A small Ohio bank is seeking to build an online banking business by marketing high-yield deposit accounts and consumer loans to college alumni groups.
Sutton Bank in Attica has established a partnership with DePaul University in Chicago and is discussing similar ventures with other colleges, said J. Anthony Gorrell, its senior vice president and chief financial officer.
Sutton and DePaul opened DePaulBank.com on Jan. 15, primarily targeting the universitys 100,000 alumni. The full-service online bank is a division of $195 million-asset Sutton Bank, which has seven branches in Seneca and Huron counties.
Its like having an eighth branch, Mr. Gorrell said. And DePaulBank.com, with its ready-made community of potential customers, could reduce Suttons reliance on high-cost brokered deposits, he said.
The online banks progress has been modest, but its first major advertising campaign will not begin until later this month. Mr. Gorrell said he expects to achieve a 2% penetration rate during the online banks first 12 months. Subsequent marketing efforts will be aimed at DePauls faculty, staff, and 22,000 students, he said.
Kenneth A. McHugh, DePauls Universitys executive vice president for operations, said it is eager to improve relations with its alumni. We want to stay connected to the people who attend the university, he said. Alumni donations are very important to our continued success.
Mr. Gorrell said the university receives a fee for each customer the bank signs up, as well as a percentage of each retail sale made via shopping links from the Web site. He declined to disclose figures.
Mr. McHugh said DePaul also wants to use the online bank to provide low-cost financial services to its students, including debit cards, no-fee automated teller machines, and eventually a low-interest credit card for tuition payments.
Lending our brand name to an Internet bank made a lot of sense, Mr. McHugh said. DePaul prides itself on its high-tech prowess, boasting one of the largest computer science schools in the country, he said.
DePaulBank.com is only the second private-label online bank at an American college. Drexel University in Philadelphia opened AJDrexelBank.com in November in partnership with TheBancorp.com of Wilmington, Del.