Alleging unfair competition, Alabama bankers are calling for changes in a Florida law that could cost them millions of dollars in public deposits.
The law, which bars banks chartered in states outside Florida from accepting government deposits, has been on the books for years. But its implications have come to the fore only recently, as regional banking companies prepare to consolidate charters with the advent of interstate banking.
"It is a serious problem that needs to be addressed," said Jerry W. Spencer, executive vice president of the Alabama Bankers Association. "With interstate banking, a principal place of business could be anywhere."
The issue is particularly galling to the Alabama bankers group because nationally chartered banking companies are not subject to the restrictions, said Mr. Spencer.
The statute is one of many issues bankers are dealing with as companies move to the system allowed under the Riegle-Neal Interstate Banking Act of 1994.
Regional banking companies across the country are moving to consolidate charters to reduce costly and time-consuming compliance-related operations, free up capital, and improve overall efficiency. But in doing so they are uncovering many potential potholes in banking laws that vary from state to state.
Birmingham, Ala.-based Amsouth Bancorp, an $18.4 billion-asset holding company and the fifth-largest bank in Florida, with 177 branches there, is the company most strongly affected by the law.
The $5 billion-asset Colonial BancGroup, Montgomery, Ala., also would be hurt, because it-like Amsouth-wants to consolidate its charters into one Alabama charter.
Nationally chartered institutions such as NationsBank Corp., which has an extensive Florida presencethough no Florida charters,can accept public deposits because of the law's provision that such national charters need only have a branch in the state to participate in taking in government funds.
"These issues have to be resolved. And it has to be done in a hurry," said Young J. Boozer 3d, executive vice president with Colonial BancGroup. Colonial, which has been on a Florida buying binge, plans to consolidate its charters in Florida, Georgia, and Tennessee.
Alabama's superintendent of banks, Wayne Curtis, took up the matter Tuesday with Art Simon, director of Florida's Division of Banking.
After the meeting, Mr. Simon said he needs to investigate the issue further. Because of competitive concerns, some Florida bankers might protest a change. But Mr. Simon said Alabama bankers have "a pretty compelling argument." He emphasized the state's desire to work closely with other states to ensure smooth transitions related to interstate banking.
The law, which comes under the auspices of the state Treasury Department, says a qualified public depository means "any bank or savings association organized and existing under the laws of this state and any bank of savings association organized under laws of United States that has its principal place of business in this state or branch office" in Florida.
One obvious way to get around the constraint is to convert from a state to a national charter.
