The Perils & Payoffs of Bank Fees

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Community banks say upholding the tradition of personalized service is important to preserving their niche as the industry turns its energies toward fee income.

Sales of loans into the secondary market are supplanting interest income, traditionally the primary income source of banks. The resulting decline in net interest margins forces banks to rely more heavily on fee income.

Fees by size

Fee income, broadly defined as non-interest income, is generated from service charges, commissions and fees on a wide range of products, including deposit accounts, ATM use and financial planning. As a percentage of gross income, the nation's smallest banks--those with less than …