Banker Larry Stutz believes that interstate branching would jeopardize small towns like Alma, a county seat of less than 1,000 people in eastern Kansas.

"Even in small communities such as ours that are a little bit remote, we can really be hurt if we have a major branch of Bank of America and they decide they need a whole bunch of deposits," said the president of First National Bank in Alma, a $23 million-asset institution.

"They can drain the deposits away from us and take them somewhere else. That would affect our ability to finance our local people."

Mr. Stutz, who chairs a task force on interstate branching for the Community Bankers Association of Kansas, will be part of a panel promoting the trade group's opt-out stance this weekend at its annual conference in Topeka.

The association says that the interstate branching component of the Riegle-Neal Interstate Banking and Branching Act of 1994 would cost the state jobs, tax revenue and capital.

"We think that a financial institution inside the state of Kansas should have a charter inside the state to ensure it does have a local board of directors," Mr. Stutz said. "We feel very firmly that when you have a local board of directors, you have people that care about your state and your community."

Next year promises to be a busy year for interstate branching legislation, as several states debate legislation before the national law's branching component becomes effective on June 1, 1997.

Texas is the only state thus far to pass and enact an opt-out bill. Colorado's legislature also passed an opt-out bill, but the governor vetoed it.

"Kansas is basically a rural state similar in a lot of ways to Texas, where we have a large number of communities and community banks," Mr. Stutz said. "I just feel strongly that the lifeblood of these small Kansas communities is dependent on community bankers."

The community bankers group and the Kansas Bankers Association both have been studying the branching issue this year, said Mr. Stutz, whose bank is a member of both organizations. The Kansas Bankers Association remains neutral on the branching issue, he said.

The Community Bankers hope to enact legislation next year to opt out, calling the move "the optimum choice for Kansas."

Though the group has loudly declared its opt-out position, it still is surveying members on the issue. Indications are that members largely support the stance, said J. Sue Anderson, the group's executive director.

James D. Herrington does. "I'd like to see them opt out," said the chairman and president of $11 million-asset Coldwater National Bank.

The trade group also is concerned about how branches of banks chartered in other states will be taxed by Kansas. And it says small businesses could suffer if larger banks don't focus on that sector of the economy.

Opting out will give Kansas bankers more time to evaluate the issues related to interstate branching, the trade group said. It believes states that opt out can opt back in at a later date. Legal opinions on Riegle-Neal have differed on this issue.

For its program on interstate branching this weekend, the association has invited state legislators, small business owners, and farmers. Texas community bankers rounded up similar support in their successful opt-out bid.

"I sense right now that we have an education process to do," Ms. Anderson said, expressing the belief that the average citizen and the legislature as a whole are not "particularly well informed."

She's also perturbed that Missouri banks have been able to branch into the Kansas side of the Kansas City metropolitan area through the loophole in The National Bank Act. It allows a bank to move its headquarters within 30 miles - even into another state - and keep previous offices as branches.

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