SAN BERNARDINO, Calif. – While most credit unions recognize the value of business loans on the balance sheet, some might not be prepared to offer comprehensive deposit services customized for small business needs. Member Business Services (MBS), a nearly two year-old business lending CUSO, is hoping to highlight those services. The CUSO started offering a new line of deposit accounting services in June in part to make deposit services enough of an incentive to attract small business owners initially and hopefully meet their lending needs down the road. "The deposit side plays an important role in gaining wallet share, fee income and continuing loyalty," said Steve von Rajcs, MBS president. The new line includes ZBA accounting, an account analysis checking product that allows a business with several offices to have their own respective accounts. Each night, the accounts are swept into a general account. "Some businesses just don't like the idea of a lot of money sitting out there," said Stacie Leake, MBS COO and vice president. MBS has also introduced Positive Pay, which allows a business to write checks on any given day and tell which ones have been written and the amount. If there are any discrepancies, the checks are flagged. This feature is especially important in being able to thwart fraud, Leake said. "It's a security level that banks are using now so when a business owner comes to a credit union, they should have it as well," von Rajcs said. Founded by $821 million Arrowhead Credit Union in January 2003, MBS also counts several California credit unions as its partner/owners: $600 million First Financial FCU in West Covina; $362 million SCE FCU in El Monte; and the California Credit Union League. Arrowhead CU has converted over to the new deposit tracking systems. So far, it has 4,000 checking accounts and 2,000 savings and CDs, said von Rajcs. Each month, MBS is netting roughly 100 new accounts. "I know fee income may be a dirty word in the industry but we're collecting $50,000 in fee income from members," von Rajcs said. MBS has already converted SCE FCU's loans and is on schedule to convert deposits, Leake said. First Financial FCU's loans will be converted at the end of September with deposits to come in November. One of the reasons why credit unions tend to focus on building business loans while deposits take a back seat, is the need to diversify and remain liquid, von Rajcs said. "As a 25-year banking veteran, I know the banks can offer both sides on the balance sheet," von Rajcs said. "If a credit union can't offer these services, business owners will take their loan needs across the street to the bank." Another key component for deposit tracking that many credit unions get tripped up on is the item processing, Leake said. "They can go out and get the most sophisticated banking system out there but if they don't have that proof of deposit environment, they're setting themselves up to have to do another conversion." MBS is in discussions to align with more credit unions and its deposit tracking systems are set up to accommodate those outside of California, von Rajcs said. "One hundred percent of businesses need checking accounts, not all need loans, von Rajcs said. "If both are there, there is the likelihood that the relationship will be maintained." [email protected]

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