2020 09-15 CC PACKET - Laserfiche WebLink

Home

CITY OF GEM LAKE, MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 NOTE 2 DEPOSITS -AND INVESTMENTS (CONTINUED) B. Investments (Continued) • Repurchase or reverse purchase .agreement and securities lending agreements firianciai institutions qualified as a "depository" by the government entity, with bariks. that are members. of the .Federal Reserve System with capitalization exceeding $10,000,000, a.primary reporting dealer in,U.S. government securities to the Federal Reserve Barak of New York, or certain Minnes©ta securitles broker -dealers. • Any security.whlch i$ an -obligation of a school district with an original. maturity nQt exceeding 13•months and (i) rated in the. highest. category by a national 4pnd rating service (1111•enrolled in athe cedit enhancement program pursuant to Minnesota $tatute §126C.55 Custodial Credit Risk For an investment, custodial credit risk is the risk that, in the. event of failure of the counterparty, the City will not be able to recover the••value of its investment or collateral securities that are in the possessiiot) of an 6091de party. The CWs investment policy doesn't specifically address custodial credit risk. interest Rate Risk Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. Generally, the longer the•:maturity of an investment, -the greater the sensitivity of its•fair value'to changes in market interest rates. The City's investment. policy doesri't specifically address interest rate risk. Information about the sensitivty of the fair values. ;qf the City's investments. to market interest rate risk fluctuations is provided by the *following table -that shows the. distribution of the City's investments by maturity:: Maturity Duration in Years: Inue*nertType Total Less Than 1 1 to 2 2 to 5 Rating Negotiable C40cohm of Do posk• $ 584,252 3 175,976 S. - S 408,276 Not Rated Money Marks 8,222 81222 - Aaa(AAA Total S 592,474 $ 184,198 . $ $ 4� 0 Credit Risk Generally, credit risk is the risk that an issyier of an investment will not fdlfili :lts•obligation to. the. holder of the investment. This is measured by the assignment of a .•rating �y a nationally recognized statistical -rating organization. The City's investment policy does not specifically address credit risk. (22)