Updated from 8:09 a.m. EDT

Another major regional bank bit the dust Monday as

SouthTrust

(SOTR)

agreed to a $14.3 billion takeover by North Carolina's

Wachovia

(WB) - Get Report

.

Wachovia will exchange stock worth $41.83 for each share of Birmingham, Ala.-based SouthTrust.

Based on SouthTrust's Friday closing price of $34.80, Wachovia is paying a 20% premium to acquire the bank, which has 742 branches. The deal, which is expected close by year's end, will enable Wachovia to leapfrog over

Bank of America

(BAC) - Get Report

to become the largest retail bank in the Southeast.

Thomson Financial says the average premium in bank deals this year is 26%, compared with a 24% premium for all other corporate deals.

In morning trading, shares of SouthTrust rose $4.67, or 13.5%, to, $39.47, while Wachovia' stock was down $1.84, or 4%, to $45.16.

"This transaction give us clear leadership in a number of attractive high-growth states," says Ken Thompson, Wachovia's chairman and chief executive.

The marriage of two southern lenders is the latest in a series of big banking deals the past nine months that began with Bank of America's acquisition of FleetBoston. Other major banking combinations include

J.P. Morgan Chase

(JPM) - Get Report

and

Bank One

(ONE) - Get Report

;

SunTrust

(STI) - Get Report

and

National Commerce

(NCF)

and

Royal Bank of Scotland

and

Charter One

(CF) - Get Report

.

On a dollar basis, 2004 already is the second biggest ever for bank mergers. Thomson Financial reports that value of announced U.S. banks mergers this year now totals $103 billion, nearly double the $66 billion in bank deals announced for all of last year. The all-time record for bank merger-and-acquisition activity was 1998, when U.S. banks deals totaled a whopping $249 billion, which include the $70 billion mega-merger between

Citicorp

and

Travelers

, which produced

Citigroup

(C) - Get Report

.

The latest marriage ends six months of speculation about SouthTrust's fate and extends a recent 11% run-up in its stock.

Not surprisingly, the deal led to an early rise in bank shares. The Nasdaq Bank Index, which includes many regional lenders, was up half-a-percent.

Wachovia, with about $411 billion in assets and $62 billion of market capitalization, was itself created through an acquisition by First Union in 2001. In SouthTrust, the Charlotte, N.C., bank bolsters its presence in the Southeast and gets an additional foothold in Texas, where it recently began its own expansion. SouthTrust has 60 branches in Texas.

SouthTrust has about $53 billion in assets and a premerger market cap of $11.5 billion.

The takeover will give the combined Wachovia 14 million household and business customers in 15 states, creating the largest bank in the Southeast with 18% of the regional deposit share. Combined, the banks will have $464 billion in assets and $76 billion of market cap, making it the nation's fourth-largest bank in the country.

In a conference call discussing the deal, officials said they expect to close between 130 and 150 branches that are located in the same general vicinity. Most of the branch closing will be in Georgia and Florida.

Wachovia officials said it's unlikely they will do any other major acquisitions for the next 18 months, as they spend that time integrating the two banks.

Thompson said the deal will advance Wachovia's timeline for expanding in Texas by about four years. He says before the deal, SouthTrust was working on plans to open another 30 to 40 branches in Texas.