SEATTLE -- The Rainier Bancorp. added 14 new Oregon branches to its chain of financial institutions Monday, receiving initial federal approval to take over the operations of Lincoln Savings and Loan Association.
Rainier's takeover of the Portland-based thrift was approved by the Federal Home Loan Bank Board. The board's insurance arm, the Federal Savings and Loan Insurance Corp., had taken control of Lincoln during negotiations that led to the buyout.
Business will go on as usual at Lincoln's branch offices and accounts will continue to be insured by FSLIC.
Rainier, an $8.1 billion bank holding company, still must gain approval from the Federal Reserve Board. Until then, Lincoln will operate as a federal mutual savings and loan association in the FHLBB's Management Consignment Program, officials said.
The thrift's assets and liabilities have been transferred to a new, federally chartered association called New Lincoln Savings and Loan. Upon Fed approval, the mutual would be converted to a federal stock savings bank. Eventually, Rainier intends to convert the thrift to a commercial bank.
Oregon's Financial Institutions Division in Salem announced late Monday that Lincoln Savings and Loan had been placed under federal receivership, but a Federal Home Loan Bank Board spokeswoman in Portland said that was only a formality pending Federal Reserve approval.
'If the Fed already had approved the sale, it would have gone straight to Rainier,' said spokeswoman Linda Pomarantz. 'Since they have not yet done so, something has to happen in the interim.'
Lincoln has been a state-chartered stock association with year-end 1985 deposits of $244 million and assets of $284 million.
Rainier President John D. Mangels said the finanical giant will invest about $16 million in new capital in Lincoln.
'The poeple at Lincoln have worked very hard under extremely difficult circumstances,' Mangels said. 'We're impressed with all of them and hope they will become part of the Rainier team.'
Rainier also has an application pending to merge with Mount Hood Security Bank, a $20.9 million bank in Gresham. That application will not be affected by the Lincoln transaction, Mangels said.
In exchange for permission to convert Lincoln to a commercial bank, Rainier agreed to pay $2.9 million, representing a negotiated prepayment of the estimated present value of future special assessments and insurance premiums that Lincoln, as a savings and loan, would pay over a 10-year period.
To facilitate the transaction, FSLIC will provide a cash contribution and indemnify Rainier against possible litigation resulting from the transaction. The estimated present value cost of the FSLIC assistance is $21.4 million.
This is the 11th FSLIC-assisted merger or acquisition in 1986, bringing to 25 the total number of FSLIC cases resolved this year.