Title
Village Investment Portfolio Overview and Direction
History
The Village currently holds its cash in a number of institutions for a variety of purposes. The focus of this report is the Village’s own cash and investments. This does not include funds for the Police Pension, E-911 Fund, or Stellwagen Foundation.
BMO Harris
Our daily operating bank is BMO Harris (BMO). We have a number of different accounts, many of which are required by law or for operational efficiency. With this banking arrangement, we receive a small credit (currently just under 1%) for funds on hand that is used to offset bank fees, but we do not earn interest.
Illinois Funds
This investment pool is used to accept certain online credit card payments (Illinois E-Pay) and some payments from the State of Illinois. Funds held in this account earn a competitive varying interest rate. For December, 2023, the average daily yield was 5.462%.
Hammond Investment Management, LLC
A portion of the Village’s investment portfolio is held at Hammond Investment Management, LLC (Hammond). We currently have about $8.7M invested in various US Treasury Bills and Notes, and various US Government Agencies. These are fixed income instruments that are very safe and secure. When these investments mature, Hammond reinvests the funds.
PMA Financial Network
The majority of our investment portfolio is held at PMA Financial Network (PMA). There are three types of investments at PMA: ISC (similar to a liquid money market account), LTD (Long Term investment with a short lead time to liquidate funds), and fixed income holdings, such as CDs and government agencies (like Hammond).
We also invest our bond proceeds with PMA, which is necessary for tracking and arbitrage purposes.
Up until a few years ago, we were earning a higher earnings credit with BMO, which fully offset our banking fees. In recent years, the earnings credit rate has declined. In 2023, the rates of return for other investments has increased from les...
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