LOS ANGELES - Richard C. Hartnack, vice chairman and head of retail banking for Union Bank of California, sounds exasperated when he talks about criticisms of the bank's three new banking offices in the heart of urban Los Angeles.

"What more can they want?" he asks, referring to the community activists - Consumers Union and others - that make it their job to pressure financial institutions to offer more services in underbanked areas.

For Mr. Hartnack, who has been bridging the often murky divide between mainstream banking and low- and moderate-income communities for nearly two decades, Union Bank's three new Los Angeles county offices are the best current solution to what he sees as major obstacle to opening branches in poorer areas: little growth - because people in these areas may not have a family tradition of using banks for their financial services - and thus, low revenue.

Opened this summer, the offices are part of a joint venture with Nix Check Cashing, a privately owned chain of check cashing and credit stores with 47 offices in greater Los Angeles.

Union Bank is the principal unit of San Francisco's Unionbancal Corp., which is majority-owned by Bank of Tokyo-Mitsubishi. But many community activists see the solution as still contributing to a second-class of financial services for lower-income, often minority communities. Notwithstanding the fact that the definition of "bank office" has changed with the advent of supermarket banking, the Internet and more ATM use, these offices are a far cry from what a customer of a bank branch in a middle-income community in, for instance, Orange County, would expect.

On a blazing-hot day in Los Angeles last week, one of the three Nix offices that now offer Union Bank products and services was handling a steady trickle of traffic.

Against one long wall stood a row of Nix check cashing tellers and their screens, facing customers from behind ceiling-high Plexiglas.

In the corner, under a new Union Bank sign, was another teller. An employee of Nix, she can offer any of Nix's regular services. But her main job at the is to facilitate opening of Union Bank accounts and direct people to pamphlets and automated services available nearby.

Interested in a loan? Pick up the Union Bank phone and dial into its loan-by-phone center. Deposits? For merchants, there's a drop box set in the wall. For individuals, there's an ATM and a mail drop.

But if you want to do a typical banking transaction as a Union Bank customer, such as cash a check or speak to an officer in person, you're out of luck. Check cashing is only available at the Union Bank/Nix Check cashing offices at the Nix windows.

Merchants who wish to exchange coins for bills are also directed to Nix tellers - although they are charged the same fee Union Bank customers pay elsewhere.

"It's definitely an issue that you can't do banking with a person," said Arthi Varma, a policy advocate at the Community Reinvestment Coalition in San Francisco.

"With a person, you're providing the perception to the customer that this is a real transaction that they're doing," she said.

Some of this is beyond Union Bank's immediate control. The absence of teller transactions, in fact, stems from Federal Reserve regulations on what constitutes a bank branch. Union Bank took advantage of the Gramm-Leach-Bliley Act of 1999 to make an investment in Navicert Financial Inc., the parent of Nix Check Cashing, without regulatory approval.

Thus, these offices cannot do "over the counter" withdrawals and deposits or make loans. What they can do is answer questions and guide new customers through the maze of financial products that most banks offer. But including such a representative would undermine the model Union Bank is following to enter these markets, Mr. Hartnack said.

In an interview in the bank's main Los Angeles offices, Mr. Hartnack said Union Bank has been trying to figure out how it could get into a market that it views as ripe for new banks. But his experience over the years in opening branches in low-income communities, such as the Bayview section of San Francisco, made him think twice about doing the same in Los Angeles.

"It's adding services to a fully financed platform that's the economic magic of this," he said.

Without check cashing and other, well-used services already in place, he said new branches in low-income communities often struggle to increase numbers of checking account customers.

Whereas with the joint venture, lower account numbers - at least at the start - should be offset by the revenues from check cashing, money orders and other fee services provided by Nix.

"Because you have a physical sales platform already bought and paid for, you don't have to have as many clients at each location to be successful," he said.

But the fact that banks are increasing their involvement in check cashing and credit services such as payday loans raises alarm bells with activists.

"We don't need banks to take on the responsibility of the really fringe areas of banking," said Gilda Hass, director of Strategic Actions for a Just Economy.

Herein seems to lie the difficulty in bring banking services to underserved, low-income and often minority communities: banks, under pressure to improve revenues, cannot afford the risk of starting up branches in areas that are not high-growth - in other words, upper and middle-income districts.

Peter Carroll, consultant for Oliver Wyman & Co. specializing in consumer services, said: "We have found that the ratio of branches to the amount of available deposits is higher in other communities, as evidenced by the lower average dollars of deposits for branches"-which means "it's harder for banks to create a viable branch in low-income communities."

Indeed, community activists generally admit that some bank services, however spare, are better than nothing. And from the start, Union Bank has involved these groups, partnering with the nonprofit Operation Hope - an economic development organization in Los Angeles created after the civil unrest in the early 1990s - to increase the use of traditional banking services among the area's residents.

But by linking up with a check cashing group, an immediate source of revenue for the bank when it goes into these communities, banks still run the risk of providing services that are a class apart from - and generally more expensive than - offerings people could expect in wealthier communities.

One community activist disagrees that a traditional bank branch couldn't go it alone. "I don't agree that people are so brainwashed that if a bank branch opens in the West Adams quarter of Los Angeles, no one could do business," said Mark Whitlock, a executive director of Fame Renaissance, an economic development program of the First AME Church in Los Angeles.

Lack of opportunity, not a fear of banking, prevents people in low-income areas from opening accounts, he said.

When Union Bank announced in March that it had taken the 40% equity stake in Navicert, with the option to buy the whole business by the 10th year of the venture, it promised to use the venture to get more Union Bank services to low-income areas. By Sept. 1, the bank had opened three offices, aiming to open more if the pilot does well.

One key to backing up its promise will be its ability to make Union Bank account holders out of Nix Cashing customers. Mr. Hartnack said such cross-selling already exists in Union Bank's Cash & Save branches, check cashing stores that offer paired-down, automated banking services similar to those in the Nix stores. His plan is to have a referral process firmly in place by the time a local advertising and marketing campaign rolls in October.

To do that, Nix must instruct its employees and set up an incentive program. This will be the test as to whether a check cashing company will want to push people into bank accounts - which could eventually replace a fee-based check cashing service.

Thomas E. Nix, president and chief executive of Navicert, said he sees no problem with customers continuing to use check cashing, even if they can open accounts with overdraft protection. "We're trying to create access - if they choose to get a bank account they can do it," he said.

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