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Fernandina Beach stuck over which bank should get $45 million in city funds

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By Mike Lednovich

The Fernandina Beach City Commission was unable Tuesday to determine which financial institution should hold approximately $45 million in city funds in the short term, rejecting all proposals for management banking services just months before the city’s current contract expires in May.

After extended discussion, the commission voted 4-0 to deny the most recent request for proposals (RFP) and direct staff to revise and reissue it, citing concerns about how interest rates were compared and how evaluation criteria were weighted.
 
The process has been lengthy and protracted. with these developments:
 

  • In 2024 by a 3-2 vote, the commission gave First Federal Bank a one-year agreement instead of a five-year contract as proposed.

  • In Feburary 2025, the commission voted to extend First Federal's contract for three years. But at its next meeting, the commission voted to reconsider that decision.

  • In March 2025, the commission debated on a three-year or one-year agreement. They voted for one-year and putting out an RFP to consider other banks in 2026.

The city’s existing banking agreement with First Federal Bank expires May 14, 2026. City officials say the city maintains an average balance of about $45 million, though only about $8 million is required monthly for operational liquidity, with the remainder considered surplus.
As commissioners debated interest-rate formulas and scoring criteria, a representative of First Federal Bank warned that restarting the bidding process would disadvantage the banks that had already participated and further compress the city’s timeline.
 

“We won the RFP, quite frankly,” said the First Federal's Market President Jim Weaver, speaking after the commission voted to reject all proposals. “To go this route again is a disservice to First Port City Bank and ourselves. We’ve shown our cards. Every other bank now knows where we stood, and every delay just brings us closer and closer to May.”

An internal city evaluation committee reviewed three complete proposals — from First Federal Bank, First Port City Bank, and Regions Bank — and ranked First Federal highest under the city’s weighted scoring system. That recommendation was forwarded to the commission for approval.
 

But several commissioners said the RFP did not allow for a clear, side-by-side comparison of interest earnings.

“I read through all the documentation,” Commissioner Genece Minshew said. “And I actually couldn’t figure out what the interest percentages were. To me, that’s a problem.”
 

Comptroller Susan Carless told commissioners that First Federal’s formula would currently yield about 2.73% interest, while First Port City Bank’s formula would yield about 2.75%, a difference she described as “very close.”

“So there’s really no difference in the interest rates that they’re offering us now?” Minshew asked.
 

“They’re very close,” Carless replied.

Beyond interest rates, commissioners raised concerns that the RFP’s scoring system favored the incumbent bank First Federal.
 

Vice Mayor Darron Ayscue said the commission was being asked to make a long-term decision without clear financial comparability.

“I’m not here wanting to forecast what’s going to happen over the next five years,” Ayscue said. “I’d rather just see it in plain sight — apples to apples.”
 

Ayscue also questioned how much weight was given to conversion planning, noting that it created what he described as a “home-field advantage” for the existing bank.

Commissioner Joyce Tuten defended the evaluation approach, arguing that safety and stability should outweigh marginal differences in interest earnings.
 

“This isn’t our money,” Tuten said. “We’re not private investors. Financial strength is the most important thing in government accounting.”

Tuten also warned that trying to force banks to use identical interest-rate formulas could be unrealistic.
 

“No bank is going to fix an interest rate for five years,” she said. “They’re going to peg it to something that moves.”

A motion to award the contract to First Federal failed for lack of a majority. A subsequent motion to award it to First Port City Bank also failed.
 

With no proposal able to secure enough votes, Commissioner Minshew made the motion to reject the RFP altogether.

“I think at the end of the day we’re not happy with the RFP,” she said. “We need to reconsider it.”
 

Mayor James Antun agreed, saying the commission had reached a procedural dead end.

“With a lack of majority on that motion,” Antun said, “we’ve sort of been pigeonholed.”
 

The commission then voted unanimously to deny all proposals and direct staff to prepare a revised RFP.

City Manager Sarah Campbell said staff would draft a new RFP incorporating commission direction, including standardized interest-rate comparisons, revised weighting of evaluation criteria, and clearer requirements for prospective banks.
 

First Federal Bank will continue to hold city funds under the existing agreement until it expires in mid-May.

The decision leaves the city under increasing time pressure to secure a banking partner before the current contract ends.

Comments

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  • rswarner

    Make sure any repository bank or institution has credible diversification of investments, deep pockets, sureties, and shown stability over time. To me, any association with crypto assets and over investments in real estate is npt a good idea.

    Friday, February 6 Report this

  • Dennis

    Did you consider other financial institutions that operate in our community that provide. much higher returns , e.g. Morgan Stanley? Our HOA did their home work and found that we ended up paying taxes due to multiple investments Let's be smarter here.

    Friday, February 6 Report this

  • stevedec2

    The circus opens a new performance ring.

    Friday, February 6 Report this

  • Mark Tomes

    Competition is good for the consumer, eh? Let the banks compete! But a paltry 2.75% APR? When they are charging 7 - 10% for loans? And why are not credit unions in the mix? They tend to be more stable in turbulent times.

    Friday, February 6 Report this

  • Astuteinv

    2.75% - Really

    Invest in a laddered US Treasury portfolio 1-3 years and get 3.5% risk free!

    Friday, February 6 Report this

  • KBNorthend

    Agreed, 2.75% on surplus balances is not a good deal. First of all why would you lock in a rate for 3 years, what happens if rates go up? As a former cash manager at a large corporation, we would always negotiate a floating rate based on the Prime rate (currently 6.75%). For example, prime less 2%, BTW 2% on $45 mil is $**** a year, pretty signifigant! Perhaps look at more sophisticated banks that offer cash management services.

    Friday, February 6 Report this

  • DaveLott

    Mark,

    As a general rule a credit union does not offer the wide array of commercial banking services that a municipality requires. You can't compare interest rates paid on deposits (guaranteed) versus interest rates charged on a loan (no guarantee). Interest income (spread between interest paid and interest collected) is the primary source of revenue for most financial institutions.

    Astuteinv, Treasury securities are not risk free - low risk and default free yes, but not risk free; as value can erode in an increasing rate environment and lose purchasing power.

    Friday, February 6 Report this

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