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JY Morgan Kerwin Deese Vice President & Relationship Manager Government Banking November 18, 2016 City of Santa Ana Evaluation Committee - Banking Services RFP #16 -111 Attn: Will Holt, Treasury & Customer Services Manager 20 Civic Center Plaza Santa Ana, CA 92701 RE: Potential Price Reductions to J.P. Morgan's Pricing Proposal Dear Mr. Holt: Pursuant to our conversation regarding J.P. Morgan's Proposal in Response to the City's Banking Services RFP #16 -111, we would like to answer questions surrounding our ECR and highlight several opportunities for the City to reduce the Combined Extended Unit Price Total of $77,277.36 found on Attachment 6B on J.P. Morgan's Cost/Bid Proposal Form. We provide details on each of these items below and have attached a proforma to illustrate these potential savings. We would also like to reiterate that we have not passed along any pricing increases to the City over the past 6 years and we provided additional pricing reductions to 13 line items in our current proposal to ensure we remain as competitive as possible. This is during a time when the financial industry has faced increased regulatory and capital costs and the firm has increased its investments in technology and innovation including cybersecurity and fraud prevention. We believe these efforts, along with the potential savings outlined below, reinforces our commitment to the City and the importance of the City's relationship to J.P. Morgan. Opportunities for Additional Price Reductions: 1) Service Fee Credit: a. As outlined in our Letter of Transmittal and in Section V. Cost of Providing Services (Fees) — A. on pg. 108 of our proposal, J.P. Morgan is pleased to offer the City a service fee credit of up to $10,000 to be applied to analysis for use over the initial (3) year contract period. This waiver is valid to offset traditional Treasury Service fees that are incurred by the City and billed to analysis (not including merchant services fees). Assuming the credit is used evenly over the initial 3yr contract period, this will reduce fees by $3333.33/yr. 2) Fed -Ready Bulk Coin /Strap Deposits: a. In reviewing the City's bulk coin deposit activity, we noticed that 99% of those deposits were processed as Partial /Mixed Bags which incurs a higher fee due to the manual, non - standard nature of handling those deposits. We tend to see a 60% standard /40% non - standard split in bulk coin and strap deposit volumes. We believe this is an opportunity for the City to further reduce its fees and we will work with the City to refine its current process (please see Figure 4 on pg. 39 of our proposal for Fed -ready denomination amounts). We have assumed the City can achieve a 60/40 standard /non- standard split in these deposit volumes in the 3 Park Plaza, Suite 900, Irvine. CA 9214 T T_ 949 333 1001 F 949 264 1093 C: '10 734 9395 kervin.adeese(oZlomoruan.com JPP.lorgan Chase Bank M a.