HomeMy WebLinkAboutFS 2010-10-19 Item 2A - Agreement - 2011-2014 Banking Services with US Bank ��ua
A sti City of Tukwila
0
y Jim Haggerton, Mayor
908 INFORMATIONAL MEMORANDUM
TO: Mayor Haggerton
Finance and Safety Committee
FROM: Peggy McCarthy, Deputy Finance Director
DATE: October 13, 2010
SUBJECT: Contract for Banking Services
ISSUE
The Council is being asked to approve the selection of US Bank as the City's primary banking
institution for the period of January 1, 2011 through December 31, 2014 The banking fees for
the four year period are estimated at $40,121 but are dependent on actual banking activity
experienced by the City during this period.
BACKGROUND
The City's primary banking relationship is currently with US Bank and is based on a 2005
agreement with them. To ensure the City receives optimal service at competitive prices, a
banking services solicitation was undertaken. On July 2, a banking services request for
proposal (RFP) was emailed to five banks that met the City's minimum qualifications. The
recipient banks were US Bank, Key Bank, Wells Fargo Bank, Bank of America and West Coast
Bank. The minimum qualifications were as follows
A. Authority to offer banking services. Institution must hold a charter from either the
United States Government or the State of Washington.
B. Access to the Federal Reserve System. Institution must be a member of (or
have access to) the Federal Reserve System and have access to all Federal
Reserve System services.
C. Legal Compliance. Institution must be in compliance with all applicable laws,
rules, regulations, and ordinances of the City of Tukwila, the State of
Washington, and the United States
D Public Deposit Protection Act. Institution must be a Washington State qualified
depository for public funds and must be in compliance with the Washington
Public Deposit Protection Act (RCW 39.58).
E. Local banking office. Institution must have an established office or local branch
within the City of Tukwila
Of the five banks receiving this solicitation, all responded with proposals except West Coast
Bank which felt they lacked the capacity to provide the full range of services to the City
A bidders' conference was held on August 13 to give representatives of the responding banks
an opportunity to meet City staff and to ask questions about the proposal, services, and other
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INFORMATIONAL MEMO
Page 2
matters Five representatives from Wells Fargo and two representatives from Key Bank
attended.
On or before the August 31, 2010 deadline, the four responding banks delivered their proposals
to City Hall. From September 16, 2010 through September 24, 2010, interviews were held with
representatives from each of the banks giving the City's banking services committee a chance
to ask questions and giving the banks a chance to market their proposals and showcase their
online banking systems. The City's banking services committee is comprised of the Finance
Director, the Deputy Finance Director and the Banking Fiscal Specialist.
The banks were evaluated by the committee on six criteria: 1) Responsiveness to the RFP, 2)
Ability to perform the required services, 3) Fees, 4) References, and 5) Community presence
All respondent banks were considered able to perform the required services, all had reliable
references and, to varying degrees, all were responsive to the RFP and maintained a
community presence. The third evaluation point, Fees, was analyzed in detail and weighted
more heavily in the evaluation process. To accomplish the analysis, service fee information from
each banking proposal bid sheet was compiled into one spreadsheet, an annual estimated cost
for each bank was computed, and the results were compared This Bid Sheet Compilation and
Comparison Analysis is included with this memorandum
In addition to annual service costs, other factors were considered in estimating the total contract
cost for services from each bank. Implementation costs for converting to a new bank were
estimated and added to the cost analysis of each bank except the incumbent bank, US Bank;
earning credits offered in the banking services proposals were reflected as a reduction of costs;
and estimated investment income derived from lower earnings credit balance requirements was
also reflected as a reduction of total contract costs. (Typically deposit balances are maintained
at a level that generates sufficient earnings credit to pay for the annual banking service fees
The optimal deposit level is a function of the earnings credit rate and the fee amount. For
example, to generate enough earnings credit to pay $10,000 of banking fees when the earnings
credit rate is .50 an average collected balance of $2,000,000 must be maintained) This Total
Contract Cost Analysis is included with this memorandum The availability of, and fee structure
for, new services were also considered.
DISCUSSION
The evaluation process identified two banks as the best candidates for selection, US Bank and
Key Bank. Both banks have the ability to provide the banking services required by the City.
Key Bank's fee structure is the most competitive. However, after taking into consideration the
implementation costs required to transition to a new bank and the potential investment income
resulting from US Bank's lower balance requirement higher earnings credit rate, US Bank's
total contract pricing is the most competitive.
RECOMMENDATION
The Council is being asked to approve the selection of US Bank as the City's primary banking
institution for the period of January 1, 2011 through December 31. 2014 with banking fees
estimated at $40,121 for the period subject to variation based on actual activity levels
experienced during this period. The Council is also being asked to consider this item at the
October 25, 2010 Committee of the Whole Meeting and subsequent November 1, 2010 Regular
Meeting
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H: \CR \Banking RFP\FINALIInfoMemo_Banking Services 10 -13 -10 b.docx
INFORMATIONAL MEMO
Page 3
ATTACHMENTS
Bid Sheet Compilation and Comparison Analysis
Total Contract Cost Analysis
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H:ICR1Banking RFPIFINALIInfoMemo_Banking Services 10 -13 -10 b.docx
CITY OF TUKVVILA
BANKING SERVICES PROPOSALS
Total Contract Cost Analysis
WELLS BANK OF
US BANK KEY BANK
FARGO AMERICA
4 YEAR CONTRACT COST ANALYSIS
Total estimated annual cost see Bid Sheet Compilation and
Comparison analysis 12,886 11,322 17,930 16,958
Number of years in contract 4 4 4 4
4 YEAR COST before credits and conversion costs 51,544 45,288 71,722 67,832
Earnings credit offered in proposal (5,000) (a) (5,000) (10,000)
Estimated conversion/transition costs 2,000 (k) 2,000 (k) 2,000 (k)
4 YEAR COST after credit and implementation costs 46,544 42,288 73,722 59,832
Estimated investment income earned from lower deposit balance Not analyzed further due to
requirement due to higher earnings credit rate see analysis below (6,423) higher costs.
4 YEAR CONTRACT COST estimate 40,121 42,288
Recommended
Contract Award
Recipient
ESTIMATED INVESTMENT INCOME ON DEPOSIT REQUIREMENT
DIFFERENTIAL
First Year'
Total estimated annual cost 7,886 6,322
Average deposit balance required, at proposed earnings rates (see
below), to earn credits sufficient to cover costs (cost earnings rate) $1,752,458 (b) $1,806,320 (c)
Deposit requirement differential (c b) 53,862
Estimated investment rate 0.55% (j)
Estimated investment income on deposit differential 296
Second Year
Total estimated annual cost 12,886 11,322
Average deposit balance required, at proposed earnings rates (see
below), to earn credits sufficient to cover costs (cost earnings rate) $2,863,569 (d) $3,234,891 (e)
Deposit requirement differential (e d) 371,323
Estimated investment rate 0.55% (j)
Estimated investment income on deposit differential 2,042
Third Year
Total estimated annual cost 12,886 11,322
Average deposit balance required, at proposed earnings rates (see
below), to earn credits sufficient to cover costs (cost earnings rate) $2,863,569 (f) $3,234,891 (g)
Deposit requirement differential (g f) 371,323
Estimated investment rate 0.55% (j)
Estimated investment income on deposit differential 2,042
Fourth Year:
Total estimated annual cost 12,886 11,322
Average deposit balance required, at proposed earnings rates (see
below), to earn credits sufficient to cover costs (cost earnings rate) $2,863,569 (h) $3,234,891 (i)
Deposit requirement differential (i h) 371,323
Estimated investment rate 0.55% (j)
Estimated investment income on deposit differential 2,042
Estimated investment income on deposit differential for 4 year period 6,423
EARNINGS CREDIT RATE
Rate quoted 0.50% 0 35%
Less 10% reserve requirement -0 05%
Effective earnings credit rate 0 45% 0.35%
(a) Additional $5,000 credit for new services is also offered.
(b) to (i) US Bank and Key Bank balance requirements to fund banking costs.
(j) Conservative estimate based on yield of 2-year agency or 3-year treasury note as of 10-08-10 Analysis assumes federal funds rate remains
below 35% for the four year period.
If nnrIent rnctc and staff time to achieve transition; costs would increase if temporary help were required
CITY OF TUKWILA Bid Sheet Compilation and Comparison Analysis
BANKING SERVICES PROPOSALS
US BANK KEY BANK 'r WELLS FARGO BANK OF AMERICA
Item Est Mo Unit Price Avg. Mo ANNUAL 1 Price t ,Avii. .Mo ANNUAL Unit Price Avg. Mo ANNUAL Unit Price Avg., Mo ANNUAL
Volume ''.r Cost' 'COST i Cogt COST Cost. COST Cost COST:
Ongoing Current Services: 1 1 1 1
Account Maintenance 6 5.00 30.00 360.00 $5.001 30.00 360.00 $5.001 30.00 360.00 7.00 42.00 504.00
Stmnt w /Ck Front Bank 1 5.00 5.00 60.00 1
Images
Paper Credits 154 0.12 18.48 221 76 $0.15 23.10 277.20 $0.50 77.00 924.00 0.20 30.80 369.60
Electronic Credits 130 0.10 13.00 156.00 3;; 0.06 7.80 93.60 $0.03 3.90 46 80 0.20 26.00 312.00 3
Paper Debits 400 0.07 28.00 336.00 $0.06 24.00 288,00 $0.10 40.00 480.00 0.10 40.00 480.00
Electronic Debits 66 0.05 3.30 39.60 $0.06 3.96 47.52 $0.10 6.60 79.20 0.30 19.80 237.60
Deposited Item On -US 293 0.03 8.79 105.48 $0.02 5.86 70.32 $0.04 11 72 140.64 I, 0.07 20.51 246.12
Deposited Item Local 1579 0.03 47.37 568.44 E:! $0.04 63.16 757.92 $0.05 78.95 947 40 0.07 $110.53 1,326.36 r
Deposited Item Regional 167 0.035 5.85 70.14 $0.04 6.68 80.16 1 11.69 140.28 0.07 11.69 140.28
Deposited Item Transit 645 0.04 25.80 309,60 $0.04 25.80 309.60 $0.08 51.60 619.20 r 0.07 45.15 541.80
Deposited Items Returned 5 2.00 10.00 120.00 $2.00 10.00 120.00 $3.00 15.00 180.00 2.00 10.00 120.00
Returned Item Maintenance 1 5.00 5.00 60.00
1st
k ;i
Retumed Item Maintenance 1
2nd
Deposited Items Special 1 5.00 5.00 60.00 $0.00 $10.00 10.00 120 00
Instructions s
Re- deposited Return Item 6 1.00' 6.00 72.00 $1.00 6.00 72.00 f. $3.00 18.00 216.00 1.00 6.00 72.00 i
Online Banking Returned 3 5,00 not used $10.00 one fee, 120.00 $15.00 45.00 540.00
Item Statement, per month unlimited
Return item image viewed 4 i 1.00 4.00 48.00
Snapshot statement copy 2 5.00 N/A 10.00
annual est
Account Inquiry 1 5.00 5.00 60.00 i
Copy of check/deposit ticket 1 1.00 1.00 12.00 1
Photocopy Per Item 1 1.00 1.00 12.00 $2.50 2.50 30.00 l 15.00 180.00 10.00 10.00 120.00
Repo sweep per month 1 $25.00 25.00 300.00 it t
2,681 02 lr 1 $.2,926,32 i 1 4,973.52. 1) 1 4,469.76
Account Reconciliation I
Services:
Positive Pay Maintenance 2 30.00 60.00 720.00 $25.00 50.00 600.00 $20.00 40.00 480.00 50.00 $100.00 1,200.00
Positive Pay per item 400 0.04 16.00 192.00 $0.06 24.00 288.00 $0.10 40.00 480.00 0.035 14.00 168,00
Nextday Positive Pay 1 No 0.00 $0.00 $20.00 20.00 N/A
Charge
Positive pay payee validation 400 $0.03 12.00 144.00
SP issue /cancel input 15 0.25 3.75 45.00
Positive Pay Exception 1 1 1.00 12.00 $0.00 i $1.00 1.00 12.00 1 1.50 1.50 18.00
Items
PosPay Trans Wkly Input 1 No 0.00 1 $25.00 25.00 300.00 $0.00
Charge
6.
ARP Manual Input 59 No 0.00 I $0.00 $0.050 2.95 35.40 1 00 no chg k
Charge online
Recon Printing Mailing fee 2 5.00 10.00 120.00
I
1 Sile Confirmation Per Fax 1 1.00 1.00 12.00 N/A $0.00 I N/A
CITY OF TUKWILA Bid Sheet Compilation and Comparison Analysis
BANKING SERVICES PROPOSALS
US BANK KEY BANK WELLS FARGO 1 BANK OF AMERICA
Item Est Mo Unit Price Avg. Mo ANNUAL 1 Unit Price Avg. Mo ANNUAL Unit Price Avg. Mo ANNUAL Unit Price Avg. Mo. ANNUAL
Volume Cost COST 1 Cogt COST Cost COST Cost .COST
ARP transmission output 1 2 5.01 10.00 120.00 $5.001 unlimited 60.00
1 I 20.00 40.00 480.00
Account recon paid item
ARP Transmission per Item 1 400 0.0011 0.40 4.80 $0.000 1 $0.065 26.00 312.00 0.035 14.00 166.00 1
r
Depository Reconciliation I 1 1 15.00 I no chg if $0.00
Reporting Monthly' using KTT
Depository Reconciliation 400 0,06 'using chg if
Reporting per Item' using KTT
I' i I c- 1, 225.80 I 1 ,248.00 1 1,463.40 I I 2,034.00_
On Line Banking: I I 1 I
On Line Banking Current Day 1 20.00 /A 20.00 240.00 N/A 1 $15.00 $15.00 180.00 15.00 15.00 180.00
Account cct
On Line Banking Current Day 1 No 0.00 i $15.00 15.00 180.00 1 $0.00 N/A
Module Charge
On Line Banking Current Day 13 .035 /ite 0.46 5.46 $0.005 0.07 0.78. $0.060 $0.780 9.36 i 0.05 0.65 7.80
Detail Trx m
On Line Banking Current Day 240 E 0.035 8.40 100.80 .1
Sum
On Line Banking Prior Day 4 $20 1st, 65.00 780.00 1 $5.00 20.00 240.00 $15.00 $60 00 720.00 1 15.00 60.00 720.00
Account $15 next
On Line Banking Prior Day 1011 .035 /ite 35.39 424.62 1 $0.005 5.06 60.66 $0.060 $60.66 727.92 0.04 40.44 485.28
Detail Trx m
O
4
n Line Banking Prior Day 240 0.035 8,40 100.80
Sum
On Line Banking Prior Day 1 No Charge 0.00 $15.00 15.00 180.00 1 $0.00 N/A
Module
On Line Banking Online DDA 4 5.00 20.00 240.00 1 $0.00 $0.00
Statement
On Line Banking token 6 No Charge $0.00
$0.00
1
Customer Initiated Stops 1 5,00 5.00 60.00 $5.00 5.00 60,00 $10.00 $10.00 120.00 i 10.00 10.00 120.00
Wires Monthly Client Maint. 1 10,00 10.00 120.00 $25.00 25.00 300.00 $0.00 g 25.00 25.00 300 00
Issue maintenance 2 10,00 unlimited 120,00
accts
Analysis Charge 1 No Charge $5.00 5.00 60.00 $0.00 I 10.00 10.00 120.00
On Line Account 1 $15.00 15.00 180.00 1
Management Module
EDI Report Monthly 1 $5.00 5.00 60.00
Fee /Unlimited Accounts
2,191.68 I 1,321.44 1 1,757,28 I I 1,933.08
Wire Transfers: I I I I
Wire Monthly Maintenance 1 5.001 5.00 60.00 $25.00 25,00 $0.001
PIN
Incoming Domestic Wire I 5 i 7.001 35.00 420.00 $5.001 25.00 300.00 1 $5.001 25.00 300.00 8.00 I 40.00 480.00
Domestic Repetitive I 4 7.001 28.00 336 00 $7.001 28.00 336.00 I $5.001 20.00 240.00 10.00 I 40.00 480.00
I I 816.00 4 I is 636.00 0 1 540.00 1 1 1 960.00
Zero Balance Accounts I 1 1 l
ZBA lead 1 1 t 10.001 10.00 120.00 $5.001 5.00 60.00 1 info not provided 1 $10.00 I 10,00 120,00
ZBA Subsidiary I 3 %I 51 15.00 180.00 I 5.00 1 15.00 180.00 i info not provided 1
1 $10.00 1 30.00 360.00
I 1$ 300.00 8 1 1$ 240.00 0 I P, I I$ 480.00
Image Services- I I 1 M
Li 1 ro
Monthly Maintenance Per 2 15.00 30.00 360.00 $0.000 p $0.00 $0.00 40.00 80 00 960.00
t. Account I I 1 1 ff I
Image Per Item I 400 0.031 12.00 144 00 80.005 2.00 24.00 $0.0201 8.00 96.00 1 0 05 20.00 240.00 1
Image CD -ROM 1 1 10.00 10.00 120.00 j 151 15.00 180.00 4 $10.001 10.00 120 00 10.00 10.00 120.00
SP Web images 1.00
g 1 1 I 1.00 12.00 f I 0 $0 10 0.10 1 20 0.25 I 0.25 3.00
es retrieved I
Oz
I I 636.00 8 1 1 204.00' 217.20 k; 1 1 1,323.10 5i
CITY OF TUKWILA Bid Sheet Compilation and Comparison Analysis
BANKING SERVICES PROPOSALS
US BANK KEY BANK WELLS FARGO BANK OF AMERICA
Item Est Mo 'Unit Price Avg. Mo, ANNUAL Unit Price Avg. Mo ANNUAL Unit Price Avg. Mo, ANNUAL, 'Unit price Avg. Mo ANNUAL
.Volume Cost. COST': Cegt COST Cost. COST,; Cost ,COST
ACH Service: I 1 1 I
ACH Monthly Maintenance 2 15.00 30.00 360.00 525.00 50.00 600.00 $10.00 20.00 240.00 15.00 30.00 360.00
ACH Process Run 3 5.00 15.00 180.00 55.00 15.00 180.00 i' $1.00 3.00 36.00 5.00 15.00 180.00
ACH Originated Fed Item 969 0.04 38.76 465.12 50.06 58.14 697.68 $0.130 $125.97 1,511.64 0.08 77.52 930.24
ACH Originated on -US Item 104 0.03 3.12 37 44 50.06 6.24 74.88 $0.1550 16.12 193.44 0.08 8.32 99.84
I
ACH Received Item 140 0.05 7.00 84.00 50.06 8.40 100.80 $0.10 14.00 168.00 0.10 14.00 168.00
ACH Block Monthly Maint 4 5.00 20.00 240.00 510.00 40.00 480.00 $5.00 20.00 240.00 15.00 60.00 720.00
Per Account
ACH Filter Monthly Maint 2 5.00 10.00 120.00 $10.00 20.00 240.0D $0.00 15.00 30.00 360.00
ACH Return Per Item 1 3.00 3.00 36.00 F 1 75 1 75 21.00 $3.50 3.50 42.00 2.50 2.50 30.00
ACH Return Notification of 1 2.75 2.75 33.00 0.50 0.50 6.00
Change
ACH Return /Notification of 2 3.00 6.00 72.00 il 1.00 2.00 24.00 ,k $5.00 10.00 12a00 2.50 5.00 60.00 1
Change Faxed 1
CVS, Coln Currency
Cash Deposits 1 5150,000 .06/$1001 90.00 not used 50.15000 $22,500 $0.00160 0.09
Branch Deposited Cash I 5150,000 .06/$100 90.00 not used 50.00190 $0.00160 0.25 537,500
Vault Deposited Cash 5150,000 .0641001 90.00 1,080 00 50,00090 135.00 1,620.00 $0.00160 $240.00 2,880.00 50.00085 $127.50 1,530.00
Cash Vault Deposit per 110 1.001 110.00 5 1,320 00 50.15000 16.50 198.00
receipt
Cash deposit adjustment 0.5 6.001 3.00 36.00 $8.00 4.00 48.00 s"
r•`
Nite Bag Deposit Cash No Charge' 0.00 $0.0009 $0.0060 0.09
Forward
Mailed Receipts 20 1.001 20.00 240.00 $0.00 $0.00 N/A
Court
Standard change order 4 5.01 20.00 240.00 52.50 10.00 120.00 r 2,50 10.00 120.00
Safekeeping (Including 1 I
reoortlnal:
Interest Received 1 No Charge 0,00 1 1
Maturities /Calls 0.5 20.00 10.00 120.00
Investment Settlement (DVP) 0.5 40.00 20.00 240.00 20.00 10.00 120.00 t.
i I
Account Maintenance 0.5 20.00 20.00 240.00 2.00 per invest 144.00 I 1
ment
Price 10 Market Report 0.5
I 1
SKG receipts GovUEquities 0.5 2.00 1.00 12.00
Annual Administrative fee I annual 3,500.00 I
fee
Minimum monthly charge 1 1 100.00 $100.00 1,200.00
'A
I I 1 492.00 i 384.00 I 3,500.00 1,200.00
a
Earnings credit 0.50 %I w/ 10 %I 0.35 %I no 0.43 %1 no 0.50 no
reserve reserve reserve (reserve
TOTAL ANNUAL COST I I 1 12,886' 1 1 11,322 1 17,930 F"; 16,958.
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CITY OF TUKWILA
BANKING SERVICES PROPOSALS
Bid Sheet Compilation and Comparison Analysis Notes
1. Certain monthly volume estimates were adjusted for changes in anticipated activity, especially
those impacted by the number of checks written. The City's Implementation of a purchasing
card program in September 2010 has reduc Monthly check volume by over 50
2. Certain line items representing pass-through costs, such as FDIC fees and supply costs,
were omitted from the analysis because these costs, and the cost variations among the
banks, were not significant in relation to total banking service costs.
3. Credit card fees are riot included 'in the analysis because the City will be transitioning to a
proprietary credit card processing vendor to achieve PCI compliance through a hosted
program and to maintain Integration with existing point of sale software.
4. Certain iihe items were added to ensure the analysis includes all existing services,
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