Bank doesn't want Yorba Linda's business, so city chooses another institution; change saves money
What would you do if officials at the bank with your millions of dollars in deposits told you they didn't want your business? That's the word Yorba Linda received, when Bank of America said it was going to sever its relationship with the city by an April 30 deadline.
But – happily – the change in the city's banking will result in more interest paid on the city's funds and other favorable financial terms under a newly negotiated agreement with Bank of the West that goes into full effect May 15.
The new pact is for five years with one optional five-year extension and includes all services now provided by Bank of America, as well as accounts related to the Black Gold golf course, including credit card processing, currently housed at Wells Fargo Bank.
Deposits to nine city accounts at the bank are expected to total more than $50 million annually.
“Housing all of these banking services in a single relationship is anticipated to result in greater monetary and staff time savings in the long term than just transitioning the city's current Bank of America services,” according to a recent report by Finance Director-Treasurer Scott Catlett.
One big difference will be the interest paid on city funds. Bank of the West will pay a 0.55 percent rate, up 0.30 percent from the 0.25 percent now paid by Bank of America. Catlett's report says this will add $19,500 per year to city coffers.
And a reduction in other banking and credit card fees will save $48,000 for a total annual boost of $67,500 to the city's bottom line. Bank of the West also is waiving fees for three months and will provide transition services and required materials free of charge.
The city-hired consultant involved in the changeover, Procure America, will be paid $15,000 and 50 percent of the savings above that amount for three years, during which time the firm will monitor the banking contract, fees, services and savings, Catlett reported.
The city's some 200 employees will be eligible for “discounted/enhanced consumer banking products and services” under the contract. The nearest branch is 2.2 miles from city hall on La Palma Avenue in Anaheim. Other nearby branches are in East Fullerton and Brea.
“Bank of America has been exiting a portion of the government services market in California due to changes in banking regulations, with a shifting focus to larger and more profitable government clients in lieu of small and medium-sized agencies, such as the city,” Catlett noted.
The city sent “requests for proposals” to five banks, with Bank of the West selected from three that responded. One factor was involvement in community events and charities, with the bank noting $236,650 in donations to 51 county organizations in the past three years.
However, none of the groups were based in Yorba Linda, so local non-profits should sharpen their pencils and submit requests to the bank, now that the institution has won a city contract.