APPROVAL OF AGREEMENTS AUTHORIZING A NEW DEPOSITORY BANKING RELATIONSHIP WITH UMPQUA BANK

Transcription

1 STAFF REPORT MEETING DATE: January 27, 2015 TO: FROM: City Council Michael Frank, City Manager Cathy Capriola, Assistant City Manager Brian Cochran, Finance Manager Maureen Chapman, Accounting Supervisor 922 Machin Avenue Novato, CA (415) FAX (415) SUBJECT: APPROVAL OF AGREEMENTS AUTHORIZING A NEW DEPOSITORY BANKING RELATIONSHIP WITH UMPQUA BANK REQUEST Consider adopting a resolution authorizing the Assistant City Manager / City Treasurer to execute all necessary documents and agreements to enter into a depository banking relationship with Umpqua Bank. RECOMMENDATION Adopt the resolution. DISCUSSION The City has been with its existing banking institution, WestAmerica Bank, for over twenty years, prior to Westamerica s merger with Novato National Bank in The relationship has worked well for the City, including the implementation of additional services with WestAmerica such as check positive pay, lockbox processing services, and credit card acceptance for certain City payments. It is a Government Finance Officers Association best practice, however, to conduct a request for proposals ( RFP ) for banking services every 5-8 years. The goals of such an RFP are to obtain updated, competitive pricing information; to re-evaluate the best overall services, both existing and optional; and to explore new technologies and services that might not have been available previously. The City began its RFP process in September, publicly releasing the document on September 4th. Proposals were due October 9th. The document emphasized the following five goals in order to establish the best overall banking partner for Novato for the next five-plus years: Safety and security of funds; cc15_

2 Understanding of the banking needs of governmental entities in general and Novato in particular; High-quality customer service throughout the duration of the relationship; Modern technology and solutions that will enhance the City s capabilities and efficiency; and, Experience and know-how to effectively implement those solutions. Novato received responsive proposals from the following eight banks: Bank of Marin Bank of the West JP Morgan / Chase Bank MUFG Union Bank Umpqua Bank US Bank Wells Fargo Bank WestAmerica Bank Staff conducted a thorough review of each proposal, keeping the above-stated goals in mind and evaluating each bank for its customer service, day-to-day banking services, online capabilities, technology, and fees / pricing. After narrowing the proposals to four that staff felt would be the best suited for Novato, finalists were invited to the City for an in-depth interview and demonstration process. This enabled staff to meet the bank s representatives in person, ask more detailed questions, and view the capabilities of each bank s online banking and cash management tools. Umpqua Bank Selected After the lengthy process outlined above, staff is pleased to select Umpqua Bank as its next banking institution. Umpqua Bank is a state-chartered bank by the State of Washington and is a large regional bank with 350 retail locations across its five-state footprint of California, Oregon, Washington, Idaho, and Nevada. As of June 30, 2014, Umpqua Bank reported total assets of $22 billion, including public funds deposits of more than $1.5 billion. Umpqua Bank maintains its Novato office at 999 Grant Ave, after acquiring the Novato-based Circle Bank in In addition to all of the existing banking services that Novato utilizes (ACH transfers, checks, deposits, online banking, wire transfers, check positive pay, online stop payments, lockbox, etc) a transition to Umpqua Bank will allow the City to implement several new services. These include Payee Positive Pay and ACH Positive Pay, which both upgrade our existing fraud prevention measures; Desktop Check Deposit, which gives the City the ability to remotely deposit all checks received via a desktop scanner; and Image-Based Lockbox, which is an upgrade to our existing lockbox, allowing staff to view remittance images and data online. Pricing and Fees While not the deciding factor, the actual pricing submitted by the various banks was considered during the decision-making process. The annual costs proposed by the eight banks ranged from $4,000 to $14,000 annually, with Umpqua Bank being the second least expensive vendor. Annualized net costs are expected to be approximately $4,700, but, since banking fees are typically activity-based (e.g. number of checks clearing, number of deposits, number of check images accessed, etc), this figure is an estimate. While not a large item of expenditure within the overall city budget, the estimated fees from Umpqua Bank are expected to be a substantial savings as compared to the approximately $9,000 the City currently spends each year on similar services with 2 2

3 its current vendor. As part of the calculation of net annual cost, the City considered the earnings credit rate ( ECR ) offered by each bank. The ECR is effectively an interest rate earned by the amount that the City holds on deposit, and is used to offset the monthly fees. Umpqua has offered the City an ECR equal to 15 basis points (i.e. 0.15%) above its standard published rate. For the past 24 months, the published rate has been 25 basis points, meaning that the City will be eaning an ECR of 40 basis points. It should also be noted that, if the ECR rate goes up or down in the future, the City s rate will similarly fluctuate. Umpqua has agreed to fix its pricing for the first four years of the relationship, including both the fee structure and the ECR offered. Documents The attached resolution authorizes the City Manager, City Treasurer, and designees, as appropriate, to sign all necessary documents to establish the relationship, open applicable accounts, and sign up for specialized services. The necessary documents include, but are not limited to, the following: Standard format Consultant Services Agreement o To include Umpqua Bank s complete RFP response including pricing terms Contract for the Deposit of Moneys: Local Agencies Waiver of Security Signature Cards Various Applications to Open Accounts and to Establish Services FISCAL IMPACT The move to a new depository bank will provide savings to the City of approximately $4,000 annually. Funds to pay for banking services are already budgeted in the operating budget. ATTACHMENTS 1. Resolution of the City Council authorizing the City Manager and City Treasurer to execute all necessary documents to establish a new banking relationship with Umpqua Bank 3 3

4 CITY COUNCIL OF THE CITY OF NOVATO RESOLUTION NO RESOLUTION AUTHORIZING THE ASSISTANT CITY MANAGER / CITY TREASURER AND / OR THE CITY MANAGER TO SIGN ALL NECESSARY AGREEMENTS TO ENTER INTO A NEW DEPOSITORY BANKING RELATIONSHIP WITH UMPQUA BANK WHEREAS, on September 4, 2014, the City publicly released its Request for Proposals for Banking Services asking for local qualified banks to provide banking services for the City s bank accounts, related depository, and cash management needs; and WHEREAS, the City received eight competitive proposals responding to the requirements outlined in the request; and WHEREAS, City staff diligently evaluated each of the proposals based a variety of criteria to determine which bank could best respond to the needs of the City; and WHEREAS, based upon that review, City staff, the City Treasurer, and the City Manager have determined that Umpqua Bank is best suited to meet those needs; NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Novato hereby authorizes the City Manager and / or Assistant City Manager / City Treasurer and their designees, as appropriate, to sign all necessary agreements needed to enter into a new depository banking relationship with Umpqua Bank. These documents may include, but are not limited to, a standard Consultant Services Agreement, a Contract for the Deposit of Moneys, a Waiver of Security, Signature Cards, Account Applications, and Service Applications. * * * * * * I HEREBY CERTIFY that the foregoing resolution was duly and regularly adopted by the City Council of the City of Novato, Marin County, California, at a meeting thereof, held on the 27th day of January, 2015, by the following vote, to wit: AYES: NOES: ABSTAIN: ABSENT: res4853 4

5 Sheri Hartz, City Clerk Approved as to form: City Attorney of the City of Novato res4853 5