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Colonial BancGroup becomes biggest bank failure of 2009 (2 failures by 7pm EST) [View All]

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UpInArms Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Aug-14-09 06:00 PM
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Colonial BancGroup becomes biggest bank failure of 2009 (2 failures by 7pm EST)
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Source: CBS Marketwatch

SAN FRANCISCO (MarketWatch) -- Colonial BancGroup Inc. became the largest bank failure this year Friday after the Federal Deposit Insurance Corporation seized the struggling Alabama-based lender and sold it to BB&T Corp.

The deal will knock roughly $2.8 billion off a pool of money, known as the Deposit Insurance Fund, which the FDIC maintains to guarantee bank customer deposits.

BB&T (BBT 28.45, +0.22, +0.78%) agreed to assume all of Colonial's deposits, which
totaled about $20 billion at the end of June, the FDIC said. Depositors of Colonial will automatically become depositors of BB&T and customers can continue accessing their money by writing checks or using ATMs and debit cards, the regulator stressed.

Colonial had $25 billion in assets at the end of June. That makes it the largest bank failure this year, exceeding the collapse of Florida's BankUnited Financial (BKUNQ 0.30, -0.01, -1.64%) , which had less than $13 billion in assets. See full story.

BB&T agreed to buy about $22 billion of Colonial's assets. The FDIC said it will hold on to the rest - about $3 billion worth - and will try to sell them later.

The FDIC and BB&T will share losses on $15 billion of Colonial's assets. Loss-sharing deals have become common since the financial crisis struck last year, as the FDIC tries to encourage more stable banks to take over failing institutions.

This year, 74 banks have failed this year as a lingering recession and surging unemployment leaves the industry nursing heavy loan losses. More than 1,000 banks may fail during the next three to five years, RBC Capital Markets estimated in February.

Read more:

Failed Bank List

Bank Name					City		State	CERT #	Closing Date	Updated Date
Colonial Bank Montgomery AL 9609 August 14, 2009 August 14, 2009
Dwelling House Savings and Loan Association Pittsburgh PA 31559 August 14, 2009 August 14, 2009
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