Your New Depository ContractMaking it Work for Your District

Presented by BBVA Compass

Robert McDaniel , City President

Gina Lobato, Public Funds Relationship Manager

Melissa Leal, Treasury Management Officer

1. New Environment and New Technology2. Preparing for the RFP3. Making the RFP Your Own4. Evaluating the Responses

2

Agenda

Objectives

o Incorporate best practices into your RFP’so Enhance success with RFP’s for Banking

Serviceso Understand the Bank’s perspective o Create a mutually beneficial RFP

3

The Current Environment

1. Historically low rates

2. Cost containment is “job one”

3. Followed immediately by revenue enhancement!

4. Regulatory changes • Collateral requirements• FDIC coverage

5. Increased paper and electronic fraud

6. Technology fuels change—and addresses risks in the current environment

4

Changing Technology

Efficiency and Cost Containment Payables outsourcing—paper, electronic and wire Paper to electronic conversion Vendor payments via commercial card

Enhancing Receivables Internet payments 21st century lockbox Check image processing

Fighting Fraud ACH blocks and positive pay Payables outsourcing

5

Look Back to Prepare for the RFP

Conduct a “WWW” review of your current depository relationship, and prioritize:

What’s Working

Service

Functionality

Relationship

Value What’s Not

Identify product and service gaps

Quantify concerns about value

6

Look Ahead to Prepare for the RFP

Continue the “WWW” process by considering: What’s Next

Economy/revenue

Expansion

New technology

New investment options

Regulatory changes

7

Prioritize and Define

Must Have’s!Keeping what worksImproving what doesn’t workMeeting regulatory requirements

WantsImproving what worksPreparing for the future

We’re ExploringAdding new technologyChanging processes

Stay focused on the possible!

8

Help Your Banks Prepare Better Responses

More information = better, more accurate pricing! Provide volumes wherever possible

“Blind” account analysis statements Historical transaction volume and balance data

Listing of all services

Share balance information Interest bearing vs. non-interest bearingUse average balances vs. one point in time

Share your account structure Share strategic plans that impact your depository relationship Provide your most recently approved Investment Policy

9

Tailor the RFP to Your District

Highlight “must have” services and features, such as: Fraud protection for paper and electronic payments Local cash vault services Direct deposit of payroll Local lockbox site

Ask for additional information in the sections that address your “wants”. These could include: Moving away from paper payments Adding deposit alternatives Offering internet payment options

10

Tailor the RFP to Your District

Give direction on what you are “exploring”. Are you considering: Enhancing your purchasing system Converting to a new ERP system Outsourcing payment services

Ask for new ideas and suggestions—free consulting! Technology is changing rapidly Innovations improve efficiency Alternatives may be more cost-effective

11

About Merchant Services and Commercial Card

Merchant Services Consider a separate RFP for this service Be sure to include a current merchant statement or equivalent

Commercial Card Services Good for gathering general information about the providers’ capabilities For pricing and vendor selection, strongly recommend a separate RFP

Vendor matching process insures best pricing

Program structure should be a tailored to your accounting system

Trend is to move to a two pronged program: distributed cards and vendor purchases

12

Evaluating the Responses

Develop criteria such as:

Expertise Safety and Soundness

Range of Products Market Presence

Dedicated Team Rates/Pricing

Research bank ratings Fitch Moody’s S&P Bauer Financial (www.bauerfinancial.com), IDC Financial Publishing

Include your criteria in the RFP Ask for references Consider presentations by finalists

Include product demonstrations Especially important for new products and services

13

Keep Your Consultants

You may receive several good bid responses, but you can only pick one…

Keep the next best 1 or 2 on your “consultant” list

Meet with each several time a year You will get new ideas You may find a vendor for a new financial service

such as Merchant or Commercial Card You will have several good banking relationships

before your next RFP is due

14