PAMELA J. MONTPELIER
‘A flurry of expansion’

If you ask bankers which part of Massachusetts has experienced branching growth in recent years, many will tell you the Interstate 495 area, located near towns like Franklin and Bellingham. As people move farther away from Boston, bank branches are going with them.

Strata Bank President and Chief Executive Officer Pamela J. Montpelier said the area has seen considerable branch building since she joined the bank in 1991.

Medway-based Strata has branch locations in Medway, Bellingham, Milford, Medfield and Millis, as well as two in Franklin.

“We had a flurry of expansion because there weren’t many banks in those locations,” Montpelier said.

There have been several factors contributing to the local growth, Montpelier said. She attributed the commuter rail stop in Franklin and the Garelick Farms site as being among the reasons more people are living in the area.

Montpelier said new residents have flocked to the Interstate 495 area because home prices are more affordable than those in Boston.

A. James Lavoie, president and chief executive officer of Natick-based Middlesex Savings Bank, said the area has become a refuge for homebuyers.

“Housing costs continue to be very high … a lot of people have moved farther west [for lower prices],” he said.

Wayne Cottle, president of Franklin-based Dean Bank, said the town has become a hot spot because of its proximity to Worcester, Boston and Providence, R.I.

“We’ve enjoyed success from growth in the area,” said Cottle.

Dean Bank has a full-service branch in Bellingham and another in Blackstone. In Bellingham, Cottle said there are a total of five bank branches, while there are two in Blackstone.

The competitive environment in the local banking industry has grown along with the population, Cottle added.

‘Busy Markets’

Besides competing with each other, the smaller community banks in the area are contending with non-bank, regional and national bank competition.

Lavoie said some of Middlesex Savings’ competition has been from Portland, Maine-based Banknorth Group, which acquired MetroWest Bank.

Pennsylvania-based Sovereign Bank has locations in Marlborough, Milford, Ashland, Holliston and Bellingham.

And in an area where community banks reign and regional banks exist, Venables said North Carolina-based Bank of America, the nation’s second-largest bank, could create a new dynamic.

Some of the effects of a growing population and additional branches are beginning to be felt.

“We are experiencing traffic patterns [similar to Route 128],” said Montpelier.

Thomas R. Venables, president and chief executive officer of Franklin-based Benjamin Franklin Savings Bank, said the Interstate 495 area has become busier.

“The Greater Franklin area has been the fastest-growing in the commonwealth,” said Venables. “Franklin and Bellingham are busy markets.”

In addition to its main office, Benjamin Franklin Savings has branches in Bellingham, Foxboro, Medfield and Milford.

Medway banks have seen some growth in recent years, including Medway Co-operative Bank, which has doubled in size. The bank moved to the business district of Medway in 1997.

John Hamilton, president and chief executive officer of Medway Co-operative, said there is a method to branching.

“The key to branching is to make sure the location needs whatever you are selling,” he said.

Lavoie also said branches are being built with the idea that banks will offer more services, such as lending or insurance.

“That’s one of the reasons branches are regaining popularity,” said Lavoie.

Venables said branches are still the main method of banking for people in both Franklin and Bellingham, as opposed to telephone or Internet banking.

Medway Co-operative has one branch, but Hamilton said branches only a few miles away are struggling because they may not be offering what customers need. Hamilton also noted that bank activity in Medway might be slightly slower because a significant number of people bank where they work.

“When dealing with towns like Medway, it’s a bedroom community … there is not a lot of industry in town,” Hamilton said.

Venables said Benjamin Franklin Savings branches are located in towns where people bank with the same institution as previous generations in their family.

In order to keep people coming in the door, banks have various strategies depending on the area they are located.

“We have stuck by a new branching strategy for many years,” he said.

Lavoie said it has been the bank’s approach to grow through new branches in towns in which it does not already have a presence. Middlesex Savings typically branches in contiguous towns because they tend to be better known.

In Medfield, Middlesex Savings built a branch at a vacated BankBoston office.

Middlesex Savings, which has 21 branches, also has found opportunities in the MetroWest area.

“The MetroWest area has been great to branch in,” said Lavoie.

A little farther west in the Berkshires, banks have not seen the same type of population or bank growth as other parts of the state – and banks have noticed.

“The Berkshires had a period of declining population, loss of job,” said David Bruce, president and chief executive officer of Lee Bank. “There is no growth out here.”

The little growth the area has seen comes from an increase in people from the New York City area who purchase second homes, Bruce said.

“They tend to get financing locally,” said Bruce.

However, many of those with second homes do their main banking near their primary residence, he said.

There are a total of four branches in Lee, two in Stockbridge and six in Great Barrington. There are eight banks, including a credit union, based in the town of Lee, according to Bruce.

Bruce said the area might have reached the worst of the population decline. Despite that, Lee Bank has no plans to build additional branches.

While western Massachusetts isn’t expected to become a bank magnet, some bankers also believe the Interstate 495 area will have to watch to assure it does not become overbanked.

“I’m not sure how many banks the area can sustain,” said Cottle.

Others say the entire state already has too many banks.

“Everyplace in Massachusetts is overbanked,” said Hamilton.

When there isn’t any more space for banks in the Interstate 495 area, there will be somewhere else to go. Both Montpelier and Venables say the Route 146 area in Rhode Island will become more popular for bank branches.

Venables said Benjamin Franklin Savings is already financing loans for that area.

Jennifer Jope may be reached at jjope@thewarrengroup.com.