In the two years since it entered Arizona, Capitol Bancorp of Lansing, Mich., has opened six community banks, created a new holding company, and taken that subsidiary public.

Now $1.1 billion-asset Capitol is looking to duplicate that success in other high-growth markets out West.

Joseph D. Reid, chairman and chief executive officer of Capitol, said the $1.1 billion-asset company has plans to set up banks in San Francisco, San Diego, Albuquerque, and Las Vegas by the first quarter of 2000.

"We're moving fast," said Mr. Reid. "The longer we delay the openings, the longer we will delay profitability."

Mr. Reid said the first to open would be Red Rock Community Bank in Las Vegas. Capitalized with $8 million and slated to open in November, it would join Capitol's other start-up bank there, two-month-old Desert Community. He said he expects that Sunrise Bank of Albuquerque -- the company's flagship New Mexico bank -- would be launched by yearend.

Capitol is still weighing its options in California, where it may start a handful of banks. The company has not decided on specific locations in the greater San Francisco or San Diego markets or begun to raise money within those communities. Nor has it recruited new executives to spearhead the efforts, Mr. Reid said.

San Diego is a prime example of the markets that Capitol targets. Economists regard Southern California as one of the nation's hottest growth markets. Moreover, three San Diego area banks have announced their sale over the past six months, possibly opening the door for new entrants.

"I think we can open a few banks there," Mr. Reid said.

Capitol's formula is to own 51% of any new bank it starts and to sell the rest of the stock to local community members. It typically hires a local banker from a big bank, such as Bank of America Corp. or Wells Fargo & Co., to head the operation.

The expansion effort would be partly funded with the proceeds from the recent $26.5 million public offering of Capitol's Arizona subsidiary, Sun Community Bancorp.

Observers voiced cautious approval.

"There is some concern, but I think they should take advantages of the opportunities," said Wayne Bopp, a bank analyst at Robert W. Baird & Co. in Milwaukee. "They've been fabulously successful in Arizona and Michigan cleaning up the customers left behind in consolidation."

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