Magazine article American Banker

Iowa House Passes Bill Giving Entry to First Bank System

Magazine article American Banker

Iowa House Passes Bill Giving Entry to First Bank System

Article excerpt

Iowa House Passes Bill Giving Entry to First Bank System

DES MOINES -- The Iowa House passed a bill Wednesday that would grant First Bank System Inc. of Minneapolis an interstate exemption to complete its buyout agreement with Banks of Iowa Inc., Cedar Rapids.

The omnibus banking bill also would allow out-of-state bank holding companies to buy failed Iowa banks and would increase the amount of commercial loans savings and loans can carry on their books from 10% of their total portfolios to 40%.

The legislation was approved on a vote of 73 to 19 and now goes to the Senate.

First Bank System, $25.5 billion-asset institution, acquired 21% of Banks of Iowa in 1982 after Ben Schwartz, a major stockholder, was forced to sell his shares. The shares purchased by First Bank System were converted to class B nonvoting common stock in accordance with the Bank Holding Company Act. In a contract patterned after a similar transaction between the Bank of Boston Corp. and Colonial Bancorp of Waterbury, Conn., First Bank System agreed to purchase the remaining Banks of Iowa stock for a minimum price of 1.5 times book value pursuant to the passage of interstate banking in both states.

The Minnesota legislature recently passed a regional reciprocal bill that includes Iowa.

At the close of trading Tuesday, Banks of Iowa stock was selling at 57 1/2. Book value for the stock was about 50 at yearend. The company has $2.3 billion in assets and reported net income of $9. …

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