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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
<br />Investment Type Rating Agency Using 1 Year Years Years Total
<br />Municipal bonds AAA S&P Level 2 –$ 151,356$ 239,388$ 390,744$
<br />Municipal bonds AAA Moody’s Level 2 – – 237,250 237,250
<br />Municipal bonds AA S&P Level 2 – 1,035,175 1,032,591 2,067,766
<br />Municipal bonds AA Moody’s Level 2 – – 1,280,804 1,280,804
<br />Municipal bonds A S&P Level 2 – 343,168 – 343,168
<br />Municipal bonds A Moody’s Level 2 – – 333,092 333,092
<br />Negotiable certificates of deposit N/R N/A Level 2 – 3,509,686 670,704 4,180,390
<br />Investment pools/mutual funds
<br />4M Fund N/R N/A N/A 6,804,467 – – 6,804,467
<br />Wells Fargo Money Market Advantage AAA S&P Level 1 9,457 – – 9,457
<br />Total investments 6,813,924$ 5,039,385$ 3,793,829$ 15,647,138
<br />Deposits 400,445
<br />Petty cash 500
<br /> Total cash and investments 16,048,083$
<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, corporate surety
<br />bond, or collateral. The fair value of collateral pledged must equal 110 percent of the deposits not
<br />covered by federal deposit insurance or corporate surety bonds. Authorized collateral includes
<br />treasury bills, notes, and bonds; issues of U.S. government agencies; general obligations rated “A” or
<br />better; revenue obligations rated “AA” or better; irrevocable standard letters of credit issued by the
<br />Federal Home Loan Bank; and certificates of deposit. Minnesota Statutes require that securities
<br />pledged as collateral be held in safekeeping in a restricted account at the Federal Reserve Bank or in
<br />an account at a trust department of a commercial bank or other financial institution that is not owned
<br />or controlled by the financial institution furnishing the collateral. The City has no additional deposit
<br />policies addressing custodial credit risk.
<br />
<br />At year-end, the carrying amount of the City’s deposits and the bank balance was $400,445. The
<br />entire bank balance was covered by federal deposit insurance, surety bonds, or by collateral held by
<br />the City’s agent in the City’s name.
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