Union Bank Outlet to Cater to Low-Income Customers : Community: Check-cashing center is intended to give residents an alternative to high-cost services.

With an eye to winning the loyalty of a largely untapped group of potential customers--Los Angeles’ working-class immigrants--Union Bank on Monday launched into full-scale competition with the high-cost check-cashing services that substitute for banks in many lower-income neighborhoods.

In a shopping district of heavily Latino Huntington Park, the bank opened what may be the state’s first stand-alone center combining check-cashing and basic banking services.

Community activists have long decried the absence of traditional bank branches in many lower-income communities. And they have objected to the expense of check-cashing outlets, which charge an average 3% to 4% fee to cash payroll, personal, government and public-assistance checks, as well as additional fees to execute money orders their customers use to pay utility and other bills.

“That’s a hell of a tax, 3%,” said Richard C. Hartnack, Union Bank’s vice chairman and group head of community banking, who presided at the ribbon-cutting for the bank’s new center.

Hartnack said fees at Union’s Cash & Save center will average 1.25% to 1.85% of a check’s face value; customers who join a check-cashing “club” for an additional $12 to $15 a year will also get several free money orders each time they use the service.

Union Bank’s fee structure will be slightly less expensive than that at Huntington Park’s branch of Nix Check Cashing, a 23-location Southern California chain. Nix charges a flat 1.6% to cash a check, plus 39 cents for money orders up to $1,000 for established customers, and up to 99 cents per money order for others.

“It is competition, but we try to give our customers the best service we can,” branch supervisor Mari Juarez said. “Most other places don’t have the special services that we have.” Among others, she said, her branch offers customers picture identification cards and fax services and accepts utility bill payments.

Four other banks have branches in the city.

Union Bank already operates three Cash & Save outlets out of existing full-service branches in Hawthorne, North Hollywood and Bellflower. Besides check cashing, the Huntington Park center will offer low-cost savings accounts and secured credit cards--that is, cards enabling customers to charge only as much as they have on deposit. The center will also take mortgage and consumer loan applications.

“This is an important step in providing competition to check-cashing services,” said Robert Gnaizda, general counsel for the San Francisco-based Greenlining Coalition.

“But it is not a substitute for opening a full-service branch,” he said, noting the economic stigma of going without a checking account.

Hartnack sought to present the new center as a reasonable middle ground between opening a new bank branch and leaving communities such as Huntington Park underserved. Union Bank spokespersons say the institution plans to open more such centers “in areas with high demand.”

“There’s no doubt that it’s a losing proposition to go into an existing low- and moderate-income community that’s built out and build a stand-alone branch,” Hartnack said. “You would be serving a group that doesn’t want full banking accounts but (rather) check cashing, low-cost savings accounts and secured credit cards. It would be like opening a swap meet in Beverly Hills.”

For all that, he said, Union hopes to eventually convert many of its check-cashing customers into regular banking clients with checking accounts and unsecured credit.

“In part this will be an educational process,” Huntington Park Mayor Richard Loya said. “A lot of Latinos don’t like banks--maybe because they were cheated by the banks in Mexico.”