Community banks in Connecticut are already profiting from the planned merger of Fleet Financial Group and Shawmut National Corp.

Smaller banks in the Hartford area raked in retail deposits in the first half.

Nine in Hartford County, which has the largest concentration of both regionals, reported increases in retail customer deposits of more than 5% from Dec. 31 to June 30, according to an American Banker study of data provided by Sheshunoff Information Services.

For the same period, Providence-based Fleet saw its time and savings deposits drop in the state by 1.62%, or $66.3 million. Boston-based Shawmut reported an increase of 11.9%, or $823 million, in deposits, but that includes its June acquisition of Northeast Federal Corp., with $2.5 billion in deposits in three states.

Most of the growth in community bank deposits occurred in the second quarter, following the February announcement that the two regionals would merge to form an $81 billion-asset institution.

Tracey Stangle, bank analyst at First Albany Corp. in Hartford, said the data "would seem to indicate that there's a migration from Fleet-Shawmut more toward community banks."

Fleet spokeswoman Meg Pier noted that the bank usually sees seasonal changes in deposits resulting from taxes and consumers paying off holiday debt.

"Fleet continues to be a major presence in the Connecticut market," she said. "The combined entity will be three times the size of the next largest bank and will have a branch network that transcends the entire state as opposed to being just located in geographic pockets."

The 21 community banks and savings banks based in the county reported total deposit growth in those accounts of $169 million, to $5.3 billion. The average growth was about 3.9% for the six-month period.

Community Savings Bank, Bank of Southington, and First National Bank of New England reported gains of more than 10% in time and savings deposits. Community had the highest gain, increasing its deposits by 12.2% to $57.6 million.

Other banks also took advantage of the merger during the six-month period. Boston-based BayBanks' Connecticut subsidiary saw its deposits grow 9.95%, to $54.8 million, while Simsbury Bank and Trust Co., a new bank that opened its doors last spring, reported deposit growth of $11 million during its first four months of operation.

Only two community banks reported deposit losses during the six-month period, the most recent for which data are available. Collinsville Savings Society saw deposits decline by 1.21%, while Bristol Savings Bank, a subsidiary of Waterbury-based Webster Financial Corp. reported a drop of 0.34%.

Ironically, Webster is about to profit handsomely from the Fleet-Shawmut merger. The $3.2 billion-asset company won the bidding for the bulk of the divested branches in the Hartford market, giving it 20 new branches, with more than $1 billion in deposits.

"As the big banks combine, that's a window of opportunity for the smaller banks," said Webster spokesman Brent DeGiorgio. "Our phones have certainly been ringing since some of these mergers have been announced."

Meanwhile, several Connecticut banks have launched advertising campaigns designed to draw in disgruntled Fleet and Shawmut customers who don't want to deal with a large institution, Mr. Stangle said.

Southington Savings Bank has been promoting its checking account and CD products, and introduced a high-balance savings account in the second quarter, with an initial interest rate of 5.25%. Southington saw a 2.77% increase in deposits, to $270 million.

And New Britain-based American Savings Bank, which reported a 5.27% surge in deposits during the period, to $995 million, has started an ad campaign in local Hartford newspapers, asking customers if they're tired of banks calling themselves local even though they're based in Boston or Providence.

"I'm sure that will attract deposits and customers," Mr. Stangle said. "I think that a lot of community banks are kind of licking their chops, thinking it will be a source of business for them as the giants get even larger."

American also launched a separate campaign lauding its mutuality, asserting that it is "not for sale at any price," and featuring its president and chief executive, Robert T. Kenney.

"There's just a lot of chaos ... and a lot of dissatisfaction in the marketplace," said Sheri Pasqualoni, American vice president of marketing. "People don't like the confusion when a new bank takes over."

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