November 18, 2008

Insurance and investment manager Lincoln Financial Group said Monday it is applying to become a savings and loan after reaching a deal to acquire Newton County Loan & Savings FSB. The move will allow Lincoln Financial (LNC, Fortune 500) to apply to receive funds as part of the government's $700 billion bank rescue package.
Lincoln Financial, formally known as Lincoln National Corp., will acquire the Goodland, Ind.-based bank for an undisclosed sum. If the acquisition and change in status to a savings and loan are approved, Lincoln Financial would be eligible to apply for funds as part of the government's broad program to provide financial support to banks. Thus far, the program has only been available to banks and not other types of financial services firms.
The government investment, administered by the Treasury Department, is part of a broader program to invest in banks amid the ongoing credit crisis in an effort to stabilize the financial services sector and spur lending between banks and to consumers and other businesses. Many banks have been hit hard over the past year-and-a-half by a sharp rise in mortgage defaults and a freezing of credit markets. As some financial firms collapsed in recent months, banks shied away from lending to each other and to customers for fear that losses would mount.