Magazine article American Banker

Southwest Community Bets on Check Processing

Magazine article American Banker

Southwest Community Bets on Check Processing

Article excerpt

A $94 million-asset bank in the San Diego suburbs is making a name for itself in a line of business still considered the territory of big banks: check processing.

Four-year-old Southwest Community Bank in Encinitas, Calif., is the founder and majority owner of Financial Data Solutions Inc., which uses imaging technology to process more than four million checks a month for about 15 Southern California banks and credit unions.

Southwest Community and its minority partner, Business Bank of California in San Bernardino, in March opened their second Financial Data Solutions office, in the Los Angeles suburb of El Monte.

Steve Didion, director of bank research at Hoefer & Arnett in San Francisco, said it is unusual for a data processing partnership to be headed by a bank of Southwest Community's size.

"It's very rare that Southwest is driving the ship because it takes a bit of expertise to do that and it also takes some big up-front spending." Mr. Didion said. "Most new banks would usually be customers of centers like this, not founders."

Leading the venture is Frank Mercardante, Southwest Community's president and chief executive officer. He has directed data processing centers at banks since 1967.

After starting his career in the data center at the former San Diego Trust and Savings Bank, Mr. Mercardante took over a similar operation in 1972 at the former Southwest Bank in nearby Vista. By the time Security Pacific National Bank (now part of Bank of America Corp.) bought the $500 million-asset Southwest Bank in 1989, the center was processing items for more than 140 financial institutions in six western states.

Mr. Mercardante joined the newly formed Southwest Community in March 1998 and shortly thereafter persuaded its board of directors that he could repeat his earlier success. …

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