NEW YORK — Because consumers are withdrawing less from ATMs and writing fewer checks, some banks are reporting a drop in noninterest income generated through overdraft and customer service fees.According to a Jan. 28 article from AHN Media (www.allheadlinenews.com), TCF Bank's total fees and other income declined 3% from 2007 to $474.1 million for 2008, AHN Media reported. Despite a growth in new checking accounts, TCF said account holders were doing fewer transactions.TCF Bank CEO William Cooper told the publication "[Consumers are] buying fewer things, they're writing fewer checks and their debit card transactions are smaller… So even though our base is growing, fee income has been pretty flat again because of the economy and higher unemployment and basically the fear factor."Amcore Financial recently reported its noninterest income went down 7% to $16.9 million compared to the same period last year and 16% from the third quarter of 2008, according to AHN Media. Fifth Third Bank's deposit service charges took a dive in the fourth quarter last year because of a decline in transaction volume and debit card use.–[email protected]

Less Than Healthy Margins PromptMore Noninterest Income Streams

MADISON, Wis. — Are the days when credit unions could differentiate from banks by charging less fees coming to an end?Jim Jerving touches on the topic in a 2008 CUNA CFO Council white paper entitled "Generating Noninterest Income." He wrote that fees and noninterest income have become an economic necessity "[in] a gray financial environment inhabited by a flat yield curve, tight margins and an overabundance of financial service providers." The consensus among the CFOs, economists and industry experts Jerving talked with for the white paper concluded that there are few innovations in noninterest income but rather "creative variations on a theme.""It is true that, in many communities, members still can count on their credit union to give them a better deal than a bank regarding fees. And therein lies a market opportunity for credit unions-fees benefit members directly while fees benefit stockholders of a bank but not necessarily their customers," Jerving wrote.Credit unions can use their approach to fees as a competitive advantage, he suggested. While fee income directly benefits members in competitive savings and loan rates rather than bank shareholder returns, Jerving said "marketing efforts need to be more aggressive in the community to make sure that this story is told, a posture some credit unions have been reluctant to assume."There are other ways credit unions can put a positive spin on noninterest income, Jerving wrote. CUSOs, for instance, play a critical role putting opportunities out front by providing a number of financial services that are not offered directly from the credit union. Jerving also suggested that the creation of a noninterest income committee and executive to actively manage this function is something that credit unions would do well to consider because it is often the prominent income earner for the organization, Jerving wrote."Fee income is intertwined with both cooperative philosophy and controversy," he said. "Traditional thinking viewed fees as akin to a nasty four-letter word and held that credit unions needed to charge as little as possible in fees to differentiate from banks. It was a sound operating philosophy for an earlier time when margins were healthier."–[email protected]