NationsBank Corp. began merging its North Carolina and Texas banks on Thursday, after a federal court rejected a request by Lone Star State officials to block the consolidation.

The ruling by the U.S. District Court for Northern Texas removed the final hurdle for NationsBank's effort to circumvent the state's ban on interstate branching.

Texas Banking Commissioner Catherine A. Ghiglieri said she will decide by the end of this week whether to appeal the ruling. An appeal, however, would not stop the consolidation.

She has argued that interstate mergers are illegal in Texas until 1999 because state lawmakers took advantage of an escape clause in the federal law permitting cross-border consolidation.

In April, the Office of the Comptroller of the Currency ruled that the state's ban on interstate mergers does not apply to this instance because NationsBank's flagship institution in Charlotte already operates some branches in Texas.

In March, the Supreme Court turned down an appeal by Texas officials to prevent NationsBank from acquiring Sun World in Santa Teresa, N.M. That deal gave the North Carolina bank the Texas branches it needed to qualify for the merger.

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