A Look at Laws Granting Interstate Powers to Banks

ALABAMA: Effective in July 1987, bank holding companies from Arkansas, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, South Carolina, Tennessee, Texas, Virginia, West Virginia, and the District of Columbia may acquire Alabama banks that have been in existence for at least five years.

ALASKA: Without restriction, out-of-state bank holding companies may acquire banks in Alaska.

ARIZONA: Out-of-state banks may acquire Arizona financial institutions under a law effective Oct. 1, 1986. Out-of-state institutions may set up de novo operations in the state after June 30, 1992. Effective May 31, 1984, Arizona financial institutions less than five years old are protected from hostile out-of-state bidders.

ARKANSAS: Arkansas permits regional reciprocal interstate banking beginning Jan. 1, 1989. The region includes Alabama, the District of Columbia, Florida, Georgia, Kansas, Louisiana, Maryland, Mississippi, Missouri, Nebraska, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, and West Virginia. The acquiring bank holding company must comply with the federal Community Reinvestment Act of 1977 and submit a plan for meeting the credit needs of individuals and small businesses in the communities affected by the transaction.

CALIFORNIA: Full nationwide reciprocal banking began Jan. 1, 1991. A law effective in July 1987 allowed California banks to be acquired by bank holding companies in the 12th Federal Reserve District, plus Colorado, New Mexico, and Texas.

COLORADO: Full nationwide interstate banking was permitted on Jan. 1, 1991. Regional reciprocal banking with seven adjacent states had been effective since July 1, 1988.

CONNECTICUT: Effective March 19, 1990, Public Act 90-2 allows banking institutions and holding companies from outside New England to acquire Connecticut banking institutions and holding companies on a reciprocal basis. Out-of-state holding companies may establish de novo banking institutions and holding companies in Connecticut, on a reciprocal basis, beginning Feb. 1, 1992.

DELAWARE: On June 30, 1990, reciprocal nationwide banking became effective. Stockholders of in-state banks may elect to exempt themselves from out-of-state takeovers.

DISTRICT OF COLUMBIA: Since Nov. 23, 1985, banking companies from Alabama, Florida, Georgia, Louisiana, Maryland, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, and West Virginia may acquire banks in the District of Columbia. Since April 11, 1986, banks outside the reciprocal region are permitted to acquire District of Columbia banks if they make certain community development commitments in the District.

FLORIDA: Bank holding companies may enter on a reciprocal basis from Alabama, Arkansas, Georgia, Louisiana, Maryland, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, West Virginia, and the District of Columbia. The 1984 law stipulates that the Florida institution being acquired must be at least two years old.

GEORGIA: Out-of-state bank holding companies from Alabama, Florida, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, and the District of Columbia may acquire Georgia banks that are at least five years old, under laws of 1984, 1987, and 1990.

IDAHO: Banks and thrifts from any state have been permitted to buy Idaho banks and thrifts since Jan. 1, 1988. The March 1987 law does not hinge on reciprocity.

ILLINOIS: Full nationwide interstate reciprocal banking became effective Dec. 1, 1990, under Senate bill 990. Signed into law in September 1987, this bill amends the Illinois Bank Holding Company Act of 1957.

INDIANA: Bank holding companies from the contiguous states of Illinois, Kentucky, Michigan, and Ohio may acquire Indiana institutions. IC 28-2-15-1, the law passed in 1985, became effective Jan. 1, 1987. Another law, effective June 1, 1987, adds Iowa, Missouri, Pennsylvania, Tennessee, Virginia, West Virginia, and Wisconsin to the compact. No out-of-state bank holding company may acquire more than 12% of the total deposits of all financial institutions in the state. Full, nationwide banking on a reciprocal basis goes into effect July 1, 1992 (IC 28-2-16-1).

IOWA: In 1990, the Iowa legislature adopted HF 685, permitting regional interstate banking - effective Jan. 1, 1991 - for the contiguous states of Illinois, Minnesota, Missouri, Nebraska, South Dakota, and Wisconsin.

KANSAS: Full reciprocal interstate banking takes effect in Kansas on July 1, 1992. Since July 1, 1991, a bank holding company in a reciprocal state contiguous to Kansas, or in Arkansas or Iowa, has been permitted to acquire a bank or bank holding company in Kansas, with approval of the state banking board. Gov. Joan Finney signed this new law (House Bill 2059) on March 18, 1991.

KENTUCKY: Since 1985, bank holding companies from anywhere in the United States may acquire banks in Kentucky on a reciprocal basis. No company is allowed to control more than 15% of bank deposits in Kentucky.

LOUISIANA: Full interstate banking on a reciprocal basis became effective Jan. 1, 1989.

MAINE: Bank holding companies nationwide may acquire Maine banks under legislation passed in 1984.

MARYLAND: Under legislation effective July 1, 1987, bank holding companies in Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, Pennsylvania, South Carolina, and Tennessee are permitted to enter the state. A separate regional reciprocal arrangement allows banks in Delaware, Virginia, West Virginia, and the District of Columbia to acquire Maryland banks. Bank holding companies from outside the regional pacts may establish limited-purpose banks in Maryland, according to legislation passed in 1983.

MASSACHUSETTS: Nationwide banking for Massachusetts banks was authorized by Chapter 102 of the Acts of 1990, effective Sept. 4, 1990. Banks are permitted to opt out of this statute by a two-thirds vote of their directors until June 30, 1992.

MICHIGAN: Effective Oct. 10, 1988, banks from any state may acquire Michigan banks on a reciprocal basis.

MINNESOTA: Since July 1, 1986, banking companies from Iowa, North Dakota, South Dakota, and Wisconsin have been allowed to acquire Minnesota banks on a reciprocal basis. The 1988 session laws, chapter 616-SF203 (effective April 24, 1988) add Idaho, Illinois, Kansas, Missouri, Montana, Nebraska, Washington, and Wyoming to the list of reciprocating states.

MISSISSIPPI: Banks in Alabama, Arkansas, Louisiana, and Tennessee may acquire Mississippi banks after July 1, 1988. On July 1, 1990, banks from Florida, Georgia, Kentucky, Missouri, North Carolina, South Carolina, Texas, Virginia, and West Virginia were also allowed to enter the state on a reciprocal basis.

MISSOURI: Since Aug. 13, 1986, bank holding companies from Arkansas, Illinois, Iowa, Kansas, Kentucky, Nebraska, Oklahoma, and Tennessee have been permitted to acquire Missouri banks on a reciprocal basis.

NEBRASKA: Full nationwide reciprocal interstate banking became effective Jan. 1, 1991. On April 8, 1988, the governor signed LB 375 into law, opening Nebraska to regional reciprocal interstate banking for one year beginning Jan. 1, 1990.

NEVADA: Since July 1, 1990, out-of-state organizations have been permitted to acquire an existing institution, charter a new institution, or establish a branch office. Reciprocal restrictions were dropped on Jan. 1, 1989.

NEW HAMPSHIRE: Gov. Judd Gregg signed SB 387 into law on April 13, 1990, permitting nationwide interstate banking. This law expands state deposit caps on banks to 20% from 15% and grants authority to the bank commissioner to waive the 20% rule with the concurrence of the attorney general's office under the same criteria that federal regulators use in a merger, consolidation, or acquisition of an unhealthy institution. Legislation enacted in 1987, allowing New Hampshire banks to avoid out-of-state acquisition by "opting out" of the interstate law every two years, has been retained.

NEW JERSEY: Nationwide reciprocal interstate banking went into effect Jan. 1, 1988. States that are currently certified as reciprocal by the New Jersey Banking Department are Alaska, Arizona, California, Colorado, Delaware, Idaho, Illinois, Kentucky, Louisiana, Maine, Michigan, Nebraska, Nevada, New Mexico, New York, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Texas, Utah, Vermont, Washington, West Virginia, and Wyoming. Puerto Rico is also been certified.

(Indiana meets this reciprocal test beginning July 1, 1992).

NEW MEXICO: On Feb. 17, 1988, the state legislature passed full interstate legislation for commercial banks, with no reciprocity requirements and no geographic limitations, effective Jan 1, 1990. To enter New Mexico a depository institution must at least five years. De novo entry is allowed beginning July 1, 1992.

NEW YORK: A 1982 law permitted out-of-state commercial bank holding companies from anywhere in the United States to enter New York on a reciprocal basis, for a five-year experimental period. In 1987 this law was made permanent and extended to cover thrifts.

NORTH CAROLINA: Bank holding companies from Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, South Carolina, Tennessee, Virginia, and West Virginia may enter his state under a law enacted in 1984.

NORTH DAKOTA: The North Dakota legislature passed a nationwide reciprocal interstate banking law that was signed by Gov. George Sinner on March 14, 1991. It took effect on July 1, 1991.

OHIO: Effective Oct. 17, 1988, bank holding companies from any state may acquire Ohio banks or bank holding companies on a reciprocal basis.

OKLAHOMA: Since July 1, 1987, bank holding companies from anywhere in the nation have been allowed to acquire healthy Oklahoma institutions. There is no reciprocity limitation attached to Oklahoma's law. To expand after the purchase, the acquiring institution's home state must have similar legislation on its books. If no legislation exists, the out-of-state institution must wait four years before expanding.

OREGON: Effective July 1, 1989, Oregon opened its borders to nationwide interstate banking on a nonreciprocal basis.

PENNSYLVANIA: March 4, 1990, was Pennsylvania's trigger date for nationwide reciprocity.

RHODE ISLAND: Effective Jan. 1, 1988 [RIGL (1956) 19-30], banks from any state may acquire Rhode Island banks on a reciprocal basis.

SOUTH CAROLINA: Bank holding companies in Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Tennessee, Virginai, West Virginia, and the District of Columbia may acquire South Carolina banks that have been in operation for five years or more.

SOUTH DAKOTA: Effective Feb. 17, 1988 (responding to a decision by the 8th Circuit Court of Appeals), the South Dakota Legislature removed restrictions and opened the state to reciprocal interstate banking on a nationwide basis. Insurance activities of banks are still limited to the extent that such activities "cannot compete to the substantial detriment of South Dakota companies."

TENNESSEE: Bank holding companies from Alabama, Arkansas, the District of Columbia, Florida, Georgia, Indiana, Kentucky, Louisiana, Maryland, Mississippi, Missouri, North Carolina, South Carolina, Virginia, and West Virginia may acquire banks in this state that have been operating for at least five years.

TEXAS: As of Jan. 1, 1987, banks from anywhere in the nation may acquire Texas banks. However, the September 1986 legislation mandates that no Texas bank chartered after July 15, 1986, may be acquired until it has been in operation for at least five years. The state requires at least 50% of the board of directors of any banking company new in the state to be Texas residents. Also, the law prohibits any out-of-state bank from acquiring control of a Texas bank if, as a result of that acquisition, the acquiring out-of-state bank holding company would control 25% or more of the total deposits of all banks in the state.

UTAH: Effective Dec. 31, 1987, banking companies from any state may acquire healthy banks and thrifts in Utah.

VERMONT: Since Feb. 1, 1990, banks from any state have been allowed to acquire Vermont banks on a reciprocal basis.

VIRGINIA: Out-of-state bank holding companies from anywhere in the United States may acquire newly chartered banks in Virginia. Their operations however, must be restricted to the credit card business. Also, bank holding companies from Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, South Carolina, Tennessee, West Virginia, and the District of Columbia may acquire Virginia banks that are at least two years old.

WASHINGTON: Under a law that took effect in July 1987, banking companies nationwide are permitted to acquire healthy institutions that are at least three years old, but only on a reciprocal basis.

WEST VIRGINIA: Effective Jan. 1, 1988, banks and savings and loans from any state may acquire, respectively, West Virginia banks and savings and loans, but only on a reciprocal basis. The in-state institution must be at least two years old.

WISCONSIN: As of Jan. 1, 1987, banking companies, savings and loans, and credit unions from Illinois, Indiana, Iowa, Kentucky, Michigan, Minnesota, Missouri, and Ohio may acquire banks, savings and loans, and credit unions in Wisconsin on a reciprocal basis.

WYOMING: Since May 22, 1987, banking companies and savings and loans from any state in the union may acquire Wyoming financial institutions. The law, passed early in 1987, does not require reciprocity. It stipulates, however, that the charter of the in-state institution being acquired must be at least three years old.

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