The Bank of Commerce in Idaho Falls normally wouldn't warrant a great deal of notice in independent banking circles.

With barely 2% of the state's deposits, 12 branches, and only $250 million in assets, at first glance it's a minor player in Idaho's overall banking picture.

Nonetheless, tiny Bank of Commerce is the biggest independent bank in the state. It owes its No. 1 ranking to the consolidation sparked by interstate banking.

Bankers in Idaho say the state's banking market is a harbinger. In the post-consolidation world, a few national companies are expected to control the bulk of the market, with a nimble group of very small banks clutching to what's left.

Idaho, having adopted national interstate banking eight years ago, has already gone through what much of the rest of the country will experience with the implementation of the Riegle-Neal Interstate Branching and Banking Law.

If the state's banking industry is a sign of what's to come for the rest of the nation, Idaho's bank regulator said he thinks other states have nothing to worry about.

"It hasn't been a negative thing here," said Gavin M. Gee, acting director of Idaho's Department of Finance. "It has spawned a lot of interest in new banks, and others are relocating here."

Mr. Gavin said six groups may apply for charters soon, one application is pending, and three Washington banks are in the process of relocating their headquarters to the state.

Still, Idaho banking does have some unusual characteristics. For example, Coeur D'Alene has a population of more than 25,000, but the combined assets of its two independent institutions, Idaho Independent Bank and Mountain West Savings Bank, don't even reach $50 million.

Neither Nampa (population 29,000) nor Twin Falls (28,000) has an independent commercial bank, though each has a thrift.

Tiny communities like Malad City (1,946), Montpelier (2,656), Sandpoint (5,203), and Meridian (9,596) all have independent banks, but the state's two largest cities - Boise (126,000) and Pocatello (46,080) - don't.

Despite the small number of independents, and their diminutive size, Idaho community bankers exude confidence.

"I feel good about what community banks can offer customers in Idaho," said Ronald O. Peterson, president and CEO of Tri-State Bank, Montpelier. "I can't speak for other banks, but we do pretty well against the bigger guys because we're just able to put things together quicker and offer more efficient services."

Big banks aren't the real threat, according to Jack W. Gustavel, president and chief executive of Idaho Independent Bank, Coeur D'Alene.

"Our toughest competition is another local bank, a local thrift, and a small bank that acts like a local independent," Mr. Gustavel said. "The big banks, with all the consolidation they've been going through, are helping us because when they make those changes, they're actually kicking customers out the door."

Much of the state's banking is dominated by a handful of out-of-state holding companies and their subsidiaries, including First Security Bank of Idaho, First Interstate Bank of Idaho, Key Bank of Idaho, and Bank of America-Idaho.

West One Bank, Idaho, was based in Boise, but it recently signed a merger agreement with U.S. Bancorp, Portland, Ore.

The out-of-staters hold more than $8 billion in deposits. Idaho independents don't even combine for 10% of that.

But Julian G. Cowley, president of Bank of Commerce, said consolidation has presented opportunities for his bank.

"Valley Bank was our biggest competition, but they were gobbled up by Key Bank," he said. "Now our biggest competition is West One, but we can provide much more rapid loan approval and much better customer service then they can."

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