BRIDGEPORT, Conn. Everybody wants to be the man at the top.

In Fairfield County, Conn., the man to be is David E.A. Carson, president and chief executive of People's Mutual Holdings Co. and its $6.1 billion-asset People's Bank. This thrift has held the dominant market share in the county as far back as anyone can remember.

But times change even in Fairfield, known for its Fortune 500 companies and sprawling Greenwich estates. Banks in Fairfield' have been swallowed up with increasing frequency over the last few years, and superregionals and money-centers are muscling their way in, boosting their market share.

High Stakes

What's happening in Fairfield County is a microcosm of the drive to rationalize the banking business nationwide. But with a median household income of almost $50,000, the richest on a per capita basis in the States, the stakes are extraordinarily high.

Because People's Mutual Holdings owns 60.7% of the lead bank's stock, analysts and competitors admit the institution is not a likely takeover candidate, Thus, competitors will have to take market share away from People's the old-fashioned way. They'll have to earn it.

How did a small thrift get to be the third-largest bank in Connecticut, with 24% of Fairfield County's deposits and a relationship with 49.9% of its households. "It's all in a name," Mr. Carson says, flashing a smile as wide as his bowtie.

Weathered Storms

Founded in 1842, People's is certainly the best-known bank in the community. Formerly mutually owned, the bank went public in 1988 in order to raise capital for new businesses and acquisitions.

People's weathered the 1980s largely by avoiding the real estate lending boom, which dragged down several larger banks and lined Interstate 95 with empty buildings sporting banners that read: Office Space For Lease.

"We didn't have the appetite for that kind of lending," Mr. Carson says. Instead the bank focused on what he calls "smart" business lending, originating loans to community businesses and real estate where tenants had already signed leases.

Although the bank racked up about $320 million of its own nonperforming assets by 1993, it sold off 31% of its problem assets by this year's first quarter, whittling down the total to $217 million.

Arthur Bender, an analyst at SNL Securities, says People's success comes from innovation. Some 20 years ago, before Mr. Carson's time, the thrift was among the first to offer bill paying by telephone.

"They move with the trends very well," Mr. Bender says. Telephone service now extends to almost every product the bank has to offer. Last year the bank processed 9.1 million calls, doubling its volume over 1992.

People's has also had success with a burgeoning credit card business, Which showed a 19% jump in the second quarter over last year's results.

The bank is also continually the No. 1 residential mortgage originator in Connecticut.

Analysts praise the bank for completing a $69 million stock offering last year, raising its Tier I capital ratio to 10.1% and its risk-based capital ratios to a healthy 11.3%.

Still, regional and money-center banks are a new competitive force that People's has to reckon with. Chase Manhattan Corp., the nation's sixth-largest bank, began opening branches in Fairfield County three years ago. It more than doubled its share of deposits in the last year to 10%, according to People's figures.

Lawrenceville, N.J.-based First Fidelity Bancorp., the nation's 26th-largest bank, has captured 10% of deposits in Fairfield County since it acquired Union Trust of Stamford in 1992. Fleet Financial Group of Providence, R.I. a regional heavyweight with $46.4 billion of assets, has 8% market share in Fairfield.

Even Citicorp, which says it wants to grow internationally above all, has made wealthy Fairfield County an exception to the rule, opening new branches last year to grab some business.

Shawmut National Corp., which acquired Norwalk, Conn.-based Gateway Bank Bank this year. upped its Fairfield market share to second place with 17%. Eileen Krauss, president of Shawmut's Connecticut bank, declared that People's is facing "the most competition they've had from anyone."

To prove it Shawmut executives last month visited, 700 small businesses in a county-wide blitz to stimulate lending. These statistics and sales campaign hardly frighten Mr. Carson. Acquisition activity in his backyard means those bigger banks get increasingly negative publicity, he says. "All of their PR is not about all the wonderful things they're going to do for customers, but about their lay-offs," he says.

Disgruntled employees who fear for their jobs in this bank-eat-bank world make for lousy service, he insists. "Is that somebody I want to do business with?" He shakes his head no.

In fact, Mr. Carson can point to a 3% market share gain for People's since yearend. The bank's market share dropped from last July to January, but Mr. Carson dismisses the notion that it had anything to do with a weakening of the company's position in Fairfield County. "It's more a function of our not chasing CD money," he says.

As interest rates went back up this year, other banks went after those deposits. But Mr. Carson says that has little effect on People's. "If you go back into those figures, we've been growing steady market share in demand deposit accounts," he says.

Indeed, People's commercial checking accounts grew 14% last year to $214 million from $188 million in 1992. Retail checking accounts grew 12%.

Preparing to Fight

But once the merger consolidations end and the bad publicity subsides, People's will have to face up to its rivals. And the competition is girding for battle.

Shawmut, for one, has matched People's 24-hour telephone banking service. And it can already boast 25% of the home equity loans in Connecticut with only four telephone customer service representatives, according to Thomas Brown, an analyst at Donaldson, Lufkin & Jenrette.

Shawmut won its franchise in Fairfield County when it merged with Hartford National Corp. in 1988. Now, executives at Shawmut's Connecticut bank say its name recognition is right behind that of People's.

Shawmut is also the first bank to offer a supermarket branch in Fairfield County, in the People's home base of Bridgeport. People's has supermarket branches in Hartford, but not in Fairfield County.

Shawmut may also be ahead of People's in personal banking business, including personal trust and investment services. These businesses are important in an area like Fairfield, with its sophisticated and affluent customer base.

Chase's Foothold

Chase Manhattan, which acquired Mechanics and Farmers Savings Bank and Citytrust in 1991, has 36 branches in Fairfield County. It leads the county in making mortgages over $350,000 through its PFS subsidiary, and is a serious player in investment management, trust, and estate planning services.

That Chase has a foothold in Fairfield is significant, analysts say. In the end, size may matter. Some argue that People's may lose its number one spot because it's simply not big enough to cover expensive high-tech services.

"That's a very costly enterprise, and it speaks to economies of scale. In other words, if you're going to have this kind of engine that can handle this kind of volume, it doesn't hurt to spread the cost over a large number of customers," says Thomas Theurkauf Jr, an analyst at Keefe, Bruyette & Woods.

But a 100-year history is nothing to sneeze at. Mr. Carson likes to point out that the bank's headquarters could be anywhere, but it remains in Bridgeport, as a sign of community loyalty. Says Mr. Bender of SNL Securities: "I imagine People's has an appearance in Connecticut of being the Connecticut bank."

Whether that's enough to keep Mr. Carson at the top is an open question.

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