For the first time in 18 years, New York's overbanked capital city could have a brand new player.

A group of local business leaders are planning to open a bank to do battle with the out-of-town institutions that dominate Albany's commercial banking market - Fleet Financial Group of Providence, R.I., and Keycorp, which moved its headquarters from Albany to Cleveland following last year's merger with Society Corp.

The new venture, to be called Capital Bank and Trust Co., would focus on serving small businesses and affluent consumers.

"We're really saying to the marketplace: The alternatives for your commercial and private banking have diminished and we want to be an alternative bank to the institutions that are presently here," said William M. Hazlett, who would be the bank's chief executive.

"We feel that being locally managed and with a board that's local and understands the needs of the community, that should be appealing," he added.

Mr. Hazlett and other investors plan to raise $8 million in start-up capital, partly from a public offering.

The group, led by chairman of the board James E. Conway, has filed applications with state and federal regulators and hopes to open the bank this summer.

Capital will aim to "provide a high level of customer service, more personalized service than some businessmen in the community feel they're receiving today," Mr. Hazlett said.

After Fleet and Keycorp, Mr. Hazlett pointed out, the biggest commercial bank in the market is Schenectady-based Trustco, which focuses more on its retail operations.

Interestingly, Capital could face competition from Mr. Hazlett's former employer. Until last summer, he was president and CEO of Evergreen Bancorp subsidiary First National Bank of Glens Falls.

Evergreen has a small presence in Albany, but wants to expand and target small business lending, said Don J. Kauth, bank analyst at First Albany Corp.

"This new company could run straight into what Evergreen wants to do as well" he said. "The difference is that these are Albany-based businesspeople, whereas Evergreen is Glens Falls-based."

And those local connections will help the new bank generate customers and overcome some of the usual difficulties of starting from scratch, Mr. Kauth said.

Mr. Kauth said he wasn't surprised that this is the first new bank in the Albany region in almost two decades.

"The economy here is relatively steady, but no boom, no bust," Mr. Kauth said. "You don't have a heck of a lot of growth in the area and you wouldn't exactly say we're underbanked."

Although two developers and an industrial park executive are on the board, Mr. Hazlett said commercial real estate loans will not dominate the new bank's portfolio. He noted that the small size of the bank would limit the maximum loan, while "the needs of the real estate developers will far exceed what we can provide."

In addition to offering private banking services and small business loans through state and federal programs, Capital will also provide trust services and a full range of retail products. But Capital will not target the consumer market, since larger banks can dominate that niche more efficiently, Mr. Hazlett said.

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