Consider recommendation to award a contract for general banking services for four years with an option for a fifth year to First Citizens Bank. Our present contract for general banking services with First Citizens Bank is due to expire on June 30, 2009. The Finance Department solicited bids from local banks for a new contract for four years with an option for a fifth year at the same terms to begin on July 1, 2009. The request for proposals described the City’s cash management operations and volumes and asked for a detail cost bid for services required as well as an estimated annual total cost. We also asked the banks to state the interest rate (tied to some well-publicized market rate) that would be paid to the City on its cash balances. We received bids from seven banks. A spreadsheet summarizing the results is attached to the agenda. It appears that First Citizens is offering the lowest estimated annual cost for the services we require. Additionally, the interest rate they are offering to pay on cash balances is equal to or better than the rates the other banks are quoting. They will pay a rate equal to the 90 day T-bill plus 10 basis points (T-bill plus 1/10 of 1%). Although that rate would currently yield only about 0.25%, they are offering a floor of 1.00% until market rates rise. Since they are proposing the lowest cost structure and best interest rate on cash deposits, we are recommending that City Council award a contract for general banking services to First Citizens Bank for a period of four years plus an option for a fifth year.

Committee

City Council

Introduced

April 21, 2009

On agenda

April 27, 2009

Passed

April 27, 2009