Facing a revolution in the banking industry and intra-industry bedlam over major political issues, state bank trade executives are preparing for dramatic changes in the nature and structure of their organizations.

"There's turmoil in the industry," said Allen I. Olson, president of the Independent Community Bankers of Minnesota. "We're all reflecting and reacting to what's going on in the industry. It's not unusual that the trade associations are looking at and seriously considering change."

State bank and thrift trade groups are increasingly feeling the urge to merge. The pressure is on to justify their existence in the face of independent lobbying by the large banks and the anticipated end of the separate thrift industry.

"There are obviously too many trade associations, and the strong are going to be survivors," said Frank Pinto, executive director of the Pennsylvania Association of Community Bankers.

Officials at groups around the country are informally talking with their in-state counterparts about possible mergers. Discussions haven't led anywhere so far, but observers expect that to change.

"Most anyone aware of the way business is facilitated understands that consolidation among the trade groups has got to occur," said Thad Woodard, president of the Community Bankers Association of North Carolina, which is discussing a possible merger with the North Carolina Bankers Association. "We won't be the first ones to have those discussions or to have those be fulfilled."

A few states have already seen some consolidation during the last few years. Thrift associations have merged with the independent bank group in Pennsylvania, and with state bankers associations in Virginia, Florida, Kentucky, and Tennessee.

So far, independent bank groups and state affiliates of the American Bankers Association have not merged, primarily because community banks still want their own organization in case they need separate legislative lobbying. But groups in several states, including Kentucky and Pennsylvania, have had discussions.

And state associations in Massachusetts, Georgia, North Carolina, and Minnesota have simply opened their membership to both banks and thrifts, dispensing with the formalities and drawing the two groups closer together by allowing bankers to vote with their feet.

"Nobody can tell the difference," said Julian Hester, chief executive of the Community Bankers Association of Georgia. "Nobody ever distinguishes between who's on first anymore. We both discovered that we look just alike. It's worked out extremely well."

But even without the merger speculation, some trade groups are facing dramatic changes in their corporate structure and mission, even if their services don't change.

In particular, association officials are being forced to revisit their voting policies because of the growing industry schism between large and small banks.

Currently, most groups follow a one-bank, one-vote policy, regardless of size and dues. But the large banks in several states are complaining loudly that they're not getting enough power for their higher dues.

That prompted the Colorado Bankers to change its voting rules this year to require approval of association positions by two-thirds each of its large bank and community bank board members.

And some organizations, such as the Massachusetts Bankers Association, have responded by capping dues for all banks, ensuring that no institution overpays.

"The trade associations themselves must be willing to change," Mr. Woodard said.

The pressure to combine with thrift associations is particularly strong as Congress and federal regulators consider proposals to eliminate the federal thrift charter and merge the bank and thrift industries.

"I think we'll see more and more of it," said Richard D. Driscoll, president of the Massachusetts Bankers. "It's almost inevitable, especially as you get into this single bank charter and the distinctions between banks and thrifts goes away."

The surging interest in trade group consolidation has also been spurred in large part by declining membership and revenues due to mergers in the industry. State associations expect to lose big-bank subsidiaries as the multistate banks consolidate them into branches under the interstate law.

Membership in state bankers associations has already become less valuable for the multistate banks, which increasingly handle their own lobbying, training, and group purchasing - functions often performed by the associations.

If these multistate banks decide they don't want to be members of multiple state organizations, those all-bank trade groups begin to look more and more like community bank associations.

That's already happening in Colorado, where the departure of First Bank System Inc. subsidiary Colorado National Bank, has led some bankers to suggest that the Colorado Bankers should merge into the independent bankers group.

"There is some informal discussion going on among bankers," said Don A. Childears, president and chief executive of the Colorado Bankers Association. "We are not actively promoting it, but we think it makes sense for the industry to be served by one association that represents basically all the banks."

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