In the latest flareup of political tensions between big and small banks, the five biggest in North Carolina have abandoned the state trade group to form their own association.

The flagship North Carolina units of NationsBank Corp., Wachovia Corp., First Union Corp., Southern National Corp., and First Citizens Bancshares said they are forming the North Carolina Association of Financial Institutions.

The move followed the recent vote of the North Carolina Bankers Association, to which they belonged for decades, to merge with the state community bankers' group.

Russell L. Stephenson Jr., senior vice president at Wachovia Bank of North Carolina, said it and its peers broke away because they believe the merged group will be overly focused on community bank issues.

The reconstituted North Carolina Bankers Association will have a one- bank, one-vote structure and a total membership of about 125. Of those, 105 have assets of less than $500 million, while the smallest of the breakaway banks, First Citizens of Raleigh, has around $8 billion.

Thad Woodard, who now heads the small-bank group known as the Community Bankers Association of North Carolina, will be president of the new North Carolina Bankers Association, effective Jan. 1.

The fight is symptomatic of disputes between independent and regional or superregional bankers across the country. Large and small banks have been increasingly at odds within their traditional trade groups on issues ranging from branching to expanded powers.

In California, for example, community bankers formed a new trade group last year to oppose legislation favored by bigger institutions and endorsed by the California Bankers Association.

Last month in Montana, First Bank System Inc. pulled out of the Montana Bankers Association over an agreement between the group and the Montana Independent Bankers to push for legislation that would limit interstate banking and favor intrastate branching.

First Bank also quit the Colorado Bankers Association over its stance on branching and concern that the group's one-bank, one-vote policy would not serve its interests.

"We hate to see this happen the way it happened," Wachovia's Mr. Stephenson said. "But it was a business decision. We need an organization that can accomplish what we feel needs to be accomplished."

Peter Keber, senior vice president at NationsBank, said the North Carolina Bankers Association "will be a significantly different organization than it has been."

It will be allied nationally with the Independent Bankers Association of America and America's Community Bankers as well as the American Bankers Association, Mr. Woodard said.

The five breakaway banks' association would link up only with the American Bankers Association.

"They've set up an organization - but we'll keep doing what we're doing," Mr. Woodard said. "We fully expect to continue all of our relationships on the national level."

Aside from the counterweight it creates to the state bankers association, the departure of the big North Carolina banks will be a financial blow, to the tune of about $100,000 in dues.

Paul H. Stock, executive vice president of the state community bankers association, who will have that title at the newly merged North Carolina Bankers Association, called the split painful.

"We did not anticipate this happening," he said. "The membership of both organizations have been working hard for a long time seeking a single voice for banking in North Carolina. It's unfortunate that we're still not going to have accomplished that goal."

Despite the rancor, the large banks said they are willing to work with their former group on some issues.

But Mr. Stock said that won't be possible.

The state association wants "a single voice for banking in North Carolina," Mr. Stock said. "We hope we'll see in a short period of time that there isn't a need for a second organization."

"The door is open," said Mr. Woodard. "We'd love for the big banks to come back so we'll have one voice in North Carolina. We'll be waiting for them, hoping for them."

Jacqueline S. Gold contributed to this article.

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