COLONIAL BANCGROUP, INC. 
By Colonial BancGroup, Inc. (NYSE: CNB):
SECOND QUARTER 2007 HIGHLIGHTS:
- EPS of $0.43
- Net interest margin expanded 20 basis points to 3.66% from the first quarter of 2007
- Core noninterest income increased 18% over the same quarter of the prior year
- Continued excellent credit quality - Nonperforming assets ratio of 0.29%; Annualized net charge-off ratio of 0.20% for the quarter and 0.13% for the first six months
- Improved efficiency ratio of 56.20%
- Successful acquisition and integration of Commercial Bankshares, Inc.; Florida deposits now exceed $10 billion
The Colonial BancGroup, Inc. (NYSE: CNB) Chairman, CEO and President, Robert E. Lowder, announced today that the Company's earnings for the quarter ended June 30, 2007 were $0.43 per diluted share. Net income for the quarter was $66 million.
Colonial's net interest income for the quarter increased 6% over the first quarter of 2007. The strong increase in net interest income was attributable to a 20 basis point increase in the Company's net interest margin primarily as a result of the sale of low yielding investments and the corresponding reduction in wholesale borrowings at the beginning of the quarter. The net interest margin increased to 3.66% for the quarter, up from 3.46% for the first quarter of 2007.
In June 2007, the Company completed the acquisition and integration of Commercial Bankshares, Inc. of Florida (CLBK), headquartered in Miami, Florida. CLBK had $1.1 billion in assets and $824 million in deposits on the date of acquisition. ?Our recent acquisition of Commercial reflects our strategy to selectively acquire high quality banks which will expand and enhance Colonial's revenue generating capability in some of the fastest growing markets in the country,? said Mr. Lowder.
Average deposits, excluding the impact of the acquisition of Commercial Bankshares, Inc., grew $225 million or 6% annualized from the first quarter of 2007. Significantly, average noninterest bearing transaction accounts grew 15% annualized over the first quarter of 2007, excluding the acquisition. ?The excellent deposit growth reflects our effort to take advantage of the competitive opportunities in our markets caused by the mergers of other financial institutions. We are pleased with the growth in the Alabama franchise which grew average deposits by 10% annualized during the quarter,? said Mr. Lowder.
Average loans, excluding mortgage warehouse lending, first quarter loan sales and the acquisition, grew by $83 million or 2% annualized over the first quarter of 2007. Credit quality remained strong during the quarter. Colonial's nonperforming assets ratio at June 30, 2007 was 0.29%. Annualized net charge-offs were 0.20% of average loans for the second quarter of 2007 and were 0.13% for the first six months of 2007. The allowance for loan losses was 1.15% of total loans and represented 391% of nonperforming assets at June 30, 2007.
?The news from the financial sector for the past three months has been largely focused on the sub-prime situation and has been decidedly gloomy. Some years ago at Colonial, we made the conscious decision not to enter the sub-prime business, and, fortunately, sub-prime issues don't affect the Company. However, Colonial is not immune from current market conditions. The seven basis point increase in nonperforming assets and in net charge-offs over the first quarter speaks for itself, but we are pleased with that relatively small accretion. Naturally we have engaged in an extensive analysis of our entire asset portfolio, and because of our stringent underwriting standards, we do not currently see any systemic risk unique to Colonial. We continue to be committed to prudent management of credit risks,? said Mr. Lowder.
Average mortgage warehouse lending assets grew by $727 million or 35% over the first quarter of 2007. The mortgage warehouse division ended the quarter with record assets under management of $4.4 billion.
Core noninterest income, which excludes securities gains and losses, and gains on the sales of merchant services and mortgage loans, increased 14% over the first quarter of 2007 and 18% over the same quarter of the prior year. The increase over the first quarter was primarily from retail banking fees, financial planning services and income from joint venture activities. Total noninterest income included a $4.9 million gain on the sale of the Company's merchant services business in the quarter. Colonial will continue to provide merchant services to its customers as an agent bank of Colonial's third party service provider.
Core noninterest expense was $137.3 million in the current quarter which was a $7 million increase over the first quarter. The second quarter reflected one month of expenses from the Commercial Bankshares acquisition, $1.5 million of additional advertising costs and increases in other expenses. The Company's efficiency ratio for core earnings improved from 57.38% in the first quarter of 2007 to 56.20% in the current quarter.
In late May, Colonial issued $300 million of REIT preferred securities with a 7.114% dividend rate. Colonial used a portion of the proceeds from the REIT preferred issuance to prepay $100 million of trust preferred securities which bore interest at 8.32%, resulting in the recognition of $2.5 million of net losses on the early extinguishment of debt.
Colonial also announced today, in a separate release, that it has entered into a definitive agreement to acquire Citrus & Chemical Bancorporation, Inc. (C&C). C&C is based in Lakeland, Florida, has total assets of $876 million, total deposits of $727 million and net loans of $514 million. C&C currently operates 10 full service offices in Polk county, located in the high growth I-4 corridor between Tampa and Orlando. Once completed, contingent on the usual approvals, this transaction will strengthen Colonial's position as the fifth largest commercial bank in Florida with 192 branches, approximately $11 billion in deposits and $15.8 billion in assets in that state.
Colonial BancGroup operates 321 branches in Florida, Alabama, Georgia, Nevada and Texas with more than $23 billion in assets. The Company's common stock is traded on the New York Stock Exchange under the symbol CNB and is located online at www.colonialbank.com. In most newspapers, the stock is listed as ColBgp.
Colonial's management has scheduled a conference call on July 18, 2007 at 3 p.m. ET to discuss the earnings results for the second quarter. Individuals are encouraged to listen to the live webcast and view a slide presentation that will be available on Colonial's web site at www.colonialbank.com. The webcast will be hosted under ?Events and Presentations? located under the ?Investor Relations? section of the website. To participate in the Q&A session of the conference call, dial (877) 502-9272 (Domestic Toll-Free) or (913) 981-5581 (Toll International), (Leader: Lisa Free). A replay of the conference call will be available beginning at 6 p.m. ET on July 18, 2007 and ending at midnight on July 23, 2007 by dialing (888) 203-1112 (Domestic Toll-Free) or (719) 457-0820 (Toll International). The passcode for both numbers is 3486760.
This release includes ?forward-looking statements? within the meaning of the federal securities laws. Words such as ?believes,? ?estimates,? ?plans,? ?expects,? ?should,? ?may,? ?might,? ?outlook,??potential? and ?anticipates,? the negative of these terms and similar expressions, as they relate to The Colonial BancGroup, Inc. (BancGroup) (including its subsidiaries or its management), are intended to identify forward-looking statements. The forward-looking statements in this release are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by such statements. In addition to factors mentioned elsewhere in this release or previously disclosed in BancGroup's SEC reports (accessible on the SEC's website at www.sec.gov or on BancGroup's website at www.colonialbank.com), the following factors, among others, could cause actual results to differ materially from forward-looking statements and future results could differ materially from historical performance. These factors are not exclusive:
- deposit attrition, customer loss, or revenue loss in the ordinary course of business;
- increases in competitive pressure in the banking industry and from non-banks;
- costs or difficulties related to the integration of the businesses of BancGroup and institutions it acquires are greater than expected;
- the inability of BancGroup to realize elements of its strategic plans for 2007 and beyond;
- changes in the interest rate environment which expand or reduce margins or adversely affect critical estimates as applied and projected returns on investments;
- economic conditions affecting real estate values and transactions in BancGroup's market and/or general economic conditions, either nationally or regionally, that are less favorable then expected;
- natural disasters in BancGroup's primary market areas which result in prolonged business disruption or materially impair the value of collateral securing loans;
- management's assumptions and estimates underlying critical accounting policies prove to be inadequate or materially incorrect or are not borne out by subsequent events;
- the impact of recent and future federal and state regulatory changes;
- current and future litigation, regulatory investigations, proceedings or inquiries;
- strategies to manage interest rate risk may yield results other than those anticipated;
- changes which may occur in the regulatory environment;
- a significant rate of inflation (deflation);
- acts of terrorism or war; and
- changes in the securities markets.
Many of these factors are beyond BancGroup's control. The reader is cautioned not to place undue reliance on any forward looking statements made by or on behalf of BancGroup. Any such statement speaks only as of the date the statement was made or as of such date that may be referenced within the statement. BancGroup does not undertake any obligation to update or revise any forward-looking statements.
| THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES | |||||||||
| FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||
| % Change | |||||||||
Statement of Condition Summary | June 30, 2007 | Dec 31, 2006 |
Dec '06 to June '07 | ||||||
| Total assets | $ | 23,823 | $ | 22,784 | 5% | ||||
| Loans, excluding mortgage warehouse loans | 15,268 | 15,197 | 0% | ||||||
| Mortgage warehouse assets | 2,885 | 2,311 | 25% | ||||||
| Mortgage warehouse assets under management | 4,385 | 4,311 | 2% | ||||||
| Total securities | 2,720 | 3,085 | -12% | ||||||
| Non-time deposits | 9,673 | 9,093 | 6% | ||||||
| Total deposits | 17,084 | 16,091 | 6% | ||||||
| Shareholders' equity | 2,210 | 2,057 | 7% | ||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||
|
Earnings Summary (In thousands, except per share amounts) | June 30, 2007 | Mar 31, 2007 |
% Change Mar '07 to June '07 | June 30, 2007 | June 30, 2006 |
% Change June 30, '06 to '07 | ||||||||||||||||||||||||||
| Net Income: | ||||||||||||||||||||||||||||||||
| Net interest income | $ | 190,217 | $ | 179,945 | 6% | $ | 370,162 | $ | 380,247 | -3% | ||||||||||||||||||||||
| Provision for loan losses | 6,105 | 2,250 | 171% | 8,355 | 17,292 | -52% | ||||||||||||||||||||||||||
| Core noninterest income | 52,765 | 46,394 | 14% | 99,159 | 86,374 | 15% | ||||||||||||||||||||||||||
| Securities and derivatives gains, net | 1,116 | 981 | 14% | 2,097 | 4,228 | -50% | ||||||||||||||||||||||||||
| Securities restructuring charges | - | (36,006) | NM | (36,006) | - | NM | ||||||||||||||||||||||||||
| Gain on sale of mortgage loans | - | 3,850 | NM | 3,850 | - | NM | ||||||||||||||||||||||||||
| Gain on sale of merchant services | 4,900 | - | NM | 4,900 | - | NM | ||||||||||||||||||||||||||
| Gain on sale of Goldleaf | - | - | NM | - | 2,829 | NM | ||||||||||||||||||||||||||
| Total noninterest income | 58,781 | 15,219 | 286% | 74,000 | 93,431 | -21% | ||||||||||||||||||||||||||
| Core noninterest expense | 137,336 | 130,291 | 5% | 267,627 | 257,087 | 4% | ||||||||||||||||||||||||||
| Severance expense | 520 | 3,025 | -83% | 3,545 | - | NM | ||||||||||||||||||||||||||
| Merger related expenses | 1,116 | 429 | 160% | 1,545 | - | NM | ||||||||||||||||||||||||||
Net losses related to the early extinguishment of debt | 2,512 | 4,396 | -43% | 6,908 | - | NM | ||||||||||||||||||||||||||
| Total noninterest expense | 141,484 | 138,141 | 2% | 279,625 | 257,087 | 9% | ||||||||||||||||||||||||||
| Minority interest expense/REIT preferred dividends | 2,312 | - | NM | 2,312 | - | NM | ||||||||||||||||||||||||||
| Income before tax | 99,097 | 54,773 | 81% | 153,870 | 199,299 | -23% | ||||||||||||||||||||||||||
| Income tax | 32,978 | 18,294 | 80% | 51,272 | 67,761 | -24% | ||||||||||||||||||||||||||
| Net Income | $ | 66,119 | $ | 36,479 | 81% | $ | 102,598 | $ | 131,538 | -22% | ||||||||||||||||||||||
| DILUTED EARNINGS PER SHARE: | ||||||||||||||||||||||||||||||||
| EPS - GAAP | $ | 0.43 | $ | 0.24 | 79% | $ | 0.66 | $ | 0.85 | -22% | ||||||||||||||||||||||
| Restructuring charges, net of tax (1) | Share
© Business Wire - 2007
The Colonial BancGroup, Inc. (BancGroup) is a financial services company that provides diversified services, including retail and commercial banking, wealth management services, mortgage banking and insurance products. The principal activity of the BancGroup is to supervise and coordinate the business of its subsidiaries. The BancGroup derives substantially all of its income from Colonial Bank, N.A (Colonial Bank) its banking subsidiary. The BancGroup's subsidiary Colonial Brokerage, Inc. provides full service, and discount brokerage services and investment advice. As of December 31, 2008, Colonial Bank had a total of 347 branches, with 197 branches in Florida, 90 branches in Alabama, 19 branches in Georgia, 21 branches in Texas and 20 branches in Nevada.
Sector
Banks
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