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Colonial BancGroup Inc. (CNB) was closed by regulators Friday evening after an agreement was reached to have BB&T Corp. (BBT) acquire most of its assets and all of its deposits.

The Federal Deposit Insurance Corp. said that the Alabama State Banking Department closed the Montgomery, Ala., bank Friday and appointed the FDIC as receiver in a failure expected to cost the federal deposit insurance fund $2.8 billion.

The agreement between the FDIC and BB&T calls for the Winston-Salem, N.C., bank to acquire Colonial's approximately $20 billion in deposits and $22 billion of assets. The FDIC will hold on to any additional Colonial assets to sell later, the agency said.

Additionally, the FDIC said it had entered into a loss-sharing agreement with BB&T on approximately $15 billion of Colonial's assets.

Colonial is the 74th U.S. bank to fail this year, and the 99th since the beginning of 2008. FDIC Chair Sheila Bair, in a statement released by the agency, said that the losses from the failure were lower than the agency had projected.

-By Michael R. Crittenden, Dow Jones Newswires; 202-862-9273; michael.crittenden@dowjones.com