Financial Corp. is gobbling up one of the few remaining large community banks in the state. Its $137 million stock deal for DS Bancor would propel Waterbury-based Webster over the $5 billion-asset mark, cementing its position as the second-largest depository institution based in Connecticut. Bridgeport's People's Bank has more than $6 billion. Webster would gain 23 branches and 45,000 customers in the south-central part of the state, plus $1 billion of deposits. That would give the thrift more than $4 billion of deposits statewide, or 7.5% of the market. And it would become the largest Connecticut-based institution in its primary markets of Hartford and New Haven counties, home to two of the state's largest cities. As a result, Webster officials are already touting the deal as enhancing their ability to compete head-to-head with regional giants Fleet Financial Group and Bank of Boston Corp. "This further strengthens Webster as a competitor in Connecticut," said James C. Smith, chairman and chief executive. "We're really filling a void that's been created by all the megamergers that have occurred." Investors reacted positively, and Webster's stock price remained at $35 per share, the same as before the announcement. "It's a threshold event," agreed John Carusone, president of Bank Analysis Center, a Hartford investment bank. "It really vaults Webster ahead." Even state Attorney General Richard Blumenthal issued a statement praising the deal. "We are extremely encouraged by this development," he said in the statement. "It appears that this merger will strengthen a growing competitor in Connecticut's banking market." Last year, Webster acquired about $1 billion of deposits, $700 million of loans, and 20 branches from Fleet as part of the latter's acquisition of Shawmut National Corp. Fleet divested the branches to appease antitrust concerns from Mr. Blumenthal and the U.S. Justice Department, which wanted to create a competitor for the Boston-based giant. The branch purchase gave $3.8 billion-asset Webster a total of 63 branches in the state's central urban corridor, and a significant commercial lending presence in Hartford. The acquisition of DS, parent of Derby Savings Bank, would enhance that presence. It would give Webster a 9% market share in Hartford County, trailing only Fleet, which dominates with more than 40%. Webster's Mr. Smith declined to project cost savings but said analysts had estimated Derby's expenses could be cut at least 40% through branch consolidations. At least half of Derby's 23 offices overlap with Webster branches. The Waterbury thrift expects to take a $15 million after-tax charge for acquisition expenses, including a severance package. The purchase, which is subject to shareholder and regulatory approvals, is expected to close in the first quarter of 1997 and add to earnings and book value that year.

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