City Council
MEETING DATE: 6/13/2018
TITLE:
Title
Banking Services Agreement
End
FROM:
Tami E. Scott, Administrative Services Director
RECOMMENDATION:
Recommendation
It is recommended that the City enter into a one-year banking services agreement with two (2) one-year extensions, exercisable at the discretion of the City upon sixty (60) days prior written notice to Wells Fargo before the expiration of the term or extended term.
Body
BACKGROUND:
The City's current banking services relationship has been with Wells Fargo Bank for the last 31 years. City staff recently completed a Request for Proposal ("RFP") with the goal of determining whether to continue with Wells Fargo Bank or establish a banking relationship with another financial institution. Staff contacted nineteen (19) Coachella Valley Banks and two (2) Coachella Valley Credit Unions, and posted the RFP on the City's website, as can be seen by the attached. We received five (5) responses to the RFP. Two of the respondents were disqualified as they did not either meet the minimum qualifications or were non-responsive to the questions asked in the RFP. Also note, staff made significant efforts to contact Cathedral City banks (Bank of America, US Bank and Chase) but they did not respond.
DISCUSSION:
As one can imagine, changing a banking relationship is a very intensive undertaking and many issues need to be considered in the process. As can be seen by the attached, a very detailed RFP was prepared to address and identify the City's banking needs. The three remaining respondents were scored independently by five city staff members on all the criteria outlined in the RFP. Of a total number of points possible, exclusive of pricing, Wells Fargo Bank was number one with 334 of 350 points, Citibank was number two with 288 of 350 points and Pacific Western Bank was number three with 267 of 350 points. Please note that both Wells Fargo Bank and Pacific Western Bank have locations in Cathedral City. As for pricing, Citibank was number one, Wells Fargo Bank number two and Pacific Western Bank was number three.
After completing the evaluation, several discriminators were identified in addition to the ratings and cost proposal such as:
• Is the bank a direct member of the Federal Reserve System?
• Is their insurance company registered to do business in the State of California?
• Are they an approved LAIF depository?
• What is their rating under the Community Reinvestment Act?
• Do they have a dedicated public banking unit
• What are their ratings with Standard & Poor's and Moody's
• Do they have the appropriate security protocols and encryption abilities required by the city?
• What is their disaster preparedness plan?
• What is the return on investment for their sweep services (assuming they provide sweep services)?
• Do they have comparable relationships with other public agencies of our size?
• Are they a direct member of NACHA?
• How do they handle merchant services and corporate credit cards?
• How do they handle cash management, reporting and investment services?
• Will the bank be able to transition to our ERP (Enterprise Resource Planning) software that we are currently in the process of implementing over the next year to 18 months?
On all accounts, Wells Fargo Bank addressed and meets these needs above and beyond that of the other respondents.
Understandably, there is significant concern, due to the recent announcement of fines and penalties assessed against Wells Fargo Bank as to how they were doing business. It should be noted that many of the banks over the last several years have also been in a similar situation to include but not limited to Bank of America, Chase, Citibank, US Bank, Goldman Sachs to name a few. Rabobank, who responded to the RFP but was disqualified, was fined $1 billion dollars over a LIBOR scandal and recently forfeited $368 million in a money laundering probe. Pacific Western Bank is currently part of a class action lawsuit for unfair labor practices from not paying overtime and not providing the appropriate regular and meal breaks to its' employees. In short, there is not a perfect financial institution that has not been under scrutiny for one thing or another either currently or in the past. In consideration of all the information and after a detailed review and discussion with the subcommittee, which included Mayor Pro Tem Pettis, Councilmember Kaplan, City Manager McClendon, Administrative Services Director Scott and Accounting Services Manager Biersack.
The results of the RFP were presented to City Council at the May 9th, 2018 Council Meeting. It was recommended we move forward with a one-year contract with Wells Fargo Bank and complete another RFP at that time. After legal review, the City, at its sole discretion would have the option to extend the contract by up to two (2) one-year terms with a 60-day notice.
FISCAL IMPACT:
A small positive impact to the General Fund
ATTACHMENTS:
List of Financial Institutions and respondents to the RFP
Copy of the Request for Proposal
Bank Services Agreement