The URL can be used to link to this page

Home My WebLink About8C - Official City Bank MEETING DATE: AGENDA #: PREPARED BY: AGENDA ITEM: DISCUSSION: STAFF AGENDA REPORT APRIL 3, 2000 8C RALPH TESCHNER, FINANCE DIRECTOR CONSIDER APPOINTMENT OF OFFICIAL CITY BANK Introduction The purpose for this agenda item is to consider appointing an official city bank for a time period of approximately 3 plus years that would formally begin effective June 1, 2000 and continue thru December 31, 2003. History In the past the City Council has always designated the official city bank, along with the normal list of annual appointments, during its first meeting of the year in January. Because there was an expressed interest by both Marquette Bank and U.S. Bank, the City Council approved Prior Lake State Bank as the City's official bank on an interim basis on 1/3/00 and directed Staff to prepare a request for proposals and bring back a final recommendation. Current Circumstances The Weekly Update of January 7th included the attached "Official Solicitation of Banking Services" for council comment and input. It was then sent out to all three local banking institutions with a response deadline of Friday March 10, 2000. Each financial institution completed the RFP and a compilation of their bank charges is indicated below: BANKING SERVICES SOLICITATION RESPONSE INTEREST RATES:(quote as 0[3/1/00 business day) [...........................................................................................T.Ma.r(i'u.ei.ie..Tp.rior..La.ke..r..U~s.jia~k....l 1 1 Bank i State Bank i l ............................................................................................................................................................;.................................; i Checking Account Interest Rate (Basic) i (1) i (2) l (3) i i i 5.385% i 5.350% i 2.90%/4.53% i ................................................................................................&.............................,...................................................................04 i (I) Marquette rate pegged to 91 day Treasury Bill rate 1 ~................................................................................................................................................................................................., ; (2) P.L. State rate pegged to 30 day Treasury Bill rate i ~..............................................................................................................................................................................................., i (3) U.S. Bank rate includes basic checking rate plus earnings credit rate i ~............................................................................................."'............................."'............................."'................................04 l Checking Interest Rate Tier Lev~ls l l i l 1..=::.:.:.:.iji~~f!~::.=I=~.Ui~=t.i;U!=\=~fi~i.:l ~...............n..................................................................................................................+..............................+................................04 i above $100,000 ~ 5.385% i 5.350% l 2.90% ~ ...................................................................................................................................................................................................... 16200 Eagle Creek Ave. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER - H:IAGENDAIAOOO2.00C ["CD'Jumb~"fut~~~~t"Rat~"(T0:'S"""""'''''''''''''''r''''''5'.'5'O%''''''''r......(jjO%......--r........(j'31%.........1 r............................................................................................1.............................1.............................1...............................1 L!:1:?~~r.:~~~~~!::9.~~~;:~~~~::::::::::::::::::::::::::::::::::T::::::~:;~:~~::::::::L::):.:~9.~:::::::T:::::>;?:~~:::::::::1 BANK SERVICES: r..DescrlptloU'...............................................................T..Marqu.etie...r..P.rio~..La.ke...r....lj'~S:..Ba.~k....) ~ i Bank i State Bank i i [..Aiito.matic.P~yroil"j).~p.~sit'i~~;ji~.~Tco;iT'..]".....$43i48.......I......$5j'i":7'2.......~.......$45.6:00.......j ~............u...............................................................................1..............................r..............................!..............................1 [..B.iifp~~c.~s~hig"(~;j~~~ily.~~stT.......................T.......$36:O'O.......r......ho...oo.......r.....$is6:00'......1 p~~~~~:~~~~~:~:~~~:I:~:~~:I:~:~:~:~::#.~~:~~~:~~?::::::::::::::::::::::::r::::::::::::::::::::::::::T::::::::::::::::::::::::::::r::::::::::::::::::::::::::::! r"Cii~'ck"R~himiN~m~~ic'ai""S'~rt"(~~~~'~i"~~;;j""r''''$3'9'O:OO'......r......$T2o:oO'....T......$S.9.9:40......j r............................................................................................1..............................r..............................l..............................1 r..safetY..D"~po~it'B.o~.(lf?~~.~uaT~~so.............rF~e.~ai~~a...I...Fe~..~.ai~~d'.T..~~~v~.ii"able...) ..............................................................................................................................................................,............................... TRANSACTION SERVICES: [..Descrlptloii.................................................................T"M~rquett.e...r...Pri.o~..Lake...r....U':S:..Ba.iii{....1 ! ! Bank i State Bank ! ! .............................................................................................................................................................................................~ 1 Deposit Charge (per item charge) ! $.06 1 $.08 1 $.045 ! r.............................................................................................1..............................r..............................~..............................~ [..NS.F..Ch~~ge"(p.~~.i't~~.~ii~~i~T........................r......$25':o.o.......r..no.charg.~....T.......$25":6'6........1 r............................................................................................1..............................r..............................r..............................~ i............................................................................................................................i..............................................................i 1 Stop Payment Charge (per item charge) i $15.00 i $15.00 j $25.00 1 j............................................................................................1..............................j..............................I..............................1 [..Wir~..Ch~~g.~.(p.~~.i'i~~.~ii~~i~T.......................T......$B:O'o.......T....~o.charg~....T........$4...00.........1 ..............................................................................................................................................................................................1 MISCELLANEOUS: [..Desc.rlptloU'...............................................................r.Ma.rqii.etie...[..P.rj"o~.iake...1....U'~S:.Ba.~k....j 1 1 Bank 1 State Bank 1 1 '.........I.I............I.:......P........k....C.......h....B......I.................................tr7:~;r::::::5C;:;:;r:;:tmm~"":X2T?%@M'~~~SX:~@?l . Co atera lZe ea as a ances .......:;:d:~S... ..................::;l:::es... .................:~::es.... ........... 1............................................................................................f;.l,.,1..~*~;~i:;;[::........i..,:J:.:...:;[]m~::;;;;~:.:.....j]j;.f;~j.j.M~;;~;;;..;;;.:.:.:jj;1 1~~~~~I~t~~:~~V~il~;H~;=== j 1 will be 1 will be j j i 1 available 3rd i available i i L..........................................................................................1.......~!!.'..~q.~9........L.~!~~.~~:..?~9.q...L...........................j EFFECTIVE DATE OF SERVICE: F~~~~?~~~~~~~~~~~~~~~~~~~~~~~~~!:~~~~~~~~~~~~~~~~~~~~~~~~T~~~~~~~~~~~~~~~~~~~~~~~T~~~~~~~=~=~~~~~~I~~~~~~=~=~~~~J 1 January 1, 2001 thn! Dec. 31, 2003 i = i = i = i r::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::L:::::::::::::::::::::::::T:::::::::::::::::::::::::::::I:::::::::::::::::::::::::::::1 In addition to the above banking and transaction service charge areas each bank identified additional charges unique to their account maintenance fee structure which were included when calculating a total monthly service cost amount. In the case of U.S. Bank, they proposed an earnings credit interest rate which would be applied as an offset credit to reduce their net monthly service charges plus an H:IAGENDAIAOO02.DOC overall checking account rate that would earn interest dollars as well. Financial Imvact A comparison of the three proposals based upon an estimated $500,000 daily cash balance and business volume, upon which each bank calculated its service fees, the City would earn the following income: [.............Ba.~k.............r...interest'"..'T.....service......T...N.et.Mo.:....r......A:ii.ii.uai"".....l ~ lns.titYfum ~ Earned ~ Q!.S! ~ Income ~ Revenue ~ C:::::::::::::::::::::::::::::::::::r:::::::::::::::::::::::::::r::::::::::::::::::::::::::r:::::::::::::::::::::::1:::::::::::::::::::::::::::::1 l Prior Lake State l $2,229.17 l <$390.03> l $1,839.14 l $22,069.68 1 [..Marque.tte.Baiik.T...$2';243:7s.....!...<$4s.jjo>..1..$1.;7"86:4s"'1'''$2'1:43'7'.'40'''1 ~..lT~rBaiik.............T..$'i";2"3'f:5C..~...*<$48'.'43>..r$'i";f8io8...~...$14:T96'''9'6'''j l:::~:~:~(?l.~~~~~i.~:~~~~[L:::::::::::::::::::::::::::::::::::::::::::::~:::::::::::::::::::::::::::::::::::::::::::::::::::::::::j On the basis of the interest earnings/service fee analysis Prior Lake State Bank provides the most responsive bid which best serves the financial interests of the city from a cost and service perspective. Also, because the City stores its microfilmed asbuilt plans, microfiched file documents and meeting minutes and all monthly computer data backup media offsite for security and fire protection a safety deposit box for such storage is required. This performance standard eliminates U.S. Bank since their safety deposit boxes are only available at their downtown office location which makes it impracticable from a convenient access perspective. (Staff typically accesses the deposit box bi-weekly.) Conclusion The new proposal from Prior Lake State Bank is significantly better than what we now enjoy. On an annual basis the following savings will be realized by the City as a result of Prior Lake State Bank improving its relationship banking services: r.........-.......BANi(SERVIC.E.............SAVINGS...............................................................~ ~ CATEGORY AMOUNT Comments j r.........-.....................................................................................................................................................~ r..L....-..SafetY.Deposi'i..Box......................$.7'5'..O.O.........F.ee..wi'ii"be.waived""..................) j"2:...._..Invest"\Vire..Charges.................$7"i6..<)"o.........F.ee.WnnJe.wa.{ve(f..................j ~..3:....-..Checking..interest.................$20jOO:OO.......5l"fference"between"'cuiTen"i"'~ l $21,495.00 rate of 1.21% and 5.35% on l 1.........._.............................................................................................~~!:..~?~.~?~.~~.~~!~.t~.~.~~~~....l This is a marked improvement over our existing account features and Prior Lake State Bank should be acknowledged for stepping up its proposal to the point where it has basically deferred its interest earning potential to the City of Prior Lake and is managing the account for the most part on a service charge basis. J"'- T H:IAGENDAIAOOO2DOC ALTERNATIVES: RECOMMENDED MOTION: REVIEWED BY: Attachments: 1. A motion and second to approve Resolution OO-XX Appointing Prior Lake State Bank as Official City Bank. 2. Take no action at this time and direct the staff to provide additional information. A motion and a second to adopt Resolution OO-XX Appointing Prior Lake State Bank as Official City Bank. Staff is requesting the Council to make the changeover on April 4, 2000 rather than the June 1 date contemplated in the RFP to maximize the benefit to the City immediately. 1. Officia Solicitation of Banking Services RFP. 2. Resolution OO-XX Appointing Prior Lake State Bank as Official City Bank. RESOLUTION OO-XX APPOINTING PRIOR LAKE STATE BANK AS OFFICIAL CITY BANK WHEREAS, the City is interested in designating an official depository for public funds for a three year time period; and WHEREAS, the City wishes to obtain the most competitive and cost effective service to process its municipal financial transactions; and WHEREAS, the City has formally solicited request for proposals from the local banking institutions; and WHEREAS, the City has evaluated all proposals with respect to service charge costs, availability of safety deposit box security and the potential for earned investment income based upon quoted interest rates that will be pegged to the U.S. Treasury; and WHEREAS, the City of Prior Lake is interested in appointing the banking institution which would best serve the financial interests ofthe City. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, that the City of Prior Lake hereby appoints Prior Lake State Bank as its official bank, based upon the interest rates and serviCe fees set forth in their proposal and stated in the April 3, 2000 Staff report, for the following time period: Effective April 4, 2000 until December 31, 2003. Passed and adopted this 3rd day of April, 2000. YES NO Mader Ericson Gundlach Petersen Schenck Mader Ericson Gundlach Petersen Schenck {Seal} City Manager City of Prior Lake 16200 Eagle Creek Ave. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER - --r ~ IIV N E S O~ 'l'- OFFICIAL SOLICIT A TION OF BANKING SERVICES The City of Prior Lake is interested in comparing the banking services and costs of local institutions within the community for the purpose of designating an official depository for public funds for a three year time period. The City wishes to obtain the most competitive cost effective service to process its municipal financial transactions. In an attempt to evaluate which bank would be most responsive to the City of Prior Lake's needs, a number of criteria has been established. These performance standards/requirements have been established in an effort to distinguish, on a comparative basis, the banking institution which would best serve the financial interests of the City from a cost and service perspective. In order for you to complete the section components the following transaction information is provided: Average Cash Balance . $500,000 daily cash balance Business Volume . Accounts payable check processing - 5,000 checks annually . Payroll checks - 3,000 checks annually . Cash receipt deposits - weekly . Water billing deposits - daily Direct Deposit . Payroll participants - 46 (bi-monthly) Please complete the following sections based upon the above information. INTEREST RATES: (quote as of 3/1/00 business day) Checking Account Interest Rate (Basic) % Checking Interest Rate Tier Levels $100,000 - $249,999 % $250,000 - $500,000 % above $500,000 % CD Jumbo Interest Rate % Money Market Rate % BANK SERVICES: Description Automatic Payroll Deposit .......... J\ vaUabUit,Y............ ::::::::m#:W(:::",'/:~#;i::r:):(:)::::: ':;::,xl~;:}!i:::.},:::... .... :::;;:;;;g~:)::):)H::~9::)::)::(rr::: Cost ;:;:~g~n:;;9~f8t:::/rr:::' Bill Processing (water utility bi1\s only - 25 per month) ;:;:::::;])t.::.i~;))?)m::::Ji~f.rr;. :'):r:::::.::: ........ ........... ...........-..... ..-....... ;:MmiOOUjijst':@rrrrr) :.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:':':':':':'.. Check ReturnlNumerical Sort Y~s~'..>N({:::.. . '.. :;;;~I'r::;::;~~::::;))) .. . )'A;P#.##1:e1p~t8::'::::::)))(("".. ............................................... . .....-...... .. Safety Deposit Box (1) ;;;;::?m~~:::t::::r::::::Jip:r:::::)?:: ::rJ:1'~>/::m9::::::::::::::::::):::mij~t!G9~~f:::;::::::::::::/:::} 16200 Eagle Creek Ave. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230) Fax"(6I2f447~4245 AN EQUAL OPPORTUNITY EMPLOYER H:\BIOIBANK.DOC ;' TRANSACTION SERVICES: Description Deposit Charge ::,':'::::::g~~_:ii~r\:\'r:::::::::: :::::::::::t'i~':mff:::m::::::::J'i9:::'::::::f:f:::':::':':: ::::::::::::I~f?r::?mr::::::Ei::::t::t:::r:::::::::::: Q!.S1 ::::~~r::~t~m::~"!~~~:'jf:r::::':\\",r::\\mr:\':::':::: ::::gMl:#~m:::~.g~':j::m:m:m::f:m:'::::f:m:::::"'mm::::::::: NSF Charge Stop Payment Charge :::::~~r::~~~m::~P.ii.~m:::tttt::t::t:m::::tt:mr:::::::: Wire Charge ':::::::::::'%#.~::::::::'::::::::::i:':fH9:::::::::::'::::::::':::::::::::: :::::?~f:~mm::Rlj!tg~,:~:'::::::::::::f:m:::::::::{::m::::::::::::::::::::::: MISCELLANEOUS: Description Collateralize Peak Cash Balances ::::g~_;:;#~t:m\,} :::::::*~~':':m:m::m":':::m9ff::m:mm::: Internet Account Access Local Customer Service A vailability ::::::tt~~::\):::r:m"::::S~f':m:m:m:m:::t: EFFECTIVE DATE OF SERVICE: June I, 2000 thru Dec. 31, 2003 January 1,2001 thru Dec. 31, 2003 CONTACT PERSON PHONE NUMBER Please disclose any banking service costs to the City of Prior Lake that are not identified above but that may be applicable at your financial institution. The City of Prior Lake reserves the right to award the official bank status to the institution which in the sole opinion of the City best meets the city's financial and service needs. All questions may be directed to the attention of Ralph Teschner, Finance Director at (612) 447- 9841. H:IBIDIBANK.DOC . ----r-