present thank you P first item on the agenda is public comments are there any members of the public present that to speak sorry just one quick one since you guys always giving us the information about what has happened which is what report does I was wondering if you could
also address a little bit on where you think the markets will be going and how positioned over the next 6 12 months thank you thank you for your comments um next item on the agenda is for the approval of the consent agenda first is the approval of minutes from last
quarterly meeting held on November 21st 2024 second is the approval of expenses at this time we have received two invoices from Bridges Chambers one invoice from Foster and Foster one invoice from Sterling capital and two invoices from truist lastly we have the
approval of one retiree do I have a motion and second to approve the consent agenda I'll make a motion to approve the consent agenda second all those in favor say I I moving on to new business today we
have Blake M presenting corly reports for sterling sterling Capital all right good afternoon I will definitely um look into my crystal ball and try to give you our best guess on what we think the Market's going to do uh in 2025 as well as
obviously review the fourth quar quarter um you know start of our fiscal year although you'll see um again kind of a lot happened but we kind of we're pretty flat for the quarter not to give away the ending but um but before you know we kind of go into that in a little bit
more detail just for the edification of the new Finance director and chair um again my name is Blake M I work with Sterling Capital um I've had the pleasure of working with you guys for I guess a little more than a decade now going back to the old uh Sun Trust days and then Sun Trust turned into truest
and then truist um sort of had a Investment Management subsidiary of the old BB&T called Sterling Capital so I slid over there um as part of that transition um and then um truus actually sold us middle of last year so we're now completely separate from truist although
truest Still Remains the custodian we still work with them um but we really manage um the US um Equity portion of the plan along with the fixed income assets that sort of our mandate is spelled out in the investment policy and then there's obviously other assets
that are outside the Sterling uh sort of um control and those are held in a custody account and and Larry kind of helps the Board direct those assets in various asset classes that kind of started as we didn't really have exposure to those in the old Sun Trust
platform um and and kind of it developed from there into some other asset classes so very well Diversified as you'll see here in a moment but that's kind of the the gist of it so I will um at least keep my comments sort of confined to the US equities and fixed income markets and
let Larry oine on those other asset classes where he has uh much more knowledge sound sound good as a a background all right well then let's dig into this quarter um and like I said it was kind of a a lot going on but um the markets really kind of ended up pretty
flat um if we dive in over behind Tab 2 is the asset allocation sort of summary page or what I call the scorecard if you will um got all the major equity and bond indices um on this on this table stocks are up top and the bonds are down at the
bottom so first row there is the the Russell 3000 growth or the broader us Benchmark good solid quarter up 2.6 um and for the year to date um up almost 24% or 23.8 so very very strong performance so that's two years in a row
that uh we've had over 20% returns out of out of the US Equity market so good solid performance and an Absol AB sense diving into it though um as uh some of the other trustees that have been here for a while know we talked a lot about those uh air related Magnificent Seven
stocks that really drove the market in the first half of 2024 we saw a bit of a broading um and to include some of the other names during the third quarter uh but then this fourth quarter um really kind of went right back to those same names and it even shrunk a little bit so
we called them the Fantastic Five cuz Tesla and apple uh didn't quite keep up as much as uh the other five names but those really again once again really led the market higher and we can kind of best see that if we look at the third and fourth rows there the Russell top
200 value and top 200 growth for the quarter those top 200 value names were actually off a little more than 2% or 2.11 and up about 15% for the year um and while the growth counter part was actually up closer to 7% just for the
last 90 days or that final quarter uh leaving it up a little more than 35% for the year so nobody's going to complain at at least shouldn't complain too much about a 15% return out of those value names but when growth was up closer to 35 that's a really big difference um for
just one single year so a little bit unusual as we look into our crystal ball we we see a broadening out of that U we've kind of remarked that you know just those seven names um you know kind of were the the the bulk of the return for the S&P 500 or even the Russell 3000
or any kind of us Benchmark that you look at we look for those other names to start um being recognized cuz candidly those aren't the only names that are going to benefit from uh AI right at least in theory we all should benefit in one one shape form or another and uh we
we started to see some of that uh like I said in the third quarter but then we kind of reversed it the other thing that was uh really Paramount during the quarter was was the bond market um it really became very apparent I guess at the beginning we started off really well in in October and early no November as
it became apparent that Mr Trump and maybe the Republicans were going to win all three uh phases of the the the house the Senate and um and the Capitol Hill over guess I guess um sorry in um the presidency so again the market being what the market is the one thing that
the market does like is when all three uh Powers align in one party or the other because it just makes predictability a little bit stronger a little bit higher we can kind of figure out what their agenda is and trade off of that um the you know the big one is
you know drill baby drill so energy should do a little bit better that's one of the areas that we're looking at and our managers are adding to um and and think should do a little bit better this year but we look for really those non US tech names to kind of um start to to
perform a little bit better in relation so um again that's kind of a what we see um the the market now from an overall perspective we don't see a recession and near term we don't see a the Gloom or Doom kind of scenario as we kind of look
out in the future you know a lot of the variables we look at remain pretty positive the economy is still pretty strong earnings came in very very solid this first quarter guidance forward wasn't too too terribly bad and that's kind of why we've seen you know the market Up 3 or 4% um year to date so far
so uh that's certainly a positive the other positive is the US consumer which makes up about 2third of the economy we're still very very flush with cash we still feel really good about it we are starting to see a little bit of a bifurcation with the high net worth versus those lower income names kind of
saw that in the Walmart number today and their guidance going forward was very cautious and that's why the market was off today was Walmart uh sort of had their earnings call and we a little disappointed um with some of the forecasts that they provided for the rest of the year but um again overall though the consumer is still in pretty
good shape companies are still um making money so from that perspective uh we still think you know High single digits is a pretty realistic um Equity expectation for this year even with the 20 plus returns we've gotten in 23 and 24 I'd love to sit up here and tell you
we're going to get another 20 25% uh but that's really unrealistic and I don't think it's ever happened three times in a row so uh the odds are stacked against us even with the the good backdrop so again that's kind of what we think on the equity side is we do see a little broadening on the fixed income side that
was really kind of the story of the fourth quarter cuz we had some solid Equity returns but you'll actually see some some pretty terrible on a absolute basis uh Bond returns um the the Barkley's I'm sorry the Bloomberg us aggregate which is the broad Benchmark
for fixed income or the bond portfolio was off over 3% I mean and we don't typically you know we usually get four or 5% out of a bond portfolio that's supposed to be the stable sort of um you know the the the hair and the the rabbit that's the hair part of the portfolio
supposed to be slow and steady and good solid income uh what we really saw was after the elections um you know the the the mood after the equity markets sort of rallied and applauded the election results Bond investors did just the
opposite thinking that you know maybe all of the rhetoric and all the talk about tariffs on the campaign Trail were going to lead to inflation which was going to lead the FED to not lower rates as much as they had previously expected so what we saw was they voted with their their supply and demand dollar
uh cuz what was really unusual is the Fed actually lowered rates during the quarter a couple of times but we still saw pretty negative returns out of bonds um because of those uh those Bond investors um selling their shares and readjusting their interest rate expectations for this year um as we
stand here today there's one um uh I think the market now has only one interest rate decrease 125 basis point decrease um in the the future's expectations uh for for the rates later this year and we're probably in that camp where we'll probably get somewhere
between none or two one or two um at the most depending on you know what kind of data we get between now and then um obviously it's predicated on the economy continuing to improve earnings continuing to grow and uh no unforeseen events but at least as we look into our crystal ball this year that's kind of
the way we're positioning portfolios so what you'll see is you know last year we were uh we kind of came into the year a little overweight our Targets in stocks we readjusted to be a little bit underweight um our targets um mid year and then as we sit here today at the
beginning of January we rebalance back to more of a neutral um stance at least for now uh which kind of means that we recognize that stocks have run very nicely over the last couple of years probably improbable to get another 20 plus return but we still like stocks and
then on the bond side because of you know some of the sell-off we saw this year we're a little bit more constructive about that piece of the portfolio um again now that rates of that 10e rate is hovering around 4 and a half% we think it should stay there um especially if the FED doesn't uh doesn't have to lower the shorter end of the
curve much uh so from that perspective you know that's kind of a four or 5% uh return out of that piece of the portfolio we would call very very good 2025 so that's kind of as we look into our crystal ball our our best guess um that's always subject to change but so again just kind of touch on I touched
about the quarterly return but it kind of wiped out what was otherwise a pretty solid year for bonds if we look at the one-year number for that aggregate it dropped it down to just one and a qu uh we were tracking in that four or 5% range uh which is kind of what we think is going to happen this year now that we've seen the
adjustments so with that guys there's a whole lot more in this first section the dissects all the sectors on the next page you know suffice it to say it it was kind of a repeat of what we've seen the last two or three years it was um really those us AI related Tech names
were were the best performers so growth did a little bit better than value and then the larger companies did a little bit better than medium and smaller sized companies um and lastly the US really kind of dominated as they did significantly better than International uh last year so that's kind of a quick
and dirty on on how the equity markets went and then bonds traded off a little bit um had a subpar year but um again we look for things to to St normalize and stabilize this year the rest of this section dissects every little nook and cranny of every
part of the market to kind of come up with uh our best thinking um don't usually go into a lot of detail there unless you guys have any specific questions uh but before I switch over and talk about the our portion of the plan performance in a little more detail let
me just stop talking and see if there's any questions comments thoughts no all right see you none then let's talk it uh over on page 22 behind tab three let's talk about our piece of the portfolio in a little more detail this first page is the portfolio summary
that shows the cash flows for the various time periods um we got the month the quarter and the fiscal year which happen to be the same this quarter and then obviously the one year and then the Inception date when we switched over from the old truest uh uh performance uh Team over to the management at Sterling
uh so you'll see that was almost three years ago now or I guess two two and 3/4 years um but for the fiscal year we started off just under 21 million there at 20, 927 we had the uh annual City City contribution came in this quarter so that's the net uh contribution of a
little more than 560,000 uh we had income um primarily from the bond portfolio for dividends and interest was about 290,000 wa a slight small U Capital depreciation of about 300,000 net out some fees and the portfolio
stood at just under 20 our piece just under 21.5 million or 2,450 and to put some uh percentages to those dollars on the next page um is the performance of our piece of the portfolio we've got the graphical U representation there at the top and then
in the middle of the uh the table is the one I'll I'll concentrate on and you guys are the dark blue uh with our Benchmark our Blended Benchmark of US Stocks is measured by the Russell 3000 and fixed income uh 5248 um there in the the lighter blue um
section so we we were almost flat off 0.01% or one basis point while the Blended Benchmark was essentially flat to it was off about 10 basis points so really performed in line um with that um moving down you'll see that really was the
fixed income piece that did slightly better even though um again it was a negative uh for the the quarter um when the the market The Benchmark was off a little more than 3% we were off about 2.7 or 2.68 um so that's really what caused us to to be slightly ahead of
that Blended Benchmark was the the bonds held up a little bit better we were just a little bit more conservative with that piece of the portfolio we had a couple of out of Benchmark Holdings and shorter term treasuries that were a little bit more conservative as well as some inflation protected securities that were
also shorter in maturity uh that kind of helped us a little bit when the the market sold off so those were the primary uh reasons we that that piece outperformed and we outperformed ever so slightly still was a challenging year though as you see the one year nobody's going to complain with a 10 almost 11% return but when the Blended Benchmark
was closer to 12 1/2 it's really kind of indicative of those AI related names we had them we just didn't have nearly as much um as we needed to and that's kind of been a real challenge for a lot of active managers and we've talked about this in previous meetings um we we like
Nvidia we we like uh you know Microsoft we like um a lot of those AI related names we just didn't have 12 or 15% of them which is what you would have needed to have in some of those names to kind of outperform um you'll see here in a minute our large capap growth manager did exceptionally well uh he just didn't
you know couldn't outperform that 35% return uh while he owned a lot of those names he owned six out of the seven he just didn't know them um in the magnitude of the weights that you needed to to outperform that combined with I'll talk about some of the individual pieces and what worked and what didn't but uh
we're still very very happy with that almost 11% return and again for the edification of the new Finance director we're never going to manage this portfolio to try to get 15% when the Market's up 12 12 we're just not comfortable taking that kind of risk we're much more comfortable coming back
showing you an 11% return When the market was up 12 and protecting those assets when things do roll over whether it be Co back in 2020 financial crisis in '08 what we don't want to do has come out and show you a negative 12% return When the market was down 10 right so to
again each and every one of these managers we we scrutinize and look at and their risk return characteristics are very consistent with that we'd love to get 95 90 ate 100% of The Upside when things are good and for that uh we we'll give up only get like 85 or 90% of the
downside that's in our eyes how we're trying to manage these portfolios and what we're trying to do is kind of protect us a little more on those those down years so um over on the next slide is the asset allocation uh again um not even including the outside pieces very
well Diversified here each and every one of those little blue pieces is a separate seg of the equity markets and then we've got the the very uh well Diversified core fixed income portfolio with treasuries mortgages um corporate Securities Etc but as you can see kind of a proof statement is what I talked
about earlier very close to that Target Benchmark we ended the quarter at about 53% in stocks uh and 46% in bonds with a little bit in cash when our targets uh more of a 5248 so really right on top of it and then I'm going to finish up talking about just a couple of pieces of
the portfolio that we're watching a little closely um as well as some of the the funds that performed very well the first we watching Pretty closely is one of our own it's the the first one there that first grouping under large cap value it was off about 5% for the quarter when
its Benchmark was off closer to 2% um the primary reasons for that is this particular strategy really puts an emphasis on dividends and higher quality companies and that's really not what the market was rewarding um Not only was growth the the primary uh driver it was
the the lower quality riskier stuff um in the universe that that tended to do a little bit better last year no problems no issues here in our mind um this fund is outperformed or this process is outperformed you know six or seven straight years 2024 we
think was just an anomaly and hopefully when the market starts to broaden out uh they should do a little bit better as well so that's one we're but we'll continue to watch that and monitor it and if we need to make any changes there we certainly will uh the other two uh mid value and mid growth didn't perform
quite as well as we had hoped it did a little bit better this last quarter U but they really kind of struggled the first half of the year uh we used some touchtone um Capital Management is the manager for both of these pieces um and again their one-year numbers um aren't aren't particularly exciting and even
their 2 and a/ half year numbers are a little bit below average but again longer term 3 5 7 10 years uh their longer term averages have been much better so we're going to continue to to to watch those as well um and then I alluded to the really the the one that really drove for good solid performance
was large growth uh we use a lumus sales product in that particular category that's that third grouping there as you can see we've got about 2.6 or a little more than 12% of the plan there um of our piece of the plan it was up over 9% for the quarter again when the The Benchmark was up closer to seven and
then for the one year up 34.6 couldn't quite keep up with that Benchmark at 35.1 but still good solid performance on an absolute basis and then obviously for the almost 3 years that we've had him they've done a very good job in in that particular space of
of keeping up and I touched a little bit on on the bond portfolio um down toward the bottom those categories really the the core category outperformed um and again having a little exposure to those shorter term treasuries helped as well so that was really the primary reasons
for the the slight outperformance there so really that's what um uh I I I wanted to cover today the next page goes into the same kind of detail but looks at each and every Fund in those various categories um and then I usually finish
up over in the appendix on page 29 one of the things that that we recognize when we transition from truth from sunrust to truest over to Sterling was you know what the board really cares about is not what Sterling's performance was for two two and a half years uh how
how did we do longer term so what we did was link our performance with that historical performance to get give you all an idea of how we've done versus the benchmarks over longer periods of time and as you can see you know again the one year slightly Behind The Benchmark that sort of dragged down that threeyear
a little bit but longer term 5 7 10 and going all the way back to the the Inception number isn't quite it's a little bit wonky here CU we had so many changes way back in the 90s and early 2000s before um so we probably should just drop that number but um again our
piece of portfolio over the 5 S 10 years performed in line and so with that guys again pretty optimistic but also u a little weary about 2025 uh the one thing I've been telling clients with 100% certainty that I can guarantee is going to happen this year
is volatility uh we saw it under Trump 1.0 um and the markets reacted a little bit more up and down to to um tweets and various Communications coming out of the Oval Office on a pretty regular basis so politics aside we think the markets will
probably continue to be a little bit more volatile with with with you know those kind of things we're going to continue to watch tariffs we think that's obviously going to be a big impact on on 2025 right now we're not overly concerned you know I didn't really talk about this uh previously but just to
give you our two cents or our thoughts on um the tariffs kind of fall into a couple of buckets um one is the negotiating bucket and that's kind of probably what we saw with the initial wave of uh our border uh border tariffs at 25% on Mexico and Canada that wasn't
really about tariffs that was more about trying to U make sure immigration and some uh some drug policies uh get uh reinforced and and and other parts of the the agenda not so much uh tariffs the second wave though um like the
aluminum and the steel tariffs that were announced last week those are probably just protectionism I mean and again that goes on um all around the the world candidly we're one of the few countries that don't do it um so I think that's just protecting us interests in in
various Industries um and then lastly um again we will continue to monitor that but obviously China was the big one um and and again I think the way China handled it the way the the president handled it was just sort of very very uh
kid gloves if you will um he talked about 60 70% on the campaign Trail U tariffs on China U he came out with a 10% tariff um and again their response was pretty muted as well they basically taxed very large vehicles I don't know
if you know but there's not a whole lot of F-150s running around in Shanghai U they're not using so that terce is not going to have a a a big impact uh on on us so their response I think was more important that Hey listen they're willing to negotiate and there there's
going to be more to come but um so again we'll continue to monitor that we think that'll obviously make some headlines and and lead to some volatility um but again we're we're used to the volatility um and we're going to stay the course and uh I think we'll be in pretty good shape now this time next
year so that's a longwinded way of saying we're pretty flat for the quarter and we're optimistic kind of about 2025 any uh questions thoughts comments Blake I I should have called
you on this before but uh don't mean to Blindside you but you've got there's a pretty heavy tilt towards large cap uh growth in your growth allocation there I mean you've got on paper it doesn't look that way cuz you've got the Vanguard S&P 500 ETF at
about 4 M lower 4 million and then you surrounded that core you treating that I guess as a core fund and then you got lumus large cap growth 2.6 and then Sterling uh the value at 1.5 but that S&P 500 as you know is very
very tilted towards the mag 7 capitalization wise is there any talk within your group do you know whether they're talking about maybe balancing that out a little bit more from a style well you know Larry it is I think a little bit deceiving because we again
we're tasked with the Russell 3000 is our Target right if you look at the growth value tilt there because of the the the run in those seven names over the last few years it used to be 55 45 growth versus value it's a whole lot
closer to 6040 and that's really more indicative of how how we're we're doing it we actually have a slight growth underweight relative to to the Russell 3000 when we combine the portfolios together and when we do the the looking at it um but if you look at it you oh
there's 2.6 in large growth there's only 1.5 1.6 in large value and then you know the core has more in in growth and value you could it would be easy to think that there's a growth overweight but that's not the case right now as a matter of fact we're slightly under well there's not a growth overweight to that
Benchmark but there is a growth overweight to The Benchmark correct to to the portf to the Russell 3000 so by by definition yeah um right I we can we can talk more about it um if but at least the way the way it's constructed
now um we're pretty comfortable you know we've been tasked with beating that Russell 3000 and um we've got the allocation that we think uh will do that best but I I recognize what you're saying and you're saying is there there's a and and again I think it's probably
underrepresented or not really talked about much but you and I have talked about it um is that there is like a lot of risk in the S&P 500 that a lot of people don't realize right I mean those names have run so far so fast um that
that some of the valuations are getting you know towards extremes especially in the that large cap growth area um so we recognize it um and again we try to mitigate it as best we can through diversification and and balancing it and
um like I said we're actually slightly underweight know growth in in total compared to the Russell 3000 but we do realize those those growth indexes um are are pretty risky at this point just so everybody understands the why that is
those in those in The Benchmark like the S&P 500 it's what they call capitalization weighted it's not 500 stocks equally weighted in that in that Benchmark the S&P 500 Benchmark is capitalization weighted so the larger companies have a bigger impact well it's
never been more concentrated than it is now and that was because of the run of the mag 7 stocks so when you see somebody saying they're holding the S&P 500 you whoops you might think well that's Diversified Diversified 500 names but
really when you look at the characteristics itself of the S&P 500 and I know that's getting into the weed a little bit but the the S&P 500 is a large cap growth stock right now just based on its characteristics I think it's selling at a price to earnings
multiple of maybe 30 yeah it's very high very expensive and um so we try to take that into account as we're looking at asset allocations and that's why I asked the question what their committee is but again he's right relative to The Benchmark uh they're not overweighted to
it so you know if your goal is keep up with the benchmark you almost have to go there a little bit yeah which you know and it's and it's by the way it's helped you up until today till it doesn't yeah it
always helps until it doesn't today really I don't know if there's any place to hide today but yeah where did the benchmarks come from uh you know I think it they they sort of developed candidly over the last 30 40 years on ways to grade investment
guys like me it's like okay you you you're up 4% you're down 4% I don't know is that good is that bad so what they uh the various um Industries tried to do was you know create some sort of Benchmark or Target that gives you some sort of sense of okay is that good is
that bad you know how did similar other Investments do um so not only does you know did we create you know the industry sort of created targets and benchmarks but there's also what Larry does as the consultant is they have universes where everybody subscribes to and they put
their active manager numbers up against other active managers to give you a better sense of how your your managers are doing not just compared to some static Benchmark right I want to know how you're doing compared to other guys that are doing what you're doing um so from that perspective that's kind of the
the the two layers of evaluation and it really is just to give you guys a sense of you know are we performing in line with expectations and and goals um and and are we doing it you know similar to other managers and taking similar kinds
of risk um all of those kind of go into to Larry's report in a little more detail but and you know just for your knowledge if you're watching the news and you see there's there's really three major indices right now benchmarks if you will the S&P 500 the Dow Jones you see report in the NASDAQ and the way you
can look at that is in theory the S&P 500 is is more of core but it has now a very very growth tilt you know with a lot of tech names in there the mag 7 the Dow Jones Industrial Average is kind of that it's more a little bit more industrial a little bit broader uh it's
a little bit more economically sensitive I would say historically uh it'll give you a little broader there's only 30 stocks in it but yet it I think it gives you a little more diversification than the S&P right now I hear that not quite as Tech heavy for sure it's not quite as
Tech heavy and then the NASDAQ you can just assume if Tech's doing well the nasdaq's doing well the NASDAQ is very heavy Tech so when you see those reports I would kind of get give you an idea how you're how you're doing and then the bond market also has a bunch of indices too which
are uh that you could pick from about 30 but um yeah but the Aggregates sort of everything put together sort of indicates it's got mortgages treasuries and corporate bonds so it gives you a really good um sort of look of all three of them combined and they're kind of the
most widely used I mean there's there's variations off of all of those but we don't usually get too far into those weeds except when we're actually looking at individual managers or individual funds and want to evaluate how they're doing so thanks no thank
you next we have Mr Larry Cole presenting corly reports for Bri Chambers all right well good afternoon again everyone um I'll get to the first uh if you go to page two of our report this is just looking at the markets uh for the quarter you already kind of got
a feel for it from Blake uh this is not portfolio specific on page two and Page Three those are those are just market indices so to give you an idea what happened as far as what we think is going to happen and and going looking out into 20125 I don't think we're too
far off of what Blake's kind of forecast is uh I I would expect stocks probably best guess right now you know you're probably see an 8 to 10% gear out of most stocks that may sound wild given what's going on today but the reality is year to date we're going into today we
were about halfway there um most indices were up anywhere from 3 to 6% depending on which Benchmark smaller cap stocks were doing a little better uh or midcap I guess we're doing a little better and um what we have seen this quarter so far looked a lot like dece the third quarter
of 2024 in that we saw a broadening of the market when I talk about that mag 7 dominating the market I like I said it's never been seen the concentration has never been seen like this before and it was very hard for most portfolios to keep up in that in the third quarter of
2024 uh we saw the market broaden and I've said in this meeting I'm probably the last two or three times if AI if artificial intelligence is everything it's cracked up to be the S&P 493 the you know the non mag 7 stocks are going to benefit tremendously too but the
market didn't seem to care about that right now they were just up till now really they've just been rewarding primarily the the creators the chip makers those people for for AI but uh you'll see that trickle down to the other companies I think and we'll see a broadening well so
far year to date we've seen the market broaden again and it's happening even though everything's getting hit today uh Tech seems to be getting hit pretty hard it was the Walmart forecast seemed to trigger it uh and it wasn't their their earnings were great but the the guidance
they gave was a little bit cautious about their their growth but if you go back and look at Walmart and I heard a good analyst as I was driving here today I had to drive over actually from s soda today so I got to listen to a lot of analysts today but uh Walmart's always
conservative in their guidance always so they always kind of set a lower bar and they were up over 80% that Stock's been up over 80% in 2024 so there's probably some profit taking in there after they came out and said hey things might slow down a little bit um the Tariff talk could impact them
although a very high percentage of their business now is food and most of their food is not is sourced in the US so uh it may not hit them as hard as you might think because I think most of us think of Walmart everything's made in China you know and that's why they price it so low but apparently that's that's changed
they've kind of changed the mix a little bit so but anyway we don't know what those tariffs are going to be and where they're going to be anyway so that that uh that's been in the news I don't think that moved everything today there was a big sell off on uh AI tech stocks related to the defense industry so
anybody who had big contracts with the defense industry got hit today um they uh the president is given the um Department of Defense a mandate to cut expenses 8% a year for the next 5 years so uh some of the names and particularly
in the NASDAQ that were U related to Ai and and had big defense contracts got hit a little bit on that news today so uh that combined with the fact that interest rates aren't going any lower for a while I doubt I don't think we'll see a rate cut this year that's just one
person's opinion you got to the the votes are all over the place uh but uh I don't see a I don't see the need for it right now and I think it would be pretty inflationary if they did and um I think the tariffs are going to be inflationary enough to deal with in the short run so
I don't I don't I don't see a decline there so anyway that's kind of the forecast for 25 bonds will probably if you can get a coupon return maybe get um 4% out of your bond portfolio this year that'd be good uh and then U hopefully we'll get somewhere between 8 and 10 on
the stocks that would be kind of where I'd guess we'd be but but you know there could be about a million as as uh as much as coming out of Washington these days every day there could be a million Black Swan ofense to interrupt that forecast so we just kind of hang in
there when it gets this noisy what we tend to do is uh even rely more on our long-term Targets in the portfolio and kind of stay keep our eyes focused and stay steady as she goes so so anyway page two is the equity markets page three that's the top is the bond market again Blake touched on that we were
actually down 3% for the quarter now remember in a bond portfolio if you're already holding the bond and rates go up the market value goes down well interestingly enough in the fourth quarter the FED cut rates in in November 25 basis points and in December by 25
basis points that was the short end of the curve so the short end of the yield curve short rate short-term rates went down the market said I don't know why you're doing that or you know Market said a lot of things but it didn't say we're going to lower rates and so the market controls more of the intermediate
and longer term rates and intermediate long-term rates actually went up uh for the quarter and that's why you see a negative return for the uh for the bond portfolio that has kind of flipped around a little bit um really they haven't moved too much the bond Market's pretty flat for the quarter uh year to
date now for this this quarter it was up just a little bit but I think it I think it ticked downward a little bit with rates crep up a little bit here but rates are pretty flat across the board I think you get I was talking right before the meeting I think you get 4% in the money market maybe 42
4.2% on a 2-year 4.3 on a 5 4.5 on a 10 just it's pretty flat everywhere is in between four and 4 and a half pretty much uh for the treasury curve but again that your your bond managers can buy investment grade stuff and now they can go into corporate investment grade bonds
and still buy in the 5% range or more so that's good news longer term we don't have to take as much risk in the portfolio if we can own more bonds paying 5% back the last few years Bonds were paying 1 and 2% but we still had a goal of over seven that we wanted to
make in the plan so we had to increase our Equity allocation increase our our other asset classes in the portfolio uh in order to try and continue to make that you couldn't just do 60% stocks 40% bonds and expect to get 8% or 7% wasn't going to happen but now we're kind of
getting closer to where we can raise that fixed income we have a little bit over the last few meetings you're up a little bit more in bonds and we're about 30% uh a little over 30% bonds and money market right now so uh I'm comfortable
with that allocation so if you go to um why don't we just skip on over to page seven as uh again Hannah Blake mentioned that they they manage about 60% I believe it is about this 60% of this portfolio this is this goes way way way
back uh to they used to manage it all when they were um SunBank Capital Management I think it was and and anyway it was the it's been an evolution it's a little unusual to have it this way but I've got another plan with Blake that works the exact
same way down in South Florida um so he he has discretion on about 60% of the portfolio he and his group and then we help you with the out anything outside that that they don't do or you know it's asset classes they don't manage and
we've helped you diversify the portfolio more we're still responsible for monitoring the entire portfolio including the that they manage and if you know if there's something in there I don't like or don't think I will call Blake and say what are you guys thinking just like I asked him about the growth
uh versus value uh tilt to portfolio now and we have a lot of those discussions so um he's made changes in the portfolio in the past but that's kind of the overall picture and that's how that's uh you know our job is still to look at the whole thing he actually manages the he
and his team manage a large portion of it a little over half of it uh that's your asset allocation I will say in this chart it's a little misleading those first three categories you see like a big underweighting and growth and value and then a big uh and core we don't have zero we have zero just treat those three
together as large cap stocks and when you add it up we're pretty close to the Target in large cap stocks okay so that's that's a again kind of a misleading way we we uh do this chart i' I think I may recommend we change it um
but it does give you an idea the gold bar is the target from the investment policy and the blue line is the actual allocation as of the end of that quarter go over to Performance why don't we just skip over to page 10 so for the quarter it was wild
quarter uh you wouldn't know that by this number minus 0.9 pretty flat but if you remember uh after the election we got a big bump in the market the market was all excited about the results because it was going to be a very progrowth deregulatory kind of environment very
Pro business environment and uh this the market just took off and then I don't know if you want to say reality set in or whatever you know but the the the the market sold back off a little bit then and uh December then was not a good month it all rotated right back to those
mag s stocks in the in the last part of the quarter and everything else got hit pretty good so so uh ended up being a negative quarter but you also had bonds down 3% uh growth you can see this and this growth portfolio was up N9 for the
quarter value was minus two for the quarter uh in or minus 5 for the quarter so that shows you what how the market rotated during that quarter again with those mag seven stocks being in that growth Benchmark everything else was flat kind of negative and then Bonds
were down 3% so or 2.6% so uh kind of a tough quarter but on the one one year basis the calendar year 24 uh up 10.1% uh in line there with the the Target or the model which was up 10% despite the fact that the value Portion
underperformed by are by 9% but it's not a large portion of your portfolio so those allocations have really helped you in terms of how they structured that large cap portion of your portfolio um what else did I want to mention oh
remember this is a calendar year one year your fiscal year ends 930 he just came off of a 21% plus uh fiscal year so we had a great fiscal year uh but so far kind of a rocky start to the 2025 fiscal
year going into today I was going to be able to tell you you were probably up 2 or 3% going into today and I think it's given about a percent away today so you're probably still in positive territory for the fiscal year to date as we sit here today but things got a
little blown up today um and then your 5year number 7.1 versus 6.8 I think we have a 7.25 we still at 725 7 and a quar assumption rate here so I like the allocation and uh we should
be able to hit that Target uh without any problem longer term um all the different funds are listed on page 12 and 13 so you can see the returns both gross and net of fees for all of the all of the individual hold Holdings in the
portfolio I'm not recommending any changes today or any rebalancing for that matter um we're getting a little rebalancing today whether we like it or not um in terms of equities getting knocked off you know a couple percent or percent or so today so um the page 14 is
just a chart that we don't always cover but I'll I'll mention it um this is going back to the fourth quarter of 2019 the Blue Line represents the market value of your portfolio as of the end of each quarter the um green line is the cash flow so
you can see by the green line sloping down there's more money going out then coming in to this plan showing a a very mature plan also shows that we need some earnings to keep things going the right direction right so the blue line is the market value shows the bad effects of
2022 but shows we're inching back up to almost getting closer to those valuations that where we were up in 2021 so so we closed the year a little bit over 34 million so uh climbing back up again um several analytical charts I
don't usually go over those with you uh but page 16 maybe I'll end on that one and if you have any questions or any charts you want to go into in detail let me know but page 16 are your fiscal year returns dating back to 2006 and you can see uh some major
volatility starting there in 2021 um but we our goal is 7 and a quarter if you I actually went ahead and did the math on those 19 full years on this chart and I came up with about a 7.4% average despite a minus 18% year in
2022 so that tells me that the longterm Target is probably good I mean it's right where we it'll get us to where we need to be uh that doesn't mean we can escape volatility when when it get when it hits like it did in 22 as we learned
we can't um but I think you've got a well Diversified portfolio I will tell you this if the market goes back to mag 7 or the Fantastic 5 whatever it is now if it stays that concentrated we will struggle to get to keep up with the benchmarks if it broadens out like I
kind of expect it to we should do very well but uh it it can't those P those five stocks that are left in the mag 7 uh to me are just priced to absolute perfection so anything that uh you know when we saw called Deep seek come out
they took a huge hit one day now they've come back they're I think most of them are back to where they were prior to deep seek but for a couple days there you know they would got really Rocky there um and then they're getting hit again a little bit today so I I don't like to expose portfolios to that kind
of risk and so we'll we'll stay Diversified and and really kind of hope the market broadens out and and reward you but I say we broaden out in conservative but you just came off 21% year so you know we had enough in there to make some money so we should be in pretty good shape um just a quick
conversation with Doug there before we started the meeting and I think your funded ratios and all that are pretty healthy so uh I'm not recommending any changes to the program I think everything's going in the right direction wonderful thank you Mr Co any questions yeah so you say it's going
down here which it is I see it's ticking up so what do you think the the realistic rate of return should be real estate the rate of return should be oh the real rate of return to keep it again I think to be I I think you mean for the
overall portfolio yeah I I I think you know it's the program is designed that and and we've got um we have to submit a report every quarter to the state I don't even know if you guys see it but it shows each asset class and what we expect the return to be and what
that gets us in the total return it's all projection it's all crystal balling but it's based on historical data too and all that so it's designed to give us the 7 and A4 plus so I think you got a good chance of making 8% plus with the way with this portfolio is allocated and
that's what I would expect I I don't see any reason why we won't be there on September 30 uh you know I'm certainly not going to predict another 20% year but I do think the bull market can continue we're only uh what 28 months or something I forget the exact number but 28 months into the bull market the
average bull market uh is runs closer to 60 months so there's plenty of room for for it uh and if you really dig into the again into the markets the markets look very expensive across the board because of those seven
stocks and their valuations you take those out of there the Market's still a little expensive relative to historical but nowhere near out of line like it was before so I think there's some room to run earnings have been coming in it uh I think uh they were saying so far this year the reported earnings most
companies were up about 17% uh uh year-over-year so strong and so if you believe in price earnings multiples then that means prices should go up too to maintain those multiples so um barring any crazy actions from the
FED uh and um again the tariffs concern me but just in the short run I I you you see a lot of different reactions to the tariffs you know he might place a 10% tariff over here but then their
government and China is subsidizing a lot of that tariff so you're not really seeing prices increasing because of it or you'll see I think I forget who it was in Europe might have been Germany but I can't remember we slapped or threatened to slap a a tariff on some
cars maybe I think it was cars but their 10% tariff on us went down to 2 and a half or two and a quarter just like that so yeah there's a tariff on one end that went up but then that one went way down so it's it's kind of a debate I think
short run it's got to be inflationary but longer term I don't I don't think it necessarily has to be especially if we start making a lot more Goods in the US to avoid the tariffs in the long run that should be good but I guess the short answer to
your question is I expect us to make the Assumption right don't have any reason at this point to believe we won't but who knows what'll happen between now and September 30 thank you does the board have any other questions for Mr
Cole seeing that there's no other questions lastly we have Doug loen from Foster and Foster um with the Actuarial valuation report all right thank you annah I'm going to come around and just fire the iPad back up with
password thank you here we go thank you's good all right good to see everybody again I promise to keep it short and sweet it's pretty
much the same answer I had when I was here last year I start on page six which shows a change in the city's contribution rate um as a reminder is the actuary our role is
to adjust the city required contribution each year based on experience either up or down in order to keep contributions flowing in that get invested ideally growing at 7 and a qu%
so as benefits come due in the future there are sufficient funds in the trust fund to pay those out and along the way keep the funded status at a reasonably High Level under understanding that from year to year you're going to have relatively minor changes in the
contribution requirements and the funded status so this is really just a true up every year that we do and and every five years we go through an an overall review of all the assumptions uh to see if we need to make
wholesale changes on a go forward we're not there yet next year is when we'll go through that exercise again so here what we we're doing for the in between those two fiveyear studies is we make these small adjustments leaving the
assumptions alone so we are still assuming that Investments are growing at 7 and a quarter we're still assuming that individual members in the plan are getting salary increases between 4 and a half and 5% a year we still have
assumptions for turnover what the likelihood of members leaving the plan before retirement eligibility we also have assumptions for when members retire knowing age and service um according to the ordinance
provides the eligibility but are the members doing it right then or are they deferring retirement all of these assumptions we leave in place for 5 years and simply adjust the contributions and the funded status accordingly again being a general
employees pension plan it's it's relatively stable uh compared to say a police and fire pension plan which has earlier retirement dates there's a lot of stability with this plan in spite of that they're still moving parts so if
you look at the page I opened up the start this is the summary of the uh summary report the city's required contribution for the current fiscal year is the right hand column uh it's
11.59% of payroll um that I say it's for the current year that was the valuation date done as of October 1st 2023 we project one year forward so the city has time to budget because I'm
usually here at the February meeting announcing the results and the city wouldn't want to get the results that late in the year they would have to adjust their contributions this year so when I did the 23 valuation and was here a year ago
presenting it it's for this fiscal year so it's the same exact 11.59% that I reported last year now for budgeting the city should use that 12.1% for fiscal
2526 and the primary reason for the increase is this is the third year in a row that the city has increased salaries a lot compared it's a relative
term I say a lot compared to the Assumption again the Assumption I mentioned this a little bit ago was in that 4 and a half to 5% range which we used based on the last experience study we did we did that four years ago and we
had looked at the 10-year average coming up to that and said okay 4 and a half to five is what was happening well with inflation everybody in the state all the local governments in Florida are doing what they can to
retain employees and Recruit new hires and part of doing that in an inflationary environment is to increase salaries so back of the envelope math if I take uh an average employee in the
plan that was here three years ago their salary and average is about 50% higher than it was 3 years ago ago based on the Assumption the 4 and a half or 5% we would have expected the average salary over that three-year
period to increase about 18% or so so that has a lot to do with why you see an increase as a percent of payroll is every year that the city gives out an average salary increase above that 4 and
a half or 5% we are now projecting benefits to retirement that were higher than the year before higher than we had expected and on a present value basis as the actuary we come back a year later and say okay you need to make a slight
adjustment to the annual contribution requirement because we expect benefits are now going to be higher by X yes sir I don't want it all the details but wouldn't higher pay equal higher
contribution also from the members yeah correct however the members are only putting in 5% of their pay I say only I mean that in comparison if you look on page six here the minimum required is uh
16.59% for this year and 17.1 for the next year that's that's the true Actuarial cost um that we see necessary to keep the plan actuly sound the members are contributing 5% so the difference comes
back to the city so yes the members are putting in more that that's true but then the city is also putting in its own proportional increase now while this is an increase I I explained because of salaries it would have been
higher had you not had favorable investment performance over the last couple of years and the good news there is that that your investment performance was on we're using a four-year average and I say good news because we want to
minimize volatility your return for this last year was over 20% but we average at over four years so that means rather than giving you a report which immediately recognizes that full 20% return we're recognizing a
quarter of it and we'll do that for the next four years so so what I'm hoping is that that while I think the city's requirement may still go up a little bit as a percent of payroll the ne maybe for one more
year those prior positive returns total over the last four years will begin taking over and should stabilize out the city's requirement now I put a caveat to that because no crystal ball I have no idea what the
city might be doing as far as additional salary increases over the next couple of years and there's there's a trigger to that as well there there's there's these little tentacles that go out it's actuaries we have to factor
in if the city is still increasing salaries that means they're trying to reduce turnover I've seen there's been a lot of turnover at the city there's been a lot of folks coming staying for a couple years and leaving that's positive for a pension plan that means the members are
putting in their own 6 and A2 the city's putting in 10 11 12 if the member leaves they take their 6 and A2 with them what the city put in stays with the pension plan but the liability is gone when that person
leaves so high turnover equals good for pension plan but it drives the city crazy so if the city's increasing salaries to try and keep people from leaving as much then favorable turnover experience next couple of years might
start tapering off so this is a long way of saying this is why you have to see the actuary every year is we do these true UPS based on what's happened in the last year compared to what we assumed happened I every year do a
presentation and I try to get everybody kind of warmed up to the idea of you know what might be coming the next year or two on an Actuarial basis and the best I can do aside from the details I just gave you you is that I still think stability I think the city's requirement
will go up for another year or two slightly as a percent of payroll and then stable off so before I get you an update on the funded status can I answer any questions from what I've covered so far is there I probably shouldn't open a
can of worms but go ahead and open the city's portion is there usually a trigger where a municipality started saying that's that's oh that's subjective um yeah yeah I I will tell you you know back 10 15 years ago the
city's requirement was was higher than this as a percent of payroll okay and it came quite a bit down and then we changed certain assumptions we lowered the investment assumption which was prudent we did that in stages um you know a lot of things have
changed in the last 10 or 15 years especially economically on the Space Coast so I that's about as far as I'm going to go it's I I know CU we do other plans here we do the Cocos the Melbourne's Titusville I know this area is a lot
better off economically than it was 15 years ago so I don't know what the trigger of pain is nowadays for the benefits package there's no answer to that yeah although I do know I can answer probably 100% accurate that
if the contribution requirements go down everybody would be happy okay so let me get you an update on the funded status if you uh just touch the iPad and keep moving to the right just swiping page 17 or you can just keep
going until you come across a graph with green bars uh this is a history a 10-year rolling history of the plan's funded status and it was very stable in the 90s even cracking 100
until about 2021 and then it's been gradually tapering off that tapering off has mostly to do with the salary increases the three consecutive years of double digit increases but I'm I'm not concerned this
is one of the reasons we put this graph in here is there's no big change from one year to the next everything is very gradual we're funding the pension plan for many decades any given year you're not going to expect a big change in the city's
requirement or in the funded status I think we're if I was to guess it might get a tad bit lower stabilize out and then begin going back up again just from everything that we've talked about
today but I'm comfortable with your plan I'm comfortable with the assumptions I think it's well funded your investment performance is on par with all of the other plans I see around the state this last fiscal year the 20 plus return is
very good um surprisingly that's that's about average I've I've seen returns this last fiscal year doing valuation reports ranging from 16 to 30 and the ones in the high 20s are you
know those are in the top few percentile you return the 20 to 21 is is actually about average maybe a little bit above average um and your your four-year average is right in the Wheelhouse of what I've seen so you're you're doing
perfectly fine um performance-wise and Investments we'll just have to let future experience dictate where the requirement goes going forward so I'm going to call my report done um I'm happy to answer question
questions if you if once they've all been answered then you'll need to approve this and then we have one exercise after that does the board have any questions at this time I have one random question in your experience how would a drop program affect our plan if
we brought inally neutral most actuaries including our firm uh say if a drop is is uh set up in the standard way a drop program is it's cost neutral that would be you have to
be eligible for normal retirement if you have a fixed interest option it should be below the 7 and a qu% I'd say probably in the 3 or 4% range or just whatever the plan gets and you should limit the
participation period to no more than eight years if those features are built in then we would say long term there's there's no real impact on liabilities okay thank you any
questions so we'll need to take a vote to approve this I'm then I have one other thing for you all to vote on approving it to accept it is it t uh yeah you could say uh motion to accept the October 1st 2024 evaluation report
to accept the valuation report presented by D loen I'll second all in favor say I I I okay there's that and then there's yeah the next item on the agenda if you want to remain at the podium is guessing
um under informational items we have the Foster and Foster Social Security government pension Provisions uh before we jump to that um which that's a very quick answer on my part there's something we have to go through every year now that you've approved the
valuation report it's for the state it's called The Declaration of returns I've said it so many times I'll say it you can say so move because no one remembers it it it it's simply the division of retirement wanting the
pension board to acknowledge your expectation for investment return for the the next year and the long term the the exact language is for the next year the next several years in the long term thereafter you expect a 7
and a qu% net of Fe investment return that's the actual motion that you can just say so moved and then you have to vote on it where does that seven come from uh we always recommend that you pick the
assumption that you just approved in the valuation report for this purpose okay say seven or seven seven and a quarter can we a motion uh yes and you can say so move to the language I just gave and then you'll have to vote on
it I'll second all those in favor say I I and I'm guessing Pam probably has it's just you take out the same letter that's gone to the state for the last 20 years and resubmit
it yeah no it it it's it's somewhere it's can you a copy of it uh yes well well you know we we don't we don't serve that role um it's
somebody acting as the administrator for the pension plan has had to send this to the state for the LA but now that Larry's coming he might hey Larry sorry you we're invoking your name since you walked off do you facilitate that
Declaration of returns letter they they just voted on it they they put the seven and a quarter in but we're trying to figure out who sends the letter to the state we we do a draft I think and send it to you well there you go great perect we'll get one for Pam okay I I facilitated it so we're good oh
wait the Declaration letter what we do is the letter we'll get with you we'll figure it out I I put in a nine and a quarter is that okay how what you say nine and a quarter long as Blake signs off on that guarantee I'm good with it there we go the
that's in the minute he's got 60% of the assets he's the ones got to give you the um okay so Hannah the the last part the um Social Security memo that's informational only it's from our Le our
legal department at Foster and Foster sent out this memo it's this new law that passed right at the end of the Biden Administration those municipalities that didn't contribute to Social Security there there's there's a bit of a windfall for those who are getting
Social Security and a defined benefit I we I'm guessing people at working at city of Coco Beach have always contributed to Social Security yeah so this is informational only just just as a a law that passed has it
doesn't pertain to Coco Beach because of that so there's there's no action needed that I just gave kind of the back of the envelope of what it is does the board have any questions at this time seeing that there's no questions
the next quarterly meeting I have one item I'd like to mention um I'm not sure about this but like we voted on a retiree you know I'm not you know we don't even know who it is or what it is or like we're voting on something we don't even know about I
don't really know if that's normal or I believe within the settings of the board we can't disclose the name of the retiree since it's public record that's fine but how what are we voting on what if it's approval of the retire the
retiree yes it just seems bizarre to me I'm not being critical you know it's like voting on something that you have no skin in the game you know we used to get the people's names and stuff not I'm not saying we should they don't allow
us what's that they don't allow us to that's fine it just seems like why are we voting on it then just how many so you so the board knows how many re in the quarter I see because we've had those mistakes of overpayments and stuff and you know not
that we're going to verify that but are there any other questions no okay um next quarterly meeting setting set for May 15th um at 3 p.m. and being that there's no other business that comes before the board I'd like to have
a motion in a second to adjourn I make a motion that we adjourn the meeting let's not second it say [Music] I right