Banks continued to take over some of the most prominent storefronts, shops old and new opened, shuttered—and in one case, opened again—and 375 businesses weathered another year in Harvard Square.

In the last year, two banks—Citizens and Harvard University Employees Credit Union (HUECU)—have moved their Harvard Square locations closer to the center of the Square. A third, Sovereign, is slated to open on Mass. Ave. between Bank of America and CVS this summer, bringing the total number of banks in the Square to seven.

Meanwhile, the Square experienced the usual turnover among its 80 restaurants. But major changes in Square business are imminent, as the City of Cambridge embarks upon a multimillion-dollar effort to make Harvard Square more pedestrian-friendly over the next several years.

IN THE MONEY

When Citizens and HUECU moved to bigger and better quarters last year, they joined a cluster of three other banks centered around the main T stop.

Of the Square’s six banks—Bank of America, Cambridge Savings Bank, Cambridge Trust Company, Citizens Bank, Harvard University Employees Credit Union (HUECU), and Wainwright Bank—only Wainwright is not located in that one-block area.

From 2003-2004, the latest time period for which data were available, banks opened in 22 new locations across Eastern Massachusetts, bringing the regional total to nearly 1,800 locations, according to Finard and Company, a market research firm.

HUECU debuted its new branch, which is attached to the Holyoke Center on Dunster Street, last week, according to president and CEO Eugene Foley.

Only its mortgage operations will remain in its old location inside the Holyoke Center arcade.

The credit union has operated out of several Harvard Square buildings since its founding during the Great Depression by members unable to get loans elsewhere, said Foley.

Founded in Lehman Hall in 1939, HUECU had its headquarters in the basement of Grays Hall—along with the Harvard University Police Department—before moving into the upper floors of the Holyoke Center following the Center’s completion in 1966.

After Sept. 11, access to the Holyoke Center towers was restricted, and the credit union moved to the first-floor arcade. But that location proved too small; “we had lines going out the door,” Foley said. So when City Sports vacated the Dunster Street location last June, HUECU arranged to move in.

Similarly, Citizens Bank closed its Mass. Ave. branch opposite Widener Library last November, moving into the John F. Kennedy Street location occupied by Abercrombie and Fitch until July 2004.

TRANSFORMING THE TOWN

Some of this year’s most important decisions affecting Square businesses laid the groundwork for the greatest change in the Square since the extension of the Red Line in 1985.

The City of Cambridge and Square businesses are involved in a joint effort to transform Palmer Street, the now-secluded road threaded between the Palmer Street Coop and the Mass. Ave. Coop.

“Instead of a tired alley, [Palmer Street] will become a really terrific corridor,” said John DiGiovanni, a Square real estate maven whose company owns the Garage, and an investor in the Palmer Street project.

Plans call for the addition of video screens to both sides of the Coop’s elevated walkway and columns on both sides of the street.

The City of Cambridge has also committted $3.5 million thus far to the revamping of the Square.

The crosswalk between Out of Town News and Bank of America will double in size, and a landscaped pedestrian island will be built in front of the Lampoon building on Mount Auburn Street, among other improvements.

“It’s fair to say that [the Harvard Square project] will be the biggest revitalization [in] a couple of decades, even a quarter century,” DiGiovanni said.

Turnover continues among the Square’s restaurants, with Brother Jimmy’s on Winthrop Street closing in May, and plans for two new eateries—Hoffa’s Swiss Alps and Phatt Boys, a “Southern barbecue seafood shack”—in the works.

And Cafe Pamplona, a Bow Street restaurant open since 1959, closed its doors last December when its 88-year-old owner, Josefina Yanguas, announced she was retiring.

But the cafe was up and running again by May, after Yanguas rejected several offers to buy or lease the cafe.

—Staff writer Brendan R. Linn can be reached at blinn@fas.harvard.edu.