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Item No. 11 IV�M �M �� TO: Mayor, Mayor Pro -Tem, & City Council Rose Beverly, City Manager FROM: Gene Anderson, Finance Director SUBJECT: CITY DEPOSITORY 2025-27 DATE: February 10, 2025 BACKGROUND: Under Chapters 105 and 131 of the Local Government Code, the City of Paris may receive bids from financial institutions to serve as the depository,and custodian of City funds. The City has historically operated under two year agreements. The current depository agreement expires February 28, 2025. STATUS OF ISSUE: The City advertised in the Paris News on January 5th and 12th of 2025 that it would receive bids to serve as the City's depository bank for a two-year period beginning March 1, 2025, and ending February 28, 2027. In addition, email notification was sent to 4 local banks and one credit union who had expressed interest in the past. Requests for additional information were received from two banks. Liberty National Bank and Farmers Bank & Trust submitted bids, and both bids were strong bids. Both banks waived service fees. Overall, Liberty Bank's CD rates would be more favorable to the City. We asked the banks on what basis the interest rate on the City's Consolidated Cash account would be made. On this issue, the banks used different base rates. Farmer's Bank used the 90 -day Treasury Bill as the base rate and added 0.05 basis points to that rate. Liberty Bank used the 26 -week Treasury Bill as the base rate and added 0.20 basis points. Currently those two Treasury Bill rates are very close to each other. Farmer's Bank did not set a floor or a cap on what the Consolidated Cash rate could be. Liberty set a floor and a cap on the Consolidated Cash rate they offered. I had a long conversation with a broker from Raymond James about what interest rates would do in the next two years. I concluded that if interest rates rose significantly and exceeded Liberty Bank's cap, the City could exercise its right to invest part or all of its surplus funds outside the designated depository bank. Taping into the open market, would give the City a work around to the cap set by Liberty Bank. BUDGET: Not affected by this selection. RECOMMENDATION: Motion to select Liberty National Bank to serve as the City of Paris depository bank for the period March 1, 2025 through February 28, 2027.