WYOMISSING, Pa. - Sovereign Bancorp said its recent agreement to acquire Colonial State Bank could save up to $10 million per year in Federal Deposit Insurance Corp. premiums within the next two years.
Colonial deposits are ensured by the FDIC's Bank Insurance Fund.
Sovereign said it intends to transfer deposit relationships to Colonial, which will be given the Sovereign name.
The bank said it expects that the majority of its deposit relationships will be transferred to the new Sovereign Bank within two years. By transferring deposit relationships to a BIF-insured institution, Sovereign said it may reduce its deposit insurance from its current rate of 23 basis points to 4.
The acquisition of Colonial is subject to execution of a definitive agreement and shareholder and regulatory approval.
Sovereign has $6.6 billion of assets and 130 community banking offices - in eastern Pennsylvania, New Jersey, and northern Delaware.