Oct. 20--A Normal, Ill., bank that in 2006 opposed allowing Wal-Mart Stores Inc. to get into the banking business has entered into a written agreement with the Federal Reserve Bank of Chicago.

Among other things, BOI Financial Corp. and its $246.7 million-asset Bank of Illinois unit, which took its case against the retail giant to Washington, D.C., must submit a plan to strengthen the bank board's oversight of management and must hire an independent third party to review its loan portfolio. It also must come up with a strategy to maintain sufficient capital and to restrict payments of dividends and interest on subordinated debt and trust preferred securities.

The Federal Deposit Insurance Corp. three years ago held hearings into whether Wal-Mart should receive a limited bank charter. BOI was among those that painted doomsday scenarios about the prospects of the smiley-face getting into the banking business.

"The failure of Wal-Mart would pose an enormous systemic risk to the FDIC insurance fund," testified Larry Maschhoff, bank president. "What if Enron ... had owned banks?"

Bank of Illinois, which bills itself as "the locally owned leader since 1914," said it's working with customers and regulators to address issues laid out in the FDIC agreement, and is committed to serving its community "for many years to come."

"Regulatory review of all banks has been heightened because of the economy," Maschhoff told the Tribune last Friday. "Over the last few months, we believe we have made substantial improvement in correcting the items listed in the agreement."

Capital raise: First Chicago Bank & Trust, a $1.22 billion-asset bank based in Chicago, has raised about $50 million in additional capital, mostly from existing shareholders.

Its holding company is First Chicago Bancorp, which in July moved its headquarters to downtown Chicago from Itasca.

Investment fund Castle Creek Capital III LLC owns 40.6 percent of the company. As of June 30, 12.7 percent of the bank's loans were seriously delinquent, and the holding company's capital was slightly below the level needed to be considered "well capitalized."

Comings and goings: Tom Boyle, named the 2006 Illinois Banker of the Year by the Illinois Bankers Association, has stepped down as chief executive of $959.7 million-asset State Bank of Countryside. He has been replaced by John Wheeler, a member of the bank's founding family. Boyle remains vice chairman of the board of the Countryside-based bank, where the percentage of loans that are seriously delinquent had risen to 12.1 percent June 30 from 2.1 percent a year earlier .

Ups and downs: A new study by numbers cruncher SNL Financial shows that Bloomington-based State Farm and Northbrook-based Allstate remain the nation's No. 1 and 2 auto writers, respectively, but State Farm's direct premiums written were up 1.8 percent for the year ended June 30 while Allstate's were down 4.6 percent.

Similarly, State Farm and Allstate remain No. 1 and No. 2 home writers, but State Farm was up 3.1 percent while Allstate was down 4 percent.

Tweet me: Reporters' Notebook, the financial-services edition, is on at twitter.com/beckyyerak.

Past financial services notebooks can be found at: www.chicagotribune.com/business/chi-financialservices-gallery,0,1189369.storygallery.

byerak@tribune.com

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