Edward D. Jones & Co. has the green light from the Office of Thrift Supervision to complete its purchase of a small Missouri thrift, and it plans to close the deal today.
The acquisition of Boone National Savings and Loan, a $64 million-asset thrift in Columbia, will allow Jones & Co. - one of the country's largest brokerage firms - to consolidate the marketing and processing of its trust services through one institution.
The deal is expected to help Jones, a leading bank competitor, boost the profitability of its trust operations by capturing fees that would previously have been farmed out to bank trust departments acting on behalf of the brokerage. The acquisition could eventually let Jones offer a broader range of bank services, including lending and insured deposits.
Thrift regulators, however, spelled out restrictions on how Boone National and Jones & Co. could operate together. And the OTS made it clear that the brokerage would need explicit permission to market more than just trust services through the thrift.
With the purchase, Jones' brokers will be able to refer business to Boone National's trust department, but they cannot act as fiduciary agents of the thrift.
Specifically, the agency said that Jones & Co. representatives cannot offer investment advice to trust officers, execute documents on behalf of the trust department, nor approve new accounts for the thrift.
The firm's officers and employees are also blocked from holding posts at Boone National. And the thrift's customer accounts and records are to be kept separate and distinct from those of the brokerage.
"These restrictions are, in all respects, perfectly normal for this type of acquisition," said Kathleen E. Topelius, a partner in the Washington law office of Bryan Cave, a St. Louis-based law firm.
Regulators typically place these "firewall restrictions" on securities firms, Ms. Topelius added, in order to protect the integrity of a thrift and its accounts.
Not everything went smoothly for Jones during the 10-month approval process, however. The Missouri Bankers Association launched a protest charging that the deal violated state law concerning interstate banking. The protest was eventually dismissed, but it added months to the debate, said lawyers familiar with the deal.
These experts added that thrift regulators have also barred Jones & Co. offices from receiving deposits or making loans. The agency did leave the door open for Jones to initiate those activities at an unspecified future date, observers said.
A spokesman for the OTS said the agency had not been asked to do a legal analysis of that issue by Jones & Co. The firm would need approval from the agency to engage in lending or deposit taking, he added.