First, states permitted multibank holding companies to convert subsidiary banks (existing or acquired) into branches. The holding companies could then expand geographically by acquiring banks and converting them into branches of one of their existing bank subsidiaries. Second, states began permitting de novo branching, whereby banks could open new branches anywhere within state borders.
Figure 1 describes the timing of intrastate branching deregulation across the states. In addition to limiting branching within a state, states prohibited cross-state ownership of banks until the 1980s. Although some banks attempted to circumvent the McFadden Act by building multibank holding companies with operations in many states, the Congress stopped them with the 1956 amendments to the Banking Holding Company Act.