William McCarthy received a letter from his bank that sent him into a rage.

"They begin 'Because you're a valued customer,"' Mr. McCarthy said. "I think they're short-sigthed."

Mr. McCarthy, a 65-year-old Pittsburgh retiree, was notified by PNC Bank Corp. last April that his free checking account for senior citizens was being discontinued. He took his business to National City Corp.

PNC's move is far from unusual. As banks continue their drive toward greater efficiencies, they're giving away less and less, and that means the free ride for older customers has come to a halt. Banks that once offered free checking accounts to anyone 62 or older are now requiring large balances, purchases of other banking products, and payment of monthly fees.

Among the banks that cater to senior citizens, but either charge monthly fees or require high balances, are Banc One Corp., Barnett Banks Inc., Comerica Inc., CoreStates Financial Corp., and First Union Corp.

Most banks will provide free checking only to those senior citizens with a combination of investment products and bank balances totaling $1,000 or more. For instance, First Union replaced a First Fidelity Bancorp. free account with one that requires a $1,000 average monthly balance.

Barnett offers perks to senior citizens who carry a $2,500 balance, while Banc One requires a $5,000 balance or it charges a $10 monthly fee.

Alone, free checking programs are "a magnet for price-sensitive customers," said James McCormick, president of First Manhattan Consulting Group.

However, banks find that determining the profitability of a senior citizen relationship can be difficult, Mr. McCormick said. At the same time that older customers can be intent on seeking checking account discounts, they can also use a number of other bank products, from safety deposit boxes to investment planning.

"Seniors, as a generalization, can be very profitable or very unprofitable," Mr. McCormick said.

Don't tell that to customers. Mr. McCarthy, who is also a PNC shareholder, isn't impressed with the bank's drive to become more profitable. "Some bean counter decided this was a way to maximize fee income," Mr. McCarthy said. Banks "will grab for anything," he added.

A PNC spokesman responded that his bank contacted older customers to help them combine other checking and investment products to get free checking.

Meanwhile, small banks are vying for the business. When PNC discontinued its free checking for seniors in the Philadelphia market last month, Commerce Bancorp of Cherry Hill, N.J., pointed out the fact in newspaper ads, and promoted its own senior citizen account, which requires a $100 balance.

"It appears to me these big banks think they are going to fee charge their way to prosperity," said Vernon W. Hill, chairman and chief executive of the $2.7 billion-asset company. "I think they're going to fee charge their customers out the door."

CoreStates Financial Corp. also revised accounts that had been offered to seniors by Meridian Bancorp, which it acquired this year. CoreStates replaced free checking for seniors with accounts that charge monthly fees or require high balances.

All such accounts in existence before the change will be honored, said Steven Ackerman, vice president of liability product management.

BankAmerica Corp. quit offering free checking accounts to senior citizens four years ago. While the bank is not expressly reaching out to senior citizens on the consumer bank side, spokesman Harvey Radin said older customers can have access to more free services if they get a checking account that includes direct deposit, which is open to all customers. Wells Fargo & Co. has a similar account. PNC's approach is similar to that of the two California banks.

One banker, who has specialized in senior citizen products for 10 years, said many banks have tried to offer products for customers only to discontinue them later.

"Managing seniors programs in today's banking environment takes a lot of resources," said Janice O'Quinn, vice president and product manager of Central Fidelity Banks' Focus 55 account.

The Richmond, Va.-based company has had a free senior citizen checking account since 1978 and claims to be the first East Coast bank to offer one.

Michael P. Sullivan, a consultant in Charlotte, N.C., who advises banks on marketing to senior citizens, said the bigger problem is banks don't do a very good job relating to older customers. For one thing, most bank lobby employees are young - 70% are under 30, he said. How a bank employee deals with an older customer can make all the difference in the world.

"One thing everyone knows and understands is older customers like the relationships," Mr. Sullivan said.

For banks that do cater to older customers, one dramatic shift has been to redefine the audience. Many banks that once offered special perks only to those in their 60s are now catering to anyone 50 or older. One bank, KeyCorp, considers customers 50 and over as an entire customer segment for which products are developed and marketed. The Cleveland-based bank even plans a special magazine to cater to its "mature market" customers.

Stephen Heine, senior vice president of KeyCorp's mature market division, said his company takes a different approach than most. The consumer banking and investment sales functions are conducted in the same department, making it easier for older customers.

There are still big banks that offer senior citizens free accounts with no minimum balances. Two that have been doing so aggressively are First Chicago NBD Corp. and Norwest Corp.

"These are loyal customers and they tend to leave higher balances and they do other business with us," said First Chicago spokesman Thomas Kelly.

Mr. Kelly said there are a number of misconceptions about older customers costing the banks more money because they use branches more often than younger customers.

At First National Bank of Chicago, 95% of customers 55 and older average four or fewer teller transactions per month, and 99% average six or fewer teller transactions per month, he said. That is only slightly more than younger customers.

"Are they in every day?," Mr. Kelly asked, referring to older customers. "No."

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