Automated Program Helps Members Avoid Hassle, Added Costs of Bounced Share
Drafts (Checks)
HOUSTON and LOUISVILLE, Ky., Sept. 21 /PRNewswire/ -- Members of
Kentucky's credit unions who bounce share drafts (checks) can avoid
embarrassment, inconvenience and additional costs, if their credit union
offers a new overdraft privilege program endorsed by the Kentucky Credit Union
League.
KYCUL Services, Inc., the wholly owned subsidiary of the League, has
signed an agreement with John M. Floyd & Associates, Inc. (JMFA) of Houston,
naming the profitability consulting firm as its "Strategic Partner" for the
JMFA Overdraft Privilege(SM) program. The League, formed in 1934, represents
101 of the 112 credit unions in the state. KYCUL members manage combined
assets of about $4 billion for more than of 700,000 accountholders.
Through contractual arrangements, Floyd & Associates now has approvals to
jointly offer its overdraft privilege program with leagues, associations or
their service corporations representing 23 states. JMFA also has a business
associate relationship with the Delaware Credit Union League and is a
"strategic alliance provider" with CUNA and Affiliates, as well as endorsed by
IntegraSys, a leading core technologies solutions provider for credit unions.
Discreet, Value-added Service
"The public is demanding value-added services like overdraft privilege,"
says CEO John M. Floyd, the originator of automated overdraft programs 16
years ago.
"This discreet service avoids the embarrassment of accountholders 'making
good' on a check with a valued retailer or creditor. Neither the
accountholder nor the merchant loses time or productivity in straightening out
an NSF (insufficient funds) mess," Floyd said. "Accountholders don't wind up
on retailers' bad check lists.
"They can avoid multiple NSF charges from a merchant or late payment
penalties on mortgages, car loans or tuition payments. They also can prevent
negative entries on their credit record or potential visits from law
enforcement for inadvertent -- but repeated -- bad checks," he added.
"With overdraft privilege, Kentucky credit unions have the opportunity to
enhance member satisfaction while also increasing their non-interest fee
income," noted Wendell Lyons, KYCUL President. (Digital image at:
http://www.kycul.org/members/admin/kyculstaff.asp#faq1 ) "Fee income has
become more important to our bottom lines in an era of declining interest
income.
"We are proud to add Floyd & Associates to our select list of business
partners," Lyons said. "JMFA's portfolio of products, coupled with its
competitive pricing, guaranteed regulatory compliance and well-recognized
customer service, clearly make it the best choice for our credit unions and
their members."
"Our goal was to identify an outstanding vendor that would combine all the
benefits of an overdraft program with the credit union philosophy of focusing
on the member's well being," added Jim Feldkamp, Director of Business
Partners, KYCUL Services. "I'm convinced our relationship with Floyd will
help credit unions implement consumer-friendly programs.
"The NSF and overdraft fee are typically the same, with JMFA's overdraft
program effectively redirecting fee income to the credit union from those
members that already utilize and pay credit cards, payday lenders, check
cashers, etc. for short-term assistance," he observed.
Overdraft Programs Vary Widely
JMFA, founded in 1973, is a leading provider of non-interest or fee income
products to financial institutions. The company has installed more than 1,750
performance improvement programs, adding more than $10 billion in increased
pre-tax earnings for its clients in 49 states and Central America. The
company also has successfully implemented variations of its overdraft
privilege program in more than 700 banks, credit unions, S&Ls and thrifts.
"JMFA's overdraft privilege program is nondiscriminatory and guaranteed to
be 100% compliant with federal and state regulations, as well as with recently
suggested changes," Floyd emphasized. "Our program has a proven track record
of producing more income and less charge-offs for financial institutions than
typical NSF programs."
He also disclosed:
-- 2,000 to 2,500 of the 18,000 financial institutions in the United
States are believed to now have defined and communicated overdraft
programs.
-- The typical fee charged on an insufficient funds (NSF) check is $17
to $35. The average in 2003 was $22.50.
-- Studies indicate the average accountholder writes about 3.4 NSF items
per year.
-- The typical users of overdraft privilege are employed, middle income
consumers with $50,000 and over in annual household income. They
have had their current job an average of four years ... have lived in
their current residence 4.5 years ... and 32% own their own home.
"A well-managed overdraft program is a win-win-win for the consumer, the
merchant and the financial institution," he said. "Additionally, automated
programs help identify troubled accountholders for necessary counseling."
The Federal Reserve System, at the urging of consumer advocate groups,
including the National Consumer Law Center, has reviewed compliance issues
concerning "bounce protection," "courtesy pay" and similar overdraft programs
for more than a year. The Fed has ruled that payment of an accountholder's
NSF item is not an extension of credit under the Truth in Lending Act.
The Fed and other regulatory agencies, however, have proposed some changes
in the way the programs are marketed, but have issued no final rules.
Floyd has been speaking from coast to coast this past year emphasizing the
multiple benefits of overdraft programs, as well as the unfair practices
endemic to the implementation, marketing and management of some overdraft
programs. He has addressed regulators, consumer groups and financial
executives, noting that some bounce or courtesy pay programs are
discriminatory, over-promote the service, under-educate consumers on its use
and base overdraft limits on a "mystery matrix."
JMFA creates strategic programs, including Privilege Manager CRM(TM)
software, specific to each credit union, its organization and its market that
maximizes all aspects of NSF revenue. It then delivers expert training,
marketing and software to ensure successful implementation and full regulatory
compliance.
About the League
The Kentucky Credit Union League, the primary trade association for
Kentucky credit unions, provides education, information, legislation,
technical assistance and more to its affiliated members. The League also
provides access to a variety of financial services and related products
through their wholly owned subsidiary, KYCUL Services, Inc.
JMFA Overdraft Privilege(SM) and Privilege Manager CRM(TM) are service
marks of John M. Floyd & Associates, Inc. Privilege Manager CRM(TM) is patent
pending.
FOR MORE INFORMATION OR INTERVIEWS:
John M. Floyd, CEO, John M. Floyd & Associates, Houston, 800-809-2307 or
281-358-4026; Web site: http://www.OverdraftPrivilege.org ; e-mail,
John.Floyd@jmfa.com
Preston F. Kirk, APR, Kirk Public Relations, Austin TX, 830-693-4447;
kirk@281.com
Jim Feldkamp, Director of Business Partners, KYCUL Services, Inc.,
800-333-5285 or 502-459-8023, ext 217, jfeldkamp@kycul.org ;
http://www.kycul.org/
SOURCE Kentucky Credit Union League; John M. Floyd & Associates,
Inc.
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Related links:
http://www.kycul.org/members/admin/kyculstaff.asp#faq1
http://www.OverdraftPrivilege.org http://www.kycul.org
CONTACT:
John M. Floyd, CEO of John M. Floyd &
Associates, Inc., +1-800-809-2307, or +1-281-358-4026, or
John.Floyd@jmfa.com ; or Preston F. Kirk, APR of Kirk Public
Relations, +1-830-693-4447, or kirk@281.com , for John M. Floyd &
Associates, Inc.; or Jim Feldkamp, Director of Business Partners
of KYCUL Services, Inc., +1-800-333-5285, or +1-502-459-8023,
ext. 217, or jfeldkamp@kycul.org
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