Archer-Daniels Gets the Nod To Convert Bank into a Thrift

Grain processing conglomerate Archer-Daniels-Midland Co. on Monday received approval to convert its state-chartered bank to a federal thrift.

The Decatur, Ill., company will convert Hickory Point Bank and Trust to a thrift by Thursday without a name change, said Dale P. Arnold, the bank's president and chief executive officer.

The conversion will let $420 million-asset Hickory Point expand into trust services as well as small-business and multifamily residential lending.

As one of a handful of so-called limited-purpose banks, Hickory Point since 1987 has been permitted only to take deposits and make personal loans and single-family mortgages.

"It's our desire to operate as a community bank and offer a full range of services," Mr. Arnold said.

Recent bank mergers in the Decatur area have increased demand for Hickory Point to expand its offerings, he said. "The big banks have removed a lot of service from the community, and we're getting a lot of calls," he said.

Most recently, First of America Bank and Magna Bank, Decatur's largest institutions, have been taken over by National City Corp. and Union Planters Corp., respectively.

Archer-Daniels-Midland's request is the sixth thrift charter the Office of Thrift Supervision has approved for a nonbank company since Congress began debating pending financial reform legislation. Applications are also under review from 23 other nonbank firms.

As part of its approval, the OTS ordered Hickory Point to limit its dealings with Archer-Daniels-Midland's commodities futures trading operation. Also Hickory Point is forbidden from entering futures or options contracts without OTS approval.

The conversion is the first nonbank application OTS has approved since Feb. 6, when it let Excel Communications Inc. charter a thrift to offer banking services to its employees.

Ronald R. Glancz, a partner here with the law firm Venable, Baetjer, Howard & Civiletti, said Hickory Point's approval may not shed much light on how the agency will treat applications pending from large insurers and financial firms.

"On the face of it, a request from a nonfinancial firm like Archer- Daniels-Midland would seem controversial, but this is really not that complicated," he said. "Hickory Point is a well-run institution with a good track record, and they are going to remain a traditional thrift."

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