Bank branches taking root, to the concern of many

NEWTON -- Newton Centre is home to popular coffee shops, ice cream parlors, and restaurants, but one particular kind of business has come to dominate the city's commercial district.

Banks.

There's Bank of America and Wainright and Citibank; Sovereign, Citizens, and Banknorth; and more. Eleven in all, including three on one block of Beacon Street alone.

"It's 'Bank Row,' " Alderman George E. Mansfield said recently. "It's displacing retail uses, some of the businesses that brought customers to Newton Centre in the first place."

It's not just Newton. In Needham, Wellesley, and other affluent communities, bank branches have come to outnumber coffee shops and hair salons. According to the Massachusetts Bankers Association, the number of bank branches in Massachusetts has grown 20 percent since the 1980s to 2,200.

Joyce Moss, economic development coordinator for Needham, said the proliferation of banks is no different from another problem faced by affluent towns: the abundance of beauty spas.

"Do you ever want 50 stores of one type in one town? No," Moss said. "The question is, what can you do about it and what's wise to do about it?"

Babson College finance professor Ralph C. Kimball said the trend is surprising because industry consolidation has left fewer banks to choose from, and more people are now banking online. He said growth in the number of retail branches shows customers like the convenience of a nearby bank branch, where they have the option to conduct banking transactions in person and can avoid ATM fees. As for the banks, they like retail operations because they draw customers -- and profits from bounced check and credit card fees.

They also like the marketing value of having a physical presence in some of Boston's richest suburbs.

"It's a competitive effort to create a neighborhood effect," Kimball said.

That competition appears heated in Needham. Nine bank branches operate in the town's center, including two separate Bank of America branches. A half-mile away in Needham Heights, there are two more banks. A third is planned.

Needham community leaders are in the midst of a long-term study of how to revitalize the city's center, with the aim of making it more like Wellesley's. Currently, Needham has hardware stores, restaurants like Sweet Basil and Masala Art, boutiques, and antiques shops. Matt Talcoff, president of the Needham Heights Neighborhood Association and chairman of the town's Council on Economic Advancement, said new banks have also moved in over the years, prompting a familiar complaint among local residents: "Not another bank."

"It seems like we have . . . the most banks per capita in the state," he wrote in an e-mail.

Talcoff said he understands why landlords like banks: They pay the rent, are clean, and operate during structured hours.

Officials in both Newton and Needham held Wellesley up as an example of a community that had a successful mix of shops in its town center.

Meghan Jop, Wellesley's town planner, said she hasn't heard complaints about banks, but added, "We have a ton." She said there are five Bank of America branches in the town. Along a three-block area of Central Street, there's a Wellesley Co-operative Bank branch, a Citibank, and a Citizens. At Linden Square, she said, there are five.

"There's so many banks, I don't even have a count," she said.

Thomas Frisardi, chairman of Wellesley's Planning Board, speculated that the town center has been able to maintain a vibrant variety of shops because many people in Wellesley do their shopping locally.

"We don't have direct competition with a large mall," he said. "You'd have to go to Newton or Natick and through heavy traffic to get there."

Deciding what to do about an overabundance of banks can be tricky for local officials. Banks also contribute money and time to worthy local causes.

The Massachusetts Bankers Association does not track the number of bank branches in cities and towns. Bruce Spitzer, a spokesman for the group, said banks are the second largest employer in Massachusetts. In some cases, when two branches operate in the same retail area, it's often the result of a merger.

"Some may think, 'There's a lot of banks here,' " he said. "That's because there's a demand."

According to the 2000 Census, Needham's median household income was $88,079 in 2000. Newton's was $86,052.

In the wealthy enclave of Bronxville, N.Y., outside of Manhattan, local officials said they were so overwhelmed by the sheer number of banks, they enacted a zoning restriction that allowed new bank branches only on the second floor of most buildings.

Mayor Mary Marvin said the rule effectively banned banks, because there were few second-floor options. A new bank has not opened in the community in the four years since the ordinance was passed.

"There was a real hue and cry to stop with the banks," she said. "You can't have every sixth or seventh building a branch of a bank."

John R. Heerwagen, president and chief executive of Natick-based Middlesex Savings Bank, said he's heard about bank branch controversies in communities like Concord, where local officials are embattled over the opening of a Citibank branch there. Middlesex has opened new branches in Framingham, Bedford, and Boxborough in recent years, and has operated a branch in downtown Needham for years.

The market regulates itself, Heerwagen said: "A lot just depends on the staying power of that bank."

In Newton, a task force is researching ways to revitalize Newton Centre. There are few vacant storefronts. In addition to banks, there are restaurants like Appetito and Pava, a National Jean Co. store, a MiniLuxe nail and beauty lounge, and dueling ice cream vendors Cold Stone Creamery and J.P. Licks. Citibank recently opened where a Pier One imports used to be. Cambridge Savings Bank opened two years ago, replacing a Bruegger's bagel shop.

Ward 6 Alderwoman at Large Victoria Danberg, who lives near Newton Centre and sits on the task force, said she would consider proposing an ordinance similar to Bronxville's to limit the number of banks.

But David Zussman, whose family is the largest property owner in Newton Centre, said he's not worried about the profusion of banks. Zussman's family trust owns property along Langley and Union streets, as well as Piccadilly Square, including dozens of stores but no banks.

"They've kind of deluged us, but I guess that's because there's a market for them here," he said of banks. There are already so many, he said, he "couldn't conceive of many more coming in."

Others wonder.

Kevin Dutt, a local environmental activist who lives near Newton Centre, said when he moved to the area more than a decade ago, there was a produce market and a variety of businesses that catered to people who lived in the neighborhood. He said he liked it because he didn't have to use a car. That's not the case today.

"Now it's high-end jeans stores and lots and lots of banks," he said.

Lisa Gordon, president of the Newton Centre Neighborhood Association, said the number of bank branches grew slowly and "was a little insidious."

She wishes a movie theater or a bakery would move in. And she often contacts her favorite restaurant owners herself to tell them about shop vacancies when she sees them. She said there's great anticipation whenever a storefront goes empty, with everyone wondering what will open next.

"It's sort of exciting," she said. "A bank isn't all that exciting."

Megan Woolhouse can be reached at mwoolhouse@globe.com.