PENSACOLA, Fla. -- When banks refused to finance his idea for a gay and lesbian resort, Steven Dunlap scrapped it and decided to start a financial institution that would welcome homosexuals instead of spurn them.
The result is G&L Bank -- the initials stand for gay and lesbian -- which Dunlap expects to open here in the spring pending final approval from federal regulators.
Not only would it be the nation's only bank whose target market is specifically to homosexuals, it would be one of the first operating primarily via the Internet.
"The whole deal is to take banking away from you having to go to the bank and let us bring the bank to you," said Dunlap, the bank's chairman. He envisions gays and lesbians as an entry market, but not the bank's sole customer base.
"Just like Federal Express is doing to overnight delivery, I expect to be the No. 1 brand name in the Internet banking arena," Dunlap said. "You're going to sort of forget, potentially, what this G&L stands for."
Niche banks, however, like many small banks, tend to have a tough time competing against giants like Citibank and Bank of America. The financial services industry is extremely competitive, margins are thin, and profits are usually made on volume.
If G&L's "personalized service or high-quality customer care is something they can charge for, maybe they can make money," said Brad Ball, a banking analyst for Credit Suisse First Boston. "But if they don't have some value added beyond traditional banking products, I think it will be very difficult to make money."
Banking on the Internet should help Dunlap keep costs down while expanding his business, but even in cyberspace, big banks like Chase Manhattan and First Union are spending big bucks to connect to customers.
"If you're a little guy trying to compete with that, it's going to be very tough," Ball said.
Nontheless, Dunlap, 42, has some unique business credentials and knows how to make money thinking outside the box.
He retired in his early 30s after developing a series of novelty products. They include Nightcrawlers, children's house shoes with eyes that light up to guide youngsters through the dark, and Pet Peeves, talking collars for cats and dogs.
He made his real fortune selling millions of Moonies. The chubby doll-size figures attach to car windows with suction cup, like Garfield the cat stickons, but with a difference.
"You squeezed the bulb and the little guy dropped his pants and mooned people," Dunlap said.
He moved in 1990 from Memphis, Tenn., to Navarre Beach, about 20 miles east of Pensacola, planning nothing more than to sit on the beach and write a book about fad products.
However, after noticing that thousands of homosexuals congregate on area beaches every Memorial Day weekend he decided the Florida Panhandle could support a small gay and lesbian resort. Dunlap and a motel developer drew up a plan and took it to local bankers about six years ago.
"You could just see the color run out of their faces," Dunlap recalled. "My personal impression and observation was that they did not want anything to do with the financing solely because it was a ... 'gay and lesbian' business."
Dunlap, himself gay, figured that what happened to him was happening to others elsewhere. But creating a bank for a geographically widespread market niche would have been difficult at best before the Internet.
"The Internet now allows us to deliver to this community without having bricks and mortar," Dunlap said. "It actually allows me to put a bank branch in every house where there is a computer."
G&L has an 11-member staff that is almost equally split between homosexuals and heterosexuals. Staffing at its Pensacola headquarters is expected to increase to about 25 employees after opening.
The Office of Thrift Supervision, a branch of the Treasury Department, does not permit disclosure of an exact opening date or capitalization until its national savings bank charter is approved.
Potential customers, however, are already expressing interest.
Michele Johnson, a Houston retail manager, learned about G&L from a newspaper article. She has had no problems herself, but wants to bank with G&L because she has heard stories from other homosexuals who tried to open joint accounts at conventional banks.
"You know, the looks, the cold shoulders, people not really wanting to do that and making you jump through all the hoops," she said.
John Redding, a civil servant in Boise, Idaho, stumbled across the G&L site (www.g-lbank.com) while surfing the Web.
"Having a banking institution that clearly stands up and does our business for us is really to our benefit, both financially and politically," Redding said. "Knowing the person on the other end is somebody that I can relate to and understands what my situation is, that's a great deal of comfort."