Three Eastern Iowa banks owned by Central Bancshares of Muscatine are planning to merge into a single financial institution.
Freedom Security Bank, with offices in Coralville and Kalona; Central State Bank, with locations in Muscatine and Wilton, and West Chester Savings Bank in Washington will operate under a common name as yet to be announced. The merger must be approved by the Iowa Division of Banking and the Federal Reserve.
Greg Kistler, president and CEO of Central Bancshares, said combining the three banks under a single charter will reduce regulatory paperwork, saving resources and staff time that can be better spent meeting the needs of customers.
“With three bank charters, you have to do everything three times,” Kistler said. “When the regulators are doing a safety and soundness examination, we will only have to do that once after the merger.
“We certainly hope to eliminate a lot of redundancy and extra expense. It’s very common in the industry and we certainly held onto the independent bank model longer than most.
“Where we are located geographically, we think there are some market advantages to being under one charter and a single name.”
Central Bancshares, with banking assets in excess of $725 million and another $400 million under brokerage and trust management, employs about 220 full- and part-time associates. Kistler said a single charter will expand loan limit capabilities for smaller banks like Freedom Security Bank, with assets of $80 million.
“Although we can share loans between us, it will give our smaller banks more flexibility when they’re dealing with our larger borrowers,” Kistler said. “The way land prices have been going, it doesn’t take much for an agricultural borrower to get up into the multimillion-dollar need for funds.”
Kistler expects regulatory review of the merger to require 60 to 90 days.
“I would hope that we can complete the merger late in the second quarter or early in the third quarter,” he said.
Central Bancshares also owns F&M Bank in Galesburg and Peoria, Ill. Kistler said that bank will not be included in the merger.