County treasurer reports reinvestment of matured CDs and short-term laddering to capture higher yields

Clallam County finance staff reported reinvesting two matured certificates of deposit into new fixed investments and outlined a dual strategy of locking longer-term no- or low-call investments while running a shorter ladder to capture higher near-term yields.

Why it matters: the county’s investment choices affect cash availability for government operations and the return on public funds. Staff told the committee that one reinvestment was placed for 12 months at about 4.06% (4.16% APY) and another for 18 months at about 4.25% (4.33% APY). The committee was also briefed on Local Government Investment Pool (LGIP) rates and recent market volatility.

Senior Accountant Bridal and Brian, the county’s account and investment officer, described how markets have moved quickly: new agency note offerings were showing materially different yields and call features in short windows, and banks are increasingly reluctant to offer competitive rates beyond 12 months. Staff said the county has been benefiting from relatively high LGIP yields while balancing duration risk on purchased notes.

Mike Abbott, CashFest, reinforced the county’s approach: he praised recent purchases that captured yields “well into the 4% range” for 12- to 60-month terms and recommended that public entities invest available cash rather than attempt to time rate movements. Abbott also noted an operational improvement in the county’s check-to-ACH ratio, now around four ACHs to one check, which he said meets a marketplace benchmark.

Planned moves and scale: staff reported reallocating funds that matured and adding roughly $2 million to a new short-term product that will settle near the end of the month; staff said the reinvestments and the supplemental purchase totaled about $4 million at a roughly 5% quoted yield on the short-term product (three-month no-call protection). County staff emphasized these shorter-duration, higher-yield lanes are intended to supplement the county’s longer-duration core holdings.

Market context: speakers noted that treasury yields have oscillated, that banks are conservative on 24-month and longer offerings, and that forecast uncertainty (including potential Federal Reserve cuts later in the year) is affecting banks’ appetite to originate longer-duration public deposits. The committee also discussed callable investments and the trade-offs between higher initial yields and call risk.

Ending: the committee accepted the investment update for the first quarter and asked staff to monitor rate movement and continue to balance liquidity needs with yield opportunities. Staff also noted a future lines-of-credit discussion would follow in committee as needed.