Depository board considers city money investment options

The city of Pine Bluff Depository Board — created by a city council vote at a May 5 meeting — held its inaugural meeting Thursday in the mayor’s conference room.

Made up of Mayor Debe Hollingsworth, City Clerk Loretta Whitfield and Ward 4 Alderman George Stepps and advised by City Treasurer Greg Gustek and Director of Finance Steve Miller, the board met with Assistant Vice President John Wall and Assistant Vice President for Wealth Management Chris Cummings of Relyance Bank to formalize an agreement between the bank and the city.

Because Whitfield was not present, the board agreed to delay deciding upon an investment strategy for city funds until she can participate in a conference call in the next few days.

Gustek said in the May 5 council meeting that a law was passed in 2011 requiring the creation of a depository board but the previous city treasurer did not do so. Gustek also said that the creation of this board would allow the city to process $5 million in city funds that would be in flux as of June 30.

“Right now the city has between $4.9 million and $5.2 million in four cash management trusts operated by Stephens Inc.,” Gustek said in May. “But Stephens notified us that they are shutting down the program that was used by municipalities to receive increased interest income by pooling their funds with other cities and towns.”

City Finance Director Steve Miller provided additional background information at the May 5 meeting.

“Over the past several years interest rates became so low that their overhead costs were not being covered in the management of the pooled funds,” Miller said. “After several years with no increase in interest rates by the federal government, they decided to shut down the program as a money-loser.”

Miller said Thursday that Relyance Bank won the bid to manage these funds for the city.

Wall said that the total amount of Pine Bluff municipal funds to be managed by Relyance is $7.6 million.

“We are a Pine Bluff bank and I grew up in Pine Bluff,” Wall said. “I want to thank the city for accepting our bid. It is a privilege to serve our home. We are required to collateralize all city deposits at 105 percent. It is actually a higher percentage than that. The city is sufficiently collateralized. I have been working in this area now for seven years. We’ve never had a public entity go to legislative audit.”

Wall said that there are several options for the city’s $500,000 restricted reserve fund.

“We have certificates of deposit that pay a higher yield the longer the term of the CD,” Wall said.

Cummings presented the investment options that the city has available to it. No final decision was made Thursday.