|
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 — 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
<br />bond, or collateral. The market value of collateral pledged must equal 110% of the deposits not covered
<br />by federal deposit insurance or corporate surety bonds. Authorized collateral includes treasury bills,
<br />notes, and bonds; issues of U.S. government agencies; general obligations rated "A" or better; revenue
<br />obligations rated "AA" or better; irrevocable standard letters of credit issued by the Federal Home Loan
<br />Bank; and certificates of deposit. Minnesota Statutes require that securities pledged as collateral be
<br />held in safekeeping in a restricted account at the Federal Reserve Bank or in an account at a trust
<br />department of a commercial bank or other financial institution that is not owned or controlled by the
<br />financial institution furnishing the collateral. The City has no additional deposit policies addressing
<br />custodial credit risk.
<br />At year end, the carrying amount of the City's deposits was $8,425,149 while the balance on the bank
<br />records was $8,478,622. At December 31, 2018, 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 />Fa ir Va lue
<br />CredttRisk measurements InterestRisk- I\LaturityDuration in Years
<br />Investment Type Rating Agency Lasing Less Than 1 Ito 5 6 to 10
<br />IIS Treasunes N/A N/A Lew l_2 $ - $ 2,083 $
<br />U S Agencies AA+ S&P Lew 1_2 493,555 4,007,066 2,479,940
<br />NIuntctpalBonds A -AAA Moodys Level_' 2,505,160 6,663,120 1,052,350
<br />NIuntctpalBonds A-AAAS&P Leve1_2 2,921,843 11,O44,238 975,889
<br />Negotiable Certificates ofDeposit N/R N/A Levell 11,784,239 14,725,074 237,833
<br />lave stme ntpools
<br />Minnesota l\IumctpalmonevMarket N/R N/A Amortized Cost 11,509,980 - -
<br />llto 15
<br />279,942
<br />Total
<br />$ 2,083
<br />7,260,50;
<br />10,220,6 30
<br />14,941,970
<br />26,747,146
<br />11,509,980
<br />Iota [Investments $ 70,682,312
<br />N/A Not Applicable
<br />N/R Not Rate d
<br />Note: The City's investments include investment pools managed by 4M, which is an external investment pool
<br />regulated by Minnesota Statutes and is not registered with the Securities and Exchange Commission. The City's
<br />investments in this investment pool are measured at the net asset value per share provided by the pools, which are
<br />based on amortized cost methods that approximate fair value. There are no restrictions or limitations on withdrawals
<br />from 4M. 4M Tenn Series Portfolios are intended to be held until maturity: a participant's withdrawal prior to maturity
<br />will require seven -days' notice of redemption and will likely carry a penalty, which could be substantial in that it
<br />would be intended to allow the Tenn Series Portfolio to recoup any associated penalties, charges, losses, or other costs
<br />associated with the early redemption of the investments therein.
<br />71
<br />
|