The Federal Reserve Board approved on Wednesday the proposal by Firstar Corp. to buy Mercantile Bancorp. Inc.

Milwaukee-based Firstar agreed on April 30 to buy St. Louis-based Mercantile for $10.6 billion. Combined, the banking companies would have $74.5 billion of assets, split almost evenly, which would make Firstar the 15th-largest commercial banking organization in the U.S., according to the Fed.

Firstar operates in nine states and Mercantile in six including Missouri, where it is the largest depository institution. Firstar agreed that it would divest seven branches in Iowa that control $137 million of deposits, to stay below that state's 10% deposit cap.

The expanded Firstar would also stay below the Fed's 30% state deposit share cap in Illinois and Kentucky, where the banking companies also overlap, without divestitures.

Separately, Wachovia Corp. said Wednesday that it has completed its purchase of Offitbank Holdings Inc., a New York State-chartered trust company, for $200 million.

Offitbank, which manages more than $11 billion of assets primarily for wealthy individuals and nonprofit organizations, will retain its name and become a separate subsidiary of Wachovia. Morris W. Offit will continue as chief executive officer and is to join the Wachovia board next month.

The deal came five months after the $67 billion-asset banking company bought Interstate Johnson Lane Inc., a brokerage firm in Charlotte, N.C.

-- Katharine Fraser and Cheryl Winokur

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