Tuesday, October 16 , 2018, 11:43 pm | Fair 58º

 
 
 
 

Union Bank Appears Poised to Retain City of Santa Barbara’s Banking Services

Montecito Bank & Trust favored by at least one councilman; full City Council still must decide

3 men sitting at a table. Click to view larger
Santa Barbara City Council Ordinance Committee members, from left, Eric Friedman, Gregg Hart and Jason Dominguez ponder the future of Santa Barbara’s banking services at a meeting on Tuesday. (Joshua Molina / Noozhawk photo)

After a two-year search, the city of Santa Barbara is poised to continue its contract with Union Bank, but for how long remains a mystery. 

Bob Samario, the city's finance director, recommended that the city sign a new, 3-year contract with Union Bank, but finance committee member Gregg Hart wants the city to continue "talks" with Montecito Bank & Trust, even if it means issuing a new request for proposals. 

Although Montecito Bank & Trust does not meet the city's banking needs, according to an extensive evaluation, Hart said, the fact that the local institution does not have investments in the controversial Dakota Access Pipeline means that they deserve more consideration.

"It is worth having additional conversations with Montecito Bank & Trust," Hart said Tuesday. "I, for one, think the price differential is not the only thing to consider."

Under a new deal, annual banking fees with Union Bank would total about $9,000. With Montecito Bank & Trust, the fees would be about $24,000.

Both banks will accept cannabis money.

Montecito Bank & Trust will take cash; Union Bank will accept the money from the city as long as it is commingled with other city funds.

A bank spokesman said Union does not accept deposits directly from medical or recreational marijuana businesses.

The city received six responses to its request for proposals. Bank of the West, Montecito Bank & Trust, JP Morgan Chase, Union Bank, American Riviera Bank, and Farmers and Merchant Bank all responded. 

The city's evaluation team threw out American Riviera, Farmers and Merchant and Montecito Bank & Trust right away because they could not meet the minimum city requirements.

Montecito Bank & Trust, in particular, has no government clients, no experience in providing services unique to cities, no experience in implementing or transitioning services, and no "lock-box" services to process utility bills. 

Bank of the West was out because it does not accept cannabis dollars. Chase and Union Bank were the strongest applicants, according to the evaluation. 

Hart and some members of the community want to shed financial involvement with banking institutions that have ties to the Dakota Access Pipeline, an 1,100-mile pipeline that connects the Bakken shale oil fields in North Dakota to storage facilities in Illinois. The pipeline began operating in June.

The Dakota Access Pipeline was opposed by environmental organizations and some Native American groups over risks to drinking water and the protection of sacred burial grounds.

Some U.S. cities have adopted socially responsible investment policies and divested entirely from banks that financed the pipeline.

Santa Barbara’s finance staff says finding a bank with no ties to investments in the pipeline that meets the city's needs will be difficult. The Finance Department’s No. 1 obligation is to protect the economic safety of the city, officials said. 

Samario stressed to the finance committee on Tuesday that Union Bank was the best choice for the city's financial needs.

"Montecito Bank & Trust could not meet our minimum requirements," Samario said. 

The full council must still vote on the matter, but the finance committee on Tuesday said it plans to talk with Union Bank about extending its current deal, and consider a new request for proposals that would allow Montecito Bank & Trust to rank higher. 

"There's no question Union Bank can do it because they have been doing it for a number of years," Samario said. 

Noozhawk staff writer Joshua Molina can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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