Big bank mergers spur boom in community banking

BOSTON (AP) - As mergers make big banks even bigger, community banks say customers are coming home to them.

Some consumers are moving their money to smaller institutions with fewer fees, free checking services and a more personalized feel.

''What matters to me isn't an Internet presence or big names,'' said Tom Rogers of Framingham, who had a checking and savings account with FleetBoston Financial Corp. for just six weeks. ''I want a bank that's user-friendly. That's what matters to me.''

Since the 1970s, the number of banks nationwide has fallen more than 40 percent, according to the Independent Community Bankers of America, a Washington-based association of smaller banks.

Over the past few years, FleetBoston acquired BankBoston for $13 billion, USTrust merged with Citizen's Financial Group, Bank of America acquired NationsBank, and Wells Fargo merged with Norwest Bank.

There are about 11,000 banks in the nation today, and analysts say mergers will cut that number in half over the next decade.

But in the midst of all the consolidation, more than 200 local banks have been formed in the past year, the most ever in one year, according to the bankers' association.

''Community banks used to have trouble competing,'' said Greg McBride, a financial analyst for Bankrate.com, a North Palm Beach, Fla.-based consumer banking Web site. ''But when there is a great deal of consolidation, consumers tend to gravitate back to what's familiar, and that's their community banks.''

''The difference between us and the big banks is that I pick up the phone when it rings,'' said David Outhouse, president of First and Ocean National Bank in Newburyport. ''My office is right in the lobby and I'll talk to any customer - big or small.''

First and Ocean, a five-branch bank in business since 1812, has grown 20 percent in the past year, Outhouse said.

For Rogers, it was a combination of high fees and a glitch that held up his savings account for weeks that spurred him to move from Fleet to Webster Five Cent Savings Bank, a chain with branches in Worcester, Auburn and Webster.

''It's like night and day,'' he said.

Fleet charges $1.50 for using other banks' automatic teller machines, up to $10 a month for checking accounts, up to $4 a month on savings accounts. Customers who hold self-service checking accounts pay $2 each time they go inside a branch and speak to a teller.

''Fleet is setting the standard on fees,'' said Bruce Marks, a leader of the Fleet Accountability Project, a neighborhood group that holds regular demonstrations outside Fleet banks. ''And people are outraged. What worries me is if someday all of the banks are going to move up to meet that standard.''

But for some people, bigger is better, insists Jim Schepker, a spokesman for Fleet, now the nation's eighth largest financial holding company.

''There is a myth that gets played out that big banks are indifferent and small banks are caring,'' Schepker said. ''The reality is that customers make their choices based on value, and we would not be so big if we were not providing values to our customers.''

There are no hard numbers available on how many people have switched to a local bank specifically to leave a larger bank, but Schepker said Fleet has experienced only ''normal attrition'' since its merger with BankBoston.

The same is true at Citizens Bank, now the second largest bank in New England after merging last year with USTrust, said spokesman Brad Minnick. Earnings were up 12 percent in the last six months, he said.

''Customers want convenience banking,'' he said. ''They want to do their banking 24 hours a day at a stable institution, and that's what we are.''

That's what keeps Thomas Newton, of Boston, with Fleet.

He can find Fleet ATMs on almost every corner.

''If I went to a small bank I would have to pay fees every time I wanted $20,'' he said. ''With Fleet, I don't have to go very far. It makes more sense.''

On the Net:

Independent Community Bankers of America: http://www.icba.org

Bankrate.com: http://www.bankrate.com

Fleet Bank: http://www.fleet.com

First and Ocean National Bank: http://www.firstandocean.com

Citizens Bank: http://www.citizensbank.com