The Hartford Financial Services Group is selling at a loss a small Florida savings bank acquired in 2009 to qualify the Hartford insurer for a $3.4 billion federal bailout at the height of the financial crisis.
The Hartford-based insurer announced Monday it has reached an agreement to sell Florida-based Federal Trust Corp. to CenterState Banks Inc.
The Hartford paid $10 million for Federal Trust, the holding company for Federal Trust Bank, in June 2009. Federal Trust has $367 million in assets.
The Hartford did not disclose the sale price Monday but declared it will record an after-tax charge of approximately $70 million in the second quarter related to the divestiture. The transactions includes losses on certain Federal Trust Bank assets and liabilities, which will not be sold to CenterState.
The sale, which is subject to regulatory approval, is expected to close in the fourth quarter and is part of The Hartford’s other recent sales of non-core operations, the company said.
The deal allowed The Hartford to become a savings and loan holding company, which satisfied a key eligibility requirement for participation in the federal capital purchase program, also known as the “troubled asset recovery program,” or TARP.
At the time, The Hartford was experiencing deep financial problems from investment losses and its large variable annuity business, and was in need of a capital injection lifeline.
After the deal was completed, The Hartford announced that it reached an agreement with the federal government to obtain $3.4 billion in bailout money, which has since been repaid.
The company also received a $2.5 billion capital infusion from German insurance giant Allianz SE in exchange for Allianz taking an equity stake in The Hartford.
CenterState Banks, with about $2.2 billion in assets, is headquartered in Davenport, Fla., and operates two subsidiary banks with 52 branch locations.
