After it joined forces with UJB Financial Corp. in March 1996, Summit Bancorp of Princeton, N.J., used its new bulk to get small.

To take on the larger banking companies edging their way into the Garden State, Summit adopted a decentralized management structure to push decision-making down to the local and branch level.

For two years, the $30 billion-asset banking company, now the largest with headquarters in New Jersey, has been organized around six regional presidents who collectively oversee 90 markets.

Summit executives said they have thus blended the economic might and technology capabilities of a large company with the intimate customer relations of a small-town bank. They believe their adaptation of the "super community" formula challenges the likes of First Union Corp. of Charlotte, N.C., and PNC Bank Corp. of Pittsburgh.

"Large banks that have entered our state did not bring local flavor," said Summit president and chief operating officer Robert G. Cox.

"We have structured ourselves to look, act, and feel like a community- oriented bank," he said in a recent interview. "It has allowed us to take better advantage of our opportunities."

Summit is not alone in trumpeting and trying to seize the opportunities that arise in the wake of megamergers. It is a rule of thumb that merging banks will lose up to 10% of their customers because of inconvenience or disgruntlement. Sometimes federal regulators force the issue by requiring branches to be divested, hoping to tilt the balance a bit in favor of smaller competitors.

But the merger wave has also shrunk Summit's peer group. The Northeast- radically altered by pairings like Chase-Chemical, Fleet-Shawmut, BankBoston-BayBanks, and soon First Union-CoreStates-has seen the number of banks with $5 billion to $30 billion of assets cut in half this decade, to 12.

Typical of other second-tier survivors nationwide, the northeasterners are intent on staying nimble and resourceful, exploiting well defined niches and competencies, and emphasizing local roots and individualized customer attention in ways that may elude the more plodding giants.

This group includes $9 billion-asset Webster Financial Corp., Waterbury, Conn.; $10.8 billion-asset People's Bank, Bridgeport, Conn.; and $16.8 billion-asset Citizens Financial Group, Providence, R.I., as well as Summit.

"They are the last of the Mohicans," said John Carusone, an investment banker at Bank Analysis Center, Hartford, Conn., who works with small New England banks. "Each has approached the identity issue in a different way."

The size issue does not seem foremost in the bankers' thoughts.

"We focus very much on being the local alternative," said James C. Smith, chairman and chief executive officer of Webster Financial. "We have achieved the size to which we aspired to compete efficiently and still maintain a service differential."

"Our plans are to be bigger and better right where we are," rather than expanding geographically, said Lawrence K. Fish, chairman and chief executive officer of Citizens Financial, which is owned by Royal Bank of Scotland. It prides itself on having one of the few remaining multistate branch networks in New England.

"Right now, I can drive from my headquarters and be at any one of our 300 branches in an hour and a half," Mr. Fish said. "That's the way we want it."

Consolidation in the Northeast, especially around the three major metropolitan centers of Boston, Philadelphia, and New York, created openings for smaller institutions with a more independent streak, especially in dealing with small and midsize businesses, consultants and analysts said.

"Consolidation has created significant lending opportunities on the commercial side," said Gerard Cassidy, an analyst at Tucker Anthony. "The big banks' crumbs are pieces of pie for the little guys."

"I believe a community bank with a focused strategy of being a good corporate lender has the ability to survive," Mr. Cassidy said.

Commercial loans rose 19.3% last year at Summit Bank, 15% at People's Bank, and 9.3% at Citizens Financial, according to yearend earnings reports.

Bankers said their local focus had everything to do with loan growth. "Our type of banking has been a blessed combination," Mr. Fish said. "We can give personalized service, and we can offer products that are competitive with bigger banks'."

With fewer competitors, pricing pressures eased a bit, analysts said, and the smaller regional banks have boosted revenues.

"When you have increasing concentration in a market, pricing becomes more advantageous," said Kevin Timmons, an analyst at First Albany Corp.

And on the liability side, though bankers talk of "cutthroat" competition, the smaller number of competitors means it costs less to attract deposits. High teaser rates on retail products are no longer in vogue, and it is costing less to fund loans.

"Pricing has become more rational," said Webster's Mr. Smith.

Bank profitability in the Northeast has outpaced the rest of the nation, analysts said. The 1997 average return on equity for 23 banking companies in the region tracked by Tucker Anthony was 17.7%. The average for all U.S. commercial banks was 14.7%.

The midsize banks have also exploited anxiety on the part of even smaller banking institutions that faced tough choices of their own about whether to tough it out or sell.

Last year, Summit bought $5.5 billion-asset Collective Bancorp, Egg Harbor City, N.J.

Citizens Financial has made four deals in Connecticut, one in New Hampshire, and one in Massachusetts since 1993. Most recently, it acquired BNH Bancshares, New Haven, Conn.

People's and Webster-increasingly close rivals in Connecticut-have also recently been on acquisition tears. In December, People's closed its purchase of $713 million-asset Norwich (Conn.) Financial Corp.

This month, Webster is to complete its purchase of $1.2 billion-asset Eagle Financial Corp., Bristol, Conn. It would be the company's third Connecticut acquisition since January 1997.

Webster also took advantage of Shawmut-Fleet divestitures mandated by regulators two years ago, buying 28 Connecticut branches.

"We have used a strategy to expand and create greater concentrations in certain markets," Mr. Smith said. "We have also used acquisitions to broaden our product offerings to compete" more effectively.

Despite the inevitable speculation that they will sooner or later be prey rather than predators, midsize banking companies in the Northeast are sticking to their guns.

"We're not necessarily dinosaurs," Mr. Fish said. "A $17 billion bank can't have national aspirations. We are what we are."

"When you look at change you could have two reactions-you could be afraid, or you could embrace it," said Summit's Mr. Cox.

"I'm not sure what the ideal size is, but I think that is less relevant than the ability to be responsive. That's the key."

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