A lawsuit filed Wednesday claims the Federal Deposit Insurance Corp. has no authority to charge banks that own thrift deposits the higher premiums levied by the savings association fund.

If the government loses this case, it would boost the banking industry's bottom line by $530 million a year. And the beleaguered Savings Association Insurance Fund would lose about one-third of its annual income.

"I do think it would be cataclysmic for SAIF," said Jim Butera, a partner with Butera & Andrews here. He noted, however, that any impact is at least year away, because of the time it takes lawsuits to move through the courts.

The suit was filed by One Valley Bank in Charleston, W.Va., in U.S. District Court for the Southern District of West Virginia.

The savings association fund is undercapitalized and under pressure as thrifts continue to reduce insured deposits to avoid costly insurance premiums.

After the Bank Insurance Fund hit the required 1.25% reserve ratio in May 1995, the FDIC drastically cut bank premiums. The fund's reserves continued to build, leading the FDIC to eliminate the bank fee in January.

But because the savings association fund's reserves are still so low, thrifts continue to pay 23 cents for every $100 of domestic deposits.

Some 809 banks hold thrift deposits and pay SAIF premiums to insure them. The banks, known as Oakars, currently hold thrift deposits totaling $230 billion.

FDIC officials refused to comment on the lawsuit. Most banking lawyers had not seen the suit Wednesday, but a number of them said One Valley will have a tough time convincing a court to overturn the FDIC's established practice. Still, industry lawyers noted that One Valley is being represented by one of the best lawyers in the business, H. Rodgin Cohen, a partner with Sullivan & Cromwell in New York.

"We think we have a solid case," Mr. Cohen said in an interview Wednesday. "What prompted this, more than anything, is Oakars watching thrifts leaving SAIF and realizing they don't want to be stuck holding the bag.

"As SAIF gets smaller and smaller, it's the Oakars who get stuck paying."

Oakar deposits have increased steadily since 1989 when Congress passed the thrift bailout bill, creating the savings association and bank funds. A last-minute amendment - sponsored by then-Rep. Mary Rose Oakar, D-Ohio - allowed banks to buy thrift deposits, but it required these "Oakar" banks to continue paying insurance premiums on those deposits to the savings association fund.

One Valley's lawsuit states that lawmakers deleted that requirement in 1992. The bank is not arguing that Oakar deposits should be removed from the thrift fund. Rather, One Valley claims the rate charged by the bank fund should apply to all deposits controlled by a bank.

The amendment took effect Jan. 1, 1994, but it didn't matter until last summer when the FDIC cut bank premiums 83% to 4 cents; until that point bank and thrift rates were the same.

J. Holmes Morrison, One Valley's president and chief executive, said a victory in court would save his company $800,000 a year. One Valley is the flagship bank of One Valley Bancorp The $4.2 billion-asset parent has 12 affiliate banks with 89 branches in West Virginia and Virginia.

"We don't think litigation is the way to solve things," Mr. Morrison said Wednesday. "But we think the law is so clear here that we really do owe it to our customers, employees, and owners to pursue this."

One Valley bought a troubled thrift, Atlantic Financial Federal, from the Resolution Trust Corp. in 1991. "That transaction saved the taxpayers millions of dollars," he said. "We feel like we were part of the resolution of the savings and loan problem...and here we are being penalized."

While Oakar deposits have been increasing, deposits held by thrifts have been gutted, declining $400 billion since 1989 to $451 billion in the first quarter.

Premiums collected by the thrift fund also must cover annual interest payments on Financing Corp., or Fico, bonds. These bonds, floated in the late 1980s to begin financing the thrift bailout, siphon $718 billion of the fund's $1.7 billion in annual income. Subtract the $530 million in premiums paid by Oakars, and the thrift fund would be making just $452 million a year.

Some sources speculated that the lawsuit might spur Congress to enact legislation rescuing the thrift fund. But that bill has been pending for a year, and faces strong banking industry opposition.

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