Press Release

EX-99.1 3 dex991.htm PRESS RELEASE Press Release

EXHIBIT 99.1

						For immediate release
						October 15, 2003

For more information contact:

*Investors:*				*Media:*
Glenda Allred or Sarah H. Moore				Bob Howell (334) 240-5025
at (334) 240-5064

COLONIAL BANCGROUP ANNOUNCES

RECORD NET INCOME

MONTGOMERY, AL — The Colonial BancGroup, Inc. Chairman and CEO, Robert E. Lowder, announced today that the Company earned record net income for the quarter ended September 30, 2003 of $39 million or $0.31 cents per diluted share, a 7% increase in earnings per share over the third quarter of 2002. Net income for the quarter increased 10% over the third quarter 2002 and net income for the nine months ended September 30, 2003 increased 6.5% compared to the corresponding period in the prior year.

“Our strong results during a weak economy demonstrate that our strategy of locating in high growth markets and lending to strong borrowers with sound collateral is paying off for our shareholders,” said Mr. Lowder.

Colonial’s net interest income for the quarter increased by $14 million or 12% over the third quarter 2002. For the nine months ended September 30, 2003, net interest income increased $34 million, or 10%, over the corresponding period in the prior year. Net interest margin was stable at 3.42% for the quarter ended September 30, 2003.

Colonial’s core (non-time) deposits grew $201 million, or 15% annualized from June 30, 2003 to September 30, 2003 and $495 million, or 13%, annualized, from December 2002 to

September 30, 2003. Total deposits, including time deposits, increased $164 million, or 7% annualized, from June 30, 2003.

Loan balances excluding mortgage warehouse loans grew $117 million, or 5% annualized, from June 30, 2003 to September 30, 2003 and $243 million, or 3% annualized, from December 31, 2002 to September 30, 2003. Mortgage warehouse loan volume is impacted by the level and direction of mortgage rates and their effect on mortgage refinancing and financing of new home purchases. Long term mortgage rates increased 74 basis points from the beginning of the current quarter to the end of the quarter causing a significant slow down in mortgage applications for both home purchases and refinancing. As such, mortgage warehouse loans decreased $477 million and $526 million from June 30, 2003 and December 31, 2002, respectively, resulting in an overall decrease in loan balances of $360 million and $283 million from June 30, 2003 and December 31, 2002, respectively.

Mortgage loans held for sale are impacted by the same factors as mortgage warehouse lending, consequently, mortgage loans held for sale decreased $151 million from June 30, 2003 to September 30, 2003.

Credit quality remained strong with nonperforming assets as a percentage of loans and ORE improving to 0.72% at September 30, 2003 from 0.78% at December 31, 2002. Annualized net charge-offs were 0.35% of average loans for the third quarter 2003 and 0.31% year to date. We expect these credit quality indicators to continue to be among the best for banks over $10 billion in assets. Provision for loan losses charged to expense was $9.3 million in the third quarter 2003 compared to $10.8 million in the second quarter 2003 and $6.8 million in the third quarter 2002. The reserve for loan losses has remained within a range of 1.16% to 1.22% of total loans over the past several quarters fluctuating as mortgage warehouse volumes have increased and decreased. Loan loss reserves net of allowances for mortgage warehouse loans and 1-4 family mortgage loans has remained substantially consistent as a percentage of loans throughout 2003 at 1.49% at September 30, 2003 compared to 1.50% at December 31, 2002.

Also during the quarter, the Company issued $100 million of junior subordinated debt which currently qualifies as Tier I Capital.

“Our relationship building and income diversification efforts are reflected in year over year increases in noninterest income. We are extremely pleased to have marked improvement in each major component of noninterest income this year,” said Mr. Lowder.

Total noninterest income, excluding securities gains, increased $7.1 million, or 28%, for the third quarter 2003 compared to the third quarter of 2002.

Noninterest income, excluding securities gains, decreased $120,000 from the second quarter 2003, primarily due to a decrease in mortgage origination income which was offset by growth in other components of noninterest income such as service charges, financial planning services, electronic banking services and other income.

Like mortgage warehouse lending, mortgage loan origination income has a high degree of correlation with mortgage refinancing and financing of new home purchases. As mortgage rates rose in the second half of the quarter, mortgage activity for both purchase and refinance slowed dramatically, therefore, noninterest income from mortgage loan originations decreased by $1.9 million, from the second quarter of 2003, although it was $416,000, or 11%, above the prior year third quarter and $6.1 million, or 69%, over the nine months ended September 30, 2002.

As a result of the Company’s growth in core deposits and revenue enhancement initiatives, service charges on deposit accounts increased $944,000, or 7%, from the second quarter to third quarter 2003 and $2.9 million, or 25%, over the third quarter of the prior year.

Income from financial planning services increased $271,000, or 8%, over the second quarter 2003 and $564,000, or 18%, from the third quarter 2002.

Noninterest expenses were $93.7 million in the current quarter compared to $91.3 million for the second quarter 2003. This 2.6% increase is primarily due to salaries and incentive related compensation, opening of three new branches during the quarter as well as normal fluctuations in various other operating expenses.

Colonial BancGroup currently operates 274 offices with $15.8 billion in assets in Florida, Alabama, Georgia, Nevada, Tennessee and Texas and is traded on the New York Stock Exchange under the symbol CNB. In most newspapers the stock is listed as ColBgp.

More detailed information on Colonial BancGroup’s quarterly earnings is available on the company’s website at www.colonialbank.com or in the Current Report on Form 8-K filed today with the Securities and Exchange Commission.

This release and the above referenced Current Report on Form 8-K of which this release forms a part contain “forward-looking statements” within the meaning of the federal securities laws. The forward-looking statements in this release are subject to risks and uncertainties that could cause actual results to differ materially from those expressed 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) an inability of the company to realize elements of its strategic plans for 2003 and beyond; (ii) increases in competitive pressure in the banking industry; (iii) general economic conditions, either internationally, nationally or regionally, that are less favorable than expected; (iv) expected cost savings from recent and future acquisitions are not fully realized; (v) changes in the interest rate environment which may reduce margins; (vi) management’s assumptions regarding allowance for loan losses may not be borne by subsequent events; (vii) changes which may occur in the regulatory environment and (viii) other factors more fully discussed in our periodic reports filed with the Securities and Exchange Commission. When used in this Report, the words “believes,” “estimates,” “plans,” “expects,” “should,” “may,” “might,” “outlook,” “anticipates” and similar expressions as they relate to BancGroup (including its subsidiaries) or its management are intended to identify forward-looking statements. Forward-looking statements speak only as to the date they are made. BancGroup does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES

FINANCIAL HIGHLIGHTS (Unaudited)

Statement of Condition Summary (Dollars in millions, except per share amounts)	September 30, 2003		December 31, 2002		September 30, 2002		% Change September 30, ‘02 to ‘03
Total assets	$	15,835	$	15,822	$	15,089	5	%
Loans		11,409		11,692		11,196	2	%
Total earning assets		14,685		14,716		14,050	5	%
Core (non-time) deposits		5,445		4,950		4,708	16	%
Shareholders' equity		1,112		1,071		1,053	6	%
Book value per share	$	8.94	$	8.66	$	8.52	5	%

	Nine Months Ended				% Change September 30, ‘02 to ‘03		Three Months Ended				% Change September 30, ‘02 to ‘03
Earnings Summary (In thousands, except per share amounts)	September 30, 2003		September 30, 2002		% Change September 30, ‘02 to ‘03		September 30, 2003		September 30, 2002		% Change September 30, ‘02 to ‘03
Net interest income (taxable equivalent)	$	377,590	$	343,856	10	%	$	130,127	$	116,610	12	%
Provision for loan losses		28,176		24,777	14	%		9,306		6,803	37	%
Noninterest income		96,008		72,354	33	%		32,263		25,996	24	%
Noninterest expense		273,675		227,269	20	%		93,727		80,361	17	%
Income from continuing operations	$	112,189	$	106,069	6	%	$	38,812	$	35,835	8	%
Net income	$	112,189	$	105,364	6	%	$	38,812	$	35,130	10	%
EARNINGS PER SHARE:
Income from continuing operations
Basic	$	0.90	$	0.90	0	%	$	0.31	$	0.30	3	%
Diluted	$	0.90	$	0.89	1	%	$	0.31	$	0.30	3	%
Net Income
Basic	$	0.90	$	0.89	1	%	$	0.31	$	0.29	7	%
Diluted	$	0.90	$	0.88	2	%	$	0.31	$	0.29	7	%
Average shares outstanding		124,050		118,201				124,354		119,457
Average diluted shares outstanding		124,768		119,305				125,180		120,400

Nonperforming Assets	September 30, 2003		December 31, 2002		September 30, 2002
Total non-performing assets ratio	0.72	%	0.78	%	0.70	%
Allowance as a percent of nonperforming loans	208	%	191	%	237	%
Net charge-offs ratio (annualized):
Quarter to date	0.35	%	0.44	%	0.27	%
Year to date	0.31	%	0.29	%	0.24	%

THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES

CONDENSED STATEMENT OF INCOME (unaudited)

																Nine Months Ended
Earnings Summary (Dollars in thousands, except per share amounts)	3rd Qtr. 2003			2nd Qtr. 2003			1st Qtr. 2003			4th Qtr. 2002			3rd Qtr. 2002			September 30, 2003			September 30, 2002
Net interest income	$	129,576		$	125,149		$	121,102		$	119,540		$	115,879		$	375,827		$	341,630
Provision for loan loss		9,306			10,810			8,060			11,203			6,803			28,176			24,777
Noninterest income:
Service charges on deposit accounts		14,304			13,360			11,713			11,883			11,404			39,377			33,058
Financial planning services		3,764			3,493			4,268			2,726			3,200			11,525			8,326
Electronic banking		2,489			2,710			2,433			2,075			2,184			7,632			6,182
Mortgage origination		4,274			6,126			4,590			5,119			3,858			14,990			8,885
Securities gains, net		142			1,947			1,770			4,062			976			3,859			1,639
Other income		7,290			6,552			4,783			4,113			4,374			18,625			14,264

Total noninterest income		32,263			34,188			29,557			29,978			25,996			96,008			72,354
Noninterest expense:
Salaries and employee benefits		50,295			48,172			47,158			44,190			42,591			145,625			120,045
Occupancy and equipment expenses		20,592			20,461			19,507			19,178			17,921			60,560			51,286
Amortization of intangibles		1,085			1,086			1,086			1,046			892			3,257			1,767
Merger related expenses		—			62			123			476			321			185			398
Other expense		21,755			21,553			20,740			20,620			18,636			64,048			53,773

Total noninterest expense		93,727			91,334			88,614			85,510			80,361			273,675			227,269
Income from continuing operations before tax		58,806			57,193			53,985			52,805			54,711			169,984			161,938
Income tax		19,994			19,446			18,355			18,003			18,876			57,795			55,869

Income from continuing operations		38,812			37,747			35,630			34,802			35,835			112,189			106,069
Discontinued operations, net of tax		—			—			—			(141	)		(705	)		—			(705	)

Net Income	$	38,812		$	37,747			35,630		$	34,661		$	35,130			112,189			105,364
Exclude discontinued operations, net of tax		—			—			—			141			705			—			705
Intangible amortization expense, net of tax		716			717			717			685			584			2,150			1,157

CASH BASIS EARNINGS FROM CONTINUING OPERATIONS	$	39,528		$	38,464		$	36,347		$	35,487		$	36,419		$	114,339		$	107,226

Earnings per share—Diluted
Income from continuing operations	$	0.31		$	0.30		$	0.29		$	0.28		$	0.30		$	0.90		$	0.89
Cash basis earnings from continuing operations	$	0.32		$	0.31		$	0.29		$	0.29		$	0.30		$	0.92		$	0.90
Selected ratios from income from continuing operations
Return on average assets		0.95	%		0.96	%		0.94	%		0.90	%		1.01	%		0.95	%		1.06	%
Return on average equity		13.92	%		13.73	%		13.32	%		13.13	%		14.34	%		13.66	%		14.99	%
Efficiency ratio		57.72	%		57.11	%		58.58	%		56.93	%		56.35	%		57.79	%		54.60	%
Noninterest income*/ avg assets		0.79	%		0.87	%		0.78	%		0.78	%		0.74	%		0.81	%		0.73	%
Noninterest expense*/ avg assets		2.30	%		2.31	%		2.31	%		2.24	%		2.29	%		2.31	%		2.27	%
Net interest margin		3.42	%		3.42	%		3.42	%		3.35	%		3.53	%		3.42	%		3.67	%
Equity to assets		7.02	%		6.92	%		6.85	%		6.77	%		6.98	%
Tier one leverage		7.13	%		6.50	%		6.58	%		6.50	%		6.93	%
Selected ratios from cash basis earnings from continuing operations
Return on average tangible assets		0.98	%		0.99	%		0.98	%		0.94	%		1.05	%		0.98	%		1.08	%
Return on average equity		14.17	%		13.99	%		13.59	%		13.39	%		14.57	%		13.92	%		15.15	%
Return on average tangible equity		18.42	%		18.22	%		17.80	%		17.77	%		18.51	%		18.15	%		18.54	%

*Annualized

Note: Discontinued operations are a result of exiting the mortgage servicing business in December 2000.

THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CONDITION (Unaudited)

STATEMENTS OF CONDITION (Dollars in thousands)	September 30, 2003			June 30, 2003			March 31, 2003			December 31, 2002			September 30, 2002
Assets:
Cash and due from banks	$	321,362		$	306,661		$	344,608		$	381,549		$	323,944
Interest-bearing deposits in banks and federal funds sold		45,757			20,539			68,090			37,872			126,940
Securities available for sale		2,852,344			2,712,339			2,825,273			2,618,129			2,547,853
Investment securities		10,952			13,071			15,116			20,006			24,248
Mortgage loans held for sale		366,080			517,323			269,488			347,101			154,752
Loans		11,409,448			11,768,847			11,504,074			11,692,430			11,196,422
Less: Allowance for loan losses		(136,625	)		(137,618	)		(137,681	)		(135,265	)		(136,360	)

Loans, net		11,272,823			11,631,229			11,366,393			11,557,165			11,060,062
Premises and equipment, net		247,068			234,708			234,060			231,574			224,986
Intangible assets, net		254,148			255,234			256,320			257,148			259,841
Other real estate owned		16,809			18,607			20,647			20,602			20,712
Accrued interest and other assets		447,176			497,794			354,065			351,209			345,387

Total Assets	$	15,834,519		$	16,207,505		$	15,754,060		$	15,822,355		$	15,088,725

Liabilities and Shareholders’ Equity:
Non-interest bearing deposits	$	1,884,568		$	1,930,859		$	1,906,310		$	1,734,321		$	1,618,195
Interest-bearing deposits		3,002,640			2,766,449			2,788,073			2,704,479			2,606,538
Savings deposits		558,071			546,866			529,521			511,643			483,387

Total core deposits		5,445,279			5,244,174			5,223,904			4,950,443			4,708,120
Time deposits		3,859,949			3,896,978			4,153,379			4,369,292			4,447,831

Total deposits		9,305,228			9,141,152			9,377,283			9,319,735			9,155,951
Short-term borrowings		3,352,913			4,018,276			3,282,589			3,355,678			2,748,976
Subordinated debt		284,926			285,543			287,375			283,317			286,356
Trust preferred securities (1)		—			201,490			197,509			197,878			194,946
Junior subordinated debt (1)		305,425			—			—			—			—
FHLB and other long-term debt		1,407,973			1,287,008			1,437,092			1,517,339			1,562,405
Other liabilities		66,260			151,986			92,593			76,972			86,834

Total liabilities		14,722,725			15,085,455			14,674,441			14,750,919			14,035,468
Total shareholders’ equity		1,111,794			1,122,050			1,079,619			1,071,436			1,053,257

Total Liabilities and Shareholders’ Equity	$	15,834,519		$	16,207,505		$	15,754,060		$	15,822,355		$	15,088,725

Common Shares Issued		124,422,742			124,255,988			123,784,053			123,700,015			123,649,591
Common Shares Outstanding		124,422,742			124,255,988			123,784,053			123,700,015			123,649,591
Treasury Shares Outstanding		—			—			—			—			—

(1)	Trust preferred securities have been deconsolidated and reclassified as junior subordinated debt in the current period.

THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES

	Three Months Ended
AVERAGE VOLUME AND RATES (unaudited) (Dollars in thousands)	September 30, 2003						June 30, 2003						September 30, 2002
	Average Volume		Interest		Rate		Average Volume		Interest		Rate		Average Volume		Interest		Rate
Assets
Loans, net of unearned income(2)	$	10,073,111	$	145,032	5.71	%	$	10,008,812	$	149,206	5.98	%	$	9,488,834	$	155,985	6.53	%
Mortgage warehouse lending		1,683,548		16,100	3.79	%		1,592,106		16,263	4.10	%		1,076,290		11,432	4.16	%
Mortgage loans held for sale		605,562		7,301	4.82	%		364,505		4,982	5.47	%		42,623		625	5.87	%
Investment securities and securities available for sale and other interest-earning assets		2,753,446		27,457	3.99	%		2,745,904		26,173	3.81	%		2,521,772		31,058	4.93	%

Total interest-earning assets(1)		15,115,667	$	195,890	5.15	%		14,711,327	$	196,624	5.35	%		13,129,519	$	199,100	6.02	%
Nonearning assets		1,168,279						1,114,053						884,225

Total assets	$	16,283,946					$	15,825,380					$	14,013,744
Liabilities and Shareholders’ Equity:
Interest-bearing non-time deposits	$	3,433,979	$	6,314	0.73	%	$	3,306,725	$	7,004	0.85	%	$	2,954,052	$	9,511	1.28	%
Time deposits		3,829,359		25,742	2.67	%		3,999,866		28,964	2.90	%		4,413,896		37,643	3.38	%
Short-term borrowings		3,582,002		9,813	1.09	%		3,373,589		10,857	1.29	%		2,131,628		10,318	1.92	%
Long-term debt		2,290,825		23,894	4.17	%		2,108,847		24,058	4.56	%		2,005,537		25,018	4.95	%

Total interest-bearing liabilities		13,136,165	$	65,763	1.99	%		12,789,027	$	70,883	2.22	%		11,505,113	$	82,490	2.84	%
Noninterest-bearing demand deposits		1,941,749						1,846,827						1,442,664
Other liabilities		99,689						86,737						74,249

Total liabilities		15,177,603						14,722,591						13,022,026
Shareholders’ equity		1,106,343						1,102,789						991,718

Total liabilities and shareholders’ equity	$	16,283,946					$	15,825,380					$	14,013,744
Rate differential					3.16	%					3.13	%					3.18	%
Net yield on interest-earning assets			$	130,127	3.42	%			$	125,741	3.42	%			$	116,610	3.53	%

(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.

(2)	Loans, net of unearned income for the purpose of this presentation excludes mortgage warehouse lending.

THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES

	Nine Months Ended September 30,
AVERAGE VOLUME AND RATES (unaudited)	2003						2002
(Dollars in thousands)	Average Volume		Interest		Rate		Average Volume		Interest		Rate
Assets
Loans, net of unearned income(2)	$	9,993,862	$	444,071	5.94	%	$	9,330,396	$	466,318	6.68	%
Mortgage warehouse lending		1,585,351		47,248	3.98	%		925,632		29,949	4.27	%
Mortgage loans held for sale		397,156		14,898	5.00	%		27,873		1,303	6.23	%
Investment securities and securities available for sale and other interest-earning assets		2,745,980		81,539	3.96	%		2,209,461		87,917	5.31	%

Total interest-earning assets(1)		14,722,349	$	587,756	5.33	%		12,493,362	$	585,487	6.26	%
Nonearning assets		1,102,778						833,565

Total assets	$	15,825,127					$	13,326,927
Liabilities and Shareholders’ Equity:
Interest bearing non-time deposits	$	3,320,132	$	20,254	0.82	%	$	2,847,220	$	27,601	1.30	%
Time deposits		4,030,425		87,165	2.89	%		4,268,096		113,744	3.56	%
Short-term borrowings		3,271,525		30,454	1.24	%		1,870,025		26,116	1.87	%
Long-term debt		2,177,637		72,293	4.43	%		1,917,182		74,170	5.17	%

Total interest-bearing liabilities		12,799,719	$	210,166	2.19	%		10,902,523	$	241,631	2.96	%
Noninterest-bearing demand deposits		1,839,122						1,396,336
Other liabilities		88,174						82,004

Total liabilities		14,727,015						12,380,863
Shareholders’ equity		1,098,112						946,064

Total liabilities and shareholders’ equity	$	15,825,127					$	13,326,927
Rate differential					3.14	%					3.30	%
Net yield on interest-earning assets			$	377,590	3.42	%			$	343,856	3.67	%

(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.

(2)	Loans, net of unearned income for the purpose of this presentation excludes mortgage warehouse lending.

THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES

NONPERFORMING ASSETS AND LOAN LOSS RESERVE ANALYSIS (unaudited)

NONPERFORMING ASSETS (Dollars in thousands)	September 30, 2003			June 30, 2003			March 31, 2003			December 31, 2002			September 30, 2002
Nonaccrual loans	$	65,205		$	65,136		$	56,927		$	70,282		$	56,336
Restructured loans		369			384			1,321			417			1,191

Total nonperforming loans		65,574			65,520			58,248			70,699			57,527
Other real estate owned		16,809			18,607			20,647			20,602			20,712

Total nonperforming assets	$	82,383		$	84,127		$	78,895		$	91,301		$	78,239

Aggregate loans contractually past due 90 days for which interest is being accrued	$	7,675		$	10,784		$	7,689		$	21,693		$	25,696

Total charge-offs	$	31,278		$	19,717		$	7,081		$	35,634		$	22,301
Total recoveries	$	(4,462	)	$	(3,200	)	$	(1,437	)	$	(4,885	)	$	(3,849	)

Net charge-offs:
Year to date	$	26,816		$	16,517		$	5,644		$	30,749		$	18,452
Quarter to date	$	10,299		$	10,873		$	5,644		$	12,297		$	7,167
RATIOS
Period end:
Total nonperforming assets as a percent of net loans and other real estate		0.72	%		0.71	%		0.68	%		0.78	%		0.70	%
Allowance as a percent of nonperforming assets		166	%		164	%		175	%		148	%		174	%
Allowance as a percent of nonperforming loans		208	%		210	%		236	%		191	%		237	%
Net charge-offs as a percent of average net loans (annualized):
Quarter to date		0.35	%		0.37	%		0.20	%		0.44	%		0.27	%
Year to date		0.31	%		0.29	%		0.20	%		0.29	%		0.24	%

	September 30, 2003				June 30, 2003				December 31, 2002				September 30, 2002
ALLOWANCE FOR LOAN LOSSES % BY CATEGORY (Dollars in thousands)	Loans		Percent reserve		Loans		Percent reserve		Loans		Percent reserve		Loans		Percent reserve
Single Family Real Estate:
Short term lines of credit secured by RE loans held for sale	$	1,144,498	0.25	%	$	1,621,008	0.25	%	$	1,670,226	0.25	%	$	1,401,035	0.25	%
1-4 Family real estate portfolio—held to maturity		1,929,111	0.50	%		1,926,053	0.50	%		1,950,119	0.50	%		1,993,164	0.50	%
Other		8,335,839	1.49	%		8,221,786	1.51	%		8,072,085	1.50	%		7,802,223	1.58	%

Total loans	$	11,409,448	1.20	%	$	11,768,847	1.17	%	$	11,692,430	1.16	%	$	11,196,422	1.22	%

Note:

The allowance allocation reflected above for short term lines of credit secured by RE loans held for sale and 1-4 family real estate portfolio loans reflects an internally developed allocation used for illustrative purposes only.

8-K Supplemental

Net Interest Income

Net interest income in the third quarter 2003 grew $4.4 million from the second quarter 2003 due to a $404 million increase in average earning assets. The average balance on loans within the mortgage warehouse lending unit plus mortgage loans held for sale increased $332 million. Average balances on all other loans increased $64 million.

The overall net interest margin was unchanged from second quarter 2003 at 3.42% as a decline of 20 basis points in earning asset yields was offset by decreasing liability costs of 23 basis points.

The Federal Reserve’s 25 basis point rate cut near the end of June lowered average loan yields during the quarter by 31 basis points and 27 basis points on the Mortgage Warehouse Division, and other loans, respectively, but this was offset somewhat by the securities portfolio, where yield improved by 18 basis points. Rates on mortgages held for sale normalized as volumes peaked. Long-term debt costs were reduced during the quarter as an existing fixed rate subordinated debt issuance was swapped to floating. The Company also issued approximately $100 million in junior subordinated debt at a fixed rate of 7.875% which was swapped to a floating rate of LIBOR + 2.03%. Other short-term borrowings and deposits re-priced lower due to the Federal Reserve rate cut.

The bank has lessened its asset sensitivity during the quarter and has moved to a more neutral position.

Loans

Period end loan balances decreased $360 million from June 30, 2003 to September 30, 2003. Change in period-end loan balances for the third quarter consisted of the following:

(in millions)	Period End Balance 6/30/03		Net Internal Change			Period End Balance 9/30/03
Mortgage warehouse loans	$	1,621	($	477	)	$	1,144
Single-family real estate		1,618		(28	)		1,590
Home Equity Lines		308		31			339
Other loans		8,222		114			8,336

Total	$	11,769	($	360	)	$	11,409

The mortgage warehouse loans decreased to $1.1 billion during the third quarter as a result of a slowdown in mortgage refinancing. Overall lending in our regional banks has increased over previous quarters, and an emphasis on home equity lines has resulted in an increase in equity line balances of approximately 40% annualized for the third quarter 2003 compared to the second quarter of 2003. The decline in single family real estate is a result of the continued shift by consumers from adjustable rate to fixed rate mortgage products.

Forward Looking Statements

Expectations for economic growth seem to be improving despite employment figures, which remain relatively weak. Hence, the market still expects the Federal Reserve to leave short-term rates at these historically-low levels for an extended period.

The increase in mortgage rates from historical lows during the quarter has brought mortgage warehouse volumes down considerably as would be expected. We anticipate mortgage warehouse loans to stabilize around $1 billion during the fourth quarter. Income from this activity is expected to decrease during the remainder of the year.

The steepness in the yield curve is allowing enhanced spread on marginal investment purchases. We plan to add to our securities portfolio given this environment to replace other earning assets.

We expect low single-digit growth in loans, excluding mortgage warehouse loans, for the fourth quarter, with slight improvement expected next year.

Core (non-time) deposit growth is expected to continue at a 10-15% annualized pace, and time deposit balances are expected to be stable or decline slightly for the remainder of the year.

Given current market conditions and the factors mentioned previously, we expect the net interest margin to remain in the range of 3.40% to 3.45%.

Colonial continues to grow internally through opening of new branch locations. Since the beginning of 2003 the Company has opened eight new locations in its existing Florida and Texas markets. Noninterest expense grew $2.4 million, or 2.6%, in the third quarter 2003 compared to the second quarter of 2003. The increase consisted of approximately $409,000 from new branches, $1.9 million in

salaries and incentive related compensation as well as normal fluctuations in various other expenses. It is anticipated that noninterest expenses will increase over the next few quarters from investments in infrastructure, technology and branches.

The acquisition of Sarasota BanCorporation (Sarasota) is scheduled for completion on October 23, 2003. Sarasota consists of one branch in Sarasota, Florida, with assets of approximately $162 million and deposits of approximately $128 million at September 30, 2003. Management expects no material impact to EPS from this acquisition.

As noted previously, there are a number of uncertainties that would impact the expectations noted above. Colonial, at the present time, has not undertaken major cost cutting initiatives but has preferred to maintain the momentum we have established in growing our customer base and the number and quality of services provided to each customer in some of the country’s fastest-growing markets.