In San Diego County Credit Union’s most recent annual report, CEO Teresa Campbell boasted about the company’s philosophy of “putting people first and profits second.”
The report, however, makes no mention of the $18 million in overdraft fees San Diego County Credit Union (SDCCU) collected last year from customers. Neither does it mention how Campbell’s compensation increased seven-fold over the last decade to nearly $12 million dollars, according to SDCCU’s latest financial statements.
Credit unions often frame themselves as community-oriented financial institutions, in contrast to big commercial banks. But credit unions chartered in California last year collected over $250 million in overdraft fees, according to an analysis by KPBS. And executives at some of those credit unions have seen their compensation skyrocket over the last decade.
“That's a type of reverse Robin Hood that is not really fulfilling the spirit or mission” of credit unions, said Aaron Klein, senior fellow in economic studies at the Brookings Institution and a vocal critic of overdraft fees.
SDCCU declined an interview request and did not respond to multiple follow-up inquiries. The California and Nevada Credit Union Leagues, a trade association, also did not respond to interview requests.
For years, large commercial banks have had to disclose their revenue from overdraft fees. Prior to the pandemic, the big banks collectively brought in between $11 billion and $12 billion annually from overdraft penalties.
However, a steady drumbeat of criticism from consumer watchdogs and members of Congress pressured many banks to change their practices. Some softened their penalties while others eliminated the fees altogether. According to the Consumer Financial Protection Bureau, overdraft revenue at bigger banks has dropped nearly 50% compared to pre-pandemic years.
Historically, credit unions have not been subject to the same disclosure laws as commercial banks, so their overdraft fee revenues remained a mystery. But a law passed last year in California is shedding some light onto just how much money these financial institutions are pulling in from customers with low checking account balances.
Data collected by the state shows California’s 114 chartered credit unions brought in more than $250 million in overdraft revenue last year. The state’s 101 chartered banks collected just over $73 million in overdraft revenue.
The new state law does not require credit unions chartered with the federal government to disclose overdraft revenue.
KPBS identified over half a dozen state-chartered credit unions based in San Diego County, which together collected more than $36 million in overdraft fees last year. Some relied on the fees as a substantial portion of their income.
Consumer and banking watchdogs say the fees disproportionately impact people living paycheck-to-paycheck, since they’re most likely to have low account balances.
“In many cases, the overdraft fee is actually larger than the amount of the credit that's extended,” said David Silberman, lecturer at Harvard Law School and senior fellow at the Center for Responsible Lending. And these fees, he added, are typically paid by “the most vulnerable” customers.
Big fees, big raises
In addition to the overdraft fee data, KPBS reviewed years of publicly available financial statements from state-chartered credit unions in the San Diego area. These records include CEO salaries and benefits. While some credit union leaders saw moderate increases to their salary, others saw their compensation balloon.
Campbell, the CEO of SDCCU, earned about $1.6 million in total compensation in 2012, according to the company’s financial statements.
By 2021, according to SDCCU’s most recently available records, her total compensation reached $11.8 million. That year, she earned $1.2 million in base pay, $1.5 million in bonuses and incentives, $6.8 million in “other reportable compensation” and the rest in retirement compensation, deferred compensation and benefits.
Other SDCCU executives also saw their compensation increase.
In 2012, the credit union spent $3.2 million on executive compensation, which represented roughly 2.3% of its total expenses that year, according to ProPublica’s Nonprofit Explorer. In 2021, the credit union spent more than $19 million on executive compensation, representing 9.3% of total expenses.
SDCCU, one of the larger credit unions in the state, has long framed itself as the antithesis of big banks. An ad campaign from the credit union boasted the tagline, “We’re nothing like a big bank — we’re better.” SDCCU’s $18 million dollars in overdraft revenue last year ranked it second highest among all state-chartered credit unions.
KPBS found other examples of big pay increases for executives at San Diego-area credit unions.
Frontwave Credit Union brought in nearly $8 million in overdraft fees last year, representing 12% of its total income and 140% of its net income. In other words, without overdraft revenue, the credit union could have lost money in 2022.
Between 2016 and 2020, CEO Bill Birnie’s annual total compensation bounced between $346,000 and $516,000. Then in 2021, his total compensation jumped to over $1 million, according to Frontwave’s most recently available financial statements.
Birnie said the significant jump appears to be the result of a filing error in the credit union’s records. He said he received a lump sum payment of roughly $500,000 from a retirement savings plan in 2021, and that the payment erroneously showed up as part of his base pay in Frontwave’s financial statements.
“We're gonna take a look at that because if it's an error, we probably ought to restate that just so people don't come to the same conclusion you did,” he told KPBS in an interview.
Birnie maintained that his base pay is currently $324,000, and that he paid all appropriate taxes on the retirement plan.
At MyPoint Credit Union, CEO David Brooke’s total compensation jumped from $361,000 to $688,00 between fiscal years 2016 and 2022, according to the credit union’s financial statements.
In 2011, MyPoint paid its executives a total of $910,000, representing 3.5% of the credit union’s annual expenses. In 2022, the most recent year available, it spent $3.5 million on executive compensation, representing 15.8% of the business’s annual expenses, according to ProPublica’s Nonprofit Explorer.
Last year, MyPoint brought in about $1.2 million in overdraft fees, which equaled roughly 5% of the business’s total income and 50% of its net income.
Brooke did not respond to an interview request.