Laserfiche WebLink
CITY OF ELK RIVER, MINNESOTA <br />NOTES TO THE FINANCIAL STATEMENTS <br />DECEMBER 31, 2015 <br />Note 3: DETAILED NOTES ON ALL FUNDS <br />A. Deposits and Investments <br />Deposits <br />Custodial credit risk for deposits is the risk that in the event of a bank failure, the City's deposits may not be returned or the City <br />will not be able to recover collateral securities in the possession of an outside party. In accordance with Minnesota statutes, the <br />City maintains deposits at the depository banks authorized by the City Council, all of which are members of the Federal Reserve <br />System. Minnesota Statutes require that all City deposits be protected by insurance, surety bond, or collateral. The market value <br />of collateral pledged must equal 110% of the deposits not covered by insurance or bonds. Authorized collateral includes the legal <br />investments as prescribed by Minnesota statutes, as well as certain first mortgage notes, and certain other state or local <br />government obligations. 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. <br />At year end, the City's carrying amount of deposits was $15,744,681 and the bank balance was $15,857,026. The bank balance <br />was covered by federal depository insurance totaling $1,004,739 and the remaining balance was covered by securities held by the <br />pledging financial institution's agent in the City's name. <br />The carrying amount of deposits for the HRA, a discretely presented component unit, was $1,173,921 and the bank balance was <br />$1,173,745. The bank balance was covered by federal depository insurance and securities held by the pledging financial <br />institution's agent in the HRA's name. <br />Investments <br />Minnesota Statutes and the City's investment policy authorize the City to invest in the following: <br />a. Direct obligations or obligations guaranteed by the United States or its agencies. <br />b. Shares of investment companies registered under the Federal Investment Company Act of 1940 and whose only <br />investments are in securities described in (a) above. <br />c. General obligations of the State of Minnesota or any of its municipalities. <br />d. Bankers acceptances of United States Banks eligible for purchase by the Federal Reserve System. <br />e. Commercial paper of the highest quality issued by United States corporations or their Canadian subsidiaries and <br />maturing in 270 days or less. <br />-60- <br />