The Treasury auctioned 758,086 warrants at $8.85 each. The final price was above the floor price of $6.50 per warrant set by the Treasury. The TCBI warrants have a strike price of $14.84 and expire in January 2019.

The current move will completely free TCBI from government intervention. The auction of TCBI warrants follows the sale of Signature Bank’s (SBNY) warrants on Thursday, Washington Federal Inc.’s (WFSL) warrants on Wednesday and Bank of America Corp.’s (BAC) warrants in the previous week.

The government received net proceeds of $11.2 million from the sale of Signature warrants, $15.4 million from Washington Federal warrants and a record $1.5 billion from the sale of Bank of America warrants.

The amount received from the auction of Bank of America warrants exceeds $1.1 billion raised from the sale of Goldman Sachs (GS) warrants earlier.

After Bank of America, Washington Federal and Signature, TCBI is the last among four banks whose warrants were scheduled to be sold via auctions this month.

In similar transactions during December 2009, the Treasury received $1.1 billion from the sale of warrants of JPMorgan Chase & Co. (JPM), Capital One Financial Corp. (COF) and TCF Financial Corp. (TCB). The government expects to conduct similar auctions in the future for other warrants it holds in approximately 242 banks.

Next, the Treasury is expected to auction warrants of Wells Fargo & Co. (WFC), PNC Financial Services Inc. (PNC) and Citigroup Inc. (C).

We think that the repayment of government money and repurchase of warrants can be viewed as a sign of recovery of the institutions as well as the economy. According to the Treasury, losses on TARP investments are likely to be significantly trimmed with the improvement in the overall financial condition.

Zacks Investment Research

(TCBI) Texas Capital Bancshares Warrents Sold by U.S. Treasury for $6.6 Million

For the full-year 2009, BOK Financial reported a net income of $200.6 million or $2.96 per share, compared to $153.2 million or $2.27 per share for 2008.

For the fourth quarter, net interest revenue totaled $184.5 million, up 2.2% sequentially and 4.6% year-over-year. Net interest margin was 3.64%, up 1 basis point sequentially and 7 basis points (bps) year-over-year. The increase in net interest margin over the previous quarter resulted from improved loan yields and lower funding costs.

Outstanding loan balances were $11.3 billion as of Dec 31, 2009, down $332 million since Sep 30, 2009. All major loan categories decreased during the reported quarter, largely due to reduced customer demand and normal repayment trends. Average deposit balances totaled $15.6 billion, up $444 million from the prior quarter.

The deterioration in credit quality has somewhat moderated. Non-performing assets decreased $5.4 million during the reported quarter to $484 million. However, non-performing assets equaled 4.24% of the loan portfolio plus other real estate owned assets, up 5 bps sequentially and 159 bps year-over-year.

Net charge-offs as a percentage of average loans were 122 bps, up 1 basis point sequentially and 17 basis points year-over-year. Provision for loan losses decreased to $48.6 million from $55.1 million in the prior quarter and $73.0 million in the year-ago quarter.

Fees and commissions revenue totaled $115.9 million, down 3.3% sequentially but up 4.5% year-over-year. The sequential decrease is driven by a decline in brokerage and trading revenue. The year-over-year increase stemmed from an improvement in mortgage banking revenue.

Operating expenses (excluding the impact of the change in the fair value of the mortgage servicing rights) were $181.7 million, up $6.0 million from the prior quarter. While personal expenses decreased due to lower incentive compensation expense, mortgage banking costs, occupancy costs and net losses and expenses of repossessed assets increased over the prior quarter.

Tangible common equity ratio increased to 7.99% as of Dec 31, 2009, from 7.78% as of Sep 30, 2009, primarily due to growth in retained earnings. The Tier 1 capital ratios were 10.86% as of Dec 31, 2009 compared to 10.56% as of Sep 30, 2009. The company chose not to participate in the Treasury’s Capital Purchase Program, as its own capital levels were adequate for its operations and expansion.

Given the current economic environment, we do not expect any significant improvement in the asset quality in the next couple of quarters. Nevertheless, BOK Financial’s diverse revenue stream and operating platform should benefit it going forward.

Zacks Investment Research

(BOKF) BOK Financial Corporation Misses Estimates

For the full year 2009, Texas Capital reported operating earnings of 55 cents per share compared to 89 cents in 2008, reflecting the issuance of 4.6 million shares in May 2009.?Texas Capital’s net interest income was $55.1 million, up 6.9% sequentially and 42.3% year-over-year. The improvement was due to an increase in average earning assets.

Net interest margin was 4.21%, up 15 basis points (bps) sequentially and 80 bps year-over-year, driven by low funding costs and improved yields on earning assets. The company has posted a 6% sequential and 14% year-over-year growth in loans while deposits were up 5% sequentially and 24% from the prior-year period.

Non-interest income increased to $7.8 million, 9.5% sequentially and 31.3% year-over-year, primarily driven by an increase in brokered loan fees.

Credit metrics remained stressed. Net charge-offs as a percentage of average loans on a 12-month trailing basis were 46 bps, up 5 bps sequentially and 11 bps year-over-year. Non-performing assets equaled 2.74% of the loan portfolio plus other real estate owned assets, down 3 bps sequentially but up 93 bps year-over-year.

However, Texas Capital has reported an improvement in provisions for loan losses which were $10.5 million in the reported quarter, compared to $13.5 million in the prior quarter and $11.0 million in the year-ago quarter.

Non-interest expense increased 15.5% sequentially and 50.5% year-over-year to $42.8 million. Results reflect an increase in salaries and employee benefit expenses primarily due to business expansion.

Texas Capital’s Tier 1 capital ratio was 10.7% (up 70 bps year-over-year) and leverage ratio was 10.5%, up 30 bps from the year-ago quarter.

Texas Capital has separately announced that that it has entered into an equity distribution agreement with Morgan Stanley & Co. Inc. (MS) to sell up to $40 million of its common shares.?Though credit metrics remain stretched in the quarter, Texas Capital’s strong loan and deposit growth and continued expansion in net interest margin is impressive.

Zacks Investment Research

(TCBI) Texas Capital Bancshares Tops View

Additionally, more aggressive credit conditions are expected to prevail over time in the backdrop of stricter regulations in the sluggish macroeconomic environment. This could further worsen the already weak status of non-performing assets and the net-charge offs in the business. Hence, it remains to be seen if the gradual growth sustains in the upcoming quarters.

As well, constrained exposure in most parts of the country except Missouri, Kansas and central Illinois raises significant risk of diseconomies of scale, especially in the current fragile economic condition where interest rate volatility furthers the adverse impact on credit quality and operating leverage of the company. Although, the company has recently begun to spread into Oklahoma, Colorado and the other surrounding states, it still requires expanding its coverage in other parts in order to negate the competitive pressure from the larger national or other regional banks.

Moreover, Commerce Bancshares has grown through a mix of organic growth and intermittent acquisitions. The splurge in acquisitions (2 each in 2006 and 2007) highlights that organic growth is hard to come by, besides posing additional risk for the company as integration and asset quality issues may be more difficult to manage and could be costlier than originally anticipated.

However, Commerce Bancshares has maintained its capital levels significantly above peers such as Associate Banc-Corp. (ASBC), FirstMerit Corp. (FMER) and TCF Financial Corp. (TCB). Despite the recent increase in credit costs, the company has a very respectable 9.60% tangible equity as of Sep 30, 2009. Moreover, a declining efficiency ratio also reflects the positive effects of expense management. We expect this to act as a buffer against any probable losses in its credit portfolio in the upcoming quarters.

Overall, the company is poised to grow significantly with its extensive growth strategy which includes expanding core fee businesses, maintaining tight control over operating expenses, continuing strict focus on risk management, preserving its strong capital position and investing in technology in a more favorable operating environment. However, given the current sluggish growth across most of its businesses ? which are mostly market driven of course ? we prefer to remain slightly on the edge in the near term.

On Monday, the shares of Commerce Bancshares closed at $39.28, down by 0.2% on the New York Stock Exchange.

Zacks Investment Research

(CBSH) Commerce Bancshares Analyst Lowers Rating to Neutral

Net interest revenue totaled $180.5 million, up 2.8% sequentially and 9.8% year-over-year. Net interest margin was 3.63%, up 8 basis points (bps) sequentially and 15 bps year-over-year. The increase in net interest margin over the previous quarter resulted from improved loan pricing and lower funding costs.

Outstanding loan balances were $11.6 billion at Sep 30, 2009, down $458 million since Jun 30, 2009. All major loan categories decreased during the quarter largely due to reduced customer demand, normal repayment trends and management decisions to exit certain loan types. Average deposits decreased $202 million from the prior-year quarter to $15.1 billion, due primarily to a $719 million decrease in average time deposits.

Credit metrics continued to expand negatively overall. Non-performing assets continued to increase across most sectors of the loan portfolio and geographic markets during the quarter. Non-performing assets equaled 4.19% of the loan portfolio plus other real estate owned assets, up 52 bps sequentially and 221 bps year-over-year. Net charge-offs as a percentage of average loans were 121 bps, up 8 bps sequentially and 57 bps year-over-year. Provision for loan losses increased to $55.1 million from $47.1 million in the prior quarter and $52.7 million in the year-ago quarter.

Fees and commissions revenue totaled $120.0 million, down 2.6% sequentially and 5.3% year-over-year. On a sequential basis, mortgage loan originations was down as the impact of government initiatives to lower national mortgage interest rates began to lessen. The decrease in mortgage-banking revenue was partially offset by growth in brokerage and trading revenue and deposit service charges.

Core expenses (excluding the impact of the change in the fair value of the mortgage servicing rights and the FDIC special assessment) were $175.7 million, up 2.3% sequentially and 10.7% year-over-year. Though personal expenses were up in the quarter, all other operating expenses were down due to company-wide initiatives to control operating expenses.

The increase in tangible common equity  ratio was primarily due to retained earnings growth and reduced net unrealized losses on available- for- sale securities. Tangible common equity ratio and tier 1 common equity ratio increased to 7.78% and 10.45%, respectively, at Sep 30, 2009, from 7.55% and 9.77%, respectively, at Jun 30, 2009, mainly because of lower unrealized losses on securities. Tier 1 capital ratios were 10.56% at Sep 30, 2009, compared to 9.86% at Jun 30, 2009. The company chose not to participate in the Treasury’s Capital Purchase Program, as its own capital levels are adequate for its operations and expansion.

Though quarterly results reflected growth in interest revenue and margin and the benefits of the cost containment measures, we note that the credit quality continued to deteriorate in the quarter with a significant increase in non-performing assets. Given the current economic environment, we do not expect any significant improvement in the asset quality in the next couple of quarters. Nevertheless, BOK Financial’s diverse revenue stream and operating platform should benefit it going forward.

Zacks Investment Research
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(BOKF) BOK Financial Corporation Beats Consensus Forecasts

Results reflected the elevated provisioning levels for loan losses due to the challenging economic conditions. However, the company posted meaningful growth in loan and deposits.

Credit metrics continued to expand negatively overall. Non-performing assets equaled 2.77% of the loan portfolio plus other real estate owned assets, up 86 basis points (bps) sequentially and 141 bps year-over-year. Net charge-offs as a percentage of average loans on a 12-month trailing basis were 41 bps, flat sequentially but up 13 bps year-over-year. Provision for loan losses increased to $13.5 million from $11.0 million in the prior quarter and $4.0 million in the year-ago quarter.

Nevertheless, net interest margin was 4.06%, up 18 bps sequentially and 59 bps year-over-year, driven by low funding costs and improved yields on earning assets. The company has posted a 2% sequential and 16% year-over-year growth in loans while deposits were up 7% sequentially and 16% from the prior-year period. As a result, Texas Capital’s net interest income was $51.6 million, up from $48.8 million in the prior quarter and $38.3 million in the year-ago period.

Non-interest income increased to $7.1 million from $4.9 million reported in the prior-year period, primarily driven by increase in brokered loan fees and service charge income, partially offset by a decrease in trust fee income.

Non-interest expense increased to $37.1 million from $27.7 million reported in the previous year quarter. Results reflect an increase in salaries and employee benefits expenses primarily due to business expansion.

Texas Capital’s Tier 1 capital ratio was 11.2% (up 70 bps year-over-year) and total leverage ratio was 10.8%, up 30 basis points from the year-ago quarter.

Though credit metrics remain stretched in the quarter, Texas Capital’s strong loan and deposit growth and continued expansion in net interest margin is impressive.

Zacks Investment Research
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(TCBI) Texas Capital Bancshares’ Report Misses Estimates

Returns on average assets, average common equity and average tangible common equity for the three months ended Sep 30, 2009, were 1.32%, 8.93% and 29.34%, respectively. Prosperity’s efficiency ratio (excluding net gains and losses on the sale of securities and assets and impairment charge on securities) was 44.46% for the most recent quarter.

Net interest income before provision for credit losses for the quarter increased 33.9% to $77.4 million compared with $57.8 million during the same period in 2008. The increase was attributable primarily to a 35.7% increase in average earning assets primarily due to the assumption of certain deposits and acquisition of certain assets of Franklin Bank from the FDIC.

Prosperity’s FDIC deposit insurance assessments for 2008 were approximately $1.4 million. The expected full year 2009 FDIC deposit insurance assessment is currently projected to be between $8.0 million and $9.0 million pre-tax, based upon deposit balances at Sep 30, 2009.

Average loans increased 4.3% or $141.8 million to $3.431 billion for the quarter, compared with $3.289 billion for the same period in 2008.

Deposits at Sep 30, 2009, were $7.118 billion, an increase of $2.013 billion or 39.4%, compared with $5.105 billion at Sep 30, 2008. Linked quarter deposits decreased $139.902 million or 1.9% from $7.258 billion at Jun 30, 2009.

Construction loans at the end of the quarter totaled $564.1 million, consisting of approximately $152 million of single family residential construction loans; $77 million of land development loans; $84 million of raw land loans; $104 million of residential lot loans; $48 million of commercial lot loans; and $99 million of commercial and other construction loans. This is a decrease of $49.280 million from construction loans at Jun 30, 2009.

Non-performing assets totaled $21.9 million or 0.29% of average earning assets at Sep 30, 2009, compared with $14.5 million or 0.26% of average earning assets at Sep 30, 2008 and $19.6 million or 0.26% of average earnings assets at Jun 30, 2009. The allowance for credit losses was 1.39% of total loans at Sep 30, 2009, compared with 1.05% at Sep 30, 2008, and 1.23% of total loans at Jun 30, 2009.

Prosperity Bancshares is a registered bank holding company that derives substantially all of its revenues and income from the operation of First Prosperity Bank. The bank is a full service bank that provides a broad line of financial products and services to small and medium sized businesses and consumers through full-service banking locations, three of which are located in the greater Houston metropolitan area. Major Competitors are Cullen/Frost Bankers Inc. (CFR) and Texas Capital BancShares Inc. (TCBI).

Zacks Investment Research
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(PRSP) Prosperity Bancshares Beats Consensus Estimates

The results for the reported quarter were far ahead of the Zacks Consensus Estimate of 51 cents. Results benefited from improvement in both spread and fee income coupled with sound expense control.

Taxable-equivalent net interest income for third quarter 2009 increased 3.9% sequentially and 7.9% year-over-year to $163.5 million. The increase  over the previous quarter was primarily the result of higher average  balances of investment securities, coupled with lower rates on deposits and partially offset by lower volumes. Net interest margin increased to 4.02% from 3.91% in the previous quarter but declined slightly from 4.04% in the prior-year quarter.

Average loans decreased 3.6% sequentially and 5.1% year-over-year to $10.3 billion. Available for-sale investment securities (excluding fair value adjustments) increased 17.8% sequentially and 66.0% year-over-year to $6.1 billion. Average deposits decreased 3.0% sequentially but increased 13.9% year-over-year to $13.8 billion.

Non-interest income came in at $102.1 million, up 3.6% sequentially and 6.8% over the prior-year quarter. Non-interest expense for the quarter decreased 3.45% sequentially and 16.2% year-over-year to $154.4 million. Non-interest expense for the current quarter included a reduction of $2.5 million in certain Visa, Inc. (V) indemnification costs.

Credit metrics continued to be weak during the quarter, with total non-performing assets at $129.2 million or 1.26% of loans outstanding compared with $131.7 million or 1.23% of loans outstanding at the end of the prior quarter, and $46.2 million or 0.42% of loans outstanding at the end of the prior-year quarter. Net charge-offs however, declined to $30.9 million compared to $36.0 million in the prior quarter but increased from $18.7 million in the prior-year quarter.

The allowance for loan losses increased to 1.85% of total loans, up 11 basis points (bps) sequentially and 43 bps year-over-year. The provision for loan losses declined 14.1% sequentially but increased 19.6% year-over-year to $35.4 million.

For the three months ended Sept. 30, 2009, return on assets (ROA) and return on equity (ROE) both improved substantially to 1.16% and 11.49%, respectively, from 0.84% and 8.91% for the three months ended June 30, 2009. Book value as on Sept. 30, 2009 was $23.45 per share, up from $22.04 per share on June 30, 2009 and $21.16 per share on Sept. 30, 2008.

Commerce Bancshares’s third-quarter earnings were aided by decent growth in net interest income, core fees and cost control initiatives. The company is one of the few names that did not report losses even during the financial crisis. We believe that Commerce is one of the best capitalized banks in the industry and will generate positive earnings throughout the credit cycle.

Therefore, we are maintaining our Outperform recommendation on the stock.

Zacks Investment Research
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($CBSH) Commerce Bancshares Beats Earnings Estimates Again

The recession continues to weigh heavily on banks as U.S. regulators on Friday shuttered five more institutions in Missouri, Illinois, Iowa and Arizona. This takes the total number of failed federally insured banks this year to 89, compared to 25 in 2008 and 3 in 2007.

Among the failed institutions two were in Illinois – Oak Forest-based InBank, with $212 million in assets and $199 million in deposits, and Rolling Meadows-based Platinum Community Bank, with $346 million in assets and $305 million in deposits.

The other three were Kansas City, MO-based First Bank of Kansas City, with $16 million in assets and $15 million in deposits; Sioux City, IA-based Vantus Bank with $458 million in assets and $368 million in deposits and Flagstaff, AZ-based First State Bank, with $105 million in assets and $95 million in deposits.

Failure of these institutions represents another sizable impact on the Federal Deposit Insurance Corporation’s (FDIC) fund for protecting customer accounts, as it has been appointed receiver for these banks. The failure of First Bank of Kansas City is expected to cost the deposit insurance fund an estimated $6 million and InBank’s failure will cost the insurance fund $66 million. Also, failures of Platinum Community Bank and First State Bank are expected to cost about $114 million and $47 million, respectively.

The FDIC insures deposits at 8,195 institutions with roughly $13.5 trillion in assets and when a bank fails, it reimburses customers for deposits of up to $250,000 per account. The outbreak of failing financial institutions has significantly stretched the regulator’s deposit insurance fund. At June 30, 2009, the fund corpus fell to $10.4 billion, the lowest since 1993, from $13.0 billion in the prior quarter.

De Soto, KS-based Great American Bank has agreed to acquire the deposits of First Bank of Kansas City.

Springfield, MO-based Great Southern Bank, a subsidiary of Great Southern Bancorp (GSBC), will acquire Vantus Bank’s deposits. The FDIC and Great Southern Bank agreed to share losses on about $338 million of Vantus Bank’s assets.

Chicago-based MB Financial Bank, a subsidiary of MB Financial (MBFI), will acquire almost all of the deposits of InBank. However, some brokered deposits will not be assumed by MB Financial Bank.

First State Bank’s deposits will be acquired by Tustin, CA-based Sunwest Bank.

However, the FDIC did not find a bank to acquire Platinum Community Bank’s branches or deposits. As a result, the FDIC will pay out insured deposits at Platinum Community Bank.

In the second quarter of 2009, the number of banks on the FDIC’s list of problem institutions grew to 416 from 305 in the first quarter. This is the highest number since the savings and loan crisis in 1994. Increasing loan losses on commercial real estate are expected to cause hundreds more bank failures in the next few years. The FDIC anticipates U.S. bank failures to cost $70 billion through 2013.

Last week, the FDIC allowed private investors to buy failed financial institutions. The FDIC’s board voted to reduce the cash that private equity funds must maintain in banks they acquire.

According to the FDIC Chairman, the agency has no immediate plans to borrow money from the government to replenish the deposit insurance fund. However, the FDIC may increase the fees for U.S. banks this year to strengthen the fund. The agency has already raised $5.6 billion through an added assessment.

On August 14, banking operations of Colonial BancGroup was seized by the FDIC. Colonial’s deposits and assets were sold to BB&T Corporation (BBT). Following this, Guaranty Bank failed on August 21. The FDIC sold all of Guaranty Bank’s deposits and $12 billion of the assets to BBVA Compass, the U.S. division of Spain’s second-largest bank Banco Bilbao Vizcaya Argentaria (BBV). Colonial is the largest and Guaranty the second-largest bank failure so far this year, and the 6th-largest and 10th-largest, respectively, in U.S. history. Guaranty was about half the size of Colonial Bank.

The failure of Washington Mutual last year is the largest bank failure in U.S. history. It was acquired by JPMorgan Chase (JPM). The other major acquirers of failed institutions during 2008 and 2009 include Fifth Third Bancorp (FITB), U.S. Bancorp (USB), Zions Bancorp (ZION), SunTrust Banks (STI), PNC Financial (PNC) and Regions Financial (RF).

The failed banks are victims of recession and rising loan losses. As a result of the ongoing market turmoil, these institutions experienced massive capital erosion stemming from losses arising from significant exposure to collateralized mortgage obligations (CMOs), commercial real estate loans and other commercial and industrial loans. All these factors were responsible for a drag on profitability and write-downs. According to the FDIC, U.S. banks overall lost $3.7 billion in the second quarter of 2009, compared to a profit of $7.6 billion in the prior quarter.

The current year has been difficult for consumers to pay off debt as a result of high unemployment, falling home prices and declining personal wealth.

Though current signals indicate that the economy may be stabilizing, we expect loan losses on commercial real estate portfolio to remain high for banks that hold large amounts of high-risk loans.

The U.S. Treasury last week said that it wants the world’s banks to maintain stronger capital and liquidity standards by the end of next year to prevent a re-run of the global financial crisis from which the financial sector is gradually recovering. The Treasury would require banking institutions to focus more on higher-quality capital that will help them absorb big losses. Though this would somewhat limit the profitability of banks, a proper implementation would bring stability to the overall sector and hopefully address bank failures.

Zacks Investment Research
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(GSBC) Five More Banks Fail

U.S. regulators on Friday shuttered more four banks, including Guaranty. The shutdown of Guaranty, a unit of Guaranty Financial Group Inc. (GFG), is the second-largest U.S. bank failure this year after Colonial, and the 10th-largest in U.S. history. This takes the total number of failed federally insured banks this year to 81, compared to 25 in 2008 and 3 in 2007.

Texas-based lender Guaranty had assets of about $13 billion and deposits of $12 billion. Souring losses on loans to homebuilders and mortgage-backed securities were the primary reasons which caused Guaranty to fail. GFG affirmed last Monday in a regulatory filing that the company was critically short of capital and didn’t believe it could stay in business. Finally, Guaranty joined the list of the 12 biggest U.S. bank failures of all time.

Guaranty had been trying to raise fresh capital with the help of the Federal Deposit Insurance Corporation (FDIC) and the Office of Thrift Supervision, but the souring losses have muddied its plans.

The three other banks were ebank, with $143 million in assets and $130 million in deposits; First Coweta, with $167 million in assets and $155 million in deposits; and CapitalSouth Bank, with $617 million in assets and $546 million in deposits.

Failure of these banks represents another sizable hit to the FDIC’s fund for protecting customer accounts, as the FDIC has been appointed receiver of these banks. Guaranty alone is expected to cost the deposit insurance fund about $3 billion. Cost to the insurance fund is expected to be about $63 million for ebank, $48 million for First Coweta and $151 million for CapitalSouth.

In the first quarter of 2009, the number of banks on the FDIC’s list of problem institutions jumped to 305. This is the highest number since the savings and loan crisis in 1994. The FDIC anticipates U.S. bank failures to cost $70 billion through 2013.

The FDIC sold all of Guaranty’s deposits and $12 billion of the assets to BBVA Compass. BBVA Compass is the U.S. division of Spain ’s second-largest bank Banco Bilbao Vizcaya Argentaria (BBV). The FDIC will share losses on Guaranty’s $11 billion assets with BBVA. The acquisition allows BBVA to expand its operation in the U.S. market. The acquisition was desirable for BBVA as it tries to extend its reach into the Spanish-speaking market of the U.S.

BBVA Compass has 600 branches from Florida to California. The takeover of Guaranty Bank, with 162 branches in Texas and California, will create the 15th-largest commercial bank in the U.S. with about $49 billion in deposits.

Earlier this month, Colonial BancGroup was seized by the FDIC. It is the biggest bank failure so far this year, and the sixth-largest in U.S. history. Colonial’s $20 billion in deposits, 346 branches and about $22 billion of assets were sold to BB&T Corporation (BBT). Guaranty was about half the size of Colonial Bank.

The failed banks are victims of recession and rising loan losses. As a result of the ongoing market turmoil, these institutions experienced massive capital erosion stemming from losses arising from significant exposure in collateralized mortgage obligations (CMOs), commercial real estate loans and other commercial and industrial loans.

The current year has been difficult for consumers to pay off debt as a result of high unemployment, falling home prices and declining personal wealth.

Though current signals indicate that the economy may stabilize, we expect loan losses on commercial real estate portfolio to remain high for banks that hold large amounts of high-risk loans.

Zacks Investment Research
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(GFG) 2nd Largest Bank Failure in ‘09