Definition of unit banking

banking system in several states that prohibits branching, or operation of more than one full-service banking office. Banks operating in these states, located principally in the Midwest, are sometimes referred to as unit banks. Restrictive branching laws, most prevalent in the Midwest and the Southwest, encouraged chartering of large numbers of small, independently owned state banks, and large multibank holding companies owning numerous unit banks. Branching laws in most states have been eased in the last several years, permitting geographic expansion and branch banking networks across the United States.