Cape Cod Five Cents Savings Bank maintains the No. 1 market share in the Cape region.

Early last month, Rockland Trust Co. announced its acquisition of Cape Cod-based Falmouth Bank, the third acquisition of a Cape bank in the past six months and the third entry of a regional bank into the typically reclusive areas of the Cape.

Just last week, Sovereign Bancorp announced its acquisition of Seacoast Financial Trust, parent company of Compass Bank and Nantucket Bank.

In another recent merger, Banknorth Group announced its acquisition of Cape Cod Bank & Trust. The mergers make Falmouth Bank and Cape Cod Five Cents Savings Bank the two single-largest banks on the Cape. With the recent mergers, however, Cape Codders are left with fewer community bank alternatives.

While the recent shakeups in the market have seemed sudden, industry insiders say the transition of Cape Cod from a community banking bastion to big-name competitive choices has been in the works for years.

“This trend started back in 1982 with consolidations … it took a hiatus following the 1998 period and has now picked up with vigor. The industry is consolidating to drive profitability higher for shareholders,” said Gerard S. Cassidy, managing director of RBC Capital Markets. “Because the banking system is driven by profits, if there is opportunity for a financial services organization to earn a [higher] rate of return on their investments, then they will offer those banking services … there will be a transition period for customers from certain branches and certain people and certain signage, but in the long run … the choices customers have, even with these consolidations, are still quite varied.”

The most recent consolidation is that of Independent Bank Corp., parent company of the $2.4 billion-asset Rockland Trust, and Falmouth Bancorp, parent company of Falmouth Bank.

Falmouth Bancorp, based in Falmouth, has $166.1 million in assets and four branches located within Barnstable County: East and North Falmouth, Falmouth and Bourne. While the banking environment on the Cape is no doubt changing, bankers say they are still trying to preserve the foundation of community banking that has been apparent for years.

Size is relative, and even regional banks moving into the Cape market are quick to point out they are much more community-oriented than national players such as Bank of America.

“The banking environment has really changed [on the Cape] – with Bank of America buying Fleet[Boston Financial] and Banknorth buying Cape Cod Bank & Trust, that is two out-of-state banks coming into the Cape and as the big guys come in, it’s going to be very interesting on how that plays off in the notion that Cape customers have always been partial to the local people,” said Christopher Oddleifson, Independent Bank Corp. president and chief executive officer. “The bigger those guys get, the better position we are in to maintain the community bank position. We are being extraordinarily sensitive to preserving the nature of the Cape by keeping the same people in the same branches and maintaining the local presence and enhancing our community contributions. With the big guys coming in, they will try to sell their bigness. We can provide everything they can provide to the segment of people who really want the intimacy of a smaller bank, and that is what we are looking to make happen.”

Oddleifson said Rockland Trust originally established itself in Falmouth in mid-2000, when the bank bought some Fleet Bank branches. Rockland Trust opened a de novo branch in Falmouth around the time it overtook the Fleet branches, but Oddleifson said that office “did not grow as we hoped, because Falmouth Bank had a pretty good hold on their customers. When Falmouth Bank showed interest in selling, it was a hand-in-glove fit. It strengthened us in the Falmouth market, it gave us several new branch locations, and it’s a good cultural fit.”

But the culture of the Cape is what banking professionals are carefully watching.

Banknorth President and Chief Executive Officer Christopher Bramley, who recently entered the Cape Cod banking market with the acquisition of Cape Cod Bank & Trust in December 2002, said it is important for banks to maintain the personal experience to which Cape customers are accustomed while providing the best in technology and updated systems.

“We like brick and mortar, we have all the electronics, and the way we interact with customers is through local offices dealing with local customers,” said Bramley of Banknorth’s move into the Barnstable region. “Cape Cod Bank & Trust has some great branches and great locations and we aren’t going to change that. Local and regional aspects are very important when you cross that bridge – it’s a different world on the Cape – and we are going to manage it that way. Our intent is just to strengthen the bank system and offer products that appeal to Cape residents.”

‘A Lot of Options’

While Cape Cod Five Cents Savings Bank still maintains the No. 1 market share in the Cape region, Bramley said the acquisition trend is happening all over the country – big and small – and it was just a matter of time before the big banks entered the small market.

“This is the same trend that is taking place all over the country and it goes in waves and cycles, and we seem to be in a pretty active phase. [Banknorth] is picking up the No. 2 player in the region and Sovereign [Bancorp] just picked up Compass Bank,” bringing the Pennsylvania-based bank into the Cape Cod marketplace, said Bramley. “There are a lot of options and a lot of competitive choices for consumers and businesses on the Cape, and that’s a good thing. We are clearly interested in Southeastern Massachusetts and we are in the process of doing the acquisition of Cape Cod Bank & Trust while at the same time, we are acquiring a bank in Foxboro. We will continue to look for other [banks] if they are there. If we have to, we’ll do it with de novo branches and lending folks.”

While the customers on the Cape prepare themselves for the entry of several of the Top 5 banks in the New England marketplace, analysts say the acquisition trend is far from over.

“There is not much left in terms of publicly traded companies in the Cape. With the last transaction being done with Seacoast, there is not much left in Massachusetts in terms of publicly traded companies, and this trend will continue for another 10 to 15 years,” said Cassidy. “We envision a polarized banking system – one end will be a half-dozen megabanks with over a trillion dollars in assets, and on the other end we expect to see small community banks that are not publicly traded and offer the level of service that the big guys cannot match and the customers are willing to sacrifice price and convenience for a high level of service. It’s a [constantly changing] industry … this has been ongoing for a number of years and it will continue.”