WASHINGTON - Birmingham-based SouthTrust Corp. converted its lead bank to an Alabama state charter on June 6, moving $44 billion of assets out of the national banking system.

So far this year, 10 national banks have opted for state charters, and nine state banks have switched to national charters. Though states charter most of the nation's banks - 6,216 institutions or 72.5% of the total - these banks hold just under 43% of the industry's $5.73 trillion of assets. SouthTrust made the jump to a state charter to save money and streamline its supervision, according to a spokeswoman.

State examination fees are roughly half those charged by the Office of the Comptroller of the Currency to national banks, and switching to a state charter means the bank only deals with state regulators and officials from the Federal Reserve Board who oversee the holding company.

"The lower fees were an important contributing factor to our decision," said Linda Baker, the company's director of corporate communications. "But it was also a matter of efficiencies. We wanted to be sending our reports to the same organization."

Mergers and a move by banks operating in multiple states to consolidate their charters have reduced the bank tally in recent years. On Wednesday, Chase Manhattan Corp. won Fed approval to roll its national bank in Houston, Chase Bank of Texas, into the New York state charter held by its lead bank.

Reducing the regulatory burden is an often-cited reason for switching charters.

Maine recently lost its two biggest banks - and nearly half the assets it supervises - when FleetBoston Financial Corp. and Banknorth Group consolidated their charters in order to cut down on the number of regulators involved in their exams. Fleet's Portland-based bank, with nearly $2 billion of assets, was rolled into the lead bank's national charter, and the $4.3 billion-asset Peoples Heritage Bank, also based in Portland, was acquired by Banknorth in the first quarter and converted to a national charter.

"We were up to nine regulators for Banknorth," said Meg Demtsey, vice president of public affairs at Peoples Heritage. "When you have so many different regulators doing exams, it is very burdensome to operations."

Whether an institution adopts a state or national charter makes a big difference to the regulators who examine it. When SunTrust Corp. bought Crestar Financial Group and rolled it into a Georgia state charter this year, Virginia's banking department lost roughly 20% of its revenue, regulatory sources said.

With their budgets on the line, state and federal regulators actively solicit charter conversions.

National Bank of Commerce in Memphis announced plans last year to switch to a state charter but was talked out of it after Comptroller John D. Hawke Jr. and the agency's chief counsel, Julie L. Williams, flew there in January.

Likewise, Alabama's banking commissioner, Norm Davis, courted SouthTrust, pitching the benefits of a state charter to executives several months ago. The charter switch makes Alabama's the nation's second-largest banking department in terms of the share, 98%, of banking assets under state charters, Mr. Davis said. New York is first.

"When people think of Alabama, they usually think football. Now they are going to think banking," Mr. Davis said Wednesday.

Alabama state regulators now oversee $177 billion of assets, up from just $40 billion in 1995. In fact, SouthTrust's Ms. Baker said another reason the company converted to a state charter was because so many other Alabama banks already had.

"We wanted to fall in line with the other large banks in Alabama" such as Regions Financial Corp., AmSouth Bancorp., and Compass Bancshares Inc., she said.

Mr. Davis attributed his department's success to the advantages of the state charter and to the accessibility of his office. Though touting his lower examination fees, he said, he never compared them directly to the cost of OCC regulation.

Mr. Hawke declined an opportunity to comment on SouthTrust's conversion.

Neil Milner, president of the Conference of State Bank Supervisors, welcomed SouthTrust's decision but said it was made for several reasons, not just because of lower fees.

"I think that the fees got their attention," said Mr. Milner. "But I think that was only part of it. They talked to a lot of other multistate banks and decided what would be best for them in terms of regulation."

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