By: Kate Kimmel
City commissioners on Tuesday voted to award a five-year management banking services contract to First Federal Bank, selecting the incumbent institution after reissuing a request for proposals and seeking revised bids from four banks.
The decision followed concerns raised during an initial round of proposals last month, when commissioners said differences in how interest rates were presented made it difficult to compare offers and determine which would provide the greatest return for the city.
In response, commissioners directed staff to rework the process, standardizing how interest rates were calculated and shifting evaluation criteria to place greater emphasis on interest earnings and the financial strength of each institution. The city also expanded its search area beyond city limits to include all of Nassau County, opening the competition to a broader pool of banks.
The revised request for proposals appeared to increase competition and ultimately resulted in improved offers, city officials said.
“This RFP looked at the things that are important to the city more finitely and more comprehensively,” Commissioner Genece Minshew said. “I appreciate the work you had to do to redo this. But I think we have a better understanding for what our banking options are going forward with this RFP.”
Under the updated process, a new evaluation committee reviewed submissions from First Federal Bank, First Port City Bank, Regions Bank and PrimeSouth Bank. City Manager Sarah Campbell said staff intentionally selected three different evaluators than those used in the initial round to ensure an independent review.
The committee included Steven Gibb, a financial adviser with Edward Jones; Dana Whicker, the city’s IT director and a certified pension trustee; and Deputy City Clerk Kim Briley. The evaluators were not compensated for their work, Comptroller Susan Carless said.
Carless presented the scoring results to commissioners, showing First Federal as the unanimous top choice among evaluators.
The revised proposals narrowed the competition to two primary contenders: First Federal Bank and First Port City Bank. Both institutions based their offers on the Effective Federal Funds Rate, a key benchmark that fluctuates with Federal Reserve policy and determines how much interest the city earns on its deposits.
During the initial round, First Port City Bank structured its proposal using the upper limit of the federal funds rate, an approach commissioners said complicated direct comparisons. The revised format required all bidders to express their rates as a percentage of the same benchmark.
First Federal increased its proposed rate from 75% of the federal funds rate in the first round to 90% in the revised submission, widening its lead over competitors. By comparison, First Port City Bank submitted a rate of 77%.
At a hypothetical federal funds rate of 5%, First Federal’s revised offer would generate a 4.5% return for the city, up from 3.75% under its initial proposal. City Manager Sarah Campbell said the city maintains an average balance of about $45 million, meaning the higher rate could translate to more than $300,000 in additional annual interest revenue, depending on market conditions.
First Port City Bank’s proposal included a higher minimum interest floor of 0.50%, compared with 0.25% offered by First Federal, providing slightly more protection in lower-rate environments.
Regions Bank and PrimeSouth Bank tied for third place, each receiving 200 evaluation points.
The city’s current banking services contract is set to expire May 14, prompting the need for a new agreement.
Commissioner Tim Poynter abstained from the vote, citing a financial interest in one of the banks under consideration.
With the contract award, the city is expected to move forward with finalizing an agreement with First Federal Bank for continued management of its banking services.
kkimmel@nassaunewsline.net
