Audit & Finance Committee Meeting
August 15, 2022
Peninsula Clean Energy
Agenda
• Call to Order / Roll Call
• Public Comment (for items not on the Agenda)
• Action to set the Agenda and Approve Consent Items
• Regular Agenda
o Q4 and YTD Financial Review
o Meet with Investment Managers
Peninsula Clean Energy
Audit Schedule – FY2021-2022 Financial Statements
• Engagement Letter – in process
• Audit Field Work – now through end of September (approx.) • AF Committee meet with Auditors – October 12
o Public meeting
o Recommendation to full Board for approval
o Private meeting with less than 50% of AF members
• Board Meeting to Review/Approve – October 27
FY2021-2022
Q4 Financial Review
Preliminary Financial Statements
Ending June 30, 2021
Peninsula Clean Energy
Revenue – Quarterly Trend
5 Quarterly
• Q4 Revenue was $33.6 MM above Budget
• Revenue was well above Budget
despite Load being 8.0% below
Budget
• Residential load – 10.2% below
Budget
• Other load – 6.5% below Budget
• Rates increased significantly
beginning in April
YTD
• Q4-YTD Revenue was $17.0 MM above
Budget
• Full year load was 5.4% below Budget
Revenue by Quarter as of
Actual Budget Var Fav/(Unf)
Q1-FY2020/21 75.1 69.3 5.8
Q2-FY2020/21 62.9 41.2 21.7
Q3-FY2020/21 46.3 49.7 (3.4)
Q4-FY2020/21 43.9 55.6 (11.7)
Total YTD 2020/21 $228.1 $215.7 $12.4
Q1-FY2021/22 58.4 61.0 (2.6)
Q2-FY2021/22 45.1 52.5 (7.5)
Q3-FY2021/22 43.8 50.3 (6.5)
Q4-FY2021/22 92.0 58.4 33.6
Total YTD FY2021/22 $239.2 $222.2 $17.0
Quarter Revenue Comparison vs Budget
June-22
Peninsula Clean Energy
Revenue – Monthly Trend
6 Revenue (Last 13 months)
Actual Budget Var Fav/(Unf)
Jun-21 $17.3 $23.4 ($6.1)
Jul-21 $19.0 $19.4 ($0.3)
Aug-21 $20.0 $21.0 ($0.9)
Sep-21 $19.3 $20.7 ($1.4)
Oct-21 $14.6 $20.1 ($5.5)
Nov-21 $14.5 $15.3 ($0.8)
Dec-21 $16.0 $17.1 ($1.1)
Jan-22 $15.1 $17.6 ($2.5)
Feb-22 $14.1 $16.0 ($1.9)
Mar-22 $14.7 $16.8 ($2.1)
Apr-22 $26.1 $15.5 $10.7
May-22 $29.5 $19.6 $9.9
Jun-22 $36.3 $23.3 $13.0
June-22
Month Revenue Comparison vs Budget
Peninsula Clean Energy
Cost of Energy – Quarterly Trend
7 Quarterly
• Q4 Cost of Energy was $10.5 MM above
Budget
• Cost was significantly higher than
Budget despite lower load than
planned
• Energy market prices continued to
be significantly higher than prior
periods and higher than Budgeted
levels
• Significant hedged position mitigated
much of the higher prices throughout
the quarter and past 6 months
YTD
• Cost of energy for full year was higher
than Budget – all attributed to very high
prices in past 6 months
Cost of Energy by Quarter as of
Actual Budget Var Fav/(Unf)
Q1-FY2020/21 66.7 55.3 (11.4)
Q2-FY2020/21 51.2 51.0 (0.1)
Q3-FY2020/21 49.4 46.7 (2.8)
Q4-FY2020/21 46.5 44.4 (2.0)
Total YTD 2020/21 $213.8 $197.4 ($16.4)
Q1-FY2021/22 56.5 57.6 1.1
Q2-FY2021/22 51.1 53.9 2.8
Q3-FY2021/22 56.2 52.9 (3.4)
Q4-FY2021/22 62.8 52.3 (10.5)
Q4-FY2021/22 $226.7 $216.7 ($10.0)
Quarter COE Comparison vs Budget
June-22
Peninsula Clean Energy
Cost of Energy – Monthly Trend
8 Cost of Energy (Last 13 months)
Actual Budget Var Fav/(Unf)
Jun-21 $14.1 $15.8 $1.7
Jul-21 $18.4 $17.9 ($0.6)
Aug-21 $20.6 $20.4 ($0.1)
Sep-21 $17.5 $19.3 $1.8
Oct-21 $17.4 $18.0 $0.6
Nov-21 $15.0 $16.7 $1.7
Dec-21 $18.8 $19.3 $0.5
Jan-22 $20.3 $18.8 ($1.5)
Feb-22 $17.6 $17.2 ($0.4)
Mar-22 $18.4 $16.9 ($1.5)
Apr-22 $19.5 $16.5 ($2.9)
May-22 $19.8 $17.6 ($2.2)
Jun-22 $23.6 $18.2 ($5.4)
June-22
Month COE Comparison vs Budget
Peninsula Clean Energy
Financial Statement vs. Budget – Quarter and YTD
YTD Results
• Revenues
• $17.0 MM above Budget for YTD – all from Q4
• Expenses
• YTD - $4.7 MM above Budget (will require BOD
resolution when audit is complete)
• Cost of Energy (and minor PG&E fees) were
the only costs over Budget – all in Q4
• Program expenses well-below Budget - $2 MM
catch-up payment not paid by year-end
• Losses in investment portfolio in Q3 and Q4
due to volatility of fixed income markets
• Change in Net Position
• Q4 was positive $22.1, $21.6 MM better than
Budget
• YTD was still negative $13.0 MM, but $5.7 MM
better than Budget due to Q4 rate increases
9 `
Actual Budget Var Fav/(Unf) Actual Budget Var Fav/(Unf)
OPERATING REVENUES
Electricity Sales, net 91,223,688 57,768,435 33,455,253 236,370,743 219,619,107 16,751,636 Green electricity premium 757,734 638,057 119,677 2,858,976 2,621,034 237,942 Total Operating Revenues 91,981,423 58,406,492 33,574,931 239,229,719 222,240,141 16,989,578
OPERATING EXPENSES
Cost of energy 62,847,765 52,321,987 (10,525,777) 226,679,208 216,705,953 (9,973,255) Staff compensation 1,750,469 1,628,177 (122,292) 6,351,193 6,464,275 113,082 Data Manager 877,699 855,000 (22,699) 3,417,178 3,420,000 2,822 Service Fees - PG&E 338,636 315,000 (23,636) 1,266,926 1,260,000 (6,926) Consultants & Professional Services 289,326 333,692 44,366 1,084,742 1,351,204 266,462 Legal 307,851 394,500 86,649 1,174,129 1,615,500 441,371 Marketing and Noticing 461,311 475,886 14,575 1,527,208 2,068,197 540,989 General and Administrative 466,086 574,063 107,978 2,033,269 2,259,391 226,122 Community Energy Programs 1,349,511 1,133,138 (216,373) 2,930,948 6,555,671 3,624,723 Depreciation 19,999 31,294 11,295 81,503 111,675 30,172 Total Operating Expenses 68,708,652 58,062,737 (10,645,915) 246,546,305 241,811,865 (4,734,440) Operating Income (Loss) 23,272,771 343,755 22,929,016 (7,316,586) (19,571,724) 12,255,138 Total Nonoperating Income/(Expense) (1,144,692) 225,000 (1,369,692) (5,660,185) 900,000 (6,560,185) CHANGE IN NET POSITION 22,128,079 568,755 21,559,324 (12,976,771) (18,671,724) 5,694,953
CHANGE IN NET POSITION
Net Position at the beginning of period 145,238,549 165,030,742 (19,792,192) 180,343,399 184,271,220 (3,927,821) Change in Net Position 22,128,079 568,755 21,559,324 (12,976,771) (18,671,724) 5,694,953 Net Position at the end of period 167,366,628 165,599,497 1,767,132 167,366,628 165,599,497 1,767,132 Ending Total Cash (Restricted/Unrestricted) 138,837,795 168,332,845 (29,495,050) 138,837,795 168,332,845 (29,495,050) Quarter ending June 2022
Current Quarter Year-to-date
Peninsula Clean Energy
Change in Net Position (Year-to-date)
10 YTD
• CINP of $13.0 MM loss was $5.7 MM
better than Budget due mostly to
higher revenues than Budget
vs: Prior Year
• YTD of $13.0 MM loss was $4.7 MM
worse than the prior year
• Significant increase in cost of energy
despite lower load) was the biggest
contributor
Change in Net Position - YTD as of
Actual Budget Var Fav/(Unf)
Revenues $239.2 $222.2 $17.0
Cost of Energy 226.7 216.7 (10.0)
Other Opex 19.9 25.1 5.2
Non-Opex/(Income) 5.7 (0.9) (6.6)
Net Position ($13.0) ($18.7) $5.7
Accounts
June-22
Year-to-date vs Budget
Change in Net Position - Year-over-year
YTD 2021-22 YTD 2020-21 Var Fav/(Unf)
Revenues $239.2 $228.1 $11.1
Cost of Energy 226.7 213.8 (12.8)
Other Opex 19.9 22.5 2.7
Non-Opex/(Income) 5.7 0.0 (5.6)
Net Position ($13.0) ($8.3) ($4.7)
Year-over-year Comparison (YTD)
June-22
Accounts
Peninsula Clean Energy
Cash and Investment Summary – Quarterly Trend
11 Investment Manager balances at 03/31/2022:
• PFM = $64.3 MM
• FRB = $61.6 MM
Note: $5.5 MM of cash is on deposit with CAISO not reflected in this summary Jun-19 Jun-20 Jun-21 Mar-22 Jun-22
Investment Account - USBank (Combined PFM/FRB)
Asset Summary
Cash & Equivalents $ 4,507,825 $ 58,937,363 $ 2,785,233 $ 91,568 $ 181,685 Fixed Income $ 90,743,561 $ 105,343,286 $ 153,947,396 $ 129,037,454 $ 125,313,000 Accrued Income $ 546,170 $ 520,977 $ 480,040 $ 421,015
Ending Balance $ 95,251,385 $ 164,826,819 $ 157,253,606 $ 129,609,062 $ 125,915,700 Other Accounts (Unrestricted)
Unrestricted - M&T LockBox $ 758,192 $ - $ -
Unrestricted - Wilmington LockBox $ 5,632,155 $ 5,030,087 $ 2,465,340 $ 5,200,816 $ 8,133,146 Operating Account - First Republic $ 3,299,345 $ 5,834,142 $ 4,340,702 $ 1,953,448 $ 1,365,681 Savings Account - First Republic $ 9,885,949 $ 2,484,545 $ 1,354,942 $ 1,571,650 $ 74,032 Other Accounts $ 573 $ - $ - $ 2,819 $ 22,908
Subtotal Unrestricted (non-Investment accounts) $ 18,818,022 $ 13,348,775 $ 8,919,176 $ 8,728,733 $ 9,595,766 Other Accounts (Restricted)
Restricted Cash - Wilmington LockBox $ 1,500,000 $ 1,000,000 $ 500,000 $ 500,000 $ - Restricted Cash - First Republic $ 11,665,799 $ 31,386,560 $ 3,949,194 $ - $ - Subtotal Restricted (non-Investment accounts) $ 13,165,799 $ 32,386,560 $ 4,449,194 $ 500,000 $ - Total Cash $ 127,235,206 $ 210,562,154 $ 170,621,976 $ 138,837,795 $ 135,511,466 Unrestricted Cash $ 114,069,407 $ 178,175,594 $ 166,172,782 $ 138,337,795 $ 135,511,466 Peninsula Clean Energy
Cash Reserves – Days Cash on Hand
12 Actual June 30, 2022
Total Cash/Investments Balance $135,511,466
Restricted by Term/Covenant
Unrestricted Cash (per Approved Reserve Policy) $135,511,466 Days Cash on Hand (per Approved Reserve Policy) 201
Approved Reserve Policy (Days Cash on Hand) 180
Unrestricted Operating Reserve Requirement (180 Days) 120,479,766 Unrestricted Cash in Excess of Current Reserve Policy $15,031,700 Days Cash on Hand
• At June 30, DCOH = 201
• Compared to 213 at March 31
• Compared to 243 that was forecasted
for end year at last AF meeting. Major
components:
• OPEX was higher than
forecasted – results in lower
DCOH (8 days)
• Investment Returns were lower
than forecasted – results in
lower DCOH (7 days)
• Significant increase in Accrued
Revenue (due to higher rates) –
results in lower cash (19 days)
• DCOH expected to recover
significantly in next few months
• Already seen significant uptick in daily
cash receipts by approx. $500K per
weekday from end of June to early
August
Investment Portfolio Review
Peninsula Clean Energy Authority
June 30, 2022
PWM Cover Page 1
Table of Contents 2
Asset Allocation by Asset Class 3
Historical Performance (Trailing Periods) 4
Historical Performance (Rolling Periods) 5
Fixed Income Detail 6
Disclosures 12
Table of Contents
Peninsula Clean Energy Authority
Investment Performance Review
As of June 30, 2022
U.S. Treasury Notes and Bonds
69.2%
Investment Grade Corporate Bonds
30.6%
Money Market Funds (all)
0.2%
ASSET TYPE $ %
Cash $137,260 0.2%
Money Market Funds (all) $137,260 0.2%
Fixed Income $61,505,993 99.8%
U.S. Treasury Notes and Bonds $42,635,100 69.2%
Investment Grade Corporate Bonds $18,870,893 30.6%
Total $61,643,253 100.0%
Asset Allocation by Asset Class
As of June 30, 2022
Peninsula Clean Energy Authority
Performance by Account
TOP LEVEL HOLDING ACCOUNT $ % QTD FYTD* 1 YR. 3 YR. 5 YR. ITD Peninsula Clean Energy Authority $61,643,253 100.0% (0.9%) (4.4%) (4.4%) (1.0%) (0.2%) 04-20-2018 Total $61,643,253 100.0% (0.9%) (4.4%) (4.4%) (1.0%) (0.2%) 04-20-2018 ICE BofA AAA-A 1-5 Year US Broad Market (Total Return) (1.0%) (4.9%) (4.9%) - - Bloomberg Government/Credit 1-3 Years (0.6%) (2.6%) (2.6%) (0.6%) (0.2%) Historical Performance
Peninsula Clean Energy Authority
As of June 30, 2022
*Fiscal year begins on 07-01-2021.
Performance by Account
TOP LEVEL HOLDING ACCOUNT $ % FYTD* 2021 2020 2019 2018 2017 ITD Peninsula Clean Energy Authority $61,643,253 100.0% (4.4%) (0.9%) 0.8% 2.0% (0.2%) 04-20-2018 Total $61,643,253 100.0% (4.4%) (0.9%) 0.8% 2.0% (0.2%) 04-20-2018 ICE BofA AAA-A 1-5 Year US Broad Market (Total Return) (4.9%) (1.2%) - - - Bloomberg Government/Credit 1-3 Years (2.6%) (0.8%) 1.0% 0.9% (0.2%) Historical Performance
Peninsula Clean Energy Authority
As of June 30, 2022
*Fiscal year begins on 07-01-2021.
Sector Allocation
CORP
31%
GOVT
69%
Bond Portfolio Summary
FYTD* ITD**
Beginning Market Value $75,885,257 $39,917,000
Net Cash Flow ($11,434,009) $20,984,271
Gain / Loss ($2,968,842) $604,722
Ending Market Value $61,505,993 $61,505,993
TWR (4.39%) (0.18%)
Income $1,053,078 $5,371,543
Estimated Annual Income
0k
50k
100k
150k
200k
250k
Jul '22 Sep '22 Nov '22 Jan '23 Mar '23 May '23
Performance vs Benchmark
Aug '21 Oct '21 Dec '21 Feb '22 Apr '22 Jun '22
Trailing 12 Months
(6%)
(5%)
(4%)
(3%)
(2%)
(1%)
0%
1%
Portfolio ICE BofA 1-5 Year US Broad Barclays Govt / Credit 1-3 Year Bond Statistics
CURRENT
Duration to Worst 2.36
Duration to Maturity 2.36
Average Maturity (Years) 2.51
Current Yield 1.52%
Yield to Worst 3.14%
Yield to Maturity 3.14%
Coupon Rate (Weighted Average) 1.46%
Average Credit Rating AAA
Credit Quality
A
4%
A-19%
AA+
3%
AA-AAA 4%
69%
Peninsula Clean Energy Authority
Fixed Income Detail
As of June 30, 2022
Year Projected Income $894,623
*Fiscal year begins on 07-01-2021.
**Inception Date is 04-23-2018.
Sector Overview
Corporate Bond
31%
Treasury Note
69%
Corporate Bond Treasury Note
Sector Breakdown
0m
10m
20m
30m
40m
50m
U.S. Treasury Notes and
Bonds
Investment Grade Corporate Bonds
$42,635K
$18,871K
Sub-Sector Overview
U.S. Government
69%
U.S. Corporate Bonds
31%
U.S. Government U.S. Corporate Bonds
Municipal Bond State Breakdown (includes only Munis)
No data available
Peninsula Clean Energy Authority
Fixed Income Detail
As of June 30, 2022
Duration to Maturity
Years
0%
10%
20%
30%
40%
50%
0.0 to 1.0 1.0 to 3.0 3.0 to 5.0
20%
48%
31%
Duration to Worst
0%
10%
20%
30%
40%
50%
0.0 to 1.0 1.0 to 3.0 3.0 to 5.0
20%
48%
31%
Peninsula Clean Energy Authority
Fixed Income Detail
As of June 30, 2022
Time to Maturity
Years
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0.0 to 1.0 1.0 to 3.0 3.0 to 5.0
20%
43%
37%
Monthly Projected Cash Flows
0k
50k
100k
150k
200k
250k
Jul '22 Aug '22 Sep '22 Oct '22 Nov '22 Dec '22 Jan '23 Feb '23 Mar '23 Apr '23 May '23 Jun '23 Peninsula Clean Energy Authority
Fixed Income Detail
As of June 30, 2022
Maturity by Year
0m
2m
4m
6m
8m
10m
12m
14m
16m
18m
20m
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Peninsula Clean Energy Authority
Fixed Income Detail
As of June 30, 2022
Portfolio Holdings
SECURITY
PAR
VALUE
COUPON
RATE
MATURITY
DATE
CALL
DATE
TIME TO
WORST PRICE
CREDIT
RATING
YIELD TO
WORST YTM
DURATION
TO WORST
MARKET VALUE
& ACCRUED
% HELD
(MV)
ANNUAL
INCOME
US Treasury Notes 10/15/2022 5,327,000 1.38% 10-15-2022 - 0.29 $99.797 AAA 2.07% 2.07% 0.29 $5,331,437 8.67% $36,723 BB&T Corp SR Medium Term
NTS B/E DTD CLB
2,000,000 2.20% 03-16-2023 02-13-2023 0.71 $99.457 A- 2.97% 2.97% 0.70 $2,001,851 3.25% $44,000 U S Treasury NT 0.250% 4/15/23 5,265,000 0.25% 04-15-2023 - 0.79 $97.988 AAA 2.84% 2.84% 0.78 $5,161,809 8.39% $13,163 U S Treasury NT 0.125% 10/15/23 5,290,000 0.13% 10-15-2023 - 1.29 $96.406 AAA 2.98% 2.98% 1.27 $5,101,254 8.29% $6,612 US Treasury Note 2.250% Due
04/30/2024
1,950,000 2.25% 04-30-2024 - 1.83 $98.695 AAA 2.99% 2.99% 1.77 $1,931,885 3.14% $43,875 United States Treas NTS B/E DTD 5,268,000 1.50% 10-31-2024 - 2.34 $96.613 AAA 3.01% 3.01% 2.27 $5,102,779 8.30% $79,020 Aflac Incorporated 3.625 % Due
Nov 15, 2024
2,400,000 3.62% 11-15-2024 - 2.38 $100.130 A- 3.57% 3.57% 2.25 $2,413,995 3.92% $87,000 Apple Inc FXD RT SR NT B/E DTD
2.50 %
2,000,000 2.50% 02-09-2025 - 2.61 $98.058 AA+ 3.28% 3.28% 2.48 $1,980,743 3.22% $50,000 Cme Group Inc Fixed Rate Note
B/E DTD CLB
2,286,000 3.00% 03-15-2025 12-15-2024 2.71 $98.706 AA- 3.50% 3.50% 2.55 $2,276,422 3.70% $68,580 Ameriprise Finl Inc SR NT B/E
DTD CLB
1,650,000 3.00% 04-02-2025 03-02-2025 2.76 $97.649 A- 3.91% 3.91% 2.59 $1,623,308 2.64% $49,500 Caterpillar Finl SVCS Corp Med
Term NTS Ser J Book Entry B/E
DTD
1,140,000 1.45% 05-15-2025 - 2.88 $94.275 A 3.56% 3.56% 2.77 $1,076,801 1.75% $16,530 United States Treas NTS B/E DTD 5,415,000 0.25% 05-31-2025 - 2.92 $92.277 AAA 3.04% 3.04% 2.86 $4,997,949 8.13% $13,538 US Treasury Note 3.000% Due
10/31/2025
2,950,000 3.00% 10-31-2025 - 3.34 $99.836 AAA 3.05% 3.05% 3.14 $2,959,952 4.81% $88,500 JPMorgan Chase & Var 25 Due
12/10/25
3,485,000 1.56% 12-10-2025 11-10-2025 3.44 $93.423 A- 4.19% 4.19% 2.41 $3,258,814 5.30% $54,401 U S Treasury NT 0.375% 1/31/26 4,140,000 0.38% 01-31-2026 - 3.59 $90.930 AAA 3.06% 3.06% 3.51 $3,770,882 6.13% $15,525 U S Treasury NT 0.750% 3/31/26 4,740,000 0.75% 03-31-2026 - 3.75 $91.848 AAA 3.07% 3.07% 3.64 $4,362,556 7.09% $35,550 Bank Amer Corp FXD RT NT
Series L B/E DTD 3.50 % Due Apr
19, 2026
1,234,000 3.50% 04-19-2026 - 3.80 $97.425 A- 4.24% 4.24% 3.49 $1,210,743 1.97% $43,190 BP Cap MKTS Amer Inc GTD FXD
RT Note B/E DTD CLB
1,450,000 3.12% 05-04-2026 02-04-2026 3.84 $96.985 A- 3.97% 3.97% 3.56 $1,413,318 2.30% $45,226 United STS Treas NTS B/E DTD 2,850,000 1.25% 11-30-2026 - 4.42 $92.598 AAA 3.05% 3.05% 4.24 $2,641,971 4.30% $35,625 Portfolio Holdings
SECURITY
PAR
VALUE
COUPON
RATE
MATURITY
DATE
CALL
DATE
TIME TO
WORST PRICE
CREDIT
RATING
YIELD TO
WORST YTM
DURATION
TO WORST
MARKET VALUE
& ACCRUED
% HELD
(MV)
ANNUAL
INCOME
Bank New York Mellon Corp
Medium Term SR NT B/E DTD
CLB
1,741,000 2.05% 01-26-2027 12-24-2026 4.57 $91.880 A 4.01% 4.01% 4.25 $1,614,898 2.63% $35,690 United States Treas NTS B/E DTD
04/30/27
150,000 0.50% 04-30-2027 - 4.83 $88.508 AAA 3.08% 3.08% 4.70 $132,887 0.22% $750 United STS Treas NTS B/E DTD 1,150,000 2.75% 04-30-2027 - 4.83 $98.648 AAA 3.05% 3.05% 4.47 $1,139,737 1.85% $31,625 Total 63,881,000 1.46% 2.51 AAA 3.14% 3.14% 2.36 $61,505,993 100.00% $894,623 First Republic provides financial services through First Republic Bank and its affiliates.
Banking products and services are provided by First Republic Bank (FRB), member FDIC.
First Republic Private Wealth Management (PWM) provides clients access to financial products and services through First Republic affiliated companies:
Brokerage products and services through First Republic Securities Company, LLC (FRSC), member FINRA and SIPC.
Investment advisory through First Republic Investment Management, Inc. (FRIM), an SEC-Registered Investment Advisor Trust services through First Republic Trust Company (FRTC), First Republic Trust Company of Delaware LLC (FRTCD), and First Republic Trust Company of Wyoming LLC (FRTCWY)
Insurance products and services through FRSC, DBA Grand Eagle Insurance Services, LLC, CA Insurance License #0I13184, and FRIM, DBA Eagle Private Insurance Services, CA Insurance License #0K93728.
Investment, Insurance and Advisory Products and Services, and Foreign Exchange Transactions are:
Not FDIC insured or insured by any federal government agency Not a Deposit or other obligation of, or guaranteed by, any bank Subject to investment risk, including possible loss of the principal amount invested This document, provided by PWM, may aggregate information from all your relationships with all First Republic affiliated companies referred to above at your request and consent. It is for information purposes only and is not intended as an offer or solicitation, or as the basis for any contract to purchase or sell any security, or other instrument, or to enter into or arrange any type of transaction as a consequence of any information contained herein.
The results achieved by individual clients will vary and will depend on a number of factors including prevailing dividend yields, market liquidity, interest rate levels, market volatility, and the client's expressed return and risk parameters at the time the service is initiated and during the term. Past performance is not a guarantee of future results.
Performance returns at the portfolio and account level are typically presented net of fees. In some instances, such as private investments where advisory fees are not included in the NAV but instead are charged to a custodial account or where one account in a larger portfolio is charged the fees for other accounts in that portfolio, some underlying accounts may be shown gross of fees. All other returns including asset type, asset class, and individual security returns are presented gross of fees.
Performance returns for periods greater than one year are annualized unless otherwise noted.
Peninsula Clean Energy Authority
Disclosures
Although information in this document has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness, and it should not be relied upon as such. Where there may be any inconsistencies in the numbers stated here and those on account statements, the data on the account statements will prevail. This document may not be reproduced or circulated without our written authority.
Data on assets not managed by First Republic Investment Management is based on most-recent available information provided by clients and/or their agents. First Republic is not responsible for managing these assets or for their suitability. First Republic undertakes no responsibility for the data’s accuracy or for independently updating such valuations – such data is provided purely by request of, and for the convenience of the client.
The investment services and products mentioned in this document may often have tax consequences; therefore, it is important to bear in mind that PWM does not provide tax advice. The levels and bases of taxation can change. Investors' tax affairs are their own responsibility and investors should consult their own attorneys or other tax advisors in order to understand the tax consequences of any products and services mentioned in this document.
The performance reporting system FRIM uses to generate performance reports relies on security prices provided by each account’s custodian, while the billing system FRIM uses to generate account statements relies on security prices provided by Pershing (the clearing broker-dealer utilized by FRSC) to the extent available, with the result that performance reports and account statements have in the past and likely will in the future have inconsistencies in the numbers stated therein. Each system also relies on a different third party data source for corporate action announcements, causing the same result.
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Please notify First Republic Investment Management if your investment objectives or financial situation has changed.
Peninsula Clean Energy Authority
Disclosures
PFM Asset Management LLC
NOT FDIC INSURED : NO BANK GUARANTEE : MAY LOSE VALUE
| pfmam.com
Update on Portfolio,
Strategy, and Market
Conditions
Monique Spyke, PFM Asset Management LLC
415.393.7259
August 15, 2022
▸ The U.S. economy is characterized by:
▹ High inflation
▹ A strong labor market
▹ Depressed consumer confidence
▹ Growing potential for prolonged economic recession
▸ The Federal Reserve is tightening monetary policy
▹ More aggressive rate hikes to battle persistent inflation ▹ Short-term fed funds rate projected to reach 3.25% to 3.75% by year-end ▹ Start of balance sheet reduction; pace to double beginning in September ▸ Asset prices have fallen sharply in 2022 as a result of:
▹ The impact of higher rates on bond prices and equity valuations ▹ Wider credit spreads
▹ High commodity prices, rising labor costs, and the continuing conflict in Ukraine ▹ High levels of volatility and uncertainty
Current Market Themes
1 U.S. Treasury Yield Curve
2 Source: Bloomberg as of 6/30/2022.
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
3M 6M 1Y 2Y 3Y 5Y
Yield
Maturity
FYE 6/30/2022 6/30/2021
6/30/22
FYE
6/30/21
Change
YoY
3-month 1.63% 0.04% 1.59%
6-month 2.46% 0.05% 2.41%
1-year 2.74% 0.07% 2.68%
2-year 2.95% 0.25% 2.70%
3-year 3.01% 0.46% 2.55%
5-year 3.04% 0.89% 2.15%
Yields Rise as Inflation Persists and Probability of
Recession Increases
3 Source: Bloomberg as of June 30, 2022.
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
Jun-20 Dec-20 Jun-21 Dec-21 Jun-22
2-Year Treasury Yield
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
Jun-20 Dec-20 Jun-21 Dec-21 Jun-22
10-Year Treasury Yield
2.95% 3.01%
Portfolio Performance
4 1. Performance inception date is June 30, 2020
2. Interest earned calculated as the ending accrued interest less beginning accrued interest, plus net interest activity.
3. Returns for periods one year or less are presented on a periodic basis. Returns for periods greater than one year are presented on an annualized basis.
4. The portfolio’s benchmark is the ICE BofAML 1-5 Year U.S. Government/Corp A-AAA Index. Source: Bloomberg.
Portfolio Snapshot
5 Yield and duration calculations exclude cash and cash equivalents. Sector allocation includes market values and accrued interests.The portfolio’s benchmark is the ICE BofAML 1-5 Year U.S. Government/Corp A-AAA Index. Source: Bloomberg.
An average of each security’s credit rating was assigned a numeric value and adjusted for its relative weighting in the portfolio.
Sector Allocation Review
6 Market values, excluding accrued interest. Only includes fixed-income securities held within the separately managed account(s) and LGIPs managed by PFMAM. Detail may not add to total due to rounding. • Align investment approach with
PCE’s core mission and
objectives
• Consider ESG risks in the
investment process
• Limit environmental risk exposure
• Eliminate direct fossil fuel
exposure
PCE’s ESG Investment Objectives & Approach
7 1. Source: https://www.peninsulacleanenergy.com/strategy/
2. Source: PCE’s Investment Policy Addendum, effective August 1, 2020. ESG metrics are based on Sustainalytics’ data and methodology
▹ Utilize ESG risk metrics and
exclusions to mitigate ESG risk
▹ Medium or lower ESG Risk
Rating
Exception for high-risk
issuers that are top
performers (rated in the
top 25% of Subindustry)
▹ Environmental risk exposure
limit
▹ Industry exclusions:
Energy Services
Oil & Gas Producers
Refiners & Pipelines
ESG Investment Approach2
PCE’s core mission is to reduce greenhouse gas emissions by expanding access to sustainable and affordable energy solutions1
Sustainable Investment
Objectives & Priorities
1 0 20 40 60 80 100
Management
Exposure
0% 20%
66%
0% 1% 11% 3%
82%
14% 3%
PCE: ESG Risk Assessment Summary
As of June 30, 2022
8 Data Source: Sustainalytics. Data as of June 30, 2022 and June 30, 2021, as indicated. Please see important disclosures at the end of this presentation.
As of June 30, 2022, the PCE portfolio maintained medium ESG risk exposure
The Portfolio’s average ESG risk rating slightly
decreased during the year as a result of an increase to issuers that fall within the low-risk range
At the issuer level, ESG risk ratings ranged from 12.6 (low risk) to 42.4 (severe risk) as of June 30, 2022
Lower ESG Risk Ratings indicate better ESG risk profiles Lower exposure scores generally result in lower ESG risk Higher management scores generally reduce ESG risk
Negligible Low Medium High Severe ESG
Risk Rating
24.626.1
6/30/22
6/30/2
1 Exposure
Management
Low Medium High
Weak Average Strong
45.947.2
45.7 51.2
Environmen
tal…
Social
46%
Governan
ce…
Risk Contribution by ESG Pillar
The economic recovery has developed several risk factors looming over continued recovery, including:
▸continued price pressures;
▸increased probability of recession;
▸aggressive monetary policy tightening; and
▸the ever-present risk of a Covid resurgence.
At quarter end, expectations were for an additional 75-basis point Fed rate increase and a terminal rate of 3.25% to 3.75% for the year in order to combat persistent inflation. The Fed has also started the process of balance sheet reduction, with the pace to double beginning in September.
What We Are Watching…
9 QUESTIONS?
Disclaimer
Investment advisory services are provided by PFM Asset Management LLC (“PFMAM”), an investment adviser registered with the U.S.
Securities and Exchange Commission and a subsidiary of U.S. Bancorp Asset Management, Inc. (“USBAM”). USBAM is a subsidiary of U.S. Bank National Association (“U.S. Bank”). U.S. Bank is a separate entity and subsidiary of U.S. Bancorp. U.S. Bank is not responsible for and does not guarantee the products, services or performance of PFMAM. The information contained is not an offer to purchase or sell any securities. Additional applicable regulatory information is available upon request.
For more information regarding PFMAM’s services or entities, please visit www.pfmam.com.
Disclaimer
Investment advisory services are provided by PFM Asset Management LLC (“PFMAM”), an investment adviser registered with the U.S.
Securities and Exchange Commission and a subsidiary of U.S. Bancorp Asset Management, Inc. (“USBAM”). USBAM is a subsidiary of U.S. Bank National Association (“U.S. Bank”). U.S. Bank is a separate entity and subsidiary of U.S. Bancorp. U.S. Bank is not responsible for and does not guarantee the products, services or performance of PFMAM. The information contained is not an offer to purchase or sell any securities. Additional applicable regulatory information is available upon request.
For more information regarding PFMAM’s services or entities, please visit www.pfmam.com. 11