2012-04-11 CC Packet - Laserfiche WebLink

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CITY OF CENTERV I L L E, MINNESOTA NOTESTOTHE FINANCIAL STATEMENTS DECEMBER 31, 2011 Note 3: DETAILED NOTES ON ALL FUNDS A. Depositsand investments Deposits Custodial credit risk for deposits and investments is the risk that in the event of a bank failure, the City's deposits and investments may not be returned or the City will not be ableto recover collateral securities in the possession of an outside party. In accordance with Minnesota statutes and as authorized by the Council, the City maintains deposits at those depository banks, all of which are members of the Federal Reserve System. Minnesota statutes require that all City deposits be protected by insurance, surety bond, or collateral. The market value of collateral pledged must equal 110 percent of the deposits not covered by i nsurance or bonds. Authorized col I ateral in l i e u of a corporate surety bond includes: • United States government Treasury bills, Treasury notes, Treasury bonds; • Issuesof United States government agencies and instrumentalities asquoted by a recognized industry quotation service avai I abl e to the government entity; • General obligation securitiesof any stateor local government with taxing powerswhich is rated "A" or better by a national bond rating service, or revenue obligation securitiesof any stateor local government with taxing powerswhich is rated "AA" or better by a national bond rating service; • General obligation securitiesof a local government with taxing powers may be pledged as collateral against funds deposited by that same local government entity; • Irrevocable standby lettersof credit issued by Federal Home Loan Banksto a municipality accompanied by written evidence that the bank's public debt is rated "AA" or better by Moody's Investors Service, Inc., or Standard & Poor's Corporation; and • Time deposits that are ful ly insured by any federal agency. Minnesota statutes require that all collateral shall be placed in safekeeping in a restricted account at a Federal Reserve Bank, or in an account at a trust department of a commercial bank or other financial institution that is not owned or controlled by the financial institution furnishing the collateral. The selection should be approved by the City. At year end, the City's carrying amount of deposits was $4,371,761, and the bank bad ance was $4,438,132. Of the bank balance, $250,000 was covered by federal depository insurance and $4,188,132 was covered by collateral held by the City's agent in the City's name. -57-