Calling the existing regional compact anticompetitive and bad for the economy, two Missouri banks said they will press lawmakers next spring to open the state to full interstate banking.
Executives at Mark Twain Bancshares and Southwest Bank, both in St. Louis, confirmed speculation they will push for legislation to replace the current eight-state pact with a law allowing Missouri banks to buy into, or be bought by banks in, any state that reciprocates.
"Its time has come," said John Dubinsky, president and chief executive officer at Mark Twain, a $2.4 billion-asset company that hopes to expand into the upper Midwest if the legislation is passed.
He declined to say who would sponsor the legislation when the session opens Jan. 4, but sees it as an uphill battle.
There are certainly a number of parochial interests who have their own monopolistic interests in maintaining the status quo," Mr. Dubinsky said.
The remark was a reference to Boatmen's Bancshares, a $25.2 billion-asset company based in St. Louis that has the legal maximum deposit share in Missouri and has begun to expand as far away as New Mexico.
A spokesman for Boatmen's declined to comment, other than to say the bank had no position on proposed legislation.
Magna Supports the Move
Spokesmen for other Missouri banks, including fast-growing Mercantile Bancorp. of St. Louis and Commerce Bancshares of Kansas City, did not return telephone calls.
Only St. Louis-based Magna Group Inc., a $3.8 billion-asset holding company often touted as a takeover candidate, expressed support.
"I hope they pass it," said Magna chairman William Badgley.
The Missouri Bankers Association is not formally behind efforts to expand the regional reciprocal agreement passed in 1986, long after, many states adopted similar pacts.
"We're hearing rumors that there may be a bill, but we haven't seen anything yet," said Bill Ratliff, chief lobbyist for the state trade group.
"Our position is that we like the current law."
But critics say the law has effectively allowed Missouri-based banks to expand while keeping out other major players.
For instance, an anti-leapfrog provision in the law blocks Norwest Corp. and Banc One Corp. from moving into the state, as they reportedly desire.
Since the law was passed, Missouri banks have expanded into other states much faster than out-of-state companies have moved into the Show-me State.
It is only recently that companies such as Fourth Financial Corp. of Wichita, Kan., have begun to acquire banks in Missouri.
|I Think It's Inevitable"
"There's really no one big enough to come into Missouri from the neighboring states," said Steven Schroll, an analyst at Piper, Jaffray & Co, Minneapolis.
"I think it's inevitable that this kind of [interstate] legislation would be passed."
Only First Chicago Corp., a $53 billion-asset bank in neighboring Illinois, is eligible and has the muscle to make a major move into Missouri.
Still recovering from bad times and concentrating on the Chicago market, that bank has been viewed as too focused, on resolving its problems to plot expansions.
Analysts said that may change with continued improvement in First Chicago's balance sheet.
In pressing their case for a broader law, Mark Twain and Southwest Bank will argue that it will make local banks stronger and boost the Missouri economy by bringing larger financial institutions to the state.
"As long as Missouri has parochial, monopolistic banking laws, assets will flow to other states," Mark Twain's Mr. Dubinsky said.
One legislative aide predicts little support for full interstate banking.
He said lawmakers might agree to add a new ring of states to the regional reciprocity law, thus allowing Minnesota and Ohio banks into Missouri. "Mark Twain and Southwest may be asking for too much at once," the source said.
Partial Move Called Inadequate
But Drew Baur, chairman and chief executive officer at Southwest Bank, sees a partial move as inadequate. "To just expand the regional compact doesn't make a hell of a lot of sense," he said.
Ironically, some expansion-minded banks that have opposed interstate banking could see their stock prices rise if such a law passes. Any increase would boost their own currency for future acquisitions.
Joseph Stieven, senior bank analyst at Stifel, Nicolaus & Co. in St. Louis, said the regional law has depressed stock prices, adding, "We think the Missouri banks, in general, are at least 15% undervalued when compared to the averages of midwestern stocks."
A History of Resistance
Still, Missouri bankers have long resisted change. In the 1960s, they fought holding company legislation.
In the early 1980s, they flatly rejected opening the state after Citicorp sought to change the law so it could establish its credit card bank there.
That reluctance is not lost on Southwest Bank's Mr. Baur. He dryly observed, " I think Missouri was the last state to use wood-burning stoves, too."