SAVANNAH — The Coastal Bank, a community bank headquartered in Savannah, recently announced it has eliminated overdraft fees for non-recurring electronic transactions on all consumer accounts.

Regulation E prohibits financial institutions from charging consumers fees for paying overdrafts on ATM and one-time debit card transactions unless a consumer opts into an overdraft service for these electronic transactions.  

The Coastal Bank is the first local community bank to publicly elect not to participate in the Reg-E opt-in. Overdraft fees will still apply to overdrawn checks on consumer accounts and to all overdrawn transactions on business accounts.

“For some time, we have been wary of so-called ‘overdraft protection programs’ within the banking industry,” said Tom Wiley, chairman, president and CEO of The Coastal Bank. “We felt it was just a matter of time before consumer watchdog groups would begin to shine a light on some of these strategies. As a result, we have not offered an official overdraft program at The Coastal Bank. We would rather eliminate the overdraft fees on consumer debit card transactions to simplify our customer’s banking relationship.”

The Coastal Bank plans to automatically opt out all of its customers, meaning customers who try to make purchases with their debit cards or withdraw money at an ATM without having enough money in their checking accounts will be declined, rather than charged overdraft fees.  

Wiley said he does not expect Reg-E to have a major effect on The Coastal Bank, which has full-service offices in Savannah, Pooler, Rincon and Hinesville.

“The largest impact Reg-E will have on The Coastal Bank will be coordinating our operational processes and disclosures to comply with the new regulation,” he explained.  “Since we did not offer overdraft programs in the past, we do not anticipate a material financial impact.”

In recent years, overdraft fees have turned into big business for the banking industry. In 2009, banks generated approximately $20 billion from overdraft fees on debit purchases and ATM transactions, plus an additional $12 billion by covering checks and recurring bills, according to Moebs Services, an economic research firm.