Failure of Merger Plan Likely To Roil Both N.C. Bank Groups

North Carolina's two banking trade groups face fundamental change in the wake of the collapse of their merger plans last week.

The North Carolina Bankers Association's overwhelming vote last Friday not to merge with the Community Bankers Association of North Carolina indicates that its big-bank members would rather downsize the group's operations than give up their legislative influence.

"I believe in a broader mission for the association, but basically what came out of the meeting was that we need to downsize and narrow the focus," said Robert R. Mauldin, who resigned as in-coming chairman of the North Carolina Bankers Association after the vote.

"I could not in good conscience go into office disagreeing with that approach," he said.

Mr. Mauldin also pulled his bank, $5.3 billion-asset Centura Bank, Rocky Mount, N.C., out of the association. Centura will seek to join the Community Bankers, he said.

The North Carolina Bankers Association intends to drop nearly all of its educational seminars and other programs in the coming months and focus its resources on lobbying efforts, said Lawrence M. Kimbrough, chairman of the group and chief executive of First Charter National Bank in Concord.

This year's convention in Bermuda will likely be its last, at least in that format, he said.

As for the Community Bankers, its board is meeting today to determine whether to expand its membership to include all banks that want to join. Currently, only banks with less than $500 million of assets can be members, though they can grow past that level after joining.

The two trade groups had been seeking a merger for nearly two years, with the most recent round of talks intensifying last summer. A combination appeared likely two months ago, after the board of the Community Bankers approved the deal in mid-December.

The talks stemmed from the rampant consolidation in recent years, which has sapped dues revenue from the two groups. Because of its high dependence on membership dues, the big-bank group in particular was interested in a combination.

In the end, however, the regional banks were worried about losing their board seats in the new organization, and consequently, their influence, both sides said.

"All we can say is that we did have some conversations with the five largest banks, and they expressed concerns over whether they would still have an appropriate level of involvement in the state legislative program," said Paul H. Stock, general counsel of the Community Bankers.

The Community Bankers proposed a one-bank, one-vote structure, as is its current practice, and would have guaranteed just one board seat to a big bank on the planned 13-member board. The state's eight big banks all have guaranteed board seats in their association.

Thad Woodard, chief executive of the Community Bankers, had general support from both sides to head the proposed group.

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