One community bank in Missouri is engaging in an interesting turnabout: paying its customers to use other banks' automated teller machines.

To compete more effectively with larger banks in the same market, $185 million-asset Citizens National Bank decided last year to allow its customers to use - at no charge - any of the 1,287 ATMs in the greater St. Louis area, or any of the 109,000 ATMs affiliated with the BankMate or Cirrus network.

And for the first six weeks of 1995, the bank is promoting this strategy with an added twist: New customers who open accounts with Citizens can get $1 back each month for three months if they decide to use a foreign ATM to conduct transactions.

"We've made a long-term commitment to this nonfee strategy," said David W. Bentele, president of the Maplewood, Mo.-based bank. "We see our ATM card as a differentiating factor, since everyone else charges for foreign transactions."

Giving up the interchange fees is not an issue, said Mr. Bentele.

"We can pay for this program for less than the cost of one ATM," he said. "The program gives us a competitive advantage over the big banks because they have already invested in all that brick and mortar and are less likely to give up the fee income."

"I applaud the bank's imagination," said community bank consultant M. Arthur Gillis, president of Computer Based Solutions Inc., New Orleans.

"One of the biggest things that turns customers off is when they think they're being forced to pay to give a bank their business," continued Mr. Gillis. "This bank hit a nerve. They've shown their desire to respond to customer attitudes."

The bank is marketing the free-ATM-use policy through radio and billboard advertisements as well as banners in the branches.

"We have a very limited marketing budget, because of our size, so we saw drive-time radio as the best opportunity for us to get the biggest splash and attract the people we're trying to reach," said Mr. Bentele.

After only one week of advertising, Citizens had received 150 queries from potential customers. Managers believe that a good number of these prospects currently bank at bigger competitors, like Boatmen's National Bank and Mercantile Bank, both of St. Louis.

The 97-employee Citizens, which historically has had a typical community bank focus on personalized service, wants to extend its reach to customers who are most attracted by convenience, not service.

"We're selling electronic banking here, not service," said Mr. Bentele. "But we don't think we have to invest in additional ATMs or make brick-and- mortar investments to attract people who accept - or even desire - electronic banking options."

The three-branch bank has not deserted its personal approach, however. Bank managers want customers so much that they will personally visit prospects at their home or office to open new accounts.

"We realize that our three locations may not be convenient," said Mr. Bentele. "So if they can't come to us, we'll go to them."

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