February 1, 2017
Re: Request for Proposals (RFP) Commercial
Banking Services Agreement
Dear Commercial Banker:
The Lake Charles Harbor & Terminal District (District) has prepared the attached request for proposals (RFP) for banking services for a period of three-years and eight months ending December 31, 2020. The District will award the contract to the commercial bank that proposes the most favorable relationship.
A synopsis of the desired relationship is outlined below:
The District maintains an exclusive service relationship with a single bank rather than a consortium relationship with several banks.
The District contracts for those services that are typically provided only by a commercial bank, such as depository and check-clearing services, wire service activities, direct deposit, lock box and investment transaction support facilities.
The contract does not address borrowing or investment transactions.
The safekeeping of investment securities, whether they are owned by the District or pledged as collateral on the District’s deposits, will generally be provided by the Federal Reserve.
The District makes direct payments to its lead bank for services provided, rather than utilizing compensating balances.
The District does not currently maintain a sweep account but will explore the costs and benefits of such an arrangement.
The District's portfolio typically contains investments such as U.S. Treasury Bills, short-term Treasury Notes, certain governmental agency discount notes, and other federal instrumentalities.
The District actively manages its investment program, dealing directly with qualified financial intermediaries, typically primary securities dealers.
Request for Proposals (RFP)
Commercial Banking Services Agreement
February 1, 2017
Page 2
The lead bank will provide the District with appropriate support for its investment transactions, including required wire transfer and safekeeping services.
The attached package includes a Bid Response Form, upon which you can enter your bids for required services. Each service requirement is separately explained in the supporting documentation. A copy of the District's cash management and investment policy will provide you with an understanding of the District's procedural and philosophical approach. In addition, we have prepared other Appendices that illustrate specific technical detail regarding the District's banking activities.
Following your review of the package, if you still have questions, please feel free to call us 337-439-3661, email r write to the following:
Director of Administration
and Finance
P. O. Box 3753
Lake Charles, LA 70602
You will have until 1:30 PM on Thursday, February 23, 2017, to submit your completed proposal.
Thank you in advance for your cooperation in this matter. We anticipate that the District's banking relationship will be significantly enhanced during the next contract period, with significant rewards accruing to both your bank and the District.
Sincerely,
Richert L. Self, CPA
Director of Administration
and Finance
1
Table of Contents
Table of Contents
Introduction
Scope of Banking Services
Bidding Instructions
Proposal Evaluation
APPENDIX A
BID RESPONSE FORM
APPENDIX B ...... 12
CASH MANAGEMENT AND INVESTMENT POLICY
appendix c
Security Agreement
APPENDIX D
CUSTODIAN AGREEMENT
APPENDIX E
TIMETABLE OF CRITICAL DATES
1
Introduction
The Lake Charles Harbor and Terminal District (District) has prepared the following package in an effort to establish a contractual, three-year and eight monthsrelationship for the provision of banking services.
The District is an independent political subdivision of the State of Louisiana governed by a Board of seven commissioners appointed by the Governor, subject to Senate confirmation.
The District anticipates that the banking services contract will extend through December 31, 2020 and may include provisions for an extension of time, should both parties choose to do so.
In an effort to provide a clearer, more comprehensive picture of the District’s expenses associated with financial management, the District requests that prospective bidders present banking costs under a direct fees method as opposed to a compensating balances method.
The District currently has a DDA account and a payroll account. The combined transaction volume of the two accounts is relatively low; however, the dollar volume is high. During 2016, the average monthly deposits totaled $3.4 million, and the average monthly disbursements totaled $6.1 million (excluding investment transactions). A detail of estimated transaction volumes is provided on the Bid Response Form (See Appendix A).
Currently, the District earns a rate of interest on unused funds at the close of the day rather than utilizing a sweep account. The District will explore a repurchase sweep account provided the rate of interest and related fees associated with the sweep account provide a more attractive return than the existing arrangement.
The District manages an investment portfolio, which as of December 31, 2016 totaled approximately $41.9 million. It is essential that prospective bidders provide wire transfer and safekeeping services which support the District’s established policies and procedures at a reasonable cost. (See Appendix B).
The District requires the proposing bank to assign a designated account representative or relationship manager to the District with a strong understanding of the District’s operations to facilitate communication of issues and their resolution.
The District reserves the right to reject any or all bids, and select the best bid in the opinion of the District.
The District requires banks to separately list any exceptions to the RFP specifications, with the provision that exceptions will otherwise be invalid.
The Bank shall indemnify, defend, and save harmless the District, its officers, agents, employees, representatives and assigns, from lawsuits, actions, costs (including attorneys’ fees), claims or liabilities of any character brought because of any injuries or damages received or sustained by any person, persons, or property on account of any act or omission, neglect, or misconduct of said Bank, its officers, agents and/or employees arising out of, or in performance of any of the provisions of the contract, including any claims or amounts recovered for any infringements of patent, trademark, or copyright; or from any claims or amounts arising or recovered under the “Worker’s Compensation Act” or any other law, ordinance, order, or decree. In connection with any such claims, lawsuits, actions, or liabilities, the District, its officers, agents, employees, representatives, and their assigns shall have the right to defense counsel of their choice. The Bank shall be solely liable for all costs of such defense and for all expenses, fees, judgments, settlements and all other costs arising out of such claims, lawsuits, actions or liabilities.
Qualified proposing banks must meet the following minimum criteria:
Must be a banking corporation incorporated under the laws of the State of Louisiana or the United States;
Maintain its home office or a full-service branch within 10 miles of the District’s main office;
Must submit financial statements for the past two fiscal years (must include an unqualified opinion from a certified public accountant and appropriate notes to the financial statements);
Must submit one copy of each of the last four quarterly call reports;
Must be in compliance with all statutes of the State of Louisiana.
In accordance with the Louisiana Statutes, no financial institution that has received at least two consecutive ratings of less than satisfactory under the Community Reinvestment Act of 1977, 12 U.S.C. 2901 et seq., shall be selected to receive the deposits of any public funds. The bank further acknowledges and agrees that if they should receive two such consecutive ratings of less than satisfactory, the institution may continue to hold all public funds until maturity to avoid the imposition of a penalty upon the depositor, however, the institution shall not accept the public funds for reinvestment and shall not accept additional public funds Each bidder shall submit with their bid documentation their two most recent CRA (Community Reinvestment Act) ratings, including the dates of examination. LA R.S. 39:1220.A.4.
Scope of Banking Services
General Account Maintenance
Currently, the District maintains two primary bank accounts titled the Enterprise Fund Account and the Payroll Account. The Enterprise Fund Account functions as the District’s main bank account. The majority of the District’s deposits are made into the Enterprise Fund Account. Checks are written against the Enterprise Fund Account for accounts payable checks and against the Payroll Account for payroll, auto allowance and uniform allowance checks. The District currently maintains a Zero Balance Account for the Payroll Account including a target balance of $1,000.
The District also requires the ability to execute transactions online and review transactions online. An online reporting system offers the District access to account balances, check clearing transactions, positive pay exception item reports, and daily wire and ACH disbursement activities. An example of transactions the District is interested in executing online includes state and federal taxes, payroll direct deposit, repetitive and non-repetitive wires.
Deposit Services
Currently, the District deposits approximately 1,250 items per year. The District utilizes a lockbox to enhance the collection and crediting process.
Paper Disbursement Services
The District currently receives cleared check images on a CD, which accelerates paid item research and eliminates cancelled check storage problems.
In an effort to deter check fraud the District will require the use of positive pay whereby the District’s data is compared to the bank’s data before the bank releases the funds to the corresponding payee bank. Positive pay will also assist the District with stale dated checks, stop-pay management and account reconciliation.
General ACH Services
Several of the District’s customers utilize Automated Clearing House (ACH) as a payment method, which improves cash flow, expedites collection of receivables and reduces overall time and effort involved with the process.
Wire Transfer Services
The District periodically wires funds for the settlement of transactions. The greatest volume relates to the investment activities (both incoming and outgoing). The attached bidding form requests the unit cost for both online and regular wires, on a repetitive and non-repetitive basis.
Lockbox – Wholesale
In an effort to speed up the collection and crediting process of the District’s accounts receivable department, and concentrate them into accounts where the money can be invested, the District utilizes a Lockbox. As a result of the low transaction volume but high dollar size of deposits, the District only requires a wholesale lockbox service. The volume of deposits mailed to the lockbox is estimated to be 500per year.
Safekeeping
As previously mentioned, the District maintains an investment portfolio. Current investment policies and procedures require prospective bidders to provide safekeeping services as detailed in the attached cash management and investment policy. The District requires copies of safekeeping receipts, which originate directly from the Federal Reserve in conjunction with the issuance of a safekeeping receipt by the bank’s safekeeping department. The Federal Reserve safekeeping receipt will designate that the described securities are held in the name of the bank “for the account of the Lake Charles Harbor and Terminal District”.
The District prefers to do business with a bank which is on-line with the Federal Reserve Bank. Such capability will allow the District to conduct its investment activities in the most efficient manner, and to implement appropriate safekeeping activities through the Federal Reserve System. As the District purchases investments, it will provide specific instructions to pay precise dollar amounts versus receipt (delivery vs. payment) of the specific securities, which it has purchased. In all cases, the bank will be obligated to verify good delivery of the securities before releasing funds. Conversely, the bank will be obligated to verify payment before releasing the security.
Collateralization
Banks holding demand or time deposits of the District must pledge securities to the District, which have a market value equal to or greater than the aggregate amount of the District’s deposit (including accrued interest) which exceeds prevailing FDIC insured balances. The District requires that the Federal Reserve Bank provide the safekeeping of such pledged securities, with the securities being held in joint custody between the pledging bank and the District. Relinquishment of such securities will require the District to provide specific instructions to the Federal Reserve Bank to release the securities. Pledging banks must provide monthly evidence of adequate market value of securities pledged in accordance with Louisiana Revised Statutes.
Interest Rate on Account Balances
District deposits earn a rate of interest on unused funds at the close of the day rather than utilizing a sweep account. As mentioned above, the District will explore a repurchase sweep account provided the rate of interest and related fees associated with the sweep account provide a more attractive return than the existing arrangement.
Bidding Instructions
Submission of the completed proposal forms is required for consideration. If the bank is unable to meet or exceed the requirements specified, then the phrase “no proposal” should be entered for that particular item.
The District reserves the right to eliminate any individual service contained in the proposal, if based on analysis, the fees for providing the service are excessive, or if the service proposed can be performed in an alternative manner.
The District intends to enter into a formal banking services contract with the awarded bank, which will incorporate all provisions of this request for proposal. Additional terms and conditions will not be included unless mutually agreed upon by both parties.
Proposal Evaluation
Proposals will be evaluated based upon the following items:
Completeness of response to all required items on the bid form;
Cost per identified activity and aggregate banking services cost;
Ability to meet the service requirements;
Best rate of interest paid on accounts;
Capacity to provide numerous electronic banking services;
Experience and governmental knowledge of bank team;
Overall responsiveness to the RFP; and
References.
The District anticipates that the proposed banking services be compensated on a fee for service basis as opposed to a compensating balances method. Appendix A provides a Bid Response Form on which banks must propose a unit charge for each required service, and must extend the unit charge based upon the District’s estimated monthly volume for each service to obtain an annual total cost for each service.
Proposals for Additional Services
If a proposing bank wishes to suggest additional services to the District, it is welcome to do so in a separate document. The District will carefully consider any such suggestions.
However, services which are beyond the scope of this specific RFP will not be included in the analysis of the competitive proposals which are received in response to the RFP.
Additional Required Information
A copy of the bank’s “Clearing Schedule,” demonstrating the maximum clearing times for deposit items, specifically defining various “cut-off” times, and describing available clearing alternatives.
The following items need not be attached to the proposal. However, their completion will be required prior to the final bid award:
A completed “Custodian Agreement”;
A completed “Security Agreement for the Collateralization of Public Funds”;
A completed “Bank Contract”; and
A completed “Master Repurchase Agreement”, if such an agreement is applicable;
CERTIFICATION OF PROPOSAL
This proposal is hereby presented to the Lake Charles Harbor and Terminal District, on or before the required due date (February 23, 2017). We have read the RFP, including all of the attached documents, and will strictly adhere to the District’s goals and objectives. We have attached our Clearing Schedule and Audited Financial Statements and will complete other documentation as required.
BANK OFFICER
______
TITLE
______
DATE
APPENDIX A
BID RESPONSE FORM
Activity Description / Estimated Annual Volume / Unit Cost / Annual CostGeneral Account Services
DDA account maintenance – one account / 12 / x / =
Online services for account information – maintenance fee / 12 / x / =
Online services for account
information – transaction fee / 12 / x / =Account Analysis – two accounts / 24 / x / =
Target balance maintenance – Payroll Account – one account / 12 / x / =
ZBA Payroll – one account / 12 / x / =
Account reconciliation – maintenance fee / 12 / x / =
Account reconciliation – per item charge / x / =
Deposit Services
Deposits / credits / 1,250 / x / =
Items deposited – non-encoded / 500 / x / =
Excess items deposited rejects / x / =
Return items / x / =
Deposit images on CD / 1,250 / x / =
Paper Disbursement Services
Checks paid / 7,000 / x / =
Check images on CD / 7,000 / x / =
Check CD Maintenance – two accounts / 24 / x / =
Positive pay / 65 / x / =
Stop payments – online / 6 / x / =
Stop payments – regular / 1 / x / =
Returned, redeposited items / 2 / x / =
Returned items / 2 / x / =
General ACH Services
ACH received debit / 65 / x / =
ACH received credit / 100 / x / =
Electronic debit protection / 24 / x / =
Direct deposit maintenance / 12 / x / =
Direct deposit transactions / 2,100 / x / =
ACH return items
/ -0- / x / =Wires and Transfer Services
Wires – Incoming / 24 / x / =
Wires – Regular – outgoing repetitive / 5 / x / =
Wires – Regular – outgoing non-repetitive / 5 / x / =
Wires – Online outgoing repetitive / 10 / x / =
Wires – Online outgoing non-repetitive / 10 / x / =
Balances
FDIC Insurance / 24 / x / =
Other Services
Lockbox – Wholesale – maintenance fee / 12 / x / =
Lockbox - Wholesale – per item charge / 500 / x / =
Safekeeping / 12 / x / =
Collateralization / 12 / x / =
Sweep Account Maintenance Fees / 12 / x / =
Other Charges
Total estimated annual cost
Index used for interest rate on account balance (variable or fixed)
Rate as of February 24, 2017 / %
Comments:
APPENDIX B