The Banking Landscape | Larger financial institutions lean toward more affluent communities
If you drive for a mile and a half through the center of Framingham, starting on Central Street, continuing on to Route 9 and then turning onto Temple Street, you’ll pass seven banks, all of them big, national or regional brands.
But head to the opposite side of Central Massachusetts and take a much longer drive, from Hubbardston to Barre and then through Rutland to Paxton, and you won’t pass a single big-name bank. Instead, you’ll see five branches of local community banks and two credit unions.
As the map above of Central Massachusetts makes clear, small banks, large banks and credit unions are all scattered across the region, but the distribution isn’t even. The MetroWest area, where median incomes are highest, has the greatest concentration of national and regional bank branches.
To The West, Smaller Banks Dominate
To the west, where the population is less dense and median incomes are lower, residents are much more likely to find a branch of a community bank. And in old industrial centers like Worcester and Fitchburg, credit unions are a big part of the mix.
Bonnie Biocchi, president of the MetroWest Chamber of Commerce, said she sees many banking institutions of all kinds in MetroWest, which is good for local businesses because they have choices when they’re looking for loans or other services.
“It seems like this is sort of a hot spot or a hub for financial institutions,” she said. “I don’t know if that’s because of the demographics here, sort of stable and affluent communities.”
Looking For The Numbers
Bruce Spitzer, spokesman for the Massachusetts Bankers Association, said the essential question for any bank considering opening a new branch is where it can find the most concentrated population.
“The vast majority of institutions will choose to be where the vast majority of customers are,” he said.
Spitzer said that’s true of both big national and regional banks and small local ones. But he noted that some community banks have been around for more than a hundred years. If they’re in less populated areas, he said, they’re less likely to be a target for mergers than small banks in big urban centers.
He said banks have actually consolidated less than many other industries in the state, in part because many Massachusetts community banks are mutual institutions that must go through an arduous process to be acquired.
“We’re fortunate to have so many legacy institutions that have been around so long,” he said.
Tied To History
Robert B. Kimmett, spokesman for the Marlborough-based Massachusetts Credit Union League, said the fact that credit unions in Central Massachusetts are largely found in former mill towns is a function of the area’s history.
“A lot of the folks that were involved in the beginnings of credit unions were immigrant families, and they set the institutions up to serve members of their own communities when they were being denied service by other financial institutions,” he said.
Kimmett said credit unions tend to be conservative with their money and have usually been slower than banks to build new branches.
Like Spitzer, he said a key to opening a location is always having enough people in the area to make it worthwhile. But he said credit unions also have a mission that encourages them to set up shop in places where incomes are lower.
“I think serving the underserved is part of what credit unions kind of embrace as part of the core mission of service to the community,” he said.
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