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City finance staff report Q4 2024 investment portfolio yields, reserves and allocation
Summary
Finance staff presented the city's fourth-quarter 2024 investment report, saying the long-term portfolio is heavily weighted to U.S. Treasuries and the city kept minimal cash on deposit to offset bank fees. Total invested balances and yield drivers were reviewed.
Joe Bartleme, the city's cash and investment officer, presented the fourth-quarter 2024 investment report to the Kent City Council Committee of the Whole on March 4, saying the city maintained a conservative portfolio and captured higher yields by lengthening maturities.
Bartleme said the city had $6.6 million in cash in the bank earning a 4.75% earnings credit that offsets bank fees and a short-term local government investment pool balance of about $114.4 million earning roughly 4.6% with overnight liquidity. The city's long-term portfolio had an average yield of about 3.21%, an average maturity near five years, a market value near $255.2 million and a book (investment) value of roughly $258.8 million.
The report showed the long-term portfolio is heavily weighted to U.S. Treasuries, while roughly a third of invested assets were in the local government investment pool. Bartleme said the city has incrementally increased the long-term portion of the portfolio over the past two years to lock in higher yields for maturities out to about five years, while drawing down fund balances to pay for large projects such as the KeyHawk project, the Administrative Services Building and ARPA-funded work.
Council members asked whether the city's bond and cash balances tracked the S&P 500; Bartleme clarified the portfolios are bond funds, not stock portfolios. The presentation also included multi-year charts showing cash flows by type, year-over-year totals and interest-earnings trends by quarter.
Bartleme said investment types and allocations were within the city's investment policy guidelines. He added the allocation across city funds could change slightly as 2024's annual closing continues but the total portfolio should remain consistent.
The Committee did not take an action on the report; members offered no objections and had no further questions.
The finance presentation and charts are on file with the city's finance department.
