Veteran Chicago-area bankers are starting community banks in hope of capitalizing on former employers' weaknesses.

Applications for charters to start banks have been on the rise in Illinois this year. Behind many of them are bankers who voluntarily left large banks after acquisitions or were laid off.

Though a start-up wave has engulfed much of the Southeast, analysts say a new spurt is just hitting the Midwest-particularly the Chicago area, where 10 start-ups have opened this year or await applications to do so.

"We want to send a message that businesses deserve a community bank," said David Keller, president of newly formed Builders Bank. Mr. Keller left Comerica Inc.'s Chicago bank to become a consultant when it revamped its commercial lending department four years ago.

Also joining the community bank fray is John Eilering, former president of 1st National Bank of Mount Prospect. After First Chicago NBD Corp. bought his bank and downsized him out, he applied for a charter to start one-Mount Prospect National Bank-in his hometown.

The 52-year-old chuckled when asked whether he will try to win customers from his former employer. "Some customers will choose a bank with 120 locations," Mr. Eilering said. "But we expect to do very well."

He and other community bankers say they hope to attract customers by building strong relationships; such efforts, they say, have been lacking since banks consolidated in the Chicago market.

One target is the older customer to whom face-to-face relationships are more important than the latest technology. Others are small-business clients who may be frustrated by remote decision-making at larger banks.

Kenneth Hemauer, a bank analyst at Robert W. Baird & Co. in Milwaukee, said new banks are a logical next step for an industry where consolidation has squeezed out executives and displaced some customers.

Richard Soukup, a partner at Grant Thornton in Chicago, said the market is ripe for start-up banks, as California and Florida were several years ago. Mr. Soukup, who consults for most of the new banks in the Chicago area, said similar start-up activity is beginning to take hold in smaller urban markets in Wisconsin and Kansas.

"This is a repetitive pattern," he said. "It doesn't take a rocket scientist to figure it out."

New community banks are typically well received in the Chicago area. Northside Community Bank in Gurnee, a high-growth suburb north of the city and just south of the Wisconsin border, opened its doors last month with $5.7 million from about 80 investors. Last week assets had grown to $19.6 million.

"We're well ahead of what I expected," said president Patricia Clausen, a career Chicago-area banker.

Mr. Hemauer, the Baird analyst, warned that banks that do well in the early stages by taking in deposits from investors and friends in the community face a growth hurdle later. But Mr. Soukup of Grant Thornton said he doesn't think the start-ups will have any trouble.

"In a worst-case scenario these banks will be worth book value in 10 years," he said.

Mr. Soukup also said that though the number of new banks in the Chicago area is growing, the large regionals needn't worry about losing much market share.

He said Builders Bank, for example, will be no threat to LaSalle National Bank and First Chicago, whose main branches will be just down the street in Chicago's financial district.

Still, $112.6 billion-asset First Chicago is being respectful of the new competition. "We recognize that customers are going to choose other banks," said Rick Johnson, a spokesman.

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