Fed Is Asked to Reconsider Blocking of Merger
A Montana bank whose merger application was turned down on community reinvestment grounds is asking the Federal Reserve Board to reconsider the decision.
First Interstate BancSystem of Montana, Billings, petitioned the regulator to reconsider its decision to squash the company's planned merger with Commerce BancShares of Wyoming, Sheridan. The bank, which is not related to First Interstate Bancorp in Los Angeles, said the merger would permit the companies to eliminate duplicate departments, services, and administrative posts. Both bank companies are controlled by the Scott family, which has ranching and financial interests in the two states.
First Such Denial
The Fed's denial of the merger - after a prolonged two-year consideration period - marked the first time regulators rejected an application solely because of failure to meet requirements of the Community Reinvestment Act.
The merger was challenged by a group representing the Northern Cheyenne Indian Reservation, which claimed that a First Interstate subsidiary in the town of Colstrip failed to make loans on the reservation.
"The Federal Reserve Board failed to give appropriate consideration to the satisfactory overall record of the companies and the subsidiary banks," asserted Howard Cayne, a partner at Arnold & Porter, the Washington-based law firm that is representing First Interstate.
He said the Fed is expected to hear arguments next spring.
First Interstate Bank of Colstrip is an $11 million subsidiary of the $630 million-asset parent. Commerce BancShares has $280 million in assets.