The lower house of the California Legislature voted overwhelmingly in support of opting in early to the federal interstate branching law, a crucial blow to opponents of the measure.

"We got our socks knocked off," said Craig Hudson, executive director of the California Independent Bankers, which opposes the measure. The larger California Bankers Association is sponsoring it, and the Western Independent Bankers Association is supporting it.

The package of opt-in bills, passed by a two-thirds majority in the state Assembly on June 2, now goes to the state Senate, where in committee hearings the embryonic split in the Golden State's banking industry is sure to get a full airing.

But the question remains: Is the debate simply a trade association war or one that could deeply affect the state's community banks, its economy, and its tax base?

The Western Independent Bankers, a San Francisco trade group that represents community banks in California and other western states where early opt-in movements have taken firm root, this week took a position in favor of California's early opt-in measure.

But the California Independent Bankers said that 95% of their 200 members oppose early opt-in.

"When I heard that 95% of community banks opposed it, it was a shocking figure to me," said Nancy Sheppard, executive director of the Western Independent Bankers. "I was curious to find out how the membership was surveyed. In fact, some of our members who are also CIB members had no recollection of being contacted.

"I'd be happy to believe that there was a big opposition to it," she added. "But I haven't seen it."

Branching in California has been reality for more than 20 years. And many community bankers there believe that more of it will not change their competitive position, Ms. Sheppard said. Western Independent supported the early opt-in after the California Bankers Association, which is sponsoring the bill, removed a loophole that would have allowed an out-of-state bank to buy a branch - instead of an entire bank - when entering the state.

Most western states will opt in early this year, a key reason why California legislators want to pass it. In all, seven states have opted into interstate branching and one state, Texas, has opted out of it.

Many community bankers are, at best, ambivalent about the issue.

"Maybe in some instances the people who opposed opting in have something to talk about," said Dean Minor, chief executive of the $120 million-asset First Valley Bank in Lompoc. "But my opinion is that a lot of times the (California Independent Bankers) doesn't really represent the ownership of independent banks."

Mr. Minor is a member of the Independent Bankers Association of America, which has funded movements in the states to scuttle interstate branching. Yet he didn't write his state legislator on the issue as California Independent Bankers, an affiliate of IBAA, asked him to.

"I just don't feel that strongly about it," he said.

However, some bankers do. Craig Collette, chief executive of Landmark Bank in La Habra, supported the federal law that allows interstate branching. But, for California, he opposes opting in until the automatic trigger date in June 1997.

"For southern California, the recession is not over yet," he said. "We need time to build up our balance sheets again before we can compete effectively with new entrants. Also, I'm not sure that the state had studied the impact on its tax base or on the monitoring of deposits and reinvestment. The issues just haven't been discussed.

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