Income from Fees on Nonsufficient Funds and Overdraft Charges
Financial Code section 521 requires state-chartered banks and credit unions to notify the Department of Financial Protection and Innovation (DFPI) annually of the revenue they received from fees on nonsufficient funds and overdraft charges during the calendar year. These reports are due by March 1 so the DFPI can publish the information on its website by March 31.
Annual Reports Publication
Financial Code § 521 FAQs for State-Chartered Banks and Credit Unions (rev. 10/31/2023)
“Nonsufficient funds (NSF) fees” means fees resulting from the initiation of a transaction that exceeds the customer’s account balance if the customer’s bank or credit union declines to make the payment.”
“Overdraft (OD) fees” means fees resulting from the processing of a debit transaction that exceeds a customer’s account balance.”
1) How will we report the required information?
On December 29th, we will send an email with a unique report (survey) link to the designated email address of each reporting institution. The email will be sent from email@example.com . The link goes to a web form on the FORM.com website which each reporting institution will complete and submit. The link takes the respondent to FORM’s secure server. Please complete and submit the report.
2) Is the data collection process secure?
The link is unique to your designated email address and is provided by our long-term service provider FORM.com. FORM adheres to IT security requirements set forth by ISO 270001 standards and has received the TRUSTe’s Privacy Seal. Only authorized DFPI staff can access your information.
3) Will my institution get an email with a report link?
This reporting requirement only applies to state-chartered banks and credit unions. If the reporting requirement applies to your institution but you have not received an email with a report link, please email Marilyn Davis at firstname.lastname@example.org (banks) or Kim-Phuong Hoang at email@example.com (credit unions) for more information.
4) How can I update my designated email address for my institution?
Please email a request with the updated email address to: Licensing@dfpi.ca.gov.
5) My institution does not charge NSF or OD fees. Do I need to complete this report?
Yes. A response is required for all applicable institutions, even if the fees are not charged. Each institution will need to attest to the accuracy of the reported information.
6) If my institution is unable to meet the filing deadline, will a late filing fee or penalty be assessed?
Yes. A penalty may be assessed for late filings.
7) Should reported figures include fees collected from commercial accounts?
Yes. FC §521 does not specify reporting only on consumer accounts; therefore, report both NSF and OD fees accordingly.
8) Should uncollected fees or reversed fees be reported?
No. Only report collected fees. If collected and reversed fees are tracked separately, then report the net amount for each category.
9) In which category would bounce protection fees be reported?
Bounce-protection fees are reported as OD fees since the debit transaction was honored with other funds.
10) In which category would courtesy pay fees be reported?
Courtesy pay fees are reported as an OD fee since the debit transaction was honored with other funds.
11) In which category would a returned check, ACH, and debit card fees be reported?
If the transaction was declined, report the fee as a NSF fee. However, if the transaction was honored with other funds, report the fee as an OD fee.
12) In which category would returned-deposit fees be reported?
Returned-deposit fees are reported as NSF fees since the transaction was presumably declined.
13) We charge an overdraft transfer fee when funds are transferred from a savings account, line-of-credit, credit card, HELOC, etc. to process the debit transaction. In which category would such fees be reported?
Transfer fees are reported as OD fees since the debit transaction was honored with other funds.
14) We charge daily interest on negative accounts. Would such interest income be included?
Yes. Such interest income is the result of an OD transaction honored with other funds causing the negative balance and should be reported as OD fees.
15) For negative balances that are subsequently converted to a loan, should interest income from the loan be included?
No. Such interest income is no longer considered part of the OD program.
16) We charge an uncollected-funds fee for pending deposits with a subsequent debit transaction that would overdraw the account. In which category would this be reported?
If the purchase transaction was declined, then the fee is reported as a NSF fee. If the purchase transaction was honored with other funds, then report the fee as an OD fee.
17) We are headquartered in California and have branches out of state. Would NSF and OD fees collected from outside California be included?
Yes. The out-of-state branches are subject to the examination authority of the Commissioner.
18) We are headquartered outside of California but have branches in the state. Are we subject to the reporting requirements?
No. The Department does not ordinarily examine out-of-state banks or credit unions with offices in California; therefore, your institution is not considered to be subject to the examination authority of the Commissioner.
19) We have wholly owned subsidiaries and have consolidated financial statements. Would we report net income based on our non-consolidated or consolidated financial statements?
Report net income in accordance with GAAP. Therefore, consolidated net income should be reported as follows:
- Banks – Form FFIEC 031-051, Schedule RI, Item 14.
- Credit unions – Form NCUA 5300, Statement of Income and Expense, Line 35.
20) The prior year’s OD/NSF published report included a percentage of OD/NSF fees to gross income. How was the gross income figure derived and why was it not included with our reporting requirements?
The gross income is derived from the following:
- Banks – Form FFIEC 031-051, Schedule RI, Item 1(h) + Item 5 (m).
- Credit Unions – Form NCUA 5300, Statement of Income and Expense, Line 5 + Line 23.
FC §521 requires the Department to collect net income, OD fees and NSF fees only.
21) Will reported data be rounded to the nearest thousands, like last year?
No. Reported figures will be reported in actual dollar amounts and will not be rounded this year.
22) Can we print the data prior to submission, like last year?
Yes. The print function will be available again this year. However, please note that it provides a preview of the information to be submitted only. You must click on “Submit” to transmit the form for completion.
23) Will we be able to make corrections once the data has been submitted?
Yes. Corrections will be accepted up until the March 1st filing deadline, using the same link.