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F.N.B. Corp (FNB) Set to Make Changes to Overdraft Practices

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In an effort to further benefit its customers, F.N.B. Corporation (FNB - Free Report) has decided to make changes to its overdraft practices. The changes include eliminating continuous overdraft fees, reducing overdraft and non-sufficient funds (“NSF”) or returned item fees, and decreasing the maximum number of times customers can be charged these fees in a single day. The updates are expected to be effective from the first quarter of 2023.

F.N.B. Corp will also ensure that customers do not incur overdraft fees for transactions that are $5 or less. The changes are expected to reduce overdraft-related fees assessed to customers by $10 million (pre-tax) on a full-year basis.

The updates have been designed to promote positive banking behaviors, prevent overdrafts and better enable customers to reasonably avoid fees.

In addition to the above-mentioned changes, F.N.B. Corp will launch two products next year in order to provide its customers with additional cash flow flexibility and expanded tools to strengthen their financial management skills.

The first product will be a short-term, small-dollar loan solution. It will allow eligible account holders to use F.N.B. Corp’s digital tools to apply for and quickly receive funds. With online and mobile access to credit to fill urgent financial gaps, this new small-dollar loan product aims to help customers reduce fees and provide an alternative to expensive, non-traditional loan options.

The second is a FNB smart secured consumer credit card. This will help customers looking to establish or improve credit. A cash deposit into F.N.B. Corp’s savings account will be used to secure the card, with the amount of the deposit set as the card’s credit limit.

The savings account will be held as collateral so that the company can enable customers, including those with no credit or low credit scores, to demonstrate responsible financial management habits and build or repair their credit over time.

Vincent J. Delie, Jr., the chairman, president and CEO of F.N.B. Corp, stated, “FNB continually monitors current practices and changes in technology and our clients' preferences, and we have made adaptations to our digital offerings and consumer fee schedule to ensure we are addressing a wide range of needs. FNB’s digital technology, enhanced product suite and commitment to transparency in our banking practices are all part of a comprehensive approach that makes it easy for consumers and businesses to access, understand and use banking tools to take control of their finances and achieve their goals.”

Our View

In order to improve its non-interest income, FNB has been undertaking several strategic actions. The company has been enhancing its product suite, along with expanding services.

Also, it has been integrating mobile, online and in-branch modes for a seamless and convenient banking experience. The company witnessed a substantial rise in digital traffic over the past couple of years, with clients relying heavily on online tools to do banking transactions. F.N.B. Corp has been building on its ongoing investments in sophisticated technology to enhance customer experience, including integrating its e-Store shopping tool into the FNB Direct mobile app. These, along with several other initiatives, are expected to improve the company’s operating efficiency over time.

In the past year, shares of F.N.B. Corp have gained 13.5% against a decline of 5.3% of the industry.

 

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Currently, FNB carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Banks Taking Similar Steps

Several banks, including Bank of America (BAC - Free Report) and Citigroup (C - Free Report) , have stopped charging NSF fees and overdraft fees.

This January, Bank of America announced changes to its overdraft services, including plans to do away with NSF fees, effective February, and lower overdraft fees to $10 from $35, beginning in May. The company said that it would also remove transfer fees associated with its Balance Connect for overdraft protection service in May.

Since 2010, BAC has taken several steps to “empower its consumer and small business clients to bank with greater confidence and reduce overdraft usage.” These efforts have substantially lowered fees related to overdrafts.

In February, Citigroup announced that it would completely terminate overdraft fees, return item fees and overdraft protection fees by this summer, making it the largest U.S. lender to do so.

Citigroup’s overdraft fee collection has been among the lowest compared with its peers. Other than a consumer-friendly overdraft policy, the banking giant continues to expand access to banking products and services, making banking more financially inclusive for underserved communities.


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