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The Federal Deposit Insur-ance Corp. announced the takeover yesterday afternoon. With $25 billion in assets and $20 billion in deposits as of June 30, Colonial Bank is the largest of the 74 U.S. banks that have failed this year.
BB&T will take over all of the deposits and about $22 billion of the assets. The FDIC will keep about $3 billion in assets.
BB&T agreed to share in the losses with the FDIC on a pool of assets worth about $15 billion.
Colonial Bank's 346 branches in Florida, Alabama, Georgia, Nevada and Texas will reopen as BB&T. Colonial Bank was hit hard by Florida's recent real estate bust. It lost $606 mil-lion in the second quarter, its fifth straight quarterly deficit. The bank lacked the financial strength to qualify for assistance from the U.S. Treasury Department's TARP program.
BB&T, which is based in Winston-Salem, N.C., is holding up better than most during the downturn. In June, BB&T bought back $3.1 billion in preferred shares in the bank that the government took as part of TARP.
Investors approved of yesterday's transaction, sending BB&T's stock up about 10 percent on the day.
BB&T had about $765 million in customer deposits in the Fredericksburg area as of June 30, 2008, according to the FDIC. That gave it a 24.2 percent market share in the area -- which comprises the city and Stafford, Spotsylvania, King George and Caroline counties.
The next-biggest banks in the area as of June 30, 2008, were Union Bank & Trust, Wachovia, PNC and SunTrust, in that order.
The FDIC has announced new U.S. bank failures just about every Friday evening of late. There are also more than 300 names on the FDIC's list of troubled banks, a signal of possible problems to come as residential and commercial loans go delinquent.
The FDIC has an insurance fund that covers the deposits of failed banks. The FDIC estimated that the Colonial Bank failure will cost the fund about $2.8 billion.
In the past 18 months the FDIC has protected about $300 billion in deposits due to bank failures. The FDIC has increased the insurance premiums member banks pay to offset the expenses of taking over failed banks.
Separately yesterday, PNC Bank agreed to assume the $13.8 million deposits of the Pittsburgh, Pa.-based Dwelling House Savings and Loan Association. PNC also bought about $3 million of the failed bank's $13.4 million in assets; the FDIC said the failure would cost the insurance fund $6.8 million.
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