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57 <br /> MEMORANDUM <br /> DATE: March 26, 2001 <br /> TO: Mike Mornson, City Manager <br /> FROM: Roger Larson, Finance Director <br /> ITEM: REORGANIZATION OF INVESTMENT PORTFOLIO <br /> The investment portfolio review report (prepared by Ehlers) recommended <br /> consolidating the City's money market accounts into the 4/M Fund in order to gain a <br /> higher annualized yield. <br /> Under our present agreement with Firstar, the banking fees are waived,with the <br /> understanding that a minimum balance of$200,000 is kept in our checking account. <br /> Firstar's annual interest rate was and continues to be lower than the 4/M Fund. <br /> Recently, a merger of US Bank and Firstar occurred. Because of fair trade and market <br /> share requirements,Bremer Bank purchased the Firstar St. Anthony branch. Mergers <br /> often reflect change, however in this instance most of the current staff will be retained <br /> in their present capacity and represent Bremer in the same manner as they functioned <br /> with Firstar. <br /> The reorganization of the bank provided an excellent opportunity to meet with Bremer <br /> officials and discuss our present rate of return. Bremer was very willing to work the <br /> City and expressed a strong desire to continue the long-term banking relationship we <br /> had with Firstar. <br /> Based on those discussions, an analysis was prepared comparing Firstar, Bremer and <br /> the 4/M Fund (see attached). A summary of the interest comparison for our sweep <br /> account (moves funds in excess of$200,000 into a money market account) is as <br /> follows: <br /> Firstar 4.77% <br /> 4/M 5.03% <br /> Bremer 5.05% <br /> In addition, Bremer agreed to pay a rate of return on our less active accounts equal to <br /> that of their Dreyfus Government Cash Management Fund of 5.05%. This solidifies a <br /> • rate of return equal to or greater than the 4/M Fund. <br />