Edward D. Jones & Co. has come a long way from the spring of 1994, when it first approached federal regulators about the possibility of buying a small Missouri thrift.

At that time, Jones officials said they were unsure how they should proceed with a plan to use Columbia, Mo.-based Boone National Savings as a beachhead for Jones' plan to become a nationwide distributor of trust services.

To test the waters, the brokerage asked the Office of Thrift Supervision to produce an opinion on several key issues involving Jones' ability to offer trust services through its 3,300 brokerage offices nationwide.

Some industry observers say the highly detailed opinion offers a blueprint for other brokerage firms interested in expanding their banking activities through thrifts.

"At a time when there is no uniform trust regulation across the country, the opinion passed down in the Jones case helps to distinguish" what a brokerage company can and cannot do through a thrift, said one lawyer familiar with the case.

The OTS, for example, said that federal law supersedes in cases where it conflicts with Missouri law over regulation of Boone's thrift and trust activities. Previously, thrifts affiliated with brokerage firms were at the mercy of regulators from each and every state they offered banking services in.

Now that Jones has closed the deal to buy Boone, the brokerage firm can market its trust services nationwide, despite a state law that allows Missouri thrifts to market those services only in states that are contiguous with Missouri.

The opinion was given further weight after the OTS dismissed a challenge by the Missouri Banker Association, which earlier this year argued against the agency's preemption of state regulation.

The OTS also ruled that Jones' brokerage offices would not be considered branches of the thrift, because of the limited scope of banking activities that would take place there.

The decision was based on legal precedent, and relieves brokerage companies from having to meet potentially costly capital and lending criteria, for their nonthrift offices.

Though the OTS based its opinion on the assumption that Jones would not perform fiduciary activities at its brokerage offices - including taking deposits or making loans - the agency did leave the door open for Jones to do so if it sought further permission.

Steven Novik, chief financial officer for Jones, said the company has no immediate plans to make personal or commercial loans, or to take deposits through its brokerage offices. But he would not rule out the possibility in the future.

Even so, he said, Jones isn't limiting its activities to trust services. Mortgage lending "is something that has always been of interest to us, and if we can utilize Boone to accomplish that objective we would consider it. But at this time we don't have any plans."

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