Location, location, location. The old adage is becoming even more significant in this era of electronic commerce as banks decide whether to close branches or add them.

Opening a branch is costly, but the face-to-face contact is a way to offset the impersonality of remote banking.

Closing one is also expensive-sometimes especially from a public relations viewpoint. The announcement can be a bombshell if community leaders think they see plans to desert certain groups of people. (Some banks have muted such criticism by giving the abandoned location to a community group for use as a clubhouse or church annex.)

But even if there is no uproar, what do you do with the building if you own it?

You can sell it to another bank. Those who arrange branch sales report that the prices offered often vastly exceed what the seller expects to get.

But this leaves a competitor in the old location. Since most banks close branches mostly because they have others nearby, selling to a competitor can be short-sighted.

When Jerry Lipkin of Valley National Bank in New Jersey heard that a large bank was going to close a branch it had acquired through a merger, he arranged to rent the building with all the teller cages still in place.

On Friday the large bank closed the branch. On Monday it opened under new ownership. Valley gleaned accounts from customers of the old bank who didn't even know they'd walked into a new one; who looks at signs on the doors?

Location specialists are sometimes valuable in the opening-and-closing game. One such is Peter Louderback, a partner of Spatial Decisions Management of Nantucket, Mass.

Mr. Louderback earns his living helping banks determine what the competition is in a given location. He helps them understand the potential for deposit growth and for business outside of traditional banking, such as selling investment products.

Sometimes human nature plays a major role in determining where a branch should be.

Consultant Carl Meyer of New York told me years ago that a branch should never go on the going-to-work side of a highway. No one has time to stop during the morning commute, he reasoned, and people coming home don't want to cross over. Bottom line: Build on the going-home side.

A new company, Commercial Real Estate on Line, is beginning to offer information for those searching for locations appropriate for retail use. This Englewood, N.J., firm is putting data about 40,00 retail sites on the Internet.

The decision on whether to cut or add branches is among the toughest a board and its top management face today. But census information and other data services can help. Mr. Nadler, an American Banker contributing editor, is professor of finance at Rutgers University Graduate School of Management.

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