For Release Upon Receipt  
Contact Patricia Harden
Wed., June 23, 2010 
pharden@hardenpartners.com
510-635-4150

 Moebs Study Shows 44 Percent Change in Pricing on Overdrafts
 More Banks Getting Into Overdrafts for the First Time Than Getting Out

(Lake Bluff, IL June 23, 2010)   Almost half of  U.S. banks and credit  unions – some 44 percent - have changed their pricing on overdrafts since last year, according to a national statistical study by Moebs $ervices of more than  2,000 banks and credit unions.
 
“Since the fourth quarter of last year, more banks and credit unions initiated an overdraft (OD) program for the first time than stopped offering it,” said Michael Moebs, economist and CEO of Moebs Services.   “We conducted surveys last November, when overdraft regulations were announced, in March of this year and just recently in May.  In March, Bank of America and Citibank announced substantial curtailment of their overdraft programs.

What Those Who Changed Did
20.5% Increased Price
6.5% Decreased Price
2.2% Increased & Decreased Price
7.1% Started an OD Program
6.4% Stopped OD Program
  1.6% Out of Business
44.3% Made a Change

Projecting the survey results to all 12,000 banks and credit unions offering checking with some type of overdraft service, about 850 institutions (7.1 percent) are getting into overdrafts for the first time, and about 770 (6.4 percent) stopped this service.  Also, another surprising result according to Moebs is that 6.5 percent of banks and credit unions surveyed decreased the price of an NSF or overdraft.  “We’ve been collecting bank and credit union price information for almost 30 years and rarely get half of one percent who lower their NSF or OD price,” said Moebs.  “These price decreases are significant.”

The average price of an NSF is $26.25 and for an overdraft is $27.01.  Those increasing their prices are charging $29.31 for an NSF and $30.02 for an overdraft.  Banks and credit unions decreasing prices charge $23.29 for an NSF and $24.83 for an overdraft.  “That’s a $5 to $6 dollar difference between those who increased the price and those who decreased the price,” according to Moebs.  “This shows consumers are being given more choices,” noted Moebs.

The nation’s banks and credit unions are preparing for sweeping changes on how they conduct their overdraft programs for checks, ACH, debit cards and ATMs.  These changes go into place for new customers and members on July 1st and for existing accountholders on August 15th.  Moebs summarized his findings in the context of these regulatory changes.  “Overall, the prices show what the Federal Reserve attorneys did with the overdraft amendments announced last November was good regulation.  Why?  When you can get a market for a service to significantly increase and decrease price, have some get out and some get into the market for the first time, all while providing the consumer with more options, then you must have done a good job with the regulation change.”

About Moebs Services
Michael Moebs is an Economist and the CEO of Moebs $ervices, headquartered in Lake Bluff, IL.  Since 1983, Moebs Services has been collecting primary empirical data about financial institutions’ services, pricing, operating expenses and financial condition and analyzing the data in a counter intuitive manner which provides simple solutions to complex issues.

###