Edward D. Jones & Co.. a nationwide brokerage firm that is one of the most-feared rivals of small-town banks, is entering the banking business.

The St. Louis-based firm's parent, Jones Financial Companies. announced Thursday that it plans to acquire Boone National Savings & Loan Association. a $64 million-asset thrift in Columbia. Mo.

The deal, valued at $8.6 million. is small by any measure. But industry observers say it would dramatically bolster Jones' competitive muscle by giving the company a base from which to offer banking services to its 1.7 million customers.

Jones casts a long shadow in the banking industry, thanks largely to its strategy of opening offices right across from bank branches. Its network of 3,200 offices is the largest in the brokerage industry, and its sales force is the ninth largest.

Some banking industry officials said owning the thrift would give Jones an unfair competitive edge over banks.

"It's a clear breach of the Glass-Steagall Act, and I think someone like [House Energy and Commerce Committee Chairman] John Dingell is going to have a problem with this," said Kenneth A., Guenther, executive vice presidebt of the Independent Bankers Association of America.

Mr. Guenther, whose group represents more than 6,000 small banks, said the acquisition also would enable Jones -- through its thrift unit -- to issue certificates of deposit, a core product for community banks.

"I'm going to get our lawyers to look at this," he said.

Jones is certainly not the first securities firm to own a financial institution. Heavyweights such as Merrill Lynch, Fidelity Investments, and Putnam Financial Services all operate banking subsidiaries with limited banking powers.

But since the enactment of the Competitive Equality Banking Act of 1987, structuring such deals has become more complicated. Securities firms that acquire banks and thrifts are regulated as bank holding companies, but they may avoid this regulation by buying a stand-alone, or "unitary," thrift.

Unitary thrifts have always been able to branch interstate. However, until recently, such deals may have had limited attractiveness because of the political risk that Congress would step in and limit thrift branching rights to those enjoyed by banks.

But with the advent of interstate branching in 1997, unitary thrifts may have greater appeal.

Karen Shaw, president of ISD/Shaw, a Washington consulting firm, said the fact that Congress rejected an amendment in that bill that would have limited thrift branching rights cleared the issue up.

Jones Financial could use the Missouri thrift to put trust services in every Edward D. Jones office, Ms. Shaw said.

"They clearly knew what they were doing," she added. "This was not put together over night."

John W. Bachmann, managing principal of Jones Financial, said the company could have set up trust companies in each of the 49 states in which it does business. But doing so would have been expensive and time-consuming.

F.H. "Rick" Kruse, the president and chief executive of Boone National, will continue in his post, the company said. He also will become a partner in Jones Financial.

The deal is subject to approval from the thrift's shareholders, and from the Office of Thrift Supervision. Jones officials said the transaction should close in six months.

Meanwhile, local reaction to the purchase was muted. "Boone National may expand some locally, but I don't expect it to make much of a difference in our business," said Jeff MacLellan, president and chief executive of First National Bank & Trust Co., Columbia, Mo.

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