Title
Consider a memorandum/resolution awarding Request for Proposal #25-05, Custody Services, to US Bank, in the estimated amount of $17,100 annually.
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DATE: January 7, 2025
TO: Kent Cagle, City Manager
FROM: Judith Tangalin, Executive Director of Finance
SUBJECT: Request for Proposal - Bank Custody Services
BACKGROUND AND FINDINGS:
On October 24, 2023, the City Council approved the transition of the City of Killeen’s banking depository from PNC Bank to JP Morgan Chase Bank. As a result of this change, PNC Bank will discontinue its custody services with the City of Killeen.
In partnership with Meeder Public Funds Inc., the City's investment consultant, staff developed and conducted a Request for Proposal (RFP) process to identify and evaluate qualified financial institutions for custody services. RFP No. 25-05 was issued in accordance with the specified terms, conditions, and requirements, advertised in the Killeen Daily Herald on October 6 and 13, 2024, and posted on OpenGov, the City’s e-bidding platform, on October 7, 2024.
Two proposals were received: one from US Bank and one from Extraco Bank. The proposals were evaluated based on the following criteria:
1. Proposal Responsiveness (35%)
2. Proposal Responsibility (40%)
3. Proposal Cost (25%)
Both banks offer comparable basic services, but US Bank has over 120 years of experience providing custody services to institutional clients and manages $680 billion in assets. In comparison, Extraco Bank has over 20 years of custody service experience and manages $2.4 billion in assets.
The evaluation scores were as follows:
• US Bank: 94
• Extraco Bank: 73.6
Service fees were evaluated based on the fee schedules provided by both banks. Extraco Bank proposed a fee of 1.95 basis points, while US Bank proposed a fee of 0.75 basis points, making Extraco's fees more than double those of US Bank.
THE ALTERNATIVES CONSIDERED:
There are three alternatives to consider:
1) Do not award the custody services agreement and issue a new RFP.
2) Do not award the bank services agreement to US Bank and award the agreement to the other financial institution.
3) Award the bank services agreement to US Bank.
Which alternative is recommended? Why?
The evaluation scores (US Bank: 94, Extraco Bank: 73.6) clearly demonstrate significant service advantages in partnering with US Bank. Additionally, the costs associated with Extraco Bank are substantially higher than those of US Bank. Considering the financial stability and asset strength of US Bank compared to Extraco Bank, the recommendation is to award the custody services agreement to US Bank based on these evaluation findings.
Staff recommends option 3, to award the Custody services agreement to US Bank.
CONFORMITY TO CITY POLICY:
The process for selecting a financial institution for bank services is governed by:
1. State of Texas Local Government Code, Chapter 105 - Municipal Depository Act.
2. State of Texas Local Government Code, Chapter 176 - Conflict of Interest Act.
3. State of Texas Government Code, Chapter 2256 - Public Funds Investment Act; and
4. State of Texas Government Code, Chapter 2257 - Public Funds Collateral Act.
FINANCIAL IMPACT:
What is the amount of the revenue/expenditure in the current fiscal year? For future years?
US Bank's proposed fees for services per year are estimated at $17,100.
Is this a one-time or recurring revenue/expenditure?
The proposed fees for services are recurring.
Is this revenue/expenditure budgeted?
Expenditure is budgeted in GL Account # 100-54215-160-162-000000.
If not, where will the money come from?
N/A
Is there a sufficient amount in the budgeted line-item for this revenue/expenditure?
Sufficient amount is in the budgeted line-item.
RECOMMENDATION:
Staff recommends that City Council award the request for proposal #25-05 for custody services to US Bank, and authorize the City Manager, or designee, to execute the agreement and any supplemental agreements or amendments as allowed by state and local law.
DEPARTMENTAL CLEARANCES:
Finance
Legal
ATTACHED SUPPORTING DOCUMENTS:
Fee Schedule
Presentation