Riverfront Federal Credit Union was established in 1948, as RDG Reading Federal Credit Union, to serve the employees of the historic Reading Railroad. Through the years, other organizations and companies were permitted to join RDG, leading to substantial growth. To reflect the resulting diversity of its field of membership, the credit union was renamed Riverfront Federal Credit Union in 1987. Today, the institution serves nearly 22,000 members with three locations in Berks County, PA.
After carefully considering options for providing its members with a product to serve as a financial safety net in the event they found themselves short of funds to cover an emergency or unexpected expense, the credit union implemented JMFA OVERDRAFT PRIVILEGE®. With JMFA’s guidance, the program achieved great success. So, credit union leadership decided not to renew the contract with JMFA, choosing to manage it on their own instead. Over the next few years, they were able to maintain the status quo of the program. But as time passed and regulations changed, it became stale.
Redirecting an outdated overdraft strategy
When Tim McLeod was hired as chief executive officer of Riverfront FCU, he and the management team began to move the credit union in a new direction. They determined that their overdraft program could be much more efficient and effective. Additionally, the team wanted to make sure they could maintain appropriate compliance and management strategies to ensure the program would perform at peak performance for the long term. With this in mind, they decided it was time for an upgrade.
It didn’t take long for McLeod and his team to decide where to turn for assistance. Not only had he used JMFA OVERDRAFT PRIVILEGE® in his prior institution, the Riverfront staff were also acquainted with the company and its program from their initial relationship several years earlier.
“I had done a thorough vetting of all the programs out there with my previous employer and JMFA came out on top of all the other options,” McLeod explained. “Based on my experience with JMFA, as well as the success Riverfront had experienced with its initial exposure to the company’s expertise in the overdraft space, we knew they could help us get our program back on track.”
Setting new program expectations
In addition to improved performance results, the credit union was very focused on maintaining a fully compliant overdraft solution in the changing regulatory environment. JMFA’s regulatory knowledge and expertise were extremely important factors in the selection process. “Over the years, we have developed a lot of confidence in how JMFA looks at compliance,” said Jeff Chelius, Riverfront FCU chief financial officer.
“There are a number of boxes that have to be checked to ensure an overdraft program is compliant. We are certain that JMFA will make sure we are in line with all regulations on the operations side, as well as from an overall industry standpoint.”
When Regulation E was implemented, Riverfront FCU stayed on the sidelines by not offering extended coverage on electronic transactions. Consequently, its program results declined. So, one of the biggest opportunities in its renewed agreement with JMFA was properly offering the service to members on purchases made with their debit card, as well as ATM withdrawals.
“During our initial analysis of how to move the credit union in a new direction, we saw where we were potentially leaving a good service on the table by not offering extended coverage to our members,” explained Steve Lescavage, Riverfront FCU asset recovery manager. “We wanted to make sure that we were doing it the right way to avoid any compliance worries. That is a big reason why we brought JMFA back in to re-evaluate the process and get us to where we are today.”
The benefits of accepting expert advice
Since accepting JMFA’s recommendations, the credit union’s overdraft program has experienced remarkable growth. By providing overdraft privilege to all eligible members at the time of account opening and giving members the opportunity to extend overdraft coverage to electronic transactions, program penetration has risen to nearly 90 percent. Extended coverage opt ins have increased 24 percent. In changing its existing overdraft strategy, the credit union has experienced more than a 142 percent increase in annualized revenue.
Improved training and communications resources
Two additional areas of focus for Riverfront FCU were staff training and member communications. According to Lescavage, JMFA addressed these areas with resources that have helped the credit union extend the value of the program to its intended audience even more.
“JMFA’s trainers are product experts and they have been very effective at conveying their knowledge to our staff,” he said. “What’s more, it’s not a ‘set it and forget it’ proposition, it’s an on-going process. They provide initial training and on-going support to help us keep new employees—as well as existing staff—up to speed whenever we need it.”
He continued, “I was in a recent training session and I could see the difference in people when they walked out of the room—their eyes were opened. The detailed training and resources that JMFA provides give our staff more confidence regarding what to say and what not to say to members about our overdraft program. That is very important from a staff development perspective.”
Chelius concurred, “JMFA offers a total package to support our staff. In addition to the training resources, they provide comprehensive materials that we can use on an on-going basis to avoid straying from the compliance side of things. The staff really appreciate having this kind of support available when they are talking to a member face-to-face or over the phone.”
In addition, JMFA’s approach to member communication is an important aspect of the program. “We had gotten away from properly addressing the program with members, but we have been more disciplined since re-engaging with JMFA,” Chelius said. “We believe the guidance and processes JMFA provides are great resources that have an impact on improving our communications efforts, as well as our program’s success.”
Helping members is what it’s all about
To make sure that the program is benefiting the members, credit union leaders regularly check in with staff to gain their input. “I hear all of the time that members who have the overdraft privilege appreciate the service and want to maintain it,” said Lescavage.
McLeod recounted one example of a conversation he had with a satisfied member. “We had just implemented the program and were working with a gentleman who happened to be a mechanic,” he said. “He needed to buy parts that cost $300 to complete a repair job, but he didn’t have that amount in his checking account. Since this member had opted in for extended overdraft coverage, he was able to pay for the parts, knowing that we would cover the transaction. He was very accepting and happy to pay the $30 fee in order to get what he needed to do this job. That is what the program is intended to do. It is a great service for our members when they need money in this type of situation or another emergency.”
For the best results, listen to the experts
As a basis for comparison, Riverfront FCU has experienced managing its overdraft program alone, as well as by utilizing JMFA’s years of program development and consulting expertise. According to McLeod, the success of JMFA’s process—including the compliance knowledge, training and advice on policies to improve program results, along with the company’s overall professionalism—speaks for itself. “Working with JMFA has enhanced our efforts to move our program in a new direction. They have been a very big part in the success of that initiative.”
He continued, “It has been a pleasure to work with everyone in JMFA’s organization—from the sales side, compliance and training personnel, as well as the implementation team. They have always made sure we have everything we need, and have helped us achieve our goals in a seamless and effortless fashion. I would definitely recommend JMFA to another institution that is interested in making its overdraft program more successful. In fact, I do so as often as I can.”