US banks have faced increasing regulatory and competitive pressure to alter their overdraft fee practices, but a new data set shows that credit unions may be the bigger culprits.

A recent law change requiring all California-chartered financial institutions to report their overdraft and nonsufficient fund (NSF) fee income revealed that credit unions in the Golden State are more reliant on that fee income than banks.

California-chartered credit unions brought in $183.1 million in overdraft fees in 2022, more than five times the $35.1 million that state-chartered banks reported. California credit unions also raked in more NSF fees than bank peers, bringing in $69.6 million in NSF fees during 2022 compared to $38.2 million for banks.

As a result, overdraft and NSF fees made up a median 3.23% of California credit unions' net income in 2022, compared to just 0.16% for banks.

California credit unions out-earned banks in both overdraft and NSF feeds in 2022 despite being much smaller, with the 114 credit unions totaling $162.02 billion in assets all together in the analysis, compared to 101 banks totaling $825.22 billion in assets.

The data is the first peek at credit unions' overdraft fee income as, under current law, only banks with more than $1 billion in assets are required to disclose overdraft income information to federal regulators.

Credit union deposit fee income leaders

Some California credit unions greatly outpaced the 3.23% median.

First Imperial CU topped the list of credit unions with the highest proportion of NSF and overdraft fees to total income in 2022 at 15.4%. The El Centro-based credit union was more reliant on overdraft fee income than NSF fees, as overdraft fees made up 12% of its total income in 2022.

Four other credit unions reported double-digit NSF and overdraft fees as a proportion of total income in 2022.

Among credit unions that brought in the most NSF and overdraft fee income overall, Sacramento-based Golden 1 CU topped the list with $28.8 million. That total was over $10 million more than the credit union in second place, San Diego County CU.

– Download an industry document to see deposit fee income data for all California-chartered financial institutions.  – Click here to read the latest deposit fee income data dispatch for banks with more than $1 billion in assets.

Banks with the most deposit fee income

The bank with the most NSF and overdraft fee income in 2022, Los Angeles-based CTBC Bank Corp. (USA), brought in $11.9 million in that fee income. That total came entirely from NSF fees, as the bank had no overdraft fee income last year. Walnut Creek-based Mechanics Bank came in second with $10.4 million in NSF and overdraft fee income last year, making up 1.4% of total income.

CTBC Bank Corp. also topped the list of banks with the highest proportion of NSF and overdraft fees to total income at 6.0%. The next bank on the list, Porterville-based Sierra Bancorp unit Bank of the Sierra, had 3.2% of its 2022 income come from NSF and overdraft fees.