SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported): July 17, 2001
THE COLONIAL BANCGROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-13508 63-0661573
(State of Incorporation) (Commission File No.) (IRS Employer I.D. No.)
Colonial Financial Center, Suite 800
One Commerce Street, Montgomery, Alabama 36104
(Address of Principal Executive Office) (Zip code)
Registrant's telephone number, including area code: 334-240-5000
Item 9. Regulation FD Disclosure
For more information contact: July 17, 2001
Lisa Free (334) 240-5105
Flake Oakley (334) 240-5061
COLONIAL BANCGROUP ANNOUNCES
QUARTERLY EARNINGS
. Income from continuing operations was $30 million or $.27 per share for the
quarter
. Cash earnings per share of $.28 for the quarter and $.55 year to date
. Annualized internal loan growth was 8% for the quarter
. 18% increase in noninterest income for the quarter over the prior year
. Annualized retail deposit growth, excluding time deposits, was 13% for the
quarter
MONTGOMERY, AL --- The Colonial BancGroup, Inc. Chairman and CEO, Robert E.
Lowder announced today that for the quarter ended June 30, 2001, income from
continuing operations was $30,090,000 or $.27 per diluted share. Cash earnings
per diluted share for the quarter were $.28. "In spite of difficult economic
conditions, we reported earnings in line with our expectations," said Lowder.
Net interest income for the quarter increased 3% over the second quarter of
2000 and 2% over the first quarter of 2001. During the quarter, the Company
securitized $307 million of single-family real estate loans and transferred
these
2
securities to the investment portfolio. Adjusting for this securitization, gross
loans increased $187 million from March 31, 2001 to June 30, 2001 representing
an 8% annualized growth rate for the quarter and a 13% annualized growth rate
year to date.
Noninterest income increased $3,352,000, or 18% for the quarter ended June
30, 2001 compared to June 30, 2000. This increase is primarily attributable to
service charges on deposit accounts, cash management services, mortgage
origination income and electronic banking fees and includes $756,000 in
securities gains. In support of our sales culture, we continue to make strategic
investments in our product and service offerings, technology systems, incentives
and our branch network to enhance our competitive presence in existing markets.
"I am convinced we have the best people in the best growth markets in the
country. Our philosophy is to make strategic investments in the tools our people
need to optimize our customers' financial success," said Lowder. Accordingly,
noninterest expenses increased 10% for the quarter ended June 30, 2001 as
compared to the same period last year, primarily due to increases in salaries
and employee benefits as well as increased occupancy and equipment expenses.
As expected, based on softening economic conditions, nonperforming assets
increased to 0.72% of loans and other real estate owned compared to 0.53% at
March 31, 2001. Most of this increase was from one loan relationship.
Annualized net charge-offs remained low at 0.22% of loans year to date, well
below industry averages. Colonial continues to focus its efforts on
relationship-based lending to known customers in its local market areas. The
loan loss provision for the current quarter was $7,433,000 compared
3
to $7,414,000 for the second quarter of 2000. Loan loss reserves as a percentage
of loans increased from 1.15% at March 31, 2001 to 1.17% at June 30, 2001.
In 2000, the Company exited the mortgage servicing business. The financial
results for this line of business have been separately reported as discontinued
operations in all periods presented.
----------------------------------------------------------------------------------------------------------------------------------
Six Months Ended June 30, Three Months Ended June 30,
Earnings Summary % Change % Change
(Dollars in thousands, except per share amounts) 2001 2000 00 to 01 2001 2000 00 to 01
----------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations (net of income taxes) $58,532 $60,656 -4% $30,090 $30,123 0%
Income (Loss) from discontinued operations (net of income
taxes) - (4,699) - (4,107)
Net income $58,532 $55,957 $30,090 $26,016
Earnings per share:
Income from continuing operations (net of income taxes)
Basic $ 0.53 $ 0.55 -4% $ 0.27 $ 0.27 0%
Diluted $ 0.53 $ 0.54 -2% $ 0.27 $ 0.27 0%
Cash earnings from continuing operations (net of income
taxes) (1)
Basic $ 0.56 $ 0.57 -2% $ 0.29 $ 0.28 4%
Diluted $ 0.55 $ 0.56 -2% $ 0.28 $ 0.28 0%
During the second quarter, Colonial entered a definitive agreement to
acquire Manufacturers Bank of Florida, headquartered in Tampa. Manufacturers,
with assets of $291 million as of March 31, 2001, operates four offices in
Hillsborough County and will become a part of Colonial's Bay Area Region also
headquartered in Tampa. Colonial also announced that it entered a branch
purchase and assumption agreement to acquire 13 Union Planters' offices located
in Alabama and Florida. Nine of these offices, with $244 million in deposits,
are located in the Tampa Bay and Naples areas. This branch purchase coupled
with the Manufacturers' merger will increase Colonial's Bay Area Region to 21
branch offices and approximately $850 million in total assets making Colonial
Bank the fifth
4
largest bank in Hillsborough County.
Colonial BancGroup currently operates 243 offices in Alabama, Florida,
Georgia, Nevada, Tennessee and Texas and is traded on the New York Stock
Exchange under the symbol CNB. In most newspapers the stock is listed as
ColBgp.
--------------------------------------------------------------------------------------------------------------------------------
Three Months Ended June 30,
Earnings Summary % Change
(Dollars in thousands, except per share amounts) 2001 2000 00 to '01
--------------------------------------------------------------------------------------------------------------------------------
Continuing Operations:
Net interest income (taxable equivalent) $102,756 $100,177 3%
Provision for possible loan losses 7,433 7,414 0%
Noninterest income 21,862 18,510 18%
Noninterest expense 69,367 62,981 10%
Income from continuing operations (net of income taxes) $ 30,090 $ 30,123 0%
Income (Loss) from discontinued operations (net of income taxes) - (4,107)
Net income $ 30,090 $ 26,016
Earnings per share:
Income from continuing operations (net of income taxes)
Basic $ 0.27 $ 0.27 0%
Diluted $ 0.27 $ 0.27 0%
Cash earnings from continuing operations (net of income taxes) (1)
Basic $ 0.29 $ 0.28 4%
Diluted $ 0.28 $ 0.28 0%
Selected Ratios:
Income from continuing operations (net of income taxes)
Average assets 0.97% 1.07%
Average shareholders' equity 15.08% 17.48%
Continuing Operations Ratios:
Efficiency ratio 56.00% 53.03%
Noninterest income (annualized) to average assets 0.69% 0.65%
Noninterest expense (annualized) to average assets 2.26% 2.21%
Cash Earnings from continuing operations (net of income taxes) (1)
Average assets 1.02% 1.11%
Average shareholders' equity 15.84% 18.22%
Cash Basis Ratios:
Efficiency ratio 54.95% 51.94%
Noninterest income (annualized) to average assets 0.69% 0.65%
Noninterest expense (annualized) to average assets 2.20% 2.17%
Consolidated:
Net interest margin 3.53% 3.85%
Equity to assets 6.56% 5.99%
Tier one leverage 6.46% 6.30%
--------------------------------------------------------------------------------------------------------------------------------
(1) Cash earnings excludes amortization of intangibles.
5
Six Months Ended June 30,
Earnings Summary % Change
(Dollars in thousands, except per share amounts) 2001 2000 00 to 01
---------------------------------------------------------------------------------------------------------------------
Continuing Operations:
Net interest income (taxable equivalent) $203,397 $198,398 3%
Provision for possible loan losses 16,897 12,961 30%
Noninterest income 42,312 36,957 14%
Noninterest expense 135,751 125,099 9%
Income from continuing operations (net of income taxes) $ 58,532 $ 60,656 -4%
Income (Loss) from discontinued operations (net of income taxes) - (4,699)
Net income $ 58,532 $ 55,957
Earnings per share:
Income from continuing operations (net of income taxes)
Basic $ 0.53 $ 0.55 -4%
Diluted $ 0.53 $ 0.54 -2%
Cash earnings from continuing operations (net of income taxes) (1)
Basic $ 0.56 $ 0.57 -2%
Diluted $ 0.55 $ 0.56 -2%
Selected Ratios:
Income from continuing operations (net of income taxes)
Average assets 0.96% 1.09%
Average shareholders' equity 14.98% 17.59%
Continuing Operations Ratios:
Efficiency ratio 55.68% 53.14%
Noninterest income (annualized) to average assets 0.69% 0.67%
Noninterest expense (annualized) to average assets 2.24% 2.24%
Cash Earnings from continuing operations (net of income taxes) (1)
Average assets 1.01% 1.14%
Average shareholders' equity 15.75% 18.33%
Cash Basis Ratios:
Efficiency ratio 54.34% 52.03%
Noninterest income (annualized) to average assets 0.69% 0.67%
Noninterest expense (annualized) to average assets 2.19% 2.19%
Consolidated:
Net interest margin 3.56% 3.86%
Equity to assets 6.56% 5.99%
Tier one leverage 6.46% 6.30%
---------------------------------------------------------------------------------------------------------------------
(1) Cash earnings excludes amortization of intangibles.
---------------------------------------------------------------------------------------------------------------------
% Change
June 30, Dec. 31, June 30, June 30,
2001 2000 2000 00 to 01
---------------------------------------------------------------------------------------------------------------------------------
Statement of Condition Summary
Total assets $12,275,492 $11,727,637 $11,620,041 6%
Loans 9,759,185 9,416,770 8,921,687 9%
Total earning assets 11,563,838 10,936,187 10,657,594 9%
Deposits 8,324,605 8,143,017 8,251,265 1%
Shareholders' equity 805,804 756,852 696,253 16%
Book value per share $ 7.28 $ 6.86 $6.32 15%
--------------------------------------------------------------------------------------------------------------------------------
6
June 30, Dec. 31, June 30,
2001 2000 2000
---------------------------------------------------------------------------------------------------
Nonperforming Assets
Total non-performing assets ratio 0.72% 0.54% 0.52%
Allowance as a percent of nonperforming loans 192% 256% 256%
Net charge-offs ratio (annualized):
Quarter to date 0.29% 0.25% 0.19%
Year to date 0.22% 0.21% 0.18%
---------------------------------------------------------------------------------------------------
More detailed information on Colonial BancGroup's quarterly earnings is
available on the company's website at www.colonialbank.com or in the Current
--------------------
Report on Form 8-K filed today with the Securities and Exchange Commission.
Copies of the Form 8-K are also available from the contact persons listed above.
This release and the above referenced Current Report on Form 8-K of which
this release forms a part contain "forward-looking statements" within the
meaning of the federal securities laws. The forward-looking statements in this
release are subject to risks and uncertainties that could cause actual results
to differ materially from those expressed 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 2001 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.
7
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA (Unaudited)
(Dollars in thousands, except per share amounts)
% Change
June 30, December 31, June 30, June 30,
2001 2000 2000 2000 to 2001
-------- ------------ -------- ------------
Statement of Condition Summary
Total assets............................ $12,275,492 $11,727,637 $11,620,041 6%
Loans................................... 9,759,185 9,416,770 8,921,687 9%
Total earning assets.................... 11,563,838 10,936,187 10,657,594 9%
Deposits................................ 8,324,605 8,143,017 8,251,265 1%
Shareholders' equity.................... 805,804 756,852 696,253 16%
Book value per share.................... $ 7.28 $ 6.86 $ 6.32 15%
----------- ----------- ----------- --
Six Months Ended June 30, Three Months Ended June 30,
---------------------------------- ---------------------------------
% Change % Change
2001 2000 2000 to 2001 2001 2000 2000 to 2001
---- ---- ------------ ---- ---- ------------
Earnings Summary
Continuing Operations:
Net interest income (taxable equivalent)............ $203,397 $198,398 3% $102,756 $100,177 3%
Provision for possible loan losses.................. 16,897 12,961 30% 7,433 7,414 0%
Noninterest income.................................. 42,312 36,957 14% 21,862 18,510 18%
Noninterest expense................................. 135,751 125,099 9% 69,367 62,981 10%
Income from continuing operations (net of income taxes) $ 58,532 $ 60,656 -4% $ 30,090 $ 30,123 0%
Loss from discontinued operations
(net of income taxes)............................. - (4,699) - (4,107)
Net income............................................. $ 58,532 $ 55,957 $ 30,090 $ 26,016
Average shares outstanding............................. 110,594 111,249 110,685 110,551
Average diluted shares outstanding..................... 111,554 112,015 111,684 111,274
Earnings per share:
Income from continuing operations (net of income taxes)
Basic............................................... $ 0.53 $ 0.55 -4% $ 0.27 $ 0.27 0%
Diluted............................................. $ 0.53 $ 0.54 -2% $ 0.27 $ 0.27 0%
Cash earnings from continuing operations
(net of income taxes) (1)
Basic............................................... $ 0.56 $ 0.57 -2% $ 0.29 $ 0.28 4%
Diluted............................................. $ 0.55 $ 0.56 -2% $ 0.28 $ 0.28 0%
Selected Ratios:
Income from continuing operations (net of income taxes)
Average assets....................................... 0.96% 1.09% 0.97% 1.07%
Average shareholders' equity......................... 14.98% 17.59% 15.08% 17.48%
Continuing Operations Ratios:
Efficiency ratio.................................... 55.68% 53.14% 56.00% 53.03%
Noninterest income (annualized) to average assets... 0.69% 0.67% 0.69% 0.65%
Noninterest expense (annualized) to average
assets............................................ 2.24% 2.24% 2.26% 2.21%
Cash Earnings (net of income taxes) (1)
Average assets....................................... 1.01% 1.14% 1.02% 1.11%
Average shareholders' equity......................... 15.75% 18.33% 15.84% 18.22%
Cash Basis Ratios:
Efficiency ratio.................................... 54.34% 52.03% 54.95% 51.94%
Noninterest income (annualized) to average assets... 0.69% 0.67% 0.69% 0.65%
Noninterest expense (annualized) to average assets.. 2.19% 2.19% 2.20% 2.17%
Consolidated:
Net interest margin................................. 3.56% 3.86% 3.53% 3.85%
Equity to assets.................................... 6.56% 5.99%
Tier one leverage................................... 6.46% 6.30%
-----------
(1) Cash earnings excludes amortization of intangibles.
June 30, December 31, June 30,
2001 2000 2000
-------- ------------ --------
Nonperforming Assets
Total non-performing assets ratio.............. 0.72% 0.54% 0.52%
Allowance as a percent of nonperforming loans.. 192% 256% 256%
Net charge-offs ratio (annualized):
Quarter to date........................... 0.29% 0.25% 0.19%
Year to date.............................. 0.22% 0.21% 0.18%
8
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION (Unaudited)
(Dollars in thousands, except per share amounts)
June 30, December 31, June 30,
2001 2000 2000
----------- ----------- -----------
Assets:
Cash and due from banks............................................................ $ 267,024 $ 348,891 $ 361,432
Interest-bearing deposits in banks and federal funds sold.......................... 137,072 15,855 86,936
Securities available for sale...................................................... 1,600,845 1,449,386 1,586,907
Investment securities.............................................................. 37,463 44,310 52,046
Mortgage loans held for sale....................................................... 29,273 9,866 10,018
Loans.............................................................................. 9,759,185 9,416,770 8,921,687
Less:
Allowance for possible loan losses............................................... (113,706) (107,165) (101,390)
----------- ----------- -----------
Loans, net......................................................................... 9,645,479 9,309,605 8,820,297
Premises and equipment, net........................................................ 183,250 184,831 187,878
Excess of cost over tangible and identified intangible
assets acquired, net............................................................. 91,585 74,393 76,989
Mortgage servicing rights.......................................................... - - 81,800
Other real estate owned............................................................ 10,813 8,928 7,011
Accrued interest and other assets.................................................. 272,688 281,572 348,727
----------- ----------- -----------
Total.............................................................................. $12,275,492 $11,727,637 $11,620,041
----------- ----------- -----------
Liabilities and Shareholders' Equity:
Deposits............................................................................ $ 8,324,605 $ 8,143,017 $ 8,251,265
FHLB short-term borrowings.......................................................... 100,000 425,000 525,000
Other short-term borrowings......................................................... 1,410,295 1,463,328 1,354,657
Subordinated debt................................................................... 260,058 111,900 111,939
Trust preferred securities.......................................................... 70,000 70,000 70,000
FHLB long-term debt................................................................. 1,121,718 547,022 372,250
Other long-term debt................................................................ 88,064 102,325 134,583
Other liabilities................................................................... 94,948 108,193 104,094
----------- ----------- -----------
Total liabilities................................................................... 11,469,688 10,970,785 10,923,788
Shareholders' equity:
Common Stock, $2.50 par value; 200,000,000 shares authorized
113,090,845, 113,081,198 and 113,075,283 shares issued at
June 30, 2001, December 31, 2000 and June 30, 2000,
respectively..................................................................... 282,727 282,703 282,688
Treasury shares (2,376,746, 2,773,782 and 2,882,076 at June 30, 2001,
December 31, 2000 and June 30, 2000, respectively)............................... (22,571) (26,467) (27,500)
Additional paid in capital........................................................ 119,731 118,600 118,824
Retained earnings................................................................. 422,459 390,442 357,926
Unearned compensation............................................................. (4,027) (2,541) (3,421)
Accumulated other comprehensive income (loss), net of taxes....................... 7,485 (5,885) (32,264)
----------- ----------- -----------
Total shareholders' equity.......................................................... 805,804 756,852 696,253
----------- ----------- -----------
Total............................................................................... $12,275,492 $11,727,637 $11,620,041
----------- ----------- -----------
9
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share amounts)
Six Months Ended Three Months Ended
June 30, June 30,
------------------ ------------------
2001 2000 2001 2000
-------- -------- -------- --------
Interest Income:
Interest and fees on loans.......................................... $411,791 $376,638 $203,322 $195,644
Interest on investments............................................. 48,755 54,007 23,234 27,322
Other interest income............................................... 1,435 1,255 697 753
-------- -------- -------- --------
Total interest income............................................... 461,981 431,900 227,253 223,719
-------- -------- -------- --------
Interest Expense:
Interest on deposits................................................ 178,634 163,858 85,203 86,072
Interest on short-term borrowings................................... 42,468 41,505 19,223 22,734
Interest on long-term debt.......................................... 39,086 29,890 20,872 15,585
-------- -------- -------- --------
Total interest expense.............................................. 260,188 235,253 125,298 124,391
-------- -------- -------- --------
Net Interest Income................................................. 201,793 196,647 101,955 99,328
Provision for possible loan losses.................................. 16,897 12,961 7,433 7,414
-------- -------- -------- --------
Net Interest Income After Provision for Possible Loan Losses........ 184,896 183,686 94,522 91,914
-------- -------- -------- --------
Noninterest Income:
Service charges on deposit accounts................................. 19,761 18,678 10,475 9,404
Wealth Management................................................... 4,524 4,942 2,282 2,381
Electronic Banking.................................................. 3,147 2,693 1,620 1,406
Mortgage Origination................................................ 3,518 2,410 1,905 1,214
Securities gains (losses), net...................................... 1,899 (61) 756 (69)
Other income........................................................ 9,463 8,295 4,824 4,174
-------- -------- -------- --------
Total noninterest income............................................ 42,312 36,957 21,862 18,510
-------- -------- -------- --------
Noninterest Expense:
Salaries and employee benefits...................................... 69,049 62,352 35,138 31,500
Occupancy expense of bank premises, net............................. 16,679 14,691 8,594 7,390
Furniture and equipment expenses.................................... 14,355 14,244 7,197 7,264
Amortization of intangibles......................................... 3,270 2,601 1,639 1,299
Other expense....................................................... 32,398 31,211 16,799 15,528
-------- -------- -------- --------
Total noninterest expense........................................... 135,751 125,099 69,367 62,981
-------- -------- -------- --------
Income from continuing operations before income taxes............... 91,457 95,544 47,017 47,443
Applicable income taxes............................................. 32,925 34,888 16,927 17,320
-------- -------- -------- --------
Income from continuing operations................................... 58,532 60,656 30,090 30,123
Discontinued Operations:
Net loss from discontinued operations and loss on disposal,
net of income taxes of $0, $(2,844), $0 and $(2,486) for the six
months ended June 30, 2001 and 2000 and for the three
months ended June 30, 2001 and 2000 .............................. - (4,699) - (4,107)
-------- -------- -------- --------
Net Income.......................................................... $ 58,532 $ 55,957 $ 30,090 $ 26,016
-------- -------- -------- --------
Earnings per share:
Income from continuing operations:
Basic............................................................. $0.53 $0.55 $0.27 $0.27
Diluted........................................................... $0.53 $0.54 $0.27 $0.27
Net Income
Basic............................................................. $0.53 $0.50 $0.27 $0.24
Diluted........................................................... $0.53 $0.50 $0.27 $0.23
10
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
AVERAGE VOLUME AND RATES
(Unaudited)
(Dollars in thousands)
------------------------------------------------------------------------------------------------------------------------------------
Three Months Ended
------------------------------------------------------------------------------------------------------------------------------------
June 30, March 31, June 30,
2001 2001 2000
------------------------------------------------------------------------------------------------------------------------------------
Average Average Average
Volume Interest Rate Volume Interest Rate Volume Interest Rate
------------------------------------------------------------------------------------------------------------------------------------
Assets
Loans, net............... $10,121,974 $203,111 8.05% $ 9,660,125 $208,439 8.73% $ 8,765,295 $195,438 8.96%
Mortgage loans held for
sale.................... 22,788 382 6.69% 11,987 195 6.51% 19,895 424 8.52%
Investment securities
and securities
available for sale
and other
interest-earning assets 1,509,902 24,557 6.51% 1,592,557 26,905 6.76% 1,690,215 28,699 6.79%
---------------------------------------------------- ----------------------- -----------------------
Total interest-earning
assets(1)............... 11,654,664 $228,050 7.84% 11,264,669 $235,539 8.45% 10,475,405 $224,561 8.61%
---------------------------------------------------- ----------------------- -----------------------
Nonearning assets........ 649,082 664,459 905,494
---------------------------------------- ----------- -----------
Total assets........... $12,303,746 $11,929,128 $11,380,899
------------------------------------------------------------------------------------------------------------------------------------
Liabilities and
Shareholders' Equity:
Interest-bearing deposits $ 7,124,565 $ 85,202 4.80% $ 7,116,844 $93,432 5.32% $ 6,805,097 $ 86,072 5.09%
Short-term borrowings.... 1,704,153 19,224 4.52% 1,623,323 23,244 5.81% 1,451,161 22,733 6.30%
Long-term debt........... 1,404,817 20,988 6.00% 1,210,291 18,401 6.17% 955,996 15,182 6.39%
---------------------------------------------------- ----------------------- -----------------------
Total interest-bearing
liabilities............. 10,233,535 $125,414 4.92% 9,950,458 $135,077 5.51% 9,212,254 $123,987 5.41%
---------------------------------------------------- ----------------------- -----------------------
Noninterest-bearing
demand deposits......... 1,181,195 1,100,535 1,365,427
Other liabilities........ 97,734 108,420 108,913
---------------------------------------- ----------- -----------
Total liabilities........ 11,512,464 11,159,413 10,686,594
Shareholders' equity..... 791,282 769,715 694,305
---------------------------------------- ----------- -----------
Total liabilities and
shareholders' equity...... $ 12,303,746 $11,929,128 $11,380,899
------------------------------------------------------------------------------------------------------------------------------------
Rate differential.......... 2.92% 2.94% 3.20%
Net yield on
interest-earning assets... $102,636 3.53% $100,462 3.59% $100,574 3.85%
------------------------------------------------------------------------------------------------------------------------------------
(1) Interest earned and average rates on obligations of states and political
subdivisions are reflected on a tax equivalent basis. Tax equivalent interest
earned is : actual interest earned times 145%. The taxable equivalent adjustment
has given effect to the disallowance of interest expense deductions, for federal
income tax purposes, related to certain tax-free assets.
Note: Above table of average volume and rates is reflected on Colonial
BancGroup, Inc. consolidated basis.
11
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
AVERAGE VOLUME AND RATES
(Unaudited)
(Dollars in thousands)
Six Months Ended June 30,
-------------------------------------------------------------
2001 2000
---------------------------- -----------------------------
Average Average
Volume Interest Rate Volume Interest Rate
----------- -------- ---- ----------- ---------- ----
Assets
Loans, net of unearned income............................ $ 9,892,326 $411,545 8.38% $ 8,559,695 $ 376,082 8.83%
Mortgage loans held for sale............................. 17,417 577 6.63% 22,815 953 8.35%
Investment securities and securities available for sale
and other interest-earning assets....................... 1,551,001 51,462 6.65% 1,673,225 56,586 6.77%
----------- -------- ----------- ----------
Total interest-earning assets(1)......................... 11,460,744 $463,584 8.14% 10,255,735 $ 433,621 8.49%
----------- -------- ----------- ----------
Nonearning assets........................................ 656,727 935,704
----------- -----------
Total assets........................................... $12,117,471 $11,191,439
Liabilities and Shareholders' Equity:
Interest-bearing deposits................................ $ 7,120,725 $178,634 5.03% $ 6,699,492 $ 163,858 4.92%
Short-term borrowings.................................... 1,663,961 42,468 5.15% 1,385,345 41,505 6.02%
Long-term debt........................................... 1,308,091 39,086 6.04% 972,958 30,736 6.35%
----------- -------- ----------- ----------
Total interest-bearing liabilities....................... 10,092,777 $260,188 5.20% 9,057,795 $ 236,099 5.24%
----------- -------- ----------- ----------
Noninterest-bearing demand deposits...................... 1,141,088 1,328,169
Other liabilities........................................ 103,048 110,321
----------- -----------
Total liabilities........................................ 11,336,913 10,496,285
Shareholders' equity..................................... 780,558 695,154
----------- -----------
Total liabilities and shareholders' equity................. $12,117,471 $11,191,439
Rate differential.......................................... 2.94% 3.25%
Net yield on interest-earning assets....................... $203,396 3.56% $ 197,522 3.86%
(1) Interest earned and average rates on obligations of states and political
subdivisions are reflected on a tax equivalent basis. Tax equivalent
interest earned is : actual interest earned times 145%. The taxable
equivalent adjustment has given effect to the disallowance of interest
expense deductions, for federal income tax purposes, related to certain tax-
free assets.
Note: Above table of average volume and rates is reflected on Colonial
BancGroup, Inc. consolidated basis.
12
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
NONPERFORMING ASSETS (Unaudited)
(Dollars in thousands)
June 30, December 31, June 30,
2001 2000 2000
---------- ------------ ----------
Nonaccrual loans........................ $58,238 $40,624 $38,380
Restructured loans...................... 1,137 1,161 1,185
---------- ---------- ----------
Total nonperforming loans............. 59,375 41,785 39,565
Other real estate owned
and in substance
foreclosures........................... 10,813 8,928 7,011
---------- ---------- ----------
Total nonperforming
assets............................... $70,188 $50,713 $46,576
---------- ---------- ----------
Aggregate loans contractually
past due 90 days for which interest
is being accrued...................... $20,080 $ 9,841 $ 6,227
Net charge-offs:
Quarter to date.................... $ 7,339 $ 4,998 $4,117
Year to date....................... $10,922 $18,508 $7,561
RATIOS
Period end:
Total nonperforming
assets as a percent of
net loans and other
real estate........................ 0.72% 0.54% 0.52%
Allowance as a percent
of nonperforming assets.............. 162% 211% 218%
Allowance as a percent
of nonperforming loans............... 192% 256% 256%
Net charge-offs as a
percent of average net
loans (annualized):
Quarter to date.................... 0.29% 0.25% 0.19%
Year to date....................... 0.22% 0.21% 0.18%
June 30, 2001 December 31, 2000 June 30, 2000
ALLOWANCE FOR POSSIBLE --------------------- --------------------- ---------------------
LOAN LOSSES PERCENT BY Percent Percent Percent
CATEGORY Loans reserve Loans reserve Loans reserve
-------------------------- --------------------- --------------------- ---------------------
Single Family Real Estate:
Short Term lines of credit
secured by real estate
loans held for sale................... $ 857,450 0.25% $ 376,995 0.25% $ 272,864 0.25%
1-4 Family real estate
portfolio - held to
maturity.............................. 2,160,852 0.50% 2,562,708 0.50% 2,606,651 0.50%
Other................................... 6,740,883 1.49% 6,477,067 1.44% 6,042,172 1.45%
---------- ---------- ----------
Total loans............................. $9,759,185 1.17% $9,416,770 1.14% $8,921,687 1.14%
---------- ---------- ----------
13
8-K Supplemental
Net Interest Margins
--------------------
Net interest margins declined to 3.53% for the quarter compared to 3.59% for the
first quarter of 2001and 3.62% for the fourth quarter of 2000. The six
reductions in the Federal Funds rate by the Federal Reserve during the year have
had a negative impact on the margin due to the Company's asset sensitive
position in the first three months following rate changes. Thereafter, the
Company is liability sensitive and should benefit from rate reductions as
liabilities catch up and reprice to lower levels. As of June 30, 2001, the
Company has approximately $2.4 billion in certificates of deposit that will
mature and reprice in the next six months at rates that are expected to be
approximately 2.0% below their current cost. The Company expects approximately
$1.0 billion in fixed rate assets to reprice in that same time frame at less
than a 1.0% reduction in rate.
In addition to the rate changes, margins were impacted by the growth in mortgage
warehouse lending volumes which have lower margins due to their relatively low
credit risk. The growth in warehouse loans resulted in an increase of $1.7
million in net interest income for the quarter but caused a six basis point
reduction in the margin compared to the first quarter of 2001.
Loan Growth
-----------
Loan growth for the quarter consisted of the following:
$ Growth (millions) Annualized %
------------------- ------------
Mortgage Warehouse Lending $ 213 132 %
Single-family real estate (52) (13)%
Regional bank lending 26 1 %
----- ---
Total internal growth 187 8 %
Loan securitization (307)
-----
Total $(120)
14
Mortgage warehouse lending consists of a self-contained lending unit that funds
mortgage loans held for sale in the secondary market by various independent
mortgage companies. With lower mortgage rates the balances outstanding have
grown substantially during the second quarter. Loan growth has slowed in the
regional banks as most borrowers are conservatively reducing their demand for
credit due to the slowing of the economy.
Noninterest Expense
-------------------
The 10% increase in noninterest expense was primarily attributable to
investments in the information technology department, salary increases,
additional incentive related compensation, increased pension costs as well as
increases in occupancy and equipment expenses from new branches.
Future Earnings Outlook
-----------------------
Federal Funds Rate reductions already executed by the Federal Reserve thus far
in 2001 should have a modest benefit over the remainder of 2001 in the Company's
net interest margin. Continued rate reductions, however, have postponed a
portion of the benefit for Colonial until 2002 due to the Company's interest
rate sensitivity position.
The pace of loan growth has slowed in 2001 to a single digit growth rate in the
Company's banking markets. Currently, the overall growth rate for loans is
expected to be less than 6% for the remainder of the year excluding the impact
of the mortgage warehouse lending unit.
The Company continues to project net charge-offs for the full year to be between
20 and 25 basis points of average loans and the nonperforming asset ratio to
stay below 80 basis points of related assets.
The net impact of lower rates, slower loan demand and maintenance of strong loan
loss
15
reserves currently result in earnings per share expectations to be in the $1.10
to $1.14 range for 2001 with cash earnings ranging from $1.13 to $1.17.
Acquisitions
------------
As part of the Company's continuing strategy to expand in its high growth
markets, the Company announced in June definitive agreements to acquire
Manufacturer's Bank in a stock for stock exchange and to purchase a total of 13
branches from Union Planters. Additional information concerning these two
agreements follows:
Manufacturers Bank has approximately $225 million in loans with 78% of the
portfolio in loans secured by real estate. There are four branch locations
being acquired in this transaction all located in Hillsborough County, Florida
with approximately $213 million in deposits of which approximately $100 million
are demand and savings deposits.
Manufacturers Bank is expected to be accounted for as a pooling of interests.
It is anticipated that the acquisition will close in the 4th quarter of 2001
with full systems conversion by year end 2001. In connection with this
transaction the Company expects to achieve $3.0 to $3.5 million in pre-tax
annual cost savings with substantially all of those savings effective for the
year 2002. One time costs including acquisition costs, asset write-offs,
severance accruals and adjustments to align loan loss reserves to Colonial
policy standards are expected to be between $1.0 and $2.0 million. The Company
also expects to reissue approximately 800,000 shares of Treasury stock prior to
completing the acquisition.
The Union Planters branch acquisition will be accounted for as a purchase
transaction and will be closed with simultaneous systems conversions early in
the 4th quarter of 2001. Four branches in Elmore County, Alabama, had
approximately $112 million in deposits and $59 million in loans at April 30,
2001. The remaining nine locations are in
16
Florida with approximately $250 million in deposits and an immaterial amount of
loans as of April 30, 2001. The Florida locations are in the following counties:
two in Pasco, three in Hillsborough, one in Manatee, one in Sarasota, one in Lee
and one in Collier. The Company expects to record core deposit premium of 5% or
less. These branches had approximately $100 million in demand and savings
deposits as of April 30, 2001.
These acquisitions are expected to be slightly accretive to earnings in 2002 and
due to their small size relative to the Company as a whole should have no
noticeable impact on EPS in 2002, with a $.01 to .015 positive impact on cash
EPS.
SIGNATURES
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.
--------------------------------
(Registrant)
Date: July 17, 2001 /s/ W. Flake Oakley, IV
--------------------------------
BY: W. Flake Oakley
ITS: Chief Financial Officer
17