Jan. 22--An Alabama-based life insurance company is preparing to make its first foray into a new line of business. A Panhandle company is at the center of the pending deal, and the U.S. Treasury may also get involved.

The Bank of Bonifay, which has a branch office in Marianna, may soon be sold to Protective Life Corporation, which currently deals primarily in life insurance and annuities.

A Protective Life representative confirmed Wednesday that a deal is in the works, but said the purchase has not yet closed and is contingent on federal regulatory approval.

Protective Life has filed a letter of intent to acquire the bank and the bank's parent company, the Bonifay Holding Company Inc.

Among the pending issues is regulatory approval of Protective Life's application to participate in the U.S. Treasury Department's Capital Purchase Program under the Troubled Asset Relief Program.

The Capital Purchase Program, approved by Congress late last year, provides $250 billion to shore up equity in financial institutions. Half of the total has already been invested by the federal government directly in 52 financial institutions, as of the end of November last year.

The remaining $125 billion has been set aside for small and mid-sized financial institutions.

Under the program, the U.S. Treasury can purchase preferred shares, and warrants for ordinary shares, in qualified financial institutions.

Holders of preferred shares are paid dividends before other shareholders, and get first preference if a company is liquidated. A warrant gives the holder the right to purchase a set amount of shares at a pre-determined price.

According to the Treasury Department's Web site, investments have ranged from $1 million to $25 billion under the Capital Purchase Program.

The Alabama company did not state how much of an investment it was seeking from the Treasury, not did it say what is was paying to buy Bank of Bonifay and its parent company.

Protective Life claims total assets of $41.1 billion. According to a statement from Protective Life, Bank of Bonifay has total assets of $220 million.

Protective Life, headquartered in Birmingham, Ala., obtained approval of its application for status as a bank holding company Jan. 15. This will allow deposits to be insured by the Federal Deposit Insurance Corporation.

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