Illinois community bankers on Dec. 9 took the state government to court over its decision to allow a Texas savings bank to branch into the tony North Shore.

In an eight-page complaint filed with the Cook County Circuit Court, the Community Bankers Association of Illinois said a state review board acted improperly in October when it allowed the bank commissioner's approval of Beal Bank SSB's branch to stand.

The trade group is asking the court to remand the matter back to the Illinois Board of Savings Institutions for reconsideration and to review legal expenses the regulator charged to the association.

"The denial was based on a technicality and didn't get at the heart of the matter, which is: Is Beal Bank's branch allowable?" said Robert J. Wingert, executive director of the association.

Besides the Board of Savings Institutions, an administrative body that reviews regulatory decisions by state banking regulators, the other defendants are the Illinois Office of Banks and Real Estate; its commissioner, Jack Schaffer; and Beal, a Dallas-based savings bank.

The battle dates back to January, when Mr. Schaffer, over objections from the trade group, approved an application by $1.3 billion-asset Beal Bank to open the branch north of Chicago.

The trade group argued that only federally chartered institutions could branch into the state; Mr. Schaffer maintained that the Illinois code gives that power to state-chartered savings banks as well. He said that institutions from Missouri and Wisconsin had done that before without challenge.

On Feb. 15, the trade group filed an appeal of Mr. Schaffer's decision with the board. In an Oct. 28 ruling, the board said it lacked authority to review the commissioner's decisions over the establishment of branches by savings banks operating under the state code.

In its Dec. 9 filing with the circuit court, the trade group argued that the board has authority because Beal Bank is an out-of-state association.

"The board's decision ... is contrary to the applicable statutory provisions, and is arbitrary, capricious, and otherwise an abuse of discretion," the complaint said.

Further, the association challenged the $25,741.89 that the board charged it for handling the appeal. According to state law, during appeals the regulator and appellant have to split the costs of the proceedings.

Some of that charge is attributable to attorneys' fees, which the association said are not authorized. Moreover, the board did not break down expenses.

While the Community Bankers battle on, Beal Bank has been building an impressive presence since it set up shop in Winnetka, a northern suburb, in March. So far the savings bank has attracted $80 million in deposits and has pumped out $30 million in real-estate loans, said chief executive David R. Farmer.

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