Four Letters. Infinite Potential.

Wake-Up Call: Revenue Loss Turns to Performance & Service Advantage

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Well-tested solution and expert advice successfully turn around program results

Years ago, when US Employees Credit Union (USECU) first implemented a third-party overdraft program, it fit nicely into what members wanted — the ability to temporarily overdraw their account to cover expenses when an unexpected need arose — and provided a healthy revenue stream for the credit union. However, after several years of maintaining the program consistently, income started to decline. According to Frank Nicholson, USECU chief financial officer, “We saw some slight drops in non-interest income over the years, but by 2014 the loss began to exceed 10 percent year over year,” he said. “There were no peaks and valleys, just a consistent double-digit drop in income without recovery.” 

The situation was puzzling. Credit union personnel were doing their best to educate members about the program and following the vendor’s advice on regulatory issues. But they weren’t getting any guidance from the provider on how to reverse the income decline and make the program successful. 

After a while, Nicholson became concerned that the trending was not going to stop — a concern that was heightened by the effects the low interest rate environment was having on the institution’s ability to remain profitable. At that point, credit union management decided it was time to look for an alternative solution that would provide greater results. 

USECU President and CEO Eric Stiegel was familiar with John M. Floyd & Associates (JMFA) through industry connections. After speaking with JMFA clients and learning more about their interactions with the company — and how JMFA OVERDRAFT PRIVILEGE® had turned their performance around to improve profitability in a quick timeframe— USECU leadership contacted JMFA. 

With USECU’s previous experience still fresh in his mind, Nicholson was somewhat skeptical that another program could provide vastly improved results. “I wondered what they could possibly suggest that would reverse the situation that we hadn’t been doing ourselves?”

A few well-placed pieces of advice lead to significant improvements

Once the relationship began, the first thing JMFA’s consultants did was take a thorough look at all aspects of the credit union’s operation, overdraft program processes and member communications. Nicholson was impressed and surprised by the comprehensive approach JMFA took to thoroughly examine the day-to-day data to uncover weaknesses in the program and look for improvement opportunities. “It was reassuring to know that JMFA was going from A to Z to see where we were lacking, in order to update our entire program,” he said.  

Not long afterward, his initial skepticism turned into satisfaction when JMFA’s recommendations started to show results. “After making three or four modifications, the program began to turn around,” Nicholson explained. “It was really surprising to see it happen so quickly.” In addition to experiencing a 20 percent net increase in non-interest income, year-over-year — compared to its previous program results —USECU saw additional improvements and gained confidence in its overdraft program, thanks to JMFA’s guidance. 


  • Comprehensive communications approach
    According to Nicholson, JMFA’s recommendations on how to improve the credit union’s member communications strategy was a major driver in turning the program around. “This had a big impact on our results,” he said. Beyond that, JMFA’s involvement has given USECU reassurance that it is handling messaging correctly to avoid any compliance concerns through:
    • periodic reviews of the member correspondence; 
    • ongoing assistance in making slight modifications to messaging; and providing members with information about the credit union’s alternative services, such as overdraft transfer and line of credit opportunities.

    “I especially like how the program is structured to include educating employees on how it works,” Nicholson continued. “This has enabled member-facing staff to confidently and effectively explain the program, along with the alternatives that members should consider first before using the overdraft option. The training consultant did a really nice job when she was here.”

  • Proven compliance and best practices guidance 
    The credit union’s commitment to due diligence has always been strong and includes monitoring heavy program usage. But management wanted to stay on the right side of regulatory expectations and restrictions. 

    Nicholson had heard about pending class action situations related to balance disclosures and wanted to make sure USECU was using the proper terminology to avoid any legal scrutiny. “JMFA OVERDRAFT PRIVILEGE® has provided everything we need to ensure we’re disclosing account information accurately to avoid any member confusion or legal scrutiny regarding balance disclosures,” he said.

    Early in the relationship, JMFA counseled USECU against raising overdraft fees as a way to increase revenue. The consultant explained that providing a reasonable price to a broad membership can have a greater impact — and serve more members — than a program with higher fees that limit usage. This type of advice has given Nicholson confidence that all of the  ‘I’s are dotted, and T’s are crossed,’ and the program is being maintained properly.
    “JMFA has stepped in to monitor the program along with us — almost on a month-to- month basis — instead of just being a third-party provider that you call when you have a problem,” he stated. “Now I am confident that I will be able to get the answers I need right away if we ever run into a problem with any part of our program.” 

  • More robust software
    The tracking aspect of JMFA Privilege Manager CRM® software has been a marked improvement over the credit union’s previous provider, according to Nicholson. He appreciates the ability to monitor recoveries and maintain balance histories — things he wasn’t able to do before implementing JMFA OVERDRAFT PRIVILEGE®. “The program is much more user intensive and provides easy access to essential information we need when members come in with questions or request to re-establish their limit,” he said. 

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Program results exceed expectations

Looking back on his initial expectations, Nicholson was just looking for anything that would help USECU improve its performance when the credit union began its partnership with JMFA. “I would have to say that I wasn’t a true believer at the time. But when I saw the contract, I thought they must really know what they’re doing because they aren’t asking for any money upfront – except for the retainer which was only for the percentages,” he said. “Within 90 days, my skepticism dissolved when I saw how quickly their recommendations improved our program results. It was just about the best case scenario.” 


What sets JMFA apart from other providers

Nicholson appreciates the good conversations he has had with JMFA consultants, along with the manpower they have provided to address different aspects of the program. He takes comfort in knowing that he doesn’t have to worry about something backfiring or thinking that USECU should have considered some other way of doing things. “JMFA is our fail safe to any legal or compliance exposure,” he said. From a financial standpoint, no upfront licensing fees; no ongoing maintenance costs; a substantial increase in income — averaging 30 percent improvement over base — and very few charge offs highlight the success of implementing JMFA OVERDRAFT PRIVILEGE®.

“Overall, JMFA is in a better position to enhance a program that is struggling,” said Nicholson. “It took me a long time to see that something was missing when our results were lagging. But JMFA was able to use the information we provided to make a tremendous impact on our results.”  He continued, “We are a success story that shows the importance of getting down to the day-to-day workings of the program.

Nicholson’s advice for a financial institution that is looking for better results? “Don’t make the mistake we did by waiting until you see results starting to fall,” he said. “Consider JMFA now as being the experts who can enhance where you are. Even if you think you’re doing okay, they can take you to the next level and help you get more than you expected. I am so sold on how they turned our program around!” 

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About JMFA

For more than 38 years JMFA has been considered one of the most trusted names in the industry—helping community banks and credit unions improve their performance and profitability. Whether it’s recovering lost revenue, uncovering savings opportunities, serving account holders better, finding the perfect personnel fit or delivering a 100% compliant courtesy pay program, JMFA has the right solutions to help you not only meet, but exceed, your goals.

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