Finance Committee Agenda and Packet 2010 04 19

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PAGE TWO SUBJECT: UPDATE ON BANKING SERVICES PROCUREMENT PROCESS DATE: APRIL 19, 2010 monitoring, and administration; • The aggregate banking service costs and the corresponding compensating balance; • The earnings credit rate on compensating balances; • The arrangement and rate for investments; • The availability schedule for deposits; • The financial strength and stability of the financial institution; • The clarity, completeness, and timeliness of reports and statements; • The overall completeness and responsiveness to the RFP; and • The availability of other value -added banking services that will enhance efficiency and /or save money for the City. Due to the recent financial issues facing the City, the Committee reduced its focus on additional service and increased emphasis on the proposed Annual Cost of Service and the proposed Earnings Credit Allowance. The schedule below summarizes those two criteria for the six proposals. Summary of Banking Ser.'ice Proposals (Initial Proposals) Annual Cost of Services and Earnings Credit Allowance First Great JP Bank of National Western r.9organ Key Wells the 1 Nest Bank Bank Chase Bank Fargo Earnings CredttAllowance (Exhibit B) Annual Cost of Services (Exhibit A) S 2..49 5 22,272 5 29,447 5 22,000 5 24,717 5 30,667 1.00% 0.75% 0.50% 0.456 0.406 0.55% Balance Required to Support 51 of Services 5 1,177 5 1,569 5 2,354 5 2,616 5 2,943 5 2,029 Required Monthly Compensating Balance 52,393,039 52,912,6,=€ s E.7 .E2C 5 `.013,1? 56,0 €0.551 .= 5 5.1 S6.072 Based upon the Annual Cost of Service and the Earnings Credit Allowance, the Committee decided to interview First National Bank, JP Morgan Chase, and Key Bank. Bank of the West was not recommended for interview due to an incomplete proposal and an apparent error in the calculation of Required Monthly Compensating Balance. The Committee held the interviews on March 4 and March 9, 2010. As a result of the interviews, the Committee determined that JP Morgan Chase and Key Bank omitted some significant service costs within Exhibit A. This omission was due, in large part, to the differences in how banks charge customers and the fact that the City cannot provide transaction volumes for all the different methodologies. The proposal from First National Bank appeared to be the only proposal that included all the costs for the City's basic banking services. JP Morgan Chase and Key Bank requested the opportunity to revise their calculations of Annual Cost of Service. The Evaluation Committee approved the request. On March 15, 2010, the Evaluation Committee recommended to the Finance Committee that staff begin negotiations with First National Bank and, during these negotiations, continue the process of evaluating Annual Cost of Service for all proposers. The Finance Committee approved the recommendation. 7