PRESENTER: Presenter
Sandy Paulos, Finance Director
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SUBJECT: Title
Approval of a contract with Frost Bank for banking services.
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DEPARTMENT: Finance
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COUNCIL DISTRICTS IMPACTED: City-wide
BACKGROUND INFORMATION:
The City has a five-year banking contract with Frost Bank that is expiring February 28, 2022. Texas Local Government Code, Chapter 105 Depositories for Municipal Funds states that a municipality may approve a depository services contract with a term that does not exceed five years. The City released a Request for Application (RFA) on November 11, 2021. The RFA was posted on the City’s website and on BidNet Direct, a third-party bid site. Staff also sent notice to every banking institution within the City of New Braunfels. The deadline for applications was December 13, 2021 and one application was received from Frost Bank.
A review team consisting of City Finance staff reviewed the application and the respondent’s ability to provide services and reports. The cost of services, experience, references and continuity of bank officials and credit worthiness and stability of the bank were all considered.
Frost Bank has provided the city’s services for the past five years and staff are satisfied with the services and rates and are confident in Frost Banks ability to provide the required services. Frost is a strong regional bank that was founded in 1868 in San Antonio. Frost Bank has a proven ability to provide the required services as well as their local based references. In addition, local presence is critical to the City. Frost bank is minutes away from City Hall. A representative from the bank has always been readily available to staff. Their reputation for personal attention and customer support is outstanding.
Frost is offering an earning credit rate pf .15% to .20% that is bank managed. The rate is reviewed annually by the bank and is adjusted at the bank’s discretion based on market conditions. Similarly, the interest rate on deposits is offered at .01% to .02% which is bank managed.
Staff are recommending award of a contract to Frost Bank for a new three-year term, March 1, 2022 through February 28, 2025, with two one-year options to renew.
ISSUE:
Strategic Priority: Maintain fiscal stability of City operations
FISCAL IMPACT:
There are no direct associated with the contract. Banking fees charged to the city will be absorbed and are offset by the earnings from the daily deposits within our accounts.
Recommendation
RECOMMENDATION:
Staff are recommending approval of a contract with Frost Bank for banking services.