WE'RE GOING TO GET STARTED WITH OUR MEETING.
[1. CALL TO ORDER]
[00:00:05]
IT IS NOW 3:01.WILL I LET EVERYBODY KNOW COMMISSIONER BRUCH WILL NOT BE HERE TODAY.
SHE LET ME KNOW SHE WOULD BE ABSENT.
WE'RE GOING TO REMOVE HER FROM THE ROLL CALL.
I DIDN'T HEAR FROM ANYONE ELSE, SO WE WILL CALL THEIR NAMES.
GOOD AFTERNOON COMMITTEE MEMBERS.
WELCOME TO OUR THIRD QUARTERLY SEIC MEETING FOR 2023.
MAY WE BEGIN WITH A ROLL CALL? (ROLL CALL).
>> NEXT IS THE APPROVAL OF THE AGENDA.
MAY I HAVE A MOTION TO APPROVE THE AGENDA.
[2. APPROVAL OF AGENDA ]
>> APPROVAL OF MINUTES, MINUTE WERE SENT TO COMMITTEE MEMBERS VIA E MAIL
[3. APPROVAL OF MINUTES ]
ON JUNEÂ 21ST, 2023.MAY I HAVE A MOTION TO APPROVE?
I JUST WANT TO GO AHEAD AND START WITH ANÂ APOLOGY FOR LAST WEEK.
THERE WAS A MISCOMMUNICATION AND I KNOW SOME HAVE THE CALENDAR ITEM FOR THIS MEETING AND DID NOT RECEIVE THE UPDATED CALENDAR ITEM THAT WAS A MISCOMMUNICATION ON MY PART AND SO I DO APOLOGIZE FOR THAT GOING FORWARD THAT WON'T HAPPEN AGAIN.
WE DID RECOGNIZE THE ERROR, AND WE ARE GOING TO FIX THAT.
SO I DON'T DRAG YOU OVER HERE FOR NOTHING.
SO THANK YOU AGAIN FOR COMING BACK THIS WEEK.
STATUS OF THE TREASURER'S OFFICE, YOU WILL FIND IN YOUR BOOK OUR CURRENT
[5. STATUS OF THE TREASURER’S OFFICE]
FLOWCHART WHICH INDICATES OUR STAFF NAMES AND TITLES.I WILL BE CAREFUL TO SAY CERTAIN WORDS SO I DON'T JINX MYSELF OR MY OFFICE.
RIGHT NOW, WE DO NOT HAVE ANY VACANCIES AND I HOPE IT STAYS THAT WAY.
JULY, WE HIRED A WONDERFUL WOMAN NAMED JEN FULLER, OUR NEW ACCOUNTING SPECIALIST.
SHE IS NEW IN HER ROLE AND DOING A GREAT JOB.
RIGHT NOW IT IS OFFICIALLY AUDIT SEASON AND OUR VAULT TEAM IS BUSY IN THE BACK GETTING ALL OF THE ITEMS TOGETHER FOR OUR AUDITORS.
OUR TAX RESEARCHERS ARE BUSY COLLECTING ON OUR DELINQUENT ACCOUNTS, TRYING TO CONTACT TAXPAYERS WHO NEED TO CATCH UP ON TAXES.
IN PARTICULAR THOSE ACCOUNTS CLOSE TO THE THREE YEAR MARK FOR DELINQUENCY.
THEY'RE ALREADY DELINQUENT BUT WHEN IT COMES TO THE THREE YEAR MARK, IT GETS THE COST TO STATE ADDED, AND WHEN THAT HAPPENS, THE COUNTY LOSES THE PENALTY AND INTEREST.
WE'RE TRYING TO CURB THAT AS MUCH AS POSSIBLE.
WE WANT TO KEEP THAT MONEY IN HOUSE.
AN UPDATE TO THE STATE AUCTION THAT PTD HAD HERE IN THE COUNTY ON JUNEÂ 6TH, 7TH, 8TH.
I WANT TO GIVE A BREAK DOWN OF THE NUMBERS FROM THE THREE DAY AUCTION.
I INCLUDED THEM IN THE PACKET SO IF YOU WILL NOTICE, THE TOTALS ON THE BOTTOM, THE TOTAL COLLECTED FOR 135 ACCOUNTS IS $643,100, TOTAL AMOUNT OF PENALTY AND INTEREST IS $27,702.32.
TOTAL FEES WAS 14Â ONLY $41,056.85 STAYED IN THE COUNTY.
$566,840 WENT BACK TO THE DELINQUENT TAXPAYERS.
THOSE ACCOUNTS THAT WERE AUCTIONED.
ARE THERE ANY QUESTIONS REGARDING THAT?
>> SO WE CALL THAT EXCESS MONEY?
>> EXCESS TO US? AND WE DON'T GET IT.
[00:05:03]
>> WE DON'T GET IT UNFORTUNATELY.
THAT IS WHY I THINK WE'RE WORKING SO HARD, ESPECIALLY TAX RESEARCHERS TO GET AHOLD OF THOSE TAXPAYERS AND GET THEM IN BEFORE THE COST TO STATE IS ADDED.
UPDATE ON OUR TREASURER'S AFFILIATE FALL CONFERENCE.
AS YOU MAY RECALL LAST APRIL I HAD TO LET YOU KNOW OUR TREASURER'S AFFILIATE WITH NEWÂ MEXICO COUNTIES ASKED US TO HOST OUR FALL CONFERENCE COMING UP THIS WEEK.
WE'RE LESS THAN TWO WEEKS AWAY FROM THE CONFERENCE.
SO WE'RE WORKING VERY HARD TO GET EVERYTHING TAKEN CARE OF.
WE'VE BEEN FORTUNATE TO GET WONDERFUL SPONSORSHIPS TO HELP PAY FOR THAT.
IT WILL BE TAKING PLACE AT THE VERY BEAUTIFUL SANTA ANA HOTEL AND CASINO, THEY HAVE A BEAUTIFUL CONFERENCE AREA.
I HAVE INVITED ALL OUR COUNTY LEADERSHIP, INCLUDING THE INDIGENOUS LEADERS.
OUR MAYORS TO COME OUT AND BE PART OF OPENING CEREMONIES ON AUGUSTÂ 15TH.
THEY WILL COMMENCE AT 1:00Â O'CLOCK THAT DAY.
OUR THEME FOR THE FALL CONFERENCE IS SANDOVAL COUNTY, COLORFUL, CULTURAL AND CAPTIVATING.
I HOPE WE'RE ABLE TO SHOWCASE HOW AWESOME OUR COUNTY IS.
I WANT TO GIVE A SHOUT OUT TO ORLANDO BACK THERE.
HE HAS DONE AN AMAZING JOB PUTTING THIS TOGETHER.
CHRIS DANIEL HAS WALKED IN, HE'S HERE FOR OUR MEETING.
IT'S A HUGE PROJECT FOR ALL OF US, ORLANDO HAS TAKEN THE BRUNT OF THE RESPONSIBILITY, SO I WANT TO MAKE SURE TO GIVE HIM CREDIT.
NEXT WE WILL LOOK AT ACCOUNT BALANCES.
AS YOU CAN SEE OUR NMBT BANK BALANCES FOR THE GENERAL FUND IS $57.2Â MILLION WHILE TAX PAYMENT ACCOUNT IS SITTING AT 1.6Â MILLION AND THE TOTAL OF ALL SANDOVAL COUNTY ACCOUNTS ARE AT 64.7Â MILLION.
AS YOU PROBABLY NOTICE AT THE BOTTOM WE HAVE A NEW ACCOUNT WE HAD TO OPEN CALLED THE MEDICAL SELF INSURED FOR COUNTY EMPLOYEE HEALTH COVERAGE AS WE NO LONGER HAVE PRESBYTERIAN AND ARE NOW INSURED BY UNITED HEALTHCARE.
GOOD NEWS, IT'S AN INTEREST BEARING ACCOUNT LIKE THE REST OF OUR ACCOUNTS, AND I'M HAPPY TO SAY WE'RE EARNING 4.5 BASES POINTS ON EACH ACCOUNT.
THE INTEREST RATES WENT UP FROM 4.0 TO 5.0 IN JULY.
ANY QUESTIONS REGARDING THE BANK BALANCES OR INTEREST RATES? NO QUESTIONS? OKAY.
NEXT CHIEF DEPUTY MCPARLIN WILL BE PRESENTING THE COST TO STATE UPDATE, TAX MAINTENANCE SCHEDULE AND DFA REPORTING.
HOLLY WILL FOLLOW UP WITH A BONDED DEBT SCHEDULE IN OUR GRT UPDATE.
I HAVE A COUPLE REPORTS TO SHARE THAT WERE CREATING BASED UPON COLLECTIONS.
FIRST IS THE TAX MAINTENANCE SCHEDULE.
FOR THE TAX YEAR 2022, WE'RE CURRENTLY AT 97.7Â PERCENT, AND FOR THE PAST TEN YEARS, COLLECTION RATE IS 99.28Â PERCENT.
NEXT IS A REPORT REQUESTED BY DFA EVERY YEAR TO HELP IN PREPPING FOR THE TAX LEVIES.
THIS SHOWS HOW OUR TAX ROLL INCREASED OVER THE PAST FIVE YEARS ALONG WITH COLLECTIONS.
AS YOU CAN SEE FOR 2022, WE BILLED 157.8Â MILLION, AND HAVE COLLECTED 153.2Â MILLION, LEAVING US WITH COLLECTION RATE FOR 2022 AT 97.07.
ANY QUESTIONS ON THOSE TWO SLIDES? THE NEXT SLIDE I LIKE TO PRESENT IS THE COST TO STATE THAT WAS JUST APPLIED IN ACCORDANCE TO STATE STATUTE OTHER JULYÂ 3RD.
ANY ACCOUNT IS ASSESSED $125 COST TO STATE FEE AND TURNED OVER TO THE STATE.
WE APPLIED THE FEE TO THE TAX YEAR FOR 2020.
OUT OF THAT 731 ACCOUNTS WERE CHARGED TOTALING $91,375 WHICH A CURRENT BALANCE OF $89,000.
AS YOU CAN SEE, THERE'S A DECREASE IN THE BALANCE BECAUSE WE'RE COLLECTING PAYMENTS ON THOSE STILL, AND LIKE TREASURER TAYLOR SAID, THAT PNI IS NOT KEPT IN THE
[00:10:05]
COUNTY, IT IS TURNED OVER TO THE STATE.OUR OFFICE IS WORKING IN OUR COLLECTION EFFORTS TO RETAIN THOSE FEES WITHIN THE COUNTY.
TREASURY OPERATIONS MANAGER HOLLY AGUILAR WILL SHARE HER PRESENTATIONS.
I HOPE YOU'RE ENJOYING THIS 5 DEGREE BREAK FROM OUR HEAT.
(LAUGHTER) I WOULD LIKE TO START WITH THE GROSS RECEIPTS TAX.
SANDOVAL COUNTY RECEIVED $23.2Â MILLION IN GROSS RECEIPTS TAX DURING THE FISCAL YEAR 2022 2023.
THIS COMPARES TO THE 17.2Â MILLION RECEIVED LAST FISCAL YEAR AND ONLY 12 MOUNTAIN 1Â MILLION IN FISCAL YEAR 2021.
WE RECEIVED 6Â MILLION DURING THE LAST QUARTER OF THE FISCAL YEAR.
AND OUR DEBT SCHEDULE, WILL YOU SEE AT THE CLOSE OF THE FISCAL YEAR, WE OWED 40.6Â MILLION IN PRINCIPAL PAYMENTS, AND 6.3Â MILLION IN INTEREST TOTALING 46.9Â MILLION IN DEBT.
ANY QUESTIONS? OKAY I'LL TURN THE MEETING BACK TO TREASURER TAYLOR NOW.
IF THERE ARE NO OTHER QUESTIONS REGARDING THE STATUS OF THE TREASURER'S OFFICE, WE WILL MOVE TO STATUS OF COUNTY INVESTMENTS, WHICH IS WHY
[6. STATUS OF COUNTY INVESTMENTS ]
YOU'RE REALLY HERE.I'LL LET HOLLY GO OVER THE INVESTMENT SUMMARY.
I LIKE HER TO GO OVER IT JUST BECAUSE SHE'S THE ONE WHO ACTUALLY PUTS IT TOGETHER AND I THINK SHE'S PROBABLY MORE WELL VERSED IN ANSWERING QUESTIONS YOU MAY HAVE.
ONCE SHE IS FINISHED, SHE WILL TURN THE PRESENTATION TO GPA.
>> THANK YOU TREASURER TAYLOR.
WE HAVE $3Â MILLION INVESTED IN LGIP ACCOUNTS, 53.4Â MILLION INVESTED AT SCIENCE AND 508,000 IN A CD HELD AT THE NEWÂ MEXICO BANK AND TRUST.
WE ENDED WITH A TOTAL OF 56.9Â MILLION INVESTED AND EARNED $611,000 ON OUR INVESTMENTS.
ANY QUESTIONS? I WOULD LIKE TO TURN THE INVESTMENT PORTION OVER TO GPA AT THIS TIME.
CAN EVERYBODY SEE THE SCREEN OKAY?
THANKS FOR HAVING US, AND HOPEFULLY GOOD NEWS ON YOUR LABOR FRONT AND IT LOOKS LIKE THE JOBS MARKET IS LOOSENING UP.
WE SEE OPEN JOBS COME DOWN AND VOLUNTARY QUITS ARE MORE OR LESS BACK IN TREND.
HOPEFULLY THIS IS A TREND THAT BENEFITS YOU GOING FORWARD.
WE WILL GO OVER THE MARKET, WHAT'S GOING ON IN THE LAST QUARTER, HOW WE SEE THE LAY OF LAND AND COVER PORTFOLIOS A LITTLE BIT.
FIRST OF ALL, JUST LOOK BACK AT THE HISTORICAL YIELDS, THIS IS THE THREE MONTH BILL AND TREASURY NOTE THAT AFFECT YOUR INVESTMENTS.
YOU SEE AN INTERESTING PATTERN.
WE HAVE LOWER HIGHS THROUGHOUT THE LAST 30, 40 YEARS IN INTEREST RATES, BUT THE CYCLE, WE BROKE THAT TREND.
WE SIT AT A 22 YEAR HIGH AS THE FED PUSHED RATES TO FIVE AND A QUARTER, FIVE AND A HALF PERCENT.
WE DON'T USUALLY STAY THERE FOR LONG.
THE ECONOMY RE EQUILIBRATES OR YOU ENTER A RECESSION THAT PULLS GROWTH AND INFLATION DOWN.
YOU NEVER KNOW WHEN THAT STARTS, WHAT EXACTLY IS THE TRIGGER OR WHAT LEVEL YOU END UP REACHING BEFORE THAT STARTS.
THE FED LOOKS TO BE MORE OR LESS DONE AT THIS POINT.
WE THOUGHT THAT LAST GO AROUND, LAST MAY, BUT THE MARKET IS NOT PREDICTING THEY MOVE AGAIN IN SEPTEMBER, EVEN ODDS THEY HIKE AGAIN AT ALL THIS CYCLE.
HERE IS ANOTHER INTERESTING POINT IN THE CYCLE.
WE'VE HAD A HISTORIC YIELD SURF INVERSION.
SHORT FITTED YIELDS OUT YIELDÂ MARKET PARTICIPANTS DON'T THINK WE WILL BE HERE LONG.
WE'RE FINDING OURSELVES BACK AT CURRENT MORE TOWARDS CYCLE HIGHS AND YIELDS THE BANK CRISIS THAT WAS ENDED UP NOT BEING PROLONGED SO WE'RE BACK ENJOYING POSITIVE GROWTH, INFLATION IS COMING DOWN AND THAT ALLOWS YIELDS TO COME BACK UP IN THE 22 23
[00:15:04]
CYCLE HIGHS.HERE IS A LOOK AT THE YIELD CURVE TODAY.
THE DOTTED LINE IS THE MARCH QUARTER END WHERE THE LIGHTER BLUE DASH LINE IS YEAR END 2022.
YOU SEE LONGER TERM YIELDS HAVE SETTLED BACK AND HIGHER THAN THE END OF MARCH.
WE THOUGHT THE FED WOULD CUT BECAUSE WE HAD BANK FAILURE, TIMES WERE UNCERTAIN.
THE TOP LEFT CORNER (INDISCERNIBLE) FIVE AND A HALF INVERTING THE YIELD CURVE AND LEADING TO HIGH RETURNS IN CASH WHICH THE TREASURY TEAM MENTIONED THAT YOU GET MORE AND MORE ON YOUR BANK DEPOSITS WHICH IS GREAT TO SEE.
REMARKABLYÂ CONSUMPTION, THE BULK OF GDP, THAT IS REMAINED STEADY THIS LAST YEAR.
(INDISCERNIBLE) HOUSING, AUTOS AND ALL THINGS GOODS AND MANUFACTURING, AND THOSE HAVE STARTED TO REBASE AND GROW AGAIN FROM A DEPRESSED LEVEL, BUT ALL AT THE SAME TIME, INFLATION IS COMING DOWN WELL, AND IT HAS NOT TAKEN US BREAKING THE BACK OF THE LABOR GROWTH MARKET, SO NOW WE'RE 9.1Â PERCENT TO 3Â PERCENT HEADLINE INFLATION.
ALL THE LEADING INDICATORS POINT TO MORE DECLINES.
HOUSING IS 70 TO 80Â PERCENT OF HEADLINE INFLATION AND HOUSING COMES IN WITH A 12 TO 18 MONTH LAG IN AND OUT OF THE CPI SERIES AND THE MARKET TODAY IS STABLE BUT NOT GROWING OR PRICES IN RENTS ARE NOT GOING GANG BUSTERS.
THAT (INDISCERNIBLE) I WILL NOTE THE NEXT TWO MONTHS ON A YEAR OVER YEAR, 3Â PERCENT NUMBER IS GOING TO REMAIN FLAT.
THAT IS A FUNCTION OF WHAT HAPPENED A YEAR AGO WHEN INFLATION WAS MODERATE IN JULY AND AUGUST OF LAST YEAR.
WE KEEP LOOKING AT THE MONTH OVER MONTH READINGS AND THAT SHOWS US REALLY GOOD INDICATIONS THAT INFLATION IS COMING DOWN, THE BREADTH OF INFLATION IS COMING DOWN.
BROAD BASE ACROSS GOODS AND SERVICES WHICH IS WHAT WE WANT TO SEE.
IF THAT CONTINUES, IT WILL TAKE A COUPLE MONTHS FOR THE FEDS TO GET COMFORTABLE AND THAT IS WHY MARKETS EXPECT THEM TO BE DONE AT THIS POINT BECAUSE WE'VE SEEN SIX MONTHS OF GOOD DATA.
THIS IS THE THING MOST PEOPLE GOT WRONG.
I DIDN'T THINK IT WOULD HOLD UP THIS WELL.
EMPLOYMENT REMAINS STRONG, WE CONTINUE TO ADD 225, 250,000 JOBS ON AVERAGE.
INTERESTINGLY, WITHIN THAT IS THAT ALL MAJOR CATEGORIES ARE POSITIVE.
YOU WOULD EXPECT THE BLUE LINE TO GET MORE NEGATIVE GIVEN OUT RIGHT ACTIVITY IN THE MANUFACTURING SECTOR IS WEAK GIVEN THE RAPID RISE IN INTEREST RATES AS WELL AS THE (INDISCERNIBLE) DEMAND WE HAD IN COVID AND THE INFRASTRUCTURE WORK.
ON THE BOTTOM LEFT, GOOD NEWS, WE'RE CONVINCES WE'RE NOT IN THE DREADED WAGE PRICE SPIRAL.
THEY'RE ELEVATED OVER PRE COVID, LABOR MARKETS ARE TIGHT BUT THEY'RE ON THE DECLINE OR MODERATING.
WE HAVE GOOD FORWARD LOOKING VIEWS.
IF INFLATION IS 9Â PERCENT, THEY COME BACK TO THE NEGOTIATION TABLE WITH DEMANDS ABOUT WAGE INCREASES, IT IS JUSTIFIED TO KEEP UP WITH THE COST OF LIVING BUT NOW THE DATA IS SHOWING MORE OF A TWO TO 4Â PERCENT TYPE ENVIRONMENT, WE DON'T EXPECT THE SAME BARGAINING TO BE AT THE TABLE.
WE EXPECT MORE MODERATION IN WAGES, WHICH IS THE SCARY THING THAT GOT THE 70S AND 80S INTO THE INFLATION PICKLE WHICH WE SEEM TO BE AVOIDING THAT WHICH IS GREAT.
THE FED MAY HAVE TO CHANGE THEIR TUNE ABOUT LABOR FORCE PARTICIPATION WHICH HAS NOT RECOVERED.
IT NOT TO PRE COVID LEVELS, BUT WHAT IS FASCINATING AND NOT SURPRISING WITH INTEREST RATES WHERE THEY ARE IS ALL OF THAT DECLINE IS COMING FROM THE 55 PLUS COHORT, THE BLACK LINE, WHICH RATE HIKES ONLY HELP THEM.
IT IS A RETIREE DREAM TO WALK AWAY WITH A NUGGET GIVEN THE BOND AND STOCK MARKET HAVE BEEN HOLDING UP NICELY THIS YEAR.
TO BE ABLE TO LOCK IN THREE, FOUR, FIVE, 6Â PERCENT YIELDS, THAT IS QUITE THE BOOM.
THE GOOD THING IS THE BLUE LINE, WORKING AGE POPULATION THAT IS 25 TO 54 YEAR OLDS.
I WONDER WHAT THEY DID POST FINANCIAL CRISIS.
THEY LEFT THE WORKFORCE WHILE HOUSE PRICES AND COST OF REARING CHILDREN KEPT GOING UP.
WE HOPE THAT CONTINUES AND DRAWS THE ORANGE LINE UP AND TAKES THE TIGHTNESS WAS HE
[00:20:05]
FROM MARKET.WAGES ARE ATTRACTIVE AND WAGES HIGHER THAN PRE COVID LEVELS, HOPEFULLY THAT ENTICES PEOPLE AND TAKES THE PRICES OUT OF THE LABOR MARKET.
WHAT DO WE EXPECT WITH THE FED.
THE FED DOESN'T EXPECT US TO BE HERE LONG.
AND WE DON'T EXPECT A RECESSION.
THE FED IS NOT PROJECTING A RECESSION.
MOST ECONOMISTS AND PARTICIPANTS DON'T EXPECT ONE EITHER.
MAYBE A SOFT PATCH AT THE BEGINNING OF THE YEAR, BUT WE THOUGHT THAT THIS YEAR.
DESPITE THAT, (INDISCERNIBLE) MORE THAN A HUNDRED BASIS POINTS OF RATE CUTS.
WE DESCRIBE THE FINE TUNING CUTS.
YOU SEE AT THE BOTTOM (INDISCERNIBLE) GREEN LINE IS WHERE THE FED IS, ORANGE IS WHERE THE FED VOTING MEMBERS PROJECT THEIR RATE TO BE IN THE LONG RETURN, ONCE THEY'RE DONE WITH THE TIGHTENING CYCLE TO MAKE SURE INFLATION IS COMING DOWN AND STAYS DOWN, THE BLACK LINE IS WHERE MARKETS THINK THE LONGER TERM FED FUNDS RATE WILL BE.
THE MARKET THINKS THREE, THREE AND A HALF, FED THINKS TWO, TWO AND A HALF.
AND WE'RE AT FIVE, FIVE AND A HALF RIGHT NOW.
AGAIN, IT IS HARD TO FIGURE OUT WHEN DOES IT START, HOW FAST DOES IT GO AND WHAT IS THE TRIGGER, BUT GOOD NEWS FOR INVESTORS BUYING BONDS, NOBODY EXPECT THE RATES TO BE AND LONGER.
WE EXPECT THEM BACK IN THE TWO TO 3Â PERCENT RANGE MEANING A TWO TO FIVE YEAR PART OF THE CURVE SHOULD BE IN THE TWO AND A HALF, THREE AND A HALF PERCENT RANGE.
NOT A WHOLE LOT LOWER THAN TODAY BUT CERTAINLY MAKES YIELDS ATTRACTIVE.
THAT IS WHAT WE HAVE IN THE MARKETS.
DID YOU HAVE ANY OTHER THOUGHTS TO ADD BEFORE I MOVE TO THE PORTFOLIO?
I THINK WHAT YOU CAN SEE IS THERE'S A LOT OF UNCERTAINTY, VOLATILITY, MORE THAN IN MULTIPLE DECADES.
THE KEY PIECE HERE IS THERE'S A LOT YOU CAN GET DISTRACTED BY, SO I THINK WHAT WE WILL GO INTO IN TERMS OF THE PORTFOLIO, ALL RIGHT.
HOW DO WE TAKE OPPORTUNITIES THE MARKET IS GIVING US AND REMAIN DISCIPLINED.
OUR JOB IS TO TAKE IN THE MARKET CONDITIONS BUT WE'RE JUST TRYING TO SMOOTH OUT EARNINGS IN THE PORTFOLIO OVER MULTIPLE CYCLES.
OUR CHALLENGE AND WHAT IS DIFFICULT IS TAKING WHAT GARY TALKED ABOUT AND SAYING, ALL RIGHT, HOW DO WE TAKE ADVANTAGE OF SHORT TERM INTEREST RATES THAT ARE WHERE THEY HAVEN'T BEEN AND POSITION THE PORTFOLIO WELL ENOUGH WHEN INTEREST RATES DO TURN OUT AND THEY WILL, WE KNOW THAT THEY WILL, IT IS JUST A MATTER OF WHEN, HOW DO WE POSITION THE PORTFOLIO SO YOU'RE EARNING HIGHER INCOME AS INTEREST RATES DROP BECAUSE YOU LOCKED IN YIELD APPROPRIATELY.
A LOT OF THAT IS JUST, YOU KNOW, WHAT IS GOING ON IN THE MARKET IS MORE THAN JUST NOISE.
AT THE SAME TIME, YOU KNOW, AS WE GET INTO THE PORTFOLIO STRATEGY, WE WILL TALK ABOUT THE DISCIPLINE FRAMEWORKS WE WILL PARK INTO TO NAVIGATE THE CYCLES.
THAT IS HOW WE CAN LINK IT TO WHAT DECISIONS YOU'RE MAKING IN THE PORTFOLIO.
>> I DON'T THINK THERE IS ANY QUESTIONS.
THIS IS A HIGH LEVEL LOOK WHERE IS YOUR PROGRAM TODAY AT THE BROAD LEVEL.
YOU'RE IN A GREAT POSITION THIS CYCLE.
YOU ENTERED IN WITH LIQUIDITY.
YOU HAVE 65Â MILLION CASH AS OF JUNE 30, AND 49Â MILLION INVESTMENTS, MOST NOTICEABLY THE CORE ACCOUNT.
CLOSING MARKET YIELD, TOTAL PORTFOLIO IS EARNING 3.3Â PERCENT, A REPRESENTATIVE INDEX OF, IF WE WERE TO REPLICATE YOUR PORTFOLIO IN THE MARKET, IT WOULD BE 4.43Â PERCENT.
YOU HAD HAD A LOT OF LIQUIDITY.
INCREASING YOUR INVESTMENTS AT A GOOD TIME.
BELOW SHOWS A DISTRIBUTION OF WHERE IS YOUR MONEY.
MOST IS IN BANK DEPOSITS FOLLOWED BY TREASURIES AGENCIES AND SO A FEW SUPER NATIONALS AND A SMALL AMOUNT OF MUNICIPALS.
NOT A LOT OF TAXABLE MUNICIPALS IN NEWÂ MEXICO.
YOU WANT TO TOUCH ON COMPLIANCE.
I WILL NOTE YOU WERE COMPLIANT AT ALL TIMES THROUGHOUT THE QUARTER, GOOD TO SEE HOUSEKEEPING APPROVAL THERE.
HERE IS YOUR PROGRAM ACROSS THE VARIOUS BUCKETS YOU HOLD IT IN.
AGAIN, MOST IS IN THE LIQUIDITY AND CORE INVESTMENT ACCOUNT, BUT YOU HAVE A FEW OTHER SMALLER ACCOUNTS LIKE THE CASH MATCH INVESTMENT, JUST A PORTFOLIO FOR US TO CARVE OUT SHORT INVESTMENTS TO PLAY OFF MARKET YIELDS VERSUS THE
[00:25:05]
BANK AND KEEP THEM TO AN HONEST NEGOTIATION KNOWING WE HAVE A TRUE ALTERNATIVE BUCKET TO PARK FUNDS.YOU CAN SEE THE BOOK YIELD IS 4.9Â PERCENT.
THAT IS WHAT WE DID, TAKE ADVANTAGE OF THAT INCREASED YIELDS IN THE FRONT END.
OF COURSE, THE SLOWEST MOVING CREATURES ARE ECO DEVELOPMENT AND THE CORE ACCOUNT AND THOSE ARE SLOWER MOVING BECAUSE THEY'RE ZERO TO FIVE YEAR, WE'RE INVESTING IN THE THREE AND FIVE YEAR SPACE.
THEY TAKE TIME TO GET BACK UP TO MARKET YIELD.
MOST OF THOSE ATTRACTIVE YIELDS BUYING INTO, THEY'RE A LOT IN THE THREE AND FIVE YEAR SPACE.
WE WILL SEE RAPID PROGRESS HERE, NEXT 12 18 MONTHS WILL ROLL OFF LOW YIELDING SECURITIES.
THE MAGNITUDE OF CHANGE BETWEEN WHAT WE'RE ROLLING OFF TO WHAT WE'RE BUYING IN THE MARKET IS SO LARGE THAT WE'RE GOING TO SEE DIFFERENT REPORTS OVER THE NEXT TWO QUARTERS.
>> I JUST WANT TO MAKE SURE TO LET THE COMMITTEE KNOW YOU WILL FIND A BIT OF A DIFFERENCE AS FAR AS THE NAME OF THE CASH MANAGEMENT ACCOUNT.
WE DID CHANGE IT TO CASH CORE INVESTMENT ACCOUNT.
THERE IS JUST SOME CONFUSION GOING ON BETWEEN THE CASH MANAGEMENT INVESTMENT ACCOUNT, AND THE CASH MATCHED INVESTMENT ACCOUNT.
YOU WILL SEE A DIFFERENCE THERE IF YOU DO NOTICE THE CASH CORE INVESTMENTS IS JUST OUR CASH MANAGEMENT ACCOUNT THAT WE PREVIOUSLY HAD.
THIS IS JUST THE CHANGE IN YOUR ASSET TYPE, WHAT YOU HOLD.
NOTHING NOTEWORTHY EXCEPT WE EXPECT TREASURIES TO CONTINUE TO CLIMB AND AGENCIES TO PICK UP.
AGENCY SPREADS ARE ATTRACTIVE AGAIN.
WHY? WE ENDED THE LAST FEW CYCLEÂ CROWDED EVERYTHING OUT.
WE DID FIVE TRILLION DOLLARS THAT WAS DEBT FINANCED IN THE LAST FEW YEARS.
THAT OVERWHELMED THE UNIVERSE AND WE'RE A REFLECTION OF THE MARKET AT THE END OF THE DAY (INDISCERNIBLE) TREASURY, THAT IS JUST WHERE WE PARK FUNDS, BUT GOOD NEWS IS AGENCIES ARE TEN OR 15 DAYS (INDISCERNIBLE) SEEING MORE ROUTINE ISSUANCE, THAT'S A CHANGE I EXPECT OVER THE NEXT FEW QUARTERS AS WELL.
JUST TO LOOK AT THE HISTORICAL BALANCES, IN AND OUT FLOWS AROUND TAX SEASON, GOOD NEWS, YOU'RE GROWING A LITTLE BIT FROM LEFT TO RIGHT, YOU ENDED WITH A HIGHER BALANCE THERE.
WE'RE PREPARING CLIENTS FOR IF YOU'RE SPENDING FUNDS, WHAT WE'RE EARNING, FOUR OR 5Â PERCENT, WE WILL SEE GROWTH THAT WE HAVEN'T SEEN IN 22 YEARS.
THAT IS GOOD NEWS TO SEE GROWTH WITHIN THE PORTFOLIO.
THIS GOES TO SHOW OVER TIME, NEXT FEW SLIDES, WE WILL LOOK AT THE CHANGES WE HAVE SEEN.
THE BOOK YIELD IS RAMPED UP, THAT LEVEL OF ACCELERATION IS NOT WHAT WE EXPECT GOING FORWARD GIVEN WE'RE NEAR OR AT THE END OF THE CYCLE.
MAYBE A LITTLE BIT MORE BUT NOT THE MAGNITUDE OF 500 BASES POINTS LIKE WE SAW.
WE WILL DEFINITELY START TO MATURE OUT OF THE OLDER YIELDING SECURITIES (INDISCERNIBLE) LONGER TERM PORTFOLIOS MORE LOCKED UP AND SMOOTH OUT THE CYCLES.
HERE IS HIGHLIGHTED, LOOK AT THE OTHER A CREWED BOOK RETURN AND BOOK INCOME PRIOR TO (INDISCERNIBLE) ISÂ NOW IT IS 2.5Â MILLION.
WE KNOW WE'RE YIELDING MORE THAN 2.24 ON AVERAGE FROM LAST YEAR, WE'RE STARTING AT 3.3 AND MOVING HIGHER AGAIN.
GREAT NEWS FOR EARNINGS AND SUPPORTING THE BUDGET GOING FORWARD AND KNOCK ON WOOD, HOPEFULLY (INDISCERNIBLE) AT THE FED CAN KEEP THIS MOVING AND WE CAN ADAPT TO A MORE NATURAL ENVIRONMENT THAT WOULD BE BETTER ECONOMICALLY AND BETTER FOR THE PORTFOLIO AS WELL.
THIS IS A BUSY SLIDE, BUT I WANT TO POINT OUT AT THE TOP RIGHT BOX, THAT IS JUST THE CHANGE IN BOOK YIELD OVER TIME.
THE LONGER MORE LOCKED UP PORTFOLIOS TAKE MORE, BUT YOU CAN SEE IN THE CORE, IT WENT FROM 1.62 TO 2.29 AND I EXPECT A BIGGER MOVE BARRING RATES COME CRASHING DOWN.
WHAT WE'RE ROLLING OFF AND INVESTING IS SO BIG IT WILL SHOW BIG ACCELERATION GOING FORWARD.
SHORT DATA PRODUCTS DON'T HAVE AS MUCH ROOM LEFT, THEY HAVE DONE THE READJUSTMENT FOR YOU.
ON THE BOTTOM RIGHT IS UNREALIZED GAIN LOSS.
THAT IS A FUNCTION OF WHEN RATES GO UP, POSITIONS GO DOWN IN VALUE.
VICE VERSA, THAT IS A I SHOULD MENTION RISK MANAGER GOOD FOR US AT GPA WITH YOUR
[00:30:06]
PORTFOLIOS.WE'VE DONE A GOOD JOB MITIGATING THAT.
LAST YEAR WAS SUCH A BOND BEAR MARKET, IT WAS THREE TIMES THE WORSE MARKET WE'VE EVER HAD AND YOU WEATHERED THAT WITH FLYING COLORS.
THIS SHOWS WHY, JUST A CONSERVATIVE DURATION PROFILE.
MOST MATURITIES AND EXPOSURES ON THE LEFT ENDÂ (INDISCERNIBLE) SECURITIES FOR CONSTANT MATURING AND, OF COURSE, YOU HAVE TURNED OUT THERE BUT THAT IS DEFINITELY SOMETHING YOU WANT TO FOCUS ON, MAKING SURE YOU HAVE LIQUIDITY SHORED UP.
YOU WANT TO LOOK UP THE INCOME FOR THE YEARS AHEAD.
NOT EVEN THE FED EXPECTS A RECESSION BUT EXPECT TO CUT RATES AS SOON AS NEXT YEAR.
WILL THAT HAPPEN? HUGE UNKNOWN.
THESE ARE GOOD TIMES TO LOCK IN THE INCOME AND SUPPORT BUDGETS FOR THE YEARS AHEAD.
THIS IS JUST A BAR GRAPH SHOWING THE EXPOSURES WE NOTED.
I THINK THE SLIDE IS BETTER SHOWING YOU HAVE OVER HALF YOUR MONEY IN NEWÂ MEXICO BANK AND TRUST WHICH IS PROTECTED BY THAT FEDERAL HOME LOAN BANK LETTER OF CREDIT.
THEY SEEM TO MANAGE THROUGH THE BANKING SITUATION QUITE WELL, ALL OF THE METRICS APPEARS THEY'RE A WELL RUN BANK.
YOU SEE THE VARIOUS NAMES HERE, WE DEFINITELY THINK YOU WILL SEE MORE HOME LOAN BANK.
THOSE ARE THE ISSUANCES WE SEE IN MARKETÂ FUNCTION OF BANKS SLOWING DOWN AND THESE ARE THE TWO (INDISCERNIBLE) THAT STEP UP WHEN BANKS STEP DOWN.
WE EXPECT TO SEE HOME LOAN BANK AND FARM CREDIT COME INTO YOUR PORTFOLIO OVER THE NEXT YEAR OR TWO.
HERE IS THE (INDISCERNIBLE) NEWÂ MEXICO, BUT YOU HAVE SO MUCH NATURAL GROWTH YOU'RE DEALING WITH, EVERYTHING IS TAX EXEMPT.
WITH THE ISSUANCES WE SEEÂ YIELDS WILL COME BACK DOWN, WE EXPECT TO SEE A WAVE OF (INDISCERNIBLE) IN THE NEXT TWO TO FIVE YEARS.
WE BELIEVE TAXABLE YIELDS WILL BE BELOW WHERE THE CURRENT TAX EXEMPT YIELDS ARE ISSUED IN THE LAST YEAR OR CURRENTLY ARE.
SO THAT SHOULD GIVE THEM AN ADVANCED REFUNDING OPPORTUNITY TO ISSUE TAXABLE PAYOFF (INDISCERNIBLE) WE LOOK FORWARD AND GET EXCITED ABOUT WHAT COULD BE IN A STATE LIKE YOURS BECAUSE YOU'RE LIMITED TO ONLY BUYING IN NEWÂ MEXICO.
KEEP THAT IN THE BACK OF YOUR HEAD, THAT MIGHT BE AN INTERESTING PLACE TO LOOK AT.
AGAIN, HERE IS JUST A LOOK AT THE FINANCIAL INSTITUTION HOLDINGS, HEAVILY WEIGHTED TO NEWÂ MEXICO BANK AND TRUST AS WE DISCUSSED AND THAT RATE JUST MOVED UP AS WAS NOTED.
REAL QUICK, WE WILL GO OVER THE CASH IN YOUR PORTFOLIO.
THIS IS WHERE THE BULK OF THE FUNDS SIT WHEN WE STRIP OUT THE ECONOMIC DEVELOPMENT.
THAT ISÂ TO PLAY THE MARKET VERSUS THE BANK.
PERFORMANCE HERE, AGAIN, WE'RE TRAILING PERFORMANCE OUR STRATEGY GOING IN ON THE CORE WAS TO MORE OR LESS HAVE AN EVEN MATURITY CADENCE FROM ZERO TO FIVE YEARS.
THAT GIVES US A LONGER DURATION.
THE BENCHMARK (INDISCERNIBLE) THAT IS FINE EVENTUALLY RATES WILL GO THE OTHER WAY OR PLATEAU AND WE WILL OUT EARN.
RATES CONTINUE TO GRIND UP IN THE LAST QUARTER, DESPITE GOOD TIMING OF INTERIM INVESTMENTS, WE'RE LAGGING A LITTLE BIT, NOTHING NOTABLE.
THAT EXPLAINS WHY THE PORTFOLIO IS UNDER PERFORMING THE BENCHMARK GIVEN THE CONSISTENT GRIND UP IN YIELDS OVER THE TIME PERIOD.
THIS SHOWS THE DIFFERENCE IN THE PORTFOLIO VERSUS THE BENCHMARK.
WE'RE UNDER (INDISCERNIBLE) YOU HAVE BEEN HARVESTING MATURITIES OUT.
YOU HAVE FOUR OR 5Â MILLION OF NEAR TERM SPENDING NEEDS SO WE'RE UNDERWAY (INDISCERNIBLE) TAIL WIND HERE IN JULY, AND THAT WILL GIVE ROOM TO REENGAGE THE LONGER TERM YIELD MARKET ONCE WE ESTABLISH WHERE WE ARE WITH LIQUID IN SPENDING.
LIMITED PORTFOLIO AND HERE IS YOUR LIQUIDITY BALANCES.
I THINK I WANT TO END ON ECONOMIC DEVELOPMENT.
AGAIN, THAT HAS BEEN ONÂ IS THAT CORRECT FOR THE SPENDING NEEDS?
>> I'M SORRY, COULD YOU REPEAT THAT?
>> YEAH, WAS ECONOMIC DEVELOPMENT, WE'RE RAISING LIQUIDITY FOR SPENDING NEEDS
[00:35:04]
IN THAT CATEGORY, RIGHT?THAT IS ALL WE WANT TODAY COVER.
ANY QUESTIONS ABOUT ANYTHING, MARKET OR PORTFOLIO RELATED?
>> NO? IT LOOKS LIKE EVERYONE IS GOOD.
ANY QUESTIONS? OR COMMENTS? YOU ALL WOULD LIKE TO MAKE? OKAY.
IF ANY OF YOU ARE LOOKING THROUGH THE PACTS AND HAVE QUESTIONS AT A LATER TIME, PLEASE DON'T HESITATE TO E MAIL ME, GIVE ME A CALL, AND I WILL MAKE SURE TO GET YOU THE ANSWERS TO YOUR QUESTIONS.
WITH THAT SAID, IF THERE ARE NO OTHER QUESTIONS REGARDING OUR COUNTY INVESTMENTS, I WILL GO AHEAD AND ASK FOR A MOTION TO ADJOURN.
>> MAY I HAVE A SECOND? OH, NO DO I HAVE A SECOND?
>> Y'ALL WANT TO STICK AROUND?
I WANT TO THANK YOU ALL FOR JOINING US, AND I'LL SEE YOU ALL IN OCTOBER FOR OUR LAST QUARTERLY MEETING OF 2023.
>> THANK YOU.
* This transcript was compiled from uncorrected Closed Captioning.