8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): January 18, 2006

THE COLONIAL BANCGROUP, INC.

(Exact name of registrant as specified in its charter)

DELAWARE	1-13508	63-0661573
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

One Commerce Street

Montgomery, Alabama 36104

(Address of principal executive offices)

(334) 240-5000

(Registrant’s telephone number)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

Item 7.01 Regulation FD Disclosure.

Information regarding the registrant’s earnings results for the quarter ended December 31, 2005 is furnished herein pursuant to Item 2.02 of this Current Report on Form 8-K and as Regulation FD Disclosure.

Item 9.01 Financial Statements and Exhibits.

The following exhibits are furnished as Regulation FD Disclosure to this Current Report on Form 8-K:

Exhibit No.	Exhibit
10.1	Director and Committee Fee Schedule
10.2	Form of Incentive Stock Option Agreement
10.3	Form of Long Term Incentive Plan Variable Stock Option Agreement
10.4	Form of Long Term Incentive Plan Nonqualified Stock Option Agreement
10.5	Form of Restricted Stock Participant Agreement
10.6	Form of Restricted Stock Participant Retention Agreement
99.1	Press Release Announcing Fourth Quarter Earnings.
99.2	Presentation materials to be used in connection with Colonial BancGroup’s conference call to be held on January 18, 2006.

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,” and “anticipates,” and similar expressions, as they relate to BancGroup including its subsidiaries or its management), are intended to identify forward-looking statements. The forward-looking statements in these reports 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 report 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;

• 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 2006 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 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;

• 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.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

THE COLONIAL BANCGROUP, INC
By	/s/    SARAH H. MOORE
	Sarah H. Moore
	Senior Executive Vice President and Chief Financial Officer

Date: January 18, 2006

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EX-10.1

EXHIBIT 10.1

SCHEDULE OF THE COLONIAL BANCGROUP, INC.

DIRECTOR AND COMMITTEE FEES

Quarterly Fees Payable to BancGroup Directors: $5,000 per quarter.

Fees Payable to BancGroup Directors for BancGroup Board Meetings: $2,000 per meeting attended.

Quarterly Fees Payable to the Chairman of the Audit Committee: $2,000 per quarter.

Fees Payable to the Chairman of the Audit Committee: $1,000 per meeting attended.

Fees Payable to BancGroup Directors for service as a Chairman of any BancGroup Committee other than the Audit Committee: $1,500 per meeting attended.

Fees Payable to BancGroup Directors for service as a member of any BancGroup Committee: $1,000 per meeting attended.

Fees Payable to any Special Litigation Committee: $1,000 per meeting attended, provided, however, that in the event a meeting extends beyond four (4) hours in length, then each member shall receive an additional $500 fee for any additional four (4) hour period or any portion thereof.

EX-10.2

EXHIBIT 10.2

FORM OF

INCENTIVE STOCK OPTION AGREEMENT

THIS AGREEMENT is made by and between The Colonial BancGroup, Inc., a corporation organized under the laws of Delaware (hereinafter referred to as “BancGroup”), and [Name] (hereinafter referred to as “Optionee”).

WHEREAS, Optionee is a valued and trusted employee of BancGroup (or a subsidiary of BancGroup), and BancGroup considers it desirable and in its best interest to grant Optionee an option to purchase the Common Stock of BancGroup, par value $2.50 per share (the “Stock”), pursuant to BancGroup’s 2001 Long-Term Incentive Plan (the “Plan”), adopted by the BancGroup’s Board of Directors on January 17, 2001, and ratified by the stockholders of BancGroup on April 18, 2001.

NOW, THEREFORE, in consideration of the premises, it is agreed by and between the parties as follows:

1. Grant of Option.

BancGroup grants to Optionee the right, privilege, and option to purchase [number of options] shares of Stock at the purchase price of $[price] per share in the manner and subject to the conditions hereinafter provided and as provided in the Plan. The effective date of this option is [Grant Date] (which date is the date on which this option was granted by the Committee or such later date designated by the Committee).

2. Time of Exercise of Option.

Except as set forth herein, the aforesaid option may be exercised at any time, and from time to time, in whole or in part, until the termination thereof as provided in Section 4 below; provided, however, that: 1) the options granted herein shall vest, provided the Optionee is employed on the anniversary dates set forth herein, and be exercisable, pursuant to the following vesting schedule: 20% on the first anniversary of the effective date of this option, 40% on the second anniversary of the effective date of this option, 60% on the third anniversary of the effective date of this option, 80% on the fourth anniversary of the effective date of this option, and 100% on the fifth anniversary of the effective date of this option; and 2) notwithstanding the vesting schedule, the aggregate fair market value of the stock (determined as of the date the option is granted) for which incentive stock options are exercisable for the first time during any calendar year under the terms of the Plan by Optionee shall not exceed the aggregate dollar limitation of Section 422(d) of the Internal Revenue Code of 1986, as amended ($100,000 at the grant of this option).

3. Method of Exercise.

The option shall be exercised by written notice directed to BancGroup’s Investor Relations Department, Colonial Financial Center, One Commerce Street, Montgomery, Alabama, 36104, accompanied by a certified or cashier’s check in payment of the option price for the number of shares specified and paid for. BancGroup shall deliver such shares as soon as reasonably possible, provided that if any law or regulation requires BancGroup to take any action with respect to the shares specified in such notice before the issuance thereof, then the date of delivery of such shares shall be extended for the period necessary to take such action.

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4. Termination of Option.

Except as herein otherwise stated, the option, to the extent not theretofore exercised, shall terminate upon the first to occur of the following dates:

(a) the expiration of three (3) months after the date on which Optionee’s employment by BancGroup, or any of its subsidiaries, is terminated (except if such termination be by reason of death or Disability);

(b) the expiration of twelve (12) months after the date on which Optionee’s employment by BancGroup, or any of its subsidiaries, is terminated, if such termination be by reason of Optionee’s Disability;

(c) in the event of Optionee’s death while in the employ of BancGroup, or any of its subsidiaries, or during the three-month period described in paragraph 4(a) hereof or during the one-year period described in paragraph 4(b) hereof, and before the option otherwise lapses, the option shall lapse one year after the date of the appointment of a personal representative for such deceased Optionee’s estate. Upon the Optionee’s death, any exercisable option granted hereunder may be exercised by the Optionee’s estate or anyone who has acquired the option pursuant to the laws of descent and distribution;

(d) the [Term Date] (being the expiration of ten (10) years from the effective date of this option).

Notwithstanding any provision herein to the contrary, if Optionee’s employment is terminated as a result of deliberate, willful, or gross misconduct as determined by the Board or the Committee, all rights under this option shall terminate and expire upon such termination.

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5. Rights Prior to Exercise of Option.

This option is non-transferable by Optionee, except in the event of Optionee’s death as provided in Section 4(c) above, and during Optionee’s lifetime is exercisable only by Optionee. Optionee shall have no rights as a stockholder with respect to the option shares until payment of the option price and delivery to Optionee of such shares as herein provided.

6. Incorporation by Reference.

This Agreement is subject to, and incorporates by reference, all terms of the Plan. A copy of the Section 10(a) Prospectus for the Plan has been furnished to the Optionee, the receipt of which the Optionee hereby acknowledges. All terms capitalized herein shall have the same meaning given to such terms in the Plan unless specified otherwise herein.

7. Status of Option.

This option is intended to be an Incentive Stock Option under Section 422 of the Internal Revenue Code of 1986, as amended.

8. Binding Effect.

This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed.

THE COLONIAL BANCGROUP, INC.
By:
	Sarah H. Moore Senior Executive Vice President and Chief Financial Officer

[Optionee Name]

[SSN]

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EX-10.3

EXHIBIT 10.3

FORM OF

STOCK OPTION AGREEMENT

THIS AGREEMENT is made by and between The Colonial BancGroup, Inc., a corporation organized under the laws of Delaware (hereinafter referred to as “BancGroup”), and [Name] (hereinafter referred to as “Optionee”).

WHEREAS, Optionee is a valued and trusted employee of BancGroup (or a subsidiary of BancGroup), and BancGroup considers it desirable and in its best interest to grant Optionee an option to purchase the Common Stock of BancGroup, par value $2.50 per share (the “Stock”), pursuant to BancGroup’s 2001 Long-Term Incentive Plan (the “Plan”), adopted by the BancGroup’s Board of Directors on January 17, 2001, and ratified by the stockholders of BancGroup on April 18, 2001.

NOW, THEREFORE, in consideration of the premises, it is agreed by and between the parties as follows:

1. Grant of Option.

BancGroup grants to Optionee the right, privilege, and option to purchase [Number of Options] shares of Stock at the purchase price of $[Price] per share in the manner and subject to the conditions hereinafter provided and as provided in the Plan. The effective date of this option is [Grant Date] (which date is the date on which this option was granted by the Committee or such later date designated by the Committee).

2. Time of Exercise, Vesting Schedule and Type of Option.

(a) Except as set forth herein, the aforesaid option may be exercised at any time after it vests with the Optionee, and from time to time, in whole or in part, until the termination thereof as provided in Section 4 below.

(b) The options granted herein shall vest, provided the Optionee is employed on the anniversary dates set forth herein, and be exercisable, pursuant to the following vesting schedule: 20% on the first anniversary of the effective date of this option, 40% on the second anniversary of the effective date of this option, 60% on the third anniversary of the effective date of this option, 80% on the fourth anniversary of the effective date of this option, and 100% on the fifth anniversary of the effective date of this option.

(c) If the aggregate fair market value of stock (determined as of the date the option is granted) exercisable for the first time during any calendar year exceeds the aggregate dollar limitation in effect under Section 422(d) of the Internal Revenue Code of 1986, as amended (the “Code”) (this limit is $100,000 as of the grant of this option), then the options for shares that exceed such dollar limitation shall vest in accordance with subsection (b) above and shall be exercisable as non-qualified stock options. A table setting forth the vesting schedule and the anticipated type of option (whether incentive or non-qualified) is attached hereto as Schedule A.

3. Method of Exercise.

The option shall be exercised by written notice directed to BancGroup’s Investor Relations Department, Colonial Financial Center, One Commerce Street, Montgomery, Alabama, 36104, accompanied by a certified or cashier’s check in payment of the option price for

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the number of shares specified and paid for. BancGroup shall deliver such shares as soon as reasonably possible, provided that if any law or regulation requires BancGroup to take any action with respect to the shares specified in such notice before the issuance thereof, then the date of delivery of such shares shall be extended for the period necessary to take such action.

4. Termination of Option.

Except as herein otherwise stated, the option, to the extent not theretofore exercised, shall terminate upon the first to occur of the following dates:

(a) the expiration of three (3) months after the date on which Optionee’s employment by BancGroup, or any of its subsidiaries, is terminated (except if such termination be by reason of death or Disability);

(b) the expiration of twelve (12) months after the date on which Optionee’s employment by BancGroup, or any of its subsidiaries, is terminated, if such termination be by reason of Optionee’s Disability;

(c) in the event of Optionee’s death while in the employ of BancGroup, or any of its subsidiaries, or during the three-month period described in paragraph 4(a) hereof or during the one-year period described in paragraph 4(b) hereof, and before the option otherwise lapses, the option shall lapse one year after the date of the appointment of a personal representative for such deceased Optionee’s estate. Upon the Optionee’s death, any exercisable option granted hereunder may be exercised by the Optionee’s estate or anyone who has acquired the option pursuant to the laws of descent and distribution;

(d) the [Term Date] (being the expiration of ten (10) years from the effective date of this option).

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Notwithstanding any provision herein to the contrary, if Optionee’s employment is terminated as a result of deliberate, willful, or gross misconduct as determined by the Board or the Committee, all rights under this option shall terminate and expire upon such termination.

5. Rights Prior to Exercise of Option.

This option is non-transferable by Optionee, except in the event of Optionee’s death as provided in Section 4(c) above, and during Optionee’s lifetime is exercisable only by Optionee. Optionee shall have no rights as a stockholder with respect to the option shares until payment of the option price and delivery to Optionee of such shares as herein provided.

6. Incorporation by Reference.

This Agreement is subject to, and incorporates by reference, all terms of the Plan. A copy of the Section 10(a) Prospectus for the Plan has been furnished to the Optionee, the receipt of which the Optionee hereby acknowledges. All terms capitalized herein shall have the same meaning given to such terms in the Plan unless specified otherwise herein.

7. Status of Option.

This option is intended to be an Incentive Stock Option under Section 422 of the Code. It is anticipated, however, that certain of the options granted pursuant to this Agreement, possibly in combination with prior incentive stock option awards, may be exercisable for the first time during a calendar year in excess of the aggregate dollar limitation contained in Section 422(d) of the Code. Consequently, such options that exceed such aggregate dollar limitation shall vest in accordance with Section 2(b) above

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and shall be exercisable as non-qualified stock options as set forth on Schedule A attached hereto.

8. Binding Effect.

This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed.

THE COLONIAL BANCGROUP, INC.
By:
	Sarah H. Moore, Senior Executive Vice President and Chief Financial Officer
	[Optionee Name] [SSN]

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SCHEDULE A

Date of Grant:	[Date]
Total Grant:	[Options Granted]
Exercise Price per Share:	$[Price]

VESTING SCEDULE

Date	Number of shares (%)	Type of Option
[1st Vest Date]	Shares Vesting (% of grant)	ISO / NQSO
[2nd Vest Date]	Shares Vesting (% of grant)	ISO / NQSO
[3rd Vest Date]	Shares Vesting (% of grant)	ISO / NQSO
[4th Vest Date]	Shares Vesting (% of grant)	ISO / NQSO
[5th Vest Date]	Shares Vesting (% of grant)	ISO / NQSO

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EX-10.4

EXHIBIT 10.4

FORM OF

NONQUALIFIED STOCK OPTION AGREEMENT

THIS AGREEMENT is made by and between The Colonial BancGroup, Inc., a corporation organized under the laws of Delaware (hereinafter referred to as “BancGroup”), and [Name] (hereinafter referred to as “Optionee”).

WHEREAS, Optionee is a valuable and trusted BancGroup (or a subsidiary of BancGroup), and BancGroup considers it desirable and in its best interest that Optionee be given an inducement to achieve certain objectives as set forth in The Colonial BancGroup, Inc. 2001 Long-Term Incentive Plan (the “Plan”), adopted by the Board on the 17th day of January, 2001, and ratified by the stockholders of BancGroup on the 18th day of April, 2001.

WHEREAS, BancGroup believes that the issuance to Optionee of an option to purchase Stock will serve as such an inducement.

NOW, THEREFORE, in consideration of the premises, it is agreed by and between the parties as follows:

1. Grant of Option.

BancGroup grants to Optionee the right, privilege, and option to purchase [Number of options] shares of Stock at the purchase price of $[Price] per share in the manner and subject to the conditions hereinafter provided and as provided in the Plan. The effective date of this option is [Grant Date] (which date is the date on which this option was granted by the Committee or such other date designated by the Committee).

2. Time of Exercise of Option.

Except as set forth herein, the aforesaid option may be exercised at any time, and from time to time, in whole or in part, until the termination thereof as provided in Section 4 below; provided, however, that the options granted herein shall vest, provided the Optionee on the anniversary dates set forth herein, and be exercisable, pursuant to the following vesting schedule: 20% on the first anniversary of the effective date of this option, 40% on the second anniversary of the effective date of this option, 60% on the third anniversary of the effective date of this option, 80% on the fourth anniversary of the effective date of this option, and 100% on the fifth anniversary of the effective date of this option.

3. Method of Exercise.

The option shall be exercised by written notice directed to the Committee, at the principal place of business of BancGroup, accompanied by a certified or cashier’s check in payment of the option price for the number of shares specified and paid for. BancGroup shall make immediate delivery of such shares, provided that if any law or regulation requires BancGroup to take any action with respect to the shares specified in such notice before the issuance thereof, then the date of delivery of such shares shall be extended for the period necessary to take such action.

4. Termination of Option.

Except as herein otherwise stated, the option, to the extent not theretofore exercised, shall terminate upon the first to occur of the following dates:

(a) the expiration of three (3) months after the date on which Optionee’s BancGroup, or any of its subsidiaries, is terminated (except if such termination be by a reason of death or Disability);

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(b) the expiration of twelve (12) months after the date on which Optionee’s BancGroup, or any of its subsidiaries, is terminated, if such termination be by reason of Optionee’s Disability;

(c) in the event of Optionee’s death while in the BancGroup, or any of its subsidiaries, or during the three-month period described in paragraph 4(a) hereof or during the one-year period described in paragraph 4(b) hereof, and before the option otherwise lapses, the option shall lapse one year after the date of the appointment of a personal representative for such deceased Optionee’s estate. Upon the Optionee’s death, any exercisable option granted hereunder may be exercised by the Optionee’s estate or anyone who has acquired the option pursuant to the laws of descent and distribution;

(d) the [Term Date] (being the expiration of ten (10) years from the effective date of this option).

Notwithstanding any provision herein to the contrary, if Optionee’s is terminated as a result of deliberate, willful, or gross misconduct as determined by the Board or the Committee, all rights under this option shall terminate and expire upon such termination.

5. Rights Prior to Exercise of Option.

This option is non-transferable by Optionee, except in the event of Optionee’s death as provided in Section 4(c) above, and during Optionee’s lifetime is exercisable only by Optionee. Optionee shall have no rights as a stockholder with respect to the option shares until payment of the option price and delivery to Optionee of such shares as herein provided.

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6. Incorporation by Reference.

This Agreement is subject to, and incorporates by reference, all terms of the Plan. A copy of the Summary and Section 10(a) Prospectus for the Plan has been furnished to the Optionee, the receipt of which the Optionee hereby acknowledges. All terms capitalized herein shall have the same meaning given to such terms in the Plan unless specified otherwise herein.

7. Status of Option.

This option is not intended to be treated as an Incentive Stock Option as defined in Section 422 of the Internal Revenue Code of 1986, as amended.

8. Binding Effect.

This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed.

THE COLONIAL BANCGROUP, INC.
By:
	Sarah H. Moore
	Senior Executive Vice President and
	Chief Financial Officer
	[Optionee Name]
	[SSN]

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EX-10.5

EXHIBIT 10.5

FORM OF

PARTICIPANT AGREEMENT

2001 LONG-TERM INCENTIVE PLAN

RESTRICTED STOCK AWARD

Name of Participant: [Name]

WHEREAS, the undersigned has been awarded the number of shares of Restricted Stock under The Colonial BancGroup, Inc.’s 2001 Long-Term Incentive Plan effective as of July 1, 2001 (the “Plan”), as set forth below; and

WHEREAS, the undersigned wishes, in consideration of this Award and as a condition to the receipt of this Award, to enter into this Agreement with the Company in accordance with Article 10 of the Plan;

NOW, THEREFORE, the Participant agrees with the Company, as follows:

1. All terms capitalized herein shall have the same meaning given to such terms in the Plan, unless specified otherwise.

2. The undersigned Participant acknowledges that the number of shares subject to this Award is set forth below and that such shares shall vest over a five year period with 20% of such shares vesting on the first anniversary of the effective date of this Award and an additional 20% vesting on each successive anniversary thereafter until fully vested. The effective date of this Award is [Grant Date] (which date is the date on which this Award was granted by the Committee or such other date designated by the Committee).

3. Each certificate in respect of shares made the subject of this Award shall be registered with the Company in the name of the Participant, and Participant shall deliver to the Company a stock power endorsed in blank by the Participant. Such certificate shall bear a legend, as deemed appropriate by the Committee, referring to the terms, conditions and restrictions applicable to such shares. Upon the vesting of shares of this Award, the Participant shall be entitled to receive a certificate representing the number of shares as to which restrictions no longer apply, with the remaining shares subject to the foregoing restrictions. The Participant shall execute a new stock power respecting any remaining shares that are restricted.

4. The Participant, as owner of the shares made the subject of this Award, shall have all the rights of a shareholder, including but not limited to the right to receive all dividends paid on such shares and the right to vote such shares.

5. Upon the termination of the Participant’s employment for any reason (other than death, Disability, or normal or early retirement), unless the Committee shall otherwise determine, all shares made the subject of this Award and which, at the time of such termination are subject to the restrictions contained in paragraph 2 hereof, shall, upon such termination of employment, be forfeited and returned to the Company. If a Participant’s employment terminates by reason of death, Disability, or normal or early retirement, the shares made the subject of this Award which, at the time of such termination are subject to the restrictions contained in paragraph 2 hereof, shall be free of such restrictions and shall not be forfeited.

6. At the expiration of restrictions imposed by paragraph 2 hereof with respect to shares made the subject of this Award, the Company shall redeliver to the Participant (or, as appropriate, to such Participant’s legal representative, beneficiary or heirs) the certificate(s) and stock power deposited with it pursuant to paragraph 3 and the shares represented by such certificates shall be free of the restrictions referred to in paragraph 2.

7. The undersigned Participant has, in consideration of the grant of this Award, executed a stock power in blank which the Participant has tendered to the Corporation along with the certificate representing the shares made the subject of this Award but which have not yet vested.

8. This Agreement is subject to, and incorporates by reference, all terms of the Plan. A copy of the Summary and Section 10(a) Prospectus for the Plan has been furnished to the undersigned Participant, the receipt of which the undersigned hereby acknowledges.

9. Failure by the undersigned Participant to comply with any term of this Agreement or of the Plan, shall result in a forfeiture of any shares which have not yet vested under the Plan.

Date:	PARTICIPANT
THE COLONIAL BANCGROUP, INC.
	Print name, address and telephone number:
Sarah H. Moore
Senior Executive Vice President and
Chief Financial Officer

Number of shares of Restricted Stock awarded: [Number of Rest. Shares]

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EX-10.6

EXHIBIT 10.6

FORM OF

PARTICIPANT AGREEMENT

2001 LONG-TERM INCENTIVE PLAN

RESTRICTED STOCK AWARD

Name of Participant: [Name]

WHEREAS, the undersigned has been awarded the number of shares of Restricted Stock under The Colonial BancGroup, Inc.’s 2001 Long-Term Incentive Plan effective as of July 1, 2001 (the “Plan”), as set forth below; and

WHEREAS, the undersigned wishes, in consideration of this Award and as a condition to the receipt of this Award, to enter into this Agreement with the Company in accordance with Article 10 of the Plan;

NOW, THEREFORE, the Participant agrees with the Company, as follows:

1. All terms capitalized herein shall have the same meaning given to such terms in the Plan, unless specified otherwise.

2. The undersigned Participant acknowledges that the number of shares subject to this Award is set forth below and such shares shall vest on the fifth anniversary of the effective date of this award. The effective date of this Award is [Grant Date] (which date is the date on which this Award was granted by the Committee or such other date designated by the Committee).

3. Each certificate in respect of shares made the subject of this Award shall be registered with the Company in the name of the Participant, and Participant shall deliver to the Company a stock power endorsed in blank by the Participant. Such certificate shall bear a legend, as deemed appropriate by the Committee, referring to the terms, conditions and restrictions applicable to such shares. Upon the vesting of shares of this Award, the Participant shall be entitled to receive a certificate representing the number of shares as to which restrictions no longer apply.

4. The Participant, as owner of the shares made the subject of this Award, shall have all the rights of a shareholder, including but not limited to the right to receive all dividends paid on such shares and the right to vote such shares.

5. Upon the termination of the Participant’s employment for any reason (other than death or Disability), unless the Committee shall otherwise determine, all shares made the subject of this Award and which, at the time of such termination are subject to the restrictions contained in paragraph 2 hereof, shall, upon such termination of employment, be forfeited and returned to

the Company. If a Participant’s employment terminates by reason of death or Disability prior to the vesting date provided for in paragraph 2 hereof, a percentage of the shares made the subject of this Award shall vest as follows and said shares shall be free of such restrictions and shall not be forfeited: shares awarded hereunder * [(number of days between the grant date of the shares awarded hereunder and the date of death or Disability)/(5 * 365)].

6. At the expiration of the restrictions imposed by paragraph 2 hereof with respect to shares made the subject of this Award, the Company shall redeliver to the Participant (or, as appropriate, to such Participant’s legal representative, beneficiary or heirs) the certificate(s) and stock power deposited with it pursuant to paragraph 3 and the shares represented by such certificates shall be free of the restrictions referred to in paragraph 2.

7. The undersigned Participant has, in consideration of the grant of this Award, executed a stock power in blank which the Participant has tendered to the Company along with the certificate representing the shares made the subject of this Award but which have not yet vested.

8. This Agreement is subject to, and incorporates by reference, all terms of the Plan. A copy of the Summary and Section 10(a) Prospectus for the Plan has been furnished to the undersigned Participant, the receipt of which the undersigned hereby acknowledges.

9. Failure by the undersigned Participant to comply with any term of this Agreement or of the Plan, shall result in a forfeiture of any shares which have not yet vested hereunder.

Date:	PARTICIPANT
	Print name, address and telephone number:
THE COLONIAL BANCGROUP, INC.
Sarah H. Moore
Senior Executive Vice President and Chief Financial Officer

Number of shares of Restricted Stock awarded: [Number of Rest. Shares]

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EX-99.1

EXHIBIT 99.1

COLONIAL BANCGROUP ANNOUNCES

18% INCREASE IN EARNINGS PER SHARE

FOR THE FOURTH QUARTER

2005 COMPARED WITH 2004:

• Strong Earnings Per Share of $0.40 for the fourth quarter, up 18%

• Record Earnings Per Share for 2005 of $1.52, up 16% over 2004

• Record Net Income of $229 million for 2005, up 32% over 2004

• Net interest income increased 25% on increased volumes and expanded net interest margin – 9^th consecutive quarter of increased margin

• Strong organic average deposit growth of 16%

• Solid organic period end loan growth of 10%

• Continued outstanding credit quality – Nonperforming Assets Ratio of 0.21%; Net Charge-Offs of 0.14%

• Florida deposits were over $9 billion at December 31, 2005, up 48% over 2004

MONTGOMERY, AL — The Colonial BancGroup, Inc. Chairman, CEO and President, Robert E. Lowder, announced today that the Company had record earnings for the year ended December 31, 2005 of $1.52 per diluted share, a 16% increase over the $1.31 recorded in 2004. Net income for the year was a record $229 million, a 32% increase over the $173 million recorded in 2004.

Net income for the fourth quarter of 2005 was $61.5 million compared to net income of $46.3 million for the fourth quarter of 2004, an increase of 33%. Diluted earnings per share were $0.40 in the fourth quarter of 2005 compared to $0.34 per share in the fourth quarter of 2004, an 18% increase.

“Our strong fourth quarter results cap an outstanding year for Colonial and its shareholders. Our total shareholder return was over 15% in 2005. Colonial has consistently outperformed its competition in both total shareholder return and earnings growth over the past two years. We are optimistic about our future and look forward to another great year,” said Lowder.

1

Colonial’s net interest income increased 25% over 2004 and increased 3%, annualized, compared to the third quarter of 2005. The net interest margin for 2005 was 3.75%, a 23 basis point improvement over 2004, and increased to 3.85% in the fourth quarter of 2005, a 7 basis point increase over the third quarter of 2005, representing the ninth consecutive quarter of net interest margin expansion.

Colonial’s average deposits, excluding acquisitions, branch sales and brokered deposits, grew by $1.7 billion, or 16% in 2005 compared to 2004. Average deposits, excluding branch sales and brokered deposits, grew $390 million, or 11% annualized, from the third quarter of 2005. Total deposits, excluding the impact of acquisitions, branch sales and brokered deposits, increased by $2.1 billion, or 18% from December 31, 2004. “The excellent deposit growth reflects the result of our strategy to reposition the bulk of our franchise in high growth markets. As an example, our Florida, Texas and Nevada branches posted greater than 20% internal growth in deposits for the year, ” said Mr. Lowder.

Loans, excluding mortgage warehouse loans, acquisitions and branch sales, grew $1.2 billion, or 10% from December 31, 2004 to December 31, 2005 and increased $285 million, or 8% annualized, from September 30, 2005 to December 31, 2005. Credit quality was excellent throughout 2005. Colonial’s nonperforming assets ratio was 0.21% at December 31, 2005 compared to 0.29% at December 31, 2004. Net charge-offs were 0.14% of average loans for 2005 and were an annualized 0.09% of average loans in the fourth quarter of 2005. The allowance for loan losses was 1.15% of total loans and represented 536% of nonperforming assets at December 31, 2005.

“Colonial continued to stick to what we do best—make loans to people we know in markets that we know and for purposes that we understand. We are very pleased with our loan growth especially considering the high level of payoffs we experienced throughout 2005 and the fact that we tightened our underwriting standards at the beginning of the year,” said Mr. Lowder.

Noninterest income for the fourth quarter of 2005, excluding gains or losses on securities, derivatives and branches, grew 15% over the fourth quarter of 2004 but was down $2.8 million from the third quarter of 2005. The increase over the fourth quarter of 2004 was

2

primarily from mortgage warehouse lending fees of $6.5 million, whereas the decrease from the third quarter of 2005 was primarily from lower service charges on deposit accounts, revenues from financial planning services and mortgage banking revenues. On November 11, 2005, Colonial completed the sale of thirteen branches in northwest Alabama. These branches had approximately $375 million in deposits and $65 million in loans. Colonial recognized a gain of $27.4 million on the sale of those branches which was substantially offset by losses of $20 million related to the sale of $813 million in securities and $6.7 million of losses on the change in fair value of derivatives in the quarter. “We believe that the branch sales in the second and fourth quarters of 2005 completed our effort to exit slow or no-growth markets of our franchise. Colonial will continue to focus on building out branches in our high growth markets during 2006 to further the Company’s well executed growth market strategy. The sale of securities is part of our on-going effort to remove lower yielding assets from the balance sheet. We expect to replace those investments with securities having higher yields,” said Mr. Lowder.

The prior period results have been restated to reflect changes in the accounting treatment of certain derivatives and other items which are immaterial. Please refer to the Current Report filed on Form 8-K on January 5, 2006 for a more complete description of the restatement.

Colonial BancGroup operates 301 branches in Florida, Alabama, Georgia, Nevada and Texas with over $21 billion in assets. The Company’s common stock is traded on the New York Stock Exchange under the symbol CNB. In most newspapers the stock is listed as ColBgp.

Colonial management will host a conference call on January 18, 2006 at 3:00 PM/ET to discuss the earnings results for the fourth quarter. Individuals are encouraged to listen to the live webcast of the presentation as well as view a slide presentation that will be available on the same date by visiting Colonial’s web site at www.colonialbank.com. The webcast will be hosted under “Conference Calls and Presentations” located under the “Investor Relations” section of the website. To participate in the Q&A session of the conference call dial (888) 289-0544 (Leader: Glenda Allred). A replay of the conference call will be available beginning at 6:00 PM/ET on January 18, 2006 and ending at midnight on January 25, 2006 by dialing (888) 203-1112 (Domestic Toll-Free) or (719) 457-0820 (Toll International). The passcode for the call is 8104567.

3

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,” and “anticipates,” and similar expressions, as they relate to BancGroup (including its subsidiaries or its management), are intended to identify forward-looking statements. The forward-looking statements in these reports 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 report 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;

• 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 2006 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 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;

• 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.

4

THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES

FINANCIAL HIGHLIGHTS (Unaudited)

Statement of Condition Summary (Dollars in millions)	Dec 31, 2005		Restated Sept 30, 2005		Restated Dec 31, 2004		% Change Dec 31, ‘04 to ‘05
Total assets	$	21,426	$	21,117	$	18,897	13	%
Total loans, net:
Mortgage warehouse loans		484		527		1,115	-57	%
All other loans		14,416		14,197		11,743	23	%
Securities available for sale and investment securities		2,844		2,970		3,654	-22	%
Non-time deposits		9,013		8,949		7,546	19	%
Total deposits		15,483		15,270		11,864	31	%
Shareholders’ equity		1,933		1,903		1,398	38	%

	Twelve Months Ended								Three Months Ended
Earnings Summary (In thousands, except per share amounts)	Dec 31, 2005			Restated Dec 31, 2004			% Change Dec 31, ‘04 to ‘05		Dec 31, 2005			Restated Dec 31, 2004			% Change Dec 31, ‘04 to ‘05
Net Income:
Net interest income	$	709,222		$	567,248		25	%	$	186,563		$	153,945		21	%
Provision for loan losses		26,838			26,994		-1	%		5,892			5,388		9	%
Noninterest income excluding gains (losses) on securities, derivatives and branches		175,663			146,050		20	%		43,573			37,836		15	%
Security (losses)gains, net		(24,654	)		7,544		-427	%		(20,012	)		127		-15857	%
Change in fair value of derivatives		(12,053	)		(393	)	2967	%		(6,671	)		(1,119	)	496	%
Gain on sale of branches		37,020			—		—			27,412			—		—
Noninterest expense excluding net losses related to extinguishment of debt and merger related expenses		501,509			422,214		19	%		132,107			113,907		16	%
Merger related expenses		4,196			1,999		110	%		374			65		475	%
Net losses related to the early extinguishment of debt		9,550			7,436		28	%		—			1,253		-100	%
Net Income	$	228,502		$	172,877		32	%	$	61,507		$	46,347		33	%
EARNINGS PER SHARE:
Net Income
Basic	$	1.53		$	1.32		16	%	$	0.40		$	0.35		14	%
Diluted	$	1.52		$	1.31		16	%	$	0.40		$	0.34		18	%
Average shares outstanding		149,053			131,144					153,808			133,755
Average diluted shares outstanding		150,790			132,315					155,604			135,017
KEY RATIOS:
Net interest margin		3.75	%		3.52	%	7	%		3.85	%		3.58	%	8	%
Book value per share	$	12.53		$	10.45		20	%	$	12.53		$	10.45		20	%
Dividends paid per share	$	0.6100		$	0.5800		5	%	$	0.1525		$	0.1450		5	%

	Dec 31, 2005		Sept 30, 2005		Dec 31, 2004
Asset Quality
Allowance as a percent of net loans	1.15	%	1.14	%	1.16	%
Total non-performing assets ratio	0.21	%	0.24	%	0.29	%
Allowance as a percent of nonperforming assets	536	%	468	%	402	%
Net charge-offs ratio:
Quarter to date (annualized)	0.09	%	0.10	%	0.12	%
Year to date (annualized)	0.14	%	0.15	%	0.19	%

5

THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

																Twelve Months Ended
Earnings Summary (Dollars in thousands, except per share amounts)	4th Qtr. 2005			Restated 3rd Qtr. 2005			Restated 2nd Qtr. 2005			Restated 1st Qtr. 2005			Restated 4th Qtr. 2004			Dec 31, 2005			Restated Dec 31, 2004
Net interest income	$	186,563		$	185,266		$	174,435		$	162,958		$	153,945		$	709,222		$	567,248
Provision for loan loss		5,892			6,007			9,010			5,929			5,388			26,838			26,994
Noninterest income:
Service charges on deposit accounts		14,518			15,325			14,827			13,632			14,220			58,302			58,467
Financial planning services		2,590			3,600			3,129			3,892			3,233			13,211			13,370
Electronic banking		4,008			3,890			3,927			3,499			3,455			15,324			12,604
Mortgage banking		2,811			4,456			2,940			2,021			1,908			12,228			8,433
Mortgage warehouse fees		6,830			4,523			3,919			783			330			16,055			1,244
Securities gains(losses), net		(20,012	)		—			(3,487	)		(1,155	)		127			(24,654	)		7,544
Gain on sale of branches		27,412			—			9,608			—			—			37,020			—
Bank-owned life insurance		3,461			3,621			3,456			3,404			3,419			13,942			10,261
Net cash settlement of swaps		1,486			2,514			2,802			3,496			3,943			10,298			16,567
Change in fair value of derivatives		(6,671	)		(7,072	)		8,034			(6,344	)		(1,119	)		(12,053	)		(393	)
Other income (2)		7,869			8,469			11,442			8,523			7,328			36,303			25,104
Total noninterest income		44,302			39,326			60,597			31,751			36,844			175,976			153,201
Noninterest expense:
Salaries and employee benefits		66,616			70,204			64,905			60,988			57,603			262,713			218,095
Occupancy expense of bank premises, net		17,380			15,990			15,268			14,028			14,952			62,666			53,167
Furniture and equipment expense		11,686			11,456			10,723			9,714			9,700			43,579			38,300
Professional services		6,915			5,487			5,254			4,435			6,436			22,091			19,356
Amortization of intangibles		3,143			2,970			3,186			2,305			1,926			11,604			6,364
Advertising		3,714			3,591			2,694			2,228			1,982			12,227			8,477
Merger related expenses		374			613			2,071			1,138			65			4,196			1,999
Net losses related to the early extinguishment of debt		—			1,673			5,587			2,290			1,253			9,550			7,436
Other expense		22,653			21,980			22,294			19,702			21,308			86,629			78,455
Total noninterest expense		132,481			133,964			131,982			116,828			115,225			515,255			431,649
Income before tax		92,492			84,621			94,040			71,952			70,176			343,105			261,806
Income tax		30,985			28,145			31,709			23,764			23,829			114,603			88,929
Net Income	$	61,507		$	56,476		$	62,331		$	48,188		$	46,347		$	228,502		$	172,877
Earnings per share - Diluted
Net Income	$	0.40		$	0.36		$	0.41		$	0.34		$	0.34		$	1.52		$	1.31
Selected ratios
Return on average assets*		1.16	%		1.05	%		1.22	%		1.00	%		0.99	%		1.10	%		0.99	%
Return on average equity*		12.75	%		11.77	%		14.07	%		12.89	%		13.36	%		12.84	%		13.45	%
Efficiency ratio(1)		57.48	%		57.02	%		57.13	%		56.53	%		59.31	%		57.06	%		59.32	%
Noninterest income(1)/ avg assets*		0.82	%		0.86	%		0.91	%		0.81	%		0.81	%		0.85	%		0.84	%
Noninterest expense(1)/ avg assets*		2.51	%		2.47	%		2.46	%		2.34	%		2.45	%		2.45	%		2.43	%
Net interest margin		3.85	%		3.78	%		3.72	%		3.64	%		3.58	%		3.75	%		3.52	%
Equity to assets		9.02	%		9.01	%		9.17	%		8.13	%		7.40	%
Tier one leverage		7.77	%		7.26	%		7.59	%		7.38	%		7.14	%
Tangible capital ratio		6.03	%		5.78	%		5.96	%		5.48	%		5.43	%

(1) Noninterest income excludes gains(losses) on securities, derivatives and branches. Noninterest expense excludes net losses related to the early extinguishment of debt.

(2) Other income includes nonrecurring gains on the sale of properties held for sale and certain other assets totaling $84,000, $2.8 million, $486,000 and $1.7 million in the 3rd quarter of 2005, the 2nd quarter of 2005, the 1st quarter of 2005 and the 4th quarter of 2004, respectively.

* Annualized

6

THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CONDITION (Unaudited)

STATEMENTS OF CONDITION (Dollars in thousands)	Dec 31, 2005			Restated Sept 30, 2005			Restated June 30, 2005			Restated Mar 31, 2005			Restated Dec 31, 2004
Assets:
Cash and due from banks	$	429,549		$	425,121		$	414,834		$	414,831		$	296,889
Interest-bearing deposits in banks, federal funds sold		69,042			110,407			113,087			142,723			85,988
Securities purchased under agreements to resell		589,902			607,409			575,267			385,937			221,491
Securities available for sale and investment securities		2,844,354			2,969,998			3,080,567			3,694,604			3,653,554
Loans held for sale		1,097,892			799,970			751,231			648,643			678,496
Total loans, net:
Mortgage warehouse loans		483,701			526,967			713,254			663,619			1,114,923
All other loans		14,416,163			14,196,682			13,864,136			12,759,922			11,742,888
Less: Allowance for loan losses		(171,051	)		(168,324	)		(166,050	)		(153,634	)		(148,802	)
Loans, net		14,728,813			14,555,325			14,411,340			13,269,907			12,709,009
Premises and equipment, net		340,011			304,894			299,772			278,791			270,236
Intangible assets, net		682,499			723,425			716,903			560,522			394,140
Bank owned life insurance		345,842			342,380			338,820			335,353			315,739
Accrued interest and other assets		298,293			277,851			280,854			271,207			271,068
Total Assets	$	21,426,197		$	21,116,780		$	20,982,675		$	20,002,518		$	18,896,610
Liabilities and Shareholders’ Equity:
Non-interest bearing transaction accounts	$	3,167,875		$	3,166,273		$	3,114,321		$	2,958,496		$	2,468,529
Interest-bearing transaction accounts		5,845,068			5,782,269			5,772,340			5,308,417			5,077,509
Total non-time deposits		9,012,943			8,948,542			8,886,661			8,266,913			7,546,038
Time deposits		6,470,506			6,321,283			5,261,714			4,716,950			4,317,657
Total deposits		15,483,449			15,269,825			14,148,375			12,983,863			11,863,695
Short-term borrowings		1,542,796			1,659,174			3,083,688			3,009,567			3,258,935
Long-term debt		2,338,831			2,186,472			1,738,470			2,285,407			2,260,957
Other liabilities		128,430			98,454			87,279			98,111			114,732
Total liabilities		19,493,506			19,213,925			19,057,812			18,376,948			17,498,319
Total shareholders’ equity		1,932,691			1,902,855			1,924,863			1,625,570			1,398,291
Total Liabilities and Shareholders’ Equity	$	21,426,197		$	21,116,780		$	20,982,675		$	20,002,518		$	18,896,610
Common Shares Issued		155,602,747			155,550,888			155,336,221			145,627,339			133,823,776
Common Shares Outstanding		154,242,820			154,190,961			155,336,221			145,627,339			133,823,776

7

THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES

	Three Months Ended
AVERAGE VOLUME AND RATES (unaudited) (Dollars in thousands)	December 31, 2005						Restated September 30, 2005						Restated December 31, 2004
	Average Volume		Interest		Rate		Average Volume		Interest		Rate		Average Volume		Interest		Rate
Assets:
All other loans, net of unearned income(2)	$	14,211,949	$	255,330	7.14	%	$	13,912,490	$	238,123	6.80	%	$	11,578,356	$	171,520	5.90	%
Mortgage warehouse loans		496,270		7,476	5.98	%		758,549		10,919	5.71	%		1,093,012		12,323	4.49	%
Loans held for sale(2)		928,366		14,233	6.08	%		1,011,722		14,410	5.65	%		656,665		7,986	4.86	%
Investment securities and securities available for sale(2)		2,964,575		34,262	4.62	%		3,035,280		34,589	4.56	%		3,568,634		40,566	4.55	%
Other interest-earning assets		697,129		9,966	5.67	%		841,131		10,455	4.93	%		271,535		2,145	3.14	%
Total interest-earning assets(1)		19,298,289	$	321,267	6.62	%		19,559,172	$	308,496	6.27	%		17,168,202	$	234,540	5.44	%
Nonearning assets(2)		1,821,982						1,856,972						1,425,976
Total assets	$	21,120,271					$	21,416,144					$	18,594,178
Liabilities and Shareholders’ Equity:
Interest-bearing non-time deposits	$	5,836,014	$	30,831	2.10	%	$	5,801,845	$	25,747	1.76	%	$	5,051,770	$	12,676	1.00	%
Time deposits		6,330,422		59,682	3.74	%		5,881,314		51,220	3.46	%		4,177,959		28,897	2.75	%
Short-term borrowings		1,614,719		14,592	3.59	%		2,769,154		22,359	3.20	%		3,122,132		14,389	1.83	%
Long-term debt(2)		2,211,414		29,274	5.26	%		1,834,780		23,546	5.10	%		2,280,619		24,240	4.23	%
Total interest-bearing liabilities		15,992,569	$	134,379	3.33	%		16,287,093	$	122,872	2.99	%		14,632,480	$	80,202	2.18	%
Noninterest-bearing demand deposits		3,077,220						3,102,800						2,448,341
Other liabilities(2)		136,284						122,674						133,607
Total liabilities		19,206,073						19,512,567						17,214,428
Shareholders’ equity		1,914,198						1,903,577						1,379,750
Total liabilities and shareholders’ equity	$	21,120,271					$	21,416,144					$	18,594,178
Rate differential					3.29	%					3.28	%					3.26	%
Net yield on interest-earning assets			$	186,888	3.85	%			$	185,624	3.78	%			$	154,338	3.58	%

(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) Unrealized gains(losses) on available for sale securities and the adjustments for mark to market valuations on hedged assets and liabilities have been classified in either nonearning assets or other liabilities.

8

THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES

	Twelve Months Ended December 31,
AVERAGE VOLUME AND RATES (unaudited) (Dollars in thousands)	2005						Restated 2004
	Average Volume		Interest		Rate		Average Volume		Interest		Rate
Assets
All other loans, net of unearned income(2)	$	13,411,323	$	894,545	6.67	%	$	11,115,275	$	625,455	5.63	%
Mortgage warehouse loans		728,057		38,526	5.29	%		1,033,238		42,749	4.14	%
Loans held for sale(2)		823,177		46,247	5.62	%		497,315		23,972	4.82	%
Investment securities and securities available for sale(2)		3,400,782		155,829	4.58	%		3,397,000		154,210	4.54	%
Other interest-earning assets		580,172		28,363	4.89	%		130,711		3,442	2.63	%
Total interest-earning assets(1)		18,943,511	$	1,163,510	6.14	%		16,173,539	$	849,828	5.25	%
Nonearning assets(2)		1,738,799						1,260,032
Total assets	$	20,682,310					$	17,433,571
Liabilities and Shareholders’ Equity:
Interest bearing non-time deposits	$	5,583,038	$	90,635	1.62	%	$	4,639,949	$	42,714	0.92	%
Time deposits		5,443,983		182,898	3.36	%		4,014,706		105,422	2.63	%
Short-term borrowings		2,639,341		75,395	2.86	%		2,906,035		38,303	1.32	%
Long-term debt(2)		2,153,881		103,906	4.82	%		2,264,698		94,331	4.17	%
Total interest-bearing liabilities		15,820,243	$	452,834	2.86	%		13,825,388	$	280,770	2.03	%
Noninterest-bearing demand deposits		2,960,504						2,207,385
Other liabilities(2)		122,482						115,026
Total liabilities		18,903,229						16,147,799
Shareholders’ equity		1,779,081						1,285,772
Total liabilities and shareholders’ equity	$	20,682,310					$	17,433,571
Rate differential					3.28	%					3.22	%
Net yield on interest-earning assets			$	710,676	3.75	%			$	569,058	3.52	%

(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) Unrealized gains(losses) on available for sale securities and the adjustments for mark to market valuations on hedged assets and liabilities have been classified in either nonearning assets or other liabilities.

9

THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES

NONPERFORMING ASSETS (unaudited)

NONPERFORMING ASSETS (Dollars in thousands)	Dec 31, 2005			Sept 30, 2005			June 30, 2005			March 31, 2005			Dec 31, 2004
Nonaccrual loans	$	25,668		$	28,814		$	23,845		$	28,996		$	26,983
Restructured loans		155			164			173			182			191
Total nonperforming loans		25,823			28,978			24,018			29,178			27,174
Other real estate owned		6,108			5,747			4,245			8,229			9,865
Loans held for sale		—			1,225			1,225			1,262			—
Total nonperforming assets	$	31,931		$	35,950		$	29,488		$	38,669		$	37,039
Aggregate loans contractually past due 90 days for which interest is being accrued	$	10,283		$	7,042		$	6,720		$	5,651		$	8,096
Total charge-offs	$	27,206		$	22,714		$	17,523		$	10,529		$	29,811
Total recoveries		(7,995	)		(6,668	)		(5,210	)		(3,514	)		(6,213	)
Net charge-offs:
Year to date	$	19,211		$	16,046		$	12,313		$	7,015		$	23,598
Quarter to date	$	3,165		$	3,733		$	5,298		$	7,015		$	3,644
RATIOS
Period end:
Total nonperforming assets as a percent of net loans and other nonperforming assets		0.21	%		0.24	%		0.20	%		0.29	%		0.29	%
Allowance as a percent of nonperforming assets		536	%		468	%		563	%		397	%		402	%
Allowance as a percent of nonperforming loans		662	%		581	%		691	%		527	%		548	%
Net charge-offs as a percent of average net loans:
Quarter to date (annualized)		0.09	%		0.10	%		0.15	%		0.21	%		0.12	%
Year to date (annualized)		0.14	%		0.15	%		0.18	%		0.21	%		0.19	%

10

EX-99.2

The Best Things Come OUT OF THE BLUE

Fourth Quarter 2005

Earnings Overview

Exhibit 99.2

2

The Best Things Come OUT OF THE BLUE

Forward Looking Statements

This

presentation

includes

“forward-looking

statements”

within

the

meaning

of

the

federal

securities

laws.

Words

such

as

“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.

The

forward-looking

statements

in

these

reports

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

report

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;

•

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

2006

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

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;

•

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.

3

The Best Things Come OUT OF THE BLUE

Record Earnings in 4Q 2005

•

Net Income of $61.5 million; up 33% over 4Q 2004

•

EPS of $0.40; up 18% over 4Q 2004

Strong increase in revenues

up 20% over 4Q 2004

•

9

consecutive quarter of expanded Net Interest Margin

•

Net Interest Income increased 21% over 4Q 2004

•

Noninterest Income

1

increased 15% over 4Q 2004

Solid Internal Loan Growth

of 10% over prior year, 8% annualized from

the end of 3Q

Overview

1

Excluding gains/losses on securities, branch sales and derivatives

2

Excluding Mortgage Warehouse Lending, acquisitions and sale of branches

1

2

th

4

The Best Things Come OUT OF THE BLUE

Overview

(cont’d)

Outstanding

Deposit

Growth

•

Average Deposits grew internally 16% from the 4Q04; 11% annualized

over 3Q 2005

•

Florida Franchise had 23% internal growth in period-end deposits from

12/31/04

Excellent Credit Quality

•

Nonperforming Assets Ratio at a very low level of 0.21%

•

Excellent net charge off history; 0.09%* for the quarter and 0.14% for

2005

*

Annualized

1

Excluding acquisitions, sale of branches and brokered deposits

1

5

The Best Things Come OUT OF THE BLUE

FL

58%

AL

22%

TX

4%

GA

5%

NV

5%

Corp

6%

FL

56%

GA

6%

AL

16%

Corp

12%

TX

6%

NV

4%

NV

14

TX

13

FL

160

GA

21

AL

93

Colonial is in four of the fastest growing states in the country

72%* of Total Deposits are in Florida, Georgia, Texas and Nevada

Projected population growth from 2005-2010 is expected to be 10.95% in our

markets versus the national average of 6.26%

Branches, Assets and Deposits at 12/31/05 are as follows:

In the Right Places

* At 12/31/05

301 Branches

$21 Billion in Assets

$15.5 Billion in Deposits

6

The Best Things Come OUT OF THE BLUE

Superior Projected Population Growth

2005 - 2010 Population Growth

Colonial BancGroup, Inc.

10.95

%

Compass Bancshares, Inc.

9.97

Wachovia Corporation

8.85

SunTrust Banks, Inc.

8.72

South Financial Group, Inc.

8.68

Synovus Financial Corp.

7.17

Bank of America Corporation

6.95

BB&T Corporation

6.80

AmSouth Bancorporation

6.46

Regions Financial Corporation

5.86

First Horizon National Corporation

5.27

Fifth Third Bancorp

4.51

Trustmark Corporation

4.15

Whitney Holding Corporation

3.80

BancorpSouth, Inc.

3.46

Median

6.80

%

Low

3.46

High

10.95

National Average

6.26

Source: SNL Financial.

Deposit data as of 6/30/05.

Population growth deposit weighted by county.

7

The Best Things Come OUT OF THE BLUE

Entered Florida in July of 1996

•

Began Florida franchise with $232 million in assets, 8 branches in Orlando

Florida at 12/31/05:

•

58% of Deposits in Florida –

Total Deposits of $9 Billion

•

56% of Assets in Florida –

Total Assets of $12 Billion

•

53% of Branches in Florida –

Total Branches –

160

Strong loan and deposit growth

•

Loan growth, excluding acquisitions and mortgage warehouse lending, was 15%

for 2005

•

Deposit growth, excluding acquisitions, was 23% for 2005

Florida Franchise

8

16 Planned Branches through 12/31/06

Current Branches at 12/31/05

CENTRAL

FLORIDA

Assets = $3.2 Billion

Deposits = $2.9 Billion

60 Branches

MORTGAGE

WHSE.

Assets = $2.2 Billion

Deposits = $524 Million

FLORIDA WEST COAST

Assets = $3.0 Billion

Deposits = $2.7 Billion

53 Branches

Current Population

2,500,000

500,000

100,000

PANHANDLE

Assets = $411 Million

Deposits = $52 Million

1 Branch

Florida Franchise and Current Population

SOUTH

FLORIDA

Assets = $3.2 Billion

Deposits = $2.8 Billion

46 Branches

9

The Best Things Come OUT OF THE BLUE

$1.55

$1.33

$1.20

$1.16

$1.06

$1.00

2000

2001

2002

2003

2004

2005

$0.40

$0.34

$1.52

$1.31

$1.16

$1.26

$1.06

$1.00

2000

2001

2002

2003

2004

2005

4Q04

4Q05

(diluted)

Originally Reported

As Restated

* As if restatement had not occurred

Earnings Per Share

*

11%

3%

9%

6%

17%

6%

19%

(8)%

13%

16%

18%

10

The Best Things Come OUT OF THE BLUE

$175

$150

$140

$122

$115

$233

2000

2001

2002

2003

2004

2005

$62

$46

$229

$173

$146

$151

$122

$115

2000

2001

2002

2003

2004

2005

4Q04

4Q05

($ in millions)

Net Income

Originally Reported

As Restated

* As if restatement had not occurred

15%

7%

6%

17%

33%

*

33%

6%

18%

32%

24%

(3)%

11

The Best Things Come OUT OF THE BLUE

$187

$709

$400

$422

$455

$495

$567

2000

2001

2002

2003

2004

2005

4Q04

4Q05

$154

Net Interest Income as restated

($ in millions)

6%

8%

9%

15%

21%

25%

12

The Best Things Come OUT OF THE BLUE

Net Interest Income

Net Interest Income increased 21% over 4Q04 and 3% annualized over 3Q05

•

Average

earning

assets

decreased

$261

million

from

the

3Q05

as

the

Company

replaced

investment

securities

and

mortgage

warehouse

assets

with

higher

yielding

loan

growth

•

Net interest margin expanded 7 bps from 3Q05

Yield on average earning assets up 35 bps over 3Q05

•

Loans comprised 76% of Average Earning Assets in 4Q05

76% of loans are adjustable or variable rate

•

Securities comprised 15% of average earning assets in the quarter

13

The Best Things Come OUT OF THE BLUE

Net

Interest

Income

(cont’d)

Strong Average Deposit Growth replaced Costly Wholesale Borrowings

•

Average

Deposits

increased

$458

million

or

3%

linked

quarter;

internal

growth

in

average

deposits

1

was

$390

million

or

11%

annualized

for

the

quarter

•

Deposits

comprised

72%

of

average

total

assets

in

4Q05

compared

to

69%

in

3Q05 and 63% in 4Q04

•

Cost

of

interest

bearing

deposits

was

160

bps

less

than

the

rate

on

average

wholesale

borrowings

in

4Q05

Subordinated Debt Exchange

•

Exchanged $137 million in subordinated debt and issued $144 million in new debt;

lowered interest cost by 49 basis points and increased Tier II Capital

1

Excluding acquisitions, sale of branches and brokered deposits

14

The Best Things Come OUT OF THE BLUE

$10,862

$9,419

$8,734

$8,435

$8,252

$14,786

2000

2001

2002

2003

2004

2005

3Q05

4Q05

Average Deposits

2%

4%

8%

15%

1

Excluding acquisitions, sale of branches, and brokered deposits

*Annualized

11%

1*

($ in millions)

12%*

$13,988

$15,244

16% 1

29%

15

The Best Things Come OUT OF THE BLUE

Net Interest Margin Improvement

3.85%

3.83%

3.78%

3.72%

3.68%

3.64%

3.60%

3.58%

3.53%

3.43%

3.78%

3.72%

3.64%

3.58%

3.53%

3.49%

3.45%

3.41%

3.36%

3.10%

3.20%

3.30%

3.40%

3.50%

3.60%

3.70%

3.80%

3.90%

3Q03

4Q03

1Q04

2Q04

3Q04

4Q04

1Q05

2Q05

3Q05

4Q05

Originally Reported

As Restated

16

The Best Things Come OUT OF THE BLUE

Net Interest Margin

NIM up 7 bps to 3.85% in 4Q05 from 3.78% in 3Q05

9

Consecutive Quarter of NIM Expansion

NIM expansion was primarily driven by the additional mortgage warehouse

asset securitization of $500 million at the end of the 3Q which contributed 5 bps

to margin

th

17

The Best Things Come OUT OF THE BLUE

Credit Quality

Nonperforming Assets ratio was 0.21% at 12/31/05

Net Charge-Off Ratio was 0.09%* for the quarter and 0.14% for 2005

Provision exceeded net charge-offs in 4Q05 and for 2005

Past dues > 30 days were 0.48% of net loans, down from 0.58% at 9/30/05

Allowance for loan losses was 1.15%, or 536% of nonperforming assets

*

Annualized

18

The Best Things Come OUT OF THE BLUE

Noninterest Income

($ in millions)

4Q05

3Q05

$ Change

% Change

Service charges on deposit accounts

14.5

$     

15.3

$     

(0.8)

$      

-5%

Financial planning services

2.6

3.6

(1.0)

-28%

Electronic banking

4.0

3.9

0.1

3%

Mortgage banking

2.8

4.5

(1.7)

-38%

Mortgage warehouse fees

6.8

4.5

2.3

51%

Bank-owned life insurance

3.5

3.6

(0.1)

-3%

Net cash settlement of swaps

1.5

2.5

(1.0)

-40%

Other income (2)

7.9

8.5

(0.6)

-7%

43.6

46.4

(2.8)

-6%

Securities (losses) gains, net

(20.0)

0.0

(20.0)

0%

Gain on sale of branches

27.4

0.0

27.4

0%

Change in fair value of swaps

(6.7)

(7.1)

0.4

-6%

        Total Noninterest Income

44.3

$     

39.3

$     

5.0

$       

13%

Noninterest Income to Average Assets (1)

0.82%

0.86%

Noninterest Income to Total Revenue (1)

18.9%

20.0%

(1)   Excluding gains (losses) on securities, deriviatives and branches

(2)   Includes nonrecurring gains of $84,000 in 3Q05

19

The Best Things Come OUT OF THE BLUE

Significant Transactions

•

Completed the sale of 13 branches in northwest Alabama; sold $375 million of

deposits; $65 million of loans and recognized a gain of $27 million

•

In

December,

the

Company

sold

approximately

$332

million

in

securities

yielding

4.35%

at

a

loss

of

$9.4

million.

These

securities

were

replaced

with

securities

yielding

5.43%

with

a

similar

duration

of

3.4

years.

The

Company

also

declared

its

intent

to

sell

approximately

$481

million

in

securities

yielding

4.86%

with

an

average

life

of

4.1

years

and

recognized

a

loss

of

$10.6

million.

The

Company

expects

to

sell

and

replace

these

with

higher

yielding

securities

with

a

longer

duration.

•

The

Company

recognized

a

$6.7

million

loss

on

the

change

in

fair

value

in

interest

rate

swaps

on

its

trust

preferreds

and

brokered

certificates

of

deposit.

Noninterest Income –

Significant Transactions

20

The Best Things Come OUT OF THE BLUE

Noninterest Expense

($ in millions)

4Q05

3Q05

$ Change

% Change

Salaries and employee benefits

66.6

$     

70.2

$     

(3.6)

$      

-5%

Occupancy expense of bank premises, net

17.4

16.0

1.4

9%

Furniture and equipment expense

11.7

11.4

0.3

3%

Professional services

6.9

5.5

1.4

25%

Amortization of intangibles

3.1

3.0

0.1

3%

Advertising

3.7

3.6

0.1

3%

Other expense

22.7

22.0

0.7

3%

132.1

131.7

0.4

0%

Merger related expenses

0.4

0.6

(0.2)

-33%

Net losses related to the early extinguishment of debt

0.0

1.7

(1.7)

-100%

        Total Noninterest Expense

132.5

$   

134.0

$   

(1.5)

$      

-1%

Efficiency Ratio (1)

57.48%

57.02%

Noninterest Expense to Average Assets (2)

2.51%

2.47%

(1)   Noninterest income excludes gains (losses) on securities, derivatives and branches.

        Noninterest expense excludes net losses related to the early extinguishment of debt.

(2)   Excludes net losses related to the early extinguishment of debt

21

The Best Things Come OUT OF THE BLUE

Outlook for 2006

Low double digit deposit growth and high single digit loan growth are

expected

Diluted earnings per share are expected to be in line with street mean

estimates ranging from $1.67 -

$1.75

There are a number of uncertainties that would impact the expectations noted above,

including the overall strength of the economy and changes in market rates. 

22

The Best Things Come OUT OF THE BLUE

$0.68

$.61

$.58

$.56

$.52

$.48

$.44

$.38

$.34

$.30

$.27

$.22

$.15

$.16

$.17

$.18

$.20

'90

'91

'92

'93

'94

'95

'96

'97

'98

'99

'00

'01

'02

'03

'04

'05

'06

15 YEARS OF INCREASED DIVIDENDS 

Solid Dividend Growth

*Expected

*

11%

23

The Best Things Come OUT OF THE BLUE

Supplemental

24

The Best Things Come OUT OF THE BLUE

Loan Portfolio Distribution

($ in millions)

Period-end

balance    

9/30/05

Sale of

Branches

Mortgage

Warehouse

Securitization

Internal

Growth

Period-end

balance   

12/31/05

Commercial real estate and construction

9,694

$          

(25)

$          

-

$                     

239

$          

9,908

$         

Single-family real estate

2,412

(6)

-

33

2,439

Other loans

1,470

(14)

-

4

1,460

Home equity lines

621

(20)

-

8

609

Total

14,197

$        

(65)

$          

-

$                     

284

$          

14,416

$       

Mortgage warehouse lending

527

$             

-

$          

92

$                 

(135)

$         

484

$            

Loans held for sale

800

$             

-

$          

(92)

$                

390

$          

1,098

$         

25

The Best Things Come OUT OF THE BLUE

(as originally reported)

NPAs

Consistently Below Industry

0.65%

0.78%

0.64%

0.54%

0.55%

0.60%

0.71%

0.84%

0.85%

0.29%

0.21%

0.78%

1.17%

1.25%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

'92

'93

'94

'95

'96

'97

'98

'99

'00

'01

'02

'03

'04

'05

All FDIC insured commercial banks (as of 9/30/05)

Colonial BancGroup

26

The Best Things Come OUT OF THE BLUE

0.47%

0.51%

0.09%

0.19%

0.14%

0.33%

0.13%

0.18%

0.23%

0.23%

0.21%

0.21%

0.28%

0.29%

0.31%

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

'91

'92

'93

'94

'95

'96

'97

'98

'99

'00

'01

'02

'03

'04

'05

All FDIC Insured Commercial Banks (as of 9/30/05)

Southern Regionals* (as of 6/30/05)

Colonial BancGroup

Net Charge-Offs/Average Loans

*Source: Sandler O’Neill & Partners

27

The Best Things Come OUT OF THE BLUE

Balance Sheet Growth & Mix Contribute Favorably to

Interest Rate Risk

76%

of

loan

portfolio

is

variable

or

adjustable

rate

Loans,

excluding

mortgage

warehouse,

grew

10%

1

from

12/31/04

Loan

yields,

excluding

mortgage

warehouse,

up

34

bps

over

3Q

Securities

represented

15%

of

earning

assets

at

12/31/05

Average

deposits

grew

11%

2

annualized

from

3Q05;

16%

2

year-over-

year

Total

Deposit

Mix:

58%

-

Non-time;

20%

-

Noninterest

Bearing

DDA

Average

deposits

comprised

72%

of

total

average

assets

in

4Q05

compared

to

69%

in

3Q05

and

63%

in

4Q04

1

Excluding acquisitions and branch sales

2

Excluding acquisitions, branch sales and brokered deposits

(as of 12/31/05)