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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, 2024, the HRA's bank balance of $1,450,277 was not exposed to custodial credit
<br />risk because it was fully collateralized. The HRA's book balance of all deposits at December 31, 2024,
<br />totaled $1,446,277.
<br />
<br />B. Investments
<br />
<br />Rating Fair Value
<br />Less than 1
<br />year 1-5 years 5+ years
<br />Money market NR 5,840,724$ 5,840,724$ -$ -$
<br />Certificates of deposit NR 7,297,284 2,360,538 4,936,746 -
<br />Municipal bonds A to AAA 27,359,358 4,110,139 15,815,286 7,433,933
<br />Other gov't backed securities NR 17,760,823 498,045 7,281,704 9,981,074
<br />4M NR 14,519,308 14,519,308 - -
<br />Total investments 72,777,497$ 27,328,754$ 28,033,736$ 17,415,007$
<br />Type of Investments
<br />Investment Maturities
<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 , 2024, 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, 202 4, 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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