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ENTITY
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The Illinois National Bank and Trust Co.
Origin of Relationship
Berkshire Hathaway purchased 97.7% of the bank's stock in 1969 for cash, marking a key milestone in Warren Buffett's strategy to redeploy capital away from textiles.
Major Milestones
| Year | Event |
|---|---|
| 1969 | Initial acquisition of 97.7% interest; Eugene Abegg continues as Chairman/CEO. |
| 1970 | Bank Holding Company Act amendments passed, forcing eventual divestiture within 10 years. |
| 1971 | Bob Kline named President; deposits shift to higher-cost consumer savings. |
| 1979 | Gene Abegg (82) and Pete Jeffrey break records, earning 2.3% on average assets in the bank's final full year under Berkshire. |
| 1980 | Divested on December 31, 1980, to comply with the Bank Holding Company Act of 1969. |
Strategic Importance
INB was an extraordinary source of earnings for Berkshire, regularly producing over 2% after-tax return on deposits. Under Eugene Abegg, the bank illustrated how an exceptionally run business could generate high returns even with zero deposit growth under strict branch banking laws ("unit banking"). It served as a template for Berkshire’s preference for high-quality, high-return businesses run by honest, autonomous managers. The forced divestiture also reinforced Buffett's lessons on regulatory risks and capital reallocation.
🔗 Connections
- Company / People: Eugene Abegg, Bob Kline
- Concepts: Redeployment of Capital, Capital Allocation
- Sources: 1969 Letter, 1970 Letter, 1971 Letter, 1972 Letter, 1974 Letter, 1975 Letter, 1978 Letter, 1979 Letter, 1980 Letter