The biggest bank in Colorado has dealt a blow to the state bankers association, pulling out of the 93-year-old group and taking nearly $90,000 in membership dues with it.

The withdrawal of Colorado National Bankshares, a subsidiary of Minneapolis-based First Bank System Inc., points up a split between big and small banks over interstate banking and may inspire other big ones to quit the Colorado Bankers Association.

The association's executive director, Donald Childears, said Colorado National's decision was unexpected but not fatal.

"We can survive without them," he said. "We do have members come and go every once in a while."

But the 1994 federal interstate branching law has pitted major superregionals like First Bank against community bank associations and other groups that want the state to opt out of the national statute.

Earlier this year, Colorado National joined units of Norwest Corp., Banc One Corp., First Interstate Bancorp, and Keycorp in denouncing the Colorado association's one-charter, one-vote policy. The big companies are thereby outnumbered by the community institutions.

But the association is financially dependent on the five big banks, which contribute nearly half the group's $700,000 annual budget, even though they control only 4% of the votes.

Colorado is one of several midwestern and western states where the interstate branching issue has caused a flare-up. Community banks in six other states have vowed to fight next year for legislation that would allow them to opt out of the federal branching law.

Only Texas has opted out so far, but it has pledged to review its position in 1999.

In supporting an opt-out bill, Colorado community banks raised the specter of giant multistate competitors. But in February, the bill was vetoed. The legislature quickly approved a compromise that allows interstate branching in Colorado in June 1997.

The Colorado Bankers Association's voting structure became a flash point for the big banks when the association came down on the community banks' side.

"When someone like First Bank of Colorado (with $344 million in assets in 1993) has more votes by itself than the large banks combined, it doesn't make sense," said Larry Pierce, a spokesman for First Interstate Bank of Denver. "We're very unhappy with the voting structure. We think it's unfair."

First Bank of Colorado has in the neighborhood of 30 votes. First Bank System's Colorado National subsidiary, which has $6.7 billion of assets, has two.

Colorado National decided to withdraw after receiving a $87,000 bill for its dues, bank spokeswoman Patrice Halloran said.

"We took a look to see if what they were doing fit with our strategies and goals," she said. "We felt like we were spending a significant amount of money with them."

Colorado National's conclusion was "completely" endorsed by its parent, First Bank System, according to Peggy Gunn, manager of First Bank's governmental affairs department.

Colorado National said it has not lobbied other big banks to follow its lead.

"We made this decision very independently," Ms. Halloran said. "There was no coercion. The others have to decide for themselves whether they agree with what we've done."

The other big banks, which threatened earlier this year to jump ship, have not indicated whether decisions are imminent. Mr. Pierce said First Interstate is evaluating whether to follow Colorado National's lead.

Mr. Childears said he expects no other defections. "We have dramatic assurances from almost all the other big banks that they are remaining as members," he said.

Both First Interstate and the $6.3 billion-asset Norwest Colorado, the state's second-largest bank, said they plan to attend an Aug. 23 meeting called by the association to consider a compromise voting method.

The new voting system would allow the organization's 15-member board, rather than the entire membership, to decide "bank structure" issues such as interstate banking.

Mr. Byrd is a freelance writer based in Denver.

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