ALEXANDRIA, Va. Pentagon FCU said it will start charging a $1 a month fee tomorrow for members who continue to pay their credit card bills by paper, as well as increase the year-old fee it charges for receiving consolidated account statements by paper to $1 from 50 cents a month.
The boost in paper fees is aimed at paying the costs of printing and mailing the paper statements, and not aimed at increasing revenue, even as the nation’s third largest credit union saw a 28% decline in net income for its first half, according to Frank Pollack, president of $15.8 billion PenFed.
PenFed reported net income of $56 million for the first six months of the year, an ROA of about 71 basis points, down from 0.94 bps for all of 2012.
“We’re not trying to make more money off fees,” Pollack told the Credit Union Journal this morning. “Basically, we’re trying to recover the cost of mailing.” He put the costs of mailing out monthly statements at 75 cents to 85 cents.
Members who aren’t comfortable with online banking can still ask for and receive a waiver from the monthly fee, he noted.
The new fee comes amid a big slowdown in loan income for PenFed, which offers some of the lowest auto and home loan rates in the nation. The credit union reported a decline of $34.2 million, or 12%, in loan income for the first six months of the year. Pollack attributed the drop in loan income to the continuing low-rate environment, which has prompted PenFed to sell of virtually all of its fixed-rate mortgages on the secondary market, to Fannie Mae. “When we see rates start to rise and start portfolioing mortgages we’ll see growth in net income,” he said, emphasizing there are no plans to alter their strategy to offer the lowest rates in the market.
“We’re definitely not reconsidering out strategy,” said Pollack. “We are going to be the low-cost provider.”
