Seneca-Cayuga Bancorp in Seneca Falls, N.Y., is looking to charter a commercial bank in upstate New York so it can offer banking services to municipalities.

The $291 million-asset Seneca-Cayuga, the holding company of Generations Bank and Medina Savings and Loan Association, has applied with the Federal Deposit Insurance Corp. to form Generations Commercial Bank.

Seneca-Cayuga wants to form a separate bank because mutuals in New York are not allowed to work with municipalities, said A.G. Cutrona, Generations' director of growth and profitability.

“We believe there are opportunities" in Rochester, N.Y., and surrounding communities, Cutrona said. “A lot of the larger banks have discontinued doing business with the smaller municipalities. … We’re hoping to fill that gap with a limited-use commercial bank.”

Municipal banking can be very competitive.

Dime Community Bancshares in Brooklyn, N.Y., filed with the FDIC to open a municipal bank, only to withdraw the application after deciding that it would be difficult to gain traction as a new entrant.

Seneca-Cayuga says it thinks it can succeed by focusing on smaller municipalities. The move also makes sense as the company seeks to grow beyond its mutual roots and still serve its communities, Cutrona said.

Generations and Medina Savings announced in March that they had agreed to merge, with Generations to be the surviving entity. The merger is expected to close by June 30.

Seneca-Cayuga, which plans to keep all Generations and Medina Savings employees, plans to hire bankers around Rochester, which is between Seneca Falls and Medina, Cutrona said.

“We’re not necessarily looking to build branch offices” in Rochester, Cutrona said. The company aims to expand in areas such as retail banking, commercial lending, insurance and investments.

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