United Bankers' Bank survey reveals bank fees rising

Northwestern Financial Review, Feb 1-Feb 14, 2004 by Hilgert, Jackie

With slight exception, bank fees are on the rise across the Upper Midwest. According to a service fee survey recently conducted in six states by United Bankers' Bank of Bloomington, Minn., increases of more than 20 percent were reported across the region for check orders, IRA custodial fees and non-customer check cashing.

In addition, banks in Montana, Nebraska, North Dakota and South Dakota have upped the fee to replace a lost ATM card by more than 20 percent since 2001, the year UBB last conducted a survey of bank fees. Customers in Iowa, Nebraska, North Dakota and South Dakota now face larger minimum balance requirements on their bank savings accounts.

"Banks are making more income through fees than ever before," said Dwight Larsen, vice president of BankValue, the UBB subsidiary that administered the survey. Larsen said the bank plans to conduct surveys on fees every other year.

Responses were received from 184 community banks in Iowa, Minnesota, Montana, Nebraska, North Dakota and South Dakota; respondents range in size from $5 million to more than $576 million. The survey asked banks to list fees in the following categories: personal banking services, teller services, personal direct deposit accounts, business direct deposit accounts, savings accounts, ATMs and ATM transaction fees, and money market accounts.

Not all fees are up, however. Across the region, notary services and faxes cost less than they did two years ago. Decreases for 401(k) services, safe deposit box rentals, coin counting and transaction fees on NOW accounts were seen in Iowa. In Minnesota, monthly inactivity fees are down, as are minimum balance requirements on regular checking accounts. Of survey participants, Iowa stood out as the least expensive place to conduct an ATM transaction regardless of consumer/ bank relationship.

Analysis of the components of non-interest income shows that Minnesota and Montana banks with assets less than $100 million earn higher amounts for service charges on deposit accounts and generally earn the highest amounts in the "other" types of non-interest income, which includes fees earned from the sale of residential mortgages to the secondary market. L a r s e n pointed to the rate of population growth in Montana and Minnesota as a factor that positively impacts that type of non-interest income. North Dakota consistently recorded the lowest amount of non-interest income earned in banks of less than $100 million.

Complete results of the 84-page survey are available from UBB. Results are tabulated by state and fee data is presented in comparison with banks of similar assets and metro or non-metro designations.

"We hope the information provided in the BankValue Service Charge Survey will meet the needs of our community bankers," said Bill Rosacker, president of UBB. "The data within the survey should be helpful in identifying pricing opportunities and assessing their current service charge schedules."

By Jackie Hilgert