Strunk Overdraft Program Bulletin

On April 23, 2023, the OCC issued guidance on debit card transactions that are authorized positive, settled negative (APSN) and on re-presented NSF items. On the same date, the FDIC also issued guidance on APSN. Previously, on August 18, 2022, the FDIC had issued guidance on re-presented NSF items. The OCC and FDIC indicate that institutions following either of these practices risk violating Section 5 of the Federal Trade Commission Act which prohibits unfair or deceptive acts or practices and Section 1036 of the Dodd Frank Wall Street Reform and Consumer Financial Protection Act of 2010 which prohibits unfair, deceptive, or abusive acts or practices. The purpose of this bulletin is to summarize that guidance.

OCC Guidance

In terms of guidance related to APSN, the OCC has found that misleading disclosures contribute to findings that the APSN practice was unfair for purposes of Section 5. However, even when disclosures describe the circumstances under which consumers may incur overdraft fees, the OCC has found that overdraft fees charged for APSN transactions are unfair for purposes of Section 5 because consumers are still unlikely to be able to reasonably avoid injury.

With respect to re-presentment of NSF items, the OCC has found that disclosures may be deceptive, for purposes of Section 5, if they do not clearly explain that multiple or additional fees may result from multiple presentments of the same transaction. And again, even when disclosures explain that a single check or ACH transaction may result in more than one fee, a bank’s practice of assessing fees on each re-presentment may also be deemed to be unfair, for purposes of Section 5, if consumers cannot reasonably avoid the harm and the other factors for establishing unfairness under Section 5 are met (there is a representation, omission, act, or practice that is likely to mislead, the act would be deceptive from the perspective of a reasonable consumer, and the representation, omission, act, or practice is material). Their finding is that consumers typically have no control over when a returned ACH transaction or check will be presented again and lack knowledge of whether an intervening deposit will be sufficient to cover the transaction and related fees.

FDIC Guidance

The FDIC guidance is essentially the same as the OCC guidance, they just issued their guidance on re-presented items separately last August. In the April 23rd guidance on APSN the FDIC indicated that failure to take steps to avoid assessing overdraft related fees when transactions are authorized on positive balances but settle on negative balances results in ‘heightened risks” of violations of Section 1036 of the Dodd Frank Wall Street Reform and Consumer Protection Act of 2010. An act or practice is unfair when it (1) causes or is likely to cause substantial injury to consumers, (2) cannot be reasonably avoided by consumers, and (3) is not outweighed by countervailing benefits to consumers or to competition.

In their August 18, 2022, guidance they said violations of law occur when financial institutions charge multiple NSF fees for the re-presentment of unpaid transactions if disclosures do not fully or clearly describe the financial institution’s re-presentment practice, including not explaining that the same unpaid transaction might result in multiple NSF fees if an item was presented more than once. Practices involving the charging of multiple NSF fees arising from the same unpaid transaction results in heightened risks of violations of Section 5 of the Federal Trade Commission Act which prohibits unfair or deceptive acts or practices (UDAP). Therefore, if a financial institution assesses multiple NSF fees arising from the same transaction, but disclosures do not adequately advise customers of this practice, the misrepresentation and omission of this information from the institution’s disclosures is material and therefore deceptive. Also, a risk of unfairness may be present if multiple NSF fees are assessed for the same transaction in a short period of time without sufficient notice or opportunity for customers to bring their account to a positive balance to avoid the assessment of additional NSF fees. As a result, while revising disclosures may address the risk of deception, doing so may not fully address the unfairness risk.

In addition to the regulatory compliance risk, the FDIC also found that multiple NSF fee practices may result in heightened litigation risk. Numerous financial institutions, including some FDIC supervised institutions, have faced class action lawsuits alleging breach of contract and other claims because of the failure to adequately disclose re-presentment NSF fee practices.

If you would like more information on Strunk’s program, please contact us at or call 800-728-3116.

Vendor Due Diligence Material

Every critical and high-risk vendor must have their fundamental business information gathered. Community financial institutions can use this information to assess if the vendor complies with any relevant local laws and regulations, as well as to spot any potential future performance problems.

An essential element in the vendor risk management lifecycle is due diligence. In many businesses, conducting due diligence on each vendor is not just a good business practice but also regulated by the law. There are baseline or foundational documents that should be gathered to further examine the majority of vendor engagements, even though not all vendor relationships pose the same risks to a financial institution.

Collecting, reviewing and storing vendors’ due diligence materials is a vital part of the vendor management process. Vendors are required to present certain documents as proof of their internal risk management as part of the due diligence procedure. The vendor should be able to provide documents that are a crucial part of evaluating the vendor’s risk and the controls they have in place. Whether it’s a SOC report to confirm information security processes, internal compliance guidelines, or even a business continuity plan and testing.

After collecting and reviewing the vendor’s due diligence material, the financial institution should have a central location to store these documents securely and also receive notification when due diligence material needs to be collected again or is missing.  Strunk’s vendor management software, Vendor Manager, can assist with your financial institution’s vendor due diligence process and provide a streamlined process. Visit to learn more.

Accessing and Filtering ODP Manager Account Data

The hosted ODP Manager software is an effective tool for managing an institution’s overdraft program. In addition to the daily tasks, ODP Manager can help users view and filter the account information that is imported from the daily extract file. If there is a specific population of accounts with certain criteria that users would like to monitor, these filtering options may facilitate the process.

Depending on the specific area of interest, users may want to limit results to a smaller population of accounts. There are three main areas in ODP Manager which will allow users this flexibility: account-level Reports, Account Inquiry, and Custom Query.

Reports show a standardized list of accounts that meet certain standard criteria. Individual column filters can be applied to incorporate additional criteria and limit the results displayed. These filtered results can be viewed on screen or exported to PDF or Excel. If users enter the same filter criteria frequently, it may be more efficient to create a new query group specific to your institution. This will allow users to display only the desired results just by selecting the group in a dropdown.

If users need more flexibility in selecting the accounts or data fields included, Account Inquiry provides additional options to select from all accounts in ODP Manager. Three different column views and all available data columns mapped from the daily extract file allow users to access additional data that may not be visible in Strunk’s standard reports. The filtered results can be viewed in the browser or exported to Excel.

Custom Query is used when an institution has a specific need to specify not only the account criteria to be used for the report but also the data columns displayed. Each day, users will download an Excel file with the updated list of accounts.

Please contact Strunk Support at with any questions or to find out more details about using the advanced ODP Manager filters.

High Performing Banks Look Outside the Box

As interest rates rise and the cost of doing business increases, bankers are challenged to figure out where we go from here. Many community banks face a huge loss in their bond portfolio due to the substantial increase in rates on US Treasury securities. Liquidity can be a problem as we have seen in some mid-sized banks. Community banks haven’t seen a run on deposits although there is pressure to compete for deposits from non-bank competitors.

Service charge and fee income has increased some since the 2020 pandemic but still are near historical lows. As banking regulators continue to scrutinize “junk” fees including overdraft fees, what alternatives does a bank have? Large banks have a multitude of ways to create service charge or fee income but smaller community banks aren’t so lucky. Banks with assets over $10B have to report NSF/OD income on their quarterly call report. Any bank with a concentration of income from this source is being criticized by the CFPB. Now community banks in some states are being asked the same question. More, not less regulation is coming.

What can you do? Strunk was the pioneer for the Overdraft Privilege program beginning in 1993 and it was the best fee income idea in the history of our industry. We have several other fee income programs that many financial institutions have implemented. High performing bankers are always thinking outside the box.

Contact Strunk at 800.728.3116 or email at to learn more about fee income programs offered by Strunk. You will be glad you did.


Charge Off and Recovery Tracking and Reporting

After an overdrawn account has been charged off, financial institutions may still need to track and report on the charge-off balances and recoveries related to the overdrawn accounts. ODP Manager includes a manual tracking process that may allow your users to manage the charge-off and recovery process after the deposit account had been closed.

Once the account has charged off, users can create a Charge-off Item with the date, charge-off principal, charge-off fees, charge-off reason, and item status. Users can also include notes at the time the item is created and throughout the recovery process. Updates and changes are logged as well. As recoveries are made, they should be entered in ODP Manager and they will reduce the overall charge-off balance tracked.

All Charge-off Items for the last year are displayed on the C/O Items and Recoveries summary page. If a longer or shorter reporting timeframe is desired, a different default timeframe can be requested by the financial institution. Also, users can change the start and end dates at any time to change the charge offs displayed. The summary displays basic account and charge-off information. When the summary information is exported as a PDF it will overall totals and adds additional totals by branch.

Please contact Strunk Support at with any questions or to find out more details about using the Charge-off Items and Recoveries feature.

Strunk introduces Pricing Manager, a commercial loan, deposit pricing, and relationship profitability tool for CFIs

Strunk is proud to announce its newest solution, Pricing Manager. Pricing Manager is a fully hosted, web-based solution that allows community financial institutions (CFIs) to deploy a tool to all lenders to ensure they are armed to price loans profitably and consistently based on target profitability objectives.  It also provides the ability to understand the details of relationship profitability so better pricing decisions can be made.

Pricing Manager offers lenders the ability to vary rate, fee, risk premium and term structure among other variables, to understand the drivers of profitability and develop pricing options for borrowers that all achieve the target ROE for all types of loans. Deposit relationships can be included to see how much ‘pricing power’ each brings to the loan or total relationship. The solution contains built in assumptions for loan origination, loan servicing and cost of funds which can all be customized.

According to Strunk’s Chief Executive Officer, Dan Roderick “Until about a year and a half ago, pricing was fairly straight forward for most community FIs, given historically low interest rates and record high liquidity. However, that has changed dramatically, as should an FI’s approach to pricing. Liquidity, which only several months back was far from a consideration, is now becoming a concern for many community FIs. Economists are beginning to predict tightening commercial credit largely due to a downturn in commercial real estate values – particularly for office space and retail properties. At no point in history has proper loan pricing been more important.”

With Pricing Manager, Strunk offers a full featured loan and deposit pricing tool that will:

  • Arm lenders with the tools needed in an increasingly competitive environment.
  • Include a relationship profitability module.
  • Allow instant adjustments to a shifting rate environment and ensure pricing consistency.
  • Increase profitability.
  • Produce rate sheets for consumer loans.
  • Provide clients with pricing offers that will win more deals.

Strunk is providing free demonstrations of the Pricing Manager solution for interested CFIs. Please visit or contact Strunk at to learn more.

Why is vendor management a hot topic in the world of financial institutions today?

Why is vendor management a hot topic in the world of financial institutions right now? It’s because regulatory organizations including the Federal Financial Institutions Examination Council, Office of Foreign Assets Control, and Federal Trade Commission are focusing on how financial institutions are managing the vendors they outsource to. The Federal Deposit Insurance Corporation (FDIC) has declared that an institution can “outsource a service, but cannot outsource the duty,” making it very apparent that the responsibility for compliance rests with the financial institutions. Various regulators refer to vendor management using various terms. Even though they all ultimately want the same thing, they approach it differently.  For regulators, third-party risk is a sensitive subject. There are many different types of risk that might be introduced when a bank outsources a task to a third-party. Assessing, evaluating, monitoring, and controlling those risks is the core of vendor management.

The importance of vendor management is something Strunk constantly think about, just like it is for the FIs we support. We take great pride in offering a vendor manager software and services that let our clients have an effective vendor management program.  Components of Strunk’s effective vendor management program:

  • Risk Assessments- Assist the financial institution in assess the risk level of the activity the vendor performs.
  • Surveys- Vendor questionnaires to elevate the controls that each vendor has for the emerging risk of the vendor.
  • Contract- Contract assessment, a place to capture and store the contract and its information.
  • Service-Level agreements (SLAs)- tracking SLAs to make sure that the vendor is sticking to the agreement and not being fraudulent.
  • Review- Reevaluating the risk the vendor has while also identify any concerns with the performance of the vendor.
  • Due Diligence- central location to store and evaluate due diligence material from the vendor.

In conclusion, a properly managed vendor relationship can result in greater quality, better service, lower costs, and happier clients.

Does Your Bank Need More Fee Income?

Community bankers across the country are holding their breath hoping they won’t have to pay increased FDIC insurance premiums to pay for the recent $23B drain on the fund by the two large failed banks. A FDIC special assessment is coming but whether all banks will have to pay their proportionate share is still up in the air. Certainly it is not fair for community banks who are not “too big to fail” to share the responsibility of maintaining the FDIC Insurance fund at regulatory levels. Regardless, expenses at community banks are not going down.

Another concern that should be on community bankers’ minds is the percentage of service charge income they derive from non sufficient fund and overdraft fees. Since 2015, the CFPB has required banks with over $10B in assets to report their income from NSF/OD fees on their quarterly call report. Now, several states are asking smaller community banks for the same data. Banks that obtain over 50% of their fee income from NSF/OD fees are being criticized by the regulators. Some bankers are keenly aware of what is going on…others have not caught on to what they can do to mitigate this from happening. Bottom line is all bankers need to diversify their sources of fee income.

Strunk’s value added checking program will generate significant amounts of fee income while keeping free checking for those customers who want it. Since 2011, over 1,200 banks have offered the benefits added checking account to their offerings. You can expect fee income to go up by at least $40 per checking account per year. The program is easy to implement and easy to manage.

Contact us at 800.728.3116 or email at to learn more about fee income programs offered by Strunk. You will be glad you did.

2023 Potential Focus

In 2023, what will regulators and auditors focus their attention on the most? How can we get ready for a change in any law or regulations? How can Strunk’s software better prepare you for your audits and examines.

To determine the top regulatory hot button problems for 2023, Strunk examined supervisory priorities, enforcement trends, rulemaking agendas, speeches, blogs, and more. Below is the list of the items that seems to be focused the most on is 2023.

  • Loan origination and servicing: The CFPB expects every regulated entity under its supervision and enforcement authority to have an effective compliance management system adapted to its business strategy and operations. Examiners should also use the compliance management system review procedures, to conduct review and testing of components of the supervised entity’s compliance management systems which is part of the 2023 Supervisory Highlights Junk Fees Special Edition from the CFPB.
  • Credit Reporting: Inaccurate information on credit reports is the most frequent complaint that the CFPB receives. The CFPB refers complaints to your regulator agency even if they do not regulate you in their 2022 Fall Supervisory Highlights. Congress has issues of its own. Make sure your financial institution train workers, test credit reporting systems, and update rules and procedures that deal with the accuracy of information reported. Financial Institutions should immediately look into and resolve customer complaints.
  • Lending practices & fair lending: Fair lending is expected to remain one of the major compliance issues, if not the main one. In its most recent annual report to Congress on fair lending, the Consumer Financial Protection Bureau (CFPB) highlighted in their 2022 Fall Supervisory Highlights, its efforts to oversee activities related to “mortgage origination and pricing, small business lending, student loan origination work, policies and procedures regarding geographic and other exclusions in underwriting, and on the use of artificial intelligence (AI) and machine learning models.” The agency has a solid track record of carrying out its obligations. There is no reason to believe that this will change in 2023 given the bureau’s track record of following through on its commitments.
  • UDAAP focus on fees: A CFPB press release and information request from January 2022 helped popularize the phrase “junk fees” in the banking sector. The definition of a “junk” fee was not clear because the agency included services for concerts and hotel resorts with other fees that banks typically charge. However, the bureau explicitly mentioned overdraft, NSF, and late fees for credit cards in their press release. The bureau declared that in order to “reduce these kinds of junk fees,” it will “craft rules, issue industry guidance, and focus supervision and enforcement resources to accomplish this objective.”, which is stated in the 2023 Supervisory Highlights Junk Fees Special Edition.
  • Deposit accounts: Ensure that you are abiding by both local and federal laws and educate your workers on policies and procedures. Making sure that each consumers gets full details regarding their accounts and understands it. This has been covered in several CFPB and FDIC reports around UDAAP.
  • Vendor Management: Regulators are still very interested in your relationships with vendors, service providers, and fintech partners, particularly those who assist you in providing Banking as a Service. Your financial institution will be held accountable if a vendor violated consumer protection rules or caused a breach involving your data. Based on CFPB Consumer Financial Protection Circular 2022.
  • BSA/AML/OFAC: Regulators have gone after BSA officers and management with individual fines per BSA/AML Civil Money Penalties. Worldwide instability creates new sanctions. Financial Institutions must implement rules, including beneficial ownership rules for the next few years.
  • AI, algorithms and big data: It’s obvious that we’re only at the starting of sorting this all out because this subject has recently grown quite popular with the agencies. There are many facets of this problem to investigate, but one of the buzzwords is “digital redlining,” which refers to a form of discrimination where lenders limit credit availability or give credit on unfair terms based on applicants’ digital footprints. These new technologies are usually used by banks for marketing, fraud detection, and credit standards. Director Chopra’s comments focused on the use of AI in lending decisions. He stated that the CFPB will be “watching for digital relining,” citing what he called “algorithmic bias” and the need for investigation of whether “discriminatory black box models are undermining the goal” of equal opportunity.

Strunk offers a variety of software solutions to assist financial institutions with their Enterprise Risk Management. Strunk’s Risk Manager, Policy Manager and Vendor Manager solution will help financial institutions be better prepared for their audits and examines, covering most of the hot topics for 2023. Also, Strunk’s overdraft privilege programs assist financial institutions grow their bottom line while also making sure they are fully compliance with regulatory issues.


Strunk at the ICBA’s Live 2023

The Independent Community Bankers Association held this year’s ICBA LIVE event all the way out in Honolulu, Hawaii from March 12-16 at the Hilton Hawaiian Village. In addition to the beautiful location, attendees enjoyed visiting with vendors in the Marketplace, various Learning Labs and sessions with ThinkTECH presentations.

Strunk was pleased to meet with so many bankers, discussing necessary solutions for community banks. Strunk was thrilled to debut their newest solution, Pricing Manager. Pricing Manager is a full-featured loan and deposit pricing solution that will provide banks with the ability to set loan and deposit pricing consistently and profitably. Commercial loans can be priced consistently by every lender – creating options for customers that all achieve the bank’s profitability targets. Additionally, rate sheets for consumer loans, residential mortgage loans, and deposits can easily be created that are also based on established profit objectives. Not only will Pricing Manager drive consistent achievement of profitability targets – it will also help you win more quality deals!

Strunk’s goal is to continually provide value-added SaaS solutions that help community banks increase profitability, while controlling operating expense. In addition to their latest offering, Strunk highlighted their overdraft service and best-in-class governance, risk and compliance solution, Risk Manager.

For more information on Pricing Manager or Strunk’s other solutions, visit or contact Strunk at