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Page 3 of 6 <br />reported at the same time last year. <br /> <br />As reported previously, the Federal Reserve (the Fed) has been raising interest rates since <br />March 2022 but halted rate increases in July 2023. In 2022, the Fed raised rates seven times <br />for a total of 425 basis points, and in 2023 the Fed raised rates another 100 basis points in <br />total, with federal funds rate in a range of 5.25 percent to 5.50 percent - the highest levels in <br />25 years - resulting in even higher comparative market rates. Most of the securities in the <br />City’s investment portfolio were purchased before the rate hikes, and the overall investment <br />return is expected to be lower than the market rates in the near term. As securities mature and <br />funds are reinvested, the City will be able to achieve higher investment returns. The Fed <br />paused its rate-cutting cycle after three consecutive reductions in 2024. With the current <br />market volatility, it is difficult to predict when the Fed will take the next action to reduce interest <br />rates. <br /> <br />As of March 31, 2025, the entire portfolio, exclusive of money market accounts and LAIF, was <br />held in third-party safekeeping for the benefit of the City of Pleasanton at Bank of New York <br />Mellon. Bank of New York Mellon is a contractual agent for the City. <br /> <br />As of March 31, 2025, all investments in the portfolio are authorized by State of California <br />Government Section 53600 et. Seq. and the City's investment policy. <br /> <br />Securities rated below "AA-/AA3" <br /> <br /> <br /> <br />Please note that the medium-term note with 3M Company matured on February 14, 2025. <br />Following this maturity, all investments hold a rating of A or higher. <br /> <br />Purchases and Maturities <br />During the quarter, the City's investment manager, Chandler Asset Management, purchased a <br />number of securities on behalf of the City. One security matured in January, one in February, <br />three in March, and one certificate of deposit matured in March and was renewed. The two <br />medium-term notes with Exxon Mobil Corporation were purchased at a premium; the City <br />received cash at par value as the securities matured in March 2025. The difference between <br />cost and par value lowered the overall March investment income. However, the two securities <br />generated positive income when accounting for the interest income received over the years. <br />Page 36 of 249