A South Dakota law that is scheduled to take effect July 1 could pave the way for state-chartered banks to start building more branches.
As it stands, a state-chartered bank looking to open branches in South Dakota must receive approval from the state's five-person Banking Commission and must prove that the community needs more banking services.
Industry observers say that the current law puts state banks at a competitive disadvantage, because federally chartered banks and thrifts looking to add branches do not have to receive approval from the commission, nor do they have to demonstrate community need.
The commission itself proposed shifting the decision-making authority to a single director and eliminating the requirement to demonstrate need. The proposal encountered little opposition when it was introduced in the South Dakota Legislature. Gov. Mike Rounds, a Republican, signed it into law before the Legislature adjourned for the year this month.
"This law allows our state banks to compete on the same playing field as national banks and federally chartered thrifts," said Curtis Everson, the president of the South Dakota Bankers Association. "It also makes our state charter more attractive."
