BB&T Acquires Colonial as Regulators Close Five U.S. Lenders
By Alison Vekshin, David Mildenberg and Dakin Campbell
Aug. 15 (Bloomberg) -- Colonial BancGroup Inc., the Alabama lender facing a criminal probe, had its banking operations closed by regulators and taken over by BB&T Corp. in the biggest failure since Washington Mutual Inc. collapsed last year.
Regulators also shut two companies in Arizona, one in Las Vegas and one in Pittsburgh yesterday, pushing the tally of failed banks this year to 77.Branches and deposits of Colonial Bank, ranked second in its home state, were turned over to BB&T in a deal brokered by the Federal Deposit Insurance Corp., the regulator said in a statement. The failure of Montgomery-based Colonial followed a Florida expansion that left the company with more than $1.7 billion in soured real-estate loans.
“We’re gaining solid market shares in great markets in Alabama, Florida and Georgia,” Kelly King, chief executive officer of Winston-Salem, North Carolina-based BB&T, said in a statement. “It comes with minimal asset risk to BB&T because of our loss-sharing agreement with the FDIC.”
Regulators are closing banks at the fastest pace in 17 years. The Sept. 25 seizure of Seattle-based Washington Mutual was the biggest bank failure in U.S. history; its branches and assets were sold to JPMorgan Chase & Co. Colonial is the sixth- biggest, FDIC spokesman David Barr said.
Colonial had assets of $25 billion and deposits of about $20 billion, the FDIC said. BB&T will buy about $22 billion of the assets and the FDIC will dispose of the rest later. The FDIC and BB&T signed a loss-sharing agreement on about $15 billion of assets, the regulator said. The failure will deplete the FDIC’s deposit insurance fund by $2.8 billion, the agency said.
Criminal Matters BB&T won’t assume any assets or liabilities “related to fraudulent, criminal or inappropriate activities of Colonial,” the North Carolina bank said. BB&T also won’t take assets or liabilities related to Taylor Bean and Whitaker Mortgage Corp., the Florida-based lender that stopped making loans this month after being suspended by U.S. agencies and Freddie Mac.
Colonial provided financing for Taylor Bean and dozens of smaller mortgage firms.Colonial said last month there was “substantial doubt” it could survive and on Aug. 7 said part of its mortgage-lending business was the target of a U.S. criminal probe. The Securities and Exchange Commission issued subpoenas for documents related to accounting for loan loss reserves and participation in the U.S. Troubled Asset Relief Program, the bank said.
The Colonial takeover will make BB&T the ninth-biggest U.S. bank by assets, moving it from 11th ahead of McLean, Virginia- based Capital One Financial Corp. and Atlanta-based SunTrust Banks Inc. BB&T said it will rank eighth by deposits. The biggest lender based in Alabama is Regions Financial Corp.New Markets “It’s a good acquisition geographically for BB&T,” Chip MacDonald, a partner specializing in financial services at law firm Jones Day, said in a telephone interview. “It complements their Florida operations and gets them into Texas.”Colonial’s 346 branches in Alabama, Florida, Georgia, Nevada and Texas will reopen as outlets of BB&T, the agency said. Colonial employs about 4,500 people, BB&T said, adding that it may sell 44 branches in Nevada and Texas.
“This is the time when smaller banks can take advantage of the weaker banks,” said Ken Thomas, an independent bank consultant in Miami. FDIC Chairman Sheila Bair “has had a lot of sleepless nights, but this is one headache gone.”Colonial posted a $606 million second-quarter loss, its fifth straight, mostly because of soured loans to developers and home builders in Florida.
A planned $300 million injection by an investor group led by Taylor Bean collapsed and the bank hasn’t met capital requirements to qualify for money from TARP, the $700 billion U.S. bailout program for troubled financial firms.Other BiddersLosses under BB&T’s agreement with the FDIC are likely to be “very minimal,” Daryl Bible, BB&T’s chief financial officer, said in an interview. “It’s a very low-risk acquisition from a credit perspective.”The FDIC told BB&T that “up to four people were looking seriously” at Colonial, Bible said. At least one other bid was received and it was very close to BB&T’s, he said, adding he didn’t know who made the competing offer.
BB&T has 450 people working on the acquisition this weekend, Bible said. BB&T is considering continuing Colonial’s so-called warehouse mortgage program that helps finance other home lenders, he said.
By Alison Vekshin, David Mildenberg and Dakin Campbell
Aug. 15 (Bloomberg) -- Colonial BancGroup Inc., the Alabama lender facing a criminal probe, had its banking operations closed by regulators and taken over by BB&T Corp. in the biggest failure since Washington Mutual Inc. collapsed last year.
Regulators also shut two companies in Arizona, one in Las Vegas and one in Pittsburgh yesterday, pushing the tally of failed banks this year to 77.Branches and deposits of Colonial Bank, ranked second in its home state, were turned over to BB&T in a deal brokered by the Federal Deposit Insurance Corp., the regulator said in a statement. The failure of Montgomery-based Colonial followed a Florida expansion that left the company with more than $1.7 billion in soured real-estate loans.
“We’re gaining solid market shares in great markets in Alabama, Florida and Georgia,” Kelly King, chief executive officer of Winston-Salem, North Carolina-based BB&T, said in a statement. “It comes with minimal asset risk to BB&T because of our loss-sharing agreement with the FDIC.”
Regulators are closing banks at the fastest pace in 17 years. The Sept. 25 seizure of Seattle-based Washington Mutual was the biggest bank failure in U.S. history; its branches and assets were sold to JPMorgan Chase & Co. Colonial is the sixth- biggest, FDIC spokesman David Barr said.
Colonial had assets of $25 billion and deposits of about $20 billion, the FDIC said. BB&T will buy about $22 billion of the assets and the FDIC will dispose of the rest later. The FDIC and BB&T signed a loss-sharing agreement on about $15 billion of assets, the regulator said. The failure will deplete the FDIC’s deposit insurance fund by $2.8 billion, the agency said.
Criminal Matters BB&T won’t assume any assets or liabilities “related to fraudulent, criminal or inappropriate activities of Colonial,” the North Carolina bank said. BB&T also won’t take assets or liabilities related to Taylor Bean and Whitaker Mortgage Corp., the Florida-based lender that stopped making loans this month after being suspended by U.S. agencies and Freddie Mac.
Colonial provided financing for Taylor Bean and dozens of smaller mortgage firms.Colonial said last month there was “substantial doubt” it could survive and on Aug. 7 said part of its mortgage-lending business was the target of a U.S. criminal probe. The Securities and Exchange Commission issued subpoenas for documents related to accounting for loan loss reserves and participation in the U.S. Troubled Asset Relief Program, the bank said.
The Colonial takeover will make BB&T the ninth-biggest U.S. bank by assets, moving it from 11th ahead of McLean, Virginia- based Capital One Financial Corp. and Atlanta-based SunTrust Banks Inc. BB&T said it will rank eighth by deposits. The biggest lender based in Alabama is Regions Financial Corp.New Markets “It’s a good acquisition geographically for BB&T,” Chip MacDonald, a partner specializing in financial services at law firm Jones Day, said in a telephone interview. “It complements their Florida operations and gets them into Texas.”Colonial’s 346 branches in Alabama, Florida, Georgia, Nevada and Texas will reopen as outlets of BB&T, the agency said. Colonial employs about 4,500 people, BB&T said, adding that it may sell 44 branches in Nevada and Texas.
“This is the time when smaller banks can take advantage of the weaker banks,” said Ken Thomas, an independent bank consultant in Miami. FDIC Chairman Sheila Bair “has had a lot of sleepless nights, but this is one headache gone.”Colonial posted a $606 million second-quarter loss, its fifth straight, mostly because of soured loans to developers and home builders in Florida.
A planned $300 million injection by an investor group led by Taylor Bean collapsed and the bank hasn’t met capital requirements to qualify for money from TARP, the $700 billion U.S. bailout program for troubled financial firms.Other BiddersLosses under BB&T’s agreement with the FDIC are likely to be “very minimal,” Daryl Bible, BB&T’s chief financial officer, said in an interview. “It’s a very low-risk acquisition from a credit perspective.”The FDIC told BB&T that “up to four people were looking seriously” at Colonial, Bible said. At least one other bid was received and it was very close to BB&T’s, he said, adding he didn’t know who made the competing offer.
BB&T has 450 people working on the acquisition this weekend, Bible said. BB&T is considering continuing Colonial’s so-called warehouse mortgage program that helps finance other home lenders, he said.
