CONTRACTOR RETENTION ESCROW

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CONTRACTOR RETENTION ESCROW

• FOR PUBLIC WORKS CONTRACTORS
• Presented by
• Anita L. Young
• VP Sr. Relationship Manager
• Union Bank, N.A.

August 13, 2009
P Please consider the impact on the environment
before printing this document.
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Are your Retention Funds earning Interest for
You?

• This workshop will focus on the benefits and
  mechanics of contractor retention escrows
• It will provide strategies for effectively
  managing your retention funds
• It will also help you evaluate and implement the
  best solutions to meet your retention needs

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Who Are We?

• Union BanCal Corporation is the second largest
  commercial company headquartered in California,
  and the 16th largest commercial bank holding
  company in the United States
• Union BanCals primary subsidiary is Union Bank,
  N.A., and has a presence in California,
  Washington and Oregon
• Acknowledged leader in Contractor Retention
  Escrow Services

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What is Contractor Retention Escrow?

• Section 22300 of the California Public Contract
  code allows retention funds to be invested in
  interest earning escrows for public works
  contractors
• If you are currently using traditional owner
  retention or performance bonds to guarantee
  performance, your funds are earning money for
  somebody else. Let your retention funds become a
  source of revenue for you rather than a business
  expense. Union Banks Contractor Retention
  Escrow Program focuses exclusively on helping
  public works contractors keep their retention
  funds working for them

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Retention Options

• Non-Interest Earning Retention Option
• 1. Owner Retention This is the default
  option. The project owner
• holds back a set percentage of each
  progress payment.
• The contractor forfeits all interest
  on these funds.
• Interest Earning Retention Options
• Standby Letter of Credit Contractor obtains a
  Standby Letter of Credit in the full retention
  amount. Contractor receives progress payments,
  but credit availability may be affected.
• 3. Pledged-Securities Escrow Contractor puts up
  100 of retention up front. Funds are used to
  buy securities placed in escrow, with interest
  available to the contractor as soon as it is
  earned.
• 4. Interest Earning Escrow Progress payments
  are deposited in an
• escrow account. Interest is
  available to the contractor with
• immediate access to monthly interest
  earned.

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Benefits of Interest Earning Escrow

• Convenient
• Progress payments are deposited in an
  interest-bearing escrow account
• Profitable
• Immediate access to monthly interest earned.
• No fees for this type of escrow account
• Lower retention costs provide the flexibility to
  be competitive on bids, thereby increasing your
  likelihood of winning more bids
• Use interest income for working capital needs to
  pay down debt
• Your choice of disbursement methods
• Interest earned can be retained in account or
  disbursed monthly at your discretion

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Who Can Benefit from a Union Bank Contractor
Retention Escrow Account?

• Contractors performing Public Works projects
  in any of the following states can benefit from a
  Union Banks Contractor Retention Escrow
• ALASKA MONTANA
• ARIZONA NEVADA
• CALIFORNIA OHIO
• COLORADO OREGON
• DELAWARE TENNESSEE
• GEORGIA TEXAS
• HAWAII UTAH
• ILLINOIS VERMONT
• INDIANA VIRGINIA
• MARYLAND WASHINGTON
• MICHIGAN WISCONSIN

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Our Commitment to You

• 24 hour turnaround for preparation and
  distribution of new escrow documents to the
  contractor
• Timely notification of all retention funds
  received
• Various disbursement methods, including cashiers
  check, wire transfer or bank transfer
• Extended business hours 700am 500 p.m.
  Pacific Time (PT) Monday through Friday,
  excluding bank holidays
• After-hours voicemail service
• Knowledgeable specialists who will handle the
  details in setting up escrow accounts

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How to open an Interest Earning Escrow Account?

• You Will
• Complete the Opening Information Sheet
• We Will
• Complete Escrow Documentation package
• Four original Escrow Agreements
• Funds Transfer Order Information
• Escrow Acceptance Agreement

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Summary

• Simplified and customized Escrow Retention
  Program
• Competitive Interest rates
• No Fees
• Questions ?