<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
JUNE 30, 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 July 31, 1997 was
41,912,989.
<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>
June 30 December 31, June 30,
1997 1996 1996
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets:
Cash and due from banks................................................ $ 188,777 $ 239,781 $ 164,031
Interest-bearing deposits in banks..................................... 8,134 5,143 2,881
Federal funds sold..................................................... 16,567 15,990 24,566
Securities available for sale.......................................... 502,772 462,313 379,257
Investment securities.................................................. 307,483 300,121 315,656
Mortgage loans held for sale........................................... 165,476 157,966 165,925
Loans, net of unearned income.......................................... 4,582,254 4,215,802 3,946,343
Less:
Allowance for possible loan losses................................... (58,525) (53,443) (49,284)
- -----------------------------------------------------------------------------------------------------------------------
Loans, net............................................................. 4,523,729 4,162,359 3,897,059
Premises and equipment................................................. 114,501 93,009 85,515
Excess of cost over tangible and identified intangible
assets acquired, net................................................. 38,991 30,431 30,565
Mortgage servicing rights.............................................. 125,342 98,856 92,511
Other real estate owned................................................ 10,120 10,229 12,535
Accrued interest and other assets...................................... 98,724 96,339 102,900
- -----------------------------------------------------------------------------------------------------------------------
Total.................................................................. $6,100,616 $5,672,537 $5,273,401
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity:
Deposits............................................................... $4,747,342 $4,299,821 $4,049,960
FHLB short-term borrowings............................................. 610,000 715,000 565,000
Other short-term borrowings............................................ 125,479 129,129 144,541
Subordinated debt...................................................... 6,676 8,612 9,507
Trust preferred securities............................................. 70,000 -- --
Other long-term debt................................................... 15,279 30,480 26,197
Other liabilities...................................................... 94,472 86,787 99,485
- -----------------------------------------------------------------------------------------------------------------------
Total liabilities...................................................... 5,669,248 5,269,829 4,894,690
- -----------------------------------------------------------------------------------------------------------------------
Shareholders' equity:
Preference Stock $2.50 par value; 1,000,000 shares
authorized, none issued............................................
Common Stock, $2.50 par value; 100,000,000 shares
authorized, 40,926,440, 39,145,685 and 37,449,448 shares issued
and outstanding at March 31, 1997, December 31, 1996 and
March 31, 1996 respectively......................................... 102,316 97,864 93,624
Treasury Stock (135,065 shares)...................................... (15,887) -- --
Additional paid in capital........................................... 180,736 168,064 166,336
Retained earnings.................................................... 164,984 137,956 128,137
Unearned compensation................................................ (1,887) (1,603) (1,521)
Unrealized losses on securites available for sale, net of taxes...... 1,106 427 (7,865)
- -----------------------------------------------------------------------------------------------------------------------
Total shareholders' equity............................................. 431,368 402,708 378,711
- -----------------------------------------------------------------------------------------------------------------------
Total.................................................................. $6,100,616 $5,672,537 $5,273,401
- -----------------------------------------------------------------------------------------------------------------------
See Notes to the Unaudited Condensed Consolidated Financial Statements
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES Six Months Ended Three Months Ended
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) June 30, June 30,
(Dollars in thousands, except per share amounts) -------------------------- ----------------------
1997 1996 1997 1996
- ------------------------------------------------------------------------------------------------- ----------------------
<S> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans.................... $204,638 $173,602 $104,728 $ 88,971
Interest on investments....................... 25,963 20,660 13,189 10,549
Other interest income......................... 1,073 1,837 296 851
- ------------------------------------------------------------------------------------------------------------------------------
Total interest income......................... 231,674 196,099 118,213 100,371
- ------------------------------------------------------------------------------------------------------------------------------
Interest Expense:
Interest on deposits.......................... 94,223 78,820 48,126 39,397
Interest on short-term borrowings............. 19,699 18,635 9,600 10,104
Interest on long-term debt.................... 3,523 1,327 1,980 654
- ------------------------------------------------------------------------------------------------------------------------------
Total interest expense........................ 117,445 98,782 59,706 50,155
- ------------------------------------------------------------------------------------------------------------------------------
Net Interest Income........................... 114,229 97,317 58,507 50,216
Provision for possible loan losses............ 6,190 3,623 3,336 1,851
- ------------------------------------------------------------------------------------------------------------------------------
Net Interest Income After Provision for
Possible Loan Losses........................ 108,039 93,694 55,171 48,365
- ------------------------------------------------------------------------------------------------------------------------------
Noninterest Income:
Mortgage servicing and origination fees....... 16,273 13,969 8,401 7,032
Service charges on deposit accounts........... 11,653 10,670 5,323 4,941
Other charges, fees and commissions........... 3,501 3,191 2,068 1,959
Securities gains (losses), net................ (17) 121 1 (54)
Other income.................................. 8,217 7,972 4,984 4,016
- ------------------------------------------------------------------------------------------------------------------------------
Total noninterest income...................... 39,627 35,923 20,777 17,894
- ------------------------------------------------------------------------------------------------------------------------------
Noninterest Expense:
Salaries and employee benefits................ 36,700 35,082 18,239 17,423
Occupancy expense, net........................ 9,022 7,643 4,463 3,689
Furniture and equipment expenses.............. 7,361 6,553 3,912 3,474
Amortization of mortgage servicing rights..... 7,712 5,716 4,013 2,974
Amortization of intangible assets............. 1,279 1,021 664 523
Other expense................................. 27,977 26,971 14,383 13,370
- ------------------------------------------------------------------------------------------------------------------------------
Total noninterest expense..................... 90,051 82,986 45,674 41,453
- ------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 57,615 46,631 30,274 24,806
Applicable income taxes....................... 21,286 16,434 11,289 8,733
- ------------------------------------------------------------------------------------------------------------------------------
Net Income.................................... $ 36,329 $ 30,197 $ 18,985 $ 16,073
- ------------------------------------------------------------------------------------------------------------------------------
Earnings per share:
Primary...................................... $ .88 $ .78 $ .46 $ .41
Fully diluted................................ .87 .77 .46 .41
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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>
Six Months Ended
June 30,
1997 1996
-------- --------
<S> <C> <C>
Net cash provided by (used in) operating activities $26,775 $(16,133)
-------- --------
Cash flows from investing activities:
Proceeds from maturities of securities available
for sale 54,648 73,934
Proceeds from sales of securities available for sale 15,752 25,308
Purchase of securities available for sale (45,718) (100,218)
Proceeds from maturities of investment securities 83,081 52,118
Purchase of investment securities (79,254) (72,600)
Net decrease in short-term securities -- 10,000
Net increase in loans (188,422) (296,882)
Cash received used in bank acquisitions/dispositions (2,191) 10,034
Capital expenditures (20,708) (10,708)
Proceeds from sale of other real estate owned 3,878 4,545
Other, net 4 (17)
-------- --------
Net cash used in investing activities (178,930) (304,486)
-------- --------
Cash flows from financing activities:
Net increase in demand, savings, and time deposits 183,249 171,307
Net (decrease) increase in federal funds purchased,
repurchase agreements and other short-term borrowings (107,677) 92,734
Proceeds from issuance of long-term debt 70,000 350
Repayment of long-term debt (17,226) (3,232)
Proceeds from issuance of common stock 4,490 2,003
Acquisition of treasury stock (15,887) --
Dividends paid (12,230) (8,582)
-------- --------
Net cash provided by financing activities 104,719 254,580
-------- --------
Net decrease in cash and cash equivalents (47,436) (66,039)
Cash and cash equivalents at beginning of year 260,914 257,507
-------- --------
Cash and cash equivalents at June 30 $213,478 $191,468
-------- --------
Disclosure of cash flow information:
Cash paid during the six months for:
Interest $108,622 $ 44,445
Income taxes 1,809 1,197
Non-cash investing activities:
Transfer of loans to other real estate $5,138 $2,203
Origination of loans for the sale of other real estate -- 164
Non-cash financing activities:
Conversion of subordinated debentures $1,927 $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 June 24, 1997. The June 30, 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., Southern Banking Corporation and Fort Brooke Bancorporation.
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 June 30, 1997 and 1996 and the results of operations and cash flows for
the interim periods ended June 30, 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. At December 31,
1996 Jefferson had approximately $473 million in assets and deposits and other
liabilities of approximately $441 million. Jefferson operated fifteen offices
n Miami and South Florida. This business combination was accounted for as a
pooling of interests.
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. At December 31, 1996, Tomoka had
approximately $77 million in assets and deposits and other liabilities of
approximately $70 million. Tomoka operated four offices in Ormond Beach, New
Smyrna Beach, Pierson and Port Orange, Florida. This business combination was
accounted for as a pooling of interests.
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.
At December 31, 1996, First Family had approximately $167 million in assets and
deposits and other liabilities of approximately $158 million. First Family
operated six offices in part of the Orlando metropolitan area. This business
combination was accounted for as a purchase and the results of operations are
included in the accompanying financial statements only from the date of
consummation forward.
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. 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. This business combination was accounted for as a pooling of interests.
<PAGE> 7
On March 5, 1997, Shamrock Holding, Inc. ("Shamrock") was merged into
BancGroup. Shamrock's subsidiary, Union Bank, was merged into BancGroup's
existing subsidiary, Colonial Bank. As of December 31, 1996, Union Bank had
assets of approximately $54 million and deposits and other liabilities of
approximately $47 million. This business combination was accounted for as a
purchase and the results of operations are included in the accompanying
financial statements only from the date of consummation forward.
On April 22, 1997, Fort Brooke Bancorporation ("Fort Brooke") was merged into
BancGroup. Fort Brooke was a Florida corporation and was a holding company for
Fort Brooke Bank located in Tampa, Florida. Fort Brooke merged into
BancGroup's subsidiary Colonial Bank. At December 31, 1996, Fort Brooke had
assets of approximately $209 million and deposits and other liabilities of
approximately $192 million. This business combination was accounted for as a
pooling of interests.
The following table presents net interest income, noninterest income,
and net income as reported by BancGroup, Fort Brooke, Jefferson and D/W on a
combined basis for the six months ended June 30, 1996. In 1997, prior to
consummation of the business combination with BancGroup, Fort Brooke recorded
$3,153,000 of net interest income, $535,000 of noninterest income and $900,000
of net income, Jefferson did not have a significant amount of net interest
income, noninterest income or net income, and D/W recorded $445,000 of net
interest income, $82,000 of noninterest income and $146,000 of net income.
<TABLE>
<CAPTION>
Net Interest Noninterest Net Income
(Dollars in thousands) Income Income
<S> <C> <C> <C>
BancGroup $ 81,854 $ 31,995 $ 27,074
Fort Brooke 4,403 740 1,033
Jefferson 8,280 2,441 1,305
D/W 2,780 747 785
------------ ----------- -----------
Combined $ 97,317 $ 35,923 $ 30,197
============ =========== ===========
</TABLE>
On July 1, 1997, Great Southern Bancorp ("Great Southern") was merged
into BancGroup. Great Southern was a Florida corporation and is a holding
company for Great Southern Bank located in West Palm Beach, Florida. Great
Southern's subsidiary bank merged into BancGroup's existing subsidiary,
Colonial Bank. At December 31, 1996, Great Southern had assets of approximately
$119 million and deposits and other liabilities of approximately $109 million.
This business combination was accounted for as a pooling of interests.
On July 1, 1997, First Commerce Banks of Florida, Inc. ("First
Commerce") was merged into BancGroup. First Commerce was a holding company for
First Commerce Bank of Polk County located in Winter Haven, Florida. First
Commerce was merged into BancGroup's existing subsidiary, Colonial Bank. At
December 31, 1996, First Commerce had assets of approximately $106 million and
deposits and other liabilities of approximately $95 million. This business
combination was accounted for as a purchase and the results of operations will
be included in BancGroup's financial statements from the date of consummation
forward.
On May 8, 1997, BancGroup entered into a definitive agreement with
First Independence Bank of Florida ("First Independence"), located in Fort
Myers, Florida. Based upon the market value of BancGroup's common stock as of
July 1, 1997, a total of 537,997 shares of BancGroup's common stock would be
issued to the stockholders of First Independence. The actual number of shares
of BancGroup's common stock to be issued in this transaction will depend upon
the market value of such common stock at the time of the merger and the
potential conversion of warrants and options into First Independence stock by
the holders thereof. This transaction is subject to, among other things,
approval by the stockholders of First Independence and approval by appropriate
regulatory authorities. At December 31, 1996 First Independence had assets of
approximately $62 million and deposits and other liabilities of approximately
$58 million. This combination will be accounted for as a pooling of interests.
On June 23, 1997, BancGroup entered into a definitive agreement with
Dadeland BancShares, Inc. ("Dadeland"), located in Miami, Florida. At December
31, 1996, Dadeland had assets of approximately $136 million and deposits and
other liabilities of approximately $121 million. BanGroup will pay $38 million
to the shareholders of Dadeland. This combination will be accounted for as a
purchase.
On July 1, 1997, BancGroup entered into a letter of intent to acquire
ASB Bancshares, Inc. ("ASB"). ASB is a Delaware corporation and is a holding
company for Ashville Savings Bank located in St. Clair County, Alabama. ASB
will merge with BancGroup and following such merger Ashville Savings Bank will
merge with Colonial Bank. BancGroup will issue a maximum of 632,362 shares of
its Common Stock depending upon the market value at the time of such merger,
and issue an aggregate amount of $7,725,000 in subordinated debentures to the
shareholders of ASB. This transaction is subject to, among other things, the
execution of a definitive agreement, approval by the stockholders of ASB and
approval by appropriate regulatory authorities and will be accounted for as a
purchase. At June 30, 1997, ASB had assets of $142.1 million, deposits of
$129.3 million and stockholders' equity of $11.6 million.
On July 21, 1997, BancGroup entered into a letter of intent to acquire
South Florida Banking Corp. ("South Florida"). South Florida is a Florida
corporation and is a holding company for First National Bank of Florida at
Bonita Springs located in Bonita Springs, Florida. South Florida will merge
with the Company and following such merger First National Bank of Florida at
Bonita Springs will merge with Colonial Bank. The Company will issue a maximum
of 2,007,000 shares of its Common Stock assuming all of South Florida's options
are exercised prior to the merger. This transaction is subject to, among other
things, the execution of a definitive agreement, approval by the stockholders
of South Florida and approval by appropriate regulatory authorities and is
expected to be accounted for as a pooling of interests. At June 30, 1997,
South Florida had assets of $249.6 million, deposits of $210.4 million and
stockholders' equity of $16.2 million.
NOTE C - COMMITMENTS AND CONTINGENCIES
BancGroup's subsidiary bank makes 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 $.90 and $.79 for the six months ended June 30, 1997 and 1996, respectively
and $.47 and $.42 for the quarter ended June 30, 1997 and 1996, respectively.
Fully-diluted EPS would not change from amounts currently reported for the six
months and quarter ended June 30, 1997 and 1996, respectively.
In June 1997, the Financial Accounting Standards Board issued SFAS No.
130, Reporting of Comprehensive Income, which establishes standards for
reporting and display of comprehensive income and its components (revenues,
expenses, gains, and losses) in a full set of financial statements. This
statement also requires that all items that are required to be recognized under
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements.
This statement is effective for fiscal years beginning after December
15, 1997. Earlier application is permitted. Reclassification of financial
statements for earlier periods provided for comparative purposes is required.
In June 1997, the Financial Accounting Standards Board also issued SFAS
No. 131. Disclosures about Segments of an Enterprise and Related Information,
which establishes standards for the way that public business enterprises report
information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports issued to shareholders. This statement
also establishes standards for related disclosures about products and services,
geographic areas, and major customers. This statement requires the reporting
of financial and descriptive information about an enterprise's reportable
operating segments.
This statement is effective for financial statements for periods
beginning after December 15, 1997. In the initial year of application,
comparative information for earlier years is to be restated.
<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 for the six months and twelve months June
30, 1997, respectively, as follows (in thousands):
<TABLE>
<CAPTION>
December 31, 1996 June 30, 1996
to June 30, 1997 to June 30, 1997
Increase (Decrease) Increase (Decrease)
------------------- ------------------
Amount % Amount %
-------- ----- -------- -----
<S> <C> <C> <C> <C>
Total assets $428,079 7.5% $827,215 15.7%
Securities 47,821 6.3% 115,342 16.6%
Mortgage loans held
for sale 7,510 4.8% (449) (.3)%
Loans, net of
unearned income 366,452 8.7% 635,911 16.1%
Deposits 447,521 10.4% 697,382 17.2%
Long term debt 52,863 135.2% 56,251 157.6%
</TABLE>
Securities:
Investment securities and securities available for sale have increased
$48 million from December 31, 1996 to June 30, 1997. Approximately $78 million
of the increase resulted from business combinations. The offsetting decrease
resulted from normal funding operations of the Company.
Loans and Mortgage Loans Held for Sale:
Loans have increased 16.1% since June 30, 1996. This increase is a
result of a 10.5% internal loan growth from June 30, 1996 to June 30, 1997, with
the remainder from acquisition activity.
The increase in loans, net of unearned income, since December 31,
1996 of $366 million is partially from internal loan growth of approximately
$180 million (an annualized rate of 8%). The remaining increase of
approximately $186 million resulted from the purchase method business
combinations. Loans increased at a 16% internal growth rate for the year ended
December 31, 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 $632.8 million and $702.8 million and sales
thereof amounted to approximately $625.3 million and $647.4 million for the six
months ended June 30, 1997 and 1996, respectively. The decrease in originations
was primarily due to the slightly higher interest rates which resulted in a
decrease in refinancings and 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 June 30, Dec. 31, June 30,
(In thousands) 1997 1996 1996
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Commercial, financial, and
agricultural $ 575,477 $ 589,418 $ 561,330
Real estate-commercial 1,105,355 1,032,970 957,908
Real estate-construction 517,241 460,537 419,201
Real estate-residential 2,043,419 1,801,703 1,702,140
Installment and consumer 283,166 278,600 258,308
Other 58,303 55,883 48,755
- -----------------------------------------------------------------------------------
Total loans $4,582,961 $4,219,111 $3,947,642
- -----------------------------------------------------------------------------------
Percent of loans in each
category to total loans:
Commercial financial, and
agricultural 12.6% 14.0% 14.2%
Real estate-commercial 24.1% 24.5% 24.3%
Real estate-construction 11.3% 10.9% 10.6%
Real estate-residential 44.5% 42.7% 43.2%
Installment and consumer 6.2% 6.6% 6.5%
Other 1.3% 1.3% 1.2%
- -----------------------------------------------------------------------------------
100.0% 100.0% 100.0%
- -----------------------------------------------------------------------------------
</TABLE>
Loans collateralized by commercial real estate loans increased
approximately $147 million since June 30, 1996 and $72 million since December
31, 1996. Loans secured by residential real estate increased $341 and $242
million since June 30, 1996 and December 31, 1996, respectively. 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>
Six Months Year Six Months
Ended Ended Ended
June 30, Dec. 31, June 30,
(In thousands) 1997 1996 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Allowance for possible loan
losses - January 1 $53,443 $46,917 $46,917
Charge-offs:
Commercial, financial, and
agricultural 1,755 3,196 1,304
Real estate-commercial 176 2,074 786
Real estate-construction 30 1,774 745
Real estate-residential 472 878 185
Installment and consumer 2,263 3,334 1,325
Other 469 594 121
- --------------------------------------------------------------------------------
Total charge-offs 5,165 11,850 4,466
- --------------------------------------------------------------------------------
Recoveries:
Commercial, financial, and
agricultural 280 1,418 1,027
Real estate-commercial 35 1,450 883
Real estate-construction 67 1 1
Real estate-residential 91 693 141
Installment and consumer 824 1,566 1,008
Other 70 85 44
- --------------------------------------------------------------------------------
Total recoveries 1,367 5,213 3,104
- --------------------------------------------------------------------------------
Net charge-offs 3,798 6,637 1,362
Addition to allowance charged to
operating expense 6,190 12,545 3,623
Allowance added from bank
mergers 2,690 618 106
- --------------------------------------------------------------------------------
Allowance for possible loan
losses-end of period $58,525 $53,443 $49,284
- --------------------------------------------------------------------------------
</TABLE>
<PAGE> 13
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
Management's Discussion, Continued
Asset quality as measured by nonperforming assets remains good at
0.79% of net loans and other real estate. Nonperforming assets have increased
$3.0 million from December 31, 1996. The increase in nonperforming assets
resulted primarily from a $2.9 million increase in nonaccrural loans and a
$.6 million decrease in other real estate. The increase in nonaccrual loans
is primarily from the acquisition of First Family and Tomoka. Management
continuously monitors and evaluates recoverability of problem assets and
adjusts loan loss reserves accordingly. The loan loss reserve is 1.28% of
loans at June 30, 1997 as compared to 1.25% at June 30, 1996. The increase in
allowance since year end has been due to provisions in excess of net
charge-offs totaling $2.4 million and reserves of $2.7 million from the
purchase of First Family, Tomoka and Shamrock. 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>
June 30, Dec. 31, June 30,
1997 1996 1996
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Nonaccrual loans $25,226 $22,334 $13,822
Restructured loans 1,063 1,683 2,210
- -------------------------------------------------------------------------------------------
Total nonperforming loans* 26,289 24,017 16,032
Other real estate owned 9,763 9,914 12,047
Repossessions 357 314 433
- -------------------------------------------------------------------------------------------
Total nonperforming assets* $36,409 $34,245 $28,512
- -------------------------------------------------------------------------------------------
Aggregate loans contractually
past due 90 days for which
interest is being accrued $ 3,700 $ 7,682 $ 5,400
Net charge-offs (recoveries)
year-to-date $ 3,799 $ 6,637 $ 1,363
- -------------------------------------------------------------------------------------------
RATIOS
Period end:
Total nonperforming assets as
a percent of net loans and
other real estate 0.79% 0.81% 0.72%
Allowance as a percent of net
loans 1.28% 1.27% 1.25%
Allowance as a percent of
</TABLE>
<PAGE> 14
<TABLE>
<S> <C> <C> <C>
nonperforming assets 161% 156% 173%
Allowance as a percent of
nonperforming loans 223% 223% 307%
For the period ended:
Net charge-offs
as a percent of average net
loans-(annualized basis) 0.17% 0.17% 0.07%
- -------------------------------------------------------------------------------------------
</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 $214 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 June 30, 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 $18 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>
June 30, Dec. 31, June 30,
(In thousands) 1997 1996 1996
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Commercial, financial, and
agricultural $10,546 $11,318 $ 9,468
Real estate-commercial 21,092 16,866 17,402
Real estate-construction 11,342 9,910 8,499
Real estate-mortgage 10,217 9,009 8,510
Installment and consumer 4,505 4,251 3,973
Other 823 2,089 1,432
- ------------------------------------------------------------------------
TOTAL $58,525 $53,443 $49,284
- ------------------------------------------------------------------------
</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 8% 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 $1.2 billion with only $621 million outstanding
at June 30, 1997. This source of credit reduces BancGroup's dependency on
deposits as a source of liquidity resulting in a loan to deposit ratio of
96.5% at June 30, 1997 and 98% at December 31, 1996. BancGroup has a brokered
Certificate of Deposit (CD) program in conjunction with Merrill Lynch, Dean
Witter 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 5.20% to 5.65%
maturing in 6 to 24 month periods. At June 30, 1997, $151 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 June
30, 1997 consists of $431 million of equity and $70 million in trust preferred
securities less $39 million of intangibles providing a 7.70% leverage ratio at
June 30, 1997. The ratio of shareholders' equity to total assets at June 30,
1997 was 7.07% as compared to 7.10% at December 31, 1996. Management believes
that 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 Securities. The securities bear interest at
8.9% and are subject to redemption by BancGroup in whole or in part
at any time after January 29, 2007 until maturity in January 2027.
Circumstances are remote that redeption will occur prior to maturity. 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 AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996:
SUMMARY:
BancGroup's net income for the quarter ended June 30, increased
18% to $18,985,000 compared to $16,073,000 in the prior year. Fully diluted
earnings per share for the quarter increased 12% to $.46 per share compared
to $.41 per share for the same quarter of the previous year.
BancGroup's net income for the six months ended June 30, 1997 was
$36,329,000. This was a 20% increase over the prior year net income of
$30,197,000. Fully diluted earnings per share for the six months ended June 30,
1997, were $.87 compared to $.77 for the same period in 1996, a 13% increase.
The increase in net income is primarily attributable to increases in
interest earning assets and noninterest income partially off-set by increases in
loan loss provision and noninterest expenses.
<PAGE> 19
<TABLE>
<CAPTION>
THE COLONIAL BANCGROUP, INC.
AVERAGE VOLUME AND RATES
(Unaudited) Three Months Ended June 30,
(Dollars in thousands) ------------------------------------------------------------------------
1997 1996
---------------------------------- ----------------------------------
Average Average
Volume Interest Rate Volume Interest Rate
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Loans, net............................................... $4,533,790 $101,973 9.02% $3,829,261 $85,841 8.99%
Mortgage loans held for sale............................. 140,702 2,910 8.30% 177,023 3,340 7.57%
Investment securities and securities available for sale
and other interest-earning assets....................... 849,668 13,822 6.52% 766,795 11,748 6.15%
- ---------------------------------------------------------------------------------- -----------------------
Total interest-earning assets(1)......................... 5,524,159 $118,705 8.62% 4,773,079 $100,929 8.48%
- ---------------------------------------------------------------------------------- -----------------------
Nonearning assets........................................ 507,799 446,298
- ---------------------------------------------------------------------- ----------
Total assets........................................... $6,031,959 $5,219,377
- -----------------------------------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity:
Interest-bearing deposits................................ $3,965,468 $48,126 4.87% $3,284,374 $39,397 4.81%
Short-term borrowings.................................... 694,665 9,600 5.54% 744,308 10,104 5.44%
Long-term debt........................................... 93,175 1,980 8.52% 37,889 654 6.92%
- ---------------------------------------------------------------------------------- -----------------------
Total interest-bearing liabilities....................... 4,753,309 $59,706 5.04% 4,066,571 $50,155 4.95%
- ---------------------------------------------------------------------------------- -----------------------
Noninterest-bearing demand deposits...................... 765,666 685,143
Other liabilities........................................ 84,951 90,785
- ---------------------------------------------------------------------- ----------
Total liabilities........................................ 5,603,925 4,842,499
Shareholders' equity..................................... 428,034 376,878
- ---------------------------------------------------------------------- ----------
Total liabilities and shareholders' equity................. $6,031,959 $5,219,377
- -----------------------------------------------------------------------------------------------------------------------------------
Rate differential.......................................... 3.58% 3.53%
Net yield on interest-earning assets....................... $58,999 4.27% $50,774 4.26%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(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
<TABLE>
<CAPTION>
THE COLONIAL BANCGROUP, INC.
AVERAGE VOLUME AND RATES
(Unaudited) Six Months Ended June 30,
(Dollars in thousands) ------------------------------------------------------------------------
1997 1996
---------------------------------- ----------------------------------
Average Average
Volume Interest Rate Volume Interest Rate
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Loans, net............................................... $4,479,967 $200,062 8.99% $3,747,357 $168,809 9.05%
Mortgage loans held for sale............................. 127,862 5,075 7.94% 142,748 5,376 7.53%
Investment securities and securities available for sale
and other interest-earning assets....................... 854,576 27,704 6.49% 762,905 23,190 6.07%
- ---------------------------------------------------------------------------------- -----------------------
Total interest-earning assets(1)......................... 5,462,405 $232,841 8.57% 4,653,010 $197,375 8.52%
- ---------------------------------------------------------------------------------- -----------------------
Nonearning assets........................................ 493,907 448,421
- ---------------------------------------------------------------------- ----------
Total assets........................................... $5,956,312 $5,101,431
- -----------------------------------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity:
Interest-bearing deposits................................ $3,913,525 $94,223 4.86% $3,252,611 $78,820 4.90%
Short-term borrowings.................................... 718,932 19,699 5.53% 686,375 18,635 5.49%
Long-term debt........................................... 85,035 3,523 8.35% 39,412 1,327 6.77%
- ----------------------------------------------------------------------------------- ------------------------
Total interest-bearing liabilities....................... 4,717,492 $117,445 5.02% 3,978,398 98,782 5.02%
- ----------------------------------------------------------------------------------- ------------------------
Noninterest-bearing demand deposits...................... 728,268 668,216
Other liabilities........................................ 85,666 83,771
- ---------------------------------------------------------------------- ----------
Total liabilities........................................ 5,531,426 4,730,385
Shareholders' equity..................................... 424,886 371,046
- ---------------------------------------------------------------------- ----------
Total liabilities and shareholders' equity................. $5,956,312 $5,101,431
- -----------------------------------------------------------------------------------------------------------------------------------
Rate differential.......................................... 3.55% 3.50%
Net yield on interest-earning assets....................... $115,396 4.24% $ 98,593 4.27%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(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> 21
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
ANALYSIS OF INTEREST INCREASES (DECREASES)
FOR THE THREE MONTHS ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
(Dollars in thousands) Three Months Ended June 30
1997 Change from 1996
----------------------------------------------------
Due to (1)
Total Volume Rate Mix
----------- ------------- --------- ---------------
<S> <C> <C> <C> <C>
Interest Income:
Total Loans, Net $ 16,132 $ 15,834 $ 287 $ 11
Mortgage loans held for sale (430) (687) 323 (66)
Investment securities and securities
available for sale and other interest-earning assets 2,074 1,274 709 91
--------- -------- -------- ---------
Total interest income (2) 17,776 16,421 1,319 36
--------- -------- -------- ---------
Interest Expense:
Interest bearing deposits 8,729 8,190 411 128
Short-term borrowings (504) (675) 130 41
Long-term debt 1,326 956 117 253
--------- -------- -------- ---------
Total interest expense 9,551 8,471 658 422
--------- -------- -------- ---------
Net interest income $ 8,225 $ 7,950 $ 661 $ (386)
--------- -------- -------- ---------
</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> 22
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
ANALYSIS OF INTEREST INCREASES (DECREASES)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
(Dollars in thousands) Six Months Ended June 30,
1997 Change from 1996
----------------------------------------------------
Total Volume Rate Mix
----------- ------------- --------- ---------------
<S> <C> <C> <C> <C>
Interest Income:
Total Loans, Net $ 31,253 $ 33,151 $(1,124) $ (774)
Mortgage loans held for sale (301) (560) 293 (34)
Investment securities and securities
available for sale and other interest-earning assets 4,514 2,782 1,602 130
--------- -------- ------- --------
Total interest income (2) 35,466 35,373 771 (678)
--------- -------- ------- --------
Interest Expense:
Interest bearing deposits 15,403 16,192 (651) (138)
Short-term borrowings 1,064 894 137 33
Long-term debt 2,196 1,544 311 341
--------- -------- -------- --------
Total interest expense 18,663 18,630 (203) 236
--------- -------- -------- --------
Net interest income $ 16,803 $ 16,743 $ 974 $ (914)
--------- -------- -------- --------
</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> 23
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES (RESTATED)
NET INTEREST INCOME:
Net interest income on a tax equivalent basis increased $8.2 million
to $59.0 million for the quarter ended June 30, 1997 from $50.8 million for
the quarter ended June 30, 1996. The net yield on interest earning assets
increased from 4.26% to 4.27% for the three months ended June 30, 1996 and
1997, respectively, while the rate differential increased from 3.53% to 3.58%
for the three month period ended June 30, 1997 and 1996, respectively.
Net interest income on a tax equivalent basis increased $16.8 million
to $115.4 million for the six months ended June 30, 1997 from $98.6 million for
the same period in 1996. The net yield on interest earning assets decreased
from 4.27% to 4.24% for the six months ended June 30, 1996 and 1997,
respectively, while the rate differential increased from 3.50% to 3.55% for
the six months ended June 30, 1996 compared to 1997.
As reflected on the previous tables the increase for the three and six
months was primarily attributable to loan growth. 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 the 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 six months of 1997 was
$6,190,000 compared to $3,623,000 for the same period in 1996. Asset quality
remains good. The current allowance for loan losses provides a 161% coverage of
nonperforming assets compared to 156% at December 31, 1996 and 173% at June 30,
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 $3.7 million for the six months ended
June 30, 1997 compared to the same period in 1996. The increase is primarily
due to increased mortgage servicing related fee income of $2.3 million and
additional fees on deposit accounts of $1.0 million.
<PAGE> 24
The increase in noninterest income for the three months ended June 30,
1997 compared to the three months ended June 30, 1996 of $2.8 million is
primarily due to $1.4 million in increased mortgage servicing fees, $.4 million
in additional fees on deposit accounts, and $1.0 million in other income.
Colonial Mortgage provides additional sources of noninterest income to
BancGroup through fees from its $12.3 billion servicing portfolio as well as
loan originations from its 4 divisional offices. Colonial Mortgage originates
loans in 36 states. Colonial Mortgage had noninterest income of $11.7 million
and $21.1 million for the three and six months ended June 30, 1997,
respectively, compared to $9.9 million and $18.6 million for the three and six
months ended June 30, 1996, respectively.
OVERHEAD EXPENSES:
BancGroup's net overhead expense (total noninterest expense less
noninterest income excluding security gains) was $24.8 million and $23.1
million for the three months ended June 30, 1997 and 1996, respectively, and
$50.4 million and $47.2 million for the six months ended June 30, 1997 and
1996, respectively.
Salary and benefit expense increased $816,000 and $1.6 million for the
three and six months ended June 30, 1997, as compared to the same period in
1996. The increase is primarily due to increased staffing levels as a result of
activity related to business combinations and normal wage increases.
Noninterest expense for the six months end June 30, 1997 increased
over June 30, 1996 $1.0 million. This increase is mostly attributable to an
increase in advertising expenses, merger and conversion related fees and
computer services. Merger expenses increased approximately $500,000 from $1
million for the first six months of 1996 to $1.5 million for the first six
months of 1997. These expenses were offset by a $760,000 gain on the sale
of a subsidiary bank by Jefferson in the first six months of 1996 as well
as a reduction in the FDIC assessment.
<PAGE> 25
PROVISION FOR INCOME TAXES:
BancGroup's provision for income taxes is based on an approximately
36.9% and 35.2%, respectively, estimated annual effective tax rate for the
years 1997 and 1996, respectively. The provision for income taxes for the six
months ended June 30, 1997 and 1996 was $21,286,000 and $16,434,000,
respectively.
<PAGE> 26
Part II
Other Information
<PAGE> 27
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 - N/A
Item 5: Other Events - N/A
Item 6: Form 8-K - A) Report on Form 8-K was filed on June 11, 1997 disclosing
the financial results for the five months ended May 31, 1997 to
include Fort Brooke Bancorporation. B) Report on Form 8-K was filed
on June 24, 1997 disclosing the amended and restated financial
statements for December 31, 1996. C) Report on Form 8-K/A was filed
on August 13, 1997 (correcting and amending Form 8-K filed on
August 12, 1997) disclosing the financial results for the seven
months ended July 31, 1997 to include Great Southern Bancorp.
Exhibit 11 - Computation of Earnings Per Share
Exhibit 27 - Financial Data Schedule (for SEC use only)
<PAGE> 28
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: August 14, 1997
-------------------------------------------
<PAGE> 1
COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
June 30, 1997
(Unaudited)(In thousands, except per share amounts)
EXHIBIT 11
<TABLE>
<CAPTION>
Primary Fully Diluted
Q-T-D Y-T-D Q-T-D Y-T-D
------- ------- -------- -------
<S> <C> <C> <C> <C>
Net income $18,985 $36,329 $18,985 $36,329
Interest expense on convertible
subordinated debentures 131 239
Tax effect @ 36.50% for the quarter and year to date (48) (87)
------- ------- ------- -------
Net income $18,985 $36,329 $19,068 $36,481
======= ======= ======= =======
Average shares outstanding 40,362 40,403 40,362 40,403
Effect of stock options 786 828 786 828
------- ------- ------- -------
Primary average shares outstanding 41,148 41,231 41,148 41,231
------- ------- ------- -------
Contingent shares:
Addtional effect of stock options 37 96
Convertible subordinated debentures 471 471
------- -------
Fully diluted average shares outstanding 41,656 41,798
------- -------
Earnings per share:
------- ------- ------- -------
Net income $ 0.46 $ 0.88 $ 0.46 $ 0.87
------- ------- ------- -------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 188,777
<INT-BEARING-DEPOSITS> 8,134
<FED-FUNDS-SOLD> 16,567
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 502,772
<INVESTMENTS-CARRYING> 307,483
<INVESTMENTS-MARKET> 0
<LOANS> 4,582,254
<ALLOWANCE> 58,525
<TOTAL-ASSETS> 6,100,616
<DEPOSITS> 4,747,342
<SHORT-TERM> 735,479
<LIABILITIES-OTHER> 94,472
<LONG-TERM> 91,955
0
0
<COMMON> 102,316
<OTHER-SE> 329,052
<TOTAL-LIABILITIES-AND-EQUITY> 6,100,616
<INTEREST-LOAN> 204,638
<INTEREST-INVEST> 25,963
<INTEREST-OTHER> 1,073
<INTEREST-TOTAL> 231,674
<INTEREST-DEPOSIT> 94,223
<INTEREST-EXPENSE> 117,445
<INTEREST-INCOME-NET> 114,229
<LOAN-LOSSES> 6,190
<SECURITIES-GAINS> (17)
<EXPENSE-OTHER> 90,051
<INCOME-PRETAX> 57,615
<INCOME-PRE-EXTRAORDINARY> 57,615
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,329
<EPS-PRIMARY> .88
<EPS-DILUTED> .87
<YIELD-ACTUAL> 4.24
<LOANS-NON> 25,226
<LOANS-PAST> 3,700
<LOANS-TROUBLED> 1,063
<LOANS-PROBLEM> 214,000
<ALLOWANCE-OPEN> 53,443
<CHARGE-OFFS> 5,165
<RECOVERIES> 1,367
<ALLOWANCE-CLOSE> 58,525
<ALLOWANCE-DOMESTIC> 58,525
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 823
</TABLE>
