WATERTOWN, N.Y.-Northern FCU here has altered its pricing structure, eliminating more than half of the fees members can be charged.

As of Sept. 1, NFCU reduced the number of fees it charges from 38 to 18, while reducing many other fees.

According to Alexa Bennett, marketing supervisor at the 25,000-member, $188-million credit union, putting the new pricing into motion was a decision in June by Northern FCU to increase its money order fee from 75 cents to $2 to be comparable to other FIs in the region. Members complaints, however, led the NFCU to evaluate all of its fees and make a cost comparison with other institutions in the area, as well as competitors such USAA and Navy FCU.

Based on that analysis, Northern cut or reduced nearly every fee it charges, including returning the money order fee back to 75 cents and refunding the difference-about $2,000 paid out among 730 members. The move to cut back on fees is largely being promoted via Northern Federal's website and in e-mails to members. No large-scale media campaign is planned.


Fees That Have Been Cut

Among the fees Northern has eliminated were check-cashing fees ($3 per check), check by phone ($10 per check), HSA closure fee ($10 per account) and research fees ($25 per instance). Fee reductions included deposited checks returned unpaid (reduced from $30 to $15), early savings withdrawal fees (from $20 to $5 for balances of $500 or less) and money orders (reduced from $2 to 75 cents).

Given thin margins every credit union is experiencing, the fee reductions naturally raise the question of how Northern Federal is offsetting the decline in fee income. However, neither Bennett nor CEO Dan St. Hilaire would say how much fee income the credit union stands to lose annually as a result of these changes. In an e-mail, St. Hilaire said, "We're confident the loss [in] fee revenue will be made up from the added business we expect current and new members will bring to Northern."


He added that the CU expects fewer employee-member confrontation as a result.

Northern has not raised any fees or instituted new fees to make up for these changes and does not expect to alter pricing on loans or deposits to make up for the loss in revenue. No loan promotions are in the works to boost loan volumes (aside from what was already planned for the year) and the CU has not instituted any new programs or services to generate non-interest income.

According to its most recent Call Report, Northern Federal Credit Union has more than 9,300 loans on its books totaling more than $160 million, an increase of more than 1,200 loans ($23 million) from December 2010. After non-interest expenses, non-interest income year-to-date is above $1.4 million; Northern made approximately $3.2 million in non-interest income in both 2011 and 2010.

Its current Net Worth Ratio is 6.81 ("Adequately Capitalized") and that figure has risen for the past several years.

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