HomeMy WebLinkAboutRes 2023-03-1402 Awarding Primary Bank Depository Services to Independent FinancialCITY OF ANNA, TEXAS
RESOLUTION NO. o'.Do2 3 — 0 3— 14 0 d2
A RESOLUTION OF THE CITY OF ANNA, TEXAS AWARDING THE PRIMARY
DEPOSITORY BANK SERVICES CONTRACT TO INDEPENDENT FINANCIAL AND
AUTHORIZING THE CITY MANAGER TO ACT ON THE CITY'S BEHALF IN
EXECUTING THE AGREEMENTS
WHEREAS, The State of Texas Local Government Codes: Chapter 105 Municipal
Depository Act, Chapter 176 Conflict of Interest Act: Chapter 2256 Public Funds
Investment Act, and Chapter 2257 Public Funds Collateral Act established the process
for selecting a depository bank; and,
WHEREAS, resolution 2022-11-1311 of the City of Anna, Texas (the "City") authorized
applications to be received from financial institutions located outside the City; and
WHEREAS, the City received applications from Independent Financial, Cadence Bank
and First State Bank, and
WHEREAS, the City in concert with Valley View Consulting, has reviewed the
applications submitted and recommends that the Primary Depository Bank Services
contract be awarded to Independent Financial;
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
ANNA, TEXAS, THAT:
Section 1. Recitals Incorporated.
The above -referenced recitals are incorporated herein as if set forth in full for all
purposes.
Section 2. Approval and Authorization of Contract
The City Council hereby approves the contract award, subject to approval as to form by
the City Attorney, for Primary Depository Bank Services and authorizes the City
Manager's execution of the same. The City Manager is hereby authorized to execute all
documents and to take all other actions necessary to finalize, act under, and enforce the
contract.
PASSED by the City Council of the City of Anna, Texas, on this the 28t" day of March,
2023.
ATTEST:
Carrie L. Land, City Secretary
CITY OFANNA,TEXAS RESOLUTION NO. 20.9-3-03-14Cia- Page 2of2
DEPOSITORY SERVICES CONTRACT
THIS DEPOSITORY SERVICES CONTRACT, hereinafter called the "Contract", is made and entered
into on the date last herein written by and between the City of Anna, Texas, hereinafter called the "City",
and Independent Financial a banking association, organized under the law of the United States and
authorized by law to do banking business in the State of Texas, hereinafter called the "Bank", and
provides as follows:
1. Designation of Depository. The City, through action of the City Council, on March 28, 2023,
hereby designates the Bank as a primary depository bank for the period beginning June 1, 2023, and
continuing through May 31, 2025, with the option for three (3) one-year extensions under the same terms
and conditions.
2. General. All services rendered to the City by the Bank under this Contract shall be performed
in accordance with commercially reasonable standards for public fund organizations and under the overall
direction and instructions of the City pursuant to the Bank's standard operations, policies, and procedures.
3. Scope of Services. The Bank agrees to provide those services as described in the City's
Request for Application for Depository Bank Services released on December 1, 2022, hereinafter referred
to as the "RFA". The RFA and the Bank's response to the RFA, hereinafter referred to as the "Application",
are incorporated herein by reference. The Bank acknowledges that all services performed by the Bank are
subject to the approval of the City. The Bank agrees to provide additional services as requested from time
to time by the City and mutually agreed upon by the Bank.
4. City Representatives. During the term of this Contract, the City will, through appropriate
action of its City Council, designate the officer, or officers, who singly or jointly will be authorized to
represent and act on behalf of City in any and all matters of every kind arising under this Contract and to
(a) appoint and designate, from time to time, a person or persons who may request withdrawals, orders for
payment or transfer on behalf of the City in accordance with the electronic funds or funds transfer agreement
and addenda, and (b) make withdrawals or transfer by written instrument.
5. Custodian. The City and the Bank, by execution of this Contract, hereby designate
F NL13 o'- De mas custodian, hereinafter called the "Custodian", to hold in trust, according to the terms
and conditions of this Contract, the collateral described and pledged by the Bank in accordance with the
provisions of this Contract.
6. Custodial Fees. Any and all fees associated with the Custodian's holding of collateral for the
benefit of the City shall be paid by the Bank, and the City will have no liability therefore.
7. Entire Agreement. The entire agreement between Bank and City shall consist of this Contract,
the City's RFA (except to the extent Bank took specific exceptions in the Bank's Application), the Bank's
Application, the Custodial Agreement with Custodian, and other such bank service agreements, policies
and documents as may be required and approved by the parties (together, the `Banking Agreements'), each
incorporated by reference as they presently exist and each listed in governing order of precedence in the
event of conflict among the documents. This Contract supersedes any and all prior representations,
statements, and agreements, whether written or oral. The terms and provisions of this Contract may not be
amended, altered, or waived except by mutual agreement evidenced by a written instrument signed by duly
authorized representatives of both parties.
8. Collateralization. All funds on deposit with the Bank to the credit of the City shall be secured
by collateral as provided for in the Public Funds Investment Act (Chapter 2256 of the Texas Government
Code as amended), the Public Funds Collateral Act (Chapter 2257 of the Texas Government Code), the
City's Investment Policy, and the Bank's Application.. The City agrees to promptly provide to the Bank
any changes to its Investment Policy. The Depositor agrees that it shall only direct the Bank in writing to
make investments authorized pursuant to the foregoing.
Primary Depository Services RFA
If marketable securities are pledged by the Bank as collateral, the total market value of the securities
securing such deposits shall be in an amount at least equal to the minimum required amount as per the
City's Investment Policy. The market value of any pledged securities (collateral) must be obtained from
non -Bank -affiliated sources. The Bank shall monitor and maintain the required collateral margins and
levels at all times.
The Bank has heretofore, or will immediately hereafter, deliver to the Custodian collateral of the
kind and character above mentioned of sufficient amount and market value to provide adequate collateral
for the funds of the City deposited with the Bank. The Custodian shall accept said collateral and hold the
same in trust for the purposes herein stated. Said collateral or substitute collateral, as hereinafter provided
for, shall be kept and retained by the Custodian in trust so long as deposits of the City remain with the Bank.
The Bank hereby grants a security interest in such collateral to City.
If at any time the collateral in the hands of Custodian shall have a market value in excess of the
required balances, the City may authorize the withdrawal of a specified amount of collateral, and the
Custodian shall deliver this amount of collateral (and no more) to the Bank.
If the Bank shall desire to sell or otherwise dispose of any one or more of said securities so
deposited with the Custodian, the Bank may substitute for any one or more of such securities other securities
of the same market value and of the character authorized herein. Such right of substitution shall remain in
full force and may be exercised by the Bank as often as it may desire; provided, however, that the aggregate
market value of all collateral pledged hereunder, shall be at least equal to the amount of collateral required
hereunder. If at any time, the aggregate market value of such collateral so deposited with the Custodian be
less than the total sum of the City's funds on deposit with the Bank, the Bank shall immediately deposit
with the Custodian such additional collateral as may be necessary to cause the market value of such
collateral to equal the total amount of required collateral. The Bank shall be entitled to income on securities
held by the Custodian, and the Custodian may dispose of such income as directed by the Bank without
approval of the City.
If surety bonds or letters of credit are utilized, the City shall agree as to the issuer and form of
contract prior to pledge. The amount of surety bonds or letters of credit will beat least equal to the minimum
required amount as per the City's Investment Policy.
9. Pledee Receipts. The Custodian shall promptly forward to the City copies of pledge receipts
covering all such collateral held for the City, including substitute collateral as provided for herein.
10. Default. Should the Bank fail at any time to pay and satisfy, when due, any check, draft, or
voucher lawfully drawn against any deposits and the interest on such deposits or in any manner breach the
Banking Agreements with the City, the City shall give written notice of such failure or breach to the Bank,
and the Bank shall have one (1) business day to cure such failure or breach. In the event the Bank shall fail
to cure any such failure or breach within one (1) business day or should the Bank be declared insolvent by
a Federal banking regulatory agency, it shall be the duty of the Custodian, upon demand of the City, to
surrender the above -described collateral to the City, or it shall be the duty of the surety bond or letter of
credit provider to perform under the terms of their respective contract.
The City may sell any part of such collateral, or receive all or any part of a surety bond or letter of
credit settlement, and out of the proceeds thereof, pay the City all damages and losses sustained by it,
together with all reasonable and documented expenses of any and every kind incurred by it on account of
such failure or insolvency, or sale, and account to the Bank for the remainder, if any, of said proceeds or
collateral remaining unsold.
11. Sale of Seized Collateral. Any sale of such seized collateral, or any part thereof, made by the
City hereunder may be either at public or private sale, provided however, it shall give both the Custodian
and the Bank two (2) hours' prior written notice of the time and place where such sale shall take place, and
Primary Depository Services RFA
such sale shall be to the highest bidder therefore for cash. The City and the Bank shall have the right to bid
at such sale.
12. Release of Collateral. When the relationship of the City and the Bank shall have ceased and
when the Bank shall have properly paid out all deposits of the City, it shall be the duty of the City to give
the Custodian notice to that effect; whereupon the Custodian shall, with the approval of the City, redeliver
to the Bank all collateral then in its possession belonging to Bank. An order in writing to the Custodian
by the City and a receipt for such collateral by the Bank shall be a full and final release of the Custodian of
all duties and obligations undertaken by it by virtue of these presents.
13. Successors. This Contract shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Whenever a reference is made herein to either party, such
reference shall include the party's successors and assigns.
14. Compensation. The City and the Bank agree that any compensation for the performance of all
duties and services and interest rate or earnings credit paid on all deposits is set forth in the Application
accepted by the City. Except as may otherwise be provided in the Banking Agreements, said compensation
shall constitute full payment for all services, liaison, products, materials, and equipment required to provide
the professional banking services, including services, materials, training, equipment, travel, overhead, and
expenses. Fees shall be fixed for the term of the Banking Agreements, including all extensions.
15. Consideration. The Banking Agreements, are executed by the parties hereto without coercion
or duress and for substantial consideration, the sufficiency of which is forever confessed.
16. Counterparts. This Contract and other agreements shall be executed in a number of identical
counterparts, each of which shall be deemed an original for all purposes. An electronic or other signature
shall also be deemed to constitute an original if properly executed.
17. Authority to Execute. The individuals executing this Contract and other agreements on behalf
of the respective parties below represent to each other and to others that all appropriate and necessary action
has been taken to authorize the individual who is executing this Contract and other agreements to do so for
and on behalf of the party for which his or her signature appears, that there are no other parties or entities
required to execute this Contract and other agreements in order for the same to be an authorized and binding
on the party for whom the individual is signing and that each individual affixing his or her signature hereto
is authorized to do so.
18. Governmne Law and Venue. This Contract shall be governed by the laws of the State of Texas.
Collin County shall be the venue for any lawsuit arising out of this Contract.
19. Certification Regarding Boycotting of Israel. Texas Government Code, Title 10, Subtitle
F, Chapter 2271.002 - Provision Required in Contract. (a) This section applies only to a contract that:
(1) Is between a governmental entity and a company with 10 or more full-time employees; and
(2) Has a value of $100,000 or more that is to be paid wholly or partly from public funds of the
government entity.
(b) A governmental entity may not enter into a contract with a company for goods or services unless the
contract contains a written verification from the company that it:
(1) Does not boycott Israel; and
(2) Will not boycott Israel during the term of the contract.
20. Certification Regardine Boycotting of Certain Energy Companies. Texas Government
Code, Title 10, Subtitle F, Chapter 2274.002 - Provision Required in Contract. (a) This section applies
only to a contract that:
Primary Depository Services RFA
(1) Is between a governmental entity and a company with 10 or more full-time employees; and
(2) Hasa value of $100,000 or more that is to be paid wholly or partly from public funds of the
government entity.
(b) Except as provided in Subsection (c), a governmental entity may not enter into a contract with a
company for goods or services unless the contract contains a written verification from the company that
it:
(1) Does not boycott energy companies; and
(2) Will not boycott energy companies during the term of the contract.
(c) Subsection (b) does not apply to a governmental entity that determines the requirement of Subsection
(b) are inconsistent with the governmental entity's constitutional or statutory duties related to the
issuance, incurrence, or management of debt obligations or the deposit, custody, management, borrowing,
or investment of funds.
21. Certification Regarding Boycotting of Firearms Entity or Firearms Trade Association.
Texas Government Code, Title 10, Subtitle F, Chapter 2274.002 - Provision Required in Contract. (a)
This section applies only to a contract that:
(1) Is between a governmental entity and a company with at least 10 full-time employees; and
(2) Has a value of at least $100,000 that is paid wholly or partly from public funds of the government
entity.
(b) Except as provided by Subsection (c) and Section 2274.003, a governmental entity may not enter into
a contract with a company for the purchase of goods or services unless the contract contains a written
verification from the company that it:
(1) Does not have a practice, policy, guidance, or directive that discriminates against a firearm entity
of firearm trade association; and
(2) Will not discriminate during the term of the contract against a firearm entity or firearm trade
association.
(c) Subsection (b) does not apply to a governmental entity that:
(1) Contracts with a sole -source provider; or
(2) Does not receive any bids from a company that is able to provide the written verification required
by that subsection.
22. Notices. Except as may otherwise be specified in the applicable service -level agreements
and/or set-up forms, any demand, notice, request, instruction, designation, or other communication(s)
required in writing under this Contract shall be personally delivered or sent certified mail, return receipt
requested, to the other party as follows:
City: Alan Guard, Director of Finance
Attn: 120 W. 7th St. Anna, TX 75409
aguard@annatexas.gov, (214) 831-5371
Kathy Armstrong, EVP Director of Specialty & Correspondent Banking
Bank: 7777 Henneman Way, McKinney, TX 7507
Attn: Kathy.Armstrong@ifnancial.com, (214)-399-3968
Primary Depository Services REA
Changes to notice information may be made by either party with written notification to the other parry.
23. Severability. If any provision of this Contract is held to be illegal, invalid, or unenforceable
by a court of competent jurisdiction, the parties, shall, if possible, agree on a legal, valid, and enforceable
substitute provision that is as similar in effect to the illegal, invalid, or unenforceable provision as possible.
The remaining portion of the Contract not declared illegal, invalid, or unenforceable shall remain valid and
in full force and effect for the term remaining.
24. Binding Commitment. The Bank hereby acknowledges itself duly and firmly bound for the
faithful performance of all the duties and obligations required by applicable law, including the Government
Code and Local Government Code, such that all funds deposited with it as depository shall be faithfully
kept by it and accounted for according to law.
25. Continuation. Unless this contract is terminated sooner, the Bank's designation as the primary
City Depository will remain continuously in effect through May 31, 2025, subject to execution of the
extension options.
Executed by the undersigned duly authorized officers of the parties hereto:
CITY
By: ' of .
Name: Alan Guard "
Title: Director of Finance
Date:
ATTEST:
BANK
By:
Name: Kathy Armstrong
Title: EVP
Date: 3/14/2023
ATTEST
By: Otkk
Name: Elizabeth Holland
Title: AVP, TM Senior Public Fund Specialist
Primary Depository Services RFA
Valley View Consulting, L.L.C.
March 13, 2023
Mr. Alan Guard, Finance Director
City of Anna
120 W. 7th St
Anna, TX 75409
Dear Mr. Guard:
Thank you for the opportunity to assist the City of Anna (the "City") with this Depository Services
Request for Applications (the "RFA") project. The objective of this engagement was to assist the City
in selecting a primary depository following the expiration of the current contract which ends May 31,
2023. The new contract period will be for an initial term of two (2) years commencing June 1, 2023 and
continuing through May 31, 2025, with three (3) one-year extension options under the same terms and
conditions.
Procedure
The Primary Depository Services RFA project began with the establishment of a Calendar of Events to
ensure that the required project steps were performed in a timely and sequential manner.
The process for selecting a Primary Depository is governed by the State of Texas Local Government
Codes: Chapter 105 Municipal Depository Act; Chapter 176 Conflict of Interest Act; Chapter 2256
Public Funds Investment Act; and Chapter 2257 Public Funds Collateral Act.
In addition to complying with these State statutory requirements, it was necessary to comply with the
City's financial and purchasing policies, and Investment Policy.
The RFA procedure was conducted as follows:
1. Analyzed bank service usage and balance records.
2. Reviewed bank accounts and statements.
3. Established the minimum required banking services and potential additional services.
4. Developed a list of eligible financial institutions within the Zip Codes of 75409, 75454, 75495,
and/or 75009:
2428 Carters Mill Road, Huddleston, VA 24104-4003
540.297.3419
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W06!j View Cdnwting, LL.G
Page 2 of 4
a. Cadence Bank
b. CapTex Bank
c. First State Bank
d. Independent Financial (Incumbent)
e. Lamar National Bank
f. Texas Bank
g. Texas Republic Bank
5. Contacted the identified financial institutions.
6. Drafted the RFA for review and approval.
7. Advertised as required.
8. RFA documents were distributed to eligible banks via email.
9. Hosted a Pre -Application Zoom Conference Call that was attended by the following:
a. Cadence Bank
b. CapTex Bank
c. First State Bank
d. Independent Financial (Incumbent)
e. Lamar National Bank
10. By the deadline, three (3) applications were received from the following banks:
a. Cadence Bank
b. First State Bank
c. Independent Financial (Incumbent)
The evaluation of the applications was based on, but not limited to, the following criteria, in no particular
order of priority:
1. Ability to perform and provide the required and requested services
2. References provided and quality of services
3. Cost of services
4. Transition cost, retention and transition offers and incentives
5. Funds availability
6. Interest paid on interest bearing accounts and deposits
7. Earnings credit calculation on compensating balances
8. Completeness of application and agreement to points outlined in the RFA
9. Convenience of location(s)
10. Previous service relationship with the City
11. And financial strength and stability of the institution
2428 Carters Mill Road, Huddlesmn, VA 24104-4003
540.297.3419
f\
V.16,9V. C.16.g, LLC
Page 3 of 4
Fees — Depository Services
First State Bank and Independent Financial offered the most competitive pricing for services that the
City currently uses. Additionally, Independent Financial will waive all service fees for the first twelve
months.
Earnings on Balances
In addition to bank service charges, the bank's interest rates on balances are an important part of the
relationship. There are two potential earnings sources for the balances held at the bank:
Earnings Credit: The earnings credit calculates "soft -dollar earnings" that can only be used to offset
banking fees. Earnings credit amounts above the applicable fees is not paid to the City as interest.
Independent Financial offered an earnings credit rate indexed to the upper end of the Fed Funds Target
rate, which at the time the application was submitted was at 4.75%. This was by far the highest rate of
the three banks that responded.
Hard -dollar Interest: Hard -dollar interest is "regular" interest earnings that result in a deposit to the
City's account, typically at the end of each month. As with their Earnings Credit Rate, Independent
Financial offered an interest rate that is indexed to the upper end of the Fed Funds Target rate (4.75% at
the time of submittal). First State Bank offered an indexed rate of the lower end of the Fed Target Rate
minus 0.15%, and Cadence Bank offered a rate, also indexed to the upper end of the Fed Target Rate
minus 1.00%.
Response Analysis
In addition to the fees, earnings credit rates, and interest rates, all three banks offered to provide the City
with tamper proof deposit bags, endorsement stamps, deposit slips, and a free scanner for remote
depositing of checks. Because the offer was the same for all three banks, these incentives were not
factored into the analysis as they offset.
A financial analysis was prepared by Valley View Consulting to compare the impact of the service fees
and the interest rates offered by each bank. The results of each analysis are presented in the following
table.
2428 Callers Mill Road, Huddleston, VA 24104-4003
540.297.3419
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valley Ucw consulting, LL.0
Page 4 of 4
$lllltrllary Financial Com arison
Cadence Bank
First State Bank
Independent
Financial
(Incumbent)
Average Bank Balance
$50,448,875
$50,448,875
$50,448 875
Earnings Credit Rate
0.50010
0.45%
4.75%
Interest Rate
3.75%
4.35%
4.75%
Fees for Two Year Term
$140,262
$15,691
$13,069
Earnings Credit for 2 Years
140,262
15,691
13,069
Two Year Investment
2,614,815
4,237,373
4 778 122
Net Two Year Income
$2,614 815
$4,237 373
$4 778 122
Fees for Five Year Term
$350,655
$39,227
$52,27
Earnings Credit for Five
350,655
39,227
52,276
Five Year Investment
6,537,037
10,593,432
11,909,0
Net Five Year Income
$6,537,037
$10,593,432
$11,909,002
Recommendation
As the incumbent, Independent Financial has been a good business partner over the course of the
current contract and has proposed to continue to provide the required services at competitive prices.
Once all applications were reviewed and compared, the services and cost presented by Independent
Financial represent the best value for the City of Anna.
Therefore, we concur with the staff recommendation that the City Council award the Primary
Depository Bank Services contract to Independent Financial and authorize the City Manager to execute
the agreements incidental to continuing the banking relationship.
Upon approval, the new contract will commence on Thursday, June 1, 2023.
Please contact E.K. Hufstedler, Tom Ross, or me to discuss any questions or additional information
needs. Thank you for this opportunity to once again serve the City of Anna.
Sincerely,
tol "
Timothy Pinon
Valley View Consulting, L.L.C.
2428 Carters Mill Road, Huddleston, VA 241044003
540297.3419