RIP, Colonial Bank, and Good Luck BB&T




It really IS like WaMu all over again! Hope none of you idiots actually listened to the Google finance people that said BUY BUY BUY. You're DUMB DUMB DUMB!

Well, this little ride has been fun kids but it's over:

11:03 (Dow Jones) Colonial BancGroup (CNB) shares halted since just after the start of today's session as speculation mounts about the troubled bank's future. A Miami judge yesterday, in issuing a restraining order against the bank, said CNB is "on the brink of collapse." CNB recently acknowledged it may not be able to remain a going concern, leading to speculation it could be taken into receivership or sold in a last-minute deal. CNB was down 6c at 41c before the halt.


Bloomberg is reporting that BB&T announced it will take on CNB, after, of course, the FDIC swoops in and cleans out all the nasty stuff on the taxpayer dime.

We'll keep you updated, as this is breaking and details are few and far between.

Update:

NEW YORK -- Southeastern regional bank BB&T Corp. has reached an agreement with the Federal Deposit Insurance Corp. to purchase deposits and branches of Montgomery, Ala.,-based Colonial BancGroup Inc., according to a person familiar with the situation.

The deal, approved by the FDIC last night, will take effect after the bank is put into receivership, this person said. BB&T, based in Winston-Salem, N.C., has already dispatched employees to Colonial markets to prepare for the takeover.

Colonial has 355 branches in five states and has about $25 billion in assets. It recently said it might not be able to continue as a going concern.

The FDIC and BB&T are expected to announce the agreement later today.

A BB&T spokeswoman said she could not comment on rumor or speculation. A Colonial spokeswoman could not be reached immediately for comment.

An FDIC spokewoman [sic] also declined to comment.
(WSJ)

(major h/t to WC Varones for being my alert while mobile!)

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.

8 comments:

Clint Athey said...

JR,

How are deals like this structured relative to the FDIC? If BBT is buying the deposits, does this mean that they bought them for less than book and the FDIC is plugging the hole?

Clint,

That's generally how this works (remember WaMu/JPM?)... what makes this different is that the FDIC is broke so they are looking to unload the deposits AND liabilities as cheaply as possible. This is where BlackRock comes sniffing around at the carcass and where the REAL discounts happen.

Knowing BB&T's style, I can't see them getting too much of a discount on the deal. It's the leftovers that you need to watch, because Sheila and Co aren't going to be able to take on a failure this large at this point. So how they unload Colonial's garbage will be the interesting part.

BB&T is just in it for the branches. They know better than to go anywhere near the trash.

Clint Athey said...

..."they are looking to unload the deposits AND liabilities as cheaply as possible". That is, the less that the liabilities are worth the smaller of a gap they might have to fill after the near worthless assets are sold to raise funds. Do I understand that correctly? Thanks, Clint

As I understand it, they'll mark down the liabilities as low as they can (there goes that "accounting magic" again! Isn't it wonderful!?) and the FDIC picks up the difference. Basically covering whatever they can't pawn off to anyone else.

Keep in mind that Colonial was raided for accounting fraud in the first place so this might be a tricky balance sheet to unwind. But that makes it easier for the FDIC in the end because they are broke and want to pay as little as possible anyway, right?

I don't have all the details on the BB&T deal, not sure what it looks like at this point.

So again, you have books that are screwed up to begin with, I'm not sure how they are going to handle that...

and OMG how did I never notice your pic was Darth Greenspan?? BWHAHAHA.

FYI I'm a bit swamped but I also have an answer to your email in my drafts :)

Happy Friday!

Bucknasty said...

BB&T bought our assets such as deposits and branches. The holding company (Colonial Bancgroup) along with loans, liabilities, lawsuits...the junk stays with the FDIC. Look for some loan brokering and dealing soon. Every Colonial employee (including myself) are EXTREMELY happy to finally have this in place.

Bobby Lowder drove us into the ground flying Auburn football recruits around in the corporate jet, wasting money and providing no leadership. The bank festered for several years. Computer systems don't talk to each other, the technology is 6-8 years behind leading financials such as Wells Fargo. We received repeated lip service to lend to something OTHER than real estate, but nothing was ever done. I'm personally happy he was forced out, and even happier to join a quality team.

Bucknasty,

Thank you! I'm SO happy to hear that actually because while it's fun to make fun of Sheila scrambling to cover the next big failure, there are REAL people out there who are afraid of losing their jobs and suffering because of all this bullshit going on right now and *that* part isn't fun at all.

So thank you, I feel better knowing that. BB&T will take good care of you guys, they're a great bank. If that's not an oxymoron. :)

Check in and let me know how it works out for you and watch out for those Richmond Fed regulators, I heard they can be rough!

I still believe the BlackRock vultures will swoop in pick up the garbage at deep discount. But that's not your concern, is it?

enjoy your weekend. you kids deserve as much.

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