Overdraft Fees: 10 Banks Hurt by 'Opt-In' Law

NEW YORK (TheStreet) -- With the August 15 deadline having passed for banks to get existing customers to opt-in for continued overdraft protection on ATM and debit card transactions, the big question for investors is which banks have the most at stake?

TheStreet has compiled a list of the ten large banks that derived the highest percentage of second-quarter operating revenue from service charges on deposit accounts.

The list is based on data from the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) filed with the Federal Reserve System, as provided by SNL Financial for bank holding companies with at least $10 billion in total assets.

Unfortunately, the bank holding company statements don't break-out the ATM and debit card overdraft fees from other deposit service fees, but the numbers for the banks deriving the greatest part of total revenue from service charges on deposit accounts are strikingly high when compared with those just a bit lower on the list. The Federal Reserve data allows for a uniform comparison.

Here are the ten U.S. bank holding companies with the highest percentages of operating revenue coming from service charges on domestic deposit accounts during the second quarter:

SNL Financial defines operating revenue as "total revenue minus securities gains minus nonrecurring revenue."

Thrift holding companies are not included on the list, since they are not required to file with the Federal Reserve.

Of course, customers who didn't sign-up for the overdraft protection by the deadline may change their minds later and they can opt-in for the protection at any time. Banks' marketing efforts to get their customers signed-up for the services will continue, and it is also worth considering that customers who were being charged for the overdraft protection already knew how much it was costing them.

It's quite possible that over time, after a bump in the road during the second half of 2010, banks will resume building their deposit service fee revenue.

Changing Times for TCF Financial

The domestic bank holding company with service charges on deposit accounts comprising, by far, the greatest portion of operating revenue during the second quarter was TCF Financial (TCB) of Wayzata, Minn. Over 25% of the company's operating revenue came from deposit service charges, although neither the company's Federal Reserve filing nor its 10-Q filing with the Securities and Exchange Commission broke-out the actual ATM or debit card overdraft fees from this figure.