Bank Notes

Are local bank customers — virtually all of us — getting nickeled-and-dimed more often by new bank fees these days?

Probably not. At least not right now.

This may surprise you given the national uproar over a new $5-per-month fee charged to Bank of America customers who use their debit cards to buy things.

But anecdotally, neither FirstBank of Colorado's local branches, nor Wells Fargo's local branches, nor Vectra Bank's local branches are charging new fees.

In fact, 71 percent of bank customers say they pay no fees at all, according to a recent American Banker's Association poll.

How did this issue become so controversial?

Banks are now limited on their ability to charge interchange fees to retailers every time a debit card is swiped. The Durbin Amendment of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act allows banks to charge an average 24 cents per card swipe. Banks previously charged an average 44 cents per debit-card transaction.

Bank of America has said it expects to lose up to $2 billion in annual revenue. And banks across the country are adding fees for previously free checking accounts and other services.

Sure — local bankers admit they're looking to make up lost revenue opportunities. It sounds like they're just trying to figure out how to move forward, at the moment, however.

Vectra Bank Colorado has accounts with balance requirements to help customers avoid fees, for example, said Shawn Cole, Vectra Bank's community banking director in Denver. Vectra has $200 million in deposits at three local branches in Boulder County.

“We want to make it clear to (customers) that however they wish to bank with us, we want to accommodate them and avoid fees,” Cole said. “(But) that is a reality our industry is facing right now with the regulatory changes and challenges as to how they'll generate the income they have in the past.”

Wells Fargo Bank in Boulder is not charging for debit card activity in Colorado, said Bill Farrell, president of Wells Fargo's Boulder market, which includes 14 branches. A $3-per-month debit-card fee is being tested in some other states, however, Farrell said.

“We have not made a decision as a company, yet,” Farrell said.

San Francisco-based Wells Fargo & Co. is the largest bank in Boulder County by deposits with 27 percent market share and 13 local offices.

FirstBank Holding Co. is touting its free checking in ads and believes it can make up lost revenue from the Durbin Amendment through volume, said Dave Baker, president of the Lakewood-based bank. FirstBank charges $10 per year to debit-card users, Baker said.

Durbin Amendment fee limits certainly hurt the bank in a significant way, Baker said, adding that he hadn't calculated the exact amount of potential revenue that would be lost at FirstBank.

But getting new customers is more important to the bank, since most new customers do more banking than just opening a checking account, he said.

“You can make up all of the money to your existing customer base, or you can try to get more customers and the associated business you get from those customers, with savings accounts, or get their mortgage,” Baker said. “That's really our motivation.”

Plain language

On a related note, consumers are likely to benefit from the plain financial language required by the new federal Consumer Protection Financial Bureau, said Sanjay Bhagat, a finance professor at the Leeds School of Business at the University of Colorado in Boulder.

The bureau in Washington, D.C., aims to promote fairness and transparency for mortgages, credit cards and other consumer-related financial products. It's going to be paid for through bank fees.

But he is opposed to bailing out consumers who say they got “exotic” mortgages. Some pundits in the financial world have discussed a potential mortgage bailout for consumers as part of the national public discussion of the new financial bureau, which opened in July.

Many homeowners who are in trouble now say they didn't understand what they were getting into with the dizzying array of adjustable rates and payback periods and progressively higher payments.

“They want the others to bail them out,” Bhagat said. “What incentive are we setting up in the country if we bail them out where would you get the money to bail them out? We should at least have a public discussion on that.”

Beth Potter can be reached at 303-630-1944 or via email at bpotter@bcbr.com.