HomeMy WebLinkAbout10D - Official City Bank
STAFF AGENDA REPORT
MEETING DATE:
AGENDA #:
PREPARED BY:
AGENDA ITEM:
JANUARY 3, 2005
./OD
RALPH TESCHNER, FINANCE DIRECTOR
CONSIDER APPROVAL OF A RESOLUTION APPOINTING
OFFICIAL CITY BANK FOR THE CITY OF PRIOR LAKE
DISCU.S.SION:
Introduction
The purpose for this agenda item is to consider appOIntIng an
official city bank. The designation and appointment is for a term of
four years that would formally begin effective January, 2005 and
continue thru December 31, 2008.
History
In January 2000 the City Council appointed Wells Fargo Bank as the
City's official bank and they have effectively served in that capacity
through 2004. On 12/6/04 the Council approved an RFP (request for
proposal) so that the City could evaluate its current banking services
and take advantage of any new opportunities and cost savings that
may improve our present banking relationship.
Current Circumstances
The City received quality RFP responses from all three of the
financial institutions within the city; Prior Lake State Bank, U.S.
Bank and Wells Fargo Bank. In an effort to rank the individual
proposals Staff consolidated the evaluation criteria into three
categories (1. Checking Income 2. Bank Service Costs 3.
Technology), and weighted each on the basis of a 1-2-3 ranking. The
individual outcome and overall ranking (lowest number of points
being the most favorable) is indicated below.
BANKING SERVICES SOLICITATION RANK
Category I - Checking Income
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! U.S. Bank ! $17,240.00 j (1) !
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Category II - Bank Service Costs
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www.cityofpriorlake.com
Phone 952.447.4230 / Fax 952.447.4245
H:\BID\Agenda bank appoint 200S.doc
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~ U.S. Bank ~ Most RFP applications ~ (1) ~
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Final Ranking
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Upon reviewing each RFP response, all three financial institutions
would in no doubt provide high quality banking services to the City
of Prior Lake. As to the selection criteria U.S. Bank excelled in both
the interest earned category and technology utilization while Prior
Lake State Bank came out best in Category II with their offer of no
service fees. In the case of Wells Fargo Bank, they proposed an
earnings credit interest rate that would offset their monthly service
charges but would fall short in providing any investment return on
the City's checking account balance.
Financial Impact
A comparison of the three proposals based upon an estimated
$862,000 daily cash balance and business volume, upon which each
bank calculated its service fees, the City would earn the following
income shown both in monthly and annual terms:
......................................................................................................................................................................................................................
! Bank ! Interest ! Service ! Net Mo.! Annual j
1 Institution 1 Earned ~ Cost ~ Income 1 Revenue 1
[;i~~~::;~rt=::::::;.:;.i.~ia::::::::::~;.~.~~~I:::::::;.:;.~~:;.~:::I:::::::::~;:.:~~]
! u.s. Bank j $1,436.67! <$397.42> ! $1,039.25! $12,471.00 j
~1.w.!.4.;~~~~~~=~:~~~::::=~=~~::~!:~::::::::::::::::=~:=:=~:::!:::::::~~.:==]
U.S. Bank has tied the interest rate that the City will earn on its
checking funds to the three month London Interbank Offered Rate
(LIB OR) minus 50 basis points. LIBOR is a widely used benchmark
for short-term interest rates. Prior Lake State quoted its rate on the
basis of 0.375% of the 90 day Treasury Rate. The difference is
significant as the current LmOR is 2.50% vs. 2.06% T -bill rate.
This difference tends to be constant throughout the year as the
benchmarks change with market conditions.
Conclusion
On the basis of the cost savings alone U.S. Bank provides the most
responsive bid which best serves the financial interests of the city
from a cost and service perspective. With respect to the technology
criteria U.S. Bank provides a greater variety of Internet payment
options. Also electronic funds processing is more advantageous with
H:\BID\Agenda bank appoint 200S.doc
ALTERNATIVES:
RECOMMENDED
MOTION:
REVIEWED BY:
Attachments:
U.S. Bank that would be conducted via the Internet as opposed to
hand delivery of a floppy disk to Prior Lake State Bank.
1. A motion and second to approve a Resolution Appointing U.S.
Bank as Official City Bank for the City of Prior Lake.
2. Take no action at this time and direct the staff to provide
additional information.
A motion and a second to dopt Resolution Appointing U.S. Bank as
Official City Bank for th ity of Prior Lake.
1. Resolution ppointing U.S. Bank as Official City Bank for the
City of Prior Lake
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I
RESOLUTION OS-XX
RESOLUTION APPOINTING U.S. BANK AS OFFICIAL CITY BANK
FOR THE CITY OF PRIOR LAKE
WHEREAS,
the City is interested in designating an official depository for public funds
for a four (4) 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,
electronic funds processing technology and the potential for earned
investment income based upon quoted interest rates that will be pegged to
the London Interbank Offered Rate (LIB OR) index; and
WHEREAS,
the City of Prior Lake is interested in appointing the banking institution that
would best serve the financial interests of the City.
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE,
1. The recitals set forth above are incorporated herein as if fully set forth.
2. That the City of Prior Lake hereby appoints U.S. Bank as its official bank, based upon
the interest rates, service fees and technology considerations set forth in their proposal
effective upon date of conversion in 2005 until December 31, 2008.
Passed and adopted this 3rd day of January, 2005.
YES
NO
Haugen
vacant
LeMair
Petersen
Zieska
Haugen
vacant
LeMair
Petersen
Zieska
{Seal}
City Manager
City of Prior Lake
www.cityofpriorlake.com
Phone 952.447.4230 / Fax 952.447.4245