The town of Longboat Key invests in high-quality income securities in order to secure its financial future and fund capital projects.
Longboat Key earned a net investment income of about $3.7 million and ended 2023 with $90 million in its cash and investment portfolio, which means more pooled cash and investments compared to the previous year’s ending balance of roughly $85.39 million.
The town had a positive return on investment in 2023, compared to a negative unrealized loss in 2022.
Overall, the town’s net investment income for 2023 was $3,747,005. But the year before, the same report shows a net loss of $552,037.
Finance Director Sue Smith said that doesn’t mean the town was in debt or needed to pay anyone that $552,037. That loss includes unrealized losses, which were $1,789,071.
Realized gains and losses are the difference between the sale price of an investment with the current market value and its book value. The gain or loss is “realized” when it’s sold, and unrealized gains or losses are based on the current market value.
The town holds investments to maturity, so those losses weren’t realized.
The town has four main funds: Synovus, TD Wealth, FL PRIME and FL CLASS.
FL PRIME and FL CLASS are both investment pools for local governments.
The Synovus account is like the town’s one big checkbook. Smith said it would be difficult to manage all of the town’s 30 funds each with a separate checkbook.
That account changes daily, Smith said, as the town purchases things for the 30 different funds, like the general fund, tennis center and capital projects.
The TD Wealth account is the town’s investment portfolio, managed by Chandler Asset Management.
The account was at $40,372,804 at the end of 2022 and ended 2023 with $42,249,568.
Investments made with that money are high-quality rated and low risk. Smith said the town’s investment policy for the money focuses on safety, liquidity and rate of return.
It’s also not an account that’s trying to earn money as the market fluctuates. Whereas investing in stocks is riskier and they can be sold when they reach high values, the bonds and securities in the town’s TD Wealth account are held to maturity.
The majority of the investments are in the U.S. Treasury (40%), the second most being in the Federal Home Loan Mortgage Corporation (13%) and the Federal Home Loan Bank (10.2%).
Reinvestments at higher interest rates, about 4.67%, resulted in higher total returns in 2023.
Average purchase yield increased this year, from 1.82% to 2.88% in the TD Wealth investments as the asset managers reinvested maturities at higher interest rate levels. This trend is expected to continue into this year, according to the annual report provided by Chandler.