Honolulu, Hawaii
                                                   , 1999

                                 RE: H.B. No. 1062
                                     H.D. 1

Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii


     Your Committee on Consumer Protection and Commerce, to which
was referred H.B. No. 1062 entitled: 


begs leave to report as follows:

     The purpose of this measure is to eliminate the existing
prohibition on de novo interstate branching, the partial
acquisition of branches by out-of-state banks, and the five-year
age requirement for whole bank acquisitions.

     The Department of Commerce and Consumer Affairs supported
this measure.  The Hawaii National Bank commented on this
measure, suggesting amendments.  The Bank of Honolulu opposed
this bill.

     Your Committee finds that the progressive and open approach
to interstate banking taken in this measure is in the best
interest of the State and its residents.  At the same time, it is
important that the concerns of local banking institutions on this
matter are also taken into consideration.

     Interstate banking, which requires a corporate entity and
sufficient capitalization, has been permissible since September
1995.  This measure eliminates existing barriers restricting out-
of-state banks from doing business in Hawaii.  Your Committee
finds that starting a bank is a time-consuming and expensive
process.  Allowing out-of-state banks to enter the Hawaii market

                                 STAND. COM. REP. NO. 715
                                 Page 2

by de novo branching or the purchase of a single branch will
allow out-of-state banks to do business in Hawaii without the
associated costs and capital.

     Testimony raised concerns that this bill may adversely
impact Hawaii's financial institutions.  Among other things, it
was suggested that additional time is needed to allow community
banks to implement strategies to compete with out-of-state banks.

     Upon further consideration, your Committee has amended this
measure by changing the effective date to June 1, 2010, to give
the Legislature ample time to carefully consider the
ramifications of this measure.

     As affirmed by the record of votes of the members of your
Committee on Consumer Protection and Commerce that is attached to
this report, your Committee is in accord with the intent and
purpose of H.B. No. 1062, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as H.B. No.
1062, H.D. 1, and be referred to the Committee on Finance.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Consumer
                                   Protection and Commerce,

                                   RON MENOR, Chair