The pending merger of the New York Bankers Association and the Community Bankers Association of New York State would be the eighth between state bank and thrift trade groups since 2000.
And as the number of state trade groups continues to dwindle - a reflection of industrywide consolidation - it seems only a matter of time before national trade groups follow suit, said Edward L. Yingling, the president and chief executive of the American Bankers Association.
"These trends that have driven the state associations are in play at the national level," Mr. Yingling said last week. "Logic tells you there may be a merger at some point."
The ABA would probably be the surviving entity of any trade group merger, and as such has little to lose in floating the idea. Mr. Yingling stressed that the ABA is not in talks to merge with other Washington-based trade groups, and his counterparts at the Independent Community Bankers of America and America's Community Bankers say those groups intend to stay independent.
But some bankers who pay the dues to belong to these groups say there are compelling reasons for national trade groups to join forces, starting with consolidation.
Since the beginning of 2000 the number of commercial banks has fallen 9.2%, to 7,549, and that of thrifts 17%, to 1,319, according to the Federal Deposit Insurance Corp.
C.R. "Rusty" Cloutier, the president and CEO of the $635 million-asset MidSouth Bancorp Inc. of Lafayette, La., said competition for members could spur more trade group mergers, at both the state level and in Washington.
"I know a lot of banks that never planned to merge, but due to loss of business or competitive issues, did," said Mr. Cloutier, who was the chairman of the Independent Community Bankers of America from 2003 to 2004 and is now a member of its executive committee.
Trade groups in California, Massachusetts, Michigan, Ohio and other states in recent years, and most industry observers expect more combinations. Indeed, the New Jersey Bankers Association and the New Jersey League of Community Bankers said this past summer that they were in merger talks and could announce a deal by the end of the year.
Aside from bank consolidation, state trade groups are merging because banks and thrifts are more alike these days. Many thrifts are making commercial loans and many commercial banks are doing home lending, and the one policy issue that had historically divided the two camps, preservation of the unitary thrift charter, was eliminated when the Gramm-Leach-Bliley Act was passed 1999.
The New York trade groups plan to complete their merger by Jan. 1 and use the New York Bankers Association name. Michael P. Smith, the president of the New York Bankers, would retain that title, and Mariel O. Donath, the president of the community bankers group, would be a consultant to the board for 18 months.
In a news release announcing the merger, Mr. Smith, Ms. Donath, and the bankers that chair their groups' boards all stressed the importance of speaking "with one voice."
"While both associations have worked closely together in the past to achieve important gains for the financial services industry, there were also some issues which divided us," said John A. Zawadzki, the president and CEO of Partners Trust Bank in Utica, N.Y., and the chairman of the community bankers group. "Those issues have been largely resolved, clearing the way for this historic joining of forces for our industry."
Donald R. Mengedoth, the chairman of the $48 million-asset Millennium Bancorp in Edwards, Colo., and the ABA's chairman from September 2000 to September 2001, said he expects national trade groups to merge eventually.
When he was on the ABA's board, the group was in serious talks to merge with America's Community Bankers, which largely represents thrifts, after longtime ACB president Paul A. Schosberg announced his retirement in 1999. On reason why talks broke down, Mr. Mengedoth said, was concern about a merger's impact on the two groups' state affiliates.
"Our hang-up was how does this affect the associations at the state level?" Mr. Mengedoth recalled. "At that time there were not enough of these combinations that had occurred of their own accord, so it was too complex." With fewer state trade groups, that would be less of a concern today, he said.
Diane Casey-Landry, ACB's president and chief executive, said hers is often the first national trade group people expect to disappear, because it had discussions with the ABA six years ago. But she said there is value in having multiple trade groups because each one offers its own products and services and its own approach to policy issues. She pointed out, for example, that ACB has partnered with Nasdaq to help community banks gain investors' attention.
Both Ms. Casey-Landry and ICBA president and CEO Camden R. Fine also pointed out that national groups, unlike state organizations, can draw members from all 50 states.
Mr. Fine said that states such as Illinois and Texas in particular still have large numbers of independent community banks and that new banks are opening all the time, so there will always be demand for a national trade group that exclusively represents small banks.
"I don't think we will have fewer than 5,000 or 6,000 banks in the country," Mr. Fine said. "As far as I can see you are going to have a very diverse financial services picture in this country."
But Eddie Canterbury, the president and CEO of the $183 million-asset Logan Bank and Trust Co., in Logan, W.Va., said he could see the value in having the three national trade groups combine. He said that if they were more unified they might help the bankers win important legislative victories - eliminating credit unions' tax exemption, for instance - that would help all banks, regardless of size or charter type.
"Right now our main competition is the credit unions," Mr. Canterbury said. "Once the large banks and small banks realize that's our main competition we'll all be better off."
