Pennsylvania community bankers say they will do fine against First Union Corp. after it takes over Philadelphia giant CoreStates Financial, whether the government "levels the playing field" or not.

These smaller banks hope to steal customers from First Union when the merger closes.

"If First Union wants to come to Philadelphia, bring them on and let them come," said Kenneth L. Tepper, president and chief executive officer of USA Bancshares, Philadelphia.

"There is a window of opportunity here," said Patrick J. Ward, president and chief operating officer of Commonwealth Bank, Norristown, Pa. "Community bankers who are aggressive in trying to pick up customers can be successful."

Mr. Ward said Commonwealth Bank has taken the offensive, increasing its advertising budget 25% since the First Union deal was announced in November.

The purchase got shareholder approval last week but still needs to be approved by the Federal Reserve Board. And Pennsylvania's two U.S. senators, Arlen Specter and Rick Santorum, both Republicans, have joined a community coalition demanding public hearings on the takeover.

The Fed has scheduled its hearing for March 13. The regulator could require First Union to divest branches of the combined companies or to take other action to ensure fair competition in the region.

But local bankers say it should be they, not the government, that determine what First Union can do in eastern Pennsylvania.

In a letter dated Feb. 23, Mr. Tepper asked regulators and legislators not to demand First Union sell branches, redeploy assets, "or otherwise attempt to influence their best independent corporate business judgment .... To do so would only give them an excuse in a few years as to why they packed up and went home."

"The antitrust business is nonsense," agreed Robert L. Stevens, chairman of Bryn Mawr Trust Co. "There are some great competitors of all sizes out there. If First Union wants to overcharge, I think that would be glorious. And many other banks do too."

Mr. Stevens said his bank is "geared to compete with the big guys," adding that $1.7 billion-asset Bryn Mawr already offers insurance, investment management, and tax advice.

His confidence was echoed by others.

"We can compete with them, I am sure of that," said John T. Connelly, president and chief executive officer of First National Bank of Leesport, Pa. "CoreStates was a huge entity to compete with, and so is First Union. But we have done well against CoreStates, and I expect that success will continue."

Mr. Stevens said he will not run ads attacking his new competitor, but he admitted that he enjoys seeing First Union take heat from the public over the CoreStates takeover.

"The more polarization that occurs, the better off we will be," he said. "This merger just sharpens the difference between Bryn Mawr and the big guys. And that is fine with me. The more distinctive we look, the better off we are."

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