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): October 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 September 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 Third Quarter Earnings.
99.2	Presentation materials to be used in connection with Colonial BancGroup’s conference call to be held on October 18, 2006.

This report 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 this report 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

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: October 18, 2006

4

EX-99.1

Exhibit 99.1

PRESS RELEASE

For more information contact:	October 18, 2006
Glenda Allred
(334) 240-5064

COLONIAL BANCGROUP ANNOUNCES

RECORD EPS OF $0.44, A 22% INCREASE

OVER THIRD QUARTER 2005

THIRD QUARTER HIGHLIGHTS:

• Record EPS of $0.44, up 22% over 3Q05

• Excellent credit quality – annualized net charge-offs of 0.06% in 3Q06; 0.12% YTD

• Record low nonperforming assets ratio of 0.10%

• Solid loan growth of 7.6%, annualized from December 31, 2005 – excluding mortgage warehouse lending

• Strong organic average deposit growth of 12%, annualized over 4Q05

• Retail banking revenues increased 23%, annualized over 2Q06

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 September 30, 2006 of $0.44 per diluted share, a 22% increase over the $0.36 per diluted share reported for the same period of the previous year. Net income for the quarter was $68 million, a 20% increase over the $56 million reported in the third quarter of 2005.

For the nine months ended September 30, 2006, Colonial reported record earnings per diluted share of $1.29, a 15% increase over the $1.12 reported in the same period of 2005.

1

“Colonial’s record earnings for the third quarter were driven by excellent credit quality, growth in revenue and solid expense control. Colonial’s nonperforming assets ratio hit a new record low of 0.10% at September 30, 2006,” said Mr. Lowder.

Annualized net charge-offs as a percentage of average loans were 0.06% for the quarter and 0.12% for the nine months ended September 30, 2006. Nonperforming assets were down $11.6 million, or 42%, from June 30, 2006 and $16.2 million, or 51%, from December 31, 2005. The allowance for loan losses remained at 1.14% of total loans at September 30, 2006.

“There is an evident decrease in loan demand from borrowers who meet our credit criteria. Therefore, loan growth may slow for a period of time. We will not sacrifice credit quality for the sake of growth, and consistent with our longstanding philosophy in economic slowdowns, it is important to note that the allowance for loan losses was 1120% of nonperforming assets,” said Mr. Lowder.

Period end loans, excluding mortgage warehouse lending, grew by $1 billion, or 7.3%, from September 30, 2005 and by 7.6%, annualized from December 31, 2005.

The mortgage warehouse lending division ended the quarter with assets under management of $4.2 billion. Colonial’s warehouse division continues to have strong customer demand; as such, Colonial securitized another $500 million of warehouse assets in the quarter bringing the total securitization to $2 billion at quarter end.

Average deposits, excluding brokered deposits and the fourth quarter 2005 branch sale, grew by $1.7 billion, or 12%, over the third quarter of 2005 and by 12%, annualized over the fourth quarter of 2005. “We continue to place a great deal of emphasis on growing low cost deposits through advertising and employee incentives; however, in the current interest rate environment, customers have a strong preference for higher rate certificates of deposit which accounted for most of the company’s deposit growth. Colonial’s retail banking results are improved across the board. Fees from retail banking activities are up 23% annualized over the second quarter,” said Mr. Lowder.

2

Colonial BancGroup operates 303 branches in Florida, Alabama, Georgia, Nevada and Texas with $22 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 October 18, 2006 at 3:00 PM/ET to discuss the earnings results for the third 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) 946-0720 or (719) 457-2645 (Toll International), (Leader: Glenda Allred).

A replay of the conference call will be available beginning at 6:00 PM/ET on October 18, 2006 and ending at midnight on October 25, 2006 by dialing (888) 203-1112 (Domestic Toll-Free) or (719) 457-0820 (Toll International). The passcode for both numbers is 1411546.

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 release or previously disclosed in BancGroup’s SEC reports (accessible on the SEC’s website at www.sec.gov or on BancGroup’s website at www.colonialbank.com), the following factors, among others, could cause actual results to differ materially from forward-looking statements and future results could differ materially from historical performance. These factors are not exclusive:

• deposit attrition, customer loss, or revenue loss in the ordinary course of business;

• increases in competitive pressure in the banking industry;

• 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;

3

• 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)	Sept 30, 2006		June 30, 2006		Sept 30, 2005		% Change Sept 30, ‘05 to ‘06
Total assets	$	22,413	$	23,011	$	21,117	6	%
Total loans, net:
Mortgage warehouse loans		283		372		527	-46	%
Loans, excluding mortgage warehouse loans		15,233		15,174		14,197	7	%
Securities available for sale and investment securities		2,960		2,866		2,970	0	%
Non-time deposits		9,039		9,777		8,949	1	%
Total deposits		15,795		16,529		15,270	3	%
Shareholders’ equity		2,024		1,962		1,903	6	%

	Three Months Ended						% Change Sept 30, ‘05 to ‘06		Nine Months Ended						% Change Sept 30, ‘05 to ‘06
Earnings Summary (In thousands, except per share amounts)	Sept 30, 2006			Sept 30, 2005					Sept 30, 2006			Sept 30, 2005
Net Income:
Net interest income	$	190,552		$	185,266		3	%	$	570,799		$	522,659		9	%
Provision for loan losses		1,450			6,007		-76	%		18,742			20,946		-11	%
Noninterest income excluding the following items:		45,806			46,398		-1	%		132,180			132,090		0	%
Securities and derivatives gains(losses), net		156			—		100	%		4,384			(4,642	)	-194	%
Change in fair value of derivatives		—			(7,072	)	-100	%		—			(5,382	)	-100	%
Gain on sale of branches		—			—		—			—			9,608		-100	%
Gain on sale of Goldleaf		—			—		—			2,829			—		100	%
Total noninterest income		45,962			39,326		17	%		139,393			131,674		6	%
Noninterest expense excluding the following items:		131,985			131,678		0	%		389,072			369,402		5	%
Merger related expenses		—			613		-100	%		—			3,822		-100	%
Net losses related to the early extinguishment of debt		—			1,673		-100	%		—			9,550		-100	%
Total noninterest expense		131,985			133,964		-1	%		389,072			382,774		2	%
Net Income	$	68,032		$	56,476		20	%	$	199,570		$	166,995		20	%
EARNINGS PER SHARE:
Net Income
Basic	$	0.44		$	0.37		19	%	$	1.30		$	1.13		15	%
Diluted	$	0.44		$	0.36		22	%	$	1.29		$	1.12		15	%
Average shares outstanding		153,813			153,721					153,968			147,450
Average diluted shares outstanding		154,954			155,510					155,217			149,171
KEY RATIOS:
Net interest margin		3.64	%		3.78	%	-4	%		3.77	%		3.72	%	1	%
Book value per share	$	13.21		$	12.34		7	%	$	13.21		$	12.34		7	%
Dividends paid per share	$	0.1700		$	0.1525		11	%	$	0.5100		$	0.4575		11	%

	Sept 30,		June 30,		Sept 30,
Asset Quality	2006		2006		2005
Allowance as a percent of net loans	1.14	%	1.14	%	1.14	%
Total nonperforming assets ratio	0.10	%	0.18	%	0.24	%
Allowance as a percent of nonperforming assets	1120	%	649	%	468	%
Net charge-offs ratio:
Quarter to date (annualized)	0.06	%	0.04	%	0.10	%
Year to date (annualized)	0.12	%	0.15	%	0.15	%

THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

	3rd Qtr. 2006			2nd Qtr. 2006			1st Qtr. 2006			4th Qtr. 2005			3rd Qtr. 2005			Nine Months Ended
Earnings Summary (Dollars in thousands, except per share amounts)																Sept 30, 2006			Sept 30, 2005
Net interest income	$	190,552		$	192,087		$	188,160		$	186,563		$	185,266		$	570,799		$	522,659
Provision for loan loss		1,450			4,950			12,342			5,892			6,007			18,742			20,946
Noninterest income:
Service charges on deposit accounts		16,642			15,332			14,213			14,518			15,325			46,187			43,784
Electronic banking		4,470			4,279			4,107			4,008			3,890			12,856			11,316
Other retail banking fees		3,618			3,754			3,521			3,286			3,571			10,893			10,736
Retail banking fees		24,730			23,365			21,841			21,812			22,786			69,936			65,836
Financial planning services		3,944			3,665			3,129			2,590			3,600			10,738			10,621
Mortgage banking		3,154			3,783			2,897			2,811			4,456			9,834			9,417
Mortgage warehouse fees		6,105			6,021			6,262			6,830			4,523			18,388			9,225
Bank-owned life insurance		4,242			3,976			3,939			3,461			3,621			12,157			10,481
Goldleaf income		—			—			1,171			2,672			2,750			1,171			7,491
Net cash settlement of swap derivatives		—			—			—			1,486			2,514			—			8,812
Other income		3,631			4,063			2,262			1,911			2,148			9,956			10,207
Core noninterest income		45,806			44,873			41,501			43,573			46,398			132,180			132,090
Securities and derivatives gains(losses), net		156			—			4,228			(20,012	)		—			4,384			(4,642	)
Change in fair value of swap derivatives		—			—			—			(6,671	)		(7,072	)		—			(5,382	)
Gain on sale of branches		—			—			—			27,412			—			—			9,608
Gain on sale of Goldleaf		—			—			2,829			—			—			2,829			—
Total noninterest income		45,962			44,873			48,558			44,302			39,326			139,393			131,674
Noninterest expense:
Salaries and employee benefits		72,472			70,915			68,793			66,616			70,204			212,180			196,097
Occupancy expense of bank premises, net		17,188			16,406			15,534			17,380			15,990			49,128			45,286
Furniture and equipment expense		12,333			11,907			11,392			11,760			11,456			35,632			31,893
Professional services		4,340			4,917			4,435			6,915			5,487			13,692			15,176
Amortization of intangibles		3,051			3,051			3,057			3,069			2,970			9,159			8,461
Advertising		2,278			3,103			2,887			3,714			3,591			8,268			8,513
Merger related expenses		—			—			—			374			613			—			3,822
Net losses related to the early extinguishment of debt		—			—			—			—			1,673			—			9,550
Other expense		20,323			20,927			19,763			22,653			21,980			61,013			63,976
Total noninterest expense		131,985			131,226			125,861			132,481			133,964			389,072			382,774
Income before tax		103,079			100,784			98,515			92,492			84,621			302,378			250,613
Income tax		35,047			34,266			33,495			30,985			28,145			102,808			83,618
Net Income	$	68,032		$	66,518		$	65,020		$	61,507		$	56,476		$	199,570		$	166,995
Earnings per share - Diluted	$	0.44		$	0.43		$	0.42		$	0.40		$	0.36		$	1.29		$	1.12
Selected ratios
Return on average assets*		1.19	%		1.21	%		1.23	%		1.16	%		1.05	%		1.21	%		1.09	%
Return on average equity*		13.51	%		13.58	%		13.44	%		12.75	%		11.77	%		13.51	%		12.88	%
Efficiency ratio(1)		55.77	%		55.31	%		54.73	%		57.48	%		57.02	%		55.27	%		56.90	%
Noninterest income(1)/ avg assets*		0.80	%		0.82	%		0.78	%		0.82	%		0.86	%		0.80	%		0.86	%
Noninterest expense(1)/ avg assets*		2.33	%		2.39	%		2.34	%		2.51	%		2.47	%		2.35	%		2.42	%
Net interest margin		3.64	%		3.81	%		3.86	%		3.85	%		3.78	%		3.77	%		3.72	%
Equity to assets		9.03	%		8.53	%		8.86	%		9.02	%		9.01	%
Tier one leverage		7.65	%		7.90	%		7.88	%		7.77	%		7.26	%
Tangible capital ratio		6.20	%		5.74	%		5.94	%		5.97	%		5.78	%

(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)	Sept 30, 2006			June 30, 2006			Mar 31, 2006			Dec 31, 2005			Sept 30, 2005
Assets:
Cash and due from banks	$	371,898		$	393,945		$	449,556		$	429,549		$	425,121
Interest bearing deposits in banks, federal funds sold		84,484			168,696			32,092			69,042			110,407
Securities purchased under agreements to resell		593,572			609,262			578,743			589,902			607,409
Securities available for sale and investment securities		2,960,443			2,866,380			2,869,169			2,844,354			2,969,998
Loans held for sale		1,322,318			1,873,025			1,227,520			1,097,892			799,970
Total loans, net:
Mortgage warehouse loans		282,985			371,787			436,248			483,701			526,967
Loans, excluding mortgage warehouse loans		15,232,710			15,174,136			14,845,657			14,416,163			14,196,682
Less: Allowance for loan losses		(176,117	)		(177,139	)		(173,632	)		(171,051	)		(168,324	)
Loans, net		15,339,578			15,368,784			15,108,273			14,728,813			14,555,325
Premises and equipment, net		372,980			356,619			348,023			340,201			304,894
Intangible assets, net		677,383			680,477			683,234			695,012			723,425
Bank-owned life insurance		354,004			350,998			348,325			345,842			342,380
Accrued interest and other assets		335,903			342,647			323,603			285,590			277,851
Total Assets	$	22,412,563		$	23,010,833		$	21,968,538		$	21,426,197		$	21,116,780
Liabilities and Shareholders’ Equity:
Noninterest bearing transaction accounts	$	2,849,718		$	3,639,310		$	3,107,338		$	3,167,875		$	3,166,273
Interest bearing transaction accounts		6,188,859			6,137,708			6,187,503			5,845,068			5,782,269
Total non-time deposits		9,038,577			9,777,018			9,294,841			9,012,943			8,948,542
Time deposits		6,473,436			6,263,428			5,871,746			5,661,715			5,412,399
Brokered time deposits		283,199			488,713			688,741			808,791			908,884
Total deposits		15,795,212			16,529,159			15,855,328			15,483,449			15,269,825
Repurchase agreements		882,561			948,327			938,170			868,871			949,074
Federal funds purchased and other short-term borrowings		1,285,000			1,136,893			956,725			673,925			710,100
Long-term debt		2,278,391			2,296,326			2,106,998			2,338,831			2,186,472
Other liabilities		147,298			138,113			164,381			128,430			98,454
Total liabilities		20,388,462			21,048,818			20,021,602			19,493,506			19,213,925
Total shareholders’ equity		2,024,101			1,962,015			1,946,936			1,932,691			1,902,855
Total Liabilities and Shareholders’ Equity	$	22,412,563		$	23,010,833		$	21,968,538		$	21,426,197		$	21,116,780
Common Shares Issued		156,196,005			156,013,266			155,788,685			155,602,747			155,550,888
Common Shares Outstanding		153,265,378			154,653,339			154,428,758			154,242,820			154,190,961

THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES

	Three Months Ended
AVERAGE VOLUME AND RATES (unaudited) (Dollars in thousands)	September 30, 2006						June 30, 2006						September 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)	$	15,166,655	$	296,335	7.76	%	$	15,004,219	$	284,251	7.60	%	$	13,912,490	$	238,123	6.80	%
Mortgage warehouse loans		338,819		6,105	7.15	%		384,701		6,961	7.26	%		758,549		10,919	5.71	%
Loans held for sale (2)		1,679,498		28,847	6.81	%		1,224,542		20,678	6.77	%		1,011,722		14,410	5.65	%
Investment securities and securities available for sale (2)		3,034,885		38,928	5.13	%		2,948,540		37,147	5.04	%		3,035,280		34,589	4.56	%
Securities purchased under agreements to resell		584,823		10,346	7.02	%		586,707		9,865	6.74	%		721,077		9,388	5.17	%
Other interest earning assets		80,852		1,041	5.11	%		71,067		858	4.84	%		120,054		1,067	3.53	%
Total interest earning assets (1)		20,885,532	$	381,602	7.26	%		20,219,776	$	359,760	7.13	%		19,559,172	$	308,496	6.27	%
Nonearning assets (2)		1,805,836						1,770,629						1,856,972
Total assets	$	22,691,368					$	21,990,405					$	21,416,144
Liabilities and Shareholders’ Equity:
Interest bearing non-time deposits	$	6,135,539	$	46,922	3.03	%	$	6,106,236	$	40,558	2.66	%	$	5,801,845	$	25,747	1.76	%
Time deposits (2)		6,837,604		78,424	4.55	%		6,574,853		70,320	4.29	%		5,881,314		51,220	3.46	%
Repurchase agreements		849,080		9,816	4.59	%		893,915		9,568	4.29	%		911,664		5,853	2.55	%
Federal funds purchased and other short-term borrowings		1,509,855		20,338	5.34	%		1,108,012		13,825	5.00	%		1,857,490		16,506	3.53	%
Long-term debt (2)		2,294,281		35,255	6.11	%		2,180,688		33,092	6.08	%		1,834,780		23,546	5.10	%
Total interest bearing liabilities		17,626,359	$	190,755	4.30	%		16,863,704	$	167,363	3.98	%		16,287,093	$	122,872	2.99	%
Noninterest bearing demand deposits		2,926,347						3,032,861						3,102,800
Other liabilities (2)		140,766						128,912						122,674
Total liabilities		20,693,472						20,025,477						19,512,567
Shareholders’ equity		1,997,896						1,964,928						1,903,577
Total liabilities and shareholders’ equity	$	22,691,368					$	21,990,405					$	21,416,144
Rate differential					2.96	%					3.15	%					3.28	%
Net yield on interest-earning assets			$	190,847	3.64	%			$	192,397	3.81	%			$	185,624	3.78	%

(1) Interest earned and average rates on securities and loans exempt from income taxes are reflected on a fully tax equivalent basis using a federal income tax rate of 35%, net of nondeductible interest expense.

(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

	Nine Months Ended September 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)	$	14,917,928	$	845,239	7.57	%	$	13,141,515	$	639,215	6.50	%
Mortgage warehouse loans		380,188		18,877	6.64	%		806,168		31,050	5.15	%
Loans held for sale (2)		1,345,000		67,531	6.71	%		787,729		32,014	5.43	%
Investment securities and securities available for sale (2)		2,962,274		112,280	5.05	%		3,547,781		121,567	4.57	%
Securities purchased under agreements to resell		592,453		29,688	6.70	%		445,673		16,198	4.86	%
Other interest earning assets		76,278		2,739	4.80	%		95,086		2,199	3.09	%
Total interest earning assets (1)		20,274,121	$	1,076,354	7.09	%		18,823,952	$	842,243	5.98	%
Nonearning assets (2)		1,796,488						1,710,767
Total assets	$	22,070,609					$	20,534,719
Liabilities and Shareholders’ Equity:
Interest bearing non-time deposits	$	6,093,033	$	122,501	2.69	%	$	5,497,785	$	59,804	1.45	%
Time deposits (2)		6,647,138		213,691	4.30	%		5,145,257		123,216	3.20	%
Repurchase agreements		872,460		27,501	4.21	%		871,832		13,289	2.04	%
Federal funds purchased and other short-term borrowings		1,092,568		41,433	5.07	%		2,112,803		47,514	3.01	%
Long-term debt (2)		2,256,429		99,507	5.89	%		2,134,492		74,632	4.67	%
Total interest bearing liabilities		16,961,628	$	504,633	3.98	%		15,762,169	$	318,455	2.70	%
Noninterest bearing demand deposits		2,997,209						2,921,170
Other liabilities (2)		136,661						117,832
Total liabilities		20,095,498						18,801,171
Shareholders’ equity		1,975,111						1,733,548
Total liabilities and shareholders’ equity	$	22,070,609					$	20,534,719
Rate differential					3.11	%					3.28	%
Net yield on interest-earning assets			$	571,721	3.77	%			$	523,788	3.72	%

(1) Interest earned and average rates on securities and loans exempt from income taxes are reflected on a fully tax equivalent basis using a federal income tax rate of 35%, net of nondeductible interest expense.

(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

NONPERFORMING ASSETS (unaudited)

NONPERFORMING ASSETS (Dollars in thousands)	Sept 30, 2006			June 30, 2006			March 31, 2006			Dec 31, 2005			Sept 30, 2005
Nonaccrual loans	$	12,765		$	21,957		$	33,287		$	25,668		$	28,814
Restructured loans		128			137			145			155			164
Total nonperforming loans		12,893			22,094			33,432			25,823			28,978
Other real estate owned		2,826			5,208			3,633			6,108			5,747
Loans held for sale		—			—			—			—			1,225
Total nonperforming assets	$	15,719		$	27,302		$	37,065		$	31,931		$	35,950
Aggregate loans contractually past due 90 days for which interest is being accrued	$	6,875		$	8,608		$	8,384		$	10,283		$	7,042
Total charge-offs	$	24,479		$	17,669		$	13,136		$	27,206		$	22,714
Total recoveries		(10,803	)		(6,465	)		(3,375	)		(7,995	)		(6,668	)
Net charge-offs:
Year to date	$	13,676		$	11,204		$	9,761		$	19,211		$	16,046
Quarter to date	$	2,472		$	1,443		$	9,761		$	3,165		$	3,733
RATIOS
Period end:
Total nonperforming assets as a percent of net loans and other nonperforming assets		0.10	%		0.18	%		0.24	%		0.21	%		0.24	%
Allowance as a percent of nonperforming assets		1120	%		649	%		468	%		536	%		468	%
Allowance as a percent of nonperforming loans		1366	%		802	%		519	%		662	%		581	%
Net charge-offs as a percent of average net loans:
Quarter to date (annualized)		0.06	%		0.04	%		0.26	%		0.09	%		0.10	%
Year to date (annualized)		0.12	%		0.15	%		0.26	%		0.14	%		0.15	%

RECONCILIATION OF CERTAIN FINANCIAL MEASURES (Dollars in thousands)	3rd Qtr. 2006			2nd Qtr. 2006			Annualized % Change		4th Qtr. 2005			Annualized % Change		3rd Qtr. 2005			% Change
Average deposit growth:
Average total deposits	$	15,899,490		$	15,713,950		5	%	$	15,243,656		6	%	$	14,785,959		8	%
Excluding:
Brokered deposits		(438,385	)		(649,427	)				(902,359	)				(626,974	)
Impact of branch sale		—			—					(167,343	)				(375,501	)
Average total deposits as adjusted	$	15,461,105		$	15,064,523		11	%	$	14,173,954		12	%	$	13,783,484		12	%

	Sept. 30, 2006
Mortgage warehouse assets under management:
Securities purchased under agreements to resell	$	593,572
Loans held for sale		1,276,680
Mortgage warehouse loans		282,985
Total mortgage warehouse assets on balance sheet		2,153,237
Securitization of mortgage warehouse assets		2,000,000
Total mortgage warehouse assets under management	$	4,153,237

EX-99.2

1

The Best Things Come OUT OF THE BLUE

Third 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 EPS of $0.44, up 22% over 3Q05

Excellent credit quality –

annualized net charge-offs of 0.06% in 3Q06;

0.12% YTD

New record low nonperforming assets ratio of 0.10%

Solid loan growth of 7.6% annualized from December 31, 2005 –

excluding mortgage warehouse lending

Strong organic average deposit growth of 12% , annualized over 4Q05

Retail banking revenues increased 23%, annualized over 2Q06

Overview

1

Excluding brokered deposits and 4Q05 branch sale

1

4

The Best Things Come OUT OF THE BLUE

69%

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 9/30/06 are as follows:

In the Right Places

$22 Billion in Assets

$16 Billion in Deposits

1

At 9/30/06

*Population change from 2000-2005

Source: US Census Bureau

FL

59%

AL

24%

TX

4%

GA

5%

NV

5%

Corp

3%

303 Branches

FL

56%

Corp

10%

GA

6%

AL

18%

TX

6%

NV

4%

NV

15

TX

13

FL

165

GA

18

AL

92

5

The Best Things Come OUT OF THE BLUE

Superior Projected Population Growth

2006 - 2011 Population Growth

Colonial BancGroup, Inc.

11.94

%

SunTrust Banks, Inc.

10.24

South Financial Group, Inc.

9.83

Compass Bancshares, Inc.

9.72

Synovus Financial Corp.

8.78

Wachovia Corporation

8.60

BB&T Corporation

7.72

Whitney Holding Corporation

7.07

Bank of America Corporation

6.68

Regions Financial Corporation

6.49

Trustmark Corporation

5.59

BancorpSouth, Inc.

4.78

First Horizon National Corporation

4.23

Fifth Third Bancorp

4.20

Median

7.39

%

Low

4.20

High

11.94

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

projected to pass New York in total population by 2011*

5   largest commercial bank in Florida

Florida at 9/30/06:

•

59% of Deposits in Florida –

Total Deposits of $9.3 Billion

•

56% of Assets in Florida –

Total Assets of $12.6 Billion

•

54% of Branches in Florida –

Total Branches –

165

Strong loan and deposit growth

•

Loans grew 11%  annualized from 12/31/05

•

Average deposit growth was 12% for 3Q06 vs. 3Q05 and 11% annualized over

4Q05

Aggressive De Novo Branching Strategy

•

Plan to open 3 branches in 4Q06 and 15-25 over the next two years

Florida Franchise

*Source: SNL Financial

1

Excluding Mortgage Warehouse Lending

th

th

1

Florida Franchise and Current Population

3 Planned Branches in 4Q06

Current Branches

Current Population

2,500,000

500,000

100,000

Current Population

2,500,000

500,000

100,000

PANHANDLE

Assets = $386 Million

Deposits = $52 Million

2 Branches

CENTRAL

FLORIDA

Assets = $3.5 Billion

Deposits = $3.1 Billion

59 Branches

MORTGAGE

WHSE.

Assets = $2.3 Billion

Deposits = $479 Million

SOUTH FLORIDA

Assets = $3.3 Billion

Deposits = $2.9 Billion

48 Branches

FLORIDA

WEST

COAST

Assets = $3.0 Billion

Deposits = $2.7 Billion

56 Branches

Planned Branches beyond 12/31/06

7

8

The Best Things Come OUT OF THE BLUE

$0.36

$0.44

3Q05

3Q06

$1.06

$1.26

$1.16

$1.31

$1.52

$1.12

$1.29

2001

2002

2003

2004

2005

YTD

9/30/05

YTD

9/30/06

(diluted)

Consistent Earnings Per Share Growth

5 Year CAGR = 9%

2000 -

2005

19%

(8)%

13%

16%

15%

22%

9

The Best Things Come OUT OF THE BLUE

$422

$455

$495

$567

$571

$185

$191

$523

2001

2002

2003

2004

2005

YTD

9/30/05

YTD

9/30/06

3Q05

3Q06

$709

Net Interest Income

($ in millions)

8%

9%

15%

3%

25%

3 Year CAGR = 16%

2002 -

2005

68%

9%

3.57%     3.55%     3.38%     3.52%     3.75%     3.72%    3.77%

3.78%    3.64%

Net Interest

Margin

10

The Best Things Come OUT OF THE BLUE

Net Interest Income and Margin

($ in millions)

Tax

Equivalent

NII

NIM

2Q06

192.4

$       

3.81%

Increase Due to Asset Sensitivity

1.8

0.03%

Earning Asset Growth Spread

3.1

-0.07%

Spread Compression on MWL Assets (-0.03%)

(2.2)

-0.01%

Deposit Mix Change & Pricing Increase

(5.3)

-0.11%

Other

(0.4)

-0.01%

Increase in Days

1.4

-

3Q06

190.8

$       

3.64%

       Net of Additional Securitization (+0.02%)

11

The Best Things Come OUT OF THE BLUE

$15,737

$13,564

$13,988

$10,862

$9,419

$8,734

$8,433

$14,786

$15,244

$15,899

2001

2002

2003

2004

2005

3Q05

4Q05

3Q06

YTD

9/30/05

YTD

9/30/06

Average Deposits

4%

8%

15%

1

Excluding acquisitions, sale of branches, and brokered deposits

*Annualized

($ in millions)

8%

29%

3 Year CAGR = 17%

2002 -

2005

89%

16%

6%*

12%

*

1

16%

1

12%

1

14%

1

12

The Best Things Come OUT OF THE BLUE

Noninterest Income

($ in millions)

3Q06

2Q06

3Q05

2Q06

3Q05

Service charges on deposit accounts

16.6

$     

15.3

$     

15.3

$     

8%

8%

Electronic banking

4.5

4.3

3.9

5%

15%

Other retail banking fees

3.6

3.7

3.6

-3%

-

        Retail Banking Fees

24.7

23.3

22.8

6%

8%

Financial planning services

3.9

3.7

3.6

5%

8%

Mortgage banking

3.2

3.8

4.5

-16%

-29%

Mortgage warehouse fees

6.1

6.0

4.5

2%

36%

Bank-owned life insurance

4.2

4.0

3.6

5%

17%

Goldleaf income

-

-

2.8

-

-100%

Net cash settlement of swap derivatives

-

-

2.5

-

-100%

Other income

3.7

4.1

2.1

-10%

76%

        Core Noninterest Income

45.8

44.9

46.4

2%

-1%

Securities and derivatives gains, net

0.2

-

-

100%

100%

Change in fair value of derivatives

-

-

(7.1)

-

-100%

        Total Noninterest Income

46.0

$     

44.9

$     

39.3

$     

2%

17%

Annualized Noninterest Income to Average Assets (1)

0.80%

0.82%

0.86%

Noninterest Income to Total Revenue (1)

19.4%

18.9%

20.0%

(1) Core noninterest income was used in the calculation

% Change

13

The Best Things Come OUT OF THE BLUE

Noninterest Expense

($ in millions)

3Q06

2Q06

3Q05

2Q06

3Q05

Salaries and employee benefits

72.5

$     

70.9

$     

70.2

$     

2%

3%

Occupancy expense of bank premises, net

17.2

16.4

16.0

5%

8%

Furniture and equipment expense

12.3

11.9

11.5

3%

7%

Professional services

4.3

4.9

5.5

-12%

-22%

Amortization of intangibles

3.1

3.1

3.0

-

3%

Advertising

2.3

3.1

3.6

-26%

-36%

Communications

2.8

2.5

2.6

12%

8%

Electronic banking expense

1.6

1.4

1.3

14%

23%

Merger related expenses

-

-

0.6

-

-100%

Operating supplies

1.2

1.3

1.3

-8%

-8%

Other expense

14.7

15.7

16.7

-6%

-12%

     Subtotal

132.0

131.2

132.3

1%

-

Net losses related to extinguishment of debt

-

-

1.7

-

-100%

     Total Noninterest Expense

132.0

$   

131.2

$   

134.0

$   

1%

-1%

Efficiency Ratio (1)

55.77%

55.31%

57.02%

Annualized Noninterest Expense to Average Assets

2.33%

2.39%

2.47%

        the calculation, see components of core noninterest income on Noninterest Income slide

% Change

(1)   Core noninterest income and noninterest expense excluding net losses related to the early extinguishment of debt were used in

14

The Best Things Come OUT OF THE BLUE

Excellent Credit Quality

Nonperforming Assets ratio hit a new record low of 0.10% at 9/30/06

•

Nonperforming Assets were $15.7 million at 9/30/06 down $11.6 million, or 42%,

from 6/30/06 and down $16.2 million, or 51%, from 12/31/05

Annualized Net Charge-Off Ratio was 0.06%

for the quarter and was

0.12% YTD

YTD provision exceeded YTD Net Charge-Offs by $5 million

Allowance for loan losses was 1.14% of total loans

15

The Best Things Come OUT OF THE BLUE

Summary

Record diluted EPS of $0.44, up 22% over 3Q05

Excellent credit quality

Solid loan growth

Strong organic average deposit growth

Retail banking revenues increased 23%, annualized over 2Q06

16

The Best Things Come OUT OF THE BLUE

Outlook for 2006

Diluted earnings per share are expected to be $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. 

17

The Best Things Come OUT OF THE BLUE

16 YEARS OF INCREASED DIVIDENDS 

Solid Dividend Growth

*Estimated

*

11%

$.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

18

The Best Things Come OUT OF THE BLUE

Supplemental Information

19

The Best Things Come OUT OF THE BLUE

Summary Income Statement

($ in thousands)

3Q06

2Q06

3Q05

2Q06

3Q05

Net interest income

190,552

$

192,087

$

185,266

$

-1%

3%

Core noninterest

income

45,806

44,873

46,398

2%

-1%

Total Revenue

236,358

236,960

231,664

-

2%

Provision for loan losses

1,450

4,950

6,007

-71%

-76%

Securities and derivatives gains, net

156

-

-

100%

100%

Change in fair value of derivatives

-

-

(7,072)

-

-100%

Net losses related to the early extinguishment of debt

-

-

(1,673)

-

-100%

Noninterest

expense

131,985

131,226

132,291

1%

-

Pretax Income

103,079

100,784

84,621

2%

22%

Income tax expense

35,047

34,266

28,145

2%

25%

Net Income

68,032

$  

66,518

$  

56,476

$  

2%

20%

Earnings Per Share -

Diluted

0.44

$      

0.43

$      

0.36

$      

2%

22%

Weighted Average Shares Outstanding -

Diluted

154,954

155,396

155,510

-

-

% Change

20

The Best Things Come OUT OF THE BLUE

Average Balance Sheet

($ in millions)

3Q06

2Q06

3Q05

2Q06*

3Q05

Earning Assets

20,886

$

20,220

$

19,559

$

13%

7%

Loans, excluding MWL

15,167

15,004

13,912

4%

9%

MWL Assets (1)

2,614

2,204

2,433

74%

7%

MWL Managed Assets (2)

4,332

3,704

3,444

68%

26%

Securities

3,035

2,949

3,035

12%

-

Total Assets

22,691

21,990

21,416

13%

6%

Assets Under Management

24,408

23,490

22,427

16%

9%

Total Deposits

15,899

15,714

14,786

5%

8%

Noninterest Bearing Deposits

2,926

3,033

3,103

-14%

-6%

Interest Bearing Transaction Accounts

6,136

6,106

5,802

2%

6%

Time Deposits

6,838

6,575

5,881

16%

16%

Shareholders' Equity

1,998

1,965

1,904

7%

5%

* Annualized

(1) Includes loans, loans held for sale and securities purchased under agreements to resell

(2) Includes MWL assets and assets securitized

% Change

21

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%

0.10%

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

9/30/06

All FDIC Insured Commercial Banks

Colonial BancGroup

(as originally reported)

NPAs

Consistently Below Industry

22

The Best Things Come OUT OF THE BLUE

0.47%

0.49%

0.09%

0.19%

0.12%

0.14%

0.33%

0.13%

0.18%

0.06%

0.23%

0.26%

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

9/30/06

3Q06

All FDIC Insured Commercial Banks

Southern Regionals*

Colonial BancGroup

Net Charge-Offs/Average Loans

*Source: KBW

1

Annualized

1

1

(as originally reported)