Intrastate branching means that a bank can have more than one office within its home state. Fifty years ago, few banks had more than one office. Today, most banks can open offices (branches) across their states. Bank branching originated at the state level, and the states have directed the expansion of banks’ geographic boundaries. Forty states, the District of Columbia and Puerto Rico allow statewide branching, and ten states allow limited branching.
Today there are almost 50,000 bank branches open across the country, constituting approximately 80% of the nation’s banking offlces. More than 60% of banks today operate branches, commonly over broad areas within their home states. The proliferation of branches has reduced the number of banks in the United States, but perhaps not as much as you might expect while the U.S. had 147399 banks in 1940, the country has 10,715 banks today, a 25% decline over more than fifty years.
The 1927 McFadden Act sought to give national banks competitive equality with state-chartered banks by letting national banks branch to the extent permitted by state law. The McFadden Act specifically prohibited interstate branching by allowing national banks to branch only within the state in which it is situated. Although the Riegle-Neal Interstate Banking and Branching Efficiency Act repealed this provision of the McFadden Act, it specified that state law continues to control intrastate branching, or branching within a state’s borders, for both state and national banks.