BB&T Corp. is taking over Colonial BancGroup Inc., the Alabama lender whose collapse would mark the biggest U.S. bank failure this year, a person familiar with the matter said.

The Wall Street Journal also reported Friday that BB&T had reached a deal with the Federal Deposit Insurance Corp. on Thursday to acquire Colonial once the troubled bank had been placed into receivership.

Montgomery-based Colonial is being shuttered by regulators after an expansion into Florida saddled the lender with more than $1.7 billion in soured real-estate loans.

The takeover would make BB&T the ninth-biggest U.S. bank by assets, moving it from 11th ahead of Capital One Financial Corp. and SunTrust Banks Inc.

Regulators are closing banks at the fastest pace in 17 years amid mounting losses on real-estate loans in the worst economic crisis since the Great Depression.

"The FDIC does not comment on open institutions," agency spokesman David Barr said in an e-mail.

BB&T doesn't comment on rumors, spokeswoman AC McGraw said. A call to Colonial spokeswoman Merrie Tolbert wasn't immediately returned.

Colonial has 355 banks in five states, including about 10 in the Tampa Bay area. It posted a $606 million second-quarter loss, its fifth-straight deficit, mostly because of soured loans to developers and homebuilders in Florida.

On Thursday, a federal court froze $1 billion of Colonial's troubled assets in response to a suit filed by Bank of America Corp. that asked the court to prevent Colonial from selling or disposing of the assets.

Colonial said last week it was under a criminal investigation by the Justice Department over alleged accounting irregularities at its mortgage warehouse lending unit in Orlando.

Information from The Associated Press was used in this report.