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.