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HomeMy WebLinkAboutResolution No. 96-08 ORIGINAL CITY OF THE COLONY, TEXAS RESOLUTION NO. t~{0 -D~ A RESOLUTION OF THE CITY OF THE COLONY, TEXAS ACCEPTING THE PROPOSAL AS PRESENTED BY FIRST STATE BANK OF THE COLONY, TEXAS; AUTHORIZING THE FINANCE DIRECTOR OF THE OFFICIAL CONTACT PERSON; PROVIDING AN EFFECTIVE DATE. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF THE COLONY, TEXAS: Section 1. That the Mayor of the City of The Colony, Texas hereby accept the proposal received from First State Bank for the Depository Agreement between the City and the Bank. Section 2. That it is understood that the Bank will comply with all conditions, schedules and materials as set out in the proposal and that a full and complete copy of such proposal is attached hereto and shall be considered the Depository Agreement. Section 3. That the Finance Director shall be the official contact person for the administration of this agreement. Section 4. That this resolution shall take effect immediately from and after its passage. PASSED AND APPROVED by the City Council of the City of The Colony., Texas this 1st day of April 1,1996. william W. Manning, Mayor ATFEST: Patti A. Hicks, TRMC, City Secretary Depos{tory Agreement 1996 CITY OF THE COLONY REQUEST FOR PROPOSAL BANK DEPOSITORY AGREEMENT 1996 TABLE OF CONTENTS Page # INTRODUCTION 1 CALENDAR OF EVENTS 2 CRITERIA FOR EVALUATION 2 I. ACCOUNT ACTIVITIES AND BANK CHARGES A. Number of Accounts 3 B. Services and Fees 4 C. Pledge Requirement 8 D. Bank Statements 8 E. Method of Payment and Reporting 8 F. Availability of Funds 9 G. Money Market Checking & Savings Accounts 9 H. Controlled Disbursement Service 10 I. Automatic Payroll Deposit 14 J. Sweep or Money Market Account 14 K. Other Deposit Services 14 L. Credit Card Services 14 II. COLLATERAL REQUIREMENTS A. Securities Pledged 15 B. Reporting Requirements 15 C. Safekeeping 16 D. Substitutions 16 E. Maximum Amount Offered 16 1I[. SECURITIES CLEARANCE AND SAFEKEEPING A. Number of Accounts 17 B. Services Required 17 C. Written Communication Requirements 17 IV. OVERDRAFTS AND LOAN PROVISIONS A. Overdraft Provisions 17 B. Short-term Loan Provisions 18 V. OTHER STIPULATIONS 18 A. Regulation Notices 18 B. Wire Transfers 18 C. Returned Checks 18 D. Right to Cancel 18 E. Right to Audit Records 18 F. Financial Reports 18 G. Term of the Agreemem 18 H. Venue 19 I. Merger 19 VI. PROPOSAL INSTRUCTIONS/REQUIREMENTS A. Date, Time, Location 19 B. Responding to this Request 19 C. Additional Information 19 D. Right to Reject Proposal 19 E. Chartered U.S. or Texas Bank 19 VII. OTHER MISCELLANEOUS A. Periodic Review 20 B. RFP and Resulting Contract 20 C. Designating Official 20 VIII. SUBMISSION CHECKLIST 21 INTRODUCTION The City of The Colony is seeking applications from eligible f'mancial institutions to be the Banking Services Depository. This includes the basic services of receiving deposits, paying items, wiring funds out, receiving funds wired in, stop payments, and other normal business banking activities. This agreement will not cover any investment transaction activities other than safekeeping services. The City plans to manage its own investment portfolio. The philosophy incorporated into this Request for Proposal (RFP) is to solicit comparable market charges for services provided and to pay for all services provided by the bank. The City also places a great deal of importance on the interest paid on daily deposits above any minimum requirements. The contract period shall be for two (2) years beginning May 1, 1996 and ending April 30, 1998, with one, two-year extension option, or thereafter until the successor Depository shall have been duly selected and qualified according to state laws. At the outset, the City wishes to communicate the primary objectives of the Depository agreement, an important component of the overall treasury program of the City of The Colony: 1. To seek a bank that is both capable of providing banking services and willing to be attentive to the City's money matters; 2. To maximize the total dollars earned by the City on account balances in order to be prudent and effective custodians of the taxpayer's f'mancial resources; 3. To maintain a good working relationship with the Depository Bank, and 4. To adequately compensate the Depository Bank for services provided and to allow a reasonable profit to be earned, subject to competitive forces in the market place. This Request for Proposal, or "RFP", is intended to serve as the bid form for the Depository agreement. There are several blanks to fill in and questions to be answered. The Depository agreement shall be prepared based on the bidder's response to this RFP. All points outlined and materials requested should be incorporated into the bidder's reply to be considered for evaluation. Attachments will be appropriate in order to answer some of the enclosed questions. The City has designated Antonio Johnston, Finance Director, as coordinator for a contact person of the bidding process. The City desires to enter into a contract that will maximize the City's interest, yet will be viewed as a good agreement on behalf of the bank. City staff members will be happy to answer any questions pertaining to the RFP. -1- CALENDAR OF EVENTS Target Date Description of Events March 22, 1996 Receive proposals from interested banks ( 5 pm at City Hall). April 1, 1996 Review Finance Committee recommendations with the City Council. April 1, 1996 Award the contract. May 1, 1996 New Bank Depository contract period begins. CRITERIA FOR EVALUATION City staff shall review the submitted proposals carefully. The recommendations shall be based on the bid determined to be best on behalf of the City and taxpayers. As an indication of what wLll be considered in the evaluation of the proposals, the following areas are listed: 1. Ability to perform the requested services. 2. Agreement to points outlined in this RFP. 3. Cost of banking services. 4. Financial stability of the bank. 5. Rates paid on interest bearing accounts. 6. Safekeeping agreements accepted. 7. Quality of all reports requested. 8. Ability to provide sufficient collateral for the deposits. 9. Quality and quantity of services above the minimums requested. -2- I. ACCOUNT ACTIVITIES AND BANK CHARGES A. The City intends to establish the following bank accounts. Additional accounts may be requested during term of agreement. In order to expedite the process of printing checks and deposit slips, the City requests advance assignment of account numbers and a National MICR Spacing Chart indicating banffs requirements for MICR printing. Please fill in all blanks contained in the following paragraphs: Assigned Account Name Type Account No. Systems Fund Master Money Market Savings Not .assigned Systems Fund Zero Balance Disbursement _ 911002701 Controlled Disbursement Payroll Controlled Disbursement Zero Balance Disbursement Not assigned Payroll Master Money Market Savings No.t ..~as s. igned Utility Deposit Account Money Market Savings Not mssigBed G.O./Revenue Bond Funds Money Market Savings Not assigned. ** Money Market Checking accounts are those accounts which will pay an interest rate on account balances above no rain with a maximum of no max transactions. Money Market Savings accounts are those accounts which will pay an interest rate on account balances above $1.000 _ with a maximum of six transactions., of which three may be third party ~ransactions. ** The Systems Fund Master Account will constitute almost all of the City's banking business. At the beginning of the contract, the City will make daily deposits to this account. Intra bank transfers to reimburse money to other City accounts and most wire transactions will occur in this account. Most securities clearance and safekeeping activity of investments will be debited or credited against this account. Daily deposits average approximately $35,000. Deposits will run higher during tax season in November, December, January, and the first half of February. Average deposit size during this period is $200,000 and can range as high as $1.7 million on the last days of December and January and first few days of February. '** The Systems Fund Controlled Disbursement Account will be set up to clear all operational checks for the City. Automatic transfers from the Systems Fund Master Account to the Controlled Disbursement account will be used to fund checks and bring the balance back to zero. ** The Payroll Master Account will be set up to fund the City's payroll. The City will transfer funds into the account by 12:00 p.m. (noon) on the Wednesday that payroll is released. The average transfer will be approximately $120,000. -3- ** Under the new contract, the City accounts will be converted to interest-bearing NOW accounts, due to transaction limitations on savings and money market accounts. The City may open money market accounts for any accounts requiring less than six transactions per month. ** The Payroll Controlled Disbursement Account will be set up to clear all payroll checks for the City. Automatic transfers from the Payroll Master Account to the Payroll Controlled Disbursement Account will be used to fund checks and bring the account balance back to zero. The bank will be required to notify the City each morning no later than 10:00 a.m. of the total amount of cash for that day. The City's payroll is released bi-weekly on Wednesday at 11:00 a.m. Some of the City's 185 employees will cash their checks the same day. The City expects the bank to arrange for these checks to clear with the presentment the following Thursday. Checks presented for payment before 3:00 p.m. on Wednesday will clear with Wednesday night's posting. The Utility Deposit Account will be set up to meet the special need the City has to hold customer utility deposits separately from the Systems Fund Master Account. Average daily deposits of $500 will be made into the account. Outgoing transfers will be made to cover customer deposit refunds and for investment purposes. The monthly average ledger balance will be approximately $50,000. G.O. Bond Accounts or Revenue Bond Accounts might be set up to hold the City's debt proceeds. This money might have to be monitored closely to insure the City is in compliance with arbitrage regulations that apply to the investments and expenditures of these funds. B. The volume estimates listed in this section are based on the activity of the Systems Fund & Payroll Controlled Disbursement accounts. The City may elect to pay for services either by direct fee payment or by a compensating balance method. Please specify the bank's calculation for each method. Include the money market basis for the interest rate used as an earnings credit. The City's account will earn credit on the average collected balance less reserve requirement of 10%. The earnings rate credit is based on the average 91-day treasury bill rate each month. This calculated credit will be applied against account charges listed on the following pages. -4- The services requested to be made available to the City include but are not limited to the following: Fee charged Per Unit Estimated Volume Description of Service 1. $10. O0 3 accounts Monthly Money Market Savings Account Maintenance 10.00 1 account Checking Maintenance 10, O0 2 accounts Zero Balance Master Account 10.00 2 accounts Zero Balance Subsidiary Account 2. Iq/C 6/month a) First original bank statement per account ~q/c 1/year b) Extra bank statements 3. lq / c 20/year a) Balance/debit/credit/float/ inquiries by phone 250.00/month 1/day b) Balance reporting (daily report 1 account listing and previous and current Report±rig software accessed day balances, debits, credits, by modem averages, and check presentments) 4. .10 200/month Deposit tickets 5. .10 60/month Credit posting - interest, sales tax, property tax, beverage tax, transfers 6. .02 10,000/month Items deposited (encoding) 7. .08 750/month Checks paid .08 deb±ts 8. 1.~0 chargebacks 70/month Debit posting-transfers/charge backs 9. .02 1/month Teller deposit corrections 10. Total 245/month Wire services 5. oo 170/year a) Incoming transfers, sales tax, property tax, mixed beverage tax 10.00 75/year b) Outgoing (excludes activities in safekeeping account) Fee Charged/Per Unit Estimated Volume Description of Service 11. 15.00 30/year Stop payment request 12. N/c 100 of each coin Coin wrappers furnished type/year vendor cost 13. approx $100 per 500 10,000/year Checks printed vendor cost 14. ~ppra~ $70 per 200 2,500/year Deposit slips printed 15. N/c 8 bags Locking vault bags 16. lq/c 50 bags Zippered money bags 17. lq/c 1 box Safe deposit box (10 x 10) 18. ~/c 5/year Money orders, cashier checks, traveler's checks 19. i~/c 1 hr/month Research hours 20. N/C $1.0 million Cost of collateral pledged by the maximum for bank (quote cost per $500,000 3 accounts pledged) 21. not ava±lable 2 accounts Controlled disbursement monthly service charge 22. ~q/c 750 checks/month Partial bank account reconciliation 23. ~q/c 2 accounts Partial bank account reconciliation maintenance 24. N/c 2 accounts Check reconciliation tape (see specifications in later section) 25. ~/c 2 accounts Zero balance automatic transfers 26. 1.50 20/month Return items -6- 27. lq/c 40/month Return items recleared 28. Iq/c 6 accounts FDIC insurance cost Fee Charged/Per Unit Estimated Volume Description of Service 29. 1 account Securities clearing and safekeeping Iq/c a) Maintenance charge (Per account) 25.00 5/month b) Short-term investment or long-term receipt fees · 003 c) SK valuation per $1,000 · 60 $10 million (max) d) Safekeeping of assets, per receipt 25. o0 3/month e) Book-entry security transfers via Federal Reserve, per transaction 25.00 (not anticipated) f) Physical New York window deliveries (Custodian bank) (only if necessary) 25.00 4/year g) Registration of physical securities in City's name 25. o0 5/month h) Registration of physical securities in Bank nominee name Iq/c 1/year i) Audit confn-mations j) Other ( list each specific charge) 30. $/40 minimum Bi-weekly (1) Fees for direct deposit services for employees (185 employees, total payroll: $120,000) 25.00 tape 10.00 modem a) Tape charge Iq/C b) ACH settlement Iq/c c) Stop payment orders · 10 d) Credit/debit posting (1) Direct deposit payroll services w±ll be offered at no charge for the first 12 months of the contract; thereafter, the above charges apply. -7- e) Other (list each specific charge) 31. 25. o0 Overdraft charges Fee Charged/Per Unit Estimated Volume Description of Service 32. iq / c 18 Endorsement stamps a) 15 Systems Fund Master b) 3 Utility Deposit Account Note: Under a straight fee arrangement with the bank, analysis charges would be debited to each individual checking account (Controlled Disbursement charges will be debited from the Consolidated account) and an analysis fee statement will be mailed to the City each month. Under a compensating balance method, all accounts would be tied to a main account and collected balances would be maintained to offset service charges. C. The average combined ledger balances of the six (6) bank accounts are currently estimated to be $350,000 and the maximum ledger balances are estimated to not exceed $1,000,000. Amounts above these levels will be actively invested under the direction of the City. D. For reconciliation of the City bank accounts the following will be required: Bank statements on all accounts shall be rendered within five (5) working days after the close of the calendar month. Statements shall include deposits made on the last day of the period. The accompanying checks shall be arranged in numerical order for the Systems & Payroll Controlled Disbursement accounts. All other account statements should include checks and debit/credit advices, but the City will be responsible for placing those items in proper numerical order. Along with the bank statements on the Systems & Payroll Controlled Disbursement accounts, the City requires a report reflecting all items paid in check number sequence, which is balanced to the bank statement (partial account reconciliation). E. The City intends to pay for all account services provided by the bank as set forth in section I-B. The City shall require account analysis each month which shall clearly show volume counts, fees charged, and total prices for servicing the account. The account analysis shall be also show average ledger balances, average uncollected funds, average collected balances, interest rates and the amount of interest paid or credited to the account. Fees charged to the City directly from the bank are not subject to change for the length of this contract. Please attach a Sample Account Analysis Statement. -8- Safekeeping fees for the City's investments shall also be set up on account analysis and paid monthly. The City requires that all charges for securities clearance and safekeeping, including fees passed on from the Federal Reserve Bank, be on account analysis and not be deducted from each security settlement. F. The City expects to receive the best availability of funds available to an institutional client of the bank. Attach the bank's availability schedule and an explanation of funds credit. The City recognizes that only collected funds may be used as available balances for placing investment orders. List any ways the City could periodically achieve better availability of funds such as through a large dollar deposit window. List all time deadlines clearly. See attached G. Please provide a detailed explanation of the bank's policy and methodology used in the setting of rates paid on Money Market checking and savings accounts. Specify whether there is a separate rate quoted on public funds vs. the rate quoted for corporations and individuals, and if so, why? Also, provide a schedule of all rates paid on Money Market checking and savings accounts since January 1, 1991. Specifically indicate if the rates are applied to the ledger balances or collected balances and whether it is computed daily or monthly. Indicate when the rates change and if they are based on a market rate such as the fed funds rate or the T-Bill discount rate or bond equivalent yield. List minimum ledger and collected balances required to earn interest. List the maximum transaction that may occur in the checking and savings accounts. Does the bank offer a freed rate of interest if the City agrees to maintain a specified collected balance? How does the bank calculate earning credit rates? What have ECR's been for the past year? Describe what balance the earnings credit applies to. See attached FIRST STATE BANK OF TEXAS ATTACHMENT TO BID FOR CITY OF THE COLONY DEPOSITORY ACCOUNTS I. ACCOUNT ACTIVITIES AND BANK CHARGES F. First State Bank gives same day ledger credit for all funds deposited by 3:00 p.m. Checks are paid from ledger balances. Interest on NOW accounts is computed on collected balances. First State Bank offers excellent availability, which is determined by the routing number on the checks being deposited. Checks receive immediate, next day, two day, three day and four day float, with the majority of items falling within the immediate and next day category. Following is and example of expected availability: All local items - immediate credit and immediate availability Eleventh fed district - immediate credit and one day float Out of district items - immediate credit and 1 to 2 day float G. NOW account rates are formulated partially on the level of short-term interest rates in general (i.e., US Treasury Bills) and on rates paid by competitors for similar products. Rates are reviewed daily and changed as appropriate. Interest is paid monthly on outstanding collected balances. There is not a separate rate quoted on public funds. Following is a schedule of rates paid on NOW accounts: 01/01/90 - 01/18/91 5.25 01/19/91 - 05/12/91 5.00 05/13/91 - 12/01/91 4.50 12/02/91 - 12/31/91 4.25 01/01/92- 03/31/92 3.75 04/01/92 - 07/31/92 3.50 08/01/92 - 09/30/92 2.75 10/01/92 - 09/30/93 2.50 10/01/93 - 12/31/94 2.25 01/01/95- 01/31/96 1.75 02/01/96 to current 1.50 There is no minimum balance required to earn interest on a NOW account, and there is no maximum number of transactions. There is a maximum of six transactions per month in a money market account. The Bank does not offer a fixed rate of interest if the City agrees to maintain a specified collected balance in a transaction account. Earnings credit rates are calculated from the average 91-day treasury bill rate. Following is a schedule of the ECR's for the past year: Mar-95 5.7325 Apr-95 5.6675 May-95 5.7000 Jun-95 5.4900 Jul-95 5.4900 Aug-95 5.4200 Sep-95 5.2600 Oct-95 5.2975 FIRST STATE BANK OF TEXAS ATTACHMENT TO BID FOR CITY OF THE COLONY DEPOSITORY ACCOUNTS Nov-95 5.3547 Dec-95 5.1855 Jan-96 5.0155 Feb-96 4.8520 The earnings credit rate is applied to the average collected balance less the 10% reserve requirement. FIRST STATE BANK OF TEXAS ATTACHMENT TO BID FOR CITY OF THE COLONY DEPOSITORY ACCOUNTS LIST OF REFERENCES: Mr. Harlan Jefferson City of Denton 215 E. McKinney Denton, TX 76201 817-565-8575 Mr. Larry Keiser Denton Independent School District P. O. Box 2387 Denton, TX 76201 817-382-0659 Ms. Linda Truitt Town of Flower Mound 2121 Cross Timbers Road Flower Mound, TX 75028 214-539-6006 H. Please address the following questions regarding the Controlled Disbursement service: 1. How many locations do you use for Controlled Disbursing? Provide the name and location of the disbursement bank that would be handling the City's checks. How many check presentments will this bank have from the Federal Reserve Bank? From Clearing House Banks? What times are these presentments made? What percent of the dollars are received at each presentment? What is the average daily dollars and items at each Controlled Disbursement site? How has statewide branching affected this service? Controlled disbursement services are not available at this time 2. What measures are you willing to take to minimize or eliminate any potential exposure arising as a result of using an affiliate or correspondent? N/A 3. In accepting over-the-counter bi-weekly City payroll check presentments after the notification cut-off hour, how will this charge show up in the next business day's check presentment total? Iq/A -10- 4. Please specify days on which the disbursement bank would be closed or would not receive cash letters. 5. Please provide an estimate of the disbursement bank's clearing times from the most current survey available. 6. What options for notification and funding exist? N/A 7. What factors might have a sigrdficant impact on the Controlled Disbursement service over the next two or three years? N/A -11- 8. Are damaged and/or reject items reentered into the system the same day and once reprocessed, are these items included in the notification cut-off time? N/A 9. What back-up arrangements for check processing exists in case of any system failure? N/^ 10. How many times has the bank missed notification deadlines and by how much in a recent 90 day period? N/^ 11. The City of The Colony requires that all checks presented, that have not had stop payments placed on them, must be funded automatically. If the master account has not been funded properly by the City, what procedure does the bank follow to assure payment on these checks? All City checks will be paid when presented. -12- 12. Please describe the Partial Reconcilement Service offered by the bank and attach a sample reconcilement statement. The Bank's statement provides a list of all items paid in check number sequence. 13. Does the bank have an established maximum dollar value limit that may not be exceeded by individual check? Are there any other restrictions regarding individual check amounts? No limits or restrictions. 14. How long are stop payment orders effective? Will the bank accept stop payments by telephone if followed up ~ writing? Stop payment orders are effective for six months. The Bank will accept stop payments by telephone ±f followed up in writing. 15. Attach any specific Controlled Disbursement agreement in keeping with the nature of this request for proposal that the City would be asked to sign. Not applicable -13- I. Automatic Payroll Deposit is a service the City would like to offer its 185 employees. The bank would be required to produce bi-weekly payroll transfers from a modem or magnetic media furnished by the City in ACH format for transfer of funds directly to the employee bank, savings and loan, or credit union account. Please state the bank's procedure for this service and list appropriate cut-off times that would apply. The City's net payroll is approximately $120,000 each pay period. State whether the bank would offer any type of special checking, money market, or loan account for City employees. See attached documentation on ACH services. J. Does the bank offer any type of sweep account where excess city funds could be invested at a higher rate overnight than in a money market account arrangement? Does the bank have money market fimds consisting of treasuries, agencies, prime commercial paper, prime domestic bankers acceptances and collateralized or insured certificates of deposit, that the City could utilize daily as an investment altemative? If so, please explain the fund's parameters and interest earnings history or attach a separate prospectus. NOW accounts and money market accounts are available for overnight investments. K. The City intends to deposit all other revenues directly to the depository bank. The City will deposit checks in batches with a tape mn for each batch. If item processing discovers an error in the deposit, then the City requires a credit or debit advise to be mailed to the City immediately after the account has been adjusted with appropriate documentation attached to justify the correction. Appropriate documentation is considered to be a copy of the City's tape with the item in question marked, a copy of the check in question, and a copy of the corresponding deposit slip(s). L. The City currently does not offer a credit card payment option for citizens to pay court frees, utilities, fees, or taxes. Several options have been analyzed in order to offer th_is service. One option was to pass on the merchant fee to the credit card customer. However, Mastercard and Visa by-laws currently do not allow any merchant, including governments, to pass on the -14- FIRST STATE BANK OF TEXAS Payroll Employee Benefits One Year Free "Performance Guarantee" Checking (New and Existing First State Bank Customers) · Unlimited ATM Usage at any First State Bank Location (13 ATM Mach/nes to Serve Your Employees) · No Annual Fee on Visa or MasterCard * · 50 Free Personalized Checks · 24 Hour Reply on Consumer Loan Applications · 1/2% Discount on Consumer Loans when Payment is Debited from a First State Bank Checking Account * Marketing · Printed Paycheck Stuffers will be Provided by First State Bank · First State Bank Employees will Assist and/or Introduce ACH Program On-Site for Campaign Kick-Off · Account Brochures and ACH Sign-Up Cards will be Provided by First State Bank for all New Hires Start-Up Cost · ACH Origination Fees are. 10 Per Account Credited with a Minimum of $40.00 Per Transmission · Subject to Credit Approval P.O. Box 100 · Denton, TX 76202 · 817-382-5421 FIRST STATE BANK OF TEXAS DIRECT DEPOSIT SERVICES SERVICES The direct deposit of payroll means the automatic deposit of all or part of the employee's net pay into his checking and/or savings account each payday. For that pay period, instead of printing checks, the employer produces a computer file containing a record for each participating employee, this information is then introduced into the ACH, Automated Clearing House, systerr~ and individual payroll entries are routed to the appropriate receiving financial institutions for posting to employees' accounts. ._. On payday, the employee continues to receive a pay x~oucher showing gross pay, payroll deductions, net pay and other information. The deposit is reflected on the employee's monthly account statement. The advantages of direct deposit of payroll may be directly applied to other transactions including dividends, interest, pensions and other regular payments. BENEFITS The company eliminates lost time employees take on payday to conduct banking business. Administration of payables is reduced as To The the expenses of check distribution decreases. Expenses for payroll Company check reconciliation are reduced. The company also reduces losses due to stolen, forged or lost paychecks. The employer needs only to deal with a single financial institution to receive their pay. To The Employees may designate any participating financial to receive their Employee pay. First State Bank of Texas offers special employee incentives on checking and saving accounts for employees who participate in direct deposit. The employee saves the time and effort involved in depositing checks. Employee Funds are consistently deposited in spite of business or vacation absence or illness. Also, paychecks can't be lost, stolen or forged. P.O. Box 100 · Denton, TX 76202 · 817-382-5421 FIRST STATE BANK OF TEXAS ACH REQUIREMENTS As a participant in the electronic payment delivery system, the company enters into an agreement with the originating financial institution, First State Bank of Texas. This agreement will define the responsibilities of both parties and the manner and cost in which payments will be processed and settled. The company then obtains written authorization from its employees granting permission for the deposits or charges to be made to their accounts. The name and routing number of the designated financial institution, along with the account number, are generally obtained from a deposit slip or voided check. This data must then be added to the company's payroll records. Zero dollar test entries (prenotification entries) are prepared prior to initiating actual dollar entries for each new participating employee. This quality check catches account number transcription errors and assures system reliability. On appropriate days, the company prepares a computer file for delivery to First State Bank of Texas. The file must be delivered to the bank by 12:00 p.m. two days prior to the designated payday. Example: If your payday is on Friday, the file must be delivered to the bank by 12:00 p.m. on Wednesday. The exact format of the information will be decided between the bank and the company. Most payroll software programs have a standard ACH format. This format is usually straight forward and relatively easy to use. P.O. Box 100 · Denton, TX 76202 · 817-382-5421 merchant surcharge to the customer even though Texas law does allow for governments to do so. Therefore, the cost is a key issue since governments cannot raise legal fees to absorb the cost as retailers do. Please list all charges and state what arrangement the bank could make with the City to help cut costs on this service. Attach any relevant information about equipment, availability of funds and any supplies needed. State what the bank would be willing to do with Mastercard and Visa to allow a surcharge or alternate solution for governments. Attach any credit card agreement in keeping with the intent of the depository contract that the City would be asked to sign. The Bank offers compet±t±ve surcharge rates and leases equ±pment for process±rig. The Bank cannot offer an alternate solut±on for the C±ty. II. COLLATERAL REQUIREMENTS A. Securities Pledged. As security for the deposits of the City of The Colony, the bank shall pledge to the City securities equal to the largest total ledger balances the City of The Colony maintains in the bank, less the amount of coverage provided by the Federal Deposit Insurance Corporation (F.D.LC.). The average level of collateral required is $350,000. During prime tax collection periods for the City, which occurs the latter part of December, January, and early February, the ledger balance may reach a maximum of $1,000,000. The securities comprising the pledge shall be valued at par or market, whichever is lower. The securities so pledged, the amounts thereon and the time for pledging same shall satisfy the requirements of Article 2560 Tex. Rev. Civ. Stat. Ann. and any subsequent statutes passed under Texas law. Repurchase Agreements are not acceptable as collateral to the City of The Colony. B. Reporting Requirements. The bank shall provide the City a report of securities pledged at the end of each month or at any time requested by the Finance Director or a designated representative. This report should reflect the following information at the end of each month: Total pledged securities itemized by: 1. Name. 2. Type/description/cusip number. 3. Par value. 4. Market value at month end. -15- 5. Maturity date. 6. Moody's or Standard and Poor's rating. If the market value of the pledged securities falls below the ledger balances of the City's accounts at any time, the City will require more securities to be pledged. C. Safekeeping. The securities pledged shall be held in safekeeping under the name of the Depository Bank and pledged to the City of The Colony. Safekeeping must be done at the Federal Reserve Bank with a three-party agreement signed. Safekeeping will be provided by NationsBank or Texas Commerce Bank. The original copy of all security receipts shall be filed with the Finance Director of the City of The Colony. The City shall reimburse the Depository Bank for all charges associated with pledged collateral at the fee rate bid in Section I-B of this RFP or with compensating balances left in the accounts. One of these methods will be chosen at the beginning of the contract. Please submit a copy of the safekeeping agreement with the Federal Reserve Bank to be used in the event you are awarded the Depository Bank contract. The safekeeping agreement shall clearly state that the Federal Reserve Bank is instructed to release the collateral to the City of The Colony if the City has determined that the bank has failed to pay on any accounts, has been closed by a regulatory authority, or is in default of this agreement, and if the instructions for release have been formally requested by the City Council by ordinance or resolution. The safekeeping agreement shall have signatories from the Federal Reserve Bank, as Trustee, the Depository Bank and the City of The Colony. D. Substitutions. Any substitutions of the securities or reductions in the total amount pledged shall be made only by and with the proper written authorization approved by the authorized signatories of the safekeeping account. These signatories will be the City Manager, Finance Director, or the City Secretary. All securities to be pledged are subject to approval by the City of The Colony. Any state or local government bonds pledged shall have a rating of "A" or better by a major bond rating agency. E. Maximum Amount Offered. Please state the maximum amount of pledged securities which the bank is willing or able to commit for collateralized money market accounts throughout the contract period. $ 5,000,000 -16- HI. SECURITIES CLEARANCE AND SAFEKEEPING OF CITY INVESTMENTS A. The City will require several safekeeping accounts or one safekeeping account that will allow for debits and credits to be made to different demand deposit accounts. These demand deposit accounts are tied to separate investment portfolios managed actively by the City. B. The City is currently approved to invest in all securities allowed under the current Public Funds Investment Act, Article 342 (a-2) of the Texas Revised Civil Statutes. This approved list includes primarily government securities which settle Fed Book Entry. All physical delivery securities, if any, would need to be delivered to a correspondent bank in New York. Fed Book entry securities should be sent directly to the City's local Depository Bank or to a correspondent bank. In all cases, carrying out all normal securities clearance and safekeeping functions or for administering another bank to carry out these functions. C. The City will send written instructions to the securities clearance department for each transaction. Most of these instructions will be sent by facsimile to assure the timeliness of the operation. The City expects written communication from the bank for call and put option notices that are received by the bank when City securities are registered in a bank nominee name or held by the Depository Trust Company. The City expects the bank to give prompt notification of any settlement problems, including securities delivered where the instructions do not match or where instructions have not been given to the bank. The City only enters into delivery vs. payment transactions. IV. OVERDRAFTS AND LOAN PROVISIONS A. Overdrafts defined - The City does not intend to have an overdraft position on any of its bank accounts singly or net throughout the course of the Depository contract. In the event that a check or checks are presented for payment on any City account where there are insufficient funds available for payment, the City will require the Depository Bank to pay said checks and promptly notify the Finance Director or designated representative of the existence of the overdraft within one business day. Define whether the bank would consider an overdraft to be a negative balance in any individual City account or as a negative balance in the six City accounts collectively. Should an overdraft occur, what stipulations would apply? An overdraft cond±l:±on will exist on any indJ_v-idual account wh±ch has a negative baJ_ance. Generally, City checks w±lJ. be paid, and the City will be contacted regar_d_~_ng the nee_d..d f~r_._a l:ransfer o,r deposit of funds. -17- B. Short-Term Loans - Specify the terms and conditions by which the bank would loan funds to the City on a short-term basis. 1. The maximum number of days for the loan is 2. The maximum amount of the loan is $ 3. The interest rate shall be * per annum computed on an actual day basis. · Subject to Sen±or Loan Committee approval. V. OTHER STIPULATIONS A. The successful bidder shall notify the City in writing within ten (10) days of any changes in Federal or State regulations or laws that would thereafter affect the Depository agreement. The bank shall also notify the City of any services that become available to the City throughout the contract per/od. B. Notification to the City of incoming wire transfers or problems with outgoing wire transfers shall be made within one hour of the transaction. The City requires two authorized City employees' signatures to be on repetitive wire set-up paperwork. All author/zed employees should be issued a personal identification number to initiate wires. If the wire is non-repetitive, the City requires the bank funds transfer personnel to call the City back and specifically request to speak to an author/zed employee other than the person initiating the wire to achieve verification that the wire is author/zed prior to releasing it. C. All checks deposited by the City that do not clear the fkst time, should be submitted a second time before returning them to the City. Checks to be returned to the City that are in an amount of $2,500 or more should not be debited to the account without prior notification from the bank. D. In the event it would be ruled illegal under the provisions of any Federal Statute or regulation for the bank to pay interest in the manner outlined in this RFP, then the City expressly reserves the right and privilege to cancel the contract and to re-bid the Depository services. E. The bank's records relating to the City of The Colony's accounts shall be open to review by either City staff members or City appointed independent auditors during normal business hours. F. The proposing bank shall submit a copy of the last annual financial statements along with the last two quarterly FDIC call reports. G. The term of the contract period shall be for two years with one, two-year extension option, beginning May 1, 1998 and ending April 30, 2000 or thereafter until a successor Depository has been selected. This contract shall be automatically extended up to 90 days if the -18- City is actively proceeding with re-bidding procedures but, for whatever reason, cannot finalize the bidding or selection process by the end of the contract period. H. This contract is governed by the laws of the State of Texas. Venue shall be exclusively in Denton County. I. Not withstanding any other provision of this agreement which may be to the contrary, this agreement and the respective rights and obligations of the parties hereunder shall remain in full force and effect and not otherwise be affected by a merger of the bank. VI. PROPOSAL INSTRUCTIONSfREQUIREMENTS A. Sealed bids or proposals clearly marked "Depository Applications" shall be delivered to the office of the following person by 5:00 p.m., MARCH 22, 1996. MR. ANTONIO JOHNSTON, FINANCE DIRECTOR DEPARTMENT OF FINANCE CITY OF THE COLONY 5151 N. COLONY BLVD. THE COLONY, TEXAS 75056 NO PROPOSAL SHALL BE RECEIVED AFTER 5:00 P.M. AND SHALL BE RETURNED UNOPENED. B. The proposing bank shall use this RFP form as the OFFICIAL BID FORM to submit rates and to answer questions. Any alterations, changes or deletions to the RFP shall be ~ounds for the City to disregard and reject the RFP and the bid. C. The City reserves the right to request additional information or to meet with representatives from proposing organizations to discuss points in the proposal before and after submission, any and all of which may be used in forming a recommendation. D. The City reserves the right to reject any and all proposals. E. The Bidder states that it is a banking institution chartered under laws of the United States or of the State of Texas. -19- VH. OTHER MISCELLANEOUS A. The City of The Colony shall require a review meeting at least once every six months to evaluate the working relationship between the City and the Depository Bank. The objective shall be to address any problems and to discuss the procedures involved in protecting the City's funds and pledged collateral. B. The f'mal appointment of a Depository Bank shall be made by the The Colony City Council. The bidder may be required to enter into a contract which incorporates all of the obligatory points in the RFP. Otherwise, a resolution shall be adopted accepting the bank's completed RFP as the OFFICIAL BID FORM with accompanying related schedules and materials called for in this RFP. C. Upon being awarded the contract, the Depository Bank shall designate an individual to be the official contact person for all correspondence. The City of The Colony's official contact person will be Mr. Antonio Johnston, Finance Director. If you have any questions regarding this RFP, please address them to Mr. Johnston. The bank shall be responsible for training and communicating the terms of this contract to bank employees. This proposal is submitted by the following person duly authorized to act on behalf of the bank: Deborah Wilkinson~ Senior Vice President Officer's Name and Title (Please Print) Officer's Signature First State Bank of Texas Name of Bank March 21, 1996 Date 101 S. Locust, Denton, TX 76201 (817) 381-7365 Address and Telephone Number -20- VIII. SUBMISSION CHECKLIST A. "RFP" with fill-in-the-blank format. B. Sample bank statement. C. Sample partial account reconciliation statement. (included in bank statement) D. Availability of funds schedule with a clear explanation of deadlines. (see I. F. ) E. Money Market Fund prospectus if applicable, not applicable F. Sample monthly collateral report. G. Sample safekeeping agreement with the Federal Reserve Bank for collateral. Securities will be held at NationsBank or Texas Commerce Bank H. Sample safekeeping agreement with the Depository Bank for the City's investmem securities. I. Sample controlled disbursement agreement, not applicable J. Sample funds transfer agreement. K. Sample stop payment agreement. L. Sample account analysis statement under a straight fee arrangement and under a compensating balance method. M. Annual financial statement of the bank along with the last two quarterly FDIC call reports. N. Sample credit card services agreement. -21-