Banks and Thrift Supervision

The Illinois Constitution of 1870 specifically prohibited branch banking. The only movement in the direction of branching was in 1967 when banks were permitted to have a drive-in facility within 1500 feet of the "Unit Bank". With the rewriting of the Illinois Constitution in 1970, the prohibition on branch banking remained. The constitution requires that there be a 3/5 vote of both houses to approve any changes to the states branching laws. The mid 1970’s to early 1990’s brought several changes in the emergence of branch banking.

In 1976, Public Act 79-1388 permitted banks to establish a second facility within 3500 yards of the bank. A third "community service facility" within the same county was allowed beginning in 1982. In 1985 Public Act 84-129 provided branching of up to five facilities, one of which had to be within 500 yards of the main bank, the second within 3500 yards, and the remaining three had to be within the same county. A branch could be located outside the county if it was within ten miles of the main bank. In 1987, Public Act 85-204 changed the term "facility" to "branch" and repealed Section 6 of the Illinois Banking Act, which prohibited branch banking.

In 1988 Public Act 85-1358 allowed for the resulting bank of a merger to maintain the branches of the merging bank provided that both banks at the time of the merger were owned or controlled by the same bank holding company. One year later, Public Act 86-952 authorized state banks to buy branches from troubled banks and thrifts regardless of branching limitations. Also in 1989 Public Act

86-912 allowed banks to purchase the assets and assume the liabilities of another bank whereby such bank became a branch of the purchasing bank without restriction of the branching limitations.

In 1990, Public Act 86-1178 authorized ten branches in the home county, five in each contiguous county and five in any other county within ten miles of the main banking premises. And finally in 1993, Public Act 88-4 authorized branching without limitations on location or number.

Branching into Illinois by out-of-state banks is only possible by acquiring an Illinois bank charter that is at least five years old and merging it into the out-of-state bank leaving a branch in Illinois (no de novo branching or purchase of a single branch is allowed).

There are no restrictions on an Illinois state bank branching out of the state (subject to the restrictions (if any) of the other state.

Public Act 93-0965, effective 08/20/04, provides for de novo interstate bank branching and eliminates age restrictions on charters subject to reciprocity provisions.