Magazine article American Banker

Mutuals' Fee Income Surging, but Banks Still in the Lead

Magazine article American Banker

Mutuals' Fee Income Surging, but Banks Still in the Lead

Article excerpt

Mutual thrifts are gaining some ground on their stockholder-owned brethren in income from service fees.

According to an analysis by American Banker, fee income as a percentage of assets at mutual institutions jumped by one third, on average, from the start of 1992 to through September 1995.

The main reason is that many mutuals started to offer checking accounts.

"Mutuals are definitely looking to increase their transactional account volume," said E. Lee Beard, president and chief executive of First Federal Savings in Hazleton, Pa., but it's "not strictly for the fees."

Rather, he said, the object is 'the total relationship ... with the customer" that such accounts can help to provide.

Surveys by two consumer groups this week criticized banks' fee structures and lauded those of small thrifts and credit unions. What the surveys did not say, however, is that mutual and stock thrifts have been ratcheting up their once-low fees significantly in recent years.

Banks have increased their fee/asset ratios by nearly a one quarter since the beginning of 1992, but thrifts have increased them more.

Call report data from Austin, Tex.-based Sheshunoff Information Services shows that small stock thrifts raised their fee/asset ratio by nearly three- quarters, from 0.23% at the start of 1992 to 0.39% last September. The rise was from 0.15% to 0.20% for mutuals and from 0.42% to 0.56% for community banks.

Over-$3 billion banks and thrifts charge less in fees as a percentage of assets. Large thrifts, most of which are publicly held, reported a 50% jump from the start of 1992, although they still lagged behind the smaller stock thrifts. …

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