When Atlanta Internet Bank opened its office in Alpharetta, Ga., two ladies came in to cash a check.

An employee obliged, but D.R. Grimes said, "Don't tell anyone."

The vice chairman and chief executive officer of Net.Bank, the holding company for Atlanta Internet Bank, preferred that they spread the word about the on-line service that was the institution's main reason for being.

Net.Bank was incorporated in 1996, and the bank opened in 1997 under the charter of one of its owners, Carolina First Bank. That was a year after the one often called the first Internet bank, Security First Network Bank, opened in Atlanta.

Atlanta Internet, like Security First, eventually received its own federal savings bank charter.

Unlike Security First, which was described as a "proof of concept" for technology marketed to other banks, Atlanta Internet wants to be just what it is, and Mr. Grimes represents a management team deeply rooted in conventional banking systems.

"I am never too impressed with the development of technology for its own sake," said Mr. Grimes, 51, who worked for Trust Company Bank, now part of SunTrust Banks Inc., for 12 years as manager of computer systems and programming. He also served as executive vice president of Servantis Systems Inc., the Atlanta software company acquired by Checkfree Corp. in 1996.

He said the background gave him an appreciation "of banking as an industry and its importance to people in this country."

A native of Tulsa, Okla., and a 30-year resident of Atlanta, Mr. Grimes came in to the Internet business with T. Stephen Johnson, president of the consulting firm T. Stephen Johnson & Associates. The two men, who worked together at Trust Company in the 1970s, jointly came up with the idea of an all-Internet bank.

Mr. Johnson, the bank's chairman, secured funding from Carolina First Corp., a $2.5 billion-asset holding company in Greenville, S.C., which today owns 18% of Net.Bank and has four directors on the 12-member board.

"Internet banking was an incredible breakthrough," said Mr. Grimes. "In the past year and a half we have proven beyond doubt that the Internet is a successful medium to deliver banking. It can be profitable and opens up an enormous market."

Like most Internet start-ups, the bank has room to grow. It lost $5.6 million last year but had no earning assets before summer.

It is now up to $181 million of assets and 9,400 customers. Analyst John J. Mason of Interstate/Johnson Lane of Charlotte, N.C., which co-managed the Net.Bank initial public offering, anticipates deposits will reach $240 million by yearend, up from $148 million. The company is aiming for 65,000 customers by 2000.

Mr. Grimes' initial assignment was to take the company public. In the IPO on July 28, 1997, 3.5 million shares were issued at $12. The stock is now around $29.

Though Mr. Mason rates Net.Bank a long-term "buy" with a 12-month target price of $35, John B. Moore of Morgan Keegan & Co. of Memphis, which was the lead underwriter in the IPO, recently downgraded it to "market perform" from "outperform."

That was based on price alone, not performance, Mr. Moore said. "We feel good about the management and business plan." He said community banks normally do not grow this fast.

Net.Bank fields an average 1,200 e-mails a week and opens 200 accounts on-line. The biggest drawback of the Internet channel, Mr. Grimes said, is the lack of a true application form.

"I would still like to see us streamline account setup," perhaps relying on digital signatures, he said. "It's not like buying a book, a two-minute thing. We're asking people to entrust us with their money."

A minimum $100 is needed to open an account. The bank does a credit check and verifies employment.

The Internet is also the preferred advertising medium. "It is cheaper to take an Internet customer and make him an Atlanta Internet Bank customer than to find someone and teach them how to use the Internet," Mr. Grimes said. "I believe we've done more marketing on the Internet than any bank anywhere" - at least of this size.

Working with the agency K2 Design Inc. of New York, Atlanta Internet has been advertising extensively since November. Its banner ads appear on about 40 Web sites, including those of Microsoft Investor, Money Magazine, Motley Fool, and Weather Channel.

"The numbers we have indicate that in November the bank was getting 400 new customers a month, about 10% of its installed base," said George Kivel, director of research for Mainspring Communications Inc., a new Internet consultancy in Cambridge, Mass. "Since the advertising campaign, Atlanta Internet Bank is getting about 800 new customers a month, a little more than 10% growth."

The analyst estimated the bank was spending a high $180 per acquired account, but the average account balance exceeds $15,000, and it is a savvy demographic, Mr. Grimes said.

The average Atlanta Internet Bank customer is 40 years old; a manager, professional, or technical person; has an annual income over $60,000; and owns a home.

The bank offers the common range of deposit and savings accounts, overdraft protection, mortgages, other loans, and a Visa check card. Credit cards will be launched this summer. It relies on Nova Corp. for check clearing and statement production. Uvest Investment Services has sold Net.Bank the rights to "private-label" its Internet brokerage service.

This week, Mr. Grimes said, the bank added the "twist" of allowing securities to be purchased by debiting a checking account.

Net.Bank has 20 employees, 10 in customer service, handling customers in all 50 states plus about 100 from other countries.

"We are the most national of national banks," Mr. Grimes said. "We believe the one thing that can differentiate us from the huge, monolithic banks is customer service with a personal touch."

Because much of the operation is outsourced, chief technology officer Tom Cable must manage external relationships to keep service levels high. Bisys Group Inc. handles the account processing portion of the Web site, and AT&T is the Web host for marketing purposes.

Checkfree Corp. processes electronic bill payments and ultimately will provide a bill presentment service. Edify Corp.'s Electronic Banking System is the banking platform.

J. Robert Jones, senior vice president of business development at Bisys, is also a stockholder in Net.Bank and a friend of the founders. "The concept is great, the service is wonderful, and it's always as close as your terminal," Mr. Jones said.

He called Mr. Grimes "extremely impressive and knowledgeable, a neat combination of banker, technical person, and marketer." Mr. Jones described the Johnson-Grimes tandem as "Homer and Jethro with brains," a reference to an old country music and comedy act.

Mr. Grimes said he was pleased that Security First is being sold to Royal Bank of Canada, because it competed for attention with Atlanta Internet and lost money, which made it "difficult for people to understand how we could make money."

"The key to being successful is to take our cost advantage and give our customers higher interest rates (on savings) and our shareholders higher profitability," Mr. Grimes said.

Future revenue opportunities could come from selling on-line mortgage application software to brokers and from establishing a partnership with a travel planner to serve customers over the Internet.

Mr. Grimes sees his strongest competitors as on-line brokerage firms, though other Internet banks are expected to open in the next few months.

Mr. Grimes points to Charles Schwab & Co. as particularly "willing to experiment, test the limits, and offer the strongest approach to complete financial management from the customer's point of view."

But he added, "you don't have to be huge to be successful."

"We have the opportunity to cross-sell more than in a physical branch, and we don't have to deal with the distribution of products and services to branches," Mr. Grimes said. On the Internet, "the customer is directly in touch with his banking records, and there is no middle man."

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