FARGO, N.D. -- When First Bank System decided in 1986 to sell some of its small-town banks in the Dakotas and Minnesota, Donald Mengedoth knew almost immediately he was interested.

Negotiating the deal to buy 21 of them took a year, but it wasn't that difficult. For Mr. Mengedoth, the North Dakota manager for First Bank, the catch was lining up $55 million to purchase the $640 million-asset operation.

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