Boston-based FleetBoston Financial, which is merging with Charlotte, N.C.-based Bank of America, currently maintains its Connecticut headquarters at 777 Main St. in Hartford.

After the initial shock of New England’s largest merger in years dies down, it should theoretically be business as usual for Connecticut banking, but experts are expressing concern about the long-term impact on the industry.

Charlotte, N.C.-based Bank of America Corp. and Boston-based FleetBoston Financial Corp. announced on Monday a definitive agreement to merge. The merger, to be accomplished through a stock-for-stock transaction, establishes a new Bank of America as the second largest bank in the country, behind Citigroup.

Fleet has maintained a large Connecticut presence, with a regional headquarters in Hartford and active membership in the Connecticut Banking Association. With a 22 percent deposit share in Connecticut, Fleet is particularly impacted by any new banking legislation and maintains a relationship with the CBA in order to benefit from the group’s strong lobby.

While BoA’s intentions are not yet known, CBA officials are hopeful that the bank will pursue membership.

“I’m certainly hoping that they’ll join us, and I would assume that they would,” said Jerry Noonan, president of the CBA, on Tuesday morning. “As far as the association is concerned, we’re in the same boat as the rest of New England with Fleet being such a major player.”

Noonan added that because BoA hasn’t had a presence in New England, he expects the bank to join up.

“This isn’t like when we had Fleet taking over Shawmut. That was a big loss because you took your two biggest guys and cut them in half. This should be fairly transparent, since it’s just a new name with many of the same people,” said Noonan. “I would assume that a $953 billion bank can afford to pay our dues.”

He added that Chandler Howard, president of Fleet’s Connecticut operation, will remain in that position for at least the immediate future. “We’ve known him for years, and I’m anticipating that things will stay that way they are,” Noonan said.

‘Positive Aspects’

However, Noonan is concerned with increased consolidation over time. With in-state banks becoming increasingly larger and with Webster Bank stretching out beyond the state’s borders on all sides, CBA officials fear they will begin to lose membership to increased consolidation and acquisition.

“You certainly hope that a bank like Webster wouldn’t be on someone’s radar screen, but you just don’t know if some other bank wants to get into New England,” he said. Noonan noted that Fleet dominated the New England market for years, forming a “moat” around the Northeast. The only way a large bank could come in was via the purchase of numerous smaller banks, he said.

“With Banknorth at $23 billion and Webster at $14 billion, they could be ripe for acquisition, and it’s worrisome from an association point of view,” said Noonan.

John Carusone, president of the Bank Analysis Center in Hartford, disagrees with Noonan’s concerns.

“Those institutions were always available for acquisitions before Bank of America came in, and they have chosen to develop their franchises on their own. In the case of Webster, a significant initiative was made to purchase an out-of-state institution,” said Carusone. “So no, I don’t believe this will initiate a selling frenzy.”

It may, however, cause those institutions to reevaluate their alternatives. Also, the investment community will likely drive up stock prices in anticipation of sales and acquisitions, Carusone noted, “but they may be disappointed.”

He said large, in-state banks must determine whether they can generate superior value on their own or if selling will generate higher value.

“I think, however, that this could act as a catalyst for larger bank acquisitions taken by major institutions,” said Carusone. “Any institution which purports to have a national banking franchise, like Bank One or Wells Fargo, has to make decisions on how they will allocate resources geographically across the U.S.”

For decades, New England had been relegated to a low-priority status as its economy shifted from one based on industry and manufacturing toward a more service- and technology-based economy.

“Now that the economy is straightening out, it became clear that a bicoastal bank like Bank of America had to be here, and they entered by purchasing the finest bank in the region,” Carusone said. He noted that large, national banks may begin to rethink their New England positions, and rethink their national strategies in general.

The deal isn’t expected to be completely final until the spring of 2004, and Dennis Schain, spokesman for Fleet’s Connecticut headquarters in Hartford, said that May is the most likely time.

In the meantime, it’s going to be business as usual at the bank’s locations, and from a branch standpoint there should be little change.

“There will be a lot of behind-the-scenes preparation work as we begin to integrate, but people can continue to do banking where they’re used to doing it and comfortable doing it, and they will work with the same people,” said Schain. “We really don’t expect any branch closings as a result of this merger.”

The merger should be fairly seamless, he said, with the objective being to cause as little disruption to customers as possible. Because both banks have experience with mergers in the past, Schain said the job shouldn’t be too difficult.

“Among the positive aspects of the merger is that BoA is very much like Fleet in terms of approach to doing business and in terms of commitment to community. BoA is focused on the regions where it does business, and while it’s too early to know specifically how we’ll be organized, we certainly expect to have some local or regional leadership and to continue our high level of community involvement,” said Schain.

“We want to serve people in all segments of the marketplace and all business opportunities from the personal right up through large business,” be said. “We think we’re going to have the best and fullest range of products and services.”

“As a practical matter I feel that Fleet made the right decision,” said Carusone. “They had a couple years of mediocre performance, their diversification into investment banking and brokerage met with mixed results, they were exposed to the vagaries of South American banking [with Latin American Bank], and they had recent changes at the top. Those sorts of things make boards of directors think about what is in the best long-term interest of its shareholders. The Bank of America simply offered superior growth in the long term, so I think Fleet did a fine job.”

Carusone also said that BoA is generally viewed as a stronger bank than Fleet from a retail standpoint, and therefore customers may be a beneficiary of the merger. With BoA anxious to “ingratiate themselves through careful loan and deposit pricing,” potential customers may win out.

While he expects most banks to a take a “wait and see” attitude, there is a chance for smaller banks to more strongly differentiate themselves from “this Charlotte-based banking behemoth,” said Carusone.

The cornerstone of any community bank’s campaign is the idea that its bankers are more knowledgeable, more focuses on local decision-making, and more flexible. Carusone said that there is potential for some “creative advertising” reminding customers of the benefits of the local bank.

As part of the merger announced on Monday, Charles K. Gifford, currently chairman and chief executive officer of FleetBoston, will be chairman of the board of directors of the merged company and will work from Boston. Kenneth D. Lewis, currently chairman and chief executive officer of Bank of America, will remain chief executive officer and will maintain his principal office in the combined company’s headquarters in Charlotte.

“This merger is about delivering the combined capabilities of two powerful organizations to our customers, shareholders and communities,” Lewis said. “Customers will benefit from the most extensive retail franchise in the nation, a shared commitment to service excellence and a full range of traditional and innovative financial products and services. Shareholders will benefit from the best retail and wealth markets in America, unmatched diversity of revenues and resources, and the most talented management team in the industry. Our communities will benefit from our shared tradition of public-private partnership, community development and philanthropic investment.

“The opportunity to merge with Fleet is unique. From the Bank of America perspective, we will have the leading market position in Massachusetts, Rhode Island, Connecticut and New Jersey, as well as a powerful retail platform in New York City, Upstate New York, New Hampshire and Maine. From a broader perspective, we are building a company that will deliver more financial service capabilities to more Americans than ever before in our nation’s history.”

The company will have 9.8 percent of the banking deposits in the United States and have the largest, second largest or third largest market shares in 21 of the 29 states in its retail footprint, including significant market shares in 21 of the nation’s 30 largest metropolitan areas. Bank of America will be first, second or third in market share in 23 of the 30 fastest-growing metropolitan areas. It will feature what it describes as the most extensive and convenient delivery network through almost 5,700 retail banking offices, more than 16,500 ATMs, award-winning online and electronic bill pay services and 24-hour telephone banking.