NORTH ANDOVER, Mass. - Banker Jane Walsh doesn't believe in branches. That's good, because any branch of her Northmark Bank would be a letdown compared with the stately Victorian mansion that doubles as its main office.

Upon entering Northmark, one has the impression of walking into the house of a rich aunt. The red brick, three-story home's entryway is bathed in natural light that streams through floor-to-ceiling windows. Fresh flowers are set on an antique table, Oriental rugs abound. Not until you turn the corner, and see a quiet trio of old-style teller windows, is there any evidence of this being a commercial bank.

It's a cross-seller's dream come true.

"We wanted to create a comfortable atmosphere for people to come into," said Mrs. Walsh, president and co-founder of Northmark. "You wouldn't want your clients standing behind a rope. The atmosphere of bringing them into the bank and sitting down in your parlor was more appealing than some stock, new, modern facility."

From behind her mahogany desk in the old master bedroom of the 110-year- old building, the 41-year-old president presides over a high-tech community bank with an aristocratic air. She's out to prove that a $145 million-asset community bank can be a destination, that more branches don't mean more money, and that a seven-year-old institution can project the image of a bank with stature, tradition, and history.

For instance, though the bank's lending is concentrated in New England, the bank has attracted clients from as far away as California, Florida, and New York City through referrals from local residents. Even Massachusetts Gov. William Weld prefers to do his banking at Northmark, which holds a mortgage on his Cambridge home.

"It's not a traditional bank. It's not in a traditional place," said Robert Fichter, executive director of the Massachusetts Bankers Association. "What it offers the customers - those who can find it - is something special in the way of service."

Much of that cachet is attributable to Mrs. Walsh, a former bank technology officer who found she had an uncanny knack for creating a unique bank.

"Jane is one of the class people in New England banking," said Stanley Lukowski, president of Eastern Bank Corp. in nearby Lynn. "She made a very smart move getting in that building. She's serving a community that lends itself to that whole scene."

The past chairman of the Massachusetts Bankers Association and a current director of the Boston Federal Reserve Bank, Mrs. Walsh started the bank with Daniel J. Murphy 3d, who worked with her as chairman of their former employer, Arlington Trust Co., before it was bought in 1986 by Hartford National Corp.

"She's absolutely the most talented person I've ever worked with," Mr. Murphy said, co-founder and chairman of Northmark. "It's been fun, sort of like playing baseball with Mickey Mantle. When you get somebody that good, it elevates the level of performance of everyone around you."

She closely supervised the 90-day renovation of the house in 1987 to ensure that the contractor maintained the historic flavor, and personally selected the lamps and Oriental rugs.

Whether it's picking out the fresh flowers for the bank every day or bending down in the portico to straighten a rug, Mrs. Walsh tries to have a hand in the bank's physical appearance.

But it's what's behind the facade that makes the difference.

Mrs. Walsh attributes Northmark's success - it's had steady growth if less than stellar profits from the day it opened - to bank officials' efforts to control costs by maximizing the use of technology.

"The need to build brick-and-mortar branches just isn't there anymore," she said, noting that because Northmark was new, it could start from a higher technological stage than its older competitors. "Community banks can serve their communities without having branches on every corner."

Back-office operations have been kept in-house, conducted out of the basement of what is known as the "Carriage House," a three-story addition to the building.

Mrs. Walsh said she doesn't plan to open branches, although she admits that the back-office operations may eventually have to be moved to another site.

Instead, the bank will rely on electronic banking and other high- technology services to fulfill its clients' needs. And, she believes, Northmark's reputation for quality customer service will draw other customers to her rural office, which is almost 30 miles north of Boston.

"The ability to serve clients throughout the market from one location works very well," she said. "I don't intend to change that. Bigger is not better. We take in one client at a time and we don't take clients unless we can service them properly."

As a result, Mrs. Walsh, who directed data processing operations in- house for Arlington Trust for 15 years, can maintain internal control over all of the banking services offered. Of the 14 new banks in the metro Boston area started from 1986 to 1988, Northmark is the only one to maintain back-room operations in-house.

Recognizing that the bank's loan and deposit products wouldn't distinguish Northmark from its competitors, Mrs. Walsh concentrates instead on the relationship approach. As each new customer enters the quaint surroundings, Mrs. Walsh and other officials cross-sell all of Northmark's other products, pushing the concept that they can best provide all of the customer's banking relationships.

In fact, bank officials are quick to point out that Northmark offers the same services as a large regional bank, but with a staff of only 27. All of the bank's employees came to Northmark with prior banking experience.

To keep costs low, not only does each official perform multiple banking duties, they share maintenance responsibilities. The chief financial officer, Robert Vachon, even takes out the garbage every Tuesday.

The in-house consolidation has ranked Northmark among the most efficient banks in the nation, Mrs. Walsh said, although the bank, which is closely held, doesn't compute efficiency ratios. According to Sheshunoff Information Services, however, Northmark's ratio of overhead expenses to average assets was 2.10% for September 1994. The average in the state is 4.38%.

Not everyone supported Mrs. Walsh's initial efforts to start Northmark. The bank's first customer, Mrs. Walsh's 67-year-old mother, thought she was crazy.

"She said, 'Oh, honey. Sit down. You've had a tough day. You don't just start a bank,'" Ms. Walsh said.

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