Tonganoxie ? First State Bank and Trust of Tonganoxie plans to acquire the family-owned Bank of Perry.

The purchase, which must receive regulatory approval, will bring the number of First State Bank locations to eight.

Dan Galbraith, president of the Bank of Perry, said he approached officials at First State Bank about buying his bank. With increased competition, Galbraith said, it is difficult for community banks to provide the services  such as additional locations and on-line banking  that customers require.

“We’ve actually done quite well,” Galbraith said, “but there’s going to be more regulatory expense and more technology, and it’s very hard to justify spending tens of thousands of dollars for a product and have only 50 people use it.”

First State Bank, which has been owned by the Bill New family since 1979, also has two banks in Lawrence.

That was attractive to Galbraith as he considered options for the 109-year-old bank.

“It seemed like that was such a good fit, because of their strong presence on 24 Highway and we’re on 24 Highway, and with so many of our customers working in Lawrence or going to Lawrence,” he said.

Galbraith, 36, said the bank has been in his family for more than 50 years. He and his sister control ownership of 95 percent of the bank. After the sale, Galbraith will serve as a consultant to the bank for several years, he said.

Kent Needham, president of First State, said the sale will be reviewed by the Federal Deposit Insurance Corp. as well as the state banking department. He expects the deal to close by July. The bank intends to retain the 11 employees at the Perry bank, which has about $30 million in assets, compared with First State’s $173 million in assets.

Needham, who declined to divulge the purchase price, said he doesn’t anticipate any additional acquisitions in the near future.

The 68-year-old First State Bank has banks in two locations in both Tonganoxie and Lawrence, as well as banks in Basehor, Clearwater and Wichita.

 Caroline Trowbridge is the editor and publisher of the Tonganoxie Mirror.