Mid-sized banks carve out niche

By PAUL LEIGHTON

When sizing up the New England banking scene, the most obvious storyline pits mammoth Fleet Boston against the small community banks.

But right in the middle of that David-vs.-Goliath matchup lie mid-sized banks like Sovereign, Citizens and Eastern.

Smaller than Fleet but bigger than your neighborhood bank, the mid-sized institutions are positioning themselves as attractive alternatives between those two extremes.

Officials at mid-sized banks say they can offer the best of both worlds _ the convenience of a large network of branches and ATM's that smaller banks can't match, and the friendliness and flexibility that a corporate giant like Fleet can't manage.

"We're in a fortunate position that allows us to have a broad distribution network, yet decisions are made locally and with less bureaucracy than a really big bank," said Kristin Tallman, director of marketing for Sovereign Bank New England. "I think that's one of the things that makes us special."

Sovereign, which is based in Pennsylvania, became a major player on the New England scene last year when it acquired 279 former FleetBoston branches in the largest divestiture in U.S. banking history. Seventeen of those branches are located on the North Shore, according to Tallman.

Although the bank is headquartered in Pennsylvania, Tallman said Sovereign Bank New England is "very much made up of New Englanders." Sovereign has retained 98 percent of the customers at the Fleet branches that it acquired, said Tallman.

Overall, Sovereign has $35.8 billion in assets and about 575 branches and more than 1,000 ATM's in seven states, making it the country's 27th largest bank.

Despite its size, Tallman said Sovereign gives its branch managers enough autonomy to make quick decisions. "We're able to operate more quickly, with more fluidity (than a larger bank)," said Tallman.

Eastern Bank ($3.2 billion in assets) might not match up with Sovereign ($35.8 billion) and Citizens ($30.2 billion) in terms of overall size.

But while those two banks are spread throughout many states (Providence-based Citizens also has branches in Rhode Island, Connecticut and New Hampshire), Eastern's 48 branches are all in Massachusetts _ including 33 on the North Shore.

"With all the disruption in the marketplace, we're trying to enhance our position in markets where we've already operated," said Eastern Bank spokesman Joe Bartolotta.

Bartolotta said Eastern is trying to cater to the market that opened up when Boston-based U.S. Trust was acquired by Citizens in January of 2000. Eastern has established free checking, a product for which U.S. Trust was well known.

"It's created the opportunity to become the next U.S. Trust," said Bartolotta. "Nobody would say that U.S. Trust was too big. It was a commercial bank that became a commercial/consumer bank. They fit a need here in Boston and we'd like to fill that void."

Eastern established a presence on the South Shore when it bought Hibernia Bank of Quincy in 1998. Last summer Eastern picked up four more North Shore branches in the FleetBoston divestiture.

"We're large enough to serve the needs of our middle-market customers, the mid-sized corporations," said Bartolotta. "However, customer service has always been a priority here. We're still very much a full-service bank. That's how we've made our mark."