A small cadre of financial institutions is working to extend the ideal of community banking to cyberspace by offering low-cost Internet access to residents of the areas they serve.

Leading the charge are Britton & Koontz First National Bank of Natchez, Miss., and Apollo (Pa.) Trust Co.

These banks say that by giving customers and noncustomers alike a window to the global computer network, they serve the community while also positioning themselves to garner new customers and fee income.

Apollo Trust provides Internet access to about 80,000 residents of rural Pennsylvania. The service had its genesis in a graduate thesis on home banking done by Raymond Muth, the bank's executive vice president.

The thesis project started out in 1994 as an electronic bulletin board system on which people could post messages about the community or chat with one another. The service, Mr. Muth said, was wildly popular and developed an almost cult-like following among local youths.

"Five months into it, we started hearing about this word called 'Internet,"' Mr. Muth said. "We thought, wouldn't it be neat, since we already had this system, to begin to give people Internet access."

Initially, the bank provided Internet access solely to its customers, but the Armstrong County government asked the bank to extend it to others as a community service. "We give everyone an hour a day," Mr. Muth said.

State banking regulators have forbidden Apollo from charging for the access, but the bank is petitioning for a change.

Until then, Mr. Muth said, the experiment is being viewed as "a CRA project."

Apollo is swamped by requests from local schools and libraries for additional free time. The local school district has applied for a state grant so that all students and parents can have 24-hour access to Apollo's system, Mr. Muth said.

And one observer was so impressed by Apollo's civic spirit that he cited the service as his reason for opening a $300,000 certificate of deposit - at a time when the bank held only six CDs over $100,000.

If Apollo does gain permission to charge for the service, Mr. Muth said, "we anticipate it will become significant fee income for the bank."

In Mississippi, regulators have allowed Britton & Koontz to charge for Internet access, and the service has become a revenue generator as well as a point of civic pride.

"We're a town of about 20,000 in the southwestern part of the state," said chief executive W. Page Ogden. "Until we came along with our site, there was no access to any of the services - like America Online or Compuserve - without a long distance telephone call."

One reason for offering Internet access is exposure: The first thing the service's 400 subscribers see when they tap into the Internet is the bank's home page.

"From a marketing standpoint it's been a wonderful thing, because our bank has become the talk of the town," Mr. Ogden said

"We are perceived as being a bank on the cutting edge."

This fall, Britton & Koontz plans to introduce Internet banking to its customers.

At Apollo, based 35 miles northeast of Pittsburgh, providing Internet access also represents a milestone toward on-line banking.

A critical component of the nascent program is the fact that the bank's own Web site is the consumer's initial interface.

"I don't think it does a community bank too much good to put a Web site out there unless they have a way to bring customers into that Web site," Mr. Muth said.

"If customers are getting access through Prodigy or Compuserve, those services will advertise the big banks," he added.

"If you're providing the access, you get to be the one who controls it."

A third community bank also has hit on an innovative way to exploit the Internet: Visalia (Calif.) Community Bank is building Web pages for local businesses.

The Kuppa Kuppa Coffee Shop, the DG Insurance Agency, and Mr. Sunshine's Fruit Packages were among the first local companies whose Web pages were designed by the bank. The bank's own Web site advertises the companies' sites and offers hyperlinks.

Service fees have been kept to a minimum: as low as $50 a month for corporate customers of the bank.

"If you're a customer of the bank, it's a real low rate," said Suellen Jackson, a vice president at Visalia.

"If you're not a customer of the bank, we charge what's being charged out there, so we have become a profit center."

In setting up the service, the bank didn't have to look far for talent. A computer programmer who already worked in back-end systems had the necessary software expertise. Another unlikely source of Web mastery was "a young kid who's 18 years old who used to do our printing for us," Ms. Jackson said.

"It's turned out to be a really fun, productive experience and we like the response we're getting from our customers," she said.

"It's given our bank a different image."

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