Even as major Wall Street investment banks and mortgage companies teetered on the edge of disaster the last few weeks, Massachusetts banks have remained strong - even benefiting from an influx of new deposits and customers - say area banks and industry spokesmen.

Bay State banks managed to avoid the worst of the mortgage crisis by steering clear of exotic and subprime mortgages that have rattled the foundations of the lending industry. Some of the state's banks held stock in Freddie Mac and Fannie Mae, the troubled secondary mortgage purchasers that were recently taken over by the federal government, but those losses appear to be confined to a minority.

The best news for consumers, says Massachusetts Banking Association spokesman Bruce Spitzer, is that Massachusetts banks have yet to feel a generalized credit shortage capable of shutting off the flow of money to businesses or consumers.

"Loans are still available to qualified borrowers," said Spitzer. An exception may be land developers facing a bleak market for new homes who may find banks less enthusiastic about lending.

Meanwhile, said Spitzer, many banks are reporting increases in deposits as some customers shift their savings from stocks and other investments to minimize risk. E. Dennis Kelly, president of Bristol County Savings Bank, said his bank has noted an increase in deposit inflows over the last 6-8 months as instability has grown in the investment world.

"We've had a modest increase, not to say that people are breaking down the doors," said Kelly who added that many depositors may be reacting emotionally to unsettling times for investments.

"People watch TV, they hear what's happening and they're concerned," he said.

Ed Steadham, vice president for public affairs of Webster Bank, said an uptick in the number of new deposits has accelerated in recent weeks and cited instability in the financial markets.

Christopher Oddleifson, president and CEO of Rockland Trust, said his bank has also seen a modest increase in the number of new deposits recently.

While some major national banks such as Washington Mutual buckled under the strain of financial troubles linked to the mortgage industry, Massachusetts banks remained relatively insulated.

Nevertheless, some were buffeted and their stock prices temporarily deflated due to the credit crisis even though they were not involved in writing subprime loans. Sovereign Bankcorp stock plunged 70 percent earlier this week, then rebounded a like amount. A bank spokesman said Sovereign may have been a victim of a rush to sell off bank stocks in general.

Many Massachusetts banks may have suffered losses because of their holdings of Fannie and Freddie stock that were virtually wiped out in the federal takeover. According to an American Bankers Association survey, 27 percent of U.S. banks owned shares.

Banking industry officials are quick to point out that deposits insured by the Federal Deposit Insurance Co are protected up to $100,000 - and soon to be $250,000 under the newly approved federal bailout.

Overall, said MBA's Spitzer, the nation's banks appear to be in better shape financially than during the last banking crisis in 1989-91. In 1989, 535 banks failed in contrast to only 13 banks so far this year. RICK FOSTER can be reached at 508-236-0360 or at rfoster@thesunchronicle.com.