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CITY OF LITTLE CANADA, MINNESOTA <br />NOTES TO BASIC FINANCIAL STATEMENTS <br />DECEMBER 31, 2022 <br /> <br /> <br /> <br />(47) <br /> <br />NOTE 2 DEPOSITS AND INVESTMENTS (CONTINUED) <br />B. Deposits <br />In accordance with applicable Minnesota Statutes, the City maintains deposits at <br />depository banks authorized by the City Council, including checking accounts and <br />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 <br />bank failure, the City’s deposits may be lost. <br /> <br />Minnesota Statutes require that all deposits be protected by federal deposit insurance, <br />corporate surety bond, or collateral. The market value of collateral pledged must equal <br />110% of the deposits not covered by federal deposit insurance or corporate surety <br />bonds. Authorized collateral includes treasury bills, notes, and bonds; issues of U.S. <br />government agencies; general obligations rated “A” or better; revenue obligations rated <br />“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 <br />collateral be held in safekeeping in a restricted account at the Federal Reserve Bank or <br />in an account at a trust department of a commercial bank or other financial institution <br />that is not owned or controlled by the financial institution furnishing the collateral. <br /> <br />At year-end, the carrying amount of the City’s deposits was $1,014,967 while the <br />balance on the bank records was $1,014,967. At December 31, 2022, all deposits were <br />fully covered by federal depository insurance, surety bonds, or by collateral held by the <br />City’s agent in the City’s name.