A forthcoming report from the Filene Research Institute, Overdraft Regulation: A Silver Lining to the Clouds?, takes a look at overdraft fee income among credit unions and the potential impact of Regulation E.
In the worst-case scenario, if no members opt-in for overdraft services, the report predicts that total fee income could sink as much as 11% and that overall ROA could fall by as much as 9 basis points. Though it would be a hit, the report also states that it would not destroy the current credit union business model.
The survey also found that the median percentage of respondents' fee income from overdraft was 39.5%. Eighty percent of respondents have automated overdraft programs, as apposed to linked-account programs or line of credit programs. Of those who offer automated programs 18.3% do not inform their members and 14.8% require members to opt-in to the program.
The report was written by Adam Levitin, an associate professor at Georgetown University Law Center, and was created from a 185-respondent credit union survey Filene conducted over the past few months. Half the credit union respondents to the survey were federally chartered and almost all were federally insured, two-thirds had at least $100 million in total assets and the median membership of respondents was 36,650.