At banks of all sizes, CEOs, marketing officers, and other executives interested in retail banking often wonder how customers are reacting to the wave of bank mergers.

What, they ask, would customers do if their branches were sold to the highest bidder? And how would they react if the bank offered a higher rate to new depositors than it is paying current ones?

Cross Keys Bank of St. Joseph, La., has some of the answers. The $144 million-asset bank surveyed its customers on a range of issues. The results are interesting and could be useful to other banks as well.

Only a few of the respondents-7%-said they would stay with their bank if the branch they usually visit were sold. Even fewer, 4.3%, said they would continue to bank at that branch no matter who owned it.

Tellingly, 28% agreed with this statement: "I would be upset and move my account to a new branch altogether." And 50% said they would want more information on the purchaser of their branch before making a decision.

Regarding attitudes toward mergers, 62% said they prefer smaller banks, and more than half said service means more to them than size. Two percent said they didn't care, and another 2% said it was too much trouble to move an account.

Acquirers take note: None of Cross Keys' respondents felt that a larger bank would give better service.

On the issue of favoring new customers over current ones, 68% said they prefer a consistent bank with competitive rates and superior service to one that offers short-term promotions.

Six percent said they would take advantage of a higher-rate offer, 35% questioned the bank's loyalty to current depositors, and 20% said they would not want to bank with an outfit that does not put its current existing customers first.

Respondents gave mixed signals about their priorities in choosing a bank.

Only 4.5% said they would stay with their branch no matter who owned it, but 48% said convenience was the key to where they bank. Assuming that people chose the first bank for convenience, then why would they switch if a branch were sold?

Other reasons for choosing a bank that ranked high with those surveyed include friendliness of personnel (66%), competitive interest rates (44%), competitive service charges (40%), and response time on loan requests (35%).

Customers apparently don't care much about ATMs or advertising. Only 10% said they choose a bank based on the reach of its ATM network, and only 11% said they choose a bank because of its ads.

If the customers of Cross Keys are typical, community banks have little to fear - and larger ones have a lot of work to do to get the public to appreciate them.

The fundamental conclusion of the survey may be that consumers don't want consolidation. Customers value quick service, the correction of errors, and being known by name just as much as they did before computers entered our lives. Mr. Nadler, an American Banker contributing editor, is a professor of finance at Rutgers University Graduate School of Management.

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