Illinois community bankers are opposing a state-chartered Texas savings bank's application to establish a branch in the Chicago area.

Beal Bank, a $1.2 billion-asset Dallas-based institution, has applied to open a de novo branch in north-suburban Winnetka.

In a letter to members this month, James Shafer, president of the Community Bankers Association of Illinois, said it objects to de novo branching by any out-of-state institution as entry "on the cheap."

There is "a definite affect on the franchise value of in-state banks if outside banks are able to come in without buying a location," said Mr. Shafer, president of $34 million-asset First National Bank in Tremont, in an interview.

The group is filing written objections with regulators.

Only federally chartered thrifts are currently allowed to do interstate de novo branching, Mr. Shafer said.

If allowed, the charters of out-of-state savings banks with state charters "could be viewed as more attractive than both state and national bank charters," he wrote to members.

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