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COUNTY OF HAWAII Notes to the Basic Financial Statements June 30,2005 and$546,440,respectively,for the primary government and$6,440,157 and$637,000, respectively,for the fiduciary funds. Information relating to bank balance,insurance and collateral of cash deposits is determined on a countywide basis. Total bank balances of deposits for the primary government and fiduciary funds amounted to$175,111,723 at June 30,2005. Of that amount,$174,909,413 represent bank balances covered by federal deposit insurance or by collateral held by the County's fiscal agents in the name of the County. The remaining bank balances of$202,310 represent deposits held by a management agent and were uncollateralized. Accordingly,these deposits were exposed to custodial credit risk. Custodial credit risk is the risk that in the even of a bank failure,the County's deposits may not be returned to it. For demand or checking accounts and time certificates of deposit,the County requires,in accordance with State statutes,that the depository banks pledge collateral based on the available bank balances to limit its exposure to custodial credit risk. All securities pledged as collateral are held by the County's fiscal agents in the name of the County. The County also requires that no more than 60%of the County's total funds available for deposit may be deposited in any one financial institution, in accordance with State statutes. Investments The County holds investments both for its own benefit and on behalf of some of the Fiduciary Funds. The County's investments of funds not required for immediate payments are predominately comprised of repurchase agreements,while equity securities are held by the fiduciary fund. The County's investments and maturities at June 30,2005 are as follows: Maturity(in years) Fair Value Less than 1 1 —5 Investments—Primary Government: Certificates of deposit $15,445,079 $15,445,079 $ -- Repurchase agreements 2,753,528 -- 2,753,528 $18.198.607 $15,455,079 2.753.528 Investments—Fiduciary Funds: Equity securities $974,41S Interest Rate Risk: As a means of limiting its exposure to fair value losses arising from rising interest rates,the County's investment policy generally limits maturities on investments to not more than five years from the date of investment. Credit Risk: The County's investment policy limits investments in state and U.S.Treasury securities,time certificates of deposit,U.S.government or agency obligations,repurchase - 56-