Agenda - Council - 10/11/2005 - Laserfiche WebLink

Home

FC# 1 AWARD CONTRACT FOR BAnG SERVIcEs By: Diana Lund, Finance Officer Background: On Tuesday, September 13, 2005, the City Council authorized staff to solicit proposals for banking services by distributing the "Request for Proposal - Banking Services" to the three local Nmking institutions - Landmark Community Bank, Village Bank and Bank of the West. Landmark Community Bank, Village Bank and Bank of the West each provided the City w/th a proposal for banking services. A copy of Landmark's and Village Banks Proposals are attached. Bank of the West's proposal will be available for review at the meeting, as it was too large to copy. The proposals for banking services were received and opened on Monday, October 3, 2005. The proposals were then reviewed and the information contained in them was analyzed using banking industry ratio trelqds, an evaluation matrix, and summary of service charges -the-evaluation matrix and summary of charges are attached. The mai:rix takes into consideration industry trends as well as "non-statistical" trends. At looking at the matrix, any of the three banks could be able to meet the City's needs, but Village Bank exceeded the other two banks in the two areas that are very important to the City, and theyare interest rates and service, fees. 1) Interest Rates - Bank of the West will pay interest at the rate of 3.25%, but they require a monthly $346,000 compensating balance to offset service fees such as wire transfers, ACH fees, etc. After the deduction for the compensating balance, Bank of the West's true interest rate is 2.691%. Landmark Community Bank proposed an interest rate of 3.44% (based on 90 day T-bill) with interest compounded monthly(interest accrued daily, so interest is not paid on interest earned). As int. erest is. paid on balances over $150,000, the true rate of interest is 3.182%. Village Bank' proposed using the monthly yield on the 4M Plus,Fund, .which is currently at 3.36%. Village Bank,would. compound interest daily(turns to principal and interest is earned on interest), which .wOuld bring the true interest to 3.364%. · Service Charges - Bank of the. West requires a monthly non-interest bearing compensating.balance ($346,000) to offset unit fees on each transaction, wires etc. A worksheet summarizing Bank of the West's Compensating Balance.is attached. Based on the $346,000 balance, the total monthly service fees would be :$608.59..: Both Landmark and Village Bank would waive all costs associated with wire transfers, daily deposits, etc., but Landmark Bank requires the monthly' :minimum of $150,000 (non-interest bearing) which would amount to $430.00 a month in lost interest (or to cover service fees). -195-