10-25-04 Regular Meeting of La Porte Audit Committee

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CITY OF LA PORTE, TEXAS Notes to the Financial Statements - Continued September 30, 2004 2. Cash, Cash Equivalents and Investments - Continued ' Investments Under provisions of state and local statutes, the City's investment policies, and provisions of the City's depository contracts with the area financial institutions, the City is authorized to place available deposits and investments in the following: ❖ Obligations of the U.S., its agencies, and instrumentalities. ' ❖ Direct obligations of the State of Texas or its agencies. ❖ Collateralized mortgage obligations directly issued by a federal agency or instrumentality of the United States, the underlying security for which is guaranteed by an agency or instrumentality of the ' United States. ❖ Other obligations, the principal and interest on which are unconditionally guaranteed or insured by, or backed by full faith and credit of the State of Texas or the United States or their agencies and ' instrumentalities. ❖ Obligations of states, agencies, counties, cities and other political subdivisions of any state having been rated as to the investment quality by a nationally recognized investment firm and having received a rating of not less than A or its equivalent. 66 Certificates of Deposit issued by state and national banks or savings and on associations domiciled in this state that are: - guaranteed or insured by the Federal Deposit Insurance Corporation; or 1 - secured by obligations that are described in 1-5 above, which are intended to include all direct federal agency or instrumentality issued mortgage backed securities that have a market value of not less than the principal amount of the certificates or in any other manner and amount provided by law for deposit of the investing entities. ' ❖ Certificates of Deposit and share certificates issued by a state or federal credit union domiciled in the State of Texas that are guaranteed or insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, or are secured as to principal by obligations ' described in 1 through 5 above in any other manner and amount provided by law for the City deposits. Fully collateralized repurchase agreements having a defined termination date, secured by obligations of the United States, its agencies or instrumentalities, pledged with a third party selected ' or approved by the political entity, and placed through a primary government securities dealer, as by the Federal Reserve, or through a financial institution domiciled in the State of Texas. •, Prime domestic banker's acceptances, defined as a banker's acceptance with a remaining term of 270 days or less, if the short-term obligations of the accepting bank or its parent are rated at least A-1 or P-1 or equivalent by at least one nationally recognized credit rating agency. ❖ Commercial paper that is rated at least A-1 or P 1 or the equivalent by either (a) two nationally recognized credit agencies or (b) one nationally recognized credit rating agency if the paper is fully ' secured by an irrevocable letter of credit issued by a U.S. or State bank. ❖ SEC -registered no-load money market mutual fund (MMMF), with a dollar weighted average portfolio maturity of 90 days or less, includes in their investment objectives the maintenance of a stable net asset value of $1 for each share. ❖ SEC -registered, no-load money market mutual funds (MMMF) that have an average weighted maturity of less than two years, invests exclusively in obligations described above and are continuously rated as to investment quality by at least one nationally recognized investment rating ' firm of no less than AAA or its equivalent. ❖ Authorized government investment pools that invest solely in obligations of any of the above investments provided that the pools are rated no lower than Aaa or AAA or an equivalent by at least one nationally recognized rating service. All significant legal and contractual provisions for investments were complied with during the fiscal year. Investments at year-end are representative of the types of investments maintained by the City during the ' year. 1 53