Frank G. Miglorie has spent the last 14 years building up the College of St. Joseph in Rutland, Vt., from a small, backwoods institution to a sprawling campus with a student body of more than 500.

The growth, he says, would not have been possible without the help of Rutland's banking community.

But lately, the 51-year-old college president has begun to worry about bank consolidation in Rutland and the effect it could have on his college's future.

"As banks consolidate, the philanthropic support coming from them has diminished," Mr. Miglorie said. "The banking community has been very supportive of us. But when two banks merge, what used to be two significant gifts merge into one, and the one usually is not equivalent to the two gifts you received in the past."

Mr. Miglorie is not the only local leader in the semi-rural town of Rutland -which has a population of about 18,000-to voice such concerns. Laura A. Vien, who heads the local United Way, bemoans the job loss that comes with bank consolidation.

Fewer employees means fewer contributions and less volunteerism, Ms. Vien said. "We've had to work doubletime."

As bank consolidation washes over the country like a tsunami, such grievances are heard in small and midsize cities everywhere.

In Rutland, a scenario is unfolding that is becoming more commonplace.

Concern over the impact of bank mergers on the local economy has led to a movement among local business leaders to create a new bank-despite pros- pects of heavy competition from the out-of-state contenders.

"There has been some enthusiasm for the project from an investor point of view," said William H. Hahn, head of the business program at the College of St. Joseph and a spokesman for the group. "Local people are likely to support it as well because there is some concern that out-of-town or out- of-state banks are not as attuned to the community needs."

The demise of the local institutions came swiftly.

In 1990, Arrow Bank-faltering because of bad loans and fraud-was acquired by Vermont Federal Bank, which was acquired by Vermont National Bank in 1996.

Later, Mascoma Savings Bank of Lebanon, N.H., moved in and snapped up the Vermont Federal branches that Vermont National chose to divest. Marble Bank, the last of the city's community banks, was acquired by Albank Corp. of Albany, N.Y., in the same year.

Consolidation has been so swift in the city that the names of old banks still remain on the buildings where new banks have moved in. In downtown Rutland, "Marble" is engraved on the front of a block-long building on Merchant's Row, while a freshly mounted Albank sign hangs on another side. The faded letters of Green Mountain Bank are just discernable on another side of the same building.

Nevertheless, Rutland is one city that, despite the wave of mergers, still faces an oversaturation of bank and financial institutions.

As many as 60 financial institutions have branches in Rutland, estimates Thomas J. Candon, Vermont's deputy commissioner of banking.

In fact, Vermont in general is considered overbanked. The Green Mountain State has 400 state chartered financial institutions, including banks, credit unions, thrifts, and finance companies, reports Vermont's Dept. of Banking, Insurance, Securities, and Health Care Administration.

In downtown Rutland, a First Vermont Bank ATM is just across the street from a branch of Chittenden Bank on Merchant's Row, which is just two blocks up from an Albank branch, which is only three blocks away from a branch of First Vermont Bank.

"This is one of the most heavily banked states in the country, and the competition is very real," said Timothy Hayward, president of Vermont's Bankers Association. "The competition is stiff."

Although consolidation may have hurt local charity, why would anyone want to invest in a new institution in the face of such competition?

Mr. Hahn argued that it is just a matter of time before consolidation makes another sweep through Rutland and Vermont in general. Consolidation would help reduce the number of competitors, Mr. Hahn said.

Vermont is a small state with slow growth, he added, but it has pretty much recovered from the recession of the early 1990s.

"I would think some of the Vermont banks would be coming up on somebody's radar screen, even though this is not a real robust market," he said. "Bigger banks must be interested."

Meanwhile, Mr. Miglorie, president of the college, is optimistic that a community bank would strenghten the community economically.

"We've received good support from outside banks, and there is a high level of interest from them, but there is no question that there is a difference between dealing with someone that is part of your local community and dealing with those who have a general interest in the southern part of the state."

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