Magazine article American Banker

Firstar's Deal for Mercantile May Force Shift of $900M of Deposits

Magazine article American Banker

Firstar's Deal for Mercantile May Force Shift of $900M of Deposits

Article excerpt

Firstar Corp.'s recent deal to purchase Mercantile Bancorp. is likely to result in the sale or relocation of more than $900 million of the merged company's Iowa deposits.

An Iowa law prohibits banks from pushing deposits past 10% of the state total through acquisitions.

Milwaukee-based Firstar may also have to make divestitures in two Iowa cities-Dubuque and Waterloo-and in one small town, Mount Pleasant, to meet federal Department of Justice antitrust concerns.

The upshot may be that the new Firstar does not overtake Wells Fargo & Co. as the No. 1 bank in the state. San Francisco-based Wells has long been the largest bank in Iowa, with $4.76 billion, or 11.4% of the state's deposits. Wells went above the deposit cap by accumulating deposits within the state, not by buying other banks.

Firstar, which agreed to buy St. Louis-based Mercantile last Friday, would not comment on possible divestitures. Company officials said they were a few weeks away from making decisions on Iowa.

Among the 12 states where Firstar and Mercantile have banks, the most overlap is in Iowa, where the combined company would have 129 branches that hold $5.07 billion, or 12.19% of the state's total deposits, according to Sheshunoff Information Services.

Steven Moser, Iowa's deputy superintendent of banking, said the depositcap law does not give state regulators much flexibility.

Wells has for years fought the deposit cap in Iowa, calling it antiquated and anticompetitive. But Firstar and Wells are not likely to get a reprieve anytime soon. …

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