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• CITY OF FALCON HEIGHTS, MINNESOTA <br />NOTES TO THE FINANCIAL STATEMENTS <br />For the Year Ended December 31, 2003 <br />NOTE 3 -DETAILED NOTES ON ALL FUNDS <br />A. Deposits and Investments (Continued) <br />Category 1-Deposits covered by Federal Depository Insurance (FDIC) and those deposits <br />collateralized with securities held by the City or by its agent in the City's name. <br />Category Bad <br />1 2 3 Balance <br />Bank Accounts* $ - $ _ $ _ $ _ <br />* The City uses a bank account in conjunction with their Minnesota Municipal Investment <br />Pool account. At the end of each day, the funds remaining in the bank account are swept <br />into the investment account. Therefore, the City does not maintain a daily cash balance. <br />The City also invests idle funds as authorized by Minnesota Statutes, as follows: <br />• 1. Direct obligations or obligations guaranteed by the United States or its agencies. <br />2. .Shares of investment companies registered under the Federal Investment Company Act of <br />.1940 and whose only investments are in securities authorized by Minnesota Statutes <br />3. Bankers' acceptances of United States banks eligible for purchase by the Federal Reserve <br />System. <br />4. Commercial paper issued by United States corporations or their Canadian subsidiaries of <br />the highest quality and maturing in 270 days or less. <br />5. Repurchase or reverse repurchase agreements with banks that are members of the Federal <br />Reserve System with capitalization exceeding $ 10,000,000, a primary reporting dealer in <br />U.S. government securities to the Federal Reserve Bank of New York, or certain <br />Minnesota securities broker-dealers. <br />The City's investments are categorized in the following table to give an indication of the level of <br />risk assumed at year-end. Category 1 includes investments that are insured or registered or for <br />which the securities are held by the City or its agent in the City's name. Category 2 includes <br />uninsured and unregistered investments for which the securities are held by the counterparty's <br />trust department or agent in the City's name. Category 3 includes uninsured and unregistered <br />investments for which the securities are held by the counterparty or by its trust department or <br />agent but not in the City's name. <br />• <br />52 <br />