Request for Proposals for Banking Services Date Issued: November 25, 2015

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1 Request for Proposals for Banking Services Date Issued: November 25, 2015 Proposals must be received no later than 5:00 p.m. on Monday, December 28, 2015 at the following address: City of Malibu Attention: Ruth Piyaman Finance Manager Stuart Ranch Road Malibu, CA Phone: (310)

2 City of Malibu Request for Proposals Banking Services INTRODUCTION The City of Malibu (the City ) is requesting proposals from eligible and qualified banking institutions (the bank ) for its primary banking services. The bank must be a qualified depository of public funds, as defined by Section of the California Government Code to perform its obligation under this proposal in compliance with all applicable federal and state laws, regulations, statutes and policies. The bank must also be a member of the Federal Reserve System. The City s goal is to enter into a long-term relationship to obtain required banking services in the most efficient and cost-effective manner available. MINIMUM QUALIFICATIONS The City is seeking a financial institution that is: A federal or State of California chartered commercial banking institution with at least one full-service branch located within Malibu city limits. A member of the Federal Reserve System and have access to all services. Capable of providing the services sought by the City including daily online reporting. Sufficiently capitalized to accommodate the City s cash management needs. A qualified depository for public funds. A full-service bank in good standing among other comparable banks. Experienced in providing banking services for government entities, preferably other municipalities. BACKGROUND The City of Malibu is a general law city incorporated under California law in The City serves a population of approximately 13,000 and is located in northwest Los Angeles County. The governing body is a five-member City Council composed of the Mayor and four council members all of whom are elected atlarge and serve four-year terms. The City covers approximately 22 miles along the coast and offers a full range of municipal services. The City has 67 full-time employees and 15 full-time equivalent part-time employees. The City, organized into 7 departments, provides a number of services in-house including management and 1

3 administrative services, public safety, parks and recreation, environmental services, planning, public works and engineering. Police and fire services are provided via contract with Los Angeles County. Other services such as City Attorney, water, street maintenance and garbage collection services are also provided via contract. The City s annual budget for fiscal year is $31.2 million with estimated revenues of $31.7 million for all funds. The accounting and financial reporting functions of the City are centralized in the Finance division of the Administrative Services department. More information can be found on the City of Malibu s website Current Banking Structure The City currently maintains a primary commercial banking relationship with one depository institution. It is the City s preference to maintain all commercial banking services with one financial institution to maximize cash flow and minimize administrative costs. Our General Deposit Checking Account is used for deposit, Merchant Card deposit, disbursement, payroll, and money transfer activities. In addition, this account is used for all incoming and outgoing ACH transactions, as well as incoming and outgoing wires, and State of California Local Agency Investment Fund (LAIF) transfers. Merchant Card Services The City accepts VISA and MasterCard as forms of payment. The City currently has two merchant accounts. These accounts accept an average of 250 credit card transactions per month, generating average receipts in excess of $100,000 per month. Transactions are generally card-swiped, hand keyed and online payments for Parks and Recreation class reservations. The City s Parks and Recreation Department is using RecPro registration software to automate fee processing as an online payment gateway. The City contracts with TransFirst for credit card payment processing services. All credit card transactions are authorized, captured, balanced and settled on a daily basis (batches nightly) with ACH transactions credited the following business day. 2

4 GENERAL BANKING INFORMATION The City is seeking a bank that has demonstrated its ability in the following areas: Demand Deposit Account Accounts payable disbursement Payroll direct deposit Payroll tax processing ACH, Wire and Other Transfers (accept, receive, blocking services) State of California Local Agency Investment Fund (LAIF) wires Account Reconcilement Balance and detail reporting Generate monthly bank statement Online banking processes Excellent customer service and response No minimum balance requirements Banking supplies Online account access Unlimited check writing The Demand Deposit Account (Analyzed Checking Account) serves as the City s master operating account. Through the account, the City s deposits, disbursements, payroll checks and direct deposit payments, and wires and ACH transfers are processed, returned checks and deposit corrections are posted, and bank services account analysis fees are debited. SCOPE OF SERVICES 1. General Requirement The City requires that the bank have a local branch network in order to meet the organization s cash management needs: Required services include: a. The bank must be a Federal or State of California chartered commercial banking institution with at least one full-service branch located within Malibu city limits. b. The bank must be a qualified depository for public funds pursuant to the applicable State of California codes. All balances must be fully collateralized through the pool collateral system required under the State of California. c. The bank must fulfill orders for currency and coin as requested. 3

5 d. The bank must provide full account reconcilement, electronic fraud protection, electronic deposits and disbursements, online tax payment, online wire entry, and online stop payment placement. e. The bank must provide online reporting that includes detail reports of prior day transactions. f. Positive Pay and a sweep account are not requirements, but could be a potential component of improved efficiencies that will be considered. g. The bank must provide key measures of the bank s financial strength, including ratings from nationally recognized rating service(s) and banking rating service(s). Include one copy of the bank s most recent audited financial statement and one copy of the bank s rating from a nationally recognized rating service. 2. Deposit Services The City collects approximately 1,000 checks per month (12,000 checks per year) and approximately over $1 million in total deposits including currency and coin per month. The majority of all monies collected within the City are physically routed from multiple locations to the City s Finance Department. The Finance Department processes, prepares, and delivers deposits to the bank on a daily basis. Required services include: a. Processing the deposits of cash and checks at local bank branches. b. Providing the cutoff time for deposits at the bank s local branch and at the bank s operations center to ensure same day credit. c. Providing bank s procedures for deposit discrepancies and change orders. d. Providing online access for deposit reconciliation including images of deposited items and returned items. e. Providing non-sufficient funds (NSF) or returned items processing procedures. The City requires redepositing NSF or returned items a second time prior to being charged back. f. Returned items must be mailed to the City of Malibu on the day the checks are debited on the account. 3. Disbursement Services The City issues an average of 300 accounts payable checks per month. The average monthly issuance is $2.5 million. Payroll is processed bi-weekly for an average of $350,000 per payday. Approximately 98% of employees receive direct deposit of their pay. However, approximately 2% of employees still receive payroll checks; this tends to be seasonal, as part-time temporary employees are hired for the busy summer months. 4

6 Required services include: a. Providing the City with daily access to an online bank balance reporting system via the City s personal computer no later than 6:30 a.m. Pacific Time. b. Providing online stop payment services for disbursement checks and how long the stop payment will remain in effect. c. Providing online access to paid/cleared check images (front and back) and capability to search for transactions. d. Describing the bank s policy regarding overdrafts, the fee and interest charges. e. Allowing City s employee to cash payroll/disbursement checks at no charge. f. Specifying payroll transmission deadlines. g. Providing method of reversal of automatic direct deposits for errors. h. Providing manual payroll checks. 4. Electronic Transfer of Funds The City processes approximately 20 ACH credits and 10 ACH debits each month, which includes the bi-weekly direct deposit of payroll. A small number of wire transfers are also received or executed per month. In addition, the City s Parks and Recreation Department is using RecPro registration software to automate fee processing as an online payment gateway. Required services include: a. Providing online ACH debit and credit processing (includes direct deposit). Capabilities shall include online entry and file upload. b. Accepting ACH payment files from third parties. c. Providing ACH debit blocking services. d. Accepting and send ACH transactions. e. Providing a secure electronic method with dual authorization for wiring funds and cutoff time for same-day wire transfers. 5. Reporting Currently, the City has access to its banking information online. The City uses previous day and current day reports to track transactions that have processed and to monitor and project s cash flow on a daily basis. Required services include: a. Providing online balance reporting services for prior day and current day transactions including, but not limited to: ledger balance, collected balance, 1-day float, 2-day and over float, beginning balance, summary credits/debits, ending balance, detailed credits/debits with description, and detailed adjustment for float adjustment. 5

7 b. Allowing at least 4 City employees to access the bank s online reporting system with different levels of authorization. c. Providing online image retrieval of cleared and deposited check items. d. Providing monthly activity statements and reports by the 10 th day of the following month. e. Providing a detailed monthly account analysis and a consolidated statement showing charges for all services. 6. Bank Balances During the past year, the City maintained an average collected balance of $1 million. Balances are currently used to offset the City s cash flow and bank charges. Required services include: a. Collateralizing all collected balances, in excess of balances insured by the Federal Deposit Insurance Corporation (FDIC), at 110%, pursuant to all applicable sections of the California Government Code. b. Providing types of securities that are used as collateral. c. Please detail the bank s procedure for collateralizing the deposits of public funds. d. Providing bank department that is responsible for tracking deposits and monitoring collateral. e. Providing a statement of the bank s current level ($ amount) of public funds deposits and the related collateral. f. Providing a statement as to the frequency of reporting to the State Treasurer s Office. 7. Customer Services The bank shall provide an officer of at least a Vice President level to act as the primary liaison between the City and the bank. The Officer shall be responsible for conflict resolution between the City and the bank. The bank shall provide direct contact information of the Officer and a secondary liaison in the event the Officer is unavailable. The Officer shall endeavor to respond to any inquiries by the City on the same day but no later than the next business day. The bank shall provide any requested training to appropriate City staff for all online banking services. Any new services shall be made available to the City with associated cost for services negotiated at the time of the new service offer. Required services include: a. Providing the name, title, address, phone number, fax number and address of the primary contract person(s) assigned to this account. 6

8 b. Describing your bank s policy on changing the primary contact person on an account. c. Naming the individuals who will work with the City on a day-to-day basis: identify what each person s role and responsibilities will be; biographical information, experience working with governmental agencies; number of years experience in this field; and number or years with your bank. 8. Transition of Services In order to ensure a smooth transition of services, the bank shall coordinate with the City and the current banking services provider. It shall also provide the following: a. The Officer and key staff shall meet with City staff immediately after contract has been fully executed. b. The Officer shall provide an implementation timeline of the transition process within ten (10) days of contract execution. c. The Officer shall provide bi-weekly status reports to the City regarding the progress of the transition of services. d. The bank shall be responsible for bearing all transition costs that may occur as a result of, including but not limited to, the conversion of existing images, loading of files, etc. e. If requested, the bank shall provide on-site training to appropriate City staff for all online banking services. f. In the event of the termination of any contract resulting from this RFP, the bank shall provide any requested files, reports or documents within one (1) week or as otherwise requested by the City. 9. Account Analysis Services The bank shall provide the City a monthly account analysis statement. The account analysis statement shall include, at a minimum, all information in the form of the pricing sheet such as service description, unit cost, extended price and earnings credit (where applicable). The statement shall also include the average daily collected balance, average daily ledger balance and any compensating balances required to support the monthly service. 10. Account Reconcilement The City issues approximately 3,500 Accounts Payable and Payroll checks per year. There are also approximately 1,200 ACH payroll and other transactions processed annually. Currently, the City s account is reconciled manually. 7

9 Required services include: a. Providing a brief description of each account reconciliation service that the bank offers and what is recommended for the City s consideration. b. Describing the bank s web-based services as they pertain to stop payments, retrieving scanned copies of paid checks, ACH exceptions, and voided checks. For example, how many days is data available to verify if a check has been cashed? c. Please be comprehensive in your response: Will the bank guarantee that all items drawn on City account be paid regardless of the balance in the funding account? What is the charge for covering these items? What notification is given if there are insufficient funds ( , phone call etc.)? Is there a service available for notification of balance below an agreed upon float amount? 11. Service Enhancements Based on the information provided in the RFP and your bank s knowledge of the public sector, describe any services or technological enhancements, not previously mentioned, that may be considered for further improving the effectiveness of the City s cash management operations. 12. Other Required Services The bank will be required to respond to audit confirmations and other requests for data at least annually or as needed from the City s internal and external auditors. The bank must allow the auditors to conduct on-site inspection of transactions or review the bank s system of internal control as requested. 13. Term of Contract It is the intent of the City to award a five (5) year contract with five (5) one-year renewal options. Either party has the option of discontinuation of the agreement with 90-day written notice. The City desires fixed pricing for the first five (5) years of the contract. Prices in subsequent years shall be negotiated based on satisfactory customer service. 8

10 PROPOSAL REQUIREMENTS The proposal shall provide information necessary for the City to evaluate the qualifications, experience, and expertise of the proposing bank to perform the requested banking services. The bank shall make a written proposal which presents an understanding of the work to be performed. The proposal should address each requirement contained in the Scope of Services and be specific in presenting their qualification. Proposals should be as thorough and detailed as possible but written clearly and concisely so that the City may properly evaluate the bank s capabilities to provide the required services. Proposals should not include any materials to be returned to the bank. Each proposal must include the following information: 1. Organization and Experience a. Provide a general overview and brief history of your organization including: customer service philosophy, parent and/or subsidiary companies, and the number of employees. b. Provide the address of the branch location within the City that will assist with the City s banking needs. c. Describe the bank s experience in providing similar services for other governmental agencies, specifically local government agencies located in California. Please include the number of public agency clients, the dollar amount of public funds on deposit, the types of services offered, and the bank s knowledge of and adherence to the California Government Code. d. Provide the bank s current credit ratings by Standard & Poor s Rating Services and Moody s Investor Services. If the proposer is not rated by these rating organizations, provide other evidence of the institution s financial strength. 2. Understanding of the Scope of Services a. Provide a narrative of the bank s understanding of the Scope of Services and proposal to complete the City s banking needs. 3. Sample Contract a. Provide a sample of the proposed contract for your bank s services. Please also provide samples of all other documents which will need to be signed/entered into relating to the provision of the services requested in this RFP including any documents referenced or incorporated into the contracts/agreements. 9

11 4. Sample Reports a. Provide one sample of each of the following type of reports from your system that are available for governmental agencies: Account Reconciliation Reports, Account Statements, Prior Day and Current Day Reports, Account Analysis Statement. 5. Latest Actual Reports a. Provide the bank s most recent Annual Report and Quarterly Report filed with the Federal Deposit Insurance Corporation (FDIC). 6. Minimum Insurance Requirements Bank (Contractor) shall procure and maintain for the duration of the contract insurance against claims for injuries to persons or damages to property that may arise from or in connection with the performance of the work hereunder by the Contractor, its agents, representatives, or employees. The cost of such insurance shall be included in the contractor s bid. Certificates of Insurance meeting the following requirements shall be provided to the City of Malibu within fifteen (15) working days from the City s written notification of approval to award the contract. In addition to the Certificates of Insurance the contractor must obtain an Additional Insured Endorsement. Contractor shall maintain limits no less than: a. General Liability including operations, products and completed operations, as applicable $1,000,000 per occurrence for bodily injury, personal injury, and property damage. If Commercial General Liability Insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit. b. Errors and Omissions Liability $1,000,000 per occurrence or per claim. If protection is accomplished through a claims made policy, a 36-month extended reporting period shall be provided. 7. Implementation Plan a. Detail all costs associated with the conversion of all the proposed services. 10

12 b. Describe any on-site training to City personnel for the operation and use of the bank s services and automated systems for all areas of service. Describe the bank s training procedures. c. Describe what supplies the bank will provide at no cost to the City, such as checks, deposit slips, endorsement stamps, cash vault supplies, and other items. The City is currently using blank check stock for its laser-printed accounts payable and payroll checks. d. Describe in detail how the bank will handle problem resolution, customer service, day-to-day contact, and ongoing maintenance after the conversion is completed. 8. References 9. Fees a. Provide at least three (3) references (including the length of time) that are of similar size and scope of service utilization as the City, preferably local government agencies located in California. Fees in this proposal should cover and be guaranteed for five (5) years. If not, please describe how long the fees are guaranteed. The City will make every effort to maintain a minimum balance in its accounts to compensate the bank for services rendered. Please provide an itemized list of services and all associated costs described in your financial institution s proposal. Include any one-time or set-up charges, research fees, minimum fees, or all other fees that will be charged. Also, include any incentives or price breaks offered based on volume or other measures. The following page is an example of the services the City currently uses. The information provided is based on the City s activities during the month of October. Please use the following page as a template when creating your list of services and fees. 11

13 General Banking Services Service Fees Activity Charge Detail (based on October 2015 information) Service Description Unit Charge Volume Service Charge Explanation BALANCE & COMPENSATION INFORMATION Dep Insurance - Bank Assessment 1,465 GENERAL ACCOUNT SERVICES Account Maintenance 1 Debits posted-other 2 Credits posted-other 79 Paper deposit statement mailed 1 DEPOSITORY SERVICES Banking center deposit 29 Curr/coin Dep/$100-Bkg Ctr 54 Cks Dep un-encoded items 673 Returns-chargeback 1 Returns-reclear 2 PAPER DISBURSEMENT SERVICES General checks paid truncated 236 Image maintenance CPO 1 GENERAL ACH SERVICES ACH monthly maintenance 1 ACH LV-monthly maintenance 1 ACH consumer on us credits 56 ACH consumer off us credits 187 ACH debit received item 9 ACH credit received item 77 ACH optional rpts-electronic 4 ACH input-file 2 WIRE & OTHER FUNDS TRANSFER SERVICES Book credit 2 Wire advice-fax 2 INFORMATION SERVICES CPO prem PDR account 1 CPO prem CDR account 1 CPO prem PDR Itm stored 596 CPO prem CDR item 252 CPO online subscription 1 CPO prem IR maintenance 1 CPO prem research item Institution Name: Address: By: Contact Name: Date: Fax: Title: Phone: 12

14 PROPOSAL PROCEDURE 1. Submission of Proposal All proposals are due by mail or hand delivered no later than 5:00 p.m. on Monday, December 28, Proposals received after the above date and time will not be considered. Telephone, electronic, faxed, or late proposals will not be accepted and will be returned to the proposer unopened. It is the proposer s responsibility to see that their proposals are sent in sufficient time to be received by the department/location specified below before the submittal deadline. Proposer assumes that burden of delivery. Submittal must include the number of proposals as per the directions outlined below. All documents contained in the submittal must have original signatures and must be signed by a person who is authorized to bind the proposer. Please submit six (6) printed and bound copies of your proposal to: Ruth Piyaman, Finance Manager City of Malibu Stuart Ranch Road Malibu, CA The City of Malibu may invite one or more proposers to be interviewed during the week of January 18, 2016 (time to be determined) at no cost to the City. 2. Clarifications The City will respond to requests for clarification to the Request for Proposal in written RFP Addendum(s) as needed. Inquiries should be directed by only to rpiyaman@malibucity.org. No verbal requests will be accepted. All requests for clarification must be received by December 10, All relevant questions and responses to inquiries will be posted as addenda on the City s website by December 15, Potential proposers should include contact information with their questions(s) in the event City Staff needs to obtain additional information or clarification in order to respond to the question(s). 3. Response Preparations No reimbursement will be made by the City for costs incurred in the preparation of the response to this Request for Proposal. Submitted materials will not be returned and become the property of the City of Malibu. 13

15 RIGHT TO REJECT PROPOSALS Submission of a proposal indicates acceptance by the bank of the conditions contained in this request for proposal unless clearly and specifically noted in the proposal submitted and confirmed in the agreement between the City of Malibu and the selected bank. The City of Malibu reserves the right without prejudice to reject any or all proposals. 14