" In the News "

Michigan Banker September 1990 Vol.2, No. 9

West Shore Computer Services Into Its Third Decade
As A Data Processing Cooperative For Financial Institutions
By JEROME O'NEIL

SCOTTVILLE- Like most any business, West Shore Computer Services Inc. has experienced some "ups and downs" in the two decades that it has been in operation. Founded in 1969, West Shore Computer is a member owned cooperative that provides data processing services to financial institutions.

It presently serves the data processing needs of nine banks, seven of which are the ,owners' of the cooperative venture. At one point, West Shore had as many as 16 banks on its client list ... but that was many years ago and "before the holding company buyouts of our (independent banks) started occurring," explains Deborah Smith Olsen, president of Lake Osceola State Bank, Baldwin. Lake Osceola State is one of West Shore's clients and enjoys the distinction of being one of the service bureau's first members back in 1969.

It was a relatively daring decision by three community bank presidents that year which led to the formation of West Shore. The trio of bank presidents were: Duane Parkes Jr., of Manistee Bank & Trust (now First of America Manistee); Bruce Draper, of State Savings Bank of Scottville; and Robert S. Smith, of Lake Osceola State.

The three bankers had been approached by Financial Computer Services, Inc., of Fremont, Ohio. FCS was one of the first independent computer services established in the nation to work exclusively with financial institutions. FCS offered to open and operate a data processing facility in Scottville. It was proposed that the new facility would provide processing services to the three local banks.

Parkes, Draper and Smith said 'go.' It was an act of faith on their part because the three banks alone could not support the scope of services that would be placed in operation.Fully operational by November, 1969, the new facility soon attracted four more banks as customers and owners of the cooperative, too.

But 16 clients was as West Shore ever became. The holding company movement, just as it has brought about a substantial reduction in the number of community banks in Michigan, also eroded some of West Shore's customer base to a point where its clients number only nine.

After those early, formative years, West Shore has made some adjustments. "Our mid years," recalls Deborah Smith Olson, I I were a period of change. We dealt with new hardware, new software, the holding company (influence), and in house systems. However, (West Shore) has survived as a cooperatively owned data center and it is still a very viable alternative to contracting with a large service bureau or coping with an inhouse system."

Interestingly, Smith-Olson pointed out out, as change overtook the banking industry, only two of West Shore's clients left the cooperative to operate their own in house processing facilities. The other clients were taken over by holding companies which absorbed their data processing needs into their larger facilities.

Paul Rasmussen, who has been with West Shore from its beginnings and is now its president, points out that the cooperative has excess capacity and is looking to add new clients. It is the nature of cooperatives that the more clients served ultimately manifests itself in lower costs to all participants. West Shore is looking to add institutions "so that we may become even more efficient, which will be passed on to our users in the form of lower costs and technological advancement," Rasmussen said.

"We are prepared to take on new financial institutions," he continued. "They could range from small independents to mid size holding companies, and they could rely on West Shore merely for batch processing assistance or on line support, depending on location and preference.

Rasmussen and Smith-Olson suggested several reasons why participation in West Shore can be beneficial to other financial institutions. Included among their observations were:
1. It provides a contact with other bankers that may lead to collective solutions of problems and an exchange of operational ideas.
2. A cost savings results from group purchasing of supplies and equipment plus the shared cost of back up site, data processing audits, software purchases, maintenance contracts and other related consulting work.
3. Security problems are solved. These include consideration of off site storage of data, dual control and back up for personnel, and emergency operating plans.
4. Cost efficient, state of the art data processing that West Shore's present customers describe as being "dependable, accessible, accommodating and competitively priced," according to Rasmussen.

The seven member/owners of West Shore Computer are: Farmers State Bank of Breckenridge, First of America Bank Manistee, Kent City State Bank, Lake Osceola State Bank, Shelby State Bank, Sparta State Bank, and State Savings Bank of Scottville.

Paul Rasmussen is president and CEO of the cooperative. Mark Kerkstra is vice president of systems and programming, while Sue O'Connor is vice president/operations. Kerkstra also is the company's lead programmer. The facility's staff includes two other computer operators, five computer operators and a secretary, plus two fulltime and two parttime drivers.

A 12 member operations board, which includes representatives from all nine client banks plus three West Shore executives, provides input on all aspects of the business including software upgrading and processing decisions. The operations board meets once a month.

But a 7 member board of directors guides the course of West Shore. It is comprised of the CEOs of the seven banks that 'own' West Shore Computer Services.