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CITY OF ORONO <br />NOTES TO FINANCIAL STATEMENTS (Continued) <br />December 31, 1989 <br />Note 3. CASH AND INVESTMENTS (continued) <br />For the purposes of Identifying the risk of Investing public funds, <br />the balances are categorized as follows: <br />A. Deposits <br />Deposits consist of checking accounts, savings accounts, and cer­ <br />tificates of deposit held In a bank or savings institution. <br />At year-end, the carrying amount of the City's deposits was <br />$1,982,512, while the balance on the bank records was $2,107,047. As <br />of December 31 , 1989, all deposits of the City were insured or <br />collateralized by securities held by the City or by its agent in the <br />City's name. <br />B. Investments <br />Minnesota State Statutes authorize the City to invest in obligations <br />of the U.S. Treasury, agencies, and instrumentalities, shares of <br />investment companies whose only investments are in the aforementioned <br />securities, obligations of the State of Minnesota or its municipali­ <br />ties, bankers' acceptances, future contracts, repurchase and reverse <br />repurchase agreements, and commercial paper of the highest quality <br />with a maturity of no longer than 270 days. Any material purchase <br />discounts or premiums are amortized over the term of the investment. <br />Interest earnings are accrued at the balance sheet date and recognized <br />as revenue when earned. <br />The City's investments are categorized below to give an indication of <br />the level of risk assumed at year-end. Category 1 includes invest­ <br />ments that are insured or registered or for which the securities are <br />held by the City or its agent in the City's name. Category 2 includes <br />uninsured and unregistered investments for which the securities are <br />held by the counterpar <br />name. Category 3 indue <br />which the securities ai <br />U.S. Government <br />Securities <br />Coraaerclal Paper <br />Bankers' Acceptances <br />Assets held by Deferred <br />Compensation Plan <br />Administrators <br />s trust department or agent in the City's <br />uninsured and unregistered Investments for <br />held by the counterparty or by its trust <br />in the City's name. <br />Credit Risk Category Carrying Market <br />1 2 3 Value Value <br />$2,973,289 <br />2,340,354 <br />879,320 </>1 1 1<n1 1 1$2,973,289 <br />2,340.354 <br />879,320 <br />$3,097,026 <br />2,401,545 <br />891,587 <br />$6,192,%3 $ - $ -$6,192,%3 $6,390,158 <br />$ 277,265 $ 277,265 <br />-35-