WHAT IS YOUR BANK DOING TO RAISE MORE REVENUE?

The Headache: Many banks face increasing financial pressures these days. Traditional activities aren't as profitable as they once were.

Our Question: What steps has your bank explored in repricing and otherwise rethinking bank service fee philosophy?

Banks face financial pressures and we recently asked prescribers how they have been addressing them through repricing, diversification, and staff reorganization. Loan spreads have grown quite thin in many banks; loan demand frequently comes in low compared to the past; and some steady revenue producers don't do what they used to do. Here is what bankers said on the first point, repricing. Future "Pass the Aspirins" online and in our monthly magazine will examined the other two issues.

If you would like to join our regular list of "prescribers," to whom we send questions, please email This e-mail address is being protected from spam bots, you need JavaScript enabled to view it today.

Let's hear your views and ideas below! (Editorial Note: Contributions to Pass the Aspirin may also appear in our print edition. While we will ask for your e-mail address, this is only as an aid to verifying identity and will not be used for any marketing or promotional purpose. The e-mail address will not be published.)

Stacey Bentley, Cedar Valley market president, Community National Bankn, Waterloo, Iowa said:

We've made two major repricing moves.

First, we began to charge for online business-banking services. There's no question the service saves customers time and money by managing their accounts online. We have found most have no issue paying the fee once they realize the benefits. Another area we found to improve pricing was in merchant-card processing. Once we began to research vendors, we found a more viable cost-saving option and made a change. We then reviewed each merchant account and determined the fees needed to cover costs and, more important, offer a profitable and beneficial tool.

report abuse

vote down

vote up

October 05, 2012
Votes: +0

George Marx, chairman, president, and CEO, Copiah Bank NA, Hazelhurst, Miss. said:

We realized at the onset of the downturn and recession that maintaining margins would be a challenge. So we made the conscious decision that we would concentrate on deposit repricing, as we knew that we would have pressure on loan rates, even those that were locked in for a remaining three to five years. This meant that our growth would slow down, and that deposits would actually decrease a little bit. We aggressively repriced our time deposits, as well as short-term, interest-bearing deposits, slightly below our market competition. We did this on both consumer and commercial deposits. The net result has been that we did have a small growth; but, more important, we were able to maintain our net interest margin, net of loan fees, which since 2007 has ranged from a low of 4.42% to a high of 4.70%, and is currently at 4.63%. This taught, first hand, what we had heard for years: "Bigger is not necessarily better."

report abuse

vote down

vote up

October 05, 2012
Votes: +0

David Rom, president and CEO, Platinum Bank, Saint Paul, Minn. said:

We have refined our pricing approach to differentiate both risk and service. On the risk side, we have recognized that loans with greater risk carry significantly more monitoring and maintenance. Particularly with operating lines secured by receivables and inventory, higher-risk credits contain higher volatility. Our appetite remains strong for operating credit financing, but we recognize the need to price for such volatility.
On the service side, we have reviewed all fee and service pricing schedules. We performed a market analysis to determine a cost-basis approach. We found, in many cases, we were charging much less than it cost us to deliver. Accordingly, we raised our earnings credit rate to encourage customers to retain higher deposit balances. We have seen that our average deposit customer carries much higher balances, resulting in stronger efficiencies per customer.

report abuse

vote down

vote up

October 05, 2012
Votes: +0

Sharon Burran, president and COO, Woodhaven National Bank, Fort Worth, Texas said:

We replaced free checking with a new checking product called Select 4, which has a monthly service charge that may be lowered in increments or to zero if a customer uses four other services: internet banking ($2 credit); electronic statements ($2); direct deposit ($2); debit card, 10 transactions per statement cycle ($1). Also, we set an interest-rate floor on commercial loans due to the low prime.

report abuse

vote down

vote up

October 05, 2012
Votes: +1

Daniel C. Yates, president and CEO, Brattleboro Savings and Loan, Brattleboro, Vt. said:

	On the business side, we established minimum borrowing rates and line fees, and eliminated free checking. On the consumer side, we eliminated several free accounts and ended a years-long tradition of buying customer checks.
	report abuse vote down vote up

October 05, 2012
Votes: +0

Frank Campbell, president and CEO, Pilgrim Bank, Cohasset, Mass. said:

	Last year, we did an overhaul of our fees and charges. We raised some, but, more important, we initiated an effort to charge for services that we had neglected in the past. And we also reduced fee waivers.
	report abuse vote down vote up

October 05, 2012
Votes: +0