Newton County bank bought by insurance giant giving it access to federal bailout funds

BY KEITH BENMAN, Times of Northwest Indiana
kbenman@nwitimes.com

NEWTON COUNTY -- A one-branch bank in Goodland, Ind., has opened the door to a federal bailout of one of the nation's largest insurance companies.

The Office of Thrift Supervision, a Treasury Department Agency, said Friday it approved an application for Lincoln National Corp. to purchase Newton County Loan and Savings in Goodland.

The purchase will allow Lincoln National, an insurance company with $200 billion under management, to access money from the U.S. Treasury's bank bailout program.

Newton County Loan and Savings President William Lah told the Times in late November that he believed the purchase by the insurance giant would benefit the bank, Lincoln National, and the community.

Insurance companies are mostly regulated at the state level, but insurers that become thrift holding companies are under federal supervision and thereby qualify for the government bailout money.

Analysts have identified Lincoln National as likely needing to raise capital and facing the possibility of a ratings downgrade in the wake of the collapse of American International Group, which was rescued with a $150 billion federal bailout last year.

Newton County Loan and Savings is one of two banks in Goodland, which has a population of 1,091, according to the latest Census figures. It was founded in 1894.

It has total assets of $7.28 million. Of the 8,461 banks in the United States, only 36 have assets smaller than Newton County Loan and Savings, according to Federal Deposit Insurance Corp. data.

Lincoln National, headquartered in the Philadelphia area, has 10,870 employee worldwide and ranks 246th on the Fortune 500 list of the largest U.S. companies.

At least two dozen insurers currently own thrifts, and many have been struggling amid the financial crisis and credit crunch.

The Associated Press contributed to this story.