Diamonds, Don'ts, and Dogs of Fee Income: Noninterest Income Comes in Many Forms-Including Not Letting Your Staff Waive All the Fees the Bank Should Be Receiving

[ILLUSTRATIONS OMITTED] the rare banker today that can boast of a surefire competitive lock, but Heckman can. in Tok, Alaska, home to 1,400. Tok lies 93 miles from the Canadian border, but up in the 49th state, that's just next door. The community designates itself as the Gateway to Tok's geographical distinction is being the only year-round way of getting into the state, or leaving it, by road. Tok's banking distinction is that it is home to one of the five offices of Fairbanks' Denali State Bank, a branch that enjoys a special advantage--no competition. That's a fun location to have a branch in, said Jyotsna Jo Heckman, president CEO of the $234.7 million-assets institution. It's a low-cost operation for us, yet it does a very good job of providing full-service banking to an area where there's no other for more than 200 miles. Do you envy Heckman's competitive environment? You shouldn't. Isolated Tok doesn't represent all of Alaska. Fairbanks itself is a hotbed of banking competition, much as any given market in the lower 48. We're about 80,000 said Heckman of Fairbanks, and we're overbanked. There are just too many financial institutions in Fairbanks, said Heckman. We have the big ones like Wells Fargo Key, she said, and we also have competitors like Alaska USA Federal Credit Union, the nation's fifth-largest credit union, plus lots of little credit unions. With such advantaged competition, staying open hinges on taking excellent care of the customer, being the said Heckman. My staff's core group has been with the since inception, so we're pretty well-known people, trusted people, whom customers can come in feel good about working with. However, when people know people, they tend to want to do something for them. And Heckman said part of the hometown bank mantle is a tendency to waive fees for good customers. Given the stiff competition on the rate front that Denali State faces, finding new sources of noninterest income ranks high, but stopping fee-income leakage on existing charges can practically be a source of fee income by itself. We know we have a very significant portion of fees being waived, said Heckman, and we are looking at that analyzing it. Heckman spoke of this challenge during an ABA Banking Journal roundtable discussion, held in the spring, among five members of ABA's America's Community Bankers Council. Roundtable participants shared views on fee waivers more. Waivers, enemy of fee income Banking fees come in many different forms, all of which the bankers discussed. These include credit-related fees; transactional fees; penalty fees; fees for traditional noncredit services, such as trust; fees for nontraditional products, such as securities brokerage; fees on convenience courtesy services, such as overdraft protection; fees for various specialized services. The latter might include fees charged, not directly to customers, but to third parties with whom the has a working relationship. For instance, roundtable participant A1 Garrett, president CEO of Robertson Banking Co., Demopolis, Ala., $221.2 million-assets, said his bank, declining to make fixed-rate mortgages for its own portfolio, makes them instead for another lender. The works with the local customer, gathers information, completes the loan package, passes everything on to the lender. In return, the obtains a fee for doing the legwork. But charging fees in the first place, avoiding waivers that erase income gained from fees, play a significant part in the entire picture. Romrell There are some services you just can't charge for, but you have to offer them, things like remote deposit capture, internet banking, debit card service, ATMs. I'm a lagger, by choice, in new products services. …

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