Federal Financial Assistance 12/31/1991

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_ City of Lino Lakes, Minnesota Legal Compliance Report FINDING: — CONDITION: Now Immo CRITERIA: Deficiencies in Collateral for Deposits At July 31, 1991 and December 31, 1991, the amount of collateral required on City deposits was $972,748 and $1,393,524, respectively. The market value of collateral provided on July 31, 1991 was $900,000, resulting in a deficiency of $72,748. The market value of collateral provided on December 31, 1991 was $1,220,000, resulting in a deficiency of $173,524. Minnesota Statute 118 provides certain specific collateral requirements for deposits as follows: 118.01 DEPOSITORY BONDS AND COLLATERAL. Subdivision. 1. Any bank, trust company or thrift institution authorized to do business in this state may, in lieu of the corporate or personal surety bond required to be furnished to secure deposited funds, deposit with the custodian of the funds as collateral security, notes secured by first mortgages of future maturity, upon which interest is not past due, on improved real estate free from delinquent taxes, within the county wherein the depository is located, or within counties immediately adjoining the county in the State of Minnesota, the obligations which are legally authorized investments for debt service funds under section 475.66, subdivision 3, and qualified state or local government obligations acceptable to the treasurer or chief financial officer. Qualified obligations must be general obligations rated "A" or better by Moody's Investors Service, Inc. or Standard & Poor's Corporation. Subd. 2. Except for notes secured by first mortgages of future maturity, the total in amount of the collateral computed at its market value shall be at least ten percent more than the amount on deposit at the close of the business day, in excess of any insured portion, which would be permitted if a corporate or personal surety bond were furnished. The total amount of collateral consisting of notes secured by first mortgages of future maturity computed at its market value shall be at least 40 percent more than the amount on deposit at the close of the business day, in excess of any insured portion, which would be permitted if a corporate or personal surety bond were furnished. The depository may furnish both a bond and collateral aggregating the required amount. — RECOMMENDATION: lows The City has amended collateral procedures in 1992. We recommend that the City continue efforts to improve the collateral system and maintain compliance with MS 118.