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NOTE 2 – DEPOSITS AND INVESTMENTS (CONTINUED)
<br />B. Deposits
<br />In accordance with applicable Minnesota Statutes, the City maintains deposits at depository banks
<br />authorized by the City Council, including checking accounts and certificates of deposits.
<br />The following is considered the most significant risk associated with deposits:
<br />Custodial credit risk
<br /> – 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 />Minnesota Statutes require that all deposits be protected by federal deposit insurance, corporate surety bond,
<br />or collateral. The market value of collateral pledged must equal 110% of the deposits not covered by federal
<br />deposit insurance or corporate surety bonds. Authorized collateral includes treasury bills, notes, and bonds;
<br />issues of U.S. government agencies; general obligations rated “A” or better; revenue obligations rated “AA”
<br />or better; irrevocable standard letters of credit issued by the Federal Home Loan Bank; and certificates of
<br />deposit. Minnesota Statutes require that securities pledged as collateral be held in safekeeping in a restricted
<br />account at the Federal Reserve Bank or in an account at a trust department of a commercial bank or other
<br />financial institution that is not owned or controlled by the financial institution furnishing the collateral. The
<br />City has no additional deposit policies addressing custodial credit risk.
<br />At year end, the carrying amount of the City's deposits was $4,401,415 while the balance on the bank
<br />records was $4,908,229. At December 31, 2014, all deposits were fully covered by federal depository
<br />insurance, surety bonds, or by collateral held by the City’s agent in the City’s name.
<br />C.Investments
<br />The City has the following investments at year end:
<br />Credit Risk
<br /> Interest Risk-Maturity Duration in Years
<br />Investment TypeRatingAgencyLess Than 11 to 56 to 1011 to 15>15Total
<br />U.S. TreasuriesN/AN/A$ -$ -$ 4,087$ -$ -$ 4,087
<br />U.S. AgenciesAA+S&P 3,700,127- 6,210,057 4,187,496 14,106,7349,054
<br />Municipal BondsAa1-Ba3Moodys653,719 3,838,198 1,916,576 806,683
<br /> - 7,215,176
<br />Municipal BondsA-AAAS&P1,938,465 5,044,338 1,817,461 8,800,264-
<br /> -
<br />Negotiable Certificates of DepositN/AN/A2,982,043 7,521,530 150,000-
<br /> - 10,653,573
<br />Investment pools
<br />Minnesota Municipal Money MarketN/RN/A5,425,061 - - 5,425,061-
<br /> -
<br /> Total Investments$46,204,895
<br />N/A Not Applicable
<br />N/R Not Rated
<br />Investments are subject to various risks, the following of which are considered the most significant:
<br />Custodial credit risk
<br /> – For investments, this is the risk that in the event of a failure of the counterparty
<br />to an investment transaction (typically a broker-dealer) the City would not be able to recover the value
<br />of its investments or collateral securities that are in the possession of an outside party. The City does
<br />not have a formal investment policy addressing this risk, but typically limits its exposure by purchasing
<br />insured or registered investments, or by the control of who holds the securities.
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