BB&T takes control of failed Colonial Bank

By Palm Beach

BOCA RATON — BB&T Corp. has bought the banking operations of troubled Colonial Bank of Montgomery, Ala., after Alabama banking regulators seized the bank and named the Federal Deposit Insurance Corp. as receiver. Both BB&T and Colonial have has branches throughout South Florida, including Boca Raton and Boynton Beach.

BB&T bought $22 billion in assets and assumed $20 billion in deposits in the transaction. The FDIC and BB&T have entered into a loss sharing agreement covering substantially all acquired loans and securities.

The deal is BB&T's largest in its 137-year history, and creates the nation's eighth largest financial holding company by deposits. It moves BB&T to No. 5 in Florida.

"Today's announcement represents an exciting growth opportunity for BB&T," BB&T Chief Executive Officer Kelly King said. "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."

The announcement follows a decision by Alabama regulators to close Colonial Bank and name the FDIC as receiver. 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 and Whitaker Mortgage Corporation.

Also excluded are assets and liabilities the FDIC determines are related to fraudulent or criminal activities. The FDIC agreed to indemnify BB&T for any liabilities not expressly assumed in the transaction, including those related to any fraudulent, criminal or inappropriate activities of Colonial.

Last week Colonial disclosed that has been informed that the Justice Department was investigating alleged accounting irregularities relate to more than one year’s audited financial statements and regulatory financial reporting. It said the bank’s board and audit committee are attempting to determine the effect the alleged accounting irregularities might have had on the Company’s financial statements. It also said it intends to cooperate with the investigation.

Colonial has branches throughout South Florida, including Boca Raton, Boynton Beach, Deerfield Beach and Coral Springs.

Earlier this year, Colonial produced documents subpoenaed by the federal inspector general for the Troubled Asset Relief Program.

Also, the Securities and Exchange Commission has issued subpoenas to Colonial for documents related to, among other things, BancGroup’s disclosures related to its participation in the TARP and the bank’s disclosures respecting accounting for loan loss reserves.

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AUGUST 17, 2009 click to go home
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