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Valley Center council approves switching banking services to Peoples Bank citing stronger yield terms
Summary
Council voted to move the city’s three-year banking services contract from Equity Bank to Peoples Bank after staff uncovered contract language that would have produced lower returns than expected and Peoples offered competitive treasury-linked rates and fee waivers.
The Valley Center City Council voted to approve switching the city's three-year banking services contract from Equity Bank to Peoples Bank after staff reported contract language in the winning bid could reduce interest earnings compared with competing offers.
City staff told the council that some bidders used differing rate definitions in their submitted examples. One set of contract language would have set rates to the lowest end of a federal funds range before subtracting a 25-basis-point margin, producing returns up to $12,000 a year lower than staff had expected under the original bid assumptions. Staff said Peoples Bank offered the full 90-day Treasury note rate for operating funds, waived account fees, and proposed an overnight cash sweep arrangement that staff considered preferable to pledging assets.
Staff recommended switching the award to Peoples Bank. A motion to move the RFP award from Equity Bank to Peoples Bank passed on a voice vote. Council members were invited to meet the Peoples Bank team after the meeting for follow-up discussion.
Staff said no contracts had been signed with Equity Bank at the time of the vote and flagged the difference in bid language as the reason for recommending the switch.
