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<br />NOTE 2 – DEPOSITS AND INVESTMENTS
<br />
<br />A. Components of Cash and Investments
<br />
<br />The City had the following cash and investments at year-end:
<br />
<br />Fair Value
<br />Measurements Less Than 1 to 5 6 to 10 Greater Than
<br />Investment Type Rating Agency Using 1 Year Years Years 10 Years Total
<br />Federal National Mortgage Association AA S&P Level 2 –$ –$ 99,742$ 248,270$ 348,012$
<br />Federal Home Loan Bank AA S&P Level 2 – 368,272 – – 368,272
<br />Municipal bonds AAA S&P Level 2 199,342 147,762 – – 347,104
<br />Municipal bonds AA S&P Level 2 253,470 882,236 814,200 – 1,949,906
<br />Municipal bonds AA Moody’s Level 2 – – 1,173,091 – 1,173,091
<br />Municipal bonds A S&P Level 2 – 313,219 – – 313,219
<br />Municipal bonds A Moody’s Level 2 150,377 – – – 150,377
<br />Commercial paper A-1 S&P Level 3 100,600 – – – 100,600
<br />Negotiable certificates of deposit N/R N/A Level 2 3,166,383 1,536,329 141,231 145,382 4,989,325
<br />Investment pools/mutual funds
<br />External investment pool – 4M Fund N/R N/A N/A 1,402,382 – – – 1,402,382
<br />Wells Fargo Money Market Advantage AAA S&P Level 1 51,181 – – – 51,181
<br />Total investments 5,323,735$ 3,247,818$ 2,228,264$ 393,652$ 11,193,469
<br />Deposits 167,687
<br />Petty cash 500
<br /> Total cash and investments 11,361,656$
<br />N/R – Not Rated
<br />N/A – Not Applicable
<br />Interest Risk –
<br />Maturity Duration in Years
<br />Credit Risk
<br />
<br />
<br />B. Deposits
<br />
<br />In accordance with applicable Minnesota Statutes, the City maintains deposits at depository banks
<br />authorized by the City Council, including checking accounts and certificates of deposit.
<br />
<br />The following is considered the most significant risk associated with deposits:
<br />
<br />Custodial Credit Risk – In the case of deposits, this is the risk that in the event of a failure, the
<br />City’s deposits may be lost.
<br />
<br />Minnesota Statutes require that all deposits be protected by federal deposit insurance, corpora te
<br />surety bond, or collateral. The market value of collateral pledged must equal 110 percent of the
<br />deposits not covered by federal deposit insurance or corporate surety bonds. Authorized collateral
<br />includes treasury bills, notes, and bonds; issues of U.S. government agencies; general obligations
<br />rated “A” or better; revenue obligations rated “AA” or better; irrevocable standard letters of credit
<br />issued by the Federal Home Loan Bank; and certificates of deposit. Minnesota Statutes require that
<br />securities pledged as collateral be held in safekeeping in a restricted account at the Federal Reserve
<br />Bank or in an account at a trust department of a commercial bank or other financial institution that is
<br />not owned or controlled by the financial institution furnishing the collateral. The City has no
<br />additional deposit policies addressing custodial credit risk.
<br />
<br />At year-end, the carrying amount of the City’s deposits and the bank balance was $167,687. The
<br />entire bank balance was covered by federal depository insurance, surety bonds, or by collateral held
<br />by the City’s agent in the City’s name.
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