TORONTO – The rising rate environment and pinched net interest margins were obviously at the forefront of many credit union executives and officials' minds as they crammed into the large room for the standing-room only session on non-interest income.
Keeping with the credit union philosophy does not mean you cannot charge fees, Rory Rowland with Top 100 Credit Unions out of Independence, Mo. explained, just more competitive fees. You have to earn money to stay in business, he emphasized.
Setting competitive fees should not be too difficult for credit unions given that banks get 42% of their revenues from non-interest income while credit unions rely on it for just 6%. "Credit unions overall, if not for fees or non-interest income, would not have a bottom line," Rowland stated.
Recommended For You
Net income is important to the continued sustainability of the business. He said credit unions have to ask themselves "How much do we give to today's member and how much.do we set aside for tomorrow's member?" Rowland pointed to Space Coast Credit Union in Melbourne, Fla., which is one of the top 100 performing credit unions for non-interest income. Between 1997 and 2003, the credit unions' membership decreased from 140,000 to 117,000 while return on assets doubled to 2.19% and assets nearly doubled to $1.125 billion. At the same time, their capital grew from 7.45% to 10.84%. To accomplish that, Space Coast set up tiered savings accounts to help retain their most profitable members.
Overdraft protection programs have caused controversy among credit unions, but are a beneficial source of non-interest income. Rowland highlighted E&A Credit Union, which instituted a courtesy pay program allowing members to overdraw accounts by up to $3,000 with 45 days for repayment. Not sufficient funds fee doubled in the first year, he said.
Also, Rowland advised credit unions to get a credit and debit card into the hands of every member immediately. He explained how Forum Credit Union of Indianapolis, Ind. has made its membership application all-in-one, including enough information that combined with a credit report with the member's approval they can also get a credit card in their members' hands quickly. "They want to turn members into borrowers immediately," he explained.
CUSOs are also an excellent way to bring in more income. CUSOs have been started to provide data processing for other credit unions or to provide a teller pool that credit unions can use in a last minute absence or for optical storage or alternative investments, Rowland said.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
