Noninterest and other income can make a big difference for small credit unions, even when that income results from an accounting reclassification.

Just ask Cathy Diamon, president/CEO of the $42.1 million Commonwealth Utilities Employees Credit Union in Marion, Mass.

Under Diamon's direction, last year, the cooperative changed the way it accounted for the costs of interchange transaction. Fees from the credit union's Visa debit and credit cards were counted as income as opposed to being applied as expenses for those two transaction products.

The change helped boost noninterest and other income as defined on NCUA's 5300 Call reports by 154.02% through June 30, 2014, according to computations done by Callahan and Associates. It also prompted Diamon to give greater consideration for promoting credit union growth through other income sources in the year ahead.

“I started comparing our ratios to those of several of our peers in southern Massachusetts,” said Diamon, who has led the credit union for just two years. “Their fee income was between 70 [basis points] and 90 bps, much higher than ours, but if they didn't register that as fee income, where would their earnings be?

Unlike some of its competitors, Commonwealth Utilities was profitable even before the change in accounting strategies, according to Diamon. But income realized from the change led her to start looking for other ways to beef up noninterest and other income on the credit union's balance sheet.

The credit union recently started offering gap coverage on auto loans, designed to cover gaps between what the insurance company will pay and what the loan may be worth in the event of an accident. Currently, the program nets the credit union an extra $900 per month, according to Diamon.

In May, Commonwealth Utilities will stop paying life insurance on loans as part of its data processing system conversion and reintroduce it in June or July as a product that members can purchase through the credit union.

Courtesy pay and account transfer programs also are on tap for implementation later this year.

“Our members pay very little in fees, and we still charge $12 each for member wire transfers that cost us $20 to make,” Diamon said. “There are a lot of opportunities and I have a whole list of changes that will help get this ship righted in the water and operating more efficiently.”

Instant Insights /

Credit Union Accounting Change Boosts Bottom Line

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