Item No.:                    7a_supp 
Meeting Date:           March 24, 2015 
Annual Treasury And Investment
Portfolio Update for 2014 

Commission Briefing 
Presented by Diane Campbell
March 24, 2015

Treasury Management Update 

2

Treasury Functions 
Manage banking activities 
Cash and liquidity management & investing
excess funds 
Execute and fund payments (Electronic Funds
Transfers (EFT) - ACH credits and wires, and fund A/P issued checks
and other EFTs) 
Using appropriate approvals requiring a two step
process 
Coordinates processes and controls with
Accounting & Financial Reporting and
Information & Communications Technology
departments complying with statute 
3

Current Treasury Initiatives 
New banking contract 
Commission authorized August 6, 2013. 
Five large commercial banks participated in RFP.
Wells Fargo Bank selected as new bank in February
2014, replacing Bank of America, for a 5-years term
with two 1-year extension options. 
As of 2014 year end 99% of banking transactions
converted to Wells Fargo Bank. Full conversion
expected by March 2015. 
Primary backup, succession planning and
enhanced training 
4

Investments Update 

5

Background 
Commission resolution approved Port
investment policy, adopted as of June
11, 2002. 
The investment policy is reviewed
periodically, and amended as
appropriate to follow best practices.
Last amendment: June 5, 2012. 
Authorized investments are made in
accordance with and subject to
restrictions of the Revised Code of
Washington (RCW) 36.29.020. 
6

Background 
To meet the policy's primary investment objectives,
additional risk controls are included that impose further
restrictions on the types of securities. These include: 
limit maturity date - no more than 10 years from settlement
date, and 
portfolio target modified duration of 2.0 years, plus or minus
year. 
Benchmark  Bank of America Merrill Lynch
Treasury/Agency 1-3 Years Index 
Long term strategy: do not forecast interest rates;
balance RETURN and RISK over cycles 
this strategy outperforms the market when rates are
falling and underperforms when rates are rising 

7

Investment Policy Highlights 
Emphasis on preservation of principal 
Priority of policy objectives 
1) Safety 
2) Liquidity 
3) Yield 
Covers all capital and operating funds 
Does not cover funds held separately in trust,
e.g. deferred compensation plans and pension
trusts 

8

Investment Policy Highlights 
Establishes prudence, ethics, conflict of
interest and disclosure requirements for
investment officials 
Authorizes delegation of day-to-day
investment program duties and
responsibilities 
Provides for safekeeping and custody of
portfolio securities 
9

Investment Policy Highlights 
Establishes criteria for eligible depositories
and broker/dealers 
Sets out allowed investment instruments;
subject to State law 
Establishes portfolio diversification
parameters 
Establishes maturity restrictions 

10

Investment Policy Highlights 
Sets portfolio performance standards 
Allows for independent review of the
investment program 
State Auditor 
External Auditors 
Internal Auditor 
Establishes reporting standards 

11

Portfolio Composition 
12/31/2014 
"HIGH GRADE"
MORTGAGE-BACKED
SECURITIES    REPURCHASE
0.1%      AGREEMENTS 
7.5% 





TREASURY NOTES 
47.2%                                               FEDERAL AGENCIES 
45.2% 




12

Interest Rates Trends 
The Federal Reserve has left short term
rates at 0.25% since 2010. 
During 2014 short and medium term rates
were generally higher than the previous
year, and longer term rates declined. 
Similar to 2014, short and medium term
rates are expected to rise slowly in 2015. 
Staff monitors market conditions; but,
does not time the market. 
13

Treasury Yield Curve 2014 
12/31/2013   12/31/2014
3.97% 
4.0%
3.5%
3.03% 
3.0%
2.45% 
2.5%                                                              2.75% 
2.0%                                          1.74% 
2.17% 
1.97% 
1.5%
1.07%   1.65% 
1.0%                              0.67% 
0.5%                       0.22%          0.77% 
0.02% 0.07%   0.12% 
0.38% 
0.0%
0.09%  0.11% 
0.01% 0.04% 
-0.5%
1 Month  3 Months 6 Months  1 Year   2 Years  3 Years  5 Years  7 Years  10 Years  30 Years
Source: Bloomberg 


14

2014 Interest Rates 
2014 Select Interest Rates 
2.25

2.00

1.75

1.50
(%)   1.25
Yield
1.00

0.75

0.50

0.25

0.00
Jan-14  Feb-14  Mar-14  Apr-14  May-14  Jun-14  Jul-14   Aug-14  Sep-14  Oct-14  Nov-14  Dec-14
2-Yr Agencies     5-Yr Agencies     Fed Funds
Source: Bloomberg 
15

2014 Yield Comparison 
Benchmark    Port's Pool 
Q1-2014      0.46%       0.99% 
Q2-2014      0.45%       0.90% 
Q3-2014      0.60%       0.78% 
Q4-2014      0.68%       0.78% 
Annual      0.55%       0.86% 

16

Portfolio Earnings 2010  2014 
2014
0.86%   $8,241,675 
2013
0.69%  $6,555,606 
Y
e  2012
1.02%   $9,547,173 
a
r
2011
1.67%   $15,069,955 

2010
2.17%  $19,376,723 
Interest Earnings - % Yield and $ 
17

Yield History 


13 years       1.96%        2.80% 
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Yield History 
Benchmark   Port's Pool
5.00% 
5.0%                   4.78% 
4.45% 
4.08%     4.07%         4.04% 
4.0%                3.72% 
4.33% 
3.57% 
3.0%        2.64%               2.76% 
2.50% 
2.17% 
2.01% 
2.0%     1.58%  2.50%                     1.67% 
1.02% 
0.86% 
1.0%                        1.12%   0.72%        0.69% 
0.48% 
0.31% 0.35% 
0.55% 
0.0%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

19

Investment Portfolio Size Fluctuates 
$900 million as of 12/31/2014 versus $953
million at prior year's end 
Over the most recent 5 years, the size has
ranged from $822 million to $1.01 billion 
Fluctuations are mostly tied to capital
funding and spending: 
bond issues to fund projects increase the
portfolio 
capital project spending reduces the portfolio
size 
20

Investment Pool Participating Funds 
Investment Pool Participating Funds 12/31/2014 
Minimum
Reserves &               Operating Fund
Security                     Balance 
24%                   28% 


Operating Cash
Special Use                        Available for
17%                        Capital 
30% 
Bond Funds 
1% 
Examples 
Minimum Operating Fund Balance: General & Airport Development = 9 months O&M expense 
Operating Funds Available for Capital: General, Airport, Tax Levy funds programmed to be
spent over the next few years. 
Bond Funds: Capital projects 
Reserves & Security: Bond reserves, customer lease security 
Special Use (primarily for capital projects): Passenger & Customer Facility Charges,
Transportation & Infrastructure                                            21