Memorandum

City of Lawrence

Finance Department

TO:	Dave Corliss, Interim City Manager
FROM:	Ed Mullins, Finance Director
Date:	May 17, 2006
RE:	Banking services

Background 

The current banking agreement with Central National Bank expires on June 1, 2006.  On April 24, 2006, the Finance Department issued an RFP to provide banking services to the City of Lawrence beginning June 1, 2006.  The successful bank would provide banking services to the City of Lawrence for one year with up to two one year extensions.  The department received responses from six banks, including Central National Bank, US Bank, Emprise Bank, Intrust Bank, Commerce Bank, and Sunflower Bank.

Analysis

The six proposals were reviewed by a committee consisted of the Finance Director, Budget Manager, and Accountant.  The proposals were evaluated based upon service costs, interest earnings, and services provided.  The analysis showed that US Bank would provide the lowest monthly service cost, but would be less than $20 per month lower than our current provider, Central National Bank.  Both US Bank and Central National Bank would pay interest at 5 basis points above the 91 day Treasury bill.  Both of these banks were considerably higher than the other submissions.  Finally, the service levels between US Bank and Central National Bank were considered to be very similar.  Both banks would be able to provide the following services in addition to what is currently being provided:  teller and payee positive pay, this allows the teller to match the check number, amount and payee name when a City of Lawrence check is presented for payment; ACH filtering, this provides the means to itemize those organizations outside the city that can initiate ACH debits to our account; free provision of tamper proof one time deposit bags, this will eliminate the need to have multiple sets of keys for locking bank bags and the need for the courier to return bank bags to the original location.

Recommendation

Central National Bank has provided the City of Lawrence with excellent banking services over the last three years.  As a result of the expanded services, high interest rates, and only slightly higher cost of service, it is the committee’s recommendation that Central National Bank be retained as the City’s depository for the year beginning June 1, 2006.  The lower cost savings of US Bank would be more than offset by the cost of making the changes necessary to securing future electronic payments to and from the City’s vendors.