Colonial Bank was closed by the Alabama State Banking Department and appointed Federal Deposit Insurance Corporation (FDIC) as receiver. However, in order to protect the depositors, the FDIC entered into a purchase and assumption agreement with Branch Banking and Trust (BB&T), a North Carolina-based bank, to assume all of the deposits of Colonial Bank.
Reportedly, Colonial Bank’s 346 branches in Alabama, Florida, Georgia, Nevada and Texas will re-open and operate as branches of BB&T. The depositors of Colonial Bank will automatically become depositors of BB&T. The deposits will continue to be insured by the FDIC. Customers can continue to use their existing branches until BB&T can fully integrate the deposit records of Colonial Bank.
Further, the FDIC and BB&T have entered into a loss-share transaction on approximately $15 billion of Colonial Bank’s assets. BB&T will share in the losses on the asset pools covered under the loss-share agreement. The agreement is expected to minimize the disruptions for loan customers.
