First Bank System Inc., Minneapolis, won Federal Reserve Board approval Monday to acquire U.S. Bancorp., Portland, Ore.

Assuming shareholders of both companies approve the merger July 31, the deal is expected to close Aug. 1. The combined banking company will have $69.9 billion of assets, making it the nation's 14th largest.

In a 31-page order, the Fed defended the banks' community reinvestment records, rejected claims that the merger would lead to higher fees or lower deposit rates, and denied requests for a hearing on the merger.

While noting Home Mortgage Disclosure Act data from First Bank and U.S. Bancorp subsidiaries shows lending disparity by racial group, the Fed said these numbers "provide an incomplete measure of an institution's lending." Community reinvestment exams revealed no evidence of lending discrimination, the Fed said.

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