Carolina First Corp. is expected this week to test investors' appetite for electronic banking by breaking off its Atlanta Internet Bank and taking it public.

Atlanta Internet-which would become a unit of new holding company NetBank Inc. and trade on Nasdaq under the symbol NTBK-would offer round- the-clock Internet-based banking services.

The initial stock offering will be three million shares priced between $10 and $12.

The IPO, led by Morgan Keegan & Co. and Interstate-Johnson Lane Corp., is aimed at raising $30 million to capitalize the bank, which, as a unit of Carolina First, managed 2,680 accounts and $43.6 million of deposits.

Carolina First, a $1.6 billion-asset bank based in Greenville, S.C., said it expects to own about 19% of the Internet bank's common stock.

The market for Internet banking looks promising. Forrester Research Inc. predicts there will be 9.7 million electronic banking households by 2001, and the vast majority of them will use the Internet as a preferred channel for PC banking.

However, Wall Street has shown some skepticism toward Internet banking and electronic commerce.

Neeraj K. Vohra, analyst at Friedman, Billings, Ramsey & Co. in Arlington, Va., said several companies-including the first Internet-based bank, Security First Network Bank-have floundered in the slowly developing market.

He said investors probably would consider NetBank's initial share price reasonable, based on the company's earnings forecasts of about 50 cents per share next year and $1 per share in 1999.

Still, he said, the share price was "probably very richly valued on the basis of revenue multiples," and he said investing in the company may be a "roll of the dice."

Not surprisingly, Carolina First executives are more optimistic about the offering.

"There is plenty of market opportunity out there for everybody," said Mary Gentry, treasurer at Greenville, S.C.-based Carolina First.

"The nice thing for (Atlanta Internet) is that it will be starting out with close to $44 million of deposits, and we (Carolina First) will sell them some loans, so they should start out profitable."

She said that because Atlanta Internet does not operate branches, its operating costs are lower than those of a traditional bank.

According to a study from Booz, Allen & Hamilton in New York, Internet- based banking transactions cost a bank about a penny each.

By contrast, automated teller machine transactions cost about 27 cents each, telephone transactions cost about 54 cents each, and branch-based transactions cost $1.07 each.

Vendors involved in Atlanta Internet include AT&T Advanced Network Solutions, which is the bank's lead technology provider, and Edify Corp., which provides the bank with Electronic Banking System software.

In addition, Checkfree Corp. provides bill payment services, and Bisys Group Inc. provides core processing services.

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