Montana's two trade associations have agreed to push for legislation that would allow immediate branching inside the state while delaying the onset of branching across its borders for another four years.

Under legislation proposed by the two groups, in-state banks would be able to branch throughout Montana for the first time ever - something for which the Montana Bankers Association has lobbied for years. Currently, Montana's 100 banks may branch only on a countywide basis.

And industry officials hope the legislation - by preventing out-of-state banks from branching into Montana until at least 2001 - would give small institutions a chance to catch up and strengthen their franchises statewide before "interstate branching becomes too prevalent," as Montana Bankers Association executive vice presidentJohn T. Cadby put it. Montana Independent Bankers has been lobbying for such a delay.

Officials of both trade groups expect the temporary opt-out bill to pass in the next session, possibly as early as January or February.

"With both associations supporting it, I think there's reasonable expectation that we can get it through," said Keith Colbo, secretary of Montana Independent Bankers. "The Legislature would just as soon not referee a family feud, so I think they'll welcome this compromise."

The agreement to jointly support legislation caps more than 30 years of bickering between the Montana Bankers and Montana Independent Bankers over branching issues. The Independent Bankers have long opposed statewide branching, but more and more banks have found ways to bypass the state's restrictive laws.

"The law was no longer of any value to anybody," Mr. Cadby said. "All the bankers agreed that it was time to tear down the walls and open 'er up."

But the decision to temporarily opt-out is now sparking a fresh spat within the Montana Bankers. One of the association's largest members, a subsidiary of First Bank System Inc., pulled out of the trade group in November in anger over the compromise.

And trade group officials aren't yet sure if the regional bank will try to fight their bill. Two years ago, First Bank pulled out of the Colorado Bankers Association when the trade group supported opt-out legislation. The bill passed, but was vetoed under intense lobbying from First Bank.

"We frankly do not know what they're going to do," Mr. Cadby said of First Bank. "Our position is to wait until 2001, but First Bank may have other ideas."

"We've always been a strong advocate of interstate banking," said First Bank spokeswoman Wendy Raway. "Banks need as many options as possible, especially given that our nonbank competitors don't have any boundaries limiting how or where or when they can serve their customers."

Ms. Raway was not sure whether the bank would fight the legislation, however.

The other major bank in Montana, First Bank Minneapolis rival Norwest Corp., supports the compromise.

If it passes the bill, Montana will join Texas as the only states in the nation to opt-out of interstate branching. Texas' law expires in September 1999.

The legislation would leave Montana somewhat isolated in the region. North Dakota, South Dakota, Idaho, Utah, Washington, and Oregon have all embraced interstate branching. Colorado has set up a structure for it, but hasn't formally opted in.

Industry officials in both Wyoming and Nebraska are supporting legislation that calls for opting in by next June, although neither state yet allows statewide branching.

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