Administrative Services
Town of Nags Head
PO Box 99
Nags Head NC 27959
www.townofnagshead.net
Telephone (252) 441-5508
Fax (252) 441-4680
MEMORANDUM
TO:
Board of Commissioners
FROM:
Administrative Services
DATE:
February 24, 2003
SUBJECT:
Consideration of Request for change in banking services
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A strong and seamless banking relationship is essential to the efficient performance of the
operations of the Town, particularly the department of Administrative Services.
With the
acquisition of Centura Bank by Royal Bank of Canada (RBC) we have experienced an ongoing
steady deterioration of our relationship with Centura, as well as, a significant reduction in the
level of customer service we receive. This decline in service has been experienced in all aspects
of the relationship including investment activities, credit card transactions, and our depository
accounts.
As a result of the changes in service, the Town no longer has funds invested by Centura. We
have maintained the custodial account for investments as required by statute, however, we
have experienced problems with this service as well. These include inaccurate information on
monthly statements, charges for the service which are not authorized by our contract, inability
to follow investment directions with the potential to overdraw the Town’s operating account,
and failure to provide sufficient details of transactions so that we can properly record
investment transactions.
With the acquisition by RBC, Centura’s credit card operations went from being handled in house
to outsourced with a corresponding reduction in oversight and accountability for operations.
We received insufficient notice that our existing cards would expire without having first received
any replacement cards. They were unable to tell us when or how many cards had been mailed,
to whose attention they had been addressed, or when we would receive them. They did offer
to overnight additional cards to us at our expense which we declined. For some departments it
took several weeks to get a sufficient number of cards and for other departments we received
more cards than we had employees. Once new cards had been received we began to
experience problems with the billing. They weren’t able to process our payments in a timely
manner resulting in the incurrence of interest and finance charges. After several attempts at
having these resolved and multiple promises that they would be, Centura ultimately reimbursed
us for the charges and we switched our payment method from check to bank draft. While this
payment method appears more efficient on its face, it no longer allows us the opportunity to
dispute erroneous charges prior to their payment with any credits due left entirely up to the
discretion of the vendors.
Problems with our level of service also extend to our depository accounts. One of the more
significant examples of poor customer service involved a situation with the exchange of
contaminated money where Centura received a full weeks advance notice of the situation and
our needs and gave us every indication that they would be able to provide us with that service.
It was not until Police personnel arrived at the bank to exchange the funds that we were
informed by Centura staff that they would be unable to handle the transaction only to take the
same funds to another bank, with which we had no established banking relationship, that easily
made the exchange of funds that we needed.
There have been several instances of adjustments to our account related to deposits. We
receive no notice of these adjustments until receipt of the monthly bank statement. At that
time we must then request that the item be researched to obtain any detailed information
regarding the adjustment which typically takes seven to ten days to receive. In most cases
these have ended up being bank encoding errors and not Town errors which are then
subsequently readjusted. On at least one occasion, Town staff had to explain to bank staff how
to correct their error. It is not unusual for us to have to call more than once to have an
adjustment explained and corrected. We have experienced checks cleared for incorrect
amounts; the most recent instance a check for $50 was encoded and cleared as $709.41. One
of the original justifications for selecting Centura as the Town’s depository three years ago was
their promised service level for adjustments that included telephone notice of any adjustment to
our account and courier delivery to the branch of our choice for returned items. Instead, we
continue to experience lengthy delays in the receipt of returned checks, rejected EFT
transactions, and documentation for adjustments to our account.
In response to these problems, staff has spoken on multiple occasions to various
representatives from Centura at all levels of the organization. While there has been some
improvement in some areas, the overall level of service does not approach what it used to be or
what it needs to be.
Staff contacted representatives from other local banks including BB&T, ECB, First South, and
Gateway for informal proposals for banking service based on the compensating balance
approach to fees that is comparable to what we have currently. We received written proposals
from BB &T, Gateway, and First South. The non-interest bearing balances required by each are
as follows: BB & T $945,000, Gateway $605,000, and First South $100,000. Based on the
responses received, it is Staff’s recommendation that First South Bank be named as the
depository for the Town of Nags Head.
First South will provide three main accounts for the Town – operating, payroll, and facility fee
accounts. First South will provide reconciliation software, direct deposit capabilities, daily
deposit courier service, Town credit cards, and investment safekeeping. The fee for services
will be based on a compensating balance of $100,000 of Town funds which will not be “swept”
for daily investment as the remainder of funds will be. In addition, there will be a one-time fee
of $250 and monthly fees of $100 for the Total Treasury Manager software needed for payroll
direct deposit, utility billing EFT activity, and ACH transactions. First South anticipates the
availability of on-line banking in the near future which will alleviate these ongoing costs.
Additional costs to the Town include the printing of new checks and deposit tickets.
Copies of all checks deposited by the Town will be image archived and available within one to
two business days. Copies can be obtained by fax immediately. Response for research items is
generally one business day. Cancelled checks will be returned to the Town each month with
the bank statement in numerical order. Free checking and savings accounts will be provided for
employees.
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First South Bank officials have been made thoroughly aware of the Town’s banking needs and
desired level of service and have indicated their willingness and ability to assume this role for
the Town of Nags Head. Additionally, First South is listed as an approved depository by the
Local Government Commission.
In summary, RBC Centura has not been able to maintain the level of service that we expect and
that we were promised. First South Bank has indicated their desire and ability to provide the
banking services that the Town requires, as well as the customer service needed by Town staff
to enable them to perform at the level required by the Board and the citizens of Nags Head.
Therefore, you are asked to name First South Bank as depository evidenced by the resolution
attached.
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