River Valley Credit Union – Overdraft Program Consulting



When a low interest rate environment negatively impacts the spread between interest income and interest expense, profitability suffers no matter an institution’s size. Couple that with fewer dependable sources of revenue, and the ability to cover operational costs can be extremely difficult for community banks and credit unions without substantially raising existing fees.

For River Valley Credit Union of Ada, Michigan, overdraft income became a dependable source of revenue after the institution signed a contract to implement JMFA OVERDRAFT PRIVILEGE®. Over subsequent years, the credit union relied on JMFA’s resources and expertise to keep the program running smoothly despite ongoing regulatory changes and extended periods of low interest rates.

At one point, with the program up and running successfully, credit union leadership decided they could maintain it internally. But they weren’t as happy with the software furnished by their core provider. So, they arranged to undergo a program review by JMFA and have maintained a relationship with the company ever since.

According to River Valley CU CEO Janelle Franke, it’s reassuring to have professional advice when it comes to maintaining such an important revenue source. “Without JMFA’s guidance, our program could easily become neglected and not perform as well as it should,” she said. “Plus, their focus on monitoring important performance trends allows me to address overall credit union growth, membership service quality and ways to increase ROA. Thanks to their involvement, I am confident we are doing things the right way.”

With JMFA’s resources and ongoing support, the program has exceeded initial performance expectations in a number of ways, including:
• total income earned from the program, to-date, has surpassed initial estimates;
• average income improvement over base for the last 12 months alone is 78 percent;
• program penetration has increased from 80 percent at renewal baseline to 92 percent; and
• opt ins for coverage on debit card transactions have increased from 67 percent at baseline to over 80 percent.

Additionally, JMFA’s Privilege Manager CRM® software has provided River Valley CU with a much more comprehensive, user-friendly tool for managing the program than its core provider offered — along with more professionally designed communications materials for staying in touch with program users.

“When we were completing our due diligence and considering a new program management agreement with JMFA, our core provider asked us why we were contracting with a third party since they had the tools we needed to manage the program ourselves,” Franke explained. “But we didn’t feel the end-product was as intuitive or as high quality. With the growing importance of technology management, JMFA’s Privilege Manager CRM® is a more efficient tool for keeping track of the daily activity.”

Plus, with access to more comprehensive program data, JMFA’s support experts have been able to clean up some old baseline information, remove non-performing accounts and provide Franke and her staff with a more complete picture of how the program is performing.

Another upgrade included in Privilege Manager CRM® was the option to utilize cloud technology — something Franke hadn’t previously considered. When JMFA first approached her about the cloud option, she was a little uncertain. “With other changes that were taking place in the credit union at the time, I was hesitant to take on a new initiative,” she said. “Besides, our current set up was working fine.”

But once she saw how simple it would be to make the upgrade and realized the benefits of going to the cloud, she had a change of heart. In addition to providing greater access to the program’s results and ensuring that data was safe from a possible on-site computer glitch, the credit union was able to open a workstation that had been restricted as the location for a standard PC that ran the program software.

“Gaining the additional office space was a tremendous plus for us, along with the reassurance that we don’t have to worry about software licensing or making sure software updates are made appropriately,” Franke explained. “Now everyone is on the same software version and we know everything is being backed up regularly. Without a doubt, utilizing JMFA’s cloud technology has been a huge positive. I definitely think the cloud is the way to go.”

Over the course of the credit union’s continued use of JMFA OVERDRAFT PRIVILEGE®, employees have come to recognize and appreciate the program’s benefits for members. “The comprehensive training materials JMFA provides have helped our staff understand how the program works and how to best explain it to our members,” said Franke. “Plus, on a regular basis our relationship manager completes a program audit and spends a day or so in the credit union. He is always readily available to answers any questions we have and makes recommendations to keep us on our toes.”

According to Franke, thanks to these resources, the staff realizes that the program is a better option for members than going to a cash advance store and they appreciate the basic intent of JMFA OVERDRAFT PRIVILEGE® is not to help perpetuate living paycheck to paycheck. This helps members to see the program as a safety net or last line of defense when other options have been exhausted. “It definitely fulfills a need for members to be able to pay for an item and not have it returned,” she said.

In addition to regular program audits, Franke welcomes the focus JMFA places on compliance. “JMFA reviews the program to make sure our practices remain in line with compliance regulations and legal expectations. If we were doing this on our own, we could slip out of compliance and not know it. I am confident that JMFA will keep us current on all overdraft regulatory and potential legal issues.”

Franke appreciates the big-picture benefits of having an expert evaluate her credit union’s overdraft program to ensure it is achieving the desired results. “We tried to manage the program on our own for a while — without JMFA’s support and software, while juggling many other credit union management responsibilities — and our results declined,” she said.

“JMFA’s ongoing recommendations on when and where to make improvements have greatly impacted our revenue and member service quality,” she added. “They just know how to maintain an overdraft privilege program better. And in the end, you get what they have promised.”

What Franke didn’t expect in the relationship with JMFA was the additional efforts the company’s consultants have made to point out other areas where the credit union could grow its business. “JMFA has gone above and beyond to bring other ideas besides overdraft privilege to the table — such as lending programs and loan recapture strategies — to help us succeed,” she said. “I know that working with JMFA will give us better results than we could ever get on our own — whatever the interest rate environment.”

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 Local Credit Union – Overdraft Program Consulting


Maintaining a strong financial foundation can be difficult for consumers when they face unexpected financial situations or have difficulty keeping track of their checking account. Likewise, community financial institutions that take on large competitors and online resources – while juggling multiple responsibilities with limited personnel resources – can struggle to remain top-of-mind in the market. In spite of these challenges, savvy institutions like The Local Credit Union have found a way to level the playing field.

Founded in 1949, to serve workers at the Ford Axle Plant in Sterling Heights, Michigan, The Local Credit Union now serves union members whose local branches are headquartered in Wayne, Oakland and Macomb counties. Creating a financial institution to help one another was – and still is – the institution’s purpose.

New leadership sees opportunity for improvement
When Joe Hallman joined The Local Credit Union as President & CEO, his top priorities included increasing non-interest income with products that fulfilled the institution’s mission. Based on previous experience, he realized that the existing strategy of relying on staff to manually review the daily overdraft report and determine whether to pay or return items was not meeting that objective. Fortunately, he knew just where to go to remedy the situation.

Hallman had worked in a community bank and another credit union that maintained established overdraft programs. The bank had implemented JMFA OVERDRAFT PRIVILEGE®, which had been a successful experience for the institution and its customers. With this in mind, hecalled JMFA to start a conversation.

“I considered JMFA the expert overdraft program provider,” Hallman said. “There were a lot of other initiatives underway at the time and I didn’t want to take the risk of managing a program on our own. I knew JMFA would provide all the resources and advice we needed to start off with the best possible approach and get successful results.”

Overcoming risk concerns with trusted compliance expertise

Hallman was especially concerned about avoiding any unnecessary risk in an uncertain regulatory environment. He realized how additional support from compliance professionals would help the credit union staff stay on top of increasing regulatory expectations by counseling them on what to look for every day.

When the credit union was initially setting up its program, leadership and staff had a lot of discussion about member eligibility, based on account activity and other criteria. But they knew from a regulatory standpoint that they couldn’t make decisions based on that type of information. “JMFA’s consultants guided us through the process when we got too conservative,” Hallman explained. “They helped us to stay focused on the fact that this is a service we want all eligible members to use. Their advice was reassuring and made settling on the right decisions easier.”

He continued, “With so many other risks involved in running a financial institution, it’s reassuring to know that JMFA is there to mitigate any overdraft program compliance concerns. That’s definitely something you don’t get when you are maintaining the program on your own.”

Little details make big things happen

Hallman feels strongly that JMFA’s ongoing follow-up is essential to ensuring the program will be successful. “If we would have implemented a program on our own, I am certain that initially we would have felt a positive impact in our non-interest income to asset ratio,” he explained.

“However, once you get complacent and just expect things to happen, results can start to diminish. As our program matures, I know I will get services from JMFA – such as meetings with program experts, quarterly reports and on-going advice – that will keep the program front and center in everyone’s mind.”

According to Hallman, thanks to JMFA’s support The Local Credit Union has experienced positive results in many important aspects of its program, including:

• The automation inherent to Privilege Manager CRM® software has allowed the staff to streamline their approach when it comes to paying overdrafts. “This aspect of the software removes the necessity for someone to subjectively look at overdrawn accounts every day, allowing the decision to happen naturally,” he said.

• Monthly reports help to keep track of program results by providing minute detail on program usage, the number of accounts that are enrolled, the number of members who are using the program, etc.

• JMFA’s comprehensive training helps to solidify important aspects of the program that staff members may lack from their previous understanding of how a compliant program works. Role-play opportunities help employees learn how to present it effectively to members.

“It was interesting to see people walking out of a training session after having that ‘aha’ moment,” Hallman explained. “I could see on their faces that it ‘had clicked’ for them.” He also appreciates having JMFA’s trainers hold the sessions at the credit union, so there are no staffing gaps during the work day.

• Effective communications resources have kept the program in front of the membership. When the credit union started the program, Hallman had some concerns about the recommended communications plan and approach. But he quickly realized the value of effective communications for maintaining a successful program. By relying on JMFA’s expertise and strategy, he has seen positive results in the program’s overall performance.

“If members don’t know about the program, they won’t use it, he said. “But if you regularly communicate the information, at some point they will look at it, so the wording is very meaningful.”

The proof is in the revenue and improved member service
A year after JMFA OVERDRAFT PRIVILEGE® was implemented, The Local Credit Union saw improvement in non-interest income of 500 percent over base. Year-to-date income exceeded JMFA’s initial projection by $100,000. For Hallman, this means the ability to provide new services that will benefit members and keep the credit union competitive.

“We are constantly looking at the possibility of adding services to make it easier for members to conduct their financial business,” he said. “Everybody is looking for ways to access financial services – like remote deposit capture, online loan applications and bill pay through mobile apps. The increased non-interest income we are earning will help us to provide these services to our members.”

An instinctive feeling turns into a win-win
Hallman had a feeling that Local Credit Union members would appreciate the value of having an overdraft safety net. Based on evaluating the program reports, he has seen that become a reality. “Word of mouth has helped to sell the product,” he said. “It has become an important service for the credit union and our members.”

After maintaining an overdraft program in both a credit union and a bank, Hallman sees very similar situations. “A credit union and a community bank both have reputations to maintain in their service area,” he said. “An overdraft program is a valuable service that can benefit many people, but it isn’t for everyone. The secret is to make sure account holders understand the program and to stay focused on helping them avoid getting into any financial hardship.”

He continued, “Having JMFA to rely on when making initial program decisions and on-going improvements has been extremely helpful for us. The consultants have a great deal of experience dealing with diverse institutional situations, which has helped our staff address many different issues.”

This on-going consultant support – along with the ability to add new programs and enhance member services – has made the cost of implementing JMFA OVERDRAFT PRIVILEGE® worthwhile for Hallman. “Institutions that are hesitant to work with an expert like JMFA because of the cost need to get past that concern,” he continued. “The potential revenue stream that allows you to enhance existing services and offer new programs is well worth it.”

Hallman is confident that JMFA will help The Local Credit Union grow sustainable revenue as long as he uses their services. “I know that if I choose to let them go at the end of our contract, I will be contacting them two years later because I lost revenue,” he concluded.

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