Loading...
2019-131 Second Quarter Financial Report FY 2018-19Date: June 21, 2019 INFORMAL STAFF REPORT TO MAYOR AND CITY COUNCIL SUBJECT: Quarterly Financial Report for the period ending March 31, 2019. BACKGROUND: Attached for your review is the Quarterly Financial Report for the period ending March 31, 2019. If you have any questions or need additional information, please let me know. STAFF CONTACT: David Gaines, Finance Director (940) 349-8260 David.Gaines@cityofdenton.com Report No.: 2019-131 About This Quarterly Financial Report This report has been prepared by the City of Denton’s Finance Department. The Quarterly Financial Report is intended to provide our users (internal and external) with information regarding the City’s financial position and economic activity. This report includes information for the quarter ending March 31, 2019. This report is presented in four sections. 1. The Executive Dashboard section contains a high level summary of the major operating funds using graphic illustrations and key economic indicators. Narrative disclosures are also included to highlight any significant changes or fluctuations. 2. The Financial Summary section reports the performance of the major operating funds of the City. In addition, the report provides an end of year projection and a comparison to the budget for major revenue sources and expenditure items. 3. The Revenue & Economic Analysis section provides additional analysis regarding key revenue sources and economic indicators. 4. The Quarterly Investment Report section provides a summary of the City’s investment portfolio, interest earnings and a brief market outlook. The Quarterly Financial Report is intended to provide our users with timely and relevant information. Please provide us with any comments or suggestions you may have. If you would like additional information, feel free to contact me. David Gaines Finance Director 215 East McKinney Street Denton, TX 76201 940-349-8260 Section 1 City of Denton Quarterly Financial Report March 2019 Executive Dashboards Note:  All figures presented are in millions of dollars.FY 2018-19 FY 2018-19ANNUAL ANNUAL FY 2018-19DESCRIPTION BUDGET 1PROJECTION VARIANCEBeginning Fund Balance as of 09/30/18 31.09$ 30.32$ RESOURCES: Ad Valorem Taxes 46.26 46.26 0% Sales Tax 41.43 37.95 -8% Franchise Fees 4.36 4.99 14% Other Taxes 0.51 0.51 0% Service Fees 8.11 8.07 0% Fines and Fees 3.72 3.72 0% Licenses and Permits 3.86 3.86 0% Miscellaneous Revenue 2.29 2.18 -5% Transfers In 17.16 19.26 12%Total Revenues 127.70 126.80 -1%Total Resources 158.79 157.12 EXPENDITURES : Personal Service 87.15 86.99 0% Material and Supplies 2.95 2.95 0% Maintenance and Repairs 3.27 3.27 0% Insurance 1.44 1.44 0% Miscellaneous 1.15 1.15 0% Operations 18.29 17.72 -3% Transfers Out 14.36 12.69 -12% Fixed Assets 0.57 0.57 0%Total Expenditures 129.18 126.78 -2%Net Income (Loss) (1.48) 0.02 Ending Fund Balance 29.61$ 30.34$ City of Denton, Texas General Fund Executive Dashboard $‐ $10 $20 $30 $40 $50 $60 $70 $80 $90Revenue & Expenses (in Millions)YTD RevenueYTD ExpensesKey TrendsSales Tax revenues are projected $3.48M less than budget due to lower collections in retail activities.Franchise Fees revenues are projected $0.63M higher than budget due to a reduction in transfers to the Street Improvement Fund.Transfers In revenues are projected $2.10M higher than budget due to recapture in previously cash funded transportation projects.Operations expenditures are projected $0.57M less than budget mainly due to savings related to 380 Agreements.Transfers Out expenditures are projected $1.67M less than budget mainly due to the Fleet right sizing effort and elimination of cash funding for renovations to the facility at 651 Mayhill. $‐ $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5Sales Tax Monthly Average by Quarter1Annual adopted budget as amended or modified. Beginning Fund Balance represents the amount which was estimated in the FY 2018‐19 budget process. Note:  All figures presented are in millions of dollars.City of Denton, Texas Electric Fund Executive DashboardDESCRIPTIONFY 2018-19 ANNUAL BUDGET 1FY 2018-19 ANNUAL PRO JEC TIO NS FY 2018-19 VARIANCEBeginning Working Capital and Reserves as of 9/30/18 62.95$ 73.94$ RESOURCES: Rate Revenues 135.52 136.93 1% Transmission Revenue 40.06 40.06 0% Other Revenues 3.75 3.96 6% DEC Revenues 36.30 35.72 -2%Total Revenues 215.63 216.67 0%Total Resources 278.58 290.61 EXPENDITURES: Purchased Power 67.19 71.09 6% DEC Fuel 14.97 16.84 12% Transmission of Power 12.50 12.50 0% Personnel Service 22.06 21.05 -5% Operation and Maintenance 27.32 26.99 -1% Debt Service 69.30 50.64 -27% Transfers Out 14.33 14.33 0% Capital Outlay 16.02 15.56 -3%Total Expenditures 243.69 229.00 -6%Net Income (Loss) (28.06) (12.33) Ending Working Capital and Reserves 34.89$ 61.61$ $0$20$40$60$80$100$120Oct‐18 Nov‐18 Dec‐18 Jan‐19 Feb ‐ 19 Mar‐19Revenue & Expenses (in Millions)YTD RevenueYTD ExpenseKey TrendsDEC Fuel expenditures are projected to be $1.87 Million more than budgeted due to higher gas prices.Debt Service is projected to be $18.7 Million less than budgeted as a result of no TMPA debt defeasance in the amount of $28.6 Million and an increase in DEC Debt Service in the amount of $9.9 Million.  01002003004005006001Q 13 3Q 13 1Q 14 3Q 14 1Q 15 3Q 15 1Q16 3Q16 1Q17 3Q17 1Q18 3Q18 1Q192013 – 2018 Historical Quarterly GWH Sales1 Annual adopted budget as amended or modified.  Beginning Fund Balance represents the amount which was estimated in the FY 2018‐19 budget process.   Note:  All figures presented are in millions of dollars.FY 2018-19 FY 2018-19ANNUAL ANNUAL FY 2018-19DESCRIPTIONBUDGET 1PROJECTION VARIANCEBeginning Working Capital and Reserves as of 09/30/18223.98$ 25.95$ RESOURCES: Water Sales 37.51 38.60 3% Other Water Revenues 1.01 1.06 5% Transfers In 1.49 1.47 -1% Impact Fee Revenue 5.70 5.70 0%Total Revenues 45.71 46.83 2%Total Resources 69.69 72.78 EXPENDITURES: Personal Service 8.86 8.66 -2% Operations, Services 10.00 10.07 1% Capital Outlay 15.28 14.75 -3% Debt Service 12.66 12.66 0% Transfers Out 3.39 3.85 14%Total Expenditures 50.19 49.99 0%Net Income (Loss) (4.48) (3.16) Ending Working Capital and Reserves 19.50$ 22.79$ 05001,0001,5002,0002,5001Q143Q141Q153Q151Q163Q161Q173Q171Q183Q181Q192014‐2019 Historical Quarterly Gallons Sold (in Millions)City of Denton, Texas Water Fund Executive Dashboard $‐ $5 $10 $15 $20 $25Oct‐18 Nov‐18 Dec‐18 Jan‐19 Feb‐19 Mar‐19Revenue & Expenses (in Millions)YTD RevenueYTD ExpensesKey TrendsWater Sales are projected to exceed budget due to continued property development.Personal Service expenses are projected to be below budget due to position vacancies.Capital Expenditures are forecast lower due to revised project timelines.1Annual adopted budget as amended or modified. Beginning Fund Balance represents the amount which was estimated in the   FY 2018‐19 budget process.2The Beginning Working Capital balance excludes $10.88M of Impact Fee Reserves and $0.75 million for Development Plan Line Reserves. FY 2018-19 FY 2018-19ANNUAL ANNUAL FY 2018-19DESCRIPTIONBUDGET 1PROJECTION VARIANCEBeginning Working Capital and Reserves as of 09/30/18219.19$ 18.67$ RESOURCES: Wastewater Fees 23.64 24.15 2% Other Wastewater Revenue 1.83 1.81 -1% Drainage Fees 4.73 4.66 -1% Transfer In 0.55 0.55 0% Impact Fee Revenue 2.00 2.00 0%Total Revenues 32.75 33.17 1%Total Resources 51.94 51.84 EXPENDITURES: Personal Service 8.61 7.95 -8% Operations, Services 8.67 8.74 1% Capital Outlay10.09 9.93 -2% Debt Service 6.81 6.81 0% Transfer Out 3.29 3.75 14%Total Expenditures 37.47 37.18 -1%Net Income (Loss) (4.72) (4.01) Ending Working Capital and Reserves 14.47$ 14.66$ Note:  All figures presented are in millions of dollars.02004006008001,0001,2001,4001Q143Q141Q153Q151Q163Q161Q173Q171Q183Q181Q192014‐2018 Historical Quarterly Gallons Billed (in Millions)City of Denton, Texas Wastewater Fund Executive Dashboard $‐ $5 $10 $15 $20 $25Oct‐18 Nov‐18 Dec‐18 Jan‐19 Feb‐19 Mar‐19Revenue & Expenses (in Millions)YTD RevenueYTD ExpensesKey TrendsPersonal Services are projected to be lower than budget due to position vacancies.Capital Expenditures are forecast lower due to revised project timelines.Projections for transfers out were increased to match updated estimates.1Annual adopted budget as amended or modified. Beginning Fund Balance represents the amount which was estimated in the FY 2018‐19 budget process.2The Beginning Working Capital balance excludes $4.19 million of Impact Fee Reserves, $1.0 million for Drainage Reserves, and $0.54 million for Development Plan Line Reserves. FY 2018-19 FY 2018-19ANNUAL ANNUAL FY 2018-19DESCRIPTION BUDGET PROJECTION VARIANCEREVENUES: Residential Drainage Fees 1.82$ 1.75$ -4% Nonresidential Drainage Fees 2.91 2.91 0% Wastewater Resources 0.04 0.04 0% General Fund Transfer 0.32 0.32 0%Total Revenues 5.09 5.02 -1%EXPENDITURES: Personal Service 1.97 1.62 -18% Operations, Services 0.80 0.84 5% Capital Outlay 1.40 1.41 1% Debt Service 0.48 0.49 2% Transfer Out 0.44 0.66 50%Total Expe n di tu re s 5.09 5.02 -1%Net Income (Loss) -$ -$ Note:  All figures presented are in millions of dollars.City of Denton, Texas Drainage Operations Executive Dashboard $‐ $0.5 $1.0 $1.5 $2.0 $2.5 $3.0Oct‐18 Nov‐18 Dec‐18 Jan‐19 Feb‐19 Mar‐19Revenue & Expenses (in Millions)YTD RevenueYTD ExpensesKey TrendsPersonal Services are projected to be lower than budget due to position vacancies.Projections for transfers out were increased to match updated estimates. FY 2018-19 FY 2018-19ANNUAL ANNUAL FY 2018-19DESCRIPTION BUDGET 1PROJECTIONS VARIANCEBeginning Working Capital and Reserves as of 09/30/1828.64$ 10.92$ RESOURCES: Collection & Disposal 26.29 26.45 1% Recycling 6.84 6.79 -1% Other Revenue 1.39 0.84 -40%Total Revenues 34.52 34.08 -1%Total Resources 43.16 45.00 EXPENDITURES: Personal Service 11.21 10.93 -2% Operations, Services 10.14 9.82 -3% Capital Outlay 1.33 1.17 -12% Debt Service 9.00 9.00 0% Transfer Out 3.19 3.72 17%Total Expenditures 34.87 34.64 -1%Net Income (Loss) (0.35) (0.56) Ending Working Capital and Reserves 8.29$ 10.36$ 01,0002,0003,0004,0005,0006,0007,0002017Qtr 32017Qtr 42018Qtr 12018Qtr 22018Qtr 32018Qtr 42019Qtr 12019Qtr 2Refuse TonnageRecycling TonnagesResidential Curbside Collection TonnageNote:  All figures presented are in millions of dollars.City of Denton, Texas Solid Waste Fund Executive DashboardKey TrendsOther revenue is less than budget due to the return of transfers from Materials Management for 651 Mayhill Project.Decrease in Capital Projects is due to decrease in container and cart purchases.Projections for transfers‐out increased to match updated estimates & assumptions. 05,00010,00015,00020,00025,00030,0002017Qtr 32017Qtr 42018Qtr 12018Qtr 22018Qtr 32018Qtr 42019Qtr 12019Qtr 2Commercial Refuse & Recycling (Front & Side Load)Cubic Yards Serviced per WeekCommercial RefuseCommercial Recycling1Annual adopted budget as amended or modified. Beginning Working Capital and Reserves represents the amount which was estimated in the FY 2018‐19 budget process.2The Beginning Working Capital and Reserves excludes $9.90 million of Landfill Closure/Post Closure reserves. City of Denton, Texas Airport Fund Executive DashboardKey TrendsAnticipating several new leases at fair market value later in the year.Fuel flowage revenue is expected to increase due to increased operations.Diminishing gas well revenues.Reduced personnel cost due to staff turnover.Operations services expense is less than expected due to savings on maintenance contracts.$0.0$1.0$2.0$3.0$4.0$5.02009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019GAS WELLREVENUE(in millions of dollars by fiscal year) 20,000 30,000 40,000 50,000 60,000AIRPORT OPERATIONS BY QUARTER(takeoff or landing by fiscal year)Note: All financial amounts presented are in millions of dollars.FY 2018-19 FY 2018-19ANNUAL ANNUAL FY 2018-19DESCRIPTION BUDGET 1PROJECTION VARIANCEBeginning Working Capital and Reserves as of 09/30/18 2.67$ 2.93$ RESOURCES: Airport Ground Leases 0.77 0.73 -5% FBO Commissions 0.11 0.12 9% Fuel Flowage Fees 0.21 0.21 0%Total Operating Revenues 1.09 1.06 -3%EXPENDITURES: Personal Service 0.55 0.48 -13% Operations, Services 0.42 0.35 -17% Transfer Out 0.52 0.52 0%Total Operating Expenditures 1.49 1.35 -9%Net Operating Income (Loss) (0.40) (0.29) NON-OPERATING REVENUES: Investment Income 0.02 0.05 150% Gas Well Royalties 0.43 0.37 -14%Total Non-Operating Revenues 0.45 0.42 -7%NON-OPERATING EXPENDITURES: Transfer Out - Capital 0.25 0.25 0%Total Non-Operating Expenditures 0.25 0.25 0%Net Non-Operating Income (Loss) 0.20 0.17 Net Income (Loss) (0.20) (0.12) Ending Working Capital and Reserves 2.47$ 2.81$ 1Annual adopted budget as amended or modified. Beginning Working Capital and Reserves represents the amount which was estimated in the FY 2018‐19 budget process. FY 2018-19 FY 2018-19ANNUAL PRELIMINARY FY 2018-19DESCRIPTION BUDGET 1ACTUALS VARIANCEBeginning Working Capital and Reserves as of 09/30/2018 1.16$ 1.62$ RESOURCES: Franchise Fees 13.52 13.52 0% Street Cuts 0.36 0.36 0% Investment Income 0.01 0.01 0% Transfers In 1.20 1.20 0%Total Revenues 15.09 15.09 0%Total Resources 16.25 16.71 EXPENDITURES: Personal Service 3.64 3.64 0% Materials & Supplies 0.09 0.09 0% Maintenance & Repairs 9.20 9.20 0% Operations, Services 0.78 0.78 0% Transfer Out 1.36 1.36 0%Total Expe n di tu re s 15.07 15.07 0%Net Income (Loss) 0.02 0.02 Ending Fund Balance 1.18$ 1.64$ 1Annual adopted budget as amended or modified. Beginning Fund Balance represents the amount which was estimated in the FY 2018-19 budget process.City of Denton, Texas Street Improvement Fund Executive DashboardKey TrendsRevenues and expenditures are projected to meet budgeted levels.No surface treatments were completed in the 1stquarter of the prior year due to cold weather.No surface treatments were completed in the 2ndquarter of the current or prior year, several are in progress and will be completed in the 3rdquarter.Note:  All figures presented are in millions of dollars.0123456Qtr1 Qtr2Tons of Asphalt Laid (in Thousands)FY17-18FY18-190204060Qtr 1 Qtr 2Lane Miles Surface TreatmentFY 17-18FY 18-19 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 $4.0 $4.5 $5.0 $5.5 $6.0 $6.5 $7.0Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19Revenue & Expenses (in Millions)YTD RevenueYTD Expenses FY 2018-19 FY 2018-19GRANT ANNUAL FY 2018-19DESCRIPTION AMOUNT PROJECTION VARIANCE2018-19 Budget Comm Development13.64$ 1.25$ -66% Public Safety 1.02 1.02 0% Transportation172.92 31.55 -57% Other 0.28 0.28 0%Total Budget 77.86 34.10 -56%New Awards Public Safety 0.10 0.10 0%Total New Awards 0.10 0.10 0%Totals 77.96$ 34.20$ -56%COMM DEV4.67%PUBLIC SAFETY1.43%TRANS93.53%OTHER0.37%FY 2018‐19 Grants Awarded $‐ $20.0 $40.0 $60.0 $80.0COMMDEVPUBLICSAFETYTRANSOTHERAwardsExpensesFY 2018‐19 Awards & Expenses (in Millions)City of Denton, Texas Grants DashboardNote: All figures presented are in millions of dollars.1This grant amount will be spent over several years and the fiscal year 2018-19 projections are estimated expenditures for one year. Remaining grant amounts will be spent in future fiscal year.Key TrendsThe following grantsamounts have been received in FY 2018-19: Federal Equitable Sharing: $5,482Chapter 59 Asset Forfeitures: $20,084U.S. Marshals Violent Offenders Task Force: $3,622Organized Crime Drug Enforcement Task Force: $5,098PD-Law Enforcement Officer Standard & Education:$9,750Sexual Assault Examiners Reimbursement:$23,9192017 UASI: $29,574 Section 2 City of Denton Quarterly Financial Report March 2019 This report is designed for internal use and does not include all the funds and accounts included in the City of Denton’s operations. The information provided is unaudited; for a complete audited report, please refer to the City of Denton Comprehensive Annual Financial Report, available through the City’s Finance Department, City Secretary’s Office, or Denton Public Libraries. FINANCIAL SUMMARY City of Denton General FundSchedule of Revenues - Budget vs Projection (Unaudited)For the Period Ended March 31, 2019 PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS REVENUE DESCRIPTION Y-T-D Y-T-D Y-T-D BUDGET PROJECTION PROJECTION Current Year - Ad Valorem 43,883,129$ 45,160,080$ 44,957,139$ 45,674,373$ 45,674,373$ 0% Delinquent - Ad Valorem 47,605 148,442 108,224 296,882 296,882 0% Miscellaneous Penalties & Fees 186,370 154,352 229,361 288,727 288,727 0% Ad Valorem Taxes 44,117,104 45,462,874 45,294,724 46,259,982 46,259,982 0% Sales Tax 18,918,854 20,721,076 18,407,545 41,425,582 37,953,567 -8% Franchise - Gas Utilities 102,198 84,800 94,926 298,753 341,345 14% Franchise - Private Electric Utilities 26,734 12,888 23,230 105,949 121,054 14% Franchise - Cable 104,825 166,396 87,725 410,188 468,667 14% Franchise - Telecom 77,690 81,561 51,697 201,058 229,722 14% Franchise - Denton Municipal Utilities 1,695,185 1,322,441 1,516,241 3,346,901 3,824,060 14% Franchise Fees 2,006,632 1,668,086 1,773,819 4,362,849 4,984,849 14% Other Taxes 3,192 126,484 9,122 505,936 505,936 0% Ambulance Service Fees 1,255,064 1,328,160 1,243,665 3,700,000 3,650,000 -1% Fire Department Fees 109,471 103,000 101,470 206,000 206,000 0% Building Inspections Fees 302,028 271,771 281,757 589,172 589,172 0% Park Department Fees 322,876 397,559 316,865 2,003,991 2,003,991 0% Planning Department Fees 474,833 531,846 470,587 1,063,557 1,063,557 0% Reprographics Fees 168,386 185,153 149,914 370,160 370,160 0% Miscellaneous Service Fees 67,025 90,601 77,773 181,171 181,171 0% Service Fees 2,699,683 2,908,090 2,642,031 8,114,051 8,064,051 -1% Denton Municipal Fines 709,033 741,004 713,530 1,482,000 1,482,000 0% Parking Fines 118,850 130,000 137,430 260,000 260,000 0% Miscellaneous Fines and Fees 424,687 424,822 411,923 901,000 901,000 0% Court Administrative and Service Fees 511,633 510,000 482,500 1,080,000 1,080,000 0% Fines and Fees 1,764,203 1,805,826 1,745,383 3,723,000 3,723,000 0% Demolition Permits 2,850 3,250 2,470 6,500 6,500 0% Building Permits 1,739,727 1,685,010 1,546,488 3,738,024 3,738,024 0% Certificate of Occupancy 34,810 40,000 42,180 80,000 80,000 0% Miscellaneous Licenses and Permits 4,077 19,502 5,682 39,000 39,000 0% Licenses and Permits 1,781,464 1,747,762 1,596,820 3,863,524 3,863,524 0% Investment Income 272,543 230,251 415,276 460,500 460,500 0% Miscellaneous Revenues 314,706 407,246 475,841 1,825,526 1,722,198 -6% Miscellaneous Resources 587,249 637,497 891,117 2,286,026 2,182,698 -5% ROI - Denton Municipal Utilities 3,566,620 3,992,002 3,765,603 8,427,209 8,427,209 0% Transfers 4,018,449 4,368,320 5,459,799 8,733,146 10,833,146 24% Transfers 7,585,069 8,360,322 9,225,402 17,160,355 19,260,355 12% Total General Fund Revenues 79,463,450$ 83,438,017$ 81,585,963$ 127,701,305$ 126,797,962$ -1% City of Denton General Fund Schedule of Expenditures - Budget vs Projection (Unaudited) For the Period Ended March 31, 2019 PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS Y-T-D Y-T-D Y-T-D BUDGET PROJECTION PROJECTION NEIGHBORHOOD SERVICES Building Inspections 1,309,243$ 1,527,054$ 1,454,125$ 3,052,886$ 3,045,139$ 0% Community Improvement Services 628,680 781,178 600,860 1,561,728 1,559,444 0% Libraries 2,877,388 2,983,019 2,920,599 5,963,678 5,936,199 0% Parks and Recreation 5,889,161 5,353,264 4,059,564 10,702,253 10,691,479 0% Planning 1,300,199 1,782,495 1,363,774 3,563,561 3,556,288 0% Gas Well Review 207,828 207,889 81,150 415,606 414,692 0% Social Services 291,238 336,597 297,759 672,928 672,023 0% 12,503,737 12,971,496 10,777,831 25,932,640 25,875,264 0% PUBLIC SAFETY Animal Services 740,526 819,050 922,449 1,633,265 1,629,598 0% Fire 13,964,776 15,171,344 14,723,724 30,330,574 30,448,307 0% Municipal Court 611,621 637,026 539,687 1,273,547 1,270,417 0% Municipal Judge 192,409 224,166 205,693 448,161 447,023 0% Police 14,933,047 17,855,905 16,589,620 35,697,544 35,612,428 0% 30,442,379 34,707,491 32,981,173 69,383,091 69,407,773 0% TRANSPORTATION Traffic Operations 2,891,446 1,046,683 759,845 2,092,526 2,088,594 0% Transportation Operations 409,302 199,222 111,059 398,291 397,962 0% Street Lighting 384,763 388,656 414,008 777,000 777,000 0% 3,685,511 1,634,561 1,284,912 3,267,817 3,263,556 0% ADMINISTRATIVE & COMMUNITY SERVICES Cable Television 149,064 169,356 157,178 338,597 338,113 0% City Manager's Office 1,490,688 1,063,515 1,045,666 2,126,205 2,119,717 0% Economic Development 1,200,879 2,976,786 1,407,011 5,951,194 5,449,792 -8% Facilities Management 1,919,078 2,694,573 2,831,963 5,386,980 4,702,509 -13% Finance 1,431,745 1,810,959 1,623,606 3,620,494 3,608,272 0% Human Resources 823,401 914,101 853,193 1,827,469 1,823,886 0% Internal Audit 204,754 274,560 182,293 548,905 548,905 0% Legal Administration 959,718 1,352,308 1,068,312 2,703,529 2,700,734 0% Public Communications Office 198,211 678,376 641,705 1,356,209 1,355,505 0% Reprographics 198,890 182,804 150,649 365,458 364,985 0% Non-Departmental 2,296,092 3,187,105 3,827,411 6,375,848 5,224,619 -18% 10,872,520 15,304,443 13,788,987 30,600,888 28,237,038 -8% TOTAL EXPENDITURES 57,504,147$ 64,617,991$ 58,832,903$ 129,184,436$ 126,783,632$ -2% City of Denton Electric Fund Schedule of Revenues and Expenditures - Budget vs Projections (Unaudited) For the Period Ended March 31, 2019 PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS DESCRIPTION Y-T-D Y-T-D Y-T-D BUDGET PROJECTION PROJECTION Beginning Working Capital and Reserves as of 9/30/18 62,950,654$ 73,942,033$ REVENUES: Rate Revenues 69,791,131$ 60,721,818$ 69,817,574$ 135,522,850 136,930,345 1% Transmission Revenues 8,241,255 13,699,118 17,637,371 40,055,256 40,055,256 0% Other Revenues 3,869,229 1,774,875 2,407,693 3,750,515 3,963,130 6% DEC Revenues - 16,070,106 6,704,071 36,304,634 35,725,784 -2% Total Revenues 81,901,615 92,265,917 96,566,709 215,633,255 216,674,515 0% EXPENDITURES: Purchased Power 38,190,703 37,658,179 30,070,504 67,185,014 71,089,178 6% DEC Fuel - 8,475,936 2,873,455 14,967,553 16,838,587 13% Transmission of Power 1,824,810 4,052,665 6,390,217 12,500,000 12,500,000 0% Personnel Services 7,888,548 10,753,502 8,410,328 22,058,231 21,051,966 -5% Materials and Supplies 267,637 353,850 333,039 1,010,795 925,501 -8% Maintenance and Repair 257,783 745,239 303,473 1,771,604 1,626,903 -8% Insurance 129,966 923,635 136,030 705,178 705,178 0% Return on Investment 2,554,860 2,755,696 2,815,200 6,204,970 6,067,025 -2% Franchise Fee 3,645,018 3,933,541 4,026,545 8,864,243 8,667,178 -2% Miscellaneous 448,852 597,745 374,912 814,132 810,788 0% Operations 2,027,217 3,815,224 2,321,569 7,967,345 8,187,693 3% Debt Service 27,518,438 31,625,711 31,625,711 69,303,309 50,644,987 -27% Interfund Transfers 6,082,967 7,162,994 7,051,023 14,325,987 14,325,987 0% Capital Outlay 47,496 1,500,000 1,500,000 16,016,335 15,559,386 -3% Total Expenditures 90,884,295 114,353,917 98,232,006 243,694,696 229,000,357 -6% Net Income (Loss) (8,982,680)$ (22,088,000)$ (1,665,297)$ (28,061,441) (12,325,842) Ending Working Capital and Reserves 34,889,213$ 61,616,191$ City of Denton Water Fund Schedule of Revenues and Expenditures - Budget vs Projections (Unaudited) For the Period Ended March 31, 2019 PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS DESCRIPTION Y-T-D Y-T-D Y-T-D BUDGET2 PROJECTION PROJECTION Beginning Working Capital and Reserves as of 09/30/181 23,982,828$ 25,947,230$ REVENUES: Water Sales Residential 7,984,325$ 8,073,501$ 7,041,066$ 19,496,000 20,036,256 3% Water Sales Commercial 7,576,402 7,673,203 7,034,849 16,841,000 17,396,504 3% Water for Resale 1,947,832 605,490 279,629 1,169,000 1,165,101 0% Other Water 672,413 427,825 653,683 843,349 831,616 -1% Transfers In 2,973,641 743,882 745,027 1,487,762 1,467,000 -1% Investment Income 124,691 87,500 204,176 175,000 233,000 33% Impact Fee Revenue 1,878,454 2,850,000 2,851,140 5,700,000 5,700,000 0% Total Revenues 23,157,758 20,461,401 18,809,570 45,712,111 46,829,476 2% Use of Reserves - - - - EXPENDITURES: Personal Service 4,814,427 4,270,069 3,707,499 8,855,034 8,663,705 -2% Purchased Power 589,780 700,588 584,240 1,431,895 1,374,500 -4% Purchase of Water 1,067 - 1,002 3,000 2,460 -18% Materials and Supplies 632,358 614,336 565,733 1,408,230 1,396,021 -1% Maintenance and Repairs 554,003 576,740 543,123 1,594,203 1,684,950 6% Insurance 111,241 111,717 111,716 223,433 222,028 -1% Miscellaneous 128,570 219,895 145,898 411,219 410,219 0% Operations, Services 953,794 902,480 696,860 1,693,620 1,646,311 -3% Capital Outlay 2,661,685 5,301,989 3,012,219 15,279,508 14,746,785 -3% Return on Investment 571,601 612,388 519,354 1,339,555 1,380,032 3% Franchise Fee 816,573 868,136 741,935 1,898,986 1,949,251 3% Debt Service 11,130,419 11,370,797 11,370,797 12,662,613 12,662,613 0% Transfers Out 1,741,317 1,695,371 1,761,297 3,390,738 3,848,527 14% Total Expenditures 24,706,835 27,244,506 23,761,673 50,192,034 49,987,402 0% Net Income (Loss)(1,549,077)$ (6,783,105)$ (4,952,103)$ (4,479,923) (3,157,926) Ending Working Capital and Reserves 19,502,905$ 22,789,304$ 1 The Beginning Working Capital balance excludes $10,884,298 of Impact Fee Reserves and $750,000 for Development Plan Line Reserves. budget process. 2 Annual adopted budget as amended or modified. Beginning Fund Balance represents the amount which was estimated in the FY 2018-19 City of Denton Wastewater Fund Schedule of Revenues and Expenditures - Budget vs Projections (Unaudited) For the Period Ended March 31, 2019 PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS DESCRIPTION Y-T-D Y-T-D Y-T-D BUDGET2 PROJECTION PROJECTION Beginning Working Capital and Reserves as of 09/30/171 19,188,011$ 18,669,754$ REVENUES: Residential Fees 5,982,589$ 5,369,278$ 5,967,036$ 10,657,173 11,357,150 7% Commercial Fees 5,958,034 5,932,906 5,658,314 12,218,689 12,048,742 -1% Effluent Irrigation Fees 46,407 26,105 35,604 68,576 60,424 -12% Wholesale Fees 288,217 323,312 371,023 694,234 686,050 -1% Other Wastewater Fees 624,596 732,147 592,154 1,624,678 1,576,659 -3% Drainage Fees 2,373,948 2,343,781 2,421,814 4,727,006 4,661,500 -1% Transfer In 447,015 275,898 412,981 551,795 551,795 0% Investment Income 102,650 104,000 137,302 208,000 235,000 13% Impact Fee Reserves 1,000,400 1,000,000 1,000,400 2,000,000 2,000,000 0% Total Revenues 16,823,856 16,107,427 16,596,628 32,750,151 33,177,320 1% EXPENDITURES: Personal Service 3,635,806 4,066,769 3,828,307 8,607,813 7,953,262 -8% Purchased Power 516,459 645,680 545,501 1,221,000 1,221,000 0% Materials and Supplies 481,904 434,781 414,619 1,254,075 1,244,367 -1% Maintenance and Repairs 544,326 643,328 573,718 1,433,519 1,488,729 4% Insurance 90,246 116,010 116,010 232,020 232,020 0% Miscellaneous 38,872 45,917 68,750 58,718 48,911 -17% Operations, Services 943,693 1,078,020 1,012,475 2,326,776 2,323,356 0% Capital Outlay 1,788,993 5,047,262 6,350,514 10,094,524 9,932,115 -2% Return on Investment 440,159 433,840 431,049 882,684 900,516 2% Franchise Fee 628,799 619,773 615,784 1,260,978 1,286,451 2% Debt Service 6,428,552 6,210,846 6,212,096 6,806,331 6,806,331 0% Transfers Out 1,649,715 - 1,777,737 3,292,816 3,746,125 14% Total Expenditures 17,187,524 19,342,226 21,946,560 37,471,254 37,183,183 -1% Net Income (Loss) (363,668)$ (3,234,799)$ (5,349,932)$ (4,721,103) (4,005,864) Ending Working Capital and Reserves 14,466,908$ 14,663,890$ 1 The Beginning Working Capital balance excludes $4,189,562 of Impact Fee Reserves, $1,000,000 for Drainage Reserves, and $535,000 for Development Plan Line Reserves. 2 Annual adopted budget as amended or modified. Beginning Fund Balance represents the amount which was estimated in the FY 2018-19 budget process. City of Denton Drainage Operations Schedule of Revenues and Expenditures - Budget vs Projections (Unaudited) For the Period Ended March 31, 2019 PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS DESCRIPTION Y-T-D Y-T-D Y-T-D BUDGET PROJECTION PROJECTION REVENUES: Residential Drainage Fees 900,012$ 907,593$ 933,718$ 1,820,000$ 1,754,500$ -4% Nonresidential Drainage Fees 1,473,936 1,436,264 1,488,097 2,907,006 2,907,000 0% Wastewater Resources - 21,900 - 43,800 43,800 0% Investment Interest Income - - - - - 0% General Fund Transfer 212,015 158,398 158,397 316,795 316,795 0% Total Revenues 2,585,963 2,524,155 2,580,212 5,087,601 5,022,095 -1% EXPENDITURES: Personal Service 767,309 919,211 807,059 1,968,225 1,623,743 -18% Materials and Supplies 20,780 35,527 21,097 76,075 83,200 9% Maintenance and Repairs 35,477 57,446 73,339 123,300 121,300 -2% Insurance 12,730 17,884 17,883 35,767 35,767 0% Miscellaneous 6,483 10,114 9,989 17,200 17,200 0% Operations, Services 151,156 231,326 219,164 546,870 573,670 5% Capital Outlay 663,475 593,890 757,065 1,403,688 1,413,825 1% Debt Service 627,356 439,234 439,234 477,433 494,098 3% Transfer Out 301,197 219,523 235,382 439,043 659,292 50% Total Expenditures 2,585,963 2,524,155 2,580,212 5,087,601 5,022,095 -1% Net Income (Loss) -$ -$ -$ -$ -$ City of Denton Solid Waste Fund Schedule of Revenues and Expenditures - Budget vs Projection (Unaudited) For the Period Ended March 31, 2019 PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS DESCRIPTION Y-T-D Y-T-D Y-T-D BUDGET2 PROJECTION PROJECTION Beginning Working Capital and Reserves as of 09/30/181 8,639,290$ 10,918,907$ REVENUES: Refuse Fees - Residential 3,183,721$ 2,849,166$ 2,864,371$ 5,788,754 5,702,020 -1% Refuse Fees - Commercial 6,928,082 7,074,478 7,305,348 14,533,461 14,890,064 2% Residential Recycling 2,901,094 2,665,354 2,640,121 5,337,119 5,226,937 -2% Commercial Recycling 660,218 752,895 699,762 1,505,187 1,562,853 4% Landfill Gate and Material Sales 2,674,337 2,842,800 2,889,049 5,967,459 5,861,791 -2% Recycled Material Sales 33,024 30,306 33,670 60,590 61,000 1% Asset Sales and Interest Income 394,957 229,700 75,842 459,217 461,801 1% Other Revenue 191,346 435,806 405,348 871,269 321,114 -63% Total Revenues 16,966,779 16,880,505 16,913,511 34,523,056 34,087,580 -1% EXPENDITURES: Personal Service 5,018,597 5,606,180 4,831,137 11,207,879 10,928,538 -2% Materials and Supplies 98,909 214,969 88,561 429,792 344,615 -20% Maintenance and Repairs 129,200 274,863 106,080 549,506 257,600 -53% Insurance 116,815 136,528 134,753 272,954 272,954 0% Miscellaneous 44,766 58,732 71,376 117,419 109,675 -7% Operations, Services 2,483,297 2,955,991 3,161,329 5,909,622 6,542,572 11% Capital Outlay 156,487 665,620 683,012 1,330,709 1,170,382 -12% Debt Service 8,686,037 8,264,375 8,263,706 8,996,579 8,995,034 0% Franchise Fee 847,501 847,486 830,613 1,694,293 1,699,396 0% Transfers for Landfill Closure 189,378 584,910 584,676 1,169,349 596,271 -49% Admin Transfers Out 1,590,783 1,597,420 1,985,238 3,193,559 3,723,971 17% Total Expenditures 19,361,770 21,207,074 20,740,481 34,871,661 34,641,008 -1% Net Income (Loss)(2,394,991)$ (4,326,569)$ (3,826,970)$ (348,605) (553,428) Ending Working Capital and Reserves 8,290,685$ 10,365,479$ 1 The Beginning Working Capital Reserve excludes $9,896,590 Landfill Closure/Post Closure Reserves. 2 Annual adopted budget as amended or modified. Beginning Fund Balance represents the amount which was estimated in the FY 2018-19 budget process. City of Denton Airport Fund Schedule of Revenues and Expenditures - Budget vs Projection (Unaudited) For the Period Ended March 31, 2019 PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS DESCRIPTION Y-T-D Y-T-D Y-T-D BUDGET1 PROJECTION PROJECTION Beginning Working Capital and Reserves as of 09/30/18 2,668,447$ 2,930,368$ OPERATING REVENUES: Airport Leases 398,075$ 385,598$ 365,912$ 770,886 732,835 -5% FBO Commissions 39,069 55,023 41,151 110,004 123,030 12% Fuel Flowage Fees 142,927 104,592 72,948 209,100 207,404 0% Total Operating Revenues 580,071 545,213 480,011 1,089,990 1,063,269 -2% OPERATING EXPENDITURES: Personal Service 224,922 272,720 241,491 545,217 481,715 -12% Materials and Supplies 5,745 18,823 12,289 37,640 22,688 -40% Maintenance and Repairs 16,132 51,771 7,107 103,500 64,167 -38% Insurance 10,911 21,905 15,646 43,792 43,792 0% Miscellaneous 349 49 - 100 100 0% Operations 57,785 119,666 80,235 239,235 214,702 -10% Transfers Out - Operating 259,920 259,968 260,772 519,730 519,730 0% Total Operating Expenses 575,764 744,902 617,540 1,489,214 1,346,894 -10% Operating (Loss) 4,307 (199,689) (137,529) (399,224) (283,625) NON-OPERATING REVENUES: Investment Income 28,689 11,136 48,339 22,263 47,949 115% Gas Well Royalties 94,671 215,813 70,604 431,456 370,000 -14% Total Non-Operating Revenues 123,360 226,949 118,943 453,719 417,949 -8% NON-OPERATING EXPENDITURES: Transfers Out - Capital 225,000 125,050 - 250,000 250,000 0% Total Non-Operating Expenses 225,000 125,050 - 250,000 250,000 0% Non-Operating Income (Loss) (101,640) 101,899 118,943 203,719 167,949 Net Income (Loss)(97,333)$ (97,790)$ (18,586)$ (195,505) (115,676) Ending Working Capital 2,472,942$ 2,814,692$ 1 Annual adopted budget as amended or modified. Beginning Working Capital and Reserves represents the amount which was estimated in the FY 2018-19 budget process. City of Denton Street Improvement Fund Schedule of Expenditures - Budget vs Projection (Unaudited) For the Period Ended March 31, 2019 PRIOR BUDGET CURRENT ANNUAL ANNUAL BUDGET VS DESCRIPTION Y-T-D Y-T-D Y-T-D BUDGET1 PROJECTION PROJECTION Beginning Fund Balance as of 9/30/2018 1,158,668$ 1,623,427$ RESOURCES: Franchise Fees 5,022,192$ 6,762,660$ 5,496,837$ 13,519,911 13,519,911 0% Street Cuts 130,980 182,142 91,709 364,140 364,140 0% Investment Income 440 5,002 10,372 10,000 10,000 0% Transfers In 517,291 598,441 517,291 1,196,404 1,196,404 0% Total Resources 5,670,903 7,548,245 6,116,209 15,090,455 15,090,455 0% EXPENDITURES: Personal Service 1,640,473 1,821,349 1,555,504 3,641,249 3,641,249 0% Materials and Supplies 48,022 43,590 34,302 86,901 86,901 0% Maintenance and Repairs 3,190,382 4,157,483 3,185,575 9,195,194 9,195,194 0% Insurance 25,847 36,379 36,363 72,727 72,727 0% Miscellaneous 4,292 2,501 5,062 5,000 5,000 0% Operations, Services 315,617 350,288 391,343 700,302 700,302 0% Transfer Out 1,545,281 1,125,419 515,765 1,366,632 1,366,632 0% Total Expenditures 6,769,914 7,537,009 5,723,914 15,068,005 15,068,005 0% Net Income (Loss) (1,099,011)$ 11,236$ 392,295$ 22,450 22,450 Ending Fund Balance 1,181,118$ 1,645,877$ 1Annual adopted budget as amended or modified. Beginning Fund Balance represents the amount which was estimated in the FY 2018-19 budget process. City of Denton Grants Schedule of Expenditures - Budget vs Projection (Unaudited) For the Period Ended March 31, 2019 GRANT DESCRIPTION EXPENDITURES AS OF 9/30/20182 CURRENT Y-T-D ANNUAL BUDGET ANNUAL PROJECTION BUDGET VS PROJECTION FY 2017-18 Budget US Dept of HUD - Community Development Block Grant(CDBG)3,511,216$ 441,598$ 2,146,395$ 700,000$ -67% US Dept of HUD - HOME Investment Partnership Program 3,320,362 218,968 1,279,659 500,000 -61% Emergency Solutions Grant (ESG)506,879 41,587 210,994 46,000 -78% Community Development1 7,338,457 702,153 3,637,048 1,246,000 -66% TxDot STEP Comprehensive Grant - 35,312 88,537 88,537 0% Domestic and Sexual Violence Initiative IACP Grant 204,202 118,953 225,000 225,000 0% 2018 UASI - - 125,956 125,956 0% Emergency Management Performance Grant - - 43,956 43,956 0% Staffing for Adequate Fire & Emergency Response (SAFER) Grant 225,381 232,836 419,971 419,971 0% 2018 SHSP SWAT Equipment Enhancement - - 24,000 24,000 0% BG-Rifle-Resistant Body Armor Grant Program (BAGP)- 82,542 91,692 91,692 0% Public Safety 429,583 469,643 1,019,112 1,019,112 0% Airport Maintenance (RAMP) Grant - 3,021 50,000 50,000 0% TxDot-RTR-Mayhill Rd-IH35 E to US 380 28,569,138 4,559,720 21,115,515 13,500,000 -36% TxDot-RTR-Bonnie Brae Rd-IH35 E to US 377 13,770,118 2,431,803 26,938,818 8,300,000 -69% TxDot-IH35E at Loop 288/Lillian Miller Pkwy - - 53,865 53,865 0% TxDot-RTR-McKinney (Formerly FM426) 1,336,448 64,472 17,598,079 7,300,000 -59% TxDot-RTR-Hickory Creek FM2181-FM2499 79,163 75,647 2,396,190 600,000 -75% Roundabout 15,393 12,354 1,986,592 380,000 -81% TxDot-RTR-ITS COMM Trunk Line 438,382 630,485 1,277,294 1,176,170 -8% Bicycle & Pedestrian Projects Grant - - 1,500,000 195,000 -87% Transportation1 44,208,642 7,777,502 72,916,353 31,555,035 -57% Interlibrary Loan Program (ILL) - - 25,000 25,000 0% TIFMAS Training Tuition Grant - - 10,500 10,500 0% Miscellaneous New Grants - - 250,000 250,000 0% Other - - 285,500 285,500 0% Total FY 2018-19 Budget 51,976,682 8,949,298 77,858,013 34,105,647 -56% New Awards Federal Equitable Sharing - 5,482 5,482 5,482 0% Chapter 59 Asset Forfeitures - 20,084 20,084 20,084 0% U.S. Marshals Violent Offenders Task Force - 3,622 3,622 3,622 0% Force - 5,098 5,098 5,098 0% PD-Law Enforcement Officer Standards & Education - 9,750 9,750 9,750 0% Sexual Assault Nurse Examiners (SANE) Reimbursement - 23,919 23,919 23,919 0% 2017 UASI - 29,574 29,574 29,574 0% Public Safety - 97,529 97,529 97,529 0% Total New Awards - 97,529 97,529 97,529 0% TOTALS 51,976,682$ 9,046,827$ 77,955,542$ 34,203,176$ -56% 1 This grant amount will be spent over several years and the fiscal year 2018-19 projections are just estimated expenditure in the one year. Remaining grant amounts will be spent in future fiscal year. 2 A portion of the grants presented cover multiple years. Section 3 City of Denton Quarterly Financial Report March 2019 REVENUE & ECONOMIC ANALYSIS Revenue & Economic Analysis Summary The data included in this section provides information on local, state and national trends impacting the City’s financial position. The following notes are provided to facilitate this section’s readability. 1. Positive Outlook – Represents favorable conditions for the local economy. Color code – Green. 2. Cautious Outlook – Represents changing conditions that require close monitoring. Color code – Yellow. 3. Negative Outlook – Represents unfavorable conditions for the local economy. Color code – Red. The data included in this section have been obtained from a variety of sources. Sales tax and construction related data have been obtained from internal city departments. Economic data for the State have been obtained from the Federal Reserve Bank of Dallas and may be subject to availability. National economic data were compiled with assistance from the City’s investment advisor, First Southwest Asset Management. National Economic Trends Period Ending March 31, 2019 Gross Domestic Product (GDP) In mid-March, economic growth for the initial quarter of 2019 appeared as though it would fall well below 1.0%; however, growth picked up considerably in March and first quarter GDP surprised to the upside with a +3.2% annualized advance. On the surface, this not only topped the +2.3% median forecast and the +2.2% fourth quarter gain, but also beat the +3.0% overall growth rate for all of 2018. However, as analysts have quickly pointed out, the key underlying component, real private domestic sales, was the weakest in three years at +1.3%. The overall Q1 GDP number was inflated by two components (inventory build-up and net exports) generally considered to be unsustainable, and in fact could reverse themselves later this year, thereby subtracting from future quarters. Nonfarm Payrolls The labor market continues to look very good. Nonfarm payrolls rose by a +196k in March, well above the +177k median forecast and a nice rebound after the poor +33k (revised) showing in February. The three-month moving average is now +180k, which should be more than enough to keep downward pressure on the unemployment rate. Headline unemployment held at 3.8%, just a tenth above the nearly 50-year low. First-time filings for unemployment benefits fell to +202k the final week in March. That had been the lowest level since December 1969. …but the first week in April brought initial claims down to +196k and by the second week, claims had fallen all the way to +193k, the lowest level since September 1969. Inflation Overall inflation has been gradually receding since last summer, but recently moved higher along with energy prices. Crude oil is up 50% since the December low point. Headline Consumer Price Index (CPI) climbed +0.4% in March, pushing the year-over-year increase up from +1.5% to +1.9%. Core CPI rose +0.1% in March, pulling the year-over-year pace down from +2.1% to +2.0%. Core PCE, a Fed favorite, was advancing at a +1.79% pace through January. If inflation were to trend lower later in the year, many believe the Fed could react by cutting interest rates. It’s unlikely that core inflation could move sharply higher as it is restrained by the global economy. Retail Sales Retail sales rose +1.6% in March, bettering all forecasts and ending a particularly volatile and noisy quarter on an upbeat note. Much of the March gain can be attributed to auto sales, which climbed +3.1%, and sales at gasoline stations, which rose +1.0%. Core retail sales (which exclude sales of autos, gas, food and building materials) rose +1.0% after a - 0.3% February decline. Consumer spending was weak early in the quarter for a number of reasons: delayed tax refunds related to the government shutdown, trade concerns, weather, but as the quarter progressed, spending picked up …as did the economy. Texas Home Sales Texas home sales fell -9.7% in the first quarter, but climbed +0.7% on a year-over-year basis. The average Texas home price in March was $287.7k, a +0.6% gain from December, but down -1.5% from the previous year, and below the record high of $298.1 set back in June. In Denton County, unit home sales fell by -8.2% during the first quarter, and -1.5% over the same three month period a year ago. The average home price in March was $365.6k, a +2.3% year-over-year gain, and just below the $367.8 high set in July. County home listings in March totaled 3,697, approximately +32% higher than a year ago. The paper was prepared by Hilltop Securities Asset Management, is intended for educational and informational purposes only and does not constitute legal or investment advice, nor is it an offer or a solicitation of an offer to buy or sell any investment or other specific product. Information provided in this paper was obtained from sources that are believed to be reliable; however, it is not guaranteed to be correct, complete, or current, and is not intended to imply or establish standards of care applicable to any attorney or advisor in any particular circumstances. The statements within constitute the views of Hilltop Securities Asset Management as of the date of the report and may differ from the views of other divisions/departments of Hilltop Securities. In addition, the views are subject to change without notice. This paper represents historical information only and is not an indication of future performance. Fuel Prices Outlook Cautious Description: Quarterly fuel trends for the United States and Texas. Analysis:Fuel prices are a major commodity source in the economy.Studies have shown a positive effect on disposable income levels when fuel prices decrease.It is estimated that for every penny decrease in the price of fuel,$1.3 billion is available to the consumer for disposable income.Therefore,the price of fuel is likely to be a key predictor of sales tax collections.Fuel prices showed an 10.4%decrease from the prior quarter at the national level and a 11.5% decrease at the state level. Staff has rated this outlook as Cautious. Source: U.S. Department of Energy $0 $2 $4 $6 $8 $10 $12 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 2Q '15 4Q '15 2Q '16 4Q '16 2Q '17 4Q '17 2Q '18 4Q '18 2Q '19 MillionsDollarsFuel Prices Sales Tax Texas Fuel Prices US Fuel Prices Municipal Cost Index Outlook Negative Description:The Municipal Cost Index was developed to show the rate of inflation for the cost of goods purchased frequently by local governments.The MCI draws on the monthly statistical data collected by the U.S.Departments of Commerce and Labor as well as independently compiled data to project a composite cost picture for the municipal budget officer or operating department manager.Costs of labor,materials and contract services are all factored into the composite MCI.Major indicators of these items used for the MCI include the Consumer Price Index,the Wholesale Price Index for Industrial Commodities (now known as the Producer Price Index)and the construction cost indexes published by the U.S. Department of Commerce, respectively. Analysis:The Municipal Cost Index (MCI)pulls a variety of prices for frequently purchased commodities for local governments.The cost for labor,materials and contract services are factored for the MCI.An increase in MCI means the overall price mix for these types of commodities will cost local governments more to do routine business. The 2nd Quarter of 2018-19 shows an increase of 0.5%over the prior quarter and an increase of 5.5%over the 2nd Quarter of 2017-18. Staff has rated this indicator as Negative. Note:The Municipal Cost Index is designed to show the effects of inflation on the cost of providing municipal services.State and local government officials rely on American City &County's Municipal Cost Index to stay on top of price trends,help control price increases for commodities,make informed government contract decisions and intelligent budget planning.Since 1978, readers have loyally referred to the Municipal Cost Index to determine the cost of inflation and,hence,the rising cost of doing business as a local government. Source: American City and County Magazine 230.00 235.00 240.00 245.00 250.00 255.00 2Q '17 3Q '17 4Q '17 1Q '18 2Q '18 3Q '18 4Q '18 1Q '19 2Q '19 Municipal Cost Index Hotel Occupancy Tax Analysis Outlook Positive 2nd Quarter FY 2018-19 Actual Y-T-D Occupancy Tax Revenue:746,038$ 1,434,214$ FY 2018-19 Budget 713,091$ 1,415,474$ Over (Under) Budget 32,947$ 18,740$ Hotel Occupancy Tax Budget:3,207,406$ 3,207,406$ Variance:-$ Description:Tax imposed on a person who,under a lease,concession,permit,right of access,license,contract,or agreement,pays for the use of a room that is in a hotel.A hotel includes:any building in which the public may obtain sleeping accomodations;motels;a tourist home,house or court;lodginghouse;inn;roominghouse;or bed and breakfast. The tax rate levied by the City is 7% of the price paid for a room. The State also levies a tax equal to 6%. Analysis:While the use of this revenue source is restricted by state law,it is an essential revenue source for various tourist related activities within the community and an important indicator of local economic activity.Hotel Occupancy tax revenue through the 2nd Quarter of FY 2019 was 4.51%more than budget and 14.6%more than the prior year's actual. Staff has rated the outlook for this economic indicator as Positive. FISCAL YEAR FORECAST End of Year Projection: $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 $900,000 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Hotel Occupancy Tax Collections FY 2015-16 FY 2016-17 FY 2017-18 FY 2018-19 Sales and Use Tax Analysis Outlook Cautious 2nd Quarter FY 2018‐19 Actual Y‐T‐D  Revenue: Gross Sales Tax      Municipal Operations 442,757$        868,787$                General Retail & Others 8,387,760      18,247,472            Comptroller Fees (164,359)        (357,937)                Amount Retained (161,072)        (350,778)                Total Revenue 8,505,086$     $18,407,544 Expenses: Economic Incentives*           Denton Crossing1 125,012$        299,905$                     Unicorn Lake2 17,122            36,090                        Rayzor Ranch3 466,456          1,031,097                   Golden Triangle4 27,762            58,948                        O'Reilly's5 74,300            483,730                      Bucees6 43,566            43,566                   Total Expenses 754,218$        1,953,336$        Net Total 7,750,868      16,454,208       FY 2018‐19 Budget 8,729,899      18,301,278       Over(Under) Budget (979,031)$       (1,847,070)$       Sales Tax Budget: 41,425,582$      Year End Projection: 37,953,567 Variance to Original Budget: (3,472,015)$       Economic Development Expenditure Budget: 3,854,014$        Year End Projection: 3,465,516 Variance to Original Budget: (388,498)$          * Economic Incentive actuals are through February 2019 with budget amount for March. 1. Incentive is 50% of general sales taxes. For the 2nd quarter sales tax equaled $250,024. 2. Incentive is 50% of general sales taxes. For the 2nd quarter sales tax equaled $34,244 3. Incentive is 75% of general sales taxes. For the 2nd quarter sales tax equaled $621,941. 4. Incentive is 75% of general sales taxes. For the 2nd quarter sales tax equaled $37,016. 5. Incentive is 100% of sales taxes. For the 2nd quarter sales tax equaled $74,300. Description:Tax imposed on all retail sales, leases, and rentals of most goods, as well as taxable services. The total tax rate levied within the City is 8.25% (State, 6.25%; City, 1.5%; DCTA, 0.5%).  Analysis:As the second largest revenue source to the City's General Fund, sales and use taxes are essential to the delivery of services to the community. Sales tax revenues through the 2nd quarter of FY 2019 compared to revenues from the prior year 2nd quarter shows a 7.74% decrease, and compared to the budget it is 11.21% below. Staff has rated this indicator as Cautious. $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 $9.0 $10.0 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Gross Sales Tax  Collections (Millions) FY 2014‐15 Actual FY 2015‐16 Actual FY 2016‐17 Actual FY 2017‐18 Actual FY 2018‐19 Actual Certificates of Occupancy Outlook Positive Source: City of Denton's Development Services Department. Description:Certificates of Occupancy (CO)are permits issued in compliance with the 2009 International Building Code (IBC)and applicable City ordinances.The IBC states,"that no building shall be used or occupied,and no change in the existing occupancy classification of a building or structure or portion thereof shall be made,until the building official has issued a certificate of occupancy."Certificates of Occupancy ensure that applicable building,fire and consumer health codes are met. Analysis:Certificates of Occupancy are an economic indicator that provides a framework for the overall condition of the local economy.Certificates of Occupancy increased 36.13%from the prior quarter and increased 116%from the 2nd Quarter of 2018. Staff has rated the outlook for this revenue indicator as positive. 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 2Q '14 3Q '14 4Q '14 1Q '15 2Q '15 3Q '15 4Q '15 1Q '16 2Q '16 3Q '16 4Q '16 1Q '17 2Q '17 3Q '17 4Q '17 1Q '18 2Q '18 3Q '18 4Q '18 1Q '19 2Q '19 Certificates of Occupancy Residential Permits Outlook Positive Source: City of Denton's Development Services Department. Description:Residential Permits are issued in compliance with the 2009 International Residential Code (IRC)and applicable City ordinances.The data presented in this analysis only include new permits issued and not remodels/alterations. Analysis:Residential Permits are an economic indicator that provides a framework for the overall condition of the local economy.In particular,residential permits have a direct correlation with building inspection fees and appraised values.Residential permits increased 10.4%from the prior quarter and decreased 35.4%from the 2nd Quarter of 2018. Staff has rated the outlook for this revenue indicator as Cautious 0.0 50.0 100.0 150.0 200.0 250.0 300.0 350.0 2Q '14 3Q '14 4Q '14 1Q '15 2Q '15 3Q '15 4Q '15 1Q '16 2Q '16 3Q '16 4Q '16 1Q '17 2Q '17 3Q '17 4Q '17 1Q '18 2Q '18 3Q '18 4Q '18 1Q '19 2Q '19 Residential Permits Texas Leading Indicators Index Outlook Negative Source: Federal Reserve Bank of Dallas Description:The Texas Leading Indicators Index is a single weighted summary statistic that sheds light on the future of the state's economy.The index is designed to signal movements and changes in the state's rate of growth.The index includes the following leading indicators:Texas Value of the Dollar,U.S.Leading Index,Real Oil Prices,Well Permits,Initial Claims for Unemployment Insurance,Texas Stock Index,Help-Wanted Advertising,and Average Weekly Hours Worked in Manufacturing. Analysis:Texas Leading Indicators provide a framework for the overall condition of the local economy.Data for this quarter shows a decrease in the state's rate of growth.The index decreased 0.61%from the prior quarter and decreased 3.24% from the 2nd Quarter of 2017-18. Staff has rated this indicator as Negative 100.0 105.0 110.0 115.0 120.0 125.0 130.0 135.0 140.0 2Q '09 4Q '09 2Q '10 4Q '10 2Q '11 4Q '11 2Q '12 4Q '12 2Q '13 4Q '13 2Q '14 4Q '14 2Q '15 4Q '15 2Q '16 4Q '16 2Q '17 4Q '17 2Q '18 4Q '18 2Q '19 Texas Leading Indicators Index Unemployment Rate Index Outlook Positive Description:Unemployment is defined as the number or proportion of people looking for work at the prevailing wage who are unable to find employment. Analysis:Unemployment is an economic indicator that provides a framework for the overall condition of the national,state and local economies.The unemployment rate for the City of Denton is at 3.13%for the 2nd Quarter. The unemployment rates for most of the other reported sectors were either up slightly or flat from the prior quarter. As a result of the doward trend since the high of the 2nd Quarter of 2013,staff has rated the outlook for this revenue indicator as Positive. Note:U6 unemployment includes marginally attached workers who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past.Discouraged workers,a subset of the marginally attached,have given a job-market related reason for not looking currently for a job. Persons employed part-time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule. Source: Federal Reserve Bank of Dallas, U.S. Bureau of Labor Statistics, and Texas Workforce Commission 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 2Q '13 4Q '13 2Q '14 4Q '14 2Q '15 4Q '15 2Q '16 4Q '16 2Q '17 4Q '17 2Q '18 4Q '18 2Q '19 Unemployment Rate Index Dallas-Plano-Irving MD Denton Texas U6 Unemployment United States Section 4 City of Denton Quarterly Financial Report March 2019 INVESTMENT REPORT 2nd Fiscal Quarter 2019- March 31, 2019 Page 1 INVESTMENT POOL Policy Par Market Book Unrealized Max.Benchmark Portfolio:Value Value Value Gain/(Loss)1 WAM WAM YTM Yield* Investment Pool 583,840,573$ 582,174,414$ 582,543,347$ (368,933)$ 242 550 2.20%2.48% *Twelve month moving average of a one year U.S. T-bill yield % of Total Par Market Book Unrealized Portfolio Policy Securities By Investment Type:Value Value Value Gain/(Loss)1 WAM YTM (Book Value)Max. U.S. Treasuries 45,000,000 44,629,860 44,450,199 179,661 431 2.75%7.63%100.00% U.S. Federal Agencies 267,456,000 266,588,486 267,137,471 (548,985) 409 1.97%45.85%100.00% Municipal Bonds 5,000,000 4,972,860 5,000,000 (27,140) 155 1.18%0.86%15.00% Certificates of Deposit 65,000,000 65,000,000 65,000,000 - 97 1.71%11.16%35.00% Commercial Paper 55,000,000 54,598,635 54,571,104 27,531 99 2.91%9.37%15.00% Local Government Investment Pools 144,804,194 144,804,194 144,804,194 (0) 1 2.44%24.86%50.00% Demand Deposits 1,580,379 1,580,379 1,580,379 (0) 1 1.00%0.27%- Total Portfolio 583,840,573$ 582,174,414$ 582,543,347$ (368,933)$ 242 2.20%100.00%- Current 3 Months Ago 3 Month 1 Year Ago Investment Pool Comparisons:3/31/2019 12/31/2018 Difference 3/31/2018 Par Value 583,840,573$ 627,577,468$ (43,736,895)$ 608,515,986$ Market Value 582,174,414$ 624,491,587$ (42,317,173)$ 605,052,760$ Book Value 582,543,347$ 626,046,406$ (43,503,059)$ 608,179,960$ Unrealized Gain(Loss)(368,933)$ (1,554,819)$ 1,185,886$ (3,127,200)$ Weighted Average Maturity 242 223 19 309 Yield to Maturity 2.20%2.01%0.19%1.42% Portfolio Composition: U.S. Treasuries 7.63%10.69%-3.06%2.79% U.S. Federal Agencies 45.85%43.55%2.30%53.20% Municipal Bonds 0.86%0.80%0.06%2.38% Certificates of Deposit 11.16%13.10%-1.94%20.72% Commercial Paper 9.37%10.44%-1.07%5.91% Local Government Investment Pools 24.86%21.12%3.74%9.59% Insured Cash Sweep Savings Deposits 0.00%0.00%0.00%4.11% Demand Deposits 0.27%0.30%-0.03%1.30% Bank Collateral Review**:Institution Collateral Type Market Value Collected Balance Collateral Ratio Wells Fargo Demand Deposits BNY Mellon U.S. Agency MBS 36,406,524$ 1,580,379$ 2303.66% LegacyTexas Bank Certificates of Deposit***Fed Home Loan Bank Standby LOC 26,390,000$ 25,745,628$ 102.50% Independent Bank Certificates of Deposit Fed Home Loan Bank Standby LOC 19,705,897$ 15,147,396$ 130.09% **Does not include FDIC insurance ***Formerly, ViewPoint Bank Depository Ledger Balance Review:Institution Account Type Beginning Bal.Deposits Ending Bal. Wells Fargo Bank Checking 1,961,759$ 75,691,958$ 1,580,379$ Compliance Statement & Review: CITY OF DENTON : QUARTERLY INVESTMENT REPORT 1 Year Ago Difference (24,675,413)$ 1Unrealized gain/(loss)is the difference between the market and book value and does not represent an actual gain or loss.Gains and losses are realizedonlywhen a security issoldprior tomaturity.Sinceit isthe City's practiceto hold investments until they mature,the temporary gains and losses are unlikely to be realized. (67) 0.78% -1.53% (22,878,346)$ (25,636,613)$ 2,758,267$ 4.84% Withdrawals The Quarterly Investment Report is in full compliance with the objectives,restrictions,and strategies as set forth in the City of Denton's Investment Policy and the Public Funds Investment Act (Texas Government Code, Chapter 2256.023). Reviewer: Antonio Puente, Jr., CGFO -7.35% -9.56% -1.03% Pledge Required 3.46% > 102% > 102% > 100% 15.27% -4.11% NANCY TOWLE ANTONIO PUENTE, JR. Chief Financial Officer Treasury Manager 76,073,338$ Preparer: Nancy Towle, CGFO 2nd Fiscal Quarter 2019- March 31, 2019 Page 2 INVESTMENT POOL Current 3 Months Ago 3 Month 1 Year Ago 1 Year 3/31/2019 12/31/2018 Difference 3/31/2018 Difference Par Value - U.S. Treasuries 45,000,000 67,500,000$ (22,500,000)$ 17,000,000$ 28,000,000$ Par Value - U.S. Federal Agencies 267,456,000 272,956,000 (5,500,000) 323,756,000 (56,300,000) Par Value - Municipal Bonds 5,000,000 5,000,000 - 14,500,000 (9,500,000) Certificates of Deposit 65,000,000 82,000,000 (17,000,000) 126,000,000 (61,000,000) Par Value - Commercial Paper 55,000,000 66,000,000 (11,000,000) 36,000,000 19,000,000 Local Government Investment Pools 144,804,194 132,202,864 12,601,330 58,324,172 86,480,022 Insured Cash Sweep Savings Deposits - - - 25,000,000 (25,000,000) Demand Deposits 1,580,379 1,918,604 (338,225) 7,935,814 (6,355,435) Total Par Value 583,840,573$ 627,577,468$ (43,736,895)$ 608,515,986$ (24,675,413)$ Market Value - U.S. Treasuries 44,629,860 67,136,495$ (22,506,635)$ 16,849,721$ 27,780,139$ Market Value - U.S. Federal Agencies 266,588,486 270,938,188 (4,349,702) 320,650,279 (54,061,793) Market Value - Municipal Bonds 4,972,860 4,948,950 23,910 14,379,250 (9,406,390) Certificates of Deposit 65,000,000 82,000,000 (17,000,000) 126,000,000 (61,000,000) Market Value - Commercial Paper 54,598,635 65,346,486 (10,747,851) 35,913,524 18,685,111 Local Government Investment Pools 144,804,194 132,202,864 12,601,330 58,324,172 86,480,022 Insured Cash Sweep Savings Deposits - - - 25,000,000 (25,000,000) Demand Deposits 1,580,379 1,918,604 (338,225) 7,935,814 (6,355,435) Total Market Value 582,174,414$ 624,491,587$ (42,317,173)$ 605,052,760$ (22,878,346)$ Book Value - U.S. Treasuries 44,450,199 66,927,741$ (22,477,542)$ 16,958,860$ 27,491,339$ Book Value - U.S. Federal Agencies 267,137,471 272,619,818 (5,482,347) 323,527,701 (56,390,230) Book Value - Municipal Bonds 5,000,000 5,000,000 - 14,500,000 (9,500,000) Certificates of Deposit 65,000,000 82,000,000 (17,000,000) 126,000,000 (61,000,000) Book Value - Commercial Paper 54,571,104 65,377,379 (10,806,275) 35,933,413 18,637,691 Local Government Investment Pools 144,804,194 132,202,864 12,601,330 58,324,172 86,480,022 Insured Cash Sweep Savings Deposits - - - 25,000,000 (25,000,000) Demand Deposits 1,580,379 1,918,604 (338,225) 7,935,814 (6,355,435) Total Book Value 582,543,347$ 626,046,406$ (43,503,059)$ 608,179,960$ (25,636,613)$ Accrued Interest 3,010,592$ 3,374,014$ (363,422)$ 3,032,833$ (22,241)$ Cash Value -585,185,006$ 627,865,601$ (42,680,595)$ 608,085,593$ (22,900,587)$ (Total Market Value + Accrued Interest) Unrealized Gain/(Loss)(368,933)$ (1,554,819)$ 1,185,886$ (3,127,200)$ 2,758,267$ Change in Fair Value since 9/30/18 -(1,348,219)$ (1,516,332)$ 168,113$ (1,919,786)$ 571,567$ (GASB 31) Strategy Statement: CITY OF DENTON : QUARTERLY INVESTMENT REPORT Theinvestmentpool isanaggregation of the majority of Cityfunds which may include taxreceipts,enterprise fund revenues,fine and fee income,as well as some,but not necessarily all bond proceeds,grants,gifts and endowments.This portfoliois maintained to meetanticipateddaily cashneedsfortheCity's operations,capital projects and debt service.In order to meet these obligations and to minimize potentialliquidation losses,the dollar- weighted stated average maturityof the investment pool shall not exceed 1.5 years or 550 days.The objectives of this portfolio are to:(1)ensure safetyofprincipal byinvesting inonly highqualitysecurities for whicha strong secondarymarket exists;(2)ensure that anticipated cash flow needs are matched with adequate investment liquidity;(3)limit market and credit risk through diversification;and (4)attain the best feasible yield, commensuratewiththeobjectivesand restrictions set forth in theInvestment Policy,byactivelymanagingtheportfolio to meetor exceedthetwelvemonth moving average yield of a one year U.S. Treasury bill as derived from the Federal Reserve Statistical Release H.15 for constant maturities. 2nd Fiscal Quarter 2019- March 31, 2019 Page 3 INVESTMENT POOL Current 3 Months Ago 1 Year Ago Summary By Security Type:3/31/2019 12/31/2018 3/31/2018 U.S. Treasuries - Coupon 44,450,199$ 66,927,741$ 16,958,860$ U.S. Federal Agencies - Amort 6,145,976 6,107,691 - U.S. Federal Agencies - Coupon 240,235,562 245,756,279 302,771,196 U.S. Federal Agencies - Callable 20,755,933 20,755,848 20,756,505 Municipal Bonds - Coupon 5,000,000 5,000,000 14,500,000 Certificates of Deposit - CDARS 25,000,000 42,000,000 49,000,000 Certificates of Deposit - SLOC 40,000,000 40,000,000 77,000,000 Commercial Paper - Discount 54,571,104 65,377,379 35,933,413 Local Government Investment Pools 144,804,194 132,202,864 58,324,172 Insured Cash Sweep Savings Deposits - - 25,000,000 Demand Deposits 1,580,379 1,918,604 7,935,814 Total Book Value 582,543,347$ 626,046,406$ 608,179,960$ Objective: Current 3 Months Ago 1 Year Ago Summary By Security Type:3/31/2019 12/31/2018 3/31/2018 U.S. Treasuries - Coupon 7.63%10.69%2.79% U.S. Federal Agencies - Amort 1.06%0.97%- U.S. Federal Agencies - Coupon 41.23%39.26%49.79% U.S. Federal Agencies - Callable 3.56%3.32%3.41% Municipal Bonds - Coupon 0.86%0.80%2.38% Certificates of Deposit - CDARS 6.87%6.71%8.06% Certificates of Deposit - SLOC 4.29%6.39%12.66% Commercial Paper - Discount 9.37%10.44%5.91% Local Government Investment Pools 24.86%21.12%9.59% Insured Cash Sweep Savings Deposits --4.11% Demand Deposits 0.27%0.30%1.30% Total 100.00%100.00%100.00% CITY OF DENTON : QUARTERLY INVESTMENT REPORT The portfolio is restricted to U.S. Treasuries and agency securities (maturing in less than five years); state and locally issued Texas municipal bonds rated AA or better (maturing inless than threeyears);insured,collateralized,or standby letter of credit backed certificates of deposit (maturing in less than three years);collateralized repurchaseagreements (maturinginless than thirty days);commercial paper rated A-1/P-1 or better (maturing in less than 270 days); and local government pools & SEC registered government money market mutual funds (weighted average maturity of less than 60 days). U.S. Treasuries - Coupon 7.63% U.S. Federal Agencies -Coupon 41.23%U.S. Federal Agencies -Callable 3.56% Municipal Bonds -Coupon 0.86% CD -SLOC 4.29% CD -CDARS 6.87% Commercial Paper - Discount 9.37% Local Government Investment Pools 24.86% Demand Deposits 0.27% U.S. Federal Agencies - Amort 1.06% Current3/31/2019 2nd Fiscal Quarter 2019- March 31, 2019 Page 4 INVESTMENT POOL Current 3 Months Ago 1 Year Ago Summary By Issuer:3/31/2019 12/31/2018 3/31/2018 CDARS CDs 25,000,000$ 42,000,000$ 49,000,000$ LEGACYTEXAS BANK CDs*25,000,000 25,000,000 62,000,000 INDEPENDENT BANK CDs 15,000,000 15,000,000 15,000,000 U.S. TREASURY 44,450,199 49,382,057 16,958,860 FFCB 67,675,156 67,645,911 79,995,171 FHLB 108,975,042 113,959,085 121,008,039 FHLMC 35,762,186 30,870,083 47,921,604 FNMA 54,725,086 77,690,424 74,602,888 DALLAS, TX WTR & SWR REV BDS 4,000,000 4,000,000 10,000,000 TEXAS A&M UNIV REV BDS 1,000,000 1,000,000 4,500,000 JP MORGAN SECURITIES LLC 9,925,267 15,830,273 10,984,992 TOYOTA MOTOR CREDIT CORP 9,979,000 29,853,322 14,979,723 ING (U.S.) FUNDING LLC - - 9,968,697 NATIXIS NY BRANCH 24,756,024 14,746,283 - NESTLE FINANCE INTL LTD 4,928,314 - - RBC 4,982,500 4,947,500 - TEXSTAR 119,750,000 107,100,000 58,324,172 TEXPOOL 25,054,194 25,102,864 - INSURED CASH SWEEP - - 25,000,000 WELLS FARGO DEMAND DEPOSITS 1,580,379 1,918,604 7,935,814 Total Book Value 582,543,347$ 626,046,406$ 608,179,960$ Objective: Current 3 Months Ago 1 Year Ago Summary By Issuer:3/31/2019 12/31/2018 3/31/2018 CDARS CDs 4.29%6.71%8.06% LEGACYTEXAS BANK CDs*4.29%3.99%10.19% INDEPENDENT BANK CDs 2.57%2.40%2.47% U.S. TREASURY 7.63%7.89%2.79% FFCB 11.62%10.80%13.15% FHLB 18.71%18.20%19.90% FHLMC 6.14%4.93%7.88% FNMA 9.39%12.41%12.27% DALLAS, TX WTR & SWR REV BDS 0.69%0.64%1.64% TEXAS A&M UNIV REV BDS 0.17%0.16%0.74% JP MORGAN SECURITIES LLC 1.70%2.53%1.81% TOYOTA MOTOR CREDIT CORP 1.71%4.77%2.46% ING (U.S.) FUNDING LLC --1.64% NATIXIS NY BRANCH 4.25%2.36%- NESTLE FINANCE INTL LTD 0.85%-- RBC 0.86%0.79%- INSURED CASH SWEEP --4.11% TEXSTAR 20.56%17.11%9.59% TEXPOOL 4.30%4.01%- WELLS FARGO DEMAND DEPOSITS 0.27%0.30%1.30% Total 100.00%100.00%100.00% *Formerly, ViewPoint Bank CITY OF DENTON : QUARTERLY INVESTMENT REPORT It is the policy of the City to diversify its investment portfolio by restricting investments in a single issuer/institution to no more than 35 percent of the portfolio's total book value and to those offering repurchase agreements, collateralized CDs (including standby letters of credit), and local or state of Texas municipal securities to no greater than 15 percent. The purpose of this requirement is to limit market and credit risk. Commercial paper issuers are further restricted by a 5 percent total portfolio limitation. There are no issuer limitations on U.S. Treasuries or FDIC insured products except as they pertain to the overall 35% certificates of deposit and 15% savings deposit restrictions. Some investment types may be further limited. CDARS CDs, 4.29% LEGACYTEXAS BANK CDs*, 4.29% INDEPENDENT BANK CDs, 2.57% U.S. TREASURY, 7.63% FFCB, 11.62% FHLB, 18.71% FHLMC, 6.14% FNMA, 9.39% DALLAS, TX WTR & SWR REV BDS, 0.69% TEXAS A&M UNIV REV BDS, 0.17% JP MORGAN SECURITIES LLC, 1.70% TOYOTA MOTOR CREDIT , 1.71% NATIXIS NY BRANCH, 4.25% NESTLE FINANCE INTL LTD, 0.85% RBC , 0.86% TEXSTAR, 20.56% TEXPOOL, 4.30%WELLS FARGO DEMAND DEPOSITS, 0.27% Current 3/31/2019 2nd Fiscal Quarter 2019- March 31, 2019 Page 5 INVESTMENT POOL Current 3 Months Ago 1 Year Ago Maturity Time Frame:3/31/2019 12/31/2018 3/31/2018 00-03 Months 222,384,573$ 250,121,468$ 191,759,986$ 03-06 Months 84,200,000 76,000,000 68,000,000 06-12 Months 143,000,000 109,200,000 109,000,000 12-24 Months 106,756,000 184,756,000 208,000,000 24 Months & Over 27,500,000 7,500,000 31,756,000 Total Par Value 583,840,573$ 627,577,468$ 608,515,986$ Objective: Current 3 Months Ago 1 Year Ago Maturity Time Frame:3/31/2019 12/31/2018 3/31/2018 00-03 Months 38.09%39.85%31.52% 03-06 Months 14.42%12.11%11.17% 06-12 Months 24.49%17.40%17.91% 12-24 Months 18.29%29.44%34.18% 24 Months & Over 4.71%1.20%5.22% Total 100.00%100.00%100.00% CITY OF DENTON : QUARTERLY INVESTMENT REPORT The risk of market price volatility is minimized through maturity diversification.Investment maturities are staggered to provide cash flows based on the anticipated needs of the City.Liquidity is achieved by matching investment maturitieswith forecasted cash disbursements and by investing in securities with active secondary markets.Short-term local government investmentpools and government money market mutual funds help toprovide daily liquidity and may be utilized as a competitive alternative to other fixed income investments. $0 $50,000,000 $100,000,000 $150,000,000 $200,000,000 $250,000,000 $300,000,000 $350,000,000 $400,000,000 $450,000,000 $500,000,000 $550,000,000 $600,000,000 $650,000,000 $700,000,000 Current 3 Months Ago 1 Year Ago 00-06 Months 06-12 Months 12-24 Months 24 Months & Over 2nd Fiscal Quarter 2019- March 31, 2019 Page 6 ECONOMIC SUMMARY Interest Rate History Source: U.S. Federal Reserve Statistical Release (H.15) Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Market Sector:Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Fed Funds (effective)0.09%0.08%0.10%0.09%0.12%0.11%0.13%0.14%0.24%0.36%0.38%0.40% 3-Month U.S. T-Bill 0.07%0.05%0.04%0.02%0.03%0.03%0.02%0.02%0.23%0.30%0.27%0.29% 2-Year U.S. T-Note 0.34%0.40%0.45%0.57%0.64%0.64%0.69%0.71%0.98%0.88%0.73%0.77% Portfolio Benchmark*0.13%0.13%0.12%0.12%0.12%0.15%0.18%0.24%0.32%0.41%0.49%0.54% Portfolio Yield 0.50%0.49%0.49%0.51%0.55%0.57%0.57%0.65%0.72%0.79%0.81%0.90% Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Market Sector:Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Fed Funds (effective)0.54%0.79%1.04%1.15%1.30%1.67%1.90%2.15%2.40%2.41% 3-Month U.S. T-Bill 0.51%0.75%1.00%1.05%1.32%1.71%1.92%2.20%2.36%2.39% 2-Year U.S. T-Note 1.20%1.31%1.34%1.38%1.84%2.27%2.53%2.57%2.49%2.26% Portfolio Benchmark*0.61%0.69%0.83%1.00%1.20%1.46%1.75%2.05%2.33%2.48% Portfolio Yield 0.95%1.07%1.16%1.25%1.29%1.42%1.58%1.73%2.01%2.20% *Twelve month moving average of a one year U.S. T-bill yield Fiscal Year: 2018-2019 2017-2018 2016-2017 2015-2016 2014-2015 QUARTERLY COMMENTARY March 31, 2019 -$ -$ 6,122,536$ 2,955,835$ 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Fiscal Year 2016-2017 Fiscal Year 2018-2019 2,138,420$ 8,955,045$ 1,874,846$ 4,734,315$ 6,999,226$ 3,961,973$ 1,175,753$ 2,763,135$ 4,317,890$ 6,515,166$ 2,743,857$ 1,771,206$ 2,695,211$ Source: Hilltop Securities Asset Management Economic Summary CITY OF DENTON : QUARTERLY INVESTMENT REPORT Fiscal Year 2013-2014 Fiscal Year 2014-2015 Fiscal Year 2015-2016 Fiscal Year to Date Earnings 3 Months 6 Months 9 Months 12 Months 849,369$ 613,877$ 1,228,059$ The portfolio was in compliance with the City's Investment Policy during the first quarter. In January, there were no maturities and $15 million in purchases at an average yield of 2.71%. In February, there were maturities totaling $89 million with an average yield of 1.50%. Purchases in February totaled approximately $30 million at an average yield of 2.60% and an average maturity of just under 24 months. During March, two investments matured totaling $10 million with an average yield of 2.20%, and two new investments were purchased totaling $15 million with an average yield of 2.55%. The portfolios weighted average yield rose 2 basis points, while the benchmark 12-month Treasury bill index increase of 3 basis points. The portfolio’s weighted average yield should generally continue increasing as older investments with lower rates mature and are replaced with new investments at higher yields. The Federal Reserve has continued to press for patience as the outcome of trade negotiations with China, as well as Brexit, are still undetermined. It is anticipated that pool yields will decline slightly in the coming months as securities within the underlying pool portfolios mature and are replaced by lower yields. Staff will continue to monitor the investment portfolio and ensure compliance with the City's Investment Policy and the Public Funds Investment Act. Fiscal Year 2017-2018 0.00% 1.00% 2.00% 3.00% Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Fed Funds 3-Month T-Bill 2-Year T-Note Portfolio Yield Portfolio Benchmark* FY 2013-14 FY 2014-15 FY 2015-16 FY 2016-17 FY 2017-18 FY 2018-19 Days to Maturity Page 1 Par Value Book Value Maturity Date Stated RateMarket Value March 31, 2019 Portfolio Details - Investments Average BalanceIssuer Portfolio Management City of Denton YTM 365CUSIPInvestment # Purchase Date Treasury Securities - Coupon 380U.S. TREASURY3990 5,000,000.00 4,933,543.58 04/15/20201.50010/18/2018 4,953,905.00 2.814912828X21 456U.S. TREASURY3991 5,000,000.00 4,940,768.42 06/30/20201.87510/18/2018 4,967,970.00 2.852912828VJ6 441U.S. TREASURY3994 5,000,000.00 4,922,582.15 06/15/20201.50010/31/2018 4,946,470.00 2.821912828XU9 471U.S. TREASURY3995 10,000,000.00 9,832,848.87 07/15/20201.50010/31/2018 9,888,670.00 2.8369128282J8 320U.S. TREASURY3999 10,000,000.00 9,879,660.09 02/15/20201.37511/16/2018 9,908,980.00 2.782912828W22 655U.S. TREASURY4011 5,000,000.00 4,955,017.70 01/15/20212.00002/04/2019 4,972,265.00 2.5179128283Q1 365U.S. TREASURY4014 5,000,000.00 4,985,778.19 03/31/20202.25003/01/2019 4,991,600.00 2.5409128284C1 44,450,199.00 2.75344,629,860.0045,000,000.0048,303,753.92Subtotal and Average 431 Federal Agency Disc. - Amortizing 127FFCB39886,200,000.00 6,145,975.61 08/06/20192.47010/11/2018 6,147,287.60 2.579313312KB5 6,145,975.61 2.5796,147,287.606,200,000.006,127,045.80Subtotal and Average 127 Federal Agency Issues - Coupon 179FFCB39328,000,000.00 8,000,766.10 09/27/20191.55002/16/2017 7,969,600.00 1.5303133EG2D6 59FFCB39375,000,000.00 5,003,195.23 05/30/20191.75002/22/2017 4,995,075.00 1.3523133EDPK2 371FFCB39596,000,000.00 6,003,653.76 04/06/20201.60007/25/2017 5,953,200.00 1.5383133EHEZ2 403FFCB39765,000,000.00 4,985,780.65 05/08/20202.15003/23/2018 4,988,410.00 2.4163133EJCA5 959FFCB40067,500,000.00 7,539,266.10 11/15/20213.05012/12/2018 7,636,740.00 2.8403133EJT74 651FFCB40095,000,000.00 4,998,898.13 01/11/20212.55002/04/2019 5,018,110.00 2.5623133EJ4Q9 1,603FFCB401310,000,000.00 9,999,122.22 08/21/20232.57002/21/2019 10,096,780.00 2.5723133EKAU0 1,065FFCB401510,000,000.00 9,998,565.44 03/01/20222.55003/01/2019 10,065,990.00 2.5553133EKBV7 228FHLB39337,000,000.00 6,993,024.06 11/15/20191.37502/16/2017 6,956,222.00 1.5393130AA3R7 256FHLB39345,000,000.00 5,026,736.28 12/13/20192.37502/16/2017 4,998,660.00 1.5903130A0JR2 323FHLB393920,000,000.00 19,999,342.08 02/18/20201.65003/08/2017 19,859,160.00 1.6543130AAXU7 323FHLB394515,000,000.00 14,996,241.11 02/18/20201.40004/26/2017 14,861,925.00 1.4293130ABAA4 323FHLB395115,000,000.00 15,000,000.00 02/18/20201.50006/29/2017 14,874,570.00 1.5003130ABM29 347FHLB39588,000,000.00 8,025,743.80 03/13/20201.87507/25/2017 7,956,144.00 1.528313378J77 221FHLB39735,000,000.00 4,981,674.81 11/08/20191.45001/25/2018 4,970,590.00 2.0723130AC2Q6 316FHLB397910,000,000.00 9,968,550.31 02/11/20202.12504/23/2018 9,972,060.00 2.5003130ADN32 256FHLB39844,000,000.00 3,999,653.67 12/13/20192.37505/30/2018 3,998,092.00 2.3873130AEDY3 423FHLB39855,000,000.00 5,007,463.02 05/28/20202.62505/30/2018 5,010,775.00 2.4923130AECJ7 347FHLB39895,000,000.00 4,968,000.99 03/13/20202.12510/18/2018 4,984,250.00 2.8163130A12B3 529FHLB400410,000,000.00 10,008,611.99 09/11/20202.87512/07/2018 10,066,150.00 2.812313370US5 14FHLMC39355,000,000.00 4,999,650.45 04/15/20191.12502/22/2017 4,997,405.00 1.3083137EADZ9 Portfolio CITY AP Run Date: 05/15/2019 - 10:16 PM (PRF_PM2) 7.3.0 Report Ver. 7.3.6.1 Days to Maturity Page 2 Par Value Book Value Maturity Date Stated RateMarket Value March 31, 2019 Portfolio Details - Investments Average BalanceIssuer Portfolio Management City of Denton YTM 365CUSIPInvestment # Purchase Date Federal Agency Issues - Coupon 396FHLMC39605,000,000.00 4,991,209.34 05/01/20201.37507/25/2017 4,943,345.00 1.5413137EADR7 291FHLMC39875,000,000.00 4,949,416.89 01/17/20201.50010/11/2018 4,962,435.00 2.8043137EAEE5 385FHLMC400710,000,000.00 9,871,909.71 04/20/20201.37501/17/2019 9,891,350.00 2.6193137EAEF2 116FNMA39035,000,000.00 5,000,000.00 07/26/20191.00007/26/2016 4,976,845.00 1.0003136G3XJ9 123FNMA393010,000,000.00 9,984,380.98 08/02/20190.87502/08/2017 9,947,120.00 1.3493135G0N33 333FNMA39365,000,000.00 5,000,000.00 02/28/20201.70002/28/2017 4,967,775.00 1.7003136G4MA8 333FNMA39425,000,000.00 4,995,838.47 02/28/20201.50003/29/2017 4,958,445.00 1.5943135G0T29 149FNMA39505,000,000.00 4,991,298.49 08/28/20191.00006/14/2017 4,970,135.00 1.4343135G0P49 206FNMA397110,000,000.00 9,945,259.13 10/24/20191.00001/08/2018 9,918,270.00 1.9933135G0R39 578FNMA400110,000,000.00 10,002,308.99 10/30/20202.87511/30/2018 10,084,430.00 2.8593135G0U84 240,235,562.20 1.988239,850,058.00240,500,000.00257,506,380.34Subtotal and Average 418 Federal Agency Issues - Callable 73FFCB38955,000,000.00 4,999,932.77 06/13/20191.18006/22/2016 4,988,265.00 1.1873133EGEF8 455FHLMC39536,000,000.00 6,000,000.00 06/29/20201.62506/29/2017 5,942,166.00 1.6253134GBVD1 515FHLMC39654,950,000.00 4,950,000.00 08/28/20201.62508/29/2017 4,896,728.10 1.6253134GBD82 497FNMA39644,806,000.00 4,806,000.00 08/10/20201.70008/29/2017 4,763,981.14 1.6823136G4NZ2 20,755,932.77 1.53320,591,140.2420,756,000.0020,755,891.25Subtotal and Average 387 Municipal Bonds - Coupon 183DALLAS, TX WTR & SWR REV BDS3899 4,000,000.00 4,000,000.00 10/01/20191.21707/07/2016 3,974,640.00 1.21723542JBE4 44TX A & M UNIV REV BD3902 1,000,000.00 1,000,000.00 05/15/20191.00907/20/2016 998,220.00 1.00988213AFU4 5,000,000.00 1.1764,972,860.005,000,000.005,000,000.00Subtotal and Average 155 CDs - CDARS 108CD - CDARS3955 10,000,000.00 10,000,000.00 07/18/20191.69807/20/2017 10,000,000.00 1.698SYS3955 129CD - CDARS3961 10,000,000.00 10,000,000.00 08/08/20191.69808/10/2017 10,000,000.00 1.698SYS3961 164CD - CDARS3966 5,000,000.00 5,000,000.00 09/12/20191.52309/14/2017 5,000,000.00 1.523SYS3966 25,000,000.00 1.66325,000,000.0025,000,000.0035,877,777.78Subtotal and Average 128 CDs - SLOC 10CD - INDEPENDENT BANK3944 10,000,000.00 10,000,000.00 04/11/20191.62304/13/2017 10,000,000.00 1.623SYS3944 311CD - INDEPENDENT BANK3974 5,000,000.00 5,000,000.00 02/06/20202.29502/08/2018 5,000,000.00 2.295SYS3974 38CD - LEGACYTEXAS BANK3946 10,000,000.00 10,000,000.00 05/09/20191.67705/11/2017 10,000,000.00 1.677SYS3946 73CD - LEGACYTEXAS BANK3949 15,000,000.00 15,000,000.00 06/13/20191.67606/15/2017 15,000,000.00 1.676SYS3949 Portfolio CITY AP Run Date: 05/15/2019 - 10:16 PM (PRF_PM2) 7.3.0 Days to Maturity Page 3 Par Value Book Value Maturity Date Stated RateMarket Value March 31, 2019 Portfolio Details - Investments Average BalanceIssuer Portfolio Management City of Denton YTM 365CUSIPInvestment # Purchase Date 40,000,000.00 1.74040,000,000.0040,000,000.0040,000,000.00Subtotal and Average 78 Commercial Paper Disc. - Amortizing 116JP MORGAN SECURITIES LLC3997 5,000,000.00 4,951,666.67 07/26/20193.00010/31/2018 4,955,885.00 3.13446640QUS8 66JP MORGAN SECURITIES LLC4005 5,000,000.00 4,973,600.00 06/06/20192.88012/10/2018 4,975,335.00 2.96246640QT68 144NATIXIS NY BRANCH4002 10,000,000.00 9,882,000.00 08/23/20192.95011/30/2018 9,894,450.00 3.08663873KVP9 66NATIXIS NY BRANCH4003 5,000,000.00 4,973,783.33 06/06/20192.86012/07/2018 4,976,360.00 2.94263873KT64 168NATIXIS NY BRANCH4008 5,000,000.00 4,933,733.33 09/16/20192.84001/17/2019 4,937,990.00 2.95763873KWG8 91NATIXIS NY BRANCH4010 5,000,000.00 4,966,506.94 07/01/20192.65002/04/2019 4,966,955.00 2.71663873KU13 197NESTLE FINANCE INTL LTD4012 5,000,000.00 4,928,313.89 10/15/20192.62002/15/2019 4,929,360.00 2.72464105SXF0 45RBC40005,000,000.00 4,982,500.00 05/16/20192.80011/16/2018 4,983,160.00 2.87978009BSG8 28TOYOTA MOTOR CREDIT3998 10,000,000.00 9,979,000.00 04/29/201911/01/2018 9,979,140.00 2.77589233HRV8 54,571,104.16 2.91254,598,635.0055,000,000.0062,414,757.53Subtotal and Average 99 Local Govt Investment Pools 1LOCAL GOVT INV POOL - TEXPOOL3996 25,054,193.98 25,054,193.98 2.50310/26/2018 25,054,193.98 2.503SYS3996 1LOCAL GOVT INV POOL - TEXSTAR3641 119,750,000.00 119,750,000.00 2.432119,750,000.00 2.432SYS3641 144,804,193.98 2.444144,804,193.98144,804,193.98136,991,971.76Subtotal and Average 1 Demand Deposits 1DEMAND DEPOSITS - WELLS FARGO3706 1,580,378.91 1,580,378.91 1.0001,580,378.91 1.000SYS3706 1,580,378.91 1.0001,580,378.911,580,378.912,300,509.11Subtotal and Average 1 2.196615,278,087.50 583,840,572.89 242582,174,413.73 582,543,346.63Total and Average Portfolio CITY AP Run Date: 05/15/2019 - 10:16 PM (PRF_PM2) 7.3.0 Days to Maturity Page 4 Par Value Book Value Stated RateMarket Value March 31, 2019 Portfolio Details - Cash Average BalanceIssuer Portfolio Management City of Denton YTM 365CUSIPInvestment # Purchase Date 0.00 2.196615,278,087.50 583,840,572.89 242 0Average Balance 582,174,413.73 582,543,346.63Total Cash and Investments Portfolio CITY AP Run Date: 05/15/2019 - 10:16 PM (PRF_PM2) 7.3.0