Fee income and other operating income are key sources of revenue for credit unions. Credit unions face a possible decline in these sources of income as a result of the stigma fee income currently has with the public. Credit unions will have be cautious to avoid the criticism banks received when they bolstered their non-interest income through fees and practices that were perceived as being unfair by the public. Re-examining existing and developing new member-friendly sources of fee income and other operating income will be critical to maintain revenue in 2010.
Fee income and other operating income has grown over the last year. As of the third quarter of 2009, fee and other operating income represented 21.43% of credit unions' total income; this is an annual growth of 10.6% from the same time in 2008, when these sources of income represented 19.4% of credit unions' total revenue. Moreover, annualized fee and operating income increased 8.6%, from $10.7 billion as of the third quarter of 2008 to $11.7 billion at the same time in 2009.
Identifying the ways credit unions have increased revenue from these sources is difficult if not impossible. Some credit unions misclassified the NCUSIF Stabilization Income as other operating income on their 5300 Call Reports. This means the growth in fee and other operating income discussed above is artificially inflated, but we can't be sure to what degree. Moreover, the NCUA does not require credit unions to break out the sources of fee income and other operating income, which makes it difficult for credit unions to learn from one another and develop best practices.
To try and fill this gap, Callahan & Associates are conducting our annual Non-Interest Income Survey. Please make sure that your credit union submits information. Based on the responses, we will develop a report on trends and best practices and host a webinar titled "Non-Interest Income: Current Trends and Strategies for Developing Successful Programs." Participants of the survey will receive the report and webinar free of charge.