Rock Financial Corp. said it plans to compete "head to head" with Internet lenders after closing 12 of its 15 branches and beginning a $20 million campaign this month to promote its on-line lending site.

Rock's chairman and chief executive officer, Daniel Gilbert, said the closings are consistent with the company's focus on its Internet loan site. He said the new strategy should make Bingham Farms, Mich.-based Rock competitive with the likes of newly public E-Loan Inc.

"I think horses and buggies existed with cars but not for long," Mr. Gilbert said. "It's a burden to walk into a branch for a paper transaction, and as long as you can give that service via phone or Web site, why waste half an afternoon?"

Rock Financial said it expects to take a one-time charge of $3.5 million to $4 million in the third quarter related to the branch closings but expects to offset this with reduced expenses.

The company said some employees would be reassigned to the three remaining branches, a joint venture with Michigan National Bank, or the company's Web and call-center operation. An unspecified number will be dismissed.

The company attributed sharp declines in its stock price in May to investments it made to position itself as an on-line lender, including the new "Web-call" center and corporate headquarters and advertising costs.

Though Rock's stock has not fully recovered-it was trading at $20.5625 a share at midday Monday-Sean C. Davis, an analyst at Ferris Baker Watts in Richmond, Va., said "it makes all the sense in the world" for Rock to go on-line now.

"The Web is the way the mortgage industry is going. One out of every three applications is expected to be completed on-line by 2005-that's 30% of a trillion dollar market," Mr. Davis said. "But this is a more volatile interest rate environment right now, so this is a Herculean endeavor for Rock at a difficult time."

Sonny Spearman, Rock's vice president of Internet marketing and content, said the money spent to promote its brand name is vital because "there isn't one right now.

"There is probably a spot for one to three big on-line players in this industry," Ms. Spearman said. "It's the wild, wild West out there right now, and there aren't too many people with pickaxes."

As for competing with its bigger-name competitors and the even bigger brand-name banks and thrifts, Rock maintains that it is still in the running.

"Do they have deeper pockets than we do? Yes, maybe. But when people think of on-line mortgages, there is no leader out there," Ms. Spearman said. "What happens at banks is that they give you more customer service than you want, until they have your deposit or account. The Internet doesn't do that."

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