Like others who manage thrifts across the country, Herbert G. Chorbajian has an ambitious plan to turn Albank Financial Corp. into a commercial bank.

But unlike his peers, Mr. Chorbajian is not in a change-or-be-acquired situation. The 58-year-old chairman, president, and chief executive officer seems to have time on his side to transform $3.5 billion-asset Albank from a residential mortgage maker into a successful lender to small and midsize businesses.

"In Albany, we have a very steady economic environment, but it's not necessarily a growing market," he said in a recent interview.

Despite the lack of sizzle in upstate New York, Mr. Chorbajian is perfectly happy to use it as a base of operations. "If we were in South Florida or Las Vegas, we might develop some significant internal growth," he said.

As they are ensconced in the Snow Belt, Albank and Mr. Chorbajian look east, to the New England states.

"In order to maximize our shareholder value, one of the best ways is to go out and do some smart acquisitions," he said.

Since 1994, Albank has picked up $740 million of assets, $669 million of deposits, and 22 branches through acquisitions in Vermont, Massachusetts, and upstate New York.

The gem of its recent buying spree is a package of 35 upstate branches from Cleveland-based KeyCorp.

The deal would bring Albank's total New York branch network to 83, adding $530 million of deposits and entry into nine new counties. Once integrated, Albank would have $4 billion of assets, and deposits of $3.6 billion.

The deal appealed to Mr. Chorbajian because, he said, it would allow Albank to enter areas it had not been in before, including Broome County, where Binghamton is located, and the Adirondack region of upstate New York.

Mr. Chorbajian said Albank will finally reach its goal of becoming more banklike in midsummer, when he expects the KeyCorp branches to be completely integrated.

Currently a thrift holding company, Albank would become a bank holding company, regulated by the Federal Reserve rather than the Office of Thrift Supervision.

It would have two separately chartered subsidiaries-a thrift unit composed of what is now Albank Federal Savings, and the newly acquired Key Bank offices in a commercial banking subsidiary.

Although Albank's bread-and-butter business is still mortgage loans for one- to four-family homes, Mr. Chorbajian said the company will continue to drift away from what thrifts normally do.

The home loans, including home equity loans, totaled $1.9 billion at yearend, up 27% from a year earlier. Commercial loans grew 114%, to $248 million.

As a share of Albank's entire portfolio, residential loans dipped 3.4 percentage points to 74.2% while commercial loans rose 3.8 points to 9.7%.

"Because of our size and our position in the community, we are now able to attract more commercial business," Mr. Chorbajian said.

The last few years of acquisitions have helped. In 1994, Albank bought Ludlow (Mass.) Savings Bank, with nine branches and $216 million of deposits.

Last year, it completed its purchase of Rutland, Vt.-based Marble Financial Corp., a $396 million-asset commercial bank with seven branches and $327 million in deposits.

Also last year, Albank grabbed six Green Mountain Bank branches in Vermont from Arrow Financial Corp. of Glens Falls, N.Y. The Green Mountain offices were eventually integrated into Albank's Marble Financial unit.

Analysts said Albank's acquisition strategy is common for an institution of its size.

"Most of the drive in crossing state lines is in the small and medium- size markets with expertise in similar operations," said Frank Barkocy, an analyst with Josephthal, Lyon, & Ross Inc. "State lines are less of a limiting consideration" for a smaller regional, he added.

Mr. Chorbajian said the acquisitions outside New York had a lot to do with the banks' proximity to Albany.

He said some of Albank's branches are 170 miles north of its Albany headquarters yet still located in New York State, while branches in Massachusetts and Vermont are considerably closer.

"We are interested in markets that are contiguous and logical extensions of the markets we are already in," he explained. "The attitudes and values in nearby regions of Massachusetts and Vermont are very similar to the attitudes and values in Albank's upstate New York market.

"Whether you are in Rutland, Vt., Springfield, Mass., or Albany, N.Y., there is little difference in the working culture within those three communities," he added.

The southern boundary of Albank's market stretches to suburban New York's Putnam and Rockland counties. But analyst Kevin T. Timmons of First Albany Corp. said he thinks Mr. Chorbajian probably would not consider a push toward New York City. "It would surprise me if Albank went further south past Rockland and Putnam counties," he said.

Mr. Chorbajian said he is more interested in northwestern Connecticut, since it is similar demographically to the Hudson Valley and Massachusetts. "To me, that would be a natural extension."

Still, Mr. Chorbajian maintained that Albank isn't on a quest to reach a specific critical mass.

"As long as there are opportunities, acquisitions are the best way to really grow your franchise, leverage your capital, grow your return, and increase profitability," he added.

Of course, the bigger Albank gets, the more likely that it will turn up on some larger bank's shopping list.

But First Albany's Mr. Timmons said that Albank wouldn't come cheap. A would-be buyer would have to offer a very good premium, he said.

Mr. Chorbajian grudgingly acknowledged that though being acquired isn't a part of Albank's strategic plan, the company "is not committed to independence into eternity.

"We have to think about our fiduciary responsibility," he said.

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