A $17 million-asset bank in the tiny town of Tabor, Iowa, recently took a step that could signal the future of correspondent banking.

First State Bank, founded in 1925, last month became the first Iowa bank to sign up with the Midwest Independent Bank, a bankers' bank in faraway Jefferson City, Mo. It rejected sales pitches from some more traditional service providers - Firstar Corp. of Milwaukee and the Federal Reserve Bank of Kansas City.

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