South Bend investment manager reports $200M portfolio, council committee backs 2026 investment policy

Paul Gifford, chief investment officer for Source Bank, told the Board of Finance and the Personal & Finance Committee that the City of South Bend’s investment portfolio stood at about $200,000,000 in principal and paid “just over $9,100,000” in interest to the city over the last year. “We believe the U.S. economy is going to continue to grow,” Gifford said, and he added that he expects “interest rates will likely be lowered by the Federal Reserve later this year,” which would reduce short-term yields for the portfolio.

Gifford described the portfolio’s composition and recent performance: about 45% is held in cash-like instruments (money markets and short Treasury bills) and the rest in Treasury and agency securities. He said the portfolio earned roughly 4.5% in the last year and averaged about 4.8% over three years, and he explained the benchmark choice: “the 1 to 3 year treasury seemed to be an appropriate benchmark, because it is slightly different than cash,” reflecting the city’s statutory maturity constraints.

City staff and Source Bank emphasized the role of Indiana’s statutory limits on municipal investing. Gifford said Indiana law constrains most investments to two years or less with a small permitted portion of two-to-five year maturities; within those rules, he said his team selects securities daily based on what provides the best return for the city. In response to questions about how the benchmark was set, Gifford said the benchmark is intended to reflect “how the portfolio is invested,” acknowledging some years will underperform if the portfolio holds fewer longer maturities.

Separately, the Personal & Finance Committee considered Bill 26-01, a resolution to adopt the City of South Bend’s investment policy for calendar year 2026 that reaffirms permitted instruments (including certificates of deposit). After a brief public‑hearing period with no speakers for or against, a committee member moved to send the resolution to the full council with a favorable recommendation; the motion was seconded and a roll-call vote recorded unanimous ayes.

What happens next: Bill 26-01 will go before the full Common Council for final action. Staff advised that the council receives quarterly reviews of the portfolio and that First Source (Source Bank) meets with city staff regularly to update performance and strategy.