wally4232,
I started with just rock along the face of the bank. I cut a ledge as you describe and worked up from there. Where to start is right where your low water line is, sounds easy but "it depends" the low water can change each year.
The rain, and I have a lot, goes in, under and around the rocks washing away the underlying bank. As the bank washes into the pond the rocks settle to fill the voids, this seems to be a continous process. In my case, I was just slowing the erosion down some what. My next step was to use concrete to cover the bank from the low water mark about half way up to the high water mark then cement the stone from there up. The water, it rains a lot here, worked it's way under the entire piece causing cavities. Where the concrete was thin it would collapse into the voids. Next, I covered the top of the bank from the rock edge about 3 to 4 feet back. That has, at least for now, solved the problem. So I have a seal from 3 feet on top of the bank to about 5 feet down the side of the bank.
If rocks are the look you want go for it, I tried planting in between the rocks, hoping that would hold the dirt and rock in place, didn't. I tried a planter in between the bank and the walk way trying to break up the expanse of man-made stuff and the water used the planter as a way under the rock.
Next pond will have a limited amount of rock and I will use a fabric to cover the banks while I establish a fast growing ground cover. I have a few pictures if you are interested.
