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City of Orono, Minnesota <br />Notes to the Financial Statements <br />December 31, 2024 <br />Note 3: Detailed Notes on All Funds (Continued) <br /> <br />Credit Segmented <br />Quality/ Time <br />Ratings (1) Distribution (2) Amount Level 1 Level 2 Level 3 <br />Pooled Investments at Amortized Costs <br />Broker Money Market Funds N/A less than 6 months 159,553$ <br />4M fund N/A less than 6 months 3,737,681 <br />Non-pooled Investments at Fair Value <br />Negotiable Certificates of Deposits N/A less than 1 year 1,951,285 -$ 1,951,285$ -$ <br />Negotiable Certificates of Deposits N/A 1 to 3 years 2,369,268 - 2,369,268 - <br />Negotiable Certificates of Deposits N/A more than 3 years 1,963,598 - 1,963,598 - <br />Municipal Bonds AAA less than 1 year 1,333,757 - 1,333,757 - <br />Municipal Bonds AAA 1 to 3 years 3,773,426 - 3,773,426 - <br />Municipal Bonds AAA more than 3 years 1,611,307 - 1,611,307 - <br />Total Investments 16,899,875$ -$ 13,002,641$ -$ <br />Types of Investments <br />Fair Value Measurement Using <br />(1) Ratings are provided by where applicable to indicate associated credit risk. <br />(2) Interest rate risk in disclosed using the segmented time distribution method. <br />N/A Indicates not applicable or available. <br />The investments of the City are subject to the following risks: <br />Interest Rate Risk - Interest Rate Risk is the risk that changes in interest rates will adversely affect the fair value of <br />an investment. <br />investments to a maturity of eight years, and twenty percent (20 percent) of the portfolio to a specific maturity. <br />The City was not exposed to interest rate risks due to the fact that their investments are not exposed to highly <br />sensitive changes in interest rates. <br />Credit Risk - Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its <br />obligations. Ratings are provided by various credit rating agencies and where applicable, indicate associate <br />page 5 of the <br />notes to the financial statements. In accordance with its investment policy, the City will minimize credit risk by <br />limiting investments to the safest types of securities, pre-qualifying the financial institutions, broker/dealers, <br />intermediaries, and advisers with which the City will do business, and diversifying the investment portfolio so that <br />the impact of potential losses from any one type of security or from any one individual issuer will be minimized. <br />o Reverse repurchase agreements <br />o Mortgage-backed securities, as defined in Minnesota Statute § 118A.04, Subd. 6 <br />o Future contracts <br />o Options <br />o Guaranteed investment contracts <br />64 91