Most financial institutions are looking for ways--now more than ever--to increase or, at the very least, stabilize profitability. One place to start is to review the number of DDA accounts that you charge-off per year, as compared to your insitution's total DDA accounts.
If the charge-off percentage is above 8%, you may want to investigate why.
BSG Financial has found that financial institutions with charge-off percentages above 8% may have overdraft programs that are not operating at their full potential and could be "leaking" income.
An overdraft program that offers pre-charge-off routines, such as automated letters and phone calling, can help bring the number of charge-offs back into line and increase profitability...not to mention customer service and retention. If you want more information about reducing charge-offs and how it could help your institution, email Hank Thompson, executive vice president, at HThompson@BSGfinancial.com.
Does your institution routinely assess charge-off percentages and make adjustments if they're too high? If your charge-offs are already low, how do you do it?
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