ABA Banking Journal - September 2008 - (Page 20)
Community Banking Pass the Aspirin Zeltinger [to Romrell] Is there a loan documentation fee for every loan that you make? And if there is, where is it, in the $50 range? Romrell Yes, there is a fee on every loan. We just completed a study on loan document fees at our bank. We found that it costs around $400 to produce loan documents. We’re charging consumer borrowers a $150 minimum, and commercial borrowers a minimum of $350, and then it goes up significantly from there, depending on the type of credit. Packard We’re running a minimum $250 or $500, depending on the circumstances. That basically just covers our cost of processing. Garrett Our minimum is $75 for a consumer loan and then generally $250 for any real estate loan. Business loans are negotiable. Going back to remote deposit capture, we’re still working on it. We’re hoping it’s something that we can charge for. Heckman There’s opportunity there, but we don’t want to outprice ourselves, either. We are very careful to not only provide the benefit, but to make sure that the customer sees the benefit, and also sees that there is a benefit to the bank, too, a win/win on both sides. It’s all part of relationship management. As Utah’s Matt Packard noted in the previous section, many such balance requirements and fees have gone by the board in recent years, due to competitive factors. However, overdrafts remain a controversial topic, especially in Washington. Through the summer the banking industry has been evaluating and commenting on a pending regulatory proposal dealing with overdraft that would, if finalized as drafted, impose various measures on overdraft services. (See the Editor’s Column, p. 4, for more.) All but one of the roundtable bankers’ institutions handle overdrafts and fees for covering them with internal programs. Alabama’s Al Garrett uses a vendor’s program. ‘It’s worked very well for us,” Garrett said. “We were afraid on the front end that we could be confusing customers, because it was so new and so different. But they adapted to it very quickly.” Garrett said the vendor program helps the bank monitor overdrafts so no customer overdoes it. Indeed, the bank’s marketing materials—including a brochure that can be downloaded from the bank’s website— sets out, in a table, four ways that customers can handle overdrafts. First from the bottom of the table is the bank’s Bounce Protection program, at the standard NSF charge of $29 for each item or other withdrawal; next, a savings account transfer, at $2 per automatic transfer from a linked account; and, next, a link to a line of credit, at the prime rate plus 4%, plus a $50 annual fee. The brochure’s remaining option, on the first line? “Good account management,” at $0. The bank allows customers to opt out of overdraft service, and the balances provided to customers, both in person and through electronic banking channels, do not reflect the overdraft limit assigned to the customer’s account. Garrett told fellow panelists that some customers have chosen to opt out. “The rest of them seem to appreciate the service,” he added. [You can find “The Diary of a Country Banker,” at www.ababj.com. Look for The Headache: Outsourcing IT he ABA/ABA Banking Journal Community Bank Competitiveness Survey: 2008 edition (www.ababj.com) found that 36.6% of community banks outsource some functions traditionally performed by staff. Among the functions outsourced were several dealing with information technology: item processing, 44.8% outsource; IT management, 24.9% outsource; and remote deposit capture, 48.4% outsource some elements. Recently, a banker who was reviewing the survey sent us these questions as a result: “My bank is looking at outsourcing our IT functions. Is anyone out there doing it currently? How did you go about it? And to whom did you outsource things?” T Remedy 1 Lynda Messick, president and CEO, Community Bank Delaware, Lewes, Del., $50.4 million-assets. Our first post-Gramm-Leach-Bliley Act rules IT audit was a huge surprise, and we found that the focus on IT security has definitely intensified. Outsourcing IT functions alone will not allay any regulatory scrutiny—the policies, procedures, and oversight have to be airtight on the bank’s part in managing its vendors, and I don’t know of any vendors who specialize in the overall management of all IT areas. If your bank is small and thinly staffed, you may want to outsource your periodic IT audits as well. There are lots of firms that do this. Consumer checking fees In this magazine’s 1927 series, “The Diary of a Country Banker,” the banker keeping that record wrote: “Yesterday, a woman called at the bank greatly peeved because a service charge of fifty cents had been made against her account for the want of an average daily balance of $50 for the month. She was greatly chagrined at ‘the conduct of the bank in making this charge,’ so the cashier sent for her ledger sheet and discovered that she was overdrawn $5.50. Before she left she discovered what it was all about. Complaints against the service charge are few-in fact, we rarely have one.” 20 SEPTEMBER 2008/ABA BANKING JOURNAL Remedy 2 Mike Murphy, executive vicepresident and CFO, First American Bank, $297.2 millionassets, Norman, Okla. Our bank has a full-time IT staff of three that services our nine locations and our 170 employees. However, we have outsourced some of our IT projects in the past year, such as implementing wireless connectivity for business continuity purposes and SANs ASPIRIN continued on page 22 Subscribe at www.ababj.com
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