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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2016 <br />Minnesota Statutes require that securities pledged as collateral be held in safekeeping by the City <br />Treasurer or in a financial institution other than that furnishing the collateral. Authorized collateral <br />includes the following: <br />a) United States government treasury bills, treasury notes, treasury bonds; <br />b) Issues of United States government agencies and instrumentalities as quoted by a recognized <br />industry quotation service available to the government entity; <br />c) General obligation securities of any state or local government with taxing powers which is rated <br />"A" or better by a national bond rating service, or revenue obligation securities of any state or local <br />government with taxing powers which is rated "AA" or better by a national bond rating service; <br />d) General obligation securities of a local government with taxing powers may be pledged as <br />collateral against funds deposited by that same local government entity; <br />e) Irrevocable standby letters of credit issued by Federal Home Loan Banks to a municipality <br />accompanied by written evidence that the bank's public debt is rated "AA" or better by Moody's <br />Investors Service, Inc. or Standard & Poor's Corporation; and <br />f) Time deposits that are fully insured by the Federal Deposits Insurance Corporation. <br />At December 31, 2016, the carrying amount of the City's deposits with financial institutions was <br />$2,872,639. <br />B. INVESTMENTS <br />Minnesota Statutes authorize the City to invest in the following: <br />a) Direct obligations or obligations guaranteed by the United States or its agencies, its <br />instrumentalities, or organizations created by an act of congress, excluding mortgage-backed <br />securities defined as high risk. <br />b) Shares of investment companies registered under the Federal Investment Company Act of 1940 and <br />whose only investments are in securities described in (a) above, general obligation tax-exempt <br />securities, or repurchase or reverse repurchase agreements. <br />c) State and local securities as follows: <br />1) any security which is a general obligation of any state or local government with taxing powers <br />which is rated "A" or better by a national bond rating service; <br />2) any security which is a revenue obligation of any state or local government with taxing powers <br />which is rated "AA" or better by a national bond rating service; and <br />3) a general obligation of the Minnesota Housing Finance Agency which is a moral obligation of <br />the State of Minnesota and is rated "A" or better by a national bond rating agency. <br />d) Bankers acceptance of United States banks. <br />e) Commercial paper issued by United States corporations or their Canadian subsidiaries, of the <br />highest quality, and maturing in 270 days or less. <br />54 <br />