SUBJECT
title
Authorizing the City Manager to renew contract FY23-075 with PNC Bank, for depository banking services for fiscal years 2027 and 2028 at a net estimated cost of $70,962.24 based on the City’s total earnings credit projection. The term of this renewal contract shall be for a two-year period. This is the last extension period. Funding is available in various city department budgets.
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PREVIOUS COUNCIL ACTION
On September 18, 2023, the City Council approved awarding a three-year (3) contract to the best value applicant, PNC Bank. The contract included a two (2) year extension option.
BACKGROUND
The Charter of the City of Laredo, section 6.14, requires the City to designate a primary bank to provide depository and specific banking services. The Charter requires that the designation of the banking institution be made to the lowest proposer cost for those services, the lowest compensating balance, or a combination of both, as determined to be in the best interest of the City. The contract shall not exceed a period of five years. The current contract is set to expire on September 30, 2026, and includes an option to extend the term for two additional years. The new contract pricing will cover the same related city entities; only two element IDs are being changed for this 2-year contract extension: bills processed and bag deposits, for a net increase of $8,748.00 per year. The current earnings credit rate is 1.75%. The column below shows the current contract amounts, using estimated earnings credits for the next two years.
PNC TM Fees for 2025 $ 304,086.57
TM fee 2-yr projection $ 608,173.14
AVG Collected Balances for 2025 $ 15,348,883
AVG Coll Bal 2-yr projection $ 30,697,766
Credit Rate 1.75%
Total Earnings Credit projection $ 537,210.91
Net Cost projection for 2-yrs $ 70,962.24
COMMITTEE RECOMMENDATION
N/A
STAFF RECOMMENDATION
recommendation
Staff recommends the approval of the extension of this contract with PNC Bank.
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Fiscal Impact
Fiscal Year: 2026
Budgeted Y/N?: Y
Source of Funds: Various Funds
Account #: Various Accounts
Change Order: Exceeds 25% Y/N: N/A
FINANCIAL IMPACT:
The cost of the contract will be allocated to the bank services fees account under various funds.