Pittsburgh's Great American Federal Savings and Loan Association is getting out of the data processing business.

Great American, with $815 million of assets, said last week that it will not renew its current contracts to provide computer services to other financial institutions. The thrift, which began selling its computer services in 1983, has two agreements set to expire next summer and one that will end in 2000.

"A decision had to be made: Are we a bank, or are we a processing company?" said John G. Micenko, president of the thrift's holding company, GA Financial Inc. "The bottom line is, we are a bank."

Mr. Micenko said Great American has never turned a profit on its processing business, though it did make enough to offset some of the cost of its own computer system. But since the thrift's 1996 conversion from mutual to public ownership, covering costs is no longer good enough.

"When we were a mutual, we could justify doing this, even if it wasn't a profit center," Mr. Micenko said. "Now that we are public, every line of business we are in we want to be profitable."

He said Great American will devote resources to "more traditional bank operations," including opening two branches. The thrift is also planning to replace its computer system.

Becoming a data processing vendor is something "a lot of banks think of but few actually do," said Dave Koto, executive vice president of Brintech Inc., a New Smyrna Beach, Fla., consulting firm. Often, banks scuttle the idea because of the complexity involved.

It is especially tough for community banks, Mr. Koto said, where information technology departments are often small and budgets limited.

"These are bankers, not software vendors," Mr. Koto said. "Down the line, when clients begin asking for new options, a bank might not have the money or the expertise to provide them."

Of course, some banks succeed in the vending business. M&I Data Services Inc., a division of Marshall & Ilsley Corp. in Milwaukee, for example, processes deposit, loan, and general ledger systems for banking companies such as Synovus Financial Corp. and Northern Trust Corp.

But some other large banking companies-such as Norwest Corp., Citicorp, and Mellon Bank Corp.-have left the business this decade.

The potential for year-2000-related problems makes now an especially dangerous time to be a vendor.

If something goes wrong at a client bank, the service-providing institution will be treated as a traditional vendor, said Mr. Koto. Therefore, "they are going to have a lot more responsibility, and possibly liability, than a typical bank."

Mr. Micenko agreed.

"If one of our clients was to miss a step and get sued by a customer, I have little doubt that suit would fall into our lap," he said.

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