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P R O J E C T I O N O F O V E R D R A F T F E E
R E D U C T I O N B Y 3 2 %
The NSF and Overdraft fees for 2009 for banks, thrifts and credit unions are projected to be
According to the June 30, 2009 FDIC data, all banks and thrifts reported service charge income
of $21.8 billion and pre-tax net operating income of $10.6 billion. Assuming NSF/OD fees are
74% of service charges (2008 FDIC Study) then $16.1 billion ($32.2 billion annualized) are
attributable to NSF/OD fees.
For the same period, credit unions reported $3.4 billion in fee income and net income of $1.2
billion. For credit unions, Bretton Woods estimates that 80% of fee income ($5.4 billion
annualized) is NSF/OD fees.
Conservatively, Bretton Woods estimates that overdrafts account for 60% ($22.6 billion
annualized) of the combined fees.
Based on estimates from Bank of America and J. P. Morgan Chase in the American Banker
article, Overdrafts Undermining Checking, on October 30, 2009, Bank of America estimates up
to $200 million fee loss in the 4th quarter 2009 ($800 million annualized) and Chase estimated an
annual $500 million reduction of overdraft fees.
The following chart depicts the impact to these two companies:
Pretax operating income
NSF/OD Fee @ 74%
OD Fee @ 60%
Estimated OD Rev Loss
These two banks represent 17% of total deposits ($8.3 trillion) in the United States. Can we then
surmise that if banks that control 17% of deposits in the United States will lose $1.3 billion in
OD fees, then would the lost OD fees in the banks th