|
CITY OF ELK RIVER
<br /> NOTES TO BASIC FINANCIAL STATEMENTS
<br /> YEAR ENDING DECEMBER 31, 2016
<br /> NOTE 3 DEPOSITS AND INVESTMENTS (CONTINUED)
<br /> C. Investments (Continued)
<br /> A schedule of the maturities and ratings of the City's investments as of December 31,
<br /> 2016 is as follows:
<br /> Maturity and Rating Breakdown of Investments: Maturity Duration in Years
<br /> Investment Type Total Less Than 1 1 to 5 More Than 5 Rating
<br /> U.S.Treasury Notes $ 20,951 $ 20,951 $ - $ -
<br /> Negotiable Certificates of Deposit 10,243,800 3,487,814 6,755,986 - Not Rated
<br /> Federal National Mortgage Association 12,864,776 9,263,352 2,600,914 1,000,510 AA+/Aaa
<br /> Federal Farm Credit Bank Bond 500,630 500,630 - - AA+/Aaa
<br /> Municipal Bonds 17,804,343 502,065 6,152,550 11,149,728 AA-to AAA
<br /> UBS Select Prime Institutional Money Market 994,781 - - - Not Rated
<br /> Minnesota Municipal Money Market(4M Fund) - Not Rated
<br /> Other Money Market Funds 33,324
<br /> Total Investments $ 42,462,605 $ 13,774,812 $ 15,509,450 $12,150,238
<br /> Custodial Credit Risk— For an investment, the custodial credit risk is the risk that in the
<br /> event of a failure of the counterparty to an investment transaction (typically a broker-
<br /> dealer) the City would not be able to recover the value of its investments or collateral
<br /> securities that are in the possession of an outside party. The City typically limits its
<br /> exposure by purchasing insured or registered investments, or by the control of who
<br /> holds the securities. As of December 31, 2016 all investments were insured or
<br /> registered, or securities were held by the City or its agent in the City's name.
<br /> Concentration Risk — This is the risk associated with investing a significant portion of
<br /> the City's investment (considered 5% or more) in the securities of a single issuer and no
<br /> more than 50% of the City's total investment portfolio may be invested in certificates of
<br /> deposit or commercial paper.
<br /> At December 31, 2016, the following is a list of investments which individually comprise
<br /> more than 5% of the City's total investments:
<br /> Percent of
<br /> Total Fair Value
<br /> Federal National Mortgage Association $ 12,864,776 27.82%
<br /> Minnesota Municipal Money Market(4M Fund) 3,781,083 8.18%
<br /> Fair Value Measurements
<br /> The City uses fair value measurements to record fair value adjustments to certain assets
<br /> and liabilities and to determine fair value disclosures.
<br /> The City follows an accounting standard which defines fair value, establishes framework
<br /> for measuring fair value, establishes a fair value hierarchy based on the quality of inputs
<br /> used to measure fair value, and requires expanded disclosures about fair value
<br /> measurements. In accordance with this standard, the City has categorized its
<br /> investments, based on the priority of inputs to the valuation technique, into a three-level
<br /> fair value hierarchy. The fair value hierarchy gives the highest priority to quotes and
<br /> prices in active markets for identical assets and liabilities (Level1) and the lowest priority
<br /> to unobservable inputs (Level 3). If the inputs used to measure the financial instruments
<br /> fall within different levels of the hierarchy, the categorization is based on the lowest level
<br /> input that is significant to the fair value measurement of the instrument.
<br /> (50)
<br />
|