Citizens Financial Group's $1.4 billion deal for UST Corp. does more than create a stronger rival for Massachusetts community bankers. It could also threaten the smaller banks' surcharge-free automated teller machine network.

"Citizens has a fine marketing and product mix," said Bill McCarthy, president of $136 million-asset Co-Operative Bank in Boston. "There are days I look at what they are doing and say, 'I wish I could do that.'"

UST's 87 branches in Massachusetts would make Providence, R.I.-based Citizens "a much tougher retail competitor," said David L. Grey, president and chief executive officer of Ipswich (Mass.) Bank.

Like many community bankers in the state, Mr. Grey already regards Citizens president and CEO Lawrence K. Fish as "one of the top retail bankers in the country."

Beyond that direct competition, the merger raises questions about the future of the SUM Program-the New England alliance of more than 200 banks, thrifts, and credit unions that have pledged not to slap extra ATM charges on each other's customers.

Boston-based UST, with $5.9 billion of assets, is the fledgling network's largest member, responsible for 15% of its 1,350 machines. Citizens, with $18.9 billion of assets, will not join the network, but Mr. Fish said on Monday that it will honor UST's existing contract. Citizens and UST spokesmen refused to say when the contract expires.

If UST drops out, the network will lose many prime downtown locations. The remaining members could offset the loss by installing their own ATMs. That idea was being discussed before the UST deal was announced, according to Daniel J. Forte, president of the Massachusetts Bankers Association, which helped organize the alliance last year.

"It certainly doesn't destroy the network," said Stanley J. Lukowski, president and CEO of Eastern Bank Corp., a SUM member in Lynn, Mass. "But it does take out a pretty significant participant."

Despite their concerns, community bankers are confident that, at least in the near term, they will benefit from Citizens' acquisition of UST. It is the third big merger involving Boston-based banks to be announced in recent months, and community bankers said they believe they can capitalize on the confusion being created.

"It's a once-in-a-decade opportunity," Mr. Lukowski said.

Citizens is also acquiring the commercial operations of Boston's State Street Corp., and Fleet Financial Group Inc. is closing its deal to buy BankBoston Corp.

"There are people out there who would rather have recognition and human interaction instead of nameless, faceless convenience," Mr. McCarthy said.

Mr. Lukowski said he intends to use the same marketing pitch that the $2.7 billion-asset Eastern is using to woo Fleet customers. That means meeting with those customers and talking to them about making their own choices.

"We don't think it is right that all these customers are having their new bank chosen for them," he said.

Mr. Grey of Ipswich Bank is taking the same approach.

"UST has advertised itself as an alternative to the larger banks," he said. "I think a lot of their customers are going to be very disappointed they are selling."

Thomas J. Leetch, president and CEO of Peoples Federal Savings Bank in Brighton, Mass., claimed to be already taking business from Fleet. He expects even more from UST.

"The last few days, I have been stopped on the street by people wanting to talk to me about opening an account at Peoples Federal," he said. "This is a great time to be a community bank."

The bank is doing very little to attract new business. "Unrest is so widespread right now, we are going to grow almost by default," he said.

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