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NOTE 3 — DEPOSITS AND INVESTMENTS
<br />A. Components of Cash and Investments
<br />Cash and investments at year-end consist of the following:
<br />Fair Value Interest Risk —
<br />Credit Risk Measurements Maturity Duration in Years
<br />Investment Type Rating Agency Using Less Than 1 1 to 5 Total
<br />U.S. agency securities
<br />Federal Home Loan Mortgage Corporation
<br />Federal Home Loan Bank notes and bonds
<br />Federal Farm Credit Bank bonds
<br />Negotiable certificates of deposit
<br />Investment pools/mutual funds
<br />4M Fund
<br />Wells Fargo Advantage 100% Treasury
<br />Money Market Fund
<br />Total investments
<br />Deposits
<br />Change funds
<br />Total cash and investments
<br />N/A — Not Applicable
<br />N/R — Not Rated
<br />AA S&P Level $ 487,958 $ 501,202 $ 989,160
<br />AA S&P Level 16,097 12,244,008 12,260,105
<br />AA S&P Level — 1,007,961 1,007,961
<br />N/R N/A Level 746,571 3,001,111 3,747,682
<br />$ 1,250,626 $ 16,754,282 18,004,908
<br />N/R N/A Amortized Cost 4,204,452
<br />AAA S&P Level 406,411
<br />22,615,771
<br />288,009
<br />483
<br />$ 22,904,263
<br />The Minnesota Municipal Money Market (4M Fund) is an external investment pool not registered with the
<br />Securities and Exchange Commission (SEC) that follows the same regulatory rules of the SEC. The fair
<br />value of the position in the pool is the same as the value of the pool shares, which is based on an amortized
<br />cost method that approximates fair value. The 4M Fund is sponsored by the League of Minnesota Cities.
<br />Investments are purchased and regulated according to Minnesota Statutes. For this investment pool, there
<br />are no unfunded commitments, redemption frequency is daily, and there is no redemption notice required
<br />for the liquid class; the redemption notice period is 14 days for the Plus Class.
<br />B. Deposits
<br />In accordance with applicable Minnesota Statutes, the City maintains deposits at depository banks
<br />authorized by the City Council, including checking accounts and certificates of deposit.
<br />The following is considered the most significant risk associated with deposits:
<br />Custodial Credit Risk — In the case of deposits, this is the risk that in the event of a bank failure, the
<br />City's deposits may be lost.
<br />Minnesota Statutes require that all deposits be protected by federal deposit insurance, corporate surety
<br />bond, or collateral. The fair value of collateral pledged must equal 110 percent of the deposits not
<br />covered by federal deposit insurance or corporate surety bonds. Authorized collateral includes treasury
<br />bills, notes, and bonds; issues of U.S. government agencies; general obligations rated "A" or better;
<br />revenue obligations rated "AA" or better; irrevocable standard letters of credit issued by the Federal
<br />Home Loan 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 in an account at
<br />a trust department of a commercial bank or other financial institution that is not owned or controlled
<br />by the financial institution furnishing the collateral. The City has no additional deposit policies
<br />addressing custodial credit risk.
<br />At year-end, the City's carrying amount of the City's deposits was $288,009, while the balance on the
<br />bank records was $315,404. At December 31, 2023, all deposits were fully covered by federal deposit
<br />insurance, surety bonds, or by collateral held by the City's agent in the City's name.
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