Banks for pet lovers, golf nuts and more
By Laura Bruce • Bankrate.com

If you're a David Bowie fan, or a golf nut, or a pet lover, it might seem like a fun idea to put your money in a bank that affiliates itself with Bowie or golf or pets. But do your homework -- make sure the bank has the backing to be there tomorrow when you click onto your account.

Niche "banks" are a mixed bag, and some of them aren't separate banks.

Pet Lovers Bank is really just a service of Foothill Independent Bank, a Southern California brick-and-mortar facility with online banking. Your checks will feature a picture of your dog, cat, bird, armadillo or whatever nonhuman creature lives with you.

Pet Lovers Bank focuses on checking and depository services. ATM cards, consumer loans and all other banking products come from Foothill -- an institution that gets four (out of five) stars in Bankrate's Safe & Sound rating system.

"We think we're the first bank that's recognized pets play a significant role in the family, and how a bank can address those needs," says marketing director Dena Smart.

Pet Lovers bank helps customers save money by arranging for discounts with partners who provide pet insurance and other services.

By adding Pet Lovers, Foothill has gone from a Southern California bank to one that has attracted customers from around the country, according to Smart.

Bowie bank leaves the stage
David Bowie fans apparently aren't as attached to Ziggy Stardust as pet lovers are to their four-legged friends.

Not too long ago you could click on www.BowieBanc.com and find BowieBanc, which was backed by USABancShares, an online bank. The site offered loans, CDs, checking, savings and an ATM card with a creepy-looking picture of Bowie. Click there now and you'll go to USABancShares -- with no mention of BowieBanc anywhere on the site.

Bank officials didn't return our calls, but BowieBanc has, reportedly, been folded into USABancShares, which is being investigated by the FDIC for alleged violations of banking regulations.

Customers who deposited money with BowieBanc don't need to worry -- it's FDIC insured. But it will serve as a heads-up to a lot of people that when it comes to banking, pay attention to what's really important.

"I think of them like Nokia phones have different color face plates. They're cosmetic changes," says James Van Dyke of Jupiter Media Metrix, a financial services consulting firm.

"People don't choose a financial institution for cosmetic reasons, and if they do, they're probably pretty flighty. The person who chooses a bank because it has David Bowie's picture on its site doesn't fit the profile for making financial decisions for the right reasons," says Van Dyke.

That's not to say Van Dyke doesn't believe there's a role for niche banks.

"We believe there's an opportunity for niche, or affinity, banks, as we call them. But to succeed they have to answer yes to these two questions. Are they targeting a unique audience, and does the unique group have a set of common and compelling needs?"

Alternative-lifestyle banking
A bank that answered "yes" to both questions is G&L Internet Bank.

G&L marketed itself to gays and lesbians. The bank is still functioning, but officials are exploring options, including sale or liquidation.

Spokesman Seth Gordon says the overwhelming reason the bank couldn't survive is the economy.

"It's been a very tough time for pure-play Internet banks. Some of the huge, well-funded ones have tanked. We were well capitalized, but not lavishly so. We weren't a spin off or outgrowth that had a financial cushion."

Analysts were stunned G&L didn't make it.

"G&L Internet is very surprising to me," says Christine Barry of Meridien Research. "G&L had a strong argument. When these couples go to a regular bank for a mortgage, they're not considered a couple so their incomes aren't combined. At G&L they're regarded as a couple, so it's easier for them to get a mortgage."

G&L is hoping to be taken over by a larger financial institution, but Gordon thinks prejudice against gays may be a hindrance.

"If there were another niche that had as much promise and logic it would be picked up by a mainstream institution. There's historic queasiness about overt gay marketing. Big banks might look at G&L as a profitable part of their offering, but because of an ongoing concern about being red-flagged to other groups, wouldn't want to get involved."

Keeping its head above water is tough enough for any niche bank, but if it's strictly an Internet bank, survival can be even more difficult.

Todd Davenport, an analyst with SNL Securities, says regardless of how well they do generating deposits they have a hard time generating profitable assets.

"Banks make money by capturing the spread between the interest they pay on deposits and the interest they make on loans. A consumer is far more likely to put their dollars in an Internet bank than they are to go there and get a loan. As a result, they have to buy their interest-earning assets on the secondary market in low yield mortgage-backed securities," says Davenport.

Banking for the greens
Golf Savings Bank, which has acquired 1,500 customers, is hoping to avoid that problem. The bank opened in June 2000 when Lynnwood Mortgage, based in the Northwest, was converted to a full-service bank.

"The first year was spent just getting it organized," says vice president Rob Fuller. "It's a different culture going from a run-and-gun mortgage company to a regulated savings bank."

While the bank has no plans to offer retail consumer loans, its bread-and-butter side of the business is going strong, Fuller says.

"We do residential construction loans, home mortgages and home equity lines. Revenue isn't a problem for us -- we're profitable. We're looking to expand the deposit base and grow our customer base."

Fuller says Golf Savings Bank, which offers full banking services at its headquarters in MountLake Terrace, Wash., and is now also online, plans to offer a debit card in 2002.

Just as Pet Lovers Bank offers discounts on pet-related products, Golf Savings Bank saves customers money when they're teeing it up on courses in the Northwest. If that interests you, don't be afraid to open an account, but make sure the bank is sound and that it meets your banking needs.

If you want a full-service bank, don't settle for less. It's generally easier to get a loan or a mortgage when you have an established relationship with a bank through a checking or savings account, a credit card or a CD.

Bankrate's Safe & Sound bank, thrift, and credit union ratings can help with researching an institution's financial stability.

-- Posted: Nov. 12, 2001