Before and since the much-publicized Bank Transfer Day in November, the midstate's credit unions and small banks have ramped up marketing attempts touting free debit cards and checking accounts, their community ties and competitive rates to lure frustrated big bank customers.

Several reported sizable jumps in membership in 2011 and said they expect continued growth this year.

"Banks seem to be deliberately trying to shed certain portions of their customer base," said Gregory Smith, president and CEO of Harrisburg-based Pennsylvania State Employees Credit Union, or PSECU.

Over the past two years, banks have been hit with several new regulations that have cost them billions of dollars in lost revenue. Stemming from the so-called Durbin amendment, the Federal Reserve this summer set a limit of 21 cents, or about half the old rates, on interchange fees for banks with more than $10 billion in assets.

Retailers pay the fees to banks on debit card transactions.

Another change known as Regulation E requires customers to choose whether they want overdraft protection on their checking accounts, which can help them avoid paying charges unknowingly.

To combat the reforms, Bank of America toyed with the idea of charging a $5 monthly debit card usage fee. Citizens Bank is charging customers as much as $50 a month for failing to maintain minimum balances in certain checking and savings accounts. Others have instituted minimum balance fees of $25 or more.

The nickel-and-diming approach has outraged many consumers.

Leading up to Bank Transfer Day, PSECU saw a 49 percent increase in new members compared with the same month in 2010, Smith said. Membership has been up every month, he said. New accounts were 11 percent higher in 2011 compared with 2010 (see chart), said PSECU spokesman Nate Muniz.

"We have to assume it is a lot of people switching," Smith said. "People are getting irritated with their bank, mainly because of the fees."

Credit unions like PSECU are highlighting their strengths. For example, some banks might be offering expedited bill payment services to consumers to help them avoid late fees, Smith said. PSECU offers free bill payer services.

The credit union also has extended call center hours and expanded ATM surcharge rebates. For members who use an out-of-network ATM, the monthly rebate doubled in October to $8. The rebate jumps up to $20 per month for members with qualifying direct deposit.

Lower Allen Township-based Members 1st Federal Credit Union said it saw a membership spike of about 40 percent around Bank Transfer Day. For the year, the Cumberland County credit union saw a 23.4 percent increase in new members compared with 2010, spokesman George Nahodil said.

"In the end, I think people are looking for stability. They are looking for that community-based organization that is going to provide good service and fair pricing and treatment," he said.

Members 1st continues to expand its branch presence and build upon its successful business lending program. To date, the credit union has 50 branches, with five more planned this year, Nahodil said.

In addition to bank fees, credit unions often see a spike in membership when there is a bank merger or acquisition, he said. One such membership swinging deal could be the Susquehanna Bancshares acquisition of Tower Bancorp, the Harrisburg-based parent of the Graystone, Tower and 1N brands.

Lititz-based Susquehanna said it does not believe the acquisition will negatively impact membership. If anything, the deal will strengthen the bank's community presence, said Stephen Trapnell, a bank spokesman.

"We'll have greater capacity to do larger loans," he said, citing a projected $18 billion in assets when the deal is done.

Banks and credit unions are in different camps, he added. For starters, credit unions are tax-exempt organizations, so they are not paying the same taxes as banks.

Susquehanna has not noticed any significant change in the number of customers, Trapnell said. The bank, which will have about 260 branch locations after the Tower deal, has rolled out a new campaign re-emphasizing the importance of free checking and its local connections.

"Some regulations have changed, and restrictions on fees banks have charged. That has an impact on revenue," Trapnell said. "But we do still offer free checking with no minimum daily balance or monthly maintenance fee."

Susquehanna understands the importance of building a relationship with a customer, he said.

"Yes, there are a lot of changes in the industry, but we're aware we need a wide range of options," Trapnell said.

Swatara Township-based Metro Bank also promotes free checking and its consumer-friendly practices, which include longer hours and weekend hours.

"No one else is open on Sundays," said Gary Nalbandian, the bank's chairman, president and CEO. "We get quite a bit of traffic from having that convenience."

Free coin-counting machines and a live answering service 24/7 are other services Metro highlights.

The Dauphin County bank anecdotally has seen an uptick in the number of consumers switching from larger banks and other financial institutions, Nalbandian said. Metro is not convinced that Bank Transfer Day had much of an impact in the midstate, he said.

"While there was a big public reaction to the Bank of America $5 fee, I am not hearing any major movement now," said Nick DiFrancesco, president and CEO of the Pennsylvania Association of Community Bankers.

Financial institutions are doing well in terms of customer service, he said. The problem is there is not a lot of activity to finance right now.

"Some banks have stepped up marketing and loyalty campaigns," DiFrancesco said. "What gets lost is the fact that community banks are there to serve. Community banks universally give back to the community."

The association's primary concern is regulatory policies aimed at Wall Street that strike at Main Street, he added, which could threaten the community bank presence in Pennsylvania.

"A community without a community bank is a lot worse off than one that has a strong community bank," he said.

Getting consumers to switch to a credit union or small bank has been hit or miss, said Diane Powell, a spokeswoman for the Pennsylvania Credit Union Association. She equated that largely to the minimal presence Bank of America has in this area.

However, that doesn't mean the association is stopping its iBelong campaign, which was started to spread awareness about credit unions and the financial services they provide.

"We help keep prices lower," Powell said about credit unions. "We're just another option in the community."

Local credit union growth

Members 1st Federal Credit Union

Members added in 2010: 31,098

Members added in 2011: 38,376

Year over year increase: 23.4 percent

Total active membership: More than 200,000

Best membership month in 2011:

November: 3,879 new members

Pennsylvania State Employees Credit Union

Members added in 2010: 27,781

Members added in 2011: 30,827

Year over year increase: 11 percent

Total active membership: About 384,000

Best membership month in 2011:

August: About 3,700 new members

Sources: Members 1st and PSECU

Credit unions in Pa.

Credit unions Q3 2011 (Latest figures available): 533 (down from 541 in 2010)

Total assets Q3 2011: $35.3 billion

Total members Q3 2011: More than 3.6 million

Total assets Q3 2010: $33.8 billion

Total members Q3 2010: Nearly 3.6 million

Annual membership growth: 1.2 percent

Source: Pennsylvania Credit Union Association