SAN DIMAS, Calif. – WesCorp has come roaring onto the Utah item processing scene picking up the $2.7 billion America First FCU and the $1.3 billion Mountain America FCU as clients. The two credit unions are the state's largest and account for four million items (both in-clearing and out-clearing) a month. According to WesCorp their volume represents 45% of all Utah credit unions' item processing activity. America First moved from the Fed to WesCorp, while Mountain America FCU, whose CEO Gordon Dames is on the WesCorp board, moved from SunCorp. There are 79 credit unions in Utah, and 77 of them currently process with SunCorp. SunCorp became the home state corporate for Utah after acquiring Rocky Mountain Corporate in 2001. Eric Kenealy is disappointed about the decision America First and Mountain America made, but he respects the competition and says ultimately competition results in better deals for credit unions. “I know we had good pricing, we have good service, we use the same technology (as WesCorp). We came up on the short end of the stick. On the pricing side, there wasn't anything we wouldn't have done to keep the business,” he said. Kenealy said the most disappointing thing to him is that SunCorp and WesCorp couldn't come to some cooperative agreement. “Now you're going to have two item processing shops in one market,” he said. Both WesCorp and SunCorp officials said there was talk about a cooperative deal, but an agreement couldn't be reached. Dames was very blunt about his thoughts on the situation – he thinks corporates need to partner on item processing or merge operations. “That's a business that's declining more and more as people use debit cards and alternative methods such as bill pay. It's going to be pretty tough for a smaller processor to keep up with it unless they add more clients. All these corporates should be joining together instead of doing it individually,” said Dames. “WesCorp has the processing centers and is attracted the clients you need to add volume and become more efficient,” said Dames. Dames said from being on the WesCorp board he is intimately familiar with the products and the people and believes it is one of the corporates that will survive in the future. “If I look into my crystal ball there is going to be a reduced number of corporates, whether it will be six or 10 of them, my feeling is why wait until the transition process, let's begin the process now,” said Dames. America First FCU President/CEO Rick Craig was out of the office as of press time and could not be reached for comment. Dames doesn't think the decline in checks is going to be as gradual as some may think. He noted that his CU has doubled the number of checking accounts over the last five years, but the number of checks has stayed steady. “You would think it would go up, but they're using other methods. In that same time our bill pay users went from 3,000 to over 12,000,” he said. Kenealy said SunCorp isn't going anywhere and with 77 of the state's 79 CUs as clients, it is still the dominant item processing provider. He pegged SunCorp's item processing volume in Utah at 7.5 million items a month. Kenealy said the corporate has a state of the art facility in Salt Lake City that employs 50 people, and it spent $1.5 million last year upgrading the item processing software. WesCorp says it is taking a unique approach in Utah that will eventually take advantage of changes brought on by Check 21. WesCorp is only opening a remote capture office in Utah, not a full blown item processing center like it has in Seattle and San Dimas. “This kind of an arrangement is sort of a new blue print for WesCorp, attempting to take advantage of our economies of scale and our large branch processing sites that are already established. Whatever can be transferred to Seattle and San Dimas, will be,” said Jill Pierce, director of WesCorp's item processing operations. Pierce said the reason the remote capture approach works is because though everyone always talks about item processing as being a geographic business, meaning you need to be in the area, that's only true on the collection side, said Pierce. “That's what's unique about this. It's a pure collection site. For in-clearings we will transport items from the Salt Lake City Federal Reserve to one of our branches for processing. We do that already for Idaho,” said Pierce. Though WesCorp is starting off with just two Utah clients, Pierce described the interest from others in Utah as “dramatic.” WesCorp SVP of Correspondent and Membership Service Tony Kitt said the cost of transporting the in-clearings will decrease as imaging picks up. “What we believe will happen over time is image exchange will become a more viable option. The cost to ship in-clearings back and forth rather than the physical check will decrease costs,” said Kitt. Kitt noted that America First was not using a corporate for processing, so WesCorp stayed true to its philosophy of going after business not in the corporate network. “America First was processing with the Fed, outside of the corporate network. They were looking for a change, and we were courting them for awhile, so it was a good opportunity for us,” said Kitt. WesCorp plans to have the remote capture branch operational by early August. Pierce said they will likely start out with a staff of 11. [email protected]