Valley Center approves switch of three-year banking services RFP to Peoples Bank

Valley Center city councilors voted Jan. 20 to switch the city’s three-year banking services contract from Equity Bank to Peoples Bank after staff reported unexpected fine print in Equity Bank’s contract that reduced expected interest earnings.

Staff told the council that during contract review the city discovered Equity Bank’s wording produced lower-than-expected rates when applied to the city’s accounts. Using the staff example, a hypothetical account rate of 3.99% could be interpreted under the contract’s phrasing to drop to 3.75% and, after contractual deductions, down to about 3.50%, reducing the city’s projected interest income by roughly $12,000 annually compared with staff expectations.

Staff said Peoples Bank’s proposal instead offered to pay the full 90-day Treasury rate on swept funds, waived all account fees and proposed additional services including underwriting support for future bond issues and covering the city’s first order of checks. Staff members who met Peoples Bank called the company’s proposal “very strong” and recommended switching the award.

Councilors voted to approve moving the RFP award to Peoples Bank. The motion carried by voice vote.

City staff said no contracts had yet been signed with Equity Bank and that staff would complete contract negotiations and schedule a transition with Peoples Bank if needed.