An interstate branching battle in South Dakota seems unlikely as independent bankers appear poised to side with the South Dakota Bankers Association to opt in early.

States have the option of opting out of the federal interstate branching law by 1997 if they don't want interstate branching within their borders. States can also opt in, and allow branching earlier than the federal law.

The probable accord in South Dakota is due in part to state statutes that limit branching in towns of less than 10,000 people - statutes that have been left alone as the state's bankers worked out a legislative package on branching.

The South Dakota Legislature sat out tackling interstate branching this year. But a task force of the Pierre-based South Dakota Bankers Association has recommended proposing legislation next year to opt in early, effective June 1, 1996.

"The feeling expressed is that there are more advantages to opting in than opting out," said Charles Seaman, chairman of the task force, who has led several bankers' conferences on the issue.

"It's something that is on the horizon and there isn't any advantage to not opting in early," said Mr. Seaman, also president and chief executive of $20 million-asset Warner Bank. "It gives our banks an opportunity to branch into other states if they want to. It just seemed to be a step in the right direction for South Dakota banks."

The group's full board will vote on the issue next month.

The surprise is that if the association sponsors opt-in legislation, it isn't likely to face opposition from the state's independent bankers group, despite heated battles that raged between similar groups in other states this year.

The Independent Community Bankers of South Dakota in Mitchell also will determine its official stance at a November board meeting.

But based on preliminary indications, "At this point, I have no reason to believe that we will take any different position" than the South Dakota Bankers, said Ginger Adams, the group's executive director.

"We have had interstate banking for a long time," Ms. Adams said. "It's just not as alarming in this state as in a state where they never have had anything in place."

The state, home to about 100 state-chartered and 30 nationally chartered banks, has had interstate banking since 1980. And unlike neighboring North Dakota, it has had in-state branching for some time. The state's favorable credit-card climate also has already brought in out-of-state companies, including Citibank.

Another factor is regulation in the state's banking code, which restricts branching in small towns.

"I think what maybe helped in South Dakota is we do have protection of our franchises by population in the smaller towns," Mr. Seaman said.

According to the code, no bank branch may be established in towns of under 3,000 that have one existing bank charter or in towns between 3,000 and 10,000 people that have two existing charters.

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