C. William Landefeld, incoming president of America's Community Bankers, expects a good time as the trade group kicks off its annual convention today in Atlanta.
"We'll party harder this year than in other years," said Mr. Landefeld, who is also president of Citizens Savings Bank, Normal, Ill. "We'll spend a little time congratulating each other."
There's nothing theoretical about Mr. Landefeld's delight in the legislative victories thrifts have racked up this year. They directly affect his bottom line: He'll be ponying up $1.3 million before taxes to pay the special assessment to shore up the Savings Association Insurance Fund, but he'll enjoy a $400,000 annual drop in the deposit insurance costs and a tax break worth more than $1 million.
His buoyant spirits are shared by the thrift trade group's members all over the country. Like most of them, Mr. Landefeld runs a small thrift - $260 million in assets. Citizens is based in a small town about midway between Chicago and St. Louis. Its slogan is "Your hometown banker."
Citizens, he said, is the third-largest financial institution in the Bloomington/Normal area, but the largest originator of mortgage loans.
"We're the largest locally owned and managed institution in that community," he added.
But his thrift faces increasing competition from banks and credit unions, he said. During the past year, Mr. Landefeld has paid about $500,000 in deposit insurance premiums, while "the bank across the street that is probably twice my size" has been paying $2,000. Next year, he'll still be paying more than banks, but the discrepancy is down to about $100,000. "Our quarterly earnings will be much improved," he predicted.
And he can look forward to a time when the bank and thrift funds merge, and everybody pays the same rate.
Mr. Landefeld, 57, said thrifts were lucky that banks didn't use the premium discrepancy to price their products and services to woo away customers. "They had us on the ropes and could have delivered the knockout punch, but chose instead to have a year of record profits," he said.
Thrifts were fortunate, too, that their insurance fund grew stronger as the industry boomed and few institutions failed.
Two years ago, thrifts would have paid about $6 billion to recapitalize the fund, he recalled. Now, the tab is about $4.5 billion. "Even though it's going to be a big hit for the year, it's not going to wipe out the year's earnings," he said.
Mr. Landefeld also is grateful that Congress agreed to forgive $3 billion in taxes owed by thrifts on reserves set aside before 1988 to cover bad loans. That means conversion to a bank charter would cost Mr. Landefeld $30,000 today, rather than more than $1 million under the old rules.
"This year ACB proved it could get things done," Mr. Landefeld said. But he says next year the thrift group will be even more effective. That's because thrifts and banks will be lobbying together.
"We'll be speaking with a common voice about every issue, even charter modernization," he said.
Thrifts would like the lending flexibility of the bank charter, he said. Banks would like the powers of the thrift unitary holding company charter for branching and for certain activities by affiliates and service corporations such as selling insurance.
"I would think we would sit down together to work out the best charter for both of us," he said.
He noted that both banks and thrifts want more regulatory reform, such as a relaxation of Community Reinvestment Act requirements, and would like credit unions to pay federal income tax. "I don't see many issues going forward where banks and thrifts are not in agreement," he said.
"On most issues, we'll be walking hand in hand with bankers when we go to the Hill."