The parent company of Ohio Savings Bank will soon join the ranks of financial institutions embracing the phased move to eliminate revenue-generating overdrafts and insufficient funds (NSF) fees.
Ohio Savings Bank operates exclusively in Cuyahoga, Lake, and Summit counties in northeastern Ohio. It operates as one of the few regionally branded divisions of New York Community Bank, a small regional bank with total assets of approximately $61 billion.
On Monday, June 6, NYCB announced plans to eliminate uncollected and unavailable fund fees on all of its traditional personal and business checking accounts, effective August 1. It will also waive transfer fees on its overdraft protection product at that time. .
These plans follow the bank’s rollout of its My Community SimplyOne checking account, which is a Bank On certified account with no provision or overdraft fees and low opening deposit requirements – the account can be opened with only $1 and has a monthly fee of only $2 but does not earn interest.
A spokesperson for the bank did not immediately respond to questions about the move, including how much the company expects to lose in annual revenue by waiving the fee.
Banks don’t always break down NSF and overdraft fee income on the balance sheet and instead report it in an aggregate fee income bracket, which was $23 million, $22 million, and $29 million. for NYCB in 2021, 2020 and 2019, respectively.
“The bank remains committed to its customer-centric philosophy,” NYCB Chairman and CEO Thomas Cangemi said in a statement. “Eliminating these fees and introducing Early Pay is another step in helping our customers better manage their finances.”
Many banks – including several in the local market – have moved to eliminate or reduce NSF and overdraft fees especially in recent times.
Although often presented as a customer-centric decision, the reduction or elimination of these types of fees is apparently inspired in large part by federal regulators and agencies like the Consumer Financial Protection Bureau, which have lobbied for banks do exactly that.
An analysis by the CFPB – which notes that overdraft fees can prevent people from withdrawing from the bank – found that banks and credit unions collected around $15.5 billion in overdraft and NSF fees in 2019.
JPMorgan Chase, Wells Fargo and Bank of America were responsible for 44% of all such fees generated that year by financial institutions with at least $1 billion in assets, according to the CFPB.
“The CFPB will strengthen its oversight and enforcement of banks that rely heavily on overdraft fees,” the agency said in December. “In recent years, the CFPB ordered TD Bank to pay $122 million in penalties and restitution to customers, and ordered TCF Bank to pay $30 million in penalties and restitution.”
According to BankRate, NSF and overdraft fees average about $33 per incident. The charge at NYCB is $36.
The NYCB seems to be on the lower end of the spectrum in terms of bank tweaking policies on NSFs and overdraft fees.
In April, KeyBank of Cleveland said it would eliminate NSF fees and reduce overdraft fees on applicable accounts later this year. Key, who has about $181 billion in assets, also declined to comment on how the move would affect his commission income.
Other institutions that have made or announced plans for similar moves include Bank of America, Citizens Bank, PNC Bank, US Bank and Wells Fargo.
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