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<br /> 68
<br />City of Elk River
<br />Notes to Basic Financial Statements
<br />
<br />
<br />NOTE 3 – DEPOSITS AND INVESTMENTS (CONTINUED)
<br />
<br />A. Deposits (Continued)
<br />
<br />Discretely Presented Component Unit
<br />As of December 31, 2023, the HRA's bank balance of $821,348 was not exposed to custodial credit
<br />risk because it was fully collateralized. The HRA's book balance of all deposits at December 31, 2023,
<br />totaled $821,348.
<br />
<br />B. Investments
<br />
<br />Credit Fair Less than Greater than
<br />Rating Value One Year 1-5 Years 5 Years No Maturity
<br />Negotiable certificates of deposit N/A
<br />8,399,209$ 1,778,477$ 6,620,732$ -$ -$
<br />Municipal bonds AA to AAA 36,987,667 3,763,582 19,048,767 14,175,318 -
<br />Government Securities N/A 493,765 493,765 - - -
<br />Asset Backed Securities N/A 2,240,741 - 580,470 - 300,096
<br />N/A 681,760 - - - 681,760
<br />N/A 11,342,221 - - - 11,342,221
<br />Other money market funds N/A
<br />5,943 5,943 - - -
<br />Total 60,151,306$ 6,041,767$ 26,249,969$ 14,175,318$ 12,324,077$
<br />Investment Maturities
<br />Investment Type
<br />UBS Select Prime Institutional Money
<br /> Market
<br />Minnesota Municipal Money Market
<br /> (4M Fund)
<br /> Concentration Risk: This is the risk associated with investing a significant portion of the City's
<br />investment (considered 5% or more) in the securities of a single issuer and no more than 50% of the
<br />City's total investment portfolio may be invested in certificates of deposit or commercial paper. As of
<br />December 31, 2023, the City had invested 5% or more of its total investment portfolio in one single
<br />issuer, the Minnesota Municipal Money Market (4M Fund).
<br />
<br />Credit Risk: Credit risk is the risk that an issuer to an investment will not fulfill its obligation. State
<br />law limits investments in state and local securities and commercial paper to those with specified
<br />rating by nationally recognized rating agencies. U.S. treasury obligations are not considered to have
<br />credit risk. The City's investment policy does not further limit the ratings of their investments.
<br />
<br />Interest Rate Risk: This is the risk that fair values of securities in a portfolio would decrease due to
<br />changes in fair value interest rates. The City's investment policy uses diversification of maturity
<br />dates as a means of managing exposure to fair value by stating that no more than 30% of the City's
<br />investments may extend beyond a five-year maturity.
<br />
<br />Custodial Credit Risk – Investments: This is the risk in the event of the failure of the counterparty
<br />the City will not be able to recover the value of its investments or collateral securities that are in
<br />the possession of an outside party. The City typically limits its exposure by purchasing insured or
<br />registered investments, or by the control of who holds the securities. As of December 31, 2023, all
<br />investments were insured or registered, or securities were held by the City or its agent in the City's
<br />name.
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