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County of Ventura Board of Supervisors February 02, 2021 Page 3 of 4 2020 was even more challenging than 2019. The interest rate market continued to decline every month as The Federal Open Market Committee continued to intervene in the bond markets. The bulk of our new investments were in the 6 -month and under category. We maintained a higher cash reserve bank balance to protect against possible withdrawals by pool participants that may have had virus related cash flow problems. Several of our issuers significantly reduced their borrowing as they held large cash balances on their own books. It requires increasing care to maintain the pool's S & P rating. We have built an admittedly lop -sided maturity barbell, weighted heavily to less -than -one-year maturities, with a much lighter weight for two -to -three year maturities. We believe this is the best structure to meet the three standard goals of safety, liquidity, and yield while also protecting the Standard and Poor's rating. We could enhance yield by purchasing more of the longer maturities and/or more of the lower quality instruments. Either approach would not only enhance risk but would also have a significantly negative effect on Standard and Poor's perception of the quality of the pool's portfolio. During 2020 the average daily portfolio balance rose from 2.902 Billion in January to 3.312 Billion in December. The lowest monthly balance was 2.550 in August; the highest, 3.312 in December. A significant part of the pool's increase is CARES ACT money. The anticipated withdrawals have not occurred. The net annualized percentage yield in January was 1.960; in December 0.458; and for the year, 1.265. Exhibit 5 shows how sharply our yield, and for those of our peers, dropped in 2020. The total net earnings for 2020 were $38.232 Million, compared to $67.646 Million in 2019. About half of that amount goes to the County general fund, the rest is apportioned to the other government agency pool participants. There were 605 investment purchases in 2020 and no investment sales, just as should be expected from a conservative buy -and -hold portfolio. Our goal continues to be to shop carefully for quality investments, to maintain competitive yield while ensuring safety and liquidity, and the Standard and Poor's rating. I will prepare a similar report covering FY 2020-2021 as part of the report of investment for June 2021, which is usually delivered at the first Board meeting in September. This letter has been reviewed and approved as to form by the County Executive Office, the Auditor controller's Office, and County Counsel. 800 South Victoria Avenue, Ventura, California 93009-1290 www.venturapropertytax,,.org (805) 654-3734