<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
- --------------------------------------------------------------------------------
FORM 10-Q/A
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MARCH 31, 1999 COMMISSION FILE NUMBER 1-13508
THE COLONIAL BANCGROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 63-0661573
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One Commerce Street
Montgomery, Alabama 36104
- --------------------------------------------------------------------------------
(Address of principle executive offices)
(334) 240-5000
- --------------------------------------------------------------------------------
(Registrant's telephone number)
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 and (2) has been subject to the filing requirements for
at least the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Class Outstanding at April 30, 1999
- --------------------------------------------------------------------------------
Common Stock, $2.50 Par Value 111,599,108
<PAGE> 2
THE COLONIAL BANCGROUP, INC.
INDEX
<TABLE>
<CAPTION>
Page Number
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Condition - March 31, 1999, December 31, 1998 and March 31, 1998 1
Consolidated Statements of Income - Three months ended March 31, 1999 and March 31, 1998 2
Consolidated Statements of Comprehensive Income - Three months ended March 31, 1999
and March 31, 1998 3
Consolidated Statements of Cash Flows - Three months ended March 31, 1999 and March 31, 1998 4
Notes to Consolidated Financial Statements - March 31, 1999 5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 20
Item 6. Exhibits and Reports on Form 8-K 20
SIGNATURES 21
</TABLE>
<PAGE> 3
CAUTIONARY STATEMENT PURSUANT TO SAFE HARBOR PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
This report contains "forward-looking statements" within the meaning
of the federal securities laws. The forward-looking statements in this report
are subject to risks and uncertainties that could cause actual results to
differ materially from those expressed in or implied by the statements. Factors
that may cause actual results to differ materially from those contemplated by
such forward-looking statements include, among other things, the following
possibilities: (i) deposit attrition, customer loss, or revenue loss in the
ordinary course of business; (ii) increases in competitive pressure in the
banking industry; (iii) costs or difficulties related to the integration of the
businesses of BancGroup and acquired institutions are greater than expected;
(iv) changes in the interest rate environment which reduce margins (v) changes
in mortgage servicing rights prepayment assumptions; (vi) changes which may
occur in the regulatory environment; (vii) a significant rate of inflation
(deflation); (viii) changes in the securities markets; (ix) specifically
relating to Year 2000 readiness disclosure, vendor representations,
technological advancements, and economic factors including liquidity
availability. When used in this Report, the words "believes," "estimates,"
"plans," "expects," "should," "may," "might," "outlook," and "anticipates," and
similar expressions as they relate to BancGroup (including its subsidiaries),
or its management are intended to identify forward-looking statements.
<PAGE> 4
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,
1999 1998 1998*
----------- ----------- -----------
<S> <C> <C> <C>
Assets:
Cash and due from banks $ 425,400 $ 437,719 $ 361,898
Interest-bearing deposits in banks and federal funds sold 85,726 57,247 129,746
Securities held for trading -- -- 24,824
Securities available for sale 1,311,503 1,414,218 816,026
Investment securities 160,925 170,954 311,810
Mortgage loans held for sale 696,833 692,042 476,655
Loans, net of unearned income 7,328,566 7,110,295 6,167,997
Less: Allowance for possible loan losses (86,162) (83,562) (74,910)
----------- ----------- -----------
Loans, net 7,242,404 7,026,733 6,093,087
Premises and equipment, net 184,193 181,617 166,577
Excess of cost over tangible and identified intangible
assets acquired, net 83,506 84,893 78,906
Mortgage servicing rights 221,520 183,469 151,618
Other real estate owned 9,324 8,728 12,896
Accrued interest and other assets 218,065 198,665 146,200
----------- ----------- -----------
TOTAL ASSETS $10,639,399 $10,456,285 $ 8,770,243
=========== =========== ===========
Liabilities and Shareholders' Equity:
Deposits $ 7,555,520 $ 7,446,153 $ 6,762,538
FHLB short-term borrowings 595,000 769,987 460,000
Other short-term borrowings 820,568 740,981 307,780
Subordinated debt 112,480 12,542 13,125
Trust preferred securities 70,000 70,000 70,000
FHLB long-term debt 572,956 528,163 283,693
Other long-term debt 135,588 135,742 93,636
Other liabilities 117,215 112,910 150,735
----------- ----------- -----------
Total liabilities 9,979,327 9,816,478 8,141,507
----------- ----------- -----------
Shareholders' equity:
Preference Stock $2.50 par value; 1,000,000 shares
authorized, none issued
Common Stock, $2.50 par value; 200,000,000 shares
authorized, 111,562,377, 110,962,365, and 109,941,543**
shares issued and outstanding at March 31, 1999,
December 31, 1998 and March 31, 1998, respectively 278,906 277,406 274,854
Treasury shares (16,892 and 26,501 shares at
March 31, 1999 and December 31, 1998, respectively) (227) (355) --
Additional paid in capital 116,365 113,469 109,619
Retained earnings 266,988 249,297 244,909
Unearned compensation (2,066) (2,348) (3,604)
Accumulated other comprehensive income,
net of taxes 106 2,338 2,958
----------- ----------- -----------
Total shareholders' equity 660,072 639,807 628,736
----------- ----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $10,639,399 $10,456,285 $ 8,770,243
=========== =========== ===========
</TABLE>
*See Note A.
**See Note E.
See Notes to the Unaudited Condensed Consolidated Financial Statements
<PAGE> 5
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------
1999 1998*
-------- --------
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $162,614 $142,402
Interest on investments 23,440 16,046
Other interest income 558 1,709
-------- --------
Total interest income 186,612 160,157
-------- --------
INTEREST EXPENSE:
Interest on deposits 64,665 62,354
Interest on short-term borrowings 19,097 10,121
Interest on long-term debt 11,898 6,153
-------- --------
Total interest expense 95,660 78,628
-------- --------
NET INTEREST INCOME 90,952 81,529
Provision for possible loan losses 6,019 3,951
-------- --------
Net Interest Income After Provision for Possible Loan Losses 84,933 77,578
-------- --------
NONINTEREST INCOME:
Mortgage servicing and origination fees 12,176 10,271
Service charges on deposit accounts 9,445 8,702
Other charges, fees and commissions 2,789 2,246
Securities gains (losses), net 9 178
Other income 10,578 7,115
-------- --------
Total noninterest income 34,997 28,512
-------- --------
NONINTEREST EXPENSE:
Salaries and employee benefits 29,577 28,457
Occupancy expense, net 7,293 6,590
Furniture and equipment expenses 6,512 5,955
Year 2000 expense 143 2,330
Acquisition and restructuring expense 464 6,119
Other expense 31,404 24,031
-------- --------
Total noninterest expense 75,393 73,482
-------- --------
Income before income taxes 44,537 32,608
Applicable income taxes 16,389 11,810
-------- --------
Net Income $ 28,148 $ 20,798
======== ========
Earnings per share**:
Basic and Diluted $ 0.25 $ 0.19
</TABLE>
*See Note A
**See Note E.
See Notes to the Unaudited Condensed Consolidated Financial Statements
<PAGE> 6
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1999 1998*
<S> <C> <C>
NET INCOME: $28,148 $20,798
Other comprehensive income, net of taxes:
Unrealized gains (losses) on securities available for sale
arising during the period, net of taxes (2,227) 861
Less: reclassification adjustment for net (gains)
losses included in net income (5) (126)
Comprehensive income $25,916 $21,533
</TABLE>
*See Note A.
See Notes to the Unaudited Condensed Consolidated Financial Statements
<PAGE> 7
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
1999 1998*
--------- ---------
<S> <C> <C>
NET CASH USED IN OPERATING ACTIVITIES $ (13,334) $(153,528)
--------- ---------
Cash flows from investing activities:
Proceeds from maturities of securities available for sale 116,051 78,219
Proceeds from sales of securities available for sale 33,170 40,028
Purchase of securities available for sale (50,372) (239,510)
Proceeds from maturities of investment securities 9,969 73,565
Purchase of investment securities -- (70,873)
Net increase in securities held for trading -- (24,824)
Net increase in loans (226,774) (54,074)
Cash received in bank acquisitions/dispositions -- 9,943
Capital expenditures (8,080) (6,607)
Proceeds from sale of other real estate owned 3,659 3,843
Other, net 75 1,048
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (122,302) (189,242)
--------- ---------
Cash flows from financing activities:
Net increase in demand, savings, and time deposits 109,368 221,952
Net (decrease) increase in federal funds purchased,
repurchase agreements and other short-term borrowings (95,142) 26,802
Proceeds from issuance of long-term debt 149,992 138,242
Repayment of long-term debt (5,620) (242)
Proceeds from issuance of common stock 3,658 2,835
Dividends paid ($0.095 and $0.085 per share
for 1999 and 1998, respectively) (10,460) (7,648)
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 151,796 381,941
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 16,160 39,171
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 494,966 452,473
--------- ---------
CASH AND CASH EQUIVALENTS AT MARCH 31 $ 511,126 $ 491,644
========= =========
Disclosure of cash flow information
Cash paid during three months for:
Interest $ 99,291 $ 83,082
Income taxes 6,068 15,129
Non-cash investing activities:
Transfer of loans to other real estate $ 4,870 $ 3,166
Origination of loans for the sale of other real estate -- 138
Non-cash financing activities:
Conversion of subordinated debentures $ 54 $ 688
Assets acquired in business combinations -- 144,821
Liabilities assumed in business combinations -- 138,023
</TABLE>
*See Note A.
See Notes to the Unaudited Condensed Consolidated Financial Statements.
<PAGE> 8
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
1998 annual report. These unaudited interim financial statements should be read
in conjunction with the audited financial statements and footnotes included in
BancGroup's 1998 annual report on Form 10-K. The March 31, 1998 financial
statements have been restated to give retroactive effect to the
pooling-of-interests business combinations with Commercial Bank of Nevada (CBN),
FirstBank, First Macon Bank & Trust, Prime Bank of Central Florida and InterWest
Bancorp (InterWest).
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, 1999 and 1998 and the results of operations and cash flows for the
interim periods ended March 31, 1999 and 1998. All 1999 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 COMBINATIONS
The Company did not enter into any business combinations for the three
months ended March 31, 1999. Business combinations in fiscal year 1998 resulted
in the restatement of March 31, 1998 financial statements. Presented below is
BancGroup's summary of operating information for the three months ended March
31, 1998, showing the effect of business combinations previously reported:
<TABLE>
<CAPTION>
As Originally Effect of Currently
Reported Poolings Reported
<S> <C> <C> <C>
Net interest income $73,432 $8,097 $81,529
Noninterest income 26,075 2,437 28,512
Net income 17,950 2,848 20,798
</TABLE>
NOTE C - COMMITMENTS AND CONTINGENCIES
BancGroup and its subsidiaries are from time to time defendants in
legal actions arising from normal business activities. Management does not
anticipate that the ultimate liability arising from litigation outstanding at
March 31, 1999, will have a materially adverse effect on BancGroup's financial
statements.
NOTE D - RECENT ACCOUNTING PRONOUNCEMENTS
<PAGE> 9
On June 15, 1998, the Financial Accounting Standards Board issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities," which
standardizes the accounting for derivative instruments by requiring that all
derivatives be recognized as assets and liabilities and measured at fair value.
This statement is effective for fiscal years beginning after June 15, 1999 and
Management is currently evaluating the impact that SFAS No. 133 will have on
BancGroup's financial statements.
On October 12, 1998, the Financial Accounting Standards Board issued
SFAS No. 134 "Accounting for Mortgage-Backed Securities after the Securitization
of Mortgage Loans Held For Sale by a Mortgage Banking Enterprise." This
statement is effective for the first fiscal quarter beginning after December 15,
1998. The company is not currently involved in these activities and therefore
the adoption of SFAS No. 134 had no impact on BancGroup's financial statements.
NOTE E: STOCK SPLIT
The March 31, 1998 information has been restated to reflect a
two-for-one stock split effected in the form of a 100 percent stock dividend
distributed on August 14, 1998.
NOTE F: MORTGAGE SERVICING RIGHTS
An analysis of mortgage servicing rights and the related valuation
reserve is as follows:
<TABLE>
<CAPTION>
(In thousands) March 31, 1999 March 31, 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Mortgage Servicing Rights
Balance, January 1 $221,798 $143,401
Additions, net 16,306 15,012
Scheduled amortization (10,181) (4,910)
Hedge losses applied 26,338 --
- --------------------------------------------------------------------------------
Balance, March 31 $254,261 $153,503
================================================================================
Valuation Reserve
Balance, January 1 $ 38,329 $ 1,361
Reduction (5,588) --
Additions -- 524
- --------------------------------------------------------------------------------
Balance, March 31 32,741 1,885
- --------------------------------------------------------------------------------
Mortgage Servicing Rights, Net $221,520 $151,618
================================================================================
</TABLE>
The estimated fair value of mortgage servicing rights was $228,721,000
at March 31, 1999. As of March 31, 1999, Colonial Mortgage services
approximately $15.9 billion of loans for third parties.
NOTE G: EARNINGS PER SHARE
The following table reflects a reconciliation of the numerator and
denominator of the basic EPS computation to the numerator and denominator of the
diluted EPS computation:
<TABLE>
<CAPTION>
(Dollars in thousands, Per Share
except per share amounts) Income Shares Amount
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1999
Basic EPS
Net income $28,148 111,330 $0.25
Effect of dilutive securities
Options 1,304
Convertible debentures 55 349
- --------------------------------------------------------------------------------
Diluted EPS $28,203 112,983 $0.25
- --------------------------------------------------------------------------------
1998
Basic EPS
Net income $20,798 109,233 $0.19
Effect of dilutive securities
Options 2,154
Convertible debentures 64 862
- --------------------------------------------------------------------------------
Diluted EPS $20,862 112,249 $0.19
- --------------------------------------------------------------------------------
</TABLE>
NOTE H: SEGMENT INFORMATION
Through its wholly owned subsidiary Colonial Bank and Colonial Bank's
wholly owned subsidiary Colonial Mortgage Company ("CMC"), BancGroup segments
its operations into two distinct lines of business: Commercial Banking and
Mortgage Banking. Colonial Bank provides general Commercial Banking services in
250 branches throughout 6 states. As both an originator and servicing agent of
mortgage loans, CMC provides services in 45 states.
Operating results of the two segments reflect those which are
specifically identifiable or which are based on an internal allocation method.
The two segments are designed around BancGroup's organizational and management
structure and while the assignments and allocations have been consistently
applied for all periods presented, the results are not necessarily comparable to
similar information published by other financial institutions.
The following table reflects the approximate amounts of consolidated
revenue, expense, and assets for the quarters ended March 31, for each segment:
SEGMENT DATA
(In thousands)
<TABLE>
<CAPTION>
Commercial Mortgage Corporate/ Consolidated
QUARTER ENDED MARCH 31, 1999 Banking Banking Other* BancGroup
- ---------------------------- ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Net interest income $ 89,516 $ 3,534 $ (2,098) $ 90,952
Provision for possible loan losses 6,019 -- -- 6,019
Noninterest income 16,905 18,117 (25) 34,997
Amortization and depreciation 6,563 5,852 (101) 12,314
Acquisition and restructuring costs 457 -- 7 464
Year 2000 expense 138 5 -- 143
Noninterest expense 49,356 12,915 201 62,472
-------- -------- -------- --------
Pretax income 43,888 2,879 (2,230) 44,537
Income taxes 16,062 1,054 (727) 16,389
-------- -------- -------- --------
Net Income (loss) $ 27,826 $ 1,825 $ (1,503) $ 28,148
======== ======== ======== ========
Commercial Mortgage Corporate/ Consolidated
QUARTER ENDED MARCH 31, 1998 Banking Banking Other* BancGroup
- ---------------------------- ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Net interest income $ 80,970 $ 2,202 $ (1,643) $ 81,529
Provision for possible loan losses 3,951 -- -- 3,951
Noninterest income 14,333 14,478 (299) 28,512
Amortization and depreciation 6,063 5,161 (65) 11,159
Acquisition and restructuring costs 6,099 -- 20 6,119
Year 2000 expense 1,971 359 -- 2,330
Noninterest expense 46,825 6,679 370 53,874
-------- -------- -------- --------
Pretax income 30,394 4,481 (2,267) 32,608
Income taxes 10,739 1,684 (613) 11,810
-------- -------- -------- --------
Net Income (loss) $ 19,655 $ 2,797 $ (1,654) $ 20,798
======== ======== ======== ========
</TABLE>
* Includes eliminations of certain intercompany transactions.
<PAGE> 10
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, mortgage servicing rights, deposits, and long term debt changed
for the three months and twelve months ended March 31, 1999, respectively, as
follows (in thousands):
<TABLE>
<CAPTION>
December 31, 1998 March 31, 1998
to March 31, 1999 to March 31, 1999
Increase Increase
Amount % Amount %
<S> <C> <C> <C> <C>
ASSETS
Colonial Bank $ 135,849 1.4% $1,521,500 18.7%
CMC 47,251 5.0 350,738 55.4
Other 15 0.1 (3,082) -20.2
- -----------------------------------------------------------------------------------------------------------
Total assets $ 183,115 1.8 $1,869,156 21.3
Securities (112,746) -7.1 319,768 27.7
Mortgage loans held for sale 4,791 0.7 220,178 46.2
Loans, net of unearned income 218,271 3.1 1,160,569 18.8
Mortgage Servicing Rights 38,051 20.7 69,902 46.1
Deposits 109,367 1.5 792,982 11.7
Long term debt 144,577 19.4 430,570 93.5
</TABLE>
Assets:
BancGroup's assets as restated have increased 21.3% since March 31,
1998. The Company's strategy has been to increase its asset size both internally
and through acquisition efforts. BancGroup has concentrated on expanding into
growth markets by merging with banks that have strong local management.
BancGroup has been most successful with this strategy in Florida. With the
mergers of CBN in Las Vegas, Nevada, FirstBank and TB&T in Dallas, Texas and
InterWest in Reno, Nevada, BancGroup has expanded into growth markets outside
the Southeast. Asset growth of $183 million during the first three months of
1999 has resulted from internal loan growth.
Securities:
Investment securities and securities available for sale have increased
$320 million (27%) from March 31, 1998 to March 31, 1999. In 1998, BancGroup
entered into reverse repurchase arrangements with Morgan Stanley, Salomon
Brothers and First Boston under which it purchased mortgage backed securities
totaling approximately $449 million of which approximately $328 million was
outstanding at March 31, 1999. These securities are collateral for $318 million
in debt of which $309 million was outstanding at March 31, 1999.
Loans and Mortgage Loans Held for Sale:
Loans, net of unearned income, have increased $1.2 billion (18.8%) and
$218 million (3.1%) from March 31, 1998 and December 31, 1998, respectively.
This increase is primarily due to 13% (annualized) and 18% internal loan
growth from December 31, 1998 and March 31, 1998, respectively.
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 amount to approximately $1.2 billion and $0.8 billion and sales
thereof amounted to approximately $1.2 billion and $0.6 billion during the three
months ended March 31, 1999 and 1998, respectively. The increase in originations
in 1999 was primarily due to a decrease in interest rates which resulted in an
increase in loan originations.
<PAGE> 11
<TABLE>
<CAPTION>
GROSS LOANS BY CATEGORY MARCH 31, Dec. 31, MARCH 31,
(In thousands) 1999 1998 1998
---------- ---------- ----------
<S> <C> <C> <C>
Commercial, financial, and agricultural $1,189,209 $1,102,446 $ 796,870
Real estate-commercial 2,201,457 2,006,851 1,750,021
Real estate-construction 1,038,092 1,028,471 720,044
Real estate-residential 2,383,738 2,438,236 2,482,494
Installment and consumer 317,085 344,860 346,102
Other 199,329 189,934 72,990
---------- ---------- ----------
Total loans $7,328,910 $7,110,798 $6,168,521
========== ========== ==========
</TABLE>
The majority of the $218 million in loan growth for 1999 has been in
loans collateralized by commercial real estate which increased approximately
$194 million from December 31, 1998. The increase of $1.2 billion from March 31,
1998 consisted primarily of Commercial loans ($392,000), Commercial real estate
loans ($451,000) and construction loans ($319,000). The growth in 1999 as well
as over the previous year was spread throughout the Company's Alabama, Georgia
and Florida markets. Residential real estate loans, decreased $54 million and
$98 million from December 31, 1998 and March 31, 1998, respectively. This
decline in residential real estate is primarily attributable to the refinancing
of these predominately adjustable rate (ARM) loans to fixed rate loans. The
Company generally sells fixed rate loans in the secondary markets resulting in
net reductions in outstanding balances. These loans are concentrated in various
areas in Alabama, the metropolitan Atlanta market in Georgia as well as the
Company's markets in Florida.
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.
ALLOCATION OF THE ALLOWANCE FOR POSSIBLE LOAN LOSSES
<TABLE>
<CAPTION>
Percent of Percent of Percent of
MARCH 31, Loans to Dec. 31, Loans to March 31, Loans to
(In thousands) 1999 Total Loans 1998 Total Loans 1998 Total Loans
--------- ----------- -------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Commercial, financial,
and agricultural $19,777 16.2% $19,068 15.5% $15,818 12.9%
Real estate-commercial 31,427 30.1 30,382 28.2 27,341 28.4
Real estate-construction 14,597 14.2 14,681 14.5 13,511 11.7
Real estate-mortgage 11,919 32.5 12,191 34.3 12,412 40.2
Installment and consumer 4,500 4.3 4,930 4.8 4,839 5.6
Other 3,942 2.7 2,310 2.7 989 1.2
------- ----- ------- ----- ------- -----
TOTAL $86,162 100.0% $83,562 100.0% $74,910 100.0%
======= ===== ======= ===== ======= =====
</TABLE>
<PAGE> 12
SUMMARY OF LOAN LOSS EXPERIENCE
<TABLE>
<CAPTION>
THREE MONTHS Year Three Months
ENDED Ended Ended
(In thousands) MARCH 31, 1999 Dec. 31, 1998 March 31, 1998
-------------- ------------- --------------
<S> <C> <C> <C>
Allowance for possible loan losses - January 1 $83,562 $72,107 $72,107
Charge-offs:
Commercial, financial, and agricultural 703 6,001 717
Real estate-commercial 305 3,273 853
Real estate-construction 199 1,731 144
Real estate-residential 437 3,380 363
Installment and consumer 1,266 6,803 1,699
Other 1,691 1,469 167
------- ------- -------
Total charge-offs 4,601 22,657 3,943
------- ------- -------
Recoveries:
Commercial, financial, and agricultural 356 1,206 452
Real estate-commercial 63 1,399 164
Real estate-construction 20 43 28
Real estate-residential 104 545 74
Installment and consumer 573 1,945 522
Other 66 789 39
------- ------- -------
Total recoveries 1,182 5,927 1,279
------- ------- -------
Net charge-offs 3,419 16,730 2,664
Addition to allowance charged to operating expense 6,019 26,345 3,951
Allowance added from business combinations -- 1,840 1,516
------- ------- -------
Allowance for possible loan losses-end of period $86,162 $83,562 $74,910
======= ======= =======
</TABLE>
Asset quality as measured by nonperforming assets remains strong at 0.61% of net
loans and other real estate. Nonperforming assets have increased $1.6 million
from December 31, 1998. The increase in nonperforming assets primarily resulted
from a $1.0 million increase in nonperforming loans and a $694,000 increase in
other real estate and repossessions. Management continuously monitors and
evaluates recoverability of problem assets and adjusts loan loss reserves
accordingly. Loan loss reserve is 1.18% of loans at March 31, 1999 and at
December 31, 1998 compared to 1.21% at March 31, 1998.
NONPERFORMING ASSETS ARE SUMMARIZED BELOW
<TABLE>
<CAPTION>
(In thousands) MARCH 31, 1999 Dec. 31, 1998 March 31, 1998
-------------- ------------- --------------
<S> <C> <C> <C>
Nonaccrual loans $33,826 $32,823 $28,889
Restructured loans 1,290 1,334 1,458
------- ------- -------
Total nonperforming loans* 35,116 34,157 30,347
Other real estate owned 8,858 8,164 12,225
Repossessions 466 564 671
------- ------- -------
Total nonperforming assets* $44,440 $42,885 $43,243
======= ======= =======
Aggregate loans contractually past due 90 days
for which interest is being accrued $ 5,877 $ 8,992 $ 6,853
Net charge-offs year-to-date $ 3,419 $16,730 $ 2,664
RATIOS
Period end:
Total nonperforming assets as a percent of net
loans and other real estate 0.61% 0.60% 0.70%
Allowance as a percent of net loans 1.18% 1.18% 1.21%
Allowance as a percent of nonperforming assets* 194% 195% 173%
Allowance as a percent of nonperforming loans* 245% 245% 247%
For the period ended:
</TABLE>
<PAGE> 13
<TABLE>
<S> <C> <C> <C>
Net charge-offs as a percent of average net loans-
(annualized basis) 0.19% 0.26% 0.18%
</TABLE>
*Total does not include loans contractually past due 90 days or more which
are still accruing interest.
<PAGE> 14
Management, through its loan officers, internal loan review staff, and
external examinations by regulatory agencies and independent auditors has
identified approximately $148 million of potential problem loans not included
above. The status of these loans is reviewed at least quarterly by loan officers
and loan administration 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, 1999, 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. The recorded investment in
impaired loans at March 31, 1999 was $24,359,000 and these loans had a
corresponding valuation allowance of $7,036,000.
MORTGAGE SERVICING RIGHTS:
During the first quarter of 1999, long-term interest rates increased
slightly. This increase resulted in an increase in the market value of mortgage
servicing rights (MSRs) as well as a loss on the mortgage servicing hedges. As
a result, BancGroup deferred $26.3 million of hedge losses and reduced the MSR
valuation allowance by $5.6 million. The hedge positions are designated to
specific portions of the servicing asset and are monitored daily and adjusted
as necessary for changes in the market and projected interest rate movement.
The objective of this strategy is to achieve a high degree of correlation
between changes in value associated with the hedged asset (the servicing
portfolio and the related servicing rights) and the servicing hedge. The
servicing hedge is designed to rise in value when interest rates fall and
decline in value when interest rates rise, in contrast to the expected
movements in value of the servicing asset, therefore reducing earnings
volatility caused by interest rate movements.
These risk-management activities do not eliminate interest-rate risk
in the MSRs. Treasury rates, to which the MSR hedges are indexed, may not move
in tandem with mortgage interest rates. As mortgage interest rates change,
actual prepayments may not respond exactly as anticipated. Other pricing
factors, such as the volatility of the market yields, may affect the value of
the option hedges without similarly impacting the MSRs.
LIQUIDITY:
The maintenance of adequate liquidity position and the constant
monitoring of rate sensitivity are principal components 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. The policy also establishes the criteria for
monitoring the short and long term impact of interest rate fluctuations on these
funds. To assist in funding loan growth, BancGroup has credit facilities at the
Federal Home Loan Bank of Atlanta (FHLB). FHLB provides availability of up to
$2.5 billion on either a short or long term basis excluding funds available
through the Federal Funds line. At March 31, 1999, the FHLB unused credit
facility was $1,249 million of which $618 million was available based on current
collateral. This credit facility is collateralized by the Company's residential
real estate loans. This source of credit reduces BancGroup's dependency on
deposits as a source of liquidity resulting in a loan to deposit ratio of 97% at
March 31, 1999 and at 95% at December 31, 1998. BancGroup has a brokered
Certificate of Deposit (CD) program in conjunction with Merrill Lynch, Paine
Webber, 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
4.85% to 5.60% maturing in 6 to 24 month periods. At March 31, 1999 $323 million
is outstanding under this program. BancGroup also has a brokered money market
program with Merrill Lynch. At March 31, 1999 $149 million is outstanding under
this program at an average rate of 4.73%. Funds are transferred daily to meet
short-term funding fluctuations. As discussed previously, BancGroup has received
funds under reverse repurchase arrangements with Morgan Stanley, Salomon
Brothers and First Boston. At March 31, 1999 there was $309 million in
outstanding debt under this agreement which is collateralized by mortgage-backed
securities. On March 16, 1999, the Company's subsidiary, Colonial Bank issued
$100 million in 8% Subordinated Notes due March 15, 2009. These notes are not
subject to redemption prior to maturity and pay interest semiannually on March
15 and September 15.
CAPITAL RESOURCES:
Management continuously monitors the Company's capital adequacy and
potential for future growth. The primary measurement for this evaluation for a
bank holding company is its tier one leverage ratio. Tier one capital for
BancGroup at March 31, 1999 consists of $660 million of equity and $70 million
in trust preferred securities less $99 million of intangibles and disallowed
mortgage servicing rights providing a 6.15% leverage ratio at March 31, 1999.
The ratio of shareholders' equity to total assets at March 31, 1999 was 6.20% as
compared to 6.08% at December 31, 1998. Management believes that capital levels
are sufficient to support future internally generated growth and fund the
quarterly dividend rates which are currently $0.095 per share each quarter.
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.
Year 2000 readiness disclosure:
Most computer software programs and processing systems, including those
used by BancGroup and its subsidiaries in their operations, were not originally
designed to accommodate entries beyond the year 1999 in date fields. Failure to
address the anticipated consequences of this design deficiency could have
material adverse effects on the business and operations of any business,
including BancGroup, that relies on computers and associated technologies.
BancGroup has aggressively addressed the challenges that Year 2000
presents to its operations. Management has completed its remediation efforts and
has tested the core business applications which are customer related. BancGroup
completed testing with its mission critical service providers during the first
quarter of 1999. As a final check to ensure that BancGroup will be ready for the
new millennium, management plans to perform additional Year 2000 testing during
the fourth quarter of 1999. Therefore management does not anticipate significant
disruptions in its operations as a result of entering the new millennium.
<PAGE> 15
Year 2000 compliant and tested mission critical applications are
currently being used in production at Colonial Bank. Colonial Mortgage Company
is currently using its Year 2000 compliant and tested servicing system and is
currently implementing its Year 2000 compliant and tested origination system.
BancGroup expects to have Year 2000 contingency plans substantially
completed by June 30, 1999. The plans are designed to minimize Year 2000
inconveniences, if any, to our customers. Colonial expects to operate as usual
on January 3, 2000.
Throughout 1998 and during 1999, BancGroup has been assessing Year 2000
readiness of vendors, business partners and other counter-parties focusing on
those considered critical to BancGroup operations. BancGroup began assessing the
Year 2000 readiness of loan customers, depositors and other funds providers
during the third quarter of 1998. BancGroup will continue to monitor and
evaluate the Year 2000 readiness of third parties whose Year 2000 noncompliance
could have a material adverse impact on the operations of BancGroup. BancGroup
is taking appropriate measures including development of contingency plans to
mitigate the risk to the company of Year 2000 noncompliance by third parties.
However, the impact of Year 2000 noncompliance by all third parties with which
BancGroup transacts business cannot be assessed at this time.
BancGroup has a customer awareness program in place designed to keep
our customers informed of our Year 2000 progress. The awareness program is
expected to minimize customer anxiety as we approach the new millennium.
However, management recognizes that a customer awareness program will not
completely eliminate such customer concerns. BancGroup is working closely with
the Federal Reserve to provide increased liquidity in our branches to meet the
anticipated increase in the cash needs of our customers.
BancGroup expects to spend approximately $14 million on the Year 2000
project. To date, BancGroup has incurred approximately $11.7 million of those
expenditures, $0.3 million during the first quarter of 1999, $11 million in 1998
and $0.4 million in 1997. Year 2000 project costs of approximately $144,000 were
expensed during the first quarter of 1999 while $4.6 million and $432,000 were
expensed during the years ended December 31, 1998 and 1997, respectively.
Although presently not anticipated, regulators require that management
disclose what could happen if BancGroup's systems fail as a result of entering
the new millennium. A possible worst case scenario could include interruption in
the normal servicing of customers as well as the funds management of the
Company. Management is currently developing a contingency plan to minimize the
impact of a failure on our customers and/or shareholders.
Management's evaluation of Year 2000 compliance and technological
upgrades is an on-going process involving continual evaluation. Unanticipated
problems could develop and alternative solutions may be available that could
cause current solutions to be more difficult or costly than anticipated.
<PAGE> 16
AVERAGE VOLUME AND RATES
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1999 1998*
Average Average
Volume Interest Rate Volume Interest Rate
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Loans, net $ 7,204,796 $151,920 8.53% $6,109,580 137,702 9.11%
Mortgage loans held for sale 613,394 10,966 7.15% 271,448 4,929 7.26%
Investment securities and securities
available for sale and other
interest-earning assets 1,578,903 24,542 6.22% 1,149,479 18,298 6.38%
------------ -------- ----------- ---------
Total interest-earning assets(l) 9,397,093 187,428 8.05% 7,530,507 160,929 8.63%
------------ -------- ----------- ---------
Nonearning assets 966,221 797,042
------------ -----------
Total assets $10,363,314 $8,327,549
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Interest-bearing deposits $ 5,912,615 $ 64,665 4.44% $5,312,631 $ 62,354 4.76%
Short-term borrowings 1,526,077 19,097 5.08% 724,510 10,121 5.66%
Long-term debt 807,584 11,898 5.98% 391,760 6,153 6.37%
------------ -------- ----------- ---------
Total interest-bearing liabilities 8,246,276 95,660 4.70% 6,428,901 78,628 4.96%
------------ -------- ----------- ---------
Noninterest-bearing demand deposits 1,369,626 1,163,483
Other liabilities 95,159 116,511
------------ -----------
Total liabilities 9,711,061 7,708,895
Shareholders' equity 652,253 618,654
------------ -----------
Total liabilities and shareholders'
equity $10,363,314 $8,327,549
============ ===========
Rate differential 3.35% 3.67%
Net yield on interest-earning assets $ 91,768 3.92% $ 82,301 4.39%
======== =========
</TABLE>
* Restated financial results above reflect the business combinations with
Commercial Bank of Nevada, FirstBank, First Macon Bank & Trust, Prime Bank
of Central Florida and Interwest BanCorp. These mergers were accounted for
as poolings of interests and the financial results have been 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> 17
ANALYSIS OF INTEREST INCREASES (DECREASES)
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31, 1999 Change from 1998*
Attributable to (1)
Total Volume Yield/Rate
<S> <C> <C> <C>
INTEREST INCOME:
Total Loans, Net $14,218 $26,363 $(12,145)
Mortgage loans held for sale 6,037 6,559 (522)
Investment securities and securities available
for sale and other interest-earning assets 6,244 7,239 (995)
Total interest income(2) 26,499 40,161 (13,662)
INTEREST EXPENSE:
Interest bearing deposits $ 2,311 $ 6,462 $ (4,151)
Short-term borrowings 8,976 10,266 (1,290)
Long-term debt 5,745 5,993 (248)
Total interest expense 17,032 22,721 (5,689)
NET INTEREST INCOME $ 9,467 $17,440 $ (7,973)
</TABLE>
* Restated financial results above reflect the business combinations with
Commercial Bank of Nevada and FirstBank, First Macon Bank & Trust, Prime
Bank of Central Florida and Interwest BanCorp. These mergers were accounted
for as poolings of interests and the financial results have been restated
accordingly.
(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. Changes not solely attributable to
a change in rate or volume are allocated proportionately relative to the
absolute value of the total change of rate and volume.
(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> 18
NET INTEREST INCOME:
Net interest income on a tax equivalent basis increased $9.5 million to
$91.8 million for the quarter ended March 31, 1999 from $82.3 million for the
quarter ended March 31, 1998. The net yield on interest earning assets decreased
from 4.39% to 3.92% for the three months ended March 31, 1998 and 1999,
respectively.
As reflected on the previous tables, the increase in net interest
income for the three months was primarily attributable to loan growth which was
partially offset by lower loan rates. During the first quarter of 1998 the prime
rate was 8.50% where it remained until September 1998 when it decreased to 8.25%
and continued to decrease to 7.75% in November 1998 where it remained through
March 31, 1999. The decline in interest rates is the primary reason for the
decline in the interest margin.
LOAN LOSS PROVISION:
The provision for possible loan losses for the first three months of
1999 was $6,019,000 compared to $3,951,000 for the same period in 1998. Asset
quality remains good. The current allowance for possible loan losses provides a
245% coverage of nonperforming loans compared to 245% at December 31, 1998 and
247% at March 31, 1998. 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 $6.5 million for the three months ended
March 31, 1999 compared to the same period in 1998. This increase is primarily
due to increases in mortgage servicing and origination fees of $1.9 million,
fees on deposit accounts of $.7 million, gains on sales of loans of $1.6
million, $.4 million in security and annuity commissions, $ .3 million in fees
for international banking activities and $1.0 million in a gain on the sale of 5
in-store branches in Southwest Florida.
Colonial Mortgage provides additional sources of non-interest income to
BancGroup through fees from its servicing portfolio as well as loan originations
from its 4 divisional offices. Colonial Mortgage purchases, originates and
services conventional, government, and jumbo mortgage products in 44 states and
the District of Columbia. Colonial Mortgage had non-interest income of $18.1
million for the three months ended March 31, 1999 compared to $14.5 million for
the three months ended March 31, 1998.
Mortgage servicing fees increased due to a $3.9 billion net increase in
the servicing portfolio to $15.9 billion at March 31, 1999 from $12.1 billion at
March 31, 1998. Gains on sales of loans increased due to additional loan
production resulting from increased refinancing activity.
BancGroup is continuing to expand its services through increased
efforts in private banking and additional products including asset management
services, trust services and sales of mutual funds and annuities. These services
contributed $1.2 million to non-interest income for the three months ended March
31, 1999 compared to $.7 million for the same period last year. In addition,
BancGroup established an international banking unit in mid 1998 to provide and
service the needs of customers involved in international activities.
International banking activities resulted in $300,000 in non-interest income for
the three months ended March 31, 1999.
NONINTEREST EXPENSES:
BancGroup's net overhead (total noninterest expense less noninterest
income, excluding security gains) was $40.4 million and $45.1 million for the
three months ended March 31, 1999 and 1998, respectively.
Noninterest expenses increased $1.9 million for the three months ended
March 31, 1999 compared to the same period in 1998. Colonial Mortgage is the
main contributor to the increase in noninterest expense. The scheduled
amortization of mortgage servicing rights increased $5.8 million while the
Company recovered $5.6 million of the MSR valuation allowance. Additionally,
Colonial Mortgage recognized a related $4.6 million trading security loss. Other
significant changes include a $1.0 million increase in salaries and benefits, a
$1.2 million increase in occupancy and furniture and equipment expense. These
increases are offset by decreases in acquisition and year 2000 related expenses.
Lower long term interest rates have caused higher prepayments of mortgages
serviced for others, resulting in fluctuation in the mortgage servicing right
asset value. BancGroup has entered into certain hedges as part of its strategy
to offset portions of the loss of value of the servicing asset that may result
from declines in mortgage rates. The increase in salary and benefit expenses
related to normal wage increases. Increases in occupancy and furniture and
equipment expenses are the result of normal business activities. Refer to
further discussion of acquisition related expenses below.
BancGroup's efficiency ratio, was 59.65% and 66.43% for the three
months ended March 31, 1999 and 1998, respectively. The Company should improve
efficiencies upon the conversion of the newly acquired banks. Conversions will
allow the consolidation of back shop operational areas into BancGroup's existing
loan and deposit operations, accounting and data processing departments.
<PAGE> 19
ACQUISITION EXPENSE AND RESTRUCTURING CHARGES:
In the first quarter of 1998, BancGroup reorganized executive
management of its Florida regions which resulted in a restructuring charge of
$2.5 million. During the fourth quarter of 1998, the Company developed a plan
to:
- Close certain unprofitable branches
- Sell five supermarket branches
- Relocate and upgrade two other branches
- Move the headquarters of the South Florida Region to downtown
Miami and to consolidate the trust department into the South Florida
headquarters to better serve its customer base.
As a result of these actions BancGroup recognized a fourth quarter
restructuring charge of $6.3 million.
The following is a summary of the activity related to these
restructuring charges for the three months ended March 31, 1999:
<TABLE>
<CAPTION>
LEASE ACCRUED
REDUCTION OF TERMINATION SEVERANCE
(In thousands) ASSET VALUES LIABILITIES & OTHER TOTAL
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at December 31, 1998 $ 0 $2,878 $ 598 $ 3,476
=============================================================
Reductions (payments) -- $ (555) $ (595) $(1,150)
-------------------------------------------------------------
Balance at March 31, 1999 $ 0 $2,323 $ 3 $ 2,326
=============================================================
</TABLE>
BancGroup discontinued operations in fourteen supermarket branches in
May 1999. The Company bought out the service contracts and lease commitments of
those branches. All equipment will be redeployed to other branch locations. By
closing these branches, the Company expects to save approximately $2 million per
year in operating expenses. The South Florida region plans to consolidate two
branches into a new location in 1999. At March 31, 1999, $2.3 million in
restructuring accruals remained for activities expected to occur in the second
and third quarters of 1999.
During the fourth quarter of 1998, management shifted the Company's
focus from bank acquisition activity to streamlining operations and emphasizing
profitable business units. As a result of this change in focus, the Company
recognized acquisition related expenses of $3.6 million for the quarter ended
March 31, 1998 and $0.5 million for the first quarter of 1999. These expenses
related primarily to transaction costs such as legal and accounting fees and
incremental charges related to the integration of acquired banks, such as system
conversion (including contract buy-outs and write-offs of equipment) and
employee severance.
PROVISION FOR INCOME TAXES:
BancGroup's provision for income taxes is based on an approximately
36.8% and 36.2%, estimated annual effective tax rate for the years 1999 and
1998, respectively. The provision for income taxes for the three months ended
March 31, 1999 and 1998 was $16,389,000 and $11,810,000, respectively.
<PAGE> 20
Part II
Other Information
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
On April 21, 1999, the annual meeting of the shareholders of Colonial
BancGroup was held. The following are the results of the votes cast by
shareholders present at such meeting, by proxy or in person, for such proposals.
1) Election of the following directors:
<TABLE>
<CAPTION>
TERM EXPIRES IN 2002: FOR WITHHOLD
<S> <C> <C>
William Britton 89,048,378 36,434
Patrick F. Dye 88,899,436 185,376
Milton E. McGregor 88,837,461 247,351
Simual Sippial 89,065,523 19,289
</TABLE>
In addition to the foregoing the following directors will continue to
serve:
<TABLE>
<CAPTION>
TERM EXPIRES IN 2001: TERM EXPIRES IN 2000:
<S> <C>
Augustus K. Clements III Lewis Beville
Robert S. Craft Jerry J. Chesser
Clinton O. Holdbrooks John Ed Mathison
Harold D. King Joe D. Mussafer
Robert E. Lowder William E. Powell III
John C. H. Miller, Jr. Frances E. Roper
Jimmy Rane Ed V. Welch
</TABLE>
ITEM 5: Other Events - N/A
ITEM 6: (a) Exhibit 27 - Financial Data Schedule (for SEC use only)
(b) Form 8-K - A) Report on Form 8-K was filed on January 19, 1999,
disclosing a Summary of the financial results for the year ended
December 31, 1998 and restated financial statements for
December 31, 1997.
<PAGE> 21
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
THE COLONIAL BANCGROUP, INC.
Date: June 30, 1999 By: /S/ W. Flake Oakley, IV
----------------------------
W. Flake Oakley, IV
Its Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 9
<RESTATED>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 425,400
<INT-BEARING-DEPOSITS> 67,348
<FED-FUNDS-SOLD> 18,378
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,311,503
<INVESTMENTS-CARRYING> 160,925
<INVESTMENTS-MARKET> 159,585
<LOANS> 7,328,566
<ALLOWANCE> 86,162
<TOTAL-ASSETS> 10,639,399
<DEPOSITS> 7,555,520
<SHORT-TERM> 1,415,568
<LIABILITIES-OTHER> 117,215
<LONG-TERM> 891,024
0
0
<COMMON> 660,072
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 10,639,399
<INTEREST-LOAN> 162,614
<INTEREST-INVEST> 23,440
<INTEREST-OTHER> 558
<INTEREST-TOTAL> 186,612
<INTEREST-DEPOSIT> 64,665
<INTEREST-EXPENSE> 95,660
<INTEREST-INCOME-NET> 90,952
<LOAN-LOSSES> 6,019
<SECURITIES-GAINS> 9
<EXPENSE-OTHER> 75,393
<INCOME-PRETAX> 44,537
<INCOME-PRE-EXTRAORDINARY> 44,537
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 28,148
<EPS-BASIC> 0.25
<EPS-DILUTED> 0.25
<YIELD-ACTUAL> 3.92
<LOANS-NON> 33,826
<LOANS-PAST> 5,877
<LOANS-TROUBLED> 1,290
<LOANS-PROBLEM> 192,000
<ALLOWANCE-OPEN> 83,562
<CHARGE-OFFS> 4,601
<RECOVERIES> 1,182
<ALLOWANCE-CLOSE> 86,162
<ALLOWANCE-DOMESTIC> 86,162
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
