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Irwin Bank & Trust Company

When Irwin Bank & Trust Company, a $693 million institution based in Irwin, Pa., implemented BSG Financial's courtesy overdraft service, OverdraftHonorâ, it did so not only with an eye on improving the bottomline, but more importantly, the bank also looked to improve service to its customers. Irwin Bank achieved both.

Irwin Bank, which operates 12 branches and serves more than 35,000 customers in southwestern Pennsylvania, implemented OverdraftHonorâ for its retail customers in September 2004 and earlier this year rolled out the program for its commercial accounts. Overdraft Honor – a comprehensive courtesy management system that is part of BSG's flagship the Responsible Approach program – provides the expertise, policy, procedure, regulatory guidance, training, and software to enable the bank to meet customer expectations and federal agencies guidelines.

"It is a great fee generator," admits Donald Henderson, vice president of Operations for Irwin Bank & Trust, but that is not the only motivating element. "It is about what is right for the customers." OverdraftHonorâ protects Irwin Bank customers from the chagrin as well as the additional expense associated with returned checks by allowing the bank to cover its customers' insufficient funds (NSF).

Irwin Bank's customers apparently appreciate the service. "We knew there is an embarrassment factor when a check is returned," states Henderson, but the results are proof that the OverdraftHonorâ provides the bank with the results it was looking for. "We get more customers thanking us for helping them than complaining about the fees," says Henderson.

Picking The Right Program

Once Irwin Bank decided to implement an overdraft program, its due-diligence process took about a year and involved researching BSG Financial and two additional companies offering overdraft programs.

"BSG appeared to be more of the experts and were more customer focused," recalls Henderson, who led the bank's research team in selecting the best solution to meet the financial institution's needs. While the bank was interested in fee generation, says Henderson, customer service was a stronger factor. "Based on our research and presentations by all three companies, we felt most comfortable selecting BSG Financial due to their professionalism and industry knowledge. We were not looking for a quick revenue increase, but were more interested in doing courtesy overdraft the right way, and BSG Financial provided the tools to do that."

"This is particularly rewarding since BSG Financial doesn't aggressively advertise as most other overdraft vendors do," said Barrett Nichols founder and CEO of BSG Financial. "We rely heavily on our superior client relationships and their word of mouth testimonials."

Irwin bank also had major concerns about compliance with government agencies. BSG Financial provided a 100 percent compliance guarantee with all government guidance and regulations. This proved to be significant when the Federal Financial Institutions Examination Council (FFIEC) – consisting of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision – released final overdraft-services guidance on Feb. 18, 2005. The guidance emphasized insured financial institution's responsibilities in the disclosure and administration of all types of overdraft services.

Irwin received a copy of the guidance from the government but the bank relied heavily on the analysis provided by BSG Financial. "The interpretation helped us adjust our program to fit the bank's risk tolerance and still assure compliance. We have been very happy with the response we received from BSG Financial regarding the guidance," says Henderson.

"Irwin Bank & Trust selected BSG Financial because, like most of our clients, their company culture mirrors our own philosophy of doing what is in the best interest of our customers," says Nichols. "This was evident throughout the implementation process, as we were able to provide guidance to Irwin Bank & Trust on regulatory and compliance issues, offering appropriate solutions and methodologies to ensure their customers see OverdraftHonorâ as a value-added service."

Implementation Leads to Desired Results

"The implementation process of OverdraftHonorâ into our bank went very smoothly," says Henderson. "The experts at BSG Financial gave us the professional support that we needed to train our employees and begin offering a compliant overdraft program to our customers. We had no complaints whatsoever about the rollout!"

Since Irwin Bank & Trust Company implemented BSG Financial's OverdraftHonorâ, the bank has effectively accomplished its initial goals of improving customer interaction as well as generating more non-interest fee income.

While Irwin's overall non-interest fee income increased 14 percent, primarily from a 49 percent increase in NSF and Overdraft Advantage fee income, the turning point in the financial institution's assessment has been in client service. "We have had customers thank us in person as well as by letter for not embarrassing them by returning checks. That is really one of the better things we take away from the program," says Henderson." As an added bonus, the bank has reduced direct deposit account (DDA) charge-offs because of increased overdraft repayments.

"We rolled it out differently than most banks did," declares Henderson. He explains that Irwin's overdraft protection just covers NSFs and does not allow individuals to head to an ATM (for example) and overdraw their accounts. The program takes a conservative or "Responsible Approach™," to customer contact, administration and follow-up, providing the financial institution with greater opportunities for helpful customer contact.

In alleviating accountholders of the extra expenditure and aggravation of dealing with returned checks, OverdraftHonorâ accentuates customer protective practices, managed within the program's software. These practices include:

• Frequent user identification
• Counseling
• A New Start™ Repayment Program, which helps accountholders deal with unanticipated difficulties

Optional credit counseling is also available for accountholders with special financial needs.

Looking Ahead

Irwin is so pleased with OverdraftHonorâ results that it is considering adding another BSG Financial product Re$ubmitIt, a turnkey post-transaction collection solution marketed to commercial accountholders. Re$ubmitIt converts returned checks to electronic transactions, which allows them to be re-presented electronically two times.

For other financial institutions considering overdraft service implementation Henderson recommends that they "Do the research. " Irwin Trust did the research and is quite happy with the results of its choice.

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