City spotlight: Delphi.

• Author: Nelson, Eric
• Position: Regional Report

Tucked quietly away in rural Carroll, County, Delphi is an unlikely harbinger for national economic trends. With only one stoplight and fewer than 4,000 residents, the town mirrors thousands of similar communities spread across the U.S.'s farm belt.

Fresh produce is sold most mornings around the courthouse square, stacked in faded pickup trucks and horse-drawn wagons. Veteran merchants and retired businessmen gather at the local drugstore for coffee and conversation, while the bank sign across the street flashes encouragement to the high school football team.

The savings and loan crisis and Japanese investment in the United States-two of our nation's most hotly debated topics-seem irrelevant in Delphi. The weather, an upcoming wedding or the Friday night barbecue would appear more important.

But not anymore. Two events in the past year have changed Delphi, interrupting the peaceful tranquility of Midwestern life and redirecting the town's history.

Last September, Fort Wayne-based Central Soya, Inc., announced plans to team with Japan's Mitsubishi Corp. for a state-of-the art pork-processing plant southeast of Delphi. And this summer, federal thrift regulators seized the community's oldest financial institution, Hometown Federal Savings Bank.

Despite past financial difficulties, Hometown Federal's failure came as a surprise to Delphi resident5. The thrift had expanded into the Lafayette market only a year earlier, sporting two new branches and making plans for a third. New management and a recapitalization had bred confidence. The worst, it seemed, was over.

On the morning of June 8, however, officials from the Office of Thrift Supervision and the Resolution Trust Corp. arrived unannounced at Hometown Federal's Delphi headquarters and abruptly removed the thrift's top officers and board of directors. A notice taped to the front door carried the news to customers. "Even though we knew there was a problem, it was still a shock," says Mayor Carolyn Wagoner.

The two government agencies initiated the action because Hometown Federal was "tangibly insolvent," says Gus Mayer, public information officer of the OTS 6th District in Indianapolis. "The thrift had depleted all of its capital with no prospect of replenishment without federal assistance."

Under the terms of the Financial Institution Reform, Recovery and Enforcement Act of 1989, Mayer continues, all thrifts are required to have tangible capital (real assets minus liabilities) equal to 1.5...