Colonial Bancgroup : Colonial BancGroup Announces First Quarter Earnings Per Share of $0.43

FIRST QUARTER 2007 HIGHLIGHTS:

• Quarterly EPS of $0.43, up 2% over 1Q06
• Core noninterest income increased 11% over 1Q06
• Loans grew 3% over 1Q06, excluding the sale of $490 million of residential real estate loans in 1Q07
• Period end deposits grew 7% annualized over December 31, 2006 ? noninterest bearing deposits grew 13% annualized
• Excellent credit quality - annualized net charge-offs were 0.06% of average loans
• The allowance for loan losses increased to 1.16% of loans ? 525% of nonperforming assets

The Colonial BancGroup, Inc. (NYSE:CNB) Chairman, CEO and President, Robert E. Lowder, announced today that the Company earned $0.43 per diluted share for the quarter ended March 31, 2007, a 2% increase over the $0.42 earned for the same quarter of the previous year. Net income for the quarter was $65 million. ?Taken as a whole, the Financial Services industry went on a roller coaster ride in the first quarter of 2007. I am pleased to report that Colonial's performance did not join that ride, and continues to reflect the results of our long time commitment to conservative lending to borrowers we know,? said Mr. Lowder.

Specifically, net charge-offs were an annualized 0.06% of average loans in the first quarter, down from 0.12% for the fourth quarter of 2006 and 0.26% for the first quarter of 2006. Nonperforming assets were 0.22% of net loans at March 31, 2007 down two basis points from 0.24% at March 31, 2006 and up six basis points from 0.16% at December 31, 2006. ?Colonial's credit quality has historically been measurably ahead of its southeastern peer average and the average of all FDIC insured commercial banks. The results at the end of the first quarter continue to reflect that trend,? said Mr. Lowder. Consistent with its conservative approach, Colonial increased its allowance for loan losses as a percentage of total loans to 1.16%, up from 1.13% at December 31, 2006. The allowance represented 525% of nonperforming assets at March 31, 2007.

Mortgage warehouse assets ended the quarter at $4.1 billion in assets under management with $2 billion in interests sold to third-party commercial paper conduits. Total mortgage warehouse assets retained by Colonial decreased 11% from December 31, 2006 to $2.1 billion. ?Colonial's mortgage warehouse lending customers include mortgage companies which originate primarily ?A? paper. Credit quality remains excellent in Colonial's warehouse division. Our borrowers are experiencing no difficulty in selling their production in a timely fashion,? said Mr. Lowder.

Net interest income was $181 million in the first quarter of 2007, a 2% decrease from the fourth quarter of 2006. Net interest margin contracted five basis points from the fourth quarter of 2006. ?Net interest income continues to be impacted by our policy of accepting slower asset growth in return for dealing only with borrowers who meet our credit standards and the migration of customer deposits from low or no rate products to higher rate products. Having said that, it has always been Colonial's belief that flexibility is one of the keys to sound management, and utilizing that approach the Company has taken a number of steps to deal with the impact of margin compression on earnings. Examples of these steps are selling low yielding assets, redeeming high rate debt, introducing new deposit products such as remote deposit capture, focusing on fee income opportunities and continuing to emphasize strong expense controls,? said Mr. Lowder.

At the end of the quarter, Colonial sold approximately $490 million of residential mortgage loans which had an average yield of 6.04%. Colonial recognized a pretax gain of $3.9 million on the sale of those mortgages. In February, Colonial redeemed $70 million of trust preferred securities with an interest rate of 8.92%. The debt was replaced with short term borrowings at lower rates. As previously announced, Colonial reduced its workforce by approximately 170 positions in January and incurred severance charges of $3 million. The benefit of the reduction in staffing is expected to be realized beginning in the second quarter of 2007.

Core noninterest income increased 11% over the first quarter of 2006. Retail banking fees, which consist primarily of deposit service charges, overdraft fees and electronic banking fees, increased 18% over the first quarter of 2006, while mortgage banking revenues from the origination and sale of fixed rate mortgages increased 10% over the first quarter of 2006. The financial planning services unit had a strong quarter, increasing revenues by 22% over the first quarter of 2006.

Noninterest expenses were well controlled in the quarter. Excluding the $3 million in severance and $429,000 of merger expenses related to the pending acquisition of Commercial Bankshares, Inc., noninterest expenses were approximately even with the fourth quarter of 2006.

Loans, excluding mortgage warehouse loans and the sale of $490 million of residential mortgage loans, grew 3% from March 31, 2006 and were even with December 31, 2006.

Period end deposits grew by $292 million, or 7% annualized, over December 31, 2006. Noninterest bearing checking accounts grew by 13% annualized over December 31, 2006. Average deposits, excluding brokered deposits, increased 5% over the first quarter of 2006 and 2% annualized over the fourth quarter of 2006.

In January, Colonial announced plans to acquire Commercial Bankshares, Inc. (Commercial) and its bank subsidiary Commercial Bank of Florida, headquartered in Miami, Florida. At March 31, 2007, Commercial had $1 billion in assets, $838 million in deposits and 14 locations in south Florida. ?The acquisition of Commercial is reflective of our strategy to acquire high quality, well-run institutions which add convenience and enhance our revenue generating capability in our existing markets. Pending shareholder and regulatory approvals, we expect the merger to be completed by June 30, 2007,? said Mr. Lowder.

Effective January 1, 2007, Colonial elected early adoption of Statements of Financial Accounting Standards (SFAS) Nos. 157 and 159, which permit the measurement of selected eligible financial instruments at fair value at specified election dates. The adoption of SFAS No. 159 is expected to provide Colonial with greater flexibility to extinguish high rate debt and to sell lower yielding assets which the Company anticipates will improve the Company's profitability for 2007 and in future periods.

Colonial BancGroup operates over 300 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 April 18, 2007 at 3 p.m. ET to discuss the earnings results for the first 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 [phone] (Domestic Toll-Free) or [phone] (Toll International), (Leader: Lisa Free). A replay of the conference call will be available beginning at 6 p.m. ET on April 18, 2007 and ending at midnight on April 25, 2007 by dialing [phone] (Domestic Toll-Free) or [phone] (Toll International). The passcode for both numbers is 4679607.

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 the 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		Mar 31,	Mar 31,	Mar 31,
	(Dollars in millions)	2007	2006	'06 to '07
	Total assets	$ 23,073	$ 21,969	5%
	Total loans, net:
	Mortgage warehouse loans	167	436	-62%
	Loans, excluding mortgage warehouse loans	14,755	14,846	-1%
	Total securities	3,394	2,869	18%
	Non-time deposits	9,409	9,295	1%
	Total deposits	16,383	15,855	3%
	Shareholders' equity	2,084	1,947	7%
		Three Months Ended
				% Change
Earnings Summary		Mar 31,	Mar 31,	Mar 31,
	(In thousands, except per share amounts)	2007	2006	'06 to '07
Net Income:
	Net interest income	$ 180,830	$ 188,160	-4%
	Provision for loan losses	2,250	12,342	-82%
	Core noninterest income	46,240	41,501	11%
	Securities, derivatives and debt gains(losses), net	3,044	4,228	-28%
	Gain on sale of mortgage loans	3,850	-	NM
	Gain on sale of Goldleaf	-	2,829	NM
	Total noninterest income	53,134	48,558	9%
	Noninterest expense excluding the following items:	130,291	125,861	4%
	Merger related expenses	429	-	NM
	Severance expense	3,025	-	NM
	Total noninterest expense	133,745	125,861	6%
	Income before tax	97,969	98,515	-1%
	Income tax	32,722	33,495	-2%
Net Income		$ 65,247	$ 65,020	0%
EARNINGS PER SHARE:
Net Income
	Basic	$ 0.43	$ 0.42	2%
	Diluted	$ 0.43	$ 0.42	2%
Average shares outstanding		152,309	153,968
Average diluted shares outstanding		153,450	155,183
KEY RATIOS:
	Net interest margin	3.48%	3.86%	-10%
	Book value per share	$ 13.63	$ 12.61	8%
	Dividends paid per share	$ 0.1875	$ 0.1700	10%