HomeMy WebLinkAbout5C - Banking Services Agreement for 2010-2013
MEETING DATE:
AGENDA #:
PREPARED BY:
AGENDA ITEM:
DISCUSSION:
DECEMBER 7,2009
5C
JERIL YN ERICKSON, FINANCE DIRECTOR
CONSIDER APPROVAL OF A RESOLUTION APPOINTING US BANK AS THE
OFFICIAL BANK FOR THE CITY OF PRIOR LAKE FOR 2010-2013
Introduction
The purpose for this agenda item is to consider approval of a banking services
agreement with US Bank for 2010-2013.
Historv
In January 2005 the City Council appointed US Bank as the City's official bank.
An agreement was entered into for a four-year period ending 12/31/2008. The
banking services agreement was extended for one year (until 12/31/2009) due to
the transition of Finance Directors and the staff time that would be needed to
issue a Request for Proposals for Banking Services.
Current Circumstances
In September, 2009, the City issued a Request for Proposals (RFP) from
qualified banking institutions to provide a full range of banking services. The
term of the agreement is for a four (4) year period beginning January 1, 2010
with up to three (3) additional one (1) year renewal options. Prices quoted in the
proposals are guaranteed for at least two (2) years.
City staff contacted all of the local financial institutions to make them aware of
the RFP. In addition, a notice was published in the September 12,2009 issue of
the Prior Lake American and posted on the City website.
The RFP was sent to the following financial institutions:
. New Market Bank
. Prior Lake State Bank
. Southwest Metro Credit Union
. TCF (Savage)
. US Bank
. Wells Fargo Bank
Proposals were received from three financial institutions:
. Prior Lake State Bank
. US Bank
. Wells Fargo Bank
New Market Bank and TCF declined the opportunity to submit a proposal citing
an inability to deliver all of the required services. Southwest Metro Credit Union
did not submit a proposal or cite a reason for not doing so.
www.cityofpriorlake.com
J?o0l"le95'2:447.9800 I. Fax 952.441A245.
ISSUES:
Evaluation of Prooosals
The proposals were evaluated by a review committee consisting of the Finance
Director, Accounting Supervisor, Accounting Clerk, and the Assistant City
Manager. All three banks were asked to make oral presentations, as well.
The proposals were evaluated based on the following criteria:
1. General Banking Services
A. Responses to all items listed in the following:
(a) Profile Questionnaire;
(b) Banking Services Questionnaire;
(c) Compensation, Fees, and Related Information;
(d) Banking Services Fee Schedule.
2. Expertise and Experience
A. The firm's past experience and performance on comparable
government accounts;
B. The quality of the firm's professional personnel to be assigned to
the City's account.
3. Technology
A. The bank's ability to deliver required banking services utilizing
current technology;
B. The bank's commitment to expanding its line of services as new
technology and new industry trends develop;
C. The bank's support to customers of the technological services
offered.
4. Fees & Earnings
A. Fees for delivery of services;
B. Investment earnings;
C. Length of time in which fees are guaranteed.
City staff independently rated each of the banks using a point system for each of
the items referenced in the RFP. Information from the presentation was also
considered. Questions that required a response were ranked using the following
schedule:
. 3 = Exceeds overall requirements
. 2 = Meets requirements
. 1 = Somewhat meets requirements
. 0 = No answer / does not meet
The average rating for each of the three banks was as follows:
213
Wells Fargo
Bank
205
I AveraQe RatinQ
Prior Lake
State Bank
82
US Bank
FINANCIAL
IMPACT:
US Bank and Wells Fargo Bank were very comparable on the level and types of
services they provide and the completeness and professionalism of their
proposals. They basically met all of the requirements of the RFP.
Consequently, their ratings are comparable.
The primary reason for the rating for Prior Lake State Bank was due to their
inability to deliver required services. The level of technology provided by Prior
Lake State Bank is not as sophisticated or advanced as is available in the
market. Their proposal also lacked some of the required elements as outlined in
the RFP.
The following chart graphically depicts the rating of the three banks.
RANGE OF SCORES
PL
WFB USB
.
. .
I 0
I
294
104
199
Cost of Services
The fees for the delivery of services were analyzed for all three banks, as well.
An average number of transactions were provided for each type of service so
banks could provide itemized costs.
Based on the costs submitted, the annual cost for banking services is as follows:
Annual Cost
Prior Lake
State Bank
$11,571
$10,860
US Bank
Wells Fargo
Bank
$12,282
When factoring in the cost for new services (services that the City desires to
implement immediately) and adjustments for recent changes to current services,
the annual cost for banking services is as follows:
Annual Cost
Prior Lake
State Bank
$12,051
$10,861
US Bank
Wells Fargo
Bank
$12,313
In both cases, US Bank provides the required banking services at the lowest
cost.
Conclusion
Upon reviewing each of the proposals, City staff determined that both US Bank
and Wells Fargo Bank would be able to provide high quality banking services to
the City of Prior Lake. Both banks are on the leading edge of technology and
have staff dedicated specifically to government clients.
The financial stability and credit quality of banks has been of great concern due
to the increase in bank failures. Both US Bank and Wells Fargo Bank have high
ratings from third-party rating agencies as shown in the proposals.
Our most recent banking experience has been with US Bank. They have
provided excellent service over the past five years. In July, 2009, the City
requested that its largest vendors consider reducing their fees by 10% to assist
us in meeting our budget challenges. US Bank reduced its fees by approximately
17%. Their proposal reduces fees even further.
The cost of conversion in both staff time and dollars was a consideration. By
continuing the banking relationship with US Bank, there would be no conversion
costs. These costs savings are not factored into the cost analysis presented
above.
Another consideration is the direct relationship that US Bank has with the 4M
Fund which we currently utilize for short-term investment of funds. There may be
some additional cost savings that can be achieved by utilizing certain services
through the 4M Fund. These possible costs savings have not been factored in to
the cost analysis presented above.
US Bank has had a presence in the Prior Lake community for many years. They
employ residents from the community and the surrounding area. In addition, US
Bank's headquarters are located here in Minnesota.
Based on US Bank's ability to deliver high quality banking services at the lowest
cost and the excellent relationship that the City has had with them for the past
five years, City staff is recommending that the banking services agreement be
renewed with US Bank for the period 2010- 2013.
The contract with US Bank for banking services will expire on December 31,
2009. In January, the City must appoint an official city bank for year 2010.
A copy of the RFP and each of the proposals is available in my office for review.
ALTERNATIVES:
1. Approve a resolution appointing US Bank as the Official City Bank for the
City of Prior Lake for 2010-2013.
2. Take no action at this time and direct the staff to provide additional
information.
RECOMMENDED Alternative #1
MOTION:
WHEREAS,
WHEREAS,
WHEREAS,
WHEREAS,
WHEREAS,
4646 Dakota Street S.E.
Prior Lake, MN 55372-1714
RESOLUTION 09-xx
A RESOLUTION APPOINTING US BANK AS THE OFFICIAL BANK
FOR THE CITY OF PRIOR LAKE FOR 2010-2013
Motion By:
Second By:
the City is interested in designating an official depository for public funds for a four (4)
year period; and
The City wishes to obtain the most competitive and cost effective service to process its
municipal financial transactions; and
The City issued a Request for Proposals for Banking Services from qualified banking
institutions; and
The City has evaluated all proposals with respect to their ability to deliver the required
services, their completeness and professionalism, and the cost to deliver the required
services; and
The City is interested in appointing the qualified banking institution that would serve the
financial interests of the City.
NOW THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE,
MINNESOTA as follows:
1. The recitals set forth above are incorporated herein.
2. The City Council hereby appoints US Bank as its official bank based on the considerations set forth
in their proposal effective January 1, 2010 through December 31, 2013.
PASSED AND ADOPTED THIS 7TH DAY OF DECEMBER 2009.
YES
NO
I Haugen
I Erickson
I Hedberg
I leMair
I Millar
Haugen
Erickson
Hedberg
leMair
Millar
Frank Boyles, City Manager
www.cityofpriorlClk~:corr:.. .
Phone 952.447.9800 / Fax 952.447.4245