RIP, Colonial Bank

Actually sold them quite a bit of property over the past few years. BB&T likely to take over. RIP.

SAN FRANCISCO (MarketWatch) -- Colonial BancGroup Inc. may become the largest bank failure so far this year.

Shares of Colonial /quotes/comstock/13*!cnb/quotes/nls/cnb (CNB 0.41, -0.06, -11.94%) dropped 12% to 41 cents before being halted Friday morning. News of the looming takeover was reported by Bloomberg News and The Wall Street Journal's online edition.

BB&T Corp. /quotes/comstock/13*!bbt/quotes/nls/bbt (BBT 28.01, +2.21, +8.57%) is expected to take over the Montgomery, Ala.-based bank as early as Friday in what would be the biggest bank failure of 2009, Bloomberg reported, citing an unidentified source close to the matter.

The deal will be supported by the Federal Deposit Insurance Corp., Bloomberg and the Journal reported.

In Washington, FDIC spokesman David Barr declined to comment.

Shares of BB&T rose 5% to $27.08.

Colonial Bank "is probably a manageable purchase although we expect some losses from the purchase," said Egan-Jones Ratings, a rating agency that's paid by investors rather than issuers, in a statement Friday