Board members discussed the transition challenges experienced with Principal, which had taken over custodial services after Truist’s exit from the public market space. Concerns were raised about Principal’s delayed reporting process, which board members found detrimental to timely financial management. During the meeting, members shared their experiences of frustration and inefficiencies, with several retirees inquiring about delayed payments. The board concurred on the need to explore alternative custodial services, prompting the decision to issue an RFQ. This step was deemed essential to ensure reliable service for the pension plan’s operations.

In the investment domain, the Palatka Pension Board reviewed the performance of its portfolio, highlighting a diversified approach that has yielded favorable returns despite market volatility. A report by Dwayne Madan from Capital City Trust outlined a strategic shift from large-cap technology stocks to mid-cap, small-cap, and international equities. This diversification had been beneficial, with the pension fund seeing a return of 2.29% in equities for the fourth quarter and an overall equity return of 5% in the fiscal year thus far. Madan emphasized the importance of maintaining a higher cash reserve due to high equity valuations, which had increased by 70% over the past three years. He warned of potential market challenges, including a weakening job market and high consumer debt.

Further insights into fixed income performance were provided, noting that interest rates influenced the portfolio significantly. David Seagull from Progress Asset Management reported a stable fixed income outlook, with a quarterly return of over 1% and a one-year return of over 8%. The portfolio’s yield at year-end was 4.6%, reflecting a favorable environment for fixed income investments, despite previous inflation spikes that had affected performance.

The meeting also touched on asset management strategies, focusing on the composition of corporate bonds and mortgage-backed securities within the portfolio. Corporate bonds were slightly underweight against the benchmark, with a suggestion that market volatility might present reallocation opportunities. Mortgage-backed securities, all government-guaranteed, were emphasized for their safety and significant contribution to the portfolio’s success over the past year and a half.

In terms of market performance, Mitchell Brennan provided an overview of 2025 and 2026, noting robust U.S. market growth, despite international markets outperforming them. This outperformance was attributed to a weakened dollar and increased defense spending amid geopolitical tensions. Brennan highlighted a shift in market dynamics, with sectors such as energy and materials gaining traction, while the previously dominant technology and AI sectors lagged.

The board also reviewed a detailed financial report of the pension plan, which earned $289,000 for the quarter, slightly lagging behind the benchmark due to a larger cash position. International funds were the standout performers, with notable gains in developed markets. Over the previous year, the plan earned $1.9 million, closely aligning with its strategic model. The report underscored the plan’s long-term success, with total earnings of $10 million over the past decade, surpassing the actuarial assumption rate.

Legal updates and administrative matters were also addressed, with the board passing an ordinance regarding a partial lump-sum option for retirement benefits. This change was expected to pass smoothly on its second reading and would impact all three plans managed by the board. The board also approved joining the Florida Public Pension Trustees Association, a move aimed at enhancing trustee education and meeting annual training requirements.