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Cross Valley Federal Credit Union

Review of card brand vendor contracts can help to pay for costly updates

The task of re-evaluating credit and debit card agreements alone is a challenging task. If there’s a need to reissue cards—and upgrade hardware—additional complexities come into play.

This was the situation for Cross Valley Federal Credit Union of Wilkes Barre, Pennsylvania. With 23,000 members and 14 ATMs located across three counties, the expense of an overall upgrade to avoid potential card fraud liability was problematic. But Cross Valley CEO Traci Donahue and her team were committed to providing members with the most up-to-date, secure services and financial products possible.

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Timely phone call brings a solution

Soon after joining Cross Valley’s leadership team, Donahue received a call from JMFA about the benefits of conducting a review of the credit union’s vendor contracts. In talking with Kelly Flynn, national sales director for JMFA Contract Optimizer, the mention of the potential savings and service improvements that could result from a review and renegotiation of the institution’s current credit and debit card brand contracts generated interest. The idea piqued Donahue’s interest because she wasn’t aware that it was possible to negotiate better terms on existing card brand agreements. “When Kelly said there were some really great incentives, I knew right away this was something we should explore,” Donahue explained.

Donahue’s confidence in moving forward with such a review stemmed from a previous experience she had with JMFA. Prior to joining Cross Valley, she had worked with the company’s experts on contract negotiations for services at another credit union. She knew that they had the contract knowledge and negotiating expertise to find out if getting a better deal was possible.

Then when Donahue became CEO at Cross Valley, she sent some contracts—that had been signed by her predecessor—to JMFA to be reviewed. But the contracts had been extended long-term so the timing wasn’t right for trying to negotiate changes right away. While that was a bit disappointing, the fact that JMFA didn’t charge for the contract review made a big impression on her.

After the JMFA team reviewed Cross Valley’s existing card brand vendor contract, they advised Donahue that there were indeed some substantial benefits to switching card brands, based on the credit union’s annual sales volume. Even though she had never considered a vendor change, she decided to proceed with the negotiations process.

She explained that the decision was simplified given the confidence she had gained in JMFA, along with an endorsement of the company’s expertise by the Cross State Credit Union Association.

Contract negotiations lead to exciting service improvement opportunities
Upon completion of the card brand contract review—and discussions with existing and potential vendors—JMFA put together an analysis that outlined the possible contract costs and terms from each bid. While the initial price of reissuing all of the member cards was overwhelming, Donahue realized when reviewing the information with JMFA’s team that the signing bonus and increase in interchange fees offered by a competing card brand vendor would allow the credit union to cover the mass card conversion.

To her surprise, it would also enable Cross Valley to complete some major improvements not possible with the deal offered by the existing brand. This included upgrading 14 ATMs to new EMV specifications and adding two new interactive ATMs—one of which would allow the credit union to maintain a strategic presence in a community where a branch had closed.

“After the branch closing, it was very important for us to continue to provide convenient services to our members in this area,”  Donahue said. “We couldn’t have done that or the ATM upgrades without the new vendor agreement that JMFA negotiated.” 

Plus, there was a $50 liability fee for unauthorized transactions with the existing vendor that the new brand did not charge. And internal reports that had been required previously would no longer be necessary with the new provider—which would help to improve the credit union’s operational efficiency.

Reflections on the impact of the process
While Donahue was amazed at the outcome of the process, she also was mindful of how members might react to the change. “Some members were a little bit uncertain about our reissuing a new card because they were comfortable with the existing card brand,”  she explained. But after reviewing JMFA’s research, she realized that one brand clearly stood out with more robust security features, higher interchange rates and a signing bonus that would allow Cross Valley to greatly improve its service.

“In the end, making the change was a win-win all around,” she continued. “We needed to issue new cards anyway to upgrade to EMV technology. This gave us the opportunity to do that and provide our members with the option to sign up for free identity theft protection. In the end, it didn’t really impact our members at all as the conversion went very smoothly.”  


Partnering with an expert uncovers valuable insight and saves time
Donahue appreciated the fact that JMFA’s involvement allowed her staff to continue focusing on other operational and member service initiatives. “Working with JMFA’s team was a great experience. They handled all of the vendor contacts and back-and-forth negotiations and provided our chief operating officer, chief compliance officer and I with updates and new options that we would never have considered,” she said.

“This project was my colleagues’ first exposure to a contract negotiation. It gave both executives great insight into what the process involves and how to think through the different components of a contract review, without taking valuable time away from their other daily responsibilities. Plus, had we tried to do this on our own, we wouldn’t have known the right questions to ask from our existing vendor, let alone who to contact at another company.”

Professionalism and great service lead to complete satisfaction
Throughout the process, Donahue was confident that JMFA’s experts were focused entirely on finding the best way to help the credit union save money, tap into valuable incentives and uncover opportunities to improve its services. “They always talked to us in a way that we understood what was going on and answered every question to make sure we were comfortable with the outcome of the negotiations,” she continued.

“In the end, making the change was a win-win all around,” she continued. “We needed to issue new cards anyway to upgrade to EMV technology. This gave us the opportunity to do that and provide our members with the option to sign up for free identity theft protection. In the end, it didn’t really impact our members at all as the conversion went very smoothly.”  

“As JMFA brought us into the conversation and explained the options that were available, we were just looking at each other and saying, ‘Is this even real? What are the strings?’ But you know what, there weren’t any strings,” Donahue said. “I realized that if I would have negotiated this contract on my own, the vendor would have given me a number and I would have said, ‘Okay, that’s what it is.’ I don’t know if I would have gone back and pressed them further like JMFA did time and time again.”

With the project complete, Donahue is confident the vendor change has increased the credit union’s level of member service. “We are now offering security and soundness that we would not be doing today if we hadn’t followed JMFA’s advice,” she said.

“We wouldn’t have been EMV-ready, our ATMs would be out of compliance, and I would not have had a solution for continuing to provide members with services after a branch closing. I believe this card brand conversion has resulted in a 100% improvement in our member service level. JMFA did us a great service and their team was a tremendous value to the credit union.”

Speaking from experience on how to get great results
What type of advice would Donahue give to another institution that is currently dealing with the ATM and credit/debit card EMV compliance issue or just looking for ways to save money and potentially gain valuable incentives in order to improve service?

“I would tell anyone to simply pick up the phone and call JMFA or drop them an email,” she said. “It’s not a difficult process, but it was the best thing to have happened for Cross Valley Federal Credit Union. You just tell JMFA the types of contracts you would like to have reviewed, they look through the list and tell you where they can help you … and then they do all of the work. 

“I can’t understand why anyone wouldn’t send their contracts to JMFA for review. There is absolutely nothing to lose,” she continued. “The worst thing that an institution could hear was JMFA saying that they can’t save them any money, and that they should stay where they are. But that’s probably not going to happen. It’s just so worth the call.

Government Printing Office FCU

CREDIT UNION GAINS VITAL SAVINGS, EXPERT ADVICE, AND PEACE OF MIND

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The Government Printing Office Federal Credit Union is located in The United States Government Publishing Office in Washington, D.C., and is committed to meeting its members’ financial needs. When the COVID-19 pandemic arrived in early 2020, the credit union—like most others—was put to the test. A 15+ year relationship with JMFA, which includes both overdraft program consulting and vendor contract negotiations, continues to be a valuable asset.

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Contract Negotiations Yield VITAL Savings

With capital down and staff working remotely during the pandemic, Government Printing Office Federal Credit Union’s President and CEO, Stephanie Covington, had been watching operating expenses carefully. Elsewhere, JMFA Contract Optimizer’s National Director Kelly Flynn was keeping tabs on expiration dates of the contracts she and her team had negotiated previously on the credit union’s behalf, which have resulted in savings of nearly $300,000.

That includes GPOFCU’s credit card processing contract, which JMFA negotiated previously for savings of more than $45,000. Seeing it was coming due in 15 months, Flynn let Covington know the credit union was in the perfect timeframe to begin looking at the renewal agreement. For Covington, it couldn’t have come at a better time.

“Our number one goal was to cut expenses,” Covington said. “We were paying a lot to our credit card processing vendor, and we needed to be efficient with our internal resources.”

After submitting requests for proposals (RFPs), JMFA connected directly with the vendors to discuss volumes and other potential opportunities to net a better deal, including a future debit card processing contract that could be up for grabs. This included quotes for both full-service and pass-thru (or ‘in-house’) options. While GPOFCU previously converted to pass-thru processing and weren’t keen on switching back to full-service, it did provide a complete picture for the credit union to consider, at no extra cost.

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Within two weeks of the initial contact, it was time to review the vendor responses.

“What surprised me was the difference in quotes when it came to costs,” Covington said. While the incumbent vendor offered minimal savings, another vendor offered nearly $18,000 per year.

Covington opted to switch vendors to secure better pricing, netting a total savings of $70,840 over a four-year term. The contract was signed and executed in record time.

In addition to the much-needed cost savings, the credit union’s credit and debit cards will now conveniently all be on one platform. JMFA also negotiated the contract to be coterminous with GPOFCU’s debit card processing contract, making it both easier to manage and giving the credit union more leverage when negotiations roll around next time. And finally, the credit union didn’t have to worry about any upfront expenses—JMFA’s contingency pricing means there aren’t any fees to pay until negotiations finish and the contract with the vendor is finalized.

Throughout the process, Covington and her team appreciated JMFA’s responsiveness and having the task taken off their plates as they steadied the credit union during the pandemic.

“Negotiations are not my forte,” she said. “JMFA’s team are the experts. To me, it was a no-brainer. Without JMFA, I probably would have been pulling my hair out!”

Overdraft Guidance on Demand

While JMFA and GPOFCU have a five-year history with contract negotiations, their time together started with a project to implement JMFA OVERDRAFT PRIVILEGE®. The program and ongoing consulting have helped the credit union develop a sustainable stream of revenue over the years while providing their members a valuable service.

 

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“Some of our members are living paycheck to paycheck,” Covington said. “JMFA’s overdraft program helps them maintain their daily needs. It has been very beneficial for our member base,” helping users to avoid payday loans, borrowing money from family, or overusing credit cards.

With performance-based pricing, JMFA’s success is tied directly to the credit union’s program success; but the access to expert advice and council remains consistent no matter the situation.

“It’s great to have someone reach out to tell us what we need to do to ensure we remain compliant and help us keep up with ever-changing guidelines,” said Carla Baker, GPOFCU’s Director of Finance & Operations. Ebony Stapleton, the credit union’s lead for their overdraft program, and Damian Babineaux, JMFA Senior Relationship Manager, have formed a trusting friendship over the years. When she needs something, she simply reaches out; and if he sees something the credit union needs to address, he does the same. They know he’s keeping a watchful eye and ready to help.

“Kudos to Damian,” Baker said. “When Ebony unexpectedly took a temporary leave of absence last year, he walked me through everything,” to continue managing the program seamlessly.

The credit union has also taken advantage of many resources to improve its overdraft program, including attending virtual learning workshops and JMFA Academy, an in-person event offering comprehensive guidance and best practices.

Silver Linings Amid Unpredictable Situations

JMFA has been a valuable resource to the credit union as it navigates the challenges of the pandemic—and it’s par for the course.

“We’ve had beneficial interactions with JMFA over the years. They’ve always been responsive and proactive,” Covington said.

Covington weighed the cost and benefits of JMFA OVERDRAFT PRIVILEGE®. After speaking with JMFA Regional Director Donna Gibson about the tracking component, the compliance guarantee, the contingency pricing, and the incomes of other institutions that use the program compared to others, she concluded the program was an asset to the credit union. “With how responsive JMFA is and how they consistently reach out, and the relationship we have with them, it’s been very good.”

As for negotiating with vendors, she said, “I’d let other CEOs know that it’s very beneficial to use JMFA. They have the expertise and know what deals are out there and which vendors are reliable. We definitely want to use JMFA for future [contract] negotiations.”

Despite a future filled with unknowns, Government Printing Office Federal Credit Union does know it can count on JMFA to find savings and help increase non-interest income while remaining 100% compliant.

If you have vendor contracts coming up for renewal in the next 18–24 months, request a free appraisal to find out how much JMFA’s negotiation experts can save you.

Find out your overdraft program’s potential today with a free analysis. Simply complete this 2-minute form to get started.

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.

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Baton Rouge Telco FCU – Vendor Contract Negotiations

CREDIT UNION SAVES MORE THAN EXPECTED– $3.2 MILLION, TO BE EXACT

With four branches and $359 million in assets, Baton Rouge Telco Federal Credit Union prides itself on keeping costs down and getting things done in-house. But sometimes, it pays to ‘have a little help from your friends.’ That’s what CEO Darryl Long discovered, and it ended up saving his credit union more than $3 million.

It all started amid breaks at a credit union conference, where another Louisiana credit union shared their contract savings success story with a Baton Rouge Telco employee. After hearing this trusted advice, Long realized JMFA could help his credit union negotiate its soon-to-expire debit and credit card processing contract.

Overcoming Initial Doubts
In the past, when a vendor contract came due, the credit union staff would review the renewal and once in a while get quotes from other vendors, then finish the deal themselves.

“I was a bit skeptical about bringing in JMFA,” said David Karisny, Senior Vice President and CFO. “We have a history of doing this ourselves, with some cost-saving success. But I also felt we were leaving money on the table and that we didn’t have all of the information needed to make the most competitive counteroffer.”

With that in mind, Karisny and Long enlisted additional expertise to explore their savings opportunities. “My goal was to achieve greater savings than we could on our own,” said Karisny, “and have JMFA bring more creativity to the negotiation process than we knew how to.”  The credit union wanted to make sure they were getting the best deal compared to their peers—and JMFA’s extensive knowledge of what vendors charge other credit unions for services gave them the best possible leverage to do so.

The initial appraisal projected an annual savings of $77,628 for the credit union’s debit and credit card processing contract, a pleasant surprise to Long and Karisny. However, they would soon learn their future included more savings than they could have imagined.

Savings … Upon Savings … Upon Savings 

What began as one contract negotiation turned into a three-contract project.

Debit and credit card processing
The JMFA team provided full support for managing the process—they issued requests for proposals (RFPs) with rates the vendor needed to meet to win their renewed business, the proposals were reviewed, and counteroffers were made. After looking at the offers for both five- and seven-year terms from its current vendor, the credit union decided on the shorter term.

Results of the negotiations identified $113,088 in annual savings for the credit union, along with a $75,000 signing bonus AND 11 months of retroactive savings valued at $103,644. Baton Rouge Telco also walked away with no annual price increase for three years, free tickets to the vendor’s annual convention, a favorable early termination schedule and competitive deconversion fees.

If that were the end of the story, everybody would have been satisfied. On the contrary, JMFA Contract Optimizer’s National Director Kelly Flynn had also pointed out early on that the credit union was missing out on major savings by not having a card brand agreement in place with its vendor. Needless to say, JMFA was on it.

Card brand agreement
To get started, calls with major card brands were promptly set up so the credit union could hear their value propositions. After discussing the proposals, the credit union preferred staying with their current brand unless the other vendor offered significantly more to switch. As a result of additional counteroffer negotiations, more substantial deals were achieved.

The credit union ultimately chose to stay with their current vendor based on years of positive experience. Plus, they would get to avoid going through a conversion and switching out member cards.

How much money had been left on the table by not having this agreement in place? The new negotiated contract will earn the credit union $1,721,000 over ten years, including a signing bonus of $280,000, funding to upgrade cards to “contactless,” and marketing support.

Long was delighted and appreciative to uncover this new opportunity. “I have a close relationship with other credit unions, and I think a lot of them don’t know about card brand agreements, either. Without JMFA, we would still be in the dark about it.”

As these negotiations wrapped up with unprecedented savings for Baton Rouge Telco, one more contract had an expiration date looming—and the credit union knew JMFA could work its magic again.

Digital banking 
For the third and final contract of this project, set to expire in approximately 13 months, Long and Karisny already knew they wanted to stay with their current digital banking vendor and have JMFA handle the negotiations. The Contract Optimizer team presented the credit union with an appraisal report, including projected annual savings of $104,610. Soon after, negotiations began they concluded in record time with new lower rates taking effect for a full year of retroactive savings.

Baton Rouge Telco will now be able to provide a mobile suite of services through a single app—a huge convenience to members that not all credit unions offer. Having multiple channels to conduct business outside of the physical credit union is especially valuable now that more people have shifted to mobile banking during the pandemic.

Additionally, Baton Rouge Telco gained a bevy of other benefits:
·       A reduction in one-time fees by $18,250
·       A favorable annual price increase clause
·       $5,500 per year in new product and services savings

New products and services which the credit union will be implementing included:
·       Card controls, for members to turn their card on and off via their app
·       A new remote deposit platform
·       Upgraded services to enhance marketing and cross-selling efforts, including the ability to execute data-driven campaigns

The new contract represents a win-win scenario for both the credit union and the vendor. With the additional savings, Baton Rouge Telco can now reinvest that money with the vendor in new services they’d already planned on adding, without making a dent in its operating budget.

All in all, JMFA found Baton Rouge Telco Federal Credit Union $3.2 million over the course of the three contracts.

“The savings realized was significantly higher than what we’d seen in the past when we negotiated with vendors ourselves,” said Karisny. “The debit and credit card signing bonus was nearly triple what we got last time when we did the negotiations in-house. Plus, the branding contract was a huge benefit we were totally missing out on.”

The proof is in the savings
Before negotiations began, Long admits to having some doubts about whether JMFA would try to convince him to switch to another vendor. “That never happened,” he said. “I never felt any pressure to go one way or another; JMFA just advised us to go with the vendor we felt most comfortable with.”  This vendor-agnostic approach is precisely why JMFA Contract Optimizer is able to get the absolute best deals for its clients.

Karisny also had to overcome reservations about outsourcing the negotiation process. “We’re a relatively small credit union, and our staff wears a lot of hats,” he said. “We usually like to do things ourselves, but we’re spread thin—even more so since COVID-19 came along—and bringing in JMFA freed us up to do other things. It was a smooth process—JMFA did all of the work.”

In the end, they both came around quickly when they saw how JMFA worked as their partner in their best interests. “They made it easy. We got better pricing—much more than if we’d done it ourselves,” Long said. “Even if you think you’re getting a good deal from a vendor, you really don’t know. But JMFA does. It was an incredibly positive experience. We will certainly use them again.”

Long also wants to share his success with others so that everyone can benefit. “The more credit unions JMFA can help, the more experience and leverage they bring to the table for all of us. Our credit union will continue to benefit from their collective knowledge.”

Baton Rouge Telco Federal Credit Union’s route to more than $3.2 million in savings started with a straightforward conversation. How much can negotiation experts save you?

Start the conversation by requesting a free appraisal of your vendor contracts up for renewal in the next 18-24 months.

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

Cornerstone Community Federal Credit Union – Vendor Contract Negotiations

LONG-TERM PARTNERSHIP WITH JMFA CONTINUES TO PAY OFF

CONTRACT NEGOTIATIONS FIND HALF A MILLION DOLLARS IN YEARLY SAVINGS

With $445 million in assets and 47,000 members, Cornerstone Community Federal Credit Union has made taking care of people its primary mission since its beginnings in 1957. It also has a long history with JMFA: Cornerstone CFCU has used JMFA’s overdraft privilege consulting services with great success since 2004. That strong partnership led the credit union to seek JMFA’s assistance with contract negotiations.

SERENDIPITOUS EMAIL CATCHES CREDIT UNION’S ATTENTION
In the past, some vendor contracts at Cornerstone had renewed automatically; but knowing that this results in ever-increasing fees, the credit union recently committed to reviewing every contract that comes up for renewal.

An email from JMFA promoting JMFA Contract Optimizer arrived in Cornerstone CFCU President and Chief Operating Officer Mary Scheib’s inbox one day.

“It was almost perfect timing,” Scheib said. “Our credit and debit card processing and bill pay contract was coming up for renewal and it really needed to be reviewed. I had already looked at the agreement myself—it was a monster.”

Scheib got in touch with JMFA National Sales Director Kelly Flynn, who could tell immediately that the credit union was overpaying. Flynn and negotiation specialist Mary Soergel reviewed the contract line item by line item and conservatively estimated $198,913 in annual savings. Thrilled, Scheib gave JMFA the green light to proceed.

NEGOTIATIONS MORE THAN DOUBLE INITIAL SAVINGS PROJECTIONS

JMFA began negotiations with the vendor. Knowing the savings that could be achieved on each service and fee, JMFA made a detailed and aggressive counteroffer with a push for additional concessions that would benefit the credit union.

By negotiating every line item of the contract, JMFA found the credit union $516,338 in annual savings. This included a $150,000 sign-on bonus, a PIN network upgrade with a $40,000 sign-on bonus and projected interchange revenue of $14,000 a month.

The outcome left Scheib with a number of emotions. “How could you not be pleased when you look at the bottom line? That number is striking,” she said. “Yet, all these years of overpaying, I also felt a bit angry at myself. I should have had JMFA review the contract five years ago. The savings we achieved is a testament to how you really have to take care of yourself—the vendor isn’t going to do it for you.”

For a credit union looking to increase its net worth, Scheib notes, “This is probably one of the easiest things we’ve done to boost our bottom line.”

EXPERT NEGOTIATIONS COME WITH EXPERT ADVICE
Early in the process, Scheib considered switching Cornerstone’s bill pay vendor. However, after negotiations, the credit union ended up saving $100,000 per year on that portion of the contract. JMFA advised Scheib to keep it bundled with the current vendor for the time being to get the best pricing, and because changing vendors would be an undertaking that Scheib was not looking to tackle at the moment.

With the new contract in place, she now has several years to consider switching and can better prepare for the change if she decides to go that route. “JMFA was a great sounding board as I made decisions,” Scheib said.

FOUND MONEY GETS PUT TO WORK
With more than half a million dollars in savings each year recouped, Cornerstone CFCU could finally pursue several services it had put on the backburner due to a lack of funds. The credit union added three services for its members:

1. Tokenization for Apple Pay, Google Pay and Samsung Pay

2. Texting notifications for debit cards

3. Identity verification and fraud detection for credit cards, and member access to their credit scores

“We want to give members what they want, and keep up with those wants,” Scheib said. “The enhanced fraud detection is especially important. If not for the savings from JMFA Contract Optimizer, these services may have been pushed to the side.”

NEW SUCCESSES ENHANCE LONG-LASTING PARTNERSHIP
“We have had a great relationship with JMFA over the years—they’re not just a vendor, it’s definitely a partnership,” Scheib relates. “I feel like Kelly and Mary are my partners now, too. They’re easy to talk to and just so open. And like anything else with JMFA, the process has been very professional.”

After bringing JMFA on board, Scheib—like many other JMFA Contract Optimizer clients—learned just how intricate the negotiation process is and how beneficial it was to hand it off confidently to an expert.

“With how much I had on my plate, I just sit back now and think, ‘How the devil could I have done this without JMFA?’” she said. “Honestly, the time it would have taken to do this myself would have been impossible. I could have gotten some savings, but nowhere near what JMFA did. They have knowledge that I don’t have—the market rate for services—because they’ve done this for so many other institutions. That gives them incredible bargaining power.”

Having found an ally for contract negotiations, Cornerstone can count on JMFA to proactively ensure they’re always getting the best deal. Not only will JMFA conduct annual billing audits to make sure the new rates are correct—Flynn will also reach out to Cornerstone 18 to 24 months before the contract expires to begin the negotiation process again.

With such a beneficial experience, Scheib urges other credit unions and banks to have a conversation with JMFA and get a free analysis. “It’s no skin off your nose to talk to JMFA,” she explained. “They’re very forthright and you’ll know before you sign anything what they’re going to get for you. If you reach out, you won’t be disappointed.”

She concludes, “Thank goodness we walked down this path!”

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.

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