Following a national trend, Bank South Corp. is seeking to escape federal regulation by converting to a state charter.
Bank South, which is based in Atlanta, filed an application with the Georgia Department of Banking and Finance and disclosed its plans to the Office of the Comptroller of the Currency at the end of May. Chairman and CEO Patrick L. Flinn said he expects approval by June 29.
"It's 50% less expensive for us to be a state-chartered bank," Mr. Flinn said. "And since we're just in Georgia, there was no reason not to have as our primary regulator the people here - sort of a closer-to-home kind of thing."
Bank South, which has $7.7 billion of assets, operates branches across the state but is concentrated in metropolitan Atlanta. It sold its one out- of-state property, a bank in Pensacola, Fla., to Jacksonville-based Barnett Banks Inc. in 1993.
Mr. Flinn estimated Bank South would save $500,000 a year by converting to state regulation, from an annual expense base of $262 million.
"It's not very much," Mr. Flinn said. "But I would also say that's not the only regulatory cost we have. Everything we do with the federal regulators is about twice as much - every application we file, whether it's for a branch or whatever."
Bank South, which suffered serious credit problems at the end of the 1980s, has been in a growth mode the last three years. Acquisitions added $3 billion of assets. Mr. Flinn said he also expects to build seven to 15 branches this year, most of them in grocery stores.
Bank South's decision to convert from a federal charter means that the three largest banks headquartered in Georgia will be state-regulated. The other two are Trust Company Bank, Atlanta, which is a subsidiary of Atlanta-based SunTrust Banks Inc., and Columbus Bank and Trust Co., which is part of Columbus-based Synovus Financial Corp.
Deputy Banking Commissioner Steve D. Bridges said the Bank South application is the only one on file in his department, although three smaller community banks converted to state regulation during the past year.
Nationally, the trend toward state regulation has been gaining ground. The Conference of State Bank Supervisors, the national trade association for state regulators, reported that 49 national banks converted to state charters in 1994, compared to 11 going the other way. Since 1993, when the momentum began, nearly 120 banks have converted to state charters.
Among the largest banks making the switch were NBD Bank, Detroit, and AmSouth Bank, Birmingham, Ala.
Comptroller of the Currency Eugene A. Ludwig has complained that banks are fleeing his agency because of stricter examinations.
But bankers say states simply charge less. NBD estimated regulation by the state of Michigan would cost it $2 million a year compared to the OCC's $3.5 million.
Responding to this criticism, the OCC reduced some of its fees late last year.
State-chartered banks also enjoy greater powers. A state bank that is not a member of the Federal Reserve system, for example, can be affiliated with a full-scale investment bank. However, Bank South is a member of the Fed and intends to stay one, its spokesman said.
