The origin of Gateway Bank of Pennsylvania can be found somewhere within the industry's circle of life: local banks are acquired by regional banks, regional banks are bought out by super regionals or national banks, and the deal-making ends up sending a lot of bank executives into early retirement or back to square one.

	Robert J. Pavuchak/Pittsburgh Post-Gazette
	From left, Bill Burt, president and CEO, and Jim McCarl, chairman of the board, on the construction site of the Gateway Bank building on Route 19 in Peters Township.

Which is where Bill Burt and a few of his colleagues are starting.

The former Integra executive is president and chief executive officer of Gateway Bank, a state-chartered institution that plans to open in March in a three-story office building being built on Washington Road in Peters. Joining Burt on Gateway's board are former Integra president Leonard M. Carroll and former Integra executive Gayland B. Cook, who retired after the regional bank was taken over by National City in 1996.

Gateway's game plan isn't much different from that of other banks starting at the bottom of the food chain: provide prompt, friendly, personal service.

"When you call our bank, one of our employees -- a live person -- will answer the phone," Burt says. "We want to make every customer experience a positive one."

Gateway will be Western Pennsylvania's first new community bank since Enterprise Bank opened in 1998 in Hampton, according to the Pennsylvania Department of Banking. The agency has approved 17 charters since the end of 1999, including one for Citizens Bank when it acquired Mellon Financial's branch network in 2001. Most of the new banks sprouted near Philadelphia, Harrisburg, Lancaster and York.

Regulators "were sort of surprised they hadn't seen more start-up banks in the Pittsburgh region," Burt says.

The idea for a new bank came to Burt in the spring of 2001 when he paid a call on Centra Bank in Morgantown seeking some consulting business. Instead, most of the conversation centered on that bank's launch, setting Burt to thinking about the possibility of starting something in Western Pennsylvania. On his way back, he stopped to discuss the idea with Washington, Pa., accountant Frank J. Palermo, Jr. Palermo, who's also a Gateway director, gave Burt office space to pursue the venture.

In order to get a state charter, would-be banks have to convince regulators that the community they want to serve needs one. Applicants make their case by citing economic and demographic statistics such as census data, housing starts and personal income. Gateway hired Danielson Associates, a Rockville, Md., consulting firm, to prepare the study. Burt supplemented the firm's research by interviewing executives who had started banks in other parts of the state.

Gateway received its conditional state charter in June and subsequently was approved by the Federal Deposit Insurance Corp., the federal agency that insures bank deposits. The largest remaining hurdle is signing up investors to provide the $15 million bankroll Gateway needs to get off the ground.

Much of that responsibility has fallen to Gateway's directors, led by Chairman Jim McCarl, who sold his Beaver Falls mechanical services firm to PP&L Resources in 1999 and is now a corporate and organizational strategy consultant. Besides the former Integra executives, Gateway's board includes Guttman Oil CEO Alan R. Guttman; Charles J. LaBelle, general manager of Falconi Enterprises; and attorney Nancy L. Rackoff.

Regulators want new banks to have a diversified board, says Dennis Ceklovsky, a former Bank of America executive and president of DFC Consulting. The Sacramento, Calif., firm helps new banks raise capital and open their doors. Having directors from varied professions not only gives a bank access to different markets, it provides the expertise needed to evaluate credit risks in those markets, Ceklovsky says.

Even as Gateway hopes to become the latest small bank to play the personalized service card, large banks are starting to pay more attention to their smaller customers. In the last two years, PNC and National City began offering free checking, while Dollar Bank made its free-checking plan more attractive by eliminating a 50-cent fee on ATM and debit cards.

While Burt is mindful of efforts by bigger competitors to provide better service, they're not exactly keeping him up at night.

"It's hot and cold. They'll do it for a while and all of a sudden it will drift back again," he says.

More compelling is the message from the proposed $43.6 billion merger of Bank of America and FleetBoston Financial. "It demonstrates the large banks want to continue to get larger," Burt says.

Small banks want to get larger too. Ceklovsky said new banks typically lose money in their first year, start making it in their second year and recoup their losses by the third year. That time line may be extended in a low interest rate environment, which squeezes interest rate margins -- the difference between rates a bank pays on deposits and rates it charges on loans, Ceklovsky said.

However long it takes, bank start-ups that build a solid track record usually end up as prime candidates for merging with their larger competitors. Gateway owes its existence to that trend, which Ceklovsky says has been pretty consistent since the end of World War II.

"At the end, it always seems [after] seven years, the larger fish find them attractive," he says.