Long known for going the extra mile on service, managers of trust departments at community banks are contemplating rate increases but still plan to compete on price.

Though they have historically charged far less than the trust departments of money-center banks or those in metropolitan areas, community banks are now finding they may have to increase fees to stay profitable in a labor-intensive business.

"You better come up with some kind of strategy of where you are going to price," Mark Stenson, a consultant, told attendees at a community banking conference here Monday.

"Unfortunately, I see a lot of community banks put together a fee schedule of about 50% or 60% of what a large bank charges."

Mr. Stenson, president of Stenson Management Consulting, Marshall, Minn., was the lead speaker at the trust banking seminar of the Independent Bankers Association of America. He suggested charging investment management fees of about 80% of what larger banks charge.

When he took the floor Monday morning, he asked attendees how much they would charge to manage the assets in a $1 million trust account.

Suggestions from a roomful of community bankers-about 30 of them - ranged between 60 and 75 basis points a year. But according to Mr. Stenson, most superregionals would charge a 1% annual fee on a $1 million dollar trust account.

Some attendees agreed that it is time to bring their prices more in line with larger banks.

"Ours is pretty close to the regionals," said Robert B. Wise, chief executive officer of Century Bank and Trust, Milledgeville, Ga. "The more consolidation you have, and the more NationsBank Corp. takes on, the easier it is to compete because those fees will come up in our area."

Many superregionals use centralized fee schedules, which are often higher than those of banks that they have bought in smaller markets, Mr. Stenson said.

Still, some community bankers expressed concern that it is "awkward" to raise fees. Others said that they did not want to revise schedules every time the competition does.

Trust fees still vary somewhat from one local market to another and are even stipulated by law in some states. Yet small banks are getting more willing to increase their fees so their trusts departments contribute to their bottom lines, rather than serve as ancillary units.

"The trust business is an old business, and it has never been managed as a profit center," said Lucinda Bentley, who is starting a trust department at Bank of Upson, a $110 million-asset bank in Thomaston, Ga.

"People are taking tried-and-true business practices and putting them into trust departments," she added. Ms. Bentley, an attorney who returned to banking from private practice, said she plans to survey her market to gauge what other community banks and the superregionals are charging. Her market is 60 miles from Atlanta and has a population of 30,000.

Under Georgia statute, Bank of Upson is limited to charging a 5% annual fee on trust assets.

To keep costs down, Ms. Bentley's initial prospects are nonprofit organizations and other clients that are not as costly to maintain as private individuals with complicated estates.

"My goal is not to give it away, but not to be the highest price either," Ms. Bentley said.

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