A new report from Filene Research Institute in Madison, Wis. aims to show creditunions how to keep non-interest income coming in while continuing to offervaluable services and refraining from turning members off byfees.
|“In Search of Member-Friendly Noninterest Income,” written byFilene Research Director Ben Rogers, reveals that 66.7% of surveyedcredit unions said credit insurance or debt protection coverage isa “very important” or “important” noninterest income source basedon importance to income, aside from overdraft fees and interchangeincome. This was followed closely by checking account fees, with62.1% of respondents naming it as a top source.
|The majority of respondents (94.4%) named GAP coverage as a“very important” or “important” noninterest income source based onvalue to members, also without including overdraft fees andinterchange income. Credit insurance or debt protection coveragecame in second in this category, with 92.1% of respondents listingit as a high-ranking source based on value to members.
|Filene said credit unions must consider that while noninterestincome in the form of fees and service charges is essential, theyshould weigh fees and service charges in the context of howtransparent and member friendly they can be.
|“Fee income is not going away and is probably going to be moreimportant as time goes on,” Rogers said. “But credit unions shouldbe uniquely concerned about their fee practices because theirmandate is to be sustainable and profitable but not to thedetriment of their member-owners. Fees at credit unions should betransparent and freely chosen, and they should add value tomembers.”
|All surveyed credit unions finished in the top third innoninterest income between 2008 and 2011, as well as had assetsbetween $50 million and $2.5 billion, more than 25 basis points ofreturn on assets in three of the four years between 2008 and 2011,and net capital higher than 7% in all four years.
|The report also contains case studies on four of theparticipating credit unions: the $181 million Texell Credit Unionin Temple, Texas, $1.1 billion Idaho Central Credit Union inChubbuck, Idaho, $98 million Texoma Community Credit Union inWichita Falls, Texas and $1.2 billion Local Government FCU inRaleigh, N.C.
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Natasha Chilingerian
Natasha Chilingerian has been immersed in the credit union industry for over a decade. She first joined CU Times in 2011 as a freelance writer, and following a two-year hiatus from 2013-2015, during which time she served as a communications specialist for Xceed Financial Credit Union (now Kinecta Federal Credit Union), she re-joined the CU Times team full-time as managing editor. She was promoted to executive editor in 2019. In the earlier days of her career, Chilingerian focused on news and lifestyle journalism, serving as a writer and editor for numerous regional publications in Oregon, Louisiana, South Carolina and the San Francisco Bay Area. In addition, she holds experience in marketing copywriting for companies in the finance and technology space. At CU Times, she covers People and Community news, cybersecurity, fintech partnerships, marketing, workplace culture, leadership, DEI, branch strategies, digital banking and more. She currently works remotely and splits her time between Southern California and Portland, Ore.
