A bill sent to the floor of the state Senate would eventually eliminate restrictions on interstate branching, but includes no definite sunset date for those barriers.
In its orginal form, the proposed bill would have let the restrictions expire in 2000. The limits, passed last year with no sunset provision as part of a law opting in to federal interstate branching, relate to de novo branching and deposit market share. They are supported by the state's smallest bank, Bank of Honolulu.
The state's two largest banks, Bancorp Hawaii and First Hawaiian Inc., oppose the restrictions and are pushing the sunset bill.
Because the state's banks differed on the sunset provisions, senators in the committee dealing with the bill chose not to decide when the restrictions should expire. Instead they sent the bill to the full Senate for discussion with a blank space where the sunset date should be, leaving it up to the full Senate to make the final decision on a date. Terrill S. W. Chock, executive vice president of Bank of Honolulu, said the unusual action was taken because the bill would have automatically died in committee if it were not advanced by Feb. 28.
Under the opt-in law that takes effect June 1, out-of-state banks will be barred from branching into Hawaii by opening or buying a single branch. Instead, they must purchase an entire bank that is at least five years old or charter a new bank.
The law also accepted the federal cap of 30% of statewide deposits. Currently, Bancorp Hawaii and First Hawaiian each controls about 40% of the state's deposits.