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): July 19, 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 June 30, 2006 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
99.1	Press Release Announcing Second Quarter Earnings.
99.2	Presentation materials to be used in connection with Colonial BancGroup’s conference call to be held on July 19, 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: July 19, 2006

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EX-99.1

Exhibit 99.1

PRESS RELEASE

For more information contact:	July 19, 2006
Glenda Allred
(334) 240-5064

COLONIAL BANCGROUP ANNOUNCES

RECORD NET EARNINGS PER SHARE OF $0.43

SECOND QUARTER HIGHLIGHTS:

• Record EPS of $0.43

• Net interest income increased 10% over the second quarter of 2005

• Strong period end loan growth of 10.5% annualized from December 31, 2005

• Strong organic average deposit growth of 13% annualized from 4Q05

• Excellent credit quality - annualized net charge-offs of 0.04% in 2Q; 0.15% year to date

• Record low nonperforming asset ratio of 0.18%

• Florida deposits were $9.9 billion at June 30, a 21% annualized increase over December 31, 2005

• Assets exceeded $23 billion at June 30, 2006

MONTGOMERY, AL — The Colonial BancGroup, Inc. Chairman, CEO and President, Robert E. Lowder, announced today that the Company had record earnings for the quarter ended June 30, 2006 of $0.43 per diluted share, a 5% increase over the $0.41 per diluted share reported for the same quarter of the previous year. Net income for the quarter was a record $67 million, a 7% increase over the $62 million reported in the second quarter of 2005.

For the first six months of 2006, Colonial reported record earnings per diluted share of $0.85, a 13% increase over the $0.75 reported in the same period in 2005. “Colonial’s record

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earnings for the second quarter and the first six months of 2006 reflect our solid approach to the expansion of our franchise in growth markets with continued focus on strong organic growth, outstanding credit quality and efficient operations,” said Mr. Lowder.

Colonial’s net interest income for the quarter increased 10% over the second quarter of 2005. “The increase in net interest income is the result of strong growth in loans and in assets of the mortgage warehouse lending division which were funded by outstanding deposit growth,” said Mr. Lowder.

The mortgage warehouse lending division ended the quarter with assets under management of $4.4 billion, a record high for the division. Of the $4.4 billion in assets under management at quarter end, $1.5 billion was managed for a third party. “Although the mortgage industry has experienced a slowdown from the record high housing markets over the last couple of years, demand from our mortgage company customers continues to be strong,” said Mr. Lowder.

The bank’s average deposits increased by $2.2 billion from the second quarter of the prior year. Average deposits, excluding brokered deposits, grew organically by $1.9 billion, or 14% over the second quarter of 2005 and by 13% annualized over the fourth quarter of 2005. “We continue to place a great deal of emphasis on growing deposits. The current interest rate environment has made growing low and no-cost deposits very challenging. With that said, our team has done an outstanding job growing deposits by implementing a strategic acquisition plan designed to attract and retain customer relationships,” said Mr. Lowder.

Period end loans, excluding mortgage warehouse lending, increased by $758 million, or 10.5% annualized from December 31, 2005 and by $1.3 billion, or 9.4% from June 30, 2005. Credit quality was excellent during the quarter. Annualized net charge-offs for the quarter were 0.04% of average loans and for the first six months of 2006 were 0.15% of average loans. Colonial’s nonperforming assets ratio hit a new record low of 0.18% at June 30, 2006. The

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allowance for loan losses was 1.14% of total loans and represented 649% of nonperforming assets at June 30, 2006 up from 468% at March 31, 2006.

“Colonial ended the quarter with $9.9 billion in deposits or 60% of total deposits in the state of Florida. In fact, our Florida deposits are more than the entire bank’s deposits were three year ago. We currently have 162 branches in Florida and we plan to open 25-30 new branches across the state over the next eighteen months,” said Mr. Lowder.

Colonial BancGroup operates 299 branches in Florida, Alabama, Georgia, Nevada and Texas with $23 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 July 19, 2006 at 3:00 PM/ET to discuss the earnings results for the second 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 (800) 967-7135 or (719) 457-2626 (Toll International), (Leader: Glenda Allred).

A replay of the conference call will be available beginning at 6:00 PM/ET on July 19, 2006 and ending at midnight on July 26, 2006 by dialing (888) 203-1112 (Domestic Toll-Free) or (719) 457-0820 (Toll International). The passcode for both numbers is 7714238.

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;

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• 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 which result in prolonged business disruption or materially impair the value of collateral securing loans;

• management’s assumptions and estimates underlying critical accounting policies prove to be inadequate or materially incorrect or are not borne out by subsequent events;

• 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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THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES

FINANCIAL HIGHLIGHTS (Unaudited)

Statement of Condition Summary (Dollars in millions)	June 30, 2006		Mar 31, 2006		June 30, 2005		% Change June 30, ‘05 to ‘06
Total assets	$	23,011	$	21,969	$	20,983	10	%
Total loans, net:
Mortgage warehouse loans		372		436		713	-48	%
Loans, excluding mortgage warehouse loans		15,174		14,846		13,864	9	%
Securities available for sale and investment securities		2,866		2,869		3,081	-7	%
Non-time deposits		9,777		9,295		8,887	10	%
Total deposits		16,529		15,855		14,148	17	%
Shareholders’ equity		1,962		1,947		1,925	2	%

	Six Months Ended								Three Months Ended
Earnings Summary (In thousands, except per share amounts)	June 30, 2006			June 30, 2005			% Change June 30, ‘05 to ‘06		June 30, 2006			June 30, 2005			% Change June 30, ‘05 to ‘06
Net Income:
Net interest income	$	380,247		$	337,393		13	%	$	192,087		$	174,435		10	%
Provision for loan losses		17,292			14,939		16	%		4,950			9,010		-45	%
Noninterest income excluding the following items:		86,374			85,692		1	%		44,873			46,442		-3	%
Securities and derivatives gains(losses), net		4,228			(4,642	)	-191	%		—			(3,487	)	-100	%
Change in fair value of derivatives		—			1,690		-100	%		—			8,034		-100	%
Gain on sale of branches		—			9,608		-100	%		—			9,608		-100	%
Gain on sale of Goldleaf		2,829			—		100	%		—			—		—
Total noninterest income		93,431			92,348		1	%		44,873			60,597		-26	%
Noninterest expense excluding the following items:		257,087			237,724		8	%		131,226			124,324		6	%
Merger related expenses		—			3,209		-100	%		—			2,071		-100	%
Net losses related to the early extinguishment of debt		—			7,877		-100	%		—			5,587		-100	%
Total noninterest expense		257,087			248,810		3	%		131,226			131,982		-1	%
Net Income	$	131,538		$	110,519		19	%	$	66,518		$	62,331		7	%
EARNINGS PER SHARE:
Net Income
Basic	$	0.85		$	0.76		12	%	$	0.43		$	0.42		2	%
Diluted	$	0.85		$	0.75		13	%	$	0.43		$	0.41		5	%
Average shares outstanding		154,047			144,263					154,126			149,782
Average diluted shares outstanding		155,304			145,960					155,396			151,568
KEY RATIOS:
Net interest margin		3.84	%		3.68	%	4	%		3.81	%		3.72	%	2	%
Book value per share	$	12.69		$	12.39		2	%	$	12.69		$	12.39		2	%
Dividends paid per share	$	0.3400		$	0.3050		11	%	$	0.1700		$	0.1525		11	%

Asset Quality	June 30, 2006		Mar 31, 2006		June 30, 2005
Allowance as a percent of net loans	1.14	%	1.14	%	1.14	%
Total non-performing assets ratio	0.18	%	0.24	%	0.20	%
Allowance as a percent of nonperforming assets	649	%	468	%	563	%
Net charge-offs ratio:
Quarter to date (annualized)	0.04	%	0.26	%	0.15	%
Year to date (annualized)	0.15	%	0.26	%	0.18	%

THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

																Six Months Ended
Earnings Summary (Dollars in thousands, except per share amounts)	2nd Qtr. 2006			1st Qtr. 2006			4th Qtr. 2005			3rd Qtr. 2005			2nd Qtr. 2005			June 30, 2006			June 30, 2005
Net interest income	$	192,087		$	188,160		$	186,563		$	185,266		$	174,435		$	380,247		$	337,393
Provision for loan loss		4,950			12,342			5,892			6,007			9,010			17,292			14,939
Noninterest income:
Service charges on deposit accounts		15,332			14,213			14,518			15,325			14,827			29,545			28,459
Financial planning services		3,665			3,129			2,590			3,600			3,129			6,794			7,021
Electronic banking		4,279			4,107			4,008			3,890			3,927			8,386			7,426
Mortgage banking		3,783			2,897			2,811			4,456			2,940			6,680			4,961
Mortgage warehouse fees		6,021			6,262			6,830			4,523			3,919			12,283			4,702
Bank-owned life insurance		3,976			3,939			3,461			3,621			3,456			7,915			6,860
Goldleaf income		—			1,171			2,672			2,750			2,525			1,171			4,741
Net cash settlement of swap derivatives		—			—			1,486			2,514			2,802			—			6,298
Other income		7,817			5,783			5,197			5,719			8,917			13,600			15,224
Core noninterest income		44,873			41,501			43,573			46,398			46,442			86,374			85,692
Securities and derivatives gains(losses), net		—			4,228			(20,012	)		—			(3,487	)		4,228			(4,642	)
Change in fair value of swap derivatives		—			—			(6,671	)		(7,072	)		8,034			—			1,690
Gain on sale of branches		—			—			27,412			—			9,608			—			9,608
Gain on sale of Goldleaf		—			2,829			—			—			—			2,829			—
Total noninterest income		44,873			48,558			44,302			39,326			60,597			93,431			92,348
Noninterest expense:
Salaries and employee benefits		70,915			68,793			66,616			70,204			64,905			139,708			125,893
Occupancy expense of bank premises, net		16,406			15,534			17,380			15,990			15,268			31,940			29,296
Furniture and equipment expense		11,907			11,392			11,760			11,456			10,723			23,299			20,437
Professional services		4,917			4,435			6,915			5,487			5,254			9,352			9,688
Amortization of intangibles		3,051			3,057			3,069			2,970			3,186			6,108			5,491
Advertising		3,103			2,887			3,714			3,591			2,694			5,990			4,923
Merger related expenses		—			—			374			613			2,071			—			3,209
Net losses related to the early extinguishment of debt		—			—			—			1,673			5,587			—			7,877
Other expense		20,927			19,763			22,653			21,980			22,294			40,690			41,996
Total noninterest expense		131,226			125,861			132,481			133,964			131,982			257,087			248,810
Income before tax		100,784			98,515			92,492			84,621			94,040			199,299			165,992
Income tax		34,266			33,495			30,985			28,145			31,709			67,761			55,473
Net Income	$	66,518		$	65,020		$	61,507		$	56,476		$	62,331		$	131,538		$	110,519
Earnings per share - Diluted	$	0.43		$	0.42		$	0.40		$	0.36		$	0.41		$	0.85		$	0.75
Selected ratios
Return on average assets*		1.21	%		1.23	%		1.16	%		1.05	%		1.22	%		1.22	%		1.11	%
Return on average equity*		13.58	%		13.44	%		12.75	%		11.77	%		14.07	%		13.51	%		13.53	%
Efficiency ratio(1)		55.31	%		54.73	%		57.48	%		57.02	%		57.13	%		55.02	%		56.84	%
Noninterest income(1)/ avg assets*		0.82	%		0.78	%		0.82	%		0.86	%		0.91	%		0.80	%		0.86	%
Noninterest expense(1)/ avg assets*		2.39	%		2.34	%		2.51	%		2.47	%		2.46	%		2.36	%		2.40	%
Net interest margin		3.81	%		3.86	%		3.85	%		3.78	%		3.72	%		3.84	%		3.68	%
Equity to assets		8.53	%		8.86	%		9.02	%		9.01	%		9.17	%
Tier one leverage		7.90	%		7.88	%		7.77	%		7.26	%		7.59	%
Tangible capital ratio		5.74	%		5.94	%		5.97	%		5.78	%		5.96	%

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

* Annualized

THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CONDITION (Unaudited)

STATEMENTS OF CONDITION (Dollars in thousands)	June 30, 2006			Mar 31, 2006			Dec 31, 2005			Sept 30, 2005			June 30, 2005
Assets:
Cash and due from banks	$	393,945		$	449,556		$	429,549		$	425,121		$	414,834
Interest-bearing deposits in banks, federal funds sold		168,696			32,092			69,042			110,407			113,087
Securities purchased under agreements to resell		609,262			578,743			589,902			607,409			575,267
Securities available for sale and investment securities		2,866,380			2,869,169			2,844,354			2,969,998			3,080,567
Loans held for sale		1,873,025			1,227,520			1,097,892			799,970			751,231
Total loans, net:
Mortgage warehouse loans		371,787			436,248			483,701			526,967			713,254
Loans, excluding mortgage warehouse loans		15,174,136			14,845,657			14,416,163			14,196,682			13,864,136
Less: Allowance for loan losses		(177,139	)		(173,632	)		(171,051	)		(168,324	)		(166,050	)
Loans, net		15,368,784			15,108,273			14,728,813			14,555,325			14,411,340
Premises and equipment, net		356,619			348,023			340,201			304,894			299,772
Intangible assets, net		680,477			683,234			695,012			723,425			716,903
Bank owned life insurance		350,998			348,325			345,842			342,380			338,820
Accrued interest and other assets		342,647			323,603			285,590			277,851			280,854
Total Assets	$	23,010,833		$	21,968,538		$	21,426,197		$	21,116,780		$	20,982,675
Liabilities and Shareholders’ Equity:
Non-interest bearing transaction accounts	$	3,639,310		$	3,107,338		$	3,167,875		$	3,166,273		$	3,114,321
Interest-bearing transaction accounts		6,137,708			6,187,503			5,845,068			5,782,269			5,772,340
Total non-time deposits		9,777,018			9,294,841			9,012,943			8,948,542			8,886,661
Time deposits		6,752,141			6,560,487			6,470,506			6,321,283			5,261,714
Total deposits		16,529,159			15,855,328			15,483,449			15,269,825			14,148,375
Short-term borrowings		2,085,220			1,894,895			1,542,796			1,659,174			3,083,688
Long-term debt		2,296,326			2,106,998			2,338,831			2,186,472			1,738,470
Other liabilities		138,113			164,381			128,430			98,454			87,279
Total liabilities		21,048,818			20,021,602			19,493,506			19,213,925			19,057,812
Total shareholders’ equity		1,962,015			1,946,936			1,932,691			1,902,855			1,924,863
Total Liabilities and Shareholders’ Equity	$	23,010,833		$	21,968,538		$	21,426,197		$	21,116,780		$	20,982,675
Common Shares Issued		156,013,266			155,788,685			155,602,747			155,550,888			155,336,221
Common Shares Outstanding		154,653,339			154,428,758			154,242,820			154,190,961			155,336,221

THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES

	Three Months Ended
AVERAGE VOLUME AND RATES (unaudited) (Dollars in thousands)	June 30, 2006						March 31, 2006						June 30, 2005
	Average Volume		Interest		Rate		Average Volume		Interest		Rate		Average Volume		Interest		Rate
Assets:
Loans, excluding mortgage warehouse loans, net of unearned income(2)	$	15,004,219	$	284,251	7.60	%	$	14,576,424	$	264,653	7.35	%	$	13,277,037	$	214,624	6.48	%
Mortgage warehouse loans		384,701		6,961	7.26	%		417,913		5,811	5.64	%		692,234		8,764	5.08	%
Loans held for sale(2)		1,224,542		20,678	6.77	%		1,124,866		18,006	6.49	%		628,435		8,073	5.13	%
Investment securities and securities available for sale(2)		2,948,540		37,147	5.04	%		2,901,936		36,205	4.99	%		3,776,556		43,223	4.58	%
Securities purchased under agreements to resell		586,707		9,865	6.74	%		606,062		9,477	6.34	%		351,950		4,109	4.68	%
Other interest-earning assets		71,067		858	4.84	%		76,871		840	4.43	%		92,806		690	2.98	%
Total interest-earning assets(1)		20,219,776	$	359,760	7.13	%		19,704,072	$	334,992	6.87	%		18,819,018	$	279,483	5.95	%
Nonearning assets(2)		1,770,629						1,813,076						1,750,284
Total assets	$	21,990,405					$	21,517,148					$	20,569,302
Liabilities and Shareholders’ Equity:
Interest-bearing non-time deposits	$	6,106,236	$	40,558	2.66	%	$	6,036,232	$	35,021	2.35	%	$	5,477,064	$	19,729	1.44	%
Time deposits(2)		6,574,853		70,320	4.29	%		6,525,529		64,947	4.04	%		5,000,161		39,469	3.17	%
Short-term borrowings		2,001,927		23,393	4.69	%		1,525,059		15,387	4.09	%		2,930,500		19,797	2.71	%
Long-term debt(2)		2,180,688		33,092	6.08	%		2,294,318		31,160	5.49	%		2,261,021		25,682	4.55	%
Total interest-bearing liabilities		16,863,704	$	167,363	3.98	%		16,381,138	$	146,515	3.62	%		15,668,746	$	104,677	2.68	%
Noninterest-bearing demand deposits		3,032,861						3,033,596						3,011,366
Other liabilities(2)		128,912						140,298						112,508
Total liabilities		20,025,477						19,555,032						18,792,620
Shareholders’ equity		1,964,928						1,962,116						1,776,682
Total liabilities and shareholders’ equity	$	21,990,405					$	21,517,148					$	20,569,302
Rate differential					3.15	%					3.25	%					3.27	%
Net yield on interest-earning assets			$	192,397	3.81	%			$	188,477	3.86	%			$	174,806	3.72	%

(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.

THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES

	Six Months Ended June 30,
AVERAGE VOLUME AND RATES (unaudited) (Dollars in thousands)	2006						2005
	Average Volume		Interest		Rate		Average Volume		Interest		Rate
Assets:
Loans, excluding mortgage warehouse loans, net of unearned income(2)	$	14,791,503	$	548,904	7.47	%	$	12,749,638	$	401,092	6.34	%
Mortgage warehouse loans		401,215		12,772	6.42	%		830,372		20,131	4.89	%
Loans held for sale(2)		1,174,980		38,684	6.64	%		673,876		17,604	5.21	%
Investment securities and securities available for sale(2)		2,925,367		73,352	5.02	%		3,808,279		86,978	4.57	%
Securities purchased under agreements to resell		596,331		19,342	6.54	%		305,689		6,809	4.49	%
Other interest-earning assets		73,953		1,698	4.63	%		82,395		1,133	2.77	%
Total interest-earning assets(1)		19,963,349	$	694,752	7.01	%		18,450,249	$	533,747	5.82	%
Nonearning assets(2)		1,791,735						1,636,454
Total assets	$	21,755,084					$	20,086,703
Liabilities and Shareholders’ Equity:
Interest bearing non-time deposits	$	6,071,428	$	75,579	2.51	%	$	5,343,236	$	34,057	1.29	%
Time deposits(2)		6,550,327		135,267	4.16	%		4,771,128		71,996	3.04	%
Short-term borrowings		1,764,810		38,780	4.43	%		3,094,162		38,444	2.51	%
Long-term debt(2)		2,237,189		64,252	5.78	%		2,286,832		51,086	4.50	%
Total interest-bearing liabilities		16,623,754	$	313,878	3.81	%		15,495,358	$	195,583	2.54	%
Noninterest-bearing demand deposits		3,033,227						2,828,851
Other liabilities(2)		134,573						115,370
Total liabilities		19,791,554						18,439,579
Shareholders’ equity		1,963,530						1,647,124
Total liabilities and shareholders’ equity	$	21,755,084					$	20,086,703
Rate differential					3.20	%					3.28	%
Net yield on interest-earning assets			$	380,874	3.84	%			$	338,164	3.68	%

(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.

THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES

OTHER INFORMATION (unaudited)

NONPERFORMING ASSETS (Dollars in thousands)	June 30, 2006			March 31, 2006			Dec 31, 2005			Sept 30, 2005			June 30, 2005
Nonaccrual loans	$	21,957		$	33,287		$	25,668		$	28,814		$	23,845
Restructured loans		137			145			155			164			173
Total nonperforming loans		22,094			33,432			25,823			28,978			24,018
Other real estate owned		5,208			3,633			6,108			5,747			4,245
Loans held for sale		—			—			—			1,225			1,225
Total nonperforming assets	$	27,302		$	37,065		$	31,931		$	35,950		$	29,488
Aggregate loans contractually past due 90 days for which interest is being accrued	$	8,608		$	8,384		$	10,283		$	7,042		$	6,720
Total charge-offs	$	17,669		$	13,136		$	27,206		$	22,714		$	17,523
Total recoveries		(6,465	)		(3,375	)		(7,995	)		(6,668	)		(5,210	)
Net charge-offs:
Year to date	$	11,204		$	9,761		$	19,211		$	16,046		$	12,313
Quarter to date	$	1,443		$	9,761		$	3,165		$	3,733		$	5,298
RATIOS
Period end:
Total nonperforming assets as a percent of net loans and other nonperforming assets		0.18	%		0.24	%		0.21	%		0.24	%		0.20	%
Allowance as a percent of nonperforming assets		649	%		468	%		536	%		468	%		563	%
Allowance as a percent of nonperforming loans		802	%		519	%		662	%		581	%		691	%
Net charge-offs as a percent of average net loans:
Quarter to date (annualized)		0.04	%		0.26	%		0.09	%		0.10	%		0.15	%
Year to date (annualized)		0.15	%		0.26	%		0.14	%		0.15	%		0.18	%

RECONCILIATION OF CERTAIN FINANCIAL MEASURES (Dollars in thousands)	2nd Qtr. 2006			2nd Qtr. 2005			Dollar Change		Percent Change		4th Qtr. 2005			Dollar Change		Annualized % Change
Average deposit growth:
Average total deposits	$	15,713,950		$	13,488,591		$	2,225,359	16.50	%	$	15,243,656		$	470,294	6.17	%
Excluding:
Brokered deposits		(649,427	)		(223,365	)						(902,359	)
Impact of acquisitions		—			441,854							—
Impact of branch sales		—			(504,999	)						(167,343	)
Average total deposits (as adjusted)	$	15,064,523		$	13,202,081		$	1,862,442	14.11	%	$	14,173,954		$	890,569	12.57	%
Average Florida deposit growth:
Average Florida deposits	$	9,199,293		$	7,558,410		$	1,640,883	21.71	%
Excluding:
Acquisitions		—			441,854
Average Florida deposits (as adjusted)	$	9,199,293		$	8,000,264		$	1,199,029	14.99	%

EX-99.2

1

The Best Things Come OUT OF THE BLUE

Second Quarter 2006

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 which result in prolonged business disruption or materially impair the

value of collateral securing loans;

•

management’s assumptions and estimates underlying critical accounting policies prove to be inadequate or materially

incorrect or are not borne out by subsequent events;

•

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 2Q06

•

EPS of $0.43, up 5% over $0.41 reported in 2Q05

•

EPS was in line with consensus

•

Net Income of $67 million, up 7% over 2Q05

Strong increase in Net Interest Income of 10%

Strong Linked Quarter Increase in Core Noninterest

Income of 8%

Strong Period End Loan Growth

1

of 10.5% annualized from the end of 2005

Excellent Credit Quality

•

Nonperforming Assets Ratio hit a new record low of 0.18%

•

Excellent annualized net charge off ratio of 0.04% for 2Q06 and 0.15% YTD

Outstanding Average Deposit Growth

2

of 14% over 2Q05 and 13% annualized

over 4Q05

Overview

1

Excluding Mortgage Warehouse Lending

2

Excluding acquisitions, sale of branches and brokered deposits

4

The Best Things Come OUT OF THE BLUE

FL

58%

Corp

9%

GA

6%

AL

17%

TX

6%

NV

4%

NV

14

TX

13

FL

162

GA

18

AL

92

FL

60%

AL

23%

TX

4%

GA

5%

NV

5%

Corp

3%

70%

1

of Colonial’s Deposits are in three of the four fastest growing states in the

U.S* -

Florida, Georgia and Nevada 

Branches, Assets and Deposits by State at 6/30/06 are as follows:

In the Right Places

299 Branches

$23 Billion in Assets

$17 Billion in Deposits

1

At 6/30/06

*Population change from 2000-2005

Source: US Census Bureau

5

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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.

6

The Best Things Come OUT OF THE BLUE

Florida, now the 4

th

most populous state in the U.S. with 17 million, is projected

to pass New York in total population by 2011*

6

th

largest commercial bank in Florida –

5

th

largest after AmSouth/Regions

merger

Florida at 6/30/06:

•

60% of Deposits in Florida –

Total Deposits of $9.9 Billion

•

58% of Assets in Florida –

Total Assets of $13.3 Billion

•

54% of Branches in Florida –

Total Branches –

162

Strong loan and deposit growth

•

Loans

1

grew 15% over June 30, 2005 and 13% annualized from 12/31/05

•

Average

deposit

growth,

excluding

acquisitions,

was

15%

for

2Q06

v.

2Q05

and

11% annualized over 4Q05

Aggressive De Novo Branching Strategy

•

Plan to open 7 branches in 2006 and 20 in 2007

•

7-10 additional branch locations secured for 2008

Florida Franchise

1

Excluding Mortgage Warehouse Lending

*Source: SNL Financial

Florida Franchise and Current Population

7 Planned Branches through 12/31/06

Current Branches

Current Population

2,500,000

500,000

100,000

Current Population

2,500,000

500,000

100,000

PANHANDLE

Assets = $400 Million

Deposits = $56 Million

2 Branches

CENTRAL FLORIDA

Assets = $3.5 Billion

Deposits = $3.1 Billion

60 Branches

MORTGAGE WHSE.

Assets = $2.9 Billion

Deposits = $1.0 Billion

SOUTH FLORIDA

Assets = $3.5 Billion

Deposits = $3.0 Billion

46 Branches

FLORIDA WEST COAST

Assets = $3.0 Billion

Deposits = $2.8 Billion

54 Branches

Planned Branches beyond 12/31/06

7

8

The Best Things Come OUT OF THE BLUE

$0.85

$1.06

$1.26

$1.16

$1.31

$1.52

$0.75

$0.41

$0.43

2001

2002

2003

2004

2005

YTD

6/30/05

YTD

6/30/06

2Q05

2Q06

$0.75

$1.55

$1.33

$1.20

$1.16

$1.06

$0.85

$0.38

$0.43

2001

2002

2003

2004

2005

YTD

6/30/05

YTD

6/30/06

2Q05

2Q06

(diluted)

Originally Reported*

As Restated

* As if restatement had not occurred

Earnings Per Share

11%

3% 

9%

17%

19%

(8)%

13%

16%

5%

13%

13%

13%

3 Year CAGR = 9%

2003 -

2005

9

The Best Things Come OUT OF THE BLUE

$422

$455

$495

$567

$174

$192

2001

2002

2003

2004

2005

2Q05

2Q06

$709

Net Interest Income

($ in millions)

8%

9%

15%

10%

25%

3 Year CAGR = 13%

2003 -

2005

68%

10

The Best Things Come OUT OF THE BLUE

$13,988

$10,862

$9,419

$8,734

$8,433

$13,489

$15,714

2001

2002

2003

2004

2005

2Q05

2Q06

Average Deposits

4%

8%

15%

1

Excluding acquisitions, sale of branches, and brokered deposits

14%¹

($ in millions)

16.5%

16%¹

29%

3 Year CAGR = 14%

2003 -

2005

86%

11

The Best Things Come OUT OF THE BLUE

3.36%

3.41%

3.45%

3.49%

3.53%

3.58%

3.64%

3.72%

3.78%

3.85%

3.86%

3.81%

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

1Q06

2Q06

Net Interest Margin

12

The Best Things Come OUT OF THE BLUE

Net Interest Income and Margin

($ in millions)

Tax

Equivalent

NII

NIM

1Q06

188.5

$       

3.86%

Increase Due to Asset Sensitivity

2.1

0.04%

Earning Asset Growth Spread

4.1

-0.01%

Deposit Pricing Competition & Mix Change

(3.1)

-0.06%

Treasury Transactions:

Security Transactions - 1Q06

0.7

0.01%

$200mm FHLB Advance at 1.84% Matured

(1.3)

-0.03%

Increase in Days

1.4

-

2Q06

192.4

$       

3.81%

Annualized Increase

8%

13

The Best Things Come OUT OF THE BLUE

Noninterest Income

($ in millions)

2Q06

1Q06

$ Change

% Change

Service charges

15.3

$     

14.2

$     

1.1

$       

8%

Financial planning services

3.7

3.1

0.6

19%

Electronic banking

4.3

4.1

0.2

5%

Mortgage banking

3.8

2.9

0.9

31%

Mortgage warehouse fees

6.0

6.3

(0.3)

-5%

Bank-owned life insurance

4.0

4.0

-

-

Other Retail Banking Fees

3.7

3.6

0.1

3%

Other income

4.1

2.2

1.9

86%

        Subtotal

44.9

40.4

4.5

11%

Goldleaf income (sold 1Q06)

-

1.2

(1.2)

-100%

        Core Noninterest Income

44.9

41.6

3.3

8%

Securities and derivatives gains (losses), net

-

4.2

(4.2)

-100%

Gain on sale of Goldleaf

-

2.8

(2.8)

-100%

        Total Noninterest Income

44.9

$     

48.6

$     

(3.7)

$      

-8%

Annualized Noninterest Income to Average Assets (1)

0.82%

0.78%

Noninterest Income to Total Revenue (1)

18.9%

18.1%

(1)   Core noninterest income was used in the calculation

14

The Best Things Come OUT OF THE BLUE

Noninterest Expense

($ in millions)

2Q06

1Q06

$ Change

% Change

Salaries and employee benefits

70.9

$      

68.8

$     

2.1

$       

3%

Occupancy expense of bank premises, net

16.4

15.5

0.9

6%

Furniture and equipment expense

11.9

11.4

0.5

4%

Professional services

4.9

4.4

0.5

11%

Amortization of intangibles

3.1

3.1

-

-

Advertising

3.1

2.9

0.2

7%

Communications

2.5

2.6

(0.1)

-4%

Electronic Banking Expense

1.4

1.3

0.1

8%

Operating Supplies

1.3

1.4

(0.1)

-7%

Other expense

15.7

14.5

1.2

8%

        Total Noninterest Expense

131.2

$    

125.9

$   

5.3

$       

4%

Efficiency Ratio (1)

55.31%

54.73%

Annualized Noninterest Expense to Average Assets

2.39%

2.34%

(1)   Core noninterest income was used in calculation, see components on Noninterest Income slide

15

The Best Things Come OUT OF THE BLUE

Excellent Credit Quality

Nonperforming Assets ratio hit a new record low of 0.18% at 6/30/06

Annualized Net Charge-Off Ratio was 0.04%

for the quarter and was

0.15% YTD

Provision exceeded net charge-offs in 2Q06 by $3.5 million

Past dues > 30 days were 0.41% of net loans, down from 0.53% at

3/31/06

Allowance for loan losses was 1.14%, or 649% of nonperforming

assets

16

The Best Things Come OUT OF THE BLUE

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%

0.18%

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

6/30/06

All FDIC Insured Commercial Banks

Colonial BancGroup

(as originally reported)

NPAs

Consistently Below Industry

17

The Best Things Come OUT OF THE BLUE

0.47%

0.51%

0.09%

0.19%

0.15%

0.14%

0.33%

0.13%

0.18%

0.04%

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

YTD

6/30/06

2Q06

All FDIC Insured Commercial Banks

Southern Regionals*

Colonial BancGroup

Net Charge-Offs/Average Loans

*Source: Sandler O’Neill & Partners

1

Annualized

1

1

18

The Best Things Come OUT OF THE BLUE

Second Quarter Summary

Record EPS of $0.43

No Unusual Transactions

Net interest income increased 10% over prior year 2Q

Fee based services increased 8% linked quarter

Excellent credit quality

Strong loan growth and good deposit growth

19

The Best Things Come OUT OF THE BLUE

Outlook for 2006

High single digit to low double digit loan growth and low double

digit

deposit growth are expected for the full year 2006

Expect full year net interest margin to be in line with or slightly above

full year 2005 margin of 3.75%

Excellent credit quality is expected to continue

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

estimate of $1.72

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. 

20

The Best Things Come OUT OF THE BLUE

$.68

$.61

$.58

$.56

$.52

$.48

$.44

$.38

$.34

$.30

$.27

$.22

$.15

$.16

$.17

$.18

$.20

$0

$0

$0

$0

$0

$1

$1

$1

'90

'91

'92

'93

'94

'95

'96

'97

'98

'99

'00

'01

'02

'03

'04

'05

'06

16 YEARS OF INCREASED DIVIDENDS 

Solid Dividend Growth

*Estimated

*

11%