When F&M Bancorp of Frederick, Md., closes its branch in rural Urbana, the employees don't hang up a "closed" sign and lock the front door. They hit the road.

The branch is a modified recreational vehicle that serves the community, retirement homes in the area, community centers, and major employers.

Also driving into the mobile banking market is Valley Bank and Trust in Brighton, Colo.

Valley plans to have two mobile units on the road by early next year. A small one, basically a mobile ATM, will serve retirement communities. A larger unit will serve as a full-service branch in two rural communities near Brighton.

James J. O'Dell, Valley's president, said he hopes to build permanent branches in the rural towns someday but is not ready to risk the start-up costs yet.

"We might find out that it's a mistake," he said. "We'd much rather spend our money on this than another million-dollar branch."

Next week Pennsylvania National Bank, which has had a mobile branch touring its market for about six months, will station it in Reading temporarily while a permanent one is being built.

In effect "it allows us to open that branch two months earlier than we would have otherwise," said J. Craig Ray, manager of the mobile unit.

The bankers say the units are effective promotional tools. F&M's is plastered with the company's logo and often showboats on local highways about 10 miles per hour below the speed limit. "It's a terrific billboard," said Faye E. Cannon, the bank's president.

Mr. Ray agreed. "You could justify the expense on marketing alone," he said.

Regulators don't know how many mobile branches are on the road, because the units can be classified as either automated teller machines or branches. But MBF Industries Inc. of Fruitland Park, Fla., one of the rare manufacturers, says it has sold about 70 since forming four years ago. (About four of them went overseas to help the federal government deliver financial services to soldiers stationed abroad.)

MBF's units vary in size and function, from a small truck with an ATM to a mobile full-service branch 38 feet long with teller lines, loan offices, and ATMs. The units range in price from $80,000 to $235,000, about 25% of the cost to build a similar permanent facility, said John Baker, MBF's president.

"This is not a substitute for a branch, but it is designed to promote personalized service when you can't justify building a branch," he said.

F&M bought its "Express Bank" from MBF in 1995 to serve retirement homes and community centers. It added its stop in Urbana after customers there requested it. Before the mobile branch started arriving two nights a week, these customers had to travel 25 miles to F&M's headquarters in Frederick.

"We're delighted with the response so far," Ms. Cannon said.

Security on the unit hasn't been a problem, said Michael B. Vavreck, F&M's vice president for alternative delivery. Unlike an armored truck, he said, the mobile unit is not a target for hijacking.

"It looks like a Winnebago," he said.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.