Title
Consider/Discuss/Act on a Resolution to Extend the American National Bank Depository Contract
Summary
COUNCIL GOAL: Financially Sound Government
MEETING DATE: June 6, 2017
DEPARTMENT: Financial Services
CONTACT: Mark Holloway, Chief Financial Officer
RECOMMENDED CITY COUNCIL ACTION:
• Adopt the Resolution.
ITEM SUMMARY:
• The original depository contract with American National Bank (ANB) allowed for one (2) two-year continuation period.
• The primary original three year agreement was signed on June 3, 2014 and will expire June 30, 2017.
• Staff is satisfied with American National Bank’s performance and recommends a continuation of the current agreement with mutually agreed upon provisions which will expire June 30, 2019.
• The City has opted to receive direct billing of bank service charges in lieu of having a compensating balance to offset the charges.
BACKGROUND INFORMATION:
- Section 105.017 of the Local Government Code states that a municipality may approve, execute, and deliver any depository service contract whose term does not exceed five (5) years.
- All pertinent requirements comply with Section 110 of the City of McKinney City Charter and Section 105.017 of the Local Government Code.
FINANCIAL SUMMARY:
• All contract terms remain as stated in the original contract with the exception of :
o ANB will no longer provide all banking services and safekeeping at no cost in lieu of an average $18,000,000 in Collected Non-Interest Bearing Compensating Balance Accounts
o City will maintain an investment account not to exceed $50,000,000 at ANB’s Public Fund Money Market Rate (PF/MM) plus 38 basis points (bp), with a floor of .43%
o The City will annually appropriate and pay bank service charges of approximately $66,000.
o Interest earnings for not having the Compensating balance will be approximately $170,000.
|
|
Current Agreement |
2 Year Continuation |
|
Interest |
15 bp above ANB's PF/MM rate only on investment account (currently .20%) |
38 bp above ANB's PF/MM rate only on investment account (currently .43%) |
|
Compensating Balance |
$18 million |
None |
|
Pledged Securities |
$50 million |
$50 million |
BOARD OR COMMISSION RECOMMENDATION: N/A