01-28-08 Board of Finance Minutes

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South Bend, Indiana Board of Finance Meeting Minutes January 28, 20098 Page 2 Mr. Murphy then highlighted selected pages of the report, noting in part that: • 2007 interest earnings were $6,954,739, an increase of $1,932,172 over 2006 interest earned • Reasons for the increase in 2007 interest included the inclusion of the Major Moves monies and the contract with ls` Source Bank guaranteeing a S.S% interest rate on the City's checking account • City of South bend seeks bids on its investments from ten (10) financial institutions • City of South bend will obtain Annual Reports for each of these ten (10) financial institutions as part of its due diligence review • For 2008, interest "will likely be reduced as interest rates have declined this past year. The current interest rate on a 60-day Certificate of Deposit is approximately 3.11%". In response to questions from Dr. Varner, Mr. Murphy noted that selection is based on the "best interest rate", and that the City budgets conservatively. Mr. Murphy stated that he would provide to the Board further information on the specific terms. He noted that Liz Rower developed the "Rate Quotation Sheet" set forth on page 5. In response to questions raised by Council Member White, Mr. Murphy noted that a verbal process is used where calls are made at 8 am with information to be provided by each financial institution by 11 am that same day. Calls are made 2-3 days before the maturity date. Mr. Murphy gave the example that he may take a $90 million amount and break it into two (2) amounts of $30 million and $60 million respectively so that smaller financial institutions may participate. He noted that the sweep account is the City's bank account. Mayor Luecke noted that this process takes place periodically throughout the year. Mr. Murphy then highlighted the City of South Bend's Investment Policy set forth on pages 29- 31. He noted in response to a question from the Council Attorney that he is not recommending any changes to this policy. The Council Attorney noted that the current Investment Policy has been in effect since 2005 when the Board of Finance approved that policy. In response to questions from Dr. Varner, Mr. Murphy noted that the city basically has one big bank account which is the "Depository Account", as well as a "Accounts Payable Account". Each are operated under business banking principals and bank account reconciliation. Every fund has to have money in the ledger account. In response to questions raised by Council President Rouse, Mr. Murphy highlighted interest earned and deposited as set forth on page 18 of the Annual Investment Report.