Marketing: Small Banks Have a Blast with 1st Chicago Teller Fees

Community banks and thrifts in the Chicago area are teeing off on First National Bank of Chicago over its new policy of charging customers $3 for some teller transactions.

The banks are not only lampooning their big rival in advertisements, but aggressively wooing First National's customers.

Days after First National's announcement, for example, Lake Forest Bank & Trust Co. paid customers $3 for using its tellers.

"We just had some fun with it," said Edward J. Wehmer, president and chief executive of the $170 million-asset bank.

The bank gave customers the option of donating the money to Oklahoma City bombing victims and ultimately sent about $500, Mr. Wehmer said.

MidCity Financial Corp., a $1.4 billion Chicago holding company, began running a newspaper ad last week that reads, "At our banks, this is not an endangered species," under a photo of a teller. The ad stresses MidCity's free teller policy.

"If the ads were positioned to do their job, we will recoup a lot of business out of this situation in the next couple of weeks," said Jack N. Macholl, vice president and marketing director. "We looked at the media fervor . . . and said, 'This is an opportunity.' You know the ads are going to get visibility."

First Chicago, owned by $72 billion-asset First Chicago Corp., last month announced that customers would be switching to four new checking accounts. The accounts permit unlimited free use of First Chicago ATMs and from four to six free visits to tellers each month.

Lisabeth Weiner, a spokeswoman for First Chicago said the company has no plans to change its teller fee program. She acknowledged that the company probably will lose some business over the issue but that it also has opened many new checking accounts since the announcement.

All banks charge customers through different means, she said. "Every community bank out there is charging you a teller fee," Ms. Weiner said. "Every regional bank our there is charging you a teller fee. They're calling it something else," such as a minimum balance, or ATM, or debit fee.

First Chicago, which has about 80 branches in the metropolitan area, hoped the teller fee would encourage customers to use automated teller machines or interactive phone systems for transactions like deposits and transfers, freeing tellers for other transactions.

But widespread negative press left the company mired in damage control and paved the way for other banks such as Community Bank of Elmhurst to fight back.

The $35 million-asset bank has programed an electronic sign at its office to say, "Make a deposit in our lobby with live tellers and we'll pay you 25 cents."

"Our main thrust is just to put the human element back in banking," said William C. Gooch Jr., president and chief executive of the two-year-old bank.

It will run at least until next month, when First Chicago's fees are scheduled to kick in, Mr. Gooch said.

"We've gotten a lot of phone calls," he said. "Some people have switched over."

At Chicago's Bell Federal Savings branches, signs have emerged proclaiming, "free tellers," after customers jokingly and seriously asked about fee structures, said Lucy Smith, senior vice president, consumer service.

The $1.8 billion-asset savings bank also plans to turn an upcoming mortgage advertising campaign into one highlighting checking products and free tellers.

"If we can capitalize on it, we might as well," Ms. Smith said. "It's almost free publicity. It makes people come in. They're angry enough to go looking."

However, Wheeling-based Cole Taylor Bank isn't advertising in response to the teller fees, said Michael S. Wien, group senior vice president of marketing.

"It's advertising a negative that you don't do as opposed to a benefit," he said. Nonetheless, getting customers into branches is a good opportunity for cross selling products, he said.

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