WASHINGTON - National and regional banks continue to charge "significantly higher" fees than community banks, the Federal Reserve Board said Wednesday.

The Fed's annual survey of bank fees found that last year banks branching across state lines charged customers between $2 toand $3 more each for bounced checks, overdrafts, and stop-payment orders than thoseinstitutions operating in only one state.

The higher fees come even after the figures in the report were adjusted to take into account for fee- setting factors, primarily the institutions' size and location of the institution. Multistate banks tend to be larger and more concentrated in urban areas where operating costs are higher.

The Fed's findings are consistent with annual bank earnings figures federal regulators reported earlier this year, showing that banks with less than $1 million of assets have not kept pace with the growing reliance on non-interest income, which is generated in a large part by fees and trading revenue.The Fed's findings are consistent with annual earnings figures reported this year by federal regulators. Those reports showed that banks with less than $1 million of assets had not been keeping pace with the growing reliance on noninterest income, which is generated in a large part by fees and trading revenue.

Large national banks - those with more than $1 billion of assets - gotreceived 43% of their operating revenue in 1999 from non-interest income, compared with only 34% in 1994, the Office of the Comptroller of the Currency has reported. Small national banks, which serve local markets and do not make enough money to develop and market specialized, fee-based products, only got 24.7% of their operating revenue from non-interest income, not much more than the 20.1% share in 1994.

Though small banks attempted to catch up by increasing such fees by about $1.03 between 1998 and 1999, the Fed's study shows, large institutions operating in multiple states outpaced them, ratcheting up their fees by about $1.73.

Multi-state banks also tended to require depositors to maintain higher balances to avoid a monthly fee last year, the report said. But in a number of cases, they required lower minimum balances to open accounts.

The Independent Community Bankers of America crowed over the results. The Fed's findings showare most noteworthy "once again in illustrating the good value community banks provide for the customers" and showing that "concentration in the financial services industry leads to higher prices for consumers," said Karen Thomas, the group's director of regulatory affairs.

An American Bankers Association spokeswoman responded, however, that there is not correlation necessarily a existscorrelation between retail fee hikes by big banks and industry-wide increases in non-interest income. "Clearly, noninterest income is of increasing importance and relevance to the bottom line, but it doesn't mean that all consumers are seeing an increase in the cost of their banking services," she said, citing a recent ABA survey that found that 59% of consumers said they pay less than $3 per month on bank fees.

The Fed report, which surveyed about 1,050 banks and thrifts nationwide, also said institutions of all sizes reducedcut back the number of no-fee checking accounts last year. The number of institutions offering free checking decreased to 11%, from 18% a year earlier.

Of 40% of banks and 25% of thrifts that offeringed checking accounts that charged a monthly fee regardless of account balance, the average fee increased 44 cents, to $5.17, in 1999.

The Fed study is the last in a series Congress required the central bank to conduct since 1989 on the changes in the cost and availability of bank services.

The Senate and House Banking committees are considering renewing the report as part of a larger piece of legislation.

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