Nebraska branching bill could be stalled by deposit cap

Northwestern Financial Review, Jan 15, 2002

[chronicle]

Two issues important to Nebraska bankers are on that state's legislative agenda this year - statewide branching and a deposit cap. But the latter could be a spoiler as both issues may be lumped together in one bill that some bankers may be unwilling to accept.

"It looks like the majority of bankers in Nebraska think it's time to do something about statewide branching," said George Beattie, executive vice president, Nebraska Bankers Association. "But there is no consensus on the deposit cap. There is general support for some kind of change, but no consensus. I think that will ultimately be resolved by input from the bankers themselves."

"There have been a number of factors leading to agreement on the branching issue, not the least of which is the changing times," said Kurt Yost, executive vice president, Nebraska Independent Community Bankers.

Late last year, the State Director of Banking, the Department of Banking, the NICB and the Nebraska Bankers Association held a hearing to test the industry climate on branching.

"Many of our members see branch banking as an opportunity to enhance their market. If I were to take a poll, you would find far more community banks for branch banking than you would big banks,"Yost said.

Thrifts and credit unions, said Yost, are allowed to operate branches and the playing field should be leveled. "You've got State Farm agents offering financial products. You've got Internet banking. And, quite frankly, through the years, if you've had enough money to hire the right attorney, you could probably find a loop hole in our branching laws," Yost said.

But in spite of industry support, legislation loosening branching laws might fail this year if it gets lumped in with the more contentious deposit cap issue. Nebraska currently has a 14 percent deposit cap.

"Before legislation can pass, a number of interested parties must conclude where the deposit cap is, where it needs to be and if it needs to be moved," Yost said. "It's still somewhat a moving target. The two will probably be tied together. This session will be a short session and there are far more pressing legislative issues than those dealing with the banks. If there is not unanimity, it runs the risk of not being dealt with until next session."