WASHINGTON – The FDIC shut down $25 billion Colonial BancGroup on Friday, the biggest bank closure so far this, and three other smaller institutions, making a total of 78 bank failures in 2008.
The 346 branches of Colonial, the parent of Colonial Bank, will open this morning as branches of BB&T Corp., which acquired them under a purchase and assumption deal with the FDIC. The FDIC has approved the sale of Colonial's $20 billion in deposits and about $22 billion of its assets to BB&T, based in Winston-Salem, N.C.
Regulators also closed four other banks: Phoenix-based Community Bank of Arizona ($55 million); Gilbert, Ariz.-based Union Bank ($124 million); Las Vegas-based Community Bank of Nevada ($1.5 billion); and Pittsburgh-based Dwelling House Savings and Loan Association ($13 million).
The failure of Colonial Bank will cost the FDIC’s Bank Insurance Fund an estimated $2.8 billion in losses. The failures of Community Bank of Nevada will cost the fun $781.5 million; Union Bank will cost $61 million; Community Bank of Arizona $25.5 million; and Dwelling House $6.8 million. The FDIC expects bank failures to cost the insurance fund around $70 billion through 2013.
The 78 bank failures nationwide this year compare with 25 last year and three in 2007.
