After much thought, State Financial Services Corp. consolidated its four separate bank charters into one about two years ago.

The $285 million-asset company is part of a trend of bank companies, both large and small, merging their charters to streamline management and save money.

But it's not as easy a decision as it appears. Losing a charter also typically means losing local senior management and, perhaps more important, a hometown board of directors. Customer service can suffer.

"We had gone down a certain path with all the banks being independent," said John B. Beckwith, one of State Financial Bank's two presidents. "But it still was our goal to continue to grow as an organization.

"If we were to do that ... we might wake up one day and have 20 different banks. And that might be fine. But if we woke up that day and said, 'Hey, maybe we should consolidate,' now it's probably two or three times more difficult to do that."

Many banks are thinking along the same lines, especially in light of the upcoming implementation of nationwide interstate branching, which will allow banks to branch into most states without having to establish new charters.

Charter consolidation already is prevalent in states that have expanded their own branching laws, such as Illinois, leaving regulators with fewer but larger institutions to examine, said Illinois' acting commissioner of banks and thrifts, Scott Clarke. The phenomenon contributed to a reduction by about 50 in his examination staff over the past several years, he said.

Overall, 277 charters were lost to mergers within holding companies in 1994, accounting for 41.4% of all charter losses, according to the most recent data available from the Federal Deposit Insurance Corp. That was up from 1993, but below a 10-year peak of 419 in 1988.

The group of banks trimming charters includes regionals that are abandoning the local charters of their super community banking structures, such as Banc One Corp. and Barnett Banks Inc. and some, such as KeyCorp, that are merging charters from several states.

Some of the smaller bank companies taking part say their motivations are similar to those of their larger counterparts.

"I read with interest the Banc One information," said Robert DeMeulenaere, president of Des Moines' $1.5 billion-asset Brenton Banks Inc., which consolidated its 13 bank charters into one in November to focus the company on a common, customer-oriented vision.

"They're doing exactly what we are doing, I think for the same reasons."

But State Financial president and chief executive Michael J. Falbo said he sees some differences in his company's charter consolidation from the big guys.

"We tried as little as possible to change authority in each office and, in fact, expanded it," he said. "In the larger institutions, I think the reverse happens, for mainly economical reasons."

He said he believes the main advantage for the big banks in cutting charters is to save on paychecks for executives at the subsidiaries.

From his fourth-floor office in this Milwaukee suburb, Mr. Falbo explained why and how State Financial consolidated its charters and what the results have been.

The company's former lead bank, State Bank, Hales Corners, formed a holding company in 1984. The company began to consider a single charter soon after its first acquisition, Milwaukee's University National Bank, in 1985, Mr. Falbo said. But it took two other buys - Edgewood Bank, Greenfield, in 1987, and Eastbrook State Bank, Brookfield, in 1992 - before the bank seriously looked at consolidation.

"It took us until '93 to make the final decision," he said. "It took us that long to get comfortable with it."

State Financial already had combined many back-room operations, but had hesitated to eliminate local boards of directors. Finally, management decided that with multiple charters employees spent too much time on internal matters like multiple examinations and call reports.

Once the decision was made, a committee of several senior managers from all the banks tried to reconcile the products and policies of the four banks into one - not an easy task.

"We had to bring all our people together and go over everything that they do ... from making a copy for a customer to making a $4 million loan," Mr. Falbo said.

Management also wanted to keep certain products in place for niches at specific locations, such as student-oriented products at the former University Bank near the University of Wisconsin-Milwaukee campus.

The strategy included splitting the new bank into two territories, each with a president, a move that also helped prevent major layoffs - Mr. Falbo said just one person lost a job.

He estimated that the consolidation cost about $100,000, mainly for new signs and marketing efforts. The company also paid for an extra exam on the national bank it converted to a state charter.

"Whatever it cost us initially, we made up prior to the end of the year in savings," Mr. Falbo said.

Cost savings have been about $12,000 to $14,000 a month since the consolidation, from efficiencies such as consolidated data processing, said Michael A. Reindl, senior vice president and chief financial officer.

But not all banks with multiple charters are on the consolidation bandwagon.

David M. Ondersma, chairman and chief executive of $3.1 billion-asset First Michigan Bank Corp., Holland, Mich., opted to keep the company's 13 - soon to be 14 - charters separate after exploring the idea in recent years.

"We're quite committed to the idea of maintaining separate charters," he said.

First Michigan weighed the costs of keeping separate charters - multiple directors' fees, call reports, and examinations - against the benefits, mainly having separate local presidents and bank boards.

Mr. Ondersma found a cost advantage to the separate charter, after calculating that cash reserves for deposits are lower for several smaller banks with fewer deposits than one large bank with more deposits.

Even State Financial's philosophy isn't carved in stone. When the company acquired $40 million-asset Waterford Bancshares last August, it agreed not to make it into a branch for three years, although it was renamed State Financial Bank - Waterford.

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