Before the Riegle-Neal Act of 1994 set the stage for nationwide interstate branching, executives at the country's biggest banks could barely wait for the right to merge or set up new branches across state lines.

But today, even though 19 states and Puerto Rico allow banks to take advantage of the law, federal regulators are hardly deluged with requests to use Riegle-Neal's interstate branching rules.

In fact, banking regulators report only seven applications from bank holding companies to merge institutions or set up branches across state lines. At the Office of the Comptroller of the Currency, the primary regulator for national banks, only four applications have been received.

Through the early 1990s, bankers insisted they could save billions of dollars by merging their banks in various states. A 1991 report by McKinsey & Co. determined building interstate branch networks could save holding companies $10 billion a year.

But many banking companies are holding back, trying to figure out the best way to operate multistate operations efficiently.

"It's somewhat early still. A lot of states haven't opted in. We're looking at a moving picture right now," said Stuart Stock, a partner with the Washington law firm Covington & Burling and an early advocate of the Riegle-Neal Act.

As of Sept. 29, banks are permitted to branch across state lines in states that have voted to "opt in" before June 1, 1997, when interstate branching becomes effective nationwide. States must vote to "opt out" before June 1, 1997, if they want to block interstate branching.

But many big banks are blase about branching.

"There is some value to keeping charters in different states," said Skip Klapheke, senior vice president at Charlotte, N.C.-based First Union Corp.

He pointed out that Riegle-Neal gives banks another option: "agency" relationships. As of Sept. 29, banks nationwide were allowed to establish agencies with institutions in other states, allowing them to take deposits, accept mortgage payments, and carry out other customer transactions for each other.

Although taking this route may not save money, it could eliminate the complaint of customers who have interstate commutes and cannot deposit paychecks near their offices, Mr. Klapheke said. "At least for now relying on agencies is not an impediment, so that's what we've chosen to do," he said.

The impact of Riegle-Neal's interstate branching rules has also been diminished because banks can merge across state lines if their headquarters are within 30 miles of each other.

San Francisco-based BankAmerica Corp. used the 30-mile rule to merge its Idaho and Washington banks, but is in no rush to use interstate branching provisions, even though it has operations in five of the six western states that have opted in.

BankAmerica spokeswoman Betty Riess said the bank instead will offer agency services in the 10 states where it operates.

James Watt, president of the Conference of State Bank Supervisors, which fought to give state's the right to opt out of interstate branching, said many Riegle-Neal backers oversold its benefits.

Nevertheless, he said banks will eventually warm to full interstate branching. "My guess is we will see banks gearing themselves up over the next six to 12 months," he said.

Nicholas Ketcha, director of supervision for the Federal Deposit Insurance Corp., agreed. "People are still feeling it out and formulating the best route to go," he said.

Mr. Stock, the attorney, said he doubted Riegle-Neal's agency provisions or the 30-mile rule would remain the bankers' first choice. "An agency isn't a branch. It doesn't allow you to achieve back-office efficiencies," he said.

Once banks get used to the idea of interstate branching, it will become the preferred way for them to enter new regions, he said.

Not all banks are sitting on the sidelines. NationsBank, Charlotte, N.C., used the 30-mile rule to merge its banks in the Mid-Atlantic and Carolina regions. Then it used interstate branching provisions to combine the two banks.

Peter Davis, NationsBank's director of government relations, said the new law would play a big role in the company's long-term plan to merge all its operations.

"The bottom line for us is that there's a variety of ways to achieve our primary goal, which is to operate a single bank," Mr. Davis said.

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