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SAN JOSE, Calif. – Nearly a year in the making, Meriwest Credit Union will soon carve out its niche in the business lending and services marketplace using a “personal touch” campaign to stand out among its bank competitors. The $904 million credit union is poised to launch its business services program in early 2005 with a blitz of offerings including checking, savings, certificates of deposits, money market accounts, overdraft lines, term loans for equipments, credit cards and merchant processing. The plan also calls for becoming an SBA lender and offer commercial loans sometime in the future, said Rich Borland, Meriwest assistant vice president of business banking. “We saw a need when we discovered existing members were using their personal accounts for business services,” said Borland, a 33-year commercial retail banking veteran hired by Meriwest in late August. Borland said other motivators to launch the program include noticing “a cry in the marketplace for a personal touch on the business banking side” and the ripe market for Meriwest to expand. Even though less than 1% of its nearly 70,000 membership use their accounts for business, Meriwest found that between 10-15% had some type of relationship with small businesses: either they worked for one or had family members that owned them. Meriwest will join a number of area banks who have already jumped into the business services fray. In September, HSBC Bank USA assembled a banking team in San Francisco to serve mid-sized companies. The bank, a joint venture between Wells Fargo and HSBCU Group, recently sent some of its executives to China to meet with middle market corporate clients about their banking needs. According to the bank, many Bay area companies use warehouses in China to house their goods as a cheaper storage alternative before shipping them to the United States. Other recent area business services launches include Comerica with its new business checking account and Washington Mutual, which is offering a similar product. Borland said the credit union will have an edge over its competitors by capitalizing on an approach used by the industry since its early beginnings. “Credit unions have historically strove to do the personal touch,” Borland. “We just want to extend that to the business side. It’s lacking there.” That extension will be directed towards area doctors, attorneys and accountants early on, he said. Meriwest will initially court businesses that are less retail oriented because they tend to require a lot of cash handling and access to more branch locations than the institution has, Borland said. The emphasis will be on companies in the $500,000 to $10 million asset range that tend to rely more on credit cards and checks. Term loans will range between $10,000 and $250,000 with later commercial loans going significantly higher, he added. “The right combination of (lending) expertise and (savvy)” will determine the SBA and commercial loan offering timeframe. Down the road, Meriwest will also do merchant card processing which will likely by outsourced and offer online business banking and bill payment, sweep accounts and payroll services, Borland said. Meriwest’s latest addition of services is keeping pace with its growth since its founding in 1961. Chartered as IBM San Jose Employees Federal Credit Union, in 1971, it changed its name to IBM Norcal Employees Federal Credit Union as its member base expanded to Northern California. In 1975, the credit union became Pacific IBM Employees Federal Credit Union and added seven additional states to its member base. When Sun States Credit Union merged with it in 1980, new branches were opened in Los Angeles and Tucson, Ariz. In 1982, NCUA granted approval to bring in select employee groups and one year later, the credit union surpassed $100 million in assets. Over the next 17 years, the credit union acquired another credit union, changed its charter from federal to state, changed its name to Meriwest in 1999 and received approval to expand to five counties. Borland, who is a currently a department of one, admits it can be a challenge for credit unions to go into the business services marketplace but the timing couldn’t be better. “If you go back and look at history, everything was specialized,” Borland explained. “Now, credit unions, savings and loans, the Paine Webbers, insurance companies – all of them are in the financial services industry. The more others get into it, the more of a challenge it becomes but the only way credit unions can grow is if they expand in the marketplace.” As for community bankers crying foul over what some consider an encroachment on their business services territory with claims of an “uneven playing field,” Borland, the former banker, said competition is as American as apple pie. “The concerns from banks are no different from (those) they’ve had in the past,” Borland said. “The issue of taxation will continue to be addressed. Competition is the American way and credit unions are going into (business services) to grow and differentiate.” -

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