For immediate release

The Federal Reserve Board today announced its approval of the application of National Canton Bancshares, Inc., Canton, Illinois, to acquire Sturm Investment, Inc., Denver, Colorado, and thereby indirectly acquire 99.4 percent of the voting shares of The Union National Bank of Macomb, Macomb, Illinois. Attached is the Board's Order relating to this action.

National Canton Bancshares, Inc. Canton, Illinois Order Approving the Acquisition of a Bank Holding Company

National Canton Bancshares, Inc., Canton, Illinois ("National Canton"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has requested the Board's approval under section 3 of the BHC Act (12 U.S.C. � 1842) to acquire Sturm Investment, Inc., Denver, Colorado ("Sturm"), and thereby indirectly acquire 99.4 percent of the voting shares of The Union National Bank of Macomb, Macomb, Illinois ("Macomb Bank"). Notice of this proposal, affording interested persons an opportunity to submit comments, has been published (62 Federal Register 14,145 (1997)). The time for filing comments has expired, and the Board has considered the proposal and all comments received in light of the factors set forth in section 3 of the BHC Act. National Canton is the 212th largest depository organization in Illinois, controlling deposits of $125.2 million, representing less than 1 percent of the total deposits in depository institutions in that state ("state deposits").1 Sturm is the 302d largest depository organization in Illinois, controlling deposits of $85.5 million, representing less than 1 percent of state deposits. On consummation of this proposal, National Canton would become the 125th largest depository organization in Illinois, controlling deposits of $210.7 million, representing less than 1 percent of state deposits. Competitive Considerations The BHC Act prohibits the Board from approving an application under section 3 of the BHC Act if the proposal would result in a monopoly, or if the proposal would substantially lessen competition in any relevant market, unless such anticompetitive effects are clearly outweighed in the public interest by the probable effect of the transaction in meeting the convenience and needs of the community to be served. National Canton and Sturm compete directly in the Canton, Illinois, banking market.2 National Canton is the largest depository organization in the market, controlling deposits of $125.2 million, representing 35.6 percent of the total deposits in depository institutions in the market ("market deposits").3 Sturm is the smallest depository organization in the market, controlling deposits of approximately $9.6 million, representing 2.7 percent of market deposits. On consummation of the proposal, National Canton would remain the largest depository organization in the Canton banking market, controlling deposits of approximately $134.8 million, representing 38.3 percent of market deposits. Market concentration, as measured by the Herfindahl-Hirschman Index ("HHI"), would increase by 194 points to 2265 and would not exceed the Department of Justice Merger Guidelines ("DOJ Guidelines").4 Seven depository institutions would remain in the market after consummation of the proposal. Four of the remaining competitors, not including National Canton, each control 11 percent or more of market deposits. As it has previously, the Board also has considered the competitive effect of the presence in the market of one of the state's largest credit unions.5 The Board has sought comments from the United States Department of Justice ("Justice Department"), the Office of the Comptroller of the Currency ("OCC"), and the Federal Deposit Insurance Corporation ("FDIC") on the competitive effects of this proposal. The Justice Department has advised the Board that consummation of the proposal would not be likely to have any significantly adverse effect on competition in any relevant market. The OCC and the FDIC have not objected to consummation of the proposal or indicated it would have any significantly adverse competitive effects in the Canton banking market or any relevant banking market. Based on the foregoing and all the other facts of record, including the increase in market concentration as measured by the HHI and the number of competitors that would remain in the market, the Board has concluded that consummation of the proposal would not have a significantly adverse effect on competition or on the concentration of banking resources in any relevant banking market. Other Considerations The BHC Act also requires the Board to consider the financial and managerial resources and future prospects of the companies and banks involved in a proposal, the convenience and needs of the community to be served, and certain other supervisory factors. Based on all the facts of record, the Board has concluded that the financial and managerial resources and future prospects of National Canton, Sturm, and their respective subsidiaries, are consistent with approval of the proposal, as are the other supervisory factors the Board must consider under section 3 of the BHC Act. Considerations relating to the convenience and needs of the communities to be served also are consistent with approval. Based on the foregoing, and in light of all the facts of record, the Board has determined that the application should be, and hereby is, approved. The Board's approval is specifically conditioned on compliance by National Canton with all the commitments made in connection with this application. For purposes of this action, the commitments and conditions relied on by the Board in reaching its decision are deemed to be conditions imposed in writing by the Board in connection with its findings and decision, and, as such, may be enforced in proceedings under applicable law. The acquisition shall not be consummated before the fifteenth calendar day following the effective date of this order, or later than three months after the effective date of this order, unless such period is extended for good cause by the Board, or by the Federal Reserve Bank of Chicago, acting pursuant to delegated authority.

By order of the Board of Governors,6 effective June 11, 1997. (signed) Jennifer J. Johnson Jennifer J. Johnson Deputy Secretary of the Board

Footnotes 1 State deposit data are as of June 30, 1996. In this context, depository institutions include commercial banks, savings banks, and savings associations. 2 The Canton, Illinois, banking market is approximated by the northeastern portion of Fulton County, Illinois, including the townships of Fairview, Farmington, Joshua, Canton, Orion, Putman, Buckheart, Banner, Lewistown, Liverpool, and Waterford. 3 Market data are as of June 30, 1996. Market concentration calculations include deposits of thrift institutions at 50 percent. The Board previously has indicated that thrift institutions have become, or have the potential to become, major competitors of commercial banks. See Midwest Financial Group, 75 Federal Reserve Bulletin 386 (1989); National City Corporation, 70 Federal Reserve Bulletin 743 (1984). Thus, the Board has regularly included thrift deposits in the calculation of market share on a 50-percent weighted basis. See, e.g., First Hawaiian Inc., 77 Federal Reserve Bulletin 52 (1991). 4 Under the revised DOJ Guidelines, 49 Federal Register 26,823 (June 29, 1984), a market in which the post-merger HHI is over 1800 is considered highly concentrated. The Justice Department has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger increases the HHI by more than 200 points. The Justice Department has stated that the higher than normal threshold for an increase in the HHI when screening bank mergers and acquisitions for anticompetitive effects implicitly recognizes the competitive effects of limited-purpose lenders and other non-depository financial entities. 5 See Norwest Corporation, 82 Federal Reserve Bulletin 156 (1996). 6 Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Phillips, and Meyer.

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1997 Orders on banking applications