Laserfiche WebLink
CITY OF GEM LAKE, MINNESOTA <br />NOTES TO BASIC FINANCIAL STATEMENTS <br />DECEMBER 31, 2019 <br /> <br /> <br /> <br />(21) <br /> <br />NOTE 2 DEPOSIT AND INVESTMENT (CONTINUED) <br />A. Deposits (Continued) <br /> <br />Custodial Credit Risk – Custodial credit risk for deposits is the risk that in the event of a <br />bank failure, the City’s deposits may not be returned to it. The City does not have a <br />deposit policy for custodial credit risk and follows Minnesota Statutes for deposits. <br />Minnesota Statutes require that all deposits be protected by insurance, surety bond, or <br />collateral. The market value of collateral pledged must equal 110% of the deposits not <br />covered by insurance or corporate surety bonds. Authorized collateral include: U.S. <br />government treasury bills, notes, or bonds; issues of a U.S. government agency; general <br />obligations of a state or local government rated “A” or better; revenue obligations of a <br />state or local government rated “AA” or better; irrevocable standby letter of credit issued <br />by a Federal Home Loan Bank; and time deposits insured by a federal agency. <br />Minnesota Statutes require securities pledged as collateral be held in safekeeping in a <br />restricted account at the Federal Reserve Bank or in an account at a trust department of <br />a commercial bank or other financial institution not owned or controlled by the <br />depository. <br /> <br />At December 31, 2019, the bank balance of the City’s deposits was $632,718; the entire <br />amount of which was insured or collateralized. <br /> <br />B. Investments <br /> <br />The City may also invest idle funds as authorized by Minnesota Statutes as follows: <br /> <br /> Direct obligations or obligations guaranteed by the United States or its agencies. <br /> Shares of investment companies registered under the Federal Investment <br />Company Act of 1940 and received the highest credit rating, are rated in one of <br />the two highest rating categories by a statistical rating agency and all of the <br />investments have a finial maturity of 13 months or less. <br /> General obligations rated “A” or better; revenue obligations rated “AA” or better. <br /> General obligations of the Minnesota Housing Finance Agency rate “A” or better. <br /> Bankers’ acceptances of United States banks eligible for purchase by the <br />Federal Reserve System. <br /> Commercial paper issued by United States banks corporations or their Canadian <br />subsidiaries, of highest quality category by a least two nationally recognized <br />rating agencies, and maturing in 270 days or less. <br /> Guaranteed investment contracts guaranteed by United States commercial <br />banks or domestic branches of foreign banks or United States insurance <br />companies if similar debt obligations of the issuer or the collateral pledged by the <br />issuer is in the top two rating categories.