Award Contract For Banking Services

On Tuesday, September 25, 2012, the City Council authorized staff to solicit proposals for banking services by distributing the "Request for Proposal - Banking Services" to the four local banking institutions - Bank of the West, Landmark Community Bank, Village Bank, and US Bank.

Only Bank of the West and Village Bank submitted proposals by the cut-off date of Friday October 12, 2012.  A copy of Bank of the West and Village Bank's proposals are attached.  

The proposals for banking services were received and opened on Friday, October 12.  The proposals were then reviewed and the information contained in them was analyzed using banking industry ratio trends, an evaluation matrix, and summary of service charges.  The evaluation matrix is attached.  Either of the two banks could meet the city's needs, but Bank of the West exceeded Village Bank in two areas that are very important to the city, and they are service charges and collateralization.


In regards to service charges and based on the information provided in the RFP, Village bank averaged approximately $302.00 per month.  Bank of the West offers an earnings credit (based on $2m dollars in account) which are netted against their monthly fees.  After applying t the earnings credit, for the RFP example, the monthly charge actually came out negative so $0 fee for the month.  As noted, these are estimates only and will vary based on the city's bank balance and activities for the month.  

Bank of the West offers what is known as an image clearing system.  What this entitles is that utility payments could be paid daily into the city's bank account from OPUS 21 (instead of weekly) which puts the cash in the city's hand and not held in a lockbox for a week, thus giving the city more control over its cash.  The fee for this service is approximately $170.00 a month, but could be lower based on the city's earnings credit listed above.   Village Bank did not offer this service at this time.

The number one issue in regards to choosing a bank, is the collateralization offered.  State Statute requires banks to fund the city's account at 110% of the cash value held.  Village Bank caps the city at $3M before charging the city for one-half of the costs attributed to extra collateralization.  The costs for a $3M LOC is $3,750.  Bank of the West did not cap the city on collateraization and consider the costs of collaterizing, a cost of doing business.  An item of interest also was the fact that Village Bank stated that the city of Ramsey should work closely with them to ensure that the maximum coverage limit is not exceeded, whereas, Bank of the West stated that they watch the account to make sure that the city is pledged accordingly.    

Award of this contract for banking services does not eliminate Village Bank from financial activities of the city.  The city will continue to purchase investments such as certificates of deposit (up to $250,000 for FDIC limits) from Village based on competitive rates.  Per the city's current purchasing policy in regard to contracted services, the city is negotiating a three-year agreement.  
 

Staff recommends that the award for banking services be made to Bank of the West for services to begin January 1, 2013.

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Motion to recommend to City Council to Adopt Resolution #12-11-XXX Awarding Banking Services to Bank of the West.