NEW ORLEANS-To get a sense of how balance sheet demands have changed for credit unions one need travel no further than the CFO Council's annual meeting here last week.
Finding income streams, especially to replace those that will likely be diminished under pending rules related to Reg E and plastic cards, and knowing at a greater level of detail exactly what each member and product means to the credit union were primary discussion points. While a number of presenters and CFOs on hand stressed the importance of not losing sight of why credit unions exist, little doubt was left that compressed margins have left few choices but to reexamine fees and pricing.
Yet even with an overhaul of those revenue streams, the silver lining in all of it, several analysts noted, was that credit unions are likely to retain or even grow their pricing advantage across numerous offerings.
"Every fee is under assault. It's hard to quantify how much of a threat there is to various income streams," noted Fabio Biasella, VP and Managing Director, Strategic Advisory Services with Illinois-based Raddon Financial Group. "Creatively, it's not just about fees, it's going to be getting back to how we price. Two big drivers are going to be debit card fees and NSF fees."
One surprise at the meeting: Despite a pending deadline and the revenue produced by one subset of members, an informal survey of CFOs attending the CUNA CFO Council's annual meeting here found that only about one-third reported they have begun the process of requiring members to opt-in to overdraft protection or so-called Courtesy Pay programs. Credit unions must comply with new Reg E opt-in rules by July 1 for new members and Aug. 15 for existing members. "If you are not beginning the process of opting in, you are really getting behind the curve," said Biasella.
Biasella noted about 10% of most credit unions checking account-holders are habitual users of overdraft protection, but they generate a significant portion of many CUs' fee income. "The good news is that when you ask the consumer if you want them to cover their charge, it's not important to the member with no overdrafts, but it'svery important to the habitual overdrafter. They see the value in opting in," said Biasella.
One CFO at the meeting told Credit Union Journal it has approximately 1,000 members who regularly use overdraft, and all of them have already opted in.
Credit Union Journal will provide additional coverage in an upcoming issue.
