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<br />CITY OF LA PORTE, TEXAS <br />Notes to the Financial Statements <br />September 30, 2008 <br /> <br />2. Cash, Cash Equivalents and Investments - Continued <br /> <br />Interest Rate Risk <br /> <br />At year-end, the City had the following investments subject to interest rate risk disclosure, under u.S. <br />generally accepted accounting principles, by investment type: <br /> <br />Federal Home Loan Bank (FHLB) <br />Federal Home Loan Mortgage Corporation (FHLMC) <br />Federal National Mortgage Association (FNMA) <br /> <br />Fair <br />Value <br />$5,987,520 <br />1,999,120 <br />995,310 <br /> <br />Weighted Average <br />Maturity (Months) <br />8.07 <br />4.23 <br />2.02 <br /> <br />Total fair value <br /> <br />$8,981,950 <br /> <br />Portfolio weighted awrage maturity <br /> <br />14.32 <br /> <br />The City's investment policy specifies the maximum stated maturity, from the date of purchase; for any <br />individual investment may not exceed 5 years and the maximum dollar-weighted average maturity for <br />the pooled fund group (investment portfolio) may not exceed 2 years. <br /> <br />Concentration of Credit Risk <br /> <br />The policy does require investments to be staggered in a way that protects interest income from the <br />volatility of interest rates. The policy has not established limitations on percentages of total portfolio that <br />may be invested in securities other than repurchase agreements, Treasury bills and notes or insured <br />and collateralized Certificates of Deposits. <br /> <br />Investment Type <br />Agency Notes <br />Investment Pools <br /> <br />Fair Value <br />$ 8,981,950 <br />47,690,800 <br />$ 56,672,750 <br /> <br />Percentage <br />of Total <br />Portfolio <br />16% <br />84% <br />100% <br /> <br />Credit Risk <br /> <br />At year-end balances in TexPool, a privately managed public funds investment pool was rated AAAm by <br />Standard & Poor's, balances in TexStar, a privately managed public funds investment pool was rated <br />AAAm by Standard & Poor's and balances in Logic, a privately managed public funds investment pool <br />was rated Aaa/MR1+ by Standard and Poor's. <br /> <br />Federal Home Loan Bank (FHLB) agency notes, Federal Home Loan Mortgage Corporation (FHLMC) <br />and Federal National Mortgage Association (FNMA) agency notes were rated AAA by Standard & <br />Poor's, AAA by Fitch Ratings and Aaa by Moody's Investors Service. <br /> <br />All credit ratings met acceptable levels required by legal guidelines prescribed in both the PFIA and the <br />City's investment policy. Legal guidelines require an A1 rating by Standard & Poor's and a P-1 rating by <br />Moody's Investors Service for investments in commercial paper. <br /> <br />55 <br />