Today, federal regulators approved holding company applications for two insurance companies and their acquisition of two depository institutions that have presented regulatory concerns. The approvals will give both companies access to Treasury’s Capital Purchase Program funds, although no insurance company has yet been approved for a CPP investment by Treasury.

The Federal Reserve approved Protective Life Corporation's application to become a bank holding company and its acquisition of Bonifay Holding Company (“BHCI”) and its subsidiary Bank of Bonifay (“Bonifay”), both of Bonifay, Florida. The Federal Reserve noted that Protective Life is well capitalized, but Bonifay’s “capital level is not considered sufficient given its current risk profile” and that today’s approval would enhance Bonifay’s financial condition.

The OTS approved an order for Phoenix Companies, Inc. (“Phoenix”), Hartford, Connecticut, to become a savings and loan holding company and acquire control of American Sterling Bank (“American Sterling”), Sugar Creek, Missouri. In the order Phoenix agreed to “inject a significant amount of capital” into American Sterling to re-capitalize it. In August, American Sterling received a cease and desist order from the OTS, with the OTS finding that American Sterling had engaged in transactions with affiliates that constituted “unsafe and unsound banking.” Last week Phoenix filed a notice of intent with the SEC announcing its possible acquisition of American Sterling. In the filing, Phoenix noted that, “There is no assurance that the company’s application to participate in the Capital Purchase Program will be approved or, if approved, that the company will elect to participate on the terms and conditions offered. The acquisition is subject to various conditions, including negotiation of a definitive agreement and approval in the company’s participation in the Capital Purchase Program.”

These orders follow last week’s approval of applications by Hartford and Lincoln National to become savings and loan holding companies.