CFPB Data Point Quantifies Overdraft/NSF Fee “Reliance” By Cheryl Lawson Executive Vice President Compliance Review for JMFA Analysis offers limited perspective on disclosed overdraft program value On Dec. 1, 2021, the Consumer Financial Protection Bureau (CFPB) released the Data Point: Overdraft/NSF Fee Reliance Since 2015 report, which expands on their earlier Data Point: Checking Account Overdraft, published in 2014. Data reviewed by the CFPB comes from the Consolidated Reports of Condition and Income, or “Call Reports,” which are submitted to the regulatory agencies. The CFPB’s analysis includes those banks and credit unions under their supervision and those with assets over $1 billion. Key points and observations The report’s analysis indicates that aggregate overdraft/ NSF fee revenues for the largest financial institutions in the U.S. gained a small, steady increase of 1.7% annually between 2015 and 2019. Account maintenance fees also grew, but at a lower rate of 0.6% annually during those years. ATM fees declined during the period. Additionally, all aggregate fees fell in 2020 due to consumer behavior changes associated with the COVID-19 pandemic. Overdraft/NSF fee revenues declined most sharply at 26.2%. The granularity of fee data used by this Data Point was possible beginning in 2015 when Call Reports required that each of the three types of fees (overdraft/ NSF, account maintenance and ATM) be reported distinctly. A total of 425 banks were analyzed using their annual fee data from 2015 to 2019. A smaller group of 238 banks was used for quarterly analysis. The two groups represented 97.2% and 90.7% of all overdraft/NSF fees, respectively. There was a small increase in the growth of combined fee income from 65% to 66% between 2015 and 2018. It rose to 66.5% in 2019 and declined to 62.4% in 2020. The CFPB reports that the market is “stable and persistent,” especially before the COVID-19 pandemic of 2020. While overdraft/NSF fee revenues declined in 2020, the report does not prescribe whether the change in institutional policies and practices or consumer use patterns drove the decline. However, the report recognizes that consumer deposit balances and average checking account balances experienced a marked rise during the pandemic, in large part due to the stimulus payments received by consumers. coloradobankers.org 12
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