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Against the Grain, Wells Fargo Increasing its Overdraft Revenues

Adam Rust's picture

Posted March 17, 2015

For the most part, changes in internal policies and regulatory have meant that big banks now draw far less in revenues from their overdraft programs. But Wells Fargo is the exception. 

Last year the Stage Coach booked more than $5.4 billion in revenues from non-interest service charges associated with deposit accounts. That sum is approximately $1.2 billion greater than those derived as recently as in 2011. On a CAGR basis, revenues are growing by 6.3 percent annually. 

Overdraft charges are only a portion of non-interest income from service charges on deposit accounts. But the share is certainly very high. Moebs Services suggested that overdraft and NSF accounts 77 percent of deposit account service charges. In 2007, the FDIC said that overdrafts accounted for 74 percent of service charges on deposit accounts.

The chart below outlines the annual revenue (in millions) for six large banks.

Big Bank Overdraft Revenues

As you can see, there has been a steady and consistent decline in the non-interest deposit service charges at almost every one of these institutions. On a CAGR basis, service charges at B of A and Citi have dropped the most. What's more, deposits have grown at each of these institutions. 

But I would hesitate to shed too many tears for any of these banks. These six institutions still recorded more than $17 billion in overdraft fees in 2014. The same Moebs Services report estimated that overdraft fees were $32 billion in 2012. That alone is greater than the entire payday loan industry. 

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