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Rethink Your Online Strategy to Target Niches

Donkeys and deposits usually don't go together-unless you're a customer of Redneck Bank, that is.

This separately branded online division of Bank of the Wichitas takes what can only be described as a zany approach to "personal bankin' bid'ness."

Redneck's homepage features a laughing donkey telling visitors to the site: "We're a real bank an' we're not horsin' around," and "Don't get saddled with stiff-necked bankers."

This creative spin on the ubiquitous tactic of Internet banking is working well for Bank of the Wichitas in tiny Snyder, Okla., even if it's not a fit for every bank.

The bank had little room to grow deposits in its community of 1,500 people.

But since it launched Redneck in January 2009-as a way to target "people with a sense of humor" nationwide-deposits have grown 36 percent to about $104 million. Todd Huckabay, the president and CEO of the $123 million-asset Bank of the Witchitas, attributes about 95 percent of that jump to the online-only division.

"We decided if we were going to market nationally, we needed a bank with national flavor," says Huckabay, whose family owns large stakes in two other Oklahoma community banks, both of which also have separately branded Internet operations meant to appeal to a particular niche. All America Bank in Oklahoma City operates an online divison called AmericaNet Bank, which has a patriotic theme. And Southwest State Bank in Sentinel uses its Evantage Bank division to target technologically savvy customers.

The desire to attract deposits from outside its market area prompted Flushing Financial Corp. to adopt a similar strategy.

Its challenge didn't come from being in a small town, though. Flushing operates in the New York suburbs, which offers plenty of deposit potential. But competition is stiff and rates are elevated.

John R. Buran, president and CEO of the $4.1 billion-asset Lake Success, N.Y., thrift company, says it created a separate Internet brand in late 2006 to attract cheaper deposits from around the country, without having to build branches.

Flushing calls its online-only division iGObanking.com to convey the idea of moving forward.

The iGO deposits made up about 12 percent of Flushing's overall total at the end of 2009, according to its annual report, which offers the most recent breakdown available. The online deposits grew 48 percent, to $323.7 million, from a year earlier, compared with a 9 percent increase for the thrift's overall deposits.

Internet-only banking is not a new idea. But today's online bank brands represent a new evolution of a model that has proved difficult for some banks in the past. For example, the former Bank One Corp.'s Internet version, Wingspan Bank, never caught on with consumers and folded in 2001. And on the community bank side, Brookline Bancorp in Massachusetts shuttered its online brand-Lighthouse Bank-in 2001, a year after it launched.

These days deposits have been flowing in so fast at Redneck that the bank "sold out" its 5.25 percent interest rate "Rewards Account" in May 2009 and stopped opening new "Mega Money Market" accounts last May, which had been paying about 3 percent.

"Our balance sheet was getting very heavy with Internet deposits and we didn't feel right lowering interest rates further," says Huckabay, who considers the strategy an overall succeess.