Lamar Institute of Technology

TEXAS STATE UNIVERSITY SYSTEM

REQUEST FOR PROPOSAL

BANK DEPOSITORY SERVICES

June 22, 2011

TABLE OF CONTENTS

  1. Introduction
  1. Statement of General Banking Services Required
  1. Proposal Submission Instructions and Qualifications
  1. Institute Financial Overview
  1. Required Financial Institution Information
  1. Required Services
  1. Optional Services

Attachment A: Schedule of Proposed Fees

Attachment B: Historical Rates Schedule

Lamar Institute of Technology

Beaumont, Texas

Request for Proposal

For Banking Services

I.INTRODUCTION

Lamar Institute of Technologyis requesting competitive proposals for a six year banking services contract to be awardedAugust, 2011, with service to beginSeptember 1, 2011 and extend throughAugust 31, 2017with one possible two year extension. All contracts will be subject to approval of the Board of Regents. Through this contract the Institute intends to minimize banking costs, improve operational efficiency, and maximize investment capabilities.

This Request for Proposal (“RFP”) details the Institute's banking services required and specifies all required qualifications for banking institutions, delineates all banking services required, details the historical activity volumes on services, sets the method and terms of compensation, establishes required contract provisions, and provides submission instructions.

The banking institution chosen shall agree to make all the Required Services available to the Institute at the proposed pricing levels (Attachment A) during the entire contract period and agrees that all applicable service fees will be included on the proposed fee schedule. Initiation of any new service during the contract period but not encompassed by the RFP shall be priced at no more than the then current published rates.

Banks are encouraged to address any service not anticipated by or outlined in this RFP that will improve efficiencies. The Institute is interested in utilizing the best technology to improve efficiencies.

All qualified financial institutions are invited to submit a proposal. Every effort has been made to notify banks within the Institute’sservice area. Banks responding to this Request for Proposal must be good standing with the Texas State Comptroller in accordance with Section 2252.903 of the Texas Government Code, must be insured through the Federal Deposit Insurance Corporation (FDIC), and must be able to demonstrate a capacity to meet the Institute’s requirements as stated in this RFP.

II. GENERAL STATEMENT OF BANKING SERVICES REQUIRED

The banking services described in this RFP are directed toward four major goals:

- efficient utilization of available banking services and technologies,

- minimization of banking costs,

- safety of Institute funds, and

- effective, market rate, investment of idle bank-held funds.

As a public entity the safety of the funds and assets of the Instituteis paramount. The use of technology to minimize manual or time-consuming operations will be a continuing effort and the bank will be expected to bring applicable new technologies to the Institute's attention through the RFP and throughout the contract period. Dependent upon the rate environment, the Institute intends toobtain the best short term investment rates either through bank alternatives or short term money markets through sweeps for the best reasonable yield.

The Institute requires a depository that is fiscally strong and able to provide the required services on an uninterrupted basis. Institute funds are public funds and fall under provisions of the Public Funds Investment Act and the Public Funds Collateral Act (Texas Government Code Chapters 2256 and 2257). All time and demand funds above FDIC insurance coverage must be collateralized at a 102% margin by securities authorized by the Institute and defined in this RFP.

III.PROPOSAL SUBMISSION INSTRUCTIONS AND QUALIFICATIONS

By submitting a proposal in response to this RFP, depositories will be deemed to agree to the mandatory contract and service provisions contained herein. This RFP and the proposal submitted will be incorporated into and form the basis of the final depository contract.

  1. Local Presence

To assure a close working relationship and to facilitate services, theInstitutewill give preference to those banks with full service capabilities within a close geographic proximity to the Institute. Banking institutions need to have a physical presence within 10 miles of the geographic boundaries of the Institute. Local support for the Institute and its programs will also be considered.

  1. Proposal Format

In order to fully and equitably evaluate each bank proposal a standard reply format is required. Each proposal must include a response to each numbered item in the RFP in the order given along with completion of Attachments A and B. Only proposals submitted timely and in the prescribed format and using the Attachments provided will be evaluated for contract award. An electronic copy of this proposal is available on the web at

  1. Schedule for Proposal Submission

The Institute will make every effort to adhere to the following schedule.

06/22/11Release of Request for Proposal

07/01/113:00pm CST Deadline for all questions pertaining to Request for Proposal

07/06/113:00pm CST Responses to all submitted questions provided

07/20/113:00pm CST Deadline for proposal submission

08/19/11Award of contract

09/01/11Contract commencement

  1. Proposal Submission

To be eligible for consideration under this RFP, three(3)complete paper copies and one electronic copy of each proposal shall be submitted by 3:00 pm CST onJuly 20, 2011 to the addressbelow. Proposals received after that time at the address designated will not be accepted. Proposals, whether accepted or not will not be returned.

Transmittal Letter

The paper proposal must be submitted in a sealed envelope or packet marked “Proposal for Depository Services”. An accompanying transmittal lettermust be submitted with the proposal signed by an individual authorized to bind the bank. The lettermust state that the proposal is valid for at least 180 days from the submission date, must state full agreement with the conditions and requirements of the RFP, and give full contact information for questions concerning the proposal.

The proposals must be delivered by mail, express mail, or in person to:

855 East Lavaca

P. O. Box 10043

Beaumont, TX 77710

Attn: Jonathan Wolfe

Telephone409-880-7633

Fax 409-880-2310

Email

Proposals should provide a clear and straightforward description of services and the bank’s ability to meet the requirements of the RFP. There is no limit on the size of the proposal but a complete, succinct, and unambiguous presentation of the services offered and the fees required will be required.

Amendments to or additional information supporting the proposal will not be accepted after the submission deadline unless requested by the Institute. The selection may be made on the basis of the proposals as initially submitted, without discussion, clarification or modification. The Institute reserves the right to request further information or presentations or enter negotiations for terms as part of the evaluation.

Withdrawal of proposals will be accepted only up to the deadline for proposal submission time and date above.

Any banking institution submitting a proposal is deemed to have read, understood and agreed to all terms, conditions and requirements set forth in the RFP.

  1. Pre-Proposal Conference

There will not be a pre-proposal conference. Questions regarding this RFP, or the services requested in it, will be accepted in e-mail formonly directed , on or before 3:00 pm CST,July 1, 2011. Responses to any material question submitted will be communicated via e-mail to all known proposers simultaneously by email by 3:00 pm CSTJuly 6, 2011, as necessary.

6.Selection Criteria

The following criteria will be used as the generalweighting basis for evaluation of the proposals.

40 % - responsiveness, innovativeness, and ability to provide services required,

40 % - banking services costs,

10 % - potential earnings through banking facilities and sweeps to maximize Institute income, 10 % - creditworthiness and stability of the bank.

Award of the contract may not be made to the bank submitting the lowest price proposal. The Institute will choose the bankwhich submits the most responsive overall proposal.

  1. Institute Rights

The Institute reserves the right to:

-waive any defect, irregularity, technicality, or informality in the proposal or proposal procedures,

-reject any and all proposals,

-accept any proposal or portion thereof most advantageous to Institute,

-request additional information or require a meeting with bank representatives for clarification,

-cancel, revise, and/or reissue this request for proposal,

-negotiate with proposers,

-modify deadlines, and

-select any proposal deemed to be in its best interest as determined by the Institute.

  1. Bank Compensation

The Institutereserves the right to utilize either a fee basis or compensating balance basis (or a combination of each) for payment of services. The Institute reserves the right to change the payment methodology during the contract period upon no less than 30 days written notice to the bank with the change commencing the first of the following month in order to react to changing interest rate environments. The intention is to use a fee basis when alternative investment earnings surpass the bank’s earnings credit rate (ECR).

The Instituteis intending to utilize a daily sweep into a SEC registered money market fund (when interest rates allow) orto an internal interest bearing account if proposed by bank as an alternative.

A consolidated account, and individual account, account analysis for the Institute is required monthly regardless of the payment basis.

All item and account charges will remain at the proposal price quoted on Attachment A for the duration of the contract period regardless of changes in service volumes. If fees are not listed on Attachment A for services provided as requested in this RFP they will not be applied or valid during the contract period.

Should new services be required during the contract period not contemplated by this RFP, those services will be provided at fees not more than the bank’s then-current published rate and approved by the Institute.

IV. INSTITUTEFINANCIAL OVERVIEW

TheVice President for Finance and Operationsis responsible for all banking, treasury, and investment activities of theInstitute encompassing accounts receivable, accounts payable, payroll and financial reporting functions. The Vice President reports to the President of the Institute.

The Institute requires fully automated transactions, accounting and reporting in its goal of limiting and eliminating paper transactions and manual handling. The institution’s current service volumes, based on history, are detailed on Attachment A. (Historical account analyses will not be provided to any proposer.)

Currently the Institute utilizes the following accounts. Historical balances for the accounts below are based on twelve months of data but continuing balances are not guaranteed. The aggregate ledger balance averages $750,000. Primary revenue is received from student fee collections and received in August, September, and Januarywith additional limited revenue received throughout the year.

Account NameAvg. Ledger BalanceType of Account

Current and Federal Funds$ 750,000Interest Bearing (main Account)

Payroll$ 0Payroll activity/Sweep Account

All financial transactions and reconciliation are handled and controlled through the Finance office. Payroll is paid monthlyfor approximately 200 total employees and a gross monthly payroll of $750Thousand. Direct deposit is used currently by 99% of the total employees. The bank will be expected to follow standard SWACHA regulations for deposit of employee funds on the scheduled date as defined by theInstitute.

Any or all Institutefunds may be maintained and invested by the Instituteoutside the bank. The Institutewill be under no obligation to maintain time or demand funds in the bank except when fees are paid under a compensating balance basis. In order to perfect ownership of securities through delivery versus payment settlement, the bank and its brokerage subsidiaries will not be authorized as brokers for the Institute during the contract period.

Debt service and payments for the Instituteare handled through the Texas State University System offices in Austin.

V.REQUIRED FINANCIAL INSTITUTION INFORMATION

To be considered the proposal must include a response to

each question in this Section in the order asked.

1. In order to fulfill the Institute’s fiduciary responsibility please provide an audited annual financial statement for the bank’s most recent fiscal year. The bank will be required to submit an audited statement annually during the contract. Provide the current statement and confirm agreement to this condition.

  1. Is the bank offering any transition or retention incentive? Define fully and quantify if applicable.
  1. List references from at least three of the bank’s current, comparable public clients. Include the length of time under contract, a client contact, title, and email address.
  1. Provide (a) the bank’s most recent Highline, Veribanc or comparable bank rating from an independent rating service or (b) the dual ratings of senior and subordinate holding company debt. The bank will be responsible for notifying the Institute within thirty (30) days of any change in this rating during the entire contract period. Provide the ratings and confirm agreement to this ongoing condition.
  1. Provide a copy of all agreements (even if not directly referenced or required in this RFP) which will be required to be executed under the contract for services rendered. Agreements should include all service agreements as well as the depository and collateral agreement. Any changes to provisions required on the agreements will be made and agreed upon before award of the contract is made.
  1. Customer Service. Service is a primary focus of theInstitute. Describe the bank's philosophy and approach to satisfying the service requirements in responses to the following.
  1. How does the bank intend to support the ongoing operational and technical needs of the Institute?
  2. How many individuals does the bank have the local bank who will be involved in support for the Institute? How will these individuals be assigned responsibilities to provide the service?
  3. How will local service and overall contract performance be monitored at the holding company level? Is monitoring done on a regular basis? Does the bank solicit regular feedback from its clients?
  4. What, if anything, is distinctive about the bank's approach to customer service? How will this be expected to impact the Institute?
  5. What provisions has the bank made for business continuity planning and operations? What, if any, support does the bank intend to offer the Institutein a disaster situation to maintain stable banking functions?

7.What changes will the recent (2010) Dodd-Franks (Financial Regulations) legislation make in the provision of services or the charging basis for those services starting in 2011 - as it is currently understood?

8. Provide a detailed timeline for implementation of the contract including the activities required by both parties and assignment of responsibilities during implementation.

VI.REQUIRED BANKING SERVICES

To be considered, the proposal must include a response to each of the questions

in this Section in the order given. All fees for associated and anticipated

services must be detailed on Attachment A.

  1. Consolidated Account Structure with Sweep Mechanism

The Institute is intent in earning at the best available interest rates at all times. The Institutedoes currently sweep account balancesbut the Instituteintends to use a ZBA sweep structure under this contract to access the best rates available and minimize bank collateral requirements.

The bank is being asked to offer an automated, daily sweep to a money market mutual fund, or internal bank alternative account, if applicable and competitive,when rates allow in order to reach its investment goal. A AAA-rated,SEC registered government, or enhanced government, money market fund is preferable for the sweep. A repurchase agreement and/or offshore accounts are notauthorized as sweep investment vehicles.

The bank shall clearly stipulate and describe the bank's most cost effective methodology for creating the sweep structure. The proposal should present the bank's most efficient and cost effective methodology in different rate environments (which, it is understood, may eliminate use of the sweep).

  1. Fully describe the proposed sweep mechanism focusing on the bank's most cost effective and highest earning structure. Detail whether the sweep will be from a master account with ZBAs or directly swept from the individual accounts.
  2. If the bank can not provide a sweep structure what account structure is proposed?
  3. Are funds swept as the day’s last transaction or swept next day? If swept next day, how are funds left in the account collateralized overnight? If swept next day. what interest is applied for funds not swept overnight?
  4. On Attachment B, provide the average monthly rates on your best sweep option for the last twelve months as indicated. Define which fund, of any, is being used.
  5. If the bank is proposing an alternative to a sweep, such as an indexed interest bearing account, detail and describe fully. Identify and describe advantages of the account type. Provide rates history on Attachment B.
  1. Are sweeps fully automatic or will the Institutebe required to initiate any transactionsor transfers under any condition? If so, describe.
  2. Will sweep interest will be distributed at the account or master account level?
  3. If an SEC registered money market fund is utilized for the sweep proposal, provide the full name and identifying cusip of the fund along with a copy of the prospectus.
  4. Interest earned on interest bearing accounts shall not be charged as an expense on the account analysis. Confirm agreement to this condition.
  5. The Institute may be required or may desire to open additional accounts, or change account types during the contract period. If this occurs the new accounts and their services shall be provided with the same features and be charged at the same contracted amount as the accounts described in this request for proposals. Confirm agreement with this condition.

2.Automated Cash Management Information Access

TheInstitute strives for efficiencies in its operations and attempts to reduce paper transactions and staff time in the processing of transactions. The Institute is not interested in instituting treasury workstationsbut needscomplete and timely detail and summary information and prefers cross-functionality of reporting.

The Institute requires timely access to prior and current daydetail and balance reporting. It requires automation within the various service areas such as ACH, reconciliation, and, increasingly, EDI. Imaging retention and access is required. Imaging of deposit slips and deposit items is preferred. Preferably, all reports, statements, and account analyses are to be available in electronic form.

Minimum automated daily reporting services shall include:

prior day summary and detail balance reporting on all accounts,

intra-day detail reporting all accounts,

initiation and monitoring of stop pays,

initiation and reporting of positive pay and exception transactions,

initiation and monitoring of wire transfers and ACH, and

initiation and monitoring of internal transfers and wires.

  1. Fully describe the bank’s online (web based) service capabilities. List system capabilities by service (i.e. balance reporting, wires, positive pay, stop pay, etc.). Are all services provided through one portal?
  2. Are all online services fees bundled or are individual service modules priced separately? Which, if any, services are priced separately?
  3. Do the bank’s systems include a standard cash forecasting module or capability?
  4. When is prior day information available? When is intra-day information available? Is it real-time?
  5. List what items are imaged and retrievable online?
  6. Does the bank charge separately for image (a) creation, (b) image retrieval and (c) image retention? Explain and define.
  7. Can data be drawn across modules and activities for reporting purposes? Describe fully with examples.
  8. Can deposit information be segregated by location? How is this accomplished?
  9. Describe provisions for bank backup and continuation of services in a local or regional disaster situation. What disaster recovery services can the bank offer if the Institute cannot operate from its facilities temporarily?
  10. Describe the security protocols for online services. How is authentication and authorization provided?
  11. How is the administration of the security module established and maintained?
  12. What are the hours of available technical support for online services? How is it accessed?
  13. What degree or type of information technology consulting will the bank provide as part of this contract? What charges will apply?
  14. Submit samples of major screens and reports available or provide a website and sign-on information for an online review of all the system functions.
  15. Does the bank solicit feedback information from users of the systems regularly? How?
  16. Is the system a proprietary system or provided by a third-party? How is support provided in a third-party arrangement?
  1. Depository Services

Standard commercial deposit services are required. Deposits are currently collected, balanced, and deposited one location.A courierwill make depositsdaily. The Institute is moving towards remote deposit or deposit solely by armored transport but initially multiple methodologies will be used.