Ronald P. Haberman, chief executive of Valley of the Rogue Bank in Rogue River, Ore., wasn't even aware that his state had just legalized interstate branching.

The way he sees it, the issue doesn't really affect his community bank, which serves small businesses along the Interstate 5 corridor in southern Oregon.

"It doesn't worry me at all," Mr. Haberman said last week

But as the forces for interstate branching move on state houses across the country in coming years, the issue will increasingly light up community bankers' radar screens.

Questions Will Arise

When the office of the superregional bank down the street becomes a branch of a bank in another state, myriad questions about taxation, competition, regulation, and community reinvestment will arise.

Some key issues: Will a bank branch have to pay the same in state taxes as a local community bank? Will a local branch of a bank chartered in another state have to comply with the same CRA requirements as a one-office community bank?

A year ago, New York was the first to pass an interstate branching bill. North Carolina, Oregon, and Alaska have since enacted laws modeled on New York's.

The law allows a state-chartered commercial bank that does not belong to the Federal Reserve System to become a branch of a bank in any other state that has an identical law.

Delay Seen Likely

The number of banks establishing, interstate branches is likely to be small until a significant number of states have enacted laws, said Arthur Wilmarth, a lawyer specializing in banking issues at Barley, Snyder, Senft & Cohen in Lancaster, Pa.

But just which states or regions will jump on the bandwagon - should there be one - is an open question. The success of such legislation within each state depends largely on the prevailing attitude of the legislature and the banking associations which usually sponsor the bills.

For example, California-based interstate bank holding companies would greatly benefit from interstate branching but the California Bankers Association hasn't pushed for such a state law. Tom Celebrezze, spokesman for the trade group, said it wants the Congress to act on the issue nationally.

A bill modeled after New York's law died in committee earlier this year in the Washington Legislature.

|A Critical Masss'

Despite the present reluctance of some states to pass interstate branching laws, the Conference of State Bank Supervisors predicts that it will be the states, not the Congress, that will take action on the issue.

"At some point, you're going to see a critical mass," said Ellen Lamb, spokeswoman for the group.

Mr. Wilmarth predicted many states in the Northeast and the West would move, sooner rather than later on interstate branching. States in the Southeast (excluding North Carolina) and the Midwest will move more slowly on the issue, he said.

"Nobody knows how it's going to shake out [in the states]," said Matthew Street, associate general counsel of the American Bankers Association. "It's still a very limited phenomenon."

If enough states pass such laws, and if Congress fails to repeal or at least amend the McFadden Act, there could be a trend of changing from national to state charters, Mr. Wilmarth said. He added that he favors federal legislation that would amend the McFadden Act and allow states to set their own rules about interstate branching.

"Many states in 1991 were waiting for Congress to act," Mr. Wilmarth said. "When that fell through, some states decided to take the initiative, which is what we're seeing now."

A Watchful Eye

The Independent Bankers Association of America, the trade group for community banks, is keeping a watchful eye on state legislatures.

"If this thing gets to be more of a movement, we'll likely help out [state community banking associations] in dealing with it," said Stephen J. Verdier, senior legislative counsel to the IBAA.

Mr. Verdier doesn't think interstate branching is as inevitable as the interstate banking movement -- in the form of regional compacts -- became in the mid- 1980s.

CRA, Taxation Big Hurdles

"I still see many roadblocks," he said. "It's not inevitable.

The biggest roadblocks feels, are community reinvestment and taxation.

"If there's a CRA challenge that NationsBank isn't serving a particular market, but NationsBank says its market it the entire United States, how does a locality deal with that?" he said.

In addition, the effect on state tax revenues could be significant if a branch becomes part of a taxable entity in another state.

The laws in Oregon, Alaska, New York, and North Carolina all deal with those issues, allowing tax-sharing and state regulalory oversight. But different states could take different approaches, Ms. Lamb said, creating conflicts.

Oregon Bankers Not Worried

That doesn't faze Frank Brawner, executive vice president of the Oregon Bankers Association, who shepherded the interstate branching bill through his state legislature.

"For once we thought [Oregon banks] deserved to be in the, forefront of this issue," Mr. Brawner said. "We hope Congress does act on this issue. We hope Washington, Idaho, California, and Nevada act on this issue. If there are conflicts, we'll deal with it."

Mr. Brawner said community bankers did not oppose the law in Oregon.

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