The Hartford is divesting Federal Trust Bank, the Florida thrift it acquired in 2009 in order to receive federal bailout money as part of the Troubled Asset Relief Program (TARP).
Davenport, Florida-based CenterState Banks will acquire Federal Trust in a deal that is expected to close in the fourth quarter.
The Hartford will take a $70-million charge this quarter in connection with the divestiture, including losses on certain Federal Trust Bank assets and liabilities which will not be sold to CenterState.
The insurer said the move is part of its overall strategy of shedding non-core operations.
CenterState will assume all of the deposits — approximately $230 million — and purchase selected performing loans — totaling approximately $170 million — and other assets of Federal Trust Bank. CenterState will not pay a premium to assume the deposits and will receive a 27% discount on selected performing loans. CenterState also has the option to put back any purchased loan for up to one year after closing that becomes 30 days past due or becomes adversely classified by applicable regulatory standards.
The Hartford paid $10 million for the bank in 2009 — and soon after received an infusion of nearly $3.4 billion from the federal government, which has since been repaid.
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