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<br />-25- <br />NOTE 2 – DEPOSITS AND INVESTMENTS <br /> <br />A. Components of Deposits and Investments <br /> <br />Cash and investments at year-end consist of the following: <br /> <br />Deposits 730,093$ <br />Investments 563,575 <br />Total 1,293,668$ <br /> B. Deposits <br /> <br />In accordance with Minnesota Statutes, the City maintains deposits at financial institutions which are <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 bank 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 market 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 was $730,093, while the balance on the bank <br />records was $854,268. At December 31, 2021, all deposits were fully covered by federal deposit <br />insurance, surety bonds, or by collateral held by the City’s agent in the City’s name. <br /> <br />C. Investments <br /> <br />The City has the following investments at year-end: <br /> <br />Fair Value <br /> Measurements <br />Investment Type Rating Agency Using Less Than 1 1 to 5 6 to 10 Total <br />Municipal bonds AA Moody’s Level 2 –$ –$ 159,056$ 159,056$ <br />Negotiable certificates of deposit N/R N/A Level 2 40,277$ 364,242$ –$ 404,519 <br />Total investments 563,575$ <br />N/R – Not Rated <br />Interest Risk – Maturity Duration in YearsCredit Risk <br />N/A – Not Applicable <br />