Retain Accountholders, Reduce Charge-Offs Take Proactive and Comprehensive Steps to Maximize OD Program Performance by Larry Giustiniani, American

Agencies When it comes realizing the full potential of your overdraft program, retaining customers is paramount. Contacting customers and resolving past due balances pri or to charge- off can be expensive, as can the subsequent costs of replacing unr e- solved customers. It is critical to control time and cost associated with these collections so that income gained through an effective overdraft program is not lost to charge-offs. Pre-charge-off accounts can be some of your institutions most pro table, which make s them worth salvaging. It is possible to retain accounts, however the tac- tics for doing so must go beyond outbound letters and phone calls by bank personnel. Those efforts can be ineffective due to the proliferation of phone tech- nology (i.e., Caller ID and voicemail), which has made it so easy to avoid communicatio n altogether. It is not dif cult for a customer to delete electronic messages or s imply avoid a call altogether. Most suspended overdraft customers canand should b ereinstated back into your program, but the dif culty in communicating with them ca n easily result in a charge-off instead. Implementing a proactive contact and customer retention approach from a third-pa rty collection organi- zation can be an optimal solution to maximize your overdr aft program performance. Successful pre-charge-off collections should: Initiate collection effort just after suspension of overdraft privilege using di plomatic and ef cient efforts to move pre-charge- off customers toward resolution; Allow your institution to maintain control and ownership of the accounts; Include systematic written prompts that notify accountholders of their over drawn status and any pending negative reporting action, as well as speci c instruc tions to satisfy the outstanding obligation; Cost less than 5% of the re- covere d pre-charge-off dollars, making it an economical choice for any institution s eeking superior customer retention and non-inter- est fee income results; Provide a no-cost interface with your institutions existing overdraft program sof tware les. Since changing our policy to allow courtesy overdrafts, we began util- izing a co llection rms customer retention solution, which has kept our charge-offs to a bare minimum. We have maintained complete control of our program customers without a lienating them and can reinstate customers that bring their accounts to a posi tive balance at our discretion, said Raul Oseguera, senior vice president of Ci ty National Bank, Newark, New Jersey. The service utilizes an automated and secure process to easily transmit accounts daily into the collection system, added Oseguera. Their systematic approach ultima tely gets the message across to the customer and allows us to maximize collections without designating personnel to those efforts" Why Pre-Charge-off Collections? Using a third-party collection partner to retain pre-charge off customers can cost LESS THAN FIVE PER CENT of the recovered pre-charge off dollars.

For over 30 years American Agencies has been a leader in the collections industr y and offers multiple overdraft collection programs for nancial institutions nationwide. For more information, contact Larry Giustiniani at 914-771-7896 lgiustiniani@americanagencies.com "Programs for Improving Your Bottom Line"