New Illinois Law Lets Casey, Other Ill. Banks Enter Indiana
Jackson, Ben, American Banker
Frustrated that its town had nary a bank branch, a citizens committee in Patoka, Ind., earlier this year invited Casey State Bank in Illinois to open an office in a branch vacated by Union Planters Corp. in 2001.
Jim Niksch, the president of the $124 million-asset Casey, said Patoka residents felt they needed a bank. And Casey executives saw the town -- about 30 miles from Casey State's closest Illinois branch -- as a good fit for a bank that focuses on agriculture and rural lending.
Except Casey State Bank is chartered in Illinois and at the time could not branch into Indiana without first getting an Indiana charter.
"There was kind of a firewall between Illinois and Indiana," Mr. Niksch said.
It came down in August, when Illinois Gov. Rod Blagojevich, a Democrat, signed a law allowing banks chartered in other states to build branches there -- if the bank's home state allows Illinois banks to do likewise. (Previously, banks had to buy into Illinois or apply for a charter.)
This opened up 17 states to Illinois banks, according to an analysis by the Illinois Division of Banks and Real Estate. Most of the interstate branching is expected to occur in Indiana, the only contiguous state with reciprocal law. At least three Illinois banks, including Casey State, have already made plans to branch across the state line.
Casey State is in final negotiations to buy the Patoka branch and aims to open it under the Casey State name sometime in January, Mr. Niksch said.
Gina Williams, a senior bank analyst with the Indiana Department of Financial Institutions, said Indiana banks have had the ability to branch into other states since 1996, "as long as reciprocity was there."
"It was the Illinois law that prevented branching" into that state, and vice versa, Ms. Williams said.
Getting into Indiana was why Ronald T. Shropshire, the president of the $686 million-asset Great Lakes Bank of Blue Island, Ill. …