WASHINGTON — To hear their leaders tell it, the merger of the American Bankers Association and America's Community Bankers was always just a matter of time.
With the Gramm-Leach-Bliley Act's enactment in 1999 and the gradual fade of bitter feelings left over from the savings and loan crisis, the two groups had become increasingly similar, both in policy positions and member composition.
The ABA, once an organization devoted largely to commercial banks, began courting thrifts five years ago. ACB, born of the merger of two thrift groups, began reaching out to commercial banks to diversify. As both groups acquired more members from the other side, their differences — and the primary reason for keeping them separate — began to evaporate.
"The reality was that the differences between the two organizations narrowed and narrowed to the point that it was really hard to distinguish — except maybe on tactics — where we differed on an issue," said Diane Casey-Landry, the president of ACB.
She and her ABA counterpart, Ed Yingling, discussed the merger in an interview late last month at the ABA's headquarters here. Mr. Yingling would be the post-merger group's president and chief executive officer, and Ms. Casey-Landry would take the No. 2 spot as chief operating officer.
Between them, the two executives have roughly 40 years of experience at trade groups.
Mr. Yingling joined the ABA in 1985 as its chief lobbyist and took the top job in 2005, when Don Ogilvie retired.
Ms. Casey-Landry, after six years as a bank examiner, joined what was then the Independent Bankers Association of America in 1985 as a regulatory liaison. She worked her way up to the No. 2 spot before leaving to join Grant Thornton LLP in 1995 as the head of its financial institutions group. She was selected to lead ACB in October 1999.
They know each other well, having worked with and against each other on a variety of issues for years. They also know their merger provides ammunition to the IBAA's successor, the Independent Community Bankers of America. Camden Fine, its president, called the merger an opportunity for his group when it was announced June 25.
"It clearly establishes the ICBA as the voice for community banks in this nation," Mr. Fine said. "We would welcome any thrift that would care to join the ICBA. If they are searching for a home, we are a good one."
That comment rankles Mr. Yingling and Ms. Casey-Landry.
"People who want to divide the industry on asset size are living in the past," she said.
Mr. Yingling nodded in agreement, and said trying to split large and small banks is counterproductive.
"At one point there were attacks going out against Citibank when it was having its regulatory troubles a couple of years ago," he said. "There were missiles from the small-bank lobby saying, 'This is wonderful. What they are doing is bad, and you ought to really throw the book at them.'
"I've been here longer than anybody. When they throw that book at Citibank, Citi will have 50 lawyers to catch it, and that same book will be thrown at the little bank," Mr. Yingling said. "When they write that regulation, it's going to apply to everybody."
The median size of the ABA's members is $115 million of assets. At ACB, it's $155 million. At the ICBA, it's $112 million.
The ABA and ACB first tried to merge in 1999, but the efforts crumbled after some thrifts balked. Ms. Casey-Landry, who joined ACB right after the deal unraveled, was told to preserve the group's independence.
"My mission was to rebuild the organization and to grow it and to keep it as an independent organization," she said.
Mr. Yingling was then considered an opponent by many thrifts. Then the ABA's chief lobbyist, he was its principal spokesman on Capitol Hill during the savings and loan crisis and its aftermath, when ill will between the banking and thrift industries was at its height. Among other things, he fought to stop commercial companies from obtaining a unitary thrift charter, and he advocated the Office of Thrift Supervision's elimination.
The differences between the banking and thrift charters have since waned, and the ABA long ago stopped pressing for a merger of the OTS and the Office of the Comptroller of the Currency.
Competition from members of other industries — including credit unions, the National Association of Realtors, and retail companies like Wal-Mart Stores Inc. — also helped to push aside old rivalries.
"We are one industry," Ms. Casey-Landry said. "Our industry needs one voice. Between the two of us, the new ABA will have it."
The post-merger group (which would use the ABA name) would represent the vast majority of banks. Though the ABA refused to provide specific numbers, Mr. Yingling said his group represents roughly 75% of the industry's assets, and that the post-merger group would represent 95%, or roughly $10 trillion.
The ABA and ACB say their memberships do not overlap by much. Ms. Casey-Landry estimated that 15% of her group's 1,000 members belong to the ABA. That percentage includes newly formed companies that get free initial memberships from both groups.
The ABA, with 340 staff members, and ACB, with 90, are not expecting to lay off personnel when the merger is complete, Mr. Yingling and Ms. Casey-Landry said. Instead, they said they have left some positions unfilled in anticipation of a merger.
Merger talk began with a conversation between Mr. Yingling and Ms. Casey-Landry shortly before Christmas of last year, after the ABA's board asked Mr. Yingling to explore the idea. (Nearly half the states have combined their bank and thrift trade groups.)
On Feb. 2 the groups' top leaders — Earl McVicker, the ABA's chairman; Bradley Rock, its chairman-elect; Mark Macomber, ACB's chairman; Arthur Connelly, its vice chairman; Mr. Yingling; and Ms. Casey-Landry — met at a Ritz Carlton hotel in the Virginia suburbs. Both sides recalled that meeting as an attempt to see how the boards' leaders would get along.
"The first meeting, from our standpoint, was really to get a flavor as to whether or not the attitude had changed," Ms. Casey-Landry said. "What ended up happening was, they were really talking, and it was very easy."
The two groups' leaders met again May 1 at the same hotel, and Ms. Casey-Landry said her group quickly realized it had a lot to gain from a merger if it could win commitments from the ABA on key issues.
"We could have gone on independently for another five years," she said. "But in a consolidating industry, where we don't have significant policy differences, where our bankers get a stronger voice for advocacy, this seemed like the time to do it."
After that second meeting, things moved quickly.
"At the end of that meeting, what came out of it was that they agreed on everything," Mr. Yingling said. "We went back to write it up — that became the document on which we built what was ultimately agreed to."
The document, which was approved by ACB's board June 23 and by the ABA's board two days later, included three key position statements, all of them relating to the thrift industry's future. The ABA said it would support the continued existence of the OTS, the thrift charter, and mutual ownership of institutions in particular.
The document also laid out a transition plan, including how the boards would be combined. The post-merger group would have 46 board members in the first year, with about a third of the seats held by ACB members. By three years after the merger, however, the board membership would drop to 27, with no specific allocation for ACB.
"We had better be one association by then," Ms. Casey-Landry said. "We don't want to be going, 'You are ACB, and you are ABA.' We are the ABA at that meeting."
The ABA did agree to reserve at least three board slots for executives at mutual companies. (The ABA already has — and would continue to have — specific board slots for institutions of different sizes.)
"We needed to ensure that the mutual thrift and the mutual savings banks were covered," Ms. Casey-Landry said. "It's a growing aspect. As more credit unions change their charter, they are becoming mutuals."
The leadership of the two groups also would be integrated. Mr. Rock of the ABA would be the post-merger group's first chairman, taking the slot this fall for a one-year term. Next year Mr. Connelly of ACB would take the chairmanship.
Mr. Yingling said one of the things that most excites him about the merger is the services the combined group would be able to provide.
"Increasingly for community banks — for all banks really but community banks in particular — it is a difficult environment," he said. "You have strong competition quite often from the credit unions and the Farm Credit System and nonbanks, the yield curve tightening them. It's tougher to make a buck. You have massive changes in technology that can really change the landscape very fast … and you have these regulatory burdens that are just killing people.
"What this new trade association is going to be able to do, because it really is an issue of depth and scale, is take those issues and provide free information and free services on a really unprecedented scale," he said.
The banking industry, he said, would finally have a united voice to rival other powerful trade groups, including the Realtors and the National Association of Home Builders.
"If you look at those two trade associations, there are no splits of any controversy," he said. "The Realtors represent the realtors. The Home Builders represent the home builders. Everybody belongs. That is one of the reasons they are so damn strong."
Mr. Yingling said he has yet to hear from an ABA member who opposes the merger; Ms. Casey-Landry said only a few thrifts have objected.
"There are those that want to make it so there is a bigger group of people saying, 'Oh, no,' " she said. "But they are by far a very small minority."
Both groups plan to spend the next several months conducting due diligence before submitting a more detailed merger proposal to their boards. The boards then would vote again before sending the question to members for a vote this fall.
Asked if they see any potential hiccups in that process, both Mr. Yingling and Ms. Casey-Landry replied with a quick "No."
"There is something to be said for those old adages that say timing is everything," Ms. Casey-Landry said. "And we have the time right this time. Ed and I are committed. Our two boards are committed. Our two organizations are committed."
