Glendale Federal Bank said this week it signed a deal to put at least 20 branches in Kinko's locations in California in the coming months.

The exclusive, three-year pact with the large document production company places the Glendale, Calif.-based thrift in a small group of institutions that have made similar deals with other retailers.

"Glendale is breaking a lot of molds right now," said Thomas O'Donnell, an analyst at Smith Barney. "This shows how innovative and creative they are - when other thrifts are sitting back, they are making things happen."

The $15 billion-asset thrift said the Kinko's deal was desirable because of the copy-shop chain's small-business customer base, a highly sought- after market. "Kinko's is a magnet for small-business owners," said Stephen Trafton, Glendale's chairman and chief executive.

"A big part of their customer focus is very similar to what we are trying to do," said William J. Birch, Glendale's executive vice president of retail banking. "So there was a natural affinity for us to reach out our distribution effort in a very different environment."

Only a handful of banks have set up branches in retail locations that are not supermarkets.

KeyCorp is opening five branches in OfficeMax locations, while BankAtlantic Bancorp of Fort Lauderdale, Fla., has 9 branches in Wal-Mart stores.

Glendale plans to open three mini-branches, staffed with two to three employees, within the next 60 days. The remaining 17 branches will open during the next 18 months, the bank said.

In 1999, Mr. Birch said, the two companies will review the program and consider several possible scenarios - install automated teller machines in every Kinko's office in the state, build more mini-branches in the stores, bring Kinko's inside Glendale locations, or end the program.

"What we're seeing here is Glendale getting creative in looking for alternative ways of finding low-cost, high-traffic locations, while offering more convenience," said David Hochstim, an analyst with Bear, Stearns & Co.

The relationship also provides Glendale with a cheaper means of branching into new markets.

The average cost of each new branch will be about $250,000, compared with around $1.5 million for the typical stand-alone branch. More than half of Kinko's California locations are in markets where Glendale does not have a branch - providing ample expansion potential.

Kinko's locations do not have the same customer flow as supermarkets, but they do have customers with some time on their hands. While they are waiting for their work to be completed, they could be opening a new account, Mr. Birch said.

Kinko's would not say if other banks competed with Glendale to get the deal, but a spokeswoman did say that the copy-shop chain is exploring expanding the concept to stores in other states.

"I can say that we are continuing to investigate relationships that will offer convenient business services to our customers," said Laura McCormick, a Kinko's spokeswoman.

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