Magazine article American Banker

In a First, Texas Suing to Block Interstate Entry under 30-Mile Rule

Magazine article American Banker

In a First, Texas Suing to Block Interstate Entry under 30-Mile Rule

Article excerpt

Texas bank regulators and an Arkansas bank will go head to head today in the first legal showdown since national banks began using a controversial rule to cross state lines last year.

The state is trying to shut down the new Texarkana, Tex., office of Commercial National Bank, which moved across the state line from Texarkana,

Ark., last week.

Commercial National, a $92 million-asset bank, won approval from the Office of the Comptroller of the Currency on March 8 to move its headquarters from Arkansas to Texas, keeping its Arkansas offices as branches. The bank did this under a provision of the National Bank Act that

lets banks move their headquarters up to 30 miles.

The 30-mile rule has been on the books in its current form since the 1970s, but was used only intermittently until 1994. Early that year, the Comptroller's office began encouraging national banks to take advantage of

it to streamline operations and move into new markets.

Since then, the Comptroller's office has approved 32 such applications -

30 to cross state lines and two to cross county lines in states that ban intercounty branching. Thirteen more 30-mile requests are pending.

In seven instances, banks have switched from state to national charters

in order to make their moves under the 30-mile rule. While some state bank

regulators protested, none had taken legal action until last Friday, when the Texas Department of Banking sued Commercial National for its move into

Texas.

In today's state district court hearing, lawyers for the state will argue for a temporary injunction stopping Commercial National from doing business from the Texas office. …

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