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City hears Redtree update: $8.8 million portfolio, yield about 4.25%; staff told to plan for lower rates
Summary
Redtree Investment Group briefed the Fostoria finance committee on a roughly $8.8 million investment portfolio averaging a 4.25% yield, advising the city to plan for lower interest income as the Federal Reserve signals lower rates through 2026–27.
Ryan Nelson of Redtree Investment Group briefed the Fostoria finance committee on the city’s investment portfolio and economic outlook, saying the portfolio’s value is about $8,800,000 with an average yield near 4.25%.
Nelson said Redtree began advising the city in February 2023 and that US Bank holds the city’s funds as third‑party custodian. He summarized the city’s investment policy—safety of principal, liquidity, and market rate of return—and noted that maximum maturities are generally limited to five years. "We purchased longer‑term securities when rates were higher," Nelson said, arguing that the average maturity of roughly 2.5 years helps protect the city’s interest income as market rates fall.
On the economic outlook, Nelson described modest growth and a sluggish job market, with inflation around 2.7 percent. He said the Federal Reserve recently paused rate increases and that market expectations point to lower rates through 2026 and 2027, advising the finance office to "plan for your interest income" accordingly.
In response to a council question about securities maturing in 2028–29, Nelson said many holdings yield "north of 3.75%" and some exceed 4.5 percent; he estimated those maturities "call it 4," but agreed to add maturity‑specific yields to future charts. Nelson also noted that much of the portfolio is held in FDIC‑insured certificates of deposit and that the portfolio remains diversified and liquid enough to meet potential cash needs for upcoming projects.
Finance staff confirmed the portfolio position and said the current mix of cash and investments is appropriate. The committee did not take formal action on the presentation; staff and Redtree agreed to provide more detailed maturity‑by‑year yield information at a future meeting.
The presentation included references to WesBanco (city depository), Star Ohio (state investment pool), and US Bank (custodian). Redtree and city staff said they will continue to coordinate on cash needs and budgeting for lower expected interest income.
