Richard A. Rathke's patience with the Federal Reserve Board is running thin.
Just over a year ago the president of Marshalltown Financial Corp. in Iowa signed off on a definitive agreement for his thrift to be acquired by a larger local rival, BancSecurity Corp., which has $516.1 million in assets.
The deal is still awaiting Fed approval, and last week the $124.1 million-asset thrift said it would pull out unless word came through by the end of December.
Although the Fed has given no reason for its slow response, Mr. Rathke contends the regulator is concerned about antitrust issues. Thrift officials estimated that the combined institution would control between 40% and 50% of the deposits in Marshalltown, a city of 26,000.
"The whole thing is absurd," Mr. Rathke said. "We are a small institution in a tiny town flooded with bank-type services. We find it hard to believe we would be part of a monopoly."
Fed spokesman Bob Moore declined to identify any reasons for the perceived delay.
"It's in the pipeline, but it's not scheduled for board consideration yet," he said.
But if Mr. Rathke's theory is correct, he is caught up in the same dynamic that has community bankers vexed all across the country.
While regulators give a thumbs-up to massive consolidations like Wells Fargo & Co.'s acquisition of First Interstate Bancorp, they cast a cold eye on consolidation in small markets.
"It is a problem for in-market mergers, particularly in rural settings," said Diane Casey, national director of financial institutions regulatory issues at Grant Thornton.
Under terms of a forbearance agreement signed by both parties a week ago, shareholders will receive the original aggregate consideration of $24.7 million, plus interest, if the transaction is completed.
If the transaction is not consummated for reasons other than breach by Marshalltown, BancSecurity will pay the thrift $75,000.
In return, Marshalltown will wait for Fed approval until Dec. 13. Depending on circumstances, the thrift could hold on until Dec. 31, but no later, Mr. Rathke said.
BancSecurity chief executive R.A Fenton said there are "indications" the Fed will take up the matter in the next month. He wouldn't speculate on whether the delay was related to antitrust concerns, but noted that in- market mergers typically take longer to approve.
