UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MARCH 31, 2002 COMMISSION FILE NUMBER 1-13508
THE COLONIAL BANCGROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 63-0661573
-------------------------------------- -------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One Commerce Street
Montgomery, Alabama 36104
------------------------------------------
(Address of principle executive offices)
(334) 240-5000
-----------------------------------
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to the filing requirements for
at least the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Class Outstanding at April 30, 2002
-------------------------------------- -------------------------------------
Common Stock, $2.50 Par Value 120,166,673
THE COLONIAL BANCGROUP, INC.
INDEX
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Condition - March 31, 2002, December 31, 2001 and March 31, 2001 4
Consolidated Statements of Income - Three months ended March 31, 2002 and March 31, 2001 5
Consolidated Statements of Comprehensive Income - Three months ended March 31, 2002 and March 31, 2001 6
Consolidated Statements of Cash Flows - Three months ended March 31, 2002 and March 31, 2001 7-8
Notes to Consolidated Financial Statements - March 31, 2002 9
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 28
Item 6. Exhibits and Reports on Form 8-K 28
SIGNATURES 29
2
CAUTIONARY STATEMENT PURSUANT TO SAFE HARBOR PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995:
This report contains "forward-looking statements" within the meaning of the
federal securities laws. 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. Factors that
may cause actual results to differ materially from those contemplated by such
forward-looking statements include, among other things, the following
possibilities: (i) an inability of the company to realize elements of its
strategic plans for 2002 and beyond; (ii) increases in competitive pressure in
the banking industry; (iii) general economic conditions, either nationally or
regionally, that are less favorable than expected; and (iv) changes which may
occur in the regulatory environment. When used in this report, the words
"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. Forward-looking statements speak only as to
the date they are made. BancGroup does not undertake to update forward-looking
statements to reflect circumstances or events that occur after the date the
forward-looking statements are made.
3
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION
(Unaudited)
(Dollars in thousands, except per share amounts)
March 31, December 31, March 31,
2002 2001 2001
----------------------------------------
ASSETS:
Cash and due from banks $ 288,950 $ 373,024 $ 297,308
Interest-bearing deposits in banks and federal funds sold 25,312 15,084 25,497
Securities available for sale 1,977,148 1,852,439 1,479,945
Investment securities 27,519 30,055 43,937
Mortgage loans held for sale 23,653 35,453 20,811
Loans, net of unearned income 10,236,272 10,367,665 10,114,964
Less: Allowance for loan losses (128,782) (122,200) (116,532)
----------------------------------------
Loans, net 10,107,490 10,245,465 9,998,432
Premises and equipment, net 226,870 198,983 191,901
Intangible assets, net 190,912 113,898 93,529
Other real estate owned 21,408 15,553 9,768
Accrued interest and other assets 295,032 305,149 278,605
----------------------------------------
TOTAL ASSETS: $13,184,294 $13,185,103 $12,439,733
========================================
LIABILITIES AND SHAREHOLDERS EQUITY:
Deposits $ 8,598,167 $ 8,322,979 $ 8,486,991
Short term borrowings 1,644,251 2,128,133 1,913,653
Subordinated debt 264,925 265,550 111,865
Trust preferred securities 176,866 70,000 73,000
FHLB long term debt 1,396,521 1,361,938 833,782
Other long term debt 57,013 88,652 103,368
Other liabilities 95,565 83,077 108,807
----------------------------------------
Total liabilities 12,233,308 12,320,329 11,631,466
----------------------------------------
SHAREHOLDERS' EQUITY:
Common Stock, $2.50 par value; 200,000,000 shares
authorized; 120,105,813, 115,244,185, and 113,071,817
shares issued at March 31, 2002, December 31, 2001, and
March 31, 2001, respectively 300,265 288,110 286,648
Treasury stock (2,419,251 at March 31, 2001) -- -- (22,973)
Additional paid in capital 162,684 102,980 124,504
Retained earnings 486,359 467,163 415,801
Unearned compensation (3,557) (3,159) (4,923)
Accumulated other comprehensive income, net of taxes 5,235 9,680 9,210
----------------------------------------
Total shareholders' equity 950,986 864,774 808,267
----------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $13,184,294 $13,185,103 $12,439,733
========================================
See Notes to the Unaudited Condensed Consolidated Financial Statements
4
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except per share amounts)
Three Months Ended
March 31,
--------------------
2002 2001
-------- --------
INTEREST INCOME:
Interest and fees on loans $162,849 $213,477
Interest and dividends on securities 26,725 25,891
Other interest 222 936
-------- --------
Total interest income 189,796 240,304
-------- --------
INTEREST EXPENSE:
Interest on deposits 48,347 95,526
Interest on short-term borrowings 7,714 23,450
Interest on long-term debt 24,079 18,725
-------- --------
Total interest expense 80,140 137,701
-------- --------
NET INTEREST INCOME 109,656 102,603
Provision for loan losses 9,478 9,464
-------- --------
Net Interest Income After Provision for Loan Losses 100,178 93,139
-------- --------
NONINTEREST INCOME:
Service charges on deposit accounts 10,603 9,497
Wealth management 2,660 2,242
Electronic banking 1,873 1,555
Mortgage origination 2,155 1,456
Securities gains (losses), net (1) 1,189
Other income 5,637 4,902
-------- --------
Total noninterest income 22,927 20,841
-------- --------
NONINTEREST EXPENSE:
Salaries and employee benefits 37,367 34,921
Occupancy expense of bank premises, net 9,350 8,301
Furniture and equipment expenses 7,122 7,322
Amortization of intangible assets 162 1,640
Other expenses 16,506 16,178
-------- --------
Total noninterest expense 70,507 68,362
-------- --------
INCOME BEFORE INCOME TAXES 52,598 45,618
Applicable income taxes 18,420 16,422
-------- --------
NET INCOME $ 34,178 $ 29,196
======== ========
EARNINGS PER SHARE:
NET INCOME
Basic $ 0.30 $ 0.26
Diluted $ 0.29 $ 0.25
See Notes to the Unaudited Condensed Consolidated Financial Statements
5
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(Dollars in thousands, except per share amounts)
Three Months Ended
March 31,
------------------
2002 2001
------- -------
NET INCOME $34,178 $29,196
OTHER COMPREHENSIVE INCOME, NET OF TAXES:
Unrealized (losses) gains on securities available for sale
arising during the period, net of taxes (4,446) 15,778
Less: reclassification adjustment for net losses (gains)
included in net income 1 (761)
------- -------
COMPREHENSIVE INCOME $29,733 $44,213
======= =======
See Notes to the Unaudited Condensed Consolidated Financial Statements
6
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
(Dollars in thousands, except per share amounts)
Three Months Ended
March 31,
----------------------
2002 2001
----------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 64,104 $ 32,382
----------------------
Cash flows from investing activities:
Proceeds from maturities and calls of securities available for sale 162,304 109,443
Proceeds from sales of securities available for sale 4,010 26,968
Purchase of securities available for sale (257,313) (121,806)
Proceeds from maturities of investment securities 2,542 2,911
Net decrease (increase) in loans 397,493 (427,995)
Cash received in bank acquisitions 13,091 33,298
Capital expenditures (23,375) (5,151)
Proceeds from sale of other real estate owned 3,921 1,829
Other, net 657 24
----------------------
NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES 303,330 (380,479)
----------------------
Cash flows from financing activities:
Net (decrease) increase in demand, savings, and time deposits (27,279) 27,226
Net (decrease) increase in federal funds purchased,
repurchase agreements and other short-term borrowings (486,554) 146,093
Proceeds from issuance of long-term debt
93,096 259,994
Repayment of long-term debt (105,110) (130,189)
Proceeds from issuance of trust preferred securities 100,000 --
Proceeds from issuance of common stock 826 3,464
Dividends paid ($0.13 and $0.12 per share for
2002 and 2001, respectively) (16,259) (13,242)
----------------------
NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES (441,280) 293,346
----------------------
Net decrease in cash and cash equivalents (73,846) (54,751)
Cash and cash equivalents at beginning of year 388,108 377,556
----------------------
Cash and cash equivalents at March 31, $ 314,262 $ 322,805
======================
See Notes to the Unaudited Condensed Consolidated Financial Statements
7
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
(Dollars in thousands, except per share amounts)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Three Months Ended
March 31,
--------------------
2002 2001
--------------------
Cash paid during the year for:
Interest $ 89,116 $147,899
Income taxes 18,400 16,419
Non-cash investing activities:
Transfer of loans to other real estate $ 398 $ 10,909
Assets (non-cash) acquired in business combination 342,855 70,450
Liabilities assumed in business combination 331,094 104,523
Origination of loans for the sale of other real estate -- 169
Non-cash financing activities:
Reissuance of treasury stock for stock plans $ -- $ 3,003
Conversion of subordinated debentures 63 35
See Notes to the Unaudited Condensed Consolidated Financial Statements.
8
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE A: ACCOUNTING POLICIES
The Colonial BancGroup, Inc. and its subsidiaries ("BancGroup" or the "Company")
have not changed their accounting and reporting policies from those stated in
the 2001 annual report on Form 10-K. These unaudited interim financial
statements should be read in conjunction with the audited financial statements
and footnotes included in BancGroup's 2001 annual report on Form 10-K.
In the opinion of BancGroup, the accompanying unaudited condensed consolidated
financial statements contain all adjustments (consisting only of normal
recurring accruals) necessary to present fairly the financial position as of
March 31, 2002 and 2001 and the results of operations and cash flows for the
interim periods ended March 31, 2002 and 2001. All 2002 interim amounts are
subject to year-end audit, and the results of operations for the interim period
herein are not necessarily indicative of the results of operations to be
expected for the year.
NOTE B: CONTINGENCIES
BancGroup and its subsidiaries are from time to time defendants in legal actions
from normal business activities. Management does not anticipate that the
ultimate liability arising from litigation outstanding at March 31, 2002 will
have a materially adverse effect on BancGroup's financial statements.
NOTE C: BUSINESS COMBINATIONS
BancGroup completed the acquisition of Mercantile Bancorp, Inc. ("Mercantile")
and its wholly owned subsidiary bank, First Mercantile Bank, N.A. ("Mercantile
Bank"), on March 28, 2002. Mercantile Bank operated four branch offices in
Dallas, Texas and one in Austin, Texas. At March 28, 2002, Mercantile had $354
million in assets, $284 million in loans and mortgage loans held for sale, and
$302 million in deposits. BancGroup issued 4,652,809 shares of its common stock
to shareholders of Mercantile. As a result of this transaction, BancGroup
recorded $69.9 million of total intangibles including $11.4 million in core
deposit premium.
NOTE D: RECENT ACCOUNTING PRONOUNCEMENTS
On June 29, 2001, the Financial Accounting Standards Board issued SFAS No. 141,
"Business Combinations". This statement is effective for all business
combinations initiated after June 30, 2001. This statement supercedes Accounting
Principles Board Opinion No. 16, "Business Combinations". SFAS No. 141 requires
the purchase method of accounting be used for all business combinations
initiated after June 30, 2001, establishes specific criteria for the recognition
of intangible assets separately from
9
goodwill, and requires unallocated negative goodwill to be written off
immediately as an extraordinary gain instead of being deferred and amortized.
On June 29, 2001, the Financial Accounting Standards Board issued SFAS No. 142,
"Intangible Assets". This statement is effective for fiscal years beginning
after December 15, 2001. SFAS No. 142 requires that goodwill and indefinite
lived intangible assets no longer be amortized, that goodwill will be tested for
impairment at least annually, that intangible assets deemed to have an
indefinite life will be tested for impairment at least annually, and that
amortization period of intangible assets with finite lives will no longer be
limited to forty years. Colonial adopted SFAS 142 on January 1, 2002. At the
date of adoption, Colonial had unamortized goodwill in the amount of $109.7
million and unamortized identifiable intangible assets in the amount of $4.2
million. Based on the current level of identifiable intangible assets,
amortization was $162,000 in the first quarter of 2002 and with the consummation
of the Mercantile acquisition, amortization expense is expected to total
approximately $1.8 million for this year and $2.0 million annually for the next
five years. The full impact of adopting SFAS No. 142 is expected to result in an
increase in annual net income of approximately $3.6 million after tax or $.03
per share based on amortization expense recorded in 2001. Reported net income
for the first quarter of 2001 would have been $1.0 million greater, exclusive of
the goodwill amortization recognized in that period; increasing diluted earnings
per share by $0.01 from $0.25 to $0.26.
In June 2001, the Financial Accounting Standards Board issued SFAS No. 143,
"Accounting for Asset Retirement Obligations". This statement is effective for
fiscal years beginning after June 15, 2002, with early adoption permitted. SFAS
No. 143 addresses the recognition and measurement of obligations associated with
the retirement of tangible long-lived assets resulting from acquisition,
construction, development, or the normal operation of a long-lived asset. SFAS
No. 143 requires that the fair value of an asset retirement obligation be
recognized as a liability in the period in which it is incurred. The asset
retirement obligation is to be capitalized as part of the carrying amount of the
long-lived asset and the expense is to be recognized over the useful life of the
long-lived asset. Management is currently evaluating the impact that SFAS No.
143 will have on BancGroup's financials, but does not expect the adoption will
have a material effect.
In August 2001, the Financial Accounting Standards Board issued SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets". The effective
date for this statement is January 1, 2002 and supersedes SFAS No. 121. SFAS No.
144 carries forward from SFAS No. 121 the fundamental guidance related to the
recognition and measurement of an impairment loss related to assets to be held
and used and provides guidance related to the disposal of long-lived assets to
be abandoned or disposal by sale. Colonial adopted SFAS No. 144 on January 1,
2002. The implementation of SFAS No. 144 did not have a material impact on
BancGroup's financials.
NOTE E: EARNINGS PER SHARE
The following table reflects a reconciliation of the numerator and denominator
of the basic EPS computation to the numerator and denominator of the diluted EPS
computation:
10
(Dollars in thousands, except per share amounts)
Three Months Ended March 31,
-------------------------------
Per Share
2002 Income Shares Amount
-------- ------- ---------
Basic EPS
Net Income $34,178 115,382 $0.30
Effect of dilutive securities:
Options 651
Convertible debentures 35 497
---------------------------------------------------------------------
Diluted EPS $34,213 116,530 $0.29
---------------------------------------------------------------------
2001
Basic EPS
Net income $29,196 114,502 $0.26
Effect of dilutive securities
Options 594
Convertible debentures 48 585
---------------------------------------------------------------------
Diluted EPS $29,244 115,681 $0.25
---------------------------------------------------------------------
NOTE F: SEGMENT INFORMATION
Through its wholly owned subsidiary, Colonial Bank, BancGroup has one distinct
line of business: Commercial Banking.
Colonial Bank provides general banking services in 261 branches throughout 6
states.
NOTE G: LONG TERM BORROWINGS
During March 2002, Colonial Bank issued $100 million in trust preferred
securities. These securities bear interest of 8.32% and are subject to
redemption by BancGroup, in whole or in part, at any time after March 2007,
until maturity in April 2032. In connetion with this issuance, BancGroup
executed an interest rate swap whereby BancGroup will receive a fixed rate and
pay a floating rate, effectively converting the fixed rate notes to floating.
The result of this interest rate swap created an effective floating rate on the
notes of 3 month LIBOR +1.40%. As of March 31, 2002, the net effective floating
rate was 3.41%. The proceeds from this issuance will be used for general
corporate purposes.
11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
--------------------------------------------------------------------------
OPERATIONS
----------
FINANCIAL CONDITION:
Ending balances of total assets, securities, mortgage loans held for sale, net
loans, deposits, and long and short term debt changed for the three months and
twelve months ended March 31, 2002, respectively, as follows:
December 31, 2001 March 31, 2001
(Dollars in thousands) to March 31, 2002 To March 31, 2002
Increase (Decrease) Increase (Decrease)
-------------------------------------------
Amount % Amount %
-------------------------------------------
Assets:
Total Assets (809) --% 744,561 6.0%
Securities 122,173 6.5% 480,785 31.6%
Mortgage loans held for sale (11,800) (33.3%) 2,842 13.7%
Loans, net of unearned income (131,393) (1.3%) 121,308 1.2%
Total Deposits 275,188 3.3% 111,176 1.3%
Short-term debt (483,882) (22.7%) (269,402) (14.1%)
Long-term debt 109,185 6.1% 773,310 68.9%
Assets:
BancGroup's assets have increased 6.0% since March 31, 2001 but have remained
relatively unchanged since December 31, 2001. The growth from March 31, 2001 is
primarily the result of increases in investment securities, internal loan growth
throughout BancGroup's banking regions, the purchase of 13 branches from Union
Planters, and the acquisition of Mercantile Bancorp in Texas. The slight
decrease from December 31, 2001 is largely due to a decrease in Mortgage
Warehouse Lending loans offset by an increase in investment securities and
growth in regional bank loans.
Securities:
Investment securities and securities available for sale have increased $480.8
million (31.6%) and $122.2 million (6.5%) from March 31, 2001 and December 31,
2001, respectively. These increases are the result of normal business activities
and $43 million in securities received with the Mercantile acquisition.
Loans and Mortgage Loans Held for Sale:
Loans, net of unearned income, have increased $121.3 million (1.2%) and
decreased $131.4 million (-1.3%) from March 31, 2001 and December 31, 2001,
respectively. Loan growth from March 31, 2001
12
was partially offset by the securitization of $307 million of single-family real
estate loans that were transferred to securities in the investment portfolio as
mortgage backed securities during the second quarter of 2001. The decrease in
loans from December 31, 2001 was primarily due to a $413 million decline in
mortgage warehouse loans partially offset by $284 million in loans acquired in
an acquisition. Volume in the mortgage warehouse lending unit had been
abnormally high at December 31, 2001 due to increases in mortgage refinancing
activity occasioned by all time lows in mortgage rates for a period during the
fourth quarter of 2001. The remaining change from December 31, 2001 consisted of
an increase of $93 million in regional bank loans offset by a decrease of $96
million in the single family real estate portfolio consisting substantially of
adjustable rate mortgage loans.
GROSS LOANS BY CATEGORY March 31, December 31, March 31,
(Dollars in thousands) 2002 2001 2001
----------------------------------------
Commercial, financial, and agricultural $ 1,087,974 $ 1,145,409 $ 1,297,773
Real estate-commercial 3,489,361 3,417,517 3,393,322
Real estate-construction 2,519,447 2,295,675 1,821,412
Real estate-residential 1,930,654 1,942,821 2,592,564
Installment and consumer 246,557 240,836 269,126
Mortgage warehouse lending 874,911 1,286,399 644,484
Other 87,513 39,019 96,314
----------------------------------------
Total Loans $10,236,417 $10,367,676 $10,114,995
========================================
Residential real estate loans represent 18.9% of total loans at March 31, 2002
compared to 18.7% at December 31, 2001 and 25.6% at March 31, 2001. A portion of
this decline is due to the second quarter 2001 securitization of approximately
$307 million in single-family real estate loans which were originally received
back into BancGroup's securities portfolio as mortgage backed securities. Also,
demand for adjustable rate mortgages has declined as more borrowers are looking
for long-term fixed rate loans, which the Company originates, but sells in the
secondary market. Substantially all of these loans are adjustable rate first
mortgages on single-family, owner-occupied properties, and therefore, have
minimal credit risk and lower interest rate sensitivity. BancGroup has a history
of successfully lending in the residential real estate market and its quality
ratios remain favorable in this portfolio segment. Annualized net charge-offs to
average loans for the residential real estate portfolio was 0.06% at March 31,
2002 compared to 0.11% for all of 2001.
Commercial loans collaterialized by real estate and construction loans increased
approximately $71.8 million and $223.8 million, respectively from December 31,
2001 and $96.0 million and $698.0 million, respectively, from March 31, 2001.
13
Management believes that any existing distribution of loans, whether
geographically, by industry, or by borrower, does not expose BancGroup to
unacceptable levels of risk. The current distribution of loans remains diverse
in location, size, and collateral function. Our diversity, in addition to
our emphasis on quality underwriting, serve to reduce the risk of losses. The
following chart reflects the geographic diversity and industry distribution of
Construction and Commercial Real Estate loans as of March 31, 2002.
14
CONSTRUCTION & COMMERCIAL REAL ESTATE
GEOGRAPHIC DIVERSITY AND INDUSTRY DISTRIBUTION
MARCH 31, 2002
(Dollars in thousands) Construction Commercial Real Estate
------------ ----------------------
Average Loan Size $ 508 $ 515
Geographic Diversity
Alabama $ 378,965 $ 897,386
Georgia 429,710 457,691
Florida 1,212,296 1,552,163
Texas 276,480 142,668
Nevada 151,018 159,087
Other 70,978 280,366
---------- ----------
Total $2,519,447 $3,489,361
-----------------------------------------------------------------------------------------------------------------------
Industry Distribution % of Industry Distribution to % of Industry Distribution to
--------------------------------- ------------------------------
Construction Total Commercial Real Total
Portfolio Portfolio Estate Portfolio Portfolio
------------ --------- ---------------- ---------
Development 22% 5% Retail 18% 6%
1-4 Family Residential 21% 5% Office 16% 6%
Land Only 18% 4% Multi-Family 11% 4%
Condominium 12% 3% Lodging 11% 4%
Multi-Family 9% 2% Office/Warehouse 6% 2%
Retail 5% 1% Nursing Home 5% 2%
Other (13 types) 13% 5% Other (11 types) 33% 10%
--- -- --- --
Total Commercial
Total Construction 100% 25% Real Estate 100% 34%
--- -- --- --
-----------------------------------------------------------------------------------------------------------------------
Characteristics of the 75 Largest Construction and Commercial Real Estate Loans
Construction Commercial Real Estate
------------ ----------------------
75 Largest Loans Total $966,585 $720,613
% of 75 largest loans to category total 38.4% 20.7%
Average Loan to Value Ratio (75 largest
loans) 68% 71%
Debt Coverage Ratio (75 largest loans) N/A 1.28x
-----------------------------------------------------------------------------------------------------------------------
Substantially all Construction and Commercial Real Estate loans have
personal guarantees of the principals involved. Owner occupied Commercial
Real Estate portfolio totals represented 22% of the total Commercial Real
Estate portfolio at March 31, 2002.
15
BancGroup does not have a syndicated lending department; however, the Company
has 28 credits with commitments (funded and unfunded) of $551 million that fall
within the bank regulatory definition of a "Shared National Credit" (generally
defined as a total loan commitment in excess of $20 million that is shared by
three or more lenders). The largest outstanding amount to any single borrower is
under $56 million (which is a mortgage warehouse facility), with the smallest
credit being approximately $142,000. As of March 31, 2002, $317 million of these
commitments were funded.
Although by definition these commitments are considered Shared National Credits,
BancGroup's loan officers have established long-term relationships with each of
these borrowers. These commitments are comprised of the following:
.. 26% - commercial real estate projects located within existing markets
.. 13% - international credits which are primarily unfunded short-term
commitments to tier one correspondent banks
.. 56% - mortgage warehouse lines to eight large institutions (the mortgage
warehouse lending department conducts its own audits of these borrowers)
.. 5% - operating facilities to two large national corporations headquartered
in the Florida markets
Management believes that these are sound participations involving credits that
fit within Colonial's lending philosophy and meet its conservative underwriting
guidelines.
ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
Allocations of the allowance for loan losses are made on an individual loan
basis for all identified potential problem loans with a percentage
allocation for the remaining portfolio. The allocation of the remaining
allowance represents an approximation of the reserves for each category of
loans based on management's evaluation of the respective historical
charge-off experience and risk within each loan type.
(Dollars in thousands) Percent of Percent of Percent of
Balance at end of period March 31, Loans to December 31, Loans to March 31, Loans to
Applicable to: 2002 Total Loans 2001 Total Loans 2001 Total Loans
--------------------------------------------------------------------------------------
Commercial, financial, and
agricultural $ 30,415 10.6% $ 33,326 11.1% $ 33,025 12.8%
Real estate-commercial 55,128 34.1% 50,393 33.0% 46,343 33.5%
Real estate-construction 21,589 24.6% 17,256 22.1% 15,801 18.0%
Real estate-residential 9,653 18.9% 9,714 18.7% 12,963 25.6%
Installment and consumer 2,898 2.4% 2,390 2.3% 2,601 2.7%
Mortgage warehouse lending 2,187 8.5% 3,216 12.4% 1,610 6.4%
Other 6,912 0.9% 5,905 0.4% 4,189 1.0%
------------------------------------------------------------------------------------
TOTAL $128,782 100.0% $122,200 100.0% $116,532 100.0%
====================================================================================
The ratio of annualized net charge-offs to average loans was 0.25%, 0.34%,
and 0.14% for the first quarter of 2002, the fourth quarter of 2001, and
the first quarter of 2001. As a result of the Company's localized lending
strategies and early identification of potential problem loans, BancGroup's
net charge-offs have been consistently low, compared to industry and peer
data.
The following schedule reflects BancGroup's coverage of nonperforming loans
(nonaccrual and renegotiated) by the allowance for loan losses of 281%,
while management has not targeted any specific coverage ratio in excess of
100%. Management is committed to maintaining adequate reserve levels to
absorb losses present in the loan portfolio.
16
SUMMARY OF LOAN LOSS EXPERIENCE
March 31, December 31, March 31,
(Dollars in thousands) 2002 2001 2001
--------------------------------------
Allowance for loan losses - January 1 $122,200 $110,055 $110,055
Charge-offs:
Commercial, financial, and agricultural 2,907 14,731 2,738
Real estate-commercial 2,839 9,354 201
Real estate-construction 108 292 45
Real estate-residential 527 3,148 652
Installment and consumer 1,038 4,049 908
Other 223 1,155 173
-----------------------------------
Total charge-offs 7,642 32,729 4,717
-----------------------------------
Recoveries:
Commercial, financial, and agricultural 273 698 208
Real estate-commercial 419 404 191
Real estate-construction 18 9 7
Real estate-residential 238 565 194
Installment and consumer 266 1,999 502
Other 95 330 59
-----------------------------------
Total recoveries 1,309 4,005 1,161
-----------------------------------
Net charge-offs 6,333 28,724 3,556
Allowance added from bank acquisitions 3,437 1,296 569
Addition to allowance charged to
operating expense 9,478 39,573 9,464
------------------------------------
Allowance for loan losses-end of period $128,782 $122,200 $116,532
------------------------------------
Net charge-offs as a percent of average
net loans - (annualized basis):
Quarter to date 0.25% 0.34% 0.14%
17
NONPERFORMING ASSETS ARE SUMMARIZED BELOW
March 31, December 31, March 31,
(Dollars in thousands) 2002 2001 2001
------------------------------------
Aggregate loans for which interest is not being accrued $44,646 $49,675 $41,631
Aggregate loans renegotiated to provide a reduction or deferral
of interest or principle because of deterioration in the
financial condition of the borrower 1,233 1,507 1,147
------------------------------------
Total nonperforming loans * 45,879 51,182 42,778
Other real estate owned and repossessions 21,408 15,553 9,768
------------------------------------
Total nonperforming assets * $67,287 $66,735 $52,546
====================================
Aggregate loans contractually past due 90 days
for which interest is being accrued $19,033 $28,249 $16,925
Net charge-offs quarter-to-date $ 6,333 $ 8,602 $ 3,556
Total nonperforming assets as a percent of net
loans and other real estate 0.66% 0.64% 0.52%
Allowance as a percent of net loans 1.26% 1.18% 1.15%
Allowance as a percent of nonperforming assets * 191% 183% 222%
Allowance as a percent of nonperforming loans * 281% 239% 272%
* Does not include loans contractually past due 90 days or more which are
still accruing interest.
Nonperforming assets increased to 0.66% of net loans and other real estate at
March 31, 2002. Nonperforming assets have remained relatively stable at $67.3
million compared to $66.7 million at December 31, 2001. Management continuously
monitors and evaluates recoverability of problem assets and adjusts loan loss
reserves accordingly. Loan loss reserve was 1.26% of loans at March 31, 2002
compared to 1.18% at December 31, 2001 and 1.15% at March 31, 2001. Fluctuations
from year to year in the balances of nonperforming assets are attributable to
several factors including changing economic conditions in various markets,
nonperforming assets obtained in various acquisitions and the disproportionate
impact of larger (over $500,000) individual credits.
Management, through its loan officers, internal credit review staff and external
examinations by regulatory agencies, regularly monitors selected loans for which
general economic conditions or changes within a particular industry could cause
the borrowers financial difficulties. This continuous monitoring of the loan
portfolio and the related identification of loans with a high degree of credit
risk are essential parts of the BancGroup's credit management. In connection
with such reviews, collateral values are updated where considered necessary. If
collateral values are judged insufficient or other sources of repayment
inadequate, the loans are reduced to estimated recoverable amounts through
increases in reserves allocated to the loans or charge-offs.
Nonperforming loans represent all material credits for which management has
serious doubts as to the ability of the borrowers to comply with the loan
repayment terms. Management also expects that the resolution of these problem
credits as well as other performing loans will not materially impact future
operating results, liquidity or capital resources. The recorded investment in
impaired loans at March 31, 2002 was $40.1 million and these loans had a
corresponding valuation allowance of $16.2 million.
18
LIQUIDITY:
BancGroup has addressed its liquidity and interest rate sensitivity through its
policies and structure for asset/liability management. It has created the
Asset/Liability Management Committee ("ALMCO"), the objective of which is to
optimize the net interest margin while assuming reasonable business risks. ALMCO
annually establishes operating constraints for critical elements of BancGroup's
business, such as liquidity and interest rate sensitivity. ALMCO constantly
monitors performance and takes action in order to meet its objectives.
A prominent focus of ALMCO is maintaining adequate liquidity. Liquidity is the
ability of an organization to meet its financial commitments and obligations on
a timely basis. These commitments and obligations include credit needs of
customers, withdrawals by depositors, repayment of debt when due and payment of
operating expenses and dividends.
Core deposit growth is a primary focus of BancGroup's funding and liquidity
strategy. Average retail deposits excluding broker and time deposits grew at an
annualized rate of 12% for the three months ended March 31, 2002. Core deposit
growth continues to be a primary strategic objective of the Company.
In addition to funding growth through core deposits, BancGroup has worked to
expand the availability of long and short term wholesale funding sources. As of
March 31, 2002 the Bank utilized only 54% of the total wholesale funding sources
estimated to be available. Management believes its liquidity sources and
funding strategies are adequate given the nature of its asset base and current
loan demand.
INTEREST RATE SENSITIVITY:
ALMCO's goal is to minimize volatility in the net interest margin from changes
in interest rates by taking an active role in managing the level, mix, repricing
characteristics and maturities of assets and liabilities and by analyzing and
taking action to manage mismatch and basis risk. ALMCO monitors the impact of
changes in interest rates on net interest income using several tools, including
static rate sensitivity reports, or Gap reports, and income simulations modeling
under multiple rate scenarios.
The following table represents the output from the Company's most recent
simulation model, when the Fed Funds Rate was 1.75%, and measures the impact on
net interest income of an immediate and sustained change in interest rates in
100 basis point increments for the 12 calendar months following the date of the
change. This twelve month projection of Net Interest Income under these
scenarios is compared to both the twelve month Net Interest Income projection
with rates unchanged and first quarter 2002 net interest income annualized.
19
Percentage Change in 12 Month Projected (1):
-------------------------------------------------
Net Interest Income Versus
1st Qtr 2002 Net Interest
Fed Funds Rate Net Interest Income Income Annualized
-------------- ------------------- --------------------------
Basis Points change
-------------------
+200 ..................... 3.75% 3% 9%
+100 ..................... 2.75 1 7
No Change ................ 1.75 -- 6
- 100 .................... 0.75 (1) 5
-----------------------------------------------------------------------------------------------
(1) The computation of prospective effects of hypothetical interest rate
changes are based on numerous assumptions, including relative levels of
market interest rates, loan prepayments and deposit decay rates, and should
not be relied upon as indicative of actual results. Further, the
computations do not contemplate any actions BancGroup could undertake in
response to changes in interest rates.
This table shows that under these rate shock scenarios, net interest income
would be expected to improve versus recent results, and would benefit most from
rising rates.
The following table summarizes BancGroup's Maturity / Rate Sensitivity or Gap at
March 31, 2002.
(Dollars in millions)
0-90 days 0-365 days
--------- ----------
Rate Sensitive Assets (RSA) $6,434 $7,811
Rate Sensitive Liabilities (RSL) 4,359 6,622
Cumulative Gap (RSA-RSL) 2,075 1,189
Cumulative Gap Ratio
(Cum. Gap / Total Assets) 16% 9%
The last two lines of the proceeding table represents interest rate sensitivity
gap which is the difference between rate sensitive assets and rate sensitive
liabilities. Therefore, BancGroup's net interest income would again generally
benefit from a rising rate environment.
In reviewing the table, it should be noted that the balances are shown for a
specific point in time and, because the interest sensitivity position is
dynamic, it can change significantly over time. For all interest earning assets
and interest bearing liabilities, variable rate assets and liabilities are
reflected in the time interval of the assets or liabilities' earliest repricing
date. Fixed rate assets and liabilities have been allocated to various time
intervals based on contractual repayment and prepayment assumptions.
Furthermore, the balances reflect contractual repricing of the deposits and
management's position on repricing certain deposits where management discretion
is permitted. Certain demand deposit accounts and regular savings accounts have
been classified as repricing beyond one year in accordance with regulatory
guidelines. While these accounts are subject to immediate withdrawal, experience
and analysis have shown them to be relatively rate insensitive.
20
CAPITAL ADEQUACY AND RESOURCES:
Management is committed to maintaining capital at a level sufficient to protect
shareholders and depositors, provide for reasonable growth and fully comply with
all regulatory requirements. Management's strategy to achieve these goals is to
retain sufficient earnings while providing a reasonable return to shareholders
in the form of dividends and return on equity. The Company's dividend payout
ratio target range is 30-45%. Dividend rates are determined by the Board of
Directors in consideration of several factors including current and projected
capital ratios, liquidity and income levels and other bank dividend yields and
payment ratios.
The amount of a cash dividend, if any, rests with the discretion of the Board of
Directors of BancGroup as well as upon applicable statutory constraints such as
the Delaware law requirement that dividends may be paid only out of capital
surplus or net profits for the fiscal year in which the dividend is declared or
the preceding fiscal year.
BancGroup also has access to equity capital markets through both public and
private issuances. Management considers these sources and related return in
addition to internally generated capital in evaluating future expansion or
acquisition opportunities.
The Federal Reserve Board has issued guidelines identifying minimum Tier I
leverage ratios relative to total assets and minimum capital ratios relative to
risk-adjusted assets. The minimum leverage ratio is 3% but is increased from 100
to 200 basis points based on a review of individual banks by the Federal
Reserve. The minimum risk adjusted capital ratios established by the Federal
Reserve are 4% for Tier I and 8% for total capital. BancGroup's actual capital
ratios and the components of capital and risk adjusted asset information
(subject to regulatory review) as of March 31, 2002 are stated below:
21
Capital (in thousands):
Tier I Capital:
Shareholders' equity (excluding unrealized gain on securities available
for sale and intangibles, plus Trust Preferred Securities) $ 932,838
-----------
Tier II Capital:
Allowable loan loss reserve 128,782
Subordinated debt 261,182
45% of net unrealized gains on available for sale equity securities 209
-----------
Total Capital $ 1,323,011
Risk Adjusted Assets (in thousands) $10,858,243
Total Assets (in thousands) $13,184,294
March 31, 2002 December 31, 2001
-------------- -----------------
Tier I leverage ratio 7.45% 6.24%
Risk Adjusted Capital Ratios:
Tier I Capital Ratio 8.59% 7.39%
Total Capital Ratio 12.18% 10.91%
BancGroup has increased capital gradually through normal earnings retention as
well as through stock registrations to capitalize acquisitions. The increase in
the Tier I Capital Ratio and Total Capital Ratio is primarily due to the
issuance of $100 million of Trust Preferred Securities during the first quarter
of 2002. These securities provide additional flexibility for liquidity, capital
management, and growth.
Management continuously monitors its capital levels in order to ensure it is
taking the necessary steps to support future internally generated growth and
fund the quarterly dividend rates that are currently $0.13 per share each
quarter.
22
AVERAGE VOLUME AND RATE
(UNAUDITED)
(Dollars in thousands)
Three Months Ended March 31,
---------------------------------------------------------------
2002 2001
------------------------------ ------------------------------
Average Average
Volume Interest Rate Volume Interest Rate
------------------------------ ------------------------------
ASSETS
Loans, net (1) $ 9,094,471 $153,270 6.82% $ 9,384,831 $204,473 8.82%
Mortgage warehouse lending 871,239 9,381 4.31% 503,294 8,972 7.13%
Mortgage loans held for sale 20,624 352 6.83% 11,987 195 6.51%
Investment securities and securities available
for sale and other interest-earning assets (2) 1,956,832 27,527 5.63% 1,593,016 27,473 6.90%
---------------------- ----------------------
Total interest-earning assets(1) 11,943,166 $190,530 6.44% 11,493,128 $241,113 8.48%
-------- --------
Nonearning assets 764,648 718,751
----------- -----------
Total assets $12,707,814 $12,211,879
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Interest-bearing non-time deposits $ 2,682,864 $ 8,506 1.29% $ 2,431,613 $ 19,885 3.32%
Time deposits 4,169,579 39,840 3.87% 4,866,708 75,642 6.30%
Short-term borrowings 1,703,851 7,716 1.84% 1,638,234 23,450 5.81%
Long-term debt 1,803,559 24,100 5.40% 1,247,369 18,913 6.13%
---------------------- ----------------------
Total interest-bearing liabilities 10,359,853 $ 80,162 3.14% 10,183,924 $137,890 5.49%
---------------------- ----------------------
Noninterest-bearing demand deposits 1,377,733 1,130,159
Other liabilities 94,592 109,358
----------- -----------
Total liabilities 11,832,178 11,423,441
Shareholders' equity 875,636 788,438
----------- -----------
Total liabilities and shareholders' equity $12,707,814 $12,211,879
=========== ===========
RATE DIFFERENTIAL 3.30% 2.99%
NET INTEREST INCOME AND NET YIELD ON
INTEREST-EARNING ASSETS (3) $110,368 3.72% $103,223 3.62%
======== ========
(1) Loans classified as non-accruing are included in the average volume
calculation. Interest earned and average rates on non-taxable loans are
reflected on a tax equivalent basis. This interest is included in the total
interest for loans. Tax equivalent interest earned is actual interest
earned times 145%.
(2) Interest earned and average rates on obligations of states and political
subdivisions are reflected on a tax equivalent basis. Tax equivalent
interest earned is equal to actual interest earned times 145%. Tax
equivalent average rate is tax equivalent interest earned divided by
average volume.
(3) Net interest income divided by average total interest-earning assets
23
NET INTEREST INCOME:
Net interest income on a tax equivalent basis increased $7.2 million to $110.4
million for the quarter ended March 31, 2002 from $103.2 million for the quarter
ended March 31, 2001. The net interest margin improved 10 basis points to 3.72%
for the first quarter of 2002 versus 3.62% for the first quarter of 2001. This
reflects the margin's adjustment to a more stable rate environment after the
rapid rate declines in 2001, when the Federal Reserve cut the funds rate 11
times by a total of 475 basis points. The last reduction in the fed funds rate
by the Federal Reserve was on December 11, 2001 to 1.75%. The Company's average
loan yields for the quarter declined 200 basis points while interest bearing
liabilities declined 235 basis points as compared to the first quarter of 2001.
The decline in interest bearing liabilities was driven by a 243 basis point
decline in the average rate on time deposits to 3.87% from 6.30% in the first
quarter of 2001. The stability of rates in the first quarter has allowed the
repricing of the time deposit portfolio to catch up with the repeated and rapid
rate declines experienced in 2001. Total time deposits stood at $4.2 billion at
March 31, 2002, with an average rate of 3.71% and a weighted average remaining
term of 10 months. Currently posted rates on 1 year time deposits are 3.00% but
range as high as 5.25% for 5 years.
24
ANALYSIS OF INTEREST INCREASES/(DECREASES)
(UNAUDITED)
(Dollars in thousands)
Three Months Ended March 31, 2002
Change from 2001
Attributed to (1)
---------------------
Total Volume Rate
--------- --------- ---------
INTEREST INCOME:
Loans, net $(51,203) $ (6,146) $(45,057)
Mortgage Warehouse Lending 409 4,870 (4,461)
Mortgage loans held for sale 157 147 10
Investment securities and securities
for sale and other interest-earning assets 54 5,631 (5,577)
-------- -------- --------
Total interest income(2) (50,583) 4,502 (55,085)
-------- -------- --------
INTEREST EXPENSE:
Interest-bearing deposits $(47,181) $ 4,937 $(52,118)
Short-term borrowings (15,734) 929 (16,663)
Long-term debt 5,187 7,687 (2,500)
-------- -------- --------
Total interest expense (57,728) 13,553 (71,281)
-------- -------- --------
Net interest income $ 7,145 $ (9,051) $ 16,196
======== ======== ========
(1) Increases (decreases) are attributed to volume changes and rate changes on
the following basis: Volume Change = change in volume times old rate. Rate
Change = change in rate times old volume. The Rate/Volume Change = change
in volume times change in rate, and it is allocated between Volume Change
and Rate Change at the ratio that the absolute value of each of those
components bear to the absolute value of their total.
(2) 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%. Tax equivalent
average rate is: tax equivalent interest earned divided by average volume.
LOAN LOSS PROVISION:
The provision for possible loan losses for the quarter ended March 31, 2002 was
$9,478,000 compared to $9,464,000 for the same period in 2001. The Company
continues to focus its efforts on relationship based lending to known customers
in its local market areas.
The current allowance for possible loan losses provides a 281% coverage of
nonperforming loans compared to 239% at December 31, 2001 and 272% at March 31,
2001. See management's discussion on loan quality and the allowance for possible
loan losses presented in the Financial Condition section of this report.
25
NONINTEREST INCOME:
Noninterest income excluding securities gains increased $3.3 million (17%) for
the three months ended March 31, 2002 compared to the same period in 2001. This
increase is primarily attributable to wealth management services, electronic
banking services, mortgage origination income, and cash management services
included in service charges on deposit accounts.
Wealth management experienced a $418,000 increase (18.6%) in fee income during
the three months ended March 31, 2002 over the same period in 2001. As a result
of investor uncertainty in the economy, the Company experienced a decline in
securities sales; however, this decline was offset by an increase in fixed rate
annuity sales.
BancGroup continues to expand electronic banking services through its ATM
network, business and personal check card services, and internet banking.
Non-interest income from electronic banking services increased $318,000 (20.5%)
for the three months ended March 31, 2002 when compared to the same period in
2001 through increased customer use and the introduction of the Colonial Bank
Business Check Card.
Mortgage origination fees increased $699,000 (48.0%) for the three months ended
March 31, 2002 compared to the three months ended March 31, 2001. This increase
is the result of additional production of one-to-four family mortgage loans sold
in the secondary market and due to the refinancing activity during the fourth
quarter of 2001 that carried into the first quarter of 2002.
Service charges on deposit accounts increased $1.1 million (11.6%) for the three
months ended March 31, 2002 over the same period in 2001. This increase is the
result of normal deposit account related fees, an increase in cash management
fees of approximately $183,000 (28.7%), and additional branches in operation for
the three months ended March 31, 2002 when compared to the first quarter of
2001.
NONINTEREST EXPENSES:
In support of the Company's sales culture, BancGroup continues to make strategic
investments in its product and service offerings, technology systems, sales
incentives and branch network to enhance the Company's competitive presence in
existing markets. Some of these investments include improved automation of
branch delivery systems, enhanced internet banking and wire transfer systems,
and an image processing system. BancGroup's philosophy is to make strategic
investments in the tools employees need to optimize its customers' financial
success. Accordingly, noninterest expense increased 3.1% for the quarter ended
March 31, 2002 as compared to the same period last year.
26
BancGroup's net overhead (total noninterest expense less noninterest income,
excluding security gains) was $47.6 million for the three months ended March 31,
2002 compared to $48.7 million for the three months ended March 31, 2001,
respectively.
Noninterest expense increased $2.1 million for the first quarter of 2002
compared to the first quarter of 2001. Noninterest expense to average assets
decreased to 2.22% for three months ended March 31, 2002 from 2.24% at March 31,
2001.
The increase in bank related expenses is primarily due to an increase of
approximately $2.4 million for the three months ended March 31, 2002 over the
same period in 2001 in salaries and employee benefits. These salary increases
are due to additional employees from acquisitions completed during the previous
year, additional branches opened, normal salary increases, additional incentive
related compensation, and increased pension costs.
In order to improve the Company's market presence, three of its regional
headquarters were relocated in 2001. The Company also acquired 13 branches from
Union Planters in October 2001 and has opened six new branches since March 2001.
Primarily as a result of these efforts, occupancy and equipment expense for the
three months ended March 31, 2002 increased $849,000 when compared to the
same period in 2001.
In July of 2001 Colonial launched the Eagle project. The objective of the Eagle
project is to implement retail delivery solutions that should enhance our
ability to produce sales, provide exceptional service and promote profitable
customer relationships while gaining operational efficiencies. We expect to
begin implementation of new retail delivery systems in late third quarter 2002
with additional Internet banking capabilities and an enhanced call center,
followed in late fourth quarter by new branch service delivery and loan delivery
systems. The new retail delivery system will be fully implemented by the end of
2003.
Intangible asset amortization decreased $1.5 million for the three months ended
March 31, 2002 over the same period in 2001 due to implementation of SFAS No.
142 discussed in Note D - Recent Accounting Pronouncements.
PROVISION FOR INCOME TAXES:
BancGroup's provision for income taxes is based on an approximate 35.0% and
36.0%, estimated annual effective tax rate for the years 2002 and 2001,
respectively. The provision for income taxes for the three months ended March
31, 2002 and 2001 was $18,420,000 and $16,422,000, respectively.
Item III Quantitative and Qualitative Disclosures About Market Risk
The information required by this item is included in Item II. Management's
Discussion and Analysis of Financial Condition and Results of Operations.
Part II Other Information
27
ITEM 1: Legal Proceedings - See Note B - COMMITMENTS AND CONTINGENCIES AT PART 1
ITEM 2: Changes in Securities - N/A
ITEM 3: Defaults Upon Senior Securities - N/A
ITEM 4: Submission of Matters to a Vote of Security Holders - N/A
On April 17, 2002, the annual meeting of the shareholders of Colonial BancGroup
was held. The following are the results of the votes cast by shareholders
present at such meeting, by proxy or in person, for such proposals.
1) Election of the following directors:
For a Term Expiring in 2005.
For Withhold Percent For
---------- --------- -----------
William Britton 94,555,847 843,692 99.1
Augustus K. Clements, III 94,566,287 833,252 99.1
Patrick F. Dye 93,972,804 1,474,735 98.5
Milton E. McGregor 94,295,971 1,103,568 98.8
William E. Powell, III 94,570,547 828,992 99.1
Simuel Sippial 94,516,040 883,499 99.1
In addition to the foregoing the following directors will continue to serve:
Term Expiring in 2004 Term Expiring in 2003
--------------------- --------------------
Robert S. Craft Lewis E. Beville
Clinton O. Holdbrooks Jerry J. Chesser
Harold D. King John Ed Mathison
Robert E. Lowder Joe D. Mussafer
John C. H. Miller, Jr. Frances E. Roper
James W. Rane Edward V. Welch
ITEM 5: Other Information - None
ITEM 6: Exhibits and Reports on Form 8-K
(a) Exhibits required by Item 601 of Regulation S-K - None
(b) Reports on Form 8-K
28
1. Form 8-K - Was furnished on April 29, 2002 as Regulation F-D
Disclosure in regard to a presentation made by management at the Gulf
South Banking Conference on second quarter 2001 earnings.
2. Form 8-K - Was furnished on April 16, 2002 as Regulation F-D
Disclosure in regard to first quarter 2002 earnings.
3. Form 8-K - Was furnished on January 25, 2002 as Regulation F-D
Disclosure in regard to restated financials with the pooling of
interest with Manufacturers Bancshares.
4. Form 8-K - Was furnished on January 17, 2002 as Regulation F-D
Disclosure in regard to fourth quarter 2001 and fiscal year 2001
earnings.
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
THE COLONIAL BANCGROUP, INC.
Date: May 14, 2002 By: /s/ W. Flake Oakley, IV
---------------------------
W. Flake Oakley, IV
Its Chief Financial Officer
29