Regional banks from New England and elsewhere, tempted by Connecticut's demographics, are looking to expand their operations in the state.

But it is not always easy to do.

BankBoston Corp., for example, which for years had considered selling its Connecticut operation out of frustration with stalled growth, has just opened a branch in Stamford.

The branch was established to cater to affluent residents of the surrounding Fairfield County suburbs and court middle-market lending customers.

BankBoston, like other out-of-state banks, has found expansion in Connecticut difficult. Rather than sell, it is looking to increase its presence in the state, said R. Nelson "Oz" Griebel.

But good property is hard to find.

The de novo branch in Stamford is symbolic, Mr. Griebel said. "We look at almost every opportunity that comes up ... but we haven't been able to come to terms and make an acquisition."

Part of the problem is that most of the attractive takeover candidates have already been taken.

Connecticut, with the nation's highest per-capita income, is seen as fertile ground.

"It's sort of what Willie Sutton said," commented Thomas O'Brien, regional president in Connecticut for First Union Corp. "You go to Connecticut because that's where the money is."

First Union, headquartered in Charlotte, N.C., recently opened a de novo branch in the City of Fairfield. It also has three in Hartford, the state capital, all of them new this fall.

But as for acquisitions, the pickings have been slim. "We are constantly considering fill-in acquisitions," Mr. O'Brien said. But First Union has not made one since entering the market with the acquisition of First Fidelity Bancorp. of New Jersey last year.

Fleet Financial Group in Boston has expansion troubles related to its 1996 combination with Hartford-based Shawmut National Corp. The deal instantly made Fleet Connecticut's leading bank, but Fleet was forced to divest 28 branches and $1.6 billion of deposits to allay antitrust concerns.

"Adding bricks-and-mortar in the state has not been at the top of our list of things to do ... because of certain constraints," said Chandler Howard, executive vice president of retail banking in Connecticut for Fleet.

"But we are looking at this not so much through short-term branch expansion as through growing the share of wallet with our current customers," Mr. Howard said.

Citizens Financial Group of Providence, R.I., has pursued acquisitions in Connecticut with more luck, striking four deals since 1993. The most recent, for BNH Bancshares in New Haven, closed in July, making Citizens No. 6 in state market share and a leader in New Haven.

Citizens would like to continue that expansion, particularly in Hartford County, where there is less competition, said Scott Kisting, chief operating officer. Citizens just opened a commercial office in the capital and would like to support it with a retail presence, but is still looking for a suitable acquisition candidate, Mr. Kisting said.

"We are certainly looking at a retail presence in Hartford," he said. "But you have to make a choice whether you can pay the prices or go de novo. We don't believe you have to spend 2.5 times book to expand."

Hubco, a holding company in Mahwah, N.J., has also been on an acquisition hunt. In September it made a deal to buy $130 million-asset Bank of Southington.

Hubco's Connecticut subsidiary, First Lafayette Bank, has grown to $1.4 billion of assets in Fairfield County, and the bank's president, Kenneth Neilson, has expressed a desire to acquire more community banks in the coming year.

Since 1992 the number of banks in the state has been cut from 150 to 75, and many analysts believe the survivors are overpriced.

The largest native banks, People's Bank of Bridgeport and Waterbury, Conn.-based Webster Financial Co., trade at 3 and 3.1 times book, respectively, said Jim Moynihan, an analyst at Advest Inc. in Hartford.

Those banks have been making deals for acquisitions of their own.

In August, People's announced a deal to buy $713 million-asset Norwich (Conn.) Financial; the deal is scheduled to close in the fourth quarter.

In September, People's rival Webster, with $6.8 billion of assets, announced a deal to buy $1.2 billion-asset Eagle Financial Corp. of Bristol, Conn. That deal is scheduled to close in the first quarter.

"We've gone after critical mass in the markets we serve in order to compete with the major regionals," said Peter Mulligan, executive vice president of retail banking at Webster.

Many of the banks have taken to nonbranch locations as a low-cost means of expansion. People's has been the leader, opening 38 automated locations in Stop N Shop supermarkets this the year, under an exclusive agreement. These locations come equipped with automated teller machines and two-way video links to a customer service center.

People's plans to open seven more locations in Stop N Shops by the end of the year, said James Biggs, president.

Webster has set its sights on regional shopping malls along busy interstates 95 and 84. Mr. Mulligan said the automated sites will act as supplements to regular branches. "Convenience is a factor," he said. "We want to have as many access points as possible."

BankBoston has seven full-service automated centers in Shaw supermarkets in Connecticut and is waiting to open more. But Shaw, a Massachusetts chain, has opened few stores in Connecticut. BankBoston will open additional in-store branches as Shaw expands, said Mr. Griebel.

Many analysts said the way to achieve clout in the state is through acquisition. Now that the economy is rebounding, these banks should "solidify their positions," said John Carusone, president of Bank Analysis Center, an investment banking and consulting firm in Hartford.

Mr. Carusone said many bankers in the state are closely watching First Union to see what it will do next. Many Wall Streeters expect First Union, once it buys Signet Bank Corp. and CoreStates Financial Corp., to set its sights on Fleet.

"First Union is at a strategic crossroads," Mr. Carusone said. "They need to double up on their investments or be satisfied with what they have. I think Connecticut figures into their overall New England strategy."

BankBoston also needs to be more aggressive in Connecticut, an analyst said.

BankBoston needs "to gather more market share," said Advest's Mr. Moynihan. "They missed out on Eagle and Norwich because they didn't want to pay the price. Now they are losing share."

Analysts said Citizen's could gain its coveted retail presence in Hartford through acquisition, a favorite strategy of chairman Lawrence K. Fish. Analysts cited $700 million-asset Mechanics Savings Bank as a leading candidate.

But despite pressure from outside, home-grown Connecticut bankers said they may have the ultimate advantage.

"We are independent, and we are just in one state," said Mr. Biggs from People's. "We can make local and timely decisions for our customers. That's our competitive advantage."

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