What began as Tropicana Federal Credit Union in 1958, became Manatee Community Federal Credit Union in 2010 with a new community charter and a name change. The $28M asset institution is located in Bradenton, FL, and serves more than 3,400 members who live, work, attend school or worship in Manatee County.
Focus on member service and compliance leads to disclosed overdraft program implementation
In 2008, credit union management and its board began to discuss implementing a product that would help financially challenged members to more effectively manage their cash flow. They decided that a fully communicated overdraft program would be an appropriate solution for members, as well as a way for the credit union to better manage non-sufficient funds items and generate additional revenue. However, a requirement for whatever courtesy pay solution they chose was that it met all regulatory expectations. “As a small credit union, it was important that we not have to constantly worry about compliance issues,” said Manatee CEO Sherod Halliburton.
As they began to look for a product that would meet their member service and performance objectives, they were faced with the decision of whether to contract with a third-party provider or maintain an internal program.
As they met with possible providers, credit union management was impressed with JMFA’s 100 percent compliance guarantee and the fact that the company offered resources and consulting advice that would help the credit union manage its program to strategically reach its goals. “It gave us comfort that we would have JMFA’s ongoing expertise to keep the program running effectively, along with their compliance guidance to make sure we were in line with examiners’ expectations,” Halliburton continued. “That was a driving force in our selecting JMFA.”
Training and support materials help to boost member education efforts
As it turns out, another benefit of implementing JMFA OVERDRAFT PRIVILEGE® was the staff training and member communications materials that the program includes. “The training has provided a roadmap so we know that we’re doing the right thing, compliance-wise, and in regards to educating our members on how to use the program wisely,” Halliburton explained.
The result? Manatee CFCU has experienced a 128 percent increase in revenue since implementing the program, and has succeeded in providing members with an alternative to more costly financial products and services. “We have very few members relying on alternative sources for getting the cash they need – such as pay day lenders – which is unusual given our market demographics,” Halliburton said.
Improved reporting capabilities prove beneficial
In response to increased regulatory influence that has made many overdraft programs outdated and obsolete, JMFA has made substantial improvements in the analytics and reporting capabilities of its program to provide clients with the best possible results. Halliburton sees the changes in JMFA’s improved analytics, measuring and reporting capabilities as great resources for the credit union.
“We recognize that this is an important aspect of the program and JMFA’s experts have been very willing to provide staff training and advice on ways to utilize the information that is most helpful in keeping the program on track,” he said. “This has been especially helpful as Manatee increases its focus and staff time on growing its consumer loan business and improving operations.”
Member communication and program management software are keys to program’s overall success
Another key difference of JMFA OVERDRAFT PRIVILEGE® – its member communications support – has proven helpful in keeping members up-to-date on their program usage and helps the credit union keep track of members who might need to be reminded that an overdraft program is a privilege to be used cautiously. “The member education materials and correspondence JMFA provides are effective tools for advising our members about the status of their account,” Halliburton said.
In addition, JMFA’s program management software Privilege Manager CRM® helps the credit union monitor program usage. “We know which members are using the program responsibly, as well as those who aren’t, and we know when we have to set limits,” he continued. “And while sending the member correspondence and the follow-up does require additional time, the results have enabled us to maintain a socially responsible program.” As a result, even though the credit union’s NSF revenue has grown considerably, it hasn’t experienced a high charge-off rate.
And feedback from Manatee’s member services representatives reinforces the value the program brings to members when they find themselves in a financial bind. “The members who use the program appreciate it,” said Halliburton. “We are happy to provide them with an alternative to having their items returned which could result in additional late charges and merchant fees.”
Overall program results are satisfactory
Halliburton has been happy with the results JMFA OVERDRAFT PRIVILEGE® has provided to the credit union. “Compliance is always an issue for a small credit union. The ability to get in with a program and not have to deal with figuring out the compliance situation or how to manage the program going forward is a benefit,” he said. “JMFA has very strong compliance oversight and instruction for analyzing data – all things that would make it an attractive product for a small credit union to take on.”
He continued, “The program has sustained us financially at a time when our loan income was exceptionally low. The income we have earned from JMFA OVERDRAFT PRIVILEGE® allowed us to maintain some fiscal prudence – given that the significant reduction in loan income was offset in part by the substantial overdraft fee income. Also, the program is a means by which we can stabilize and increase our fee income; as we try to grow the community aspect of the membership. We see this as a valuable product for potential new members who may not be able to get access to funds elsewhere.”
Looking forward, Halliburton is confident that JMFA OVERDRAFT PRIVILEGE® will continue to play an important role in the credit union’s success; so much so that the credit union has decided to continue to partner with JMFA for their consulting expertise.