A group of investors trying to start a bank in Texas' capital says its venture will prove it safe to get back into local bank stocks.

Longtime bankers F. Hagen McMahon and Jack A. Collins are leading a group of 88 other investors in starting a federally chartered community bank in Austin. If approved by federal regulators, the proposed City National Bank would be the first start-up in Austin since 1988.

After several years of bank failures and consolidations, only five banks remain headquartered in Austin. Mr. McMahon said local customers want to know their banker again. And he wants to prove that there's money to be made in banking again.

Many Texans were burned by the bank failures and slumping economy of the mid- to late 1980s and early 1990s. And now most banking deposits in Austin-about 65%-are held by four superregionals. NationsBank Corp., which has 24.5% of the deposit market share, is the leader.

"Personalized service is really our thing," said Mr. McMahon. "When you get so large that you can't take care of your own customers, that's very frustrating for a banker."

Both Mr. McMahon, who would be chairman of City National, and Mr. Collins, who would be president and chief executive officer, have been bankers in Austin for decades.

Mr. McMahon was executive director of the Independent Bankers Association of Texas from 1976 to 1988, and Mr. Collins was formerly president of Bank of the West in Austin. Also advising the investment group is Robert Clarke, a comptroller of the currency in the 1980s.

Mr. McMahon and Mr. Collins are using their contacts in the community not only to attract investors but also to draw in customers.

"Jack and I have been in this for a long time," Mr. McMahon said. "We've logged in 1,300 personal calls, and we haven't talked to anyone who said they won't bank with us."

The investors have until the end of the month to raise $5 million in capital to start the bank. In its original application to the Office of the Comptroller of the Currency, City National Bank said it would start with $7.5 million of capital. But the group recently reduced its target to $5 million after deciding it was unnecessary to start with so much capital.

While City National would be the first new Austin bank in years, others may be forming soon.

"There are a couple of groups looking at locating here," said Stephen Y. Scurlock, executive vice president of the Independent Bankers Association of Texas. "There seems to be a trend toward putting a local group together and starting a new bank."

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