Over the protests of West Virginia's bank commissioner, a handful of national banks are about to hop across the state line - in both directions - using the "30-mile rule."
One West Virginia city alone, Wheeling, in the state's northern panhandle, will likely see at least three banks either leave or enter in coming months after getting approval from the Office of the Comptroller of the Currency.
The loophole, as written in the National Bank Act, allows national banks to relocate their headquarters 30 miles, even if that means moving across a state line.
"This should be a decision for the Legislature, not the OCC," said West Virginia Bank Commissioner Sharon G. Bias. "An appointed administrator should not be making decisions that have an impact on our tax revenue. Using this loophole, the OCC has gone ahead and made a decision that should belong to our legislators."
Ms. Bias recently protested an application by Belmont Bancorp of St. Clairsville, Ohio, to move its headquarters into Wheeling so it can begin branching in West Virginia. The Comptroller's office overrode her objection.
Three other bank companies in West Virginia or surrounding states have applied to use the loophole, not to branch into a new state as Belmont is doing but to consolidate their two-state holdings under one charter.
One, American Bancorp., would exchange headquarters towns with Belmont, if its application is approved. Now based in Wheeling, it wants to move across the Ohio River to St. Clairsville and then combine its two subsidiaries into one bank to save on costs and to become more convenient for customers.
In addition, Ms. Bias' office has spoken with four other banks that plan to file for a move under the 30-mile rule; two want to move out of the state and two into it.
Ms. Bias has no doubt that her objection to these latest applications will also be overridden by the Comptroller's office, since all 20 applications filed by banks nationwide since January 1994 have been granted. Twelve other banks have applications pending.
The 30-mile rule will become moot once interstate branching takes effect in 1997, but meanwhile, national banks are using it to get a leg up on their state bank competitors in the interstate banking-branching race.
In 14 of the 20 applications granted to date, the national bank has used the rule to move its main office up to 30 miles into a neighboring state where it has an affiliate bank, then merged the two, converting the out-of- state office into a branch.
In the remaining six cases, the applicants used the rule to move their headquarters into a new state in order to branch there.
"Our customers ignore state boundaries as far as employment and shopping goes," said J. Vincent Ciroli, president and chief executive of Belmont Bancorp. "So there's no reason why a bank should have to abide by archaic interstate banking laws."
Of its 10 offices in Ohio, five are located close to the West Virginia border, and consequently have many customers who come from West Virginia. Expanding into the state is a natural extension for the bank, he said.
As for $337 million-asset American Bancorp., it comes down to business sense, said its chairman, Jeremy C. McCamic.
"We're not trying to play fun and games with interstate banking laws," he said. "We're just trying to put our headquarters in the center of our operations and realize the savings from that."
Under its current two-state structure, American Bancorp. must have two sets of everything, such as advertising campaigns, boards of directors and regulatory exams, he said. By consolidating the company under one national charter, the bank expects to save about $1 million after the process is complete, he said.
Ms. Bias does not have much company among other state banking commissioners in her opposition. Only three other cases have been protested.
One result of this activity, she said, could be more support for opting into interstate branching. Seeing national banks branching into their markets under the 30-mile rule may be enough to make state banks lobby for the right to branch under the federal law, which automatically goes into effect in the summer of 1997.
