Title
Acceptance of the Quarterly Investment Report for the quarter ended June 30, 2025.
Body
Summary:
Chapter 2, Administration, Article VII (Finance), All of Division 2 (Investment Policy), Section 2-281 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 June 30, 2025 and each has signed the report.
At June 30, 2025, 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) $33,684,286.44
Money Market Accounts 6,472,140.35
Certificates of Deposit 16,399,407.45
Securities 25,030,140.82
TexPool 73,035,419.54
TexSTAR 3,343,131.85
Texas CLASS 23,961,854.64
Total Book Value $181,926,381.09
Working with the City's investment advisor, the City has diversified the portfolio during the last several years with current investments of $47,901,688.62 in various depository banks invested in money market accounts, certificates of deposit, 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 19% of the portfolio at June 30, 2025.
These depository investments are earning between 0.68% and 5.10%. Comparatively, rates in the investment pools averaged 4.30%, 4.28%, and 4.22% for the quarter in TexPool, TexSTAR, and Texas CLASS, respectively. The City also executed two trades in the third quarter, including one certificate of deposit opened at American National Bank and Trust with a maturity date of November 2026 yielding 4.18% and opening one Money Market Account at Interbank earning +0.15% of the Fed Funds Rate, earning 4.65% currently. The City will continue to review and evaluate investment opportunities for safety, liquidity, and yield.
At the end of 2024-2025’s third quarter, investments in TexPool totaled $73,035,419.54, which is a decrease of $13,471,591 from the previous quarter. Investments in TexSTAR totaled $3,343,131.85, which is a $34,347.00 increase from the prior quarter. Investments in Texas CLASS totaled $23,961,854.64, which is a decrease of $4,337,396 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 and the increases were related to interest earnings.
The Federal Open Markets Committee (FOMC) has maintained the federal funds rate target range at 4.25% - 4.50% for the fifth straight meeting. Future rate decreases are expected soon, with two 25 basis-point cuts by the end of 2025, presumably in September and December. The FOMC views their current policy as appropriate to guard against inflation risks and manage the uncertainty in the market.
Fiscal/Budgetary Impact:
N/A.
Recommended action
Accept the Investment Report for the Quarter Ended June 30, 2025.