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CITY OF CENTERVILLE, MINNESOTA <br /> NOTES TO THE FINANCIAL STATEMENTS <br /> DECEMBER 31, 2012 <br /> Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED <br /> Investments <br /> As of December 31, 2012, the City had the following investments that are insured or registered, or securities held by the <br /> City or its agent in the City's name. <br /> Fair Value <br /> Credit Segmented Concentration and <br /> Quality/ Time of Carrying <br /> Investment Type Ratings (1) Distribution (2) Credit Risk Amount <br /> Pooled investments <br /> Broker money market N/A N/A N/A $ 2,124 <br /> Nonpooled investments <br /> U.S. Government Agency Securities AAA 1 - 3 years N/A 500,745 <br /> Total investments $ 502,869 <br /> (1) Ratings are provided by various credit rating agencies where applicable to indicate associated credit risk. <br /> (2) Interest rate risk is disclosed using the segmented time distribution method. <br /> N/A Indicates not applicable or available. <br /> The investments of the City are subject to the following risks: <br /> • Credit Risk. The credit risk for investments is the risk that an issuer or other counterparty to an investment will <br /> not fulfill its obligations. Ratings are provided by various credit rating agencies and where applicable, indicate <br /> associated credit risk. Minnesota statutes limit the City's investments to the list on page 54 of the notes. <br /> • Custodial Credit Risk. The custodial credit risk for investments is the risk that, in the event of the failure of the <br /> counterparty to a transaction, a government will not be able to recover the value of investment or collateral <br /> securities that are in the possession of an outside party. Generally, the City limits its securities purchases to <br /> those insured and registered under the City's name. <br /> • Concentration of Credit Risk. The concentration of credit risk for investments is the risk of loss attributed to the <br /> magnitude of a government's investment in a single issuer. The City has 99 percent of its portfolio invested in <br /> FHLB at year end. <br /> • Interest Rate Risk. The interest rate risk for investments is the risk that changes in interest rates will adversely <br /> affect the fair value of an investment. <br /> The City does not currently have a formal investment policy that addresses the above mentioned risks. <br /> A reconciliation of cash and temporary investments as shown on the statement of net position for the City follows: <br /> Total <br /> Carrying amount of deposits $ 5,149,888 <br /> Investments 502,869 <br /> Cash with fiscal agent 509,210 <br /> Petty cash 199 <br /> Total $ 6,162,166 <br /> -60- <br /> 80 <br />