The Credit Union National Association, in a move it openly acknowledges is payback, has come out in opposition to Zions Bancorp.'s acquisition of Amegy Bancorp.
Harris H. Simmons, Zions' chairman and chief executive, is one of the credit union industry's fiercest critics. As the new chairman of the American Bankers Association, he now has a bully pulpit to press his - and the banking industry's - case against credit union expansion.
Eric Richard, CUNA's general counsel, said Monday that his group had never before weighed in on a bank merger but is doing so now because Mr. Simmons is involved.
"He's slapped our cheeks so many times we've run out of cheeks," Mr. Richard said. "It's important that bankers who are vocal about credit unions know that punches can be thrown in both directions."
CUNA's letter, drafted in conjunction with the Texas Credit Union League and delivered Friday to the Federal Reserve Bank of San Francisco, was a shot in an increasingly contentious battle between bank and credit union trade groups.
The banking industry argues that community charters have essentially turned many credit unions into tax-exempt banks. Credit unions say they need to expand into new communities and new lines of business to remain viable.
Zions, with $33 billion of assets, announced in July that it would buy the $7.7 billion-asset Amegy, in Houston, for $1.7 billion. The deal is scheduled to close in the fourth quarter.
In its letter CUNA made the point that despite Mr. Simmons' criticism of credit unions' looser field-of-membership rules, banks have vastly superior expansion opportunities. It would be virtually impossible, for example, for a credit union in Salt Lake City to buy a credit union in Houston.
Credit unions "cannot target certain markets … without meeting demonstrable field-of-membership standards," the letter said.
CUNA also said the benefits to customers would be minimal, and it called the compensation packages Zions is offering Amegy's senior managers "excessive." According to the comment letter, at least six Amegy executives, including president and CEO Paul B. Murphy Jr., stand to receive payouts in excess of $1 million.
"The funds earmarked for these compensation agreements would be better spent on reducing loan rates and increasing savings rates for consumers," the comment letter stated.
Mr. Simmons said the letter poses absolutely no threat to the Amegy deal, mainly because the clear desire to get back at him for his position on credit unions undercuts whatever credibility it might otherwise have had with regulators.
"I'm amused that they feel so strong about me that they would go to the trouble," he said Monday. "Clearly this has nothing to do with the merits of the transaction and everything to do with my criticism of the credit union industry."
He also said the deal would bring Amegy's business customers many benefits, including more access to Small Business Administration loans and the ability to make remote deposits from their offices instead of having to travel to a bank branch.
Mr. Simmons called CUNA's attack on the compensation packages Amegy executives are set to receive "highly ironic," given that all but a handful of credit unions refuse to disclose the salaries they pay to their managers.
Chris Cole, the regulatory counsel for the Independent Community Bankers of America, called the comment letter "an emotional response to the banking industry's attempts to rein in credit union expansion."
Mr. Richard acknowledged that it is unlikely the Federal Reserve will deny Zions' application to acquire Amegy, but he said he hopes regulators will give CUNA an opportunity to state its case more fully.
"If the Federal Reserve is interested in talking to us, we'd be very interested in talking to them," he said.
