PORTLAND – The 42-page document on William Ryan’s desk is titled “Operation FBI.”

This binder – “Operation Fleet-Bank of America Initiative” – contains a detailed town-by-town analysis of where Ryan’s company, Banknorth Group Inc., competes with FleetBoston Financial Corp.

These are the “war zones” where Banknorth will aggressively woo Fleet’s customers and employees as Fleet, now New England’s largest bank, gets taken over by Bank of America Corp. in a $47 billion deal.

When that happens, the Fleet name will disappear and Banknorth will become the largest bank with its headquarters in New England. Such a thought would have been laughable not long ago. After all, the company came within a few bad loans of failing in the early 1990s, when its stock price fell below $2 a share.

Banknorth has risen from those ashes and intends to keep rising. In the months ahead, it will use its “Operation FBI” strategy to send mailings to hundreds of thousands of Fleet personal banking customers asking them come to Banknorth. Banknorth will also seek out Fleet’s small business and government customers to add to its customer base.

Ryan, the president and chief executive of Banknorth, is relishing the company’s ascent in the banking world.

“When I go to Wall Street they say, ‘You’re the largest bank in New England?’ What they’re really saying is, ‘It’s hard to believe,”‘ Ryan said from his downtown Portland office.

In the early 1990s, People’s Heritage Bank – it didn’t become Banknorth Group until 2000 – was just another New England bank in big trouble. In Maine, the venerable Maine National and Maine Savings banks had already gone under, and many were predicting that People’s Heritage would be next.

Its stock price fell to $1.87 a share – 94 cents when adjusted for a 1998 stock split. The company lost nearly $100 million from 1990 to 1993.

But 1993 was also a turning point, the year the company made its first acquisition as part of a long-range plan to become the largest community bank in New England. It has since acquired 23 other banks, and now has 354 branches in Maine, New Hampshire, Vermont, Massachusetts, Connecticut and upstate New York.

Along the way, Banknorth has had 10 consecutive years of record earnings and its assets have grown to $25.7 billion, up from less than $2.5 billion a decade ago. In its latest issue, Forbes magazine calls Banknorth the nation’s best-managed bank.

If you had invested $10,000 in Banknorth on the day the stock hit its low, it would be worth more than $340,000 today.

“I think the growth has exceeded everybody’s expectations, including the people who have been driving the growth,” said Brad McCurtain, who has followed the company since it went public in 1987. “I remember when assets were $2 or $3 billion and everybody thought the bank would remain that size.”

Ryan sees opportunity with the Bank of America takeover of Fleet.

Banknorth already has 204 branches that compete with Fleet; those Fleet branches have $14.6 billion in deposits, he said.

The “Operation FBI” document provides details of how many customers each bank has in those towns, how many deposits are in each bank and each bank’s market share. Mailings will soon go out to Fleet customers in specific zip codes.

Banknorth will hold internal contests with financial incentives to see which employees can lure the most Fleet customers. Ryan expects Banknorth’s revenues to grow an additional 8 percent in 2004 simply through new business picked up from Fleet customers.

He also expects continued growth through acquisitions, primarily in Massachusetts and Connecticut, and projects that Banknorth’s assets will exceed $40 billion in two years.

In the long run, however, Bank of America’s takeover of Fleet will make for a formidable competitor in New England. Bank of America has a reputation for being more customer-friendly than Fleet, and is strong in electronic banking and with large business customers.

And even as the largest New England-based bank, Banknorth is still a midsize regional enterprise. By comparison, Bank of America will have 32 times the assets that Banknorth has when it completes it takeover of Fleet, according to SNL Financial in Charlottesville, Va.

Evan Thomas, an analyst with SNL Financial, said Banknorth executives acknowledged at a recent forum that Bank of America will pose new challenges.

“That says good things about Banknorth because they’re realistic,” Thomas said.

Banknorth, meanwhile, has become a potential takeover target itself. That’s one reason why its stock price has risen more than 40 percent this year.

Jim Ackor, an analyst with RBC Capital Markets in Portland, said he expects Banknorth to continue with its current business strategy for the next five years or so.

“If I’m going to look out five to 10 years, I’m going to bet they’re being bought by someone else,” he said.

For now, Ryan, who’s 60, plans to stay at the helm for at least five more years and probably longer, continuing to put 50,000 miles a year on his company Cadillac visiting his banks and others.

Ryan said he wants to make sure the company continues to emphasize customer service and walk-in branches, and live by its “Too big to be small, but too small to be big” philosophy.

Banknorth’s structure, with each state having its own bank name, president and boards of directors, will ensure that it won’t become a behemoth out of touch with its customers, he said.

“Size is not the issue,” Ryan said. “It’s how you run it.”

On the Net:

Banknorth Group Inc. http://www.banknorth.com

FleetBoston Financial Corp. http://www.fleet.com

Bank of America Corp. http://www.bankofamerica.com

AP-ES-01-03-04 1204EST

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