Rod R. Blagojevich, the Governor of Illinois, signed Illinois Senate Bill 2710 into law on August 20, 2004. The bill amends the Illinois Banking Act and provides that out-of-state banks may establish branches in Illinois after obtaining a certificate of authority and written confirmation from the Illinois Commissioner of Banks and Real Estate. However, the ability to branch into Illinois is only available to banks chartered in states having reciprocal rights. Additionally, the branching rights reciprocated between two states must be equivalent. Interestingly, the State of Indiana’s banking code provides for interstate branching rights similar to those contemplated in the Illinois amendments. This means that Illinois and Indiana banks will be able to branch freely into one another’s state. The Wisconsin Commissioner’s office apparently is reviewing the matter. This reciprocity concept is very similar to the initial interstate banking pacts of twenty years ago. At the present time, Iowa law does not allow for branch reciprocity. Therefore, the amendment to the Illinois Banking Act will not allow Iowa chartered banks to branch into Illinois. However, Iowa banks may open representative or loan production offices in Illinois, which may not engage in deposit-taking activities. Subsequently, this representative or loan production office may apply for a charter and open a de novo bank in Illinois.

For more information, please contact Howard O. Hagen at 515.246.4543.