Rising Fees Pad Bank Earnings Revenue Tops $16 Billion During Third Quarter ‘97

If it feels like you’re paying more in bank fees, it’s because you are.

According to statistics compiled by the U.S. Federal Reserve and independent groups, U.S. banks continued to rake in more and more revenue from fees during the third quarter of 1997.

The $16.5 billion in fees collected by the country’s 9,793 banks was $1.5 billion more than the third quarter 1996 total even though there were almost 300 fewer banks as of Sept. 30, 1997.

The priciest banks, the figures show, were those possessing assets of $25 million or less. The cheapest fees were levied by institutions holding between $25 million and $2 billion in assets.

Warren Heller, research director at Veribanc in Wakefield, Mass., said the numbers show money generated by fees has become a large piece of a bank’s profit puzzle.

“Historically, fees were a patch to help make up what was lost to overhead such as salaries and buildings,” Heller said. “But fees can now push up the net income bar beyond just keeping it from being pushed down.”

However, William Plasencia, managing editor of Bank Rate Monitor in North Palm Beach, Fla., said banks have also become savvy at lowering some fees to attract customers - and then jacking up others.

An October Bank Rate Monitor study of 250 banks in the country’s top 10 markets showed that the average balances needed to avoid paying fees on checking accounts were on the decline.

“Banks want to attract as many people as possible, and the checking account is one of the hooks they use to get you in the door in the first place,” said Plasencia. “They can afford to shave the checking fees because they can always sock it to noncustomers through ATM fees. … They are repackaging fees to make them more palatable and to maximize profit.”