By Allison Petro-Williams, Interning Correspondent for The Apopka Voice
May the best bank win.
Commissioner Nick Nesta laid his cards on the table at the May 17th Apopka City Council meeting. The first term-commissioner shared his plan to ensure the City is getting its money's worth on investments. Nesta encouraged City staff and administrators to demand more proactivity from banks. He suggested taking their business to the better candidate.
According to Apopka Finance Director, Blanche Sherman, the City's funds are divided and deposited into three different banks: Seacoast Bank holds around $5 million, One Florida Bank has approximately $30 million and Synovous Bank has about $80 million.
Nesta suggested a motion to merge all the funds into Synovus after explaining that the returns on investment with Seacoast and One Florida are at 4.7%, while Synovous has a higher return rate of 5.3%. He said this percentage differential equals thousands of dollars in monthly interest rates.
"What I would like to happen is to move the other two accounts into that one account now or into Synovus saving account with similar yield as that's what our investment policy dictates," Nesta said. "We are leaving a lot of money on the table, and this helps to pay for what we need."
Nesta said that their investment policy suggests that the objective should be the safety of principles, providing liquidity and maximizing investment income or yield. Still, Sherman added that the policy also indicates the need to diversify by institution.
Commissioner Smith and Mayor Nelson disagreed with Nesta's request and advised that they first negotiate with the other banks for a higher percentage.
"I think what we ought to do is go to the other two banks and say, 'Hey can you match this?' Let's do that,'" Nelson said. "Then I can see us refiguring the numbers and putting more with Synovus and less with the others."
But for Nesta, if Synovus is already voluntarily offering them better rates, they should stick with them.
"We have a bank that's already increasing our returns without us having to ask, so they are being proactive, and they have the most amount of our money. Then we have these other banks that are not being proactive, and we are leaving money on the table," Nesta said.
Commissioner Becker's concern over Nesta's request was what the changes in the return rate would be like if they were to merge all the money into one account.
"What I want to know is, if we went that route, would they honor the same rate even though we're shoving all the money there," said Becker.
Commissioner Velazquez asked if Seacoast had offered to raise their rates.
Sherman replied that Seacoast had previously declined to increase their rate on investment returns because it would force the other banks to increase their rates and potentially create a continuous competitive race.
Commissioner Smith said it's best to wait until an investment advisor comes in instead of moving the funds around.
"I would like to see what the investment people are going to say," Smith said. "If we're going to move money tomorrow, and then they come in and say, 'Why did you do that? You should've put it here or put it there.'"
Sherman also added that an investment advisor could review the situation and give effective suggestions.
"I think by the time we get an investment advisor under contract and let him come in, take a look at everything, give a report, give you some suggestion on how we need to approach from an overall standpoint instead of getting out here in this market race," Sherman said.
Although Nelson agrees that rates are important, he also said they shouldn't be the only consideration factor.
"We have to be very cognizant of what the rate is, and I think we have to take that into prime consideration, but I don't think that can be the only consideration because we can't just be constantly moving big money around," Nelson said.
The City Council reached the final agreement to request the banks for higher return rates and more proactivity.
"We need to do what's fiscally responsible for our residents, and every day it's a loss of interest, so that’s all my point is," Nesta said.