- Not affected by competition
The primary types of non-interest income in a bank are revenue from sundry services, fiduciary fees, and deposit service charges. Various sundry services include computer services, financial planning, brokerage, insurance, and others. Fiduciary services include trust and estate administration, securities safekeeping, corporate stock transfers, and many more. Deposit service charges are levied on various business and individual checking and savings accounts.
Fees from sundry services. All banks selected for BANKdynamics show Non-Interest Income form "other" sources. Few banks have the same set of miscellaneous services, but revenue from these sources has been growing at least at a pace that is consistent with the bank's balance sheet accounts, and in many cases, faster than balance sheet loans and deposits. For BANKdynamics, Non-Interest Income: Other will grow at the community growth rate.
Fiduciary services. Trust departments have been a part of banking for a long time. Some trust departments have been profitable while others have been loss leaders that attract loan and deposit customers. Over the years trust department services have gone beyond the traditional administration of trusts and estates. Now, Fiduciary Services can include such services as security safekeeping, corporate stock transfer, dividend payment services, legal and official depository services, and many others. Some, but not all, of the banks selected for BANKdynamics show Non-Interest Income: Trust and Fiduciary Services. These types of revenue will grow at the community growth rate.
Loan fees. Loan fees are important sources of non-interest income to most financial institutions. Such fees, however, are generally not accounted for as non-interest income but rather as part of interest income.
Deposit service charges. Even though "free" checking accounts are a popular marketing item, commercial banks collect a significant amount of checking account fees, included fees for account service, sales of checks and deposit slips, NSF checks, bank by mail supplies, charges for deposit and check transactions, etc.
For BANKdynamics, service charges are collected for Commercial and Retail Checking Accounts when the customer's average balance falls below the agreed upon minimums. The higher the minimum balances, the more customers must pay. The Management Team has the flexibility of deciding whether to change the fees on NOW accounts. Fees on Regular Savings and Money Market Accounts will accrue in line with historical averages. All fees will grow or shrink with the balances in the deposit accounts; but some will be impacted by decisions of the Management Team.
Other non-interest income. Other sources of non-interest income include security gains and losses and fees from Off Balance Sheet Activity such as interest rate swap contracts. Both mentioned sources might appear on your income statement, depending upon the Assumption of the Management Team.