City of Lufkin, Texas Service Proposal Bank Depository Contract. Each proposal must respond to the following specified requirements.

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1 City of Lufkin, Texas Service Proposal Bank Depository Contract Each proposal must respond to the following specified requirements. Provide the following: 1. Audited financial statements for the most recent fiscal year; 2. Ratings on outstanding debt; 3. Community Reinvestment Act performance history for the Lufkin community for 2009; 4. Three Texas local government and/or school district references for cash management services managed by the bank executive who will be responsible for the City s account; 5. Sample account analysis and monthly statement; 6. Availability of funds schedule; 7. Vault services deposit cutoff times, 8. Sample of daily balance report; 9. Most recent quality assurance data and customer satisfaction procedures; 10. New customer conversion procedures and applicable information; 11. Daylight overdraft policy; 12. Retail lockbox literature, proposed agreement and information; 13. Proposed positive pay agreement; 14. Proposed remote deposit capture agreement; 15. Proposed wire transfer agreement; 16. Proposed custodial and safekeeping agreement; 17. Proposed collateral agreement; 18. Proposed Automated Clearing House agreement; 19. Proposed vault services agreement; 20. Proposed security clearance agreement; 21. Any additional agreements that require City approval. Respond to the following service area inquiries: Coin and Currency Change Orders Specify any advance notice requirements greater than 24 hours. Daylight Overdrafts Answer the following: Define daylight overdraft. Could a daylight overdraft result if funds are to be received (security transactions, wires), but have not been credited to the City's account? If a daylight overdraft occurs, what is the policy on such an event and what charges, if any, would be made to the City? Page - 1

2 Deposit Availability Identify the name and deposit location that will receive City deposits. Wire Transfers Identify the provisions for the release of wire transfers. Page - 2

3 Calendar for Bank Contract April 1 April 1 April 14 April 20 April 26 April 26 May 13 May 27 June 15 June 21 October 1 Prepare RFP and forms Submit RFP to city attorney for review Finalize RFP, forms Submit RFP to Finance Committee for Approval Mail RFP Advertise in newspaper Pre-Bid Conference Banks submit proposals Council Agenda Execute contracts/ agreements (Effective date of October 1, 2010) Implement contracts/agreements Page - 3

4 City of Lufkin, Texas Request for Proposal Bank Depository Contract Introduction The City of Lufkin (the City) is requesting proposals from qualified banking institutions to provide bank depository services to the City as described below. This contract will be awarded June 15, 2010 with service to begin per the contract terms. The objective of this Request for Proposal (the RFP) is to identify the financial institution (the Depository) that will provide the highest quality service at the lowest aggregate cost to the City. Bid specifications and evaluation criteria have been developed and are described herein. Only banks with locations/branches within the Lufkin city limits are eligible to bid. Each proposal must be complete and specifically address the requirements described in the RFP. Proposals must respond to all specified requirements. Bidding Procedures Each bidder shall use the enclosed City of Lufkin form entitled Fee Schedule" to identify all applicable fees for services requested. The Fee Schedule must be completed in its entirety. The respondent shall identify all applicable fees for each service if the fee is not already listed on the Fee Schedule. The enclosed form entitled Service Proposal" identifies the information, agreements and responses each bidder shall provide in the submitted proposal. If the bidder cannot provide a service requirement, the term No Proposal" should be entered on the Fee Schedule and Service Proposal for that specific service requirement. In the case of a No Proposal" remark, the bidder may offer an alternative equivalent service for the City's consideration. Services for which a bidder intends to charge a fee must have all applicable fees indicated on the Fee Schedule. Space has been provided under each requested service for Other" applicable fees, if any. Any service that does not have a fee indicated on the Fee Schedule will be considered to be free of any and all charges in the Depository Bank Contract. A bidder may submit written questions to the City by May 10, 2010 in order to clarify any matters relating to the RFP. The question and the City's response will be shared with all bidders. Belinda Southern, Finance Manager, 936/ , may be contacted on all aspects of the RFP. All costs incurred by the bidder in preparing and responding to the RFP shall be borne by the bidder. A pre-bid conference will be held at 10:00 a.m. in the City Council Chambers, Room 102, City Hall, 300 East Shepherd Street on Thursday, May 13, The pre-bid conference should last no longer that one hour. Page - 4

5 The proposal must be submitted in a sealed envelope bearing the title City of Lufkin Bank Depository Request for Proposal" along with the name of the bidder. The Proposal shall contain: a completed City of Lufkin Fee Schedule, responses to the Service Proposal requirements, and all additional items identified below. The envelope shall be delivered to Douglas R. Wood at Lufkin City Hall, Room 117, 300 East Shepherd Street, Lufkin, Texas, no later than 5:00 p.m., May 27, Unauthorized modifications of City of Lufkin bid specifications, forms or terms may render the proposal invalid. Selection Criteria The City Manager, Finance Director and Finance Manager will evaluate the merit of the proposals submitted. The sole objective of this evaluation will be to determine the financial institution whose proposal is most responsive to the City's bank depository needs. The following criteria will be included in the evaluation of the submitted proposals. Lowest aggregate cost, consistent with the other selection criteria; Demonstrated ability to meet service requirements; Financial condition and ability to meet collateral requirements; Incorporation of effective, high quality and innovative cash management services; Submission of all required information. Required Information Each bidder must provide the following in the Service Proposal: Audited financial statements for the most recent fiscal year; Ratings on outstanding debt; Community Reinvestment Act performance history for the Lufkin community for 2009; Three Texas local government or school district references for cash management services managed by the bank executive that will be responsible for the City's account; Sample account analysis and monthly statement; Availability of funds schedule; Sample of daily balance report; Most recent quality assurance statistics and customer satisfaction procedures; New customer conversion procedures and applicable information; Daylight overdraft definition and policy; Retail lockbox literature, proposed agreement and information; Proposed positive pay agreement; Proposed remote deposit capture agreement; Proposed wire transfer agreement; Proposed custodial and safekeeping agreement; Proposed collateral agreement; Page - 5

6 Proposed Automated Clearing House agreement; Proposed vault services agreement; Proposed security clearance agreement; Any additional agreements that require City approval. Contract term The contract is for five years commencing October 1, All fees shall be fixed for a five-year term. Services may be modified by mutual agreement during the contract term. It is expected the range of services described in this bid will be used for the length of the contract; however, the City may discontinue any service after 60 days written notification to the Depository. Services not identified in the RFP may be added, with the cost of new services to be negotiated at that time. Designated Depository Contact Personnel Upon selection, the Depository shall provide a list of personnel qualified to provide product information and assistance in the following areas: General information Investments and safekeeping Accounting and Bookkeeping Deposit discrepancies Wire transfers Vault services Balance reporting Controlled disbursements Pledged collateral Automated Clearing House Remote Deposit Capture Electronic Banking In addition, the Depository shall designate one account officer with authority and responsibility for the City's entire account Service Exclusion This RFP excludes all City retirement and deferred compensation programs. Additionally, the City retains the right to invest its funds with the financial institution that provides the City with the best investment return. The City also retains the right to separately contract for services provided by other institutions in addition to those contained in the Depository contract. Page - 6

7 Right to Reject The City reserves the right to reject any and all bids. The City, at its option, may waive any and all informalities, minor irregularities and/or technicalities. The City may reject the proposal of a bidder who is in litigation with the City or who has previously failed to perform to the City s expectations. The City may also accept or reject any of the alternates that may be set forth in a proposal. The City reserves the right to reject any bid if the evidence submitted by, or investigation of, such bidder fails to satisfy the City that such bidder is properly qualified to carry out the obligations of the contract and to complete the work contemplated therein. Exceptions Exceptions, conditions, or qualifications to the provisions of the City's specifications or contracts must be clearly identified in writing as such, with the reasons therefore, and alternate language proposed by bidder, if any, clearly stated and inserted in the appropriate place in the bid submission. Each of these exceptions, conditions, or qualifications to the City's specifications will be included, as appropriate, in the Contract document. Items and matters not explicitly excepted in this manner shall be deemed to be in conformance with the City's specifications. The City is the final judge of acceptability for items quoted on this RFP Account Structure The City requires a master account entitled Treasury Account" into which all daily deposits, wire transfers in and out, investment activities, debit and credit adjustments, change orders, zero-balance accounts and controlled disbursements will be transacted. The City reserves the right to open or close any number or type of accounts throughout the term of the contract. ACH Transactions The City has approximately 966 utility customers whose individual bank accounts are drafted monthly by the City for payment of their utility bills. The City transmits data to the Depository weekly by direct transmission via the City's computer system. This is a required service of the Depository. The City also has ACH debit and credit transactions for state and federal governmental activities. In addition, approximately 470 City employees are paid biweekly of which approximately 80% have ACH deposits and 20% receive paper checks. Employee payroll funds are available to employees on a biweekly pay schedule. During this depository contract period the biweekly pay schedule begins October 8, 2010 and extends bi-weekly on Friday (excluding holidays) through the term of the contract. Page - 7

8 Check Clearing Services The City utilizes Positive Pay for all checks issued. The City will require the Depository to perform a computerized match of all presented City checks with a database of issued checks. All checks issued by the City will be transmitted to the Depository electronically. The proposal should include any software charges associated with this service on the Fee Schedule. The City is considering the use of full account reconciliation. Both full and partial account reconciliation, with Positive Pay, are included on the Fee Schedule. The City will choose one of these services. Check Safekeeping Service Check imaging (front and back) is required for cleared checks, sorted in serial sequence, along with the monthly statement. The City prefers the use of CD ROM for the imaging and retention of cleared checks. If this service is selected, the serial sort of checks and the return of checks may not be a required service. The City shall require certain format specifications of the data for the compact disc in order to use the data electronically. Coin and Currency Change Orders Several City departments require coin and currency change orders. The Depository shall provide a cost effective change order system for coins and currency, and give the change order to the City. The City's account shall be debited on the day the change order is released to the City. Please specify any advance notice requirements greater than 24 hours. Account Reconciliation The City is currently utilizing partial account reconciliation services. The City is considering the use of full account reconciliation services. Identify all applicable costs on the Fee Schedule for these services. The full account reconciliation service may or may not be considered in evaluating the proposals, per the City's decision to utilize the services. Daily Balance Reporting The City requires daily on-line reporting of ledger, collected and available balances, as well as all credit and debit totals for the Treasury Account. This information should be available by 8:00 a.m. CST. List the software and hardware requirements, associated costs, if any, and the timing Page - 8

9 of implementation as well as assurances of compatibility between the City s hardware/software and the Bank s. Daylight Overdrafts The City will attempt to avoid daylight overdrafts. Include the daylight overdraft policy in the proposal and answer the following questions. How does the respondent define daylight overdraft? If funds are to be received (security transactions, wires), but have not been credited to the City's account, could a daylight overdraft result? If a daylight overdraft occurs, what is the policy on such an event and what charges, if any, would be made to the City? (Include all charges in the Fee Schedule). Debit and Credit Adjustments The City requires that a copy of all debit and credit adjustments be forwarded ( ed or faxed) to the City's Finance Department with supporting documentation, as the entries are made throughout the month. The City's monthly statement shall include a copy of all debit and credit adjustments. Adjustment documentation shall include description, date and amount in order for the City to properly record the entry. The City shall not be responsible for the cost of credit and debit adjustments necessitated by bank error. Deposit Availability The City desires to receive same day credit for all funds deposited by City representatives to the designated deposit location. Please state your cut off time for same day credit in your Service Proposal. The City expects to receive the best availability on deposits as well as any future improvements to the availability schedule. Please submit a funds availability schedule in your proposal. Identify the name and deposit location that will receive City deposits. Remote Deposit Capture The City desires to use the services of remote deposit capture for processing checks to be deposited. Please state the RDC deposit deadlines for each day of the week to receive same day ledger credit. Please state the hardware (scanner) indicating specific brands and models of scanners that are approved for RDC service at your bank and software system requirements. Please list associated costs for the equipment should the City s current system not be compatible and any startup and training costs. Assuming 10,000 checks per month are deposited using Remote Deposit Capture, list all of the service charges for RDC including per item fees, per deposit fees, monthly maintenance fees, exception handling fees, analysis, check clearing and deposit reconciliation. Attach a copy of all agreement(s) that must be signed to use the RDC service. Page - 9

10 Deposit Slips The City uses two-part, encoded deposit slips. The City requires the Depository to validate and return on a daily basis to the depositor, the copy of each deposit slip. An image of the original deposit slip shall be returned to the City in the monthly statement. Same day telephone notification is required for deposit discrepancies. The City will designate a contact person to handle deposit discrepancies. Account Analysis Earnings Credit In the proposal, explain the method or calculation used to determine the earnings credit rate applied to City balances on the monthly account analysis. Identify which balance, ledger or collected, the earnings credit shall be applied, and if a percentage reserve requirement is subtracted from this balance. Errors Depository errors resulting in lower City balances or reduced earnings shall be corrected by the Depository to the satisfaction of the City. The Depository and the City shall mutually agree upon the method of reimbursement or correction. Investments The City may choose to invest in certificates of deposit in the Depository or any other financial institution. Alternatively, the City may invest in other types of securities as permitted by the City's written investment policy. Monthly Statements Monthly statements are required for all accounts. Statements should include sorted deposit slips, sorted checks, all debit and credit slips, and wire transfers. The statements shall be delivered to the City within ten (10) business days after the end of the month. Research Requests The City requests that all research requests be turned around within three (3) business days of the request. Returned Items All checks deposited by the City that do not clear the first time shall be submitted a second time before returning the item to the City. A returned check that does not clear on the second attempt shall be returned to the City within two (2) business days. Page - 10

11 Other items such as bank drafts or credit card charges shall be returned to the City with supporting documentation to allow the City to identify and correct the transactions. Securities Clearance and Safekeeping The Depository may act as transfer agent for some or all security transactions undertaken by the City. All security transactions shall be executed delivery versus payment. The Depository must have the capability of executing on behalf of the City DTC and Federal book entry security purchases and sales through the Federal Reserve Bank or a New York correspondent bank. The City requires that security purchase and sale instructions be transmitted to the Depository on-line. The City requires the ability to review the status of security transactions on-line. Controls for securities clearance will be established by mutual agreement. Include in the proposal a security clearance and custody agreement. A safekeeping confirmation for each City security transaction will be issued and mailed to the City within two (2) business days of settlement. A monthly report listing all City securities held in safekeeping will be mailed to the City within seven (7) business days of the end of each month. Stop Payments The City will require the Depository to issue stop payments upon telephone or online notification from authorized City staff. The method of stop payment is at the City's discretion. The City will provide all required stop payment information. The Depository will provide the City with hard copy confirmation of each stop payment. Wire Transfers The City requires that wire transfers and secondary authorizations be initiated online by the City's Finance Department. The City also requires the ability to verify incoming and outgoing wire transfers on-line as well as the current status of all City wire transfers. This service must also be available on-line to the City's Finance Department. A hard copy notification of all incoming and outgoing wire transfers shall be mailed to the City within three (3) business days. In the event the Depository experiences computer or unexpected difficulties, the Depository shall use whatever means necessary to ensure that the City's wire transfers are completed on the date specified. The City transfers large dollar amounts on a daily basis. Collected balances, security maturities and sales and incoming wire transfers are the sources of funds for these transfers. The City requires that all outgoing wire transfers be released within one hour of origination by the City. Since the posting of security transactions may occur during overnight processing, a procedure to ensure the prompt release of wire transfers is necessary. Identify in your proposal the provisions for the release of wire transfers. Page - 11

12 Lockbox Service The City may or may not use lockbox services in the future. Please provide a cost estimate if the services are available. This service may or may not be considered in evaluating the proposals, per the City's decision to utilize the service. Employee Credit Card Program The City issues credit cards to selected employees to use for city related training, travel and meeting purposes. Each card typically has a $2,000 - $5,000 limit. Please provide information regarding the cost and requirements of this program. Credit Card Processing The City currently accepts MasterCard and VISA credit cards for payment of utility bills, Municipal Court fines, zoo admissions and parks and recreation user fees. Provide the bank discount and other fees associated with this program. Preprinted Forms The City currently orders its deposit forms from the Depository bank; other banking forms are ordered from other vendors. The City is constantly investigating cost saving measures, in that regard, please provide a cost estimate for supplying two-part, pre-numbered deposit slips to the City. Employee Check Cashing Employees are paid on a bi-weekly basis. Some employees do not utilize checking accounts and many employees bank outside the city or at banks other than the City s depository bank. Employees want the ability to cash City payroll checks utilizing the bank s drive-thru facilities. The City requires that its employees have the ability to utilize the bank s drive-thru facilities for City payroll check cashing. Collateral Requirements The Depository is required to comply with Government Code Chapter 2257, Collateral for Public Funds, and the City of Lufkin, Texas and Lufkin Economic Development Corporation, Texas current Investment Policy. The City maintains deposits between $1,000,000 and $3,000,000 on a routine basis requiring the depository to maintain appropriate collateral or acceptable sweep account product to secure deposits. The custodian shall provide an original safekeeping receipt for each security being pledged. Page - 12

13 The Depository will provide to the City on a timely basis a monthly report of securities pledged. The report should provide the following: 1. Security type and description including CUSIP, coupon, maturity and call date, if any, 2. Par value or outstanding principal balance 3. Market value of each security and total market value for all securities. Page - 13

14 City of Lufkin, Texas Fee Schedule Bank Depository Services Approximate Monthly Activity Service Fee Per Item Service Description Account and depository services: Account maintenance 3 Zero balance account maintenance 1 Debits posted 1150 Credits posted 300 Items deposited: On Us 1625 Transit 7005 Remote Deposit Capture Items Deposited: On Us Transit ACH Files 10 ACH items 1900 Internet Wire Fees 15 Stop Payment Fee 5 NSF Fees 50 Fedline Micr Fees 1 Bills Strapped 63 Coins Rolled 135 Account reconciliation: Partial (without positive pay) 1 Full (without positive pay) Positive Pay: Partial reconciliation 1 Full reconciliation Item Transmission Serial sort: Item 918 Monthly minimum CD ROM Check imaging Disk Page - 14

15 City of Lufkin, Texas Fee Schedule Bank Depository Services Service Description Approximate Monthly Activity Service Fee Per Item Other Account and depository services: Encoding Charges 4,200 Controlled disbursements: Monthly maintenance Report Checks paid Other: Funds Transfer: Incoming Repetitive: Domestic 10 Internal 2 Non-repetitive: Domestic Internal Mail advise 20 Other: Security clearance/safekeeping FRB transaction DTC transaction Account maintenance Safekeeping (per issue) Monthly marked to market report Other: Page - 15

16 City of Lufkin, Texas Fee Schedule Bank Depository Services Service Description Approximate Monthly Activity Service Fee Per Item Automated Clearing House Services: Debit/credit origination 2075 Data transmission Return notice Maintenance Other: Page - 16