Mercantile buyer may offer free ATM service

October 10, 2006|By Eileen Ambrose | Eileen Ambrose,Sun reporter

After buying a scandal-damaged Riggs National Corp. last year, PNC Financial Services Group decided to offer free ATM transactions for customers in the Washington area to attract deposits.

It worked so well that PNC decided in August to extend the offer to all its markets.

So free ATMs might be one of the most noticeable changes for Mercantile Bankshares Corp. customers if the Baltimore bank's merger with PNC Financial Services Group is completed. Mercantile customers also are likely to see more products, and night and weekend hours in certain busy branches.

PNC began offering its own credit cards last month after previously contracting with MBNA to provide cards to customers, something that Mercantile does now.

There also could be quicker service in bank branches because PNC's technology allows tellers to process transactions faster, said Janice Davis, Mercantile's director of communications.

But, Davis added, customers would also see very little change in areas that are important to them: branches, tellers and branch managers.

PNC has about 850 branches, but only 10 of those are in Maryland - all branches in the Washington suburbs that were acquired in the Riggs deal. Mercantile has 240 branches, with 188 in Maryland. Mercantile's Davis said most of the branches are expected to remain and so will their staffs.

"Customers will still be able to deal with those people they have developed relationships with over time," Davis said.

Like many banks, Mercantile does not charge its own customers for using one of Mercantile's 250 ATMs. But Mercantile does charge $2 for a withdrawal and $1.75 for a balance inquiry when customers use another bank's ATM, Davis said.

PNC goes a step further, rebating ATM fees charged to its customers by other banks, as long as PNC customers meet certain conditions.

To be eligible, PNC customers must have one of three new checking accounts. The most popular is the free-checking account that has no minimum balance or monthly charge - although to get the ATM rebate, a customer must have an average monthly balance of at least $2,500.

Tapping discontent

PNC's policy tapped into increasing consumer discontent about having to pay to get access to their money. Customers on average pay $126 a year in ATM fees, according to PNC, but banks increasingly have been lowering their fees for competitive reasons.

In the Baltimore area, a number of banks have struck deals recently to have some free ATMs in retail outlets, and one bank new to the region, Tennessee's First Horizon, has said it plans to reimburse its customers' fees to use other banks' ATMs.

One of PNC's biggest competitors, Commerce Bank, also offers a free-ATM feature, said Greg McBride, a senior financial analyst with

"The biggest banks are realizing zero ATM fees is a perk that attracts new customers," said Ed Mierzwinski, with the consumer advocacy group U.S. Public Interest Research Group. Nevertheless, he said, banks might not keep ATMs free forever.

As far as other fees, PNC's policies eventually will be adopted at its Maryland banks, but that isn't necessarily bad, McBride said.

There are two types of bank mergers, and only one affects fees, McBride said. When two banks in the same market merge, they become such a dominant player they can afford "to throw their weight around" and raise fees, he said.

The PNC-Mercantile deal seems to be the other kind, he said. That's when a bank makes an acquisition to gain customers in a new market. The bank is unlikely to increase fees and chase off these new customers, he said.

Customer views

So do customers like PNC? A recently published Consumer Reports survey of more than 11,100 customers rated PNC in the middle of the pack among the largest banks in customer satisfaction.

PNC tied for 10th place with a score of 76, on a scale where 80 meant customers were "very satisfied." Commerce Bank, PNC's competitor, topped the list with a score of 87.

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