Though interstate branching sparked political donnybrooks in many statehouses during the last year, observers say the debates pitting big banks against small will turn out to mean very little.

The vast majority of states signed on early for interstate branching authorized by a new federal law. But the benefits of "opting in" haven't materialized, mostly because relatively few banks in these states have taken advantage.

Similarly, because multistate bank holding companies appear to be taking their time to consolidate bank units, the drawbacks of "opting out" - or waiting longer to opt in - haven't been as stark as branching proponents had warned.

"Since we're only looking at a 12-month time frame now, I'm not sure there's going to be a major disadvantage" for states waiting until June 1, 1997, the federal trigger date, said Jeffrey C. Gerrish, a lawyer at Gerrish & McCreary in Memphis.

The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 allowed states several options: to opt in to interstate branching early, to let the federal law take effect automatically in June 1997, or to opt out of interstate branching altogether.

At least half the states plus Puerto Rico have opted in early, and at least 12 more will allow interstate branching in June 1997.

Only one state - Texas - has definitely opted out of the new regulatory landscape, at least until 1999. The Colorado Legislature passed an opt-out bill, but the governor vetoed it.

A few states, including Ohio, Massachusetts, and South Carolina still may pass opt-in legislation this year, according to the Conference of State Bank Supervisors.

Kansas and Missouri also may still act, although observers now expect their interstate legislation to wait until next year. Both have had vocal groups supporting opting out. However, some observers said they would be surprised if any more states opt out.

Other states that have not yet addressed the branching issue in legislation are Arkansas, Kentucky, Montana, Nebraska, Wisconsin, and Wyoming.

Ellen Lamb, vice president of public affairs at the Conference of State Bank Supervisors, agreed that "a year one way or the other is probably not going to make a huge difference" because interstate banks are moving very slowly to consolidate branches into multistate networks. She said she expects the remaining states to take positions before June 1997, however.

Mr. Gerrish, the Memphis lawyer, said states that opted in early have the advantage of reciprocity with other states that adopt interstate branching. However, it has not proven to be a major advantage because there's been no mad branching rush, he said.

Richard Dean, Wisconsin bank commissioner, said his state intentionally has waited on considering interstate branching legislation while it completed a recodification of banking law and explored issues such as regulation of interstate branches. He said he expects the state to enact branching legislation early next year.

However, the Texas Bankers Association, which wanted to opt in, maintains that the state's banks are at a disadvantage to those in neighboring states that have authorized branching.

For instance, New Mexico's law allows interstate branching this June but only for banks from states that themselves allow interstate branching, said Texas Bankers Association president Robert E. Harris.

"That's a natural market extension for banks in West Texas," he said. "Obviously, it's going to put them behind banks from other states."

Texas' opt-out law has a 1999 "sunset clause," although disagreement remains on what happens then. However, bankers are trying to compromise on the issue before then, Mr. Harris said. Moreover, if banks use the National Bank Act's "30-mile loophole" to circumvent the state's interstate branching moratorium, the Legislature may reconsider the issue, he said.

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