Bank of America, Regions Face Overdraft Fee Cliff

NEW YORK ( TheStreet) -- Bank of America ( BAC), Regions Financial ( RF) and several other big banks face a sizeable hit to earnings from expected new rules related to overdraft fees, according to a Deutsche Bank report published Monday.

New rules expected from the Consumer Financial Protection Bureau (CFPB) would require banks to stop clearing customer transactions in order to maximize overdraft fee revenue. While regulators including the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency have already issued guidance stating their opposition to this practice, the CFPB has yet to do so.

Several big banks, including Citigroup ( C), BB&T ( BBT), Comerica ( CMA) and US Bancorp ( USB) have already changed processing order to appease the regulators, but many other institutions haven't, according to the report from Deutsche Bank analyst Matt O'Connor.

O'Connor cites 12 big banks that still clear transactions with large dollar values first in order to be able to charge as many overdraft and related fees as possible. Of these banks, which also include JPMorgan Chase ( JPM) and Wells Fargo ( WFC), Bank of America faces the largest hit in dollar terms, at $480 million or 3% of estimated 2013 earnings. Regions, meanwhile, would see the biggest impact as a percentage of 2013 earnings, at 4%, or $62 million.

Spokespeople for both banks had no immediate response to questions, and a call to the CFPB was not returned.

Other banks O'Connor sees facing a 3% hit to 2013 earnings from a new rule are Huntington Bancshares ( HBAN), M&T Bank Corp. ( MTB) and SunTrust Banks ( STI). The median earnings impact for the 12 banks would be 2%, O'Connor believes.

-- Written by Dan Freed in New York.

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