For immediate release

The Federal Reserve Board today announced its approval of the application of ANB Corporation, Muncie, Indiana, to acquire Farmers State Bancorp, and thereby acquire The Farmers State Bank of Union City, both of Union City, Ohio. Attached is the Board's Order relating to this action.

ANB Corporation Muncie, Indiana Order Approving the Acquisition of a Bank Holding Company

ANB Corporation ("ANB"), 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 Farmers State Bancorp ("Bancorp") and thereby to acquire The Farmers State Bank of Union City ("Bank"), both in Union City, Ohio. Notice of proposal, affording interested persons an opportunity to submit comments, has been published (64 Federal Register 6361 (1999)). 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. ANB is the 33rd largest depository institution in Indiana, controlling deposits of approximately $417.5 million, representing less than 1 percent of total deposits in depository institutions in Indiana ("state deposits").1 Bank is the 179th largest depository institution in Ohio, controlling deposits of $63.3 million, representing less than 1 percent of state deposits. Bank also is the 112th largest depository institution in Indiana, controlling approximately $18.2 million in deposits, representing less than 1 percent of state deposits.2 On consummation of the proposal, ANB would become the 32nd largest depository institution in Indiana, controlling $435.7 million, representing less than 1 percent of state deposits. Interstate Analysis Section 3(d) of the BHC Act allows the Board to approve an application by a bank holding company to acquire control of a bank located in a state other than the home state3 of such bank holding company, provided that certain conditions are met. For purposes of the BHC Act, the home state of ANB is Indiana, and ANB proposes to acquire a bank in Ohio. The proposed transaction meets all of the conditions for an interstate acquisition that are enumerated in section 3(d).4 In view of all the facts of record, the Board is permitted to approve the proposal under section 3(d) of the BHC Act. 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 would be in furtherance of any attempt to monopolize the business of banking. The BHC Act also prohibits the Board from approving a proposed combination that would substantially lessen competition or tend to create a monopoly in any relevant banking market, unless the Board finds that the anticompetitive effects of the proposal are clearly outweighed in the public interest by the probable effect of the proposal in meeting the convenience and needs of the community to be served. ANB and Bank compete in the Muncie, Indiana, banking market ("Muncie banking market").5 The Board has carefully reviewed the competitive effects of the proposal in the Muncie banking market in light of all of the facts of record, including the characteristics of the market and the projected increase in the concentration of total deposits in insured depository institutions in this market ("market deposits") as measured by the Herfindahl-Hirschman Index ("HHI") under the Department of Justice Merger Guidelines ("DOJ Guidelines"). The Board also has carefully considered the number of competitors that would remain in the market after consummation of the proposal. ANB is the second largest depository institution in the Muncie banking market, controlling $355.5 million in deposits, representing 23 percent of market deposits.6 Bank is the seventh largest depository institution in the market, controlling $81.5 million in deposits, representing 5.3 percent of market deposits. On consummation of the proposal, ANB would remain the second largest depository institution in the market, controlling deposits of $417.5 million, representing 28.3 percent of market deposits. The HHI would increase by 243 points to 2450.7 The Board believes that several characteristics of the Muncie banking market mitigate the proposal's potential anticompetitive effects. First, a significant number of other depository institutions would have the market share and resources to compete effectively in the banking market. Eight bank and thrift institutions, including ANB, would remain in the market after consummation of the proposal, including several multistate banking organizations. Four of these institutions, including ANB, would each control market shares of 9 percent or more of market deposits and several large regional bank holding companies would continue to operate in the market. The Muncie banking market also is attractive for entry. Data for the year ending June 30, 1998 show that the Muncie Metropolitan Statistical Area ("MSA"), which encompasses most of the population of the Muncie banking market, has had a larger increase in total deposits and per capita income than the increase on average in these statistics for other MSAs in Indiana. The market also has recently experienced de novo entry and entry by acquisition, including two entries by acquisition in 1998. Indiana, moreover, permits unrestricted intrastate branching.8 The Department of Justice reviewed the proposal and advised the Board that consummation of the proposal would not likely have any significantly adverse competitive effects in the Muncie banking market or any other relevant banking market. The Federal Deposit Insurance Corporation has been consulted and has not objected to the proposal. Based on all the facts of record, and for the reasons discussed above, the Board concludes that consummation of the proposal is not likely to result in any significantly adverse effects on competition or on the concentration of banking resources in the Muncie banking market or any other relevant banking market, and that competitive factors are consistent with approval of the proposal. Other Considerations The BHC Act also requires the Board, in acting on an application, to consider the financial and managerial resources and future prospects of the companies and banks involved, the convenience and needs of the communities to be served, and certain supervisory factors. The Board has reviewed these factors in light of all the facts of record, including supervisory reports of examination assessing the financial and managerial resources of the organizations. Based on all the facts of record, the Board concludes that the financial and managerial resources and future prospects of ANB, its subsidiary banks, and Bank are consistent with approval, as are the other supervisory factors the Board must consider under section 3 of the BHC Act. Considerations related to the convenience and needs of communities to be served, including the records of performance of the institutions involved under the Community Reinvestment Act (12 U.S.C. § 2901 et seq.), also are consistent with approval of the proposal. Conclusion 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. Approval of the application is specifically conditioned on compliance by ANB with all the commitments made in connection with the application. For the purposes of this order, 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 transaction shall not be consummated before the fifteenth calendar day after 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,9 effective April 1, 1999. (signed) Jennifer J. Johnson Jennifer J. Johnson Secretary of the Board

Footnotes 1 Deposit data are as of June 30, 1998. In this context, depository institutions include commercial banks, savings banks, and savings associations. 2 Bank controls total deposits of $81.5 million, $18.2 million of which are booked in its branch office in Indiana. The balance of the bank's deposits are booked in its main office in Ohio. 3 12 U.S.C. § 1842(d). A bank holding company's home state is that state in which the total deposits of all banking subsidiaries of such company were the largest on July 1, 1966, or on the date on which the company became a bank holding company, whichever is later. 12 U.S.C. 1841(o)(4)(C). 4 See 12 U.S.C. §§ 1842(d)(1)(A) & (B) and 1842(d)(2)(A) & (B). ANB is adequately capitalized and adequately managed, as defined by applicable law. Bank has been in existence and operated continuously during the five-year minimum statutory period. On consummation of the proposal, ANB would control less than 10 percent of the total amount of deposits of insured depository institutions in the United States. All other requirements of section 3(d) of the BHC Act would be met on consummation of the proposal. 5 The Muncie banking market is defined as Delaware County excluding Salem township; Randolph County excluding Washington and Greensfork townships; Licking and Johnson townships in Blackford County, all in Indiana; and Jackson township in Darke County, Ohio. 6 Market share data are reported as of June 30, 1998. Market share data are based on calculations that include the deposits of thrift institutions at 50 percent. The Board previously has indicated that thrift institutions have become, or have the potential to become, significant competitors of commercial banks. See, e.g., 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). 7 Under the revised DOJ Guidelines, 49 Federal Register 26,823 (June 29, 1984), a market in which the post-merger HHI exceeds 1800 is considered highly concentrated. The Department of Justice 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 Department of Justice has stated that the higher than normal HHI thresholds for screening bank mergers for anticompetitive effects implicitly recognize the competitive effect of limited-purpose lenders and other non-depository financial entities. 8 Ind. Code Ann. §§ 28-2-13-19 & 28-2-16-15 (West 1998). 9 Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Meyer, Ferguson, and Gramlich.

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1999 Orders on banking applications