Credit Unions Open Shared Branch

17-Member California Group Is Eying Other States

A group of 17 California credit unions has opened an unusual shared branch, the first of a planned network of such offices.

The branch, in a Los Angeles suburb, will let the credit unions set up shop in areas where there are too few members justify individual branches, but where an additional office can be collectively justified.

And instead of shelling out between $200,000 and $500,000 to open and operate individual branches, each credit union will pay a membership fee and charges based on the transactions it performs.

Starting in California

Initially, the group is focusing on California, though "we'd like our members in other states to have access to this network," said Rick Scali, chief operating officer of the Credit Union Service Center, the new entity.

Credit unions in Georgia and New York also are evaluating a system of shared branches, Mr. Scali said. A number credit unions in Michigan already share branches, but the California effort will be bigger.

Sharing branches is a concept that commercial banks have talked about, but never put into practice because of concerns about maintaining competitive advantages. Instead, banks have focused on combining back office operations.

Pushing Services

The credit unions hope the shared branches will encourage their members to use more services. "While ATMs do a lot of things pretty cost-effectively, there are still a million situations where you want to talk to someone directly," said Frank Reed, chief executive of the Long Beach School Credit Union, a member of the service center.

Mr. Reed said members can sometimes be reluctant to open checking and other types of accounts because it is difficult for them to get to a branch if they have a problem.

With the network of shared branches, "I hope I will never have to open any more offices," he added.

Six of the 17 members have on-line links into the first branch office. The six credit unions have a total of 300,000 members in Southern California.

The service center will charge each credit union between $1.50 and $2.80 for a transaction.

The first branch is in Long Beach, a suburb of Los Angeles. Two other branches, in northern and southern California, are scheduled to be opened by mid-summer. The Credit Union Service Center expects to have 10 locations by the end of this year.

The service center branches use a switching system from Deluxe Data Systems, Brown Deer, Wis. Each credit union's data processor designed links to the switch, so that information from the files of each credit union can be accessed by the shared branch.

The teller system, designed by MAI Basic Four, Tustin, Calif., runs on personal computers connected to Deluxe Data's computers. The first branch is staffed by nine tellers. When credit union members arrive in the branch, they put their magnetic-stripe card through a card reader, and key in a four-digit personal identification number.

The system identifies the customer and routes the request to the appropriate credit union, bringing back to the teller's workstation the customer's name, address, and account information.

Members can make deposits, withdrawals, get credit card cash advances, or apply for loans. Transactions are processed right at the branch, then posted at the member's credit union.

ATM Card Selects Account

In the lobby, a computerized customer service device is set up to allow customers to view their own credit union's rates and services.

Credit unions can become members by buying shares, which gives them the right to run for board membership; or they can pay an annual membership fee based on the size of the institution's assets. A credit union with under $50 million in assets pays about $12 in dues.

The group is setting up two types of branches. Some will be stand-alones in shopping centers or other busy neighborhoods, and outlets in an existing credit union's offices.

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