In trying to leverage its status as the last locally owned bank in Jewell County, Kan., State Exchange Bank in Mankato needed an inexpensive way to extend its market to include the entire 910-square-mile jurisdiction.

The obvious solution — Internet banking — was far too expensive for the $20 million-asset farm bank, but the medium was right, in the form of OnlinEquity.com.

Last month State Exchange Bank became one of the first banks to sign on with the cooperative-marketing Web site, launched Oct. 1 by Equity Consultants Inc. of Glenwood, Iowa.

Philip Menhusen, executive vice president of State Exchange, said the bank has no plans to develop its own Web site; OnlinEquity.com will be the online channel it uses to “get our name out in the county.”

John Blanchfield, director of the American Banking Association’s Center for Agricultural and Rural Banking, said OnlinEquity is a LendingTree for farmers. Here’s how it works:

Equity Consultants assembles a network of lenders that provide underwriting guidelines and the ZIP codes of the communities they want to serve. Twenty have joined, said David McEvoy, the 15-year-old company’s vice president for media and advertising.

Borrowers go to the Web site to complete an application, and Equity Consultants matches their information with the banks serving their ZIP codes. Those whose lending guidelines complement the applicant’s needs are sent leads.

Though OnlinEquity is similar to LendingTree and other loan sites, it differs from the others fundamentally. Because farm loans are not commodities, applicants are directed only to banks serving the ZIP codes in which they live, and they must pre-qualify using the underwriting information supplied by the banks.

“That’s one thing the banks were adamant about,” said Gary L. Kruse, president and chief executive officer of Equity Consultants. “They didn’t want a lot of junk applications. If the applicants aren’t qualified, the banks don’t want them.”

Equity Consultants is not turning away any banks interested in joining OnlinEquity, but its focus is on community banks, particularly those with little or no Internet presence, Mr. McEvoy said.

“OnlinEquity gives them a chance to get into the Internet economy without a lot of expense,” he said. “They get visibility, and a chance to compete for loans they would not have had otherwise.”

Equity Consultants develops software for financial institutions. Its flagship product, Equity Manager, helps agricultural lenders assign a risk rating to loans, and has more than 2,000 U.S. and Canadian customers.

To generate more business and traffic, Mr. Kruse and Mr. McEvoy are encouraging Equity Manager customers to enroll with OnlinEquity and are trying to link the Web site with popular farming portals.

But Mr. Kruse said he wants to avoid an agriculture-only label for OnlinEquity and noted that the site emphasizes business loans as well as farm credit. Indeed, it offers a range of products, including home and auto loans, but its focus will be small business and agriculture, he said.

Many farmers use the Web to buy seed, fertilizer, and other supplies. The U.S. Department of Agriculture says 29% of the nation’s 1.9 million farms used the Internet in 1999.

Even though just a handful have signed contracts with OnlinEquity, many of the bankers that have looked at it say they like it.

“We’re considering it,” said Jim Bakken, vice president of $28 million-asset Prairie State Bank in Milan, Minn. “We’re 150 miles west of Minneapolis and St. Paul, and there is nothing else out here.”

For Prairie State and most other community banks, cost will in large part determine whether they join OnlinEquity. There are no up-front charges, but the leads cost banks $10 to $100, depending on loan size.

Mr. Kruse says Equity Consultants has paid all of its development costs — “It’s been expensive, I’ll tell you that” — and that he is arranging a round of private venture capital financing.

“I hope to be able to announce something in the next month,” he said.

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