Look at the record, Wal-Mart said. Beginning in 2003, it started actively soliciting local and community banks as tenants for its stores and to date there are more than 300 different banks operating branches in approximately 1,100 locations.

A new report by an independent research firm, though, casts doubt on Wal-Mart's sincerity.

"The key word Wal-Mart uses is 'tenant'," said Bart Narter, an analyst with the Boston-based Celent, a consulting firm that researches issues related to the financial services industry. "If Wal-Mart receives an industrial bank license from Utah, those tenants might well be evicted."

Opponents such as the Independent Community Bankers of America believe the king of the big-box retailers intends to use its Utah bank to offer savings accounts, auto loans and other services - products that if provided though a Wal-Mart Bank branch could impact small banks and credit unions in the same way that hardware and grocery stores are when Wal-Mart stores open in small towns.

Wal-Mart spokesman Marty Heires maintains there are no such plans. The company will use the Utah bank only to save money on the 140 million credit and debit card transactions carried out at the company's stores each month.

Along with the approximately 1,100 existing bank branches in its stores, Wal-Mart has commitments for another 300, Heires added. "And those leases are for 15 years and renewable at the option of the bank every five years. And they can only be canceled by the bank tenants."

In Utah, America First Credit Union and Washington Mutual operate branches in a number of Wal-Mart Superstores.

Yet Narter, whose analysis of Wal-Mart took up only a small portion of his "What's in Store for In-Store" report on in-store bank branching, doubts the giant retailer's bank tenants have much power. "Wal-Mart is known for squeezing its suppliers and structuring every deal it does to its own advantage," he said.

Salt Lake attorney George Sutton, former commissioner of the Utah Department of Financial Institutions, however, doubts if Wal-Mart gets permission to organize its industrial bank that it will try to open branches.

"There is nothing now that prevents Wal-Mart from offering a full range of financial products from automobile loans to home mortgages, but they're not doing it," he said. "Anybody can lend money, where they would have a limitation [without the bank] is in taking deposits."

The only reason banks take deposits is to loan the money out eventually, Sutton said. "Wal-Mart already has all the money it needs to loan out if it wants."

Despite Wal-Mart's assurances, Narter said there are plenty of signs the company is actively moving into the financial services arena and that eventually it could open its own bank branches.

In the recent past, Narter said, Wal-Mart has:

* Attempted to enter retail banking three times

* Test marketed banks under the Wal-Mart brand

* Sold money orders and wire transfers

* Cashed checks

* Issued Wal-Mart brand credit cards

"Wal-Mart will branch as soon as regulators permit it," he said. "And when they do, they will become an incredibly efficient deposit gatherer and fee generator in small town America. And many community banks will be in dire straits."

Narter pointed out that in its application for its Utah-based industrial bank, the Bentonville, Ark.-based retailer states that its bank, "will not establish branches and does not have any plans to relocate the main office within the first three years of its operations."

The Utah Department of Financial Institutions' policy is to make industrial banks stick to their original business plans for the first three years.

After that, any big changes must be approved.

But before any such changes are OK'd, state regulators must be convinced the safety and soundness of the bank is not threatened and that it has the capital and management in place to successfully carry out the proposed transition.

Financial Institutions Commissioner Ed Leary said the state still has Wal-Mart's application under review. "At this point, we have determined their application is not complete, and we're asking them to provide additional information," he said.

Industrial banks, also known as industrial loan corporations, are found only in Utah and a few other states.

Such banks trace their origins to an exemption in federal banking laws enacted by Congress in 1987 that for the first time in decades provided stock brokerages and retailers a way to own a federally insured deposit-taking financial institution.

About the only thing an industrial bank cannot do is offer standard checking accounts if its assets exceed $100 million.

Public hearing

l Before state regulators make a decision on whether to approve Wal-Mart's application, they plan to schedule a public comment period, although a date has yet to be set.