Though North Dakota's new intrastate branching law hasn't taken effect yet, banks in the state are already rushing to stake their claims in the competitive environment the law will create.

North Dakota Bank Commissioner Gary D. Preszler isn't even accepting applications for de novo branching, but banks in the state are gearing up for expansion - and reviewing their market-share defenses against new entrants.

"They know that they can't be too apprehensive too long or the good spots are going to be taken," said Arlene Melarvie, executive director of the Independent Community Bankers Association of North Dakota, which last year supported opting out on nationwide interstate branching and lost. "The ones that want to grow are looking at it very seriously."

North Dakota was one of just a handful of states still restricting statewide branching. Georgia is the biggest state that still restricts it, but a bill letting banks branch across county lines is on its way to enactment. (See article below.)

In its biennial session last year, the North Dakota legislature approved intrastate branching, including de novo branching.

Mr. Preszler will probably start accepting applications May 1. Approved branches can open as of Aug. 1. He predicted about 20 applications initially.

Across the nation, interstate branching - which will become effective in North Dakota in 1997 - will not include de novo branching in the state.

North Dakota banks previously could establish new locations in the same or adjacent counties if no other bank existed. They could also add a walk- in or drive-up facility in their own community, Mr. Preszler said.

Anticipating the new intrastate law, several banks have announced the acquisition of sites for proposed branches.

James D. Schlosser, executive vice president of the North Dakota Bankers Association, said, "The interesting thing will be if there's some hot spots in the state."

Though he and other observers expect more populous urban areas to be most attractive, $37 million-asset Kirkwood Bank and Trust Co., is purchasing a facility in rural Dickinson, 100 miles away from its home in Bismarck, where president Jerry Willer grew up and has banking and business ties.

"We would have had to initiate a new charter before," Mr. Willer said. "Now, it's a lot simpler.

The potential branching flurry is not without risks, observers said.

"If your bank is going to go into an area, you can look at existing banks," Mr. Preszler said. "But you don't know how many other banks are going to be making an application just like you."

To do it right, Mr. Willer said, banks must watch costs and not spend a lot more on a new office than they'll make up in growth.

In contrast, a bank that attracts deposits far in excess of projections could dilute capital, Mr. Preszler said.

Moreover, many banks won't try to branch, but that doesn't mean they should ignore the new law, Mr. Preszler said.

"Other banks may decide to branch in," he said, so banks should ensure that they're adequately meeting the needs of the local community.

Although Dee Baertsch is eager to put North Dakota's new in-state branching law to use at her bank, she's not so positive about the law's overall effects on small communities.

"It's not the best thing, because what you need to do to promote stability is have a locally owned bank," said Ms. Baertsch, cashier and a majority owner of $15 million-asset First State Bank of Golva, which, nonetheless, intends to branch into nearby Beach.

Ms. Baertsch said her own bank's expansion still would offer the only locally owned - on a county level - bank in Beach, because Beach's only bank recently was acquired by Fargo-based Community First Bankshares, from the opposite side of the state.

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