LOWVILLE – Another type of investment fund is used by Lewis County these days. Time will tell if the algorithm that chose it is on something.
During his first year in office, County Treasurer Eric J. Virkler asked the Council of Lawmakers to consider using Pittsford-based Three Plus One Investments after a few people, including lawmakers, asked if it was possible to get better interest rates, and therefore more income, from county investments.
“I saw (Three Plus One) primarily through the channels of the New York State Treasurers and so I became aware of what they did and put those two things together,” said Mr. Virkler. “I thought if we wanted to try something different, let’s see if we can use professionals to try something different. “
After analyzing the county’s banking politics and habits using its proprietary algorithm software, Cashvest, Three Plus One recommended that the county change its $ 17.55 million into a certificate of deposit account, or CD, with JP Morgan Chase to accounts with the register of certificates of deposit. , or CDAR, through the Chemung Canal Trust Company based in Elmira.
A company formed by a group of former financial regulators, Promontory Interfinancial Network, also known as the IntraFi Network, created the registry service in 2003 according to Investopedia.com, an online resource that defines financial terminology.
This company pools CDs of $ 250,000 or less to provide federal insurance with a number of over 3,000 member banking institutions, which can then be purchased by other registry banks, such as Chemung, for their customers. .
Sticking to CDs below the federal insurance limit eliminates the need for banks to procure other collateral as required for CDs over $ 250,000, Virkler said. By using a bank as a point of contact instead of having to research banks individually, it streamlines both the investment process and the subsequent monitoring of investments.
The county withdrew from Chase on December 7, and a total of $ 22 million from the county’s reserves was invested in eight CDAR accounts purchased between December 24, 2020 and January 28 from Chemung.
The majority of accounts have a term of two years at 0.45% interest. A six-month CDAR of $ 4 million was cashed in June and deposited in the general checking account, and a one-year CDAR of $ 10 million will be redeemable in December.
Interest earned over the past year with CDARs instead of CDs was $ 89,290 at the end of October. Another $ 19,000 is expected by the end of the year. Once Three Plus One’s $ 15,000 fee is paid, the amount is comparable to the $ 89,177 earned in 2020, although there was an additional $ 2.5 million invested in 2021.
Three Plus One also helped renegotiate a low interest rate for funds held on deposit with Community Bank from 0.01% to 0.3%, which has since fallen to 0.2%. This change, Virkler said, is expected to bring in about $ 54,000 more to the county over 12 months.
Beyond the act of investing, the company helped the county rewrite its investment policy which had not been changed for about 20 years, according to Virkler.
Three Plus One is not a registered financial advisor or a bank and therefore has no fiduciary responsibility to ensure that it puts the best interests of the client before its own, but due to the role of the company in the process, Mr Virkler does not think this creates any risk for the canton.
He said ensuring that no harm is done to the county because of these investments is his due diligence as treasurer and that state laws restricting the types of investments municipalities can make with the money. of taxpayers are adding another layer of protection.
“You can’t invest in junk bonds, you can’t invest in stocks. We have to (make) very stable investments, ”added Virkler. “It’s our fiduciary responsibility to the public – (because) we have public money – so the public knows we’re not just going to throw it on a bad investment.”
Mr Virkler said that while the changes he made with Three Plus One are not “major”, he believes improvements have been made to the way the county invests and the way it will invest it. the future.
The money invested is the combination of all funds named in the county budget such as the general fund, the capital fund and the health insurance fund, with the exception of the amounts needed in cash for expenses and projects In progress.
“We are certainly doing our best to use the funds wisely,” said Virkler. “We certainly have healthy funds and reserves, so we need to make sure we use them effectively to achieve taxpayer benefits. In today’s environment, it’s not easy, but we have to do our best.
The county began its investment relationship with Three Plus One in October 2020.