Academic journal article ABA Banking Journal

Big Fish in a Growing Pond

Academic journal article ABA Banking Journal

Big Fish in a Growing Pond

Article excerpt

When First Bank System, the Minneapolis holding company, announced in 1984 that management would have the first shot at purchasing the 42 banks it was selling, the company had in mind the local management that worked at the banks being divested.

Donald R. Mengedoth wasn't local management at one of those 42 community banks located throughout the Midwest--he was a First Bank System executive.

"When I went to the chairman and told him I wanted to purchase several of the banks, he said, 'Gee, we didn't expect you to take advantage of this, and we won't make it easy for you,'" says Mengedoth. "I remember going back to my then-young family and my mortgage and saying, 'Whoops! That was a bad idea.'"

However, the chairman recanted his position. He granted Mengedoth an undertaking agreement that allowed him to continue working for First Bank System while attempting to purchase 21 of its banks located in Minnesota and the Dakotas.

"Clearly, if they had not taken that posture with me, there is no way I could have afforded the time, resources, and career interruption needed to pull the deal together," says 52-year-old Mengedoth. "Although that first decision was the biggest risk, we had lots of other things to overcome in terms of negotiating the transaction, finding investment capital, and getting regulator approval. However, once we got the consent of the banks we were going to purchase, we knew we could overcome them. …

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