To close a loophole in state branching restrictions, Nebraska has enacted legislation against so-called "phantom" savings and loan charters.

The S&L Cross-Industry Merger/Acquisition Act says a chartered S&L must have been in actual operation for at least 18 months before a bank can turn it into a branch.

Gov. E. Benjamin Nelson signed the measure April 4.

Except in Lancaster County, home to Lincoln, the state capital, a bank can branch outside its immediate community only by acquisition. But a vague 1995 law governing thrift acquisitions provided a loophole: Banks could establish thrifts elsewhere in the state and simultaneously "acquire" them and turn them into branches.

Twenty-eight applications have been made to use the loophole. Thirteen were approved, and 11 are pending; three were denied, and one was withdrawn.

The newly enacted legislation, which banks generally supported, closes the loophole and also bars so-called "reverse mergers," in which existing banks merged with newly created ones.

However, the measure lets banks acquire healthy bank and thrift branches outside their home territories that otherwise might be closed.

The law also closed a loophole that let banks outside Lancaster County branch into Lincoln, the state capital and the county's largest city, by chartering a bank in an unincorporated part of the county.

The old law let banks that established charters in unincorporated areas of Lancaster County have as many as nine branches in Lincoln.

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