Colonial's collapse is the largest ever in Alabama and the biggest yet for 2009.
The Federal Deposit Insurance Company (FDIC) was immediately put into receivership over the company, and it will be sold to BB&T Corporation, a company headquartered in Winston-Salem, North Carolina.
BB&T has more than $150 billion in assets and dates back to the mid 1800s.
Your money is SECURE. In its 75 year history, not a single dime has ever been lost from an account insured by the FDIC.
All deposits were transferred to BB&T as of 5:00 Friday afternoon and are available to customers immediately. Accounts may be accessed through existing Colonial branches and customers may continue to make ATM, check and debit transactions as usual.
A website and toll-free hotline to answer questions has been set up. WWW.FDIC.GOV.
The phone number is 1-800-405-8739 and it's active until 9pm Friday. The number will be available on Saturday from 9am until 6pm, Sunday from 12pm until 6pm and from that point on 8am until 8pm daily.
Colonial was founded in 1981 with $166 million. The bank grew to a value of more than $25 billion over the years, and its stock paid handsomely. In 2005 the Wall Street Journal ranked it "Number One Among Southeast Banks" for shareholder returns. In 2007 Forbes ranked the bank on its list of "Platinum 400 Best Publicly Traded Companies in America" and its Global 1,000 list for international businesses based on revenue.
So what happened?
"I think the main problem Colonial Bank had was it was very aggressive in Florida," finance professor Bruce Gordon said. "They made a lot of construction loans and lot of real estate loans then the value of those loans just plummeted because of the real estate problems in Florida. I feel they were a little too aggressive in a market that turned out to be very bad."
The bank reported losing more than $1 billion in the last year and at least $600 million in the second quarter of 2009, mostly due to those bad real estate loans.
Just this week Bank of America Corporation sued Colonial for more than a billion dollars to protect its claims on the Colonial loans and to keep Colonial from selling or disposing of the assets.
A federal criminal investigation by the Department of Justice and probe by the Securities and Exchange Commission added to the troubles Colonial was facing, and things just became too much.
Trouble could be seen early in the day for the bank. The New York Stock Exchange stopped trading of Colonial shares just after the opening bell. A company which boasted a stock value of more than $27 per share in 2006 fell to just .41 cents before trading stopped.
Colonial operated more than 350 branches across five states: Alabama, Georgia, Florida, Texas and Nevada.
Colonial employees were called into a meeting by FDIC officials at 5:30 Friday afternoon. Business should continue as usual, and customers should expect no major changes from day-to-day business.