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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2004 <br />Note 2 DEPOSITS AND INVESTMENTS <br />DEPOSITS <br />In accordance with Minnesota Statutes, the City maintains deposits at those depository banks <br />authorized by the City Council, all of which are members of the Federal Reserve System. <br />Minnesota Statutes require that all City deposits be protected by insurance, surety bond, or collateral. <br />The market value of collateral pledged must equal 110% of the deposits not covered by insurance or <br />bonds. <br />Authorized collateral includes the legal investments described below and certain other state or local <br />government obligations. Minnesota Statutes require that securities pledged as collateral be held in <br />safekeeping by the City Treasurer or m a financial institution other than that furnishing the collateral. <br />At year -end, the carrying amount of the City's deposits was $462,836 and the bank balance was <br />$583,695. The entire bank balance was covered by Federal depository insurance or by collateral held <br />by the City's agent in the City's name. <br />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 <br />and whose only investments are in securities described in (a) above, general obligation tax - exempt <br />securities, or repurchase or reverse repurchase agreements. <br />c) General obligations of the State of Minnesota or any of its municipalities. <br />d) Bankers acceptance of United States banks eligible for purchase by the Federal Reserve System. <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 />f) Repurchase or reverse repurchase agreements with banks that are members of the Federal Reserve <br />System with capitalization exceeding $10,000,000; a primary reporting dealer in U.S. government <br />securities to the Federal Reserve Bank of New York; certain Minnesota securities broker - dealers; <br />or, a bank qualified as a depositor. <br />41 <br />