Return to Kent County pool continues to slide

March 25, 2011
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Kent County Treasurer Kenneth Parrish revealed that the county’s investment pool earned a return of $3.8 million for 2010, a year when investment income was nearly indiscernible because of the Federal Reserve Board’s ongoing interest-rate policy that has led to the lowest fixed-income returns in decades.

Returns to the pool have dwindled since 2007, when the investments earned $19.6 million. In 2008, the interest was $17.8 million and the pool earned $7.9 million in 2009. “Frankly, it can’t go lower than what is being offered,” said Parrish of the interest rates presented last year by local institutions.

Parrish, who is required by county policy to make safety his top investment policy, ended 2010 with $71.4 million in government securities, $12.1 million in pooled funds and $216.2 million in CDs and money market accounts. Another $25.8 million was in cash. The pool’s cash and investments totaled nearly $325.8 million Dec. 31.

“We have investments with 19 different banks,” said Parrish.

That number is down by five from last year’s report. Gone are Macatawa Bank, Michigan Commerce Bank, Citizens Bank, Wells Fargo Bank and Byron Center State Bank. Parrish said a couple of banks were merged into existing banks with which the pool was already doing business; two others weren’t considered as investment options and one didn’t offer CDs.

Any bank Parrish invests with has to have a presence in Michigan, and he can’t invest more than 25 percent of the pool’s total with a single institution.

“We never go longer than a year on CDs. We will go longer on government securities, but usually not longer than three years,” he said, adding that one of his investments matures almost every business day.

Huntington Bank had the pool’s largest investment last year at $47.5 million, or 15 percent of the total. PNC Bank was second with $33.1 million, or 10 percent. “Much of the money invested in Huntington is in a liquid pool. It’s a judgment call, but it’s based on history,” said Parrish.

The county’s pool doesn’t only make investments for the county: Roughly 20 percent of the total belongs to other local governments and agencies.

“They and we benefit from the larger investment,” said Parrish. “There are approximately 25 local units and authorities that invest with us and it allows them to earn a little more on their money.”

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