Service charges and fees at U.S. banks and thrifts started to recover in the third quarter, following sharp declines in the second quarter from the impact of the COVID-19 pandemic.

Overdraft fees bounced back to $2.03 billion in the third quarter from $1.41 billion in the previous quarter. Overdraft fees had plunged 49% sequentially in the second quarter as the pandemic led to a drop in consumer spending.

Third-quarter consumer deposit fees reached $3.34 billion, up from $2.60 billion in the second quarter, but lower than $4.61 billion in the year-ago period. ATM fees increased quarter over quarter to $401.1 million from $290.7 million.

Service charges and fees accounted for 1.66% of the industry's operating revenue in the third quarter, up from the previous quarter's 1.28%, but down 55 basis points from the third quarter of 2019.

Bank of America NA reported the most service fees on consumer deposits over the last 12 months to Sept. 30 at $2.57 billion, 3.8% of its operating revenue. By comparison, the industry median was 1.5%.

Meanwhile, smaller community banks dominate the list of institutions most reliant on fees as a percentage of operating revenue. Among the top 20, TD Bank NA and Regions Bank were the only institutions with more than $100 billion in assets.

The Woodlands, Texas-based Woodforest National Bank topped the list of banks most reliant on service charges, with more than 30% of its operating revenue from such fees over the last 12 months.