Title
Acceptance of the Quarterly Investment Report for the quarter ended December 31, 2024.
Body
Summary:
Chapter 2, Administration, Article VII (Finance), All of Division 2 (Investment Policy), Section 2-274 Reporting, of the Code of Ordinances of the City of Deer Park, requires the Investment Officers to prepare and submit to City Council an investment report no less than on a quarterly basis. This requirement is in compliance with the Texas Public Funds Investment Act, V.T.C.A., Government Code Ch. 2256 as amended (the "Act"). The City's Investment Officers have worked with the Investment Advisor to prepare this report for the quarter ended December 31, 2024 and each has signed the report.
At December 31, 2024, all City funds were held in various depository accounts or in accounts at TexPool, TexSTAR, or Texas CLASS, which are local government investment pools authorized by the Investment Policy. All three pools continue to maintain their AAAm rating by Standard & Poor's, which is the highest rating a local government investment pool can achieve.
Cash and investment activity included on the attached report is summarized below:
Cash in Wells Fargo (Depository Bank) $46,628,798.46
Money Market Accounts 2,395,676.38
Certificates of Deposit 24,922,298.40
Securities 22,953,342.65
TexPool 78,137,095.08
TexSTAR 3,275,333.93
Texas CLASS 25,911,447.68
Total Book Value $204,223,992.58
Working with the City's investment advisor, the City has diversified the portfolio during the last several years with current investments of $50,271,317.43 in various depository banks invested in money market accounts, certificates of deposit (CDs), and securities. At the end of the quarter, these investments represent about 25% of the portfolio. Cash balances held in the primary depository bank represent about 23% of the portfolio at December 31, 2024.
These depository investments are earning between .55% and 5.50%. Comparatively, rates in the investment pools averaged 4.56%, 4.56%, and 4.45% for the quarter in TexPool, TexSTAR, and Texas CLASS, respectively. The City also executed two trades in the first quarter. Two treasury notes were purchased with a maturity dates of April 2026 and October 2026. The yields of the two purchases are 4.09% and 4.30%, respectively. The City will continue to review and evaluate investment opportunities for safety, liquidity, and yield.
At the end of 2024-2025’s first quarter, investments in TexPool totaled $78,137,095.08, which is an increase of $925,139 from the previous quarter. Investments in TexSTAR totaled $3,275,333.93, which is a $38,625 increase from the prior quarter. Investments in Texas CLASS totaled $25,911,447.68, which is an increase of $298,446 from the previous quarter. These increases in balances were due to interest earnings in the pools.
The Federal Open Markets Committee (FOMC) decreased the federal funds rate .25% at the November 7th meeting, and then another .25% at the December 18th meeting, lowering the target range to 4.25% - 4.50%. Gradual rate drops are expected in 2025, with two more rate cuts expected before the close of the year.
Fiscal/Budgetary Impact:
N/A.
Recommended action
Accept the Investment Report for the Quarter Ended December 31, 2024.