Firstar Corp. and Mercantile Bancorp. of St. Louis may have to reduce their Iowa deposits by more than $1 billion if their pending merger is to be approved by state regulators, Steven Moser, Iowa's deputy superintendent of banking, said Wednesday.

Mr. Moser said his latest figures indicate that a combined Firstar and Mercantile would have to move or divest $1.1 billion of deposits, because of an Iowa law that prohibits banks from gaining more than 10% of the state's deposits through mergers. Mr. Moser estimated that the merged bank would have about $5.65 billion of deposits, or 13% of the state's total. That figure is slightly higher than the $5.07 billion, or 12.2% of the state's total deposits, in an estimate provided by Sheshunoff Information Services.

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