By Kent Darr

Marion-based City State Bank plans to buy five Liberty Bank branches in eastern Iowa, according to a news release.

 

The banks have signed a purchase agreement that must be approved by regulators. The deal is expected to close in the fourth quarter.

 

Under the agreement, City State Bank will acquire Liberty Bank branches in Cedar Falls, Coralville, Waterloo and two banks in Cedar Rapids.

 

The deal allows West Des Moines-based Liberty Bank to further contract its operations after an expansion into Florida drained bank capital, prompting an order from regulators to improve operations and raise capital ratios.

 

"I think all along we've been working very hard to improve our balance sheet and our capital position," said Liberty Bank President and CEO John Rathjen.

 

After the sale, the bank will have seven branches in Greater Des Moines, where it plans to remain "focused on its customers and footprint," he said.

 

Liberty Bank, once a statewide presence, has consolidated operations in the Greater Des Moines market by selling branches. The bank reported $332.5 million in assets at the end of the first quarter. Three years earlier, it reported $1.2 billion in assets.

 

When the City State Bank deal if final, Liberty Bank will have sold 19 branches in eight markets. The bank also has sold three branch buildings, including one in Clive, but those sales were of the properties only and did not include a transfer of customers.

 

Since 2007, City State Bank's assets have grown from $80 million to $170 million. At the close of the Liberty Bank transaction, it's estimated that assets will exceed $240 million, according to the news release.

 

City State Bank was acquired in 2009 by local investors Roger Baker, Steve Dummermuth, John Maurice, Bruce Anderson, Brian Scott, Tom Slattery, and Monica Vernon. Anderson is president and CEO.