Tennessee's banks and thrifts, burdened by mutual regulatory and marketplace problems, have voted to merge their trade groups.

The Tennessee Banks Association's union with the Tennessee League of Savings institutions is effective July 1, with the new entity taking the name of the bank group.

More Mergers Expected

It is the first such outright merger in the Southeast, but there likely will be more.

"They're being discussed in a lot of states in our region." said Wavmon L. Hickman. who heads both the banks group and $425 million-asset First Farmers and Merchants National Bank, Columbia.

"It makes sense because the number of thrifts is dwindling and they need [bank groups'] education programs, our government contacts, and access to insurance products -- but education is paramount."

Education is particularly important because "we've got so many changes happening so frequently that you can't take anything for granted in our industry anymore," said Ronald F. Knight, president of the savings league and executive vice president of $200 million-asset Cavalry Banking, Murfreesboro.

Mr. Knight says fighting proposals to require interest payments on escrow accounts -- at both the state and federal level -- is his main lobbying effort on behalf of thritis.

For banks as well as thrifts, the bankers said, the top concerns are easing regulatory burdens and leveling the playing field with nonbank entities, which are often less regulated than depository institutions.

The new group will include 254 banks and 37 thrifts. The banks, whose total assets are $52 billion, have a typical asset size of $20 million. The thrifts hold $8 billion in assets, with the typical one at $100 million.

Banks Association vice president Brad Barrett said that while both groups are financially very strong, their joint lobbying and outreach programs will help preserve Tennessee's community banks at a time when regional players are starting to set up shop in more rural areas.

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