The city of Davenport will soon embark on transferring its checking and savings accounts from Wells Fargo to Quad-City Bank & Trust, but it won't be making its withdrawal all at once.
Finance Director Brandon Wright said the city holds $100 million in assets spread among the city's checking, savings and investments accounts.
Although the majority of funds are held in short-term investment accounts spread among different financial institutions that eventually get reinvested, managing a large payroll and a high volume of daily transactions means it won't be dropping off a huge sack of money just yet.
"Imagine on your own personal checking account that has a lot of checks outstanding," Wright said. "If you want to move your money on a single day, you would have to stop writing checks well in advance. Because we write so many checks, there first are concerns of making sure all are negotiable items when they turn them into their banks."
Wells Fargo is the current holder of the city's primary checking and savings accounts, but that will change soon after Wells Fargo's Community Reinvestment Act rating, or CRA, was downgraded by the federal Office of the Comptroller of the Currency to "needs to improve" in March.
The CRA rating, which was established in 1977, "requires financial institutions to meet the credit needs of their entire communities, including low- and moderate-income (LMI) neighborhoods."
Davenport's depository policy requires that eligible financial institutions maintain a "satisfactory" or above CRA rating, which prompted the city to sever its 32-year relationship with Wells Fargo and seek out another bank.
Besides managing its payments to vendors, Wright said, the process is complicated by the city needing to redo its direct deposit payments to employees and test the system to make sure all the kinks are worked out before the transition is complete.
"All of those need to be recreated because people like to get their money," Wright said. "We can pay 1,000 people within five minutes, but now we have to make sure our own system and the new system read each other and work correctly. There's a lot of testing so all of that gets recorded properly."
Wright said that likely means funds in Wells Fargo accounts will maintain some balance in the short run so no payments are missed.
With the custom approach for transferring funds between banks, the city will meet with Quad-City Bank & Trust on Tuesday for the first of a few meetings to determine the timeline and how the transfer of funds will take place.
Davenport's Wells Fargo accounts
In terms of checking accounts, Wright said the city has eight accounts, seven of which are operable.
The city's main disbursement account, which handles payroll and vendor payments, currently has $15 million, although that number balloons between $40 million and $60 million when property taxes are received.
Davenport's Wells Fargo accounts also include escrow accounts to set aside funds related to bond sales and to set aside future payments due.
Two accounts are maintained for the operations at the RiverCenter for it to take in cash and hold money for the presale of tickets.
The city also holds two zero-balance accounts related to employee health insurance, which a third party administrator accesses and writes health payments from.
As for short-term investment accounts, Davenport has maintained accounts with Wells Fargo in the past, but has only two currently active.
Wright said a $5 million investment recently matured on July 28, but two $1 million treasury bill accounts are set to mature on Dec. 7 and 31.
Although the city is moving its accounts from Wells Fargo and has classified the bank as ineligible for deposits, the current investments will stay untouched until the maturity date.
"We could withdraw them early, but there's a penalty, so we're not looking to do that," Wright said.
Q-C Bank & Trust continues to prosper
The city of Davenport's accounts are the second big get for Quad-City Bank & Trust in the past few months.
Before the city selected it, the Davenport Community School District chose the bank to handle its banking services for the next three years.
"It's a great honor to be selected," President and CEO John Anderson said. "Our team is excited to get started, and this is a relationship we are all excited for. We can take those dollars and continue to invest into the community because that's what a community bank is supposed to do."
During its presentation to the city, Anderson said the bank had estimated about an eight-week process for the transition, but the city will lead the conversation to better understand its expectations.
"Our meeting really is to go through the process on how they would like that to happen," Anderson said. "They will likely have very specific accounts, and we need to understand how they are designated for certain funds."
Wright already has indicated that the process for moving money likely will not begin for at least a month or month and a half because the city currently is undergoing the auditing process and committing resources there.
While it will be months before process is complete, Anderson was thrilled to welcome the city as its newest client.
"We look forward to working for the city for years to come," Anderson said. "As our relationship continues to evolve, we want it to be beneficial for the city and its residents."