Interstate branching was not permitted nationally until IBBEA allowed banks to purchase other banks in any state after September 29, 1995, and to merge them into a single branch network after June 1, 1997, unless the host state opted out of this provision.
IBBEA allowed the Federal Reserve Board to approve interstate acquisitions regardless of state law, if the Board was assured that the acquiring .bank was "adequately capitalized" and "adequately managed" (Johnson and Rice, 2007).
IBBEA gave states a number of ways in which they could discourage (or encourage) entry by the branches of out-of-state banks.
Data in the FDIC's Quarterly Banking Profile (2006) show that the most interstate mergers (209) occurred in 1997 after IBBEA was implemented.
As subsidiaries were converted into branches after IBBEA, the share of interstate branch deposits in total deposits rose from 0.5% in 1994 to 38% in 2006 (Figure 4).
(37) Table 6 illustrates the sharp increases in the numbers of branches and banks with interstate branches after the passage of IBBEA. Beginning from the very low numbers at the start of 1994, they moved rapidly and consistently upward under IBBEA.
Although IBBEA makes national banks subject to state usury and consumer protection laws, the OCC has asserted that it, not the host state, will ensure compliance with such state laws.