Community banks explore new areas of business to raise revenue.

• Position: MARKETING NEWS

MORE THAN HALF OF COMMUNITY BANKS in a recent survey said that they are exploring new residential and commercial mortgage originations as a source of new business and revenues. In addition, approximately one-third are considering getting into the insurance business. Over 25 percent are exploring wealth management.

These are some of the findings of a survey conducted by HEIT, a CSI company, and cbanc Network. The survey received meaningful and detailed data from 148 community financial institutions.

The survey showed that the majority (61 percent) of community banks have not yet given up on overdraft protection as a viable source of fee-based income. Although regulations now require banks to have customers opt in to overdraft services before charging overdraft protection fees, the fact is that over 100 million American consumers (77 percent of more than 130 million checking accounts) have opted in for overdrafts on debit and ATM card transaction, says HEIT.

Overdraft revenue at the end of the second quarter of 2011 was up over $700 million at banks and credit unions, according to Moebs Services, an economic research firm.

More than half (52 percent) of community banks say that they are currently offering lines of credit in place of the overdraft protection. Another 22 percent are considering similar lines of credit.

While free checking may stay around--at least for the foreseeable future--community banks are considering new fees across a variety of products and services that often were free in the past: mobile banking, online bill payment and online statements.

While many community banks focus on finding new sources of noninterest income, HEIT notes that they should not forget about net interest margin, since this is how 90...