NEW YORK (MainStreet) — It’s no secret that banks have a lousy reputation with consumers, and in areas such as overdraft fees and savings rates that low repute is well deserved. But in one area, banks have been carrying customers for years: the checking account, where banks lose more money than they make.

Unfortunately, that practice is soon to disappear.

Moebs Financial Services says fewer banks offer free checking to consumers these days, primarily due to more onerous “pubic policy initiatives” such as the Dodd-Frank Financial Reform Act of 2010 that have cut into the fees banks can charge linked to those checking accounts.

According to Moebs, about half of all big banks offer free checking accounts to retail customers, down 13.6% from 2010.

“There is a fundamental consumer shift going on in the banking sector,” explains Mike Moebs, CEO of Moebs Services, in a statement. “This shift is going to move about 13 million checking accounts to community banks and credit unions by the end of 2011.”

Moebs notes the myriad regulatory hurdles banks need to clear in this new age of financial reform (including the Federal Reserve’s rule limiting overdraft charges to four per day), all of which have reduced the incentive for banks to offer free checking.

“It costs about $300 (or higher) on a fully absorbed cost basis to operate a checking account, and with fees falling below these costs, the average checking account at a Wall Street bank is unprofitable. Because Main Street financial institutions can operate below the $300 cost level, they can turn a profit, and will continue take market share away from the larger banks,” Moebs adds.

Moebs does go out of his way to say that the era of free checking account hasn’t ended, but that it’s just shifted playing fields. His company says that 5 million checking accounts shifted from large banks to smaller credit unions in 2010, a trend that should double by the end of 2011.

“By the end of this year, we expect community banks and credit unions will have 65% of the checking account market. To paraphrase Mark Twain, the death of free checking has been greatly exaggerated,”  Moebs notes. “From July 2010 to February 2011, community banks offering free checking increased by 1% and by 9% at credit unions.”

As stated above, there’s a big financial reason for that shift.

American Banker reports that maintaining a checking account can cost banks anywhere from $250 to $450 annually per customer.

Once again turning to Moebs as a source, the magazine reports that the average bank checking account hit banks to the tune of $349 per account this year. But Moebs says the average revenue banks gets per checking account is only $268.

You don’t need a degree from the Wharton School of Business to figure out that banks aren’t going to stick with a service model that costs them $81 per account. And that’s a big reason – check that, the biggest reason – for the consumer exodus.