Bank of America retains state account and picks up others

Thursday, Dec. 4, 1997 | 9:53 a.m.

CARSON CITY -- Bank of America has won the battle to handle most state money transactions while Wells Fargo got shut out.

State Treasurer Bob Seale announced Wednesday he has awarded two-year contracts to Bank of America to handle much of the $27 million in business that flows through the various accounts.

Bank of America has held the state's commercial checking account since 1991 and retained that business. In addition, it received contracts for the Employment Security Department commercial account and lockbox services. The Employment Security account had been held by Wells Fargo.

The business had been put out to bid and Seale said Bank of America submitted a "superb proposal." For instance, on the commercial checking account, the state will pay 10 cents per check processed to Bank of America. Seale said bids from other banks ranged up to 15 cents per check.

Seale estimates the state next year will pay about $500,000 in fees for banking services, down from the $850,000 charged the state when he took office seven years ago and started putting the business out to bid.

The state won't actually pay these fees, he said. There is enough money left in these accounts so the banks can invest it and earn interest overnight, thereby offsetting the fees. But this state balance is "not too large" so the banks can make an extra profit, he said.

The commercial checking account was the biggest item. Submitting bids were Bank of America, Wells Fargo, U.S. Bank and Norwest. Those four and Pioneer Citizens Bank also submitted bids for the commercial account of the Employment Security Department.

Contracts were awarded to the Nevada State Bank for safekeeping custody services and to Nevada State Bank, Norwest and U.S. Bank for trust services. Seale said a decision will be made later for corporate custody services between State Street Bank and Trust Co. and BNY Western Trust Co.

Seale said this was the first time his office has "unbundled" the traditional banking request, putting them into different packages. "The intent was to provide an opportunity to the smaller and local banks to be competitive in specialized areas," he said. And it worked in the case of Nevada State Bank, which ended up with two contracts.

In the evaluation process, Seale said he considered the records of the banks on reinvesting in the community. "It's critical that we at the state level encourage our banks to be the best possible neighbors and that they meet the credit needs of the entire community -- including low and moderate income neighborhoods."

He said the four banks chosen have received an outstanding rating in this area.