“Tips and Tools for Evaluating Financial Services:RFP Process and

Banking Fees”

Presented by:

Aimee Briles, Wintrust FinancialKimberly Feeney, Bank of America

Moderator: Mark Staehlin, Controller - CHSD 99

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Mark Staehlin, Controller CHSD 99 Community High School District 99

6301 Springside AvenueDowners Grove. IL 60516-2488(630) 795-7121mstaehlin@csd99.org

Mark has been the Controller for CHSD 99 since 1994. Prior to that he was an Audit Manager for RSM McGladrey, Inc., in charge of more than 60 school audits each year. In addition to his school clients, Mark performed audits of banks, savings and loans and other financial institutions. He also serves as President of his local Board of Education in Palos Heights, IL.

Mark is a Certified Public Accountant (CPA) and has a BS degree in Finance from Northern Illinois University. 

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Aimee Briles, Vice President Wintrust Financial

500 Roosevelt Rd., Ste 320Glen Ellyn, 60137630-516-4685abriles@wintrust.com

Aimee works with public entities throughout Chicagoland and has over 11 years of banking experience, with 6 years in Treasury Management and Government Banking. Aimee is a member of the Illinois Association of School Business Officials, Illinois Government Finance Officer's Association, and the Illinois Park & Recreation Association. Wintrust Financial owns over 75 community banks throughout the Chicago and Madison, WI areas.

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Kimberly Feeney, Vice President Bank of America

231S. LaSalle StreetChicago, Illinois 60697312-828-2582kimberly.feeney@bankofamerica.com

Kim is a Government Client Manager in the Midwest Region. Joining the Bank in May 2003, she came with over ten years of government finance experience and has held roles as Accounting Manager and Chief Financial Officer for the Cook County Treasurer and Comptroller for the Cook County Forest Preserve District.  Her responsibilities at Bank of America include working with clients to understand their current operations and assist in improving, enhancing and automating their treasury management operations as well as meeting all their capital raising solutions.

Kim is a Certified Public Accountant (CPA) and has an MBA in Finance from Loyola University. 

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Session Agenda

Why issue a formal RFP? RFP Basics – What, Why & How? Banking services to consider

CollectionsDisbursements Investment Services Information Reporting

Paying for Services Final steps in the RFP process

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Why Issue a Formal RFP? GFOA recommended practice – periodic

evaluation of banking services Evaluates current banking relationship Evaluates available banking/TM services Initiates competitive bidding and negotiation Mediate political situations

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Preparation Questions Are you willing to change providers? What are your goals?

Improvement of efficiencies Implementing new technology Lowering costs

Important end results? New structure New (or renewed) banking relationship Best value vs. low cost

Bundled vs. Unbundled approach?

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Preparation Steps

Understand current contract, services, fees and bank relationship

Determine minimum qualifications for proposers & list of banks to be included

Determine District employees to be involved Understand political issues (internal &

external)

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RFP Section 1: Introduction

General information about District Evaluation criteria Contract specifications (duration, renewal &

termination clause) Timeline & due dates Required qualifications of vendors Questions & response instructions Proposal format requirements

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Proposal Format Requirements: Example Include requirements of each section

Cover LetterPrincipal Officers / Bank BackgroundScope of Services Implementation ScheduleReferencesConcluding RemarksCost Proposal

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RFP Section 2: Scope of Services Question/Response Format

Account structureRate requirements Core service requirements

• Collections, Disbursements, Information Reporting

Account Executive requirementsOther services neededBank recommendations for additional and/or new

services

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RFP Section 3: Cost Proposal

Standardize format Provide accurate activity volumes

Mirror you Account Analysis statement

Specify annual or monthly volumes Allow space for misc. charges and new

services Include “Compensating Balance” calculation

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TM Collection Services

Services

EFT / ACH Collection Remote Deposit Electronic Bill Payment

Solutions Merchant Services Courier Services

Benefits

Accelerates funds availability

Cost reductions Simplifies reconcilement Reduces errors / fraud Reduces bank runs

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Questions to Consider: Collections

EFT / ACH Collection (includes wires) Is Bank a “receiving” member on the Automated

Clearing House system?Same day availability?Access to full addenda record?Costs involved?

• Receipt of addenda• Incoming wire transfer vs. ACH

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Remote DepositCut-off time?ACH conversion? Image clearing capability?Equipment options? Cost involved?

• Monthly maintenance• Per item• Scanner (payment options)

Questions to Consider: Collections

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Electronic Bill Payment SolutionsCustomizable to District?Reporting options?File format options?Payment options?Secure payment site? Maintained by who? Cost involved?

• Set up /programming fees• Monthly maintenance• Per item

Questions to Consider: Collections

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Courier ServicesArmored Car or Bank Employee?

• If Bank employee are they bonded?

Same day credit for courier deposits?Costs involved?

• Per month, per stop, per day

Questions to Consider: Collections

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TM Disbursement Services

Services

ACH (Payroll & Vendor Payments)

Wire Transfers P-Card / Credit Card

Payments

Benefits

Standard formats & templates reduce errors

Eliminates lost checks Reduces fraud Reduces paper items

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Questions to Consider: Disbursements ACH Services

Is Bank a “sending” member on the Automated Clearing House system?

What are your options for file transmission?File transmission security?What are the cut-off times for file receipt?How are returns & NOCs communicated?Costs involved?

• Per item, transmission, returns, deletions

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Wire Transfer Services Initiation Capabilities?Cut off times?Security features?Notifications?Costs involved?

• Online vs. fax/phone• Notification fees• Repetitive vs. Non-Repetitive

Questions to Consider: Disbursements

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P-Card / Credit Card PaymentsOnline capabilities?

• Reporting, Administrative Functions

Card limits available? What types?Monthly statements?Billing methods and cycles available?Rebate schedule?

Questions to Consider: Disbursements

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TM Reconciliation & Fraud Prevention Services

Services

Account Recon Services

Positive Pay ACH Blocks &

Filters

Benefits

Automates & expedites monthly reconcilement

Eliminates incorrectly posted or encoded items

Protects District funds

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Account Reconciliation ServicesFile formats – Customizable?Timing of file transmission to & from Bank?File transmission options & security?Costs involved?

• Monthly maintenance (partial vs. full)

• Per item• File transmission

Questions to Consider: Recon & Fraud Prevention Services

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Positive Pay ServicesPositive Pay vs. Reverse Positive Pay?Payee information verification?Teller line transactions verified?Exception notification? (phone, fax, online)

Decision deadlines?Costs involved?

• Included with Full Recon Services?• Exception items

Questions to Consider: Recon & Fraud Prevention Services

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Questions to Consider: Recon & Fraud Prevention Services

ACH Blocks & FiltersVerification types available?

• Dollar amounts, SEC Codes, Business Names

Costs involved?• Monthly maintenance• Per suspect item

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TM Investment Services

Services

Automated Investment Sweep (AIS or Sweep)

Public Funds Interest Checking Account (PFIC)

Benefits

Earn interest on idle funds Remains liquid to cover

inclearing items Accurate and convenient Several investment vehicle

options

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Questions to Consider: Investments

Automated Investment Sweeps (AIS)What are the associated fees? Is it properly collateralized?What are my investment options? (i.e. repo, MM)

Is reporting available online?Can I set a peg or target balance?

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Questions to Consider: Investments

Public Funds Interest Checking AccountsWhat are the associated fees? Is it properly collateralized?What % of balances are invested?Can I also use Compensating Balances with this?

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TM Online Banking Services

Services

Information Reporting Internal Transfers Stop Payment Initiation Outgoing Wire Initiation ACH Origination Check Images

Benefits

Cheaper Easy to access Multiple Users Accessibility of

information Availability of

transaction history

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Information ReportingCurrent Day and/or Previous Day reporting?Cost involved?Format of reports?Can I export?

• What formats are available?

Can I schedule reports?

Questions to Consider: Online Banking

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Money MovementReal time or delayed information?Associated Costs?Are templates available for recurring transfers?Can controls be set to segregate duties?

Questions to Consider: Online Banking

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FeesBundled or menu-basedPer item fees or access chargesActivity retention fees

Discounts for online initiated services • Stop payments• Wire transfers• Internal transfers

Questions to Consider: Online Banking

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Design Comparative Evaluation Matrix

Evaluating the Proposals

Bank A Bank B Bank C Bank DBranch

Location>1 mile 1-2 miles 5 miles < 1 miles

Public Funds Specialist

yes no no yes

Total Fees

Balances

$1,040

975,000

$1,290

$1,129,500

$950

Not provided

$1,150

$1,325,00

Price Guarantee

2 years 3 years 3 years 2 years

Understands Needs

A- B+ B A

Quality of RFP A- B A B-

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Paying for Bank Services: OptionsCompensating BalancesDirect Fee Payment

Private and Public Sector moving to payment via direct fees

Payments with direct fees are less expensive than payments with balances

Combination of Balances and Fees (Blended)

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Compensating BalancesCompensating balances – why is this

option popular?“That’s the way we’ve always done it”“I don’t pay the banks anything”No budgeting impact

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Direct FeesRequired bank reserves (10%) become

earning assetsDirect investment of balances normally

exceeds bank earnings credit rateLower balances mean lower FDIC

assessmentLower balances mean reduced state

collateral requirements

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Direct Fees (Cont.)Bank charges properly expensed, not

“hidden” In some cases, fees can be charged

against the investment income account as a cost of overall investment program

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Potential Problems Using FeesRequires budgeting Requires additional monitoring of

collected balancesRequires active investing

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Decision Factors: Fees vs. BalancesTime/resourcesActive investorCash flow monitoringCost/yield of cash management

techniques available

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Compensating Balances: Terms Earning Credit Rate:

Rate provided by your bank – used in computation of compensating balance

Multiplier: Balance required to support $1.00 of Service

Reserve RequirementBank’s current Federal Reserve Requirement

(percentage) as applied to the positive collective balance maintained in the demand deposit account

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Compensating Balance Formula Compensating Balance Formula:

monthly service charge /

(1.00 - reserve requirement) / Monthly ECR

Example:Monthly service charge = $4,116Earnings credit rate: 1.15% divided by 12.167

months = .00095Reserve requirement: 10%

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Compensating Balance: Example

CB = $4,116 /(1.00-.10) = $4,814,035 .00095

Multiplier (365/31)/1.15% For every $1.00 of service fee you need $1,023.84 in

balances

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Evaluating Proposals Low Cost vs. Best Value

Lowest compensating balance, best interest rate, individual price points

Ability to meet service requirements Creative suggestions for enhancements Government experience of bank & RM References Finalist interviews Bank visits

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RFP Preparation Reminders:Help Bidders and Yourself

Be specific; facilitates understanding of District needs

Allow for question submission & hold pre-bidder meeting

Provide a copy of District Investment Policy & Collateral Requirements

Provide electronic form of RFP and attachments (include any required agreements)

Goal is “apples to apples” comparison

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Questions

Thank you!