Keeping pace with new branching powers for thrifts, four national banks in Oklahoma received approval last week from the Office of the Comptroller of the Currency to open offices around the state.
The banks are allowed to open the branches because federal law guarantees national banks the same privileges as their state-chartered competitors. The decision could end up eliminating branching restrictions for all financial institutions in Oklahoma.
Until recently, a 1983 Oklahoma law said state banks and thrifts and national banks could open only two branches in their hometowns and one branch outside of town. Even then, the out-of-town branch had to be within 25 miles of the main office and in a community lacking a local bank.
But, as specified in that law, the prohibition expired for thrifts on July 1, meaning they could open an unlimited number of branches anywhere in the state.
That left only state and national commercial banks subject to the branching restrictions, because federally chartered thrifts and credit unions were already exempt from the law.
But four national banks-InterBank of Elk City, Bank of Oklahoma in Tulsa, First Fidelity Bank of Oklahoma City, and First National Bank and Trust Company of Weatherford-successfully argued that limits on de novo branches should be dropped for them, too, because federal law says the comptroller may let national banks establish branches anywhere if state banks may do so.
Their case hinged on the definition of "banks" in Oklahoma, which includes trust companies, savings banks, and other institutions conducting banking business under state laws.
Prior decisions by the comptroller allowing national banks the branching authority of state thrifts have been upheld by two federal appeals courts and four district courts.
The July 28 approvals might help lift restrictions for state commercial banks too. Oklahoma is one of many states that has a wild card, or parity, statute. These laws let state banks do anything national banks are allowed to do in their state.
Lawmakers and bankers have fought over the Oklahoma law all year.
The Oklahoma Bankers Association and the Community Bankers Association of Oklahoma wanted the prohibition preserved for thrifts.
A group of about 60 community banks and thrifts-about 20% of the total based in the state-supported an end to the branching limitations for all institutions. They claimed the law was unfair and kept prices for community banks high, because it forced them to buy one another to grow.
Oklahoma lawmakers voted in March to let the prohibition expire for thrifts. They also amended the state wild card law, dropping a specific exclusion designed to protect the old branching law.
So while the branching restrictions still apply to state banks, institutions can get around them by requesting parity with national banks under the wild card law.