIF Statement LAIF RDA: N/A N/A 0.654% 364.39 364.39 N/A LAIF Statement Total LAIF: 14,025,307.21 14,025,307.21 US Treasury Notes 03/04/16 01/31/20 1.250% 625,341.80 628,588.75 3.25 Bank of New York US Treasury Notes 11/09/15 02/29/20 1.250% 888,750.00 905,027.40 3.33 Bank of New York US Treasury Notes 06/27/16 03/31/20 1.375% 101,226.56 100,910.20 3.42 Bank of New York US Treasury Notes 06/27/16 03/31/20 1.375% 126,591.80 126,137.75 3.42 Bank of New York US Treasury Notes 06/28/16 03/31/20 1.375% 278,125.98 277,503.05 3.42 Bank of New York US Treasury Notes 02/03/16 04/30/20 1.375% 854,482.42 857,536.95 3.50 Bank of New York US Treasury Notes 09/03/15 05/15/20 3.500% 681,616.21 676,171.88 3.54 Bank of New York US Treasury Notes 12/04/15 05/31/20 1.375% 619,995.12 630,395.63 3.58 Bank of New York US Treasury Notes 03/31/16 07/31/20 1.625% 691,395.31 691,342.40 3.75 Bank of New York US Treasury Notes 09/03/15 08/15/20 2.625% 578,144.53 579,390.90 3.79 Bank of New York US Treasury Notes 01/11/16 10/31/20 1.750% 371,141.80 377,775.92 4.00 Bank of New York US Treasury Notes 05/06/16 11/30/20 2.000% 517,324.22 515.332.00 4.08 Bank of New York US Treasury Notes 05/27/16 01/31/21 1.375% 550,429.69 552,664.20 4.25 Bank of New York US Treasury Notes 10/05/16 02/28/21 2.000% 658,117.97 654,496.41 4.33 Bank of New York CA Earthquake Auth Txbl Rev Bonds 11/06/14 07/01/17 1.824% 140,000.00 140.579.60 0.67 Bank of New York Univ of Cal TXBL Rev Bonds 10/02/13 05/15/18 2.054% 405,000.00 411,561.00 1.54 Bank of New York CT ST TXBL Gold Bonds 03/25/15 03/15/19 1.974% 315,000.00 319,684.05 2.37 Bank of New York Federal Home Loan Banks AGCY 08/15/16 06/29/18 0.875% 335,418.75 335,006.03 1.66 Bank of New York Federal Home Loan Banks AGCY 05/27/16 06/29/18 0.875% 608,529.90 610,010.98 1.66 Bank of New York FNMA Benchmark Note 09/01/15 10/19/18 1.125% 853,614.90 858,292.61 1.97 Bank of New York Fannie Mae Global Notes 10/23/14 11/27/18 1.625% 232,185.00 233,114.20 2.07 Bank of New York Fannie Mae Global Notes 06/05/14 11/27/18 1.625% 618,597.75 623,327.10 2.07 Bank of New York FNMA Benchmark Note 02/16/16 01/28/19 1.375% 506.035.00 504,497.50 2.24 Bank of New York FNMA Benchmark Note 01/08/16 01/28/19 1.375% 649,597.00 655,846.75 2.24 Bank of New York FNMA Benchmark Note 02/23/16 02/26/19 1.000% 463.902.60 465,180.89 2.32 Bank of New York Freddie Mac Notes 03/21/16 04/15/19 1.125% 169,943.90 170,468.18 2.45 Bank of New York Freddie Mac Notes 02/16/16 05/30/19 1.750% 204.596.00 203,802.60 2.58 Bank of New York Freddie Mac Notes 07/22/15 05/30/19 1.750% 646,444.80 652,168.32 2.58 Bank of New York FNMA Benchmark Note 08/02/16 08/02/19 0.875% 748.740.00 746,196.75 2.75 Bank of New York FHLB Global Note 08/04/16 08/05/19 0.875% 788,483.20 785,880.15 2.76 Bank of New York FNMA Notes 09/02/16 08/28/19 1.000% 139,781.60 139,677.30 2.82 Bank of New York FNMA Benchmark Note 12/03/14 11/26/19 1.750% 327,122.25 331,213.03 3.07 Bank of New York FNMA Benchmark Note 08/25/16 05/06/21 1.250% 794,777.40 789,900.08 4.52 Bank of New York FHLB Global Note 07/15/16 07/14/21 1.125% 278,297.32 276,663.52 4.70 Bank of New York FNMA Notes 08/19/16 08/17/21 1.125% 189,350.01 188,294.18 4.80 Bank of New York 1 CITY OF SEAL BEACH Preliminary Investments Detail Report 10/31/2016 Years to Source of Market Issuer Settlement Date Maturity Date Interest Rate Book Value Market Value Maturity Valuation FNMA Notes 09/02/16 08/17/21 1.250% 372,705.00 371,633.25 4.80 Bank of New York FNMA Notes 08/19/16 08/17/21 1.125% 607,529.50 604,523.42 4.80 Bank of New York JP Morgan Chase&Co 06/11/15 05/15/18 1.625% 755.424.80 761,284.40 1.54 Bank of New York Bank of New York Mellon Corp 05/29/15 05/22/18 1.600% 504,954.55 507,399.26 1.56 Bank of New York Berkshire Hathaway Fin Global 01/10/14 08/15/18 2.000% 100,231.00 101,457.70 1.79 Bank of New York Toyota Motor Credit Corp 02/19/16 02/19/19 1.700% 249,970.00 251,256.75 2.30 Bank of New York Wells Fargo&Company 03/26/15 04/22/19 2.125°fo 373,955.30 374,123.28 2.47 Bank of New York General Electric Capital Corp Notes 04/15/15 08107//9 6.000% 588.015.00 561,425.50 2.77 Bank of New York Berkshire Hathaway Inc 08/15/16 08/15/19 1.300% 109,893.30 109,763.83 2.79 Bank of New York Burlington NRTH Corp 06/08/16 10/01/19 4.700% 137,987.50 136,712.63 2.92 Bank of New York Apple Inc 02/25/15 02/07/20 1.550% 617.000.00 626,561.25 3.27 Bank of New York American Honda Finance Corp Notes 09/14/16 09/09/21 1.700% 382,370.45 380,955.96 4.86 Bank of New York Nordea Bank Finland NY 05/29/15 05/26/17 1.150% 750,000.00 750,212.25 0.57 Bank of New York Toronto Dominion Bank NY 06/19/15 06/16/17 1.240% 750,000.00 750,303.75 0.62 Bank of New York US Bank NA Cincinnati 09/11/14 09/11/17 1.375% 628,985.70 632,287.53 0.86 Bank of New York Bank of Nova Scotia Houston YCD 11/09/15 11/06/17 1.560% 750.000.00 751,800.00 1.02 Bank of New York Skandinaviska Enskilda Banken NY C[ 11/17/15 11/16/17 1.480% 635,000.00 635,349.25 1.04 Bank of New York HSBC Bank USA NA Floating Cert DeF 11/18/15 11/17/17 1.218% 500,000.00 500,935.00 1.05 Bank of New York Royal Bank of Canada NY CD 03/15/16 03/09/18 1.700% 380.000.00 381,520.00 1.35 Bank of New York Total CDs and Bonds 26,152,122.89 26,204,143.27 Total Investments: 40,177,430.10 40,229,450.48 2 r PFM PFM Asset Management LLC CITY OF S I- AL B 'H ACH INVESTMENT PORTFOLIO Investment Performance Review For the Quarter Ended September 30, 2016 Client Management Team PFM Asset Management LLC Sarah Meacham,Director 601 South Figueroa,Suite 4500 One Keystone Plaza,Suite 300 Kenneth Schiebel,CFA,Managing Director Los Angeles,CA 90017 Harrisburg,PA 17101-2044 213-489-4075 717-232-2723 Market Update 2016 PFM Asset Management LLC IIIIII n r MI MN S MI I - - ! M - - - E INII 2-YEAR TREASURY YIELDS INCREASE • Following the sharp decline in yields instigated by the Brexit vote at the end of the second quarter, yields rebounded during the third quarter, resulting in a quarter-over-quarter increase of 16 basis points for the 2-year Treasury. • Speeches by various Fed officials during the quarter hinted at an additional rate hike before year-end, causing a further bump in yields. 2-Year Treasury Yields 1.25°/o 1.00% - Janet Yellen's speech ints 0.75% - at to hike 0.50% - Brexit vote 0.25% Sep '15 Oct'15 Nov'15 Dec'15 Jan'16 Feb '16 Mar'16 Apr'16 May '16 Jun'16 Jul'16 Aug'16 Sep '16 Source:Bloomberg,as of 9/30/16. 1 2016 PFM Asset Management LLC YIELDS INCREASE ACROSS THE BOARD • Yields on short- and intermediate-term U.S. Treasuries increased during the quarter as the markets priced in a likely rate hike by year-end. U.S. Treasury Yield Curve 2.00% -September 30,2016 12/31/15 6/30/16 9/30/16 June 30,2016 3-month 0.16% 0.17% 0.28% -December 31,2015 1.50% - 6-month 0.47% 0.26% 0.43% 1-year 0.60% 0.35% 0.59% cu 2-year 1.05% 0.44% 0.76% 1.00% - 3-year 1.31% 0.58% 0.88% 5-year 1.76% 0.69% 1.15% 0.50% - 7-year 2.09% 1.00% 1.42% 10-year 2.27% 1.28% 1.60% 0.00% 30-year 3.02% 1.47% 2.32% 3 6 1 2 3 5 M M Y Y Y Y Source:Bloomberg. 2016 PFM Asset Management LLC `' OM MN MN r - - r ME in r M MO ME MN NM - - E M r r r — M r I ■r - - r r r r — — I it r U.S. ECONOMIC GROWTH PICKED UP IN THIRD QUART ER 2016 • U.S. GDP growth increased at an annual rate of 2.9% in the third quarter of 2016, according to the Bureau of Economic Analysis. • Third quarter GDP reflected positive contributions from personal consumption and increased exports. Offsetting these contributions to growth, residential housing investment and state and local government spending declined. 6% Bloomberg TJ 5% Survey of Economists I 4 I3% 2.2%• — — — — 2% Ca 15% 0 x L : 111 . _1 . H1ttttI1i CA ct 4 U -1% a O a -2% - a aI a al a co' al 1 oa a c a a a a a1 a a a al a & I a s 2012 2013 2014 2015 2016 2017 Source:Bureau of Economic Analysis;Bloomberg survey results as of 1013116.Orange is average over last 12 months. 3 2016 PFM Asset Management LLC U.S. LABOR MARKET REMAINS STRONG • The U.S. economy added 598,000 jobs during the third quarter, continuing the trend of favorable job growth - exceeding economists' expectations of 532,000 net new jobs. • The unemployment rate ended the quarter at 5.0%, and the labor force participation rate increased to 62.9%, suggesting that more individuals are re-entering the labor force as the labor market approaches full employment. Monthly Job Gains U.S. Unemployment Rate NM Nonfarm Payrolls •12-Month Moving Average 10% - 400K 9% 300K Sept: +156k 8% 200K 1 6% 100ti I 5% 5.1% 5.0% Sep'11 Sep'12 Sep'13 Sep'14 Sep'15 Sep'16 Sep'11 Sep'12 Sep'13 Sep'14 Sep'15 Sep'16 Average Hourly Earnings (YoY) Labor Force Participation Rate 3.0% 65% 2.6% 64% :::;:% 6 3% ��9"° 2.1"<, 2.0% 63% 62. 3",, 1.3" 62.4% 62% 1.0% 62% Sep'11 Sep'12 Scp'13 Sep'14 Sep'15 Sep'16 Sep'11 Sep'12 Sep'13 Sep'14 Sep'15 Sep'16 Source:Bureau of Labor Statistics. 2016 PFM Asset Management LLC 4 NM - - NM Mil - NM in MN MN I i E I M MI r M MN • MI NMI MI • la 111 I 111011 10111 IIIIIII MN OM OM ME MI OM =I 11.1 INFLATION RISING SLOWLY • The core personal consumption expenditures (PCE) price index, the Fed's preferred gauge of core inflation, inched up to 1.7% year- over-year through August, but continues to undershoot the 2% target. • Some regional Fed Presidents, such as Cleveland's Mester and Richmond's Lacker, have urged for a pre-emptive rate increase, to prevent the economy from overheating. Mester said that "the Fed should be looking ahead and not just waiting". Inflation Measures Consumer Price Index vs Personal Consumption Expenditures Core CPI Core PCE — Fed's Long Term Inflation Target 3.0% 2.5% 2.0% ~ • r V 1.5% *it r . o x' 1.0% 0.5% 0.0% I I I I I I Aug'06 Aug'07 Aug'08 Aug'09 Aug'10 Aug'11 Aug'12 Aug'13 Aug'14 Aug'15 Aug'16 Source:Bloomberg as of 8/31/2016. 5 2016 PFM Asset Management LLC FED HOLDS OFF IN SEPTEMBER, HINTS AT IMMINENT RA 1 E HIKE • At the Federal Reserve's September meeting, they voted to keep Probability of Fed Rate Hike the fed funds target range at 0.25% to 0.50%. — Three dissenters cast their votes in favor of a rate hike. Meeting 9/30/16 7/31/16 6/30/16 • Highlights from the September 21 Press Release: 11/2/16 17% 20% 0% — ". . . the labor market has continued to strengthen, and growth of economic activity has picked up. . ." 12/14/16 60% 36% 9% — "The Committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued 2/1/17 61% 36% 9% progress toward its objectives." — " . . . the federal funds rate is likely to remain, for some 3/15/17 66% 41% 13% time, below levels that are expected to prevail in the longer run." 5/3/17 68% 42% 14% 6/14/17 72% 46% 23% Source:Federal Reserve and Bloomberg. WIRP. 2016 PFM Asset Management LLC 6 MN M - - NM I I r NM — — — NM I MN In MI IN III NM N MI = I♦ • SW I • N NM OM MI MI MO - OM MO I FOMC `DOT PLOT" 4% • I •• • I • • • Sep-16 Minutes • • I • I •••• • Jun-16 Minutes • • I 3% -Sep 16 Median • ••• I •••+•• •••••• ••• • I —Jun-16 Median •• • I • •• • •• —Fed Fund Futures I ••• — • ••• I I • • • I 2% • ••••••• I 1 • • I Fed members lowered expectations in • ••••••• September 1% ••••••••• • I I •••••• •••••• •• • • • I • I •• I I 0% 2016 2017 2018 2019 Longer Term Source:FOMC,Fed Funds Futures as of 9/20/2016.Individual dots represent each of the 17 FOMC memberrjudgment of the midpoint of the appropriate target range for the federalfunds rate. 7 2016 PFM Asset Management LLC MI E Ea MB r — — r — I OM SE NM MI — I — 1111 Investment Performance Review 2016 PFM Asset Management LLC r For the Quarter Ended September 30, 2016 CITY OF SEAL BEACH INVESTMENT POKI:FOLIO Third Quarter 2016 Recap • We generally maintained the portfolio's duration and maturity distribution comparable to that of the benchmark to reduce potential performance mismatches given the uncertain rate environment. • We traded out of U.S. Treasuries into new-issue federal agencies where additional yield pickup was available. While federal agency yields continued to move in tandem with U.S. Treasury yields, the slight decrease in the difference between federal agency yields and U.S. Treasury yields led to modest outperformance for federal agency bonds and increased year-to-date gains. • Our primary strategy involved emphasizing allocations to credit instruments, including corporate notes and negotiable bank certificates of deposits (CDs). Credit sectors provided incremental yield, a key contributor to return in a low rate environment. • We increased the portfolio's allocation to corporate notes by 2%. The corporate sector outperformed other sectors during the quarter and over the past year. 8 2016 PFM Asset Management LLC For the Quarter Ended September 30, 2016 CITY OF SEAL BEACH INVESTMENT PORTFOLIO Sector Allocation and Compliance Market Value as of Percentage % Change Permitted In Security Type September 30, 2016 of Portfolio vs. 6/30/16 by Policy Compliance U.S. Treasury $6,979,866 26% -15% 100% ✓ Federal Agencies $9,604,557 37% +17% 100% ✓ Negotiable CDs $5,066,261 19% -4% 30% ✓ Municipal Obligations $876,719 3% - 100% ✓ Corporate Notes $3,844,922 15% +2% 30% ✓ Money Market y $29,180 <1% - 20%° ✓ Fund Totals $26,401,505 100% Notes 1. End of quarter trade-date market values of portfolio holdings include accrued interest. 2016 PFM Asset Management LLC 9 ■ O - - MN iii iii NE r r UM NM NM r NM MI — NM NM MR I IMI MI MN NM MI OM all MN r N UM NM ME OM MI MI OM For the Quarter Ended September 30,2016 CITY OF SEAL BEACH INVESTMENT PORTFOLIO Portfolio Snapshot Credit Quality (S&P Ratings) Sector Allocation A Certificate of Not Rated* 3.9% U.S.Treasury Deposit 0.5% A- 26.5% 19.2% 2.9% Portfolio Statistics ' A+ As of September 30,2016 1.5% > � A-1 77% Par Value: 25,920,000 A-1+ Total Market Value: 26,401,505 1.9% AA Security Market Value: 26,260,378 2.4% Municipal #x P Accrued Interest: 111,947 3.a% AA- Federal Corporate 13.9% en GSE 14.6% Cash: 29,180 AA+ Agency/ PFM 65.3 ■ 36.4% Amortized Cost: 26,076,576 Yield at Market: 1.06% Maturity Distribution Yield at Cost: 1.37% 32% 29.2% Effective Duration: 2.59 Years 28% Duration to Worst: 2.60 Years 25.1% Average Maturity: 2.69 Years 24% Average Credit: ** AA 20% 19.1% 16% 15.5% 12% 11.1% 8% 4% 0.0% 0% 0-1 Year 1-2 Years 2-3 Years 3-4 Years 4-5 Years > 5 Years *CA Earthquake Authority is not rated by S&P but is rated A3 by Moody's and A by Fitch. **An averate of each security's credit rating assi,¢ned a numeric value and adjusted for its relative weirhtinzin the portfolio. 2016 PFM Asset Management LLC 10 For the Quarter Ended September 30, 2016 CITY OF SEAL BEACH INVESTMENT PORI FOLIO Portlfolio Performance Portfolio Performance (Total Return) Annualized Return Effective Current Since h Ince on Portfolio/Benchmark Duration Quarter 1 Year 3 Year 5 Year 10 Year Inception ** CITY OF SEAL BEACH INVESTMENT 2.59 -0.05% 1.90% 1.69% - - 1.53% PORTFOLIO City Of Sead Beach Investment Portfolio Custom 2.66 -0.19% 1.52% 1.43% - - 1.33% Index Difference 0.14% 0.38% 0.26% - - 0.20% 2.0% 1.90% 1.69% 1.6% 1.52% 1.53% 1.43% 1.33 1.2% a 0.8% p 0.4% H . e 0.0% -0.05% -0.19% -0.4% Current Quarter 1 Year 3 Year 5 Year 10 Year Since Inception ■ CITY OF SEAL BEACH INVESTMENT PORTFOLIO ■ City Of Seal Beach Investment Portfoko Custom Index Portfolio performance isgross of fees unless otherwise indicated **Since Inception performance is not shown for periods less than one year 2016 PFM Asset Management LLC 11 r all NM M N — MI NM MI — MI — MI MI MI MI M r MI MO MI r ■M MI • • all MI MI III OM — ■I MS ■■O all NM For the Quarter Ended September 30,2016 CITY OF SEAL BEACH INVESTMENT PORTFOLIO Portfolio Performance Portfolio Earnings Quarter-Ended September30,2016 Market Value Basis Accrual(Amortized Cost) Basis Beginning Value (06/30/2016) $26,202,904.79 $25,898,896.44 Net Purchases/Sales $173,302.91 $173,302.91 Change in Value ($115,830.06) $4,376.52 Ending Value (09/30/2016) $26,260,377.64 $26,076,575.87 Interest Earned $102,608.97 $102,608.97 Portfolio Earnings ($13,221.09) $106,985.49 2016 PFM Asset Management LLC 12 For the Quarter Ended September 30,2016 CITY OF SEAL BEACH INVESTMENT PORTFOLIO Portfolio Composition Sector Allocation September 30,2016 June 30,2016 March 31,2016 December 31,2015 Sector MV($MM) %of Total MV($MM) %of Total MV($MM) %of Total MV($MM) %of Total Federal Agency/GSE 9.6 36.4% 5.3 20.4% 5.2 19.9% 4.1 16.0% U.S.Treasury 7.0 26.5% 10.6 40.3% 8.7 33.2% 7.7 29.8% Certificate of Deposit 5.0 19.2% 6.1 23.1% 6.5 25.1% 6.1 23.9% Corporate 3.8 14.6% 3.3 12.8% 4.8 18.4% 6.6 25.9% Municipal 0.9 3.3% 0.9 3.4°/o 0.9 3.4% 1.1 4.4% Total $26.3 100.0% $26.2 100.0% $26.1 100.0% $25.7 100.0% 100% 90% 80% 70% • Municipal 60% • Corporate • Certificate of Deposit 50°/ • U.S.Treasury • Federal Agency/GSE 40% 30% 20% 10% Ell 0% September 2016 June 2016 March 2016 December 2015 Detail may not add to total due to rounding. 2016 PFM Asset Management LLC 13 M. r NM - r in E - - - - OM i - MO - - - - OM I MN — — OM — MO i — r NM — — MN NM — — r For the Quarter Ended September 30,2016 CITY OF SEAL BEACH INVESTMENT PORTFOLIO Portfolio Composition Maturity Distribution As of September 30, 2016 Yield Average 0-1 1-2 2-3 3-4 4-5 >5 Portfolio/Benchmark at Market Maturity Years Years Years Years Years Years CITY OF SEAL BEACH INVESTMENT PORTFOLIO 1.06% 2.69 yrs 11.1% 19.1% 29.2% 25.1°/a 15.5% 0.0% City Of Seal Beach Investment Portfolio Custom Index 0.90% 2.83 yrs 1.7% 30.0% 26.4% 21.3% 20.6% 0.0% 32% 30.0% ° 29.2/o 28% 26.4% 25.1% 24% 21.3% 20.6% 20% 19.1% 16% 15.5% 12% 11.1% 8% 4% 1.7% 0.0% 0.0% 00/u 0-1 Years 1-2 Years 2-3 Years 3-4 Years 4-5 Years >5 Years ■ CITY OF SEAL BEACH INVESTMENT PORTFOLIO ■ City Of Seal Beach Investment Portfolio Custom Index 2016 PFM Asset Management LLC 14 For the Quarter Ended September 30,2016 CITY OF SEAL BEACH INVESTMENT POR1 FOLIO Portfolio Composition Issuer Distribution As of September 30,2016 Issuer Market Value ($) %of Portfolio UNITED STATES TREASURY 6,950,475 26.5% FANNIE MAE 6,531,894 24.9% ,00 ` ui FEDERAL HOME LOAN BANKS 2,013,656 7.7% �n z,2; FREDDIE MAC 1,028,295 3.9% II • IP MORGAN CHASE&CO 761,585 2.9% °,' BANK OF NOVA SCOTIA 752,501 2.9% TORONTO-DOMINION BANK 750,353 2.9% NORDEA BANK AB 749,655 2.9% BANK OF MONTREAL 636,088 2.4% SKANDINAVISKA ENSKIDA BANKEN AB 635,953 2.4% US BANCORP 632,204 2.4% APPLE INC 630,637 2.4% GENERAL ELECTRIC CO 564,969 2.2% BANK OF NEW YORK CO INC 508,011 1.9% HSBC HOLDINGS PLC 501,130 1.9% UNIVERSITY OF CALIFORNIA 412,071 1.6% AMERICAN HONDA FINANCE 382,446 1.5% ROYAL BANK OF CANADA 381,796 1.5% 2016 PFM Asset Management LLC 15 MEN ii. iii Miii Mie iii 0.1 in. iMi iiii NM iiii iii iiii Min iii iiii iiii NM NMI Eli r MO MN - UM OM • r MN MI • I MI • MI • For the Quarter Ended September 30, 2016 CITY OF SEAL BEACH INVESTMENT PORTFOLIO Portfolio Composition Issuer Market Value ($) %of Portfolio WELTS FARGO&COMPANY 375,125 1.4% STATE OF CONNECTICUT 319,923 1.2% TOYOTA MOTOR CORP 251,950 1.0% BERKSHIRE HATHAWAY INC 211,621 0.8% CA EARTHQUAKE AUTH TXBL REV BOND 140,666 0.5% BURLINGTON NORTHERN SANTA FE 137,375 0.5% Grand Total: 26,260,378 100.0% 2016 PFM Asset Management LLC 16 For the Quarter Ended September 30, 2016 CITY OF SEAL BEACH INVESTMENT PORT POLIO OLIO Current Outlook and Strategy • We will continue to monitor incoming economic data to assess and confirm the prospect for a Fed rate hike by year-end. In the near-term, the upcoming U.S. Presidential election could be a source of market volatility. • Agency yield spreads moved modestly tighter during the third quarter, but still offer value in certain maturities. New issues, which typically offer a yield concession, offer the best opportunities. • We plan to keep the duration and maturity distribution of the portfolio generally in line with the distribution of the benchmark, except where shifting to short-term credit securities offers better value. • Our strategy continues to favor broad allocation to various credit sectors, including corporate notes and negotiable bank CDs. • We believe the best opportunities in the corporate sector are currently with issuers in the financial industry, where capital is strong and valuations are fair. We are monitoring industrial issues, where valuations are generally high and may not align with fundamentals,which are being pressured lower by increased borrowing. 2016 PFM Asset Management LLC 17 NM M M - NM - - En - - ME r - M ii. Min iiii Mi. iiii - - = P • ,;. W. Managed Account Detail of Securities Held For the Month Ending September 30, 2016 CITY OF SEAL BEACH INVESTMENT PORTFOLIO Security Type/Description S&P Moody's Trade Settle Original YTM Accrued Amortized Market Dated Date/Coupon/Maturity CUSIP Par Rating Rating Date Date Cost at Cost Interest Cost Value U.S.Treasury Bond / Note US TREASURY NOTES 912828H52 625,000.00 AA+ Aaa 03/02/16 03/04/16 625,341.80 1.24 1,316.24 625,293.81 630,761.88 DTD 02/02/2015 1.250%01/31/2020 US TREASURY NOTES 912828U01 900,000.00 AA+ Aaa 11/05/15 11/09/15 888,750.00 1.55 963.40 891,026.69 908,120.70 DTD 02/28/2013 1.250%02/29/2020 US TREASURY NOTES 912828384 100,000.00 AA+ Aaa 06/22/16 06/27/16 101,226.56 1.04 3.78 101,142.94 101,308.60 DTD 03/31/2015 1.375%03/31/2020 US TREASURY NOTES 912828384 125,000.00 AA+ Aaa 06/22/16 06/27/16 126,591.80 1.03 4.72 126,483.23 126,635.75 DTD 03/31/2015 1.375%03/31/2020 US TREASURY NOTES 912828384 275,000.00 AA+ Aaa 06/23/16 06/28/16 278,125.98 1.07 10.39 277,915.15 278,598.65 DTD 03/31/2015 1.375%03/31/2020 US TREASURY NOTES 912828K58 850,000.00 AA+ Aaa 02/01/16 02/03/16 854,482.42 1.25 4,890.96 853,806.18 861,056.80 DTD 04/30/2015 1.375%04/30/2020 US TREASURY NOTES 912828ND8 625,000.00 AA+ Aaa 09/01/15 09/03/15 681,616.21 1.50 8,262.57 669,000.45 679,809.38 DTD 05/17/2010 3.500%05/15/2020 US TREASURY NOTES 912828VF4 625,000.00 AA+ Aaa 12/02/15 12/04/15 619,995.12 1.56 2,888.06 620,889.83 632,836.88 DTD 05/31/2013 1.375%05/31/2020 US TREASURY NOTES 912828XM7 680,000.00 AA+ Aaa 03/30/16 03/31/16 691,395.31 1.23 1,861.68 690,104.68 694,795.44 DTD 07/31/2015 1.625%07/31/2020 US TREASURY NOTES 912828NT3 550,000.00 AA+ Aaa 09/01/15 09/03/15 578,144.53 1.55 1,843.92 572,205.38 582,527.55 DTD 08/16/2010 2.625%08/15/2020 US TREASURY NOTES 912828WC0 370,000.00 AA+ Aaa 01/06/16 01/11/16 371,141.80 1.68 2,709.65 370,978.96 379,726.93 DTD 10/31/2013 1.750%10/31/2020 US TREASURY NOTE 912828A42 500,000.00 AA+ Aaa 05/03/16 05/06/16 517,324.22 1.22 3,360.66 515,829.61 518,281.00 DTD 12/02/2013 2.000%11/30/2020 US TREASURY NOTES 912828N89 550,000.00 AA+ Aaa 05/26/16 05/27/16 550,429.69 1.36 1,274.12 550,401.43 556,015.90 DTD 01/31/2016 1.375%01/31/2021 Security Type Sub-Total 6,775,000.00 6,884,565.44 1.38 29,390.15 6,865,078.34 6,950,475.46 CI PFM Asset Management LLC 18 JIMMIE w, .. - ' °- Managed Account Detail of Securities Held For the Month Ending September 30, 2016 CITY OF SEAL BEACH INVESTMENT PORTFOLIO Security Type/Description S&P Moody's Trade Settle Original YTM Accrued Amortized Market Dated Date/Coupon/Maturity CUSIP Par Rating Rating Date Date Cost at Cost Interest Cost Value Municipal Bond / Note CA EARTHQUAKE AUTH TXBL REV BONDS 13017HAD8 140,000.00 NR A3 10/29/14 11/06/14 140,000.00 1.82 638.40 140,000.00 140,666.40 DTD 11/06/2014 1.824%07/01/2017 UNIV OF CAL TXBL REV BONDS 91412GSZ9 405,000.00 M Aa2 09/26/13 10/02/13 405,000.00 2.05 3,142.62 405,000.00 412,071.30 DTD 10/02/2013 2.054%05/15/2018 CT ST TXBL GO BONDS 20772JZK1 315,000.00 AA- Aa3 03/13/15 03/25/15 315,000.00 1.97 276.36 315,000.00 319,923.45 DTD 03/25/2015 1.974%03/15/2019 Security Type Sub-Total 860,000.00 860,000.00 1.99 4,057.38 860,000.00 872,661.15 Federal Agency Bond/ Note FEDERAL HOME LOAN BANKS AGCY 3130A8BD4 335,000.00 M+ Aaa 08/12/16 08/15/16 335,418.75 0.81 749.10 335,390.50 336,287.74 DTD 05/27/2016 0.875%06/29/2018 FEDERAL HOME LOAN BANKS AGCY 3130A8BD4 610,000.00 AA+ Aaa 05/26/16 05/27/16 608,529.90 0.99 1,364.03 608,769.63 612,344.84 DTD 05/27/2016 0.875%06/29/2018 FNMA BENCHMARK NOTE 3135G0E58 855,000.00 AA+ Aaa 08/27/15 09/01/15 853,614.90 1.18 4,328.44 854,086.28 859,428.05 DTD 09/01/2015 1.125%10/19/2018 FANNIE MAE GLOBAL NOTES 3135G0YT4 230,000.00 AA+ Aaa 10/22/14 10/23/14 232,185.00 1.39 1,287.36 231,166.03 233,715.42 DTD 10/01/2013 1.625%11/27/2018 FANNIE MAE GLOBAL NOTES 3135G0YT4 615,000.00 AA+ Aaa 06/02/14 06/05/14 618,597.75 1.49 3,442.29 616,761.83 624,934.71 DTD 10/01/2013 1.625%11/27/2018 FNMA BENCHMARK NOTE 3135G0H63 500,000.00 AA+ Aaa 02/12/16 02/16/16 506,035.00 0.96 1,203.13 504,770.62 505,523.50 DTD 01/08/2016 1.375%01/28/2019 FNMA BENCHMARK NOTE 3135G0H63 650,000.00 AA+ Aaa 01/06/16 01/08/16 649,597.00 1.40 1,564.06 649,690.68 657,180.55 DID 01/08/2016 1.375%01/28/2019 FNMA BENCHMARK NOTE 3135G0353 465,000.00 AA+ Aaa 02/19/16 02/23/16 463,902.60 1.08 452.08 464,120.64 465,659.84 DTD 02/23/2016 1.000%02/26/2019 FREDDIE MAC NOTES 3137EADZ9 170,000.00 AA+ Aaa 03/18/16 03/21/16 169,943.90 1.14 1,009.38 169,953.73 170,754.97 DTD 03/21/2016 1.125%04/15/2019 FREDDIE MAC NOTES 3137EADG1 200,000.00 AA+ Aaa 02/12/16 02/16/16 204,596.00 1.04 1,176.39 203,735.10 204,176.20 DTD 04/16/2012 1.750%05/30/2019 PF`1 PFM Asset Management LLC 19 NM ME - - E ME En - OM MI ME - - M. - - NM i E r - OM - - ME MN ME ME - - - M Elli Managed Account Detail of Securities Held For the Month Ending September 30, 2016 CITY OF SEAL BEACH INVESTMENT PORTFOLIO Security Type/Description S&P Moody's Trade Settle Original YTM Accrued Amortized Market Dated Date/Coupon/Maturity CUSIP Par Rating Rating Date Date Cost at Cost Interest Cost Value Federal Agency Bond / Note FREDDIE MAC NOTES 3137EADG1 640,000.00 AA+ Aaa 07/21/15 07/22/15 646,444.80 1.48 3,764.44 644,494.12 653,363.84 DTD 04/16/2012 1.750%05/30/2019 FNMA BENCHMARK NOTE 3135GON33 750,000.00 AA+ Aaa 07/29/16 08/02/16 748,740.00 0.93 1,075.52 748,808.03 747,084.00 DID 08/02/2016 0.875%08/02/2019 FHLB GLOBAL NOTE 3130A8Y72 790,000.00 AA+ Aaa 08/03/16 08/04/16 788,483.20 0.94 1,094.48 788,562.26 787,080.16 DTD 08/04/2016 0.875%08/05/2019 FNMA NOTES 3135G0P49 140,000.00 AA+ Aaa 08/31/16 09/02/16 139,781.60 1.05 112.78 139,787.40 139,935.60 DTD 09/02/2016 1.000%08/28/2019 FNMA BENCHMARK NOTE 3135GOZY2 325,000.00 AA+ Aaa 12/01/14 12/03/14 327,122.25 1.61 1,974.83 326,363.17 332,258.55 DTD 11/07/2014 1.750%11/26/2019 FNMA BENCHMARK NOTE 3135GOK69 795,000.00 AA+ Aaa 08/24/16 08/25/16 794,777.40 1.26 3,726.56 794,783.48 794,356.05 DTD 05/16/2016 1.250%05/06/2021 FHLB GLOBAL NOTE 3130A80S5 280,000.00 AA+ Aaa 07/14/16 07/15/16 278,297.32 1.25 673.75 278,367.26 277,943.12 DTD 07/14/2016 1.125%07/14/2021 FNMA NOTES 3135GON82 190,000.00 AA+ Aaa 08/17/16 08/19/16 189,350.01 1.32 277.08 189,364.74 189,485.48 DTD 08/19/2016 1.250%08/17/2021 FNMA NOTES 3135GON82 375,000.00 AA+ Aaa 09/01/16 09/02/16 372,705.00 1.38 546.88 372,741.22 373,984.50 DTD 08/19/2016 1.250%08/17/2021 FNMA NOTES 3135GON82 610,000.00 AA+ Aaa 08/17/16 08/19/16 607,529.50 1.33 889.58 607,585.47 608,348.12 DTD 08/19/2016 1.250%08/17/2021 Security Type Sub-Total 9,525,000.00 9,535,651.88 1.20 30,712.16 9,529,302.19 9,573,845.24 Corporate Note JPMORGAN CHASE&CO GLOBAL NOTES 46625HJL5 760,000.00 A- A3 06/08/15 06/11/15 755,424.80 1.84 4,665.56 757,437.36 761,584.60 DTD 05/15/2013 1.625%05/15/2018 BANK OF NEW YORK MELLON CORP 06406HDB2 505,000.00 A Al 05/22/15 05/29/15 504,954.55 1.60 2,895.33 504,974.37 508,010.81 (CALLABLE) DTD 05/29/2015 1.600%05/22/2018 l-1 1a. PFM Asset Management LLC 20 PFv1 Managed Account Detail of Securities Held For the Month Ending September 30, 2016 CITY OF SEAL BEACH INVESTMENT PORTFOLIO Security Type/Description S&P Moody's Trade Settle Original YTM Accrued Amortized Market Dated Date/Coupon/Maturity CUSIP Par Rating Rating Date Date Cost at Cost Interest Cost Value Corporate Note BERKSHIRE HATHAWAY FIN GLOBAL NOTES 084664BY6 100,000.00 AA Aa2 01/06/14 01/10/14 100,231.00 1.95 255.56 100,096.86 101,435.30 DTD 08/15/2013 2.000%08/15/2018 TOYOTA MOTOR CREDIT CORP 89236TCU7 250,000.00 AA- Aa3 02/16/16 02/19/16 249,970.00 1.70 495.83 249,976.05 251,950.25 DTD 02/19/2016 1.700%02/19/2019 WELLS FARGO&COMPANY 94974BFU9 370,000.00 A A2 03/23/15 03/26/15 373,955.30 1.85 3,472.60 372,520.62 375,124.87 DTD 04/22/2014 2.125%04/22/2019 GENERAL ELECTRIC CAPITAL CORP NOTES 36962G4D3 500,000.00 AA- Al 04/10/15 04/15/15 588,015.00 1.74 4,500.00 558,920.87 564,968.50 DTD 08/07/2009 6.000%08/07/2019 BERKSHIRE HATHAWAY INC CORPORATE 084664CK5 110,000.00 AA Aa2 08/08/16 08/15/16 109,893.30 1.33 182.72 109,897.77 110,185.79 NOTES DTD 08/15/2016 1.300%08/15/2019 BURLINGTON NRTH CORP 12189TBC7 125,000.00 A A3 06/03/16 06/08/16 137,987.50 1.48 2,937.50 136,786.57 137,374.63 DTD 09/24/2009 4.700%10/01/2019 APPLE INC 037833AX8 625,000.00 AA+ Aal 02/20/15 02/25/15 617,000.00 1.82 1,399.31 619,509.78 630,636.88 DTD 02/09/2015 1.550%02/07/2020 AMERICAN HONDA FINANCE CORP NOTES 02665WBG5 385,000.00 A+ Al 09/09/16 09/14/16 382,370.45 1.84 399.97 382,394.37 382,445.91 DTD 09/09/2016 1.700%09/09/2021 Security Type Sub-Total 3,730,000.00 3,819,801.90 1.76 21,204.38 3,792,514.62 3,823,717.54 Certificate of Deposit BMO HARRIS BANK NA CD 05574BFW5 635,000.00 A-1 Aa3 10/22/15 10/23/15 635,000.00 1.01 6,067.78 635,000.00 636,087.76 DTD 10/23/2015 1.000%04/24/2017 NORDEA BANK FINLAND NY CD 65558LFA5 750,000.00 AA- Aa3 05/27/15 05/29/15 750,000.00 1.15 3,066.67 750,000,00 749,655.00 DTD 05/29/2015 1.150%05/26/2017 TORONTO DOMINION BANK NY YCD 89113ESN7 750,000.00 AA- Aal 06/16/15 06/19/15 750,000.00 1.25 2,660.83 750,000,00 750,352.50 DTD 06/19/2015 1.240%06/16/2017 US BANK NA CINCINNATI(CALLABLE)CD 90333VPF1 630,000.00 AA- Aal 09/09/14 09/11/14 628,985.70 1.41 481.25 629,680.72 632,203.74 DTD 09/11/2014 1.375%09/11/2017 C1 PFM Asset Management LLC 21 OM IIIM 11111 MIll MN En 1.11 NM OM Mie 1.11 111111 MI MO EM NM NM ! MI - MI - - - - - - = - Ma MI - M OM M yea° W Managed Account Detail of Securities Held For the Month Ending September 30, 2016 CITY OF SEAL BEACH INVESTMENT PORTFOLIO Security Type/Description S&P Moody's Trade Settle Original YTM Accrued Amortized Market Dated Date/Coupon/Maturity CUSIP Par Rating Rating Date Date Cost at Cost Interest Cost Value Certificate of Deposit BANK OF NOVA SCOTIA HOUSTON YCD 06417GAS7 750,000.00 A-1 P-1 11/06/15 11/09/15 750,000.00 1.55 4,712.50 750,000.00 752,501.25 DTD 11/09/2015 1.560%11/06/2017 SKANDINAVISKA ENSKILDA BANKEN NY CD 83050FBG5 635,000.00 A-1 P-1 11/16/15 11/17/15 635,000.00 1.48 8,327.67 635,000.00 635,952.50 DTD 11/17/2015 1.480%11/16/2017 HSBC BANK USA NA FLOATING CERT DEPOS 40428AR41 500,000.00 A-1+ P-1 11/17/15 11/18/15 500,000.00 0.97 871.32 500.000.00 501,130.00 DTD 11/18/2015 1.394%11/17/2017 ROYAL BANK OF CANADA NY CD 78009NZZ2 380,000.00 AA- Aa3 03/11/16 03/15/16 380,000.00 1.69 394.78 380,000.00 381,795.50 DTD 03/15/2016 1.700%03/09/2018 Security Type Sub-Total 5,030,000.00 5,028,985.70 1.30 26,582.80 5,029,680.72 5,039,678.25 Managed Account Sub-Total 25,920,000.00 26,129,004.92 1.37 111,946.87 26,076,575.87 26,260,377.64 Securities Sub-Total $25,920,000.00 $26,129,004.92 1.37% $111,946.87 $26,076,575.87 $26,260,377.64 Accrued Interest $111,946.87 Total Investments $26,372,324.51 1'111 PFM Asset Management LLC 22 For the Quarter Ended September 30,2016 CITY OF SEAL BEACH INVESTMENT PORTFOLIO Polo. ortf olio Actirrily Important Disclosures This material is based on information obtained from sources generally believed to be reliable and available to the public,however PFM Asset Management LLC cannot guarantee its accuracy,completeness or suitability.This material is for general information purposes only and is not intended to provide specific advice or a specific recommendation.All statements as to what will or may happen under certain circumstances are based on assumptions,some but not all of which are noted in the presentation.Assumptions may or may not be proven correct as actual events occur,and results may depend on events outside of your or our control.Changes in assumptions may have a material effect on results. Past performance does not necessarily reflect and is not a guaranty of future results.The information contained in this presentation is not an offer to purchase or sell any securities. • Market values which include accrued interest,are derived from closing bid prices as of the last business day of the month as supplied by a third patty vendor. Where prices are not available from generally recognized sources the securities are priced using a yield based matrix system to arrive at an estimated market value. • In accordance with generally accepted accounting principles,information is presented on a trade date basis;forward settling purchases are included in the monthly balances and forward settling sales are excluded. • Performance is presented in accordance with the CFA Institute's Global Investment Performance Standards (GIPS).Unless otherwise noted,performance is shown gross of fees. Quarterly returns are presented on an unannualized basis. Returns for periods greater than one year are presented on an annnali7ed basis. Past performance is not indicative of future returns. • Bank of America/Merrill Lynch Indices provided by Bloomberg Financial Markets. • Money market fund/cash balances are included in performance and duration computations. • Standard&Poor's is the source of the credit ratings.Distribution of credit rating is exclusive of money market fund/LGIP holdings. • Callable securities in portfolio are included in the maturity distribution analysis to their stated maturity date,although they may be called prior to maturity. • NIBS maturities are represented by expected average life. • 2016 PFM Asset Management LLC 23 MN i in N - - - - - - - - - - - - r