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West Des Moines State Bank

June 3, 1999

West Des Moines State Bank
1601 22nd Street
West Des Moines, Iowa 50266-1474

Members of the Board:

We have reviewed your request to directly continue an activity that may not be permissible for a national bank. The application, dated November 12, 1998, was filed pursuant to Section 362.3 (b)(2)(i) of the Federal Deposit Insurance Corporation (FDIC) Rules and Regulations and was received in the FDIC Kansas City Regional Office November 16, 1998.

For the reasons set forth in the attached Statement, your application was approved today subject to the following conditions:

(1) That the Bank continue to meet applicable capital standards as prescribed by the FDIC.

(2) That the Bank either register as a municipal securities dealer or obtain a no-action letter from the U.S. Securities and Exchange Commission (SEC) prior to engaging in this activity.

(3) That the consent granted herein is based on the facts and circumstances presented or known to the FDIC in connection with this request, and that the bank notify the FDIC of any significant change in facts or circumstances. The FDIC's action is conditioned upon its ability to alter, suspend, or withdraw its approval in the event the facts and circumstances presented in the application change significantly.

Questions relating to this matter may be referred to Assistant Regional Director Randall T. Daughenbaugh or Case Manager Deanna L. Malvey in the Kansas City Regional Office at (816) 234-8000.

Sincerely,

Mark S. Schmidt
Associate Director


FEDERAL DEPOSIT INSURANCE CORPORATION

RE: West Des Moines State Bank West Des Moines, Iowa

Application Pursuant to Section 24(a) of the Federal Deposit Insurance Act to Directly Continue an Activity That May Not Be Permissible for a National Bank

STATEMENT

Pursuant to section 24 of the Federal Deposit Insurance and Part 362 of the Federal Deposit Insurance Corporation's ("FDIC") regulations, West Des Moines State Bank, West Des Moines, Iowa (the "Bank") has filed an application requesting the FDIC's consent for the Bank to use general obligation and revenue bonds of state and political subdivisions ("municipal bonds") to serve as collateral for overnight sweep repurchase agreements. The activity of issuing repurchase agreements with a maturity of less than seven days for municipal bonds is not a permissible activity for a national bank. State-chartered, FDIC-insured banks may not engage as principal in an activity prohibited to nationally chartered banks unless they obtain consent from the FDIC. Consent may not be granted unless the bank is in compliance with applicable capital standards and the FDIC determines that the activity poses no significant risk to the deposit insurance fund. Iowa state law does not prohibit this activity, and the State authority has not objected to the Bank's request.

Bank management is satisfactory, and the Bank is in overall satisfactory condition. The Bank is in compliance with applicable capital standards. It is common for banks (including national banks) to offer overnight sweep repurchase agreements using debt obligations issued by the United States or its agencies as the underlying instrument. If appropriately managed as part of the bank's finds management policy, the use of municipal bonds in lieu of U.S. obligations entails essentially the same risk considerations. Appropriate management entails, among other things, that bank management also take applicable federal law into account when structuring and administering an overnight sweep repurchase agreement program, including appropriate antifraud disclosures under the securities laws, as well as any applicable state law. In this case, the size of the program currently contemplated by the Bank is reasonable in proportion to its overall funding structure, and the Bank's program uses the same procedures as would be used for an overnight sweep repurchase agreement program using U.S. obligations.

Based on the foregoing, the FDIC has determined that the Bank's use of municipal bonds -in connection with its overnight sweep repurchase agreements does not pose a significant risk to the deposit insurance find, and the Bank's request is granted, subject to the bank continuing to meet applicable capital standards as prescribed by the FDIC, and certain other conditions.

The Bank's activity may raise novel questions of whether the Bank should register as a municipal securities dealer under section 15B of the Securities Exchange Act of 1934. The Bank shall either register as a municipal securities dealer or obtain a no-action letter from the Securities Exchange Commission prior to engaging in the activity.

The FDIC's consent in this case is based on the facts and circumstances presented or known to the FDIC in connection with this request, and the Bank shall notify the FDIC of any significant change in facts or circumstances. The FDIC's action is conditioned upon its ability to alter, suspend, or withdraw its approval in the event the facts and circumstances presented in the application change significantly.

ASSOCIATE DIRECTOR
DIVISION OF SUPERVISION



Last Updated 03/24/2011 Legal@fdic.gov