A state-chartered Texas thrift that triggered a lawsuit when it branched into a tony Chicago suburb is trying to sell its branch to another out-of-state thrift.
Beal Bank, a Dallas-based thrift, is negotiating the sale of its Winnetka branch to Guaranty Bank, Milwaukee, said Douglas Levy, Guaranty's president.
David R. Farmer, Beal's president and CEO, has said in earlier interviews that Beal decided doing business in the Chicago area was too expensive.
Since the branch was opened last year, Beal has had to offer slightly higher rates than its competition to attract about $80 million of deposits in the affluent community.
Mr. Farmer could not be reached for comment for this article.
However, Mr. Farmer has said Beal's intended departure had nothing to do with a lawsuit filed by the Community Bankers Association of Illinois.
The trade group sued the Illinois State Review Board, which regulates state banking, claiming that Beal should never have been allowed to branch into Illinois. The suit is pending in Cook County Circuit Court.
Jack R. Schaffer, commissioner of savings and residential finance at the Illinois State Review Board, said he had approved Beal's application based on federal law that allows national thrifts to branch across state lines.
He said he applied the same law to the state-chartered Beal because Illinois law neither condones nor forbids such branching.
Mr. Schaffer said he would continue to consider other branching applications by thrifts chartered in other states.
He dismissed the Community Bankers Association's complaint, saying it has always had a "hostile attitude" toward interstate branching.
But David E. Manning, director of government relations for the Community Bankers Association of Illinois, said out-of-state thrifts with state charters should not be allowed to branch into Illinois just because Illinois legislators have not acted on the issue.
Branching "authority has to be specific in the law," Mr. Manning said, "and it's not."
Should $500 million-asset Guaranty Bank buy Beal's branch, Guaranty may face similar legal questions, Mr. Manning said.
Guaranty "could convert their charter to a federal thrift charter, but I don't know if they would do that," he said.
Mr. Levy said Guaranty wants to avoid any legal controversy should it complete an agreement for the Beal branch.
The deal is "in the discussion stages," he said, and the two parties have not signed a letter of intent.
