NEW YORK ( TheStreet) -- Five Chicago-area commercial lenders are positioned to continue taking business from Bank of America ( BAC) and JPMorgan Chase ( JPM), but face stiff competition from another out-of-town player. "We're coming off a challenging quarter for Chicago banks," said analyst John Rodis of Howe Barnes Hoeffer & Arnett, adding that a majority of the five area banks that he covers reported increases in problem loans during the third quarter. Rodis believes we'll see "a choppy couple of quarters" but over the long haul, "there should be a lot of opportunity for growth" as the group resumes its pursuit of commercial clients from Bank of America and JPMorgan chase, which have dominated the Chicago market. Locally-based institutions have a built-in advantage in their home markets, since their lending teams are more likely to know the local business climate and they have more flexibility to work with borrowers on unique deals. Another bank that is growing its Chicago business is FirstMerit of Akron Ohio, which has purchased two failed Chicago-area banks from the Federal Deposit Insurance Corp. this year, including Midwest Bank & Trust in May, George Washington Savings Bank in February, when it also bought 24 Chicago-area branches from First Bank of Creve Coeur, Mo. First Merit has $14.4 billion in total assets as of September 30, increasing 36% from a year earlier, and CEO Paul Greig has 28 years experience in the Chicago market. Out of the five Chicago banks he covers, Rodis only has one buy rating, although four out of the five are cheaply-priced relative to tangible book value, according to SNL Financial. The single buy rating is on First Midwest Bancorp ( FMBI) because of the company's strong capital position. All five of the Chicago banks we're focusing on are still participating in the Troubled Assets Relief Program, or TARP. Because of the associated dilution risk and forward price-to-earnings multiples, based on consensus earnings estimates this group is only attractive when we go out to 2012 and are best considered by long-term investors with horizons of several years.