If you think having only three community banks on a small island would make interstate branching a negligible issue, think again.

Guam's small homegrown banking industry is torn internally over the federal interstate branching law.

Bank of Guam, the largest independent on the island, with $750 million of assets, wants the U.S. territory to opt out of the branching law. That would bar Hawaiian and foreign banks from branching onto the island and prevent island banks from expanding overseas.

The island's two other community banks, Citizens Security Bank and Guam Savings and Loan Association, are joining Hawaiian and foreign banks in opposing such a move.

Last year all three community banks supported opting out. The island's 21-member unicameral Legislature passed an opt-out bill, but it was vetoed by Gov. Carl T.C. Gutierrez. The Legislature failed to override him.

Bank of Hawaii and First Hawaiian Bank, both with large island presences and much influence, had actively opposed opting out.

Now the smaller banks, each with about $65 million of assets, want to opt in but bar de novo branching. Officials at Bank of Guam said they're looking at the other institutions' proposal but still plan to support opting out.

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