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CITY {}FELK RIVER, MINNESOTA <br />NOTES TDFINANCIAL STATEMENTS <br />DECEMBER 31.2U0O <br />Not 3: DEPOSITS AND INVESTMENTS <br />Cash surpluses are pooled and invested incertificates ofdeposit and short-term government securities <br />Investment earnings are allocated tofunds onthe basis ofaverage cash balances. Investments are <br />stated at fair value based on quoted market price and are not identified with specific funds. <br />Qev_g��Its <br />In accordance with Minnesota Statutes, the City maintains deposits at those depository banks <br />authorized bvthe City Council, all mfwhich are members ofthe Federal Reserve System. <br />K8imneaoh* Statutes require that all City deposits be protected by insurance, surety bond. or collateral. <br />The market value ofcollateral pledged must equal 11O96mfthe deposits not covered bvinsurance or <br />bonds (14O96inthe case ofmortgage notes p|edged). <br />Authorized collateral includes the legal investments described below, as well as certain first mortgage <br />notes and certain other state orlocal government obligations. Minnesota Statutes require that <br />securities pledged as collateral be held in safekeeping by the City treasurer or in a financial institution <br />other than that furnishing the collateral. <br />At year end, the City's carrying amount of deposits, was $5,800,841 and the bank balance was <br />$5,837.871 Dfthe bank balance, $1.287.000was covered bvfederal depository insurance and <br />$4,550,673 was covered by collateral held by the City's agent in the City's name. <br />The carrying amount ofdeposits for the HRA, adiscretely presented component unit, was $93,005 and <br />the bank balance was $93.805. The bank balance was covered byfederal depository insurance. <br />Investmentsi <br />The City also invests idle funds, oeauthorized byN1inneeuteOtatubee.aefV|lowe <br />a. Direct obligations orobligations guaranteed bythe United States orits agencies <br />h. Shares of investment companies registered under the Federal Investment Company Act of <br />194Oand whose only investments are insecurities described in(g)above. <br />C. Bankers acceptances ofUnited States Banks eligible for purchase bythe Federal Reserve <br />System. <br />d. Commercial paper of the highest quality issued by United States corporations or their <br />Canadian subsidiaries and maturing in27Odays orless. <br />e. Repurchase agreements with banks that are members of the Federal Reserve System with <br />capita|izationexceeding$1O.U00.0O0.aprimarynapurUngdeakarinU.S.0mvernnlent <br />securities tothe Federal Reserve Bank mfNew York orcertain Minnesota securities <br />broker-dealers. <br />The City's investments are categorized to give enindication of the level ofrisk assumed at yearend. <br />Category includes investments that are insured or registered or for which the securities are held by <br />the City orits agent inthe City's name, Category 2includes uninsured and unregistered investments <br />for which the securities are held bythe oounterparty's trust department oragent inthe City's name. <br />Category 3 includes uninsured and unregistered investments for which the securities are held bythe <br />onunterparty's trust department oragent but not inthe City's name. <br />17 <br />