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Minutes for the Depository Board meeting on July 21, 2009.
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Board members Mayor Perrin, chair, City Clerk Donna Jackson and City Collector Becky Sharp were in attendance. Also in attendance were Finance Director Jim Barksdale and Assistant City Accountant Jim Eagan.
Mr. Barksdale discussed taking bids on a CD rates on a weekly basis. Chairman Perrin recommended meeting on a quarterly basis so the board would know how much money is being invested and where. He noted the City has $6.1 million to $6.2 million in excess reserves, but that floats. He also stated he would like the board to be given cash projections for at least three months in the future.
Discussion was then held regarding how far in advance the cash projections provided to the board should be. Mr. Eagan noted projecting it for more than three months might leave out some information, such as state turn back money and the privilege license collection which mostly takes place in January and February. It was decided to have a minimum 90-day cash projection for the board.
Discussion was then held regarding how much money to invest in CDs. Mr. Barksdale noted the FDIC increased the amount in which they will insurance to $250,000 until 2013. He suggested investing up to $1 million in $250,000 increments. He noted Heritage Bank bid the highest rate at 1.7% for 12-months. Chairman Perrin suggested having the City’s assets that banks have to pledge should also be given out in a report for the board meetings. Mr. Barksdale stated the City has $20 million in the bank, with $14 million in required reserves and $6 million in excess reserves. He questioned whether the City would need to use any of the $6 million in excess reserves in the next 12 months. Chairman Perrin answered no, that he cannot foresee any reason to use the excess reserves. He then asked if the bids included the investments being penalty-free. Mr. Barksdale answered yes. He explained bidding out the CD rates every week would give them a good analysis for the rates. Chairman Perrin agreed, adding if the rates increase and they go higher than what the City is currently invested in, then the CDs can be cashed in and re-invested. Mr. Eagan questioned whether cashing in the CDs earlier would cause the City to have a negative reputation with banks. Chairman Perrin stated that might happen if the City was investing more money, but with just $250,000 it probably wouldn’t be a problem.
Ms. Jackson motioned, seconded by Ms. Sharp, for the board to meet in a quarterly basis. No vote was taken.
Chairman Perrin motioned, seconded by Ms. Jackson, to allow the Finance Director to invest up to $1 million in $250,000 increments in CDs with whatever company bid the highest interest rate, penalty-free for early withdrawal, for at least 90-days provided due diligence has been done to ensure there are no problems with the company and it includes at least 25 basis points each time. All voted aye.
Ms. Sharp recommended the board meet at least in October to review the checking accounts. Chairman Perrin suggested letting the bids out in August because he is hoping to start the budget process in September.
Chairman Perrin also suggested providing market information to the board at each meeting showing the national averages for CD rates, such as the information found on Bloomberg.com.
Chairman Perrin motioned, seconded by Ms. Jackson, to approve the minutes from December 30, 2008. All voted aye.
It was asked that the following reports be given to the board:
• Cash report - including money in all banks, total deposits and assets, how much is collaterized and how much interest was made in each bank
• Quarterly/monthly analysis with an investment activity report
• 90-day cash flow projections
• Current market data showing current CD rates, such as the information found on Bloomberg.com
Mr. Barksdale also noted they need to write a cash management policy. He stated he has started on one, but it needs to be completed. Chairman Perrin also suggested they go to FDIC.gov to look at the companies’ call reports to make sure everything is sound before they make a decision on what bids to go with.
Ms. Jackson motioned, seconded by Ms. Sharp, for the board to meet on August 25, 2009, at 9 a.m. All voted aye.
With no further business, the meeting was adjourned.