We promised you last week that we would delve more deeply into bank service fee income. In particular, we want to make sure the banks that are making promises to lower their fees, actually do so.
To that end, we took the chart published in January (JRN 39:04) based on third quarter 2021 numbers and updated it with the year-end figures (see page 2). Some things stayed the same: the three largest U.S. banks still charge 45% of total fees. But, two of those three did report decreases: 5-Star Bank of America and 5-Star JPMorgan Chase Bank were down by 7 and 14 bps respectively. 4-Star Wells Fargo was the outlier with a 20 basis point increase.
4-Star PNC Bank took over the 4th slot with 3.87% of the total service fees charged. That’s up 27 basis points from the 3.60% it reported at September 30th. 4-Star U.S. Bank is now at #5 with a 1 basis point drop (3.63% to 3.62%).
While the largest 8 banks charged 59% of all service fees during 2021, none are included on the list on page 7. The 50 banks that are listed have the highest percent of Total Service Fee income relative to their transaction and savings deposits (T&SD). This total includes consumer overdraft and maintenance fees reported by certain banks that are required to itemize those fees (as we reported last week), but also adds ATM & “Other” fees that are reported as one lump sum for most banks.
5-Star rated First National Bank Texas, Killeen, TX, which had, by far, the highest percent last week, ranks at #5 this week. In fact, only five of the banks that were in the top 50 last week remained in the top 50 when we included all banks and all service charges (yellow highlighted).
There is one other bank large enough to itemize that was not on last week’s list but is on this week’s. 5-Star Republic Bank of Chicago, IL reported service fee income of $17.6 million but only $132,000 was attributed directly to the consumer fees we focused on last week. The remainder came from sources that, while they may include consumers, apply to all deposit accounts (i.e. stop payments and wire fees).
Over half of the banks on page 7 showed some improvement over third quarter numbers.
The bank with the highest service fees as a percent of Transaction and Savings Accounts is 5-Star FSNB (formerly Fort Sill National Bank), Lawton, OK. FSNB, a bank that “serves” our military, charges a stunning 10.6% in service charges. The national average is 0.18%. This is not the first time we’ve called out FSNB for over-charging military personnel (JRN 38:28, 36:19). It appears to be working. While the fee to deposit ratio only decreased from 10.9% to 10.6% during 2021, it dropped from 16.2% during 2020.
Another bank of note: In July of 2020, 3½-Star Varo Bank, N.A., Draper, UT became the first “Consumer” Fintech to be granted a national bank charter by the Office of the Comptroller of the Currency (OCC). Varo touts itself as affordable and accessible, removing barriers “that are often too difficult, or expensive, for everyone to access”.
Varo Bank’s fee schedule does, in fact include a lot of $0.00s, but… out of network ATM withdrawals and over the counter cash withdrawals are $2.50 each. Cash deposits by way of a third party servicer can cost as much as $5.95 each. Consumers must be aware.