Georgia has reaffirmed its reputation for having one of the most restrictive branching laws in the country.

In a significant victory for the state's independent banks, the Georgia House last week shelved a Senate bill that would have allowed state- chartered banks to branch into neighboring counties. A bank can cross a Georgia county line only by buying a bank in the county and converting it into a branch.

"We've been operating under the present system for at least 30 years now, and we have one of the best economies in the nation," said Julian Hester, executive director of the Community Bankers Association of Georgia. "If it ain't broke, why fix it?"

The bill had squeaked through the state Senate a month ago but failed to reach the House floor for a vote. It has been tabled for further study and will be reconsidered in next year's General Assembly session.

If passed next year, it could still go into effect on July 1, 1997, the effective date approved by the Senate.

By putting off the vote on the bill, which has been one of the most divisive and controversial in recent years for Georgia bankers, the state has retained its membership in a club of six states that prohibit statewide branching.

"We had an opportunity here to take a step forward, so I was very disappointed that they elected to table it," said J. Alton Wingate, president and chief executive of the $250 million-asset Community Bankshares of Cornelia. "I think some viewed it as lemons, but they were lemons we could've made lemonade out of."

Those against the bill, primarily community banks, argued that banks branching into their counties would erode their market share and franchise value. Mr. Hester pointed out that contiguous county branching would inevitably lead to the consolidation that North Carolina has experienced, which would result in less competition.

Supporters of the bill, which include banks of all sizes, said it would enhance customer convenience by allowing them access to branches of their banks throughout the state. It would also allow banks to expand more cheaply and increase the efficiency of their companies.

The delay leaves state banks at a branching disadvantage compared with national banks and thrifts. A national bank can move its head office 30 miles in any direction, branching into counties where it might have no offices. A thrift can branch anywhere, even across state lines.

About a dozen state banks are considering converting to thrift charters as a result of the bill's failure, according to the Georgia banking commissioner, Edward D. "Jack" Dunn.

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