The Alabama State Banking Department closed Colonial Bank and appointed the Federal Deposit Insurance Corp. (FDIC) as receiver on Friday. With 346 branches in Alabama, Florida, Georgia, Nevada and Texas, Colonial had total assets of $25 billion and total deposits of approximately $20 billion as of the end of June.
Winston Salem, N.C.-based Branch Banking and Trust (BB&T) will purchase about $22 billion of Colonial assets, and it entered into a loss-share agreement with the FDIC on approximately $15 billion of assets. The estimated damage to the FDIC's Deposit Insurance Fund is $2.8 billion. In an FDIC statement, Chair Sheila C. Bair noted that the losses were lower than originally projected.
Under the terms of the agreement, BB&T has assumed all of Colonial Bank's deposit accounts, whether or not insured by the FDIC. BB&T will not acquire any of the assets or assume any obligations of Colonial's holding company or select assets and liabilities of Colonial Bank, including any relating to Taylor Bean & Whitaker.
‘We're gaining solid market shares in great markets in Alabama, Florida and Georgia. And it comes with minimal asset risk to BB&T because of our loss-sharing agreement with the FDIC,’ says BB&T CEO Kelly King.