Casket Firm Undertakes S & L Tasks
For those who think banking is a dying business, consider that a list of recent applicants for federal thrift charters included Hillenbrand Industries Inc., America’s leading maker of funeral caskets.
The company began making coffins 113 years ago in Batesville, Ind. But in the synergistic spirit of the times, Hillenbrand is positioning itself as a full-service “death-care” provider--marketing not only caskets and cremation urns, but also insurance policies and trust funds so people can pay for their funerals in advance. As it branched out into financial services, Hillenbrand found that it made sense to secure a federal bank charter, then to apply for a federal thrift charter.
In doing so, Hillenbrand joins a growing list of companies that are seeking banking credentials so they can target one niche or another in financial services. And it illustrates how difficult it is to say what a bank is nowadays. Hillenbrand wants to be a savings and loan, legally speaking, but it doesn’t want to grant home mortgages or provide other traditional bank services.
“We are principally a manufacturing company,” said Mark Lanning, vice president and treasurer of Hillenbrand, which makes coffins at Batesville Casket Co. and arranges funerals through Forethought Financial Services Inc.
“Through the casket company, we have a lot of contacts with the funeral industry,” Lanning said. And that has given the company an edge in selling funeral services.
The irony is that outsiders such as Hillenbrand are taking to the banking arena just as many bigger banks are looking to move into new areas. They, too, don’t want to be traditional bankers.
All sorts of companies are lining up for federal thrift charters, which are granted by the U.S. Office of Thrift Supervision in Washington. What seemed like a dying industry only a few years ago is suddenly chic.
In November, the Travelers Group, the New York-based financial services giant, won approval from the Office of Thrift Supervision to operate a federal savings and loan. Other companies applying for thrift charters include insurers such as Transamerica Corp. of San Francisco and even Archer-Daniels-Midland Co., the Decatur, Ill., grain processor that owns a limited-services bank in Illinois, which it eventually hopes will be able to branch out to business lending and trust services.
Federal thrift charters are attractive because holders can operate nationwide without going through state regulators, said Christopher Bellini, a Washington banking lawyer.
Hillenbrand first put its toe into the financial-service waters a dozen years back, providing insurance policies to funeral directors, who in turn sold them to people looking to cover the cost of their funerals.
It was a good idea. Last year, Lanning said, Hillenbrand’s insurance sales rose 18%, compared with a 2% jump for sales of caskets. Forethought Financial manages more than $1.6 billion in assets. However, Hillenbrand discovered that state regulations limited its ability to sell insurance through funeral homes.
“We believe the insurance product is a far better vehicle,” Lanning said. “But there are a number of funeral directors who are reluctant to use insurance.”
To set up trust funds, however, Hillenbrand needed a banking license. So Forethought National Trust Bank secured a charter. Only that didn’t work so well. “Some states don’t recognize an Indiana-based national bank,” said Judith Wright, Hillenbrand’s general counsel. “We realized a thrift charter might provide more flexibility.”
