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SUBJECT:
Placentia City Council
AGENDA REPORT
CITY COUNCIL
CITY ADMINISTRATOR
DIRECTOR OF FINANCE
NOVEMBER 15, 2022
AWARD OF CONTRACT TO CITIZENS BUSINESS BANK (CBB) FOR BANKING
SERVICES
FISCAL
IMPACT: Cost savings of approximately $24,000/ year in merchant service fees (101003-6040) SUMMARY:
The City's current agreement for banking services expires 12/31/22. The Government Finance Officers Association (GFOA) recommends that governments review their financial services contracts every five years to ensure that the City is receiving quality banking services at the best rates possible. In compliance with the City's procurement policy, the City issued a Request for Proposal (RFP) for banking services on July 27, 2022. Six (6) proposals were received and reviewed by a committee consisting of the City Treasurer, Director of Finance and Senior Financial Analyst (the "Committee"). Following the initial review of proposals, the Committee invited the top four (4) banking institutions for an in-person interview and selected Citizens Business Bank (CBB) as the best choice for the City of Placentia. Staff is recommending the City Council approve a Banking Services Agreement with Citizens Business Bank for a term of five years.
RECOMMENDATION:
It is recommended that the City Council take the following actions:
1. Approve a Banking Services Agreement with Citizens Business Bank (CBB) for a term of five (5) years; and
2. Authorize the City Administrator to sign the necessary documents, on behalf of the City, in a form approved by the City Attorney.
STRATEGIC PLAN STATEMENT:
This item is consistent with the City Council approved 5 -Year Strategic Goal # 1: Ensure Long - Term Fiscal Sustainability, but not directly related to a specific Objective.
1.i.
Nov 15, 2022
City Council Agenda
November 15, 2022
DISCUSSION:
The City's current agreement for banking services expires December 31, 2022. To ensure the City was receiving the most competitive rates as well as taking advantage of industry service enhancements, the City issued a Request for Proposals (RFP) on July 27, 2022. Six (6) proposals were received with the top four (4) invited to an in-person interview. The RFP focused on the specific banking needs of the City including general banking, merchant card processing, procurement cards, online reporting and transaction processing, overnight sweep account capability as well as ability to adhere to the City's security requirements.
After considerable review and analysis of all proposals, the Committee selected Citizens Business Bank (CBB) based upon their competitive proposal, cost savings, dedicated banking staff with decades of experience in providing banking services to government agencies and references from other agencies. Locally, CBB is providing banking services to the cities of Brea, Chino, Fountain Valley, Commerce, San Gabriel, Tustin as well as the East Orange County Water District, Orange Unified School District and the Orange County Council of Governments.
The weighted score of the top four proposals is outlined below:
Weighted
Score
Citizens Bank of the JPMorgan Banc of
Business Bank West California
4.73 4.55 4.4 4.04
Citizens Business Bank Services
Citizens Business Bank provides the opportunity for the City to manage the banking cash balances more effectively, taking advantage of overnight sweep investment accounts when market conditions are more favorable. Citizens Business Bank provides outstanding customer service from knowledgeable staff at both their Government Services Division in Ontario and the local Orange County financial office in Brea; collateralization of all cash pursuant to the California Government Code; five-year fixed fees; a clear conversion and implementation plan and a higher earnings credit rating than our current bank. Citizens Business Bank adds value to client relations by developing creative solutions to help customers minimize bank charges and streamline internal operations. As requested in the RFP, CBB provided the following recommendations for the City to explore to increase security and efficiency: use of an image cash letter service, ACH positive pay filter on all city accounts, as well as receipt of a BA12 reconciliation file daily to help the City reconcile all banking activity more efficiently.
City Council Agenda
November 15, 2022
Michael Duran, the bank manager for the Brea financial offices will be the local representative for the City. Michael has over forty-four (44) years of banking experience, including nineteen (19) years with CBB. Deborah George, Senior Vice President and Manager Government Services will be the City's corporate bank contact. Deborah has over thirty-two (32) years of banking experience and at CBB for twenty-six (26) years.
Earnings Credit and Deferral Period
The Earnings Credit Rate (ECR) is a monthly credit to the City based upon the daily account balance. Using a snapshot of the City's standard balance activity on June 30, 2022 and Citizens Business Bank's offered rate of 55 bases points, the City would earn a monthly credit of $5,144 based on the cash balance. This credit is then applied to the monthly banking fees leaving a $2,368 credit balance for the City to use toward the next month's banking fee activity charges, or to add additional services. Citizens Business Bank will provide the City with a monthly or quarterly deferral period to allow flexibility in the utilization of the credit balance. Staff will manage the cash balances so that it can maximize earnings to cover banking costs and at the same time reduce cash on hand to increase other interest earnings.
Citizens Business Bank has maintained the earning credit rate of 55 basis points since January 2012. While other proposals offered higher earnings credit ratings, those rates were only recently increased as a result of the current market conditions, and in all but one proposal, were not guaranteed for the duration of the contract term.
Day-to-Dav Management
CBB's banking services is easily managed with a robust, web -based portal allowing the City to manage users and user roles, review transactions, download statements, stop payments, initiate wires and other day to day banking activities. The banking portal is partnered with an app and/or web -based portal for a city -administered procurement card program. This portal will enable users to upload receipts by taking a photo and uploading it into the transaction record, establish default GL coding saving employee's time and upload data directly into the City's financial system.
FISCAL IMPACT:
The City is projecting to save approximately $24,000 per year in merchant services fees the City pays for processing credit card payments. In addition, the City projects that all monthly banking service fees will be offset by the earnings credit resulting in no fees paid to the bank or impact to the City's budget, and offers the opportunity for the City to further enhance its current services within the offsetting earnings credit.
City Council Agenda
November 15, 2022
Prepared by: Reviewed and approved:
Jenni er Lampman
Director of Finance
Reviewed and approved:
Damien Arrula
City Administrator
Kevin Larson
City Treasurer
Attachments:
1. Banking Services Agreement
2. Request for Proposals for Banking Services
3. Citizens' Business Bank Proposal