COLONIAL BANCGROUP INC, S-4, 1997-05-06

COLONIAL BANCGROUP INC
S-4, 1997-05-06
STATE COMMERCIAL BANKS

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 6, 1997.
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D. C. 20549
---------------------

FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------

THE COLONIAL BANCGROUP, INC.
(Exact name of Registrant as specified in its charter)
---------------------

DELAWARE 6711 63-0661573
(State of Incorporation) (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification No.)

ONE COMMERCE STREET, SUITE 800 (334) 240-5000
MONTGOMERY, ALABAMA 36104 (Telephone No.)
(Address of principal executive offices)

---------------------

W. FLAKE OAKLEY, IV
SECRETARY
POST OFFICE BOX 1108
MONTGOMERY, ALABAMA 36101-1108
(Name and address of agent for service)
---------------------

COPIES TO:

<TABLE>
<C> <C>
MICHAEL D. WATERS, ESQ. JOHN P. GREELEY, ESQ.
MILLER, HAMILTON, SNIDER & ODOM, L.L.C. SMITH, MACKINNON, GREELEY, BOWDOIN & EDWARDS,
ONE COMMERCE STREET, SUITE 802 P.A.
P. O. BOX 19 CITRUS CENTER, SUITE 800
MONTGOMERY, ALABAMA 36101-0019 255 S. ORANGE AVENUE
FACSIMILE: (334) 265-4533 ORLANDO, FLORIDA 32801
</TABLE>

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
---------------------

CALCULATION OF REGISTRATION FEE(1)

<TABLE>
<CAPTION>
=====================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED PER UNIT PRICE REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $2.50 per
share.......................... 887,895 Not Applicable $13,366,164 $4,050.35
==================================================================================================================
</TABLE>

(1) Calculated pursuant to Rule 457(f)(2) based upon the market value of $7.00
per share of 1,909,452 shares of company acquired, including 323,715 shares
subject to employee stock options and warrants.
---------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON EACH SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.

================================================================================
<PAGE> 2

FIRST COMMERCE BANKS OF FLORIDA, INC.
141 EAST CENTRAL AVENUE
WINTER HAVEN, FLORIDA 33880
(941)299-6072
---------------------

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD ON , , 1997, AT P.M.
---------------------

NOTICE IS HEREBY GIVEN that a special meeting of shareholders (the "Special
Meeting") of First Commerce Banks of Florida, Inc. ("First Commerce") will be
held at the office of First Commerce Bank of Polk County, located at 141 East
Central Avenue, Winter Haven, Florida, on , , 1997, at
p.m., local time, for the following purposes:

1. Merger. To consider and vote upon the proposed merger (the
"Merger") of First Commerce with and into The Colonial BancGroup, Inc.
("BancGroup"), in accordance with an Agreement and Plan of Merger, dated as
of March 24, 1997 between First Commerce and BancGroup (the "Agreement").
BancGroup will be the surviving corporation in the Merger. Each share of
common stock of First Commerce outstanding at the time of the Merger will
be converted into the right to receive .4326 of a share of BancGroup Common
Stock, subject to adjustments based upon the market value (as calculated in
accordance with the terms of the Agreement) of the BancGroup Common Stock
at the time of the Merger, with cash paid in lieu of fractional shares at
the market value of such fractional shares, as described more fully in the
accompanying Proxy Statement and Prospectus. The Agreement is attached to
the Proxy Statement and Prospectus as Appendix A.

2. Other Matters. To transact such other business as may properly
come before the Special Meeting or any adjournments or postponements
thereof.

The Board of Directors of First Commerce has fixed the close of business on
, , 1997, as the record date for the determination of
shareholders entitled to notice of and to vote at the Special Meeting. Only
holders of record of the common stock of First Commerce at the close of business
on that date will be entitled to notice of and to vote at the Special Meeting or
any adjournments or postponements thereof. First Commerce shareholders are
entitled to exercise dissenters' rights pursuant to the Florida Business
Corporation Act. A copy of the dissenters' rights provisions is attached to the
enclosed Proxy Statement as Appendix C.

You are cordially invited to attend the Special Meeting, but whether or not
you plan to attend, please complete and sign the enclosed form of proxy and mail
it promptly in the enclosed envelope. The proxy may be revoked at any time by
filing a written revocation with the Secretary of First Commerce, by executing a
later dated proxy and delivering it to the Secretary of First Commerce, or by
attending the Special Meeting and voting in person.

BY ORDER OF THE BOARD OF DIRECTORS

DONALD K. STEPHENS
Chairman
<PAGE> 3

PROXY STATEMENT AND PROSPECTUS

THE COLONIAL BANCGROUP, INC.

COMMON STOCK

FIRST COMMERCE BANKS OF FLORIDA, INC.

SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON , , 1997

This Proxy Statement and Prospectus (the "Prospectus") relates to the
proposed merger (the "Merger") of First Commerce Banks of Florida, Inc., a
Florida corporation ("First Commerce"), with and into The Colonial BancGroup,
Inc., a Delaware corporation ("BancGroup"). This Prospectus is being furnished
to the shareholders of First Commerce in connection with the solicitation of
proxies by the Board of Directors of First Commerce for use at a special meeting
of the shareholders of First Commerce (the "Special Meeting") to be held on ,
, 1997, at p.m., local time, at the office of First Commerce
Bank of Polk County, located at 141 East Central Avenue, Winter Haven, Florida,
including any adjournments or postponements thereof. At the Special Meeting,
shareholders of First Commerce will consider and vote upon the matters set forth
in the preceding Notice of Special Meeting of the Shareholders, as more fully
described in this Prospectus.

The Merger will be consummated pursuant to the terms of a certain Agreement
and Plan of Merger dated as of March 24, 1997 by and between BancGroup and First
Commerce (the "Agreement"). The Agreement provides that, subject to the approval
of the Agreement by the shareholders of First Commerce at the Special Meeting
and the satisfaction (or waiver, to the extent that such waiver is permitted by
law) of other conditions contained in the Agreement, First Commerce will be
merged with and into BancGroup and BancGroup will be the surviving corporation.
Each issued and outstanding share of common stock, par value $.01 per share, of
First Commerce (the "First Commerce Common Stock"), will be converted into .4326
of a share of the common stock, par value $2.50 per share, of BancGroup (the
"BancGroup Common Stock"), subject to adjustments based upon the average market
price of BancGroup Common Stock for the 10 trading days ending on the trading
day that is five calendar days immediately preceding the Effective Date of the
Merger. See "THE MERGER -- Conversion of First Commerce Common Stock". The
shares of BancGroup Common Stock are listed on the New York Stock Exchange
("NYSE"). The closing price per share of the BancGroup Common Stock on the NYSE
on April 22, 1997 was $22.

Consummation of the Merger requires, among other things, the affirmative
vote of the holders of at least a majority of the outstanding shares of First
Commerce Common Stock.

BancGroup has filed a Registration Statement pursuant to the Securities Act
of 1933, as amended (the "Securities Act"), to register the shares of the
BancGroup Common Stock to be issued in connection with the Merger as well as to
register shares of BancGroup Common Stock to be issued upon the exercise of
stock purchase warrants and stock options respecting First Commerce Common Stock
assumed by BancGroup as part of the Merger. This document constitutes a Proxy
Statement of First Commerce in connection with the solicitation of proxies by
First Commerce for the Special Meeting and a Prospectus of BancGroup with
respect to the BancGroup Common Stock to be issued in the Merger and with
respect to the BancGroup Common Stock to be issued upon the exercise of stock
purchase warrants and stock options assumed in the Merger. This Prospectus and
accompanying form of proxy are first being mailed to shareholders of First
Commerce on or about the date set forth below.

THE BOARD OF DIRECTORS OF FIRST COMMERCE UNANIMOUSLY RECOMMENDS APPROVAL OF
THE AGREEMENT.
---------------------
THE SECURITIES TO WHICH THIS PROSPECTUS RELATES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
THE SHARES OF BANCGROUP COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS
ACCOUNTS OR DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.

The principal office and mailing address of First Commerce is 141 East
Central Avenue, Winter Haven, Florida 33880 (telephone 941-299-6072), and the
principal office and mailing address of BancGroup is Colonial Financial Center,
One Commerce Street, Post Office Box 1108, Montgomery, Alabama 36192 (telephone
334-240-5000).
THE DATE OF THIS PROSPECTUS IS , 1997.
<PAGE> 4

AVAILABLE INFORMATION

BancGroup and First Commerce are subject to the informational requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file reports and other information with the Securities and
Exchange Commission (the "Commission"). Such reports and other information filed
by BancGroup and First Commerce, including proxy and information statements, can
be inspected and copied at the public reference facilities of the Commission,
Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and
at certain regional offices: 7 World Trade Center, 13th Floor, New York, New
York 10048; Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511; 1401 Brickell Avenue, Suite 200, Miami, Florida 33131; 1801
California Street, Suite 4800, Denver, Colorado 80202-2648; and 5670 Wilshire
Boulevard, 11th Floor, Los Angeles, California 90036-3648. Copies of such
material can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.

The Commission also maintains a Web site (http://www.sec.gov) that contains
reports, proxy and information statements and other information regarding
registrants, such as BancGroup and First Commerce, that file electronically with
the Commission.

The BancGroup Common Stock is listed for trading on the NYSE. Reports,
including proxy and information statements, of BancGroup and other information
may be inspected at the NYSE, 20 Broad Street, New York, New York 10005.

BancGroup has filed with the Commission a Registration Statement under the
Securities Act to register the shares of BancGroup Common Stock being offered in
connection with the Merger. This Prospectus omits certain information contained
in the Registration Statement and exhibits thereto. Such Registration Statement,
including the exhibits thereto, can be inspected at the Public Reference Section
of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, and copies of
such Registration Statement can be obtained at prescribed rates from the
Commission at that address.

The information in this Prospectus concerning BancGroup and its
subsidiaries has been furnished by BancGroup, and the information concerning
First Commerce and its subsidiary has been furnished by First Commerce.

DOCUMENTS INCORPORATED BY REFERENCE

THIS PROSPECTUS INCORPORATES DOCUMENTS OF BANCGROUP BY REFERENCE WHICH ARE
NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE,
WITHOUT CHARGE, UPON REQUEST FROM THE PERSONS SPECIFIED BELOW. IN ORDER TO
ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE RECEIVED BY
BANCGROUP NO LATER THAN FIVE BUSINESS DAYS PRIOR TO THE SPECIAL MEETING.

The following documents filed by BancGroup with the Commission are hereby
incorporated by reference into this Prospectus:

(1) BancGroup's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996;

(2) BancGroup's Report on Form 8-K dated January 20, 1997;

(3) BancGroup's Report on Form 8-K dated March 10, 1997;

(4) BancGroup's Report on Form 8-K dated April 15, 1997; and

(5) BancGroup's Registration Statement on Form 8-A dated November 22,
1994, effective February 22, 1995, containing a description of the
BancGroup Common Stock.

All documents filed by BancGroup pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
Special Meeting, or, in the case of the exercise of stock purchase warrants and
stock options that are being assumed by BancGroup, prior to the exercise of such
warrants and options, shall be deemed incorporated by reference in this
Prospectus and made a part hereof from the date of filing of such documents. Any
statement contained in a document incorporated or deemed

i
<PAGE> 5

incorporated herein by reference will be deemed to be modified or superseded for
the purpose of this Prospectus to the extent that a statement contained herein
or in another subsequently filed document which also is, or is deemed to be,
incorporated herein by reference modifies or supersedes such statement. Any such
statement so modified or superseded will not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.

BancGroup has entered into the Agreement with First Commerce regarding the
Merger described herein. Various provisions of the Agreement are summarized or
referred to in this Prospectus, and the Agreement is incorporated by reference
into this Prospectus and attached hereto as Appendix A.

BancGroup will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the request of any
such person, a copy of any and all of the documents which have been incorporated
herein by reference but not delivered herewith (other than the exhibits to such
documents unless specifically incorporated herein). Such request, in writing or
by telephone, should be directed to W. Flake Oakley, IV, Secretary, The Colonial
BancGroup, Inc., One Commerce Street, Post Office Box 1108, Montgomery, Alabama
36192 (telephone 334-240-5000).

ii
<PAGE> 6

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
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<S> <C>
SUMMARY.....................................................

THE SPECIAL MEETING.........................................
General.....................................................
Record Date; Shares Entitled to Vote; Vote Required for the
Merger....................................................
Solicitation, Voting and Revocation of Proxies..............
Effect of Merger on Outstanding BancGroup Common Stock......

THE MERGER..................................................
General.....................................................
Background of the Merger....................................
First Commerce's Board of Directors' Reasons for Approving
the Merger................................................
Opinion of Financial Advisor................................
Recommendation of the Board of Directors of First
Commerce..................................................
BancGroup's Reasons for the Merger..........................
Interests of Certain Persons in the Merger..................
Conversion of First Commerce Common Stock...................
Surrender of First Commerce Common Stock Certificates.......
Certain Federal Income Tax Consequences.....................
Other Possible Consequences.................................
Conditions to Consummation of the Merger....................
Amendment or Termination....................................
Regulatory Approvals........................................
Conduct of Business Pending the Merger......................
Commitments with Respect to Other Offers....................
Indemnification.............................................
Rights of Dissenting Shareholders...........................
Resale of BancGroup Common Stock Issued in the Merger.......
Accounting Treatment........................................
NYSE Reporting of BancGroup Common Stock Issued in the
Merger....................................................
Treatment of First Commerce Options.........................

COMPARATIVE MARKET PRICES AND DIVIDENDS.....................
BancGroup...................................................
First Commerce..............................................

BANCGROUP CAPITAL STOCK AND DEBENTURES......................
BancGroup Common Stock......................................
Preference Stock............................................
1986 Debentures.............................................
Changes in Control..........................................

COMPARATIVE RIGHTS OF STOCKHOLDERS..........................
Director Elections..........................................
Removal of Directors........................................
Voting......................................................
Preemptive Rights...........................................
Directors' Liability........................................
Indemnification.............................................
Special Meetings of Stockholders; Action Without a
Meeting...................................................
Mergers, Share Exchanges and Sales of Assets................
Amendment of Certificate of Incorporation and Bylaws........
Rights of Dissenting Stockholders...........................
Preferred Stock.............................................
Effect of the Merger on First Commerce Shareholders.........
</TABLE>

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<PAGE> 7
<TABLE>
<CAPTION>
PAGE
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<S> <C>
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES...............
Condensed Pro Forma Statements of Condition (Unaudited).....
Condensed Pro Forma Statements of Income (Unaudited)........
Selected Financial Data.....................................

FIRST COMMERCE..............................................
Selected Financial Data.....................................
Management's Discussion and Analysis of Financial Condition
and Results of Operations for the Fiscal Years Ended
December 31, 1996, and 1995...............................

BUSINESS OF BANCGROUP.......................................
General.....................................................
Proposed Affiliate Banks....................................
Voting Securities and Principal Stockholders................
Security Ownership of Management............................
Management Information......................................

BUSINESS OF FIRST COMMERCE..................................
General.....................................................
Deposit Activities..........................................
Lending Activities..........................................
Investments.................................................
FSB/Osceola Sale............................................
Employees...................................................
Properties..................................................
Legal Proceedings...........................................
Principal Holders of Common Stock...........................

ADJOURNMENT OF SPECIAL MEETING..............................

OTHER MATTERS...............................................

DATE FOR SUBMISSION OF BANCGROUP STOCKHOLDER PROPOSALS......

LEGAL MATTERS...............................................

EXPERTS.....................................................

INDEX TO FINANCIAL STATEMENTS............................... F-1

APPENDIX A -- Agreement and Plan of Merger.................. A-1

APPENDIX B -- Opinion of Financial Adviser.................. B-1

APPENDIX C -- Sections 607.1301, 607.1302 and 607.1320 of
the Florida Business Corporation Act Regarding
Dissenters' Rights............................ C-1
</TABLE>

---------------------

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS IN CONNECTION WITH THE SOLICITATION OF PROXIES OR THE OFFERING OF
SECURITIES MADE HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY BANCGROUP OR FIRST
COMMERCE. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES, OR THE SOLICITATION OF A PROXY,
IN ANY JURISDICTION, TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL
TO MAKE ANY SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF BANCGROUP OR FIRST COMMERCE SINCE THE DATE OF THIS
PROSPECTUS OR THAT INFORMATION IN THIS PROSPECTUS OR IN THE DOCUMENTS
INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF OR THE DATES THEREOF.

iv
<PAGE> 8

SUMMARY

The following provides a summary of certain information included in this
Prospectus. This summary is qualified in its entirety by the more detailed
information appearing elsewhere herein, the Appendices hereto and the documents
incorporated herein by reference. Shareholders of First Commerce are urged to
read this Prospectus in full.

GENERAL

This Prospectus relates to the issuance of shares of BancGroup Common Stock
in connection with the proposed Merger of First Commerce with and into
BancGroup.

THE SPECIAL MEETING

The Special Meeting will be held at the office of First Commerce's
subsidiary, First Commerce Bank of Polk County (the "Bank"), located at 141 East
Central Avenue, Winter Haven, Florida on , , 1997, at
p.m., local time, for the purpose of considering and voting upon the
Merger and the Agreement. Only holders of record of First Commerce Common Stock
at the close of business on , , 1997 (the "Record Date")
are entitled to the notice of and to vote at the Special Meeting. As of the
Record Date, shares of First Commerce Common Stock were issued and
outstanding. See "THE SPECIAL MEETING."

THE COMPANIES

BancGroup. BancGroup is a bank holding company within the meaning of the
Bank Holding Company Act of 1956, as amended (the "BHCA"). It was organized in
Delaware in 1974 and has operated under its current name and management since
1981. BancGroup operates wholly owned commercial banking subsidiaries in the
states of Alabama, Florida, Georgia and Tennessee, each under the name Colonial
Bank. Colonial Bank conducts a full service commercial banking business in the
State of Alabama through 110 branches. In Tennessee, Colonial Bank conducts a
general commercial banking business through three branches. In Georgia, Colonial
Bank, operates eleven branches in the Atlanta area and three branches in the
Dalton area. In Florida, Colonial Bank operates eleven branches in the Orlando
and Ormond Beach areas, nine branches in Dade, Broward and Palm Beach counties,
and six branches in Eustis and Lake County. BancGroup has also entered into an
agreement to acquire one additional bank. BancGroup plans to merge all of its
existing subsidiary banks into its Alabama Bank, Colonial Bank, no later than
July 1, 1997. Colonial Mortgage Company, a subsidiary of the Colonial Bank in
Alabama, is a mortgage banking company which services approximately $10.6
billion in residential loans and which originates residential mortgages in 37
states through 6 regional offices. At December 31, 1996, BancGroup had
consolidated total assets of $4.9 billion and consolidated stockholders' equity
of $343.2 million. Since December 31, 1996, BancGroup has merged five banks into
BancGroup with aggregate assets of $896.9 million and aggregate stockholders'
equity of $66.6 million. These acquisitions are included in the pro forma
statements included herein. See "BUSINESS OF BANCGROUP."

First Commerce. First Commerce is a bank holding company under the BHCA,
having been incorporated on March 28, 1984. First Commerce owns 99.7% of the
outstanding shares of the Bank, which is headquartered in Winter Haven, Florida.
Currently, the Bank operates five offices located in Polk County, Florida. At
December 31, 1996, First Commerce had total consolidated assets of approximately
$105.9 million, total consolidated deposits of approximately $94.7 million and
total consolidated shareholders' equity of approximately $10.6 million. See
"BUSINESS OF FIRST COMMERCE."

TERMS OF THE MERGER

The Agreement provides for the Merger of First Commerce with and into
BancGroup, with BancGroup to be the surviving corporation. Upon the date of
consummation of the Merger (the "Effective Date"), each outstanding share of
First Commerce Common Stock (except shares as to which dissenters' rights are
perfected) will be converted by operation of law and without any action by any
holder thereof into .4326 of a
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<PAGE> 9

share of BancGroup Common Stock (the "Merger Consideration"), provided that the
Market Value for BancGroup Common Stock is not less than $19.35 and not greater
than $25.16. If the Market Value is less than $19.35, then each share of First
Commerce Common Stock will be converted into the number of shares of BancGroup
Common Stock equal to $8.37 divided by the Market Value. If the Market Value is
greater than $25.16, then each share of First Commerce Common Stock will be
converted into the number of shares of BancGroup Common Stock equal to $10.88
divided by the Market Value. The "Market Value" will represent the per share
market value of the BancGroup Common Stock at the Effective Date and will be
determined by calculating the average of the closing prices of the BancGroup
Common Stock as reported by the NYSE on each of the 10 trading days ending on
the trading day five calendar days immediately preceding the Effective Date. The
appropriate ratio that is used to calculate the Merger Consideration based upon
the Market Value as set forth above is referred to as the "Exchange Ratio." If
BancGroup publicly announces prior to the Effective Date that it has entered
into an agreement pursuant to which BancGroup will be acquired through a merger,
sale of assets of BancGroup or tender offer or exchange offer for BancGroup
Common Stock (or otherwise), then the Exchange Ratio will be determined by
disregarding whether the Market Value is greater than $25.16. Any merger in
which BancGroup is the surviving corporation that does not involve a change of
control of BancGroup will be excluded from the preceding sentence. For this
purpose a "change of control" means the acquisition of beneficial ownership of
the BancGroup Common Stock by any person or group (as that term is defined under
section 13(d) of the Exchange Act) of more than 50 percent of the outstanding
shares of such stock.

No fractional shares of BancGroup Common Stock will be issued in connection
with the Merger. To the extent that a fractional interest arises as a result of
the BancGroup Common Stock issuable in the Merger, cash will be paid in lieu
thereof based upon the Market Value.

As of the date of this Prospectus, First Commerce had granted options and
warrants (collectively, the "First Commerce Options") which entitle the holders
thereof to acquire up to 321,215 shares of First Commerce Common Stock. On the
Effective Date, BancGroup will assume all First Commerce Options outstanding,
and each such option will represent the right to acquire BancGroup Common Stock
on substantially the same terms applicable to the First Commerce Options. The
number of shares of BancGroup Common Stock to be issued pursuant to such options
will equal the number of shares of First Commerce Common Stock subject to such
First Commerce Options multiplied by the Exchange Ratio, provided that no
fractions of shares of BancGroup Common Stock will be issued. The number of
shares of BancGroup Common Stock to be issued upon the exercise of First
Commerce Options, if a fractional share exists, will equal the number of whole
shares obtained by rounding to the nearest whole number, giving account to such
fraction, or by paying for such fraction in cash. The exercise price for the
acquisition of BancGroup Common Stock will be the exercise price for each share
of First Commerce Common Stock subject to such options divided by the Exchange
Ratio, adjusted appropriately for any rounding to whole shares that may be
required. As an alternative, holders of First Commerce Options may elect by
giving written notice to First Commerce before the Effective Date to be paid in
cash the difference between the exercise price for such options and the value of
such option determined at the Effective Date based upon the Exchange Ratio.

First Commerce shareholders will be given notice of the consummation of the
Merger promptly after the Effective Date of the Merger. Certificates for the
shares of BancGroup Common Stock issued will not be distributed or dividends
paid on such shares until shareholders surrender their certificates representing
their shares of First Commerce Common Stock.

See "THE MERGER -- Conversion of First Commerce Common Stock," "Surrender
of First Commerce Common Stock Certificates," and "Treatment of First Commerce
Options."

For certain information concerning dissenters' rights, voting at the
Special Meeting, and management of BancGroup and First Commerce, see "THE
MERGER -- Rights of Dissenting Shareholders," "-- Conversion of First Commerce
Common Stock;" "THE SPECIAL MEETING -- Solicitation, Voting and Revocation of
Proxies," "-- Record Date; Shares Entitled to Vote; Vote Required;" "BUSINESS OF
BANCGROUP -- Voting Securities and Principal Stockholders," "-- Security
Ownership of Management," and "BUSINESS OF FIRST COMMERCE -- Principal Holders
of Common Stock."
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<PAGE> 10

RECOMMENDATION OF FIRST COMMERCE'S BOARD OF DIRECTORS

The Board of Directors of First Commerce has unanimously approved the
Agreement. THE BOARD OF DIRECTORS OF FIRST COMMERCE BELIEVES THAT THE MERGER IS
FAIR TO, AND IN THE BEST INTERESTS OF, THE SHAREHOLDERS OF FIRST COMMERCE, AND
RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPROVAL OF THE AGREEMENT. For a
discussion of the factors considered by the Board of Directors in reaching its
conclusions, see "THE MERGER -- Background of the Merger" and "-- First
Commerce's Board of Directors' Reasons for Approving the Merger."

OPINION OF FINANCIAL ADVISOR

First Commerce has received an opinion from Austin Associates, Inc. that
the terms of the Agreement are fair, from a financial point of view, to the
shareholders of First Commerce. The full text of Austin Associates, Inc.'s
opinion, which describes the procedures followed, assumptions made, limitations
on the review taken, and other matters in connection with rendering such
opinion, is set forth as Appendix B to this Prospectus and should be read in its
entirety by First Commerce shareholders. For additional information regarding
Austin Associates, Inc.'s opinion, see "THE MERGER -- Opinion of Financial
Advisor."

INTERESTS OF CERTAIN PERSONS IN THE MERGER

Certain of the directors and executive officers of First Commerce hold
First Commerce Options which entitle them to purchase, in the aggregate, up to
292,220 shares of First Commerce Common Stock. Under the terms of the Agreement,
any First Commerce Options which are not exercised prior to the Effective Date
will be assumed by BancGroup. See "THE MERGER -- Conversion of First Commerce
Common Stock" and "Treatment of First Commerce Options."

On the Effective Date, and subject to the existing agreement referenced
above, all employees of First Commerce will, at BancGroup's option, either
become employees of BancGroup or its subsidiaries or be entitled to severance
benefits in accordance with Colonial Bank's severance policy as of the date of
the Agreement. All employees of First Commerce who become employees of BancGroup
or its subsidiaries on the Effective Date will be entitled, to the extent
permitted by applicable law, to participate in all benefit plans of BancGroup to
the same extent as BancGroup's employees.

Under the Agreement, BancGroup has agreed to indemnify the directors and
executive officers of First Commerce against certain claims and liabilities
arising out of or pertaining to matters existing or occurring at or prior to the
Effective Date, to the extent that First Commerce would have been permitted
under Florida law, or under its Articles of Incorporation or Bylaws, to
indemnify such persons.

Except as indicated above, none of the directors or executive officers of
First Commerce, and no associate of any such person, has any substantial direct
or indirect interest in the Merger, other than an interest arising from the
ownership of First Commerce Common Stock.

See "THE MERGER -- Interests of Certain Persons in the Merger."

VOTE REQUIRED

Under Florida law, the Agreement must be approved by the affirmative vote
of the holders of at least a majority of the outstanding shares of First
Commerce Common Stock. Each share of First Commerce Common Stock is entitled to
one vote on the Agreement. Approval of the Agreement and the Merger by
3
<PAGE> 11

BancGroup stockholders is not required under Delaware, Florida or other
applicable law, or the rules of the NYSE on which the BancGroup Common Stock is
listed. See "THE SPECIAL MEETING."

Only holders of record of First Commerce Common Stock at the close of
business on the Record Date are entitled to notice of and to vote at the Special
Meeting. As of such date, shares of First Commerce Common Stock were
issued and outstanding. As of the Record Date, the directors and executive
officers of First Commerce and the Bank held approximately % of the
outstanding shares of First Commerce Common Stock. As of the same date, the
directors, executive officers and affiliates of BancGroup held no shares of
First Commerce Common Stock. See "THE SPECIAL MEETING."

The directors of First Commerce own shares of First Commerce
Common Stock representing approximately % of the outstanding shares and
have agreed with BancGroup to vote their shares in favor of the Agreement. See
"THE SPECIAL MEETING." As of March 1, 1997, Directors and executive officers of
BancGroup beneficially owned in the aggregate 4,454,136 shares of BancGroup
Common Stock representing approximately 10.98% of BancGroup's outstanding
shares.

Proxies should be returned to First Commerce in the envelope enclosed
herewith. Shareholders of First Commerce submitting proxies may revoke their
proxies by (i) giving notice of such revocation in writing to the Secretary of
First Commerce at or prior to the Special Meeting, (ii) by executing and
delivering a proxy bearing a later date to the Secretary of First Commerce at or
prior to the Special Meeting, or (iii) by attending the Special Meeting and
voting in person. Because approval of the Agreement requires the approval of at
least a majority of the outstanding shares of First Commerce Common Stock,
failure to submit a proxy or failure to vote in person at the Special Meeting
will have the same effect as a negative vote. See "THE SPECIAL
MEETING -- Solicitation, Voting and Revocation of Proxies."

RIGHTS OF DISSENTING SHAREHOLDERS

Holders of First Commerce Common Stock as of the Record Date are entitled
to dissenters' rights of appraisal pursuant to Sections 607.1301, 607.1302 and
607.1320 of the FBCA. The FBCA, as explained more fully in "THE MERGER -- Rights
of Dissenting Shareholders" permits a shareholder to dissent from the Merger and
obtain payment for the fair value of his shares. Such "fair value" may be
determined in a judicial proceeding, the result of which cannot be predicted.
Shareholders wishing to exercise dissenters' rights must follow properly all
requirements for the exercise of such rights as set forth in Sections 607.1301,
607.1302 and 607.1320 of the FBCA, a copy of which is attached as Appendix C to
this Prospectus. See "THE MERGER -- Rights of Dissenting Shareholders." Any
shareholder who properly exercises dissenters' rights and receives cash for his
or her shares will encounter income tax treatment different than the treatment
for shareholders who do not exercise dissenters' rights. See "THE
MERGER -- Rights of Dissenting Shareholders."

CONDITIONS TO THE MERGER

The parties' obligation to consummate the Merger is subject to the
satisfaction (or waiver, to the extent permitted by law) of various conditions
set forth in the Agreement.

The mutual obligations of the parties to consummate the Merger are subject
to the following conditions, among others: (i) the approval of the Agreement by
the holders of at least a majority of the outstanding shares of First Commerce
Common Stock; (ii) the approval of the Merger by The Board of Governors of the
Federal Reserve System (the "Federal Reserve") and the approval of the merger of
the Bank with Colonial Bank (the "Bank Merger") by the Alabama Banking
Department (the "Alabama Department") and the Federal Reserve; (iii) the absence
of any pending or threatened litigation which seeks to restrain or prohibit the
Merger; (iv) the consummation of the Merger on or before November 30, 1997; and
(v) receipt of opinions of counsel as to certain matters, including tax matters.

The obligation of First Commerce to consummate the Merger is further
subject to several conditions, including: (i) the absence of any material
adverse changes in the financial condition or affairs of BancGroup;
4
<PAGE> 12

and (ii) the shares of BancGroup Common Stock to be issued under the Agreement
shall have been approved for listing on the NYSE.

The obligations of BancGroup to consummate the Merger are subject to
various conditions, including: (i) the absence of any material adverse change in
the financial condition or affairs of First Commerce; and (ii) the holders of
not more than 15% of the outstanding shares of First Commerce Common Stock shall
have exercised dissenters' rights with respect to their shares.

Applications for appropriate regulatory approvals by the Federal Reserve
and the Alabama Department were filed with such agencies on April 21, 1997. The
regulatory approval process is expected to take approximately two months from
that date, and it is anticipated that the Merger will be consummated on or about
July 1, 1997.

See "THE MERGER -- Conditions to Consummation of the Merger" and
"Regulatory Approvals."

AMENDMENT OR TERMINATION OF AGREEMENT

The Boards of Directors of BancGroup and First Commerce may agree to amend
or terminate the Agreement at any time prior to the Effective Date. However, the
Board of Directors of First Commerce may not amend the Agreement which would
alter the Merger Consideration or which, in the opinion of the Board of
Directors of First Commerce, would adversely affect the rights of the
shareholders of First Commerce, unless such amendments are approved by the
holders of a majority of the outstanding First Commerce Common Stock. Such
amendments may require the filing of an amendment of the Registration Statement,
of which this Prospectus forms a part, with the Commission. See "THE
MERGER -- Amendment or Termination."

COMPARISON OF SHAREHOLDER RIGHTS

The rights of the holders of the First Commerce Common Stock may be
different from the rights of the holders of the BancGroup Common Stock. A
discussion of these rights and a comparison thereof is set forth at "COMPARATIVE
RIGHTS OF STOCKHOLDERS."

FEDERAL INCOME TAX CONSEQUENCES

No ruling with respect to the federal income tax consequences of the Merger
to First Commerce's shareholders will be requested from the Internal Revenue
Service (the "IRS"). First Commerce has received an opinion from Coopers &
Lybrand L.L.P., that, among other things, a shareholder of First Commerce who
exchanges shares of First Commerce Common Stock for BancGroup Common Stock will
not recognize gain except that, shareholders of First Commerce will recognize
gain to the extent such shareholders receive cash in lieu of fractional shares
of BancGroup Common Stock. Shareholders who receive cash for their shares of
First Commerce Common Stock upon perfection of dissenters' rights also, will
realize gain or loss for federal income tax purposes with respect to such
shares. See "APPROVAL OF THE MERGER -- Certain Federal Income Tax Consequences."
First Commerce shareholders are urged to consult their own tax advisors as to
the specific tax consequences to them of the Merger.

ACCOUNTING TREATMENT

The acquisition of First Commerce will be treated as a "purchase"
transaction by BancGroup for accounting purposes. See "THE MERGER -- Accounting
Treatment."

RECENT PER SHARE MARKET PRICES

First Commerce. There is no established public trading market for the
First Commerce Common Stock. The shares of First Commerce Common Stock are not
actively traded, and such trading activity, as it occurs, takes place in
privately negotiated transactions. Management of First Commerce is aware of
certain transactions in shares of First Commerce that have occurred since
January 1, 1995, although the trading prices of all stock transactions are not
known. The following sets forth the trading prices for the shares of First
5
<PAGE> 13

Commerce Common Stock that have occurred since January 1, 1995 for transactions
in which the trading prices are known to management of First Commerce:

<TABLE>
<CAPTION>
PRICE PER SHARE OF
COMMON STOCK
------------------
HIGH LOW SHARES
----- ----- ------
<S> <C> <C> <C>
1995
First Quarter........................................ $ -- $ -- --
Second Quarter....................................... 7.00 7.00 5,100
Third Quarter........................................ 8.03 7.00 33,060
Fourth Quarter....................................... 9.00 9.00 1,600
1996
First Quarter........................................ -- -- --
Second Quarter....................................... 8.00 7.00 7,044
Third Quarter........................................ 7.00 5.50 810
Fourth Quarter....................................... 7.00 7.00 4,520
1997
First Quarter........................................ -- -- --
(Second Quarter through May 5, 1997)................. -- -- --
</TABLE>

First Commerce has not paid any cash dividends.

BancGroup. BancGroup Common Stock is listed for trading on the NYSE under
the symbol "CNB." The following table indicates the high and low closing prices
of the BancGroup Class A Common Stock and the BancGroup Common Stock as reported
on the NASDAQ System and the NYSE, respectively, for the last two full fiscal
years. Prior to February 21, 1995, BancGroup had two classes of Common Stock
outstanding, Class A and Class B. Class B was not publicly traded. Class A was
traded as a NASDAQ security under the symbol "CLBGA" until February 24, 1995. On
February 21, 1995, the BancGroup Class A and Class B Common Stock were
reclassified into BancGroup Common Stock.

<TABLE>
<CAPTION>
PRICE PER SHARE OF
COMMON STOCK(1)
-------------------
HIGH LOW
------ -----
<S> <C> <C>
1995
First Quarter(2).......................................... $11 13/16 $ 9 3/4
Second Quarter............................................ 13 5/8 11 9/16
Third Quarter............................................. 14 15/16 13 3/4
Fourth Quarter............................................ 16 7/16 14 1/4
1996
First Quarter............................................. 18 1/4 15
Second Quarter............................................ 18 1/16 15 5/8
Third Quarter............................................. 17 15/16 15 5/8
Fourth Quarter............................................ 20 1/8 17 3/8
1997
First Quarter............................................. 24 18 2/3
Second Quarter (through April 22, 1997)................... 23 1/2 22
</TABLE>

- ---------------

(1) Restated to reflect the impact of a two-for-one stock split effected in the
form of a 100% stock dividend paid February 11, 1997.
(2) Trading on the NYSE commenced on February 24, 1995.

On February 14, 1997, the business day immediately prior to the public
announcement of the Merger, the closing price of the BancGroup Common Stock on
the NYSE was $22 7/8 per share. The following table
6
<PAGE> 14

presents the market value of BancGroup Common Stock on that date, and the market
value and equivalent per share value of First Commerce Common Stock on that
date:

<TABLE>
<CAPTION>
EQUIVALENT
BANCGROUP FIRST COMMERCE BANCGROUP
COMMON STOCK COMMON STOCK COMMON STOCK
(PER SHARE) (PER SHARE) (PER SHARE)
------------ -------------- ------------
<S> <C> <C> <C>
Comparative Market Value................. $22 7/8(1) $7.00(2) $9.90(3)
</TABLE>

- ---------------

(1) Closing price as reported by the NYSE on February 14, 1997.
(2) There is no established public trading market for the shares of First
Commerce Common Stock. The value shown is the price at which shares of First
Commerce Common Stock were sold on December 31, 1996, which was the last
sale price prior to February 15, 1997, the date of public announcement of
the Merger, of which management of First Commerce is aware.
(3) If the Merger had closed on February 14, 1997, .4326 of a share of BancGroup
Common Stock would have been exchanged for each share of First Commerce
Common Stock.

See "COMPARATIVE MARKET PRICES AND DIVIDENDS."

CERTAIN LEGAL RESTRICTIONS ON ACQUISITIONS OF CONTROL

Certain restrictions under Delaware law prevent a person who beneficially
owns 15% or more of the BancGroup Common Stock from engaging in a "business
combination" with BancGroup unless certain conditions are satisfied. Also, the
Change in Bank Control Act of 1978 prohibits a person from acquiring "control"
of BancGroup unless certain notice provisions with the Federal Reserve Board
have been satisfied.

BancGroup's Restated Certificate of Incorporation and bylaws also contain
provisions which may deter or prevent a takeover of BancGroup that is not
supported by BancGroup's Board of Directors. These provisions include: (1) a
classified board of directors, (2) supermajority voting requirements for certain
"business combinations" that exceed the provisions of Delaware law described
above, (3) flexibility for the board to consider non-economic and other factors
in evaluating a "business combination," (4) inability of stockholders to call
special meetings and act by written consent, and (5) certain advance notice
provisions for the conduct of business at stockholder meetings.

See "BANCGROUP CAPITAL STOCK AND DEBENTURES" and "COMPARATIVE RIGHTS OF
STOCKHOLDERS."
7
<PAGE> 15

PER SHARE DATA

The table below presents on a per share basis the book value, cash
dividends and income from continuing operations of BancGroup and First Commerce
on a historical basis and on a pro forma equivalent basis assuming consummation
of the Merger. Certain information from the table has been taken from the
condensed pro forma statements of condition and income included elsewhere in
this document. The table should be read in conjunction with those pro forma
statements.

<TABLE>
<CAPTION>
YEAR
ENDED
1996
------
<S> <C>
PER SHARE DATA
BancGroup-Historical (as restated):
Net Income
Primary................................................ $ 1.30
Fully diluted.......................................... 1.28
Book value at end of period............................... 10.31
Dividends per share:
Common Stock.............................................. 0.54
First Commerce
Net Income
Historical:
Primary................................................ 0.08
Fully diluted.......................................... 0.08
Pro forma equivalent assuming combination with completed
business combinations and First Commerce (a):
Primary................................................ 0.53
Fully diluted.......................................... 0.52
Pro forma equivalent assuming combination with completed
business combinations, First Commerce, and other
proposed business combinations (a):
Primary................................................ 0.52
Fully diluted.......................................... 0.51
Book value at end of period
Historical............................................. 6.69
Pro forma equivalent assuming combination with
completed business combinations and First
Commerce(a)........................................... 4.49
Pro forma equivalent assuming combination with
completed business combinations, First Commerce and
other proposed business combinations(a):.............. 4.49
Dividends per share
Historical................................................ --
Pro forma equivalent assuming combination with
completed business combinations and First
Commerce(b)........................................... 0.23
Pro forma equivalent assuming combination with
completed business combinations, First Commerce and
other proposed business combinations(b):.............. 0.23
BancGroup-Pro Forma Combined (Completed business
combinations and First Commerce):
Net Income
Primary................................................ 1.23
Fully diluted.......................................... 1.21
Book value at end of period................................. 10.39
</TABLE>

8
<PAGE> 16

<TABLE>
<S> <C>
BancGroup-Pro Forma Combined (Completed business combinations, First Commerce, and other proposed
business combinations):
Net Income
Primary........................................................................................... $ 1.20
Fully diluted..................................................................................... 1.19
Book value at end of period............................................................................ 10.38
</TABLE>

- ---------------

(a) Pro forma equivalent per share amounts are calculated by multiplying the pro
forma combined total income per share and the pro forma combined total book
value per share of BancGroup by the conversion ratio so that the per share
amounts are equated to the respective values for one share of First
Commerce. For the purposes of these pro forma equivalent per share amounts,
a .4326 BancGroup common stock share conversion ratio is utilized. The ratio
is fixed under the Agreement provided the Market Value stays within a set
range. See "THE MERGER -- Conversion of First Commerce Common Stock."
(b) Pro forma equivalent dividends per share are shown at BancGroup's Common
Stock dividend per share rate multiplied by the .4326 conversion ratio per
share of First Commerce common stock (see note (a)). BancGroup presently
contemplates that dividends will be declared in the future. However, the
payment of cash dividends is subject to BancGroup's actual results of
operations as well as certain other internal and external factors.
Accordingly, there is no assurance that cash dividends will either be
declared and paid in the future, or, if declared and paid, that such
dividends will approximate the pro forma amounts indicated.
9
<PAGE> 17

THE SPECIAL MEETING

GENERAL

This Prospectus is being furnished to the shareholders of First Commerce in
connection with the solicitation of proxies by the Board of Directors of First
Commerce for use at the Special Meeting. The purpose of the Special Meeting is
to consider and vote upon the Agreement which provides for the proposed Merger
of First Commerce with and into BancGroup. BancGroup will be the surviving
corporation in the Merger.

This Prospectus is also furnished by BancGroup in connection with the offer
of shares of BancGroup Common Stock to be issued in the Merger. No vote of
BancGroup stockholders is required to approve the Merger.

THE BOARD OF DIRECTORS OF FIRST COMMERCE BELIEVES THAT THE MERGER IS IN THE
BEST INTERESTS OF FIRST COMMERCE AND ITS SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS
THAT SHAREHOLDERS VOTE "FOR" THE AGREEMENT (ITEM 1 ON THE PROXY CARD).

RECORD DATE; SHARES ENTITLED TO VOTE; VOTE REQUIRED FOR THE MERGER

The Board of Directors of First Commerce has fixed the close of business on
, 1997, as the Record Date for determination of shareholders
entitled to vote at the Special Meeting. There were record holders of
First Commerce Common Stock and shares of First Commerce Common Stock
outstanding, each entitled to one vote per share, as of the Record Date. First
Commerce is obligated to issue an additional 321,215 shares of First Commerce
Common Stock upon the exercise of outstanding First Commerce Options.

The presence at the Special Meeting, in person or by proxy, of the holders
of a majority of the outstanding shares of First Commerce Common Stock on the
Record Date is necessary to constitute a quorum for the transaction of business
at the Special Meeting. In the absence of a quorum, the Special Meeting may be
postponed from time to time until First Commerce shareholders holding the
requisite amount of shares of First Commerce Common Stock are represented in
person or by proxy. If a quorum is present, the affirmative vote of the holders
of at least a majority of the outstanding shares of First Commerce Common Stock,
whether or not present or represented at the Special Meeting, is required to
approve the Agreement. Broker nonvotes and abstentions will not be counted as
votes cast "FOR" or "AGAINST" the proposal to approve the Agreement, and, as a
result, such non-votes will have the same effect as votes cast "AGAINST" the
Agreement. Each holder of record of shares of First Commerce Common Stock is
entitled to cast, for each share registered in his or her name, one vote on the
Agreement as well as on each other matter presented to a vote of shareholders at
the Special Meeting.

As of the Record Date, directors of First Commerce owned shares
of First Commerce Common Stock representing approximately % of the
outstanding shares. These individuals have agreed with BancGroup to vote the
shares owned by them in favor of the Merger.

If the Agreement is approved at the Special Meeting, First Commerce is
expected to merge with and into BancGroup promptly after the other conditions to
the Agreement are satisfied. See "THE MERGER -- Conditions of Consummation of
the Merger."

THE BOARD OF DIRECTORS OF FIRST COMMERCE URGES THE SHAREHOLDERS OF FIRST
COMMERCE TO EXECUTE AND RETURN THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE AND
UNANIMOUSLY RECOMMENDS THAT THE SHARES REPRESENTED BY THE PROXY BE VOTED IN
FAVOR OF THE AGREEMENT.

SOLICITATION, VOTING AND REVOCATION OF PROXIES

In addition to soliciting proxies by mail, directors, officers and other
employees of First Commerce, without receiving special compensation therefor,
may solicit proxies from First Commerce's shareholders by

10
<PAGE> 18

telephone, by telegram or in person. Arrangements will also be made with
brokerage firms and other custodians, nominees and fiduciaries, if any, to
forward solicitation materials to any beneficial owners of shares of First
Commerce Common Stock.

First Commerce will bear the cost of assembling and mailing this Prospectus
and other materials furnished to shareholders of First Commerce. It will also
pay all other expenses of solicitation, including the expenses of brokers,
custodians, nominees, and other fiduciaries who, at the request of First
Commerce, mail material to or otherwise communicate with beneficial owners of
the shares held by them. BancGroup will pay all expenses incident to the
registration of the BancGroup Common Stock to be issued in connection with the
Merger.

Shares of First Commerce Common Stock represented by a proxy properly
signed and received at or prior to the Special Meeting, unless properly revoked,
will be voted in accordance with the instructions on the proxy. IF A PROXY IS
SIGNED AND RETURNED WITHOUT ANY VOTING INSTRUCTIONS, SHARES OF FIRST COMMERCE
COMMON STOCK REPRESENTED BY THE PROXY WILL BE VOTED "FOR" THE PROPOSAL TO
APPROVE THE AGREEMENT AND IN ACCORDANCE WITH THE DETERMINATION OF THE MAJORITY
OF THE BOARD OF DIRECTORS OF FIRST COMMERCE AS TO ANY OTHER MATTER WHICH MAY
PROPERLY COME BEFORE THE SPECIAL MEETING, INCLUDING ANY ADJOURNMENT OR
POSTPONEMENT THEREOF. A shareholder may revoke any proxy given pursuant to this
solicitation by: (i) delivering to the Secretary of First Commerce, prior to or
at the Special Meeting, a written notice revoking the proxy; (ii) delivering to
the Secretary of First Commerce, at or prior to the Special Meeting, a duly
executed proxy relating to the same shares and bearing a later date; or (iii)
voting in person at the Special Meeting. All written notices of revocation and
other communications with respect to the revocation of First Commerce's proxies
should be addressed to:
First Commerce Banks of Florida, Inc.
141 East Central Avenue
Winter Haven, Florida 33880
Attention: J. Jeffrey Seale, Secretary

Attendance at the Special Meeting will not, in and of itself, constitute a
revocation of a proxy.

Proxies marked as abstentions and shares held in street name which have
been designated by brokers on proxy cards as not voted will not be counted as
votes cast. Such proxies will, however, be counted for purposes of determining
whether a quorum is present at the Special Meeting.

The Board of Directors of First Commerce is not aware of any business to be
acted upon at the Special Meeting other than consideration of the Merger
described herein. If, however, other matters are properly brought before the
Special Meeting, or any adjournments or postponements thereof, the persons
appointed as proxies will have the discretion to vote or act on such matters
according to their best judgment. Proxies voted in favor of the Merger, or
proxies as to which no voting instructions are given, will be voted to adjourn
the Special Meeting, if necessary, in order to solicit additional proxies in
favor of the Merger. Proxies voted against the Merger and abstentions will not
be voted for an adjournment. See "ADJOURNMENT OF THE SPECIAL MEETING."

EFFECT OF MERGER ON OUTSTANDING BANCGROUP COMMON STOCK

Assuming that no dissenters' rights of appraisal are exercised in the
Merger, no First Commerce Options are exercised prior to the Merger, and a
Market Value not less than $19.35 and no more than $25.16, BancGroup would issue
685,990 shares of BancGroup Common Stock to the shareholders of First Commerce
pursuant to the Merger based upon the Exchange Ratio of .4326. Based on those
assumptions, the 685,990 shares of BancGroup Common Stock would represent
approximately 1.7% of the total number of shares of BancGroup Common Stock
outstanding following the Merger, not counting any additional shares BancGroup
may issue, including shares to be issued pursuant to other pending acquisitions.
BancGroup anticipates that the shares of BancGroup Common Stock to be issued in
the Merger will come from shares repurchased by BancGroup in the open market.

11
<PAGE> 19

THE MERGER

THE FOLLOWING SETS FORTH A SUMMARY OF THE MATERIAL PROVISIONS OF THE
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY. THE DESCRIPTION DOES NOT
PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
AGREEMENT ATTACHED HERETO AS APPENDIX A AND CERTAIN PROVISIONS OF FLORIDA LAW
RELATING TO THE RIGHTS OF DISSENTING SHAREHOLDERS, A COPY OF WHICH PROVISIONS
ARE ATTACHED HERETO AS APPENDIX C. ALL FIRST COMMERCE SHAREHOLDERS ARE URGED TO
READ THE AGREEMENT AND THE APPENDICES IN THEIR ENTIRETY.

GENERAL

The Agreement provides that, subject to shareholder approval, receipt of
necessary regulatory approval and certain other conditions described below at
"Conditions to Consummation of the Merger," First Commerce will merge with and
into BancGroup. Upon completion of the Merger, the corporate existence of First
Commerce will cease, and BancGroup will succeed to the business formerly
conducted by First Commerce.

BACKGROUND OF THE MERGER

On January 3, 1996, First Commerce entered into a Plan of Merger and Merger
Agreement with First Mercantile National Bank ("First Mercantile"), Longwood,
Florida, whereby First Mercantile would become a wholly-owned subsidiary of
First Commerce. At the same time, First Commerce entered into a similar
agreement with Prime Bank of Central Florida ("Prime Bank"), headquartered in
Titusville, Florida. These transactions intended to bring the First Commerce,
First Mercantile and Prime Bank organizations together on a "combination of
equals" basis. The First Commerce agreements with First Mercantile and Prime
Bank were terminated by mutual consent effective August 1, 1996, as a result of
certain issues, including an increase in First Commerce's non-performing assets
and a decrease in its earnings.

Following the termination of the agreements between First Commerce and
First Mercantile and Prime Bank, the Board of Directors of First Commerce
engaged T. Stephen Johnson & Associates, Inc. ("TSJA"), an investment banking
firm which specializes in the securities of southeastern United States'
financial institutions, to assist First Commerce in the assessment of its
strategic position. At a meeting of the Boards of Directors of First Commerce
and the Bank held on November 18, 1996, TSJA presented an analysis of First
Commerce's financial position and results of operations. TSJA also discussed
certain financial and operating criteria that First Commerce needed to
accomplish, and the time period within which such results might be achievable,
in order for First Commerce to realize earnings and performance ratios
comparable to peer financial institutions. Among other issues discussed during
the presentation was the assessment that it may take First Commerce
approximately three years to report earnings in the range of comparable
financial institutions and that there was no assurance that the prevailing
multiples being paid for independent community banks would continue or be
realized by First Commerce shareholders at that time.

After the conclusion of the planning session, the First Commerce directors
requested that TSJA explore the market among regional financial institutions for
a potential acquisition of First Commerce, without committing to any sale of
First Commerce at that time. The Board of Directors was interested in
determining if there were opportunities out there for a possible sale of First
Commerce and the range of pricing that First Commerce might realize in such a
transaction. First Commerce and TSJA prepared a confidential information package
setting forth certain financial, budget, branch, loan, employment, option and
warrant, and shareholder ownership information and other data. TSJA then
solicited indications of interest from a group of regional financial
institutions selected by First Commerce.

On December 19, 1996, TSJA called five financial institutions to solicit
their interest in acquiring First Commerce. On December 23, 1996, confidential
information regarding First Commerce was sent to the four financial institutions
requesting the information. On January 7, 1997, TSJA advised each of the
financial institutions of a January 17, 1997 date for the submission of
proposals regarding an acquisition of First Commerce. One of the four financial
institutions declined to issue a proposal. On January 8, 1997, TSJA contacted
two additional regional financial institutions to see if they had any interest
in acquiring First Commerce. These two institutions declined to receive
confidential information regarding First Commerce. On

12
<PAGE> 20

January 9, 1997, BancGroup and another financial institution requested
additional information on First Commerce. On January 16, 1997, the audited
financial statements of First Commerce for 1996 were provided to the three
remaining interested financial institutions, two of which declined to submit any
proposal for the acquisition of First Commerce. On January 17, 1997 BancGroup
delivered a proposal for the acquisition of First Commerce, subject to certain
conditions, including a due diligence review of First Commerce by BancGroup.

At a special meeting of the First Commerce Board of Directors held on
January 27, 1997, the directors reviewed the BancGroup proposal and authorized
First Commerce executives to continue their discussions with BancGroup. During
the first two weeks of February, 1997, BancGroup conducted a due diligence
review of First Commerce. At a special meeting of the First Commerce Board of
Directors held on February 12, 1997, representatives of BancGroup met with First
Commerce directors. During the meeting, the BancGroup representatives presented
financial and other information regarding BancGroup. The BancGroup
representatives and First Commerce directors also reached an agreement that an
acquisition of First Commerce by BancGroup would provide for an exchange ratio
of .4326 shares of BancGroup Common Stock for each share of First Commerce
Common Stock. On February 13, 1997, BancGroup and First Commerce entered into a
letter of intent providing for BancGroup's acquisition of First Commerce in
accordance with the foregoing exchange ratio.

From February 14, 1997 through March 23, 1997, BancGroup and First Commerce
reviewed drafts, and negotiated the terms, of a definitive agreement. On March
10, 1997, First Commerce retained Austin Associates, Inc. ("AAI") to provide an
opinion to the First Commerce Board as to the fairness of the Merger, from a
financial point of view, to the shareholders of First Commerce. The Agreement
was reviewed and approved by the Board of Directors of First Commerce at a
meeting held on March 24, 1997. At this meeting, the directors reviewed the
terms of the Agreement and related issues. Also at the meeting, a representative
of AAI rendered an opinion that the terms of the Merger are fair, from a
financial point of view, to the shareholders of First Commerce. The First
Commerce Board then unanimously approved the Agreement and the transactions
contemplated thereby.

FIRST COMMERCE'S BOARD OF DIRECTORS' REASONS FOR APPROVING THE MERGER

First Commerce's Board of Directors believes that the Merger is in the best
interests of First Commerce and its shareholders. The Board of Directors of
First Commerce considered a number of factors in deciding to approve and
recommend the terms of the Agreement to First Commerce shareholders, including
the terms of the proposed transaction; the financial condition, results of
operations, and future prospects of First Commerce; the value of the
consideration to be received by First Commerce shareholders relative to the book
value and earnings per share of First Commerce Common Stock; the competitive and
regulatory environment for financial institutions generally; the fact that the
Merger will enable First Commerce shareholders to exchange their shares of First
Commerce Common Stock for shares of common stock of a larger and more
diversified entity, the stock of which is more widely held and more actively
traded; that the Merger will enable First Commerce shareholders to hold stock in
a financial institution that has historically paid cash dividends to its
shareholders (as compared to First Commerce, which has not paid any cash
dividends to its shareholders); the likelihood of receiving the requisite
regulatory approvals; that it is expected that the Merger will be a tax-free
transaction (except in respect of cash received for First Commerce Common Stock)
for federal income tax purposes; and other information. The Board of Directors
also took into account an opinion received from Austin Associates, Inc. that the
terms of the Agreement are fair, from a financial point of view, to the
shareholders of First Commerce. See "-- Opinion of Financial Advisor." The
foregoing discussion of the information and factors considered by the Board of
Directors is not intended to be exhaustive of the factors considered by the
Board of Directors. The First Commerce Board of Directors did not assign any
relative or specific weights to the foregoing factors, and individual directors
may have given different weights to different factors.

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<PAGE> 21

OPINION OF FINANCIAL ADVISOR

Austin Associates, Inc. ("AAI") is a recognized investment banking firm
regularly engaged in the valuation of financial institutions and their
securities in connection with mergers and acquisitions and other purposes. First
Commerce selected AAI to issue a fairness opinion in connection with the Merger
on the basis of its reputation and qualifications.

AAI has rendered a separate written opinion to the board of directors of
First Commerce to the effect that the terms of the Agreement are fair, from a
financial point of view, to the shareholders of First Commerce as of the date of
the opinion. AAI based its opinion upon, among other things: (i) this
Prospectus; (ii) the audited financial statements of First Commerce and
BancGroup for the period 1992 through 1996; (iii) the reported prices and stock
trading activity of First Commerce and BancGroup; (iv) publicly available
information regarding the performance of certain other companies whose business
activities were believed to be generally comparable to those of First Commerce
and BancGroup; (v) the financial terms, to the extent publicly available, of
certain comparable bank merger transactions; and (vi) such other analysis and
information deemed relevant.

No limitations were imposed on the scope of AAI's investigation. The terms
of the Agreement, including the Exchange Ratio, were negotiated by First
Commerce and BancGroup, and their representatives, on an arm's-length basis. AAI
did not participate in the negotiation of the terms of the Agreement; however,
it did advise the Board of First Commerce during the negotiation of the Exchange
Ratio. A copy of the fairness opinion is attached as Appendix B to this
Prospectus and should be read in its entirety.

In connection with rendering its opinion, AAI performed a variety of
financial analyses, which are summarized below. AAI believes its analyses must
be considered as a whole and that selecting portions of such analyses and the
factors considered therein, without considering all factors and analyses, could
create an incomplete view of the analyses and the process underlying AAI's
opinion. The preparation of a fairness opinion is a complex process involving
subjective judgments and is not necessarily susceptible to partial analyses or
summary description. In its analyses, AAI made numerous assumptions with respect
to industry performance, business and economic conditions, and other matters,
many of which are beyond the control of First Commerce and BancGroup. Any
estimates contained in AAI's analyses are not necessarily indicative of future
results or values, which may be significantly more or less favorable than the
estimates.

Transaction Summary. The terms of the Agreement provide for an Exchange
Ratio of 0.4326 shares of BancGroup Common Stock for each outstanding share of
First Commerce, provided that the Market Value (as defined in the Agreement) of
BancGroup is not less than $19.35 and not greater than $25.16 per share. This
corresponds to per share consideration for each First Commerce share of between
$8.37 and $10.88. If the Market Value of BancGroup is less than $19.35, the
Exchange Ratio shall be increased to provide for a minimum per share
consideration of $8.37 for each First Commerce share. If the Market Value of
BancGroup is greater than $25.16, the Exchange Ratio shall be decreased to
provide for a maximum per share consideration of $10.88 for each First Commerce
share. If BancGroup publicly announces prior to the Effective Date that it has
entered into an agreement pursuant to which it will be acquired, the Exchange
Ratio shall be determined by disregarding whether the Market Value is greater
than $25.16 per share. The Agreement further provides that BancGroup shall
assume all First Commerce options and warrants adjusted for the Exchange Ratio.
Based on 1,585,737 outstanding First Commerce common shares, and outstanding
options and warrants respecting the issuance of 321,215 shares of First Commerce
common stock, the aggregate consideration in the Merger ranges from a minimum
value of approximately $14.8 million to a maximum value of $19.6 million. Based
on the closing market price of BancGroup on March 31, 1997 of $23.00, the
transaction is valued at $17.8 million, which equals 167 percent of First
Commerce's December 31, 1996 book value.

BancGroup Market Price and Financial Performance. The closing market price
of BancGroup was $23.00 on March 31, 1997. BancGroup originally reported fully
diluted earnings per share ("EPS") of $1.60 for 1996, including a one-time
charge of $.07 per share for the SAIF special assessment. As of December 31,
1996, BancGroup originally reported a book value of $10.48 per share. Based on
the March 31 market price, BancGroup shares are valued at 14.4 times 1996 fully
diluted EPS and 219 percent of December 31, 1996

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<PAGE> 22

book value. AAI compared BancGroup's stock trading multiples to banking
organizations headquartered in Alabama, Florida, Georgia, Louisiana,
Mississippi, North Carolina, South Carolina and Tennessee with assets ranging
from $1.5 billion to $25 billion (the "Peer Group"). As of March 31, 1997, the
median price-to-book multiple for the 21 organizations comprising the Peer Group
was 209% compared to BancGroup's multiple of 219%. The median price-to-earnings
multiple for the Peer Group was 14.9 compared to BancGroup's multiple of 14.4.
The median dividend yield for the Peer Group was 2.62 percent compared to
BancGroup's dividend yield of 2.61 percent.

AAI also reviewed the originally reported financial performance of
BancGroup as compared to the Peer Group. The median return on average assets
("ROA") of the Peer Group for 1996 was 1.26% compared to BancGroup's ROA of
1.19%. The median return on average equity ("ROE") of the Peer Group for 1996
was 14.83% compared to BancGroup's ROE of 16.80%. For the period 1992 through
1996, the Peer Group recorded a five year median ROA of 1.16%, compared to
BancGroup's five year average ROA of 1.05%. During the 1992 to 1996 time period,
the Peer Group recorded a five year median ROE of 14.46%, compared to
BancGroup's five year average ROE of 16.65%. The leverage ratio for BancGroup as
of December 31, 1996 of 6.65% compared to the Peer Group median of 7.94%. During
1996, BancGroup recorded an efficiency ratio of 57.9 percent compared to the
Peer Group median of 59.6 percent.

In addition to overall performance measures, AAI reviewed certain
originally reported asset quality measures. The ratio of nonperforming assets to
total assets for BancGroup was the highest of all Peer Group banks at 0.64%, and
compared to the Peer median of 0.30%. The loan loss reserve to total loan ratio
for BancGroup of 1.23% compared to a Peer median of 1.52%.

Comparative Transactions. AAI reviewed comparison prices in 27 sale of
control transactions in Florida for banks having assets ranging from $50 million
to $200 million since January 1, 1995. The median multiples for these
transactions were 206% of book value and 17.8 times earnings. AAI also screened
this Peer Group to determine the 25th percentile rankings for transaction
pricing and underlying performance measures. At the 25th percentile, the Peer
Group price-to-book multiple measured 163% and the price-to-earnings multiple
measured 15.0.

AAI also reviewed the financial performance of First Commerce as compared
to the Peer Group. The 25th percentile ROA of the Peer Group for the year prior
to sale of 0.88% compared to First Commerce's 1996 ROA of 0.13%. The 25th
percentile ROE of the Peer Group for the year prior to sale was 8.92% compared
to First Commerce's 1996 ROE of 1.31%. For the five years preceding sale, the 15
Peer Group banks that sold during 1996 recorded a 25th percentile ROA of 0.59%,
compared to First Commerce's 1992-1996 five year average ROA of 0.61%. The Peer
Group banks that sold during 1996 recorded a preceding five year 25th percentile
ROE of 7.31%, compared to First Commerce's 1992-1996 five year average ROE of
7.62%.

In addition to overall performance measures, AAI reviewed certain asset
quality measures. The ratio of nonperforming assets to total assets for First
Commerce of 2.57%, compared to the Peer Group 75th percentile of 1.33% (i.e. 75
percent of peer banks had lower ratios). The ratio of loan loss reserve to
nonperforming loans for First Commerce measured 53.8% compared to the Peer Group
25th percentile of 61.7%.

Contribution Analysis. AAI compared the pro forma ownership interest in
BancGroup that First Commerce shareholders would receive, in the aggregate, to
the contribution by First Commerce to the total assets, equity and net income of
the combined organization. Based on March 1, 1997 information, First Commerce
shareholders would own approximately 1.73% of BancGroup on a pro forma basis.
First Commerce's restated pro forma contribution of total assets would have
equaled 1.81%, the contribution of total equity would have equaled 2.65%, and
the contribution of 1996 net income would have equaled 0.29%.

Based on First Commerce's relatively high loan loss provision and other
operating expenses during 1995 and 1996, AAI has recalculated First Commerce's
normalized earnings capacity for purposes of completing this Contribution
Analysis and the Summary Pro Forma Analysis presented in the following section.
Based on AAI's review of First Commerce's historical earnings trends, 1997
budget, year to date performance through February 1997, other internal reports
and discussions with management, AAI assumed a current normalized

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<PAGE> 23

earnings capacity for First Commerce at an annualized ROA of 1.00%. Based on
First Commerce's average asset level of $109.5 million during 1996, this
corresponds to an annualized earnings capacity of $1,095,000. Assuming this
level of earnings, First Commerce would have contributed 2.23% of the restated
pro forma combined earnings of BancGroup during 1996.

Summary Pro Forma Analysis. AAI also reviewed the pro forma effect of the
Merger to First Commerce's earnings per share and book value per share. First
Commerce recorded fully diluted earnings per share in 1996 of $0.08. Based on an
assumed $1,095,000 of normalized earnings capacity, First Commerce would have a
fully diluted earnings per share capacity of $0.65. First Commerce's book value
per share as of December 31, 1996 equaled $6.69. Giving effect to the Merger as
of December 31, 1996, including the effect of BancGroup's completed and proposed
business combinations, the equivalent First Commerce earnings per share would
have equaled $0.51, an increase of $0.43 over actual results. Book value per
share would have decreased to $4.49 per share, a decrease of $2.20 from actual
results.

Discounted Cash Flow Analysis. AAI performed a discounted cash flow
("DCF") analysis of the value of First Commerce as of December 31, 1996. A DCF
analysis is a forward looking projection based principally on estimated future
earnings capacity and asset growth. To provide a range of values, AAI selected
three separate growth scenarios and three separate ROA forecasts. DCF values
were determined based on asset growth scenarios of 5%, 10% and 15%. In addition,
AAI estimated ROA ratios for First Commerce for a five year time period (1997 to
2001). The three ROA scenarios consisted of: (1) a flat ROA of 1.00% in each
year; (2) an increasing ROA from 1.00%, to 1.05%, to 1.10%, to 1.15% and to
1.20% from 1997 to 2001; and (3) an increasing ROA from 1.00%, to 1.10%, to
1.20%, to 1.30% and to 1.40% from 1997 to 2001. Based on these assumptions, nine
separate DCF values for First Commerce were calculated. The DCF values for First
Commerce ranged from $11.7 million (5% growth, flat 1.00% ROA) to $18.5 million
(15% growth, increasing ROA from 1.00% to 1.40%).

Dividends. AAI reviewed the cash dividends to be received by First
Commerce shareholders as a result of the Merger. Based on an exchange ratio of
0.4326 BancGroup shares for each share of First Commerce, equivalent dividends
to First Commerce shareholders would have been $0.23 per share in 1996. No cash
dividends have been paid previously to First Commerce shareholders.

The summary set forth above does not purport to be a complete description
of the analyses performed by AAI. Further, AAI did not conduct a physical
inspection of any of the properties or assets of First Commerce or BancGroup.
AAI has assumed and relied upon the accuracy and completeness of the financial
and other information provided to it or publicly available, has relied upon the
representations and warranties of First Commerce and BancGroup made pursuant to
the Agreement, and has not independently attempted to verify any of such
information. AAI has also assumed that the conditions to the Merger as set forth
in the Agreement would be satisfied and that the Merger would be consummated on
a timely basis in the manner contemplated by the Agreement. No limitations were
imposed by First Commerce or BancGroup on AAI as to the scope of its
investigation nor were any specific instructions given to AAI in connection with
its fairness opinion.

For AAI's services as financial advisor, First Commerce will pay the firm a
fee of $17,500. In addition, First Commerce has agreed to reimburse AAI for
reasonable out-of-pocket expenses and indemnify AAI against certain liabilities,
including liabilities under the securities laws.

RECOMMENDATION OF THE BOARD OF DIRECTORS OF FIRST COMMERCE

The Board of Directors of First Commerce has determined that the Merger is
in the best interests of First Commerce and its shareholders. THE BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF FIRST COMMERCE VOTE IN
FAVOR OF THE APPROVAL AND ADOPTION OF THE MERGER AND THE AGREEMENT.

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BANCGROUP'S REASONS FOR THE MERGER

The Board of Directors of BancGroup has unanimously approved the Merger and
the Agreement. BancGroup has been seeking to expand its banking operations in
the state of Florida. BancGroup currently operates a commercial bank in the
Orlando, Ormond Beach and the Miami Beach areas, with acquisitions pending in
the Tampa and West Palm Beach areas. The Board of Directors of BancGroup
believes that the combination with First Commerce and the Bank is consistent
with that strategy.

In approving the Merger and the Agreement, the Board of Directors of
BancGroup took into account: (i) the financial performance and condition of
First Commerce, including its strong capital and good asset quality; (ii)
similarities in the philosophies of BancGroup and First Commerce, including
First Commerce's commitment to delivering high quality personalized financial
services to its customers; and (iii) First Commerce's management's knowledge of
and experience in the Polk County, Florida market.

INTERESTS OF CERTAIN PERSONS IN THE MERGER

Certain directors and executive officers of the Bank hold First Commerce
Options which entitle them to purchase, in the aggregate, up to 292,220 shares
of First Commerce Common Stock. Under the terms of the Agreement, any First
Commerce Options which are not exercised prior to the Effective Date will be
assumed by BancGroup giving the holders of such options the right to acquire
shares of BancGroup Common Stock. As an alternative to assumption by BancGroup,
holders of First Commerce Options may elect by giving written notice to First
Commerce before the Effective Date to be paid in cash the difference between the
exercise price for such options and the value of such option determined at the
Effective Date based upon the Exchange Ratio. See "Conversion of First Commerce
Common Stock" and "Treatment of First Commerce Options."

BancGroup has agreed that, upon consummation of the Merger, the existing
employment agreement of Robert W. Stickler, Jr., Vice Chairman, President and
Chief Executive Officer of First Commerce, will remain in effect until
terminated in accordance with the provisions of the agreement. Under the
agreement, Mr. Stickler currently receives an annual base salary of $140,000,
and is eligible for annual bonuses as determined by the Board of Directors. The
employment agreement provides for reimbursement of certain business related
expenses, and the maintenance by First Commerce and the Bank of officers' and
directors' insurance coverage. The employment agreement also provides that Mr.
Stickler will not work for any financial institution located within a radius of
50 miles of any office of the Bank for a two-year period following voluntary
termination of employment by Mr. Stickler or termination of employment for the
executive for "cause" (as defined in the employment agreement). Mr. Stickler has
also agreed in the employment agreement not to solicit Bank employees and
customers during the two-year period. The employment agreement provides for Mr.
Stickler to terminate his employment for "good reason" (as defined in the
agreement). The employment agreement terminates on August 31, 1998. If after a
change of control of First Commerce or the Bank and before August 31, 1998, Mr.
Stickler's employment is terminated, his duties are materially reduced, his base
salary is reduced, his employment is relocated more than 50 miles from the
Bank's main office, or his participation in any employee benefit plan is
materially reduced or adversely affected, and Mr. Stickler does not consent to
such change, then Mr. Stickler is entitled to receive promptly thereafter an
amount equal to two times the average base annual salary received by him during
the five-year period prior to such termination. The closing of the Merger will
constitute a change of control for purposes of Mr. Stickler's employment
agreement.

The Bank also has entered into separate salary continuation agreements with
Mr. Stickler and J. Jeffrey Seale (Vice President and Controller of First
Commerce). The agreements require the Bank to pay $8,133 and $2,325 per month to
Messrs. Stickler and Seale, respectively, for 180 months following their
retirement or death. If the executive's employment is terminated by him
voluntarily or by the Bank with "just cause" (as defined in the agreements),
then the executive is entitled to receive his portion of the monthly payments in
accordance with a vesting schedule which provides for vesting at 40% after 1996
and 10% for each year thereafter. The executive is considered to be fully vested
if First Commerce or the Bank merges with another company and the executive is
terminated for any reason. The agreements do not affect the right of the
executive to participate in any other retirement plans or supplemental
compensation arrangements provided by

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<PAGE> 25

First Commerce or the Bank. To fund the obligations under the agreements, First
Commerce has purchased life insurance policies on the participants. For
additional information regarding the salary continuation agreements, see Note 14
to the Notes to First Commerce's Consolidated Financial Statements.

On the Effective Date and subject to the agreements described above, all
employees of First Commerce (including its executive officers) will, at
BancGroup's option, either become employees of BancGroup or its subsidiaries or
be entitled to severance benefits in accordance with the severance policy of
Colonial Bank, as of the date of the Agreement. All employees of First Commerce
who become employees of BancGroup or its subsidiaries on the Effective Date will
be entitled, to the extent permitted by applicable law, to participate in all
benefit plans of BancGroup to the same extent as BancGroup's employees.

Except as described above, none of the directors or executive officers of
First Commerce, and no associate of any such person, has any substantial direct
or indirect interest in the Merger, other than an interest arising from the
ownership of First Commerce Common Stock.

CONVERSION OF FIRST COMMERCE COMMON STOCK

On the Effective Date, each share of First Commerce Common Stock
outstanding and held by First Commerce's shareholders (except shares as to which
dissenters' rights are perfected) will be converted by operation of law and
without any action by any holder thereof into .4326 of a share of BancGroup
Common Stock subject to adjustment as determined below (the "Merger
Consideration") provided that the Market Value for BancGroup Common Stock is not
less than $19.35 and not greater than $25.16. If the Market Value is less than
$19.35, then each share of First Commerce Common Stock will be converted into
the number of shares of BancGroup Common Stock that will equal $8.37 divided by
the Market Value. If the Market Value is greater than $25.16, then each share of
First Commerce Common Stock will be converted into the number of shares of
BancGroup Common Stock that will equal $10.88 divided by the Market Value. The
Market Value will represent the per share market value of the BancGroup Common
Stock at the Effective Date and will be determined by calculating the average of
the closing prices of the Common Stock of BancGroup as reported by the NYSE on
each of the 10 consecutive trading days ending on the trading day five calendar
days immediately preceding the Effective Date.

If BancGroup publicly announces prior to the Effective Date that it has
entered into an agreement pursuant to which BancGroup will be acquired through a
merger, sale of assets of BancGroup or tender offer or exchange offer for
BancGroup Common Stock (or otherwise), then the Exchange Ratio will be
determined by disregarding whether the Market Value is greater than $25.16. Any
merger in which BancGroup is the surviving corporation that does not involve a
change of control of BancGroup will be excluded from the preceding sentence. For
this purpose a "change of control" means the acquisition of beneficial ownership
of BancGroup Common Stock by any person or group (as that term is defined under
section 13(d) of the Exchange Act) of more than 50 percent of the outstanding
shares of such stock.

No fractional shares of BancGroup Common Stock will be issued in the
Merger. Each shareholder of First Commerce having a fractional interest arising
upon the conversion of First Commerce Common Stock into BancGroup Common Stock
will, at the time of surrender of the certificates representing First Commerce
Common Stock, be paid by BancGroup an amount of cash equal to such fractional
interest multiplied the Market Value.

As an example, assuming the Market Value of BancGroup Common Stock at the
Merger is no less than $19.35 and not greater than $25.16, then a shareholder of
First Commerce who owns 500 shares of First Commerce Common Stock would receive
216.3 shares of BancGroup Common Stock (.4326 multiplied by 500) with the .3 of
a share paid in cash based upon the Market Value. If the Market Value is greater
than

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<PAGE> 26

$25.16 or less than $19.35, the Exchange Ratio will be adjusted as described
above. The closing sales price on the NYSE of the BancGroup Common Stock on
April 14, 1997 was $22 7/8 per share.

Shareholders are advised to obtain current market quotations for BancGroup
Common Stock. The market price of BancGroup Common Stock at the Effective Date,
or on the date on which certificates representing such shares are received by
First Commerce shareholders, may be higher or lower than the market price of
BancGroup Common Stock as of the Record Date or at the time of the Special
Meeting.

The Agreement provides that if, prior to the Effective Date, BancGroup
Common Stock is changed into a different number of shares or a different class
of shares by reason of any recapitalization or reclassification, stock dividend,
combination, stock split, or reverse stock split of the BancGroup Common Stock,
an appropriate and proportionate adjustment will be made in the number of shares
of BancGroup Common Stock into which the First Commerce Common Stock will be
converted in the Merger.

For a description of the assumption of First Commerce Options, see
"Treatment of First Commerce Options."

SURRENDER OF FIRST COMMERCE COMMON STOCK CERTIFICATES

Upon the Effective Date and subject to the conditions described at
"Conditions to Consummation of the Merger," First Commerce's shareholders
(except to the extent that such holders perfect dissenters' rights under
applicable law) will automatically, and without further action by such
shareholders or by BancGroup, become owners of BancGroup Common Stock as
described herein. Outstanding certificates representing shares of the First
Commerce Common Stock will represent shares of BancGroup Common Stock.
Thereafter, upon surrender of the certificates formerly representing shares of
First Commerce Common Stock, the holders will be entitled to receive
certificates for the BancGroup Common Stock. Dividends on the shares of
BancGroup Common Stock will accumulate without interest and will not be
distributed to any former shareholder of First Commerce unless and until such
shareholder surrenders for cancellation his certificate for First Commerce
Common Stock. SunTrust Bank, Atlanta, Atlanta, Georgia, transfer agent for
BancGroup Common Stock, will act as the Exchange Agent with respect to the
shares of First Commerce Common Stock surrendered in connection with the Merger.

A detailed explanation of these arrangements will be mailed to First
Commerce shareholders promptly following the Effective Date. STOCK CERTIFICATES
SHOULD NOT BE SENT TO THE EXCHANGE AGENT UNTIL SUCH NOTICE IS RECEIVED.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The Merger is intended to qualify as a "reorganization" for federal income
tax purposes under Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as
amended (the "Code"). The obligation of First Commerce to consummate the Merger
is conditioned on the receipt by First Commerce of an opinion from Coopers &
Lybrand L.L.P., which serves as BancGroup's independent public accountant, to
the effect that the Merger will constitute such a reorganization. The opinion
has been delivered to First Commerce. In delivering its opinion, Coopers &
Lybrand L.L.P., has received and relied upon certain representations contained
in certificates of officers of BancGroup and First Commerce and certain other
information, data, documentation and other materials as it deems necessary. The
tax opinion is based upon customary assumptions contained therein, including the
assumption that First Commerce has no knowledge of any plan or intention on the
part of the First Commerce shareholders to sell or dispose of BancGroup Common
Stock that would reduce their holdings to the number of shares having in the
aggregate a fair market value of less than 50% of the total fair market value of
the First Commerce Common Stock outstanding immediately upon the Merger.

Neither First Commerce nor BancGroup intends to seek a ruling from the
Internal Revenue Service as to the federal income tax consequences of the
Merger. First Commerce's shareholders should be aware that the opinion will not
be binding on the Internal Revenue Service or the courts. First Commerce's
shareholders also should be aware that some of the tax consequences of the
Merger are governed by provisions of the Code as to

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<PAGE> 27

which there are no final regulations and little or no judicial or administrative
guidance. There can be no assurance that future legislation, administrative
rulings, or court decisions will not adversely affect the accuracy of the
statements contained herein.

The tax opinion states that, provided the assumptions stated therein are
satisfied, the Merger will constitute a reorganization as defined in Section
368(a) of the Code and the following federal income tax consequences will result
to First Commerce's shareholders who exchange their shares of First Commerce
Common Stock for shares of BancGroup Common Stock:

(i) No gain or loss will be recognized by First Commerce's
shareholders on the exchange of shares of First Commerce Common Stock for
shares of BancGroup Common Stock;

(ii) The aggregate basis of BancGroup Common Stock received by each
First Commerce shareholder (including any fractional shares of BancGroup
Common Stock deemed received, but not actually received), will be the same
as the aggregate tax basis of the shares of First Commerce Common Stock
surrendered in exchange therefor;

(iii) The holding period of the shares of BancGroup Common Stock
received by each First Commerce shareholder will include the period during
which the shares of First Commerce Common Stock exchanged therefor were
held, provided that the shares of First Commerce Common Stock were a
capital asset in the holder's hands as of the Effective Date;

(iv) Cash payments received by each First Commerce shareholder in lieu
of a fractional share of BancGroup Common Stock will be treated for federal
income tax purposes as if the fractional share had been issued in the
exchange and then redeemed by BancGroup. Gain or loss will be recognized on
the redemption of the fractional share and generally will be capital gain
or loss if the First Commerce Common Stock is a capital asset in the hands
of the holder;

(vi) No gain or loss will be recognized by First Commerce upon the
transfer of its assets and liabilities to BancGroup. No gain or loss will
be recognized by BancGroup upon the receipt of the assets and liabilities
of First Commerce;

(vii) The basis of the assets of First Commerce acquired by BancGroup
will be the same as the basis of the assets in the hands of First Commerce
immediately prior to the Merger;

(viii) The holding period of the assets of First Commerce in the hands
of BancGroup will include the period during which such assets were held by
First Commerce; and

(ix) A First Commerce shareholder who dissents and receives only cash
pursuant to dissenters rights will recognize gain or loss. Such gain or
loss will, in general, be treated as capital gain or loss, measured by the
difference between the amount of cash received and the tax basis of the
shares of First Commerce Common Stock converted, if the shares of First
Commerce Common Stock were held as capital assets. However, a First
Commerce shareholder who receives only cash may need to consider the
effects of Section 302 and 318 of the Code in determining the federal
income tax consequences of the transaction.

Each First Commerce shareholder will be required to report on such
shareholder's federal income tax return for the fiscal year of such shareholder
in which the Merger occurs that such shareholder has received BancGroup Common
Stock in a reorganization.

THE FOREGOING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF ALL MATERIAL
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO THE SHAREHOLDERS OF FIRST
COMMERCE, TO FIRST COMMERCE AND TO BANCGROUP AND DOES NOT PURPORT TO BE A
COMPLETE DESCRIPTION OF ALL POTENTIAL TAX EFFECTS OF THE MERGER. THE DISCUSSION
DOES NOT ADDRESS THE TAX CONSEQUENCES THAT MAY BE RELEVANT TO A PARTICULAR
SHAREHOLDER SUBJECT TO SPECIAL TREATMENT UNDER CERTAIN FEDERAL INCOME TAX LAWS,
SUCH AS DEALERS IN SECURITIES, BANKS, INSURANCE COMPANIES, TAX-EXEMPT
ORGANIZATIONS, NON-UNITED STATES

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PERSONS, STOCKHOLDERS WHO DO NOT HOLD THEIR SHARES OF FIRST COMMERCE COMMON
STOCK AS "CAPITAL ASSETS" WITHIN THE MEANING OF SECTION 1221 OF THE CODE, AND
SHAREHOLDERS WHO ACQUIRED THEIR SHARES OF FIRST COMMERCE COMMON STOCK PURSUANT
TO THE EXERCISE OF OPTIONS OR OTHERWISE AS COMPENSATION, NOR ANY CONSEQUENCES
ARISING UNDER THE LAWS OF ANY STATE, LOCALITY OR FOREIGN JURISDICTION. THE
DISCUSSION IS BASED UPON THE CODE, TREASURY REGULATIONS THEREUNDER AND
ADMINISTRATIVE RULINGS AND COURT DECISIONS AS OF THE DATE HEREOF. ALL OF THE
FOREGOING IS SUBJECT TO CHANGE AND ANY SUCH CHANGE COULD AFFECT THE CONTINUING
VALIDITY OF THIS DISCUSSION. FIRST COMMERCE SHAREHOLDERS ARE URGED TO CONSULT
THEIR OWN TAX ADVISORS CONCERNING THE PARTICULAR FEDERAL, STATE, LOCAL AND
FOREIGN TAX CONSEQUENCES OF THE MERGER TO THEM.

OTHER POSSIBLE CONSEQUENCES

If the Merger is consummated, the shareholders of First Commerce, a Florida
corporation, will become shareholders of BancGroup, a Delaware business
corporation.

For a discussion of the differences, if any, in the rights, preferences,
and privileges attaching to First Commerce Common Stock as compared with
BancGroup Common Stock, see "COMPARATIVE RIGHTS OF STOCKHOLDERS."

CONDITIONS TO CONSUMMATION OF THE MERGER

The parties' obligation to consummate the Merger is subject to the
satisfaction (or waiver, to the extent permitted by law) of various conditions
set forth in the Agreement.

The obligations of First Commerce and BancGroup to consummate the Merger
are conditioned upon, among other things, (i) the approval of the Agreement by
the holders of at least a majority of the outstanding shares of First Commerce
Common Stock; (ii) the approval of the Merger by the Federal Reserve and
approval of the Bank Merger by the Alabama Department and the Federal Reserve;
(iii) the absence of pending or threatened litigation with a view to restraining
or prohibiting consummation of the Merger or in which it is sought to obtain
divestiture, rescission or damages in connection with the Merger; (iv) the
absence of any investigation by any governmental agency which might result in
any such proceeding; (v) consummation of the Merger no later than November 30,
1997; and (vi) receipt of opinions of counsel regarding certain matters.

The obligation of First Commerce to consummate the Merger is further
subject to several other conditions, including: (i) the absence of any material
adverse change in the financial condition or affairs of BancGroup; (ii) the
shares of BancGroup Common Stock to be issued under the Agreement shall have
been approved for listing on the NYSE; and (iii) the accuracy in all material
respects of the representations and warranties of BancGroup contained in the
Agreement and the performance by BancGroup of all of its covenants and
agreements under the Agreement.

The obligation of BancGroup to consummate the Merger is subject to several
other conditions, including: (i) the absence of any material adverse change in
the financial condition or affairs of First Commerce; (ii) the holders of not
more than 15% of the outstanding shares of First Commerce Common Stock shall
have exercised dissenters' rights with respect to their shares; (iii) the
accuracy in all material respects of the representations and warranties of First
Commerce contained in the Agreement, and the performance by First Commerce of
all of its covenants and agreements under the Agreement; and (iv) the receipt by
BancGroup of certain undertakings from holders of First Commerce Common Stock
who may be deemed to be "affiliates" of First Commerce pursuant to the rules of
the Commission.

It is anticipated that the foregoing conditions, as well as certain other
conditions contained in the Agreement, such as the receipt of certificates of
officers of each party as to compliance with the Agreement, and satisfaction of
each party of all representations, warranties and covenants, will be satisfied.
The Agreement

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provides that First Commerce and BancGroup may waive all conditions to their
obligations to consummate the Merger, other than the receipt of the requisite
approvals of regulatory authorities and First Commerce shareholder approval of
the Merger. In making any decision regarding a waiver of one or more conditions
to consummation of the Merger or an amendment of the Agreement, the Boards of
Directors of First Commerce and BancGroup would be subject to the fiduciary duty
standards imposed upon such boards by relevant law that would require such
boards to act in the best interests of their respective shareholders.

AMENDMENT OR TERMINATION

The Boards of Directors of BancGroup and First Commerce may agree to amend
or terminate the Agreement before or after approval by the shareholders of First
Commerce. However, the Board of Directors of First Commerce may not amend the
Agreement which would alter the Merger Consideration or which, in the opinion of
the Board of Directors of First Commerce, would adversely affect the rights of
the shareholders of First Commerce, unless such amendments are approved by a
majority of the outstanding shares of First Commerce Common Stock. Such
amendments may require the filing of an amendment of the Registration Statement,
of which this Prospectus forms a part, with the Commission. See "Conditions to
Consummation of the Merger."

REGULATORY APPROVALS

Prior to the Merger, a 10-day prior notification to the Federal Reserve
will be provided pursuant to Section 3 of the BHCA and the regulations
promulgated pursuant thereto. It is contemplated that the Merger will occur
simultaneously with the Bank Merger. The approval of the Federal Reserve and the
Alabama Department must be obtained prior to consummation of the Bank Merger.
Applications were filed with the Federal Reserve and the Alabama Department on
or about April 21, 1997. The regulatory approval process is expected to take
approximately two months from that date.

Federal Reserve Notification. Under limited circumstances, approval of the
Merger by the Federal Reserve under Section 3 of the BHCA is not required. More
specifically, the Merger would not require Federal Reserve approval if: (1) the
Bank is merged into a BancGroup bank subsidiary simultaneously with the Merger;
(2) the Bank's merger into a BancGroup bank subsidiary requires the prior
approval of a federal supervisory agency under the Bank Merger Act; (3) the
transaction does not involve an acquisition subject to Section 4 of the BHCA;
(4) both before and after the transaction, BancGroup meets the Federal Reserve's
capital adequacy guidelines; and (5) BancGroup provides written notice of the
transaction to the Federal Reserve at least ten days prior to the transaction,
and during that period, the Federal Reserve does not require an application
under Section 3 of the BHCA. It is anticipated that BancGroup will satisfy the
foregoing requirements, and, absent Federal Reserve action pursuant to item (5)
above, an application with the Federal Reserve pursuant to Section 3 of the BHCA
will not be required.

In the event the Federal Reserve requires an application pursuant to
Section 3 of the BHCA, approval of the Federal Reserve would be required prior
to the Merger. Pursuant to Section 3 of the BHCA, and the regulations
promulgated pursuant thereto, the Federal Reserve must withhold approval of the
Merger if it finds that the transaction will result in a monopoly or be in
furtherance of any combination or conspiracy to monopolize or attempt to
monopolize the business of banking in any part of the United States. In
addition, the Federal Reserve may not approve the Merger if it finds that the
effect thereof may be substantially to lessen competition in any section of the
country, or tend to create a monopoly, or would in any other manner be in
restraint of trade, unless it finds that the anti-competitive effects of the
Merger are clearly outweighed by the probable effect of the Merger in meeting
the convenience and needs of the communities to be served. The Federal Reserve
will also take into consideration the financial condition and managerial
resources of BancGroup, its subsidiaries, any banks related to BancGroup through
common ownership or management, and the Bank. Finally, the Federal Reserve will
consider the compliance records of BancGroup's subsidiaries under the Community
Reinvestment Act.

The BHCA provides for the publication of notice and public comment on the
application and authorizes the Federal Reserve to permit interested parties to
intervene in the proceedings. If an interested party is

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permitted to intervene, such intervention could delay the regulatory approvals
required for consummation of the Merger. Section 11 of the BHCA imposes a
waiting period which prohibits the consummation of the Merger, in ordinary
circumstances, for a period ranging from 15-30 days following the Federal
Reserve's approval of the Merger. During such period, the United States
Department of Justice, should it object to the Merger for antitrust reasons, may
challenge the consummation of the Merger.

Alabama State Banking Department Approval. The Bank Merger must be
approved by the Alabama Department pursuant to applicable provisions of the
Alabama Banking Code. If the Superintendent of the Alabama Department finds that
(1) the proposed transaction will not be detrimental to the safety and soundness
of the bank resulting from the Bank Merger, (2) any new officers and directors
of the resulting bank are qualified by character, experience, and financial
responsibility to direct and manage the resulting bank, and (3) the proposed
Bank Merger is consistent with the convenience and needs of the communities to
be served by the resulting bank in the State of Alabama and is otherwise in the
public interest, the Bank Merger will be approved by the Superintendent.

Federal Reserve Approval. On March 14, 1997, Colonial Bank, a
state-chartered non-member bank, the primary federal regulator of which is
currently the Federal Deposit Insurance Corporation, filed an application for
membership in the Federal Reserve. Subject to Federal Reserve approval of the
pending membership application, it is anticipated that Colonial Bank will become
a member of the Federal Reserve on or about June 1, 1997. As the primary federal
regulator of state-chartered banks that are members of the Federal Reserve, the
Federal Reserve will become the primary federal regulator of Colonial Bank upon
its admission to membership in the Federal Reserve. In that the Bank Merger Act
requires that a bank merger be approved by the primary federal regulator of the
resulting bank, and in that Colonial Bank will be the bank resulting from the
Bank Merger, the Federal Reserve's approval of the Bank Merger must be obtained.
A delay in the receipt of the Federal Reserve's approval of the membership
application or the Federal Reserve's disapproval of such application could
significantly impact the timing of the Bank Merger.

The Federal Reserve is prohibited from approving the Bank Merger if it
would result in a monopoly or would be in furtherance of any combination or
conspiracy to monopolize or to attempt to monopolize the business of banking in
any part of the United States. In addition, the Federal Reserve is prohibited
from approving the Bank Merger if its effect, in any section of the country,
would be substantially to lessen competition, or to tend to create a monopoly,
or which in any other manner would be in restraint of trade, unless it finds
that the anti-competitive effects of the Bank Merger are clearly outweighed in
the public interest by the probable effect of the Bank Merger in meeting the
convenience and needs of the community to be served. The Federal Reserve is
required to take into consideration the financial and managerial resources and
future prospects of the existing and proposed institutions, and the convenience
and needs of the community to be served.

In that the Bank Merger constitutes an interstate bank merger, certain
additional requirements are applicable to the Bank Merger. For example, subject
to certain exceptions, the Federal Reserve is prohibited from approving the Bank
Merger if Colonial Bank materially fails to comply with filing requirements
imposed by the Florida Department of Banking and Finance for interstate bank
merger transactions. In addition, the Federal Reserve is prohibited from
approving the Bank Merger if the bank resulting from the Bank Merger, including
all insured depository institutions which are affiliates of such resulting bank,
upon consummation of the transaction, would control more than 10% of the total
amount of deposits of insured depository institutions in the United States. The
Federal Reserve is also prohibited from approving the Bank Merger if either
party to the Bank Merger has a branch in any state in which any other bank
involved in the Bank Merger has a branch, and the resulting bank, upon
consummation of the Bank Merger, would control 30% or more of the total amount
of deposits of insured depository institutions in any such state. Finally, the
Federal Reserve may approve the interstate bank merger only if each bank
involved in the transaction is adequately capitalized as of the date the
application is filed, and the Federal Reserve determines that the resulting bank
will continue to be adequately capitalized and adequately managed upon
consummation of the Bank Merger.

The Bank Merger Act imposes a waiting period which prohibits consummation
of the Bank Merger, in ordinary circumstances, for a period ranging from 15-30
days following the Federal Reserve's approval of the

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<PAGE> 31

Bank Merger. During such period, the United States Department of Justice, should
it object to the Merger for antitrust reasons, may challenge the consummation of
the Merger.

The Agreement provides that the obligation of each of BancGroup and First
Commerce to consummate the Merger is conditioned upon the receipt of all
necessary regulatory approvals, including the approval of the Federal Reserve
and the Alabama Department, and the absence in such approvals of any condition
or restriction which in the reasonable good faith judgment of the Board of
Directors of BancGroup or First Commerce would so materially adversely impact
the economic benefits of the transaction as contemplated by the Agreement so as
to render inadvisable the consummation of the Merger. There can be no assurance
that the Federal Reserve or the Alabama Department will approve BancGroup's
applications to acquire First Commerce, and, if such approvals are received,
that such approvals will not be conditioned upon terms and conditions that would
cause the parties to abandon the Merger.

Any approval received from the banking agencies reflects only their view
that the Merger does not contravene applicable competitive standards imposed by
law, and that the Merger is consistent with regulatory policies relating to
safety and soundness. THE APPROVAL OF THE BANKING AGENCIES IS NOT AN ENDORSEMENT
OR RECOMMENDATION OF THE MERGER.

BancGroup is not aware of any other governmental approvals or actions that
may be required for consummation of the Merger except for the Federal Reserve
and the Alabama Department approvals, described above. Should any such approval
or action be required, it is presently contemplated that such approval or action
would be sought.

CONDUCT OF BUSINESS PENDING THE MERGER

The Agreement contains certain restrictions on the conduct of the business
of First Commerce pending consummation of the Merger. The Agreement prohibits
First Commerce from taking any of the following actions, prior to the Effective
Date, subject to certain limited exceptions previously agreed to by the parties,
without the prior written approval of BancGroup:

(i) Issuing, delivering or agreeing to issue or deliver any stock,
bonds or other corporate securities (whether authorized and unissued or
held in the treasury), except shares of First Commerce Common Stock issued
upon the exercise of First Commerce Options;

(ii) Borrowing or agreeing to borrow any funds or incurring or
becoming subject to, any liability (absolute or contingent) except
borrowings, obligations and liabilities incurred in the ordinary course of
business and consistent with past practice;

(iii) Paying any material obligation or liability (absolute or
contingent) other than current liabilities reflected in or shown on the
most recent balance sheet and current liabilities incurred since that date
in the ordinary course of business and consistent with past practice;

(iv) Declaring or making or agreeing to declare or make, any payment
of dividends or distributions of any assets of any kind whatsoever to
shareholders, or purchasing or redeeming or agreeing to purchase or redeem,
any of its outstanding securities;

(v) Except in the ordinary course of business, selling or transferring
or agreeing to sell or transfer, any of its assets, property or rights or
canceling, or agreeing to cancel, any debts or claims;

(vi) Except in the ordinary course of business, entering or agreeing
to enter into any agreement or arrangement granting any preferential rights
to purchase any of its assets, property or rights or requiring the consent
of any party to the transfer and assignment of any of its assets, property
or rights;

(vii) Waiving any rights of value which in the aggregate are material;

(viii) Except in the ordinary course of business, making or permitting
any amendment or termination of any contract, agreement or license to which
it is a party if such amendment or termination is material considering its
business as a whole;

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(ix) Except in accordance with past practice, making any accrual or
arrangement for or payment of bonuses or special compensation of any kind
or any severance or termination pay to any present or former officer or
employee;

(x) Except in accordance with past practice, increasing the rate of
compensation payable to or to become payable to any of its officers or
employees or making any material increase in any profit-sharing, bonus,
deferred compensation, savings, insurance, pension, retirement or other
employee benefit plan, payment or arrangement made to, for or with any of
its officers or employees;

(xi) Failing to operate its business in the ordinary course so as to
preserve its business intact and to preserve the goodwill of its customers
and others with whom it has business relations; and

(xii) Entering into any other material transaction other than in the
ordinary course of business.

The Agreement provides that prior to the Effective Date, no director or
officer of First Commerce or any of its subsidiaries shall, directly or
indirectly, own, manage, operate, join, control, be employed by or participate
in the ownership, proposed ownership, management, operation or control of or be
connected in any manner with, any business, corporation or partnership which is
competitive to the business of First Commerce or its subsidiaries.

The Agreement also provides that (i) First Commerce will consult with
BancGroup respecting loan requests in excess of $100,000 that are not
single-family residential loan requests and respecting other loan requests
outside the normal course of business, and (ii) First Commerce will consult with
BancGroup respecting business issues that First Commerce believes should be
brought to the attention of BancGroup.

COMMITMENTS WITH RESPECT TO OTHER OFFERS

Until the termination of the Agreement, and except for the Merger, neither
First Commerce nor any of its directors or officers (or any person representing
any of the foregoing) may solicit or encourage inquiries or proposals with
respect to, furnish any information relating to or participate in any
negotiations or discussions concerning, any acquisition or purchase of all or of
a substantial portion of the assets of, or of a substantial equity interest in,
First Commerce or any business combination involving First Commerce
(collectively, an "Acquisition Proposal") other than as contemplated by the
Agreement. First Commerce is required to notify BancGroup immediately if any
such inquiries or proposals are received by First Commerce, if any such
information is requested from First Commerce, or if any such negotiations or
discussions are sought to be initiated with First Commerce. First Commerce is
required to instruct its officers, directors, agents or affiliates or their
subsidiaries to refrain from doing any of the above. First Commerce may
communicate information about an Acquisition Proposal to its shareholders if and
to the extent that legal counsel provides a written opinion to First Commerce (a
copy of which shall be provided in advance to BancGroup) that it is required to
do so in order to comply with its legal obligations.

If (i) an Acquisition Proposal is submitted to and approved by the
shareholders of First Commerce at any time prior to the Effective Date; or (ii)
an Acquisition Proposal is received by First Commerce or is made directly to the
shareholders of First Commerce at any time prior to the termination of the
Agreement (except for a termination by First Commerce for a breach of the
Agreement by BancGroup) and, in the case of (i) or (ii), such Acquisition
Proposal is closed, then First Commerce will pay to BancGroup a termination fee
in an amount equal to 10% of the shareholders' equity of First Commerce as of
the end of the month preceding such payment, as liquidated damages, and not as a
penalty, and, upon the payment in full thereof, the Agreement will be terminated
and no party to the Agreement will have any further liability under the
Agreement.

INDEMNIFICATION

BancGroup has agreed to indemnify present and former directors and officers
of First Commerce and the Bank against liabilities arising out of actions or
omissions occurring at or prior to the Effective Date to the extent provided in
the Florida Business Corporation Act and First Commerce's Articles of
Incorporation and Bylaws.

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RIGHTS OF DISSENTING SHAREHOLDERS

Holders of First Commerce Common Stock as of the Record Date are entitled
to dissenters' rights of appraisal under Florida law. Consummation of the Merger
is subject to, among other things, the holders of no more than 15% of the
outstanding First Commerce Common Stock electing to exercise their dissenters'
rights. Pursuant to Section 607.1320 of the FBCA, a First Commerce shareholder
who does not wish to accept the shares of BancGroup Common Stock to be received
pursuant to the terms of the Agreement may dissent from the Merger and elect to
receive the fair value of his shares as of the day prior to the date the Merger
is approved by First Commerce shareholders. Such fair value is exclusive of any
appreciation or depreciation in anticipation of the Merger, unless exclusion
would be inequitable.

In order to exercise appraisal rights, a dissenting shareholder of First
Commerce (a "Dissenting Shareholder") must fully comply with the statutory
procedures of Sections 607.1320, 607.1301 and 607.1302 of the FBCA, which are
summarized below. Such Sections are attached hereto as Appendix C. Shareholders
of First Commerce are urged to read such Sections in their entirety and to
consult with their legal advisors. Each shareholder of First Commerce who
desires to assert his or her appraisal rights is cautioned that failure on his
or her part to adhere strictly to the requirements of Florida law in any regard
will cause a forfeiture of any appraisal rights. The following summary of
Florida law is qualified in its entirety by reference to the full text of the
provisions of the FBCA attached hereto as Appendix C.

To exercise appraisal rights,

1. A Dissenting Shareholder must file with First Commerce, prior to the
taking of the vote on the Merger, a written notice of intent to demand
payment for his or her shares if the Merger is effectuated. A vote
against the Merger will not alone be deemed to be the written notice of
intent to demand payment. A Dissenting Shareholder need not vote against
the Merger, but cannot vote for the Merger.

2. Within ten days after the vote on the Merger is taken, First Commerce
must give written notice of the authorization of the Merger, if obtained,
to each First Commerce shareholder who filed notice of intent to demand
payment for his shares. WITHIN TWENTY DAYS AFTER THE GIVING OF THE
FOREGOING NOTICE BY FIRST COMMERCE, EACH DISSENTING SHAREHOLDER MUST FILE
WITH FIRST COMMERCE A NOTICE OF ELECTION TO DISSENT, STATING HIS OR HER
NAME AND ADDRESS, THE NUMBER OF SHARES AS TO WHICH HE OR SHE DISSENTS AND
A DEMAND FOR PAYMENT OF THE FAIR VALUE OF HIS OR HER SHARES. ANY
DISSENTING SHAREHOLDER FAILING TO FILE SUCH ELECTION WITHIN THE PERIOD
WILL LOSE HIS OR HER APPRAISAL RIGHTS AND BE BOUND BY THE TERMS OF THE
AGREEMENT. A Dissenting Shareholder filing an election to dissent must
also deposit the certificate(s) representing his or her shares with First
Commerce simultaneously with the filing of the election.

3. Upon filing a notice of election to dissent, a Dissenting Shareholder
shall thereafter be entitled only to payment pursuant to the procedure
set forth in the applicable sections of FBCA and shall not be entitled to
vote or to exercise any other rights of a shareholder. A notice of
election may be withdrawn in writing by the Dissenting Shareholder at any
time before an offer is made by First Commerce to pay for shares. Upon
such withdrawal, the right of the Dissenting Shareholder to be paid the
fair value of his or her shares will cease, and he or she will be
reinstated as a shareholder.

4. Within ten days after the expiration of the period in which a Dissenting
Shareholder may file notice of election to dissent, or within ten days
after the Effective Date of the Merger, whichever is later (but in no
event later than ninety days after the Merger is approved), First
Commerce (or BancGroup after the Effective Date) must make a written
offer to each Dissenting Shareholder who has made demand for appraisal
for his or her shares at a price deemed by First Commerce to be the fair
value thereof.

5. If, within thirty days after the making of such offer, the Dissenting
Shareholder accepts the offer, payment for the shares of the Dissenting
Shareholder is to be made within ninety days after the making of such
offer or the effective date of the Merger, whichever is later. Upon
payment of the agreed value, the Dissenting Shareholder will cease to
have any interest in such shares.

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6.If First Commerce (or BancGroup, if appropriate) fails to make such
offer within the period specified above or if it makes an offer and a
Dissenting Shareholder fails to accept the same within a period of 30
days thereafter, then First Commerce, within 30 days after receipt of
written demand from any Dissenting Shareholder given within 60 days after
the date on which the Merger was effected, shall, or at its election at
any time within such period of 60 days may, file an action in any court
of competent jurisdiction in Polk County requesting that the fair value
of such shares be determined by the Court.

7.If First Commerce fails to institute such proceeding within the
above-prescribed period, any Dissenting Shareholder may do so in the name
of First Commerce. A copy of the initial pleading will be served on each
Dissenting Shareholder. First Commerce is required to pay each Dissenting
Shareholder the amount found to be due within ten days after final
determination of the proceedings. The judgment of the court is payable
only upon and concurrently with the surrender to First Commerce of the
certificate(s) representing the shares. Upon payment of the judgment, the
Dissenting Shareholder ceases to have any interest in such shares.

8.The costs and expenses of the court proceeding are determined by the
court and will be assessed against First Commerce (or BancGroup, if
appropriate) except that all or any part of such costs and expenses may
be apportioned and assessed against any Dissenting Shareholders who are
parties to the proceeding and to whom First Commerce has made an offer to
pay for their shares, if the court finds their refusal to accept such
offer to have been arbitrary, vexatious or not in good faith. Expenses
include reasonable compensation for, and expenses of, appraisers, but
shall exclude the fees and expenses of counsel for, and experts employed
by, any party. If the value of the shares, as determined by the court,
materially exceeds the amount that First Commerce offered to pay for the
shares then the court may, in its discretion, award to any Dissenting
Shareholder who is a party to the proceedings, such sum as the court may
determine to be reasonable compensation to any expert(s) employed by the
Dissenting Shareholder in the proceeding.

The foregoing discussion is only a summary of the provisions of Florida law
and does not purport to be complete and is qualified in its entirety by
reference to the provisions of Florida law, which are attached hereto as
Appendix C. Successful assertion by First Commerce shareholders of their
dissenters' appraisal rights is dependent upon compliance with the requirements
described above. Non-compliance with any provision will result in a failure to
perfect those rights and the loss of any opportunity to receive payment for
shares pursuant to an appraisal.

BECAUSE OF THE COMPLEXITY OF THE PROVISIONS OF THE FLORIDA LAW RELATING TO
DISSENTERS' APPRAISAL RIGHTS, SHAREHOLDERS WHO ARE CONSIDERING DISSENTING FROM
THE MERGER ARE URGED TO CONSULT THEIR OWN LEGAL ADVISERS.

RESALE OF BANCGROUP COMMON STOCK ISSUED IN THE MERGER

The issuance of the shares of BancGroup Common Stock pursuant to the Merger
(including any shares to be issued pursuant to First Commerce Options) has been
registered under the Securities Act of 1933 (the "Securities Act"). As a result,
shareholders of First Commerce who are not "affiliates" of First Commerce (as
such term is defined under the Securities Act) may resell, without restriction,
all shares of BancGroup Common Stock which they receive in connection with the
Merger. Under the Securities Act, affiliates of First Commerce are subject to
restrictions on the resale of the BancGroup Common Stock which they receive in
the Merger.

The BancGroup Common Stock received by affiliates of First Commerce who do
not also become affiliates of BancGroup after the consummation of the Merger may
not be sold except pursuant to an effective Registration Statement under the
Securities Act covering such shares or in compliance with Rule 145 promulgated
under the Securities Act or another applicable exemption from the registration
requirements of the Securities Act. Generally, Rule 145 permits BancGroup Common
Stock held by such shareholders to be sold in accordance with certain provisions
of Rule 144 under the Securities Act. In general, these provisions of Rule 144
permit a person to sell on the open market in brokers or certain other
transactions within any three-

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<PAGE> 35

month period a number of shares that does not exceed the greater of 1% of the
then outstanding shares of BancGroup Common Stock or the average weekly trading
volume in BancGroup Common Stock reported on the NYSE during the four calendar
weeks preceding such sale. Sales under Rule 144 are also subject to the
availability of current public information about BancGroup. The restrictions on
sales will cease to apply under most circumstances once the former First
Commerce affiliate has held the BancGroup Common Stock for at least one year.
BancGroup Common Stock held by affiliates of First Commerce who become
affiliates of BancGroup, if any, will be subject to additional restrictions on
the ability of such persons to resell such shares.

First Commerce will provide BancGroup with such information as may be
reasonably necessary to determine the identity of those persons (primarily
officers and directors) who may be deemed to be affiliates of First Commerce.
First Commerce will also obtain from each such person a written undertaking to
the effect that no sale or transfer will be made of any shares of BancGroup
Common Stock by such person except pursuant to Rule 145 or pursuant to an
effective registration statement or an exemption from registration under the
Securities Act. Receipt of such an undertaking is a condition to BancGroup's
obligation to close the Merger. If such undertakings are not received and
BancGroup waives receipt of such condition, the certificates for the shares of
BancGroup Common Stock to be issued to such person will contain an appropriate
restrictive legend and appropriate stock transfer orders will be given to
BancGroup's stock transfer agent.

ACCOUNTING TREATMENT

The acquisition of First Commerce will be treated as a "purchase"
transaction by BancGroup. Accordingly, the purchase price will be assigned to
the fair value of the net tangible assets acquired and any purchase price in
excess thereof will be assigned to intangibles. The valuation of intangibles, if
any, will be made as of the Effective Date of the Merger. Intangibles, in the
approximate amount of $6 million, will be amortized by charges or credits to
future earnings over a period of approximately twenty years.

NYSE REPORTING OF BANCGROUP COMMON STOCK ISSUED IN THE MERGER

Sales of BancGroup Common Stock to be issued in the Merger in exchange for
First Commerce Common Stock will be reported on the NYSE.

TREATMENT OF FIRST COMMERCE OPTIONS

ASSUMPTION OF OPTIONS. As of the date of this Prospectus, First Commerce
had granted options and stock purchase warrants (collectively, the "First
Commerce Options"), which entitle the holders thereof to acquire up to 321,215
shares of First Commerce Common Stock. On the Effective Date, BancGroup will
assume all First Commerce Options outstanding, and each such option will
represent the right to acquire BancGroup Common Stock on substantially the same
terms applicable to the First Commerce Options. The registration statement
registering the shares of BancGroup Common Stock issued pursuant to the Merger
also registers the shares of BancGroup Common Stock to be issued upon the
exercise of the First Commerce Options assumed by BancGroup. The number of
shares of BancGroup Common Stock to be issued pursuant to such options will
equal the number of shares of First Commerce Common Stock subject to such First
Commerce Options multiplied by the Exchange Ratio, provided that no fraction of
shares of BancGroup Common Stock will be issued and the number of shares of
BancGroup Common Stock to be issued upon the exercise of First Commerce Options,
if a fractional share exists, will equal the number of whole shares obtained by
rounding to the nearest whole number, giving account to such fraction, or else
such fractional interest will be paid in cash. The exercise price for the
acquisition of BancGroup Common Stock will be the exercise price for each share
of First Commerce Common Stock subject to such options divided by the Exchange
Ratio, adjusted appropriately for any rounding to whole shares that may be done.

As an alternative to assumption by BancGroup, holders of First Commerce
Options may elect by giving written notice to First Commerce before the
Effective Date to be paid in cash the difference between the exercise price for
such options and the value of such option determined at the Effective Date based
upon the Exchange Ratio.

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<PAGE> 36

The First Commerce Options are issuable pursuant to the First Commerce 1992
Stock Option Plan for Directors (the "Director Plan"), the 1992 Stock Option
Plan for Officers (the "Option Plan") and the Stock Purchase Warrants (the
"Warrants") (collectively the "Plans").

The Plans are not qualified under Section 401(a) of the Internal Revenue
Code of 1986, as amended, nor are they subject to the Employee Retirement Income
Security Act of 1974. First Commerce Options are not transferrable except under
the laws of descent and distribution. No further options will be granted under
the Plans after the Merger. A total of 26 persons currently hold First Commerce
Options.

TAX CONSEQUENCES -- INCENTIVE OPTIONS. Options issued under the Option
Plan may qualify as "incentive stock options," under Section 422 of the Internal
Revenue Code of 1986, as amended. If such options so qualify under the Internal
Revenue Code no income will result to a grantee of any such option upon the
granting or exercising of an option by the grantee, and BancGroup will not be
entitled to a tax deduction by reason of such grant or exercise.

If, after exercising the option, the employee holds the stock obtained
through exercise for at least two years after the date of option grant and at
least one year after the stock was obtained, the employee's gain (if any) on
selling the stock will generally be treated as a long term capital gain.
Generally, the employee's alternative minimum taxable income for minimum tax
purposes will be increased by the difference between the option price and the
fair market value of the stock on the date of exercise.

If the holding period requirements just stated are not met, then any gain
on the sale of the stock will be taxed partly or entirely at ordinary income tax
rates. If the stock is held for less than the required holding period, then the
difference between the option exercise price and the fair market value of the
stock on the date of exercise will be taxed at ordinary income tax rates. The
gain equal to the increase in the fair market value of the stock after the date
of exercise of the option will generally be taxed as capital gain.

It should be understood that the holding periods discussed above relate
only to federal income tax treatment and not to any securities law restrictions
that may apply to the sale of shares obtained through an option.

TAX CONSEQUENCES -- NON QUALIFIED OPTIONS. Certain options issued under
the Option Plan and the Director Plan that are issued as nonqualified options
are not "incentive stock options" under Section 422 of the Internal Revenue Code
of 1986, as amended. Thus, upon the exercise of such an option, ordinary income
will result to the grantee equal to the difference between the price of the
option and the fair market value of the stock subject to the option at the date
of exercise. BancGroup, however, will be entitled to a tax deduction equal to
the amount of ordinary income accruing to the optionee.

TAX CONSEQUENCES -- WARRANTS. If the warrants were issued in connection
with the performance of services, the assumption of the warrants should be
treated in the same fashion as the tax consequences of nonqualified options
discussed above. If, however, the warrants were not issued in connection with
the performance of services, the assumption of those warrants by BancGroup would
result in the recognition of taxable income by the holders of the warrants.

The foregoing statements concerning federal income tax treatment are
necessarily general and may not apply in a particular instance. Option holders
should contact their own professional tax advisors for advice concerning their
particular tax situation and any changes in the tax law since the date of this
Prospectus.

ADMINISTRATION. The shares of stock to be delivered upon the exercise of
First Commerce Options will be made available, after the Merger, from the
authorized but unissued shares of BancGroup's Common Stock or shares reacquired
by BancGroup in the open market.

The Plans are to be administered, after the Merger, by the Personnel and
Compensation Committee (the "Committee") of the Board of Directors of BancGroup.
All members of the Committee are directors of BancGroup. The Chairman of the
Committee, John C. H. Miller, Jr., receives employee-related compensation from
BancGroup and holds options under BancGroup's stock option plans. Mr. Miller is
a member of a law firm that performs legal services for BancGroup. See "LEGAL
OPINIONS." Another member of the Committee, Jack H. Rainer, is Chairman of
Bankers Credit Life Insurance Company, which provides credit

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<PAGE> 37

life insurance on certain loans made by Colonial Bank, BancGroup's Alabama bank
subsidiary. The members of the Committee serve at the pleasure of the Board of
Directors of BancGroup. The Committee shall interpret the Plans and resolve
questions presented by holders of options under the Plans. Requests for
information or questions about the Plans should be directed to BancGroup's
Corporate Secretary, at the offices of BancGroup, Post Office Box 1108, One
Commerce Street, Montgomery, Alabama 36102, telephone: (334) 240-5000.

EXERCISE OF OPTIONS. After a First Commerce Option becomes exercisable in
accordance with its terms, it may be exercised by the holder by giving written
notice to BancGroup on a form provided by BancGroup and by paying to BancGroup
in cash the exercise price of the shares to be acquired under the option.
Payment may be made to BancGroup by cash, check, bank draft, or money order, or,
if the Committee agrees in a particular instance, by delivering BancGroup stock
already owned by the option holder. The period during which an option may be
exercised is stated in the agreement respecting each grant of options.

TERMINATION OF OPTIONS. Options under the Option Plan and the Director
Plan may not be exercised after 10 years from the date of grant and may be
exercised at any time, but must be exercised no later than within (1) 90 days
after termination of a holders' employment or directorship as applicable; or (2)
within six months after termination due to permanent and total disability; or
(3) within one year after the holder's death. Options terminate in 2002.

Warrants must be exercised on or before 2 p.m., May 15, 1999.

AMENDMENT AND OTHER MATTERS. BancGroup's Board of Directors may at any
time amend the Plans, except that no amendment may make any change in any option
already granted which would adversely affect the rights of any participant.

It is not anticipated that BancGroup will make any reports to option
holders regarding the amount or status of First Commerce Options held. Option
holders may obtain such information from BancGroup at the address given above.

COMPARATIVE MARKET PRICES AND DIVIDENDS

BANCGROUP

BancGroup Common Stock is listed for trading on the NYSE. The Common Stock
was first listed on the NYSE on February 24, 1995. Prior to February 21, 1995,
BancGroup had two classes of common stock outstanding, Class A and Class B. The
Class B was not publicly traded. The Class A Common Stock was traded in the
over-the-counter market and quoted on the NASDAQ National Market System. The
BancGroup Class A Common Stock had more limited voting rights than the BancGroup
Class B Common Stock. The Class A and Class B Common Stock were reclassified
into one class of Common Stock on February 21, 1995, and the Class A Common
Stock ceased to be quoted on NASDAQ on February 24, 1995.

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<PAGE> 38

The following table shows the dividends paid per share and indicates the
high and low closing prices for the BancGroup Class A Common Stock as reported
by the NASDAQ National Market System up to February 24, 1995, and the same
information reported by the NYSE for the BancGroup Common Stock commencing
February 24, 1995.

<TABLE>
<CAPTION>
PRICE(1)
--------------- DIVIDENDS(1)
HIGH LOW (PER SHARE)
----- ---- ------------
<S> <C> <C> <C>
1995
1st Quarter............................................... $11 13/16 $ 9 3/4 $0.1125
2nd Quarter............................................... 13 5/8 11 9/16 0.1125
3rd Quarter............................................... 14 15/16 13 3/4 0.1125
4th Quarter............................................... 16 7/16 14 1/4 0.1125
1996
1st Quarter............................................... 18 1/4 15 0.135
2nd Quarter............................................... 18 1/6 15 5/8 0.135
3rd Quarter............................................... 17 15/16 15 5/8 0.135
4th Quarter............................................... 20 1/8 17 3/8 0.135
1997
1st Quarter............................................... 24 18 2/3 0.15
2nd Quarter (through April 22, 1997)...................... 23 1/2 22 0.15
</TABLE>

- ---------------

(1) Price and dividends have been restated to reflect the impact of a
two-for-one stock split effected in the form of a 100% stock dividend paid
February 11, 1997.

On February 14, 1997, the business day immediately prior to the public
announcement of the Merger, the closing price as reported on the NYSE of the
BancGroup Common Stock was $22 7/8 per share.

At December 31, 1996, BancGroup's subsidiaries accounted for approximately
98% of BancGroup's consolidated assets. BancGroup derives substantially all of
its income from dividends received from its subsidiaries. Various statutory
provisions and regulatory policies limit the amount of dividends the subsidiary
banks may pay without regulatory approval. In addition, federal statutes
restrict the ability of subsidiary banks to make loans to BancGroup, and
regulatory policies may also restrict such dividends.

FIRST COMMERCE

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<PAGE> 39

Commerce Common Stock that have occurred since January 1, 1995 for transactions
in which the trading prices are known to management of First Commerce:

<TABLE>
<CAPTION>
PRICE PER SHARE
OF COMMON STOCK
----------------
HIGH LOW SHARES
----- ----- ------
<S> <C> <C> <C>
1995
First Quarter.......................................... $ -- $ -- --
Second Quarter......................................... 7.00 7.00 5,100
Third Quarter.......................................... 8.03 7.00 33,060
Fourth Quarter......................................... 9.00 9.00 1,600
1996
First Quarter.......................................... -- -- --
Second Quarter......................................... 8.00 7.00 7,044
Third Quarter.......................................... 7.00 5.50 810
Fourth Quarter......................................... 7.00 7.00 4,520
1997
First Quarter.......................................... -- -- --
Second Quarter (through May 5, 1997)................... -- -- --
</TABLE>

First Commerce has not paid any cash dividends.

The Agreement restricts First Commerce's ability to pay dividends prior to
the Effective Date. See "THE MERGER -- Conduct of Business Pending the Merger."

BANCGROUP CAPITAL STOCK AND DEBENTURES

BancGroup's authorized capital stock consists of 100,000,000 shares of
BancGroup Common Stock, par value $2.50 per share, and 1,000,000 shares of its
Preference Stock, par value $2.50 per share. As of March 1, 1997, there were
issued and outstanding a total of 38,955,210 shares of BancGroup Common Stock.
No shares of Preference Stock are issued and outstanding. BancGroup issued in
1986 $28,750,000 in principal amount of its 7 1/2% Convertible Subordinated
Debentures due 2011 (the "1986 Debentures") of which $7,187,000 were outstanding
as of December 31, 1996 and convertible at any time into 512,800 shares of
BancGroup Common Stock, subject to adjustment. There are 1,605,010 shares of
BancGroup Common Stock subject to issue upon exercise of options under
BancGroup's stock option plans. In addition to BancGroup Common Stock to be
issued in the Merger, BancGroup will issue additional shares of its Common Stock
in pending acquisitions. On January 20, 1997, BancGroup issued, through a
special purpose trust, $70 million of Trust Preferred Securities. See "BUSINESS
OF BANCGROUP -- Proposed Affiliate Banks."

The following statements with respect to BancGroup Common Stock and
Preference Stock are brief summaries of material provisions of Delaware law, the
Restated Certificate of Incorporation (the "Certificate"), as amended, and
bylaws of BancGroup, do not purport to be complete and are qualified in their
entirety by reference to the foregoing.

BANCGROUP COMMON STOCK

Dividends. Subject to the rights of holders of BancGroup's Preference
Stock, if any, to receive certain dividends prior to the declaration of
dividends on shares of BancGroup Common Stock, when and as dividends, payable in
cash, stock or other property, are declared by the BancGroup Board of Directors,
the holders of BancGroup Common Stock are entitled to share ratably in such
dividends.

Voting Rights. Each holder of BancGroup Common Stock has one vote for each
share held on matters presented for consideration by the stockholders.

Preemptive Rights. The holders of BancGroup Common Stock have no
preemptive rights to acquire any additional shares of BancGroup.

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<PAGE> 40

Issuance of Stock. The BancGroup Certificate authorizes the BancGroup
Board to issue authorized shares of BancGroup Common Stock without stockholder
approval. However, BancGroup's Common Stock is listed on the NYSE, which
requires stockholder approval of the issuance of additional shares of BancGroup
Common Stock under certain circumstances.

Liquidation Rights. In the event of liquidation, dissolution or winding-up
of BancGroup, whether voluntary or involuntary, the holders of BancGroup Common
Stock will be entitled to share ratably in any of its assets or funds that are
available for distribution to its stockholders after the satisfaction of its
liabilities (or after adequate provision is made therefor) and after preferences
of any outstanding Preference Stock.

PREFERENCE STOCK

BancGroup's Preference Stock may be issued from time to time as a class
without series, or if so determined by the BancGroup Board of Directors, either
in whole or in part in one or more series. The voting rights, and such
designations, preferences and relative, participating, optional or other special
rights, if any, and the qualifications, limitations or restrictions thereof, if
any, including, but not limited to, the dividend rights, conversion rights,
redemption rights and liquidation preferences, if any, of any wholly unissued
series of BancGroup Preference Stock (or of the entire class of BancGroup
Preference Stock if none of such shares has been issued), the number of shares
constituting any such series and the terms and conditions of the issue thereof
may be fixed by resolution of the BancGroup Board of Directors. BancGroup
Preference Stock may have a preference over the BancGroup Common Stock with
respect to the payment of dividends and the distribution of assets in the event
of the liquidation or winding-up of BancGroup and such other preferences as may
be fixed by the BancGroup Board.

1986 DEBENTURES

BancGroup issued in 1986 its 7 1/2% Convertible Subordinated Debentures due
2011 (the "1986 Debentures") in the total principal amount of $28,750,000. The
1986 Debentures were issued under a trust indenture (the "1986 Indenture")
between BancGroup and SunTrust Bank, Atlanta, Georgia, as trustee.

The 1986 Debentures will mature on March 31, 2011, and are convertible at
any time into shares of BancGroup Common Stock at the option of a holder
thereof, at the conversion price of $14 principal amount of the 1986 Debentures
for each share of BancGroup Common Stock. The conversion price is, however,
subject to adjustment upon the occurrence of certain events as described in the
1986 Indenture. In the event all of the outstanding 1986 Debentures are
converted into shares of BancGroup Common Stock in accordance with the 1986
Indenture, a total of 512,800 shares of such BancGroup Common Stock will be
issued. The 1986 Debentures are redeemable, in whole or in part, at the option
of BancGroup at certain premiums until 1996, when the redemption price shall be
equal to 100% of the face amount of the 1986 Debentures plus accrued interest.
The payment of principal and interest on the 1986 Debentures is subordinate, to
the extent provided in the 1986 Indenture, to the prior payment when due of all
Senior Indebtedness of BancGroup. "Senior Indebtedness" is defined as any
indebtedness of BancGroup for money borrowed, or any indebtedness incurred in
connection with an acquisition or with a merger or consolidation, outstanding on
the date of execution of the 1986 Indenture as originally executed, or
thereafter created, incurred or assumed, and any renewal, extension,
modification or refunding thereof, for the payment of which BancGroup (which
term does not include BancGroup's consolidated or unconsolidated subsidiaries)
is at the time of determination responsible or liable as obligor, guarantor or
otherwise. Senior Indebtedness does not include (i) indebtedness as to which, in
the instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such indebtedness is subordinate in right of
payment to any other indebtedness of BancGroup, and (ii) indebtedness which by
its terms states that such indebtedness is subordinate to or equally subordinate
with the 1986 Debentures.

At December 31, 1996, BancGroup's Senior Indebtedness as defined in the
1986 Indenture aggregated approximately $870 million. Such debt includes all
short-term debt consisting of federal funds purchased, securities purchased
under repurchase agreements and borrowings with the Federal Home Loan Bank but
excludes all federally-insured deposits. BancGroup may from time to time incur
additional indebtedness

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<PAGE> 41

constituting Senior Indebtedness. The 1986 Indenture does not limit the amount
of Senior Indebtedness which BancGroup may incur, nor does such indenture
prohibit BancGroup from creating liens on its property for any purpose.

On January 29, 1997, BancGroup issued, through a special purpose trust, $70
million of Trust Preferred Securities in a private placement offering. The
securities bear interest at 8.92% and are mandatorily redeemable by BancGroup
beginning January 2017 through January 2027. Also, BancGroup has the option to
redeem the securities, in whole or in part, at a premium after January 2007
through January 2017, or at the face amount plus accrued interest after January
2017. The securities are subordinated to substantially all of BancGroup's
indebtedness. In BancGroup's consolidated statement of condition, these
securities will be shown as long-term debt.

CHANGES IN CONTROL

Certain provisions of the BancGroup Certificate and bylaws may have the
effect of preventing, discouraging or delaying any change in control of
BancGroup. The authority of the BancGroup Board of Directors to issue BancGroup
Preference Stock with such rights and privileges, including voting rights, as it
may deem appropriate may enable the BancGroup Board to prevent a change in
control despite a shift in ownership of the BancGroup Common Stock. See
"General" and "Preference Stock." In addition, the power of BancGroup's Board to
issue additional shares of BancGroup Common Stock may help delay or deter a
change in control by increasing the number of shares needed to gain control. See
"BancGroup Common Stock." The following provisions also may deter any change in
control of BancGroup.

Classified Board. BancGroup's Board of Directors is classified into three
classes, as nearly equal in number as possible, with the members of each class
elected to three-year terms. Thus, one-third of BancGroup's Board of Directors
is elected by stockholders each year. With this provision, two annual elections
are required in order to change a majority of the Board of Directors. There are
currently 22 directors of BancGroup. This provision of BancGroup's Certificate
also stipulates that (i) directors can be removed only for cause upon a vote of
80% of the voting power of the outstanding shares entitled to vote in the
election of directors, voting as a class, (ii) vacancies in the Board may only
be filled by a majority vote of the directors remaining in office, (iii) the
maximum number of directors shall be fixed by resolution of the Board of
Directors, and (iv) the provisions relating to the classified Board can only be
amended by the affirmative vote of the holders of at least 80% of the voting
power of the outstanding shares entitled to vote in the election of directors,
voting as a class.

Business Combinations. Certain "Business Combinations" of BancGroup with a
"Related Person" may only be undertaken with the affirmative vote of at least
75% of the outstanding shares of "Voting Stock," plus the affirmative vote of at
least 67% of the outstanding shares of Voting Stock, not counting shares owned
by the Related Person, unless the Continuing Directors of BancGroup approve such
Business Combination. A "Related Person" is a person, or group, who owns or
acquires 10% or more of the outstanding shares of BancGroup Common Stock,
provided that no person shall be a Related Person if such person would have been
a Related Person on the date of approval of this provision by BancGroup's Board
of Directors, i.e., April 20, 1994. An effect of this provision may be to
exclude Robert E. Lowder, the current Chairman and President of BancGroup, and
certain members of his family from the definition of Related Person. A
"Continuing Director" is a director who was a member of the Board of Directors
immediately prior to the time a person became a Related Person. This provision
may not be amended without the affirmative vote of the holders of at least 75%
of the outstanding shares of Voting Stock, plus the affirmative vote of the
outstanding shares of at least 67% of the outstanding Voting Stock, excluding
shares held by a Related Person. This provision may have the effect of giving
the incumbent Board of Directors a veto over a merger or other Business
Combination that could be desired by a majority of BancGroup's stockholders. As
of March 1, 1997, the Board of Directors of BancGroup owned approximately 10.95%
of the outstanding shares of BancGroup Common Stock.

Board Evaluation of Mergers. BancGroup's Certificate permits the Board of
Directors to consider certain factors such as the character and financial
stability of the other party, the projected social, legal, and economic effects
of a proposed transaction upon the employees, suppliers, regulatory agencies and
customers and communities of BancGroup, and other factors when considering
whether BancGroup should undertake a

34
<PAGE> 42

merger, sale of assets, or other similar transaction with another party. This
provision may not be amended except by the affirmative vote of at least 80% of
the outstanding shares of BancGroup Common Stock. This provision may give
greater latitude to the Board of Directors in terms of the factors which the
board may consider in recommending or rejecting a merger or other Business
Combination of BancGroup.

Director Authority. BancGroup's Certificate prohibits stockholders from
calling special stockholders' meetings and acting by written consent. It also
provides that only BancGroup's Board of Directors has the authority to undertake
certain actions with respect to governing BancGroup such as appointing
committees, electing officers, and establishing compensation of officers, and it
allows the Board to act by majority vote.

Bylaw Provisions. BancGroup's bylaws provide that stockholders wishing to
propose nominees for the Board of Directors or other business to be taken up at
an annual meeting of BancGroup stockholders must comply with certain advance
written notice provisions. These bylaw provisions are intended to provide for
the more orderly conduct of stockholder meetings but could make it more
difficult for stockholders to nominate directors or introduce business at
stockholder meetings.

Delaware Business Combination Statute. Subject to some exceptions,
Delaware law prohibits BancGroup from entering into certain "business
combinations" (as defined) involving persons beneficially owning 15% or more of
the outstanding BancGroup Common Stock (or who is an affiliate of BancGroup and
has over the past three years beneficially owned 15% or more of such stock)
(either, for the purpose of this paragraph, an "Interested Stockholder"), unless
the BancGroup Board has approved either (i) the business combination or (ii)
prior to the stock acquisition by which such person's beneficial ownership
interest reached 15% (a "Stock Acquisition"), the Stock Acquisition. The
prohibition lasts for three years from the date of the Stock Acquisition.
Notwithstanding the preceding, Delaware law allows BancGroup to enter into a
business combination with an Interested Stockholder if (i) the business
combination is approved by the BancGroup Board of Directors and authorized by an
affirmative vote of at least 66 2/3% of the outstanding voting stock of
BancGroup which is not owned by the Interested Stockholder or (ii) upon
consummation of the transaction which resulted in the stockholder becoming an
Interested Stockholder, such stockholder owned at least 85% of the outstanding
stock of BancGroup (excluding BancGroup stock held by officers and directors of
BancGroup or by certain BancGroup stock plans). These provisions of Delaware law
apply simultaneously with the provisions of BancGroup's Certificate relating to
business combinations with a related person, described above at "Business
Combinations," but they are generally less restrictive than BancGroup's
Certificate.

Control Acquisitions. As it relates to BancGroup, the Change in Bank
Control Act of 1978 prohibits a person or group of persons from acquiring
"control" of a bank holding company unless the Federal Reserve has been given 60
days' prior written notice of such proposed acquisition and within that time
period the Federal Reserve has not issued a notice disapproving the proposed
acquisition or extending for up to another 30 days the period during which such
a disapproval may be issued. An acquisition may be made prior to the expiration
of the disapproval period if the Federal Reserve issues written notice of its
intent not to disapprove the action. Under a rebuttable presumption established
by the Federal Reserve, the acquisition of more than 10% of a class of voting
stock of a bank holding company with a class of securities registered under
Section 12 of the Exchange Act, such as BancGroup, would, under the
circumstances set forth in the presumption, constitute the acquisition of
control. The receipt of revocable proxies, provided the proxies terminate within
a reasonable time after the meeting to which they relate, is not included in
determining percentages for change in control purposes.

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<PAGE> 43

COMPARATIVE RIGHTS OF STOCKHOLDERS

If the Merger is consummated, shareholders of First Commerce (except those
perfecting dissenters' rights) will become holders of BancGroup Common Stock.
The rights of the holders of the First Commerce Common Stock who become holders
of the BancGroup Common Stock following the Merger will be governed by
BancGroup's Certificate and bylaws, as well as the laws of Delaware, the state
in which BancGroup is incorporated.

The following summary compares the rights of the shareholders of First
Commerce Common Stock with the rights of the holders of the BancGroup Common
Stock. For a more complete description of the rights of the holders of BancGroup
Common Stock, see "BANCGROUP CAPITAL STOCK AND DEBENTURES."

The following information is qualified in its entirety by BancGroup's
Certificate and bylaws, and First Commerce's Restated Articles of Incorporation
and bylaws, the Delaware General Corporation Law (the "Delaware GCL") and the
Florida Business Corporation Act ("FBCA").

DIRECTOR ELECTIONS

First Commerce. First Commerce's directors are elected annually.
Shareholders may not cumulate votes in connection with such election (nor for
any other purpose).

BancGroup. BancGroup's directors are elected to terms of three years with
approximately one-third of the Board to be elected annually. There is no
cumulative voting in the election of directors. See "BANCGROUP CAPITAL STOCK AND
DEBENTURES -- Changes in Control -- Classified Board."

REMOVAL OF DIRECTORS

First Commerce. First Commerce's Restated Articles of Incorporation
provide that directors may be removed by shareholders only for cause.

BancGroup. The BancGroup Certificate provides that a director may be
removed from office, but only for cause and by the affirmative vote of the
holders of at least 80% of the voting shares then entitled to vote at an
election of directors.

VOTING

First Commerce. Each holder of First Commerce Common Stock is entitled to
cast one vote for each share held on each issue with respect to which a
shareholder vote is authorized, but may not cumulate votes for the election of
directors or for any other purpose.

BancGroup. Each stockholder of BancGroup is entitled to one vote for each
share of BancGroup Common Stock held, and such holders are not entitled to
cumulative voting rights in the election of directors.

PREEMPTIVE RIGHTS

First Commerce. Holders of First Commerce Common Stock have no preemptive
rights to subscribe for additional shares on a pro rata or other basis when and
if shares are offered for sale by First Commerce.

BancGroup. The holders of BancGroup Common Stock have no preemptive rights
to acquire any additional shares of BancGroup Common Stock or any other shares
of BancGroup capital stock.

DIRECTORS' LIABILITY

First Commerce. Section 607.0831 of the FBCA provides that a director of
First Commerce will not be personally liable for monetary damages to First
Commerce or any other person for any statement, vote, decision or failure to
act, regarding corporate management or policy, by a director unless: (a) the
director breached or failed to perform his duties as a director, and (b) the
director's breach of or failure to perform those duties constitutes: (1) a
violation of the criminal law, unless the director had reasonable cause to
believe

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<PAGE> 44

his conduct was lawful or had no reasonable cause to believe his conduct was
unlawful, (2) a transaction in which the director derived an improper personal
benefit, (3) a payment of certain unlawful dividends and distributions, (4) in a
proceeding by or in the right of First Commerce to procure judgment in its favor
or by or in the right of a shareholder, conscious disregard for the best
interests of First Commerce, or willful misconduct, or (5) in a proceeding by or
in the right of someone other than First Commerce or a shareholder, recklessness
or an act or omission which was committed in bad faith or with malicious purpose
or in a manner exhibiting wanton and willful disregard of human rights, safety
or property. This provision would absolve directors of First Commerce of
personal liability for negligence in the performance of their duties, including
gross negligence. It would not permit a director to be exculpated, however, from
liability for actions involving conflicts of interest or breaches of the
traditional "duty of loyalty" to First Commerce and its shareholders, and it
would not affect the availability of injunctive and other equitable relief as a
remedy.

BancGroup. The BancGroup Certificate provides that a director of BancGroup
will have no personal liability to BancGroup or its stockholders for monetary
damages for breach of fiduciary duty as a director except (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (iii) for the payment of certain unlawful dividends
and the making of certain stock purchases or redemptions, or (iv) for any
transaction from which the director derived an improper personal benefit. This
provision would absolve directors of personal liability for negligence in the
performance of duties, including gross negligence. It would not permit a
director to be exculpated, however, for liability for actions involving
conflicts of interest or breaches of the traditional "duty of loyalty" to
BancGroup and its stockholders, and it would not affect the availability of
injunctive or other equitable relief as a remedy.

INDEMNIFICATION

First Commerce. Under Section 607.0850 of the FBCA, the directors and
officers of First Commerce may be indemnified against certain liabilities which
they may incur in their capacity as officers and directors. Such indemnification
is generally available if the executive acted in good faith and in a manner he
or she reasonably believed to be in, or not opposed to, the best interest of
First Commerce, and with respect to any criminal proceeding, had no reasonable
cause to believe his or her conduct was unlawful. Indemnification may also be
available unless a court of competent jurisdiction establishes by final
adjudication that the actions or omissions of the executive are material to the
cause of action so adjudicated and constituted: (a) a violation of the criminal
law, unless the executive had reasonable cause to believe his or her conduct was
lawful or had no reasonable cause to believe his or her conduct was unlawful;
(b) a transaction from which the executive derived an improper personal benefit;
or (c) willful misconduct or conscious disregard for the best interest of First
Commerce in a proceeding by or in the right of First Commerce to procure a
judgment in its favor or in a proceeding by or in the right of a shareholder.
First Commerce's Bylaws require First Commerce to indemnify its officers and
directors to the full extent permitted by the statute. Further, to the extent
that the proposed indemnitee is successful on the merits or otherwise in the
defense of any action, suit or proceeding (or any claim, issue or matter
therein) he or she must be indemnified against expenses (including attorney's
fees) actually and reasonably incurred by him or her in connection with such
proceeding.

First Commerce maintains a directors' and officers' insurance policy
pursuant to which officers and directors of First Commerce would be entitled to
indemnification against certain liabilities, including reimbursement of certain
expenses.

BancGroup. Section 145 of the Delaware GCL contains detailed and
comprehensive provisions providing for indemnification of directors and officers
of Delaware corporations against expenses, judgments, fines and settlements in
connection with litigation. Under the Delaware GCL, other than an action brought
by or in the right of BancGroup, such indemnification is available if it is
determined that the proposed indemnitee acted in good faith and in a manner he
or she reasonably believed to be in or not opposed to the best interests of
BancGroup and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. In actions brought by or
in the right of BancGroup, such indemnification is limited to expenses
(including attorneys' fees) actually and reasonably incurred in the defense or
settlement of such action if the indemnitee acted in good faith and in a manner
he or she reasonably believed to be in or not

37
<PAGE> 45

opposed to the best interests of BancGroup and except that no indemnification
shall be made in respect of any claim, issue or matter as to which such person
has been adjudged to be liable to BancGroup unless and only to the extent that
the Delaware Court of Chancery or the court in which the action was brought
determines upon application that in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses as
the court deems proper.

To the extent that the proposed indemnitee has been successful on the
merits or otherwise in defense of any action, suit or proceeding (or any claim,
issue or matter therein), he or she must be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.

BancGroup maintains an officers' and directors' insurance policy and a
separate indemnification agreement pursuant to which officers and directors of
BancGroup would be entitled to indemnification against certain liabilities,
including reimbursement of certain expenses that extends beyond the minimum
indemnification provided by Section 145 of the Delaware GCL.

SPECIAL MEETINGS OF STOCKHOLDERS; ACTION WITHOUT A MEETING

First Commerce. First Commerce's bylaws authorize a special shareholder
meeting to be called by the board of directors, the chairman of the board, First
Commerce's president, or by the holders of not less than twenty-five percent of
the total voting power of all outstanding shares of voting stock.

Pursuant to section 607.0704 of the FBCA, the First Commerce Restated
Articles of Incorporation provide that any action required or permitted by the
FBCA to be taken by shareholders of First Commerce may be taken only at an
annual or special meeting of shareholders, and may not be taken by written
consent.

BancGroup. Under the BancGroup Certificate, a special meeting of
BancGroup's stockholders may only be called by a majority of the BancGroup Board
of Directors or by the chairman of the Board of Directors of BancGroup. Holders
of BancGroup Common Stock may not call special meetings or act by written
consent.

MERGERS, SHARE EXCHANGES AND SALES OF ASSETS

First Commerce. The FBCA provides that mergers and sales of substantially
all of the property of a Florida corporation must be approved by a majority of
the outstanding shares of the corporation entitled to vote thereon. The FBCA
also provides, however, that the shareholders of a corporation surviving a
merger need not approve the transaction if: (a) the articles of incorporation of
the surviving corporation will not differ from its articles before the merger,
and (b) each shareholder of the surviving corporation whose shares were
outstanding immediately prior to the effective date of the merger will hold the
same number of shares with identical designations, preferences, limitations and
relative rights, immediately after the merger.

BancGroup. The Delaware GCL provides that mergers and sales of
substantially all of the assets of Delaware corporations must be approved by a
majority of the outstanding stock of the corporation entitled to vote thereon.
The Delaware GCL also provides, however, that the stockholders of the
corporation surviving a merger need not approve the transaction if: (i) the
agreement of merger does not amend in any respect the certificate of
incorporation of such corporation; (ii) each share of stock of such corporation
outstanding immediately prior to the effective date of the merger is to be an
identical outstanding or treasury share of the surviving corporation after the
effective date of the merger; and (iii) either no shares of common stock of the
surviving corporation and no shares, securities or obligations convertible into
such stock are to be issued or delivered under the plan of merger, or the
authorized unissued shares or the treasury shares of common stock of the
surviving corporation to be issued or delivered under the plan of merger plus
those initially issuable upon conversion of any other shares, securities or
obligations to be issued or delivered under such plan do not exceed 20% of the
shares of common stock of such corporation outstanding immediately prior to the
effective date of the merger. See also "BANCGROUP CAPITAL STOCK AND
DEBENTURES -- Changes in Control" for a description of the statutory provisions
and the provisions of the BancGroup Certificate relating to changes of control
of BancGroup. See "Antitakeover Statutes" for a description of additional
restrictions on business combination transactions.

38
<PAGE> 46

AMENDMENT OF CERTIFICATE OF INCORPORATION AND BYLAWS

First Commerce. Section 607.1002 of the FBCA permits the Board of
Directors to amend the Restated Articles of Incorporation in certain minor
respects without stockholder action, but Section 607.1003 requires most
amendments to be adopted by the stockholders upon recommendation of the Board of
Directors. Unless the FBCA requires a greater vote, amendments may be adopted by
a majority of the votes cast, a quorum being present.

Section 607.1020 of the FBCA permits the Board of Directors to amend or
repeal the bylaws unless the FBCA or the stockholders provide otherwise. The
stockholders entitled to vote have concurrent power to amend or repeal the
bylaws.

BancGroup. Under the Delaware GCL, a Delaware corporation's certificate of
incorporation may be amended by the affirmative vote of the holders of a
majority of the outstanding shares entitled to vote thereon, and a majority of
the outstanding stock of each class entitled to vote as a class, unless the
certificate requires the vote of a larger portion of the stock. The BancGroup
Certificate requires "supermajority" stockholder approval to amend or repeal any
provision of, or adopt any provision inconsistent with, certain provisions in
the BancGroup Certificate governing (i) the election or removal of directors,
(ii) business combinations between BancGroup and a Related Person, and (iii)
board of directors evaluation of business combination procedures. See "BANCGROUP
CAPITAL STOCK AND DEBENTURES -- Changes in Control."

As is permitted by the Delaware GCL, the Certificate gives the Board of
Directors the power to adopt, amend or repeal the bylaws. The stockholders
entitled to vote have concurrent power to adopt, amend or repeal the BancGroup
bylaws.

RIGHTS OF DISSENTING STOCKHOLDERS

First Commerce. Holders of First Commerce Common Stock as of the Record
Date are entitled to dissenters' rights of appraisal under Florida law. For a
description of such appraisal rights, see "THE MERGER -- Rights of Dissenting
Stockholders."

BancGroup. Under the Delaware GCL, a stockholder has the right, in certain
circumstances, to dissent from certain corporate transactions and receive the
fair value of his or her shares in cash in lieu of the consideration he or she
otherwise would have received in the transaction. For this purpose, "fair value"
may be determined by all generally accepted techniques of valuation used in the
financial community, excluding any element of value arising from the
accomplishment or expectation of the transaction, but including elements of
future value that are known or susceptible of proof. Such fair value is
determined by the Delaware Court of Chancery if a petition for appraisal is
timely filed. Appraisal rights are not available, however, to stockholders of a
corporation (i) if the shares are listed on a national securities exchange (as
is BancGroup Common Stock) or quoted on the NASDAQ National Market System, or
held of record by more than 2,000 stockholders (as is BancGroup Common Stock),
and (ii) stockholders are permitted by the terms of the merger or consolidation
to accept in exchange for their shares (a) shares of stock of the surviving or
resulting corporation, (b) shares of stock of another corporation listed on a
national securities exchange or held of record by more than 2,000 stockholders,
(c) cash in lieu of fractional shares of such stock, or (d) any combination
thereof. Stockholders are not permitted appraisal rights in a merger if such
corporation is the surviving corporation and no vote of its stockholders is
required.

PREFERRED STOCK

First Commerce. First Commerce's Restated Articles of Incorporation
authorize the issuance of 3,000,000 shares of Preferred Stock from time to time
by resolution of the First Commerce Board of Directors. Currently, no shares of
Preferred Stock are issued and outstanding.

BancGroup. The BancGroup Certificate authorizes the issuance of 1,000,000
shares of Preference Stock from time to time by resolution of the BancGroup
Board of Directors. Currently, no shares of Preference Stock are issued and
outstanding. See "BANCGROUP CAPITAL STOCK AND DEBENTURES -- Preference Stock."

39
<PAGE> 47

EFFECT OF THE MERGER ON FIRST COMMERCE SHAREHOLDERS

As of , 1997, First Commerce had shareholders of
record and outstanding shares of First Commerce Common Stock. As of
March 1, 1997, BancGroup had 38,955,210 shares of BancGroup Common Stock
outstanding with 7,129 stockholders of record.

Assuming that no dissenters' rights of appraisal are exercised in the
Merger, no First Commerce Options are exercised prior to the Merger, and a
Market Value of BancGroup Common Stock not less than $19.35 and no more than
$25.16, an aggregate amount of shares of BancGroup Common Stock would
be issued to the shareholders of First Commerce pursuant to the Merger. These
shares would represent approximately % of the total shares of BancGroup
Common Stock outstanding after the Merger, not counting any shares of BancGroup
Common Stock to be issued in other pending acquisitions. BancGroup anticipates
that the shares of BancGroup Common Stock to be issued in the Merger will come
from shares repurchased by BancGroup in the open market.

The issuance of the BancGroup Common Stock pursuant to the Merger will not
reduce the percentage interest of the BancGroup Common Stock currently held by
each principal stockholder and each director and officer of BancGroup if
BancGroup repurchases in the open market all shares to be issued in the Merger.
Based upon the foregoing assumption, a group, the directors and officers of
BancGroup would own approximately 10.98% of BancGroup's outstanding shares after
the Merger. See "BUSINESS OF BANCGROUP -- Voting Securities and Principal
Stockholders."

BancGroup has entered into agreements pursuant to which additional shares
of BancGroup Common Stock will be issued. See "BUSINESS OF BANCGROUP -- Proposed
Affiliate Banks."

40
<PAGE> 48
THE COLONIAL BANCGROUP INC. AND SUBSIDIARIES

CONDENSED PRO FORMA STATEMENT OF CONDITION (UNAUDITED)
(IN THOUSANDS)

The following summary includes (i) the condensed consolidated statement of
condition of BancGroup and subsidiaries (as restated) as of December 31, 1996,
(ii) the combined presentation of the condensed consolidated statements of
condition of completed business combinations: Tomoka Bancorp, Inc. ("Tomoka"),
First Family Financial Corporation ("First Family"), and Shamrock Holding, Inc.
("Shamrock"), ("completed business combinations") as of December 31, 1996, (iii)
the condensed consolidated statement of condition of First Commerce Banks of
Florida, Inc. and subsidiary ("First Commerce"), as of December 31, 1996, (iv)
the combined presentation of the condensed consolidated statements of condition
of other probable business combinations with BancGroup: Fort Brooke
Bancorporation ("Fort Brooke") and Great Southern Bancorp, Inc. ("Great
Southern"), ("other probable business combinations") as of December 31, 1996,
(v) adjustments to give effect to the proposed and completed purchase method
acquisitions of First Commerce, Shamrock and First Family, respectively and the
proposed and completed pooling-of-interests method business combinations with
Great Southern, Fort Brooke and Tomoka, respectively, and (vi) the pro forma
combined condensed statement of condition of BancGroup and subsidiaries as if
such combinations had occurred on December 31, 1996.
These pro forma statements should be read in conjunction with the
accompanying notes and the separate consolidated statements of condition of
BancGroup and subsidiaries (as restated), incorporated by reference herein, and
separate statements of condition of First Commerce included elsewhere herein.
The pro forma information provided may not be indicative of future results.
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-----------------------------------------------------------------------------------------------
CONSOLIDATED
COLONIAL COMPLETED FIRST
BANCGROUP BUSINESS ADJUSTMENTS/ COMMERCE BANKS ADJUSTMENTS/
(RESTATED)** COMBINATIONS (DEDUCTIONS) OF FLORIDA, INC. (DEDUCTIONS) SUBTOTAL
--------------- ------------ ------------ ---------------- ------------ ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Assets:
Cash and due from banks.......... $ 222,059 $ 13,244 $ (6,404)(2) $ 5,763 $(15,778)(4) $ 207,071
(11,813)(3)
Interest-bearing deposits in
banks........................... 5,143 2,408 7,551
Federal funds sold............... 15,990 4,862 7,688 28,540
Securities available for sale.... 440,015 37,717 20,157 497,889
Investment securities............ 282,210 39,948 (658)(2) 1,547 41 (5) 323,088
Mortgage loans held for sale..... 157,966 157,966
Loans, net of unearned income.... 4,074,633 191,103 67,840 4,333,576
Less: Allowance for possible loan
losses.......................... (50,761) (2,895) (1,453) (55,109)
---------- -------- -------- ------- -------- ----------
Loans, net....................... 4,023,872 188,208 66,387 4,278,467
Premises and equipment, net...... 87,514 5,831 970 (2) 1,309 (198)(5) 95,336
(90)(3)
Excess of cost over tangible and
identified intangible assets
acquired, net................... 30,381 111 5,840 (2) 6,005 (5) 46,093
3,756 (3)
Mortgage servicing rights........ 98,856 98,856
Other real estate owned.......... 9,270 154 79 9,503
Accrued interest and other
assets.......................... 93,575 4,816 (341)(2) 3,039 452 (5) 102,009
407 (2)
61 (3)
---------- -------- -------- ------- -------- ----------
Total Assets..................... $5,466,851 $297,299 $ (8,272) $105,969 $ (9,478) $5,852,369
========== ======== ======== ======= ======== ==========
Liabilities and Shareholders'
Equity:
Deposits......................... $4,113,934 $270,922 $ 94,749 $4,479,605
FHLB short-term borrowings....... 715,000 715,000
Other short-term borrowings...... 126,262 1,533 127,795
Subordinated debt................ 8,612 8,612
Other long-term debt............. 30,480 30,480
Other liabilities................ 85,567 2,074 $ 1,133 (2) 607 $ 1,135 (5) 90,601
85 (3)
---------- -------- -------- ------- -------- ----------
Total liabilities................ 5,079,855 274,529 1,218 95,356 1,135 5,452,093
Common Stock..................... 93,864 2,064 (2,055)(1) 16 (16)(5) 96,337
1,656 (1)
(5)(2)
817 (2)
(4)(3)
Additional paid in capital....... 159,640 4,672 (1,266)(1) 6,738 (6,738)(5) 167,425
1,665 (1)
(2,910)(2)
5,587 (2)
533 (2)
(496)(3)
Retained earnings................ 134,523 17,456 (5,341)(2) 3,892 (3,892)(5) 137,568
(9,070)(3)
Treasury Stock................... (1,245) 1,245 (3) (15,778)(4)
15,778 (5)
Unearned compensation............ (1,603) (1,603)
Unrealized gain (loss) on
securities available for sale,
net of taxes.................... 572 (177) 154 (3) (33) 33 (5) 549
---------- -------- -------- ------- -------- ----------
Total equity..................... 386,996 22,770 (9,490) 10,613 (10,613) 400,276
---------- -------- -------- ------- -------- ----------
Total liabilities and equity..... $5,466,851 $297,299 $ (8,272) $105,969 $ (9,478) $5,852,369
========== ======== ======== ======= ======== ==========
Capital Ratios:
Capital Ratio................... 8.09%
Tangible Leverage Ratio......... 6.73%
Tier One Capital Ratio*......... 9.15%
Total Capital Ratio*............ 10.63%

<CAPTION>
DECEMBER 31, 1996
--------------------------------------------

OTHER PROBABLE PRO FORMA
BUSINESS ADJUSTMENTS/ COMBINED
COMBINATIONS (DEDUCTIONS) TOTAL
-------------- ------------ ----------

<S> <C> <C> <C>
Assets:
Cash and due from banks.......... $ 24,368 $ 231,439

Interest-bearing deposits in
banks........................... 7,551
Federal funds sold............... 2,752 31,292
Securities available for sale.... 31,428 529,317
Investment securities............ 21,310 344,398
Mortgage loans held for sale..... 157,966
Loans, net of unearned income.... 235,363 4,568,939
Less: Allowance for possible loan
losses.......................... (3,709) (58,818)
-------- ---------- ----------
Loans, net....................... 231,654 4,510,121
Premises and equipment, net...... 7,980 103,316

Excess of cost over tangible and
identified intangible assets
acquired, net................... 46,093

Mortgage servicing rights........ 98,856
Other real estate owned.......... 1,027 10,530
Accrued interest and other
assets.......................... 4,356 106,365

-------- ---------- ----------
Total Assets..................... $324,875 $6,177,244
======== ========== ==========
Liabilities and Shareholders'
Equity:
Deposits......................... $293,638 $4,773,243
FHLB short-term borrowings....... 715,000
Other short-term borrowings...... 3,742 131,537
Subordinated debt................ 8,612
Other long-term debt............. 30,480
Other liabilities................ 1,686 92,287

-------- ---------- ----------
Total liabilities................ 299,066 5,751,159
Common Stock..................... 17 $ (1)(6) 102,586
4,000 (6)
(16)(7)
2,249 (7)

Additional paid in capital....... 20,015 (12,424)(6) 181,208
8,425 (6)
(7,591)(7)
5,358 (7)

Retained earnings................ 5,947 143,515

Treasury Stock...................

Unearned compensation............ (1,603)
Unrealized gain (loss) on
securities available for sale,
net of taxes.................... (170) 379
-------- ---------- ----------
Total equity..................... 25,809 426,085
-------- ---------- ----------
Total liabilities and equity..... $324,875 $6,177,244
======== ========== ==========
Capital Ratios:
Capital Ratio................... 8.14%
Tangible Leverage Ratio......... 6.61%
Tier One Capital Ratio*......... 8.78%
Total Capital Ratio*............ 10.25%
</TABLE>

- ---------------
* Based on risk weighted assets
** Restated to give effect to the January 3, 1997 and January 31, 1997
pooling-of-interests business combinations with Jefferson Bancorp, Inc. and
D/W Bankshares, Inc.

41
<PAGE> 49

COMPLETED BUSINESS COMBINATIONS

TOMOKA BANCORP INC.
(pooling of interests)

(1) To record the issuance of approximately 662,515 shares of BancGroup Common
Stock in exchange for all of the outstanding shares of Tomoka:

<TABLE>
<CAPTION>
OUTSTANDING
SHARES
-----------
<S> <C> <C>
Tomoka outstanding shares................................... 410,913
Conversion ratio, determined as follows:
$32/$19.8469 per share, the 20-day average market value of
BancGroup Common Stock on the fifth day prior to
January 2, 1997........................................ 1.6123
---------
BancGroup shares to be issued............................... 662,515
Par value of 662,515 shares issued at $2.50 per share....... $ 1,656
Shares issued at par value.................................. $ 1,656
Total capital stock of Tomoka............................... 3,321
Excess recorded as an increase to contributed capital....... 1,665
--------
3,321
To eliminate Tomoka capital stock:
Common stock, at par value................................ (2,055)
Contributed capital....................................... (1,266)
--------
(3,321)
--------
Net change in equity.............................. $ 0
========
</TABLE>

42
<PAGE> 50

FIRST FAMILY FINANCIAL CORPORATION
(purchase method)

(2) To assign the amount by which the estimated value of BancGroup's investment
in First Family is in excess of the historical carrying amount of the net
assets acquired, based on the estimated fair value of such net assets and to
record the investment in First Family by the issuance of approximately
326,618 shares of BancGroup Common Stock and $6,403,750 in cash for all of
the outstanding 545,000 shares of First Family as follows:

<TABLE>
<S> <C>
Equity in carrying value of net assets of First Family...... $ 8,256
Adjustments to state assets at fair value:
Write-up of fixed assets.................................. 970
Write-down securities held to maturity.................... (658)
Other..................................................... (341)
Acquisition accruals:
Severance pay............................................. (952)
Other legal, accounting, and professional................. (181)
Tax effect of purchase adjustments.......................... 407
Goodwill.................................................... 5,840
-------
Total adjustments........................................... 5,085
Adjusted equity in carrying value of net assets............. $13,341
=======
Allocated as follows:
Par Value of 326,618 shares issued for all outstanding
shares of First Family.................................... $ 817
Estimated amount in excess of par value of 326,618 shares of
BancGroup Common Stock issued for First Family outstanding
shares at an assumed market value of $19.6063 per share
(10 day average at January 8, 1997) (date of closing)..... 5,587
Stock options to be assumed by BancGroup.................... 533
Cash of $11.75 per share paid to First Family
shareholders.............................................. 6,404
-------
Total purchase price........................................ $13,341
=======
</TABLE>

SHAMROCK HOLDING, INC.
(purchase method)

(3) To assign the amount by which the estimated value of BancGroup's investment
in Shamrock is in excess of the historical carrying amount of the net assets
acquired, based on the estimated fair value of such net assets and to record
the investment in Shamrock by the payment of approximately $11,813,000 for
all of the outstanding shares of Shamrock as follows:

<TABLE>
<S> <C>
Equity in carrying value of net assets of Shamrock.......... $ 8,171
Adjustments to state at fair market value:
Write-down software....................................... (90)
Acquisition Accruals
Buyout data processing contract........................... (45)
Other legal & professional................................ (40)
Tax effect of purchase adjustments.......................... 61
Goodwill.................................................... 3,756
-------
Total adjustments........................................... 3,642
-------
Adjusted equity in carrying value of net assets........... $11,813
=======
Allocated as follows:
Cash of $387.65 per share paid to Shamrock shareholders..... 11,813
-------
Total purchase price........................................ $11,813
=======
</TABLE>

43
<PAGE> 51

FIRST COMMERCE BANKS OF FLORIDA, INC.
(purchase method)

(4) To show the purchase of treasury stock for the purpose of the First Commerce
business combination:

<TABLE>
<S> <C>
Cash........................................................ (15,778)
Treasury stock.............................................. 15,778
</TABLE>

(5) To assign the amount by which the estimated value of BancGroup's investment
in First Commerce is in excess of the historical carrying amount of the net
assets acquired, based on the estimated fair value of such net assets and to
record the investment in First Commerce by the issuance of approximately
685,990 shares of BancGroup Common Stock for all of the outstanding
1,585,737 shares of First Commerce as follows:

<TABLE>
<S> <C>
Equity in carrying value of net assets of First Commerce.... $10,613
Adjustments to state assets at fair value:
Write-down of fixed assets................................ (198)
Write-up securities held to maturity...................... 41
Acquisition accruals:
Broker's fee.............................................. (156)
Employment contracts...................................... (230)
Buyout data processing contract........................... (540)
Other legal, accounting, and professional................. (209)
Tax effect of purchase adjustments.......................... 452
Goodwill.................................................... 6,005
-------
Total adjustments........................................... 5,165
Adjusted equity in carrying value of net assets............. $15,778
=======
Allocated as follows:
Cost of 685,990 shares of BancGroup common stock purchased
and re-issued for First Commerce outstanding shares at an
assumed market value of $23 per share..................... 15,778
Total purchase price........................................ $15,778
=======
</TABLE>

44
<PAGE> 52

OTHER PROBABLE COMBINATIONS

FORT BROOKE BANCORPORATION
(pooling of interests)

(6) To record the issuance of 1,600,124 shares of BancGroup Common Stock in
exchange for all of the outstanding shares of Fort Brooke:

<TABLE>
<CAPTION>
OUTSTANDING
SHARES
-----------
<S> <C> <C>
Fort Brooke outstanding shares............................. 990,553
Conversion ratio, determined as follows:
$31.50/$19.50 per share, the maximum market value per the
merger agreement, as compared to the 10-day average
market value of BancGroup Common Stock on March 24,
1997.................................................. 1.6154
---------
BancGroup shares to be issued.............................. 1,600,124
Par value of 1,600,124 shares issued at $2.50 per share.... $4,000
Shares issued at par value................................. $ 4,000
Total capital stock of Fort Brooke......................... 12,425
Excess recorded as an increase in contributed capital.... 8,425
---------
12,425
To eliminate Fort Brooke capital stock:
Common stock, at par value............................... (1)
Contributed capital...................................... (12,424)
---------
(12,425)
---------
Net change in equity............................. $ 0
=========
</TABLE>

GREAT SOUTHERN BANCORP
(pooling of interests)

(7) To record the issuance of 899,698 shares of BancGroup Common Stock in
exchange for all of the outstanding shares of Great Southern:

<TABLE>
<CAPTION>
OUTSTANDING
SHARES
-----------
<S> <C> <C>
Great Southern outstanding shares........................... 1,590,845
Conversion ratio, determined as follows:
$13.05/$23.075 per share, the 10-day average market value
of BancGroup Common Stock on March 24, 1997............ 0.5655
---------
BancGroup shares to be issued............................... 899,698
Par value of 899,698 shares issued at $2.50 per share....... $2,249
Shares issued at par value.................................. $2,249
Total capital stock of Great Southern....................... 7,607
Excess recorded as an increase in contributed capital..... 5,358
---------
7,607
To eliminate Great Southern capital stock:
Common stock, at par value................................ (16)
Contributed capital....................................... (7,591)
---------
(7,607)
---------
Net change in equity.............................. $ 0
=========
</TABLE>

45
<PAGE> 53

THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES

CONDENSED PRO FORMA STATEMENT OF INCOME (UNAUDITED)
(IN THOUSANDS)

The following summary includes (i) the condensed consolidated statements of
income of BancGroup on a historical basis for the year ended December 31, 1996,
(as restated), (ii) the combined presentation of condensed consolidated
statement of income of the completed business combinations for the year ended
December 31, 1996, (iii) the condensed consolidated statement of income of First
Commerce for the year ended December 31, 1996, (iv) the combined presentation of
condensed consolidated statement of income of the other probable business
combinations for the year ended December 31, 1996, (v) adjustments to give
effect to the proposed and completed purchase method combinations with Shamrock,
First Family and First Commerce, respectively and the proposed and completed
pooling-of-interests method business combinations with Fort Brooke and Great
Southern and Tomoka, respectively, and (vi) the pro forma combined condensed
consolidated statement of income of BancGroup and subsidiaries as if such
business combinations had occurred on January 1, 1996.

These pro forma statements should be read in conjunction with the
accompanying notes and the separate consolidated statements of income of
BancGroup and subsidiaries (as restated), incorporated by reference herein, and
the statements of income of First Commerce, included elsewhere herein. The pro
forma information provided may not necessarily be indicative of future results.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
---------------------------------------------------------------------------
CONSOLIDATED FIRST
COLONIAL COMPLETED COMMERCE
BANCGROUP BUSINESS ADJUSTMENTS/ BANKS OF ADJUSTMENTS/
(RESTATED)* COMBINATIONS (DEDUCTIONS) FLORIDA, INC. (DEDUCTIONS)
------------ ------------ ------------ -------------- ------------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Interest income................ $391,957 $21,247 $132(1) $8,957 $(907)(3)
(368)(1) (8)(3)
(679)(2)
Interest expense............... 199,953 11,156 3,541
---------- ------- --------- --------- ----------
Net interest income............ 192,004 10,091 (915) 5,416 (915)
Provision for loan losses...... 11,783 1,933 974
---------- ------- --------- --------- ----------
Net interest income after
provision for loan losses..... 180,221 8,158 (915) 4,442 (915)
---------- ------- --------- --------- ----------
Noninterest income............. 70,818 2,477 68(1) 923
30(2)
Noninterest expense............ 174,822 9,135 341(1) 5,212 (40)(3)
188(2) 150(3)
---------- ------- --------- --------- ----------
Income before income taxes..... 76,217 1,500 (1,346) 153 (1,025)
Applicable income taxes........ 26,834 1,127 (76)(1) 15 306(3)
(227)(2)
---------- ------- --------- --------- ----------
Net income..................... $49,383 $373 $(1,043) $138 $(719)
========== ======= ========= ========= ==========
Average primary shares
outstanding**................. 38,117,000 998,500 (998,500) 737,559 (737,559)
1,069,242 51,569
Average fully-diluted shares
outstanding**................. 38,977,000 998,500 (998,500) 749,639 (737,559)
1,079,135 51,569
Earnings per share:
Net Income:
Primary**................... $1.30
Fully diluted**............. $1.28

<CAPTION>
YEAR ENDED DECEMBER 31, 1996
-----------------------------------------------------
OTHER
PROBABLE PRO FORMA
BUSINESS ADJUSTMENTS/ COMBINED
SUBTOTAL COMBINATIONS (DEDUCTIONS) TOTAL
---------- ------------ ------------ ----------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Interest income................ $420,331 $23,985 $444,316

Interest expense............... 214,650 8,902 223,552
---------- ---------- ---------- ----------
Net interest income............ 205,681 15,083 220,764
Provision for loan losses...... 14,690 872 15,562
---------- ---------- ---------- ----------
Net interest income after
provision for loan losses..... 190,991 14,211 205,202
---------- ---------- ---------- ----------
Noninterest income............. 74,316 2,447 76,763

Noninterest expense............ 189,808 13,382 203,190

---------- ---------- ---------- ----------
Income before income taxes..... 75,499 3,276 78,775
Applicable income taxes........ 27,367 1,208 28,575

---------- ---------- ---------- ----------
Net income..................... $48,132 $2,068 $50,200
========== ========== ========== ==========
Average primary shares
outstanding**................. 39,237,811 2,650,746 (2,650,746) 41,822,232
2,584,421
Average fully-diluted shares
outstanding**................. 40,119,784 2,650,746 (2,650,746) 42,712,744
2,592,960
Earnings per share:
Net Income:
Primary**................... $1.23 $1.20
Fully diluted**............. $1.21 $1.19
</TABLE>

- ---------------

* Restated to give effect to the January 3, 1997 and January 31, 1997
pooling-of-interests combinations with Jefferson Bancorp, Inc. and D/W
Bankshares, Inc.
** Restated to reflect the impact of a two-for-one stock split in the form of a
100% stock dividend paid February 11, 1997.

46
<PAGE> 54

PRO FORMA ADJUSTMENTS:
(In thousands)

Completed business combinations

Adjustments applicable to the purchase method business combinations with
First Family (1) and Shamrock (2):

(1) To amortize the assignment of estimated fair value in excess of the
carrying amount of assets acquired. The amortization consists of the
following:

<TABLE>
<CAPTION>
DECEMBER 31,
1996
------------
<S> <C>
Increases in income:
Amortization of other write-downs (5 year period)......... $ 68
Amortization of write-down on securities portfolio (5 year
period)................................................ 132
Decrease in income:
Earnings forgone on $6,403,750 cash at an average interest
rate 5.75%............................................. (368)
-----
Total............................................. (168)
-----
Increase in expense:
Additional depreciation due to write-up in building and
premises (20 year period).............................. (49)
Amortization of goodwill (20 year period)................. (292)
-----
Total............................................. (341)
-----
Net decrease in income before tax........................... (509)
-----
Tax effect of the pro forma adjustments (other than goodwill
amortization)............................................. 76
-----
Net decrease in income...................................... $(433)
-----
</TABLE>

(2) To amortize the assignment of estimated fair value in excess of the
carrying amount of assets acquired. The amortization consists of the
following:

<TABLE>
<S> <C>
Increase in income:
Amortization of write-down on software (3 year period).... $ 30
Decrease in income:
Earnings forgone on $11,813,000 cash at an average
interest rate 5.75%.................................... (679)
-----
Total............................................. (649)
Increase in expense:
Amortization of goodwill (20 year period)................. (188)
-----
Total............................................. (188)
Net decrease in income before tax........................... (837)
Tax effect of the pro forma adjustments (other than goodwill
amortization)............................................. 227
-----
Net decrease in income...................................... $(610)
-----
</TABLE>

47
<PAGE> 55

PENDING BUSINESS COMBINATIONS

Adjustments Applicable to the purchase method business combination with
First Commerce:

(3) To amortize the assignment of estimated fair value in excess of the
carrying amount of assets acquired. The amortization consists of the
following:

<TABLE>
<S> <C>
Decreases in income:
Amortization of write-up on securities portfolio (5 year
period)................................................ $ (8)
Earnings forgone on $15,777,770 cash at an average
interest rate 5.75%.................................... (907)
-------
Total............................................. (915)
-------
Increase in expense:
Amortization of goodwill (20 year period)................. (300)
-------
Decrease in expense:
Amortization of write-down on fixed assets (5 year
period)................................................ 40
-------
Total............................................. (260)
-------
Net decrease in income before tax........................... (1,175)
-------
Tax effect of the pro forma adjustments (other than goodwill
amortization)............................................. (306)
-------
Net decrease in income...................................... $(1,481)
-------
</TABLE>

48
<PAGE> 56

RECENT DEVELOPMENTS -- BANCGROUP AND FIRST COMMERCE

The following table presents certain unaudited data for BancGroup for the
period ended March 31, 1997. Unaudited historical data reflect, in the opinion
of management, all adjustments (consisting of normal recurring adjustments)
necessary to a fair presentation of such data. The unaudited financial
information is presented for informational purposes only and is not necessarily
indicative of the financial position or results of operations which would have
actually occurred if the transactions had been consummated in the past or which
may be obtained in the future.
THE COLONIAL BANCGROUP, INC.

SELECTED FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
% CHANGE
MARCH 31, DEC. 31, MARCH 31, MARCH 31,
1997 1996 1996 1996 TO 1997
---------- ---------- ---------- ------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
STATEMENT OF CONDITION SUMMARY
Total assets.................................... $5,797,328 $5,466,851 $4,933,532 18%
Loans, net of unearned income................... 4,338,994 4,074,633 3,587,951 21%
Total earnings assets........................... 5,318,917 4,975,957 4,488,267 19%
Deposits........................................ 4,525,183 4,113,934 3,747,987 21%
Shareholders' equity............................ 410,130 386,996 353,532 16%
Book value per share............................ $ 10.49 $ 10.31 $ 9.76 8%
</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------------
% CHANGE
1997 1996 97 TO 96
------- ------- --------
<S> <C> <C> <C>
EARNINGS SUMMARY
Net interest income (taxable equivalent).................... $53,983 $45,769 18%
Provision for loan losses................................... 2,854 1,750 63%
Noninterest income.......................................... 18,401 17,640 4%
Noninterest expense......................................... 42,662 39,812 7%
Net income.................................................. 16,723 13,623 23%
Average primary shares outstanding.......................... 39,679 37,158
Average fully-diluted shares outstanding.................... 40,279 37,908
Earnings per share:
Primary................................................... $ 0.42 $ 0.36 17%
Fully-diluted............................................. 0.42 0.35 20%
SELECTED RATIOS:
Return on average assets.................................... 1.20% 1.14%
Return on average equity.................................... 16.72% 15.69%
Efficiency ratio............................................ 58.94% 62.79%
Equity to assets............................................ 7.07% 7.17%
Total capital............................................... 8.07% 8.26%
Tier one leverage........................................... 7.85% 6.85%
</TABLE>

- ---------------

NOTE: Restated financial results above reflect the January 1997 mergers of
Colonial BancGroup with Jefferson Bancorp and D/W Bankshares. These
mergers were accounted for as poolings of interest and the financial
results restated accordingly.

Net income for the three months ended March 31, 1997 was $16,723,000
compared to $13,623,000 for the previous period, a 23% increase. Earnings per
share for the three months were $0.42 on a fully diluted basis, a 20% increase
over 1996. The company's return on average equity was 16.72% compared to 15.69%
in 1996. Return on average assets was 1.20% compared to 1.14% in 1996.

49
<PAGE> 57

FIRST COMMERCE UNAUDITED RESULTS OF OPERATIONS AND FINANCIAL HIGHLIGHTS FOR THE
THREE MONTHS ENDED MARCH 31, 1997.

First Commerce reported net income for the three months ended March 31,
1997 of $304,000 or $.18 per share, versus $233,000 or $.14 per share for the
prior year.

Set forth below are selected financial highlights at and for the periods
indicated:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
1997 1996
-------- --------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Total interest income....................................... $ 2,176 $ 2,305
Total interest expense...................................... 778 946
-------- --------
Net interest income......................................... 1,398 1,359
Provision for loan losses................................... 73 92
-------- --------
Net interest income after provision for loan losses......... 1,325 1,267
Total other income.......................................... 258 255
Total other expenses........................................ 1,097 1,182
-------- --------
Income before taxes......................................... 486 340
Income tax.................................................. 182 107
-------- --------
Net income.................................................. $ 304 $ 233
======== ========
</TABLE>

<TABLE>
<CAPTION>
MARCH 31,
-------------------
1997 1996
-------- --------
(UNAUDITED)
<S> <C> <C>
Total assets................................................ $106,043 $110,435
Deposits.................................................... 94,491 97,262
Loans receivable, net of allowances for loan losses......... 65,377 69,296
Securities.................................................. 21,557 24,730
Real estate owned........................................... 79 299
Shareholders' equity........................................ 10,843 10,621
Return on average assets.................................... 0.93% 0.84%
Return on average equity.................................... 9.07% 8.85%
</TABLE>

50
<PAGE> 58

THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES

SELECTED FINANCIAL AND OPERATING INFORMATION

The following tables present certain financial information for BancGroup on
a historical basis (as restated) for the years ended December 31, 1996, 1995,
1994, 1993 and 1992 and as of December 31, 1996 and on a pro forma basis for the
years ended December 31, 1996, 1995, 1994, 1993 and 1992 and as of December 31,
1996.

The pro forma information includes consolidated BancGroup and subsidiaries
(as restated) and consolidated Great Southern, Tomoka, Fort Brooke, First
Commerce, Shamrock and First Family. The pro forma balance sheet data gives
effect to the combinations as if they had occurred on December 31, 1996 and the
pro forma operating data gives effect to the combinations as if they had
occurred at the beginning of the earliest period presented. Note that for the
purchase method combinations, Article 11 of Regulation S-X requires pro forma
statements be presented for only the most recent fiscal year. Accordingly, only
the pro forma information as of and for the year ended December 31, 1996 is
included for Shamrock, First Family and First Commerce.

The following selected financial information should be read in conjunction
with the discussion set forth in "Management's Discussion and Analysis of
Financial Condition and Results of Operations," and all of the financial
statements included elsewhere in this Prospectus or incorporated by reference.

51
<PAGE> 59
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
--------------------------------------------------------- -----------------------
BANCGROUP BANCGROUP BANCGROUP BANCGROUP BANCGROUP BANCGROUP BANCGROUP
PRO FORMA PRO FORMA PRO FORMA PRO FORMA PRO FORMA HISTORICAL HISTORICAL
1996 1995 1994 1993 1992 1996* 1995*
--------- --------- --------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME
Interest income....... $444,316 $355,332 $266,373 $212,918 $200,290 $391,957 $327,897
Interest expense...... 223,552 175,550 109,541 84,161 89,649 199,953 164,895
-------- -------- -------- -------- -------- -------- --------
Net interest income... 220,764 179,782 156,832 128,757 110,641 192,004 163,002
Provision for possible
loan losses......... 15,562 9,166 8,506 12,178 15,417 11,783 8,281
-------- -------- -------- -------- -------- -------- --------
Net interest income
after provision for
loan losses......... 205,202 170,616 148,326 116,579 95,224 180,221 154,721
Noninterest income.... 76,763 62,033 55,408 52,513 47,308 70,818 59,261
Noninterest expense... 199,373 157,200 149,976 131,577 116,702 171,005 144,525
SAIF special
assessment (1)...... 3,817 -- -- -- -- 3,817 --
-------- -------- -------- -------- -------- -------- --------
Income before income
taxes............... 78,775 75,449 53,758 37,515 25,830 76,217 69,457
Applicable income
taxes............... 28,575 27,005 17,939 11,339 7,070 26,834 24,656
-------- -------- -------- -------- -------- -------- --------
Income before
extraordinary items
and the cumulative
effect of a change
in accounting for
income taxes........ 50,200 48,444 35,819 26,176 18,760 49,383 44,801
Extraordinary items,
net of income
taxes............... (396) -- --
Cumulative effect of
change in accounting
for income taxes.... 3,926 -- --
-------- -------- -------- -------- -------- -------- --------
Net income............ $ 50,200 $ 48,444 $ 35,819 $ 29,706 $ 18,760 $ 49,383 $ 44,801
======== ======== ======== ======== ======== ======== ========
EARNINGS PER SHARE
Income before
extraordinary items
and the cumulative
effect of a change
in accounting for
income taxes:
Primary**........... $ 1.20 $ 1.22 $ 0.95 $ 0.80 $ 0.68 $ 1.30 $ 1.23
Fully-diluted**..... $ 1.19 $ 1.19 $ 0.94 $ 0.80 $ 0.66 $ 1.28 $ 1.20
Net income:
Primary**........... $ 1.20 $ 1.22 $ 0.95 $ 0.91 $ 0.68 $ 1.30 $ 1.23
Fully-diluted**..... $ 1.19 $ 1.19 $ 0.94 $ 0.90 $ 0.66 $ 1.28 $ 1.20
Average shares
outstanding
Primary**........... 41,822 39,607 37,611 32,681 29,397 38,117 36,327
Fully-diluted**..... 42,713 41,507 39,145 34,886 32,125 38,977 38,199
Cash dividends per
common share:
Common**............ $ 0.540 $ 0.034 $ 0.54 $ 0.3375
Class A**........... $ 0.113 $ 0.040 $ 0.355 $ 0.335 -- $ 0.1125
Class B**........... $ 0.063 $ 0.020 $ 0.155 $ 0.135 -- $ 0.0625

<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
BANCGROUP BANCGROUP BANCGROUP
HISTORICAL HISTORICAL HISTORICAL
1994* 1993* 1992*
---------- ---------- ----------
<S> <C> <C> <C>
STATEMENT OF INCOME
Interest income....... $244,145 $193,026 $179,872
Interest expense...... 101,293 76,378 80,212
-------- -------- --------
Net interest income... 142,852 116,648 99,660
Provision for possible
loan losses......... 8,070 11,423 12,899
-------- -------- --------
Net interest income
after provision for
loan losses......... 134,782 105,225 86,761
Noninterest income.... 52,830 49,555 44,518
Noninterest expense... 136,906 119,589 105,853
SAIF special
assessment (1)...... -- -- --
-------- -------- --------
Income before income
taxes............... 50,706 35,191 25,426
Applicable income
taxes............... 16,831 10,727 6,926
-------- -------- --------
Income before
extraordinary items
and the cumulative
effect of a change
in accounting for
income taxes........ 33,875 24,464 18,500
Extraordinary items,
net of income
taxes............... -- (396) --
Cumulative effect of
change in accounting
for income taxes.... -- 3,890 --
-------- -------- --------
Net income............ $ 33,875 $ 27,958 $ 18,500
======== ======== ========
EARNINGS PER SHARE
Income before
extraordinary items
and the cumulative
effect of a change
in accounting for
income taxes:
Primary**........... $ 0.98 $ 0.82 $ 0.70
Fully-diluted**..... $ 0.97 $ 0.81 $ 0.70
Net income:
Primary**........... $ 0.98 $ 0.94 $ 0.70
Fully-diluted**..... $ 0.97 $ 0.92 $ 0.70
Average shares
outstanding
Primary**........... 34,445 29,884 26,470
Fully-diluted**..... 35,979 32,069 29,186
Cash dividends per
common share:
Common**............ -- -- --
Class A**........... $ 0.40 $ 0.355 $ 0.335
Class B**........... $ 0.20 $ 0.155 $ 0.135
</TABLE>

- ---------------

* Restated to give retroactive effect to the January 3, 1997 and January 31,
1997 pooling-of-interests business combinations with Jefferson Bancorp, Inc.
and D/W Bankshares, Inc.

** Restated to reflect the impact of a two-for-one stock split in the form of a
100% stock dividend paid February 11, 1997.
(1) Legislation approving a one-time special assessment to recapitalize the
Savings Association Insurance Fund ("SAIF") resulted in $3,817,000 in
expense before income taxes and $2,466,000 net of applicable income taxes in
1996.

52
<PAGE> 60

<TABLE>
<CAPTION>
BANCGROUP BANCGROUP HISTORICAL
PRO FORMA --------------------------------------------------------------
1996 1996* 1995* 1994* 1993* 1992*
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF CONDITION DATA
At year-end:
Total assets...................................... $6,177,244 $5,466,851 $4,773,049 $3,690,626 $3,555,476 $2,493,824
Loans, net of unearned income..................... 4,568,939 4,074,633 3,521,514 2,622,181 2,182,755 1,549,316
Mortgage loans held for sale...................... 157,966 157,966 112,203 61,556 368,515 150,835
Deposits.......................................... 4,773,243 4,113,934 3,700,715 2,909,623 2,831,978 2,102,575
Long-term debt.................................... 39,092 39,092 47,688 86,662 57,397 22,979
Shareholders' equity.............................. 426,085 386,996 336,931 261,560 243,396 152,602
Average balances:
Total assets...................................... $5,795,487 $5,093,410 $4,193,246 $3,535,205 $2,850,680 $2,426,537
Interest-earning assets........................... 5,307,987 4,661,294 3,824,327 3,192,897 2,530,300 2,141,541
Loans, net of unearned income..................... 4,273,554 3,799,947 3,007,312 2,375,396 1,710,797 1,505,114
Mortgage loans held for sale...................... 135,135 135,135 98,785 135,046 248,502 121,820
Deposits.......................................... 4,428,785 3,896,620 3,291,343 2,865,107 2,277,465 2,048,111
Shareholders' equity.............................. 418,844 367,075 293,651 255,861 187,322 147,980
Book value per share at year-end**.................. $ 10.39 $ 10.31 $ 9.41 $ 7.87 $ 7.62 $ 6.19
Tangible book value per share at year-end**......... $ 9.48 $ 9.50 $ 8.57 $ 7.26 $ 7.09 $ 5.90
SELECTED RATIOS
Income before extraordinary items and the cumulative
effect of a change in accounting for income taxes
to:
Average assets.................................... 0.87% 0.97% 1.07% 0.96% 0.86% 0.76%
Average shareholders' equity...................... 12.00 13.45 15.26 13.24 13.06 12.50
Net income to:
Average assets.................................... 0.87 0.97 1.07 0.96 0.98 0.76
Average shareholder's equity...................... 12.00 13.45 15.26 13.24 14.93 12.50
Efficiency ratio(1)................................. 67.10 64.54 64.43 69.20 71.67 72.87
Dividend payout ratio............................... 45.00 41.54 36.59 40.82 37.77 47.86
Average equity to average total assets.............. 7.23 7.21 7.00 7.24 6.57 6.10
Allowance for possible losses to total loans (net of
unearned income).................................. 1.29% 1.25% 1.28% 1.56% 1.62% 1.54%
</TABLE>

- ---------------

* Restated to give retroactive effect to the January 3, 1997 and January 31,
1997 pooling-of-interests business combinations with Jefferson Bancorp, Inc.
and D/W Bankshares, Inc.
** Restated to reflect the impact of a two-for-one stock split in the form of a
100% stock dividend paid February 11, 1997.
(1) Legislation approving a one-time special assessment to recapitalize the SAIF
resulted in $3,817,000 in expense before income taxes and $2,466,000 net of
applicable income taxes in 1996.

53
<PAGE> 61

FIRST COMMERCE BANKS OF FLORIDA, INC.
SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------------------
1996 1995 1994 1993 1992
--------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Interest income........................ $ 8,957 $ 9,815 $ 8,730 $ 7,412 $ 7,193
Interest expense....................... 3,541 4,168 3,294 2,759 3,077
--------- --------- --------- --------- ---------
Net interest income.................... 5,416 5,647 5,436 4,653 4,116
Provision for credit losses............ 974 1,191 282 318 375
--------- --------- --------- --------- ---------
Net interest income after provision for
credit losses........................ 4,442 4,456 5,154 4,335 3,741
Non-interest income.................... 923 1,615 1,075 1,135 1,003
Non-interest expenses.................. 5,211 5,021 4,731 4,187 3,664
--------- --------- --------- --------- ---------
Income before taxes on income and
minority interest.................... 154 1,050 1,498 1,283 1,080
Taxes on income........................ 15 497 554 446 401
Minority interest...................... 1 (6) 31 20 --
--------- --------- --------- --------- ---------
Net income before cumulative effect of
change in accounting principle....... 138 559 913 817 679
Cumulative effect of change in
accounting principle................. -- -- -- 74 --
--------- --------- --------- --------- ---------
Net income............................. $ 138 $ 559 $ 913 $ 891 $ 679
========= ========= ========= ========= =========
Per share data:
Net income per share................. $ .08 $ .34 $ .57 $ .59 $ .47
Cash dividends declared.............. -- -- -- --
Book value at end of period.......... $ 6.69(a) $ 6.63 $ 5.87 $ 5.67 $ 5.06
Common shares outstanding at end of
period............................... 1,585,737 1,585,737 1,585,853 1,459,061 1,459,061
Weighted average common shares
outstanding during period............ 1,679,145 1,663,729 1,590,820 1,490,444 1,459,061
Total assets at end of period.......... $ 105,969 $ 113,083 $ 119,521 $ 110,783 $ 92,239
Cash and cash equivalents.............. 13,451 10,369 13,950 16,005 12,694
Investment securities.................. 21,704 28,143 27,960 27,025 20,481
Loans receivable, net.................. 66,387 70,265 72,675 63,416 55,486
Deposits............................... 94,749 101,941 107,846 100,472 83,563
Stockholders' equity................... 10,613 10,521 9,316 8,273 7,382
Allowance for credit losses as a
percentage of period-end total
loans................................ 2.14% 1.67% 1.12% 1.29% 1.19%
Allowance for credit losses as a
percentage of non-performing loans... 54.91% 66.17% 98.46% 83.60% 148.89%
Total non-performing loans as a
percentage of total loans............ 3.89% 2.52% 1.14% 1.55% .80%
Total non-performing loans as a
percentage of total assets........... 2.50% 1.60% .71% .90% .49%
Total non-performing loans and real
estate owned as a percentage of total
assets............................... 2.57% 1.86% 1.14% 1.37% 1.22%
</TABLE>

- ---------------

(a) Assuming conversion of all stock options and warrants, book value per share
as of December 31, 1996 would have been $6.32.

54
<PAGE> 62

FIRST COMMERCE BANKS OF FLORIDA, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FSB/OSCEOLA SALE AND FSB/CBC MERGER

Sale of FSB/Osceola

On May 1, 1995, First Commerce sold the 240,000 shares of common stock of
First Sterling Bank of Osceola County ("FSB/Osceola") (which constituted 80% of
the outstanding shares of FSB/Osceola stock) owned by First Commerce to certain
unaffiliated individuals for $1.8 million in cash. See "--Sale of FSB/Osceola."
Accordingly, FSB/Osceola's results of operations for the four months ended April
30, 1995 are included in First Commerce's 1995 consolidated financial statements
and operating results for 1995 in "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

FSB/CBC Merger

On August 31, 1995, Commerce Bank Corporation ("CBC") merged with and into
First Sterling Bancshares, Inc. ("FSB") (the "FSB/CBC Merger") and FSB changed
its name to First Commerce Banks of Florida, Inc. In the FSB/CBC Merger, the
outstanding shares of CBC common stock were converted into an aggregate of
746,704 shares of FSB common stock, par value $.01 per share, and $1,000 of cash
in lieu of fractional shares. Upon consummation of the FSB/CBC Merger, Commerce
Bank of Central Florida (a subsidiary of CBC) merged with and into First
Sterling Bank (a subsidiary of FSB), which changed its name to First Commerce
Bank of Polk County ("the Bank"). First Commerce's principal asset is its
ownership of 99.7% of the voting shares of the Bank. The First Commerce/CBC
Merger has been accounted for as a pooling of interests and, accordingly,
amounts presented in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" have been combined to include financial
information for both FSB and CBC.

GENERAL

First Commerce's results of operations are primarily dependent upon the
results of operations of the Bank. The Bank conducts commercial banking business
consisting of attracting deposits from the general public and applying those
funds to the origination of commercial, consumer and real estate loans
(including commercial loans collateralized by real estate). The Bank's
profitability depends primarily on net interest income, which is the excess of
interest income generated from interest-earning assets (i.e., loans, investments
and federal funds sold) over interest expense incurred on interest-bearing
liabilities (i.e., customer deposits and borrowed funds). Net interest income is
affected by the relative amounts of interest-earning assets and interest-bearing
liabilities, and the interest rate earned and paid on these balances. Net
interest income is dependent upon The Bank's interest-rate spread which is the
excess of average yield earned on its interest-earning assets over the average
rate paid on its interest-bearing liabilities. When interest-earning assets
approximate or exceed interest-bearing liabilities, any positive interest rate
spread will generate net interest income. The interest-rate spread is impacted
by interest rates and the amounts of deposits and loans. Additionally, the
Bank's profitability is affected by such factors as the level of non-interest
income and expenses, the provision for credit losses, and the effective tax
rate. Non-interest income consists primarily of service fees on deposit accounts
and income from the sale of loans and investment securities. Non-interest
expense consists primarily of compensation and employee benefits, occupancy and
equipment expenses, professional fees, data processing costs, deposit insurance
premiums paid to the FDIC, and other operating expenses.

Management's discussion and analysis of earnings and related financial data
are presented herein to assist investors in understanding the financial
condition of First Commerce at, and the results of operations of First Commerce
for the years ended, December 31, 1996 and 1995. This discussion should be read
in conjunction with the consolidated financial statements and related footnotes
of First Commerce presented elsewhere herein.

55
<PAGE> 63

LIQUIDITY

First Commerce

First Commerce is a legal business entity separate and distinct from the
Bank. First Commerce's principal source of cash flow during 1996 was interest
income on its portfolio of loans purchased from FSB/Osceola and cash on deposit
($887,000 as of December 31, 1996) with the Bank, which totaled $108,000 during
the year ended December 31, 1996. Possible future sources of cash flow for First
Commerce include dividends or management fees from the Bank. However, there are
various statutory limitations on the ability of the Bank to pay dividends,
extend credit, or otherwise supply funds to First Commerce. The FDIC and the
Florida Department also have the general authority to limit the dividends paid
by insured banks and bank holding companies. First Commerce has not paid any
cash dividends to its shareholders.

During the year ended December 31, 1996, First Commerce's cash and cash
equivalents increased $3.1 million, to $13.5 million as of December 31, 1996
from $10.4 million as of December 31, 1995. During 1996, investing activities
provided $8.9 million of cash, and financing activities used $7.2 million of
cash. First Commerce's total assets decreased $7.1 million to $106 million at
December 31, 1996 from $113.1 million at December 31, 1995.

The Bank

Liquidity management involves the ability to meet the cash flow
requirements of customers who may be depositors wanting to withdraw their funds
or borrowers needing assurance that sufficient funds will be available to meet
their credit needs. In the ordinary course of business, the Bank's cash flows
are generated from interest and fee income, as well as from loan repayments and
the maturity of investment securities held-to-maturity. In addition to cash and
due from banks, the Bank considers all securities available-for-sale and federal
funds sold as primary sources of asset liquidity. Many factors affect the
ability to accomplish these liquidity objectives successfully, including the
economic environment, and the asset/liability mix within the balance sheet, as
well as the Bank's reputation in the community. At December 31, 1996, the Bank
had commitments to originate loans totaling $2.8 million. In addition, scheduled
maturities of certificates of deposit during 1997 totaled $31.3 million.
Management believes that the Bank has adequate resources to fund all of its
commitments, that substantially all of its existing commitments will be funded
within 12 months and, if so desired, that the Bank can adjust the rates and
terms on certificates of deposit and other deposit accounts to retain deposits
in a changing interest rate environment.

A state-chartered commercial bank is required to maintain a liquidity
reserve of at least 15% of its transaction deposit accounts and 8% of its
non-transaction deposit accounts. The liquidity reserve may consist of cash on
hand, cash on demand deposit with other correspondent banks, and other
investments and short-term marketable securities as determined by the rules of
the Florida Department, such as federal funds sold and United States securities
or securities guaranteed by the United States. As of December 31, 1996, the Bank
had a liquidity ratio of 36.01%.

CAPITAL RESOURCES

First Commerce's total stockholders' equity was $10.6 million and $10.5
million as of December 31, 1996 and 1995, respectively, which represents an
increase of $100,000. This increase was the result of 1996's net income of
$138,000 offset by the $46,000 change in the unrealized securities losses at
December 31, 1996 from December 31, 1995. First Commerce's total stockholders'
equity was 10.0% and 9.30% of total assets as of December 31, 1996 and 1995,
respectively. The Bank's total stockholders' equity was $9.4 million and $8.5
million as of December 31, 1996 and 1995, respectively, or an increase of
$900,000. This increase was the result of the purchase of $750,000 of the Bank's
common stock by First Commerce plus the Bank's 1996 net income of $239,000 less
the $46,000 change in the unrealized securities losses at December 31, 1996 from
December 31, 1995.

The federal banking regulatory authorities have adopted certain "prompt
corrective action" rules with respect to depository institutions. The rules
establish five capital tiers: "well capitalized," "adequately

56
<PAGE> 64

capitalized," "undercapitalized," "significantly undercapitalized," and
"critically undercapitalized." The various federal banking regulatory agencies
have adopted regulations to implement the capital rules by, among other things,
defining the relevant capital measures for the five capital categories. An
institution is deemed to be "well capitalized" if it has a total risk-based
capital ratio of 10% or greater, a Tier 1 risk-based capital ratio of 6% or
greater, and a Tier 1 leverage ratio of 5% or greater and is not subject to a
regulatory order, agreement, or directive to meet and maintain a specific
capital level. At December 31, 1996, the Bank met the capital ratios of a "well
capitalized" financial institution with a total risk-based capital ratio of
13.43%, a Tier 1 risk-based capital ratio of 11.66%, and a Tier 1 leverage ratio
of 9.37%. Depository institutions which fall below the "adequately capitalized"
category generally are prohibited from making any capital distribution, are
subject to growth limitations, and are required to submit a capital restoration
plan. There are a number of requirements and restrictions that may be imposed on
institutions treated as "significantly undercapitalized" and, if the institution
is "critically undercapitalized," the banking regulatory agencies have the right
to appoint a receiver or conservator.

In accordance with risk capital guidelines issued by the FDIC, the Bank is
required to maintain a minimum standard of total capital to risk-weighted assets
of 8%. Additionally, the FDIC requires banks to maintain a minimum
leverage-capital ratio of Tier 1 capital (as defined) to total assets. The
leverage-capital ratio ranges from 3% to 5% based on the bank's rating under the
regulatory rating system. The required leverage-capital ratio for the Bank at
December 31, 1996 was 4%. The following table summarizes the regulatory capital
levels and ratios for the Bank:

<TABLE>
<CAPTION>
ACTUAL REGULATORY
RATIOS REQUIREMENT
------ -----------
<S> <C> <C>
At December 31, 1996:
Total capital to risk-weighted assets..................... 13.43% 8.00%
Tier 1 capital to risk-weighted assets.................... 11.66 4.00
Tier 1 capital to total assets-leverage ratio............. 9.37 4.00
At December 31, 1995:
Total capital to risk-weighted assets..................... 11.39% 8.00%
Tier 1 capital to risk-weighted assets.................... 10.17 4.00
Tier 1 capital to total assets-leverage ratio............. 7.44 4.00
</TABLE>

RESULTS OF OPERATIONS

General

First Commerce's net income was $138,000, or $.08 per share, for the year
ended December 31, 1996, as compared to $559,000, or $.34 per share, for the
year ended December 31, 1995, or a decrease of $421,000 or 75.3%. First
Commerce's income before taxes on income and minority interest was $154,000 for
the year ended December 31, 1996, as compared to $1.1 million for the year ended
December 31, 1995, or a decrease of $896,000 or 85.30%.

For the years ended December 31, 1996 and 1995, selected ratios were as
follows:

<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Average equity as a percentage of average assets............ 9.74% 8.76%
Return on average assets.................................... .13 .47
Return on average equity.................................... 1.30 5.38
Non-interest expense to average assets...................... 4.79 4.23
</TABLE>

57
<PAGE> 65

For the years ended December 31, 1996 and 1995, the following table
presents information regarding (i) the total dollar amount of First Commerce's
interest income from interest-earning assets and the resultant average yield;
(ii) the total dollar amount of interest expense on interest-bearing liabilities
and the resultant average cost; (iii) net interest income; (iv) net interest
spread; and (v) net interest margin.

<TABLE>
<CAPTION>
1996 1995
----------------------------- -----------------------------
AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST RATE BALANCE INTEREST RATE
-------- -------- ------- -------- -------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Interest-earning assets:
Loans receivable:(1)
Commercial............................ $ 19,343 $1,875 9.69% $ 24,060 $2,451 10.19%
Real estate:(2)
Construction........................ 2,403 235 9.78 2,977 321 10.78
Mortgage............................ 43,961 4,678 10.64 38,821 4,108 10.58
Consumer and other.................... 4,995 523 10.47 5,556 586 10.55
-------- ------ ----- -------- ------ -----
Total loans, net of unearned
income......................... 70,702 7,311 10.34 71,414 7,466 10.45
Investments -- taxable................... 24,676 1,297 5.26 27,642 1,682 6.08
Investments -- tax free(3)............... 1,053 66 10.00 1,117 67 9.64
Federal funds sold....................... 5,410 283 5.23 10,027 600 5.98
-------- ------ ----- -------- ------ -----
Total interest-earning assets.... 101,841 8,957 8.79 110,200 9,815 8.91
------ ----- ------ -----
Cash and due from banks.................... 4,401 4,778
Allowance for credit losses................ (1,501) (955)
Other non-earning assets................... 4,110 4,538
-------- --------
Total assets..................... $108,851 $118,561
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Interest-bearing liabilities:
NOW accounts............................. $ 14,082 325 2.31 $ 14,882 329 2.21
Money market............................. 5,654 168 2.97 6,357 191 3.00
Savings.................................. 8,200 185 2.26 8,570 200 2.33
Time deposits:
Under $100,000........................ 44,808 2,426 5.41 49,190 2,761 5.61
$100,000 and over..................... 7,814 437 5.59 11,916 687 5.77
-------- ------ ----- -------- ------ -----
Total interest-bearing
liabilities.................... 80,558 3,541 4.40 90,915 4,168 4.58
------ ----- ------ -----
Demand deposits............................ 17,053 16,443
Other liabilities and minority interest.... 638 820
Stockholders' equity....................... 10,602 10,383
-------- --------
Total liabilities and
stockholders' equity........... $108,851 $118,561
======== ========
</TABLE>

58
<PAGE> 66
<TABLE>
<CAPTION>
1996 1995
----------------------------- -----------------------------
AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST RATE BALANCE INTEREST RATE
-------- -------- ------- -------- -------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
SPREAD AND INTEREST DIFFERENTIAL:
Net interest income........................ $5,416 $5,647
====== ======
Interest-rate spread(4).................... 4.39% 4.33%
===== =====
Net interest margin(5)..................... 5.32% 5.12%
===== =====
Excess of total interest-earning assets
over total interest-bearing
liabilities.............................. $ 21,283 $ 19,285
======== ========
</TABLE>

- ---------------

(1) Includes loans on non-accrual status.
(2) Interest income on mortgage loans included loan fees recognized as income of
$297,000 and $124,000 during the years ended December 31, 1996 and 1995,
respectively.
(3) Yields on tax-free investments are computed on a tax equivalent basis using
a 37.3% effective income tax rate.
(4) Interest-rate spread represents the excess of the average yield on
interest-earning assets over the average cost of interest-bearing
liabilities.
(5) Net interest margin represents net interest income divided by average
interest-earning assets.

Net interest income

Net interest income, which constitutes the principal source of income for
First Commerce, represents the excess of interest income on interest-earning
assets over interest expense on interest-bearing liabilities. The principal
interest-earning assets are federal funds sold, investment securities and loans
receivable. Interest-bearing liabilities primarily consist of time deposits,
interest-bearing checking accounts ("NOW accounts"), savings deposits and money
market accounts. Funds attracted by these interest-bearing liabilities are
invested in interest-earning assets. Accordingly, net interest income depends
upon the volume of average interest-earning assets and average interest-bearing
liabilities and the interest rates earned or paid on them.

59
<PAGE> 67

The following table sets forth certain information regarding changes in
First Commerce's interest income and interest expense during the year ended
December 31, 1996 as compared to the year ended December 31, 1995. For each
category of interest-earning assets and interest-bearing liabilities,
information is provided on changes attributable to (1) changes in interest rate
(change in rate multiplied by prior volume), (2) changes in the volume (change
in volume multiplied by prior rate) and (3) changes in rate-volume (change in
rate multiplied by change in volume).

<TABLE>
<CAPTION>
INCREASE (DECREASE) DUE TO
-------------------------------
RATE/
RATE VOLUME VOLUME TOTAL
----- ------ ------ -----
(IN THOUSANDS)
<S> <C> <C> <C> <C>
INTEREST-EARNING ASSETS:
Loans receivable:
Commercial................................................ $(118) $(481) $23 $(576)
Real estate:
Construction........................................... (30) (62) 6 (86)
Mortgage............................................... 23 544 3 570
Consumer and other........................................ (4) (59) -- (63)
----- ----- --- -----
Total loans receivable............................ (129) (58) 32 (155)
Investments -- taxable...................................... (230) (180) 25 (385)
Investments -- tax free(1).................................. 5 (6) -- (1)
Federal funds sold.......................................... (76) (276) 35 (317)
----- ----- --- -----
Total interest-earning assets..................... (430) (520) 92 (858)
----- ----- --- -----
INTEREST-BEARING LIABILITIES:
NOW accounts.............................................. 15 (18) (1) (4)
Money market.............................................. (3) (20) -- (23)
Savings................................................... (6) (9) -- (15)
Time deposits under $100,000.............................. (97) (246) 8 (335)
Time deposits $100,000 and over........................... (20) (237) 7 (250)
----- ----- --- -----
Total interest-bearing liabilities................ (111) (530) 14 (627)
----- ----- --- -----
Net change in net interest income........................... $(319) $ 10 $78 $(231)
===== ===== === =====
</TABLE>

- ---------------

(1) Yields on tax-free investments are computed on a tax equivalent basis using
a 37.3% effective income tax rate.

First Commerce's net interest income was $5.4 million for the year ended
December 31, 1996 compared with $5.6 million for the year ended December 31,
1995, or a decrease of $200,000 or 3.6%. This decrease in net interest income
resulted from a shrinkage in earning assets of $8.4 million. Throughout 1996,
management allowed high priced deposit accounts to leave the Bank and this
shrinkage in deposits was funded with cash flow from loan payoffs and repayments
of mortgage backed securities. For a discussion of the purchase of loans from
FSB/Osceola, see "-- Sale of FSB/Osceola." The 15% volume decrease in 1996 from
1995 in interest expense was primarily attributable to the 11% decrease in
average interest-bearing liabilities. The yield on total investments and Federal
Funds sold decreased 122 basis points reflecting a general decrease in the rate
paid on Federal Funds sold and the above normal repayment amounts on mortgage
backed securities in the months of February, April, May and June of 1996. The
interest rate paid on interest bearing liabilities decreased 12 basis points
primarily due to a reduced amount of deposits as a result of management's policy
to reprice the Bank's deposits at lower rates. The overall result was an
increase in the net interest margin to 5.32% during 1996 from 5.16% during 1995.

Provision for Credit Losses

The provision for credit losses is charged to earnings to bring the
allowance for credit losses to a level deemed appropriate by management and is
based upon historical experience, the volume and type of lending

60
<PAGE> 68

conducted by First Commerce, the amounts of non-performing loans, general
economic conditions, particularly as they relate to First Commerce's market
area, and other factors related to the collectibility of First Commerce's loan
portfolio. During the year ended December 31, 1996, the provision for credit
losses was $974,000, as compared to $1.2 million during the year ended December
31, 1995, or a decrease of $226,000. While the provision for credit losses
decreased, the allowance for credit losses increased to $1.5 million at December
31, 1996 from $1.2 million at December 31, 1995, or an increase of $300,000. The
increased allowance for credit losses was primarily in recognition of an
increase in non-performing loans to $2.6 million as of December 31, 1996 from
$1.6 million as of December 31, 1995. See "-- General," "-- Financial
Condition -- Classification of Assets," and "-- Financial Condition -- Allowance
for Credit Losses." As of December 31, 1996 and 1995, the allowance for credit
losses was 2.14% and 1.67%, respectively, of total loans receivable, and was
55.88% and 74.69%, respectively, of non-performing loans.

Other Income

Other income is primarily composed of deposit service charges and fees and
gains on sales of certain assets. During the year ended December 31, 1996, other
income decreased to $923,000 from $1.6 million during the year ended December
31, 1995, or a decrease of $677,000 or 43%. This decrease was primarily due to
First Commerce recognizing two, non-recurring events in 1995. On May 1, 1995,
First Commerce sold its stock ownership in FSB/Osceola, recognizing a gain on
the sale of $564,000 and First Commerce recognized a previously deferred gain of
$171,000 which had resulted from the sale of bank property by FSB to FSB/Osceola
prior to 1995.

During the year ended December 31, 1996, deposit service charges and fees
decreased to $855,000 from $917,000 during the year ended December 31, 1995, or
a decrease of $62,000 or 6.8%. This decrease was primarily attributable to the
decrease in service chargeable accounts resulting from the sale of the
subsidiary bank, First Commerce/Osceola in May of 1995 and the reduction of
higher priced deposit accounts in 1996.

Other Expenses

During the year ended December 31, 1996, other expenses increased to $5.2
million from $5.0 million during the year ended December 31, 1995, or an
increase of $200,000 or 3.85%. The following narrative sets forth additional
information on certain other expense categories which had significant changes.

During the year ended December 31, 1996, compensation and benefits
increased to $2.47 million from $2.15 million during the year ended December 31,
1995, or an increase of $320,000 or 14.9%. This increase was primarily due to an
increase in the number of employees at the Bank and annual compensation and
benefit increases for existing employees.

Professional fees increased to $446,000 during 1996, from $428,000 during
1995, or an increase of $18,000 or 4.2%. This increase resulted primarily from
the increased professional fees associated with the planned mergers with two
unaffiliated banks during 1996 (which mergers were terminated in August 1996)
and fees in 1996 associated with collection costs of non-performing loans.

Other real estate owned expenses decreased to $77,000 during 1996, from
$175,000 during 1995, or a decrease of $98,000 or 56%. This decrease primarily
resulted from a decrease in the amount of acquired real estate held for sale,
going to $79,000 in 1996 from $301,000 in 1995. Certain OREO properties, carried
forward into 1996, have been written down to carrying values in 1996.

Advertising and promotion expense decreased to $90,000 during 1996, from
$163,000 during 1995, a decrease of $73,000 or 44.8%. This decrease resulted
primarily from one-time expenses in 1995 related to the FSB/CBC merger.

FDIC insurance expense decreased to $123,000 during 1996, from $140,000
during 1995, a decrease of $17,000 or 12%. This decrease resulted primarily from
two factors: (i) the FDIC's reduction in insurance premiums; and (ii) a refund
of the 4th Quarter Assessment of $10,000 due to the recapitalization of the SAIF
Insurance fund.

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<PAGE> 69

Stationery expense increased to $163,000 during 1996, from $121,000 during
1995, or an increase of $42,000 or 34.7%. This increase resulted primarily from
printing expenses associated with the FSB/CBC merger.

Other expenses decreased to $617,000 during 1996, from $673,000 during
1995, or a decrease of $56,000 or 8.3%. This decrease resulted primarily from
decreased business development expenses, HONOR expense, telephone expense,
consultant fees, courier service, property and casualty insurance and check
printing charges.

Taxes on Income

During the years ended December 31, 1996 and 1995, First Commerce recorded
taxes on income of $15,000 and $497,000, respectively, reflecting effective
income tax rates of 9.74% in 1996 and 47.33% in 1995. The decrease in the
effective income tax rate during 1996 was primarily due to income tax refunds
received in 1996 for the 1995 tax year which were more than the amount recorded
at December 31, 1995.

SALE OF FSB/OSCEOLA

On May 1, 1995, First Commerce sold its 80% ownership interest in
FSB/Osceola to certain unaffiliated individuals for $1.8 million in cash. See
"Business of First Commerce -- FSB/Osceola Sale." At April 30, 1995, FSB/Osceola
had total assets of $16.4 million, total liabilities of $14.8 million, and
stockholders' equity of $1.6 million as summarized below:

<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Cash and federal funds sold................................. $ 6,600
Investment security......................................... 94
Loans receivable, net of allowance for credit losses of
$119...................................................... 8,712
Accrued interest receivable................................. 49
Other real estate owned..................................... 86
Office premises and equipment, net.......................... 806
Other assets................................................ 99
-------
Total............................................. $16,446
=======
Deposits:
Demand deposits........................................... $ 2,716
NOW accounts.............................................. 1,115
Money market accounts..................................... 1,268
Savings accounts.......................................... 2,462
Certificates of deposit................................... 6,847
-------
Total deposits.................................... 14,408
Other liabilities........................................... 437
Stockholders' equity, including minority interest........... 1,601
-------
Total............................................. $16,446
=======
</TABLE>

First Commerce and the Bank agreed to purchase the FSB/Osceola loan
portfolio for the remaining unpaid principal balance of the loans less any
related allowance for credit losses, during the 12-month period following the
sale of FSB/Osceola. Of the total $8.7 million loan portfolio owned by
FSB/Osceola at April 30, 1995, $4.7 million was purchased during 1995 ($4.4
million by the Bank and $269,000 by First Commerce) and the remaining balance of
$1.9 million was purchased during 1996 ($1.4 million by the Bank and $493,000

62
<PAGE> 70

by First Commerce). As of December 31, 1996, First Commerce's loans receivable
included the following loans purchased from FSB/Osceola:

<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Commercial.................................................. $ 191
Real estate construction.................................... 84
Commercial real estate...................................... 538
Residential mortgage........................................ 2,237
Consumer and other.......................................... 540
------
Total loans receivable............................ 3,590
Less: Allowance for credit losses........................... (31)
Loans receivable, net............................. $3,559
======
</TABLE>

ASSET/LIABILITY MANAGEMENT

A principal objective of First Commerce's asset/liability management
strategy is to minimize its exposure to changes in interest rates by matching
the maturity and repricing horizons of interest-earning assets and
interest-bearing liabilities. This strategy is overseen in part through the
direction of the Bank's Asset and Liability Committee (the "ALCO Committee")
which establishes policies and monitors results to control interest rate
sensitivity.

Management evaluates interest rate risk and then formulates guidelines
regarding asset generation and repricing, funding sources and pricing, and
off-balance sheet commitments in order to maintain interest rate risk within
target levels for the appropriate level of risk which are determined by the ALCO
Committee. The ALCO Committee uses computer models prepared by a third party to
measure the Bank's interest-rate sensitivity. From these reports, the ALCO
Committee can estimate the net interest income effect of various interest-rate
scenarios.

As a part of First Commerce's interest-rate risk management policy, the
ALCO Committee examines the extent to which its assets and liabilities are
"interest-rate sensitive" and monitors the Bank's interest-rate sensitivity
"gap." An asset or liability is considered to be interest-rate sensitive if it
will reprice or mature within the time period analyzed, usually one year or
less. The interest-rate sensitivity gap is the difference between
interest-earning assets and interest-bearing liabilities scheduled to mature or
reprice within such time period. A gap is considered positive when the amount of
interest-rate sensitive assets exceeds the amount of interest-rate sensitive
liabilities. A gap is considered negative when the amount of interest-rate
sensitive liabilities exceeds interest-rate sensitive assets. During a period of
rising interest rates, a negative gap would tend to adversely affect net
interest income, while a positive gap would tend to result in an increase in net
interest income. During a period of falling interest rates, a negative gap would
tend to result in an increase in net interest income, while a positive gap would
tend to adversely affect net interest income. In addition, any premiums on
mortgage-backed securities are amortized to interest income based on the
estimated remaining life of the related securities. Management periodically
reviews the remaining estimated life of mortgage-backed securities, and adjusts
the amortization of the premiums accordingly, in light of changes in market
interest rates and other factors affecting prepayment rates on the underlying
mortgages. Acceleration of the amortization of premiums on mortgage-backed
securities reduces the effective yield on these investments and, accordingly,
adversely affects net interest income. As of December 31, 1996, the remaining
unamortized premiums on mortgage-backed securities totaled $286,000. See
"-- Financial Condition -- Investment Securities."

The ALCO Committee's policy is to maintain a cumulative one-year gap which
falls in the range of (20%) to 20% of total assets. As of December 31, 1996,
First Commerce's cumulative one-year gap was a positive 17% of total assets.
Management attempts to conform to this policy by managing the maturity
distribution of its investment portfolio, emphasizing originations and purchases
of adjustable-interest rate loans, and by managing the product mix and maturity
of its deposit accounts.

63
<PAGE> 71

A simple interest rate "gap" analysis by itself may not be an accurate
indicator of how net interest income will be affected by changes in interest
rates. Accordingly, the ALCO Committee also evaluates how the repayment of
particular assets and liabilities is impacted by changes in interest rates.
Income associated with interest-earning assets and costs associated with
interest-bearing liabilities may not be affected uniformly by changes in
interest rates. In addition, the magnitude and duration of changes in interest
rates may have a significant impact on net interest income. For example,
although certain assets and liabilities may have similar maturities or period of
repricing, they may react in different degrees to changes in market interest
rates. Interest rates on certain types of assets and liabilities fluctuate in
advance of changes in general market interest rates, while interest rates on
other types may lag behind changes in general market rates. In addition, certain
assets, such as adjustable-interest rate mortgage loans, have features
(generally referred to as "interest rate caps") which limit changes in interest
rates on a short-term basis and over the life of the asset. In the event of a
change in interest rates, prepayments (on loans and mortgage-backed securities)
and early withdrawal (of deposit accounts) levels also could deviate
significantly from those assumed in calculating the interest rate gap. The
ability of many borrowers to service their debts also may decrease in the event
of an interest rate increase.

Management's strategy is to maintain a relatively balanced interest-rate
risk position to protect its net interest margin from market fluctuations. To
this end, the ALCO Committee reviews, on a quarterly basis, the maturity and
repricing of assets and liabilities.

Management believes that the type and amount of First Commerce's interest
rate sensitive liabilities may reduce the potential impact that a rise in
interest rates might have on First Commerce's net interest income. First
Commerce seeks to maintain a core deposit base by providing quality services to
its customers without significantly increasing its cost of funds or operating
expenses. First Commerce's non-interest bearing demand deposits, NOW accounts,
money market, and savings accounts were 48.19% and 43.69% of total deposits at
December 31, 1996 and 1995, respectively. These accounts bore a weighted average
interest rate of 1.48% and 1.56% during the years ended December 31, 1996 and
1995, respectively. Management anticipates that these accounts will continue to
comprise a significant portion of First Commerce's total deposit base. First
Commerce also maintains a relatively large portfolio of liquid assets in order
to reduce its overall exposure to changes in market interest rates. At December
31, 1996 and December 31, 1995, the Bank's liquidity ratios were 36.01% and
31.35%, respectively. First Commerce also maintains a "floor," or minimum rate,
on certain of its floating or prime based loans. These floors allow First
Commerce to continue to earn a higher rate when the floating rate falls below
the established floor rate.

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<PAGE> 72

The following table sets forth certain information relating to First
Commerce's interest-earning assets and interest-bearing liabilities at December
31, 1996 that are estimated to mature or are scheduled to reprice within the
period shown.

<TABLE>
<CAPTION>
0 TO 30 31 TO 90 91 TO 180 181 TO 365 OVER ONE
DAYS DAYS DAYS DAYS YEAR TOTALS
-------- -------- --------- ---------- -------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Loans receivable:(1)
Commercial.................... $ 1,720 $ 1,518 $ 1,790 $ 4,213 $ 4,471 $13,712
Real estate construction...... 48 187 256 76 875 1,442
Commercial real estate........ 1,255 2,044 2,734 3,274 21,142 30,449
Residential mortgage.......... 1,482 819 1,538 2,348 9,284 15,471
Consumer and other............ 547 537 772 1,369 3,752 6,977
-------- -------- -------- ------- ------- -------
Total loans........... 5,052 5,105 7,090 11,280 39,524 68,051
Federal funds sold.............. 7,688 -- -- -- -- 7,688
Investment Securities:(2)
Available-for-sale............ 236 7,000 5,908 1,383 5,630 20,157
Held-to-maturity.............. -- -- -- -- 1,547 1,547
-------- -------- -------- ------- ------- -------
Total rate-sensitive assets..... 12,976 12,105 12,998 12,663 46,701 97,443
-------- -------- -------- ------- ------- -------
Deposits:
NOW accounts.................. 13,722 -- -- -- -- 13,722
Money market.................. 5,136 -- -- -- -- 5,136
Savings accounts.............. 8,390 -- -- -- -- 8,390
Time deposits:(3)
Under $100,000............. 3,152 6,908 7,900 8,864 15,947 42,771
$100,000 and over.......... 200 1,558 1,287 1,389 1,523 5,957
-------- -------- -------- ------- ------- -------
Total rate-sensitive
liabilities................... 30,600 8,466 9,187 10,253 17,470 75,976
-------- -------- -------- ------- ------- -------
Gap (repricing differences)..... $(17,624) $ 3,639 $ 3,811 $ 2,410 $29,231 $21,467
======== ======== ======== ======= ======= =======
Cumulative Gap.................. $(17,624) $(13,985) $(10,174) $(7,764) $21,467
======== ======== ======== ======= =======
Cumulative GAP/total assets..... (16.63)% (13.20)% (9.60)% (7.33)% 20.26%
======== ======== ======== ======= =======
</TABLE>

- ---------------

(1) In preparing the table above, adjustable-interest rate loans were included
in the period in which the interest rates are next scheduled to adjust
rather than in the period in which the loans mature. Fixed-interest rate
loans were scheduled according to their contractual maturities.
(2) In preparing the table above, adjustable-interest rate investment securities
were included in the period in which the interest rates are next scheduled
to adjust rather than in the period in which the investment securities
mature. Fixed-interest rate investment securities were scheduled according
to their contractual maturities.
(3) Time deposits were scheduled according to their contractual maturities.

FINANCIAL CONDITION

Lending Activities

A significant source of First Commerce's income is the interest earned on
its loan portfolio. At December 31, 1996, First Commerce's total assets were
$106.0 million and its loans receivable, net were $66.4 million or 62.65% of
total assets. At December 31, 1995, First Commerce's total assets were $113.1
million and its loans receivable, net were $70.3 million or 62.14% of total
assets. The decrease in total loans receivable

65
<PAGE> 73

to December 31, 1996 from December 31, 1995 was $3.9 million or 5.52%. For the
years ended December 31, 1996 and 1995, the net change in total loans receivable
was approximately as follows:

<TABLE>
<CAPTION>
1996 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Balance at beginning of year................................ $ 71,684 $ 73,841
Loan originations........................................... 39,613 38,459
Loan repayments............................................. (43,920) (35,594)
Sale of FSB/Osceola's loans................................. -- (8,850)
Purchase of FSB/Osceola loan................................ 1,864 4,763
Loans charged-off........................................... (967) (788)
Transfers to other real estate owned........................ (223) (147)
-------- --------
Balance at end of year...................................... $ 68,051 $ 71,684
======== ========
</TABLE>

For additional information on the FSB/Osceola loans, see "-- Sale of
FSB/Osceola."

The increase in loan repayments during 1996 from 1995 was primarily due to
the emphasis placed by the Bank's management during 1996 on managing the
increase in non-performing assets rather than soliciting new loans and getting
non-performing and marginal loans repaid.

The Bank's primary market area consists of Polk County, Florida. This area
is located approximately 25 miles southwest of Walt Disney World and its related
parks and resorts, 45 miles southwest of Orlando, and 55 miles east of Tampa.
The principal economic activities of the area include citrus, services,
miscellaneous manufacturing (including wholesale and retail trade),
distribution, mining, finance, insurance, real estate, utilities, tourism and
trucking. There is no assurance that this area will continue to experience
economic growth. Adverse conditions in any one or more of the industries
operating in such markets or a slow-down in general economic conditions could
have an adverse effect on the Bank.

Lending activities are conducted pursuant to a written policy which has
been adopted by the Bank. Each loan officer has defined lending authority beyond
which loans, depending upon their type and size, must be reviewed and approved
by a loan committee comprised of certain officers and directors of the Bank.

As of December 31, 1996 and 1995, the composition of First Commerce's loan
portfolio was as follows:

<TABLE>
<CAPTION>
1996 1995
---------------- ----------------
% OF % OF
AMOUNT TOTAL AMOUNT TOTAL
------- ------ ------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Commercial..................................... $13,712 20.15% $19,888 27.74%
Real estate construction....................... 1,442 2.12 4,163 5.81
Commercial real estate......................... 30,449 44.75 24,633 34.36
Residential mortgage........................... 15,471 22.73 14,788 20.63
Consumer and other............................. 6,977 10.25 8,212 11.46
------- ------ ------- ------
Total loans receivable............... 68,051 100.00% 71,684 100.00%
====== ======
Less:
Unearned income and fees..................... (211) (224)
Allowance for credit losses.................. (1,453) (2.14)% (1,195) (1.67)%
------- ====== ------- ======
Loans, net........................... $66,387 $70,265
======= =======
</TABLE>

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<PAGE> 74

As of December 31, 1996, the maturities and interest rate sensitivities of
First Commerce's loan portfolio, based on remaining scheduled principal
repayments, were as follows:

<TABLE>
<CAPTION>
DUE IN DUE AFTER ONE
ONE YEAR YEAR THROUGH DUE AFTER
OR LESS 5 YEARS 5 YEARS TOTAL
-------- ------------- --------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Commercial.................................... $ 9,241 $ 3,255 $1,216 $13,712
Real estate construction...................... 567 828 47 1,442
Commercial real estate........................ 9,307 18,819 2,323 30,449
Residential mortgage.......................... 6,187 8,324 960 15,471
Consumer and other............................ 3,225 3,230 522 6,977
------- ------- ------ -------
Total loans receivable.............. $28,527 $34,456 $5,068 $68,051
======= ======= ====== =======
Loans with maturities over one year:
Fixed-interest rate......................... $17,719 $4,115 $21,834
Variable-interest rate...................... 16,737 953 17,690
------- ------ -------
Total maturities greater than one
year.............................. $34,456 $5,068 $39,524
======= ====== =======
</TABLE>

Asset Quality

Management seeks to maintain quality assets through sound underwriting and
sound lending practices. The largest category of loans in First Commerce's loan
portfolio are collateralized by commercial real estate mortgages. As of December
31, 1996 and 1995, 44.74%, and 34.36%, respectively, of the total loan portfolio
were collateralized by this type of property. The level of delinquent loans and
other real estate owned also is relevant to the credit quality of a loan
portfolio. As of December 31, 1996, total non-performing assets were $2.8
million or 2.60% of total assets, compared to $2.1 million or 1.86% of total
assets as of December 31, 1995.

The commercial real estate mortgage loans in First Commerce's portfolio
consist of fixed- and adjustable-interest rate loans which were originated at
prevailing market interest rates. The Bank's policy has been to originate
commercial real estate mortgage loans predominantly in its primary market area,
except for those loans purchased from FSB/Osceola. Commercial real estate
mortgage loans are generally made in amounts up to 75% of the appraised value of
the property securing the loan and entail significant additional risks compared
to residential mortgage loans. In making commercial real estate loans, the Bank
primarily considers the net operating income generated by the real estate to
support the debt service, the financial resources and income level and
managerial expertise of the borrower, the marketability of the collateral and
the Bank's lending experience with the borrower.

Unlike residential mortgage loans, which, generally, are made on the basis
of the borrower's ability to make repayment from his employment and other
income, and which are collateralized by real property whose value tends to be
more readily ascertainable, commercial loans typically are underwritten on the
basis of the borrower's ability to make repayment from the cash flow of his
business and, generally, are collateralized by business assets, such as accounts
receivable, equipment and inventory. As a result, the availability of funds for
the repayment of commercial loans may be substantially dependent on the success
of the business itself, which is subject to adverse conditions in the economy.
Commercial loans also entail certain additional risks since they usually involve
large loan balances to single borrowers or a related group of borrowers,
resulting in a more concentrated loan portfolio. Further, the collateral
underlying the loans may depreciate over time, cannot be appraised with as much
precision as residential real estate, and may fluctuate in value based on the
success of the business.

From time to time, the Bank will originate loans on an unsecured basis. As
of December 31, 1996 and 1995, unsecured loans totaled $4.6 million and $5.3
million, respectively.

Loan concentrations are defined as amounts loaned to a number of borrowers
engaged in similar activities which would cause them to be similarly impacted by
economic or other conditions. First Commerce, on a

67
<PAGE> 75

routine basis, monitors these concentrations in order to consider adjustments in
its lending practices to reflect economic conditions, loan to deposit ratios,
and industry trends. As of December 31, 1996 and 1995, no concentration of loans
within any portfolio category to any group of borrowers engaged in similar
activities or in a similar business exceeded 10% of total loans, except that as
of such dates, loans collateralized with mortgages on real estate represented
68.62% and 60.80%, respectively, of the loan portfolio and were to borrowers in
varying activities and businesses.

The Loan Committee of the Board of Directors of the Bank concentrates its
efforts and resources, and that of its senior management and lending officers,
on loan review and underwriting procedures. Internal controls include ongoing
reviews of loans made to monitor documentation and the existence and valuations
of collateral. In addition, management of the Bank has established a review
process with the objective of identifying, evaluating, and initiating necessary
corrective action for marginal loans. The goal of the loan review process is to
address classified and non-performing loans as early as possible.

Classification of Assets

Generally, interest on loans accrues and is credited to income based upon
the principal balance outstanding. It is management's policy to discontinue the
accrual of interest income and classify a loan on non-accrual status when in the
opinion of management, principal or interest is not likely to be paid in
accordance with the terms of the obligation or when principal or interest is
past due 90 days or more unless, in the determination of management, the
principal and interest on the loan are well collateralized and in the process of
collection. Consumer installment loans are generally charged-off after 90 days
of delinquency unless adequately collateralized and in the process of
collection. Loans are not returned to accrual status until principal and
interest payments are brought current and future payments appear reasonably
certain. Interest accrued and unpaid at the time a loan is placed on non-accrual
status is charged against interest income.

Real estate acquired by First Commerce as a result of foreclosure or by
deed in lieu of foreclosure is classified as other real estate owned ("OREO").
OREO properties are recorded at the lower of cost or fair value less estimated
selling costs, and the estimated loss, if any, is charged to the allowance for
credit losses at the time it is transferred to OREO. Further write-downs in OREO
are recorded at the time management believes additional deterioration in value
has occurred and are charged to non-interest expense.

Interest income that would have been recorded under the original terms of
loans on non-accrual status and interest income actually recognized was $309,000
and $126,000, respectively, for the year ended December 31, 1996, and $144,000
and $28,000, respectively, for the year ended December 31, 1995.

On January 1, 1995, First Commerce adopted Statements of Financial
Accounting Standards No. 114 and 118. These Statements address the accounting by
creditors for impairment of certain loans and generally require First Commerce
to identify loans, for which full repayment of principal and interest will
probably not be received, as impaired loans. The Statements require that
impaired loans be valued at the present value of expected future cash flows,
discounted at the loan's effective interest rate, or at the observable market
price of the loan, or the fair value of the underlying collateral if the loan is
collateral dependent. First Commerce has implemented the Statements by modifying
its quarterly review of the adequacy of the allowance for credit losses to also
identify and value impaired loans in accordance with guidance in the Statements.
As a result of First Commerce's review, impaired loans totaled $1.9 million and
$1.2 million and the allowance for credit losses related to these loans totaled
$548,000 and $156,000 as of December 31, 1996 and 1995, respectively. The
average balance of impaired loans amounted to approximately $1.5 million and
$795,000 during the years ended December 31, 1996 and 1995, respectively. The
adoption of the Statements did not have a material effect on the results of
operations for the year ended December 31, 1995.

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<PAGE> 76

As of December 31, 1996 and 1995, loans on non-accrual status and other
real estate owned, the ratio of such loans and real estate owned to total
assets, and certain other related information was as follows:

<TABLE>
<CAPTION>
1996 1995
-------------- --------------
% OF % OF
TOTAL TOTAL
AMOUNT LOANS AMOUNT LOANS
------ ----- ------ -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Loans on non-accrual status:
Commercial......................................... $1,173 1.72% $ 416 .58%
Real estate construction........................... -- -- -- --
Commercial real estate............................. 1,221 1.79 832 1.16
Residential mortgage............................... 180 0.26 302 .42
Consumer and other................................. 72 0.11 57 .08
------ ---- ------ ----
Total loans on non-accrual status.......... 2,646 3.89 1,607 2.24
Accruing loans over 90 days delinquent:
Residential mortgage............................... -- -- 199 .28
Troubled debt restructurings......................... -- -- -- --
------ ---- ------ ----
Total non-performing loans................. $2,646 3.89% $1,806 2.52%
====== ==== ====== ====
Other real estate owned.............................. $ 79 $ 301
====== ======
Total non-performing assets........................ $2,725 $2,107
====== ======
Loans past-due:
30-59 days delinquent.............................. $ 905 1.33% $1,352 1.89%
60 to 89 days delinquent........................... 115 0.17 286 .40
------ ---- ------ ----
Total loans past-due 30 to 89 days......... 1,020 1.50 1,638 2.29
------ ---- ------ ----
Total loans past-due over 30 days.................... $3,666 5.39% $3,444 4.81%
====== ==== ====== ====
As a percentage of total assets:
Total non-performing loans......................... 2.50% 1.60%
====== ======
Total non-performing assets........................ 2.57% 1.86%
====== ======
Allowance for credit losses as a percentage of:
Total loans........................................ 2.14% 1.67%
====== ======
Non-performing loans............................... 54.91% 66.17%
====== ======
</TABLE>

As of December 31, 1996, loans on non-accrual status totaled $2.6 million
and consisted primarily of five customer relationships totaling $2.2 million or
85% of total non-accruing loans.

The first customer relationship consisted of a commercial real estate
mortgage that had a balance of $729,000 as of December 31, 1996. After 1996, the
obligors on this loan agreed to increase the balance of the loan by $159,000 so
that the proceeds could be used to repay First Commerce for a previously
charged-off loan by one of the principals and for attorneys' fees incurred by
First Commerce. The mortgage loan has a balance of $888,000 and is
collateralized with a first mortgage on a 35 acre recreational vehicle park and
fish camp. During 1996, the customer made interest payments which brought the
loan to a current status. During the first quarter of 1997, the customer paid
interest in advance to September 1, 1997. This loan remains on non-accrual
status.

The second customer relationship consisted of three commercial loans
totaling $291,000 at December 31, 1996. During the first quarter of 1997,
management charged off $168,000 of the loans, bringing the outstanding balance
to market value. The credit is collateralized by accounts receivable, high dump
trailers and assignment of leases on high dump trailers. The Bank is receiving
the lease payments pursuant to the assignments of the leases. These loans remain
on a non-accrual status.

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<PAGE> 77

The third relationship consisted of two loans totaling $195,000. The credit
is secured by commercial real estate and a residential property. During the
first quarter of 1997, the customer reaffirmed the debt and it was restructured
under a new repayment schedule. Also during the first quarter of 1997, a
contract for sale of the residential property securing the loan was signed
which, if closed, would result in First Commerce receiving $13,000 to be applied
to the loan balance. These loans remains on a non-accrual status.

The fourth relationship consisted of three loans totaling $232,000 secured
by commercial real estate. Subsequent to December 31, 1996, two of the three
properties were sold paying off two of the three loans. The remaining balance is
$114,000. The remaining loan is being restructured to include additional
collateral consisting of an assignment of a lease agreement with a third party
on the related commercial real estate. This loan remains on a non-accrual
status.

The fifth relationship consisted of four loans of equal size totaling
$771,000 at December 31, 1996. These loans are to four family members and are
secured by stock issued on a closely held family corporation, which has filed
for Chapter 11 reorganization under the Bankruptcy Code. These loans remain on a
non-accrual status.

After December 31, 1996, two additional loans aggregating $508,000 were
placed on non-accrual status. One of these loans is related to the fifth
relationship, and consisted of a funded letter of credit secured by commercial
real estate and an assignment of a life insurance policy having a cash surrender
value of approximately $150,000. The other credit consisted of a $208,000 loan
secured by residential real estate. Payments received on this credit are being
applied to principal only. The loan remains on non-accrual status.

As of December 31, 1996, there were no accruing loans over 90 days
delinquent.

As of December 31, 1996, loans 30 to 89 days delinquent totaled $1,020,000
and consisted primarily of 27 customer relationships totaling $731,000 or 72% of
total loans 30 to 89 days delinquent. The remaining $289,000 of loans 30 to 89
days delinquent consisted of a $181,000 loan secured by residential real estate
and a $108,000 loan secured by commercial real estate.

Following the FSB/CBC Merger, First Commerce experienced a significant
increase in its classified loans. As a result of the increase in First
Commerce's classified loans, management during the fourth quarter of 1995
completed a special review of First Commerce's loan portfolio and instituted a
number of steps intended to improve the identification, evaluation, and
resolution of First Commerce's problem assets. As a result of these actions, the
senior management and loan staff of the Bank meet weekly to review all past due
and non-performing loans and to discuss collection activities. The Board of
Directors of the Bank also reviews problem assets on a monthly basis. In
addition, an independent firm has been retained to conduct periodic loan reviews
and make recommendations for improvement. Management has also instituted steps
to improve underwriting practices. These actions include establishing a bank
credit department separate from the loan origination function, changing loan
origination authorities, hiring a senior vice president in charge of commercial
lending and an assistant vice president in charge of handling nonaccruing loans
and other real estate. Although management believes that the foregoing steps
should contribute to an improvement in First Commerce's asset quality over the
longer term, no estimate can be made at present as to future levels of problem
assets or as to the impact of those assets and related expenses on the financial
condition and results of operations of First Commerce.

Allowance for Credit Losses

In originating loans, First Commerce recognizes that credit losses will be
experienced and that the risk of loss will vary with, among other things, the
type of loan being made, the credit worthiness of the borrower over the term of
the loan and, in the case of a collateralized loan, the quality of the
collateral for the loan, as well as general economic conditions. As a matter of
policy, First Commerce maintains an allowance for credit losses. The amount
provided for credit losses during any period is based on an evaluation by
management of the amount needed to maintain the allowance at a level sufficient
to cover anticipated losses and the inherent risk of losses in the loan
portfolio. In determining the amount of the allowance, management considers the
dollar amount of loans outstanding, its assessment of known or potential problem
loans, current economic conditions,

70
<PAGE> 78

the risk characteristics of the various classifications of loans, credit record
of its borrowers, the fair market value of underlying collateral and other
factors. Specific allowances are provided for individual loans when ultimate
collection is considered questionable by management after reviewing the current
status of loans which are contractually past due and considering the fair value
of the underlying collateral for each loan. See "-- Results of
Operations -- Provision for Credit Losses."

Management continues to actively monitor First Commerce's asset quality and
to charge-off loans against the allowance for credit losses when appropriate or
to provide specific loss allowances when necessary. Although management believes
that it uses the best information available at the time to make determinations
with respect to allowance for credit losses, subsequent adjustments to the
allowance for credit losses may be necessary if future economic conditions or
other facts differ from the assumptions used in making the initial
determinations or if regulatory policies change.

As of December 31, 1996 and 1995, the allocation of the allowance for
credit losses was as follows:

<TABLE>
<CAPTION>
1996 1995
----------------- -----------------
% OF % OF
LOANS TO LOANS TO
TOTAL TOTAL
AMOUNT LOANS AMOUNT LOANS
------ -------- ------ --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Commercial.......................................... $ 634 43.63% $ 348 27.74%
Real estate construction............................ 13 0.92 42 5.81
Commercial real estate.............................. 586 40.33 465 34.36
Residential mortgage................................ 145 9.97 213 20.63
Consumer and other.................................. 75 5.15 127 11.46
------ ------ ------ ------
Total allowance for credit losses......... $1,453 100.00% $1,195 100.00%
====== ====== ====== ======
</TABLE>

During the year ended December 31, 1996, the provision for credit losses
was $974,000, compared to $1.2 million during the year ended December 31, 1995,
or a decrease of $217,000.

The Bank continued to provide for loan losses throughout 1996, especially
in the fourth quarter. During the fourth quarter, $406,000 was added to the
allowance for credit losses, which was in recognition of an increase in charged
off loans in the month of December 1996 of $595,000. Total charged off loans,
net of recoveries, were $741,000 for 1996 and $742,000 for 1995.

During 1996, $923,000 of loans were charged off, of which $306,000
consisted of unsecured loans. The three largest charged off loans totaled
$617,000, representing 67% of the total loans charged off. The first charged off
loan was a $121,000 commercial real estate loan. The second charged off loan was
the aggregate balance of three separate commercial real estate loans of $121,000
to one borrower. The third charged off loan was a $375,000 commercial loan,
secured by an assignment of proceeds of fruit sales. The Bank was unsuccessful
in its efforts or decided it was too costly to protect or seize the related
collateral on these three loans.

71
<PAGE> 79

During the years ended December 31, 1996 and 1995, the activity in First
Commerce's allowance for credit losses was as follows:

<TABLE>
<CAPTION>
1996 1995
------- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Allowance at beginning of period............................ $ 1,195 $ 830
Loans charged-off:
Commercial................................................ (707) (708)
Real estate construction.................................. -- --
Commercial real estate.................................... (103) --
Residential mortgage...................................... (37) (50)
Consumer and other........................................ (120) (30)
------- -------
Total loans charged-off........................... (967) (788)
------- -------
Recoveries:
Commercial................................................ 202 40
Real estate construction.................................. -- --
Commercial real estate.................................... -- 1
Residential mortgage...................................... -- 1
Consumer and other........................................ 22 4
------- -------
Total recoveries.................................. 226 46
------- -------
Net loans charged-off..................................... (741) (742)
------- -------
FSB/Osceola allowance sold in 1995.......................... -- (119)
------- -------
Allowance related to loans purchased from FSB/Osceola....... 25 35
------- -------
Provision for credit losses charged to expense.............. 974 1,191
------- -------
Allowance at end of period.................................. $ 1,453 $ 1,195
======= =======
Net charge-offs as a percentage of average loans
outstanding............................................... 1.05% 1.04%
======= =======
Allowance for credit losses as a percentage of period-end
total loans receivable.................................... 2.14% 1.67%
======= =======
Allowance for credit losses as a percentage of
non-performing loans...................................... 54.91% 66.17%
======= =======
Average loans outstanding................................... $70,702 $71,414
======= =======
Period-end total loans receivable........................... $68,051 $71,684
======= =======
</TABLE>

Investment Securities

The total investment portfolio decreased to $29.4 million as of December
31, 1996, from $33.7 million as of December 31, 1995, or a decrease of $4.3
million or 12.80%. This decrease was primarily to fund the higher priced
deposits leaving the Bank during 1996.

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<PAGE> 80

The following table sets forth the carrying balances of First Commerce's
investment portfolio as of December 31, 1996 and 1995:

<TABLE>
<CAPTION>
1996 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Securities available-for-sale:
U.S. Treasury securities.................................. $ 2,008 $ 2,000
U.S. Government agency obligations........................ 4,475 1,001
FHLMC mortgage-backed securities.......................... 12,166 19,430
FNMA mortgage-backed securities........................... 609 1,177
Collateralized mortgage obligations:
FHLMC obligations...................................... -- 24
FNMA................................................... 899 952
------- -------
Total securities available-for-sale............... $20,157 $24,584
======= =======
Securities held-to-maturity:
U.S. Treasury securities.................................. $ -- $ 2,000
U.S. Government agency obligations........................ 500 500
State, county and municipal securities.................... 1,047 1,059
------- -------
Total held-to-maturity............................ $ 1,547 $ 3,559
======= =======
Total investment securities................................. $21,704 $28,143
======= =======
Federal funds sold.......................................... $ 7,688 $ 5,562
======= =======
Total Investment portfolio........................ $29,392 $33,705
======= =======
</TABLE>

First Commerce has adopted Statement of Financial Accounting Standards No.
115 ("FAS 115"), which requires companies to classify investments securities,
including mortgage-backed securities as either held-to-maturity,
available-for-sale, or trading securities. Securities classified as
held-to-maturity are carried at amortized cost. Securities classified as
available-for-sale are reported at fair value, with unrealized gains and losses,
net of tax effect, reported as a separate component of stockholders' equity.
Securities classified as trading securities are recorded at fair value, with
unrealized gains and losses included in earnings. At December 31, 1996, all
mortgage-backed securities were classified as available-for-sale. As a result of
the adoption of FAS 115, under which First Commerce expects to continue to
classify certain of its mortgage-backed securities as available-for-sale,
changes in the underlying market values of such securities could have a material
adverse effect on First Commerce's capital position. Typically, an increase in
interest rates results in a decrease in underlying market value and an increase
in the level of principal repayments on mortgage-backed securities. As a result
of a general decrease in interest rates during the past year, decreases in the
market value of available-for-sale mortgage-backed securities resulted in a
decrease in stockholders' equity of $33,000 at December 31, 1996. Such decrease
represents the impact of changes in interest rates on the value and maturity of
these investments.

As allowed by "A Guide to Implementation of Statement 115 on Accounting for
Certain Investments in Debt and Equity Securities" issued by the Financial
Accounting Standards Board, First Commerce reevaluated the classification of its
investment securities and on December 12, 1995, reclassified securities with an
amortized cost of $2.1 million and a fair value of $2.1 million from securities
held-to-maturity to securities available-for-sale.

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<PAGE> 81

As of December 31, 1996, the maturity distribution and certain other
information pertaining to investment securities were as follows:

<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE YIELD
----------- --------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Securities available-for-sale:
U.S. Treasury securities:
Due within one year.................................. $ 2,004 $ 2,008 5.66%
======= ======= ====
U.S. Government agency obligations:
Due within one year.................................. $ 2,000 $ 2,002 5.61%
Due one to five years................................ 2,489 2,473 6.00
------- ------- ----
$ 4,489 $ 4,475 5.82%
======= ======= ====
FHLMC mortgage-backed securities:
Due within one year.................................. $ 1,665 $ 1,648 6.30%
Due over ten years(1)................................ 10,451 10,518 6.25
------- ------- ----
$12,116 $12,166 6.25%
======= ======= ====
FNMA mortgage-backed securities:
Due one to five years................................ $ 89 $ 91 8.50%
Due over ten years(1)................................ 511 518 3.84
------- ------- ----
$ 600 $ 609 4.53%
======= ======= ====
Collateralized mortgage obligations:
FNMA mortgage-backed securities:
Due over ten years(1)................................ $ 1,000 $ 899 5.95%
======= ======= ====
Total securities available-for-sale............. $20,209 $20,157 6.03%
======= ======= ====
Securities held-to-maturity:
U.S. Government agency obligations:
Due one to five years................................ $ 500 $ 497 5.52%
======= ======= ====
State, county and municipal obligations:(2)
Due five to ten years................................ $ 300 $ 299 4.62%
Due over ten years................................... 747 792 8.82
------- ------- ----
Total........................................... $ 1,047 $ 1,091 7.62%
======= ======= ====
Total securities held-to-maturity............... $ 1,547 $ 1,588 6.94%
======= ======= ====
</TABLE>

- ---------------

(1) The mortgage-backed securities and collateralized mortgage obligations were
purchased with an expected average life of approximately three years.
(2) Yields on state, county and municipal obligations are not computed on a tax
equivalent basis.

First Commerce invests in mortgage-backed securities that are guaranteed as
to principal and interest by the Government National Mortgage Association
("GNMA"), the Federal Home Loan Mortgage Corporation ("FHLMC"), or the Federal
National Mortgage Association ("FNMA"). Although mortgage-backed securities
generally have a lower yield than loans, mortgage-backed securities increase the
quality of First Commerce's assets by virtue of the guarantees that back them,
are more liquid than individual mortgage loans and may be used to collateralize
borrowings or other obligations of First Commerce. Due to repayment and
prepayments of the underlying loans, the actual maturities of mortgage-backed
securities are substantially less than the scheduled maturities. First
Commerce's portfolio of mortgage-backed securities was purchased with an
anticipated average life of approximately three years. Changes in interest and
prepayment rates may also affect the average life, yield to maturity, and
related market value of First Commerce's mortgage-backed securities. Changes in
the market values of First Commerce's mortgage-backed securities may result in

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<PAGE> 82

volatility in capital based on how First Commerce classifies the securities. See
" -- Asset/Liability Management."

Deposit Activities

Deposits are the major source of First Commerce's funds for lending and
other investment purposes. Deposits are attracted principally from within First
Commerce's primary market area through the offering of a broad variety of
deposit instruments including checking accounts, money market accounts, regular
savings accounts, term certificate accounts (including "jumbo" certificates in
denominations of $100,000 or more) and retirement savings plans. As of December
31, 1996 and 1995, the distribution by type of First Commerce's deposit accounts
was as follows:

<TABLE>
<CAPTION>
1996 1995
------------------ -------------------
% OF % OF
AMOUNT DEPOSITS AMOUNT DEPOSITS
------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Demand deposits.................................. $18,773 19.81% $ 17,056 16.73%
NOW deposits..................................... 13,722 14.48 15,045 14.76
Money market..................................... 5,136 5.42 4,698 4.61
Savings accounts................................. 8,390 8.86 7,735 7.59
Time deposits under $100,000..................... 42,771 45.14 48,864 47.93
Time deposits $100,000 and over.................. 5,957 6.29 8,543 8.38
------- ------ -------- ------
Total deposits......................... $94,749 100.00% $101,941 100.00%
======= ====== ======== ======
</TABLE>

Time deposits included individual retirement accounts ("IRAs") totalling
$6.0 million at December 31, 1996 and 1995, all of which are in the form of
certificates of deposit.

First Commerce's deposits decreased to $94.7 million as of December 31,
1996, from 101.9 million as of December 31, 1995, or a decrease of $7.2 million
or 7.06%. This decrease was primarily attributable to the $7.8 million, or
13.6%, decrease in deposits of the Bank. During 1996, the Bank repriced deposits
at a lower rate resulting in a decrease in deposits.

Maturity terms, service fees and withdrawal penalties are established by
the Bank on a periodic basis. The determination of rates and terms is predicated
on funds acquisition and liquidity requirements, rates paid by competitors,
growth goals and federal regulations.

FDIC regulations limit the ability of certain insured depository
institutions to accept, renew, or rollover deposits by offering rates of
interest which are significantly higher than the prevailing rates of interest on
deposits offered by other insured depository institutions having the same type
of charter in such depository institutions' normal market area. Under these
regulations, "well capitalized" depository institutions may accept, renew, or
roll over deposits at such rates without restriction, "adequately capitalized"
depository institutions may accept, renew or roll over deposits at such rates
with a waiver from the FDIC (subject to certain restrictions on payments of
rates), and "undercapitalized" depository institutions may not accept, renew or
roll over deposits at such rates. As of December 31, 1996, the Bank met the
definition of a "well capitalized" depository institution.

First Commerce does not have a concentration of deposits from any one
source, the loss of which would have a material adverse effect on First
Commerce. Management believes that substantially all of First Commerce's
depositors are residents in its primary market area. First Commerce currently
does not accept brokered deposits.

Time deposits of $100,000 and over, public fund deposits and other large
deposit accounts tend to be short-term in nature and more sensitive to changes
in interest rates than other types of deposits and, therefore, may be a less
stable source of funds. In the event that existing short-term deposits are not
renewed, the resulting loss of the deposited funds could adversely affect First
Commerce's liquidity. In a rising interest rate market, such short-term deposits
may prove to be a costly source of funds because their short-term nature

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<PAGE> 83

facilitates renewal at increasingly higher interest rates, which may adversely
affect First Commerce's earnings. However, the converse is true in a falling
interest-rate market where such short-term deposits are more favorable to First
Commerce.

As of December 31, 1996 and 1995, time deposits of $100,000 and over mature
as follows:

<TABLE>
<CAPTION>
1996 1995
------ ------
(IN THOUSANDS)
<S> <C> <C>
Due in three months or less................................. $1,758 $2,130
Due from three months to six months......................... 1,287 1,564
Due from six months to one year............................. 1,389 1,568
Due over one year........................................... 1,523 3,281
------ ------
Total time deposits $100,000 and over............. $5,957 $8,543
====== ======
</TABLE>

IMPACT OF INFLATION AND CHANGING PRICES

The financial statements and related data concerning First Commerce have
been prepared in accordance with generally accepted accounting principles which
require the measurement of financial position and operating results in terms of
historical dollars without considering changes in the relative purchasing power
of money over time due to inflation. The principal element of First Commerce's
earnings is interest income which may be significantly affected by the level of
inflation and by government monetary and fiscal policies adopted in response to
inflationary or deflationary pressures.

Inflation affects the reported financial condition and results of
operations of all companies. However, the majority of assets and liabilities of
financial institutions are monetary in nature and therefore differ greatly from
most commercial and industrial companies that have significant investments in
fixed assets or inventories. Inflation does have an important impact on the
growth of total assets and the resulting need to increase equity capital at
higher than normal rates in order to maintain an appropriate equity to assets
ratio Inflation also is a factor which may influence interest rates, yet the
frequency and magnitude of interest rate fluctuations do not necessarily
coincide with changes in the general inflation rate. In an effort to cope with
the effects of inflation, First Commerce attempts to monitor its interest-rate
sensitivity gap position, as discussed above. In addition, a periodic review of
banking services and products is conducted to adjust pricing in view of current
costs.

FUTURE ACCOUNTING REQUIREMENTS

Statement of Financial Accounting Standards No. 125 ("FAS 125"),
"Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities" provides accounting and reporting standards for transfers and
servicing of financial assets and extinguishments of liabilities based on
consistent application of a financial components approach that focuses on
control. FAS 125 provides standards for distinguishing transfers of financial
assets from transfers that are secured borrowings. The accounting and disclosure
requirements of FAS 125 will become effective for First Commerce beginning
January 1, 1997. Management is in the process of evaluating FAS 125, but does
not anticipate that FAS 125 will have a material impact on First Commerce's
financial statements.

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<PAGE> 84

BUSINESS OF BANCGROUP

GENERAL

BancGroup is a bank holding company registered under the BHCA. It was
organized in 1974 under the laws of Delaware and has operated under its current
name and management since 1981. BancGroup operates wholly owned commercial
banking subsidiaries in the states of Alabama, Florida, Georgia and Tennessee,
each under the name "Colonial Bank." Colonial Bank conducts a full service
commercial banking business in the state of Alabama through 110 branches. In
Tennessee, Colonial Bank conducts a general commercial banking business through
three branches. In Georgia, Colonial Bank operates eleven branches in the
Atlanta area and three branches in the Dalton area. In Florida, Colonial Bank
operates eleven branches in the Orlando and Ormond Beach areas, nine branches in
Dade, Broward and Palm Beach counties, and six branches in Eustis and Lake
County. Colonial Mortgage Company, a subsidiary of Colonial Bank in Alabama, is
a mortgage banking company which services approximately $10.6 billion in
residential loans and which originates mortgages in 37 states through 6 regional
offices. BancGroup's commercial banking loan portfolio is comprised primarily of
commercial real estate loans (24%) and residential real estate loans (43%), a
significant portion of which is located within the State of Alabama. BancGroup's
growth in loans over the past several years has been concentrated in commercial
and residential real estate loans.

BancGroup plans to merge all of its existing subsidiary banks in Florida,
Georgia and Tennessee into its Alabama bank subsidiary, Colonial Bank, no later
than July 1, 1997. Thereafter, Colonial Bank will conduct business as a single
bank subsidiary of BancGroup in the states of Alabama, Florida, Georgia and
Tennessee.

PROPOSED AFFILIATE BANKS

Since December 31, 1996, BancGroup has acquired five banking institutions,
First Family, Tomoka, and Jefferson, located in Florida, Bankshares, located in
Georgia, and Shamrock, located in Alabama, with aggregate assets and
stockholders' equity acquired of $896.9 and $66.6 million, respectively. These
acquisitions are included in the pro forma statements contained herein.

See "THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES -- Condensed Pro Forma
Statements of Condition (Unaudited)."

BancGroup has entered into a definitive agreement dated as of March 6,
1997, to acquire Great Southern Bancorp ("Great Southern"). Great Southern is a
Florida corporation and is a holding company for Great Southern Bank located in
West Palm Beach, Florida. Great Southern will merge with BancGroup and following
such merger Great Southern Bank will merge with BancGroup's existing Alabama
bank subsidiary, Colonial Bank. Based on the market price of BancGroup Common
Stock as of March 24, 1997, a total of 899,698 shares of BancGroup Common Stock
would be issued to the stockholders of Great Southern. The actual number of
shares of BancGroup Common Stock to be issued in this transaction will depend
upon the market value of such Common Stock at the time of the merger, subject to
maximum and minimum amounts to be issued. This transaction is subject to, among
other things, approval by the stockholders of Great Southern and approval by
appropriate regulatory authorities. At December 31, 1996, Great Southern has
assets of $119.2 million, deposits of $107.8 million and stockholders' equity of
$10.1 million.

VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS

As of March 1, 1997, BancGroup had issued and outstanding 38,955,210 shares
of BancGroup Common Stock with 7,129 stockholders of record. Each such share is
entitled to one vote. In addition, as of that date, 1,605,010 shares of
BancGroup Common Stock were subject to issue upon exercise of options pursuant
to BancGroup's stock option plans and up to 512,800 shares of BancGroup Common
Stock were issuable upon conversion of BancGroup's 1986 Debentures. There are
currently 100,000,000 shares of BancGroup Common Stock authorized.

77
<PAGE> 85

The following table shows those persons who are known to BancGroup to be
beneficial owners as of March 1, 1997, of more than five percent of BancGroup's
outstanding Common Stock.

<TABLE>
<CAPTION>
PERCENTAGE
COMMON OF CLASS
NAME AND ADDRESS STOCK OUTSTANDING(1)
- ---------------- --------- --------------
<S> <C> <C>
Robert E. Lowder(2)......................................... 2,888,820(3) 7.12%
Post Office Box 1108
Montgomery, AL 36101
James K. Lowder............................................. 2,199,298 5.42%
Post Office Box 250
Montgomery, AL 36142
Thomas H. Lowder............................................ 2,146,106 5.29%
Post Office Box 11687
Birmingham, AL 35202
</TABLE>

- ---------------

(1) Percentages are calculated assuming the issuance of 1,605,010 shares of
Common Stock pursuant to BancGroup's stock option plans.
(2) Robert E. Lowder is the brother of James K. and Thomas H. Lowder. Robert E.
Lowder disclaims any beneficial ownership interest in the shares owned by
his brothers. Robert E. Lowder's mother, Catherine K. Lowder, owns 170,884
shares of Common Stock. Mr. Lowder disclaims any beneficial interest in such
shares.
(3) Includes 181,020 shares of BancGroup Common Stock subject to options under
BancGroup's stock option plans.

SECURITY OWNERSHIP OF MANAGEMENT

The following table indicates for each director, executive officer, and all
executive officers and directors of BancGroup as a group the number of shares of
outstanding Common Stock of BancGroup beneficially owned as of March 1, 1997.

<TABLE>
<CAPTION>
PERCENTAGE
COMMON OF CLASS
NAME STOCK OUTSTANDING(1)
- ---- --------- --------------
<S> <C> <C>
DIRECTORS
Lewis Beville............................................... 1,816 *
Young J. Boozer............................................. 15,256(2) *
William Britton............................................. 19,616 *
Jerry J. Chesser............................................ 147,428 *
Augustus K. Clements, III................................... 18,600 *
Robert S. Craft............................................. 11,994 *
Patrick F. Dye.............................................. 37,960(3) *
Clinton O. Holdbrooks....................................... 280,900(4) *
D. B. Jones................................................. 20,714(5) *
Harold D. King.............................................. 156,108 *
Robert E. Lowder**.......................................... 2,888,820(6) 7.12%
</TABLE>

78
<PAGE> 86
<TABLE>
<CAPTION>
PERCENTAGE
COMMON OF CLASS
NAME STOCK OUTSTANDING(1)
- ---- --------- --------------
<S> <C> <C>
John Ed Mathison............................................ 28,454 *
Milton E. McGregor.......................................... -- *
John C. H. Miller, Jr....................................... 40,480(7) *
Joe D. Mussafer............................................. 20,264 *
William E. Powell, III...................................... 14,352 *
J. Donald Prewitt........................................... 244,940(8) *
Jack H. Rainer.............................................. 2,900 *
Jimmy Rane.................................................. -- *
Frances E. Roper............................................ 365,342 *
Simuel Sippial.............................................. 2,774 *
Ed V. Welch................................................. 30,454 *
EXECUTIVE OFFICERS WHO ARE NOT ALSO DIRECTORS
Young J. Boozer, III........................................ 46,920(9) *
W. Flake Oakley, IV......................................... 39,458(9) *
Michelle Condon............................................. 18,586(9) *
All Executive Officers and Directors as a Group............. 4,454,136(10) 10.98%
</TABLE>

- ---------------

* Represents less than one percent.
** Executive Officer.
(1) Percentages are calculated assuming the issuance of 1,605,010 shares of
Common Stock pursuant to BancGroup's stock option plans.
(2) Includes 1,000 shares of Common Stock out of 2,000 shares owned by Young J.
Boozer, and Young J. Boozer, III EX U/W Phyllis C. Boozer.
(3) Includes 35,960 shares of Common Stock subject to options exercisable under
BancGroup's stock option plans.
(4) Includes 24,524 shares of Common Stock subject to options under BancGroup's
stock option plans, and 78,998 shares over which Mr. Holdbrooks serves as
trustee.
(5) Mr. Jones holds power to vote these shares as trustee.
(6) These shares include 181,020 shares of Common Stock subject to options
under BancGroup's stock option plans. See the table at "Voting Securities
and Principal Stockholders."
(7) Includes 20,000 shares subject to options.
(8) Includes 61,604 shares subject to stock options.
(9) Young J. Boozer, III, W. Flake Oakley, IV and Michelle Condon, hold options
respecting 25,000, 16,000 and 10,000 shares of Common Stock, respectively,
pursuant to BancGroup's stock option plans.
(10) Includes shares subject to options.

MANAGEMENT INFORMATION

Certain information regarding the biographies of the directors and
executive officers of BancGroup, executive compensation and related party
transactions is included in BancGroup's Annual Report on Form 10-K for the
fiscal year ending December 31, 1996, at items 10, 11, and 13 and is
incorporated herein by reference.

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<PAGE> 87

BUSINESS OF FIRST COMMERCE

GENERAL

First Commerce was incorporated under the laws of the State of Florida on
March 28, 1984 under the name First Sterling Bancshares, Inc. ("FSB"). On August
31, 1995, FSB closed the merger of Commerce Bank Corporation ("CBC") with and
into FSB (the "FSB/CBC Merger"). Upon effectiveness of the FSB/CBC Merger, the
corporate name of FSB was changed to First Commerce Banks of Florida, Inc. First
Commerce is a registered bank holding company under the Bank Holding Company Act
of 1956, as amended (the "BHC Act"), and owns 99.7% of the voting shares of
First Commerce Bank of Polk County (the "Bank").

The Bank commenced operations in 1982 under the name First Sterling Bank.
Upon the effectiveness of the FSB/CBC Merger, Commerce Bank of Central Florida
(a subsidiary of CBC) was merged with and into First Sterling Bank and the name
of First Sterling Bank was changed to First Commerce Bank of Polk County. The
Bank is a state banking corporation subject to regulation by the Federal Deposit
Insurance Corporation ("FDIC") and the Florida Department of Banking and Finance
(the "Florida Department"). The Bank's operations are conducted from its main
office located in Winter Haven, Florida, a branch office located in Auburndale,
Florida, two branch offices located in Lakeland, Florida, and a branch office
located in Polk City, Florida.

The Bank provides a range of consumer and commercial banking services to
individuals, businesses and industries. The basic services offered by the Bank
include: demand interest bearing and noninterest bearing accounts, money market
deposit accounts, NOW accounts, time deposits, safe deposit services, credit
cards, cash management, direct deposits, notary services, money orders, night
depository, travelers' checks, cashier's checks, domestic collections, savings
bonds, bank drafts, drive-in tellers, and banking by mail. In addition, the Bank
makes secured and unsecured commercial and real estate loans and issues stand-by
letters of credit. The Bank provides automated teller machine ("ATM") cards, as
a part of the HONOR ATM network, thereby permitting customers to utilize the
convenience of larger ATM networks. The Bank does not have trust powers and,
accordingly, no trust services are provided.

The revenues of the Bank are primarily derived from interest on, and fees
received in connection with, real estate and other loans, and from interest and
dividends from investment and mortgage-backed securities, and short-term
investments. The principal sources of funds for the Bank's lending activities
are its deposits, repayment of loans, and the sale and maturity of investment
securities. The principal expenses of the Bank are the interest paid on
deposits, and operating and general administrative expenses.

As is the case with banking institutions generally, the Bank's operations
are materially and significantly influenced by general economic conditions and
by related monetary and fiscal policies of financial institution regulatory
agencies, including the Federal Reserve, the FDIC, and the Florida Department.
Deposit flows and costs of funds are influenced by interest rates on competing
investments and general market rates of interest. Lending activities are
affected by the demand for financing of real estate and other types of loans,
which in turn is affected by the interest rates at which such financing may be
offered and other factors affecting local demand and availability of funds. The
Bank faces strong competition in the attraction of deposits (its primary source
of lendable funds) and in the origination of loans.

DEPOSIT ACTIVITIES

Deposits are the major source of the Bank's funds for lending and other
investment activities. The Bank considers the majority of its regular savings,
demand, NOW and money market deposit accounts to be core deposits. These
accounts comprised 48.6% of the Bank's total deposits at December 31, 1996. At
December 31, 1996, 51.4% of the Bank's deposits were certificates of deposit.
Generally, the Bank attempts to maintain the rates paid on its deposits at a
competitive level. Time deposits of $100,000 and over made up 6.3% of the Bank's
total deposits at December 31, 1996. The majority of the deposits of the Bank
are generated from Polk County. The Bank does not accept brokered deposits. For
additional information on the

80
<PAGE> 88

Bank's deposit activities, see "First Commerce Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Financial
Condition -- Deposit Activities".

LENDING ACTIVITIES

The Bank offers a range of lending services, including real estate,
consumer and commercial loans, to individuals and small businesses and other
organizations that are located in or conduct a substantial portion of their
business in the Bank's market area. The Bank's loans receivable, net at December
31, 1996 were $66.4 million, or 62.6% of total assets. The interest rates
charged on loans vary with the degree of risk, maturity, and amount of the loan,
and are further subject to competitive pressures, money market rates,
availability of funds, and government regulations. The Bank has no foreign loans
or loans for highly leveraged transactions.

The Bank's loans are concentrated in three major areas: real estate loans,
commercial loans, and consumer loans. As of December 31, 1996, 69.6% of the
Bank's loan portfolio consisted of loans secured by mortgages on real estate and
20.1% of the loan portfolio consisted of commercial loans. At the same date,
6.8% of the Bank's loan portfolio consisted of unsecured loans.

The Bank's real estate loans are secured by mortgages and consist primarily
of loans to individuals and businesses for the purchase, improvement of or
investment in real estate and for the construction of single-family residential
units or the development of single-family residential building lots. These real
estate loans may be made at fixed- or variable-interest rates. The Bank
generally does not make fixed-interest rate commercial real estate loans for
terms exceeding five years. Loans in excess of three years generally have
adjustable-interest rates. The Bank's residential real estate loans generally
are repayable in monthly installments based on up to a 30-year amortization
schedule with variable-interest rates.

The Bank's commercial loans include loans to individuals and
small-to-medium sized businesses located primarily in Polk County for working
capital, equipment purchases, and various other business purposes. A majority of
the Bank's commercial loans are secured by equipment or similar assets, but
these loans may also be made on an unsecured basis. Commercial loans may be made
at variable- or fixed-interest rates. Commercial lines of credit are typically
granted on a one-year basis, with loan covenants and monetary thresholds. Other
commercial loans with terms or amortization schedules of longer than one year
will normally carry interest rates which vary with the prime lending rate and
will become payable in full and are generally refinanced in three to five years.

The Bank's consumer loan portfolio consists primarily of loans to
individuals for various consumer purposes, but includes some business purpose
loans which are payable on an installment basis. The majority of these loans are
for terms of less than five years and are secured by liens on various personal
assets of the borrowers, but consumer loans may also be made on an unsecured
basis. Consumer loans are made at fixed-and variable-interest rates, and are
often based on up to a five-year amortization schedule.

Loan originations are derived from a number of sources, including direct
solicitation by the Bank's loan officers, existing customers and borrowers,
advertising, walk-in customers and, in some instances, referrals from brokers.

For additional information on the Bank's lending activities, see "First
Commerce Management's Discussion and Analysis of Financial Condition and Results
of Operations -- Financial Condition -- Lending Activities," and "-- Asset
Quality."

INVESTMENTS

The Bank invests a portion of its assets in U.S. Treasury and U.S.
Government agency obligations, FHLMC and FNMA mortgage-backed securities, state,
county and municipal obligations, certificates of deposit, collateralized
mortgage obligations ("CMO's"), and federal funds sold. The Bank's investments
are managed in relation to loan demand and deposit growth, and are generally
used to provide for the investment of excess funds at reduced yields and risks
relative to yields and risks of the loan portfolio, while providing liquidity to
fund increases in loan demand or to offset fluctuations in deposits. For
additional information relating to First Commerce's investments, see "First
Commerce Management's Discussion and Analysis of

81
<PAGE> 89

Financial Condition and Results of Operations -- Financial
Condition -- Investment Securities" and Note 5 to the Notes to First Commerce's
Consolidated Financial Statements.

FSB/OSCEOLA SALE

On May 1, 1995, First Commerce sold all of the 240,000 shares of common
stock of First Sterling Bank of Osceola County ("FSB/Osceola") (which
constituted 80% of the outstanding shares of FSB/Osceola stock) owned by First
Commerce to certain unaffiliated individuals. The purchasers of FSB/Osceola paid
First Commerce a cash purchase price of $1.8 million, or $7.69 per share, which
was approximately equal to 1.45 times the adjusted shareholders' equity per
share of FSB/Osceola. The terms of the transaction were the result of
arms-length negotiations between First Commerce and the purchasers. The purchase
price allowed First Commerce to achieve a profit on the sale, due to the premium
over the book value being paid by the purchasers. At the closing of the sale,
FSB/Osceola also issued to First Commerce warrants to purchase 24,000 shares of
FSB/Osceola common stock exercisable over a five-year period at an exercise
price of $5.30 per share. No value for the warrants issued by FSB/Osceola to
First Commerce is carried on First Commerce's balance sheet.

The terms of the agreement for the sale by First Commerce of the
FSB/Osceola shares to the purchasers provided that First Commerce would
repurchase FSB/Osceola's other real estate owned and classified loans (which the
purchasers did not want FSB/Osceola to retain as a result of the sale) and that
the Bank would purchase substantially all of the FSB/Osceola loans in several
installments over a one-year period. During 1995, $4.6 million of FSB/Osceola
loans were purchased ($4.4 million by the Bank and $269,000 by First Commerce),
and during 1996, $1.9 million of FSB/Osceola loans were purchased ($1.4 million
by the Bank and $450,000 by First Commerce). See "First Commerce Management's
Discussion and Analysis of Financial Condition and Results of Operations -- Sale
of FSB/Osceola."

EMPLOYEES

As of December 31, 1996, First Commerce employed 61 full-time employees and
one part-time employee. The employees are not represented by a collective
bargaining unit. First Commerce and the Bank consider relations with employees
to be good.

PROPERTIES

The main office of First Commerce and the Bank is located at 141 Central
Avenue East, Winter Haven, Florida 33880, in a four story building of
approximately 28,065 square feet, approximately 17,372 of which is used by the
Bank and leased by the Bank from TBG Properties, Inc., a corporation in which
eight of the Bank directors (two of whom also serve as First Commerce directors)
are shareholders. The lease agreement, with renewal options, expires in 2004.
Under the lease agreement, the Bank has the option to purchase the building
during the term of the lease for a purchase price equal to the fair market value
as determined by a mutually agreed upon M.A.I. appraiser and, if the parties
cannot mutually agree upon an appraiser, then by two M.A.I. appraisers (one
selected by TBG Properties, Inc. and one selected by the Bank, with one-half of
the costs of the appraisals to be paid by the Bank). The purchase price will
equal the average of the two appraisals if they do not vary by more than 10%
and, if they do, the two appraisers will select a third M.A.I. appraiser, and
the purchase price will equal the average of the three appraisals. Either party
has the right not to proceed with the purchase and sale if it so notifies the
other within 10 days after the amount of the purchase price has been determined
pursuant to the appraisal process.

The Bank also has branch offices located at 3660 Havendale Boulevard,
Auburndale, Florida 33823, in a two-story building of approximately 7,500 square
feet which is owned by the Bank; at 2215 South Combee Road, Lakeland, Florida
33801 in a one story building of approximately 2,500 square feet which is owned
by the Bank; at 3900 South Florida Avenue, Lakeland, Florida 33813 in a one
story building of approximately 1,100 square feet which is leased by the Bank
(under a month to month lease); and at 212 North Commonwealth Avenue, Polk City,
Florida 33868 in a one story building of approximately 1,300 square feet which
is owned by the Bank.

82
<PAGE> 90

LEGAL PROCEEDINGS

First Commerce and the Bank are periodically parties to or otherwise
involved in legal proceedings arising in the normal course of business, such as
claims to enforce liens, claims involving the making and servicing of real
property loans, and other issues incident to their respective businesses.
Management does not believe that there is any pending or threatened proceeding
against First Commerce or the Bank which, if determined adversely, would have a
material adverse effect on First Commerce's consolidated financial position.

PRINCIPAL HOLDERS OF COMMON STOCK

The following table sets forth information as of March 1, 1997, regarding
the ownership of First Commerce Common Stock by each director of First Commerce,
and by all directors and executive officers as a group. Unless otherwise
indicated, all persons shown in the table have sole voting and investment power
with regard to the shares shown.

<TABLE>
<CAPTION>
SHARES PERCENTAGE
NAME BENEFICIALLY OWNED(1) OF OWNERSHIP
- ---- --------------------- ------------
<S> <C> <C>
Jack P. Brandon*....................................... 17,790(2) 1.12%
Herbert O. Gingrich.................................... 38,925(3) 2.44
Don E. Ingram*......................................... 67,816(4) 4.28
Jerry D. Miller........................................ 65,153(5) 3.98
Donald K. Stephens..................................... 72,020(6) 4.48
Robert W. Stickler, Jr................................. 25,930 1.61
Brian K. Swain*........................................ 83,037(7) 5.15
Robert C. Turner*...................................... 59,411(8) 3.75
All directors and executive officers as a group (9
persons)............................................. 448,272 25.43
</TABLE>

- ---------------

* Served as a member of the Board of Directors of Commerce Bank Corporation
prior to its merger with and into First Commerce on September 1, 1995.
(1) Information related to beneficial ownership is based upon information
available to First Commerce and uses "beneficial ownership" concepts set
forth in rules of the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended. Under such rules, more than one
person may be deemed to be a beneficial owner of the same securities, and a
person may be deemed to be a beneficial owner of securities as to which he
or she may disclaim any beneficial interest. Accordingly, directors are
named as beneficial owners of shares as to which they may disclaim any
beneficial interest. Except as otherwise indicated in the notes to this
table, the individuals possessed sole voting and investment power as to all
shares of First Commerce Common Stock set forth opposite their names. The
shares set forth above also include as to each director the number of shares
listed below, which represent shares the individual has the right to acquire
pursuant to presently exercisable options and warrants:

<TABLE>
<CAPTION>
NAME OF INDIVIDUAL NUMBER OF SHARES
- ------------------ ----------------
<S> <C>
Jack P. Brandon........................................... 5,627
Herbert O. Gingrich....................................... 8,925
Jerry D. Miller........................................... 50,813
Donald K. Stephens........................................ 23,340
Robert W. Stickler, Jr.................................... 25,930
Brian K. Swain............................................ 28,144
Don E. Ingram............................................. 16,182
</TABLE>

(2) Includes 2,442 shares held by him in trust for his children.
(3) Includes 7,350 shares held by his individual retirement account and 12,150
shares held by his spouse.
(4) Includes 2,442 shares held by him as custodian for his children.
(5) Includes 12,405 shares held by his individual retirement account and 1,935
shares held by his spouse's individual retirement account.
(6) Includes 16,800 shares held by his company's pension plan and 17,000 shares
held by his company's profit sharing plan.

83
<PAGE> 91

(7) Includes 52,519 shares held jointly with his spouse and 2,374 shares held by
a trust for his children.
(8) Held by a partnership in which he is a managing partner.

ADJOURNMENT OF SPECIAL MEETING

Approval of the Agreement by First Commerce's shareholders requires the
affirmative vote of at least a majority of the total votes eligible to be cast
at the Special Meeting. In the event there are an insufficient number of shares
of First Commerce Common Stock present in person or by proxy at the Special
Meeting to approve the Agreement, First Commerce's Board of Directors intends to
adjourn the Special Meeting to a later date provided a majority of the shares
present and voting on the motion have voted in favor of such adjournment. The
place and date to which the Special Meeting would be adjourned would be
announced at the Special Meeting. Proxies voted against the Agreement and
abstentions will not be voted to adjourn the Special Meeting. Abstentions and
broker non-votes will not be voted on this matter but will not count as "no
votes." If it is necessary to adjourn the Special Meeting and the adjournment is
for a period of not more than 30 days from the original date of the Special
Meeting, no notice of the time and place of the adjourned meeting need be given
the shareholders, other than an announcement made at the Special Meeting.

The effect of any such adjournment would be to permit First Commerce to
solicit additional proxies for approval of the Agreement. While such an
adjournment would not invalidate any proxies previously filed as long as the
record date for the adjourned meeting remained the same, including proxies filed
by shareholders voting against the Agreement, an adjournment would afford First
Commerce the opportunity to solicit additional proxies in favor of the
Agreement.

OTHER MATTERS

The Board of Directors of First Commerce is not aware of any business to
come before the Special Meeting other than those matters described above in this
Prospectus. If, however, any other matters not now known should properly come
before the Special Meeting, the proxy holders named in the accompanying proxy
will vote such proxy on such matters as determined by a majority of the Board of
Directors of First Commerce.

DATE FOR SUBMISSION OF BANCGROUP STOCKHOLDER PROPOSALS

In order to be eligible for inclusion in BancGroup's proxy solicitation
materials for its 1998 annual meeting of stockholders, any stockholder proposal
to take action at such meeting must be received at BancGroup's main office at
One Commerce Street, Post Office Box 1108, Montgomery, Alabama 36192, no later
than 120 calendar days in advance of the date of March 14, 1998.

LEGAL MATTERS

Certain legal matters regarding the shares of BancGroup Common Stock of
BancGroup offered hereby are being passed upon by the law firm of Miller,
Hamilton, Snider & Odom, L.L.C., Mobile, Alabama, of which John C. H. Miller,
Jr., a director of BancGroup and of Colonial Bank, is a partner. Such firm
received fees for legal services performed in 1996 of $1,474,853. John C. H.
Miller, Jr. beneficially owns 40,480 shares of Common Stock. Mr. Miller also
received employee-related compensation from BancGroup in 1996 of $41,000.
Certain legal matters relating to the Merger are being passed upon for First
Commerce by the law firm of Smith, Mackinnon, Greeley, Bowdoin & Edwards, P.A.,
Orlando, Florida.

EXPERTS

Coopers & Lybrand L.L.P. serves as the independent accountants for
BancGroup. The consolidated financial statements of BancGroup and the
supplemental consolidated financial statements of BancGroup, both as of December
31, 1996 and 1995 and for each of the three years ended December 31, 1996 are

84
<PAGE> 92

incorporated by reference in this Prospectus in reliance upon the report of such
firm, given on the authority of that firm as experts in accounting and auditing.
It is not expected that a representative of such firm will be present at the
Special Meeting.

Carter, Belcourt & Atkinson, P.A. serves as the independent auditors for
First Commerce. First Commerce's consolidated financial statements as of
December 31, 1996 and 1995 and for the two years ended December 31, 1996 and
1995 are in this Prospectus in reliance upon the report of such firm and are
given on the authority of that firm as experts in accounting and auditing. It is
expected that a representative of such firm will be present at the Special
Meeting.

PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE
ACCOMPANYING ENVELOPE AS PROMPTLY AS POSSIBLE. YOU MAY REVOKE THE PROXY BY
GIVING WRITTEN NOTICE OF REVOCATION TO THE SECRETARY OF FIRST COMMERCE PRIOR TO
THE SPECIAL MEETING, BY EXECUTING A LATER DATED PROXY AND DELIVERING IT TO THE
SECRETARY OF FIRST COMMERCE PRIOR TO THE SPECIAL MEETING OR BY ATTENDING THE
SPECIAL MEETING VOTING IN PERSON.

85
<PAGE> 93

FIRST COMMERCE BANK OF FLORIDA, INC. AND SUBSIDIARY

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Certified Public Accountants.......... F-2
Consolidated Statements of Condition........................ F-3
Consolidated Statements of Income........................... F-4
Consolidated Statements of Stockholders' Equity............. F-5
Consolidated Statements of Cash Flows....................... F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>

F-1
<PAGE> 94

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
First Commerce Banks of Florida, Inc.

We have audited the accompanying consolidated statements of condition of
First Commerce Banks of Florida, Inc. and subsidiary as of December 31, 1996 and
1995, and the related consolidated statements of income, stockholders' equity,
and cash flows for the years then ended. These consolidated financial statements
are the responsibility of the Holding Company's management. Our responsibility
is to express an opinion on these consolidated financial statements based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, based on our audits, the consolidated financial statements
referred to above present fairly, in all material respects, the financial
position of First Commerce Banks of Florida, Inc. and subsidiary as of December
31, 1996 and 1995, and the results of their operations and their cash flows for
the years then ended in conformity with generally accepted accounting
principles.

CARTER, BELCOURT & ATKINSON, P.A.

Winter Haven, Florida
February 14, 1997

F-2
<PAGE> 95

FIRST COMMERCE BANKS OF FLORIDA, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CONDITION

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
(DOLLARS IN
THOUSANDS,
EXCEPT FOR SHARE
AMOUNTS)
<S> <C> <C>
ASSETS
Cash and due from banks (Note 4)............................ $ 5,763 $ 4,807
Federal funds sold.......................................... 7,688 5,562
-------- --------
Total cash and cash equivalents................... 13,451 10,369
Investment securities (Note 5):
Available for sale........................................ 20,157 24,584
Held to maturity.......................................... 1,547 3,559
Loans receivable, net of allowance for credit losses (Notes
6 and 7).................................................. 66,387 70,265
Accrued interest receivable................................. 871 1,013
Property and equipment, less accumulated depreciation (Note
8)........................................................ 1,309 1,304
Other real estate owned..................................... 79 301
Cash surrender value of officers' life insurance ($1,695,000
face amount).............................................. 1,126 1,079
Deferred tax asset (Note 11)................................ 271 165
Refundable income taxes..................................... 213 100
Other assets................................................ 558 344
-------- --------
TOTAL ASSETS...................................... $105,969 $113,083
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits (Note 9)......................................... $ 94,749 $101,941
Other liabilities......................................... 577 592
-------- --------
Total liabilities................................. 95,326 102,533
Minority interest........................................... 30 29
Commitments and contingencies (Notes 14 and 19)
Stockholders' equity (Note 13):
Preferred stock $.01 par -- 3,000,000 shares authorized
and none outstanding................................... -- --
Common stock $.01 par -- 10,000,000 shares authorized and
1,585,737 outstanding in 1996 and 1995................. 16 16
Additional paid-in capital................................ 6,738 6,738
Retained earnings......................................... 3,892 3,754
Unrealized gain (loss) on securities available for sale,
net of income taxes (benefit) of $(20) and $8.......... (33) 13
-------- --------
Total stockholders' equity........................ 10,613 10,521
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY........ $105,969 $113,083
======== ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-3
<PAGE> 96

FIRST COMMERCE BANKS OF FLORIDA, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1996 1995
----------- -----------
(DOLLARS IN THOUSANDS,
EXCEPT FOR SHARE AMOUNTS)
<S> <C> <C>
Interest Income:
Loans receivable.......................................... $ 7,311 $ 7,466
Investment securities:
Taxable................................................ 1,297 1,682
Exempt from federal income tax......................... 66 67
Federal funds sold........................................ 283 600
---------- ----------
Total interest income............................. 8,957 9,815
Interest Expense on Deposits................................ 3,541 4,168
---------- ----------
Net interest income............................... 5,416 5,647
Provision for Credit Losses (Note 7)........................ 974 1,191
---------- ----------
Net interest income after provision for credit
losses.......................................... 4,442 4,456
Other Income:
Service charges and fees.................................. 855 917
Gain (loss) from sales of investment securities, net...... 1 (129)
Gain on sale of subsidiary................................ 564
Recognition of deferred gain on sale of building.......... -- 171
Other..................................................... 67 92
---------- ----------
Total other income................................ 923 1,615
Other Expenses:
Compensation and benefits (Note 10)....................... 2,465 2,148
Occupancy and equipment................................... 776 765
Professional fees......................................... 446 428
Data processing........................................... 339 300
Other real estate owned................................... 77 175
Advertising and promotion................................. 90 163
FDIC insurance premiums................................... 123 140
Stationery and supplies................................... 163 121
Postage and freight....................................... 115 108
Other..................................................... 617 673
---------- ----------
Total other expenses.............................. 5,211 5,021
---------- ----------
Income before taxes on income and minority
interest........................................ 154 1,050
Taxes on Income (Note 11)................................... 15 497
Minority Interest........................................... 1 (6)
---------- ----------
Net Income.................................................. $ 138 $ 559
========== ==========
Net Income Per Share of Common Stock........................ $ .08 $ .34
========== ==========
Weighted Average Number of Shares........................... 1,679,145 1,663,729
========== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-4
<PAGE> 97

FIRST COMMERCE BANKS OF FLORIDA, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
UNREALIZED
GAIN (LOSS)
COMMON STOCK ADDITIONAL ON SECURITIES TOTAL
---------------- PAID-IN RETAINED AVAILABLE STOCKHOLDERS'
SHARES COST CAPITAL EARNINGS FOR SALE EQUITY
--------- ---- ---------- -------- ------------- -------------
(DOLLARS IN THOUSANDS, EXCEPT FOR SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994........... 1,585,853 $16 $6,739 $3,195 $(634) $ 9,316
Payment for fractional shares...... (116) -- (1) -- -- (1)
Change in unrealized gain on
securities available for sale,
net of income taxes of $361..... -- -- -- -- 647 647
Net income for 1995................ -- -- -- 559 -- 559
--------- --- ------ ------ ----- -------
Balance, December 31, 1995........... 1,585,737 16 6,738 3,754 13 10,521
Change in unrealized loss on
securities available for sale,
net of income tax benefit of
$28............................. -- -- -- -- (46) (46)
Net income for 1996................ -- -- -- 138 -- 138
--------- --- ------ ------ ----- -------
Balance, December 31, 1996........... 1,585,737 $16 $6,738 $3,892 $ (33) $10,613
========= === ====== ====== ===== =======
</TABLE>

See accompanying notes to consolidated financial statements.

F-5
<PAGE> 98

FIRST COMMERCE BANKS OF FLORIDA, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1996 1995
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash Flows from Operating Activities:
Net income................................................ $ 138 $ 559
Adjustments to reconcile net income to net cash provided
by (used for) operating activities:
Minority interest in net income (loss) of consolidated
subsidiaries.......................................... 1 (6)
Provision for credit losses............................ 974 1,191
Accretions (amortization) of unearned premiums
(discounts) and loan fees............................. 174 (181)
Depreciation and amortization.......................... 237 171
Deferred income taxes.................................. (78) (174)
Deferred gain recognized on sale of building........... -- (171)
Loss on disposal of equipment.......................... -- 7
Gain on sale of subsidiary............................. -- (564)
(Gain) loss on sales of investment securities.......... (1) 129
Loss on sale of other real estate owned................ 43 13
Changes in assets and liabilities net of effects of
sale of subsidiary:
(Increase) decrease in:
Accrued interest receivable....................... 142 (211)
Cash surrender value of officers' life
insurance....................................... (47) (38)
Other assets...................................... (184) (172)
Decrease in:
Other liabilities................................. (15) (1,363)
-------- --------
Net cash provided by (used for) operating
activities................................. 1,384 (810)
Cash Flows from Investing Activities:
Net (increase) decrease in loans receivable, net of
effects of sale of subsidiary.......................... 2,698 (7,423)
Purchases of investment securities held to maturity....... -- (95)
Proceeds from maturities of investment securities held to
maturity............................................... 2,000 1,110
Purchases of investment securities available for sale..... (5,509) (31,077)
Proceeds from sales and maturities of investment
securities available for sale.......................... 9,568 30,628
Cash sold in sale of subsidiary, net of proceeds.......... -- (4,755)
Proceeds from sale of other real estate owned............. 351 273
Purchases of property and equipment....................... (218) (321)
-------- --------
Net cash provided by (used for) investing
activities................................. 8,890 (11,660)
Cash Flows from Financing Activities:
Net increase (decrease) in deposits, net of effects of
sale of subsidiary..................................... (7,192) 8,890
Cash paid for fractional shares........................... -- (1)
-------- --------
Net cash provided by (used for) financing
activities................................. (7,192) 8,889
-------- --------
Net Increase (Decrease) in Cash and Cash Equivalents........ 3,082 (3,581)
Cash and Cash Equivalents, beginning of year................ 10,369 13,950
-------- --------
Cash and Cash Equivalents, end of year...................... $ 13,451 $ 10,369
======== ========
Supplemental Disclosures:
Interest paid in cash..................................... $ 3,614 $ 4,112
======== ========
Income taxes paid in cash................................. $ 328 $ 877
======== ========
Noncash Investing Activities:
Transfers from loans to other real estate owned........... $ 223 $ 147
======== ========
Loans originated on sales of other real estate owned...... $ 51 $ --
======== ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-6
<PAGE> 99

FIRST COMMERCE BANKS OF FLORIDA, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business Activities. First Commerce Banks of Florida, Inc. (Holding
Company) is a bank holding company for its majority owned subsidiary, First
Commerce Bank of Polk County (Bank). The Bank provides financial services to
individuals and corporate customers.

Consolidation. The consolidated financial statements include the accounts
of the Holding Company and its majority owned subsidiary, Bank. The operations
of First Sterling Bank of Osceola County (FSBO) are included in the consolidated
financial statements for the period prior to May 1, 1995. The minority interest
represents a .30 percent ownership interest in the common stock of the Bank held
by third parties. All material intercompany accounts and transactions are
eliminated.

Cash and Cash Equivalents. For purposes of the statements of cash flows,
the Holding Company defines cash and cash equivalents as cash and due from
banks, which includes currency on hand, demand deposits with other financial
institutions and federal funds sold.

Use of Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant change
relate to the determination of the allowance for credit losses. While management
uses available information to recognize losses on loans, future additions to the
allowances may be necessary based on changes in local economic conditions. In
addition, regulatory agencies, as an integral part of their examination process,
periodically review the Bank's allowances for credit losses. Such agencies may
require the Bank to recognize changes to the allowances based on their judgments
about information available to them at the time of their examination. Because of
these factors, it is possible that the allowances for credit losses and
foreclosed real estate may materially change in the future.

Investment Securities. The Bank follows Statement of Financial Accounting
Standards No. 115 which requires investment securities that the Bank has the
positive intent and ability to hold to maturity to be classified as held to
maturity securities and reported at amortized cost. Investment securities that
are held principally to sell in the near term are classified as trading
securities and reported at fair value, with unrealized gains and losses included
in income. Investment securities not classified as either held to maturity
securities or trading securities are classified as available for sale securities
and reported at fair value, with unrealized gains and losses excluded from
earnings and reported in a separate component of stockholders' equity.

Gains and losses on the sale of investment securities are computed on the
basis of specific identification.

Loans Receivable and Allowance for Credit Losses. Loans are stated at the
amount of unpaid principal, less an allowance for credit losses and net of
deferred loan fees and unearned discounts. Interest on loans is recognized over
the term of the loan and is calculated using the simple interest method on
principal amounts outstanding. Unearned discounts on installment loans are
recognized as income over the terms of the loans using the interest method. Loan
origination and commitment fees and certain direct origination costs are
deferred and amortized as a yield adjustment over the lives of the related loans
using a method that approximates the interest method.

The allowance for credit losses is established through a provision for
credit losses charged to expense. The allowance is an amount which management
believes may become uncollectible based on an evaluation of the loans in the
portfolio and prior loss experience. This evaluation of the potential loss in
the loan portfolio includes a review of all loans for which full collection may
not be reasonably assured and considers the estimated value of the underlying
collateral, loan portfolio composition, historical experience, general

F-7
<PAGE> 100

FIRST COMMERCE BANKS OF FLORIDA, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

economic conditions and other appropriate matters. Loans are charged against the
allowance for credit losses when management believes that collection of the
principal is unlikely.

Loan Impairment and Losses. On January 1, 1995, the Holding Company and
Bank adopted Statements of Financial Accounting Standards No. 114 and 118. These
Statements address the accounting by creditors for impairment of certain loans.
The Statements generally require the Holding Company and Bank to identify loans,
for which the Holding Company and Bank probably will not receive full repayment
of principal and interest, as impaired loans. The Statements require that
impaired loans be valued at the present value of expected future cash flows,
discounted at the loan's effective interest rate, or at the observable market
price of the loan, or the fair value of the underlying collateral if the loan is
collateral dependent. The Holding Company and Bank have implemented the
Statements by modifying their quarterly review of the adequacy of the allowance
for credit losses to also identify and value impaired loans in accordance with
guidance in the Statements. As a result of the Holding Company and Banks'
review, impaired loans totaled $1,911,000 and $1,182,000 and the allowance for
credit losses related to these loans totaled $548,000 and $156,000 as of
December 31, 1996 and 1995, respectively. The average balance of impaired loans
amounted to approximately $1,547,000 during 1996 and $794,000 during 1995. Cash
receipts recorded as interest income on impaired loans was $51,000 in 1996.
There were no cash receipts on impaired loans in 1995. The adoption of the
Statements did not have a material effect on the results of operations for the
year ended December 31, 1995.

Impairments in accordance with the Statement are recognized by establishing
an allowance for credit losses and a corresponding charge to expenses.
Subsequent changes in impairment are recognized in the same manner in the period
of change.

The Holding Company and Banks' policy is to discontinue accruing interest
on a loan after it has become 90 days delinquent as to payment of principal or
interest unless, in the determination of management, the loan is well secured
and in process of collection. If the ultimate collectibility of principal,
either in whole or in part, is in doubt, any payment received on a loan for
which the accrual of interest has been discontinued is applied to reduce
principal to the extent necessary to eliminate such doubt. If the ultimate
collectibility of principal is not in doubt, interest is credited to income in
the period of recovery. Nonaccrual loans are considered impaired loans, except
for those nonaccrual loans the Holding Company and Bank have sufficient
collateral to collect all principal and interest as specified in the original
loan agreement.

Other Real Estate Owned. Other real estate acquired in settlement of loans
is carried at the lower of the fair value of the property less the estimated
costs to sell or the Bank's basis in the loan. At the date of acquisition,
losses are charged to the allowance for credit losses. Costs incurred to bring
the property up to the condition for which it is intended are capitalized up to
the property's fair value, while holding costs, legal fees and other direct
costs are expensed. Real property, held by the Bank and not used for banking
purposes, is recorded with other real estate at cost.

Property, Equipment and Depreciation. Property and equipment are stated at
cost, less accumulated depreciation. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets.

Net Income per Share of Common Stock. Net income per share of the Holding
Company's common stock is computed by dividing net income for the year by the
weighted average number of shares of common stock outstanding, including common
stock equivalents using the treasury stock method. Warrants and stock options
issued to officers and directors are common stock equivalents. Fully-diluted and
primary earnings per

F-8
<PAGE> 101

FIRST COMMERCE BANKS OF FLORIDA, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

share are not materially different. Information necessary to calculate net
income per share of common stock follows:

<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Average common shares outstanding........................... 1,585,737 1,585,853
Common shares assumed outstanding to reflect the dilutive
effect of warrants to purchase common stock at book
value..................................................... 53,884 48,186
Common shares assumed outstanding to reflect the dilutive
effect of stock options to purchase common stock at book
value..................................................... 39,524 29,690
--------- ---------
Weighted average shares..................................... 1,679,145 1,663,729
========= =========
</TABLE>

Stock Option and Warrant Plans. Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation", encourages the
Holding Company and Bank to account for employee stock option plans entered into
after December 15, 1995 under a fair value based method of accounting, which
requires compensation costs to be measured at the grant date of options and
recorded over the grantee's service period. Also, the standard provides for
these plans to be accounted for under an intrinsic value method, which
compensation costs are the excess, if any, of the quoted market price of stock
at grant date or other measurement date over the amount the employee must pay to
acquire the stock. The standard also requires the Holding Company and Bank to
disclose the difference in compensation costs between the two methods if the
intrinsic value method is used. The Holding Company and Bank have accounted for
previous plans under the intrinsic value method and will continue to do so on
future plans; however, no new plans were entered into in 1996. There were no
options granted in 1996 and options granted in 1995 approximated fair value;
therefore, there were no significant differences in compensation costs between
the two methods to disclose.

Taxes on Income. Accounting policies with respect to taxes on income are
described in Note 11.

(2) BUSINESS COMBINATIONS

On August 31, 1995, First Sterling Bancshares, Inc. (FSB) merged (the
Merger) with Commerce Bank Corporation (Commerce). In the Merger, all the
outstanding shares of Commerce were exchanged for 746,704 shares of FSB common
stock and $1,000 of cash in lieu of fractional shares. In addition, the name of
FSB was changed to First Commerce Banks of Florida, Inc. At the same time, their
subsidiaries, First Sterling Bank and Commerce Bank of Central Florida, merged
together to become First Commerce Bank of Polk County.

F-9
<PAGE> 102

FIRST COMMERCE BANKS OF FLORIDA, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Merger with Commerce has been accounted for as a pooling of interests
and all amounts prior to the Merger have been restated to include the results of
operations, financial position and cash flows of FSB and Commerce. Interest and
other income and net earnings for the individual entities during the periods
preceding the Merger were as follows:

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, 1995
--------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C>
Interest and other income:
FSB....................................................... $3,501
Commerce.................................................. 2,536
------
Combined.................................................... $6,037
======
Net earnings:
FSB....................................................... $ 596
Commerce.................................................. 174
------
Combined.................................................... $ 770
======
</TABLE>

(3) SALE OF SUBSIDIARY

On May 1, 1995, the Holding Company sold its stock in FSBO to an
unaffiliated third party for approximately $1,845,000. The agreement provided
that the Holding Company purchase any other real estate owned at book value from
FSBO at the date of the sale and the Bank purchase the existing loan portfolio
(including any allowance for credit losses) from FSBO over the one-year period
following the sale at book value. At December 31, 1996, the Bank has no
remaining commitment to purchase loans from FSBO.

(4) CASH AND DUE FROM BANKS

The Bank is required to maintain certain average reserve balances pursuant
to regulations of the Federal Reserve Board. These balances must be maintained
in the form of vault cash or non-interest-bearing deposits at a Federal Reserve
Bank. The Bank exceeded this requirement, which was $678,000 and $552,000, at
December 31, 1996 and 1995, respectively.

The Holding Company's cash and due from banks includes $4,699,000 and
$3,696,000 maintained at other banks as of December 31, 1996 and 1995,
respectively. Funds at each bank are federally insured up to $100,000. The
balance of cash not remaining at other banks consists of cash on hand and on
deposit with the Federal Reserve.

F-10
<PAGE> 103

FIRST COMMERCE BANKS OF FLORIDA, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(5) INVESTMENT SECURITIES

The amortized cost and fair market values of investment securities are
summarized as follows:

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Securities available for sale:
December 31, 1996:
U.S. Treasury securities................... $ 2,004 $ 4 $ -- $ 2,008
U.S. Government agency obligations......... 4,489 1 15 4,475
Mortgage-backed securities:
FHLMC obligations........................ 12,116 67 17 12,166
FNMA obligations......................... 600 9 -- 609
Collateralized mortgage obligations:
FNMA obligations......................... 1,000 -- 101 899
------- --- ---- -------
$20,209 $81 $133 $20,157
======= === ==== =======
December 31, 1995:
U.S. Treasury securities................... $ 2,000 $-- $ -- $ 2,000
U.S. Government agency obligations......... 997 4 -- 1,001
Mortgage-backed securities:
FHLMC obligations........................ 19,370 60 -- 19,430
FNMA obligations......................... 1,172 5 -- 1,177
Collateralized mortgage obligations:
FHLMC obligations........................ 24 -- -- 24
FNMA obligations......................... 1,000 -- 48 952
------- --- ---- -------
$24,563 $69 $ 48 $24,584
======= === ==== =======
Securities held to maturity:
December 31, 1996:
U.S. Government agency obligations......... $ 500 $-- $ 3 $ 497
State, county and municipal securities..... 1,047 47 3 1,091
------- --- ---- -------
$ 1,547 $47 $ 6 $ 1,588
======= === ==== =======
December 31, 1995:
U.S. Treasury securities................... $ 2,000 $-- $ 7 $ 1,993
U.S. Government agency obligations......... 500 -- 1 499
State, county and municipal securities..... 1,059 9 -- 1,068
------- --- ---- -------
$ 3,559 $ 9 $ 8 $ 3,560
======= === ==== =======
</TABLE>

F-11
<PAGE> 104

FIRST COMMERCE BANKS OF FLORIDA, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Mortgage-backed securities and collateralized mortgage obligations included
in investment securities are summarized as follows:

<TABLE>
<CAPTION>
PRINCIPAL UNAMORTIZED UNEARNED CARRYING FAIR
BALANCE PREMIUMS DISCOUNTS VALUE VALUE
--------- ----------- --------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Securities available for sale:
December 31, 1996:
Mortgage-backed securities:
FHLMC obligations............... $11,845 $275 $4 $12,116 $12,166
FNMA obligations................ 589 11 -- 600 609
Collateralized mortgage
obligations:
FNMA obligations................ 1,000 -- -- 1,000 899
------- ---- -- ------- -------
$13,434 $286 $4 $13,716 $13,674
======= ==== == ======= =======
December 31, 1995:
Mortgage-backed securities:
FHLMC obligations............... $18,838 $538 $6 $19,370 $19,430
FNMA obligations................ 1,139 33 -- 1,172 1,177
Collateralized mortgage
obligations:
FHLMC obligations............... 24 -- -- 24 24
FNMA obligations................ 1,000 -- -- 1,000 952
------- ---- -- ------- -------
$21,001 $571 $6 $21,566 $21,583
======= ==== == ======= =======
</TABLE>

Investment securities with amortized costs of $2,500,000 and $2,998,000,
and market values of $2,400,000 and $2,992,000 at December 31, 1996 and 1995,
respectively, were pledged to secure public deposits.

As allowed by "A Guide to Implementation of Statement 115 on Accounting for
Certain Investments in Debt and Equity Securities" issued by the Financial
Accounting Standards Board, the Bank reevaluated the classification of its
investment securities and on December 12, 1995, reclassified securities with an
amortized cost of $2,140,000 and a fair value of $2,137,000 from securities held
to maturity to securities available for sale.

Proceeds from sales of investment securities available for sale totaled
$9,568,000 in 1996, resulting in $1,000 in gross realized gains, and $28,481,000
in 1995, resulting in $16,000 in gross realized gains and $141,000 in gross
realized losses.

F-12
<PAGE> 105

FIRST COMMERCE BANKS OF FLORIDA, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The amortized cost and fair value of investment securities at December 31,
1996, by contractual maturity, are shown below. Expected maturities may differ
from contractual maturities because borrowers may have the right to call or
prepay obligations.

<TABLE>
<CAPTION>
SECURITIES AVAILABLE SECURITIES HELD TO
FOR SALE MATURITY
--------------------- ------------------
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
---------- -------- --------- ------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Within one year........................................... $ 4,004 $ 4,009 $ -- $ --
One to five years......................................... 2,489 2,474 500 497
Five to ten years......................................... -- -- 300 299
Over ten years............................................ -- -- 747 792
------- ------- ------ ------
6,493 6,483 1,547 1,588
Mortgage-backed securities................................ 13,716 13,674 -- --
------- ------- ------ ------
$20,209 $20,157 $1,547 $1,588
======= ======= ====== ======
</TABLE>

(6) LOANS TO OFFICERS AND DIRECTORS

Certain of the Holding Company's directors and officers are customers and
have loans with the Bank. The loans were made in the ordinary course of business
on substantially the same terms and conditions, including interest rates and
collateral, as those prevailing at the same time for comparable transactions
with other customers. Activity in loans to directors and officers is as follows:

<TABLE>
<CAPTION>
1996 1995
------ -------
(IN THOUSANDS)
<S> <C> <C>
Balance, at beginning of year............................... $4,043 $ 3,698
Loans originated............................................ 276 1,401
Principal repayments........................................ (987) (1,056)
------ -------
Balance, at end of year..................................... $3,332 $ 4,043
====== =======
</TABLE>

(7) LOANS RECEIVABLE

Loans receivable are at fixed and variable interest rates and consist of:

<TABLE>
<CAPTION>
1996 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Commercial.................................................. $13,712 $19,888
Commercial Real Estate...................................... 31,891 28,796
Residential Mortgage........................................ 15,471 14,788
Consumer and other.......................................... 6,977 8,212
------- -------
Total loans receivable............................ 68,051 71,684
Less:
Unearned interest and fees................................ (211) (224)
Allowance for credit losses............................... (1,453) (1,195)
------- -------
$66,387 $70,265
======= =======
</TABLE>

Loans, commitments and standby letters of credit have been granted to
customers primarily in the Central Florida area. Commitments to extend credit
relate primarily to real estate loans. Standby letters of credit were granted
primarily to commercial borrowers.

F-13
<PAGE> 106

FIRST COMMERCE BANKS OF FLORIDA, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Subsequent to the sale of FSBO by the Holding Company in 1995, the Bank
purchased $4,520,000 and $1,383,000 in loans from FSBO in 1995 and 1996,
respectively. The loans were purchased for the unpaid principal balance reduced
by the related allowance for credit losses and discounts attributed to these
loans, which were transferred to the Bank. Additionally, the Holding Company
purchased $189,000 and $493,000 in loans from FSBO in 1995 and 1996,
respectively. Due to regulatory rules, the Bank could not acquire any nonaccrual
loans so the Holding Company purchased them.

A summary of changes in the allowance for credit losses is as follows:

<TABLE>
<CAPTION>
1996 1995
------ ------
(IN THOUSANDS)
<S> <C> <C>
Balance at beginning of year................................ $1,195 $ 830
Allowance related to loans purchased from FSBO.............. 25 35
Provision charged to expense................................ 974 1,191
Loans charged off, net of recoveries........................ (741) (742)
FSBO's allowance sold in 1995............................... -- (119)
------ ------
Balance at end of year...................................... $1,453 $1,195
====== ======
</TABLE>

Nonaccrual loans totaled approximately $2,646,000 and $1,607,000 at
December 31, 1996 and 1995, respectively. Interest income that would have been
recorded under the original terms of such loans and the interest income actually
recognized are summarized below:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------
1996 1995
------ -----
(IN THOUSANDS)
<S> <C> <C>
Interest income that would have been recorded............... $ 309 $144
Interest income recognized.................................. (126) (28)
----- ----
Interest income foregone.................................... $ 183 $116
===== ====
</TABLE>

(8) PROPERTY AND EQUIPMENT

Major classes of property and equipment consist of:

<TABLE>
<CAPTION>
1996 1995
------ ------
(IN THOUSANDS)
<S> <C> <C>
Land........................................................ $ 223 $ 223
Buildings and improvements.................................. 672 664
Furniture and equipment..................................... 1,730 1,527
Leasehold improvements...................................... 64 59
Construction in progress.................................... 15 14
------ ------
Totals............................................ 2,704 2,487
Less accumulated depreciation............................... 1,395 1,183
------ ------
Net property and equipment.................................. $1,309 $1,304
====== ======
</TABLE>

F-14
<PAGE> 107

FIRST COMMERCE BANKS OF FLORIDA, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(9) DEPOSITS

Deposits consist of:

<TABLE>
<CAPTION>
1996 1995
------- --------
(IN THOUSANDS)
<S> <C> <C>
Non-interest bearing:
Demand deposits........................................... $18,773 $ 17,056
Interest bearing:
Certificates of deposit:
Less than $100,000..................................... 42,771 48,864
$100,000 or more....................................... 5,957 8,543
NOW....................................................... 13,722 15,045
Savings................................................... 8,390 7,735
Money market.............................................. 5,136 4,698
------- --------
$94,749 $101,941
======= ========
</TABLE>

The maturities of certificates of deposit are summarized as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- ------------------------ (IN THOUSANDS)
<S> <C>
1997................................................. $31,261
1998................................................. 8,836
1999................................................. 3,245
2000................................................. 3,172
2001................................................. 2,214
-------
Total........................................ $48,728
=======
</TABLE>

Interest expense on deposits is summarized as follows:

<TABLE>
<CAPTION>
1996 1995
------ ------
(IN THOUSANDS)
<S> <C> <C>
Certificates of deposit..................................... $2,863 $3,448
NOW......................................................... 325 329
Savings..................................................... 185 200
Money market................................................ 168 191
------ ------
$3,541 $4,168
====== ======
</TABLE>

The Bank held deposits of approximately $1,060,000 and $1,221,000 for
officers and directors at December 31, 1996 and 1995, respectively.

(10) PROFIT SHARING PLAN

Prior to the FSB/Commerce Merger, FSB and Commerce maintained separate
employee benefit plans. Under the 401(k) component of the FSB plan, participants
were able to contribute up to 15 percent, but not less than 1 percent, of their
annual compensation. FSB was required to match the participant's contribution up
to the lower of 50% of the participant's contributions or 6% of participant's
compensation. Commerce had a noncontributory profit sharing plan which covered
all eligible employees. Employer contributions to the Commerce plan were
voluntary and at the discretion of the Board of Directors. The Holding Company
merged the Commerce Plan into the FSB Plan of Florida, Inc., Employee 401(k)
Plan and Trust. Employer contributions under all plans charged to operations
were $30,394 in 1996 and $39,685 in 1995.

F-15
<PAGE> 108

FIRST COMMERCE BANKS OF FLORIDA, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(11) TAXES ON INCOME

Taxes on income in the accompanying consolidated statements of income are
made up of the following components:

<TABLE>
<CAPTION>
1996 1995
----- -----
(IN THOUSANDS)
<S> <C> <C>
Currently payable:
Federal................................................... $ 90 $ 611
State..................................................... 3 60
----- -----
93 671
Deferred:
Federal................................................... (67) (148)
State..................................................... (11) (26)
----- -----
(78) (174)
----- -----
Total taxes on income............................. $ 15 $ 497
===== =====
</TABLE>

Income taxes are calculated using the liability method specified by
Statement of Financial Accounting Standards No. 109. Deferred income taxes are
recognized for the tax consequences of temporary differences between the
financial reporting bases and the tax bases of the Holding Company's assets and
liabilities.

The components of the net deferred tax asset recognized in the accompanying
consolidated statements of condition are:

<TABLE>
<CAPTION>
1996 1995
----- -----
(IN THOUSANDS)
<S> <C> <C>
Deferred tax asset:
Allowance for credit losses............................... $ 394 $ 330
Unrealized loss on securities available for sale.......... 20 --
Other..................................................... 80 51
----- -----
494 381
Deferred tax liability:
Property and equipment.................................... (175) (178)
Cash surrender value of officers' life insurance.......... (48) (30)
Unrealized gain on securities available for sale.......... -- (8)
----- -----
(223) (216)
----- -----
Net deferred tax asset...................................... $ 271 $ 165
===== =====
</TABLE>

The reconciliation of income tax attributable to operations computed at the
federal statutory rates to taxes on income is as follows:

<TABLE>
<CAPTION>
1996 1995
---- ----
(IN THOUSANDS)
<S> <C> <C>
Tax at federal statutory rate............................... $ 41 $357
State income taxes, net of federal tax benefit.............. 4 38
Nondeductible merger expenses............................... 38 72
Other....................................................... (68) 30
---- ----
$ 15 $497
==== ====
</TABLE>

F-16
<PAGE> 109

FIRST COMMERCE BANKS OF FLORIDA, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(12) SHORT TERM BORROWINGS

The Bank has lines of credit agreements with several financial institutions
for a total of $6,000,000 to purchase short term federal funds. No amounts were
outstanding at December 31, 1996 and 1995.

(13) STOCK WARRANTS AND STOCK OPTION PLANS

The Holding Company has outstanding stock warrants to purchase 140,731
shares of common stock. The warrants are exercisable at $4.11 per share and
expire in May 1999.

In May 1992, the Board of Directors approved a stock option plan for
officers which provides for the granting of 150,000 stock options to officers of
the Holding Company or the Bank. The stock options are exercisable over a period
of ten years from the date the plan was adopted at a price of $5.06 per share
for 76,000 shares and $6.63 per share for 18,891 shares. Information with
respect to stock options under the plan follows:

<TABLE>
<CAPTION>
1996 1995
------ -------
<S> <C> <C>
Options outstanding, beginning of year...................... 94,891 76,000
Options granted at $6.63 per share.......................... -- 18,891
------ -------
Options outstanding, end of year............................ 94,891 94,891
====== =======
Options available for granting, beginning of year........... -- 74,000
Options granted at $6.63 per share.......................... -- (18,891)
Options terminated.......................................... -- (55,109)
------ -------
Options available for granting, end of year................. -- --
====== =======
</TABLE>

In August 1992, the Board of Directors approved a stock option plan for
directors which provides for the granting of 95,000 stock options to directors
of the Holding Company or the Bank. The stock options are exercisable over a
period of ten years from the date the plan was adopted at a price of $5.11 per
share. Information with respect to stock options under the plan follows:

<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
Options outstanding......................................... 91,008 91,008
====== ======
Options available........................................... 3,992 3,992
====== ======
</TABLE>

In October 1995, the Board of Directors approved a stock option plan for
employees which provides for the granting of 55,109 stock options to employees
of the Holding Company or the Bank. The stock options are exercisable over a
period of ten years from the date the options were granted at a price equal to
the fair market value of the common stock at the date of grant. Information with
respect to stock options under the plan follows:

<TABLE>
<CAPTION>
1996 1995
------- ------
<S> <C> <C>
Options outstanding, beginning of year...................... 20,000 --
Options granted at $7.00 per share.......................... 9,000 20,000
Options terminated.......................................... (29,000) --
------- ------
Options outstanding, end of year............................ -- 20,000
======= ======
Options available for granting, end of year................. 55,109 35,109
======= ======
</TABLE>

No amounts were charged to expense under any plan in 1996 or 1995.

F-17
<PAGE> 110

FIRST COMMERCE BANKS OF FLORIDA, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(14) COMMITMENTS AND CONTINGENCIES

The Bank leases premises in Winter Haven, Florida from an entity controlled
by certain directors of the Holding Company under a noncancelable lease that
expires December 1999. The agreement contains an option renewal for one
additional five-year period. The agreement requires monthly rental payments as
well as a pro-rata share of the maintenance, property taxes, and insurance on
the premises. The following is a schedule by years of future minimum rental
payments required by the lease:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- ------------------------
<S> <C>
1997........................................................ $226,161
1998........................................................ 237,469
1999........................................................ 249,343
--------
Total............................................. $712,973
========
</TABLE>

The lease agreement contains a purchase option for the Bank to purchase the
premises. The purchase price for the premises will be the fair value on the date
of the exercise of the option as determined by an MAI appraisal.

Rental expense under all operating leases charged to operations was
$259,000 and $230,000 for the years ending December 31, 1996 and 1995,
respectively.

The consolidated financial statements do not reflect various commitments
and contingent liabilities which arise in the normal course of business and
which involve elements of credit risk, interest rate risk and liquidity risk.
These commitments and contingent liabilities are commitments to extend credit
and standby letters of credit and total $10,365,000 at December 31, 1996.

Commitments to extend credit and standby letters of credit include exposure
to some credit loss in the event of nonperformance by the customer. The Bank's
credit policies and procedures for credit commitments and financial guarantees
are the same as those for extension of credit that are recognized on the
consolidated statements of condition. Because these instruments have fixed
maturity dates, and because many of them expire without being drawn upon, they
do not generally present any significant liquidity risk to the Bank. The Bank
has not been required to perform on any financial guarantees during the past two
years and did not incur any losses on its commitments in either 1996 or 1995.

The Bank is party to litigation and claims arising in the normal course of
business. Management, after consultation with legal counsel, believes that the
liabilities, if any, arising from such litigation and claims will not be
material to the Holding Company's financial position.

The Bank has salary continuation agreements with two officers which provide
for payments to the officers or their beneficiaries of $27,900 and $97,600
annually for fifteen years. The Bank is accruing the estimated amount of future
payments to be made under these agreements over the period of the officers'
active employment. The payments begin at the earlier of an officer's retirement
or death.

The Bank has entered into an agreement dated September 1, 1996 with a
former officer. The agreement provides for the Bank to pay the former officer
$108,000, at his discretion, in either a lump sum on September 1, 1997 or in
seven equal annual installments. As of December 31, 1996, the Bank has accrued
an amount equal to the future payments.

The Bank has entered into an employment agreement with an officer which
expires August 1997. The agreement provides for annual salaries, benefits and
covenants not to compete. The agreement is renewable for a one-year term after
the original term of two years.

F-18
<PAGE> 111

FIRST COMMERCE BANKS OF FLORIDA, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(15) HOLDING COMPANY FINANCIAL INFORMATION

Summary financial information for the Holding Company only as of December
31, 1996 and 1995 and for the years then ended is as follows:

STATEMENTS OF CONDITION

<TABLE>
<CAPTION>
1996 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Cash........................................................ $ 887 $ 1,983
Investment in subsidiary.................................... 9,365 8,423
Land........................................................ -- --
Other assets................................................ 361 115
------- -------
Total Assets...................................... $10,613 $10,521
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities................................................. $ -- $ --
Stockholders' equity........................................ 10,613 10,521
------- -------
Total Liabilities and Stockholders' Equity........ $10,613 $10,521
======= =======
</TABLE>

STATEMENTS OF INCOME

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------
1996 1995
----- ----
<S> <C> <C>
Revenues.................................................... $ 108 $811
Expenses.................................................... 208 732
----- ----
Income (loss) before equity in earnings of subsidiaries..... (100) 79
Equity in earnings of subsidiaries.......................... 238 480
----- ----
Net income.................................................. $ 138 $559
===== ====
</TABLE>

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
----------------
1996 1995
------- ------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income................................................ $ 138 $ 559
Adjustments to reconcile net income to net cash used for
operating activities:
Equity in earnings of subsidiaries..................... (238) (480)
Depreciation........................................... 2 --
Gain on sale of subsidiary............................. -- (564)
Gain on sale of other real estate owned................ -- (2)
Gain on sale of building............................... -- (171)
Provision for credit losses............................ (117) 221
(Increase) decrease in other assets.................... 175 (140)
------- ------
Net cash used for operating activities............ (40) (577)
</TABLE>

F-19
<PAGE> 112

FIRST COMMERCE BANKS OF FLORIDA, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
----------------
1996 1995
------- ------
<S> <C> <C>
Cash Flows From Investing Activities:
Purchase of stock in subsidiary........................... (750) --
Proceeds from sale of subsidiary.......................... -- 1,844
Purchase of loans......................................... (493) (188)
Net decrease in loans receivable.......................... 196 --
Proceeds from sale of other real estate owned............. -- 179
Purchases of property and equipment....................... (9) --
Dividend from subsidiary.................................. -- 80
------- ------
Net cash provided by (used for) investing
activities....................................... (1,056) 1,915
Cash Flows From Financing Activities:
Cash paid for fractional shares........................... -- (1)
------- ------
Net cash used for financing activities............ -- (1)
------- ------
Net Increase (Decrease) in Cash............................. (1,096) 1,337
Cash, beginning of year..................................... 1,983 646
------- ------
Cash, end of year........................................... $ 887 $1,983
======= ======
</TABLE>

(16) FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value
of financial instruments:

Cash and due from banks. The carrying amount is a reasonable estimate of
fair value.

Federal funds and investment securities. For federal funds sold and other
short-term investments, the carrying amount is a reasonable estimate of fair
value. U.S. government and agency obligations, state, county and municipal
securities and other investments are valued using quoted market prices.

Loans receivable. For demand loans, the carrying value is a reasonable
estimate of fair value. Fair value of other loans is estimated by discounting
estimated future cash flows using the current rates at which similar loans are
being offered by the Bank.

Deposit accounts. The fair value of demand deposits is the amount payable
on demand at the reporting date. The fair value of certificates of deposit is
estimated by discounting future cash flows using the rates currently offered for
deposits with similar remaining maturities.

The fair value estimates were made at a discrete point in time based on
relevant market information and information about the financial instruments.
Because no market exists for a significant portion of the financial instruments,
fair value estimates were based on judgments regarding future expected loss
experience, current economic conditions, risk characteristics of various
financial instruments, and other factors. These estimates were subjective in
nature and involved uncertainties and matters of significant judgment and
therefore cannot be determined with precision. Changes in assumptions could
significantly affect the estimates.

The fair value estimates were based on existing on-balance sheet and
off-balance sheet financial instruments without attempting to estimate the value
of anticipated future business and the value of assets and liabilities that were
not considered financial instruments. Other significant assets that were not
considered financial instruments included deferred tax assets, other assets, and
property and equipment. The tax effects related to the realization of the
unrealized gains and losses on investment securities can have a significant
impact on fair value estimates and were not considered in the estimates.

F-20
<PAGE> 113

FIRST COMMERCE BANKS OF FLORIDA, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The estimated fair values of the Holding Company's financial instruments
are as follows:

<TABLE>
<CAPTION>
1996 1995
--------------------- ---------------------
CARRYING ESTIMATED CARRYING ESTIMATED
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
-------- ---------- -------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Assets:
Cash and due from banks......................... $ 5,763 $ 5,763 $ 4,807 $ 4,807
Federal funds sold.............................. 7,688 7,688 5,562 5,562
Investment securities........................... 21,704 21,745 28,143 28,144
Loans receivable, net of allowance.............. 66,387 66,742 70,265 70,793
Liabilities:
Deposits........................................ 94,749 94,989 101,941 102,416
</TABLE>

(17) REGULATORY CAPITAL REQUIREMENTS

The Bank is subject to various regulatory capital requirements administered
by the federal banking agencies. Failure to meet minimum capital requirements
can initiate certain mandatory, and possibly additional discretionary, actions
by regulators that, if undertaken, could have a direct material effect on the
Bank's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must meet specific
capital guidelines that involve quantitative measures of the Bank's assets,
liabilities, and certain off-balance-sheet items as calculated under regulatory
accounting practices. The Bank's capital amounts and classification are also
subject to qualitative judgments by the regulators about components, risk
weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the table
below) of total and Tier I capital (as defined in the regulations) to average
assets (as defined). Management believes, as of December 31, 1996, that the Bank
meets all capital adequacy requirements to which it is subject.

As of March 31, 1996, the most recent notification from the Federal Deposit
Insurance Corporation categorized the Bank as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as well
capitalized, the Bank must maintain minimum total risk-based, Tier I risk-based,
Tier I leverage ratios as set forth in the table. There are no conditions or
events since that notification that management believes have changed the
institution's category.

The Bank's actual capital amounts and ratios are also presented in the
table. No amounts were deducted from capital for interest-rate risk.

F-21
<PAGE> 114

FIRST COMMERCE BANKS OF FLORIDA, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
TO BE WELL
CAPITALIZED
UNDER
PROMPT
FOR CAPITAL CORRECTIVE
ADEQUACY ACTION
ACTUAL PURPOSES PROVISIONS
--------------- -------------- --------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------- ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1996:
Total Capital (to Risk Weighted Assets):
Consolidated............................. $12,037 14.94% $6,445 8.00% $ N/A
First Commerce Bank of Polk County....... 10,784 13.43 6,425 8.00 8,031 10.00%
Tier I Capital (to Risk Weighted Assets):
Consolidated............................. 10,584 13.14 3,223 4.00 N/A
First Commerce Bank of Polk County....... 9,365 11.66 3,212 4.00 4,818 6.00
Tier I Capital (to Average Assets):
Consolidated............................. 10,584 10.51 4,028 4.00 N/A
First Commerce Bank of Polk County....... 9,365 9.37 3,999 4.00 4,999 5.00
</TABLE>

(18) FOURTH QUARTER ADJUSTMENT

In the fourth quarter of 1996, the Holding Company recorded adjustments
which decreased its net income by approximately $305,000, net of income tax
benefit of $101,000, as the result of amounts charged to the provision for
credit losses.

(19) PENDING BUSINESS COMBINATION

On February 18, 1997, the Holding Company entered into a letter of intent
with The Colonial BancGroup, Inc. (Colonial), a multi-bank holding company
headquartered in Montgomery, Alabama. The letter of intent relates to the
proposed acquisition of First Commerce Banks of Florida, Inc. by Colonial and
the conversion of First Commerce Banks of Florida, Inc.'s common stock into
Colonial's common stock. The transaction is subject to a number of conditions,
including prior approval by regulatory agencies and First Commerce Banks of
Florida, Inc.'s shareholders.

F-22
<PAGE> 115

APPENDIX A

AGREEMENT AND PLAN OF MERGER

BY AND BETWEEN

THE COLONIAL BANCGROUP, INC.,

AND

FIRST COMMERCE BANKS OF FLORIDA, INC.

DATED AS OF

MARCH 24, 1997
<PAGE> 116

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE 1 -- NAME
1.1 Name........................................................
ARTICLE 2 -- MERGER -- TERMS AND CONDITIONS
2.1 Applicable Law..............................................
2.2 Corporate Existence.........................................
2.3 Articles of Incorporation and Bylaws........................
2.4 Resulting Corporation's Officers and Board..................
2.5 Stockholder Approval........................................
2.6 Further Acts................................................
2.7 Effective Date and Closing..................................
2.8 Subsidiary Bank Merger......................................
ARTICLE 3 -- CONVERSION OF ACQUIRED CORPORATION STOCK
3.1 Conversion of Acquired Corporation Stock....................
3.2 Surrender of Acquired Corporation Stock.....................
3.3 Fractional Shares...........................................
3.4 Adjustments.................................................
3.5 BancGroup Stock.............................................
3.6 Dissenting Rights...........................................
ARTICLE 4 -- REPRESENTATIONS, WARRANTIES AND COVENANTS OF BANCGROUP
4.1 Organization................................................
4.2 Capital Stock...............................................
4.3 Financial Statements; Taxes.................................
4.4 No Conflict with Other Instrument...........................
4.5 Absence of Material Adverse Change..........................
4.6 Approval of Agreements......................................
4.7 Tax Treatment...............................................
4.8 Title and Related Matters...................................
4.9 Subsidiaries................................................
4.10 Contracts...................................................
4.11 Litigation..................................................
4.12 Compliance..................................................
4.13 Registration Statement......................................
4.14 SEC Filings.................................................
4.15 Form S-4....................................................
4.16 Brokers.....................................................
4.17 Government Authorization....................................
4.18 Absence of Regulatory Communications........................
4.19 Disclosure..................................................
ARTICLE 5 -- REPRESENTATIONS, WARRANTIES AND COVENANTS OF ACQUIRED
CORPORATION
5.1 Organization................................................
5.2 Capital Stock...............................................
5.3 Subsidiaries................................................
5.4 Financial Statements; Taxes.................................
5.5 Absence of Certain Changes or Events........................
5.6 Title and Related Matters...................................
5.7 Commitments.................................................
</TABLE>

i
<PAGE> 117

<TABLE>
<S> <C> <C>
5.8 Charter and Bylaws.............................................................................
5.9 Litigation.....................................................................................
5.10 Material Contract Defaults.....................................................................
5.11 No Conflict with Other Instrument..............................................................
5.12 Governmental Authorization.....................................................................
5.13 Absence of Regulatory Communications...........................................................
5.14 Absence of Material Adverse Change.............................................................
5.15 Insurance......................................................................................
5.16 Pension and Employee Benefit Plans.............................................................
5.17 Buy-Sell Agreement.............................................................................
5.18 Brokers........................................................................................
5.19 Approval of Agreements.........................................................................
5.20 Disclosure.....................................................................................
5.21 Registration Statement.........................................................................
5.22 Loans; Adequacy of Allowance for Loan Losses...................................................
5.23 Environmental Matters..........................................................................
5.24 Transfer of Shares.............................................................................
5.25 Collective Bargaining..........................................................................
5.26 Labor Disputes.................................................................................
5.27 Derivative Contracts...........................................................................
ARTICLE 6 -- ADDITIONAL COVENANTS
6.1 Additional Covenants of BancGroup..............................................................
6.2 Additional Covenants of Acquired Corporation...................................................
ARTICLE 7 -- MUTUAL COVENANTS AND AGREEMENTS
7.1 Best Efforts; Cooperation......................................................................
7.2 Press Release..................................................................................
7.3 Mutual Disclosure..............................................................................
7.4 Access to Properties and Records...............................................................
7.5 Notice of Adverse Changes......................................................................
ARTICLE 8 -- CONDITIONS TO OBLIGATIONS OF ALL PARTIES
8.1 Approval by Shareholders.......................................................................
8.2 Regulatory Authority Approval..................................................................
8.3 Litigation.....................................................................................
8.4 Registration Statement.........................................................................
8.5 Tax Opinion....................................................................................
ARTICLE 9 -- CONDITIONS TO OBLIGATIONS OF ACQUIRED CORPORATION
9.1 Representations, Warranties and Covenants......................................................
9.2 Adverse Changes................................................................................
9.3 Closing Certificate............................................................................
9.4 Opinion of Counsel.............................................................................
9.5 Fairness Opinion...............................................................................
9.6 NYSE Listing...................................................................................
9.7 Other Matters..................................................................................
9.8 Material Events................................................................................
ARTICLE 10 -- CONDITIONS TO OBLIGATIONS OF BANCGROUP
10.1 Representations, Warranties and Covenants......................................................
10.2 Adverse Changes................................................................................
10.3 Closing Certificate............................................................................
10.4 Opinion of Counsel.............................................................................
10.5 Controlling Shareholders.......................................................................
</TABLE>

ii
<PAGE> 118

<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
10.6 Other Matters..................................................................................
10.7 Dissenters.....................................................................................
10.8 Material Events................................................................................
10.9 Repurchase of Shares...........................................................................
ARTICLE 11 -- TERMINATION OF REPRESENTATIONS AND WARRANTIES
ARTICLE 12 -- NOTICES
ARTICLE 13 -- AMENDMENT OR TERMINATION
13.1 Amendment......................................................................................
13.2 Termination....................................................................................
13.3 Damages........................................................................................
13.4 Acquisition Proposal; Termination and Fee......................................................
ARTICLE 14 -- DEFINITIONS
ARTICLE 15 -- MISCELLANEOUS
15.1 Expenses.......................................................................................
15.2 Benefit........................................................................................
15.3 Governing Law..................................................................................
15.4 Counterparts...................................................................................
15.5 Headings.......................................................................................
15.6 Severability...................................................................................
15.7 Construction...................................................................................
15.8 Return of Information..........................................................................
15.9 Equitable Remedies.............................................................................
15.10 Attorneys' Fees................................................................................
15.11 No Waiver......................................................................................
15.12 Remedies Cumulative............................................................................
15.13 Entire Contract................................................................................
</TABLE>

iii
<PAGE> 119

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER is made and entered into as of this the
24th day of March 1997, by and between FIRST COMMERCE BANKS OF FLORIDA, INC.
("Acquired Corporation"), a Florida corporation, and THE COLONIAL BANCGROUP,
INC. ("BancGroup"), a Delaware corporation.

W I T N E S S E T H

WHEREAS, Acquired Corporation operates as a bank holding company for its
wholly owned subsidiary, First Commerce Bank of Polk County (the "Bank"), with
its principal office in Winter Haven, Florida; and

WHEREAS, BancGroup is a bank holding company with Subsidiary banks in
Alabama, Florida, Georgia and Tennessee; and

WHEREAS, Acquired Corporation wishes to merge with BancGroup; and

WHEREAS, it is the intention of BancGroup and Acquired Corporation that
such Merger shall qualify for federal income tax purposes as a "reorganization"
within the meaning of section 368(a) of the Code, as defined herein;

NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the Parties hereto agree as follows:

ARTICLE 1

NAME

1.1 Name. The name of the corporation resulting from the Merger shall be
"The Colonial BancGroup, Inc."

ARTICLE 2

MERGER -- TERMS AND CONDITIONS

2.1 Applicable Law. On the Effective Date, Acquired Corporation shall be
merged with and into BancGroup (herein referred to as the "Resulting
Corporation" whenever reference is made to it as of the time of merger or
thereafter). The Merger shall be undertaken pursuant to the provisions of and
with the effect provided in the DGCL and, to the extent applicable, the FBCA.
The offices and facilities of Acquired Corporation and of BancGroup shall become
the offices and facilities of the Resulting Corporation.

2.2 Corporate Existence. On the Effective Date, the corporate existence of
Acquired Corporation and of BancGroup shall, as provided in the DGCL and the
FBCA, be merged into and continued in the Resulting Corporation, and the
Resulting Corporation shall be deemed to be the same corporation as Acquired
Corporation and BancGroup. All rights, franchises and interests of Acquired
Corporation and BancGroup, respectively, in and to every type of property (real,
personal and mixed) and choses in action shall be transferred to and vested in
the Resulting Corporation by virtue of the Merger without any deed or other
transfer. The Resulting Corporation on the Effective Date, and without any order
or other action on the part of any court or otherwise, shall hold and enjoy all
rights of property, franchises and interests, including appointments,
designations and nominations and all other rights and interests as trustee,
executor, administrator, transfer agent and registrar of stocks and bonds,
guardian of estates, assignee, and receiver and in every other fiduciary
capacity and in every agency, and capacity, in the same manner and to the same
extent as such rights, franchises and interests were held or enjoyed by Acquired
Corporation and BancGroup, respectively, on the Effective Date.

A-1
<PAGE> 120

2.3 Articles of Incorporation and Bylaws. On the Effective Date, the
certificate of incorporation and bylaws of the Resulting Corporation shall be
the restated certificate of incorporation and bylaws of BancGroup as they exist
immediately before the Effective Date.

2.4 Resulting Corporation's Officers and Board. The board of directors and
the officers of the Resulting Corporation on the Effective Date shall consist of
those persons serving in such capacities of BancGroup as of the Effective Date.

2.5 Stockholder Approval. This Agreement shall be submitted to the
shareholders of Acquired Corporation at the Stockholders Meeting to be held as
promptly as practicable consistent with the satisfaction of the conditions set
forth in this Agreement. Upon approval by the requisite vote of the shareholders
of Acquired Corporation as required by applicable Law, the Merger shall become
effective as soon as practicable thereafter in the manner provided in section
2.7 hereof.

2.6 Further Acts. If, at any time after the Effective Date, the Resulting
Corporation shall consider or be advised that any further assignments or
assurances in law or any other acts are necessary or desirable (i) to vest,
perfect, confirm or record, in the Resulting Corporation, title to and
possession of any property or right of Acquired Corporation or BancGroup,
acquired as a result of the Merger, or (ii) otherwise to carry out the purposes
of this Agreement, BancGroup and its officers and directors shall execute and
deliver all such proper deeds, assignments and assurances in law and do all acts
necessary or proper to vest, perfect or confirm title to, and possession of,
such property or rights in the Resulting Corporation and otherwise to carry out
the purposes of this Agreement; and the proper officers and directors of the
Resulting Corporation are fully authorized in the name of Acquired Corporation
or BancGroup, or otherwise, to take any and all such action.

2.7 Effective Date and Closing. Subject to the terms of all requirements
of Law and the conditions specified in this Agreement, the Merger shall become
effective on the date specified in the Certificate of Merger to be issued by the
Secretary of State of the State of Delaware (such time being herein called the
"Effective Date"). Assuming all other conditions to the Closing have been or
will be satisfied as of the Closing, the Closing shall take place at the offices
of BancGroup, in Montgomery, Alabama, at 11:00 a.m. on a date specified by
BancGroup that shall be as soon as reasonably practicable after the later to
occur of the Stockholder Meeting or all required regulatory approvals under
Section 8.2, or at such other place and time that the Parties may mutually
agree.

2.8 Subsidiary Bank Merger. BancGroup and Acquired Corporation anticipate
that immediately after the Effective Date the Bank will merge with and into
Colonial Bank, BancGroup's Florida Subsidiary bank. The exact timing and
structure of such merger are not known at this time, and BancGroup in its
discretion will finalize such timing and structure at a later date. Acquired
Corporation will cooperate with BancGroup, including the call of any special
meetings of the board of directors of the Bank and the filing of any regulatory
applications, in the execution of appropriate documentation relating to such
merger, including the taking of any action required by section 3.1(e) hereof.

ARTICLE 3

CONVERSION OF ACQUIRED CORPORATION STOCK

3.1 Conversion of Acquired Corporation Stock. (a) On the Effective Date,
each share of common stock of Acquired Corporation outstanding and held by
Acquired Corporation's shareholders (the "Acquired Corporation Stock"), shall be
converted by operation of law and without any action by any holder thereof into
shares of BancGroup Common Stock (the "Merger Consideration") at the rate of
.4326 of a share of BancGroup Common Stock for each share of Acquired
Corporation Stock, provided that the Market Value for BancGroup is not less than
$19.35 and not greater than $25.16. If the Market Value is less than $19.35,
then each share of Acquired Corporation Stock outstanding at the Effective Date
shall be converted into the number of shares of BancGroup Common Stock that
shall equal $8.37 divided by the Market Value. If the Market Value is greater
than $25.16, then each share of Acquired Corporation Stock shall be converted
into such number of shares of BancGroup Common Stock that shall equal $10.88
divided by the Market Value, subject to section 3.1(d) below. The appropriate
ratio that is used to calculate the Merger Consideration based

A-2
<PAGE> 121

upon the Market Value as set forth above is referred to as the "Exchange Ratio."
For these purposes, the "Market Value" shall represent the per share market
value of the BancGroup Common Stock at the Effective Date and shall be
determined by calculating the average of the closing prices of the Common Stock
of BancGroup as reported by the NYSE on each of the ten consecutive trading days
ending on the trading day five calendar days preceding the Effective Date. As of
the date hereof, there are 1,585,737 shares of Acquired Corporation Stock
outstanding. To the extent that the number of shares of Acquired Corporation
Stock may increase based upon the exercise of Acquired Corporation Options or
the exercise of Acquired Corporation warrants, the number of shares of BancGroup
Common Stock to be issued in the Merger shall be increased with each share of
Acquired Corporation Stock outstanding at the Effective Date exchanged for
shares of BancGroup Common Stock at the Exchange Ratio.

(b)(i) On the Effective Date, BancGroup shall assume all Acquired
Corporation Options outstanding, and each such option shall cease to represent a
right to acquire Acquired Corporation common stock and shall, instead, represent
the right to acquire BancGroup Common Stock on substantially the same terms
applicable to the Acquired Corporation Options except as specified below in this
section. The number of shares of BancGroup Common Stock to be issued pursuant to
such options shall equal the number of shares of Acquired Corporation common
stock subject to such Acquired Corporation Options multiplied by the Exchange
Ratio, provided that no fractions of shares of BancGroup Common Stock shall be
issued and the number of shares of BancGroup Common Stock to be issued upon the
exercise of Acquired Corporation Options, if a fractional share exists, shall
equal the number of whole shares obtained by rounding to the nearest whole
number, giving account to such fraction, or by paying for such fraction in cash,
based upon the Market Value. The exercise price for the acquisition of BancGroup
Common Stock shall be the exercise price for each share of Acquired Corporation
common stock subject to such options divided by the Exchange Ratio, adjusted
appropriately for any rounding to whole shares that may be done. It is intended
that the assumption by BancGroup of the Acquired Corporation Options shall be
undertaken in a manner that will not constitute a "modification" as defined in
Section 424 of the Code as to any stock option which is an "incentive stock
option." Schedule 3.1 hereto sets forth the names of all persons holding
Acquired Corporation Options, the number of shares of Acquired Corporation
common stock subject to such options, the exercise price and the expiration date
of such options.

(ii) In lieu of the foregoing section 3.1(b)(i), and at the election of
holders of Acquired Corporation Options, BancGroup shall pay at the Closing a
sum in cash equal to the difference between the exercise price of Acquired
Corporation Options and the value of such options using the Market Value to
calculate the value of such options based upon the Exchange Ratio. Any Holder of
such options may notify BancGroup in writing at any time prior to the Closing of
his or her election to receive such cash.

(iii) BancGroup shall file at its expense a registration statement with the
SEC on Form S-8 (including the Form S-4 to be filed in connection with the
Merger) with respect to the shares of BancGroup Common Stock to be issued
pursuant to Acquired Corporation Options and pursuant to the Acquired
Corporation warrants assumed under section 3.1(c), and shall use its reasonable
best efforts to maintain the effectiveness of such registration statement for so
long as such options or warrants remain outstanding. Such shares shall also be
registered or qualified for sale under the securities laws of any state in which
registration or qualification is necessary.

(c) (i) On the Effective Date, BancGroup will assume Acquired Corporation's
warrants respecting the issuance of 140,716 shares of Acquired Corporation
Stock. Such warrants shall be exercisable for shares of BancGroup Common Stock,
with each share of Acquired Corporation Stock that would have been issued upon
exercise of such warrant being convertible into such number of shares of
BancGroup Common Stock equal to one share of Acquired Corporation common stock
multiplied by the Exchange Ratio and with the exercise price for such warrants
divided by the Exchange Ratio. No fractions of shares of BancGroup Common Stock
will be issued upon conversion and exercise of such warrants, and if a fraction
exists, such fraction shall be rounded to the nearest whole number or shall be
paid in cash based upon the Market Value.

(ii) In lieu of the foregoing Section 3.1(c)(i), and at the election of
holders of such warrants, BancGroup shall pay at the Closing a sum in cash equal
to the difference between the exercise price of such

A-3
<PAGE> 122

warrants and the value of such warrants using the Market Value to calculate the
value of such warrants based upon the Exchange Ratio. Any Holder of such
warrants may notify BancGroup in writing at any time prior to the Closing of his
or her election to receive such cash.

(d) If BancGroup publicly announces prior to the Effective Date that is has
entered into an agreement pursuant to which BancGroup will be acquired through a
merger, sale of assets of BancGroup or tender offer or exchange offer for
BancGroup common stock (or otherwise), then the Exchange Ratio shall be
determined for all purposes of this Agreement by disregarding whether the Market
Value is greater than $25.16. Any merger in which BancGroup is the surviving
corporation that does not involve a change of control of BancGroup shall be
excluded from the preceding sentence. For this purpose a "change of control"
means the acquisition of beneficial ownership of the common stock of BancGroup
by any person or group (as that term is defined under section 13(d) of the 1934
Act) of more than 50 percent of the outstanding shares of such stock.

(e) There are currently 600 shares of outstanding common stock of the Bank
that are held by shareholders other than Acquired Corporation. Prior to the
Effective Date, Acquired Corporation and Colonial Bank, BancGroup's bank
subsidiary in Florida, will enter into a merger agreement providing for a merger
of the Bank with Colonial Bank following consummation of the Merger pursuant to
the provisions of the Florida Banking Code and the Alabama Banking Code, as
applicable. It is the intention of the Parties that on the Effective Date, and
following the Closing, the Bank will be merged with Colonial Bank and that cash
will be paid to such shareholders in an amount per share equal to the per share
Merger Consideration received by shareholders of Acquired Corporation.

3.2 Surrender of Acquired Corporation Stock. After the Effective Date,
each holder of an outstanding certificate or certificates which prior thereto
represented shares of Acquired Corporation Stock who is entitled to receive
BancGroup Common Stock shall be entitled, upon surrender to BancGroup of their
certificate or certificates representing shares of Acquired Corporation Stock
(or an affidavit or affirmation by such holder of the loss, theft, or
destruction of such certificate or certificates in such form as BancGroup may
reasonably require and, if BancGroup reasonably requires, a bond of indemnity in
form and amount, and issued by such sureties, as BancGroup may reasonably
require), to receive in exchange therefor a certificate or certificates
representing the number of whole shares of BancGroup Common Stock into and for
which the shares of Acquired Corporation Stock so surrendered shall have been
converted, such certificates to be of such denominations and registered in such
names as such holder may reasonably request. Until so surrendered and exchanged,
each such outstanding certificate which, prior to the Effective Date,
represented shares of Acquired Corporation Stock and which is to be converted
into BancGroup Common Stock shall for all purposes evidence ownership of the
BancGroup Common Stock into and for which such shares shall have been so
converted, except that no dividends or other distributions with respect to such
BancGroup Common Stock shall be made until the certificates previously
representing shares of Acquired Corporation Stock shall have been properly
tendered.

3.3 Fractional Shares. No fractional shares of BancGroup Common Stock
shall be issued, and each holder of shares of Acquired Corporation Stock having
a fractional interest arising upon the conversion of such shares into shares of
BancGroup Common Stock shall, at the time of surrender of the certificates
previously representing Acquired Corporation Stock, be paid by BancGroup an
amount in cash equal to the Market Value of such fractional share.

3.4 Adjustments. In the event that prior to the Effective Date BancGroup
Common Stock shall be changed into a different number of shares or a different
class of shares by reason of any recapitalization or reclassification, stock
dividend, combination, stock split, or reverse stock split of the BancGroup
Common Stock, an appropriate and proportionate adjustment shall be made in the
number of shares of BancGroup Common Stock into which the Acquired Corporation
Stock shall be converted.

3.5 BancGroup Stock. The shares of Common Stock of BancGroup issued and
outstanding immediately before the Effective Date shall continue to be issued
and outstanding shares of the Resulting Corporation.

A-4
<PAGE> 123

3.6 Dissenting Rights. Any shareholder of Acquired Corporation who shall
not have voted in favor of this Agreement and who has complied with the
applicable procedures set forth in the FBCA, relating to rights of dissenting
shareholders, shall be entitled to receive payment for the fair value of his
Acquired Corporation Stock. If after the Effective Date a dissenting shareholder
of Acquired Corporation fails to perfect, or effectively withdraws or loses, his
right to appraisal and payment for his shares of Acquired Corporation Stock,
BancGroup shall issue and deliver the consideration to which such holder of
shares of Acquired Corporation Stock is entitled under Section 3.1 (without
interest) upon surrender of such holder of the certificate or certificates
representing shares of Acquired Corporation Stock held by him.

ARTICLE 4

REPRESENTATIONS, WARRANTIES AND COVENANTS OF BANCGROUP

BancGroup represents, warrants and covenants to and with Acquired
Corporation as follows:

4.1 Organization. BancGroup is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware. BancGroup
has the necessary corporate powers to carry on its business as presently
conducted and is qualified to do business in every jurisdiction in which the
character and location of the Assets owned by it or the nature of the business
transacted by it requires qualification or in which the failure to qualify
could, individually or in the aggregate, have a Material Adverse Effect.

4.2 Capital Stock. (a) The authorized capital stock of BancGroup consists
of (A) 44,000,000 shares of Common Stock, $2.50 par value per share, of which as
of February 14, 1997, 38,880,014 shares were validly issued and outstanding,
fully paid and nonassessable and are not subject to preemptive rights (not
counting additional shares subject to issue pursuant to stock option and other
plans and convertible debentures), and (B) 1,000,000 shares of Preference Stock,
$2.50 par value per share, none of which are issued and outstanding. The shares
of BancGroup Common Stock to be issued in the Merger are duly authorized and,
when so issued, will be validly issued and outstanding, fully paid and
nonassessable, will have been registered under the 1933 Act, and will have been
registered or qualified under the securities laws of all jurisdictions in which
such registration or qualification is required, based upon information provided
by Acquired Corporation.

(b) The authorized capital stock of each Subsidiary of BancGroup is validly
issued and outstanding, fully paid and nonassessable, and each Subsidiary is
wholly owned, directly or indirectly, by BancGroup.

4.3 Financial Statements; Taxes. (a) BancGroup has delivered to Acquired
Corporation copies of the following financial statements (as restated) of
BancGroup:

(i) Consolidated balance sheets as of December 31, 1994, and December
31, 1995, and for the nine months ended September 30, 1996;

(ii) Consolidated statements of operations for each of the three years
ended December 31, 1993, 1994 and 1995, and for the nine months ended
September 30, 1996;

(iii) Consolidated statements of cash flows for each of the three
years ended December 31, 1993, 1994 and 1995, and for the nine months ended
September 30, 1996; and

(iv) Consolidated statements of changes in shareholders' equity for
the three years ended December 31, 1993, 1994 and 1995, and for the nine
months ended September 30, 1996.

All such financial statements are in all material respects in accordance
with the books and records of BancGroup and have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods indicated, all as more particularly set forth in the
notes to such statements. Each of the consolidated balance sheets presents
fairly as of its date the consolidated financial condition of BancGroup and its
Subsidiaries. Except as and to the extent reflected or reserved against in such
balance sheets (including the notes thereto), BancGroup did not have, as of the
dates of such balance sheets, any material Liabilities or obligations (absolute
or contingent) of a nature customarily reflected in a balance sheet or the notes
thereto. The statements of consolidated income, shareholders' equity and changes
in consolidated financial position present fairly the results of operations and
changes in financial position of

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BancGroup and its Subsidiaries for the periods indicated. The foregoing
representations, insofar as they relate to the unaudited interim financial
statements of BancGroup for the nine months ended September 30, 1996, are
subject in all cases to normal recurring year-end adjustments and the omission
of footnote disclosure.

(b) All Tax returns required to be filed by or on behalf of BancGroup have
been timely filed (or requests for extensions therefor have been timely filed
and granted and have not expired), and all returns filed are complete and
accurate in all material respects. All Taxes shown on these returns to be due
and all additional assessments received have been paid. The amounts recorded for
Taxes on the balance sheets provided under section 4.3(a) are, to the Knowledge
of BancGroup, sufficient in all material respects for the payment of all unpaid
federal, state, county, local, foreign or other Taxes (including any interest or
penalties) of BancGroup accrued for or applicable to the period ended on the
dates thereof, and all years and periods prior thereto and for which BancGroup
may at such dates have been liable in its own right or as transferee of the
Assets of, or as successor to, any other corporation or other party. No audit,
examination or investigation is presently being conducted or, to the Knowledge
of BancGroup, threatened by any taxing authority which is likely to result in a
material Tax Liability, no material unpaid Tax deficiencies or additional
liabilities of any sort have been proposed by any governmental representative
and no agreements for extension of time for the assessment of any material
amount of Tax have been entered into by or on behalf of BancGroup. BancGroup has
withheld from its employees (and timely paid to the appropriate governmental
entity) proper and accurate amounts for all periods in material compliance with
all Tax withholding provisions of applicable federal, state, foreign and local
Laws (including without limitation, income, social security and employment Tax
withholding for all types of compensation).

4.4 No Conflict with Other Instrument. The consummation of the
transactions contemplated by this Agreement will not result in a breach of or
constitute a Default (without regard to the giving of notice or the passage of
time) under any material Contract, indenture, mortgage, deed of trust or other
material agreement or instrument to which BancGroup or any of its Subsidiaries
is a party or by which they or their Assets may be bound; will not conflict with
any provision of the restated certificate of incorporation or bylaws of
BancGroup or the articles of incorporation or bylaws of any of its Subsidiaries;
and will not violate any provision of any Law, regulation, judgment or decree
binding on them or any of their Assets.

4.5 Absence of Material Adverse Change. Since the date of the most recent
balance sheet provided under section 4.3(a)(i) above, there have been no events,
changes or occurrences which have had or are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on BancGroup.

4.6 Approval of Agreements. The board of directors of BancGroup has
approved this Agreement and the transactions contemplated by it and has
authorized the execution and delivery by BancGroup of this Agreement. This
Agreement constitutes the legal, valid and binding obligation of BancGroup,
enforceable against it in accordance with its terms. Approval of this Agreement
by the stockholders of BancGroup is not required by applicable law. Subject to
the matters referred to in section 8.2, BancGroup has full power, authority and
legal right to enter into this Agreement and to consummate the transactions
contemplated by this Agreement. BancGroup has no Knowledge of any fact or
circumstance under which the appropriate regulatory approvals required by
section 8.2 will not be granted without the imposition of material conditions or
material delays.

4.7 Tax Treatment. BancGroup has no present plan to sell or otherwise
dispose of any of the Assets of Acquired Corporation, subsequent to the Merger,
and BancGroup intends to continue the historic business of Acquired Corporation.

4.8 Title and Related Matters. BancGroup has good and marketable title to
all the properties, interests in properties and Assets, real and personal,
reflected in the most recent balance sheet referred to in section 4.3(a), or
acquired after the date of such balance sheet (except properties, interests and
Assets sold or otherwise disposed of since such date, in the ordinary course of
business), free and clear of all mortgages, Liens, pledges, charges or
encumbrances except (i) mortgages and other encumbrances referred to in the
notes of such balance sheet, (ii) liens for current Taxes not yet due and
payable and (iii) such imperfections of title and easements as do not materially
detract from or interfere with the present use of the properties subject thereto
or affected thereby, or otherwise materially impair present business operations
at such

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properties. To the Knowledge of BancGroup, the material structures and equipment
of BancGroup comply in all material respects with the requirements of all
applicable Laws.

4.9 Subsidiaries. Each Subsidiary of BancGroup has been duly incorporated
and is validly existing as a corporation in good standing under the Laws of the
jurisdiction of its incorporation and each Subsidiary has been duly qualified as
a foreign corporation to transact business and is in good standing under the
Laws of each other jurisdiction in which it owns or leases properties, or
conducts any business so as to require such qualification and in which the
failure to be duly qualified could have a Material Adverse Effect upon BancGroup
and its Subsidiaries considered as one enterprise; each of the banking
Subsidiaries of BancGroup has its deposits fully insured by the Federal Deposit
Insurance Corporation to the extent provided by the Federal Deposit Insurance
Act; and the businesses of the non-bank Subsidiaries of BancGroup are permitted
to and may be conducted by subsidiaries of registered bank holding companies.

4.10 Contracts. Neither BancGroup nor any of its Subsidiaries is in
Default in any material respect under the terms of any material Contract,
agreement, lease or other commitment which is or may be material to the
business, operations, properties or Assets, or the condition, financial or
otherwise, of such company and, to the Knowledge of BancGroup, there is no event
which, with notice or lapse of time, or both, may be or become an event of
Default under any such material Contract, agreement, lease or other commitment
in respect of which adequate steps have not been taken to prevent such a Default
from occurring.

4.11 Litigation. Except as disclosed in or reserved for in BancGroup's
financial statements, there is no Litigation before or by any court or Agency,
domestic or foreign, now pending, or, to the Knowledge of BancGroup, threatened
against or affecting BancGroup or any of its Subsidiaries (nor is BancGroup
aware of any facts which could give rise to any such Litigation) which is
required to be disclosed in the Registration Statement (other than as disclosed
therein), or which may have any Material Adverse Effect or prospective Material
Adverse Effect, or which is likely to materially and adversely affect the
properties or Assets thereof or which is likely to materially affect or delay
the consummation of the transactions contemplated by this Agreement; all pending
legal or governmental proceedings to which BancGroup or any Subsidiary is a
party or of which any of their properties is the subject which are not described
in the Registration Statement, including ordinary routine litigation incidental
to the business, are, considered in the aggregate, not material; and neither
BancGroup nor any of its Subsidiaries have any contingent obligations which
could be considered material to BancGroup and its Subsidiaries considered as one
enterprise which are not disclosed in the Registration Statement as it may be
amended or supplemented. To the Knowledge of BancGroup, each of BancGroup and
its Subsidiaries has complied in all material respects with all material
applicable Laws and Regulations including those imposing Taxes, of any
applicable jurisdiction and of all states, municipalities, other political
subdivisions and Agencies, in respect of the ownership of its properties and the
conduct of its business, which, if not complied with, would have a Material
Adverse Effect on BancGroup and its Subsidiaries taken as a whole.

4.12 Compliance. BancGroup and its Subsidiaries, in the conduct of their
businesses, are to the Knowledge of BancGroup, in material compliance with all
material federal, state or local Laws applicable to their or the conduct of
their businesses.

4.13 Registration Statement. At the time the Registration Statement
becomes effective and at the time of the Stockholders' Meeting, the Registration
Statement, including the Proxy Statement which shall constitute a part thereof,
will comply in all material respects with the requirements of the 1933 Act and
the rules and regulations thereunder, will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the representations and warranties
in this subsection shall not apply to statements in or omissions from the Proxy
Statement made in reliance upon and in conformity with information furnished in
writing to BancGroup by Acquired Corporation or any of its representatives
expressly for use in the Proxy Statement or information included in the Proxy
Statement regarding the business of Acquired Corporation, its operations, Assets
and capital.

4.14 SEC Filings. (a) BancGroup has heretofore delivered to Acquired
Corporation copies of BancGroup's: (i) Annual Report on Form 10-K for the fiscal
year ended December 31, 1995; (ii) 1995 Annual

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Report to Shareholders; (iii) Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 1996; and (iv) any reports on Form 8-K, filed by
BancGroup with the SEC since December 31, 1995. Since December 31, 1995,
BancGroup has timely filed all reports and registration statements and the
documents required to be filed with the SEC under the rules and regulations of
the SEC and all such reports and registration statements or other documents have
complied in all material respects, as of their respective filing dates and
effective dates, as the case may be, with all the applicable requirements of the
1933 Act and the 1934 Act. As of the respective filing and effective dates, none
of such reports or registration statements or other documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.

(b) The documents incorporated by reference into the Registration
Statement, at the time they were filed with the SEC, complied in all material
respects with the requirements of the 1934 Act and Regulations thereunder and
when read together and with the other information in the Registration Statement
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading at the time the Registration Statement becomes effective
or at the time of the Stockholders Meeting.

4.15 Form S-4. The conditions for use of a registration statement on SEC
Form S-4 set forth in the General Instructions on Form S-4 have been or will be
satisfied with respect to BancGroup and the Registration Statement.

4.16 Brokers. All negotiations relative to this Agreement and the
transactions contemplated by this Agreement have been carried on by BancGroup
directly with Acquired Corporation and without the intervention of any other
person, either as a result of any act of BancGroup or otherwise in such manner
as to give rights to any valid claim against BancGroup for finders fees,
brokerage commissions or other like payments.

4.17 Government Authorization. BancGroup and its Subsidiaries have all
Permits that, to the Knowledge of BancGroup and its Subsidiaries, are or will be
legally required to enable BancGroup or any of its Subsidiaries to conduct their
businesses in all material respects as now conducted by each of them.

4.18 Absence of Regulatory Communications. Neither BancGroup nor any of
its Subsidiaries is subject to, or has received during the past three (3) years,
any written communication directed specifically to it from any Agency to which
it is subject or pursuant to which such Agency has imposed or has indicated it
may impose any material restrictions on the operations of it or the business
conducted by it or in which such Agency has raised a material question
concerning the condition, financial or otherwise, of such company.

4.19 Disclosure. No representation or warranty, or any statement or
certificate furnished or to be furnished to Acquired Corporation by BancGroup,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state a material fact necessary to make the statements contained in
this Agreement or in any such statement or certificate not misleading.

ARTICLE 5

REPRESENTATIONS, WARRANTIES AND COVENANTS OF ACQUIRED CORPORATION

Acquired Corporation represents, warrants and covenants to and with
BancGroup, as follows:

5.1 Organization. Acquired Corporation is a Florida corporation, and the
Bank is a Florida state bank. Each Acquired Corporation Company is duly
organized, validly existing and in good standing under the respective Laws of
its jurisdiction of incorporation and has all requisite power and authority to
carry on its business as it is now being conducted and is qualified to do
business in every jurisdiction in which the character and location of the Assets
owned by it or the nature of the business transacted by it requires
qualification or in which the failure to qualify could, individually, or in the
aggregate, have a Material Adverse Effect.

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5.2 Capital Stock. (i) As of the date hereof, the authorized capital stock
of Acquired Corporation consisted of 10,000,000 shares of common stock, $0.01
par value per share, 1,585,737 shares of which are issued and outstanding, and
3,000,000 shares of preferred stock, $0.01 par value per share, none of which is
issued and outstanding. All of such shares which are outstanding are validly
issued, fully paid and nonassessable and not subject to preemptive rights.
Acquired Corporation has 182,999 shares of common stock subject to exercise at
any time pursuant to Acquired Corporation Options under its stock option plans
and 140,716 shares of common stock subject to issue upon the exercise of its
stock purchase warrants originally issued by Commerce Bank of Central Florida
and due to expire in May, 1999. Except for the foregoing, Acquired Corporation
does not have any other arrangements or commitments obligating it to issue
shares of its capital stock or any securities convertible into or having the
right to purchase shares of its capital stock, including the grant or issuance
of Acquired Corporation Options.

5.3 Subsidiaries. Acquired Corporation has no direct Subsidiaries other
than the Bank, and there are no Subsidiaries of the Bank. Acquired Corporation
owns its outstanding shares of capital stock of the Bank free and clear of any
liens, claims or encumbrances of any kind. All of the issued and outstanding
shares of capital stock of the Subsidiaries have been validly issued and are
fully paid and non-assessable. As of the date hereof, there were 300,000 shares
of the common stock, par value $5.00 per share, authorized of the Bank, 290,017
of which are issued and outstanding and all but 600 of which are wholly owned by
Acquired Corporation. The Bank has no arrangements or commitments obligating it
to issue shares of its capital stock or any securities convertible into or
having the right to purchase shares of its capital stock.

5.4 Financial Statements; Taxes (a) Acquired Corporation has delivered to
BancGroup copies of the following financial statements of Acquired Corporation:

(i) Consolidated statements of financial condition as of December 31,
1994 and 1995, and for the nine months ended September 30, 1996;

(ii) Consolidated statements of income for each of the three years
ended December 31, 1993, 1994 and 1995, and for the nine months ended
September 30, 1996;

(iii) Consolidated statements of stockholders' equity for each of the
three years ended December 31, 1993, 1994, and 1995, and for the nine
months ended September 30, 1996; and

(iv) Consolidated statements of cash flows for the three years ended
December 31, 1993, 1994 and 1995, and for the nine months ended September
30, 1996.

All of the foregoing financial statements are in all material respects in
accordance with the books and records of Acquired Corporation and have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods indicated, except for changes required
by GAAP, all as more particularly set forth in the notes to such statements.
Each of such balance sheets presents fairly as of its date the financial
condition of Acquired Corporation. Except as and to the extent reflected or
reserved against in such balance sheets (including the notes thereto), Acquired
Corporation did not have, as of the date of such balance sheets, any material
Liabilities or obligations (absolute or contingent) of a nature customarily
reflected in a balance sheet or the notes thereto. The statements of income,
stockholders' equity and cash flows present fairly the results of operation,
changes in shareholders equity and cash flows of Acquired Corporation for the
periods indicated. The foregoing representations, insofar as they relate to the
unaudited interim financial statements of Acquired Corporation for the nine
months ended September 30, 1996, are subject in all cases to normal recurring
year-end adjustments and the omission of footnote disclosure.

(b) Except as set forth on Schedule 5.4(b), all Tax returns required to be
filed by or on behalf of Acquired Corporation have been timely filed (or
requests for extensions therefor have been timely filed and granted and have not
expired), and all returns filed are complete and accurate in all material
respects. All Taxes shown on these returns to be due and all additional
assessments received have been paid. The amounts recorded for Taxes on the
balance sheets provided under section 5.4(a) are, to the Knowledge of Acquired
Corporation, sufficient in all material respects for the payment of all unpaid
federal, state, county, local, foreign and other Taxes (including any interest
or penalties) of Acquired Corporation accrued for or

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applicable to the period ended on the dates thereof, and all years and periods
prior thereto and for which Acquired Corporation may at such dates have been
liable in its own right or as a transferee of the Assets of, or as successor to,
any other corporation or other party. No audit, examination or investigation is
presently being conducted or, to the Knowledge of Acquired Corporation,
threatened by any taxing authority which is likely to result in a material Tax
Liability, no material unpaid Tax deficiencies or additional liability of any
sort have been proposed by any governmental representative and no agreements for
extension of time for the assessment of any material amount of Tax have been
entered into by or on behalf of Acquired Corporation. Acquired Corporation has
not executed an extension or waiver of any statute of limitations on the
assessment or collection of any Tax due that is currently in effect.

(c) Each Acquired Corporation Company has withheld from its employees (and
timely paid to the appropriate governmental entity) proper and accurate amounts
for all periods in material compliance with all Tax withholding provisions of
applicable federal, state, foreign and local Laws (including without limitation,
income, social security and employment Tax withholding for all types of
compensation). Each Acquired Corporation Company is in compliance with, and its
records contain all information and documents (including properly completed IRS
Forms W-9) necessary to comply with, all applicable information reporting and
Tax withholding requirements under federal, state and local Tax Laws, and such
records identify with specificity all accounts subject to backup withholding
under section 3406 of the Code.

5.5 Absence of Certain Changes or Events. Except as set forth on Schedule
5.5, since the date of the most recent balance sheet provided under section
5.4(a)(i) above, no Acquired Corporation Company has

(a) issued, delivered or agreed to issue or deliver any stock, bonds
or other corporate securities (whether authorized and unissued or held in
the treasury) except shares of common stock issued upon the exercise of
existing Acquired Corporation Options or existing Acquired Corporation
warrants and shares issued as director's qualifying shares;

(b) borrowed or agreed to borrow any funds or incurred, or become
subject to, any Liability (absolute or contingent) except borrowings,
obligations (including purchase of federal funds) and Liabilities incurred
in the ordinary course of business and consistent with past practice;

(c) paid any material obligation or Liability (absolute or contingent)
other than current Liabilities reflected in or shown on the most recent
balance sheet referred to in section 5.4(a)(i) and current Liabilities
incurred since that date in the ordinary course of business and consistent
with past practice;

(d) declared or made, or agreed to declare or make, any payment of
dividends or distributions of any Assets of any kind whatsoever to
shareholders, or purchased or redeemed, or agreed to purchase or redeem,
directly or indirectly, or otherwise acquire, any of its outstanding
securities;

(e) except in the ordinary course of business, sold or transferred, or
agreed to sell or transfer, any of its Assets, or canceled, or agreed to
cancel, any debts or claims;

(f) except in the ordinary course of business, entered or agreed to
enter into any agreement or arrangement granting any preferential rights to
purchase any of its Assets, or requiring the consent of any party to the
transfer and assignment of any of its Assets;

(g) suffered any Losses or waived any rights of value which in either
event in the aggregate are material considering its business as a whole;

(h) except in the ordinary course of business, made or permitted any
amendment or termination of any Contract, agreement or license to which it
is a party if such amendment or termination is material considering its
business as a whole;

(i) except in accordance with normal and usual practice, made any
accrual or arrangement for or payment of bonuses or special compensation of
any kind or any severance or termination pay to any present or former
officer or employee;

(j) except in accordance with normal and usual practice, increased the
rate of compensation payable to or to become payable to any of its officers
or employees or made any material increase in any

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profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement or other employee benefit plan, payment or arrangement made to,
for or with any of its officers or employees;

(k) received notice or had Knowledge or reason to believe that any of
its substantial customers has terminated or intends to terminate its
relationship, which termination would have a Material Adverse Effect on its
financial condition, results of operations, business, Assets or properties;

(l) failed to operate its business in the ordinary course so as to
preserve its business intact and to preserve the goodwill of its customers
and others with whom it has business relations;

(m) entered into any other material transaction other than in the
ordinary course of business; or

(n) agreed in writing, or otherwise, to take any action described in
clauses (a) through (m) above.

Between the date hereof and the Effective Date, no Acquired Corporation
Company, without the express written approval of BancGroup, will do any of the
things listed in clauses (a) through (n) of this section 5.5 except as permitted
therein or as contemplated in this Agreement, and no Acquired Corporation
Company will enter into or amend any material Contract, other than Loans or
renewals thereof entered into in the ordinary course of business, without the
express written consent of BancGroup.

5.6 Title and Related Matters.

(a) Title. Acquired Corporation has good and marketable title to all the
properties, interest in properties and Assets, real and personal, reflected in
the most recent balance sheet referred to in section 5.4(a)(i), or acquired
after the date of such balance sheet (except properties, interests and Assets
sold or otherwise disposed of since such date, in the ordinary course of
business), free and clear of all mortgages, Liens, pledges, charges or
encumbrances except (i) mortgages and other encumbrances referred to in the
notes to such balance sheet, (ii) Liens for current Taxes not yet due and
payable and (iii) such imperfections of title and easements as do not materially
detract from or interfere with the present use of the properties subject thereto
or affected thereby, or otherwise materially impair present business operations
at such properties. To the Knowledge of Acquired Corporation, the material
structures and equipment of each Acquired Corporation Company comply in all
material respects with the requirements of all applicable Laws.

(b) Leases. Schedule 5.6(b) sets forth a list and description of all real
and personal property owned or leased by any Acquired Corporation Company,
either as lessor or lessee.

(c) Personal Property. Schedule 5.6(c) sets forth a depreciation schedule
of each Acquired Corporation Company's fixed Assets as of the date hereof.

(d) Computer Hardware and Software. Schedule 5.6(d) contains a description
of all agreements relating to data processing computer software and hardware now
being used in the business operations of any Acquired Corporation Company.
Acquired Corporation is not aware of any defects, irregularities or problems
with any of its computer hardware or software which renders such hardware or
software unable to satisfactorily perform the tasks and functions to be
performed by them in the business of any Acquired Corporation Company.

5.7 Commitments. Except as set forth in Schedule 5.7, no Acquired
Corporation Company is a party to any oral or written (i) Contracts for the
employment of any officer or employee which is not terminable on 30 days' (or
less) notice, (ii) profit sharing, bonus, deferred compensation, savings, stock
option, severance pay, pension or retirement plan, agreement or arrangement,
(iii) loan agreement, indenture or similar agreement relating to the borrowing
of money by such party, (iv) guaranty of any obligation for the borrowing of
money or otherwise, excluding endorsements made for collection, and guaranties
made in the ordinary course of business, (v) consulting or other similar
material Contracts, (vi) collective bargaining agreement, (vii) agreement with
any present or former officer, director or shareholder of such party, or (viii)
other Contract, agreement or other commitment which is material to the business,
operations, property, prospects or Assets or to the condition, financial or
otherwise, of any Acquired Corporation Company. Complete and accurate copies of
all Contracts, plans and other items so listed have been made or will be made
available to BancGroup for inspection.

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5.8 Charter and Bylaws. Schedule 5.8 contains true and correct copies of
the articles of incorporation and bylaws of each Acquired Corporation Company,
including all amendments thereto, as currently in effect. There will be no
changes in such articles of incorporation or bylaws prior to the Effective Date,
without the prior written consent of BancGroup.

5.9 Litigation. There is no Litigation (whether or not purportedly on
behalf of Acquired Corporation) pending or, to the Knowledge of Acquired
Corporation, threatened against or affecting any Acquired Corporation Company
(nor is Acquired Corporation aware of any facts which are likely to give rise to
any such Litigation) at law or in equity, or before or by any governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, or before any arbitrator of any kind, which involves the possibility of
any judgment or Liability not fully covered by insurance in excess of a
reasonable deductible amount or which may have a Material Adverse Effect on
Acquired Corporation, and no Acquired Corporation Company is in Default with
respect to any judgment, order, writ, injunction, decree, award, rule or
regulation of any court, arbitrator or governmental department, commission,
board, bureau, agency or instrumentality, which Default would have a Material
Adverse Effect on Acquired Corporation. To the Knowledge of Acquired
Corporation, each Acquired Corporation Company has complied in all material
respects with all material applicable Laws and Regulations including those
imposing Taxes, of any applicable jurisdiction and of all states,
municipalities, other political subdivisions and Agencies, in respect of the
ownership of its properties and the conduct of its business, which, if not
complied with, would have a Material Adverse Effect on Acquired Corporation.

5.10 Material Contract Defaults. Except as disclosed on Schedule 5.10, no
Acquired Corporation Company is in Default in any material respect under the
terms of any material Contract, agreement, lease or other commitment which is or
may be material to the business, operations, properties or Assets, or the
condition, financial or otherwise, of such company and, to the Knowledge of
Acquired Corporation, there is no event which, with notice or lapse of time, or
both, may be or become an event of Default under any such material Contract,
agreement, lease or other commitment in respect of which adequate steps have not
been taken to prevent such a Default from occurring.

5.11 No Conflict with Other Instrument. The consummation of the
transactions contemplated by this Agreement will not result in the breach of any
term or provision of or constitute a Default under any material Contract,
indenture, mortgage, deed of trust or other material agreement or instrument to
which any Acquired Corporation Company is a party and will not conflict with any
provision of the charter or bylaws of any Acquired Corporation Company.

5.12 Governmental Authorization. Each Acquired Corporation Company has all
Permits that, to the Knowledge of Acquired Corporation, are or will be legally
required to enable any Acquired Corporation Company to conduct its business in
all material respects as now conducted by each Acquired Corporation Company.

5.13 Absence of Regulatory Communications. Except as provided in Schedule
5.13, no Acquired Corporation Company is subject to, nor has any Acquired
Corporation Company received during the past three years, any written
communication directed specifically to it from any Agency to which it is subject
or pursuant to which such Agency has imposed or has indicated it may impose any
material restrictions on the operations of it or the business conducted by it or
in which such Agency has raised any material question concerning the condition,
financial or otherwise, of such company.

5.14 Absence of Material Adverse Change. To the Knowledge of Acquired
Corporation, since the date of the most recent balance sheet provided under
section 5.4(a)(i), there have been no events, changes or occurrences which have
had, or are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on any Acquired Corporation Company.

5.15 Insurance. Each Acquired Corporation Company has in effect insurance
coverage and bonds with reputable insurers which, in respect to amounts, types
and risks insured, management of Acquired Corporation reasonably believes to be
adequate for the type of business conducted by such company. No Acquired
Corporation Company is liable for any material retroactive premium adjustment.
All insurance policies and

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bonds are valid, enforceable and in full force and effect, and no Acquired
Corporation Company has received any notice of any material premium increase or
cancellation with respect to any of its insurance policies or bonds. Within the
last three years, no Acquired Corporation Company has been refused any insurance
coverage which it has sought or applied for, and it has no reason to believe
that existing insurance coverage cannot be renewed as and when the same shall
expire, upon terms and conditions as favorable as those presently in effect,
other than possible increases in premiums that do not result from any
extraordinary loss experience. All policies of insurance presently held or
policies containing substantially equivalent coverage will be outstanding and in
full force with respect to each Acquired Corporation Company at all times from
the date hereof to the Effective Date.

5.16 Pension and Employee Benefit Plans. (a) To the Knowledge of Acquired
Corporation, all employee benefit plans of each Acquired Corporation Company
have been established in compliance with, and such plans have been operated in
material compliance with, all applicable Laws. Except as set forth in Schedule
5.16, no Acquired Corporation Company sponsors or otherwise maintains a "pension
plan" within the meaning of section 3(2) of ERISA or any other retirement plan
other than the 401(k) plan of Acquired Corporation that is intended to qualify
under section 401 of the Code, nor do any unfunded Liabilities exist with
respect to any employee benefit plan, past or present. To the Knowledge of
Acquired Corporation, no employee benefit plan, any trust created thereunder or
any trustee or administrator thereof has engaged in a "prohibited transaction,"
as defined in section 4975 of the Code, which may have a Material Adverse Effect
on the condition, financial or otherwise, of any Acquired Corporation Company.

(b) To the Knowledge of Acquired Corporation, no amounts payable to any
employee of any Acquired Corporation Company will fail to be deductible for
federal income tax purposes by virtue of Section 280G of the Code and
regulations thereunder.

5.17 Buy-Sell Agreement. To the Knowledge of Acquired Corporation, there
are no agreements among any of its shareholders granting to any person or
persons a right of first refusal in respect of the sale, transfer, or other
disposition of shares of outstanding securities by any shareholder of Acquired
Corporation, any similar agreement or any voting agreement or voting trust in
respect of any such shares.

5.18 Brokers. Except for services provided by T. Stephen & Johnson and
Associates, Inc., and Austin Associates, Inc., all negotiations relative to this
Agreement and the transactions contemplated by this Agreement have been carried
on by Acquired Corporation directly with BancGroup and without the intervention
of any other person, either as a result of any act of Acquired Corporation, or
otherwise, in such manner as to give rise to any valid claim against Acquired
Corporation for a finder's fee, brokerage commission or other like payment.

5.19 Approval of Agreements. The board of directors of Acquired
Corporation has approved this Agreement and the transactions contemplated by
this Agreement and has authorized the execution and delivery by Acquired
Corporation of this Agreement. Subject to the matters referred to in section
8.2, Acquired Corporation has full power, authority and legal right to enter
into this Agreement, and, upon appropriate vote of the shareholders of Acquired
Corporation in accordance with this Agreement, Acquired Corporation shall have
full power, authority and legal right to consummate the transactions
contemplated by this Agreement.

5.20 Disclosure. No representation or warranty, nor any statement or
certificate furnished or to be furnished to BancGroup by Acquired Corporation,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state a material fact necessary to make the statements contained in
this Agreement or in any such statement or certificate not misleading.

5.21 Registration Statement. At the time the Registration Statement
becomes effective and at the time of the Stockholders Meeting, the Registration
Statement, including the Proxy Statement which shall constitute part thereof,
will not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided, however,
that the representations and warranties in this section shall only apply to
statements in or omissions from the Proxy Statement relating to descriptions of
the business of

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Acquired Corporation, its Assets, properties, operations, and capital stock or
to information furnished in writing by Acquired Corporation or its
representatives expressly for inclusion in the Proxy Statement.

5.22 Loans; Adequacy of Allowance for Loan Losses. All reserves for loan
losses shown on the most recent financial statements furnished by Acquired
Corporation have been calculated in accordance with prudent and customary
banking practices and are adequate in all material respects to reflect the risk
inherent in the loans of Acquired Corporation. Acquired Corporation has no
Knowledge of any fact which is likely to require a future material increase in
the provision for loan losses or a material decrease in the loan loss reserve
reflected in such financial statements. Each loan reflected as an Asset on the
financial statements of Acquired Corporation is the legal, valid and binding
obligation of the obligor of each loan, enforceable in accordance with its terms
subject to the effect of bankruptcy, insolvency, reorganization, moratorium, or
other similar laws relating to creditors' rights generally and to general
equitable principles. Acquired Corporation does not have in its portfolio any
loan exceeding its legal lending limit, and except as disclosed on Schedule
5.22, Acquired Corporation has no known significant delinquent, substandard,
doubtful, loss, nonperforming or problem loans.

5.23 Environmental Matters. Except as provided in Schedule 5.23, to the
Knowledge of Acquired Corporation, each Acquired Corporation Company is in
material compliance with all Laws and other governmental requirements relating
to the generation, management, handling, transportation, treatment, disposal,
storage, delivery, discharge, release or emission of any waste, pollution, or
toxic, hazardous or other substance (the "Environmental Laws"), and Acquired
Corporation has no Knowledge that any Acquired Corporation Company has not
complied with all regulations and requirements promulgated by the Occupational
Safety and Health Administration that are applicable to any Acquired Corporation
Company. To the Knowledge of Acquired Corporation, there is no Litigation
pending or threatened with respect to any violation or alleged violation of the
Environmental Laws. To the Knowledge of Acquired Corporation, with respect to
Assets of or owned by any Acquired Corporation Company, including any Loan
Property, (i) there has been no spillage, leakage, contamination or release of
any substances for which the appropriate remedial action has not been completed;
(ii) no owned or leased property is contaminated with or contains any hazardous
substance or waste; and (iii) there are no underground storage tanks on any
premises owned or leased by any Acquired Corporation Company. Acquired
Corporation has no Knowledge of any facts which might suggest that any Acquired
Corporation Company has engaged in any management practice with respect to any
of its past or existing borrowers which could reasonably be expected to subject
any Acquired Corporation Company to any Liability, either directly or
indirectly, under the principles of law as set forth in United States v. Fleet
Factors Corp., 901 F.2d 1550 (11th Cir. 1990) or any similar principles.
Moreover, to the Knowledge of Acquired Corporation, no Acquired Corporation
Company has extended credit, either on a secured or unsecured basis, to any
person or other entity engaged in any activities which would require or requires
such person or entity to obtain any Permits which are required under any
Environmental Law which has not been obtained.

5.24 Transfer of Shares. Acquired Corporation has no Knowledge of any plan
or intention on the part of Acquired Corporation's shareholders to sell or
otherwise dispose of any of the BancGroup Common Stock to be received by them in
the Merger that would reduce such shareholders' ownership to a number of shares
having, in the aggregate, a fair market value of less than fifty (50%) percent
of the total fair market value of Acquired Corporation common stock outstanding
immediately before the Merger.

5.25 Collective Bargaining. There are no labor contracts, collective
bargaining agreements, letters of undertakings or other arrangements, formal or
informal, between any Acquired Corporation Company and any union or labor
organization covering any of Acquired Corporation Company's employees and none
of said employees are represented by any union or labor organization.

5.26 Labor Disputes. To the Knowledge of Acquired Corporation, each
Acquired Corporation Company is in material compliance with all federal and
state laws respecting employment and employment practices, terms and conditions
of employment, wages and hours. No Acquired Corporation Company is or has been
engaged in any unfair labor practice, and, to the Knowledge of Acquired
Corporation, no unfair labor practice complaint against any Acquired Corporation
Company is pending before the National Labor Relations Board. Relations between
management of each Acquired Corporation Company and the employees

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are amicable and there have not been, nor to the Knowledge of Acquired
Corporation, are there presently, any attempts to organize employees, nor to the
Knowledge of Acquired Corporation, are there plans for any such attempts.

5.27 Derivative Contracts. No Acquired Corporation Company is a party to
or has agreed to enter into a swap, forward, future, option, cap, floor or
collar financial contract, or any other interest rate or foreign currency
protection contract or derivative security not included in Acquired
Corporation's financial statements delivered under section 5.4 hereof which is a
financial derivative contract (including various combinations thereof).

ARTICLE 6

ADDITIONAL COVENANTS

6.1 Additional Covenants of BancGroup. BancGroup covenants to and with
Acquired Corporation as follows:

(a) Registration Statement and Other Filings. BancGroup shall prepare
and file with the SEC the Registration Statement on Form S-4 (or such other
form as may be appropriate) and all amendments and supplements thereto, in
form reasonably satisfactory to Acquired Corporation and its counsel, with
respect to the Common Stock to be issued pursuant to this Agreement.
BancGroup shall use reasonable good faith efforts to prepare all necessary
filings with any Agencies which may be necessary for approval to consummate
the transactions contemplated by this Agreement. BancGroup shall provide to
counsel for Acquired Corporation (i) copies of drafts of all filings made
pursuant to this section 6.1(a) in advance of filing, (ii) copies of
documents as filed, and (iii) copies of any correspondence between
BancGroup and any Agencies, including the SEC, respecting the filings made
pursuant to this section 6.1(a).

(b) Blue Sky Permits. BancGroup shall use its best efforts to obtain,
prior to the effective date of the Registration Statement, all necessary
state securities Law or "blue sky" Permits and approvals required to carry
out the transactions contemplated by this Agreement.

(i) As soon as practicable and in any event within forty-five (45)
days after the end of each quarterly period (other than the last
quarterly period) in each fiscal year, consolidated statements of
operations of BancGroup for such period and for the period beginning at
the commencement of the fiscal year and ending at the end of such
quarterly period, and a consolidated statement of financial condition of
BancGroup as of the end of such quarterly period, setting forth in each
case in comparative form figures for the corresponding periods ending in
the preceding fiscal year, subject to changes resulting from year-end
adjustments;

(ii) Promptly upon receipt thereof, copies of all audit reports
submitted to BancGroup by independent auditors in connection with each
annual, interim or special audit of the books of BancGroup made by such
accountants;

(iii) As soon as practicable, copies of all such financial
statements and reports as it shall send to its stockholders and of such
regular and periodic reports as BancGroup may file with the SEC or any
other Agency; and

(iv) With reasonable promptness, such additional financial data as
Acquired Corporation may reasonably request.

(d) No Control of Acquired Corporation by BancGroup. Notwithstanding
any other provision hereof, until the Effective Date, the authority to
establish and implement the business policies of Acquired Corporation shall
continue to reside solely in Acquired Corporation's officers and board of
directors.

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(e) Listing. Prior to the Effective Date, BancGroup shall use its
reasonable efforts to list the shares of BancGroup Common Stock to be
issued in the Merger on the NYSE or other quotations system on which such
shares are primarily traded.

(f) Employee Benefit Matters. On the Effective Date, all employees of
any Acquired Corporation Company shall, at BancGroup's option, either
become employees of the Resulting Corporation or its Subsidiaries or be
entitled to severance benefits in accordance with Colonial Bank's severance
policy as of the date of this Agreement. All employees of any Acquired
Corporation Company who become employees of the Resulting Corporation or
its Subsidiaries on the Effective Date shall be entitled, to the extent
permitted by applicable Law, to participate in all benefit plans of
Colonial Bank to the same extent as Colonial Bank employees, except as
stated otherwise in this section. Employees of any Acquired Corporation
Company who become employees of the Resulting Corporation or its
Subsidiaries on the Effective Date shall be allowed to participate as of
the Effective Date in the medical and dental benefits plan of Colonial Bank
as new employees of Colonial Bank, and the time of employment of such
employees who are employed at least 30 hours per week with any Acquired
Corporation Company as of the Effective Date shall be counted as employment
under such dental and medical plans of Colonial Bank for purposes of
calculating any 30 day waiting period and pre-existing condition
limitations. To the extent permitted by applicable Law, the period of
service with the appropriate Acquired Corporation Company of all employees
who become employees of the Resulting Corporation or its Subsidiaries on
the Effective Date shall be recognized only for vesting and eligibility
purposes under Colonial Bank's benefit plans. In addition, if the Effective
Date falls within an annual period of coverage under any group health plan
or group dental plan of the Resulting Corporation and its Subsidiaries,
each such Acquired Corporation Company employee shall be given credit for
covered expenses paid by that employee under comparable employee benefit
plans of the Acquired Corporation Company during the applicable coverage
period through the Effective Date towards satisfaction of any annual
deductible limitation and out-of-pocket maximum that may apply under that
group health plan or group dental plan of the Resulting Corporation and its
Subsidiaries.

(g) Indemnification. (i) Subject to the conditions set forth in the
succeeding paragraph, for a period of six years after the Effective Date
BancGroup shall, and shall cause Colonial Bank to, indemnify, defend and
hold harmless each person entitled to indemnification from the Acquired
Corporation (each being an "Indemnified Party") against all liabilities
arising out of actions or omissions occurring upon or prior to the
Effective Date (including without limitation the transactions contemplated
by this Agreement) to the extent authorized under the articles of
incorporation and bylaws of Acquired Corporation and Florida law.

(ii) Any Indemnified Party wishing to claim indemnification under
this subsection (g), upon learning of any such liability or Litigation,
shall promptly notify BancGroup thereof. In the event of any such
Litigation (whether arising before or after the Effective Date) (i)
BancGroup or Colonial Bank shall have the right to assume the defense
thereof with counsel reasonably acceptable to such Indemnified Party
and, upon assumption of such defense, BancGroup shall not be liable to
such Indemnified Parties for any legal expenses of other counsel or any
other expenses subsequently incurred by such Indemnified Parties in
connection with the defense thereof, except that if BancGroup or
Colonial Bank elects not to assume such defense or counsel for the
Indemnified Parties advises that there are substantive issues which
raise conflicts of interest between BancGroup and the Indemnified
Parties, the Indemnified Parties may retain counsel satisfactory to
them, and BancGroup or Colonial Bank shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as
statements therefor are received; provided, that BancGroup shall be
obligated pursuant to this subsection to pay for only one firm of
counsel for all Indemnified Parties in any jurisdiction, (ii) the
Indemnified Parties will cooperate in the defense of any such
Litigation; and (iii) BancGroup shall not be liable for any settlement
effected without its prior consent; and provided further that BancGroup
and Colonial Bank shall not have any obligation hereunder to any
Indemnified Party when and if a court of competent jurisdiction shall
determine, and such

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determination shall have become final, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by
applicable Law.

(iii) In consideration of and as a condition precedent to the
effectiveness of the indemnification obligations provided by BancGroup
in this section to a director or officer of the Acquired Corporation,
such director or officer of the Acquired Corporation shall have
delivered to BancGroup on or prior to the Effective Date a letter in
form reasonably satisfactory to BancGroup concerning claims such
directors or officers may have against Acquired Corporation. In the
letter, the directors or officers shall: (i) acknowledge the assumption
by BancGroup as of the Effective Date of all Liability (to the extent
Acquired Corporation is so liable) for claims for indemnification
arising under section 6.1(g) hereof; (ii) affirm that they do not have
nor are they aware of any claims they might have (other than those
referred to in the following clause (iii)) against Acquired Corporation;
(iii) identify any claims or any facts or circumstances of which they
are aware that could give rise to a claim for indemnification under
section 6.1(g)(i) hereof; and (iv) release as of the Effective Date any
and all claims that they may have against any Acquired Corporation
Company other than (A) those referred to in the foregoing clause (iii)
and disclosed in the letter of the director or officer, (B) claims by
third parties which have not yet been asserted against such director or
officer (other than claims arising from facts and circumstances of which
such director or officer is aware but which are not disclosed in such
director or executive officer's letter), (C) claims by third parties
arising from any transaction contemplated by this Agreement or disclosed
in any schedule to this Agreement, and (D) claims by third parties
arising in the ordinary course of business of any Acquired Corporation
Company after the date of the letter.

(iv) Acquired Corporation hereby represents and warrants to
BancGroup that it has no Knowledge of any claim, pending or threatened,
or of any facts or circumstances that could give rise to any obligation
by BancGroup to provide the indemnification required by this section
6.1(g) other than as disclosed in the letters of the directors and
executive officers referred to in section 6.1(g)(iii) hereof or
described in any schedule to this Agreement and claims arising from any
transaction contemplated by this Agreement.

6.2 Additional Covenants of Acquired Corporation. Acquired Corporation
covenants to and with BancGroup as follows:

(a) Operations. (i) Acquired Corporation will conduct its business
and the business of each Acquired Corporation Company in a proper and
prudent manner and will use its best efforts to maintain its relationships
with its depositors, customers and employees. No Acquired Corporation
Company will engage in any material transaction outside the ordinary course
of business or make any material change in its accounting policies or
methods of operation, nor will Acquired Corporation permit the occurrence
of any change or event which would render any of the representations and
warranties in Article 5 hereof untrue in any material respect at and as of
the Effective Date with the same effect as though such representations and
warranties had been made at and as of such Effective Date. Acquired
Corporation will take no action that would prevent or impede the Merger
from qualifying as a reorganization with the meaning of Section 368 of the
Code.

(ii) If requested by BancGroup, Acquired Corporation shall use its
best efforts to cause all officers and directors that own any stock of
Acquired Corporation to execute an acknowledgment that such person has
no present plan, intention, or binding commitment to sell or otherwise
dispose of the BancGroup Common Stock to be received in the Merger
within twelve (12) months after the Effective Date.

(b) Stockholders Meeting; Best Efforts. Acquired Corporation will
cooperate with BancGroup in the preparation of the Registration Statement
and any regulatory filings and will cause the Stockholders Meeting to be
held for the purpose of approving the Merger as soon as practicable after
the effective date of the Registration Statement. Acquired Corporation will
take all steps required by the FBCA to effect the merger of the Bank with
Colonial Bank on the Effective Date, and will provide BancGroup with copies
in advance of any notices sent to the shareholders of the Bank. Acquired
Corporation will use its

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best efforts to bring about the transactions contemplated by this
Agreement, including stockholder approval of this Agreement, as soon as
practicable unless this Agreement is terminated as provided herein.

(c) Prohibited Negotiations. Neither Acquired Corporation nor any of
Acquired Corporation's directors or officers (or any person representing
any of the foregoing) shall solicit or encourage inquiries or proposals
with respect to, furnish any information relating to or participate in any
negotiations or discussions concerning, an Acquisition Proposal other than
as contemplated by this Agreement. Acquired Corporation will notify
BancGroup immediately if any such Acquisition Proposal is received by
Acquired Corporation, if any such information is requested from Acquired
Corporation, or if any such negotiations or discussions are sought to be
initiated with Acquired Corporation, and Acquired Corporation shall
instruct Acquired Corporation's officers, directors, agents or affiliates
or their subsidiaries to refrain from doing any of the above; provided,
however, that Acquired Corporation may communicate information about such
an Acquisition Proposal to its shareholders if and to the extent that legal
counsel provides a written opinion to Acquired Corporation (a copy of which
shall be provided in advance to BancGroup) that it is required to do so in
order to comply with its legal obligations. Acquired Corporation shall
immediately cease and cause to be terminated any existing activities,
discussions, or negotiations with any Persons other than BancGroup
conducted hereto with respect to any of the foregoing.

(d) Director Recommendation. The members of the Board of Directors of
Acquired Corporation agree to support publicly the Merger.

(e) Shareholder Voting. Acquired Corporation shall on the date of
execution of this Agreement obtain and submit to BancGroup an agreement
from the directors of Acquired Corporation and the Bank substantially in
the form set forth in Exhibit A.

(f) Financial Statements and Monthly Status Reports. Acquired
Corporation shall furnish to BancGroup:

(i) As soon as practicable and in any event within 45 days after
the end of each quarterly period (other than the last quarterly period)
in each fiscal year, consolidated statements of operations of Acquired
Corporation for such period and for the period beginning at the
commencement of the fiscal year and ending at the end of such quarterly
period, and a consolidated statement of financial condition of Acquired
Corporation as of the end of such quarterly period, setting forth in
each case in comparative form figures for the corresponding periods
ending in the preceding fiscal year, subject to changes resulting from
year-end adjustments;

(ii) Promptly upon receipt thereof, copies of all audit reports
submitted to Acquired Corporation by independent auditors in connection
with each annual, interim or special audit of the books of Acquired
Corporation made by such accountants;

(iii) As soon a practicable, copies of all such financial
statements and reports as it shall send to its stockholders and of such
regular and periodic reports as Acquired Corporation may file with the
SEC or any other Agency;

(iv) With reasonable promptness, such additional financial data as
BancGroup may reasonably request; and

(v) Within 10 calendar days after the end of each month (or, if the
financial statements referred to in clause (d) below are not then
available, as soon as possible thereafter) commencing with the next
calendar month following the date of this Agreement and ending at the
Effective Date, a written description of (a) the actions taken during
the preceding month with respect to its compliance or non-compliance
with the terms of this section 6.2, together with its then current
estimate of the out-of-pocket costs and expenses incurred or reasonably
accruable in connection with the transactions contemplated by this
Agreement; (b) the status, as of the date of the report, of all existing
or threatened litigation against any Acquired Corporation Company; (c)
copies of minutes of any meeting of the board of directors of any
Acquired Corporation Company and any committee

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thereof occurring in the month for which such report is made, including
all documents presented to the directors at such meetings; and (d)
monthly financial statements, including a balance sheet and income
statement.

(g) Fiduciary Duties. Prior to the Effective Date, (i) no director or
officer (each an "Executive") of any Acquired Corporation Company shall,
directly or indirectly, own, manage, operate, join, control, be employed by
or participate in the ownership, proposed ownership, management, operation
or control of or be connected in any manner with, any business, corporation
or partnership which is competitive to the business of any Acquired
Corporation Company, (ii) all Executives, at all times, shall satisfy their
fiduciary duties to Acquired Corporation and its Subsidiaries, and (iii)
such Executives shall not (except as required in the course of his or her
employment with any Acquired Corporation Company) communicate or divulge
to, or use for the benefit of himself or herself or any other person, firm,
association or corporation, without the express written consent of Acquired
Corporation, any confidential information which is possessed, owned or used
by or licensed by or to any Acquired Corporation Company or confidential
information belonging to third parties which any Acquired Corporation
Company shall be under obligation to keep secret or which may be
communicated to, acquired by or learned of by the Executive in the course
of or as a result of his or her employment with any Acquired Corporation
Company.

(h) Certain Practices. At the request of BancGroup, (i) Acquired
Corporation shall consult with BancGroup and advise BancGroup through its
bank Subsidiary in Orlando of all of the Bank's loan requests over $100,000
that are not single-family residential loan requests or of any other loan
request outside the normal course of business, and (ii) Acquired
Corporation will consult with BancGroup to coordinate various business
issues on a basis mutually satisfactory to Acquired Corporation and
BancGroup. Acquired Corporation and the Bank shall not be required to
undertake any of such activities, however, except as such activities may be
in compliance with existing Law and Regulations.

ARTICLE 7

MUTUAL COVENANTS AND AGREEMENTS

7.1 Best Efforts; Cooperation. Subject to the terms and conditions herein
provided, BancGroup and Acquired Corporation each agrees to use its best efforts
promptly to take, or cause to be taken, all actions and do, or cause to be done,
all things necessary, proper or advisable under applicable Laws or otherwise,
including, without limitation, promptly making required deliveries of
stockholder lists and stock transfer reports and attempting to obtain all
necessary Consents and waivers and regulatory approvals, including the holding
of any regular or special board meetings, to consummate and make effective, as
soon as practicable, the transactions contemplated by this Agreement. The
officers of each Party to this Agreement shall fully cooperate with officers and
employees, accountants, counsel and other representatives of the other Parties
not only in fulfilling the duties hereunder of the Party of which they are
officers but also in assisting, directly or through direction of employees and
other persons under their supervision or control, such as stock transfer agents
for the Party, the other Parties requiring information which is reasonably
available from such Party.

7.2 Press Release. Each Party hereto agrees that, unless approved by the
other Parties in advance, such Party will not make any public announcement,
issue any press release or other publicity or confirm any statements by any
person not a party to this Agreement concerning the transactions contemplated
hereby. Notwithstanding the foregoing, each Party hereto reserves the right to
make any disclosure if such Party, in its reasonable discretion, deems such
disclosure required by Law. In that event, such Party shall provide to the other
Party the text of such disclosure sufficiently in advance to enable the other
Party to have a reasonable opportunity to comment thereon.

7.3 Mutual Disclosure. Each Party hereto agrees to promptly furnish to
each other Party hereto its public disclosures and filings not precluded from
disclosure by Law including but not limited to call reports, Form 8-K, Form 10-Q
and Form 10-K filings, Y-3 applications, reports on Form Y-6, quarterly or
special reports to shareholders, Tax returns, Form S-8 registration statements
and similar documents.

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7.4 Access to Properties and Records. Each Party hereto shall afford the
officers and authorized representatives of the other Party full access to the
Assets, books and records of such Party in order that such other Parties may
have full opportunity to make such investigation as they shall desire of the
affairs of such Party and shall furnish to such Parties such additional
financial and operating data and other information as to its businesses and
Assets as shall be from time to time reasonably requested. All such information
that may be obtained by any such Party will be held in confidence by such party,
will not be disclosed by such Party or any of its representatives except in
accordance with this Agreement, and will not be used by such Party for any
purpose other than the accomplishment of the Merger as provided herein.

7.5 Notice of Adverse Changes. Each Party agrees to give written notice
promptly to the other Party upon becoming aware of the occurrence or impending
occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) would cause or constitute a
material breach of any of its representations, warranties, or covenants
contained herein, and to use its reasonable efforts to prevent or promptly to
remedy the same.

ARTICLE 8

CONDITIONS TO OBLIGATIONS OF ALL PARTIES

The obligations of BancGroup and Acquired Corporation to cause the
transactions contemplated by this Agreement to be consummated shall be subject
to the satisfaction, in the sole discretion of the Party relying upon such
conditions, on or before the Effective Date of all the following conditions,
except as such Parties may waive such conditions in writing:

8.1 Approval by Shareholders. At the Stockholders Meeting, this Agreement
and the matters contemplated by this Agreement shall have been duly approved by
the vote of the holders of not less than the requisite number of the issued and
outstanding voting securities of Acquired Corporation as is required by
applicable Law and Acquired Corporation's articles of incorporation and bylaws.

8.2 Regulatory Authority Approval. Orders, Consents and approvals, in form
and substance reasonably satisfactory to BancGroup and Acquired Corporation,
shall have been entered by the Board of Governors of the Federal Reserve System
and other appropriate bank regulatory Agencies (i) granting the authority
necessary for the consummation of the transactions contemplated by this
Agreement, including the merger of the Bank with Colonial Bank as structured
pursuant to section 2.8 hereof and (ii) satisfying all other requirements
prescribed by Law. No Order, Consent or approval so obtained which is necessary
to consummate the transactions as contemplated hereby shall be conditioned or
restricted in a manner which in the reasonable good faith judgment of the Board
of Directors of BancGroup or Acquired Corporation would so materially adversely
impact the economic benefits of the transaction as contemplated by this
Agreement so as to render inadvisable the consummation of the Merger.

8.3 Litigation. There shall be no pending or threatened Litigation in any
court or any pending or threatened proceeding by any governmental commission,
board or Agency, with a view to seeking or in which it is sought to restrain or
prohibit consummation of the transactions contemplated by this Agreement or in
which it is sought to obtain divestiture, rescission or damages in connection
with the transactions contemplated by this Agreement and no investigation by any
Agency shall be pending or threatened which might result in any such suit,
action or other proceeding.

8.4 Registration Statement. The Registration Statement shall be effective
under the 1933 Act and no stop order suspending the effectiveness of the
Registration Statement shall be in effect; no proceedings for such purpose, or
under the proxy rules of the SEC or any bank regulatory authority pursuant to
the 1934 Act, with respect to the transactions contemplated hereby, shall be
pending before or threatened by the SEC or any bank regulatory authority; and
all approvals or authorizations for the offer of BancGroup Common Stock shall
have been received or obtained pursuant to any applicable state securities Laws,
and no stop order or proceeding with respect to the transactions contemplated
hereby shall be pending or threatened under any such state Law.

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8.5 Tax Opinion. An opinion of Coopers & Lybrand, LLP, shall have been
received in form and substance reasonably satisfactory to the Acquired
Corporation and BancGroup to the effect that (i) the Merger will constitute a
"reorganization" within the meaning of section 368 of the Code; (ii) no gain or
loss will be recognized by BancGroup or Acquired Corporation; (iii) no gain or
loss will be recognized by the shareholders of Acquired Corporation who receive
shares of BancGroup Common Stock except to the extent of any taxable "boot"
received by such persons from BancGroup, and except to the extent of any
dividends received from Acquired Corporation prior to the Effective Date; (iv)
the basis of the BancGroup Common Stock received in the Merger will be equal to
the sum of the basis of the shares of Acquired Corporation common stock
exchanged in the Merger and the amount of gain, if any, which was recognized by
the exchanging Acquired Corporation shareholder, including any portion treated
as a dividend, less the value of taxable boot, if any, received by such
shareholder in the Merger; (v) the holding period of the BancGroup Common Stock
will include the holding period of the shares of Acquired Corporation common
stock exchanged therefor if such shares of Acquired Corporation common stock
were capital assets in the hands of the exchanging Acquired Corporation
shareholder; and (vi) cash received by an Acquired Corporation shareholder in
lieu of a fractional share interest of BancGroup Common Stock will be treated as
having been received as a distribution in full payment in exchange for the
fractional share interest of BancGroup Common Stock which he or she would
otherwise be entitled to receive and will qualify as capital gain or loss
(assuming the Acquired Corporation common stock was a capital asset in his or
her hands as of the Effective Date).

ARTICLE 9

CONDITIONS TO OBLIGATIONS OF ACQUIRED CORPORATION

The obligations of Acquired Corporation to cause the transactions
contemplated by this Agreement to be consummated shall be subject to the
satisfaction on or before the Effective Date of all the following conditions
except as Acquired Corporation may waive such conditions in writing:

9.1 Representations, Warranties and Covenants. Notwithstanding any
investigation made by or on behalf of Acquired Corporation, all representations
and warranties of BancGroup contained in this Agreement shall be true in all
material respects on and as of the Effective Date as if such representations and
warranties were made on and as of such Effective Date, and BancGroup shall have
performed in all material respects all agreements and covenants required by this
Agreement to be performed by it on or prior to the Effective Date.

9.2 Adverse Changes. There shall have been no changes after the date of
the most recent balance sheet provided under section 4.3(a)(i) hereof in the
results of operations (as compared with the corresponding period of the prior
fiscal year), Assets, Liabilities, financial condition or affairs of BancGroup
which in their total effect constitute a Material Adverse Effect, nor shall
there have been any material changes in the Laws governing the business of
BancGroup which would impair the rights of Acquired Corporation or its
shareholders pursuant to this Agreement.

9.3 Closing Certificate. In addition to any other deliveries required to
be delivered hereunder, Acquired Corporation shall have received a certificate
from the President or a Vice President and from the Secretary or Assistant
Secretary of BancGroup dated as of the Closing certifying that:

(a) the Board of Directors of BancGroup has duly adopted resolutions
approving the substantive terms of this Agreement and authorizing the
consummation of the transactions contemplated by this Agreement and such
resolutions have not been amended or modified and remain in full force and
effect;

(b) each person executing this Agreement on behalf of BancGroup is an
officer of BancGroup holding the office or offices specified therein and
the signature of each person set forth on such certificate is his or her
genuine signature;

(c) the certificate of incorporation and bylaws of BancGroup
referenced in section 4.4 hereof remain in full force and effect;

(d) such persons have no knowledge of a basis for any material claim,
in any court or before any Agency or arbitration or otherwise against, by
or affecting BancGroup or the business, prospects,

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condition (financial or otherwise), or Assets of BancGroup which would
prevent the performance of this Agreement or the transactions contemplated
by this Agreement or declare the same unlawful or cause the rescission
thereof;

(e) to such persons' knowledge, the Proxy Statement delivered to
Acquired Corporation's shareholders, or any amendments or revisions thereto
so delivered, as of the date thereof, did not contain or incorporate by
reference any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under which
they were made (it being understood that such persons need not express a
statement as to information concerning or provided by Acquired Corporation
for inclusion in such Proxy Statement); and

(f) the conditions set forth in this Article 9 insofar as they relate
to BancGroup have been satisfied.

9.4 Opinion of Counsel. Acquired Corporation shall have received an
opinion of Miller, Hamilton, Snider & Odom, L.L.C., counsel to BancGroup, dated
as of the Closing, substantially in the form set forth in Exhibit B hereto.

9.5 Fairness Opinion. Acquired Corporation shall have received within five
days prior to the mailing of the Proxy Statement from Austin Associates, Inc. a
letter setting forth its opinion that the Merger Consideration to be received by
the shareholders of Acquired Corporation under the terms of this Agreement is
fair to them from a financial point of view, and such opinion shall not have
been withdrawn as of the Effective Date.

9.6 NYSE Listing. The shares of BancGroup Common Stock to be issued under
this Agreement shall have been approved for listing on the NYSE.

9.7 Other Matters. There shall have been furnished to such counsel for
Acquired Corporation certified copies of such corporate records of BancGroup and
copies of such other documents as such counsel may reasonably have requested for
such purpose.

9.8 Material Events. There shall have been no determination by the board
of directors of Acquired Corporation that the transactions contemplated by this
Agreement have become impractical because of any state of war, declaration of a
banking moratorium in the United States or a general suspension of trading on
the NYSE or any other exchange on which BancGroup Common Stock may be traded.

ARTICLE 10

CONDITIONS TO OBLIGATIONS OF BANCGROUP

The obligations of BancGroup to cause the transactions contemplated by this
Agreement to be consummated shall be subject to the satisfaction on or before
the Effective Date of all of the following conditions except as BancGroup may
waive such conditions in writing:

10.1 Representations, Warranties and Covenants. Notwithstanding any
investigation made by or on behalf of BancGroup, all representations and
warranties of Acquired Corporation contained in this Agreement shall be true in
all material respects on and as of the Effective Date as if such representations
and warranties were made on and as of the Effective Date, and Acquired
Corporation shall have performed in all material respects all agreements and
covenants required by this Agreement to be performed by it on or prior to the
Effective Date.

10.2 Adverse Changes. There shall have been no changes after the date of
the most recent balance sheet provided under section 5.4(a)(i) hereof in the
results of operations (as compared with the corresponding period of the prior
fiscal year), Assets, Liabilities, financial condition, or affairs of Acquired
Corporation which constitute a Material Adverse Effect, nor shall there have
been any material changes in the Laws governing the business of Acquired
Corporation which would impair BancGroup's rights pursuant to this Agreement.

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10.3 Closing Certificate. In addition to any other deliveries required to
be delivered hereunder, BancGroup shall have received a certificate from
Acquired Corporation executed by the President or Vice President and from the
Secretary or Assistant Secretary of Acquired Corporation dated as of the Closing
certifying that:

(a) the Board of Directors of Acquired Corporation has duly adopted
resolutions approving the substantive terms of this Agreement and
authorizing the consummation of the transactions contemplated by this
Agreement and such resolutions have not been amended or modified and remain
in full force and effect;

(b) the shareholders of Acquired Corporation have duly adopted
resolutions approving the substantive terms of the Merger and the
transactions contemplated thereby and such resolutions have not been
amended or modified and remain in full force and effect;

(c) each person executing this Agreement on behalf of Acquired
Corporation is an officer of Acquired Corporation holding the office or
offices specified therein and the signature of each person set forth on
such certificate is his or her genuine signature;

(d) the articles of incorporation and bylaws of Acquired Corporation
and the Bank referenced in section 5.8 hereof remain in full force and
effect and have not been amended or modified since the date hereof;

(e) to such persons' knowledge, the Proxy Statement delivered to
Acquired Corporation's shareholders, or any amendments or revisions thereto
so delivered, as of the date thereof, did not contain or incorporate by
reference any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under which
they were made (it being understood that such persons need only express a
statement as to information concerning or provided by Acquired Corporation
for inclusion in such Proxy Statement); and

(f) the conditions set forth in this Article 10 insofar as they relate
to Acquired Corporation have been satisfied.

10.4 Opinion of Counsel. BancGroup shall have received an opinion of
Smith, Mackinnon, Greeley, Bowdoin & Edwards, P.A., counsel to Acquired
Corporation, dated as of the Closing, substantially as set forth in Exhibit C
hereto.

10.5 Controlling Shareholders. Each shareholder of Acquired Corporation
who may be an "affiliate" of Acquired Corporation, within the meaning of Rule
145 of the general rules and regulations under the 1933 Act shall have executed
and delivered an agreement satisfactory to BancGroup to the effect that such
person shall not make a "distribution" (within the meaning of Rule 145) of the
Common Stock which he receives upon the Effective Date and that such Common
Stock will be held subject to all applicable provisions of the 1933 Act and the
rules and regulations of the SEC thereunder. Acquired Corporation recognizes and
acknowledges that BancGroup Common Stock issued to such persons may bear a
legend evidencing the agreement described above.

10.6 Other Matters. There shall have been furnished to counsel for
BancGroup certified copies of such corporate records of Acquired Corporation and
copies of such other documents as such counsel may reasonably have requested for
such purpose.

10.7 Dissenters. The number of shares as to which shareholders of Acquired
Corporation have exercised dissenters rights of appraisal under section 3.6 does
not exceed 15% of the outstanding shares of common stock of Acquired
Corporation.

10.8 Material Events. There shall have been no determination by the board
of directors of BancGroup that the transactions contemplated by this Agreement
have become impractical because of any state of war, declaration of a banking
moratorium in the United States or general suspension of trading on the NYSE or
any exchange on which BancGroup Common Stock may be traded.

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10.9 Repurchase of Shares. No later than the Closing, BancGroup shall have
repurchased a sufficient number of shares of its Common Stock in open market
transactions or otherwise to be issued pursuant to Section 3.1(a).
Alternatively, if BancGroup shall have decided not to repurchase shares in
accordance with the foregoing sentence, or if a sufficient number of shares
shall not have been repurchased prior to the Closing, at the 1997 annual
meeting, the stockholders of BancGroup shall have approved an increase in the
authorized number of shares of BancGroup Common Stock from 44,000,000 to
100,000,000.

ARTICLE 11

TERMINATION OF REPRESENTATIONS AND WARRANTIES

All representations and warranties provided in Articles 4 and 5 of this
Agreement or in any closing certificate pursuant to Articles 9 and 10 shall
terminate and be extinguished at and shall not survive the Effective Date. All
covenants, agreements and undertakings required by this Agreement to be
performed by any Party hereto following the Effective Date shall survive such
Effective Date and be binding upon such Party. If the Merger is not consummated,
all representations, warranties, obligations, covenants, or agreements hereunder
or in any certificate delivered hereunder relating to the transaction which is
not consummated shall be deemed to be terminated or extinguished, except that
Sections 7.2, 7.4, 13.3, 13.4, Article 11, Article 15 and any applicable
definitions of Article 14, shall survive. Items disclosed in the Exhibits and
Schedules attached hereto are incorporated into this Agreement and form a part
of the representations, warranties, covenants or agreements to which they
relate. Information provided in such Exhibits and Schedules is provided only in
response to the specific section of this Agreement which calls for such
information.

ARTICLE 12

NOTICES

All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given at the
time given or mailed, first class postage prepaid:

(a) If to Acquired Corporation to Robert W. Stickler, First Commerce
Bank of Polk County, 141 East Central Avenue, Winter Haven, Florida 33880,
facsimile (941)293-0733, with copies to John P. Greeley, Esq., Smith,
Mackinnon, Greeley, Bowdoin & Edwards, P.A., Suite 800 Citrus Center, 255
South Orange Avenue, Orlando, Florida 32801, facsimile 407-843-2448, or as
may otherwise be specified by Acquired Corporation in writing to BancGroup.

(b) If to BancGroup, to W. Flake Oakley, IV, One Commerce Street,
Suite 800, Montgomery, Alabama, 36104, facsimile (334) 240-6019, with a
copy to Michael D. Waters, Esq., Miller, Hamilton, Snider & Odom, L.L.C.,
One Commerce Street, Suite 802, Montgomery, Alabama 36104, facsimile (334)
265-4533, or as may otherwise be specified in writing by BancGroup to
Acquired Corporation.

ARTICLE 13

AMENDMENT OR TERMINATION

13.1 Amendment. This Agreement may be amended by the mutual consent of
BancGroup and Acquired Corporation before or after approval of the transactions
contemplated herein by the shareholders of Acquired Corporation.

13.2 Termination. This Agreement may be terminated at any time prior to or
on the Effective Date whether before or after action thereon by the shareholders
of Acquired Corporation, as follows:

(a) by the mutual consent of the respective boards of directors of
Acquired Corporation and BancGroup;

(b) by the board of directors of either Party (provided that the
terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this

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Agreement) in the event of a material breach by the other Party of any
representation or warranty contained in this Agreement which cannot be or
has not been cured within thirty (30) days after the giving of written
notice to the breaching Party of such breach and which breach would provide
the non-breaching Party the ability to refuse to consummate the Merger
under the standard set forth in section 10.1 of this Agreement in the case
of BancGroup and section 9.1 of this Agreement in the case of Acquired
Corporation;

(c) by the board of directors of either Party (provided that the
terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the
event of a material breach by the other Party of any covenant or agreement
contained in this Agreement which cannot be or has not been cured within
thirty (30) days after the giving of written notice to the breaching Party
of such breach, or if any of the conditions to the obligations of such
Party contained in this Agreement in Article 9 as to Acquired Corporation
or Article 10 as to BancGroup shall not have been satisfied in full; or

(d) by the board of directors of either BancGroup or Acquired
Corporation if all transactions contemplated by this Agreement shall not
have been consummated on or prior to November 30, 1997, if the failure to
consummate the transactions provided for in this Agreement on or before
such date is not caused by any breach of this Agreement by the Party
electing to terminate pursuant to this section 13.2(d).

13.3 Damages. In the event of termination pursuant to section 13.2,
Acquired Corporation and BancGroup shall not be liable for damages for any
breach of a covenant, warranty or representation contained in this Agreement
made in good faith, and, in that case, the expenses incurred shall be borne as
set forth in section 15.1 hereof.

13.4 Acquisition Proposal; Termination and Fee. During the term of this
Agreement, if (i) an Acquisition Proposal (other than the Merger contemplated by
this Agreement) is submitted to and approved by the shareholders of Acquired
Corporation at any time prior to the Effective Date; or (ii) an Acquisition
Proposal (other than the Merger contemplated by this Agreement) is received by
Acquired Corporation or is made directly to the shareholders of Acquired
Corporation at any time prior to the termination of this Agreement under Section
13.2(b), (c), or (d) (except for a termination by Acquired Corporation for a
breach of this Agreement by BancGroup) and, in the case of (i) or (ii), such
Acquisition Proposal is closed, then Acquired Corporation shall pay to BancGroup
a termination fee in an amount equal to 10% of the shareholders' equity of
Acquired Corporation as of the end of the month preceding such payment, as
liquidated damages, and not as a penalty, and, upon the payment in full thereof,
this Agreement shall be terminated and no Party shall have any further liability
under this Agreement (except as set forth in Section 13.3). The obligations of
the Parties under this Section 13.4 shall survive the termination of this
Agreement.

ARTICLE 14

DEFINITIONS

(a) The following terms, which are capitalized in this Agreement, shall
have the meanings set forth below for the purpose of this Agreement:

Acquired Corporation....... First Commerce Banks of Florida, Inc., a Florida
corporation.

Acquired Corporation
Company.................. Shall mean Acquired Corporation, the Bank, any
Subsidiary of Acquired Corporation or the Bank, or
any person or entity acquired as a Subsidiary of
Acquired Corporation or the Bank in the future and
owned by Acquired Corporation or the Bank at the
Effective Date.

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Acquired Corporation
Options.................... Options respecting the issuance of a maximum of
182,999 shares of Acquired Corporation common stock
pursuant to Acquired Corporation's stock option
plans.

Acquired Corporation
Stock...................... Shares of common stock, par value $.01 per share,
of Acquired Corporation.

Acquisition Proposal....... Shall mean, with respect to a Party, any tender
offer or exchange offer or any proposal for a
merger, acquisition of all of the stock or assets
of, or other business combination involving such
Party or any of its Subsidiaries or the acquisition
of a substantial equity interest in, or a
substantial portion of the assets of, such Party or
any of its Subsidiaries.

Agencies................... Shall mean, collectively, the Federal Trade
Commission, the United States Department of
Justice, the Board of the Governors of the Federal
Reserve System, the Federal Deposit Insurance
Corporation, the Office of Thrift Supervision, all
state regulatory agencies having jurisdiction over
the Parties and their respective Subsidiaries, HUD,
the VA, the FHA, the GNMA, the FNMA, the FHLMC, the
NYSE, and the SEC.

Agreement.................. Shall mean this Agreement and Plan of Merger and
the Exhibits and Schedules delivered pursuant
hereto and incorporated herein by reference.

Assets..................... Of a Person shall mean all of the assets,
properties, businesses and rights of such Person of
every kind, nature, character and description,
whether real, personal or mixed, tangible or
intangible, accrued or contingent, or otherwise
relating to or utilized in such Person's business,
directly or indirectly, in whole or in part,
whether or not carried on the books and records of
such Person, and whether or not owned in the name
of such Person or any Affiliate of such Person and
wherever located.

BancGroup.................. The Colonial BancGroup, Inc., a Delaware
corporation with its principal offices in
Montgomery, Alabama.

Bank....................... First Commerce Bank of Polk County, a Florida bank.

Closing.................... The closing of the transactions contemplated hereby
as described in section 2.7 of this Agreement.

Code....................... The Internal Revenue Code of 1986, as amended.

Common Stock............... BancGroup's Common Stock authorized and defined in
the restated certificate of incorporation of
BancGroup, as amended.

Consent.................... Any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any
Person pursuant to any Contract, Law, Order, or
Permit.

Contract................... Any written or oral agreement, arrangement,
authorization, commitment, contract, indenture,
instrument, lease, obligation, plan, practice,
restriction, understanding or undertaking of any
kind or character, or other document to which any
Person is a party or that is binding on any Person
or its capital stock, Assets or business.

Default.................... Shall mean (i) any breach or violation of or
default under any Contract, Order or Permit, (ii)
any occurrence of any event that with the passage
of time or the giving of notice or both would
constitute a breach or violation of or default
under any Contract, Order or Permit, or (iii) any

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occurrence of any event that with or without the
passage of time or the giving of notice would give
rise to a right to terminate or revoke, change the
current terms of, or renegotiate, or to accelerate,
increase, or impose any Liability under, any
Contract, Order or Permit.

DGCL....................... The Delaware General Corporation Law.

Effective Date............. Means the date and time at which the Merger becomes
effective as defined in section 2.7 hereof.

Environmental Laws......... Means the laws, regulations and governmental
requirements referred to in section 5.23 hereof.

ERISA...................... The Employee Retirement Income Security Act of
1974, as amended.

Exchange Ratio............. The ratio obtained as set forth in sections 3.1(a)
and 3.1(d).

Exhibits................... A through C, inclusive, shall mean the Exhibits so
marked, copies of which are attached to this
Agreement. Such Exhibits are hereby incorporated by
reference herein and made a part hereof, and may be
referred to in this Agreement and any other related
instrument or document without being attached
hereto.

FBCA....................... The Florida Business Corporation Act

Knowledge.................. Means the actual knowledge of the Chairman,
President, Chief Financial Officer, Chief
Accounting Officer, Chief Credit Officer, General
Counsel or any Senior or Executive Vice President
of BancGroup, in the case of knowledge of
BancGroup, or of Acquired Corporation and the Bank,
in the case of knowledge of Acquired Corporation.

Law........................ Any code, law, ordinance, regulation, reporting or
licensing requirement, rule, or statute applicable
to a Person or its Assets, Liabilities or business,
including those promulgated, interpreted or
enforced by any Agency.

Liability.................. Any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost
or expense (including costs of investigation,
collection and defense), deficiency, guaranty or
endorsement of or by any Person (other than
endorsements of notes, bills, checks, and drafts
presented for collection or deposit in the ordinary
course of business) of any type, whether accrued,
absolute or contingent, liquidated or unliquidated,
matured or unmatured, or otherwise.

Lien....................... Any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation,
infringement, lien, mortgage, pledge, reservation,
restriction, security interest, title retention or
other security arrangement, or any adverse right or
interest, charge, or claim of any nature whatsoever
of, on, or with respect to any property or property
interest, other than (i) Liens for current property
Taxes not yet due and payable, (ii) for depository
institution Subsidiaries of a Party, pledges to
secure deposits and other Liens incurred in the
ordinary course of the banking business, and (iii)
Liens in the form of easements and restrictive
covenants on real property which do not materially
adversely affect the use of such property by the
current owner thereof.

Litigation................. Any action, arbitration, complaint, criminal
prosecution, governmental or other examination or
investigation, hearing, inquiry, administrative or
other proceeding relating to or affecting a Party,
its business, its Assets

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(including Contracts related to it), or the
transactions contemplated by this Agreement.

Loan Property.............. Any property owned by the Party in question or by
any of its Subsidiaries or in which such Party or
Subsidiary holds a security interest, and, where
required by the context, includes the owner or
operator of such property, but only with respect to
such property.

Loss....................... Any and all direct or indirect payments,
obligations, recoveries, deficiencies, fines,
penalties, interest, assessments, losses,
diminution in the value of Assets, damages,
punitive, exemplary or consequential damages
(including, but not limited to, lost income and
profits and interruptions of business),
liabilities, costs, expenses (including without
limitation, reasonable attorneys' fees and
expenses, and consultant's fees and other costs of
defense or investigation), and interest on any
amount payable to a third party as a result of the
foregoing.

material................... For purposes of this Agreement shall be determined
in light of the facts and circumstances of the
matter in question; provided that any specific
monetary amount stated in this Agreement shall
determine materiality in that instance.

Material Adverse Effect.... On a Party shall mean an event, change or
occurrence which has a material adverse impact on
(i) the financial position, Assets, business, or
results of operations of such Party and its
Subsidiaries, taken as a whole, or (ii) the ability
of such Party to perform its obligations under this
Agreement or to consummate the Merger or the other
transactions contemplated by this Agreement,
provided that "material adverse impact" shall not
be deemed to include the impact of (x) changes in
banking and similar laws of general applicability
or interpretations thereof by courts or
governmental authorities, (y) changes in generally
accepted accounting principles or regulatory
accounting principles generally applicable to banks
and their holding companies, and (z) the Merger and
compliance with the provisions of this Agreement on
the operating performance of the Parties.

Merger..................... The merger of Acquired Corporation with BancGroup
as contemplated in this Agreement.

Merger Consideration....... The distribution of BancGroup Common Stock for each
share of Acquired Corporation Stock as provided in
section 3.1(a) hereof.

NYSE....................... The New York Stock Exchange.

Order...................... Any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial
decision or award, ruling, or writ of any federal,
state, local or foreign or other court, arbitrator,
mediator, tribunal, administrative agency or
Agency.

Party...................... Shall mean Acquired Corporation or BancGroup, and
"Parties" shall mean both Acquired Corporation and
BancGroup.

Permit..................... Any federal, state, local, and foreign governmental
approval, authorization, certificate, easement,
filing, franchise, license, notice, permit, or
right to which any Person is a party or that is or
may be binding upon or inure to the benefit of any
Person or its securities, Assets or business.

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Person..................... A natural person or any legal, commercial or
governmental entity, such as, but not limited to, a
corporation, general partnership, joint venture,
limited partnership, limited liability company,
trust, business association, group acting in
concert, or any person acting in a representative
capacity.

Proxy Statement............ The proxy statement used by Acquired Corporation to
solicit the approval of its stockholders of the
transactions contemplated by this Agreement, which
shall include the prospectus of BancGroup relating
to the issuance of the BancGroup Common Stock to
the shareholders of Acquired Corporation.

Registration Statement..... The registration statement on Form S-4, or such
other appropriate form, to be filed with the SEC by
BancGroup, and which has been agreed to by Acquired
Corporation, to register the shares of BancGroup
Common Stock offered to stockholders of the Bank
pursuant to his Agreement, including the Proxy
Statement.

Resulting Corporation...... BancGroup, as the surviving corporation resulting
from the Merger.

SEC........................ United States Securities and Exchange Commission.

Stockholders............... Meeting The special meeting of stockholders of
Acquired Corporation called to approve the
transactions contemplated by this Agreement.

Subsidiaries............... Shall mean all those corporations, banks,
associations, or other entities of which the entity
in question owns or controls 5% or more of the
outstanding equity securities either directly or
through an unbroken chain of entities as to each of
which 5% or more of the outstanding equity
securities is owned directly or indirectly by its
parent; provided, however, there shall not be
included any such entity acquired through
foreclosure or any such entity the equity
securities of which are owned or controlled in a
fiduciary capacity.

Tax or Taxes............... Means any federal, state, county, local, foreign,
and other taxes, assessments, charges, fares, and
impositions, including interest and penalties
thereon or with respect thereto.

1933 Act................... The Securities Act of 1933, as amended.

1934 Act................... The Securities Exchange Act of 1934, as amended.

ARTICLE 15

MISCELLANEOUS

15.1 Expenses. Each Party hereto shall bear its own legal, auditing,
trustee, investment banking, regulatory and other expenses in connection with
this Agreement and the transactions contemplated hereby.

15.2 Benefit. This Agreement shall inure to the benefit of and be binding
upon Acquired Corporation and BancGroup, and their respective successors. This
Agreement shall not be assignable by any Party without the prior written consent
of the other Party.

15.3 Governing Law. This Agreement shall be governed by, and construed in
accordance with the Laws of the State of Alabama.

15.4 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to constitute an original. Each such counterpart shall
become effective when one counterpart has been signed by each Party thereto.

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15.5 Headings. The headings of the various articles and sections of this
Agreement are for convenience of reference only and shall not be deemed a part
of this Agreement or considered in construing the provisions thereof.

15.6 Severability. Any term or provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining terms and provisions thereof or affecting the
validity or enforceability of such provision in any other jurisdiction, and if
any term or provision of this Agreement is held by any court of competent
jurisdiction to be void, voidable, invalid or unenforceable in any given
circumstance or situation, then all other terms and provisions, being severable,
shall remain in full force and effect in such circumstance or situation and the
term or provision shall remain valid and in effect in any other circumstances or
situation.

15.7 Construction. Use of the masculine pronoun herein shall be deemed to
refer to the feminine and neuter genders and the use of singular references
shall be deemed to include the plural and vice versa, as appropriate. No
inference in favor of or against any Party shall be drawn from the fact that
such Party or such Party's counsel has drafted any portion of this Agreement.

15.8 Return of Information. In the event of termination of this Agreement
prior to the Effective Date, each Party shall return to the other, without
retaining copies thereof, all confidential or non-public documents, work papers
and other materials obtained from the other Party in connection with the
transactions contemplated in this Agreement and shall keep such information
confidential, not disclose such information to any other person or entity, and
not use such information in connection with its business.

15.9 Equitable Remedies. The parties hereto agree that, in the event of a
breach of this Agreement by either Party, the other Party may be without an
adequate remedy at law owing to the unique nature of the contemplated
transactions. In recognition thereof, in addition to (and not in lieu of) any
remedies at law that may be available to the non-breaching Party, the
non-breaching Party shall be entitled to obtain equitable relief, including the
remedies of specific performance and injunction, in the event of a breach of
this Agreement by the other Party, and no attempt on the part of the
non-breaching Party to obtain such equitable relief shall be deemed to
constitute an election of remedies by the non-breaching Party that would
preclude the non-breaching Party from obtaining any remedies at law to which it
would otherwise be entitled.

15.10 Attorneys' Fees. If any Party hereto shall bring an action at law or
in equity to enforce its rights under this Agreement (including an action based
upon a misrepresentation or the breach of any warranty, covenant, agreement or
obligation contained herein), the prevailing Party in such action shall be
entitled to recover from the other Party its costs and expenses incurred in
connection with such action (including fees, disbursements and expenses of
attorneys and costs of investigation).

15.11 No Waiver. No failure, delay or omission of or by any Party in
exercising any right, power or remedy upon any breach or Default of any other
Party shall impair any such rights, powers or remedies of the Party not in
breach or Default, nor shall it be construed to be a wavier of any such right,
power or remedy, or an acquiescence in any similar breach or Default; nor shall
any waiver of any single breach or Default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any Party of any
provisions of this Agreement must be in writing and be executed by the Parties
to this Agreement and shall be effective only to the extent specifically set
forth in such writing.

15.12 Remedies Cumulative. All remedies provided in this Agreement, by law
or otherwise, shall be cumulative and not alternative.

15.13 Entire Contract. This Agreement and the documents and instruments
referred to herein constitute the entire contract between the parties to this
Agreement and supersede all other understandings with respect to the subject
matter of this Agreement.

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IN WITNESS WHEREOF, Acquired Corporation and BancGroup have caused this
Agreement to be signed by their respective duly authorized officers as of the
date first above written.

<TABLE>
<S> <C>
ATTEST: FIRST COMMERCE BANKS OF FLORIDA, INC.

/s/ J. JEFFREY SEALE /s/ ROBERT W. STICKLER, JR.
- ----------------------------------------------------- -----------------------------------------------------
By: J. Jeffrey Seale By: Robert W. Stickler, Jr.
Its: Vice President, Secretary & Controller Its: Vice Chairman, President & CEO

(CORPORATE SEAL)

ATTEST: THE COLONIAL BANCGROUP, INC.

/s/ TERESA SKIPPER /s/ ROBERT E. LOWDER
- ----------------------------------------------------- -----------------------------------------------------
By: Teresa Skipper By: Robert E. Lowder
Its: Assistant Secretary Its: Chairman, President & CEO

(CORPORATE SEAL)
</TABLE>

A-31
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APPENDIX B

April , 1997

Board of Directors
First Commerce Banks of Florida, Inc.
141 Central Avenue East
Winter Haven, FL 33880

Members of the Board:

You have requested our opinion as to the fairness, from a financial point
of view, to First Commerce Banks of Florida, Inc. ("First Commerce") and its
shareholders of the terms of the Agreement and Plan of Merger dated March 24,
1997 ("Agreement") by and among First Commerce and The Colonial BancGroup, Inc.
("BancGroup"). The terms of the Agreement provide for the merger of First
Commerce with and into BancGroup.

The terms of the Agreement provide for an Exchange Ratio of 0.4326 shares
of BancGroup Common Stock for each outstanding share of First Commerce, provided
that the Market Value (as defined in the Agreement) of BancGroup is not less
than $19.35 and nor more than $25.16 per share. This corresponds to per share
consideration for each First Commerce share of between $8.37 and $10.88. If the
Market Value of BancGroup is less than $19.35, the Exchange Ratio shall be
increased to provide for a minimum per share consideration of $8.37 for each
First Commerce share. If the Market Value of BancGroup is greater than $25.16,
the Exchange Ratio shall be decreased to provide for a maximum per share
consideration of $10.88 for each First Commerce share. If BancGroup publicly
announces prior to the Effective Date that it has entered into an agreement
pursuant to which it will be acquired, the Exchange Ratio shall be determined by
disregarding whether the Market Value is greater than $25.16 per share.
BancGroup will pay cash for fractional shares. The Agreement further provides
that BancGroup shall assume all First Commerce options and warrants adjusted for
the Exchange Ratio.

In carrying out our engagement, we have reviewed and analyzed material
bearing upon the financial and operating condition of First Commerce and
BancGroup, including but not limited to the following: (i) the Proxy Statement
and Prospectus; (ii) the financial statements of First Commerce and BancGroup
for the period 1992 through 1996; (iii) certain other publicly available
information regarding First Commerce and BancGroup; (iv) publicly available
information regarding the performance of certain other companies whose business
activities were believed by Austin Associates to be generally comparable to
those of First Commerce and BancGroup; (v) the financial terms, to the extent
publicly available, of certain comparable transactions; and (vi) such other
analysis and information as we deemed relevant.

In our review and analysis, we relied upon and assumed the accuracy and
completeness of the financial and other information provided to us or publicly
available, and have not attempted to verify the same. We have made no
independent verification as to the status of individual loans made by First
Commerce or BancGroup, and have instead relied upon representations and
information concerning loans of First Commerce and BancGroup in the aggregate.
In rendering our opinion, we have assumed that the transaction will be a
tax-free reorganization with no material adverse tax consequences to First
Commerce or BancGroup, or to First Commerce shareholders receiving BancGroup
stock. In addition, we have assumed in the course of obtaining the necessary
regulatory approvals for the transaction, no condition will be imposed that will
have a material adverse effect on the contemplated benefits of the transaction
to First Commerce and its shareholders.

Based upon our analysis and subject to the qualifications described herein,
we believe that as of the date of this letter, the terms of the Agreement are
fair, from a financial point of view, to First Commerce and its shareholders.

For our services in rendering this opinion, First Commerce will pay us a
fee and indemnify us against certain liabilities.

Austin Associates, Inc.
<PAGE> 151

APPENDIX C

607.1301 DISSENTER'S RIGHTS; DEFINITIONS. -- The following definitions
apply to sec.sec. 607.1302 and 607.1302 and 607.132:

(1) "Corporation" means the issuer of the shares held by a dissenting
shareholder before the corporate action or the surviving or acquiring
corporation by merger or share exchange of that issuer.

(2) "Fair value," with respect to a dissenter's shares, means the
value of the shares as of the close of business on the day prior to the
shareholders' authorization date, excluding any appreciation or
depreciation in anticipation of the corporate action unless exclusion would
be inequitable.

(3) "Shareholders' authorization date" means the date on which the
shareholders' vote authorizing the proposed action was taken, the date on
which the corporation received written consents without a meeting from the
requisite number of shareholders in order to authorize the action, or, in
the case of a merger pursuant to sec. 607.1104, the day prior to the date
on which a copy of the plan of merger was mailed to each shareholder of
record of the subsidiary corporation.

607.1302 RIGHT OF SHAREHOLDERS TO DISSENT. -- (1) Any shareholder has the
right to dissent from, and obtain payment of the fair value of his shares in the
event of, any of the following corporate actions:

(a) Consummation of a plan of merger to which the corporation is a
party:

1. If the shareholder is entitled to vote on the merger, or

2. If the corporation is a subsidiary that is merged with its
parent under sec. 607.1104, and the shareholders would have been
entitled to vote on action taken, except for the applicability of
sec. 607.1104;

(b) Consummation of a sale or exchange of all, or substantially all,
of the property of the corporation, other than in the usual and regular
course of business, if the shareholder is entitled to vote on the sale or
exchange pursuant to sec. 607.1202, including a sale in dissolution but not
including a sale pursuant to court order or a sale of cash pursuant to a
plan by which all or substantially all of the net proceeds of the sale will
be distributed to the shareholders within 1 year after the date of sale;

(d) Consummation of a plan of share exchange to which the corporation
is a party as the corporation the shares of which will be acquired, if the
shareholder is entitled to vote on the plan;

(e) Any amendment of the articles of incorporation if the shareholder
is entitled to vote on the amendment and if such amendment would adversely
affect such shareholder by:

1. Altering or abolishing any preemptive rights attached to any of
his shares;

2. Altering or abolishing the voting rights pertaining to any of
his shares, except as such rights may be affected by the voting rights
of new shares then being authorized of any existing or new class or
series of shares;

3. Effecting an exchange, cancellation, or reclassification of any
of his shares, when such exchange, cancellation, or reclassification
would alter or abolish his voting rights or alter his percentage or
equity in the corporation, or effecting a reduction or cancellation of
accrued dividends or other arrearages in respect to such shares;

4. Reducing the stated redemption price of any of his redeemable
shares, altering or abolishing any provision relating to any sinking
fund for the redemption or purchase of any of his shares, or making any
of his shares subject to redemption when they are not otherwise
redeemable;

5. Making noncumulative, in whole or in part, dividends of any of
his preferred shares which had theretofore been cumulative;

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6. Reducing the stated dividend preference to any of his preferred
shares; or

7. Reducing any stated preferential amount payable on any of his
preferred shares upon voluntary or involuntary liquidation; or

(f) Any corporate action taken, to the extent the articles of
incorporation provide that a voting or nonvoting shareholder is entitled to
dissent and obtain payment for his shares.

(2) A shareholder dissenting from any amendment specified in paragraph
(1)(e) has the right to dissent only as to those of his shares which are
adversely affected by the amendment.

(3) A Shareholder may dissent as to less than all the shares registered in
his name. In that event, his rights shall be determined as if the shares as to
which he has dissented and his other shares were registered in the names of
different shareholders.

(4) Unless the articles of incorporation otherwise provide, this section
does not apply with respect to a plan of merger or share exchange or a proposed
sale or exchange of property, to the holders of shares of any class or series
which, on the record date fixed to determine the shareholders entitled to vote
at the meeting of shareholders at which such action is to be acted upon or to
consent to any such action without a meeting, were either registered on a
national securities exchange or designated as a national market system security
on a interdealer quotation system by the National Association of Securities
Dealers, Inc., or held of record by not fewer than 2,000 shareholders.

(5) A shareholder entitled to dissent and obtain payment for his shares
under this section may not challenge the corporate action creating his
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.

607.1320 PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS. -- (1)(a) If a
proposed corporate section creating dissenters' rights under sec. 607.1320 is
submitted to a vote at a shareholders' meeting, the meeting notice shall state
that shareholders are or may be entitled to assert dissenters' rights and be
accompanied by a copy of sec.sec. 607.1301, 607.1302, and 607.1320. A
shareholder who wishers to assert dissenter's rights shall:

1. Deliver to the corporation before the vote is taken written notice
of his intent to demand payment for his shares if the proposed action is
effectuated, and

2. Not vote his shares in favor of the proposed action. A proxy or
vote against the proposed action does not constitute such a notice of
intent to demand payment.

(b) If proposed corporate action creating dissenters' rights under
sec. 607.1302 is effectuated by written consent without a meeting, the
corporation shall deliver a copy of sec.sec. 607.1301, 607,1302, and 607.1320 to
each shareholder simultaneously with any request for his written consent or, if
such a request is not made, within 10 days after the date the corporation
received written consents without a meeting from the requisite number of
shareholders necessary to authorize the action.

(2) Within 10 days after the shareholders' authorization date, the
corporation shall give written notice of such authorization or consent or
adoption of the plan of merger, as the case may be, to each shareholder who
filed a notice of intent to demand payment for his shares pursuant to paragraph
(1)(a) or, in the case of action authorized by written consent, to each
shareholder, excepting any who voted for, or consented in writing to, the
proposed action.

(3) Within 20 days after the giving of notice to him, any shareholder who
elects to dissent shall file with the corporation a notice of such election,
stating his name and address, the number, classes, and series of shares. Any
shareholder failing to file such election to dissent within the period set forth
shall be bound by the terms of the proposed corporate action. Any shareholder
filing an election to dissent shall deposit his certificates for certificated
shares with the corporation simultaneously with the filing of the election to
dissent. The corporation may restrict the transfer of uncertificated shares from
the date the shareholder's election to dissent is filed with the corporation.

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(4) Upon filing a notice of election to dissent, the shareholder shall
thereafter be entitled only to payment as provided in this section and shall not
be entitled to vote or to exercise any other rights of a shareholder. A notice
of election may be withdrawn in writing by the shareholder at any time before an
offer is made by the corporation, as provided in subsection (5), to pay for his
shares. After such offer, no such notice of election may be withdrawn unless the
corporation consents thereto. However, the right of such shareholder to be paid
the fair value of his shares shall cease, and he shall be reinstated to have all
right of such shareholder to be paid the fair value of his shares shall cease,
and he shall be reinstated to have all his rights as a shareholder as of the
filing of his notice of election, including any intervening preemptive rights
and the right to payment of any intervening dividend or other distribution or,
if any such rights have expired or any such dividend or distribution other than
in cash has been completed, in lieu thereof, at the election of the corporation,
the fair value thereof in cash as determined by the board as of the time of such
expiration or completion, but without prejudice otherwise to any corporate
proceeding that may have been taken in the interim, if:

(a) Such demand is withdrawn as provided in this section;

(b) The proposed corporate action is abandoned or rescinded or the
shareholders revoke the authority to effect such action;

(c) No demand or petition for the determination of fair value by a
court has been made or filed within the time provided in this section; or

(d) A court of competent jurisdiction determines that such shareholder
is not entitled to the relief provided by this section.

(5) Within 10 days after the expiration of the period in which shareholders
may file their notices of election to dissent, or within 10 days after such
corporate action is effected, whichever is later (but in no case later than 90
days from the shareholders' authorization date), the corporation shall make a
written offer to each dissenting shareholder who has made demand as provided in
this section to pay an amount the corporation estimates to be the fair value for
such shares. If the corporate action has not been consummated before the
expiration of the 90-day period after the shareholders' authorization date, the
offer may be made conditional upon the consummation of such action. Such notice
and offer shall be accompanied by:

(a) A balance sheet of the corporation, the shares of which the
dissenting shareholder holds, as of the latest available date and not more
than 12 months prior to the making of such offer; and

(b) A profit and loss statement of such corporation for the 12-month
period ended on the date of such balance sheet or, if the corporation was
not in existence throughout such 12-month period, for the portion thereof
during which it was in existence.

(6) If within 30 days after the making of such offer any shareholder
accepts the same, payment for his shares shall be made within 90 days after the
making of such offer or the consummation of the proposed action, whichever is
later. Upon payment of the agreed value, the dissenting shareholder shall cease
to have any interest in such shares.

(7) If the corporation fails to make such offer within the period specific
therefor in subsection (5) or if it makes the offer and any dissenting
shareholder or shareholders fail to accept the same within the period of 30 days
thereafter, then the corporation, within 30 days after receipt of written demand
from any dissenting shareholder given within 60 days after the date on which
such corporate action was effected, shall, or at its election at any time within
such period of 60 days may, file an action in any court of competent
jurisdiction in the county in this state where the registered office of the
corporation is located requesting that the fair value of such shares be
determined. The court shall also determine whether each dissenting shareholder,
as to whom the corporation requests the court to make such determination, is
entitled to receive payment for his shares. If the corporation fails to
institute the proceeding as herein provided, any dissenting shareholders
(whether or not residents of this state), other than shareholders who have
agreed with the corporation as to the value of their shares, shall be made
parties to the proceeding as an action against their shares. The corporation
shall serve a copy of the initial pleading in such proceeding upon each
dissenting shareholder who is a resident of

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this state in the manner provided by law for the service of a summons and
complaint and upon each nonresident dissenting shareholder either by registered
or certified mail and publication or in such other manner as is permitted by
law. The jurisdiction of the court is plenary and exclusive. All shareholders
who are proper parties to the proceeding are entitled to judgment against the
corporation for the amount of the fair value of their shares. The court may, if
it so elects, appoint one or more persons as appraisers to receive evidence and
recommend a decision on the question of fair value. The appraisers shall have
such power and authority as is specified in the order of their appointment or an
amendment thereof. The corporation shall pay each dissenting shareholder the
amount found to be due him within 10 days after final determination of the
proceedings. Upon payment of the judgment, the dissenting shareholder shall
cease to have any interest in such shares.

(8) The judgment may, at the discretion of the court, include a fair rate
of interest, to be determined by the court.

(9) The costs and expenses of any such proceeding shall be determined by
the court and shall be assessed against the corporation, but all or any part of
such costs and expenses may be apportioned and assessed as the court deems
equitable against any or all of the dissenting shareholders who are parties to
the proceeding, to whom the corporation has made an offer to pay for the shares,
if the court finds that action of such shareholders in failing to accept such
offer was arbitrary, vexatious, or not in good faith. Such expenses shall
include reasonable compensation for, and reasonable expenses of, the appraisers,
but shall exclude the fees and expenses of counsel for, and experts employed by,
any party. If the fair value of the shares, as determined, materially exceeds
the amount which the corporation offered to pay therefor or if no offer was
made, the court in its discretion may award to any shareholder who is a party to
the proceeding such sum as the court determines to be reasonable compensation to
any attorney or expert employed by the shareholder in the proceeding.

(10) Shares acquired by a corporation pursuant to payment of the agreed
value thereof or pursuant to payment of the judgment entered therefor, as
provided in this action, may be held and disposed of by such corporation as
authorized but unissued shares of the corporation, except that, in the case of a
merger, they may be held and disposed of as the plan of merger otherwise
provides. The shares of the surviving corporation into which the shares of such
dissenting shareholders would have been converted had they assented to the
merger shall have the status of authorized but unissued shares of the surviving
corporation.

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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Pursuant to section 145 of the Delaware General Corporation Law, as
amended, and the Restated Certificate of Incorporation of the Registrant,
officers, directors, employees, and agents of the Registrant are entitled to
indemnification against liabilities incurred while acting in such capacities on
behalf of the Registrant, including reimbursement of certain expenses. In
addition, the Registrant maintains an officers and directors insurance policy
pursuant to which certain officers and all directors of the Registrant are
entitled to indemnification against certain liabilities, including reimbursement
of certain expenses, and the Registrant has indemnity agreements
("Indemnification Agreements") with certain officers and all of its directors
pursuant to which such persons may be indemnified by the Registrant against
certain liabilities, including expenses.

The Indemnification Agreements are intended to provide additional
indemnification to directors and officers of BancGroup beyond the specific
provisions of the Delaware General Corporation Law. Under the Delaware General
Corporation Law, a company may indemnify its directors and officers in
circumstances other than those under which indemnification and the advance of
expenses are expressly permitted by applicable statutory provisions.

Under the Delaware General Corporation Law, a director, officer,
employee or agent of a corporation (i) must be indemnified by the corporation
for all expenses incurred by him (including attorneys' fees) when he is
successful on the merits or otherwise in defense of any action, suit or
proceeding brought by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, (ii) may be indemnified by the corporation
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement of any such proceeding (other than a proceeding by or in the right
of the corporation) even if he is not successful on the merits if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interest of the corporation (and, in the case of a criminal proceeding, had
no reasonable cause to believe his conduct was unlawful), and (iii) may be
indemnified by the corporation for expenses (including attorneys' fees) incurred
by him in the defense or settlement of a proceeding brought by or in the right
of the corporation, if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation;
provided that no indemnification may be made under the circumstances described
in clause (iii) if the director, officer, employee or agent is adjudged liable
to the corporation, unless a court determines that, despite the adjudication of
liability but in view of all of the circumstances, he is fairly and reasonably
entitled to indemnification for the expenses which the court shall deem proper.
The indemnification described in clauses (ii) and (iii) above (unless ordered by
a court) may be made only as authorized in a specific case upon determination by
(i) a majority of a quorum of disinterested directors, (ii) independent legal
counsel in a written opinion, or (iii) the stock holders, that indemnification
is proper in the circumstances because the applicable
<PAGE> 156
standard of conduct has been met. Expenses (including attorneys' fees) incurred
by an officer or director in defending a proceeding may be advanced by the
corporation prior to the final disposition of the proceeding upon receipt of an
undertaking by or on behalf of the director or officer to repay the advance if
it is ultimately determined that he is not entitled to be indemnified by the
corporation. Expenses (including attorneys' fees) incurred by other employees
and agents may be advanced by the corporation upon terms and conditions deemed
appropriate by the board of directors.

The indemnification provided by the Delaware General Corporation Law
has at least two limitations that are addressed by the Indemnification
Agreements: (i) BancGroup is under no obligation to advance expenses to a
director or officer, and (ii) except in the case of a proceeding in which a
director or officer is successful on the merits or otherwise, indemnification of
a director or officer is discretionary rather than mandatory.

The Indemnification Agreements, therefore, cover any and all expenses
(including attorneys' fees and all other charges paid or payable in connection
therewith) incurred in connection with investigating, defending, being a witness
or participating in (including an appeal), or preparing to defend, be a witness
in or participate in, any threatened, pending or completed action, suit or
proceeding, or any inquiry or investigation, whether civil, criminal,
administrative or otherwise, related to the fact that such director or officer
is or was a director, officer, employee or agent of BancGroup or is or was
serving at the request of BancGroup as a director, officer, employee, agent,
partner, committee member or fiduciary of another corporation, partnership,
joint venture, employee benefit plan, trust or other enterprise, or by reason of
anything done or not done by such director or officer in any such capacity.

The Indemnification Agreements also provide for the prompt advancement
of all expenses incurred in connection with any proceeding and obligate the
director or officer to reimburse BancGroup for all amounts so advanced if it is
subsequently determined, as provided in the Indemnification Agreements, that the
director or officer is not entitled to indemnification.

The Indemnification Agreements further provide that the director or
officer is entitled to indemnification for, and advancement of, all expenses
(including attorneys' fees) incurred in any proceeding seeking to collect from
BancGroup an indemnity claim or advancement of expenses under the
Indemnification Agreements, BancGroup's Certificate of Incorporation, or the
Delaware General Corporation Law, regardless of whether the director or officer
is successful in such proceeding.

The Indemnification Agreements impose upon BancGroup the burden of
proving that the director or officer is not entitled to indemnification in any
particular case, and the Indemnification Agreements negate certain presumptions
which might otherwise be drawn against a director or officer in certain
circumstances. Further, the Indemnification Agreements provide that if BancGroup
pays a director or officer pursuant to an Indemnification Agreement, BancGroup
will be subrogated to such director's or officer's rights to recover from third
parties.
<PAGE> 157
The Indemnification Agreements stipulate that a director's or officer's
rights under such contracts are not exclusive of any other indemnity rights a
director or officer may have; however, the Indemnification Agreements prevent
double payment. The Indemnification Agreements require the maintenance of
directors' and officers' liability insurance if such insurance can be maintained
on terms, including rates, satisfactory to BancGroup.

The benefits of the Indemnification Agreements would not be available
if (i) the action with respect to which indemnification is sought was initiated
or brought voluntarily by the officer or director (other than an action to
enforce the right to indemnification under the Indemnification Agreements); (ii)
the officer or director is paid for such expense or liability under an insurance
policy; (iii) the proceeding is for an accounting of profits pursuant to Section
16(b) of the Securities Exchange Act of 1934, as amended; (iv) the conduct of
the officer or director is adjudged as constituting an unlawful personal
benefit, or active or deliberate dishonesty or willful fraud or illegality; or
(v) a court determines that indemnification or advancement of expenses is
unlawful under the circumstances.

The Indemnification Agreements would provide indemnification for
liabilities arising under the Securities Act of 1933, as amended. BancGroup has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in such act and is,
therefore, unenforceable.

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) The following is a list of exhibits that are included in Part
II of the Registration Statement. Such exhibits are separately
indexed elsewhere in the Registration Statement.

DESCRIPTION

Exhibit 2 Plan of acquisition, reorganization, arrangement, liquidation
of successor:

(A) Agreement and Plan of Merger between The Colonial BancGroup,
Inc. and First Commerce Banks of Florida, Inc., dated as of
March 24, 1997, included in the Prospectus portion of this
Registration Statement at Appendix A and incorporated herein
by reference.

(B) First Commerce 1992 Stock Option Plan for Directors

(D) First Commerce Stock Purchase Warrants

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Exhibit 4 Instruments defining the rights of security holders:

(A)(1) Article 4 of the Restated Certificate of Incorporation of the
Registrant filed as Exhibit 4.1 to the Registrant's Current
Report on Form 8-K, dated February 21, 1995, and incorporated
herein by reference.

(A)(2) Amendment to Article 4 of Registrant's Restated Certificate of
Incorporation, dated April 16, 1997.

(B) Article II of the Bylaws of the Registrant filed as Exhibit
4.2 to the Registrant's Current Report on Form 8-K, dated
February 21, 1995, and incorporated herein by reference.

(C) Dividend Reinvestment and Class A Common Stock Purchase Plan
of the Registrant dated January 15, 1986, and Amendment No. 1
thereto dated as of June 10, 1986, filed as Exhibit 4(C) to
the Registrant's Registration Statement on Form S-4 (File No.
33-07015), effective July 15, 1986, and incorporated herein by
reference.

(D) Trust Indenture dated as of March 25, 1986, included as
Exhibit 4 to the Registrant's Amendment No. 1 to Registration
Statement on Form S-2, file number 33-4004, effective March
25, 1986, and incorporated herein by reference.

(E) All other instruments defining the rights of holders of
long-term debt of the Registrant and its subsidiaries - not
filed pursuant to clause 4(iii) of Item 601(b) of Regulation
S-K, to be furnished upon request of the Commission.

Exhibit 5 Opinion of Miller, Hamilton, Snider & Odom, L.L.C. as to
certain Delaware law issues of the securities being
registered.

Exhibit 8 Tax Opinion of Coopers & Lybrand, L.L.P.

Exhibit 23 Consents of experts and counsel:

(A) Consents of Coopers & Lybrand, L.L.P.

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<PAGE> 159
(B) Consent of Miller, Hamilton, Snider & Odom, L.L.C.

(D) Consent of Austin Associates, Inc.

(E) Consent of Smith, Mackinnon, Greeley, Bowdoin & Edwards, P.A.

Exhibit 24 Power of Attorney, filed as Exhibit 24 to the registrant's
Registration Statement on Form S-4, Registration No.
333-20291, and incorporated herein by reference.

Exhibit 99 Additional exhibits:

(A) Form of Proxy of First Commerce

(b) Financial Statement Schedules

The financial statement schedules required to be included
pursuant to this Item are not included herein because they are
not applicable or the required information is shown in the
financial statements or notes thereto.

ITEM 22. UNDERTAKINGS.

(a) The undersigned hereby undertakes as follows as required by
Item 512 of Regulation S-K:

(1) That prior to any public reoffering of the securities
registered hereunder through use of a prospectus
which is a part of this Registration Statement, by
any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus
will contain the information called for by the
applicable registration form with respect to
reofferings by persons who may be deemed
underwriters, in addition to the information called
for by the other Items of the applicable form.

(2) That every prospectus (i) that is filed pursuant to
paragraph (1) immediately above, or (ii) that
purports to meet the requirements of section 10(a)(3)
of the Act and is used in connection with an offering
of securities subject to Rule 415, will be filed as a
part of an amendment to the Registration Statement
and will not be used until

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such amendment is effective, and that, for purposes
of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to
such securities offered therein, and the offering of
such securities at that time shall be deemed to be
the initial bona fide offering thereof.

(3) Insofar as indemnification for liabilities arising
under the Act may be permitted to directors,
officers, and controlling persons of the Registrant,
the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such
indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by the Registrant
of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the
successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling
person in connection with the securities being
registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as
expressed in the Act and will be governed by the
final adjudication of such issue.

(b) The undersigned Registrant hereby undertakes to respond to
requests for information that is incorporated by reference
into the prospectus pursuant to Items 4, 10(b), 11, or 13 of
Form S-4, within one business day of receipt of such request,
and to send the incorporated documents by first class mail or
other equally prompt means. This includes information
contained in documents filed subsequent to the effective date
of the Registration Statement through the date of responding
to the request.

(c) The undersigned Registrant hereby undertakes to supply by
means of a post-effective amendment all information concerning
a transaction, and the company being acquired involved
therein, that was not the subject of and included in the
Registration Statement when it became effective.

(d) The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
Registration Statement:

(i) To include any prospectus required by
section 10(a)(3) of the Securities Act of
1933;

7
<PAGE> 161
(ii) To reflect in the prospectus any facts or
events arising after the effective date of
the Registration Statement (or the most
recent post-effective amendment thereof)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the Registration
Statement;

(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in the Registration
Statement or any material change to such
information in the Registration Statement;

(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration relating to the securities offered
therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide
offering thereof.

(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.

(e) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrant's annual report
pursuant to section 13(a) or section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section
15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the Registration Statement shall
be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.

8
<PAGE> 162
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Montgomery,
Alabama, on the 5th day of May, 1997.

THE COLONIAL BANCGROUP, INC.

By: /s/ Robert E. Lowder
------------------------------------
Robert E. Lowder
Its Chairman of the Board
of Directors, Chief
Executive Officer, and
President

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ---------- ----- ----

<S> <C> <C>
/s/ Robert E. Lowder Chairman of the Board **
- ------------------------------ of Directors, President
Robert E. Lowder and Chief Executive
Officer

/s/ W. Flake Oakley, IV Chief Financial **
- ------------------------------ Officer, Secretary
W. Flake Oakley, IV and Treasurer (Principal
Financial Officer and
Principal Accounting
Officer)

Director
- ------------------------------
Lewis Beville

* Director **
- ------------------------------
Young J. Boozer
</TABLE>

9
<PAGE> 163
<TABLE>
<S> <C> <C>

* Director **
- ------------------------------
William Britton

* Director **
- ------------------------------
Jerry J. Chesser

* Director **
- ------------------------------
Augustus K. Clements, III

* Director **
- ------------------------------
Robert C. Craft

Director
- ------------------------------
Patrick F. Dye

* Director **
- ------------------------------
Clinton O. Holdbrooks

* Director **
- ------------------------------
D. B. Jones

* Director **
- ------------------------------
Harold D. King

* Director **
- ------------------------------
John Ed Mathison
</TABLE>

10
<PAGE> 164
<TABLE>
<S> <C> <C>
* Director **
- ------------------------------
Milton E. McGregor

* Director **
- ------------------------------
John C. H. Miller, Jr.

* Director **
- ------------------------------
Joe D. Mussafer

* Director **
- ------------------------------
William E. Powell

Director
- ------------------------------
Donald J. Prewitt

* Director **
- ------------------------------
Jack H. Rainer

Director
- ------------------------------
Jimmy Rane

* Director **
- ------------------------------
Frances E. Roper

Director
- ------------------------------
Simuel Sippial
</TABLE>

11
<PAGE> 165
<TABLE>
<S> <C> <C>

* Director **
- ------------------------------
Ed V. Welch
</TABLE>

* The undersigned, acting pursuant to a power of attorney, has signed
this Registration Statement on Form S-4 for and on behalf of the
persons indicated above as such persons' true and lawful
attorney-in-fact and in their names, places and stead, in the
capacities indicated above and on the date indicated below.

/s/ W. Flake Oakley, IV
- ------------------------------
W. Flake Oakley, IV
Attorney-in-Fact

** Dated: May 5, 1997

12
<PAGE> 166
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

EXHIBITS TO

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

THE COLONIAL BANCGROUP, INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

13
<PAGE> 167
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT PAGE
<S> <C> <C>
Exhibit 2 Plan of acquisition, reorganization, arrangement, liquidation
of successor:

(A) Agreement and Plan of Merger between The Colonial BancGroup,
Inc., and First Commerce Banks of Florida, Inc., dated as of
March 24, 1997, included in the Prospectus portion of this
registration statement at Appendix A and incorporated herein
by reference.

(B) First Commerce 1992 Stock Option Plan for Directors

(D) First Commerce Stock Purchase Warrants

Exhibit 4 Instruments defining the rights of security holders:

(A)(1) Article 4 of the Restated Certificate of Incorporation of the
Registrant filed as Exhibit 4.1 to the Registrant's Current
Report on Form 8-K, dated February 21, 1995, including the
amendment to Article 4 noted at Exhibit 4(B) above, and
incorporated herein by reference.

(A)(2) Amendment to Article 4 or Registrant's Restated Certificate of
Incorporation, dated April 16, 1997.

(B) Article II of the Bylaws of the Registrant filed as Exhibit
4.2 to the Registrant's Current Report on Form 8-K, dated
February 21, 1995, and incorporated herein by reference.

14
<PAGE> 168
<TABLE>
<S> <C>
(D) Trust Indenture dated as of March 25, 1986, included as
Exhibit 4 to the Registrant's Amendment No. 1 to Registration
Statement on Form S-2, file number 33-4004, effective March
25, 1986, and incorporated herein by reference.

Exhibit 5 Opinion of Miller, Hamilton, Snider & Odom, L.L.C. as to
certain Delaware law issues of the securities being
registered.

Exhibit 8 Tax Opinion of Coopers & Lybrand, LLP

Exhibit 23 Consents of experts and counsel:

(A) Consents of Coopers & Lybrand, L.L.P.

(B) Consent of Miller, Hamilton, Snider & Odom, L.L.C.

(D) Consent of Austin Associates, Inc.

(E) Consent of Smith, Mackinnon, Greeley, Bowdoin & Edwards, P.A.

Exhibit 24 Power of Attorney, filed as Exhibit 24 to the registrant's
Registration Statement on Form S-4, Registration No. 333-
20291, and incorporated herein by reference.

Exhibit 99 Additional exhibits:

(A) Form of Proxy of First Commerce
</TABLE>

<PAGE> 1
EXHIBIT 2(B)

FIRST COMMERCE 1992 STOCK OPTION PLAN FOR DIRECTORS

16
<PAGE> 2
FIRST STERLING BANCSHARES, INC.

1992 STOCK OPTION PLAN
FOR DIRECTORS

The purpose of this Stock Option Plan (the "Plan") is to promote the
interests of First Sterling Bancshares, Inc. (the "Company"), its subsidiaries
and its shareholders by providing a stock ownership incentive to its directors
and the directors of its subsidiaries, whose judgment, initiative and efforts
will be largely responsible for the successful operation of the Company. The
Plan offers incentives for each Participant to improve the Company's
profitability and, in turn, increase the value of the Company, through the grant
of options to purchase shares of the Company's common stock.

1. DEFINITIONS. As used herein, the following definitions apply:

(a) "Board" shall mean the Board of Directors of the Company.

(b) "Committee" shall mean the Committee appointed by the Board in
accordance with Section 3 of the Plan.

(d) "Company" shall mean First Sterling Bancshares, Inc.

(e) "Option" shall mean a stock option granted pursuant to the
Plan.

(f) "Optioned Stock" shall mean stock subject to an Option granted
pursuant to the Plan.

(g) "Optionee" and "Participant" shall each mean a director of the
Company and/or a subsidiary of the Company who has been
designated as a Participant and/or Optionee by the Board and
has entered into a written stock option agreement with the
Company in such form as the Committee shall, from time to
time, approve.

(h) "Share" shall mean a share of the $2.50 par value Common Stock
of the Company as adjusted in accordance with Section 7 of the
Plan.

2. STOCK SUBJECT TO PLAN. NUMBER OF SHARES. Subject to the
provisions of Section 7 of the Plan, the maximum aggregate number of Shares
which may be optioned and sold under the Plan shall be 95,000. Such Shares shall
be Treasury Shares or authorized but unissued Shares.

17
<PAGE> 3
3. ADMINISTRATION OF THE PLAN.

(a) PROCEDURAL RULES.

(i) The Plan shall be administered by a Committee
appointed by the Board.

(ii) The Board shall appoint a Committee, consisting of
not less than three members of the Board who are not
also employees, to administer the Plan on behalf of
the Board, subject to such terms and conditions as
the Board may prescribe. Once appointed, the
Committee shall continue to serve until otherwise
directed by the Board. From time to time the Board
may increase the size of the Committee and appoint
additional members thereof, remove members (with or
without cause) and appoint new members in
substitution therefor, and fill vacancies, however
caused. A majority of the entire Committee shall
constitute a quorum and the action of the majority of
the members present at any meeting at which a quorum
is present shall be deemed the action of the
Committee, not counting the vote of a member whose
option is the subject of the action. In addition, any
decision or determination reduced to writing and
signed by all of the members of the Committee shall
be as fully effective as if it had been made by a
majority vote at a meeting duly called and held. The
Committee may appoint a secretary to keep minutes of
its meetings and may make such rules and regulations
for the conduct of its business as it shall deem
advisable.

(iii) The members of the Committee shall be eligible to
receive Options.

(b) POWERS OF THE COMMITTEE. Subject to the provisions of the
Plan, the Committee shall have the authority:

(i) To recommend to the Board for approval the directors
to whom and the time or times at which Options shall
be granted and the number of Shares to be represented
by each Option.

(ii) To interpret the Plan and option agreements entered
into hereunder;

(iii) To prescribe, amend and rescind rules and regulations
relating to the Plan and any option agreements
entered into hereunder;

(iv) To authorize any person to execute on behalf of the
Company any instrument required to effectuate the
grant of an Option previously granted by the
Committee; and

18
<PAGE> 4
(v) To make all other determinations deemed necessary or
advisable for the administration of the Plan.

(c) EFFECT OF COMMITTEE'S DECISION. The implementation,
interpretation and construction by the Committee of any
provisions of the Plan or of any Option granted hereunder
shall be final and conclusive, unless otherwise determined by
the Board. No member of the Board or the Committee shall be
liable for any action or determination made in good faith with
respect to the Plan or any Option granted under it.

4. ELIGIBILITY. Options may be granted under this Plan by the
Board to directors of the Company and/or its subsidiaries. The Board shall
determine the terms and provisions of each Option granted under the Plan (which
need not be identical) and, with the consent of the holder thereof, prescribe
modifications or amendments to any Option. The vote of a director shall not be
counted in the Board's determining the granting of an option, or the terms and
conditions of the option, to such director.

5. TERM OF PLAN. The Plan shall become effective upon its
adoption by the Board, subject to the condition that it be approved by the vote
of the holders of a majority of the outstanding common stock of the Company
within twelve months thereafter. The Plan shall continue in effect for a term
of 10 years from the date of its adoption by the Board unless sooner
terminated under the provisions of Section 8 of the Plan.

6. TERMS AND CONDITIONS OF OPTIONS. All Options granted pursuant
to this Plan must be granted within ten (10) years from the date the Plan is
adopted by the Board. Each Option shall be evidenced by a written stock option
agreement in such form as the Committee shall, from time to time, approve and
shall comply with and be subject to the following terms and conditions:

(a) OPTION PRICE. Each option agreement shall state the number of
Shares to which it pertains and the option price, which shall
be the book value at the close of business of the month end
preceding the date upon which the Option is granted. For the
purpose of this Plan, the term "book value" shall be the sum
of the capital stock, surplus and retained earnings accounts
of the Company.

(b) OPTION. Each Option shall state the date on which it is
granted. Each Option shall be exercisable at such time(s) and
under such condition(s) as shall be permissible under the
terms of this Plan and of the Option granted to the Optionee,
but in no event shall an Option be exercisable after the
expiration of ten (10) years from the date of grant. Except as
otherwise hereinafter provided in case of disability or death,
an Option can only be exercised during, or within ninety (90)
days after the termination of, an Optionee's directorship with
the Company, or any parent or subsidiary of the

19
<PAGE> 5
Company which now exists or hereafter is organized or acquired
by or acquires the Company; provided however, that no Option,
or any part of an Option, shall be exercisable before the date
it would otherwise be exercisable.

If the Optionee's directorship with the Company or a parent or
subsidiary of the Company is terminated by reason of permanent
and total disability, the exercise period shall be extended
for a period of six (6) months following the date of
termination of the Optionee's directorship subject to the
condition that no Option shall be exercisable after the
expiration of ten (10) years from the date it is granted or
before the date it would otherwise be exercisable. Permanent
and total disability shall exist if the Optionee is unable to
engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can
be expected to result in death or which has lasted and can be
expected to last for a continuous period of not less than 12
months.

If the Optionee dies while a director of the Company or a
parent or subsidiary of the Company and shall not have fully
exercised Options granted pursuant to the Plan, such Options
may be exercised in whole or in part at any time within one
(1) year after the Optionee's death by the executor or
administrator of the Optionee's estate or by any person or
persons who shall have acquired the Options directly from the
Optionee by bequest or inheritance, subject to the condition
that no Option shall be exercisable after the expiration of
ten (10) years from the date it is granted or before the date
it would otherwise be exercisable.

(c) TRANSFERABILITY LIMITATIONS. Any Option granted hereunder may
not be sold, pledged, assigned, hypothecated, transferred, or
disposed of in any manner other than by Will or by the laws of
descent and distribution and shall be exercisable, during the
Optionee's lifetime, only by him or her.

(d) PROCEDURE FOR EXERCISE.

(i) An Option shall be deemed to be exercised when
written notice of such exercise has been given to the
Company in accordance with the terms of the Option by
the person entitled to exercise the Option and full
payment for the Shares with respect to which the
Option is exercised has been received by the Company.
The Option price shall be paid in cash or by the
surrender, at fair market value on the date on which
the Option is exercised of Shares, or by any
combination of cash and Shares. Until the issuance or
transfer of the stock certificate(s) (as evidenced by
the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company),
no right to vote or to receive dividends or any other
rights as a

20
<PAGE> 6
stockholder shall exist with respect to Optioned
Stock notwithstanding the exercise of the Option. No
adjustment will be made for a dividend or other
rights for which the record date is prior to the date
the stock certificates are issued or transferred
except as provided in Section 7 of the Plan.

(ii) An Option may not be exercised for fractional Shares.

(e) ADDITIONAL PROVISIONS. The option agreements authorized under
the Plan shall contain such other provisions as the Committee
shall deem advisable, including, without limitation,
restrictions upon the exercise of the Option.

(f) CONDITIONS UPON ISSUANCE OF SHARES.

(i) LEGAL RESTRICTIONS. Shares shall not be issued or
sold with respect to an Option granted under the Plan
unless the grant and exercise of such Option and the
issuance or sale and delivery of such Shares pursuant
thereto shall comply with all applicable provisions
of law including, without limitation, the Securities
Act of 1933, as amended, the Securities Exchange Act
of 1934, as amended, the Florida Securities Act, the
rules and regulations promulgated thereunder and
shall be further subject to the approval of counsel
for the Company with respect to such compliance.

(ii) REPRESENTATIONS REQUIRED. As a condition to the
exercise of an Option, the Company may require the
Participant to represent and warrant at the time of
any such exercise that the Shares are being purchased
by the Optionee for the Optionee's own account for
investment and without an intention to sell or
distribute such Shares if, in the opinion of counsel
for the Company, such a representation is required by
applicable law.

7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event that
the outstanding shares of the Common Stock of the Company shall be increased,
decreased, or otherwise changed in number, class, or character by reason of any
issuance or repurchase of Common Stock, or subdivision or combination of the
outstanding Common Stock of the Company into a greater or lesser number of
shares, split-up, change of par value, common stock dividend, reclassification
of shares, recapitalization, merger, consolidation, exchange of shares, or sale,
lease, or conveyance of substantially all the assets of the Company, or other
change in the capitalization or organization of the Company, or shall be changed
in value by reason of any so-called spin-off dividend in partial liquidation or
other special distribution, the Committee shall, in light of such change, make
such adjustments, if any, as it deems to be equitable in (1) the respective
numbers of Shares and/or the respective option price specified in the Options
theretofore granted under this Plan and then

21
<PAGE> 7
outstanding, and (2) the aggregate number of Shares of Common Stock which may be
purchased upon the exercise of Options granted under this Plan, as set forth in
Section 2 thereof. Such adjustment shall not result in the issuance of
fractional Shares. In the event of the issuance of any warrants, rights to
purchase, or other securities of the Company to all holders of Common Stock,
then Optionee shall also receive such warrants, rights to purchase, or other
securities attributable to each share of Common Stock reserved for issuance or
sale to Optionee hereunder upon issuance or sale to Optionee hereunder upon
issuance or sale of shares of Common Stock to Optionee after exercise of the
Option.

The foregoing adjustments shall be made by the Committee, subject to
the approval of the Board. The grant of an Option pursuant to the Plan shall not
affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations, or changes in its capital or business
structure or to merge or consolidate or dissolve, liquidate, or sell, or
transfer all or any part of its business or assets.

8. AMENDMENT AND TERMINATION OF THE PLAN.

(a) AMENDMENT. The Board may amend the Plan from time to time in
such respects as the Board may deem advisable.

(b) EFFECT OF AMENDMENT OR TERMINATION. The amendment or
termination of this Plan shall not, without the consent of an
affected Optionee, alter or impair any rights or obligations
previously granted hereunder.

9. RESERVATION OF SHARES. The Company, during the term of this
Plan, will at all times reserve and keep available the number of Shares as shall
be sufficient to satisfy the requirements of the Plan.

10. LIABILITY OF COMPANY. The Company, its parent, or any
subsidiary which is in existence or hereafter comes into existence, shall not be
liable to the Optionee or other person as to:

(a) NONISSUANCE OR SALE OR SHARES. The nonissuance or sale of
Shares as to which the Company has been unable to obtain from
any regulatory body having jurisdiction the authority deemed
by the Company's counsel to be necessary to the lawful
issuance and/or sale of any Shares hereunder; or

(b) TAX CONSEQUENCES. Any tax or securities consequences expected,
but not realized, by the Optionee or other person due to the
grant or exercise of any Option granted hereunder.

11. SUCCESSORS AND ASSIGNS. The provisions of this Plan shall be
binding upon all permitted successors and assigns of the Optionee and upon all
successors and assigns of the Company.

22
<PAGE> 8
12. GOVERNING LAW. This Plan shall be interpreted and construed in
accordance with the laws of the State of Florida.

IN WITNESS WHEREOF, the Company has duly adopted and executed this Plan
the 13th day of August, 1992.

FIRST STERLING BANCSHARES, INC.

By:
--------------------------------
President

By:
--------------------------------
Secretary

<PAGE> 1

EXHIBIT 2(C)

FIRST COMMERCE 1992 STOCK OPTION PLAN

24
<PAGE> 2
FIRST STERLING BANCSHARES, INC.

1992 STOCK OPTION PLAN

The purpose of this Stock Option Plan, (the "Plan") is to promote the
interests of First Sterling Bancshares, Inc. (the "Company"), its subsidiaries
and its shareholders by providing a stock ownership incentive to its officers
and the officers of its subsidiaries, whose judgement, initiative and efforts
will be largely responsible for the successful operation of the Company. The
Plan offers incentives for each Participant to improve the Company's
profitability and, in turn, increase the value of the Company, through the grant
of options to purchase shares of the Company's common stock.

1. DEFINITIONS. As used herein the following definitions apply:

(a) "Board" shall mean the Board of Directors of the Company.

(b) "Committee" shall mean the Committee appointed by the Board in
accordance with Section 3 of the Plan.

(d) "Company" shall mean First Sterling Bancshares, Inc.

(e) "Option" shall mean a stock option granted pursuant to the
Plan.

(f) "Optioned Stock" shall mean stock subject to an Option granted
pursuant to the Plan.

(g) "Optionee" and "Participant" shall each mean an officer of the
Company and/or a subsidiary of the Company who has been
designated as a Participant and/or Optionee by the Board and
has entered into a written stock option agreement with the
Company in such form as the Committee shall, from time to
time, approve.

(h) "Share shall mean a share of the $2.50 par value Common Stock
of the Company as adjusted in accordance with Section 7 of the
Plan.

2. STOCK SUBJECT TO PLAN. NUMBER OF SHARES. Subject to the
provisions of Section 7 of the Plan, the maximum aggregate number of Shares
which may be optioned and sold under the Plan shall be one hundred fifty
thousand (150,000). Such Shares shall be Treasury Shares or authorized but
unissued Shares.

25
<PAGE> 3
3. ADMINISTRATION OF THE PLAN

(a) PROCEDURAL RULES.

(i) The Plan shall be administered by a Committee
appointed by the Board.

(ii) The Board shall appoint a Committee, consisting of
not less than three members of the Board who are not
also employees, to administer the Plan on behalf of
the Board, subject to such terms and conditions as
the Board may prescribe. Once appointed, the
Committee shall to continue serve until otherwise
directed by the Board. From time to time the Board
may increase the size of the Committee and appoint
additional members thereof, remove members (with or
without cause) and appoint new members in
substitution therefor, and fill vacancies, however
caused. A majority of the entire Committee shall
constitute a quorum and the action of the majority of
the members present at any meeting at which a quorum
is present shall be deemed the action of the
Committee. In addition, any decision or determination
reduced to writing and signed by all members of the
Committee shall be as fully effective as if it had
been made by a majority vote at a meeting duly called
and held. The Committee may appoint a secretary to
keep minutes of its meetings and may make such rules
and regulations for the conduct of its businesses as
it shall deem advisable.

(iii) The members of the Committee shall not be eligible to
receive Options.

(b) POWERS OF THE COMMITTEE. Subject to the provisions of the
Plan, the Committee shall have the authority:

(i) To recommend to the Board for approval the officers
to whom and the time or times at which Options shall
be granted and the number of Shares to be represented
by each Option.

(ii) To interpret the Plan and option agreements entered
into hereunder;

(iii) To prescribe, amend and rescind rules and regulations
relating to the Plan and any option agreements
entered into hereunder;

(iv) To authorize any person to execute on behalf of the
Company any instrument required to effectuate the
grant of any Option previously granted by the
Committee; and

(v) To make all other determinations deemed necessary or
advisable for

26
<PAGE> 4
the administration of the Plan.

(c) EFFECT OF COMMITTEE'S DECISION. The implementation,
interpretation and construction by the Committee of any
provisions of the plan or any Option granted hereunder shall
be final and conclusive, unless otherwise determined by the
Board. No member of the Board or the Committee shall be liable
for any action or determination made in good faith with
respect to the Plan or any Option granted under it.

4. ELIGIBILITY. Options may be granted under this Plan by the
Board to officers of the Company and/or its subsidiaries. The Board shall
determine the terms and provisions of each Option granted under the Plan (which
need not be identical) and, with the consent of the holder thereof, prescribe
modifications or amendments to any Option;

5. TERM OF PLAN. The Plan shall become effective upon its
adoption by the Board, subject to the condition that it be approved by the vote
of the holders of a majority of the outstanding common stock of the Company
within twelve months thereafter. The Plan shall continue in effect for a term of
10 years from the date of its adoption by the Board unless sooner terminated
under the provisions of Section 8 of the Plan.

(a) OPTION PRICE. Each option agreement shall state the number of
Shares to which it pertains and the option price, which shall
be the book value at the close of business of the month end
preceding the date upon which the Option is granted. For the
purpose of this Plan the terms "book value" shall be the sum
of the capital stock, surplus and retained earnings accounts
of the Company.

(b) OPTION. Each Option shall state the date on which it is
granted. Each Option shall be exercisable at such time(s) and
under such condition(s) as shall be permissible under the
terms of this Plan and of the Option granted to the Optionee,
but in no event shall an Option be exercisable after the
expiration of ten (10) years from the date of grant. Except as
otherwise hereinafter provided in case of disability or death,
an Option can only be exercised during, or within ninety (90)
days after the termination of, an Optionee's employment with
the Company, or any parent or subsidiary of the Company which
now exists or hereafter is organized or acquired by or
acquires the Company; provided however, that no Option, or any
part of an Option, shall be exercisable before the date it
would otherwise be exercisable.

27
<PAGE> 5
If the Optionee's employment with the Company or a parent or
subsidiary of the Company is terminated by reason of permanent
and total disability, the exercise period shall be extended
for a period of six (6) months following the date of
termination of the Optionee's employment subject to the
condition that no Option shall be exercised after the
expiration of ten (10) years from the date it is granted or
before the date it would otherwise be exercisable. Permanent
and total disability shall exist if the Optionee is unable to
engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can
be expected to result in death or which has lasted and can be
expected to last for a continuous period of not less than 12
months.

If the Optionee dies while in the employ of the Company or a
parent or subsidiary of the Company and shall not have fully
exercised Options granted pursuant to the Plan, such Options
may be exercised in whole or in part at any time within one
(1) year after the Optionee's death by the executor or
administrator of the Optionee's estate or by any person or
persons who shall have acquired the Options directly from the
Optionee by bequest or inheritance, subject to the condition
that no Option shall be exercisable after the expiration of
ten (10) years from the date it is granted or before the date
it would otherwise be exercisable.

(d) PROCEDURE FOR EXERCISE.

28
<PAGE> 6
Section 7 of the Plan.

(ii) An Option may not be exercised for fractional Shares.

(f) CONDITIONS UPON ISSUANCE OF SHARES.

7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. In the event that
the outstanding shares of the Common Stock of the Company shall be increased,
decreased, or otherwise changed in number, class, or character by reason of any
issuance or repurchase of Common Stock, or subdivision or combination of the
outstanding Common Stock of the Company into a greater or lesser number of
shares, split-up, change of par value, common stock dividend, reclassification
of shares, recapitalization, merger, consolidation, exchange of shares, or sale,
lease or conveyance of substantially all the assets of the Company, or other
change in the capitalization or organization of the Company, or shall be changed
in value by reason of any co-called spin-off dividend in partial liquidation or
other special distribution, the Committee shall, in light of such change, make
such adjustments, if any, as it deems to be equitable in (1) the respective
numbers of Shares and/or the respective option price specified in the Options
theretofore granted under this Plan and then outstanding, and (2) the aggregate
number of Shares of Common Stock which may be purchased upon the exercise of
Options granted under this Plan, as set forth in Section 2 thereof. Such
adjustment shall not result in the issuance of fractional Shares. In the event
of the issuance of any warrants, rights to purchase, or other securities of the
Company to all holders of Common Stock, then Optionee shall also receive such
warrants, rights to purchase, or other securities attributable to each share of
Common Stock reserved for issuance or sale to Optionee hereunder upon issuance
or sale to Optionee hereunder upon issuance or sale of Common Stock to Optionee
after exercise of the Option.

29
<PAGE> 7
The foregoing adjustments shall be made by the Committee, subject to
the approval of the Board. The grant of an Option pursuant to the Plan shall not
affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations, or changes in its capital or business
structure or to merge or consolidate or dissolve, liquidate, or sell, or
transfer all or any part of its business or assets.

8. AMENDMENT AND TERMINATION OF THE PLAN.

(a) AMENDMENT. The Board may amend the Plan from time to time in
such respects as the Board may deem advisable.

9. RESERVATION OF SHARES. The Company, during the term of this
Plan, will at all times reserve and keep available the number of Shares as shall
be sufficient to satisfy the requirements of the Plan.

10. LIABILITY OF COMPANY. The Company, its parent, or any
subsidiary which is in existence or hereafter comes into existence, shall not be
liable to the Optionee or other person as to:

(a) NONISSUANCE OR SALE OF SHARES. The nonissuance or sale of
Shares as to which the Company has been unable to obtain from
any regulatory body having jurisdiction the authority deemed
by the Company's counsel to be necessary to the lawful
issuance and/or sale of any Shares hereunder; or

(b) TAX CONSEQUENCES. Any tax or securities consequences expected,
but not realized, by the Optionee or other person due to the
grant or exercise of any Option granted hereunder.

11. SUCCESSORS AND ASSIGNS. The provisions of this Plan shall be
binding upon all permitted successors and assigns of the Optionee and upon all
successors and assigns of the Company.

12. GOVERNING LAW. This Plan shall be interpreted and construed in
accordance with the laws of the State of Florida.

30
<PAGE> 8
IN WITNESS WHEREOF, the Company has duly adopted and executed this Plan
the ____ of ______________, 1992.

FIRST STERLING BANCSHARES, INC.

By:
--------------------------------
President

By:
--------------------------------
Secretary

<PAGE> 1

EXHIBIT 2(D)

FIRST COMMERCE STOCK PURCHASE WARRANTS

32
<PAGE> 2
WARRANT

NO.____________ RIGHT TO PURCHASE _____ SHARES

COMMERCE BANK OF CENTRAL FLORIDA
A FLORIDA BANKING CORPORATION

STOCK PURCHASE WARRANT

VOID AFTER 2 P.M., MAY ___, 1999

This is to certify that the registered owner of this certificate is
entitled to purchase, on or before May ____, 1999, at 2 p.m., ________ shares of
common stock of Commerce Bank of Central Florida, a Florida banking corporation,
at the price of $10.045 per share, upon presentation of this Warrant and payment
of the purchase price at the principal office of the Bank; subject, however, to
the Statement of Rights of Warrant Owners printed on the reverse hereof, which
is incorporated herein by reference, and to which the owner hereof assents by
acceptance of this Warrant.

This Warrant is transferable only by devise of the registered owner
hereof.

This Warrant shall be void unless the purchase right granted herein is
exercised on or before 2 p.m. May _____, 1999.

COMMERCE BANK OF CENTRAL FLORIDA

-------------------------------------------
J.E. Stephens, Jr., President and CEO
(Corporate Seal)

ATTEST:

- ------------------------------
Cynthia B. Roberts, Cashier

33
<PAGE> 3
STATEMENT OF RIGHTS OF WARRANT OWNERS

1. Reservation of Stock. The Bank covenants that while the warrants are
exercisable, it will reserve from its authorized and unissued common stock a
sufficient number of shares to provide for the delivery of stock pursuant to the
exercise of this and all other similar warrants.

2. Merger. In case the Bank, or any successor, shall be consolidated or
merged with another company, or substantially all of its assets shall be sold to
another company in exchange for stock with a view to distributing such stock to
its stockholders, each share of stock purchasable by this Warrant shall be
replaced for the purposes hereof by the securities or property issuable or
distributable in respect of one share of common stock of this Bank, or its
successors, upon such consolidation, merger or sale, and adequate provision to
that effect shall be made at the time thereof.

3. Stockholders Rights. Until the valid exercise of this Warrant, the
owner hereof shall not be entitled to any rights of a stockholder; but
immediately upon the exercise of this Warrant and upon payment as provided
herein, the owner hereof shall be deemed a record holder of the common stock so
purchased.

4. Divisibility of Warrant. This Warrant may be divided into warrants
of one share or multiples thereof, upon surrender at the principal office of the
Bank.

5. Fractional Warrants. Upon exercise of this Warrant, no fractions of
shares shall be issued; but fractional warrants will be delivered, entitling the
owner, upon surrender of other fractional warrants aggregating one or more full
shares, to purchase such full shares.

6. Negotiability. This Warrant is not negotiable and may be exercised
only by the registered owner hereof, his legal representative, personal
representative or valid devisee.

7. Term. This Warrant shall become void unless the rights hereunder are
exercised and payment made prior to 2 p.m., May ___, 1999; provided that in the
case of the earlier dissolution of the Bank, this Warrant shall become void on
the date fixed for such dissolution.

34
<PAGE> 4
FORM OF SUBSCRIPTION

(To be signed only upon exercise of Warrant)

TO: COMMERCE BANK OF CENTRAL FLORIDA
141 Central Avenue East
Winter Haven, Florida 33881

The undersigned, the owner of this Warrant, hereby irrevocably elects to
exercise the purchase right represented by this Warrant for, and to purchase
thereunder, ______ shares of common stock of Commerce Bank of Central Florida, a
Florida banking corporation, and herewith makes payment of $_______ therefor,
and requests that the certificates of such shares be issued in the name of and
be delivered to ____________________, ____________________ whose address is
_________________________, and if such shares shall not be for all the shares
purchasable hereunder, that a new Warrant of like tenor for the balance of the
shares purchasable hereunder be delivered to the undersigned.

DATED:
------------------------

-------------------------------------

<PAGE> 1

EXHIBIT 4(A)(2)

AMENDMENT TO ARTICLE 4 OF REGISTRANT'S RESTATED CERTIFICATE
OF INCORPORATION, DATED APRIL 16, 1997.

THE TOTAL NUMBER OF SHARES OF ALL CLASSES OF STOCK WHICH THE
CORPORATION SHALL HAVE AUTHORITY TO ISSUE IS 101,000,000 SHARES, OF WHICH
1,000,000 SHARES OF THE PAR VALUE OF $2.50 PER SHARE ARE TO BE PREFERENCE STOCK
(HEREINAFTER CALLED "PREFERENCE STOCK") AND 100,000,000 SHARES OF THE PAR VALUE
OF $2.50 PER SHARE ARE TO BE COMMON STOCK (HEREINAFTER SOMETIMES CALLED "COMMON
STOCK").

[THE REMAINDER OF ARTICLE 4 IS NOT INCLUDED.]

<PAGE> 1

EXHIBIT 5

OPINION AS TO CERTAIN DELAWARE LAW ISSUES OF THE SECURITIES
BEING REGISTERED

37
<PAGE> 2
April 25, 1997

Montgomery Office

The Colonial BancGroup, Inc.
P. O. Box 1108
Montgomery, AL 36101

Re: Registration Statement on Form S-4 relating to the issuance of
shares of Common Stock of The Colonial BancGroup, Inc., in
connection with the acquisition by merger of First Commerce
Banks of Florida, Inc. ("Merger")

Gentlemen:

We are familiar with the proceedings taken and proposed to be taken by
The Colonial BancGroup, Inc., a Delaware corporation (the "Company"), in
connection with the proposed issuance by the Company of shares of its Common
Stock, par value of $2.50 per share, in connection with the Merger and in
accordance with an Agreement and Plan of Merger, dated as of March 24, 1997 (the
"Agreement"), by and between the Company and First Commerce Banks of Florida,
Inc. and the issuance by the Company of its Common Stock pursuant to stock
options and warrants being assumed by the Company in accordance with the
Agreement. We have also acted as counsel for the Company in connection with the
preparation and filing with the Securities and Exchange Commission under the
Securities Act of 1933, of the Registration Statement on Form S-4 referred to in
the caption above. In this connection we have reviewed such documents and
matters of law as we have deemed relevant and necessary as a basis for the
opinions expressed herein.

Upon the basis of the foregoing, we are of the opinion that:

(i) The Company is a corporation duly organized and existing under the
laws of
<PAGE> 3
The Colonial BancGroup
April 25, 1997
Page 2

the State of Delaware;

(ii) The shares of Common Stock of the Company referred to above, to
the extent actually issued pursuant to the Agreement will, when so issued, be
duly and validly authorized and issued and will be fully paid and nonassessable
shares of Common Stock of the Company;

(iii) Under the laws of the State of Delaware, no personal liability
attaches to the ownership of the shares of Common Stock of the Company.

We hereby consent to the filing of this opinion as an exhibit to the
above-referenced registration statement. In consenting to the inclusion of our
opinion in the Registration Statement, we do not thereby admit that we are a
person whose consent is required pursuant to Section 7 of the Securities Act of
1933, as amended.

Sincerely yours,

MILLER, HAMILTON, SNIDER & ODOM, L.L.C.

By: /s/ Michael D. Waters
---------------------------------
Michael D. Waters

MDW/mfm

<PAGE> 1

EXHIBIT 8

TAX OPINION

40
<PAGE> 2
April 17, 1997

Mr. Flake Oakley
Chief Financial Officer
Colonial BancGroup, Inc.
P.O. Box 1109
Montgomery, AL 36101

Dear Mr. Oakley:

For various business reasons, First Commerce Banks of Florida, Inc. (Acquired
Corporation) and The Colonial BancGroup, Inc. (BancGroup) have entered into an
Agreement and Plan of Merger (Agreement). Pursuant to your request, our letter
addresses the income tax consequences of the proposed transaction as outlined
below. We will address whether the merger will qualify as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986
(I.R.C.). We will also address additional income tax consequences to Acquired
Corporation, BancGroup, and shareholders.

BACKGROUND

Acquired Corporation, a Florida corporation, operates as a bank holding company
for its wholly owned subsidiary, First Commerce Bank of Polk County (Bank), with
its principal office in Winter Haven, Florida. BancGroup, a Delaware
corporation, is a bank holding company with Subsidiary banks in Florida
(Colonial Bank), Alabama, Georgia and Tennessee.

CERTAIN TERMS OF THE MERGER

At the effective date of the merger, Acquired Corporation will merge with and
into BancGroup, with BancGroup as the surviving corporation. Pursuant to the
terms of the transaction, each share of common stock of Acquired Corporation
outstanding and held by Acquired Corporation's shareholders other than shares
held by shareholders who perfect their dissenter's rights, will be converted by
operation of law and without any action on the part of the parties or the
holders thereof into shares of BancGroup Common Stock at a rate of .4326 of a
share of BancGroup Common Stock for each share of Acquired Corporation Stock. On
the effective date and as a result of the merger, BancGroup will assume all the
outstanding options of Acquired Corporation, whether or not vested or
exercisable. Each such option will cease to represent a right to acquire
Acquired Corporation Common Stock and will, instead, represent a right to
acquire BancGroup common stock on substantially

41
<PAGE> 3
the same terms applicable to the Acquired Corporation Options except as
specified in the Agreement.

No fractional shares of BancGroup Common Stock will be issued. Instead, each
holder of shares of Acquired Corporation Stock having a fractional interest
arising upon the conversion of such shares into shares of BancGroup Common Stock
shall, at the time of surrender of the certificates previously representing
Acquired Corporation Stock, be paid by BancGroup an amount in cash. Any
shareholder of Acquired Corporation who does not vote in favor of the Agreement
and who complies with certain procedures relating to the rights of dissenting
shareholders will be entitled to receive payment for the fair value of his or
her Acquired Corporation Stock.

Further, after consummation of the merger, BancGroup and Acquired Corporation
anticipate merging two bank subsidiaries, the Bank and Colonial Bank. Colonial
Bank will be the surviving entity.

REPRESENTATIONS OF PARTIES

- BancGroup and Acquired Corporation intend that the merger will
qualify for federal income tax purposes as a "reorganization"
within the meaning of I.R.C. Section 368(a) of the Code.

- The fair market value of the BancGroup stock received by each
shareholder of Acquired Corporation pursuant to the terms of
the Agreement will be approximately equal to the fair market
value of Acquired Corporation surrendered in the exchange. The
terms of the Agreement are the result of arm's-length
negotiations between unrelated parties.

- There is no plan or intention by the shareholders of Acquired
Corporation to sell, exchange, or otherwise dispose of a
number of shares of acquiring stock received in the
transaction that will reduce the Acquired Corporation
shareholders' ownership of BancGroup stock to a number of
shares having a value, as of the date of the transaction, of
less than fifty percent of the value of all of the formerly
outstanding stock of Acquired Corporation as of the same date.
For purposes of this representation, shares of Acquired stock
exchanged for cash, and surrendered by dissenters, or
exchanged for cash in lieu of fractional shares of BancGroup
stock will be treated as outstanding Acquired Corporation
stock on the date of the transaction. Shares of Acquired stock
and shares of BancGroup stock held by Acquired Corporation
shareholders and otherwise sold, redeemed or disposed of prior
or subsequent to the transaction will be considered in making
this representation.

- Following the merger, BancGroup will continue the historic
business of Acquired Corporation or use a significant portion
of Acquired Corporation's historic business assets in a
business.

42
<PAGE> 4
- Acquired Corporation, BancGroup and Acquired Shareholders will
pay their respective expenses, if any, incurred in connection
with the transaction.

- No part of the consideration received by the Acquired
Corporation shareholders will be received by them in their
capacity as debtor, creditor, employee, or any way other than
as shareholder.

- The fair market value of the assets of Acquired Corporation
transferred to BancGroup will equal or exceed the sum of the
liabilities assumed by BancGroup plus the amount of
liabilities, if any, to which the assets transferred are
subject.

- The total adjusted basis of the assets of Acquired Corporation
transferred to BancGroup will equal or exceed the sum of the
liabilities assumed by BancGroup plus the amount of
liabilities, if any, to which the assets transferred are
subject.

- If nonqualified stock options to purchase Acquired Corporation
common stock are exchanged for nonqualified stock options to
purchase BancGroup common stock, then the difference between
the option price and fair market value of BancGroup common
stock subject to options immediately after the exchange will
be equal to (or greater than) the difference between the
option price and the fair market value of Acquired Corporation
common stock subject to options immediately before the
exchange. All other terms of the BancGroup nonqualified stock
options will be the same as those of Acquired Corporation's
nonqualified stock options.

- Any incentive stock options acquired from Acquired Corporation
as a part of the merger and reissued by BancGroup will be
issued at substantially the same terms, so as not to create
material modification as defined in I.R.C. Section 424.

TAX CONSEQUENCES TO ACQUIRED CORPORATION AND BANCGROUP

The merger of Acquired Corporation with and into BancGroup will constitute a
merger within the meaning of I.R.C. Section 368(a)(1)(A), provided that the
merger qualifies as a statutory merger pursuant to state law. Acquired
Corporation and BancGroup will each be "a party to the reorganization" within
the meaning of I.R.C. Section 368(b) of the Code. Based upon I.R.C. Sections
357(a) and 361(a), Acquired Corporation will recognize no gain or loss when it
transfers its assets to BancGroup in a constructive exchange solely for
BancGroup's stock and the assumption of Acquired Corporation's liabilities by
BancGroup. Acquired Corporation will not recognize any gain or loss upon the
receipt of cash in the exchange if it distributes such property as part of the
plan of reorganization under I.R.C. Section 361(b).

Pursuant to I.R.C. Section 1032 of the Code, no gain or loss will be recognized
by BancGroup upon the acquisition by BancGroup of the assets of Acquired
Corporation in exchange for BancGroup common stock and the assumption of
Acquired Corporation's

43
<PAGE> 5
liabilities. BancGroup's basis in the assets acquired in the transaction will be
equal to the basis of the assets in the hands of Acquired Corporation
immediately before the transaction under I.R.C. Section 362(b). I.R.C. Section
1223(2) provides that BancGroup's holding period for each Acquired Corporation
asset received in the merger will include the period during which the asset was
held by Acquired Corporation immediately before the transaction.

Pursuant to I.R.C. Section 381(a), BancGroup will succeed to and take into
account the items of Acquired Corporation described in I.R.C. Section 381(c),
subject to the conditions and limitations of I.R.C. Sections 381, 382, 383, 384,
and 1502 and the regulations thereunder. BancGroup will succeed to and take into
account the earnings and profits, or deficit in earnings and profits, of
Acquired Corporation as provided by I.R.C. Section 382(c)(2) of the Code and
Section 1.381(c)(2)-1 of the Regulations.

TAX CONSEQUENCES TO BANK AND COLONIAL BANK

The merger of Bank with and into Colonial Bank will constitute a merger within
the meaning of I.R.C. Section 368(a)(1)(A), provided that the merger qualifies
as a statutory merger pursuant to state law. Bank and Colonial Bank will each be
"a party to the reorganization" within the meaning of I.R.C. Section 368(b) of
the Code. Based upon I.R.C. Sections 357(a) and 361(a), Bank will recognize no
gain or loss when it transfers its assets to Colonial Bank's in a constructive
exchange solely for Colonial Bank's stock and the assumption of Colonial Bank's
liabilities by BancGroup. Bank will also not recognize any gain or loss upon the
receipt of cash in the exchange if it distributes such property as part of the
plan of reorganization under I.R.C. Section 361(b).

Pursuant to I.R.C. Section 1032 of the Code, no gain or loss will be recognized
by Colonial Bank upon the acquisition by Colonial Bank of the assets of Bank in
exchange for Colonial Bank's common stock and the assumption of Bank's
liabilities. Colonial Bank's basis in the assets acquired in the transaction
will be equal to the basis of the assets in the hands of Bank immediately before
the transaction per I.R.C. Section 362(b). I.R.C. Section 1223(2) provides that
Colonial Bank's holding period for each Bank asset received in the merger will
include the period during which the asset was held by Bank immediately before
the transaction.

Pursuant to I.R.C. Section 381(a), Colonial Bank will succeed to and take into
account the items of Bank described in I.R.C. Section 381(c), subject to the
conditions and limitations of I.R.C. Sections 381, 382, 383, 384, and 1502 and
the regulations thereunder. Colonial Bank will succeed to and take into account
the earnings and profits, or deficit in earnings and profits, of Bank as
provided by I.R.C. Section 382(c)(2) of the Code and Section 1.381(c)(2)-1 of
the Regulations.

TAX CONSEQUENCES TO ACQUIRED CORPORATION SHAREHOLDERS

44
<PAGE> 6
I.R.C. Section 354 states that a shareholder who receives solely BancGroup
common stock in exchange for Acquired Corporation common stock will recognize no
gain or loss on the exchange, except with respect to cash received in lieu of a
fractional interest in BancGroup common stock. I.R.C. Section 358 of the Code
provides that the shareholder's tax basis in the BancGroup common stock received
in the exchange will be the same as the basis of the Acquired Corporation common
stock surrendered, decreased by the amount of cash (if any) received by the
shareholder and increased by the amount of gain (if any) recognized in the
exchange. I.R.C. Section 1223 of the Code provides that such shareholder will
include the period during which Acquired Corporation stock was held in his
holding period for the BancGroup common stock received in the exchange.

The payment of cash in lieu of fractional shares of BancGroup common stock will
be treated as if the fractional shares were issued as part of the exchange and
then redeemed by BancGroup. These cash payments will be treated as having been
received as distributions in full payment in exchange for the stock redeemed as
provided in I.R.C. Section 302(a) of the Code. Generally, any gain or loss
recognized upon such exchange will be capital gain or loss, provided the
fractional share constitutes a capital asset in the hands of the exchanging
shareholder. The shareholders will recognize capital gain or loss equal to the
difference between the cash received and the basis of the fractional share
interest that would have been issued.

Holders of shares of Acquired Corporation Common Stock who receive cash upon the
exercise of any appraisal rights will be subject to a taxable transaction for
federal income tax purposes. Such a shareholder will recognize gain or loss
measured by the difference between the tax basis for his or her shares and the
amount of cash received pursuant to I.R.C. Section 1012 of the Code (unless the
receipt of cash is treated as a dividend, as described below).

In certain circumstances, the receipt of solely cash by an Acquired Corporation
shareholder could be treated as a dividend (to the extent of the shareholder's
ratable share of applicable earnings and profits) if the shareholder
constructively owns shares of Acquired Corporation Common Stock that are
exchanged for BancGroup Common Stock in the Merger. Generally, a shareholder
constructively owns stock that is owned by members of the shareholder's family,
and by certain controlled or related partnerships, estates, trusts and
corporations, pursuant to the constructive ownership rules of I.R.C. Section 318
of the Code, as well as any shares that the shareholder has an option to
acquire.

The receipt of solely cash by an Acquired Corporation shareholder in exchange
for his stock will not be treated as a dividend if such exchange or receipt
results in a meaningful reduction or a substantially disproportionate reduction
in the shareholder's ownership interest or results in a complete termination of
the shareholder's interest, taking into account, in each case, the constructive
ownership rules described above. A complete termination of a shareholder's
interest will occur if, after the receipt of cash in exchange for stock, the
shareholder owns no shares of stock in BancGroup. Thus, a shareholder who

45
<PAGE> 7
receives solely cash for all of the stock actually owned by him will generally
qualify for capital gain treatment under the complete termination test if none
of the shares constructively owned by him are exchanged in the merger for
BancGroup Common Stock and the shareholder does not otherwise own, actually or
constructively, any shares of BancGroup Common Stock after the merger.

Where the complete termination of interest test is not satisfied with respect to
a particular shareholder (because, for example, Acquired Corporation shares
owned by a related party are exchanged for BancGroup Common Stock in the
merger), that shareholder will nonetheless generally be entitled to capital gain
treatment if the receipt of cash in exchange for his shares results in a
"substantially disproportionate" reduction or a "meaningful" reduction in his
ownership interest. I.R.C. Section 302 of the Code provides that a shareholder's
reduction in ownership interest should normally be "substantially
disproportionate," and capital gain treatment should normally result, if (1) the
shareholder owns less than 50% of the total combined voting power of all classes
of stock immediately after the merger, and (2) the shareholder's proportionate
stock interest in BancGroup immediately after the merger is 20% or more below
what his proportionate interest in BancGroup would have been if he had received
solely BancGroup Common Stock in the merger.

Acquired Corporation shareholders who constructively own stock in Acquired
Corporation should consult a tax advisor regarding the characterization of cash
payments received in the reorganization in exchange for Acquired Corporation
stock as either capital gain income or dividend income.

CONVERSION OF ACQUIRED CORPORATION OPTIONS INTO BANCGROUP OPTIONS

INCENTIVE STOCK OPTIONS

The assumption and conversion of Acquired Corporation incentive stock options,
whether vested or exercisable, into rights to acquire BancGroup common stock
pursuant to the terms of the Agreement shall not be considered the granting of a
new option as long as the following requirements of I.R.C. Section 424 are met.
I.R.C. Section 424 provides that the excess of the aggregate fair market value
of the shares subject to the options immediately after the substitution or
assumption over the aggregate option price of such shares is not more than the
excess of the aggregate fair market value of all shares subject to the option
immediately before such substitution or assumption over the aggregate option
price of such shares. Section 424 also provides that the new option or the
assumption of the old option must not give the employee additional benefits
which he did not have under the old option. If the terms of the old option are
modified, extended, or renewed, such modification, extension, or renewal shall
be considered the granting of a new option which will disqualify the option as
an incentive stock option.

46
<PAGE> 8
The shareholders of Acquired Corporation, in lieu of receiving BancGroup
options, can elect to receive shares of BancGroup common stock for the
difference between the exercise price of Acquired Corporation options and the
fair market value of BancGroup stock at the effective date of the Agreement.
This election, if made, is effectively a "cashless exercise" of an incentive
stock option (i.e. the option holder is treated as exercising all of the options
and remitting a portion of the Bancgroup stock to Acquired Corporation in
satisfaction of the exercise price ("foregone stock"). The cashless exercise of
Acquired Corporation incentive stock options will result in the option holder
recognizing ordinary income equal to the amount of the bargain purchase element
of the Bancgroup stock foregone. In addition, if Acquired Corporation's
incentive stock plan does not have a cashless exercise feature, the cashless
exercise of an incentive stock option by an option holder could be interpreted
as a material modification under I.R.C. Section 424. If the cashless exercise
feature constituted a material modification, all incentive stock options of
Acquired Corporation would lose their status as incentive stock options and
would be taxed as nonqualified stock options. The disqualification of an
incentive stock option would entitle Acquired Corporation to a compensation
deduction when the option is exercised.

NONQUALIFIED STOCK OPTIONS

The assumption and conversion of Acquired Corporation nonqualified stock options
into BancGroup nonqualified stock options pursuant to the merger will not result
in current federal income tax consequences if neither the nonqualified options
to purchase shares of Acquired Corporation stock nor the substituted options to
purchase BancGroup stock have a readily ascertainable value. I.R.C. Section
83(e) provides that I.R.C. Section 83 does not apply to the transfer of an
option without a readily ascertainable fair market value. The regulations under
Section 1.83-7 state that if an option is not actively traded on an established
market, the option does not have a readily ascertainable fair market value when
granted unless a taxpayer can show that the option is transferable by the
optionees; the option is exercisable immediately in full by the optionee; the
option or property subject to the option is not subject to any restriction or
condition that has a significant effect upon the fair market value of the
option; and, the fair market value of the option privilege is readily
ascertainable under the provision for determining fair market value in the case
of options not actively traded on an established market.

The shareholders of Acquired Corporation, in lieu of receiving BancGroup
options, can elect to receive shares of BancGroup common stock for the
difference between the exercise price of Acquired Corporation options and the
fair market value of BancGroup stock at the effective date of the Agreement. The
cashless exercise of nonqualified stock options does not alter the timing or
character of income recognition. The shareholders of Acquired Corporation will
recognize ordinary income for the fair market value of the stock received in
conjunction with the exercise of the options (i.e. the difference between the
fair market value of Bancgroup stock and the exercise price). Acquired
Corporation is entitled to a corresponding compensation deduction of the same
amount.

47
<PAGE> 9
SUMMARY

The merger of BancGroup and Acquired Corporation will qualify as a tax-free
reorganization within the meaning of I.R.C. Section 368(a)(1)(A). BancGroup's
basis in Acquired Corporation's assets will be the same as Acquired
Corporation's basis in its assets before the merger. The merger of Colonial Bank
and Bank will also qualify as a tax-free reorganization within the meaning of
I.R.C. Section 368(a)(1)(A). Colonial Bank's basis in Bank's assets will be the
same as Bank's basis in its assets before the merger. Acquired Corporation
shareholders will retain a substituted basis in the shares of BancGroup stock
received in the merger decreased by the amount of cash received and increased by
the amount of gain recognized in the deal. The only taxable consequences will be
to those shareholders who receive cash in lieu of fractional shares and those
shareholders who receive solely cash in the exchange upon perfecting their
dissenter's rights. Shareholders receiving cash must examine their actual and
constructive ownership of Acquired Corporation and BancGroup stock for purposes
of determining the tax consequences of the cash payments.

The cashless exercise of Acquired Corporation incentive stock options will
result in the option holders recognizing ordinary income equal to the amount of
the bargain purchase element of the BancGroup stock foregone. In addition, there
is a risk that a cashless exercise of incentive stock options could be treated
as a material modification under I.R.C. Section 424, subjecting all incentive
stock options issued by Acquired Corporation to taxation as nonqualified stock
options. The cashless exercise of Acquired Corporation nonqualified stock
options will result in the option holders recognizing ordinary income equal to
the fair market value of stock received, with a corresponding compensation
deduction to Acquired Corporation.

If you have any questions or comments, please call Thomas Lee or Mark Borden at
(205) 252-8400.

Very Truly Yours,

Coopers & Lybrand L.L.P.

<PAGE> 1
EXHIBIT 23(A)

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in this registration statement on
Form S-4 of our report dated February 20, 1997, on our audits of the
consolidated financial statements of The Colonial BancGroup, Inc., as of
December 31, 1996 and 1995 and for each of the three years in the period ended
December 31, 1996 and our report dated February 20, 1997, except Note 2 as to
which the date is March 5, 1997, on our audits of the supplemental consolidated
financial statements of The Colonial BancGroup Inc., as of December 31, 1996 and
1995, and for each of the three years in the period ended December 31, 1996. We
also consent to the reference to our firm under the caption "Experts".

/s/ Coopers & Lybrand L.L.P.

Montgomery, Alabama
May 2, 1997

<PAGE> 2
CONSENT OF TAX ACCOUNTANTS

We consent to the reference in this registration statement on Form S-4 of our
firm under the caption "The Merger - Certain Federal Income Tax Consequences",
and to the inclusion of our opinion at Exhibit 8 of the registration statement.

/s/ Coopers & Lybrand L.L.C.

Birmingham, Alabama
May 2, 1997

<PAGE> 1

EXHIBIT 23(B)

CONSENT OF MILLER, HAMILTON, SNIDER & ODOM, L.L.C.

CONSENT OF COUNSEL

THE COLONIAL BANCGROUP, INC.

WE HEREBY CONSENT TO USE IN THIS FORM S-4 REGISTRATION STATEMENT OF THE
COLONIAL BANCGROUP, INC., OF OUR NAME IN THE PROSPECTUS, WHICH IS A PART OF SUCH
REGISTRATION STATEMENT, UNDER THE HEADING "LEGAL MATTERS," TO THE SUMMARIZATION
OF OUR OPINION REFERENCED THEREIN, AND TO THE INCLUSION OF OUR OPINION AT
EXHIBIT 5 OF THE REGISTRATION STATEMENT.

/s/ MILLER, HAMILTON, SNIDER & ODOM, L.L.C.

MAY 2, 1997

<PAGE> 1

EXHIBIT 23(C)

CONSENT OF CARTER, BELCOURT & ATKINSON, P.A.

CONSENT OF INDEPENDENT ACCOUNTANTS

WE CONSENT TO THE USE IN THIS REGISTRATION STATEMENT ON FORM S-4 OF OUR
REPORT DATED FEBRUARY 14, 1997, ON OUR AUDIT OF THE CONSOLIDATED FINANCIAL
STATEMENTS OF FIRST COMMERCE BANKS OF FLORIDA, INC. AS OF DECEMBER 31, 1996 AND
1995 AND FOR THE YEARS THEN ENDED AND TO THE REFERENCE TO OUR FIRM UNDER THE
HEADING "EXPERTS."

/s/ CARTER, BELCOURT & ATKINSON, P.A.

APRIL 22, 1997

<PAGE> 1

EXHIBIT 23(D)

CONSENT OF AUSTIN ASSOCIATES, INC.

CONSENT

THE COLONIAL BANCGROUP, INC.

WE HEREBY CONSENT TO USE IN THIS FORM S-4 REGISTRATION STATEMENT OF THE
COLONIAL BANCGROUP, INC., OF OUR NAME IN THE PROSPECTUS, WHICH IS A PART OF SUCH
REGISTRATION STATEMENT, UNDER THE HEADINGS "APPROVAL OF THE MERGER - OPINION OF
FINANCIAL ADVISOR," TO THE SUMMARIZATION OF OUR OPINION REFERENCED THEREIN, AND
TO THE INCLUSION OF SUCH OPINION AT APPENDIX B TO THE PROSPECTUS.

/s/ AUSTIN ASSOCIATES, INC.

BY: /s/ CRAIG J. MANCINOTTI
--------------------------
CRAIG J. MANCINOTTI
ITS: EXECUTIVE VICE PRESIDENT

DATE: APRIL 18, 1997

<PAGE> 1

EXHIBIT 23(E)

CONSENT OF SMITH, MACKINNON, GREELEY, BOWDOIN & EDWARDS, P.A.

CONSENT OF COUNSEL

THE COLONIAL BANCGROUP, INC.

WE HEREBY CONSENT TO THE USE IN THIS FORM S-4 REGISTRATION STATEMENT
OF THE COLONIAL BANCGROUP, INC., OF OUR NAME IN THE PROSPECTUS, WHICH IS A PART
OF SUCH REGISTRATION STATEMENT, UNDER THE HEADING "LEGAL MATTERS".

/s/ SMITH, MACKINNON, GREELEY, BOWDOIN & EDWARDS, P.A.

MAY 5, 1997

<PAGE> 1

EXHIBIT 99(A)

FORM OF PROXY OF FIRST COMMERCE

53
<PAGE> 2

SOLICITED BY THE BOARD DIRECTORS
PROXY

FIRST COMMERCE BANKS OF FLORIDA, INC.
SPECIAL MEETING OF SHAREHOLDERS
, 1997

The undersigned hereby appoints and
, and either of them, or such other persons as the board of directors
of First Commerce Banks of Florida, Inc. ("First Commerce"), may designate,
proxies for the undersigned, with full power of substitution, to represent the
undersigned and to vote all of the shares of common stock of First Commerce at
the special meeting of stockholders to be held on , 1997, and at any
and all adjournments thereof.

1. To ratify and approve the Agreement and Plan of Merger dated as of March 24,
1997, pursuant to which First Commerce will be merged with and into The
Colonial BancGroup, Inc.

FOR [ ] AGAINST [ ] ABSTAIN [ ]

2. In their discretion, to vote on such other matters as may properly come
before the meeting, but which are not now anticipated, and to vote upon
matters incident to the conduct of the meeting.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF FIRST
COMMERCE AND WILL BE VOTED AS DIRECTED HEREIN. IF NO DIRECTION IS GIVEN, THIS
PROXY WILL BE VOTED FOR PROPOSAL 1 AND IN ACCORDANCE WITH THE DISCRETION OF THE
PROXY HOLDERS RESPECTING SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
SPECIAL MEETING BUT WHICH ARE NOT NOW ANTICIPATED, AND TO VOTE UPON MATTERS
INCIDENT TO THE CONDUCT OF THE SPECIAL MEETING.

Dated: 1997
--------------------,

Phone No:
-----------------------

--------------------------------
Signature of Shareholder

--------------------------------
Signature of Shareholder, if
more than one)

Please sign exactly as your name
appears on the envelope in which
this material was mailed. If
shares are held jointly, each
stockholder must sign. Agents,
executors, administrators,
guardians and trustees must give
full title as such. Corporations
should sign by their president
or authorized officer.