To: Mayor & City Council From: Michael Kovacs, City Manager Raju Anthony, Director of Finance Date: May 2, 2019 Agenda Item & Caption: Primary Depositary Services.

Action Requested: Consider the adoption of resolution authorizing City Manager to sign an exclusive contact with Independent Bank, as the Primary Depositary Bank Services.

Prior Action: N/A Financial Considerations: N/A Overview and Background: The City of Fate entered into an exclusive contract with Independent Bank, as the Primary Depositary Bank on 06/16/2014. The contract was for two years commencing July 1, 2014, with an option for three one-year extensions under the same terms and conditions. So, the current contract will expire June 30, 2019. In order to implement the Request For Applications (RFA) process, the City hired Valley View Consulting, LLC to assist the City in its Primary Depositary Bank Request for Applications solicitation process. We started the RFA process in November 2018 and completed in April 2019. The whole RFA process is explained in the recap documents attached herewith. The objective of the RFA process was to secure the most cost effective relationship for current and future banking services with a bank whose accounts and services meet the criterial of “best value.” Based on the RFA process, the staff is recommending Independent Bank as the Primary Depositary Bank. We are recommending the contract for two years commencing July 1, 2019, with an option for three one-year extensions under the same terms and conditions.

Supporting Documents: • Resolution • RFA Analysis • Contract RESOLUTION NO. R-XXX

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF FATE, TEXAS, DESIGNATING A PRIMARY BANK DEPOSITORY AND AUTHORIZING THE CITY MANAGER TO SIGN AND EXECUTE A BANK DEPOSITORY SERVICES CONTRACT AND ASSOCIATED BANK SERVICES AGREEMENTS AS NECESSARY TO IMPLEMENT SAID CONTRACT PURSUANT TO THE REQUEST FOR APPLICATION DATED FEBRUARY 15, 2019 FOR PRIMARY BANK DEPOSITORY SERVICES; AND PROVIDING AN EFFECTIVE DATE.

WHEREAS, Chapter 105 of the Texas Local Government Code requires municipalities to have a primary bank depository contract for a term not to exceed five years; and

WHEREAS, the City's current bank depository services contract expires June 30, 2019, with no remaining extension options; and

WHEREAS, the City has advertised and solicited applications from eligible financial institutions as required; and

WHEREAS, the City received applications from four : and

WHEREAS, the applications have been evaluated in accordance with the established criteria and the application submitted by Independent Bank has been determined to represent the "best value" to the City.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FATE, TEXAS:

Section 1. That the City Council hereby awards the contract for the City's primary bank depository services to Independent Bank for two years commencing July 1, 2019, with an option for three one-year extensions under the same terms and conditions.

Section 2. That the findings and premises contained in the above are deemed to be true and correct.

Section 3. The City Manager is hereby authorized to execute any necessary documents to complete this contractual relationship.

Section 4. This Resolution shall become effective upon the date of passage.

AND IT IS SO RESOLVED.

PASSED AND APPROVED by the City Council of Fate, Texas, this 6th May 2019.

APPROVED:

______Lorne Megyesi, Mayor

Vickey Raduechel, TRMC

______City Secretary

March 28, 2019

Mr. Raju Anthony Director of Finance City of Fate 1900 CD Boren Parkway Fate, Texas 75087

Dear Mr. Anthony:

We sincerely appreciated and welcomed the opportunity to assist the City of Fate (the “City”) with this Primary Depository Bank Services Request for Applications (the “RFA”) project.

The objective of this engagement was to select a primary depository bank following the expiration of the current contract which ends June 30, 2019. This agreement, when approved, will commence on July 1, 2019 and terminate on June 30, 2021. Upon the option of the City, the contract may be extended for three additional one-year periods under the same terms and conditions.

Procedure

The project began with the establishment of a calendar of events to ensure that the required project steps were performed in a timely and sequential manner.

The process for selecting a Primary Depository Bank is governed by the State of Texas Local Government Codes: Chapter 105 Municipal Depository Act; Chapter 176 Conflict of Interest Act; Chapter 2256 Public Funds Investment Act; and Chapter 2257 Public Funds Collateral Act.

In addition to complying with these State statutory requirements, it was necessary to understand and comply with the City’s financial and purchasing policies and Investment Policy.

The RFA project was conducted as follows:

1. Analyzed historical bank service usage and balance records. 2. Reviewed the minimum banking services and potential additional services. 3. Developed a list of eligible financial institutions within 8.5 miles of City Hall:

a. Alliance Bank b. Bank of America, N.A. c. Branch Banking and Trust Company d. First Texas e. Guaranty Bank & Trust, N.A. f. HomeBank Texas

2428 Carters Mill Road, Huddleston, VA 24104-4003 540.297.3419

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g. Independent Bank (incumbent) h. Inwood National Bank i. JPMorgan Chase Bank, N.A. j. Lakeside National Bank k. MidSouth Bank, N.A. l. Regions Bank m. The American National Bank of Texas n. Wells Fargo Bank, N.A.

4. Contacted the financial institutions to confirm distribution information, describe the process, and identify the designated recipient. 5. Drafted the RFA for City review and approval. 6. Posted the notice and advertised the RFA. 7. Distributed RFAs to the identified and receptive financial institutions. 8. Held a non-mandatory pre-application conference that was attended by representatives of:

a. Branch Banking and Trust Company b. Guaranty Bank & Trust, N.A. c. Independent Bank d. The American National Bank of Texas

9. By the closing deadline, applications were received from:

a. Guaranty Bank & Trust, N.A. b. Independent Bank c. The American National Bank of Texas

10. No additional RFA responses were received as a result of the advertisement.

The evaluation of the applications was based on, but not limited to, the following criteria, in no particular order of priority:

1. Ability to perform and provide the required and requested services; 2. References provided and quality of services; 3. Cost of services; 4. Transition cost, retention and transition offers and incentives; 5. Funds availability; 6. Interest paid on interest bearing accounts and deposits; 7. Earnings credit calculation on compensating balances; 8. Completeness of application and agreement to points outlined in the RFA; 9. Convenience of location(s); 10. Previous service relationship with the City; and 11. Financial strength and stability of the institution.

2428 Carters Mill Road, Huddleston, VA 24104-4003 540.297.3419

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Application Analysis

As seen in the attachment, the Application Analysis began with an overall review of each financial institution’s general financial strength and ability to provide the services necessary to meet the City’s current and future service needs. Each of the qualified responding financial institutions exhibited acceptable financial strength and the ability to provide services the City requested.

For added convenience, Guaranty Bank & Trust, N.A. and The American National Bank of Texas were willing to offer the City safekeeping services for the City’s future anticipated investment activity. Independent Bank would be able to offer this service using a third-party provider, Texas Independent Bank. This service can be contracted through a provider other than the primary depository, however there may be transactional costs avoided by having the same institution provide both services.

The attached analysis of proposed fees, earnings credit, and investment income potential is summarized below.

Net Income/(Cost)

Each financial institution’s fee schedule was analyzed based on the City’s banking service needs and estimated activity levels. Where quantifiable and appropriate, the estimated service fees were adjusted for any incentives (including waived fees and transition allowances).

The American National Bank of Texas provided two (2) options with one (1) option being a proposed monthly fee assessment for services utilized, an earnings credit rate or an interest bearing checking option to offset monthly fee charges, and investment income option for any excess balances available. This option was deemed to be the best option for the City and is presented in the table shown below.

Each of the responding financial institutions provided a “no-fee” pricing option so the use of an earnings credit rate is not applicable. The American National Bank of Texas option of “no-fee” was subject to a minimum compensating average monthly balance of $2,000,000. Independent Bank’s offer was subject to a minimum compensating average monthly balance of $1,000,000. Each of the “no-fee” offers provided for interest bearing checking accounts for the investment income option.

Historical average annual deposit balances of $3,200,000 have been maintained by the City, therefore the analysis was completed assuming the same historic average balance.

The analysis below is for both the two (2) year initial contract term, and the full five (5) year term allowing for the three (3) possible one-year extensions at the option of the City.

Two-Year Term ANBTX Guaranty Bank Independent Bank Proposed Fees ($22,140) $0 $0 (net of incentives) Earnings Credit $106,675 $80,640 $112,000 and Hard Interest Net Income / (Cost) $84,535 $80,640 $112,000

2428 Carters Mill Road, Huddleston, VA 24104-4003 540.297.3419

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Five-Year Term ANBTX Guaranty Bank Independent Bank Proposed Fees ($62,849) $0 $0 (net of incentives) Earnings Credit $266,685 $201,600 $280,000 and Hard Interest Net Income / (Cost) $203,836 $201,600 $280,000

Recommendation

As the incumbent, Independent Bank has been a good business partner over the course of the current contract and the “no-fee” application offered by Independent Bank provides a favorable option for the City. The investment option offered by The American National Bank of Texas would limit the City to the transaction restrictions (six debits per month) of a , therefore restricting the balances placed in the account. For purposes of the analysis, the balance of $3,200,000 was placed in a NOW checking account (unlimited transactions) for Guaranty Bank & Trust as well as Independent Bank. Independent Bank offered a superior interest rate for both the NOW checking account option and Money Market Account option.

Based on the analysis results and discussion with staff, it was determined that the terms offered by Independent Bank provide the “best value” to the City. We concur with the staff recommendation that the Council award the Primary Depository Bank Services contract to Independent Bank and authorize the City Manager to execute the agreements necessary to continue the banking relationship.

Upon approval, the new contract will commence on Monday, July 1, 2019.

Please contact Bill Koch, Dick Long, Tom Ross, or me to discuss any questions or additional information needs.

Thank you for this opportunity to serve the City of Fate.

Sincerely,

E. K. Hufstedler, III Valley View Consulting, L.L.C.

Attachment

2428 Carters Mill Road, Huddleston, VA 24104-4003 540.297.3419 City of Fate, Texas RFA # 2019-01 Primary Depository Bank Services

ANBTX (Alternate) $2,000,000 Independent Bank $1,000,000 March 28, 2019 ANBTX Guaranty Bank & Trust Compensating Balance Compensating Balance

DETAIL RESPONSE ANALYSIS OF DEPOSITORY BANK SERVICES Required Bank Services 1 Services Yes Yes Yes Yes 2 ACH Yes Yes Yes Yes 3 ACH Debit Blocking and Filtering Yes Yes Yes Yes 4 Remote Deposit Capture Yes - Compatible w/current scanner Yes - Compatible w/current scanner Yes Yes - One free scanner provided 5 Wire Transfers Yes Yes Yes Yes 6 Post No Checks Yes Yes Yes Yes - via positive pay 7 Positive Pay and Account Reconciliation Service Yes Yes Yes Yes 8 Tamperproof Bank Bags Yes Yes Yes Yes 9 Bank Supplies Yes Yes Yes Yes 10 Funds Availability Yes Yes Yes Yes 11 Employee Check Cashing Yes Yes Yes Yes 12 Returned Check Processing Yes Yes Yes Yes 13 Account Analysis Yes Yes Yes - but need to verify Yes 14 Bank Statements Yes Yes Yes Yes Yes - comment requires $1,000,000 15 Payment for Services Yes Yes Yes compensating balance 16 Account Settlement Yes Yes - N/A with no fee offer Yes Yes - N/A with no fee offer 17 Research Yes Yes Yes Yes 18 Bank Errors Yes Yes Yes Yes 19 Investment Account Yes Yes Yes Yes 20 Audit Confirmations Yes Yes Yes Yes 21 Balance Assessment Waived Waived Waived Waived 22 Reserve Requirement Yes - 10% N/A No Yes - N/A with no fee offer 23 Earnings Credit Rate 1.00% N/A N/A - Free Business Checking N/A Services That May Be Considered 1 Online Payment Acceptance Yes Yes Yes No 2 Zero Balance Accounts Yes Yes Yes Yes 3 Controlled Disbursement Account No - Could use ZBA No - Could use ZBA Yes No 4 Consumer Bill Pay Processing Yes Yes Yes No 5 Courier or Armored Car Services Cannot Provide Cannot Provide Cannot Provide Cannot Provide Collateral Requirements 1 Collateralization Yes Yes Yes Yes Yes - but prior notification is required if Yes - but prior mutual agreement is required 2 Collateral Amount Yes Yes collateral needs will exceed $5,000,000 if collateral needs will exceed $4,000,000 3 Collateral Custody FHLB - Dallas FHLB - Dallas Yes - TIB Yes - TIB or FHLB LOC 4 Collateral Substitution Yes Yes Yes Yes 5 Collateral Report Yes Yes Yes Yes 6 Board Resolution Yes Yes Yes Yes Investment Activities 1 Direct Investment Alternative Yes Yes Yes Yes 2 Certificates of Deposit Yes Yes Yes Yes 3 Security Clearance/Safekeeping Services Yes Yes Yes - fees waived Yes - Thru TIB 4 Separate Securities Clearing/Safekeeping Services Yes Yes Yes No 5 Cost Sharing or Credit for Third Party Safekeeping Services Yes - follow-up to verify Yes - follow-up to verify No No Overdraft Provisions 1 Net Overdraft Defined Yes Yes Yes Yes 2 Notification Yes Yes Yes Yes 5 days; Case by Case; 5.0% on 3 Stipulations Case by Case Case by Case No Charge amounts longer than 5 days; $35.00 per item Valley View Consulting, L.L.C. 2428 Carters Mill Road, Huddleston, VA 24104 540.297.3419 City of Fate, Texas RFA # 2019-01 Primary Depository Bank Services

ANBTX (Alternate) $2,000,000 Independent Bank $1,000,000 March 28, 2019 ANBTX Guaranty Bank & Trust Compensating Balance Compensating Balance

Other Stipulations 1 Regulation Notifications Yes Yes Yes Yes 2 Notification of Incoming Wire Transfers Yes Yes Yes Yes 3 Right to Cancel Under Federal or State Law Rulings Yes Yes Yes Yes 4 Access to Bank Records Yes Yes Yes Yes 5 Right to Open and Maintain Other Accounts Yes Yes Yes Yes 6 Secondary Bank Depository Yes Yes No Yes 7 Right to Terminate Yes Yes Yes Yes - with reciprocity 8 Terms Fixed Yes Yes Initial term only - extensions reviewed Yes Blake James, Regional Market President, Blake James, Regional Market President, Lee Horn, President - Rockwall/Royce Marcey Bench; AVP Area Manager; 9 One Relationship Officer 214.863.6935 214.863.6935 City; 972.722.3001 972.853.5808 Miscellaneous 1 Semi-Annual Meeting Yes Yes Yes Yes 2 Formal Agreement Required Yes Yes Yes Yes Required Response Attachments Not Provided - but commit to provide AA 1 Account Analysis - pro-forma Provided Provided Provided statements as required. 2 Rate Basis Bank Managed Rates Bank Managed Rates Provided Provided 3 Sample Collateral Agreement Provided Provided Provided Provided - TIB 4 Security Measures Provided Provided Provided Provided 5 Technology Specifications Provided Provided Provided Provided 6 Sample Safekeeping Report Provided Provided Provided Provided 7 Securities Safekeeping Fees Provided Provided No Charge - TIB Provided - TIB 8 Investment Account Information Provided Provided Provided Provided 9 Summary Business Continuity Plan Provided Provided Not Provided Provided 10 References Provided Provided Provided Provided 11 Sample FIRREA Compliant Document Provided Provided Will provide if selected Provided No Fees - but state that they will provide 12 Completed Fee Schedule in Excel Provided Provided No Fees an account analysis Other Considerations 1 Unrestricted Incentive Payment $5,000 $5,000 Check orders and bank supplies at no 2 Bank Supplies and tamperproof bags at NC for term of contract Provided at no cost Provided at no cost cost 3 Reimburse conversion costs up to $5,000 $5,000 4 Remote Deposit Capture Scanner(s) Provide one (1) scanner at no cost

Valley View Consulting, L.L.C. 2428 Carters Mill Road, Huddleston, VA 24104 540.297.3419 City of Fate, Texas RFA # 2019-01 Primary Depository Bank Services

ANBTX (Alternate) $2,000,000 Independent Bank $1,000,000 March 28, 2019 ANBTX Guaranty Bank & Trust Compensating Balance Compensating Balance

FEE ANALYSIS OF DEPOSITORY BANK SERVICES Proposed Fees - Banking Services Monthly Fee Estimate ($1,131) $0 0 0 Monthly Estimated Assessment Fee $0 $0 0 0 Fees for Two Year Term ($27,140) $0 0 0 Fees for Five Year Term ($67,849) $0 0 0 Contract Incentives Estimated Waived Fees 0 0 0 0 Transition Allowance $5,000 $5,000 0 0

Total Fees for Two Year Term less Incentives ($22,140) $5,000 0 0 Total Fees for Five Year Term less Incentives ($62,849) $5,000 0 0 Earnings Credit Earnings Credit Rate / Hard Interest for Guaranty and Independent 1.00% N/A 1.26% 1.75% No fees; IB NOW Checking 13 Week T- No fees; IB NOW Checking 0.50% plus Rate Basis Managed Rate Waive all fees Bill minus 1.10% floor 0.40% ceiling 1.70% floor 0.50% 1.75% Target DDA Compensating Balance 1,507,775 2,000,000 3,200,000 3,200,000 Monthly Earnings Credit less Reserve 1,131 N/A 3,360 4,667 Earnings Credit for Two Year Term 27,140 80,640 112,000 Earnings Credit for Five Year Term 67,850 201,600 280,000

Reserve Requirement 10% 0% 0% 0%

Net Fees for Two Year Term 0 5,000 80,640 112,000 Net Fees for Five Year Term 0 5,000 201,600 280,000 Interest Income Estimate Public Funds Index Fund Money Market Investment Option Public Fund Money Market Account Public Fund Money Market Account Money Market Account Account Managed; current .05% + 2.30% = Managed; current .05% + 2.30% = 13 Week T-Bill minus 0.50% - floor Fed Funds Target minus 25 bps - floor Rate Basis 2.35% 2.35% 0.60% ceiling 3.00% of 0.50%

Interest Rate 2.35% 2.35% 1.86% 2.25% Investment Balance 1,692,225 1,200,000 0 0 Monthly Investment Income 3,314 2,350 0 0 Two Year Investment Income 79,535 56,400 0 0 Five Year Investment Income 198,836 141,000 0 0

Two Year Income/(Cost) 84,535 61,400 80,640 112,000 Five Year Income/(Cost) 203,836 146,000 201,600 280,000

February 15, 2019 Submission Date Historical Bank Balance 3,200,000 3,200,000 3,200,000 3,200,000 91-Day T-Bill Discount Rate 2.38% 2.38% 2.38% 2.38% Fed Funds Rate Actual 2.40% 2.40% 2.40% 2.40% Fed Funds Rate Target 2.25 - 2.50% 2.25 - 2.50% 2.25 - 2.50% 2.25 - 2.50% Local Government Investment Pool 2.40% 2.40% 2.40% 2.40%

Valley View Consulting, L.L.C. 2428 Carters Mill Road, Huddleston, VA 24104 540.297.3419 DEPOSITORY BANK SERVICES AGREEMENT

THIS DEPOSITORY BANK SERVICES AGREEMENT hereinafter called the “Agreement”, is made and entered into on the date last herein written by and between the City of Fate, Texas, hereinafter called the “City”, and Independent Bank a banking association, organized under the law of the United States and authorized by law to do banking business in the State of Texas, hereinafter called the "Bank”, and provides as follows:

1. Designation of Depository. The City, through action of the City Council, on April 15, 2019, hereby designates Bank as a primary depository bank for the period beginning July 1, 2019, and continuing through June 30, 2021, with the option for three (3) one-year extensions under the same terms and conditions.

2. General. The Bank shall faithfully perform all of its duties and obligations required by the laws of the State of Texas for public funds depositories and shall upon presentation pay all checks drawn on it against collected funds on demand deposits, and shall, at the expiration of the Agreement, turn over to its successor, all funds, City-owned securities, property and things of value held as depository. All services rendered to City by Bank under this Agreement shall be performed in accordance with accepted commercial banking standards for public fund organizations and under the overall direction and instructions of City pursuant to Bank’s standard operations, policies, and procedures.

3. Scope of Services. Bank agrees to provide those services as described in the City of Fate, Texas Request for Application for Depository Bank Services released on January 11, 2019 hereinafter referred to as the “RFA”. The RFA and Bank’s response to the RFA, hereinafter referred to as the “Application”, are incorporated herein by reference. Bank acknowledges that all services performed by Bank are subject to the approval of City. If any provisions of the RFA, the Bank’s response to the RFA or this Agreement are in conflict, this Agreement, the RFA and the Bank’s response to the RFA will control in that order.

4. Financial Position. The Bank will provide a statement of its financial position on at least a quarterly basis. The Bank will provide an annual statement audited by its independent auditors including a letter as to its “fair representation.”

5. City Representatives. During the term of this Agreement, City will, through appropriate action of its City Council, designate the officer, or officers, who singly or jointly will be authorized to represent and act on behalf of City in any and all matters of every kind arising under this Agreement and to (a) appoint and designate, from time to time, a person or persons who may request withdrawals, orders for payment or transfer on behalf of City in accordance with the electronic funds or funds transfer agreement and addenda, and (b) make withdrawals or transfer by written instrument.

6. Custodian. City and Bank, by execution of this Agreement, hereby designate Federal Home Bank as custodian, hereinafter called “Custodian”, to hold in trust, according to the terms and conditions of this Agreement, the collateral described and pledged by Bank in accordance with the provisions of this Agreement.

7. Custodian Fees. Any and all fees associated with Custodian’s holding of collateral for the benefit of City will be paid by Bank and City will have no liability therefore.

8. Entire Agreement. The entire agreement between Bank and City shall consist of this Agreement, City’s RFA (except to the extent Bank took specific exceptions in the Bank’s Application),

1 Bank’s Application, the Custodial Agreement with Custodian, and other such bank service agreements, policies and documents as may be required and approved by the parties (together, the “Banking Agreements”), each incorporated by reference as they presently exist and each listed in governing order of precedence in the event of conflict among the documents. This Agreement supersedes any and all prior representations, statements, and agreements, whether written or oral. The terms and provisions of this Agreement may not be amended, altered, or waived except by mutual agreement evidenced by a written instrument signed by duly authorized representatives of both parties.

9. Default. The Bank shall be in default if it fails to pay all or part of a , a matured , or a matured , including accrued but unpaid interest, at a specified maturity date. The Bank shall also be in default if ruled “bankrupt,” “insolvent” or “failed” by a federal or state banking regulator, or if a receiver is appointed for the Bank. In the event of a default, failure or insolvency of the Bank, the City shall be deemed to have vested full title to all securities pledged under this Agreement. The City is empowered to take possession of and transfer and or sell any and all securities. If the security is liquidated, any proceeds over the defaulted amount, plus expenses related to liquidation, shall be returned to the Bank. This power is in addition to other remedies which the City may have under this Agreement and without prejudice to its rights to maintain any suit in any court for redress of injuries sustained by the City under this Agreement.

10. Collateralization. All funds on deposit with Bank to the credit of City shall be secured by collateral as provided for in the Public Funds Investment Act (Chapter 2256 of the Texas Government Code as amended), the Public Funds Collateral Act (Chapter 2257 of the Texas Government Code), City’s Investment Policy, and Bank’s Application.

If marketable securities are pledged, the total market value of the securities securing such deposits will be in an amount at least equal to the minimum required amount as per City’s Investment Policy. The market value of any pledged securities (collateral) will be obtained from non-Bank-affiliated sources. Bank will monitor and maintain the required collateral margins and levels at all times.

Bank has heretofore, or will immediately hereafter, deliver to Custodian collateral of the kind and character above mentioned of sufficient amount and market value to provide adequate collateral for the funds of City deposited with Bank. Custodian will accept said collateral and hold the same in trust for the purposes herein stated. Said collateral or substitute collateral, as hereinafter provided for, shall be kept and retained by Custodian in trust so long as deposits of City remain with Bank. Bank hereby grants a security interest in such collateral to City.

If at any time the collateral in the hands of Custodian shall have a market value in excess of the required balances, City may authorize the withdrawal of a specified amount of collateral, and Custodian shall deliver this amount of collateral (and no more) to Bank.

If surety bonds or letters of credit are utilized, City shall agree as to the issuer and form of contract prior to the pledge. The amount of surety bonds or letters of credit will be at least equal to the minimum required amount as per City’s Investment Policy. The termination or expiration of any surety bond or letter of credit shall be a minimum of two (2) business days after City anticipates withdrawing the secured deposit.

11. Successors. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, if any. Whenever a reference is made herein to either party, such reference shall include the party’s successors and permitted assigns, if any.

12. Non-Assignability. This Agreement is not assignable in whole or in part.

2 13. Compensation. City and Bank agree that any compensation for the performance of all duties and services is set forth in the Application accepted by City. Except as may otherwise be provided in the Banking Agreements, said compensation shall constitute full payment for all services, liaison, products, materials, and equipment required to provide the professional banking services, including services, materials, training, equipment, travel, overhead, and expenses. Fees shall be fixed for the term of the Banking Agreements, including all extensions.

14. Consideration. The Banking Agreements are executed by the parties hereto without coercion or duress and for substantial consideration, the sufficiency of which is forever confessed.

15. Counterparts. The Banking Agreements may be executed in a number of identical counterparts, each of which shall be deemed an original for all purposes. A facsimile signature will also be deemed to constitute an original if properly executed.

16. Authority to Execute. The individuals executing the Banking Agreements on behalf of the respective parties below represent to each other and to others that all appropriate and necessary action has been taken to authorize the individual who is executing the Banking Agreements to do so for and on behalf of the party for which his or her signature appears, that there are no other parties or entities required to execute the Banking Agreements in order for the same to be authorized and binding on the party for whom the individual is signing and that each individual affixing his or her signature hereto is authorized to do so.

17. Governing Law and Venue. This Agreement shall be governed by the laws of the State of Texas. Rockwall County will be the venue for any lawsuit arising out of this Agreement.

18. Notices. Except as may otherwise be specified in the applicable service-level agreements and/or set-up forms, any demand, notice, request, instruction, designation, or other communication(s) required in writing under this Agreement shall be personally delivered or sent certified mail, return receipt requested, to the other party as follows:

Bank: Noah Elrod, Vice President Independent Bank 543 West Main Street Lewisville, Texas 75057

City: Raju Anthony, Director of Finance City of Fate P.O. Box 159 Fate, Texas 75132

Changes to notice information may be made by either party with written notification to the other party.

19. Severability. If any provision of this Agreement is held to be illegal, invalid, or unenforceable by a court of competent jurisdiction, the parties, shall, if possible, agree on a legal, valid, and enforceable substitute provision that is as similar in effect to the illegal, invalid, or unenforceable provision as possible. The remaining portion of the Agreement not declared illegal, invalid, or unenforceable shall remain valid and in full force and effect for the term remaining.

20. Binding Commitment. Bank hereby acknowledges itself duly and firmly bound for the faithful performance of all the duties and obligations required by applicable law, including the Government Code and Texas Local Government Code, such that all funds deposited with it as depository shall be faithfully kept by it and accounted for according to law.

3 21. Termination. This Agreement may be terminated by either the City or the Bank, for any reason or no reason, by giving one hundred eighty (180) days prior written notice to the other party. Notices will be delivered as required and addressed in item 18.

22. Bank Authorization. The Bank represents and warrants that this Agreement is made pursuant to and is duly authorized by the Board of Directors of the Bank and recorded in the official records of the Bank.

23. Continuation. Unless this Agreement is terminated sooner, Bank’s designation as the primary City Depository will remain continuously in effect through June 30, 2021 subject to execution of the extension options if applicable.

Executed by the undersigned duly authorized officers of the parties hereto:

CITY OF FATE, TEXAS INDEPENDENT BANK

By: By: Name: Name: Title: Title: Date: Date:

ATTEST: ATTEST By: By: Name: Name: Title: Title:

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