ALEXANDRIA, Va.–Credit unions of more than $1 billion in assets collected more than $915 million in overdraft and non-sufficient funds fees during Q1, according to the first-ever compilation and release of such data by NCUA.
The total non-interest income reported by credit unions of more than $1 billion in assets during Q1 was $5.079 billion, according to NCUA’s new Quarterly Data Summary Report. Of the more than 400 CUs in the data set, nine reported collecting no OD/NSF fees.
While asset growth and lending were both up during Q1 among credit unions, and concerns are being expressed over delinquencies, especially on credit cards (see separate reporting), it is the OD/NSF numbers that are almost certainly going to get the most attention from the new data, with some elected officials, certain media outlets and others likely to seize on the near $1 billion in fees collected just from NSFs/ODs.
The Biden Administration and the CFPB, for example, have both been highlighting what they call “junk fees,” announcing various efforts to rein them in. In the lead-up to the release of the new data on NSFs/ODs, the credit union trade groups have been expressing their worries over what the numbers might mean and how it might be perceived.
Navy FCU Collects Nearly $170 Million
Of the $915,624,727 in OD/NSF fees that were reported by the 442 credit unions of more than $1 billion in assets that were required to break out those numbers for the first time on their Q1 call reports, the $178-billion Navy FCU in Vienna, Va., collected by far the most in NSF/OD income, with $77.847 million in overdraft income and $91.750 million in NSF income, for a total of $169.5 million.
The nation’s second and third largest credit unions, State Employees’ CU in North Carolina and Pentagon FCU, collected $3.765 million and $3.059 million in such fees, respectively.
CUs Collecting the Most
Other credit unions that the data show collected the most in OD/NSF income include:
- The $17.4-billion Randolph Brooks FCU in Texas: $22.858 million
- The $19.2-billion Mountain America Credit Union in Utah: $22.378 million
- The $20.2-billion America First Credit Union in Utah: $10.279 million
- The $18.1-billion Suncoast Credit Union in Florida: $10.715 million
- The $11-billion Idaho Central CU in Idaho: $9.993 million
- The $9-billion Police & Fire Credit Union in Pennsylvania: $9.559 million
- The $13.5-billlion Security Service FCU in Texas: $8.925 million
- The $8.89-billion Desert Financial CU in Arizona: $7.931 million
It should be noted that many of the credit unions listed above are also among the largest in assets, and in the coming days and weeks CUToday.info will have additional breakdowns of the data according to percentage of income from NSFs/ODs to total income and other metrics.
No Fees Collected
There were a number of credit unions that reported they collected no OD/NSF fees, including Amplify Credit Union in Texas, SelfReliance Credit Union in Illinois, Self Reliance Credit Union in New York, U.S. Eagle Credit Union in New Mexico, United States Senate FCU in Virginia, Self-Help CU in North Carolina, Covantage CU in Wisconsin, Digital Credit Union in Massachusetts, and Alliant Credit Union in Illinois.
The total NCUA data for all 442 credit unions can be viewed in CUToday.info’s The Gov section here.
What Board Member Says
During a media call in conjunction with release of the data, NCUA Board Member Tonya Otsuka said the agency is collecting the information to ensure NSF/OD programs are being structured in a way that is both “reasonable and beneficial to the member-owners” of the credit unions, and for other reasons.
“As we see in multiple instances, people of color and with lower incomes are the ones paying most of the fees,” Otsuka said. “It’s important for NCUA to understand the lay off the land and to make sure members are protected.
Tonya Otsuka
“In order to have a fair and competitive marketplace, information needs to be transparent,” Otsuka continued. “Credit union member-owners and the general public have a right to know how much a credit union generates from (overdraft) fees.”
In addition, Otsuka, who noted that while the data is being released now it has been a supervisory priority for NCUA for several years, said it is “essential” for the agency to understand the sources of income for credit unions, as the issue is concentration risk.
“Failing to diversity income streams could lead to safety and soundness problems,” Otsuka said.
Worries Over Perceptions
What the release of the data means for credit unions remains unknown, but it seems a certainty there will be scrutiny, whether from legislators, the media, banking groups—or all three.
America’s Credit Unions has been raising its concerns throughout 2024. In an earlier interview, the trade group’s chief advocacy officer, Carrie Hunt, said that judging credit unions based on just OD/NSF revenue ignores the “positive message” to be found in the “totality” of the value credit unions deliver to members, because it doesn’t take into consideration the “different types of programs and services that credit unions provide.”
Such reporting, said Hunt, overlooks the fees credit unions refund, alternative products that are available, and specialized loans that members can use to address financial needs.
‘Extremely Frustrating’
“It's extremely frustrating for credit unions to see that and to feel this pressure on the regulatory side,” Hunt said.
One big worry for credit unions is the release of the national data will lead to the kind of criticism and scrutiny CUs have come under in California, where a new law requires OD/NSF income at state-chartered CUs to be compiled and released by the state regulator.
Media reports in California have repeatedly highlighted the fees being collected, and have led to reports that have included CEO salaries at some of those institutions. In one example, Congress has demanded answers from Frontwave Credit Union over its fees charged to members of the military.
In that earlier interview, Hunt said, “Our biggest fear is that just because of the number of credit unions reporting, even if the information is not surprising and is consistent with what we've seen from credit unions relative to moderate fees when compared to the banks, it will just simply be a talking point put out in the general and in social media. It will just be fodder for the enemies of credit unions to continually push back and remove that as an option.”
‘Might be Shocking’
Otsuka said she was aware of the California data but said efforts in that state played no role in NCUA’s decision to gather its own information.
“I think $900 million might be immediately shocking, but we are still in the early stages,” said Otsuka, adding a better picture will become available as more data is collected over a longer period. “From my perspective it confirms what I have heard, that some credit unions really rely heavily on OD and NSF income. So, this informs our understanding."
Revisions Ahead
Rachel Cononi, deputy chief economist with NCUA, said that given this is the first time NCUA has collected the OD/NSF income data, it’s likely that revisions will occur in the future.
Kelly Lay, director of NCUA’s Office of Examination & Insurance, said that during Q1 among the most frequently asked questions by credit unions related to the data collection involved clarity around how to correctly report the OD/NSF numbers
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