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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 277,198$ <br />Investments 1,121,070 <br />Total 1,398,268$ <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 $277,198, while the balance on the bank <br />records was $280,722. At December 31, 2023, all deposits were fully covered by federal deposit <br />insurance, surety bonds, or by collateral held by the City’s agent in the City’s name. <br /> <br />C. Investments <br /> <br />The City has the following investments at year-end: <br /> <br /> <br />Fair Value No <br />Measurements Maturity Less <br />Investment Type Rating Agency Using Date Than 1 1 to 5 6 to 10 Total <br />Municipal bonds AA Moody’s Level 2 –$ –$ –$ 139,468$ 139,468$ <br />Municipal bonds AA S&P Level 2 – – 491,889 – 491,890 <br />Negotiable certificates of deposit N/R N/A Level 2 – 116,057 315,183 – 431,240 <br />Investment pools/mutual funds Aaa Moody’s NAV 58,472 – – – 58,472 <br />Total investments 58,472$ 116,057$ 807,072$ 139,468$ 1,121,070$ <br />N/R – Not Rated <br />NAV – Net Asset Value <br />Credit Risk <br />N/A – Not Applicable <br />Interest Risk – Maturity Duration in Years