A year and a half after a branching fight sharply divided the industry, Colorado's banks are more united now than in over two decades, trade group officials say.

Officials of the Colorado Bankers Association and the Independent Bankers of Colorado said they see no other divisive issues on the horizon. The two groups are even discussing a merger.

But the official detente masks deep distrust among small banks of the political clout wielded by the largest, all controlled by out-of-state interests.

"We would love to have anybody other than large banks join the Independent Bankers of Colorado," said Richard C. Tucker, chairman of Denver's Tri-State Bank and former president of the Independent Bankers. "We don't want them. They have their own association, and that's where they belong."

Despite such sentiments, large and small banks in Colorado are presenting a united front on the key issues of regulatory reform and credit union taxation. But a decade of ill will over branching could hinder attempts to merge the two groups.

Preliminary discussions are being held at the behest of the Colorado Bankers, said the Independent Bankers' executive manager, Jim Thomas.

But with the Colorado Bankers still weakened by last year's in-fighting and the loss of the group's largest dues-paying member, the Independent Bankers are hoping to negotiate from strength and set their own terms.

"We're not asking for a merger," Mr. Thomas said. "They're asking for a merger."

However, Don A. Childears, executive vice president of the Colorado Bankers, said any decisions about a merger should be up to the state's banks, not the two associations. "They're the ones who need to be making the decisions," he said. "It's not Jim or me. We're the hired guns."

Mr. Childears said any merged group should meld the strong points of both while improving any weak areas. And he insisted that his group is still vibrant, citing 15 new community bank members in the last four months.

"We feel pretty good right now," he said. "We're not throwing down any conditions. If this makes sense to the bankers of the state, so be it. If not, we feel quite comfortable about continuing to serve our member banks and building on the growing base of community banks we've got."

Last year, Colorado community banks fought hard in the state legislature against their larger brethren to pass a bill opting out of the Riegle-Neal interstate branching law.

The bill, endorsed by both trade groups but vehemently opposed by the largest banks, passed - but was vetoed by Gov. Roy Romer after intense lobbying by First Bank System, Norwest Corp., Banc One Corp., First Interstate Bancorp (now Wells Fargo & Co.), and KeyCorp.

Eventually the state passed a compromise bill that simply accepted the federal trigger date of June 1, 1997.

First Bank's $7 billion-asset subsidiary Colorado National Bank quit the Colorado Bankers over the group's endorsement of opting out. It has yet to return.

Mr. Thomas said that the merger talks between the groups have not been substantive, and that the Colorado Bankers have made no formal proposals.

The Independent Bankers are insisting on retaining a one-bank, one-vote structure - the main reason the big banks revolted in the Colorado Bankers last year.

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