New York — A number of insurance companies and specialty lenders that aim to become bank or thrift holding companies most of them so they can qualify for government capital are still waiting for their holding company applications to be approved.

When it unveiled its plan in October to invest in banks and thrifts, the Treasury Department says publicly traded companies had to be approved as bank or thrift holding companies by Dec. 31, 2008, to be eligible for funds.

Several non-banks that plan to convert to holding companies an simultaneously buy banks or thrifts to be eligible for capital infusions says Thursday they have not been told the deadline has been extended but believe their applications are still on track.

In an e-mail after the print edition of American Banker went to press, a Treasury spokeswoman says that the agency has given regulators until Jan. 15 to finish processing any remaining holding applications for non-banks seeking government capital. 

Chip MacDonald, a partner at the law firm Jones Day, says, "Deadlines and decisions appear to have evolved to more be fluid and flexible than initially announced."

John Gorman, a partner at Luse Gorman Pomerenk & Schick PC in Washington, says he suspects some decisions on non-banks' applications are being deferred until President-elect Barack Obama takes office Jan. 20, 2009, and his new team is in place.

Regulators have shown "they can move quickly when they need to" on holding company applications, but there may be a sense right now that they "shouldn't be making these calls," Gorman says.

This week two more non-banks Phoenix Cos. Inc. in Hartford, Conn., and NewStar Financial Inc. in Boston announced that they have agreements to buy a bank or thrift as part of the plan to get holding company status.

In a Securities and Exchange Commission filing, Phoenix says that it has signed a non-binding letter of intent to acquire the $194 million-asset American Sterling Bank in Sugar Creek, Mo. Phoenix says that it still has to negotiate a definitive agreement, and that the deal hinges on approval for government capital. It did not disclose any other details about the deal.

Phoenix had disclosed its intent to become a thrift holding company and seek government capital in November, but at the time it had yet to arrange an acquisition. It lost $340 million in the third quarter after taking a hefty hit on its investments.

American Sterling is under orders from the Office of Thrift Supervision to raise capital or sell itself. It lost $14.4 million in the first nine months of last year, and its total risk-based capital ratio fell to 5.2% in the third quarter about half the level regulators require for a thrift to be considered well capitalized.

Several other insurers have deals to buy troubled thrifts so they can qualify to participate in the Treasury's Troubled Asset Relief Program.

Like Phoenix, they says their acquisitions hinge on whether they are approved for Treasury money, so even though it is up to the Office of Thrift Supervision to ultimately approve the holding company applications,  Gorman says the Treasury's influence looms large.

"I think Treasury is still trying to figure out how the insurance industry fits into the overall picture," Gorman says.

His firm is representing Federal Trust Corp., a Sanford, Fla., thrift company that has a deal to sell itself to Hartford Financial Services Group Inc.

NewStar made no mention of Tarp approval as a condition for closing its deal to acquire Southern Commerce Bank in Tampa from Dickinson Financial Corp. in Kansas City, Mo.

The commercial financial company is paying $19 million for the $218 million-asset Southern Commerce. Robert Brown, NewStar's managing director and head of strategy and corporate development, says Thursday that it was looking for a bank because it wanted to be able to use deposits to fund its business.

Despite the troubled housing market, Florida is attractive to NewStar, because it is rich in deposits, Brown says.

"We like the demographics of the state," he says. "We're focused on growing the deposit franchise, and it's still one of the largest deposit markets in the country."

Southern Commerce has $182 million of deposits, and Brown says NewStar intends to expand the bank organically and possibly through additional acquisitions. He says NewStar would not limit its future acquisitions to Florida, "but it would be logical" to expand there.

The deal is expected to close this quarter, and either side can terminate it if is not closed by March 31.

Alan Kline contributed to this story.

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