Colonial Bank went bankrupt

On Friday, August 14, 2009, regulators of the Alabama State Banking Department shut down Colonial, the largest US bank to fail this year, based in Montgomery, AL.

The bank which held about $25 billion in assets was a big lender in real estate development.
The Federal Deposit Insurance Corporation (FDIC) has been made receiver and approved the sale of Colonial's assets and $26.06 billion in deposits. Rival BB&T has taken over the bulk of Colonial's assets, the government banking agency said.

Before the takeover, BB&T wants to secure fresh money. The bank therefore initiated the sale of new shares worth $750 million. It will be the biggest takeover for BB&T in its history.
Three other US banks filed bankruptcy the same day, the Community Bank of Arizona, the Community Bank of Nevada and the Union Bank, National Association.

The states in the US that are hit hardest by the financial crisis are Florida and Georgia. Colonial operated mainly in Alabama and Florida and was therefore hit very hard by the burst of the real estate bubble. Unfortunately, the problems became to big so that, at the end, FDIC had to pull the rip line.