Small Banks Want New York Allowed into Pennsylvania

Article excerpt

HARRISBURG, Pa. -- The Independent Bankers of Pennsylvania, a trade association of the state's smaller, community banks, wants to include New York State in a proposal reciprocal banking region, but the Pennsylvania Bankers Association is against the idea.

Paul A. Adams, general counsel of the IBP, said the group will seek to amend Senate Bill 1075, now in the state Senate banking and insurance committee, to include New York, so its members in the northern tier of counties adjoining New York will be able to acquire banks, or be acquired by banks in their "natural market areas."

Mr. Adams, a former chief counsel for the Pennsylvania Department of Banking, said another proposed amendment would put limits on the degree of banking concentration in Pennsylvania.

The group's members, with average assets between $50 million and $60 million, represent about half the 342 banks in the state. Most also belong to the Pennsylvania Bankers Association.

Mr. Adams was attending a hearing here Friday of the Pennsylvania House business and commerce committee, which will take up regional reciprocity after the Senate acts, possibly before the end of the year.

Ben McEnteer, Pennsylvania banking secretary, testified at the hearing that he favors new powers for state chartered commercial banks. He said this would make a state charter "more attractive."

Mr. McEnteer said the new powers would help maintain the dual banking system and provide for the regulation "of Pennsylvania banks in Harrisburg rather than in Washington, D.C."

Mr. McEnteer suggested that state banks be allowed some real estate development activities and permission to sell insurance, to underwrite municipal revenue bonds, and to take equity positions along with loans in new and small business.

He emphasized to the committee that these new powers would have to be strictly limited by law so that the institutions would not be tempted "to go wild."

He noted that insurance companies, which he said have the insurance business "sewed up," have already gotten into the business of banking.

James Beery of the Pennsylvania Bankers Association said that temporarily excluding "awesome" New York banks would give Pennsylvania banks "time to reposition themselves" to acquire or be acquired by New Yorkers when they are allowed in under a three-year trigger provision in the proposed legislation. …