Loading...
R2004-088 08-14-04 RESOLUTION NO. R2004-88 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS, AUTHORIZING THE CITY MANAGER OR HIS DESIGNEE TO ENTER INTO A DEPOSITORY AGREEMENT WITH PEARLAND STATE BANK AND FIRST COMMUNITY BANK FOR BANK DEPOSITORY SERVICES. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS: Section 1. That certain contracts by and between the City of Pearland and Pearland State Bank and the City of Pearland and First Community Bank, copies of which are attached hereto as Exhibits "A" and "B" and made a part hereof for all purposes, are hereby authorized and approved. Section 2. That the City Manager or his designee is hereby authorized to execute and the City Secretary to attest contracts with Pearland State Bank and First Community Bank for bank depository services. PASSED, APPROVED and ADOPTED this the 14th , A.D., 2004. ATTEST: APPROVED AS TO FORM: DARRIN M. COKER CITY ATTORNEY day of June TOM REID MAYOR May 13, 2004 Mrs. Andrea Gardner Finance Director 3519 Liberty Pearland, TX 77581 Dear Andrea: When I was last in the City we discussed the audit note regarding under-collateralization at the bank. We determined that the bank referred to by the auditors could not be Wells Fargo because the Request for Proposal of 2002 in sections IV and V. 11. clearly state that the bank is responsible for the monitoring and maintaining of collateral and required margins at all times. The City' s Investment Policy has the same language in its Section 6.01 and the bank certified to City its review and understanding of the Policy. From the documents you sent me I have reviewed the documents from Pearland State Bank to determine if the same provisions applied in 1993 and 1999 when the bank won the depository contract for the City. In the 1999 bid and response the Pearland State agreed, to the collateral conditions of Section H which require 102% margins and minimal collateral of $2,000,000. However, there are a number of problems in this situation. The bid unfortunately put the responsibility on the City to act to require additional collateral at low levels. The bid and response by Pearland were for a banking services contract begun in 1999 and ending in 2002 when the City chose Wells Fargo as the new depository. Therefore any collateral agreements ended with the cancellation of the contract in 2002. A Depository Agreement for Pearland State Bank was sent to Mary Ross in 2002 for use with Pearland State Bank and First Community Bank as depositories for time deposits only. I have updated the form and one is attached for both banks. (These are available in electronic form also.) Our review of City records did not indicate that this agreement was executed for either bank. If that is the case, it should be sent to Pearland and First Community and executed as soon as possible. Currently the banks hold City funds without any contract in place. The only control the City has in this situation is the Public Funds Collateral Act which sets collateral at 100% and does not make the banks responsible for monitoring and maintaining the collateral levels. EXecution of this agreement should reinstate the City in control of the situation. Sincerely, Linda T. Patterson President PATTERSON & ASSOCIATES INVESTiVIENT ?ROFESS~O~ALS Exhibit "A" Resolution No. R2004-88 DEPOSITORY AGREEMENT BETWEEN THE CITY OF PEARLAND, TEXAS AND PEARLAND STATE BANK, PEARLAND, TEXAS The City of Pearland, hereinafter referred to as "CITY", has selected Pearland State Bank hereinafter referred to as "BANK", and designated BANK as a depository for time deposits from the CITY. BANK and CITY, bY execution of this Depository Agreement, hereby designate The Zndependent Bankers Bank as CUSTODIAN to hold in trust, according to the terms and conditions of this Agreement, any necessary collateral and substitute collateral which may be required under this Agreement. CUSTODIAN shall not be within the same holding company as the BANK. The~ITY shall have the power to determine and designate the character and amount of the funds which vCrl[;~ de~.l~.sited in the BANK. Deposits of the CITY shall never be the subject of any garnishment or a~aebme¢~: and BANK shall not recognize any attempt to garnish or attach same or be a party to any DUring t~term of this Agreement period, the CITY will through appropriate action of its governing boai[d, d~nate the officer or officers, who singly or jointly will be authorized to represent and act on beh'aff of~e CITY in any and all matters of every kind arising under this Agreement and to (a) execute and deliver to BANK an electronic funds transfer agreement (and any addenda thereto), (b) appoint and designate, from time to time, a person or persons who may request withdrawals, orders for payment or transfers on behalf of CITY, and (c) make withdrawals or transfers by written instrument. All funds on deposit with BANK to the credit of CITY above the FDIC insurance coverage shall be secured by collateral as provided for in the Public Funds Collateral Act (Texas Government Code Chapter 2257), the City's Investment Policy, and upon which the CITY shall have first and prior lien. Collateral shall be limited to Obligations of the US Government, its agencies and instrumentalities including mortgage backed securities. The total market value of the collateral (to include accrued interest or income) securing such deposits shall have a market value at least equal to 102% of such deposits plus the amount of any accrued interest thereon and less the amount that such deposits are insured by an agency or instrumentality of the United States Government. The market price on such collateral will be obtained from an independent source. The final determination of such value shall be at the discretion of the CITY, whose decision shall be final and binding. The BANK shall be responsible for the monitoring and maintance of collateral and required margins at all times. VI. BANK and CUSTODIAN are to value the collateral no less than once a month. A report listing the specific collateral including current market value is to be sent to the City once a month. CUSTODIAN shall permit the CITY or its independent auditor to examine said securities in the presence of the appropriate officials of said BANK at any time during normal business hours. VII. If at any time the market value of said securities shall be or become more than 102% of the total amount of CITY funds on deposit with the BANK, the BANK shall notify the CITY and BANK may request from the CITY that certain securities be released from the pledge. VIII. The BANK shall have the right of substitution of securities, and the lien hereby created thereon may be released by the CITY, after prior CITY approval, provided that the securities substituted meet the requirements set forth above and are approved by the CITY which approval shall not be unreasonably withheld. Substituting securities shall be placed in safekeeping before substituted securities are released. IX. CUSTODIAN shall promptly provide CITY with safekeeping receipts describing each collateral security and substitute collateral and these shall be clearly marked that these securities are "Pledged to the City of Pearland". Xo Should BANK fail at any time to pay and satisfy, when due, any check, transfer, draft or voucher lawfully drawn against CITY deposits, or in any manner breach its agreement with CITY, CITY shall give written notice of such failure or breach and BANK shall have three (3) business days to cure such failure or breach. In the event BANK shall fail to cure such failure or breach within the three (3) days or should the BANK be declared insolvent by a Federal bank regulatory agency, if collateral has been pledged to the CITY, it shall be the duty of the CUSTODIAN as bailee, upon demand by the CITY, to surrender the collateral. C1TY may sell all or any part of such collateral and out of the proceeds thereof, pay CITY all damages and looses sustained together with any expenses incurred by it of any kind on account of such failure. Collateral may be sold by CITY at public or private sale provided however that BANK shall have one business day notice of the time and place of the sale and shall have the right to bid at such sale. XI. BANK shall send to th~ CITY, on an annual basis, audited annual financial statements. XII. It is the intention of the parties hereto that the covenants and agreements, terms and conditions hereof shall extend to the entire period during which the BANK shall act as depository for CITY. Either BANK or CITY shall have the right to terminate this Agreement at any time by advance written to the other of its election to do so and this Agreement shall be void from and after the expiration of thirty (30) days after receipt of such notice, provided all provisions of this Agreement have been fulfilled. When the relationship of CITY and BANK shall have ceased to exist, and when BANK has properly paid out all deposits to CITY, CUSTODIAN shall, upon notification by CITY, release all collateral to the BANK. XIII. Not withstanding any of the provisions hereof, the CITY shall have, and does hereby retain the right to utilize other depositories and the right to terminate this c~ontract whenever in its judgement the interest of the CITY may demand. XIV. The execution of this agreement has been author, ized by resolution of the Board of Directors of the BANK, which resolution has been spread on the Minutes of said BANK. EXECUTED, this_ 17 day of August, 2004 under the provisions of FIRREA by the undersigned duly authorized officers. Betty Vaughan Name (Printed) FOR THE :,C_~~ Signature Cashier Title Resolution Number: City Manaqer Title Bill Eisen Name (Printed) THE CUSTOD]AN~ / Lorfing, TRMC Name (Printed) City: Secretary Title Exhibit "B" Resolution No. R2004-88 DEPOSITORY AGREEMENT BETVVEEN THE CITY OF PEARLAND, TEXAS AND FIRST COMMUNITY BANK, PEARLAND, TEXAS TI~ Cityc~f Pearland, hereinafter referred to as "CITY", has selected First Community Bank hereinafter re~j~rred~ as "BANK", and designated BANK as a depository for time deposits from the CITY. ]BARK ~nd CITY, ~Bbyazik execution of this Depository Agreement, hereby designate ;'Federa~-~_.~_. ome Loan as CUSTODIAN to hold in trust, according to the terms and conditions of i this Agr~_~ment, any necessary collateral and substitute collateral which may be required under this Agreem~t. CUSTODIAN shall not be within the same holding company as the BANK. The CITY shall have the power to determine and designate the character and amount of the funds which will be deposited in the BANK. Deposits of the CITY shall never be the subject of any garnishment or attachment, and BANK shall not recognize any attempt to garnish or attach same or be a party to any action. III. During the term of this Agreement period, the CITY will through appropriate action of its governing board, designate the officer or officers, who singly or jointly will be authorized to represent and act on behalf of the CITY in any and all matters of every kind arising under this Agreement and to (a) execute and deliver to BANK an electronic funds transfer agreement (and any addenda thereto), (b) appoint and designate, from time to time, a person or persons who may request withdrawals, orders for payment or transfers on behalf of CITY, and (c) make withdrawals or transfers by written instrument. IV. All funds on deposit with BANK to the credit of CITY above the FDIC insurance coverage shall be secured by collateral as provided for in the Public Funds Collateral Act (Texas Government Code Chapter 2257), the City's Investment Policy, and upon which the CITY shall have first and prior lien. Collateral shall be limited to Obligations of the US Government, its agencies and instrumentalities including mortgage backed securities. The total market value of the collateral (to include accrued interest or income) securing such deposits shall have a market value at least equal to 102% of such deposits plus the amount of any accrued interest thereon and less the amount that such deposits are insured by an agency or instrumentality of the United States Government. The market price on such collateral will be obtained from an independent source. The final determination of such value shall be at the discretion of the CITY, whose derision shall be final and binding. The BANK shall be responsible for the monitoring and maintance of collateral and required margins at all times. VI. BANK and CUSTODIAN are to value the collateral no less than once a month. A report listing the specific collateral including current market value is to be sent to the City once a month. CUSTODIAN shall permit the CITY or its independent auditor to examine said securities in the presence of the appropriate officials of said BANK at any time during normal business hours. VII. If at any time the market value of said securities shall be or become more than 102% of the total amount of CITY funds on deposit with the BANK, the BANK shall notify the CITY and BANK may request from the CITY that certain securities be released from the pledge. VIII. The BANK shall have the right of substitution of securities, and the lien hereby created thereon may be released by the CITY, after prior CITY approval, provided that the securities substituted meet the requirements set forth above and are approved by the CIT~' which approval shall not be unreasonably withheld. Substituting securities shall be placed in safekeeping before substituted securities are released. IX. CUSTODIAN shall promptly provide CITY with safekeeping receipts describing each collateral security and substitute collateral and these shall be clearly marked that these securities are "Pledged to the City of Pearland". Should BANK fail at any time to pay and satisfy, when due, any check, transfer, draft or voucher lawfully drawn against CITY deposits, or in any manner breach its agreement with CITY, CITY shall give written notice of such failure or breach and BANK shall have three (3) business days to cure such failure or breach. In the event BANK shall fail to cure such failure or breach within the three (3) days or should the BANK be declared insolvent by a Federal bank regulatory agency, if collateral has been pledged to the CITY, it shall be the duty of the CUSTODIAN as bailee, upon demand by the C~'Y, to surrender the collateral. C~I-Y may sell all or any part of such collateral and out of the proceeds thereof, pay CITY all damages and looses sustained together with any expenses incurred by it of any kind on account of such failure. Collateral may be sold by C~I'Y at public or private sale provided however that BANK shall have one business day notice of the time and place of the sale and shall have the right to bid at such sale. XI. BANK shall send to the C~¥Y, on an annual basis, audited annual financial statements. XlI. It is the intention of the parties hereto that the covenants and agreements, terms and conditions hereof shall extend to the entire period during which the BANK shall act as depository for CITY. Either BANK or CITY shall have the right to terminate this Agreement at any time by advance written to the other of its election to do so and this Agreement shall be void from and after the expiration of thirty (30) days after receipt of such notice, provided all provisions of this Agreement have been fulfilled. When the relationship of C~rI'Y and BANK shall have ceased to exist, and when BANK has properly paid out all deposits to CITY, CUSTODIAN shall, upon notification by CITY, release all collateral to the BANK. XlII. Not withstanding any of the provisions hereof, the C~TY shall have, and does hereby retain the right to utilize other depositories and the right to terminate this contract whenever in its judgement the interest of the C~-I-Y may demand. XIV. The execution of this agreement has been authorized by resolution of the Board of DirectOrs of the BANK, which resolution has been spread on the Minutes of said BANK. EXECUTED, this day of , 2004 under the provisions of FIRREA by the undersigned duly authorized officers. FOR THE BANK: 9f es kovd-woxe Signature ,, ' Title v Mc Name (Print Resolution Number: FOR THE CITY: �---� —� City Manager Signature Title Bill Eisen Name (Printed) FOR THE CUSTODIAN: City Secretary • ature Title oung Lorfing. TRMC Name (Printed)