BOK Financial Corp.'s plan to buy 17 New Mexico branches from BankAmerica Corp. may run afoul of a state law.
BOK of Tulsa, Okla., agreed last week to buy branches being divested by BankAmerica, including $500 million of deposits and $167 million in loans. Federal regulators are requiring the divestiture as part of BankAmerica's planned merger with NationsBank Corp.
BOK, a $5.7 billion-asset banking company, would be acquiring the branches without having established a New Mexico bank, which is prohibited by New Mexico law.
BOK officials say they are confident their deal will go through, but it is likely to require an interpretation by New Mexico's state bank regulator.
Some of the state's independent bankers are demanding a public hearing on the matter.
"We still expect out-of-state banks to live by our standards," said J.R. Nunn, chairman of Citizens Bank in Tucumcari, N.M.
New Mexico's law is not unique. Thirty-two states prohibit out-of-state banks from buying only a portion of another bank's branches, according to the Conference of State Bank Supervisors.
Many of these laws were adopted when states revised their statutes to adhere to federal interstate banking and branching laws, said Ellen Lamb, a spokeswoman for the bank supervisors group.
The state laws vary, but as multistate banks continue to merge, there may be more controversies.
"It's something we may see happen more often," Ms. Lamb said.
William J. Verant, New Mexico's director of financial institutions, was unavailable for comment. Arthur Gonzales, examiner supervisor for the state's banking agency, said BOK has yet to provide enough information on the matter.
"We can't render a good, firm opinion until we get more details," Mr. Gonzales said.
Michael R. Stanford, chief executive officer of First State Bank of Taos and president-elect of the New Mexico Bankers Association, said the sale to BOK would not be legal. He predicted the deal could emerge as one of the first test cases of New Mexico's interstate branching law.
His association, which includes both big and small banks, would like a hearing on the matter, he said.
Mr. Nunn, who is also chairman of the legislative committee of the Independent Community Bankers of New Mexico, said his group would "be looking rather closely" at the BOK issue.
BOK remains confident that its deal will be approved.
"We've got extremely competent legal counsel, and it's not a problem," said James A. White, BOK's chief financial officer. "We feel very, very comfortable with this transaction."
A BankAmerica spokeswoman declined to comment.
Nevada has a similar law limiting branch sales to banks that have a presence in the state. But out-of-state banks can get around the law by forming a Nevada-based subsidiary.
Still, that law has caused some confusion over who would be eligible to bid on branches divested by Wells Fargo & Co. and Norwest Corp. in their planned merger.