UKROP'S SETS PARTNERSHIP FOR CO-OWNED STORE BANKS

LAURA REINA

RICHMOND, Va. -- Ukrop's Super Markets here has entered into a partnership with a Memphis, Tenn.-based financial institution, National Commerce Bancorporation, to charter a new federal savings bank, First Market Bank.

Each First Market Bank branch will be a full-service bank, and will operate out of a Ukrop's store location.

James Ukrop, vice chairman and chief executive officer of Ukrop's, said that the retailer hopes to have First Market Bank branches operating out of 10 Ukrop's stores by late fall, pending regulatory approvals. By this time next year, Ukrop's hopes to have automated teller machines with the First Market Bank banner at all 24 of its stores.

Ultimately, Ukrop's executives plan for all stores to have manned branches offering the full range of traditional banking services.

"It's very user-friendly. There's an ATM, and there are financial-service representatives there to assist you. You can get a car loan, you can make a deposit, you can get a home-equity loan," said Bob Ukrop, president and chief operating officer of the chain.

"Our first commitment is always to our customers, and we are very excited about bringing them the convenience of banking where they already shop at times that are convenient to them," James Ukrop said.

The partnership between the supermarket and the financial institution is the first of its kind in the country, according to the companies. Traditionally, banks rent space within supermarkets and, as a result, the supermarkets have no equity interest in the banks they house, nor do they have a say in how the banks are run.

Bob Ukrop noted that "supermarkets have [had banks on-site] for a long time. What's unique about this is the fact that we're actually an owner."

In the interests of providing better customer service, Bob Ukrop said that Ukrop's had been searching for a local bank to operate out of its locations for a while. "We posed to [banks] that we wanted to participate in both the risk and reward," he said, but the banks Ukrop's approached were only interested in leasing space from the retailer.

The retailer was then approached by NCBC, a financial institution that has traditionally leased space in supermarkets, about a partnership. NCBC has been operating its own bank branches, National Commerce Bank Services, in supermarkets for about 10 years, and has also acted as a consultant to banks interested in operating branches out of supermarkets.

"We're their first equity partner," said Bob Ukrop.

"NCBC is the premier operator of in-store banks because it is fully committed to low-cost retailing of financial services that most people use. Because of that, we will be able to offer our customers attractive rates on deposits and loans. It's an ideal partnership for Ukrop's customers," said James Ukrop. NCBC is a $4.4 billion banking company with 109 branches, including 92 in-store locations, in five states.