HomeMy WebLinkAboutItem 1e: Agreement with Bank of the West for General Banking Services of ARC
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STAFF REPORT
Administrative Services Department
DATE: March 20, 2012
TO: Mayor and City Council
FROM: Hue Quach, Administrative Services Director ' /
Shannon Huang, Financial Services Manager/Treasurer
SUBJECT: AUTHORIZE THE CITY MANAGER TO AWARD A THREE YEAR
AGREEMENT TO BANK OF THE WEST FOR GENERAL BANKING
SERVICES WITH THE OPTION TO RENEW FOR TWO MORE YEARS
Recommendation: Approve
SUMMARY
On March 6, 2007, the Council approved a five year agreement with Bank of the West
for the City's general banking services. It contains a group of accounts including a
general account for operations, a payroll account through which personnel costs are
paid, a checking account for checks issued to outside vendors and a deposit account for
credit card payments.
The current agreement with Bank of the West will expire on June 30, 2012. Bank of the
West has provided a new proposal with lower costs and higher balance earnings that is
guaranteed for five years. Staff is recommending the Council's approval in granting a
three year contract with the option to renew for two more years to Bank of the West.
DISCUSSION
The general banking services include acceptance of daily deposits, processing paid
items, direct deposit capabilities for payroll, electronic fund transfers for water utility
accounts, wire transfers, and receiving of state and federal taxes electronically.
In June of 2006, the City solicited proposals for banking services and received seven
proposals. Bank of the West's proposal was determined to be the most competitive with
their proposed costs significantly lower than the other bidders. Recently, Bank of the
West has thoroughly reviewed the City's banking service fees and has further reduced
most of the service fees by 10%. As illustrated in the enclosed comparison schedule
Page 1 of 3
that consists of both current and proposed fees, the new fee schedule will result in
savings of$100 per month on average.
It is common practice that the earnings on average account balance are used to offset
the bank fees for depository accounts. The original proposal offered the earning rate
equivalent to interest rate for 90 day Treasury Notes, which is currently at around
0.066%. Upon staffs request, Bank of the West reviewed our profile in 2010 and
increased the earning rate for our depository accounts, which has been in the range of
0.42% to 0.75% for the past twelve months. Nevertheless, the current earning rate is
determined monthly and is subject to the bank's management discretion. In their new
proposal, Bank of the West has included a guaranteed earning rate of 0.75%, which is
much higher than the two years Treasury note of 0.30%. For comparison purpose,
LAIF's January 2012 investment return was 0.385%. The earnings on our average
balance of $600,000 will be $4,500 annually vs. $396 based on the 90 day Treasury
Notes, which will reduce bank service fees.
Staff is satisfied with our current banking services and has not experienced any issues
with Bank of the West. In 2008, the City implemented remote deposit with the help from
Bank of the West staff. The service was provided at no costs to the City. Staff no
longer needs to deliver the checks physically to the bank, instead, deposits are made
through an on-line connection and credited to our account the same day.
Bank of the West is the third largest full service commercial and retail bank based in
California with $62 billion in assets. Its holding company, BancWest Corp, is one of the
Top 30 bank holding companies in the nation. In addition, Bank of the West's Tier I
capital ratio, one of the indicators commonly used to measure safety of a financial
institution, is among one of the top 5 for all the banks in the United States as of
December 31, 2011.
FISCAL IMPACT
The annual banking service fees are estimated to be $15,000, which has been included
in the general fund budget.
Page 2 of 3
RECOMMENDATION
Authorize The City Manager to award a three year agreement to Bank
of the West for general banking services with the option to renew for
two more years.
APPROVED:
Donald Penman
City Manager
Page 3 of 3
Proposed Analysis Statement BA NIll y\ L' S 1
City of Arcadia Prepared February 2012
Balance and Compensation Information For Statement Period December 2011
Average Ledger Balance $662,980.66
Less Average Float $105,269.74
Average Collected Balance $557,710.92
Average Positive Collected Balance $557,710.92
Average Negative Collected Balance $0.00
Positive Collected Balance $557,710.92
Less Federal Reserve Requirement at 10% $0.00
Investable Balance $557,710.92
Average Positive Collected Balance $557,710.92
Less Balance Required For Services $2,761,813.32
Deficit Balance $2,204,102.40
December Actual Analyzed Position ECR Fee Basis
Earnings Credit of Earnings Balance Basis 0.75% $355.25
Less Total Analyzed Fees $1,759.24
Analyzed Charges Due After Earnings Credit $1,403.99
npp.oysed Analyzed Position = :m
=; nines Credit of Eat nings Boiance Basis
T otal Analyzed Fees
r,;;ly ed Charges Due After Earnings Credit
Dec
Service Charge Detail Volume Unit Price Fy ` posed Actual
''''r"}'````` Compensating
Pate Balance
Charge
Miscellaneous Services
Checks Paid 896 $0.050 0 0450 $44.80 $78,145.76
Deposits Processed 13 $0.750 0.6750 $9.75 $17,007.17
FDIC Insurance 663 $0.150 0 1 500 $99.45 .+. $173,473.12
Monthly Account Maintenance 7 $8.000 7 2000 $56.00 717Q $97,682.20
Total Miscellaneous Services $210.00 $19 .9C $366,308.24
Zero Balance Accounts(ZBA)Services
ZBA Concentration Account 1 $15.000 1 r,C?C1i` $15.00 " $26,164.87
ZBA Tier Account 3 $8.000 3 000C't $24.00 '_,4 $41,863.80
Total ZBA Services $39.00 237. +: $68,028.67
Checks Deposited - Non-encoded
Non-encoded On Us* 3 $0.080 0 07Z. $0.24 $418.64
Non-encoded Local and Non-local* 107 $0.120 0.10'3 $12.84 .. .'_5 $22,397.13
Total Checks Deposited Services $13.08 1117 7 $22,815.77
Bank of the West Confidential 02/23/2012 Page 1
Dec
tir
Service Charge Detail Volume Unit Price ` ;�' "rt, Actual Compensating
:, Balance
Charge
Deposited Items Returned/Recleared
Deposited Item Returned 9 $1.500 i'000 $13.50 $23,548.39
Returned Item Maker Name 14 $0.500 0.S(Jt $7.00 $12,210.27
Deposited Item Recleared 5 $0.750 ;Gift=' $3.75 $6,541.22
Total Deposited Items Returned/ Recleared Services $24.25 '6"..::'.._ . $42,299.88
Transportation Services
Armored Car 1 $178.500 '1 7' °;01...l $178.50 - $311,362.01
Total Transportation Services $178.50 217F. ''..P $311,362.01
Image Express Services
CD Produced-per CD 1 $20.000 12 00000 $20.00 $34,886.50
Images Written to CD 889 $0.030 (DA)3D(.: $26.67 $46,521.15
Total Image Express Services $46.67 .24' u-, $81,407.65
Wire Transfer Services
Incoming Wire 9 $4.500 4,0100 $40.50 T'::-."7 40 $70,645.16
Total Wire Transfer Services $40.50 S36.4`. $70,645.16
Account Reconcilement Services
Void -Cancel tape, Diskette 4 $0.030 0.030i $0.12 C; 11 $209.32
Input Issue, Electronic 960 $0.030 0.030U $28.80 '_; -o $50,236.56
Base Fee 2 $30.000 27.0000 $60.00 :054 0 $104,659.50
Stand Alone Positive Pay
Positive Pay Base Fee 2 $25.000 22.5000 $50.00 goo $87,216.25
Exception Items 2 $1.250 1.1250 $2.50 $4,360.81
Stand Alone Positive Pay 3 $30.00027 0000 $90.00 2$1.0G $156,989.25
Total Account Reconcilement Services $231.42 T2.11 17 $403,671.68
Automated Clearing House(ACH)Services
Electronic(ACH)Credits 141 $0.140 0.1260 $19.74 0.1-; 7T Waived
Electronic(ACH) Debits 19 $0.140 01260 $2.66 Waived
Returned Items-Debit 4 $5.000 4.5000 $20.00 012 02 $34,886.50
Returned Items-Credit 1 $5.000 4.5000 $5.00 F.,4 51.'' $8,721.62
Data Block-Per Account 6 $5.000 4.5000 $30.00 $27.00' $52,329.75
Total ACH Services $55.00 69..66 $95,937.87
Electronic Deposit Service
Deposit Fee 20 $0.000 0.0000 $0.00 r,0 0,. $0.00
Deposit Fee 19 $0.750 0.6750 $14.25 $$ 2.30 $24,856.63
ICS CC Maintenance 1 $30.000 :30.005o $30.00 030 C1C $52,329.75
EDS Items 7,321 $0.040 0 0360 $292.84 ,3 0 • $510,808.12
EDS Items 100 $0.000 ().0)01 $0.00 s!) O%, $0.00
Total Electronic Deposit Service $337.09 0.306.35' $587,994.50
Bank of the West Confidential 02/23/2012 Page 2
Dec
Service Charge Detail Volume Unit Price Actual Compensating
Charge Balance
WebDirect
Corp-prey Day Mo Fee, 1 st Acct 1 $10.000 :iC i, $10.00 1, $17,443.25
Corp-prey Day Mo Fee, 2-10 Accts 6 $10.000 c i $60.00 $104,659.50
Info Reporting
WD Corp/prey Day Detail Items 1,317 $0.070 0.0630 $92.19 - $160,809.32
WD Check Imaging 17 $0.100 $1.70 $2,965.35
Current Day Reporting
WD curr Day 1st Account 1 $20.000 IS 0000 $20.00 $34,886.50
WD curr Day 2-10 Accounts 1 $20.000 I ;000 $20.00 $34,886.50
WD curr Day Detail Items 37 $0.070 033 $2.59 $4,517.80
Special Reports
Deposit Statements, DEPSTMT 8 $1.000 _ ._ t, $8.00 $13,954.60
Analysis Statements,ANASTMT 7 $1.000 $7.00 $12,210.27
WD ACH Special Reports 4 $1.000 0000 $4.00 $6,977.30
WD ARP Special Reports 66 $1.000 0 2)000 $66.00 $0.00
Stop Payments
WD 6 Month Stop Payment 2 $4.000 a+ $8.00 $13,954.60
Wire Transfer
WD Wire Transfer Base Fee 1 $10.000 i 0000 $10.00 :!, $17,443.25
WD Book Transfer Wire 5 $6.000 5 4.000 $30.00 $52,329.75
WD Domestic Wire 7 $5.000 ` ,C)01 $35.00 $61,051.37
WD Account Transfer Items 2 $1.000 0 0000 $2.00 $3,488.65
ACH Services
WD ACH Monthly Maintenance 1 $20.000 ).u00C: $20.00 $34,886.50
WD ACH 1-1000 Transactions 10 $0.040 0 0 Vii0 $0.40 . _ _ $697.73
WD ACH File Upload 1-1000 1,000 $0.040 0 0360 $40.00 ;:.i $69,773.00
WD ACH File Upload Items 1049 $0.040 0.03+60 $41.96 ... $73,191.88
Total WebDirect Corporate Services $478.84 $4.3 ?..`' $720,127.12
Cash Services
Currency Deposited, per$1 50,000 $0.001 0.0013 $62.50 $109,020.31
Total Cash Services $62.50 3`62.;3 $109,020.31
Cash Vault Services
Currency/Coin Deposited
Cash Vault Deposits 19 $0.7500 a+"/'5i10 $14.25 S $24,856.63
Currency Dep-Standard, per$100 469 $0.0600 r.3.0f3(}i;? $28.14 1 ', $49,085.30
Total Cash Vault Services $42.39 X54'2.30 $73,941.94
TOTAL SERVICE CHARGES $1,759.24 $1,662.7L, $2,953,560.81
Notes:
1. Pro Forma fees/volumes are assumptions based on Bank of the West's knowledge of company structure.
2. The Earnings Credit Rate(ECR) is based on several market indicators and balance maintained. ECR subject to change monthly.
3. Fees stated in this pro-forma are valid for ninety(90)days.
Bank of the West Confidential 02/23/2012 Page 3