Your New Depository Contract Making 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 Technology 2. Preparing for the RFP 3. Making the RFP Your Own 4. Evaluating the Responses 2 Agenda

Objectives o Incorporate best practices into your RFP’s o Enhance success with RFP’s for Banking Services o 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  21 st 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 works Improving what doesn’t work Meeting regulatory requirements  Wants Improving what works Preparing for the future  We’re Exploring Adding new technology Changing 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 bearing Use 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: ExpertiseSafety and Soundness Range of ProductsMarket Presence Dedicated TeamRates/Pricing  Research bank ratings  Fitch  Moody’s  S&P  Bauer Financial ( IDC Financial Publishingwww.bauerfinancial.com  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