WASHINGTON - The chairman and chief executive officer of a $7.1 billion-asset bank in Tennessee said Thursday that his board was talked out of switching to a state charter by Comptroller of the Currency John D. Hawke Jr.

On Jan. 6, a few weeks after National Bank of Commerce filed to become a state-chartered bank, Mr. Hawke and his agency's chief counsel, Julie L. Williams, flew to Memphis to meet with some of the bank's directors and senior managers. The bank's board voted not to pursue the charter switch nearly two weeks later.

At the meeting, the two regulators offered to take National Bank of Commerce into the agency's large-bank supervision program, chairman and CEO William R. Reed Jr. said. That will give the institution an on-site regulator - treatment usually reserved for only the three dozen largest national banks in the country. (National Bank of Commerce is the 72d-largest, ranked by asset size, according to Federal Deposit Insurance Corp. statistics.)

Mr. Reed said Mr. Hawke and Ms. Williams also persuaded the bankers that one of the institution's stated goals - merging the multiple thrift charters owned by its holding company - could best be accomplished under a national bank charter. Mr. Reed said that they pointed out specific provisions of the Gramm-Leach-Bliley Act of 1999 that made such consolidation more advantageous under a national charter.

"They made a very good case for the benefits of staying a national bank, especially under the new bill," said Mr. Reed. "It kind of enlightened us."

According to agency officials, the comptroller's offer of entry into the large-bank supervision program did not amount to special treatment for National Bank of Commerce.

"We didn't offer the bank any inducements at all," an agency spokesman said. "This is an extremely well-managed, high-performing bank, and all of us felt that we would benefit from a more continuous supervisory relationship. As a result we offered to bring them into our large-bank program so that a resident examiner would be assigned to the bank."

A number of observers expressed surprise that a bank would voluntarily submit to what amounts to more regulatory scrutiny. But Mr. Reed argued that having a dedicated examiner would streamline preparations for examinations.

"There is a fear that if they are here full time they will be asking a lot of questions about things you don't want them asking about," Mr. Reed said. "But we don't have anything to hide. The internal management group came down heavily in favor of it."

Other observers said that the comptroller's effort to keep the institution in the national bank fold is an unsurprising result of regulators' battling to maintain their turf and exam fee income.

"This is regulatory competition. We know it's there," said Alexandria, Va.-based banking consultant Bert Ely. "If this were a private-sector company about to lose a big customer, quite possibly top executives would go there and say, 'Don't take your business away from us.' "

State regulators and the Federal Reserve Bank of St. Louis, which would have shared supervisory authority over the institution had it switched charters, said they were unaware of the high-level agency officials' visit to National Bank of Commerce.

"The reason they gave us [for retaining the national charter] is that board had met and they simply did not want to take the word 'national' out of their name," said James S. Douthit, chief examiner for the Tennessee Department of Financial Institutions.

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