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JULIE SABLE

Staff Reporter

Shortly after Wells Fargo Bank acquired First Interstate Bank, billboards went up all over town asking motorists how many Wells Fargo branches they had passed on their way to work.

On the surface, the ad campaign was about touting the bank's number of branches. But it also addressed one of the biggest complaints from consumers about bank consolidations the closure of branches.

"The branch is important to a neighborhood and can stabilize a neighborhood," said Gail Hillebrand, an attorney with Consumers Union of U.S., Inc., a non-profit publisher of Consumer Reports magazine.

"Take the business owner who cannot make his night drop at an ATM and now has to drive further to get to the closest branch to make that deposit," she said. "That takes time away from his business."

Hillebrand and other consumer advocacy groups also complain that bank mergers diminish the amount of loans available for small businesses and hurt those individuals and businesses who do not like banking over the phone or computer.

But banking industry officials counter that consolidations generally are beneficial, saying that consumers get more banking options, a greater variety of banking services and the ability to do business with a stronger institution.

Who's right? Both sides, according to Conrad W. Hewitt, superintendent of banks for the California Department of Banking.

"Closing banks sometimes hurts (and) sometimes doesn't hurt the consumer," Hewitt said.

Although branch closures can be an inconvenience, "consumers benefit from additional financial products and if branches close, there are usually other branches or ATM's in the area so the impact is not all that dramatic," he said.

Hewitt also said that bank consolidations benefit consumers indirectly by weeding out the weak banks that might fail in hard times.

"There are a large number of problem banks that would get into trouble if California has a recession," he said. "Also, there is plenty of competition from non-banks that take deposits and offer banking services to consumers.

Critics and supporters of bank consolidations agree on one point: the bigger banks that drive the consolidations generally offer a greater variety of banking options, such as banking kiosks in grocery stores.

And that trend is only going to continue, as the satellite banking locations begin offering non-bank services, including sales of theater and ski lift tickets, said John Stafford, spokesman for the California Bankers Association.

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