Overdraft, cash advance, monthly maintenance, card processing and ATM fees all add up to millions of dollars of revenues for each of the region’s biggest banking companies.

Yet that revenue is declining. Such fees totaled a combined $10.5 billion in 2011 at Fifth Third, Huntington, JPMorgan Chase, KeyCorp, PNC and U.S. Bank, according to financial statements analyzed by the Dayton Daily News.

The year before, the fees and service charges totaled more than $10.6 billion.

Financial reform reduced revenues from these fees by allowing customers to opt-in on overdraft protection and by capping fees charged to process debit card transactions.

The reduced fee income, combined with a struggling economy and historically low interest rates, are prompting big banks to compete for new customers and change certain fees.

“When the cost of doing business has increased to the point we’ve seen today, it’s making the decision difficult to pass costs on or not,” said James Thurston, the spokesman for the Ohio Bankers League

Effect of regulation on bank revenues

The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act was passed with the intent to prevent another financial crisis that led to the most recent recession.

But the law is still not fully implemented, so its total impact remains unknown.

Components of the Dodd-Frank Act implemented so far include a cap on interchange fees banks receive to process card transactions and increased capital requirements.

Additionally, a new rule of the Electronic Fund Transfer Act that took effect in July 2010 gave customers the choice to opt-in on overdraft protection.

Cincinnati-based Fifth Third saw a $54 million decrease in service charges on deposits in 2011, primarily due to the first full-year impact of consumer consent on overdraft charges, the company said in its annual filings. Card and processing revenue decreased $8 million in 2011 compared with 2010 in part because the cap on debit card interchange fees took effect the fourth quarter of last year.

Growth in transaction volumes helped Minneapolis, Minn.,-based U.S. Bank offset lower debit card processing revenues with higher ATM fee revenues, the company said in its reports. But at the end of last year, U.S. Bank said it lost millions in revenues from the cap on interchange fees and it expects noninterest income — total income from services and sales of securities—to be reduced $300 million a year.

KeyBank of Cleveland also saw service charges on deposit accounts drop by $20 million in 2011, mostly because of customer overdraft opt-in policies, the company said in its 2011 report.

Huntington Bancshares of Columbus had 10 percent growth in customers in 2011, helping it combat a 6 percent reduction in income from new overdraft policies. Electronic banking income, as a result of the cap on interchange rates, dropped by $17 million in just the fourth quarter. Huntington also introduced late 2010 a strategy that includes a 24-hour grace period for overdrafts and “asterisk-free” checking, which voluntarily reduced fee income. The company expects new customers and efforts to sell more products to customers can more than make up the lost revenue.

“I would say what we’ve consciously tried to do is make fees fair,” said Bryan Carson, Huntington’s head of deposit products. “We’re growing households and our profitability per household is increasing because our customers are getting more products and services from us.”

Despite record earnings — JPMorgan Chase and U.S. Bancorp had overall record revenues in 2011— loan growth for banks is slowing and interest rates are expected to remain low through 2013.

While low interest rates mean banks pay less interest on deposits, the low rates also mean banks collect less interest on loans and earn less interest on investments.

Goldman Sachs bank industry analysts expect weak loan growth of 3 percent over the next two years.

“As revenues are going up, costs are going up and the margins are getting squeezed,” Thurston said.

How region’s banks handle this setback

In the past two weeks, Consumer Federation of America revealed that Fifth Third Bank and U.S. bank plan to change this month their fee tier structures for overdraft charges.

The charges increase the amount customers pay on the second overdraft in a 12-month period, but both banks said they also eliminated other fees — Fifth Third, an $8-a-day fee for balances overdrawn more than three days; U.S. Bank, early account closure fees, for example.

It’s the first time in two years overdraft fees at the nation’s largest banks inched upward, the Consumer Federation said.

“We continuously monitor the marketplace and have always been focused on keeping our products and services competitively priced. We felt that this was a good time to do a holistic review and remove fees that are no longer relevant, while rewarding customers for positive things such as building their savings,” said U.S. Bank spokeswoman Nicole Garrison-Sprenger in a statement.

Meanwhile, competition is fierce for new customers, as most banks said they’re focused on attracting customers and “deepening” their relationships with existing customers by cross-selling other products to them.

“New client acquisition is important, always has been, always will be,” Reilly said.

“The bottom line is we don’t want to make our livelihood on overdraft fees,” said Ed Reilly, KeyBank Southwest Ohio district president.

“We don’t like the fact that people incur overdrafts any better than the consumer does. But the fact is when they do, it’s a penalty.”

Contact this reporter at (513) 705-2551 or clevingston@coxohio.com.