Treasurer reports earnings of $93.6M
The state treasury made “excellent earnings” of $93.6 million in the quarter that ended Dec.31, on an investment portfolio of more than $11 billion, Arkansas Treasurer Larry Walther told the state Board of Finance on Tuesday.
He said the treasury’s “investment team navigated a pretty difficult and volatile time with interest rates” during the last quarter.
“It appears we will be seeing lower interest rates as we move forward into 2024,” Walther said.
As the state’s bank, the state treasury focuses on safety first, liquidity second and the return on the investment third, the Republican state treasurer noted.
The treasury’s investment portfolio reached nearly $11.5 billion at the end of the quarter, said Stephen Pulley, senior investment manager for the treasurer’s office.
In the same quarter a year ago, then-state Treasurer Dennis Milligan reported the state treasury earned $59.2 million based on an investment portfolio that totaled $9.5 billion on Dec. 31, 2022. Milligan, a Republican, has served as state auditor since January 2023 and continues to serve on the state Board of Finance.
For the quarter that ended Dec. 31, the state treasury’s book rate of return was 3.436%, said Steven Kilgore, director of investment accounting for the state treasurer’s office.
The state Board of Finance on Tuesday voted to increase its range for the state treasury’s book rate of return for the quarter that started Jan 1 to between 3.30% and 3.40% — up from a range of 3.25% to 3.35% for the quarter that ended Dec. 31.
In the last quarter, the state treasury’s long-term investment portfolio earned $64.97 million and the state treasury’s short-term investment portfolio earned $28.69 million, according to the state treasurer’s report.
The long-term investment portfolio includes mortgage-backed securities, U.S. treasuries, agency bonds, municipal bonds, Small Business Administration loans, Israel bonds and corporate bonds, and the short-term investment portfolio includes commercial paper, treasury bills, certificates of deposit, and demand and money market accounts, the report shows.
During the first six months of fiscal year 2024 that started July 1, the state treasurer reported earnings of $179.6 million compared to $99.8 million during the first six months of fiscal year 2023, according to the state treasurer’s office.
With the help of rising interest rates and a larger investment portfolio, the Arkansas treasury’s interest earnings skyrocketed to $254.5 million in fiscal year 2023 that ended June 30 — far exceeding the $69.9 million earned in fiscal year 2022 — state officials reported in July. The treasury’s interest earnings total in fiscal 2023 was the highest amount since at least 2005. The next-highest since then was $116.9 million in fiscal 2019.
Walther, the former secretary of the state Department of Finance and Administration, has been serving as state treasurer since Aug. 7, when he was sworn in by state Supreme Court Justice Cody Hiland.
Republican Gov. Sarah Huckabee Sanders appointed Walther as state treasurer after the death of then-state Treasurer Mark Lowery in late July. Walther will serve as state treasurer until January of 2025.
A state treasurer will be elected in the 2024 elections to serve the final two years of Lowery’s four-year term to which he was elected in November 2022.