Based on a survey conducted by Callahan & Associates, Inc., the leading component of non-interest income distribution was interchange income from debit and credit cards, making up 30% of all service revenue. However, income from non-sufficient funds, which comprised 27.7% of total service revenue made the biggest jump from last year's survey findings of 19.3%.
Programs like courtesy pay and overdraft privilege are becoming more prevalent in the credit union industry, and it appears as though this trend will continue. In 2004, the credit union industry increased service revenue by 13.5%, reaching $7.3 million.
One credit union that substantially increased service revenue in 2004 was San Antonio City Employees Federal Credit Union in Texas with over $280 million in assets. The credit union grew total service revenue from $4.4 million last year to $6.0 million in 2004, or 35.7%.
“We have got to credit our experienced staff for the increase in fee income,” said Steve Schipull, CFO, “Thus far our courtesy pay program has been a success and we have also benefited from improved ancillary product line sales.” Over the past year, courtesy pay has increased non-sufficient funds income by approximately 50%. “The key has been to provide services that truly benefit the member,” added Schipull.
Service revenue took a pinch from the decrease in fees from mortgage originations and secondary sales of mortgage products from 14.3% in 2003 to current 7.7% of total non-interest income. For all credit unions, mortgage originations fell by almost 35%, from the record high $87.8 billion in 2003 to $57.2 billion. Although the figures for 2004 represent historical highs, credit unions have been moving toward reducing closing costs to attract new homebuyers.
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