Under new rules mandated by the 1991 banking law, federal regulators have been approving state banks' involvement in activities and investments that are barred to national banks.

The Federal Deposit Insurance Corp. Improvement Act generally limited the operations of state-chartered institutions to the activities allowed national banks.

But the 1991 law set up a mechanism for state banks to win approval for certain equity investments and nontraditional activities.

The FDIC was charged with deciding which state bank powers could stay and which must go on a case-by-case basis. Rules governing the new-activities exception were finalized last November, while the equity investment regulations were finished in 1992.

Eight applications have been considered by the agency. To win approval for either, banks and thrifts must show that they are adequately capitalized and that the activity poses no safety 0r soundness concerns, an FDIC official explained.

So far, the FDIC board has turned down just one of the eight applications, a spokesman said. The FDIC refused to provide any details on the rejected application.

The most interesting approval was made in February, when the FDIC board voted to allow Branch Banking and Trust Co., Wilson, N.C., to acquire FARR Associates Inc., a personality analysis firm in Greensboro.

That BB&T subsidiary, "is engaged in the business of offering professional services associated with the study and analysis of personality characteristics and their relationship to leadership effectiveness, development, and enhancement of leadership skills," according to FDIC documents.

National banks are generally prevented from engaging in activities unrelated to banking, and they may not make equity investments, a spokeswoman for the Office of the Comptroller of the Currency said.

Before the new rules, the state-chartered banks were not required to seek FDIC approval for their non-banking activities and equity investments as long as their state regulator permitted it.

Because deposit insurance puts the federal government on the hook if a bank fails, the new law gives "the federal regulators, in effect, a veto of what the statechartered institutions can do," said Bert Ely, an Alexandria, Va.-based financial consultant.

Some other recent approvals, according to FDIC documents:

The FDIC board voted July 11 to allow Truckee River Bank, Truckee, Calif., to continue to hold five life insurance policies on four former employees.

On June 14, the FDIC board allowed Barretville, Tenn.'s Barretville Bank & Trust Co. to establish a subsidiary to hold its current 40% equity investment in Somerville Bank & Trust Co. in Somerville, Tenn.

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