A community bank holding company in California that just four years ago did not have a single ATM-and did not want one-is now counting on the fee- laden machines to drive its earnings.

The parent of Palm Desert National Bank, Palm Desert Investments, recently filed an application with the Federal Reserve Bank of San Francisco to broker sales of automated teller machines. The $93.3 million- asset company could also run the machines, which would be located in hotels, casinos, and other nonbank sites.

It is believed to be the first time the Fed has received such a request. The Fed, which said it could not comment on a pending application, is expected to rule by June 17.

Palm Desert already has a stake in 1,100 ATMs nationwide through servicing arrangements and sponsorships in regional networks such as Cirrus. Its clients are major hotels, Native American-owned casinos, and regional malls. And later this year Palm Desert will dock its ATMs on converted ocean-liner casinos in New York and New Orleans.

"It's a niche market that we've found quite lucrative," said Kevin B. McGuire, Palm Desert's chief executive officer. "We've worked hard at getting the right controls in place."

As a broker, Palm Desert would marry sellers-such as ATM manufacturers or banks looking to unload machines-with buyers. The company would collect roughly 3% of any sale.

Palm Desert stumbled into the ATM business four years ago, when a local mall asked it to replace a machine yanked by Wells Fargo & Co. After initially balking at the idea, Mr. McGuire changed his mind- and soon was installing ATMs at malls across Southern California.

Mr. McGuire concedes the ATM business is a bit odd for a community bank. But if done right, the venture could pull in up to $900,000 this year in fee income, compared with $287,000 in 1997, he said.

Currently, income is generated by $1 to $2 surcharges and up to 3 cents per transaction in sponsorship deals. A typical contract runs three to five years.

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