Community bankers long have argued that they've taken a bad rap for the misdeeds of big banks in the country's financial crisis.
Though Dodd-Frank and subsequent laws were designed to regulate the financial industry's biggest players, those same rules have hurt the ability of community lenders to make loans, which in turn hurts their ability to offer free checking, officials say.
"We're getting closer to becoming a utility," said Larry Kuglar, senior consultant for Peachtree City, Ga.-based SouthCrest Financial, which owns the Bank of Chickamauga. "We've had to adjust our account offerings, because without loans we're having to produce revenue from other sources, including the consumer."
Community banks -- which are technically exempt from many financial reform provisions -- have worked hard to differentiate themselves from impersonal big banks and their big fees.
But without a great deal of loan income, it has been difficult to maintain completely free checking.
SouthCrest and most other community banks still offer free checking accounts, but only for the most basic types of accounts -- and in many cases, consumers have to meet certain qualifications.
For instance, many accounts require customers to do most of their banking online, give up paper statements and use a debit card instead of paper checks.
The rest of small bank customers end up paying fees, Kuglar said.
"The uncertainty of how much it's going to cost to operate based on Dodd-Frank regulations, taxation, new accounting standards that are now trickling down -- it will affect all institutions," Kuglar said. "And somebody's got to pay for it."
Frank Hughes, president and CEO of Chattanooga-based Cornerstone Community Bank, said he still offers free accounts to customers, as long as they forgo paper statements and checks in favor of a debit card.
"All the community banks are basically letting the debit cards go out without a fee," Hughes said, though he noted that "There's not a huge amount of profitability in it."
Enter Kasasa, a third-party checking account system that aims to make the new banking reality a little bit more fun.
Kasasa, which was created by Austin, Texas-based BankVue, brings back the glory days of free checking with interest-bearing checking accounts, refunds on ATM fees and free song downloads, the company claims.
The system takes the burden off its bank partners like Citizens State Bank in Jasper, Tenn., or Capital Bank in Fort Oglethorpe, and spreads it out among dozens of institutions.
"We're able to encourage debit card transactions and pay a bit higher interest rate to these customers," said Barry Allan, executive vice president at Citizens State Bank.
"Not only have we been able to maintain and keep a solid income for our bank and shareholders, but we've been able to keep a very competitive, low fee and high interest rate environment for our customers," Allan said.
The account is truly free, he says, and customers get the cool bonuses if they use e-statements, online banking and other activities that save the bank money.
"The difference with this one is that regardless of whether you qualify for the 2.5 percent interest rate or not, it's still a free account," Allan said.
Though some of the profit has gone out of free checking because of increased regulations, the best part of any type of free account is that it gets customers to walk in the front door, Cornerstone's Hughes added.
"That is where we succeed; we have the body on the ground with the customer," Hughes said. "As the big banks pull more and more people out of the market and invest less, we'll continue to succeed."
Chattanooga-based CapitalMark Bank has a different strategy entirely, said Stefanie Crowe, executive vice president and director of communications for the local lender.
CapitalMark focuses on business lending instead of the consumer market, she said. The company's teams of bankers work one-on-one with business owners and do very little marketing to individuals.
"It's still too early to determine the long-term impact of Dodd-Frank and the Durbin Amendment," Crowe wrote in an email.
The bank has held off competing for individual customers in part because of the new laws, she said.
"Although banks with less than $10 billion in assets are exempt from the debit card caps, the fear is they will be forced to adjust prices to remain competitive with the new pricing of the larger banks," Crowe said. "Mindful of the regulatory changes, CapitalMark remains focused on our successful model."