It's Time To Do The Patriotic Thing

These are certainly tough times all around. You don't need me telling you that. I, for one, have champagne taste, but live on a Kool-aid budget. Times are tough.

But I didn't realize quite how tough things were until I saw the following article in the Tribune today. I had no idea the banks were suffering so much. And it's our fault. We each need to take responsibility for our part in the suffering of the banks. We created this mess and only we can fix it.

So I implore you to get out there and bounce some checks! As George Bush told us all after September 11th, it's our patriotic duty to spend money. If it was patriotic then, well, then by God, it's even more so now when no one has any.

Now, embattled banks taking hit in service fees
By Becky Yerak |Tribune reporter
11:08 AM CST, January 27, 2009

First, banks had to worry about bad loans taking a bite out of their interest income.

Now, consumers are pulling back on their use of ATMs, and they're not writing as many checks, so fewer require overdrafts.

So some financial institutions are seeing dwindling levels of what's known in the industry as "non-interest income," which includes ATM, overdraft and other customer service fees.

An example: Amcore Financial Inc. last week reported that non-interest income was $16.9 million, off 7 percent from the fourth quarter of 2007 and down 16 percent from the third quarter of 2008.

One chief reason: "Service charges have declined as customers started to curtail spending during the quarter," Judith Sutfin, chief financial officer of the Rockford-based bank, said in a conference call.

Specifically, Amcore's revenue related to ATM fees and overdraft charges were down.

Fifth Third saw its deposit service charges fall in the fourth quarter, citing a falloff on lower transaction volumes and debit card usage.

"The economy is very weak, not just in credit, but where consumer spending is important, such as deposit service charges," Fifth Third Chief Executive Kevin Kabat said last week.

At TCF Bank, total fees and other revenue was $474.1 million for 2008, down 3 percent from 2007.

TCF is seeing growth in the number of checking accounts, but "due to the economy people are doing fewer transactions," said CEO William Cooper.

"They're buying fewer things, they're writing fewer checks, and their debit card transactions are smaller," he said last week in an earnings conference call. "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."

The volume of transactions involving checks and debit cards is down – the "first time in my career that it's down," Cooper said. "People are simply buying less."

It has been a trend for six to nine months but has been worsening by the quarter, he said.

An analyst asked whether consumers might be getting more sensitive to overdraft fees.

"It doesn't seem to be a change in being more prudent about non-sufficient fund fees or anything like that," Cooper replied. "It more of just they're spending less so they have fewer incidents" involving bounced checks and their subsequent fees.

TCF's ATM revenue for 2008 was $32.6 million, down 8 percent from 2007, due to continued declines in fees charged to TCF customers for use of non-TCF ATM machines as TCF offers more no-fee checking products.

byerak@tribune.com