REPORT TO COUNCIL
SUBJECT
Title
Action on Amendments to Agreement with Principal Bank for Investment Portfolio Custody Services to the City
Report
COUNCIL PILLAR
Manage Strategically Our Workforce Capacity and Resources
BACKGROUND
In July 2020, subsequent to a formal competitive solicitation process, the City Council approved an agreement with Wells Fargo Bank, N.A. (Wells Fargo) to provide investment portfolio custody services for the City of Santa Clara's (City) securities portfolio through Wells Fargo's Institutional Retirement and Trust (IRT) business division. The Wells Fargo agreement, inclusive of all terms and conditions, was subsequently assigned to Principal Bank (Principal) following the acquisition of Wells Fargo's IRT business division by Principal.
It is crucial to obtain a trusted financial institution to act as an independent third-party custodian to protect and oversee City's invested assets. The custody services provided include, but are not limited to, settlement, safekeeping, and reporting of the City's investment securities portfolio, which is managed by PFM Asset Management, the City's external investment manager in accordance with the City's Investment Policy. As of March 31, 2025, the City's portfolio, consisting of high-quality fixed-income marketable securities, totals over $1.1 billion and is held at Principal while all securities are registered in the name of the City.
DISCUSSION
Principal's (formerly Wells Fargo) IRT business division has been providing custody service to the City since 2005 and has consistently demonstrated its ability to provide excellent value and customer service. The relationship manager and customer service team have remained in place following the acquisition by Principal.
In addition to Principal's proven outstanding customer service to the City, another key factor in its original selection to provide investment portfolio custody services was its competitive pricing. Compared to the next lowest bi...
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