- The Washington Times - Monday, October 23, 2000

A local bank is celebrating the fifth anniversary of its Internet operations, which are now the fastest-growing segment of its business.

The president of the Bethesda-based Presidential Bank, A. Bruce Cleveland, claims the institution was the first to offer deposit accounts on line on Oct. 6, 1995. The bank is marking its anniversary by sending thank-you cards to all of its approximately 4,000 on-line customers.

The Office of Thrift Supervision, which oversees savings and loans, could not confirm the bank's first-on-line status because thrifts were not required to register Web sites with the agency in 1995. But First Security Network Bank, which the OTS certified as the first Internet-only bank, went on line on Oct. 18, 1995.

Presidential has been around for 15 years, and now has eight branches in the District, Maryland and Virginia. Mr. Cleveland said the bank wanted to be ahead of the curve five years ago.

"It was becoming evident that the Internet would be a significant vehicle of commerce," he said.

But they were perhaps too far ahead of the curve "In the beginning, nothing much was happening on the Internet, so our Web site just kind of sat there," Mr. Cleveland said.

Two years ago, when the Internet started to catch on with a mainstream audience, the bank's site started getting more traffic. So the institution upgraded, and now offers account balance access, transfers, bank statement archives, check imaging and bill payment on line.

"Now the Internet is our major source of deposit growth," servicing about one-third of Presidential's 12,000 customers, Mr. Cleveland said.

Kathleen McKeever, a Presidential customer since the early 1990s and avid Internet user for banking, said she likes the convenience of banking on line.

"I do pretty much everything on line, I've been to a branch like once in the last year," said Ms. McKeever, an accountant who lives in Frederick, Md.

She doesn't look at paper statements that come in the mail anymore because she reconciles her account on line, and pays bills over the Internet as well.

Unlike the early days, the bank and Ms. McKeever are far from alone when it comes to transactional banking on the Internet. An OTS spokesman said about half of the 1,000 savings and loans the agency supervises have Web sites, one-quarter of those with transactional capabilities such as bill payment.

Mr. Cleveland thinks the trend still has ample room to grow.

"I think it's still fairly early. There are a lot of people banking on line already, but I see it as an evolutionary trend that's probably going to continue for many years," he said.

Arnie Danielson, a banking analyst in Bethesda, said Presidential is not known as a Web institution but the bank is a good performer.

"They've been earning double-digits [return on equity] for years when most thrifts can't get close to that type of situation," he said.

The bank recently won kudos in the Oct. 16 issue of Time magazine, which highlighted the 6-percent interest rate on its on-line checking account.

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