REPORT TO THE CITY COUNCIL
FROM: SANTINO DANISI, Controller/Director/(ex-officio) Treasurer
Finance Department
BY: KALEB NEUFELD, Assistant Controller/Assistant Director
Finance Department
SUBJECT:
Title
Approve banking services agreement with Wells Fargo in the amount of $173,915 per year for five years for a total contract value of $869,575 (Bid File 12500077).
Body
RECOMMENDATION
Staff recommends that City Council authorize the Finance Director or designee(s) to execute a five-year contract, with the option for two one-year extensions, to Wells Fargo Bank in the amount of $173,915 per year to provide banking services to the City of Fresno Finance Department as outlined in the Request for Proposal (RFP) issued by the City (Bid File 12500077).
EXECUTIVE SUMMARY
The City of Fresno (City) currently has an Agreement with Bank of America for banking services, scheduled to expire on June 30, 2025. A Request for Proposal (RFP) was issued for banking services and posted on PlanetBids on July 29, 2024. Five banks submitted Proposals which were opened publicly on August 27, 2024. A Review committee was formed consisting of Finance staff, a staff member from the Department of Public Utilities, and a staff member from the Department of Public Works. Each Proposal was examined for conformity with the criteria published in the RFP, consisting primarily of the bank’s ability to meet the required services and its cost proposal for providing such services. Staff recommends awarding a five-year contract, with the option for two one-year extensions, in the amount of $173,915 per year to Wells Fargo Bank. The contract has been approved as to form by the City Attorney’s Office and the Risk Department.
BACKGROUND
As a large government entity, the City of Fresno (City) has extensive and complex banking service requirements that are essential for ensuring the efficient operation of the City’s financial systems and safeguarding its financial assets. The City relies on its banking partner to manage a variety of critical financial activities, including the processing coin and currency, checks, wire transfers, and Automated Clearing House (ACH) transactions. These services are vital for maintaining smooth and secure financial operations, enabling the City to meet its obligations to vendors, employees, and the public while adhering to best practices and regulatory standards.
The City maintains approximately fifty bank accounts, each essential for a specific purpose, through which hundreds of millions of dollars flow every year. Due to the volume of transactions, the monthly bank reconciliation, including monitoring the accounts, is a full-time function that could not be performed without the assistance of specialized banking software. In addition to normal daily banking services, the City relies on the bank for expertise and assistance in reducing exposure to fraud, as well as suggesting services to enhance the City’s day-to-day operations, ensuring a high level of customer service for the City and its constituents, and streamlining processes.
The City’s current contract for banking services with Bank of America expires on June 30, 2025. A Request for Proposal (RFP) was issued for banking services and posted on PlanetBids on July 29, 2024. Five banks submitted proposals, which were opened publicly on August 27, 2024. The proposers include Bank of America, BMO, JPMorgan Chase Bank, US Bank, and Wells Fargo Bank.
A committee was formed to review the proposals and included staff from the Finance, Utilities and Billing (UBC), Public Works and Public Utilities Departments. The RFP called for the banks to address 16 services for the City and provide pricing on 100 items for products and services that the City currently uses. Furthermore, each bank was asked to explain any product(s) or service(s), in addition to the services already utilized by the City, that may provide additional benefit. Each proposer was also asked to provide various documents and detailed contract language for comparison to the City’s standard and preferred terms and conditions.
The committee evaluated each proposal by reviewing all material presented. In addition each proposer provided a virtual presentation to the committee. As stated in the RFP, the committee based its evaluations on the following criteria: (i) Comprehensiveness of Services Provided, (ii) Public Sector Experience and Resources, (iii) Strength and Stability of Financial Institution, (iv) Assigned Relationship Manager/Team, (v) Charges for Services, (vi) Service Enhancements, (vii) Cash management Solutions, and (viii) Other Factors.
As noted, the cost of services was only one of the factors included in the committee’s evaluation. Because each bank submitted a proposal for banking services, as requested, rather than a formal bid, the City is not required to select the lowest proposed cost. Costs and offsets considered included pricing for current services, conversion costs, and offsets to those costs provided by the proposers, as well as the earnings credit rate offered by each.
Selection Committee Findings and Recommendations
All proposing banks provide a wide array of banking services; however, Wells Fargo was able to offer solutions that most effectively facilitate banking service operations for the City. As a result, the committee concluded that Wells Fargo Bank has the strongest credentials for the City’s banking needs and will provide the best value based on their strong presence in the government and institutional banking sector, ability to effectively address the banking service needs of the City, their high level of professionalism, and strong reference checks with other municipalities. In addition, Wells Fargo presented a comprehensive transition plan, demonstrating strong expertise and experience in transitioning clients from other banks successfully and timely.
Many of the proposing banks offered effective solutions to improve cash management while maintaining the high volume of services the City requires. However, Wells Fargo provided the best comprehensive solution and provided detailed reports to illustrate the services that would be implemented that would most effectively optimize the City’s cash and ensure maximum interest earnings. Furthermore, with respect to banking fees, Wells Fargo was one of the lowest bidders. The City’s current bank service provider, Bank of America, was the highest-priced bidder and did not provide the committee with a clear path for effective improvement in cash management.
In addition, Wells Fargo has a dedicated public sector division that will provide the City with a dedicated Senior Relationship Manager and staff. This Senior Relationship Manager has worked at Wells Fargo for over 24 years and has the strongest reputation in public sector banking compared to the other proposers and is the most experienced in ensuring that the City will have a successful bank conversion.
Based on an in-depth review of all proposals and the committee’s evaluation of key criteria, including: (i) Comprehensiveness of Services Provided, (ii) Public Sector Experience and Resources, (iii) Strength and Stability of Financial Institution, (iv) Assigned Relationship Manager/Team, (v) Charges for Services, (vi) Service Enhancements, (vii) Cash management Solutions, (viii) Other Factors, the committee recommends that Council award a five-year contract with the option for two one-year extensions, to Wells Fargo Bank.
ENVIRONMENTAL FINDINGS
By the definition provided in the California Environmental Quality Act Guidelines Section 15378 this item does not qualify as a “project” and is therefore exempt from the California Environmental Quality Act requirements.
LOCAL PREFERENCE
Local preference was not considered because all the proposers have at least one branch within the City of Fresno.
FISCAL IMPACT
Current annual banking fees are priced at $359,462 and entirely offset through the City earnings credit rating. The proposed annual pricing is $173,915, which is anticipated to be offset through the earnings credit rating and create a new revenue stream with interest earnings.
Attachments:
Bid Evaluation
Service Contract and Special Conditions