Maybe there will be a winner in stand-alone Internet banking. If so, the odds are good that it will be NetBank, one of the few, if any, standalone cyber banks that's making a profit.

With its strength, NetBank is taking advantage of the weakness of its competitors. At the end of March it swallowed up the business of CompuBank, another on-line banking company that had to throw in the towel. That added more than 50,000 deposit accounts to NetBank's book. At the end of last year, Atlanta-based NetBank had $980 million in deposits and 162,000 customers.

NetBank has avoided the errors made by Houston-based Compubank and most other independent cyber banks. In its attempts to lure customers, CompuBank overpaid. It offered rates of 4% on checking accounts, for example, along with bonuses to customers who brought in others.

NetBank had the advantage of getting into the space early—October 1996, and grabbed a large amount of publicity. And though it offers customers more than they would get at a traditional bank, it hasn't been giving away the store. The bank has shown staying power and it does make a profit, though "many want to challenge the quality of this profitability," says Paul Jamieson, an analyst at, Waltham, MA. That may be carping, he says. "It's a small bank and is profitable by generally accepted financial standards." Compubank, in contrast, lost $26 million last year.

Above all, Jamieson credits NetBank with remembering to act as a bank and not a dotcom. "They resisted the temptation to spend half their revenues on an ad running during the Superbowl," he says.

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