First State Bank of Red Bud has agreed to a merger with the First National Bank of Waterloo.
The stock-for-stock exchange will give the Red Bud bank's shareholders shares of commons stock of First Waterloo Bancshares Inc. The transaction is pending regulators' and shareholders' approval.
First National Bank of Waterloo President and Chief Executive Officer Gary Hemmer said that First State Bank of Red Bud approached First National Bank of Waterloo about the merger, and both sides had been meeting about the move for the past five months. He anticipates that the merger could be completed by the first quarter of next year.
"I think basically that Red Bud was in need of capital," Hemmer said. "We have access to capital, and we looked at merging the two together and look to make a better community bank as result."
First State Bank Interim Chief Executive Officer Ronald Wallace said that the recent increases in costs associated with regulations, monitoring and compliance with consumer laws and others such as the Patriot Act have become too steep for the Red Bud bank and others like it.
"This was an opportunity for a bank for which we have a lot of synergies to assure that they are going to be a strong, local community bank presence in this community for some time to come," Wallace said.
First National Bank of Waterloo was established in 1912 and has three banks in Waterloo, one in Columbia and another in Millstadt. First State Bank of Red Bud was founded in 1875 and has banks in Red Bud and Belleville.
Hemmer said he does not know if the move will come with any job cuts. First National Bank of Waterloo has 87 employees, and State Bank of Red Bud employs 35.
As of June 30, First National Bank of Waterloo had total assets of $279 million, and First State Bank of Red Bud had $105 million in total assets.