Tucked into the Obama administration's regulatory reform proposal is a plan to lift restrictions on interstate branching, an issue that could end up dividing community bankers.

Though the industry has focused on higher-profile provisions in the reform plan, observers say banks close to state lines will generally favor the plan so that they can better serve customers who tend to cross state lines often. Banks in the middle of states, meanwhile, might not be so eager to expand into new states — or be receptive to more competition.

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