Texas National Bank butts heads with City of San Juan

SAN JUAN — The San Juan City Commission voted Oct. 11, to authorize its city manager to negotiate a contract with Texas National Bank to provide financial depository services for the city.

Four local banks, in fact, had placed bids (requests for proposals) with the city after San Juan published legal notices for the work this past August. The four banks include Texas National, Texas Regional, Plains Capital, and Lone Star National Bank, which has been the city’s bank depository (checking, savings, etc.) for the past two years.

Then things turned a little wonky.

Someone apparently noticed that there was no way Texas National’s bid could be the winner, the recommended bid, when at least two other banks were offering better interest rates to the city.

As a result, San Juan scheduled a special called meeting for Oct. 17 during which the commission wanted to rescind its original vote, invite all the players to the table, and review the original bids.

Texas National Bank (TNB) cried foul, so to speak, and went to county court, where Judge Sergio Valdez signed a temporary restraining order, putting the Oct. 17 meeting on hold. A hearing is scheduled for Oct. 31 to further argue the matter.

In its original court petition, Texas National Bank argues, in part, that it believes the city commission intends to rescind the contract, albeit not yet signed, and award it to another bank. TNB also asserts that the city commission plans to take into consideration information that was not previously contained in the original proposal submitted by the other bank in question, in violation of the city’s specifications for sealed proposals.

If the city is allowed to rescind its Oct. 11 vote, TNB asserts that it will suffer irreparable harm.

At this point, there is no talking to city officials, elected or employed, since this matter is now in litigation.

Last week, however, after learning of the TRO filed by Texas National Bank, The Advance News filed a public information request for the four bids (requests for proposals) submitted by the four banks.

How the city’s finance director missed the line item that is marked “interest bearing,” who knows because that’s where the city stands to make the most money based on which bank gets the contract.

During the Oct. 11 meeting, the only thing the city commissioners discussed was the fact that Texas National Bank wasn’t charging a monthly service fee, when the three other banks were, which averaged approximately $1,400 per month. However, based on an average bank balance of $20 million, it would seem that those service fees would be waived.

The biggest difference between the four banks was the interest they were willing to pay the city to have its money on deposit.

Texas Regional Bank was offering 0.75 percent.

Texas National Bank was offering 0.30 percent.

Plains Capital has N/A marked in that line item.

Lone Star National Bank was offering 1.73 percent interest.

If indeed the city carries an average $20 million on deposit, the annual money paid for a 1.73 interest bearing account offered by Lone Star equates to approximately $357,572. That rate, as stated in the bid, is also a floating rate vs. the fixed rate offered by Texas National.

For the same amount on deposit, $20 million, the 0.75 percent interest offered by Texas Regional would pay the city of San Juan approximately $155.016 annually.

Based on the 0.30 interest offered by Texas National, the annual money paid to the city would equate to approximately $63,000.

All the numbers offered in the original bids would have to be calculated, reconsidered, with no ability for any of the four banks to alter the numbers as laid out in their original bids.

Again, according to people reportedly in the know about this matter, speaking on condition of anonymity because this case is now in litigation, the finance director needs a re-set, and the matter needs to be reconsidered by the city commission.

Obviously, based on its court filings, Texas National Bank disagrees.

Bring all the players back to the table, so to speak, to answer questions from the mayor and city commission? Let none of them make any changes to their respective bids, and decide who is the best bank for the city’s financial business for the next two years?

Because if the difference in annual interest paid to the city of San Juan is indeed approximately $295,000, using a 0.30 percent fixed rate vs. a 1.73 floating interest rate, then you’re talking real money, some would argue.

The court hearing is scheduled for next Monday at 8:30.