Cover Sheet For Agenda Item

Transcription

1 Cover Sheet For Agenda Item TO: Matt Jordan, Chief Executive Officer FROM: Cheryl Spivey, Chief Financial Officer SUBJECT: Banking Services DATE: October 10, 2012 Short Title: Background: Banking Services A Request for Proposals (RFP) for Banking Services was sent out on July 10, 2012 to 15 Banks with local branches that expressed interest in the bid. The bid was also posted on CFPUA s website and publically advertised. Our current Banking Services contract with BB&T expires June 30, The Banking Services RFP was broken down into core banking services and lockbox services. Core banking services covers our general checking account, payroll checking account and investment account. CFPUA earns interest on our checking and investment account. Our current agreement waives all fees associated with core banking and approximately 50% of fees associated with Lock Box. This agreement will expire on June 30, 2013 and the fee waiver will not be renewed by BB&T. Lockbox services cover the sorting and processing of payments mailed to the PO Box on the customer s bill and e-checks from customer s banks. Today, approximately thirty-eight thousand customers utilize this service for payment of their bi-monthly bill. This PO Box is directly associated with the bank providing the lockbox services. In FY 12 CFPUA paid approximately $36,200 for lockbox services with BB&T. (The $36,200 does not include the fees that were waived by BB&T.) Bidders were given the option to respond to core banking services and/or lockbox services. If they responded to both, they were then given the option to submit a proposal that combined both services. CFPUA staff analyzed both the single services and combined services bids. The banks were requested to provide fixed fees for services for five years in addition to an earning credit rate (to be applied to offset fees) and interest rates on investment accounts. Core Services Analysis After examining the fees, earnings, and total impact to the Authority over a five year period, staff recommends the award of Core Banking Services to Bank of America. Bank of America offered the greatest earnings and lowest fees of the six banks that submitted a proposal for core services. Staff has met with Bank of America and determined that they meet the requirements of the bid. Please see attached bid tab for details. Bank of America did not submit a lockbox proposal.

2 Lockbox Analysis After reviewing the five lockbox service proposals, it was determined that none of the lockbox processing centers proposed were located in New Hanover County. They were located in Lexington, SC, Atlanta, GA, Durham, NC and Charlotte, NC. Staff requests to defer the lockbox decision until November so that more analysis can be conducted. Staff will analyze whether mailed payments can be brought in house, keeping the job(s) in New Hanover County. The use of optional newer banking technology may make this possible. If after this review, staff determines that lockbox services cannot be brought in house at a cost less than or equal to lockbox fees proposed, a recommendation will be brought to the Board at the November meeting to award the contract to one of the proposers. Budget Impact: Estimated earnings, less fees, of $928,000 over five years for Core Banking Services. Fees and earnings will be budgeted in future years. Specific Action Requested: Authorization for the Chief Executive Officer to enter into a 5-year contract with Bank of America for Core Banking Services with the option to renew for two additional five year terms under the same terms and conditions. Attachments: Bid Tab Requested Agenda Placement: Finance Committee

3 Banking Core Services Bid Tab Bank BB&T** Bank of America PNC Suntrust TD Bank Wells Fargo Service Fees per month $ (6,359.19) $ (953.67) $ (4,545.23) $ (2,776.38) $ (2,262.94) $ (2,007.83) Fees Offset by ECR* per month $ 6, $ $ 4, $ 2, $ 2, $ 2, Total Fees $ - $ - $ - $ - $ - $ - Earnings On Investments (Not needed to offset fees) Per Month $ 4, $ 15, $ 9, $14, thru Dec '14 $ 11, $ 1, $13, after Dec '14 Supplies $ - $ - $ (560.00) $ - $ - $ - Courier Services $ (156.20) Waived $ (656.20) $ (656.20) $ (656.20) $ (656.20) Total Earnings Per Month $ 4, $ 15, $ 8, $13, thru Dec '14 $ 11, $ 1, $12, after Dec '14 Credits - Applied First Year $ - $ 10, $ - $ 5, $ - $ 6, One Time Costs $ - $ - $ (400.00) $ - $ - $ - Year One Earnings $ 57, $ 193, $ 101, $ 172, $ 134, $ 18, Year Two Earnings $ 57, $ 183, $ 102, $ 161, $ 134, $ 12, Year Three Earnings $ 57, $ 183, $ 102, $ 155, $ 134, $ 12, Year Four Earnings $ 57, $ 183, $ 102, $ 155, $ 134, $ 12, Year Five Earnings $ 57, $ 183, $ 102, $ 155, $ 134, $ 12, Total Five Year Earnings $ 285, $ 928, $ 510, $ 799, $ 670, $ 68, * ECR is the Earnings Credit Rate - The interest rate applied to the account balance that is used to offset service fees. CFPUA will maintain the minimum balance needed in the account to offset all service fees. **Did not provide fixed costs for five years

4 Lock Box Services Bid Tab Bank BB&T* PNC Suntrust TD Bank** Wells Fargo Service Fees Per Month $ 6, $ 6, $ 4, $ 6, $ 5, Yearly Cost $ 83, $ 77, $ 56, $ 80, $ 67, One Time Cost $ - $ $ - $ - $ - Five Year Cost $ 417, $ 389, $ 283, $ 404, $ 338, *Did not provide fixed costs for five years ** Did not provide a lock box Rental Charge

5 Banking - Combined Services - Bid Tab Bank BB&T** Suntrust TD Bank*** Wells Fargo Service Fees $ (12,834.50) $ (8,131.12) $ (7,183.56) $ (11,831.91) Fees Offset by ECR* $ 12, $ 8, $ 7, $ 11, Total Fees $ - $ - $ - $ - Earnings On Investments (Not needed to offset fees) Per Month $ 2, $11, Thru Dec '14 $ 11, $ 1, $9, After Dec '14 Supplies $ - $ - $ - $ - Courier Services $ (156.20) $ (656.20) $ (656.20) $ (656.20) Total Earnings Per Month $ 2, $11, Thru Dec '14 $ 11, $ 1, $8, After Dec '14 Credits - Applied First Year $ - $ 16, $ - $ 35, Year One Earnings $ 31, $ 151, $ 133, $ 48, Year Two Earnings $ 31, $ 118, $ 133, $ 12, Year Three Earnings $ 31, $ 102, $ 133, $ 12, Year Four Earnings $ 31, $ 102, $ 133, $ 12, Year Five Earnings $ 31, $ 102, $ 133, $ 12, Total Five Year Earnings $ 155, $ 578, $ 668, $ 98, * ECR is the Earnings Credit Rate - The interest rate applied to the account balance that is used to offset service fees. CFPUA will maintain the minimum balance needed in the account to offset all service fees. **Did not provide fixed costs for five years *** Did not provide a lock box Rental Charge