CITY OF SIGNAL HILL
STAFF REPORT
2175 Cherry Avenue • Signal
Hill, California 90755-3799
10/24/2023
AGENDA ITEM
TO: HONORABLE MAYOR
AND MEMBERS OF THE CITY COUNCIL
FROM: CARLO TOMAINO
CITY MANAGER
BY: SHARON DEL ROSARIO
ADMINISTRATIVE SERVICES OFFICER/FINANCE DIRECTOR
SUBJECT:
AMENDMENT TO MASTER AGREEMENT WITH WELLS FARGO BANK, N.A. FOR
TREASURY MANAGEMENT SERVICES
Summary:
The City Council will consider entering into an amended Master Agreement with Wells Fargo Bank, N.A. (Wells Fargo) for the City’s treasury management services with an expiration date of October 2, 2028 to lock in lower service fee pricing through the stated term.
Strategic Plan Goal(s):
Goal No. 1 Financial Stability: Ensure the City’s long-term financial stability and resilience.
Recommendation:
Authorize the City Manager, or designee, to enter into an amended Master Agreement with Wells Fargo Bank, N.A. for treasury management services and related fees, retroactive to October 1, 2023, and expiring on October 2, 2028, in a form approved by the City Attorney.
Fiscal Impact:
The fiscal impact is estimated to reduce monthly banking service fees by $1,000. This estimate is based on the monthly volume of banking transactions and current market rates affecting the earnings allowance. Annually, the City conservatively estimates a budget for banking service fees, and includes that amount in the annual adopted budget.
Background and Analysis:
The City’s current treasury management service provider is Wells Fargo Bank, N.A. Services provided by Wells Fargo include treasury management services, safekeeping and the commercial CITY OF SIGNAL HILL Page 1 of 2 Printed on 10/20/2023
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10/24/2023
provided by Wells Fargo include treasury management services, safekeeping and the commercial card program.
The City’s Wells Fargo relationship manager recently reviewed the City’s current services and associated fees and is offering a reduction in some fees rendering an approximate monthly savings of $1,000 (see pro forma statement in Attachment A). Currently, the City is paying zero service fees due to the high earnings allowance applied towards monthly fees. The earnings allowance is currently 1.65%, which is variable rate and has steadily increased from 1.15% in September 2022 and 0.25% in April 2022 due to rising interest rates. Current monthly banking service fees average between $3,300 to $3,700. As noted, the new agreement would lock in element pricing for service fees resulting in an estimated reduction of $1,000 monthly. The proposed amendment to the Master Agreement would better protect the City from future market rate fluctuations affecting the earnings allowance. Staff is recommending entering into an updated Master Service Agreement with Wells Fargo, projected to lower the City’s service fees, through October 2, 2028.
Attachment:
A. Amendment to Master Agreement for Treasury Management Services CITY OF SIGNAL HILL Page 2 of 2 Printed on 10/20/2023
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