Laserfiche WebLink
City of Paris, Texas <br />Notes to Financial Statements <br />September 30, 2011 <br />IV. Detailed Notes on All Funds and Component Unit (Continued) <br />A. Deposits and Investments (Continued) <br />As of September 30, 2011, the City and Component Unit had the following investments: <br />Credit Weighted Average <br />Type of Security Fair Value Rating Maturity (Years) <br />Primary Government <br />Mortgage Backed Securities: <br />Federal Home Loan Mortgage Corporation <br />Federal National Mortgage Association <br />Federal Home Loan Bank <br />Certificates of Deposit <br />Totals <br />$ 1,297,361 <br />AAA <br />6.77 <br />3,395,251 <br />AAA <br />3.05 <br />2,008,451 <br />AAA <br />0.25 <br />88,213 <br />Not Rated <br />0.50 <br />$ 6,789,276 <br />2.90 <br />Component Unit - PEDC <br />Certificates of Deposit <br />$ 477,344 Not Rated 0.60 <br />Interest Rate Risk. It is the policy of the City to invest public funds in a manner which will <br />provide the highest investment return with the maximum security while meeting the daily cash <br />flow demands of the entity and conforming to all state and local statutes governing the investment <br />of public funds. The City's investment portfolio will be designed with the objective of attaining a <br />rate of return throughout budgetary and economic cycles and commensurate with the City's <br />investment risk constraints and the cash flow characteristics of the portfolio. The City's <br />investment strategy is active. Given this strategy, the basis used by the Finance Director to <br />determine whether market yields are being achieved shall be the six-month U.S. Treasury Bill and <br />the Average Fed Funds rate. No other formal policy related to interest rate risk is included in the <br />City's adopted investment policy. <br />Credit Risk is the risk that an issuer or other counter-party will not fulfill its obligations. Investing <br />is performed in accordance with the City's investment policy adopted by the City Council <br />complying with State law and the City Charter. City funds may be invested in securities <br />authorized by Chapter 2256 of the State of Texas Government Code. <br />Concentration of Credit Risk. The City's policy is to diversify its investments by security type <br />and institution. With the exception of obligations of the United States or its agencies and <br />authorized pools, no more than 50% of the City's total investment portfolio will be invested in a <br />single financial institution with the exception of its local depository. <br />35 <br />