Ms. Anitta Pross
Senior Administrative Officer
SouthTrust Corporation
Post Office Box 2554
Birmingham, Alabama 35290

Dear Ms. Pross:

This is in response to your letter, dated July 22, 1997, to the Federal Reserve Bank of Atlanta ("Reserve Bank") requesting a determination of whether an application under section 3 of the Bank Holding Company Act, 12 U.S.C. § 1842 et seq. ("BHC Act"), is required by SouthTrust Corporation ("SouthTrust"), and its wholly owned subsidiary, SouthTrust of Alabama, Inc. ("SouthTrust-Alabama"), both of Birmingham, Alabama, in connection with SouthTrust-Alabama's proposed acquisition of Barnett Bank of Southwest Georgia, Columbus, Georgia ("Barnett Bank").

The purpose of the proposed transaction is to facilitate the merger of Barnett Bank into SouthTrust Bank of Alabama, N.A., Birmingham, Alabama ("SouthTrust Bank"), a wholly owned subsidiary of SouthTrust-Alabama. The proposed transaction would proceed in two steps. First, SouthTrust-Alabama, would purchase all of the voting shares of Barnett Bank from its current shareholder, First City Bancorp, Inc., Columbus, Georgia ("First City").¹ Second, Barnett Bank would merge into SouthTrust Bank, with SouthTrust Bank as the survivor. The steps described above would occur in immediate succession. Neither SouthTrust nor SouthTrust-Alabama would operate Barnett Bank as a separate bank at any time. SouthTrust Bank has filed an application with the Office of the Comptroller of the Currency ("OCC") under the Bank Merger Act for approval of the merger of Barnett Bank into SouthTrust Bank.

Section 3(a)(3) of the BHC Act requires an application to the Board before a bank holding company may acquire direct or indirect ownership or control of more than 5 percent of the voting shares of a bank. An application is required under this section even where the transaction is subject to review under the Bank Merger Act if, as a result of the transaction, the bank holding company would directly or indirectly acquire shares of a bank that it previously did not control. See Girard Bank v. Board of Governors of the Federal Reserve System, 748 F.2d 838 (3d Cir. 1984). Under the proposed transaction, SouthTrust and SouthTrust-Alabama would acquire all the outstanding shares of the voting stock of Barnett Bank. Such acquisitions fall within the requirements of prior approval under section 3(a)(3) of the BHC Act.

In cases similar to yours, however, involving an existing bank holding company's acquisition of the stock of a bank, followed immediately by the merger of the bank holding company's subsidiary bank and the acquired bank, Board staff has advised that, when no issue is raised under the BHC Act and the merger is subject to the prior approval of a federal banking agency under the Bank Merger Act, it would not object to consummation of the proposal without the filing of a formal application under the Bank Holding Company Act. See, e.g., letter dated January 25, 1985, to Mellon Bank, N.A., and letter dated November 19, 1982, to Alabama National Banks of Alabama, Inc. In such cases, the Board has required the bank holding company to submit sufficient financial and other information to the Board in order that it may evaluate the effects of the proposed merger on the bank holding company. In the absence of such a filing, demonstrating no significant issue regarding the financial effect of the proposal on the bank holding company or other facts over which the Board has exclusive or primary jurisdiction, the Board would require an application under section 3 of the BHC Act.

The required information has been submitted to the Reserve Bank and Board staff. Barnett Bank does not engage in any nonbanking activities that would require approval under section 4 of the BHC Act, and there are no outstanding issues in the proposed transaction as described above with respect to section 3(d) of the BHC Act or other state law considerations. SouthTrust Bank has filed an application with the OCC for approval of this transaction under the Bank Merger Act, and it has been represented to the Reserve Bank and Board staff that all applicable requirements under state law and the Bank Merger Act will be met in completing this transaction. Based upon a review of the facts presented and acting pursuant to authority delegated by the Board, the Secretary of the Board of Governors of the Federal Reserve System has determined that the filing of formal applications by SouthTrust and SouthTrust-Alabama under the BHC Act is not required for approval of the proposed transaction. The determination in this case is subject to approval by the OCC of the proposed transaction under the Bank Merger Act.

The determination in this case is based upon facts presented to the Reserve Bank and Board staff. Any material change in those facts should be communicated to Board staff. If SouthTrust wishes to engage in additional activities or to acquire additional banks or nonbanking companies, the Board's prior approval would be required under the BHC Act. This opinion is limited to the proposed transaction and does not authorize any other transaction or any substitution of parties to the proposed transaction.

If you have any further questions about this matter, please contact Dennis White, Staff Attorney (202/452-2523) of the Legal Division of the Board.

Very truly yours,

(signed) Jennifer J. Johnson

Jennifer J. Johnson

cc: Federal Reserve Bank of Atlanta
Office of the Comptroller of the Currency
Alabama Superintendent of Banks
Georgia Commissioner of Banking and Finance

Footnotes 1 First City is a wholly owned subsidiary of Barnett Banks, Inc., Jacksonsville, Florida.