The past year has marked new beginnings for banks all over Connecticut, with a new merger or acquisition popping up once every couple of months. 2004 also marked the beginning of the end for check processing as it stood at the beginning of the year.

Local banks spent much of the year scrambling to capture new business as institutions like Charlotte, N.C.-based Bank of America acquired FleetBoston Financial Corp. and The Savings Bank of Manchester, New Haven Savings Bank and Tolland Bank combined to form NewAlliance Bank.

“All of the merger activity … has created a lot of opportunity for local institutions to capitalize on,” said Jeff Brown, executive vice president of Waterbury-based Webster Bank.

Many Connecticut banks over the past year have set themselves up to catch any customers left unsatisfied after their bank goes through a merger or acquisition. The hope is that those newly formed banks will experience the typical headaches associated with such deals, leaving customers frustrated and causing them to look elsewhere for a bank.

Customers who fall through the cracks during such transactions often look for a stable, hometown bank, and many of those have left their doors wide open for new customers who want to open checking and savings accounts.

Webster offered ongoing programs over the past year that have helped capitalize on the mergers and acquisitions, Brown said. The bank offers free checking and other such perks.

The acquisition that made the most news over the past year was that of FleetBoston by Bank of America. The acquisition created controversy in late August and early September when, after Fleet Bank executives told state officials that there would be no or minimal layoffs in Connecticut, rumors began flying that Bank of America had laid off employees across the state. Connecticut Attorney General Richard Blumenthal issued a statement on Aug. 18 lambasting the bank for not following through on earlier promises. He followed that with a letter to the bank the next day, after getting no response to requests for the exact number of layoffs.

“Concealing this basic, simple information – vital to public policy and fair dealing – is incomprehensible and reprehensible,” Blumenthal wrote. “Secrecy about this issue is plainly unnecessary to any legitimate corporate competitive or individual privacy interests.”

Bank of America responded several days later, saying that about 100 employees were receiving severance packages, but that the bank would be offering about the same number of new positions in the state.

Blumenthal wrote a letter to the bank on Aug. 26 thanking bank officials for releasing the numbers.

“I appreciated your providing this information and I understand that you will regularly keep me apprised of the effect of the merger on Connecticut employees in the future,” Blumenthal wrote. “I fully expect – and am grateful for your efforts to ensure – that Bank of America will honor its commitment to maintain or increase overall employment levels.”

The formation of New Haven-based NewAlliance Bank also grabbed headlines at the beginning of 2004. The state approved the merger on March 30. The banking commissioner first approved the conversion of The New Haven Savings Bank to NewAlliance Bank and the formation of that bank’s holding company, NewAlliance Bancshares. The commissioner then approved the acquisition by NewAlliance Bancshares of The Savings Bank of Manchester’s holding company, Connecticut Bancshares, and Tolland Bank’s holding company, Alliance Bancorp of New England, according to documents from the Department of Banking.

The transition went well, NewAlliance spokesman Brian Arsenault said earlier this year.

“It’s gone just as planned,” he said.

Webster Bank also continued its string of acquisitions in 2004 when it announced in September that it had acquired a Wisconsin-based company that specializes in health savings accounts.

Webster bought Eastern Wisconsin Bancshares, the holding company for State Bank of Howards Grove, which also runs HSA Bank, a large provider of tax-exempt health and medical savings accounts. Webster paid $26 million in cash and expects the deal to close early in 2005, according to a press release from the bank.

Health or medical savings accounts allow individuals or employers to contribute money to an account, tax-free, to save for medical expenses, according to HSA Bank’s Web site.

Earlier in the year, Webster also announced the acquisition of New Britain-based First City Bank in a combination cash-and-stock transaction valued at about $33 million. Webster acquired the bank to strengthen its presence in the Hartford area, according to a July release from Webster.

“It’s part of our strategy to strengthen our Connecticut market,” said Art House, the head of Webster’s public relations team, in July.

A small community bank also followed the merger and acquisition trend when it made its first acquisition early in the year. Fairfield County Bank Corp. acquired the Bank of Westport in February.

Paul S. McNamara, chairman of the board of Fairfield County Bank Corp., described the acquisition as “a strategic opportunity to expand our brand of community banking to the Westport market.”

Bridgeport-based People’s Bank made a mark in early 2004 by selling its credit card business to The Royal Bank of Scotland. The move was probably the bank’s biggest milestone of the year, said spokesman Brent Digiorgio. The sale also put People’s in a position to expand into southern Massachusetts and Westchester County.

As of Dec. 31, 2003, the total amount of People’s managed credit card receivables was approximately $2.3 billion.

“The strategic decision to exit the credit card business strengthens People’s and better enables us to focus on our core retail and commercial banking businesses where we have proven competencies and demonstrated competitive advantages,” said John A. Klein, People’s president and chief executive officer, in February.

The 2004 development that will have the most profound impact on banking as a whole, according to Brown, is the Check Clearing Act for the 21st Century, or Check 21.

“We only, as an industry, just starting to scratch the surface,” he said.

Bankers have long been talking about the end of checks, but over the years check-writing has increased. Now, it is finally decreasing and the imaging possibilities that come from Check 21 will result in a “real transformation,” Brown said, and new product possibilities for the customers.

“It’s an exciting time,” he said.

Imaging is possible since Check 21 became law on Oct. 28. The law allows banks to replace original paper checks with substitute checks, which are made from digital copies of the original, according to the American Bankers Association. The law was created to reduce the time, risks and costs that occur with paper check processing.

“Currently, checks travel on trains, planes and automobiles during the clearing process,” according to an ABA release on the subject. “When Check 21 [became] effective, banks will be able to send digital images of checks electronically, eliminating the need to physically transport paper checks between banks.”