Nordstrom establishes federal savings bank

Nordstrom, long in the business of lending money to buy merchandise, is poised to expand into the business of loaning money to buy, well, whatever.

The company yesterday announced creation of the Nordstrom Federal Savings Bank, whose charter was approved in December by the Office of Thrift Supervision. Under its new charter, Nordstrom fsb will offer a full line of credit and banking services, including checking accounts to customers and mortgage loans to low- and moderate-income borrowers in the Phoenix area, where the bank is chartered.

The lending institution is based in Scottsdale because of Arizona's favorable banking regulations. Like its predecessor, the Nordstrom National Credit Bank, the new bank will focus primarily on issuing and servicing the specialty clothing store's own credit card and Nordstrom Visa cards.

In addition, the bank will offer money-market checking accounts, Nordstrom Visa debit cards, home-equity lines of credit, business credit cards, prepaid gift cards in a customer's name and some limited mortgage lending.

All that's missing are tellers and the traditional brick-and-mortar building. All banking will be done electronically, by mail or through automatic teller machines.

"We're in a unique position to offer our customers products and services that typically aren't available through traditional retailers," said Kevin Knight, chairman of the savings bank.

Indeed, Federated Department Stores - parent company of The Bon Marche - is the only other retailer that has applied for a similar bank charter. It has not yet been granted by the federal agency that oversees thrift institutions.

The most curious aspect of the new bank is Nordstrom's entry into the low-income housing loan market. Knight said that while the company has no intention of getting heavily involved in mortgage lending, the bank is required to make a certain number of community reinvestment loans as a condition of its charter.

Having the ability to issue customers debit cards on money-market accounts was the primary reason for the company's desire to change the nature of its bank, Knight said.

While Knight downplayed the mortgage aspect of the new bank, he said he could foresee the day when a Nordstrom customer who wanted to remodel a house or send a teenager through college would take out a tax-deductible home-equity loan through Nordstrom.

"The big motivator for us is broadening our relationship with our customers," said Knight.

Robert T. Nelson's phone message number is 206-464-2996. His e-mail address is rnelson@seattletimes.com