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First Century Bank – Overdraft Program Consulting

TO FULFILL COMPLIANCE, OUTDATED SOLUTIONS NEED REPLACING

All-new overdraft strategy leads to full compliance, improved service and increased revenue

As regulatory expectations on financial products and services increased following the economic downturn, the leadership at First Century Bank of Tazewell, Tennessee, made the decision to discontinue use of its overdraft program because of compliance concerns when Regulation E was implemented on ATM and one-time debit card transactions. “There was a lot of uncertainty about the program from a regulatory perspective,” said Overdraft Privilege Program Administrator Amy Earl. “We didn’t want to put the bank or its customer service initiatives at risk. Plus, at the time there was no one dedicated to managing the program full time.”

Since implementing JMFA OVERDRAFT PRIVILEGE®, the bank has experienced many positive results, both internally and from a customer service perspective.

More accessibility to expert advice

According to Amy, during the initial implementation JMFA’s experts worked closely with bank staff to provide the information they needed to get on board. Since then, they have continued to offer on-going support and advice to help keep the program running smoothly. This support is very important to her. “We talk every month and I know that JMFA’s expertise is just a quick email away whenever I need anything,” she said. “We are very happy with the amount of help we get—no matter what time it is, it is easy to get a hold of JMFA.”

Additionally, the company’s monthly newsletter, Industry Insights and periodic Compliance Update bulletins help to keep bank personnel up-to-date with timely information. “The details JMFA provides are very helpful to keep everyone up-to-speed—from a program management and compliance perspective,” she continued.

The reports provided through Privilege Manager CRM® software are also a big part of JMFA’s support. “Before we implemented JMFA OVERDRAFT PRIVILEGE®, we spent time manually preparing many of the reports we relied on to manage our program,” Amy said. “Now, we can obtain customized reports at the touch of a button.”

This has allowed staff members who contact customers when they overdraw their account to keep track of the program and how it is being used much better than with their previous provider. “We use Privilege Manager CRM® religiously,” she continued. “People are in and out of the program all day. It is very helpful for me when I need information on such things as charge offs and recoveries, and making sure customer calls are made in a timely manner.”

Increased training resources and support

Bank personnel also have benefited from JMFA’s on-going staff training focus. In addition to the time JMFA consultants have spent in the bank’s six branches, Amy and a colleague attended a recent session of the JMFA Academy in the company’s Houston training center. “They provided the latest information on compliance, tips on program reporting and different benefits of Privilege Manager CRM® software, as well as a very thorough refresher on some of the information and resources that had been presented when we initially implemented our program,” she said. “When you are in the process of learning something new, there is a lot to take in. So, this was a good reminder for us.”

She continued, “Once we were back at the bank, I realized that having a second person attend the sessions was really helpful. There are some things she picked up regarding overall processes and procedures that I missed and vice versa.”

Better customer communications

With the guidance that JMFA provides, the bank is now much more able to communicate effectively with account holders. “We definitely use the materials to make sure customers know when they are overdrawn, as well as to explain how the overdraft program works, said Amy. “When customers receive notification and contact us to check on their account status, our staff has an opportunity to point out the benefits of the program, describe how it works and provide all the details. This helps to alleviate customer concerns and puts them more at ease with the process.”

Results beyond expectations

Initial income projections for the bank’s overdraft program potential were impressive. And thanks to the commitment of management and staff to follow JMFA’s program recommendations, actual results have far exceeded initial projections with a 141 percent increase in revenue.

Moreover, front line staff is more knowledgeable about how to explain the proper usage of the program. As a result, customer response has been positive. And it shows, based on program use and an increase in opt ins for extended coverage on debit and ATM transactions. “Customers appreciate having access to the additional convenience and service the program provides,” said Amy.

The advantages of following expert advice

Since accepting the initial peer recommendation for JMFA OVERDRAFT PRIVILEGE®, First Century Bank management has been very happy with the overall program results, according to Amy. “Our first impression has been fortified by the peace of mind provided by the compliance guarantee, the ease of program management, and the on-going advice and support that JMFA provides,” she said.

Now, someone is looking at the bank’s overdraft program every day to keep track of how it is working. Plus, with better training and customer communications support, bank personnel have stronger confidence in the service they are offering to customers.

“We rely on JMFA and know that if they tell us to do something it will work. We were missing out on a lot of income opportunity. JMFA has provided us with the guidance and direction we needed to run our program effectively,” Amy concluded. “All of the pieces are working smoothly together and it has been great for us and our customers. We would absolutely recommend JMFA to another institution.”

About JMFA
JMFA is one of the most trusted names in the industry. Whether it’s recovering lost revenue, creating more value, serving members better, delivering a 100% compliant overdraft service, or uncovering new savings with vendor contract negotiations—JMFA provides measurable results with proven solutions. To learn more, contact your local representative or call us at (800) 809-2307.

Read more Case Studies

The Bank of Marion – Overdraft Program Consulting

BANK RENEWS AND PROCLAIMS: “IF IT’S NOT BROKE, DON’T TRY TO FIX IT.”

The Bank of Marion (BoM) was founded in 1874, making it the third-oldest bank in Virginia. With $351 million in assets and 14 locations across Southwest Virginia (plus a branch across the state line in Johnson City, Tennessee), the bank continues to thrive by giving its account holders the latest and greatest offerings along with good old-fashioned customer care.

WHY MESS WITH SUCCESS?
The Bank of Marion signed on to implement JMFA OVERDRAFT PRIVILEGE® after seeing a decline in performance and service from its previous vendor. Then, after their initial engagement, the bank signed a renewal contract with JMFA with no hesitation. What made this decision so easy?

According to BoM CFO Chris Snodgrass, “We’re not the experts on overdraft, JMFA is. It’s our largest source of non-interest income — why not remain partnered with the experts and keep that income steady?”

More specifically, the bank found the ongoing monitoring by JMFA to be invaluable in maintaining both performance and compliance.

PERSONALLY MONITORING PERFORMANCE
Snodgrass enthusiastically recalls how JMFA has had a presence during the entire five years of the bank’s initial contract.

First, there are the monthly reports which show key profitability areas. Second, every two to three months, there is a deeper dive into the metrics with data analysis to review what looks good, what is doing ok, and what needs attention. And third, every year, the JMFA team offers Snodgrass a comprehensive and detailed check-in.

But that’s not all. JMFA also visits The Bank of Marion on-site each year to re-interview Snodgrass, the bank’s Operations Officer, and the employee who administers the overdraft program. And each year, according to Snodgrass, they discover a few things that the bank hadn’t fully implemented, shining light on new opportunities.

“When we implemented our customer acquisition and growth program [with another vendor],” Snodgrass said, “we doubled our account openings and our charge-offs went up. They monitored that and after implementing his recommendations, we got our charge-offs down and more in-line with the peer-group averages for JMFA’s client base.”

This personalized, ongoing monitoring and service proved a stark contrast to the overdraft vendor that BoM used previously, which rarely contacted the bank aside from collecting the yearly software maintenance fee.

“Before JMFA,” said Snodgrass, “I couldn’t tell you all the data points, but now, we’ve dialed into those key metrics on the monthly reports.”

This personalized, ongoing monitoring and service proved a stark contrast to the overdraft vendor that BoM used from 2003 to 2013, which rarely made contact with the bank aside from collecting the yearly software maintenance fee.

“Before JMFA,” said Snodgrass, “I couldn’t tell you all the data points; but now, we’ve dialed in to those key metrics on the monthly reports.”

MAINTAINING COMPLIANCE
In keeping with JMFA’s 100% compliance guarantee, the compliance component of the program has also impressed Snodgrass and BoM, saving them time, money, and headaches.

For instance, the bank often sends out educational mailings. If any regulatory changes occur, JMFA immediately notifies BoM about what needs to be updated—then confirms that those changes have been made when on-site for the comprehensive review.

“That review is important not only from an income perspective but also from a compliance and risk management perspective as well,” Snodgrass said.

On why BoM renewed with JMFA, he said, “I know from talking with my JMFA reps that some clients decide to go off-contract and try to do it on their own, but we decided that the ongoing fine-tuning is a clear benefit. If you leave something untouched, best practices will fade over time—things get lost in transitions, between changes in employees.”

But, Snodgrass is confident that that the ongoing monitoring and customer service from JMFA would catch anything that slipped through their team, preserving the integrity and profitability of the overdraft program.

“As a retail-focused bank, we’re spending a significant amount of money acquiring new customers. I think it would be foolish to not to keep the good systems [from JMFA] in place.”

LEARNING OPPORTUNITIES ABOUND
The Bank of Marion has also taken advantage of JMFA’s educational resources over the years.

The bank’s training manager leads the bank’s new teller training and annual refresher training. Parts of those trainings include how to open a new account — a process that uses scripts provided by JMFA for overdraft opt-in.

The bank has also sent two employees to Houston for continuing education through the JMFA Academy. Snodgrass reports that upon returning, the employees felt more engaged, had a more comprehensive view of what they were doing, and felt proud of the services the bank offers to its account holders

CONTINUED SUCCESS MAKES FOR AN EASY CHOICE
Since implementing JMFA OVERDRAFT PRIVILEGE® and its customer acquisition program, the Bank of Marion has seen considerable growth. Comparing quarterly reports of all the banks in Virginia, The Bank of Marion’s fee income as a percentage of assets regularly outperforms the average of the larger banks in the state with $1 billion or more in assets. Snodgrass notes that this is particularly outstanding, as BoM doesn’t have the trust departments or mortgage servicing that some of those larger banks have.

“Some of the numbers are kind of hard to believe,” said Snodgrass. “When I talk to other bankers, I show them our numbers and they see it. But you have to believe results [like ours] can be true for your bank. It’s been a fantastic thing for us and our customers.”

In closing, Snodgrass suggests other banks and credit unions don’t delay in contacting JMFA about its overdraft program.

JMFA is proud to continue delivering exceptional service to The Bank of Marion and helping to provide a fully disclosed, 100% compliant overdraft program and valuable service to its account holders.

About JMFA
JMFA is one of the most trusted names in the industry. Whether it’s recovering lost revenue, creating more value, serving members better, delivering a 100% compliant overdraft service, or uncovering new savings with vendor contract negotiations—JMFA provides measurable results with proven solutions. To learn more, contact your local representative or call us at (800) 809-2307.

Read more Case Studies

Heartland Tri-State Bank – Vendor Contract Negotiations

AMID A HECTIC ACQUISITION, BANK CEO ENLISTS HELP TO RENEGOTIATE VENDOR CONTRACTS

Established in 1985, Heartland Tri-State Bank is a full-service community bank that prides itself on being “locally owned and community focused.” With $130 million in assets and four branches across Kansas, the bank has experienced a stretch of growth, having recently acquired two smaller banks.

These acquisitions, and the work involved in completing them, represented a huge undertaking for Heartland Tri-State CEO Shan Hanes. It became the catalyst for seeking outside help and expertise with contract negotiations, but first he had to clear one hurdle: convincing his Board of Directors that it would be both necessary and profitable.

ONE CONTRACT NEGOTIATION LEADS TO ANOTHER
Hanes had first met Regional Sales Director Andre Branning at an industry event, where they had briefly discussed that the bank’s core processing contract would expire in approximately 24 months. Branning suggested that before Hanes sign the renewal, he let JMFA take a look and see how much they could save by doing the renegotiation. Having nothing to lose, Hanes agreed, and was contacted later by National Sales Director Kelly Flynn to begin the free analysis.

Around the same time, Hanes had begun discussions with his current vendor for the two core bank conversions of the acquisitions. He was shocked and dismayed when they gave him a $150,000 quote just to convert the two new banks to their service.

“I kind of lost it,” Hanes said. “I thought, ‘We’re done! We’re going to another vendor.’” He even requested a proposal from another core provider, eager to get that cost down. “Credit to JMFA and Mary Soergel, our project manager,” he said. “She allowed me to lose it for a minute; part of the value she provided throughout the process was keeping a level head.” (JMFA would later use that proposal as leverage while negotiating with the bank’s current vendor.)

SECURING BOARD APPROVAL
When Hanes first suggested hiring JMFA to renegotiate the bank’s contracts, he experienced unexpected pushback from his Board of Directors. They wanted to do it in-house and didn’t think it made sense to outsource such a project. Undeterred, Hanes laid out his reasoning.

For starters, he and his staff were much too busy with the bank acquisitions to successfully take on the renegotiations themselves.

However, the main selling point was the estimate that JMFA had put together for Heartland Tri-State. It detailed specific savings across five services: core processing, debit card processing, item processing, bill pay and fees for card plastics. Hanes took that estimate to his Board, who then realized how much work was actually involved in the renegotiation process.

“JMFA broke down every line item,” Hanes explained. “That, to me, was above and beyond, but that’s what it takes [with vendors]. You can’t just go in saying, ‘I want to save $150,000.’ That’s the difference between a banker negotiating and JMFA.”

Of course, the projected savings also impressed the Board. Of an annual vendor spend of $333,430, JMFA estimated they could secure $43,481 in yearly savings. With JMFA’s long-standing reputation for meeting and exceeding projections, the Board confidently signed off on the proposal. It was now time for JMFA to get to work.

INSIDE THE NEGOTIATION PROCESS
JMFA began contract negotiations with the bank’s current service provider, knowing that if they wouldn’t budge, Hanes would be willing to move to another vendor. They used the proposal he had secured earlier to their advantage, letting the current vendor know what others were willing to concede to and opening the door for more attractive concessions.

The first response from the current vendor was $50,724 in annual savings—more than initially predicted in JMFA’s analysis. But, the vendor still wanted a large fee to convert the acquisitions. JMFA knew they could do better and answered with an aggressive counteroffer, getting creative in breaking down the savings among the five services and multitude of line items. In this case, the vendor feared losing their client to the other vendor JMFA and Hanes had in their back pockets and had to go to higher-ups to sign off on the offer. And sign off on it they did.

When all was said and done, JMFA negotiated an annual savings of $83,461 for Heartland Tri-State Bank, as well as $250,000 in signing bonuses that would more than offset the cost of the two bank conversions. Additionally, JMFA secured a co-terminous date for the bank’s debit card processing contract (which, unlike the other contracts being negotiated, was not set to renew until 2022—a range typically too far off to begin renegotiations).

With the new year fast approaching, Hanes relied on JMFA to complete the negotiations while he tended to his many other projects. “Year-end is busy for me,” he explained, “and I didn’t have time to stay on top of the vendor. My plate was full. I knew the clock was ticking, but I wasn’t worried. I had huge peace of mind and trust in JMFA.”

IN HINDSIGHT, THE CHOICE WAS OBVIOUS
Once the deal was done, the year had ended and the bank acquisitions were completed, Hanes had time to reflect on the entire process with JMFA.

With all the moving parts involved, follow-up calls and questions for the vendors, and pages and pages of contractual language to comb through and negotiate, Hanes wholeheartedly recommends JMFA for the savings they provide, in terms of both money and time.

“I’ve already addressed with the Board that this was the smartest decision we could have made,” he said. “Now that I’m through it, it’s the only way to do it. As a banker, you don’t have the time to go into all the details involved.”

In addition to the savings, Heartland Tri-State can also count on JMFA’s ongoing monitoring and support. JMFA will review the bank’s vendor invoices annually, ensuring that what was agreed upon is reflected in the bills. Plus, with the services now all terminating on the same date, JMFA will know precisely when to start the renegotiations to get the best deal, and will proactively reach out to Heartland Tri-State at that time.

In the case of Heartland Tri-State Bank, as with so many other JMFA Contract Optimizer clients, all it took to get the ball rolling toward major savings was requesting a free analysis.

About JMFA
JMFA is one of the most trusted names in the industry. Whether it’s recovering lost revenue, creating more value, serving members better, delivering a 100% compliant overdraft service, or uncovering new savings with vendor contract negotiations—JMFA provides measurable results with proven solutions. To learn more, contact your local representative or call us at (800) 809-2307.

Read more Case Studies

The First State Bank of Columbus – Overdraft Program Consulting

STAYING FOCUSED ON COMPLIANCE & PERFORMANCE STRENGTHENS COMPETITIVE EDGE

The First State Bank in Columbus, Texas, implemented JMFA OVERDRAFT PRIVILEGE® in order to enhance its product offerings, grow its customer base and provide superior service in a competitive marketplace. Over the past several years, the bank has experienced very positive results in terms of strong program participation, increased revenue and compliance peace of mind. At the same time, its customers have benefitted from a reliable service that helps them maintain financial stability. .

Compliance peace of mind reinforced by on-going advice and resources
According to Donna Krueger, First State Bank senior vice president/compliance and operations, the bank relies on JMFA’s regulatory expertise and quality employee training opportunities to maintain compliance with all overdraft regulations and best practices. As regulatory uncertainty and marketplace competition have continued, Donna and her colleagues have remained confident that their overdraft program is fully compliant.

Donna has so much confidence in JMFA’s compliance expertise that when she was completing due diligence on another overdraft program option, the first thing she did was to check the program’s compliance component. When her contact explained that the provider considered this the responsibility of an institution’s compliance officer, she said, “I am the compliance officer and there is no way I would run this program without an expert to guide me on how to keep it compliant.”

Donna considered that difference a big selling point for JMFA. “We know that if we follow what JMFA tells us to do, the assurance is there that we are doing it right, she explained.”

On-going support simplifies program management
As far as the everyday program maintenance is concerned, Donna and her staff credit JMFA’s customer communications resources, on-going recommendations and easy-to-use software for facilitating the process. “The program’s reporting capabilities help us keep track of important metrics, such as program penetration rates, opt-in rates, income per account, NSF income, charge-offs and more,” Donna said.

Best practices lead to improved service and sustainable income
While JMFA’s compliance expertise was one of the main reasons bank management originally chose JMFA OVERDRAFT PRIVILEGE®, they are also satisfied with the results it provides from both a customer service and revenue perspective. Customer appreciation of the service is evidenced by increases in extended coverage opt ins and program use. And by following JMFA’s best practice recommendations, the bank has been able to protect and grow its revenue.

The value of a professional perspective
Donna and her staff continue to realize how important it is to listen to the experts when it comes to compliance and best practices. “I would advise any other bank to get JMFA out to look at their situation to see what they are doing. JMFA will provide a compliant solution that works for them.”

From a program administration perspective, Liska Pilsner, the bank’s overdraft program administrator appreciates JMFA’s hands-on approach. “They have great people who will walk you through the program and answer any questions you might have to make sure you are doing things the right way,” she said. “They always respond to our questions in a timely manner and work with us to fix any problems we have.”

Melissa Fitzpatrick, First State Bank vice president agreed. “JMFA runs a complete program with compliance being at the very heart. Institutions should give them a try.”

About JMFA
JMFA is one of the most trusted names in the industry. Whether it’s recovering lost revenue, creating more value, serving members better, delivering a 100% compliant overdraft service, or uncovering new savings with vendor contract negotiations—JMFA provides measurable results with proven solutions. To learn more, contact your local representative or call us at (800) 809-2307.

Read more Case Studies

Washington Savings Bank – Vendor Contract Negotiations

JMFA NEGOTIATORS NET $2.4 MILLION IN SAVINGS, TO BANK’S SURPRISE AND DELIGHT

Founded in 1883 as a means to help its customers purchase homes, Washington Savings Bank has grown over the past 130+ years to three branches in and around Effingham, IL, with assets totaling $374 million. Nevertheless, the bank had never previously thought it represented a sizeable account to its core and card processing vendor, and therefore had never attempted to negotiate its renewal contracts beyond a few relatively minor perks and discounts. They soon learned that they had more leverage than they ever could have dreamed.

Eye-Opening Appraisal Extinguishes Doubt
Washington Savings Bank President and CEO David Doedtman had cost reduction on his radar, and began wondering if they’d been paying too much to their vendors. One day, he received a call from JMFA to discuss overdraft consulting services. But with contracts on his mind, Doedtman quickly turned the focus to vendor contract negotiation services.

It turns out the bank had not attempted to negotiate with its vendors in the past, aside from an extra ticket to the vendor’s annual conference or credit to spend on a new service. They had always just trusted their client representative to watch out for them, and assumed everyone received a standard pricing package. They also had several of their services bundled with the vendor and felt that it may disrupt the flow of business if they made a switch.

“I thought, if they don’t think I’m leaving, I don’t have any leverage,” Doedtman recalled.

Having years of experience working with financial institutions of all asset sizes, different geographic markets and likely just about any vendor in the financial services industry, the team at JMFA, led by National Director Kelly Flynn, knew the opposite to be true.

For starters, Doedtman began his contract discussions with JMFA a full 18 months before the contracts were up for renewal. That, says Flynn, is the optimal time to begin opening dialogues with vendors.

The JMFA team went through the bank’s contracts line item by line item and provided Doedtman with a free appraisal, projecting that the bank could be saving approximately $255,000 per year.

“I was happily shocked … and a little angry at having overpaid so much in the past,” Doedtman said. From there, it was full steam ahead.

Negotiations Exceed Expectations 

Doedtman, along with Washington Savings Bank Vice President Elaine Buehnerkemper and Project Manager Allison Donsbach, gave JMFA the go-ahead to create a formal request for proposal with their vendor that week. In the meantime, the trio demoed new services, including Online Account Opening, Account Opening Screening, Voice Banking technology, and some new online banking features for business account holders.

JMFA received the first response from the vendor: $220,000 in annual savings. Though a solid first offer, the amount fell a bit short of initial projections and came with terms that JMFA advised against. JMFA knew from experience they could do better. Having expert contract negotiators on their side gave Doedtman and Donsbach confidence they would get the maximum savings and most beneficial terms without having to spend their valuable time in the minutia of negotiations.

After further discussions and negotiation, the vendor offered a 6-year term with $2,800 more in monthly savings on debit card processing, bringing the new annual savings to $289,000. With one more counter-offer by JMFA, the bank secured a final savings of $300,000 per year, plus bonus money to offset the cost of new services, and 12 months of retroactive savings. 

During the negotiation process, JMFA also uncovered that the bank did not have a card brand agreement in place. They swiftly negotiated a $119,000 one-time signing bonus with that vendor, a move that astounded Doedtman.

“I didn’t know we could get money for our debit card … $119,000 just to keep using a logo on debit cards we’ve been using forever!” he exclaimed.

All in all, JMFA negotiated the following terms for Washington Savings Bank, resulting in $2.4 million in savings over the next 6 years:

  • $2.1 million in savings ($300,000 per year in savings for a 6-year term plus 1 year of retroactive savings)
  • $300,000+ in signing bonuses

A significant amount, especially considering the bank didn’t believe they had any leverage to negotiate!

Putting New Money to Good Use 
With more than $300,000 annually recouped, Washington Savings Bank is now in a position to offer additional services to account holders.
In addition, the savings will help the bank’s bottom line with the compressing interest margins in today’s market.

Lessons Learned from Hiring a Third-party Negotiator
After working with JMFA to negotiate one of their largest vendor contracts, Washington Savings Bank walked away knowing more about the process and the value of hiring an expert negotiator.

Donsbach says, “I’m very pleased with JMFA and their responsiveness. We would have been blind going in and doing this by ourselves.”

“I think it was great that we didn’t have to go back and forth with our rep,” Doedtman adds. “Obviously, JMFA knows what they’re doing. They had a firm grasp of what each line item should cost, they knew where to push, and they knew where to let go so we could get a better deal on other items.”

Doedtman is beyond pleased with the incredible savings JMFA helped them find. “The sheer dollar amount … I’m just shocked at how much [the vendor] was willing to go down and how much savings are out there,” he said. “I never would have thought once you’re locked in that you would have that negotiation leverage.”

Partnering with experts also opened Doedtman’s eyes to how smooth and successful it can be to renegotiate a complex contract. “It’s been incredibly valuable. Had we tried this ourselves … Gosh, I don’t know where we would have started, but I know we wouldn’t be where we ended up!”

Donsbach agrees, saying, “Even if I had dedicated 40 hours in the workweek for a month, I still didn’t have the expertise necessary to do this.”

Think you don’t have the leverage to get a better deal on your vendor contracts? So did Washington Savings Bank—and then JMFA found them $2.4 million. Request a free appraisal to find out how much your institution could be saving with an expert contract negotiator.

About JMFA
JMFA is one of the most trusted names in the industry. Whether it’s recovering lost revenue, creating more value, serving members better, delivering a 100% compliant overdraft service, or uncovering new savings with vendor contract negotiations—JMFA provides measurable results with proven solutions. To learn more, contact your local representative or call us at (800) 809-2307.

Read more Case Studies