Kentucky Credit Union League Endorses Floyd & Associates for Overdraft Privilege Program

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Kentucky Credit Union League, through its service corporation subsidiary, has selected John M. Floyd & Associates of Houston to provide an automated, nondiscriminatory overdraft privilege program to its credit unions and there members. The JMFA OVERDRAFT PRIVILEGE(SM) program helps memers avoid embarrassment, inconvenience and additional costs when they write checks (share drafts) without sufficient funds in their accounts.

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." 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: “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.


Floyd & Associates, Inc. PRIVILEGE MANAGER CRM (TM) is patent pending.


John M. Floyd, CEO, John M. Floyd & Associates, Houston, 800-809-2307 or 281-358-4026;

Web site:; e-mail,

Preston F. Kirk, APR, Kirk Public Relations, Austin TX, 830-693-4447;

Jim Feldkamp, Director of Business Partners, KYCUL Services, Inc., 800-333-5285 or 502-459-8023, ext 217,;

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Preston F. Kirk, APR
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