Hartford to Sell Federal Trust Holding Company to Florida Bank

Hartford Financial Services Group Inc. plans to sell Federal Trust Corp., the thrift-holding company Hartford acquired two years ago that made it possible for Hartford to receive $3.4 billion from the Troubled Asset Relief Program.

Hartford will sell Federal Trust, the parent company of Federal Trust Bank, a federally chartered savings bank with 11 offices, to CenterState Banks Inc.Hartford expects to incur a second-quarter after-tax charge of $70 million related to the sale. The charge will include losses on some Federal Trust Bank assets and liabilities that will not be sold to CenterState Banks, Hartford said.

CenterState Banks, with its headquarters in Davenport, Fla., has approximately $2.2 billion in assets. The company operates through two subsidiary banks with 52 branches in central Florida.

Hartford acquired Federal Trust for $10 million in June 2009 and provided the holding company with $100 million of capital. The acquisition made the company eligible to apply for $3.4 billion in federal aid under the U.S. Treasury Department's Capital Purchase Program, part of TARP (BestWire, June 26, 2009).

In the second-quarter of 2010, Hartford incurred a $100 million goodwill charge related to the Federal Trust Bank. Hartford reported second-quarter net income of $76 million (BestWire, Aug. 5, 2010). Earlier in the year, the company completed its plan to buy back $3.4 billion of its preferred shares issued to the Treasury under the Capital Purchase Program (BestWire, March 31, 2010).

Members of Hartford Insurance Group have current Best's Financial Strength Ratings of A (Excellent).

In late morning trading on May 23, shares of Hartford (NYSE: HIG) were changing hands at $26.67, down 1.55% from the previous close.

(By Diana Rosenberg, senior associate editor, BestWeek)