Title
Acceptance of the Quarterly Investment Report for the quarter ended September 30, 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 September 30, 2024 and each has signed the report.
At September 30, 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) $39,424,540.16
Money Market Accounts 2,367,828.10
Certificates of Deposit 33,123,206.82
Securities 14,834,583.12
TexPool 77,211,955.85
TexSTAR 3,236,709.27
Texas CLASS 25,613,001.83
Total Book Value $195,811,825.15
Working with the City's investment advisor, the City has diversified the portfolio during the last several years with current investments of $50,325,618 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 26% of the portfolio. Cash balances held in the primary depository bank represent about 20% of the portfolio at September 30, 2024.
These depository investments are earning between .94% and 5.69%. Comparatively, rates in the investment pools averaged 5.16%, 5.13%, and 5.11% for the quarter in TexPool, TexSTAR, and Texas CLASS, respectively. The City also executed two trades in the fourth quarter. A CDARS account was opened at Cornerstone Capital Bank with a maturity date of March 2026, and a Federal Home Loan Bank security was purchased maturing June 2026. The yields of the two purchases are 4.50% and 4.66%, respectively. The City will continue to review and evaluate investment opportunities for safety, liquidity, and yield.
At the end of 2023-2024’s fourth quarter, investments in TexPool totaled $77,211,956, which is a decrease of $7,052,258 from the previous quarter. Investments in TexSTAR totaled $3,236,709, which is a $40,882 increase from the prior quarter. Investments in Texas CLASS totaled $25,613,002, which is a decrease of $2,400,622 from the previous quarter. These decreases in balances were due to withdrawals from the pools to the City’s depository, Wells Fargo, to cover bond fund expenditures.
The Federal Open Markets Committee (FOMC) decreased the federal funds rate .50% at the September 19th meeting, lowering the target range to 4.75% - 5.00%. The rate was dropped again at the November 8th meeting an additional .25%, making the target range to date 4.50% - 4.75%. Gradual rate drops are expected in the future with at least one more .25% drop by the end of 2024.
Fiscal/Budgetary Impact:
N/A.
Recommended action
Accept the Investment Report for the Quarter Ended September 30, 2024.