<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED
March 31, 1997
--------------
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
TO .
-------------------- -------------------
COMMISSION FILE NUMBER 1-13508
THE COLONIAL BANCGROUP, INC.
(A DELAWARE CORPORATION)
EMPLOYER IDENTIFICATION NUMBER 63-0661573
ONE COMMERCE STREET, MONTGOMERY, ALABAMA 36104
TELEPHONE: (334) 240-5000
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Shares of common stock ($2.50 par value) outstanding at April 30, 1997 was
40,740,357.
<PAGE> 2
Part I, Item 1
Condensed Consolidated Financial Statements
<PAGE> 3
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION (Unaudited)
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
March 31 December 31, March 31,
1997 1996 1996
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets: (Restated) (Restated)
Cash and due from banks................................................ $ 179,042 $ 222,059 $ 190,879
Interest-bearing deposits in banks..................................... 5,767 5,143 5,584
Federal funds sold..................................................... 59,998 15,990 56,990
Securities available for sale.......................................... 454,175 440,115 377,654
Investment securities.................................................. 317,473 282,110 264,791
Mortgage loans held for sale........................................... 142,510 157,966 195,297
Loans, net of unearned income.......................................... 4,338,994 4,074,633 3,587,951
Less:
Allowance for possible loan losses................................... (54,310) (50,761) (46,847)
- -----------------------------------------------------------------------------------------------------------------------
Loans, net............................................................. 4,284,684 4,023,872 3,541,104
Premises and equipment................................................. 97,651 87,514 77,371
Excess of cost over tangible and identified intangible
assets acquired, net................................................. 39,526 30,381 29,317
Mortgage servicing rights.............................................. 114,616 98,856 88,788
Other real estate owned................................................ 9,567 9,270 11,990
Accrued interest and other assets...................................... 92,319 93,575 93,767
- -----------------------------------------------------------------------------------------------------------------------
Total.................................................................. $5,797,328 $5,466,851 $4,933,532
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity:
Deposits............................................................... $4,525,183 $4,113,934 $3,747,987
FHLB short-term borrowings............................................. 540,000 715,000 526,571
Other short-term borrowings............................................ 138,927 126,262 178,620
Subordinated debt...................................................... 7,522 8,612 10,766
Trust preferred securities............................................. 70,000 -- --
Other long-term debt................................................... 15,762 30,480 27,330
Other liabilities...................................................... 89,804 85,567 88,726
- -----------------------------------------------------------------------------------------------------------------------
Total liabilities...................................................... 5,387,198 5,079,855 4,580,000
- -----------------------------------------------------------------------------------------------------------------------
Shareholders' equity:
Preference Stock $2.50 par value; 1,000,000 shares
authorized, none issued............................................
Common Stock, $2.50 par value; 44,000,000 shares
authorized, 39,083,681, 37,545,561 and 36,222,732 shares issued
and outstanding at March 31, 1997, December 31, 1996 and
March 31, 1996 respectively......................................... 97,709 93,864 90,557
Treasury Stock (135,065 shares)...................................... (3,152) -- --
Additional paid in capital........................................... 170,464 159,640 154,172
Retained earnings.................................................... 148,438 134,523 112,669
Unearned compensation................................................ (1,978) (1,603) (1,685)
Unrealized losses on securites available for sale, net of taxes...... (1,351) 572 (2,181)
- -----------------------------------------------------------------------------------------------------------------------
Total shareholders' equity............................................. 410,130 386,996 353,532
- -----------------------------------------------------------------------------------------------------------------------
Total.................................................................. $5,797,328 $5,466,851 $4,933,532
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: Restated financial results above reflect the January 1997 mergers of
Colonial BancGroup with Jefferson Bancorp, Inc. and D/W Bankshares, Inc.
These mergers were accounted for as poolings of interests and the
financial results restated accordingly.
See Notes to the Unaudited Condensed Consolidated Financial Statements
<PAGE> 4
<TABLE>
<CAPTION>
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES Three Months Ended
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) March 30,
(Dollars in thousands, except per share amounts) --------------------------
1997 1996
- ----------------------------------------------------------------------------------------------
(Restated)
<S> <C> <C>
Interest Income:
Interest and fees on loans.................... $ 96,759 $ 81,806
Interest on investments....................... 12,169 9,491
Other interest income......................... 623 863
- ----------------------------------------------------------------------------------------------
Total interest income......................... 109,551 92,160
- ----------------------------------------------------------------------------------------------
Interest Expense:
Interest on deposits.......................... 44,493 37,986
Interest on short-term borrowings............. 10,076 8,513
Interest on long-term debt.................... 1,543 673
- ----------------------------------------------------------------------------------------------
Total interest expense........................ 56,112 47,172
- ----------------------------------------------------------------------------------------------
Net Interest Income........................... 53,439 44,988
Provision for possible loan losses............ 2,854 1,750
- ----------------------------------------------------------------------------------------------
Net Interest Income After Provision for
Possible Loan Losses........................ 50,585 43,238
- ----------------------------------------------------------------------------------------------
Noninterest Income:
Mortgage servicing and origination fees....... 7,872 6,937
Service charges on deposit accounts........... 5,935 5,390
Other charges, fees and commissions........... 1,433 1,232
Securities gains (losses), net................ (18) 175
Other income.................................. 3,179 3,906
- ----------------------------------------------------------------------------------------------
Total noninterest income...................... 18,401 17,640
- ----------------------------------------------------------------------------------------------
Noninterest Expense:
Salaries and employee benefits................ 17,596 16,860
Occupancy expense, net........................ 4,238 3,633
Furniture and equipment expenses.............. 3,449 3,079
Amortization of mortgage servicing rights..... 3,699 2,742
Amortization of intangible assets............. 615 498
Other expense................................. 13,065 13,000
- ----------------------------------------------------------------------------------------------
Total noninterest expense..................... 42,662 39,812
- ----------------------------------------------------------------------------------------------
Income before income taxes 26,324 21,066
Applicable income taxes....................... 9,601 7,443
- ----------------------------------------------------------------------------------------------
Net Income.................................... $16,723 $13,623
- ----------------------------------------------------------------------------------------------
Earnings per share:
Primary...................................... $ .42 $ .36
Fully diluted................................ .42 .35
- ----------------------------------------------------------------------------------------------
</TABLE>
NOTE: Restated financial results above reflect the January 1997 mergers of
Colonial BancGroup with Jefferson Bancorp, Inc. and D/W Bankshares, Inc.
These mergers were accounted for as poolings of interests and the financial
results restated accordingly.
See Notes to the Unaudited Condensed Consolidated Financial Statements
<PAGE> 5
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flow
(Unaudited)(In Thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
-------- --------
(Restated)
<S> <C> <C>
Net cash provided by (used in) operating activities $12,464 (61,249)
-------- --------
Cash flows from investing activities:
Proceeds from maturities of securities available
for sale 43,500 41,466
Proceeds from sales of securities available for sale 12,821 17,307
Purchase of securities available for sale (4,617) (71,537)
Proceeds from maturities of investment securities 13,370 10,749
Purchase of investment securities (40,400) (10,007)
Net decrease in short-term securities -- 11,100
Net increase in loans (79,866) (77,785)
Cash received in bank acquisitions/dispositions 16,114 3,000
Capital expenditures (7,170) (5,432)
Proceeds from sale of other real estate owned 2,447 1,347
Other, net 2 1,076
-------- --------
Net cash used in investing activities (43,799) (78,716)
-------- --------
Cash flows from financing activities:
Net increase in demand, savings, and time deposits 146,977 69,046
Net (decrease) increase in federal funds purchased,
repurchase agreements and other short-term borrowings (162,349) 90,103
Proceeds from issuance of long-term debt 70,000 350
Repayment of long-term debt (15,748) (2,131)
Proceeds from issuance of common stock 3,050 717
Acquisition of treasury stock (3,152) --
Dividends paid (5,828) (4,187)
-------- --------
Net cash provided by financing activities 32,950 153,898
-------- --------
Net increase/decrease in cash and cash equivalents 1,615 13,933
Cash and cash equivalents at beginning of year 243,192 171,688
-------- --------
Cash and cash equivalents at March 31 $244,807 $185,621
-------- --------
Supplemental Disclosure of cash flow information:
Cash paid during the nine months for:
Interest $ 57,279 $41,082
Income taxes 1,809 276
Non-cash investing activities:
Transfer of loans to other real estate $4,072 $2,284
Origination of loans for the sale of other real estate -- 164
Non-cash financing activities:
Conversion subordinated debentures $1,081 $7,656
Assets acquired in business combinations 225,799 -
Liabilities assumed in business combinations 207,504 -
</TABLE>
See Notes to the Unaudited Condensed Consolidated Financial Statements.
<PAGE> 6
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements
NOTE A - ACCOUNTING POLICIES/RESTATEMENT
The Colonial BancGroup, Inc. ("BancGroup") and its subsidiaries have
not changed their accounting and reporting policies from those stated in the
1996 annual report. These unaudited interim financial statements should be read
in conjunction with the audited financial statements and footnotes included in
BancGroup's 1996 annual report and also the restated audited financial
statements and footnotes included in BancGroup's 8-K filing dated April 15,
1997. The March 31, 1996 financial statements have been restated to give
retroactive effect to the pooling-of-interests business combinations with
Jefferson Bancorp., Inc. D/W Bankshares, Inc., Commercial Bancorp of Georgia,
Inc. and Southern Banking Corporation.
In the opinion of BancGroup, the accompanying unaudited condensed
consolidated financial statements contain all adjustments (consisting only of
normal recurring accruals) necessary to present fairly the financial position
as of March 31, 1997 and 1996 and the results of operations and cash flows for
the interim periods ended March 31, 1997 and 1996. All 1997 interim amounts are
subject to year-end audit, and the results of operations for the interim period
herein are not necessarily indicative of the results of operations to be
expected for the year.
NOTE B - BUSINESS COMBINATONS
On January 3, 1997, Jefferson Bancorp, Inc. ("Jefferson") was merged
into BancGroup. Jefferson's subsidiary, Jefferson Bank of Florida was merged
into BancGroup's existing subsidiary bank, Colonial Bank, headquartered in
Orlando, Florida. At December 31, 1996 Jefferson had approximately $473 million
in assets and deposits and other liabilities of approximately $441 million.
Jefferson operated fifteen offices in Miami and South Florida.
On January 3, 1997, Tomoka Bancorp, Inc. ("Tomoka") was merged into
BancGroup. Tomoka's subsidiary, Tomoka State Bank, was merged into BancGroup's
existing subsidiary bank, Colonial Bank, headquartered in Orlando, Florida.
At December 31, 1996, Tomoka had approximately $77 million in assets and
deposits and other liabilities of approximately $70 million. Tomoka operates
four offices in Ormond Beach, New Smyrna Beach, Pierson and Port Orange,
Florida.
On January 9, 1997, First Family Financial Corporation ("First
Family") was merged into BancGroup. First Family's subsidiary, First
Family Bank was merged into BancGroup's existing subsidiary bank, Colonial
Bank, headquartered in Orlando, Florida in April 1997. At December 31, 1996,
First Family had approximately $167 million in assets and deposits and other
liabilities of approximately $158 million. First Family operates six offices
in part of the Orlando metropolitan area.
On January 31, 1997, D/W Bancshares, Inc. ("D/W") was merged into
BancGroup. D/W's subsidiary, Dalton/Whitfield Bank & Trust, was merged into
BancGroup's existing subsidiary bank, Colonial Bank, headquartered in
Lawrenceville, Georgia. At December 31, 1996, D/W had approximately $139
million in assets and deposits and other liabilities of approximately $129
million. D/W operated three branches in the Dalton Georgia area.
<PAGE> 7
On March 5, 1997, Shamrock Holding, Inc. ("Shamrock") was merged into
BancGroup. Shamrock's subsidiary, Union Bank, merged into BancGroup's
existing subsidiary, Colonial Bank, headquartered in Montgomery, Alabama, in
April 1997. Union Bank had assets of approximately $54 million and
stockholders' equity of $7.3 million.
Presented below is BancGroup's summary operating information for the
quarter ended March 31, 1996, showing the effect of business combinations
described above.
<TABLE>
<CAPTION>
As Previously Effect Currently
Reported of Poolings Reported
<S> <C> <C> <C>
Net interest income $33,406 $11,582 $44,988
Noninterest income 14,775 2,865 17,640
Net income 11,054 2,569 13,623
</TABLE>
BancGroup entered into a definitive agreement dated November 18,
1996, to merge Fort Brooke Bancorporation ("Fort Brooke") into BancGroup. Fort
Brooke is a Florida corporation and is a holding company for Fort Brooke Bank
located in Tampa, Florida. Fort Brooke will be merged into BancGroup's
subsidiary Colonial Bank, headquartered in Orlando, Florida. At December 31,
1996, Fort Brooke had assets of approximately $209 million, deposits of
approximately $186 million and stockholders' equity of approximately $17
million. The merger was consummated on April 22, 1997.
BancGroup entered into a definitive agreement dated March 6, 1997, to
merge Great Southern Banccorp ("Great Southern") into BancGroup. 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 into
BancGroup's existing subsidiary, Colonial Bank. At December 31, 1996, Great
Southern had assets of approximately $119 million, deposits of approximately
$108 million and stockholders' equity of $10 million.
BancGroup also entered into a definitive agreement dated March 24,
1997, to merge First Commerce Banks of Florida, Inc. ("First Commerce") into
BancGroup. First Commerce is a holding company for First Commerce Bank of Polk
County located in Winter Haven, Florida. First Commerce will merge into
BancGroup's existing subsidiary, Colonial Bank. At December 31, 1996, First
Commerce had assets of approximately $106 million, deposits of approximately
$95 million and stockholders' equity of $11 million.
NOTE C - COMMITMENTS AND CONTINGENCIES
BancGroup's subsidiary banks make loan commitments and incur contingent
liabilities in the normal course of business which are not reflected in the
consolidated statements of condition.
NOTE D - ACCOUNTING CHANGE
In June 1996, the Financial Accounting Standards Board issued SFAS No.
125, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities, which requires an entity to recognize the
financial and servicing assets it controls and the liabilities it has incurred,
derecognize financial assets when control has been surrendered, and derecognize
liabilities when extinguished.
<PAGE> 8
This statement distinguishes between transfers that are sales and those that
are secured borrowings.
SFAS No. 125 also provides implementation guidance for assessing
isolation of transferred assets and for accounting for transfers of partial
interests, servicing of financial assets, securitizations, transfers of
sales-type and direct financing lease receivables, securities lending
transactions, repurchase agreements, loan syndications and participations, risk
participations in banker's acceptances, factoring arrangements, transfers of
receivables with recourse, and extinguishments of liabilities.
BancGroup adopted SFAS No 125 as of January 1, 1997. The adoption of
SFAS No. 125 did not have a material impact on BancGroup's financial statements.
This statement is effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after December 31, 1996 and is to be
applied prospectively. Earlier or retroactive application is not permitted.
However, in December 1996, the Financial Accounting Standards Board issued SFAS
No. 127, "Deferral of the Effective Date of Certain Provisions of FASB
Statement No. 125 This statement defers the effective date of certain provisions
for one year (December 31, 1997). The deferred provisions relate to repurchase
agreements, dollar-roll transactions, securities lending, and similar
transactions. The effective date for all other transfers and servicing of
financial assets is unchanged.
In February 1997, the Financial Accounting Standards Board issued SFAS
No. 128, Earnings Per Share, which establishes standards for computing and
presenting earnings per share (EPS) and applies to entities with publicly held
common stock or potential common stock. This statement replaces the
presentation of primary EPS with a presentation of basic EPS and requires dual
presentation of basic and diluted EPS on the face of the income statement for
all entities with complex capital structures and requires a reconciliation of
the numerator and denominator of the basic EPS computation to the numerator and
denominator of the diluted EPS computation.
This statement is effective for financial statements issued for
periods ending after December 15, 1997, including interim periods; earlier
application is not permitted. Under SFAS No. 128, BancGroup's basic EPS would
be $.43 and $.38 and fully-diluted EPS would not change from amounts currently
reported for the three months ended March 31, 1997 and 1996, respectively.
<PAGE> 9
Part I, Item 2
Management's Discussion and Analysis of
Financial Condition and Results of Operations
<PAGE> 10
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition and Results of
Operations
FINANCIAL CONDITION:
Ending balances of total assets, securities, mortgage loans held for
sale, net loans, and deposits changed from December 31, 1996 to March 31, 1997
as follows (in thousands):
<TABLE>
<CAPTION>
Increase (Decrease)
-------------------
Amount %
-------- -----
<S> <C> <C>
Total assets $330,477 6.1%
Securities 49,423 6.8%
Mortgage loans held
for sale (15,456) (9.8%)
Loans, net of
unearned income 264,361 6.5%
Deposits 411,249 10.0%
</TABLE>
Securities:
Investment securities and securities available for sale have increased
$49 million from December 31, 1996 to March 31, 1997. The increase in
securities resulted from approximately $78 million from acquisitions and the
remainder resulting from normal funding operations of the Company.
Loans and Mortgage Loans Held for Sale:
The increase in loans, net of unearned income, of $264 million is
partially from internal loan growth of approximately $72 million at an
annualized rate of 7%. The remaining increase of $190 million resulted from the
purchase of assets of First Family Financial Corporation, Tomoka Bancorp, Inc.,
and Shamrock Holding, Inc. located in Eustis and Ormond Beach, Florida, and
Evergreen, Alabama respectively. Loans increased at a 16% internal growth
rate for the full year in 1996.
Mortgage loans held for sale are funded on a short-term basis (less
than 90 days) while they are being packaged for sale in the secondary market by
Colonial Mortgage Company, a wholly owned subsidiary of Colonial Bank. Loans
originated amounted to approximately $285 million and $308.0 million and sales
thereof amounted to approximately $300.4 million and $224.8 million for the
three months ended March 31, 1997 and 1996, respectively. The decrease in
originations was primarily due to the higher interest rates which resulted in
a decrease in refinancings as well as new originations.
<PAGE> 11
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
Management's Discussion, Continued
Gross loans by category and summary of loan loss experience are shown in the
following schedules.
<TABLE>
<CAPTION>
GROSS LOANS BY CATEGORY March 31, Dec. 31, March 31,
(In thousands) 1997 1996 1996
(Restated) (Restated)
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Commercial, financial, and
agricultural $ 525,701 $ 560,824 $ 515,901
Real estate-commercial 1,083,164 983,673 873,859
Real estate-construction 465,604 446,288 398,850
Real estate-residential 1,923,996 1,767,003 1,513,832
Installment and consumer 287,836 264,307 239,420
Other 55,553 55,883 48,941
- -----------------------------------------------------------------------------------
Total loans $4,341,854 $4,077,978 $3,590,803
- -----------------------------------------------------------------------------------
Percent of loans in each
category to total loans:
Commercial financial, and
agricultural 12.1% 13.8% 14.4%
Real estate-commercial 25.0% 24.1% 24.3%
Real estate-construction 10.7 % 10.9% 11.1%
Real estate-residential 44.3% 43.3% 42.1%
Installment and consumer 6.6% 6.5% 6.7%
Other 1.3% 1.4% 1.4%
- -----------------------------------------------------------------------------------
100.0% 100.0% 100.0%
- -----------------------------------------------------------------------------------
</TABLE>
Loans collateralized by commercial real estate loans increased
approximately $99 million during the first three months of 1997. Loans secured
by residential real estate increased $157 million for the same period. These
loan categories continue to be a significant source of loan growth and are
concentrated in various areas in Alabama, the metropolitan Atlanta market in
Georgia as well as Central and South Florida.
<PAGE> 12
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
Management's Discussion, Continued
SUMMARY OF LOAN LOSS EXPERIENCE
<TABLE>
<CAPTION>
Three Months Year Three Months
Ended Ended Ended
March 31, Dec. 31, March 31,
(In thousands) 1997 1996 1996
(Restated) (Restated)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Allowance for possible loan
losses - January 1 $50,761 $45,215 $45,215
Charge-offs:
Commercial, financial, and
agricultural 1,037 3,078 501
Real estate-commercial 125 1,941 602
Real estate-construction 3 1,774 23
Real estate-residential 202 837 102
Installment and consumer 1,171 3,281 546
Other 247 594 64
- --------------------------------------------------------------------------------
Total charge-offs 2,785 11,505 1,838
- --------------------------------------------------------------------------------
Recoveries:
Commercial, financial, and
agricultural 126 1,016 181
Real estate-commercial 3 1,317 1,126
Real estate-construction 35 1 1
Real estate-residential 35 693 84
Installment and consumer 387 1,538 429
Other 36 85 19
- --------------------------------------------------------------------------------
Total recoveries 622 4,650 1,840
- --------------------------------------------------------------------------------
Net charge-offs(recoveries) 2,163 6,855 (2)
Addition to allowance charged to
operating expense 2,854 11,783 1,750
Allowance added (deducted) from bank
mergers/disposals 2,858 618 (120)
- --------------------------------------------------------------------------------
Allowance for possible loan
losses-end of period $54,310 $50,761 $46,847
- --------------------------------------------------------------------------------
</TABLE>
<PAGE> 13
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
Management's Discussion, Continued
Asset quality as measured by nonperforming assets remains very good at
0.80% of net loans and other real estate. Nonperforming assets have increased
$1.7 million from December 31, 1996. The increase in nonperforming assets
resulted primarily from a $1.2 million increase in nonaccrural loans and a
$.6 million increase in other real estate. The increase in nonaccrual loans
is primarily from the acquisition of First Family Financial Corporation and
Tomoka Bancorp, Inc. Management continuously monitors and evaluates
recoverability of problem assets and adjusts loan loss reserves accordingly.
The loan loss reserve is 1.25% of loans at March 31, 1997. The increase in
allowance since year end has been due to provisions in excess of net
charge-offs totaling $0.7 million and reserves of $2.8 million from the purchase
of First Family Financial Corporation, Tomoka Bancorp, Inc. and Shamrock
Holdings, Inc. The provisions in excess of net charge-offs have been made
primarily as a result of loan growth.
Nonperforming assets are summarized below (in thousands):
<TABLE>
<CAPTION>
March 31, Dec. 31, March 31,
1997 1996 1996
(Restated) (Restated)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Nonaccrual loans $23,143 $21,982 $18,256
Restructured loans 1,974 1,683 1,173
- -------------------------------------------------------------------------------------------
Total nonperforming loans* 25,117 23,665 19,429
Other real estate owned 9,567 8,956 12,732
Repossessions -- 314 --
- -------------------------------------------------------------------------------------------
Total nonperforming assets* $34,684 $32,935 $32,161
- -------------------------------------------------------------------------------------------
Aggregate loans contractually
past due 90 days for which
interest is being accrued $ 6,257 $ 6,695 $ 4,415
Net charge-offs (recoveries)
year-to-date $ 2,163 $ 6,855 $ (68)
- -------------------------------------------------------------------------------------------
RATIOS
Period end:
Total nonperforming assets as
a percent of net loans and
other real estate 0.80% 0.81% 0.89%
Allowance as a percent of net
loans 1.25% 1.25% 1.31%
Allowance as a percent of
</TABLE>
<PAGE> 14
<TABLE>
<S> <C> <C> <C>
nonperforming assets 157% 154% 146%
Allowance as a percent of
nonperforming loans 216% 215% 241%
For the period ended:
Net charge-offs
as a percent of average net
loans-(annualized basis) 0.20% 0.18% (.01)%
- -------------------------------------------------------------------------------------------
</TABLE>
* Total does not include loans contractually past due 90 days or more which
are still accruing interest.
<PAGE> 15
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
Management's Discussion, Continued
Management, through its loan officers, internal loan review staff, and
external examinations by regulatory agencies and independent auditors, has
identified approximately $223 million of potential problem loans not included
above. The status of these loans is reviewed at least quarterly by loan
officers and the centralized loan review function and annually by independent
auditors and regulatory agencies. In connection with such reviews collateral
values are updated where considered necessary. If collateral values are judged
insufficient and other sources of repayment inadequate the loans are reduced to
estimated recoverable amounts through increases in reserves allocated to the
loans or charge-offs. As of March 31, 1997 substantially all of these loans
are current with their existing repayment terms. Given the reserves and the
ability of the borrowers to comply with the existing repayment terms,
management believes any exposure from these potential problem loans has been
adequately addressed at the present time.
The above nonperforming loans and potential problem loans represent
all material credits for which management has doubts as to the ability of the
borrowers to comply with the loan repayment terms. Of these loans, management
believes it is probable that loans totaling $22 million will not be collected
as scheduled and therefore are considered impaired. Management also expects
that the resolution of these problem credits as well as other performing loans
will not materially impact future operating results, liquidity or capital
resources.
Allocations of the allowance for possible loan losses are made on an
individual loan basis for all identified potential problem loans with a
percentage allocation for the remaining portfolio. The allocations of the total
allowance represent an approximation of the reserves for each category of loans
based on management's evaluation of risk within each loan type.
<PAGE> 16
ALLOCATION OF THE ALLOWANCE FOR POSSIBLE LOAN LOSSES
<TABLE>
<CAPTION>
March 31, Dec. 31, March 31,
(In thousands) 1997 1996 1996
(Restated) (Restated)
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Commercial, financial, and
agricultural $10,078 $10,644 $ 9,058
Real estate-commercial 19,000 15,705 14,133
Real estate-construction 9,926 9,574 5,253
Real estate-mortgage 9,620 8,835 14,387
Installment and consumer 4,661 3,914 2,452
Other 1,025 2,089 1,564
- ------------------------------------------------------------------------
TOTAL $54,310 $50,761 $46,847
- ------------------------------------------------------------------------
</TABLE>
<PAGE> 17
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
Management's Discussion, Continued
LIQUIDITY:
The maintenance of an adequate liquidity position is a principal
component of BancGroup's asset/liability management strategy. BancGroup's
governing policy provides for daily and longer term monitoring of both sources
and uses of funds to properly maintain the cash position. To assist in funding
a projected 18% annualized growth in loans, BancGroup has credit facilities at
the Federal Home Loan Bank (FHLB). FHLB of Atlanta has established credit
availability in an amount up to $1.1 billion with only $549 million outstanding
at March 31, 1997. This source of credit reduces BancGroup's dependency on
deposits as a source of liquidity resulting in a loan to deposit ratio of
96% at March 31, 1997 and 99% at December 31, 1996. BancGroup has a brokered
Certificate of Deposit (CD) program in conjunction with Merrill Lynch and
Oppenheimer Capital to offer CD's in increments of $1,000 to $99,000 to out of
market customers at competitive rates ranging from 5.15% to 5.65% maturing in
6 to 24 month periods. At March 31, 1997, $176 million is outstanding under
this program. Rate sensitivity is also constantly monitored.
CAPITAL RESOURCES:
Management continuously monitors the capital adequacy and potential for
future growth. The primary measurement for these evaluations for a bank holding
company is its tier one leverage ratio. Tier one capital for BancGroup at March
31, 1997 consists of $410.1 million of equity and $70 million in trust preferred
securities less $39.5 million of intangibles providing a 7.85% leverage ratio at
March 31, 1997. The ratio of shareholders' equity to total assets at March 31,
1997 was 7.07% as compared to 7.08% at December 31, 1996. Capital levels are
sufficient to support future internally generated growth and fund the quarterly
dividend rates which are currently $0.15 per share.
BancGroup also has access to equity capital markets through both
public and private issuances. Management considers these sources and related
return in addition to internally generated capital in evaluating future
expansion, merger or acquisition opportunities.
On January 29, 1997, BancGroup issued, through a special purpose trust,
$70 million of Trust Preferred Securites in a private placement offering. The
securities bear interest at 8.92% and are subject to mandatory redemption by
BancGroup in whole or in part at any time after January 29, 2007 until maturity
in January 2027. The securities are subordinated to substantially all of
BancGroup's indebtedness.
<PAGE> 18
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
Management's Discussion, Continued
COMPARISON OF THE THREE ENDED MARCH 31, 1997 AND 1996:
SUMMARY:
BancGroup's net income for the quarter increased 23% to
$16,723,000 compared to $13,623,000 in the prior year. Fully diluted EPS
increased 20% to $.42 per share compared to $.35 per share for the same quarter
of the previous year.
The increase in net income is primarily attributable to increases in
interest earning assets and noninterest income partially off-set by a lower
interest margin and increases in loan loss provision and noninterest expenses.
<PAGE> 19
<TABLE>
<CAPTION>
THE COLONIAL BANCGROUP, INC.
AVERAGE VOLUME AND RATES
(Unaudited) Three Months Ended March 31,
(Dollars in thousands) ------------------------------------------------------------------------
1997 1996
---------------------------------- ----------------------------------
Average Average
Volume Interest Rate Volume Interest Rate
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Loans, net............................................... $4,282,368 $94,854 8.95% $3,540,598 $80,198 9.09%
Mortgage loans held for sale............................. 115,272 2,170 7.53% 108,473 2,060 7.60%
Investment securities and securities available for sale
and other interest-earning assets....................... 807,660 13,071 6.49% 709,864 10,683 6.04%
- ---------------------------------------------------------------------------------- -----------------------
Total interest-earning assets(1)......................... 5,205,300 $110,095 8.53% 4,358,935 $92,941 8.56%
- ---------------------------------------------------------------------------------- -----------------------
Nonearning assets........................................ 466,874 436,779
- ---------------------------------------------------------------------- ----------
Total assets........................................... $5,672,174 $4,795,714
- -----------------------------------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity:
Interest-bearing deposits................................ $3,711,191 $44,493 4.86% $3,086,783 $37,986 4.95%
Short-term borrowings.................................... 741,251 10,076 5.51% 624,871 8,513 5.48%
Long-term debt........................................... 76,805 1,543 8.15% 40,935 673 6.61%
- ---------------------------------------------------------------------------------- -----------------------
Total interest-bearing liabilities....................... 4,529,247 $56,112 5.02% 3,752,589 $47,172 5.06%
- ---------------------------------------------------------------------------------- -----------------------
Noninterest-bearing demand deposits...................... 652,200 616,863
Other liabilities........................................ 85,119 77,106
- ---------------------------------------------------------------------- ----------
Total liabilities........................................ 5,266,566 4,446,558
Shareholders' equity..................................... 405,608 349,156
- ---------------------------------------------------------------------- ----------
Total liabilities and shareholders' equity................. $5,672,174 $4,795,714
- -----------------------------------------------------------------------------------------------------------------------------------
Rate differential.......................................... 3.51% 3.50%
Net yield on interest-earning assets....................... $53,983 4.16% $45,769 4.20%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: Restated financial results above reflect the January 1997 mergers of
Colonial BancGroup with Jefferson Bancorp, Inc. and D/W Bankshares, Inc.
These mergers were accounted for as poolings of interests and the
financial results restated accordingly.
(1) Interest earned and average rates on obligations of states and political
subdivisions are reflected on a tax equivalent basis. Tax equivalent
interest earned is: actual interest earned times 145%. The taxable
equivalent adjustment has given effect to the disallowance of interest
expense deductions, for federal income tax purposes, related to certain
tax-free assets.
Dividends earned and average rates for preferred stocks are reflected on a
tax equivalent basis. Tax equivalent dividends are: actual dividends times
137.7%.
<PAGE> 20
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
ANALYSIS OF INTEREST INCREASES (DECREASES)
FOR THE THREE MONTHS ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
(Dollars in thousands) Three Months Ended March 31
1997 Change from 1996
, ----------------------------------------------------
Due to (1)
Total Volume Rate Mix
----------- ------------- --------- ---------------
<S> <C> <C> <C> <C>
Interest Income:
Total Loans, Net $ 14,656 $ 16,857 $ (1,239) $ (962)
Mortgage loans held for sale 110 129 (19) -
Investment securities and securities
available for sale and other interest-earning assets 2,388 1,477 799 112
--------- -------- -------- ---------
Total interest income (2) 17,154 18,463 (459) (850)
--------- -------- -------- ---------
Interest Expense:
Interest bearing deposits 6,507 7,727 (695) (525)
Short-term borrowings 1,563 1,594 47 (78)
Long-term debt 870 593 158 119
--------- -------- -------- ---------
Total interest expense 8,940 9,914 (490) (484)
--------- -------- -------- ---------
Net interest income $ 8,214 $ 8,549 $ 31 $ (366)
--------- -------- -------- ---------
</TABLE>
(1) Increases (decreases) are attributable to volume changes and rate changes on
the following basis: Volume Change = change in volume times old rate.
Rate Change = change in rate times old volume. The Mix Change =
change in volume times change in rate.
(2) Interest earned on obligations of state and political subdivisions is
reflected on a tax equivalent basis. Tax equivalent interest earned is:
actual interest earned times 145%. The taxable equivalent adjustment has
given effect to the disallowance of interest, for federal income tax
purposes, related to certain tax-free assets. Dividends earned on
preferred stock are reflected on a tax equivalent basis. Tax equivalent
dividends earned are: actual dividends times 137.7%. Tax equivalent
average rate is tax equivalent interest or dividends earned divided by
average volume.
<PAGE> 21
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES (RESTATED)
NET INTEREST INCOME:
Net interest income on a tax equivalent basis increased $8.2 million
to $54 million for the quarter ended March 31, 1997 from $45.8 million for the
quarter ended March 31, 1996. The net yield on interest earning assets
decreased from 4.20% to 4.16% for the three months ended March 31, 1996 and
1997, respectively, while the rate differential remained almost unchanged at
3.51% and 3.50% for the three month period ended March 31, 1997 and 1996,
respectively.
As reflected on the previous tables the increase for the three months
were primarily attributable to loan growth offset by decreasing rates. The
prime rate decreased to 8.5% in December 1995 and continued to decline to 8.25%
in 1996. During the first quarter of 1997 prime rate increased to 8.50%. This
increase in prime will be reflected in increasing rates as repricing occurs.
LOAN LOSS PROVISION:
The provision for loan losses for the first three months of 1997 was
$2,854,000 compared to $1,750,000 for the same period in 1996. Asset quality
remains good. The current allowance for loan losses provides a 157% coverage of
nonperforming assets compared to 154% at December 31, 1996 and 146% at March
31, 1996. See management's discussion on loan quality and the allowance for
possible loan losses presented in the Financial Condition section of this
report.
NONINTEREST INCOME:
Noninterest income increased $761,000 for the three months ended
March 31, 1997 compared to the same period in 1996. The increase is primarily
due to increased mortgage servicing related fee income of $935,000, additional
fees on deposit accounts of $545,000, and is offset by a decrease in other
income of $727,000 primarily related to the gain from the sale of a subsidiary
bank by Jefferson in February 1996.
<PAGE> 22
Colonial Mortgage provides additional sources of noninterest income to
BancGroup through fees from its $10.6 billion servicing portfolio as well as
loan originations from its 6 regional offices. Colonial Mortgage originates
loans in 36 states. Colonial Mortgage had noninterest income of $9.4 million
for the three months ended March 31, 1997 compared to $8.7 million for the
three months ended March 31, 1996.
OVERHEAD EXPENSES:
BancGroup's net overhead expense (total noninterest expense less
noninterest income excluding security gains) was $24.2 million and $22.3
million for the three months ended March 31, 1997 and 1996, respectively.
Salary and benefit expense increased $736,000 for the three months
ended March 31, 1997, as compared to the same period in 1996. The increase is
primarily due to increased staffing levels as a result of acquisitions.
The increase in other noninterest expenses for the three months has
been due to increases in merger expenses and advertising expenses. These
increases were somewhat offset by a reduction in the FDIC assessment.
<PAGE> 23
PROVISION FOR INCOME TAXES:
BancGroup's provision for income taxes is based on an approximately
36.5% and 35.5%, respectively, estimated annual effective tax rate for the years
1997 and 1996, respectively. The provision for income taxes for the three
months ended March 31, 1997 and 1996 was $9,601,000 and $7,443,000,
respectively.
<PAGE> 24
Part II
Other Information
<PAGE> 25
Item 1: Legal Proceedings - See Note C - COMMITMENTS AND
CONTINGENCIES AT PART 1 ITEM 1
Item 2: Changes in Securities - N/A
Item 3: Defaults Upon Senior Securities - N/A
Item 4: Submission of Matters to a Vote of Security Holders - *
Item 5: Other Events - N/A
Item 6: Form 8-K - Report on Form 8-K was filed on April 15, 1997
disclosing the amended and restated financial statements for December
31, 1996.
Exhibit 11 - Computation of Earnings Per Share
Exhibit 27 - Financial Data Schedule (for SEC use only)
* On April 16, 1997, the annual meeting of the shareholders of Colonial
BancGroup was held; shareholders present at such meeting, by proxy or in
person, elected the following directors:
<TABLE>
<CAPTION>
FOR WITHHOLD
--- --------
<S> <C> <C>
Term expires in 2000:
Lewis Beville 27,405,237 179,431
Jerry J. Chesser 27,422,925 161,743
John Ed Mathison 26,711,025 873,643
Joe D. Mussafer 27,423,234 161,434
William E. Powell III 27,407,106 177,562
J. Donald Prewitt 27,423,185 161,483
Frances E. Roper 27,382,579 202,089
Ed V. Welch 27,422,733 161,935
Term expires in 1999:
Simuel Sippial 27,415,507 169,161
Term expires in 1998:
Jimmy Rane 27,353,437 231,231
In addition to the foregoing the following directors will continue to serve
Term expires in 1999:
Young J. Boozer
Willaim Britton
Patrick F. Dye
D. B. Jones
Milton E. McGregor
Jack H. Rainer
Term expires in 1998:
Augustus K. Clements, III
Robert S. Craft
Clinton O. Holdbrooks
Harold D. King
Robert E. Lowder
John C. H. Miller, Jr.
</TABLE>
In addition, an amendment to the Restated Certificate of Incorporation to
increase the authorized number of shares of common stock from 44,000,000 to
100,000,000 was approved as follows:
FOR AGAINST ABSTAIN
--- ------- -------
26,914,984 471,623 256,878
<PAGE> 26
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
The Colonial BancGroup, Inc.
By: /s/ W. Flake Oakley
---------------------------------------------------
W. Flake Oakley
Chief Financial Officer, Secretary & Treasurer
Date: May 15, 1997
-------------------------------------------
<PAGE> 1
COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
March 31, 1997
(Unaudited)(In thousands, except per share amounts)
EXHIBIT 11
<TABLE>
<CAPTION>
Primary Fully Diluted
Q-T-D Q-T-D
------- --------
<S> <C> <C>
Net income $16,723 $16,723
Interest expense on $7,522,000, 7.50%
convertible subordinated debentures 141
Tax effect @ 36.50% for the quarter and year to date (51)
------- -------
Net income $16,723 $16,813
------- -------
Average shares outstanding 38,892 38,892
Effect of stock options 787 787
------- -------
Primary average shares outstanding 39,679 39,679
------- -------
Contingent shares:
Addtional effect of stock options 62
$7,522,200/$14.00 537
-------
Fully diluted average shares outstanding 40,279
-------
Earnings per share:
------- -------
Net income $ 0.42 $ 0.42
------- -------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 179,042
<INT-BEARING-DEPOSITS> 5,767
<FED-FUNDS-SOLD> 59,998
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 454,175
<INVESTMENTS-CARRYING> 317,473
<INVESTMENTS-MARKET> 0
<LOANS> 4,338,994
<ALLOWANCE> 54,310
<TOTAL-ASSETS> 5,797,328
<DEPOSITS> 4,525,183
<SHORT-TERM> 678,927
<LIABILITIES-OTHER> 89,804
<LONG-TERM> 93,284
0
0
<COMMON> 97,709
<OTHER-SE> 312,421
<TOTAL-LIABILITIES-AND-EQUITY> 5,797,328
<INTEREST-LOAN> 96,759
<INTEREST-INVEST> 12,169
<INTEREST-OTHER> 623
<INTEREST-TOTAL> 109,551
<INTEREST-DEPOSIT> 44,493
<INTEREST-EXPENSE> 56,112
<INTEREST-INCOME-NET> 53,439
<LOAN-LOSSES> 2,854
<SECURITIES-GAINS> (18)
<EXPENSE-OTHER> 42,662
<INCOME-PRETAX> 26,324
<INCOME-PRE-EXTRAORDINARY> 26,324
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,723
<EPS-PRIMARY> .42
<EPS-DILUTED> .42
<YIELD-ACTUAL> 4.16
<LOANS-NON> 23,143
<LOANS-PAST> 6,257
<LOANS-TROUBLED> 1,974
<LOANS-PROBLEM> 223,000
<ALLOWANCE-OPEN> 50,761
<CHARGE-OFFS> 2,785
<RECOVERIES> 622
<ALLOWANCE-CLOSE> 54,310
<ALLOWANCE-DOMESTIC> 54,310
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,025
</TABLE>
