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31

City of Raleigh

Financial Section

Note 3.  Detailed Notes on All Funds 

A. Deposits and investments 

Deposits

.

 All of the Cityʹs deposits are either insured or collateralized by the Pooling Method.  Under the Pooling 

Method, a collateral pool, all insured deposits are collateralized with securities held by the State Treasurerʹs agent in 

the name of the State Treasurer.  Since the State Treasurer is acting in a fiduciary capacity for the City, these deposits 

are considered to be held by the Cityʹs agent in the Cityʹs name.  The amount of the pledged collateral is based on an 

approved averaging method for non‐interest bearing deposits and the actual current balance for interest bearing 

deposits. Depositories using the Pooling Method report to the State Treasurer the adequacy of their pooled collateral 

covering uninsured deposits.  The State Treasurer does not confirm this information with the City or the escrow 

agent.  Because of the inability to measure the exact amount of collateral pledged for the City under the

Pooling 

Method, the potential exists for under collateralization, and this risk may increase in periods of high cash

flows

.  

However, the State Treasurer of North Carolina enforces strict standards of financial stability for each Pooling 

Method depository. The City relies on the State Treasurer to monitor these financial institutions.  It is the City’s policy 

to utilize only the pooling method of collateralization.  The City complies with the provisions of G.S. 159‐31 when 

designating official depositories and verifying that the deposits are properly secured. 

At June 30, 2016, the Cityʹs bank balance in operating accounts was $44,833,428 and the carrying amount of the Cityʹs 

deposits was $29,830,565.  The difference represents reconciling items such as deposits and payments in transit.  Of 

the bank balance, $258,088 was covered by federal depository insurance and $44,575,340 was covered by collateral 

held under the Pooling Method. 

Investments

.

  At June 30, 2016, the City had the following investments and maturities

:

Investment Type

Fair Value

% < 1 Year

1‐ 3 Years

>3 ‐ 5 Years

> 5 Years

US  Government Treasuries

Fair Value, Level 1

81,771,400

$       

10.5

16,511,830

$       

754,456

$          

47,980,129

$        

16,524,985

$           

Federal Home Loan Bank

Fair Value, Level 1

238,525,401

30.5

164,662,375

72,651,186

1,211,840

Freddie Mac

Fair Value, Level 1

59,713,320

7.7

1,004,070

58,382,621

326,629

Fannie Mae

Fair Value, Level 1

146,385,361

18.7

11,203,080

46,360

128,318,272

6,817,649

Federal Farm Credit Bank

Fair Value, Level 1

155,170,649

19.9

56,306,211

98,864,438

Bank certificates of deposit

Fair Value, Level 1

14,183,203

1.8

14,183,203

NCCMT ‐ Cash Portfolio

Amortized Cost 

17,941,428

2.3

17,941,428

NC Municipal Bonds

Fair Value, Level 1

18,467,752

2.4

537,017

1,693,982

14,102,770

2,133,983

Other investments

Fair Value, Level 1

48,594,627

6.2

34,846,073

1,334,849

9,459,435

2,954,270

Total City‐wide investments

780,753,141

$     

100% 317,195,287

$     

3,829,647

$       

429,758,851

$      

29,969,356

$           

Valuation 

Measurement 

Method

All investments are measured using the market approach:  using prices and other relevant information 

generated by market transactions involving identical or comparable assets or a group of assets. 

Level of fair value hierarchy:  Level 1: Debt securities valued using directly observable, quoted prices 

(unadjusted) in active markets for identical assets. 

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