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Posted: 8/1/2009 7:25:26 AM EST
[Last Edit: 8/1/2009 7:27:43 AM EST by callgood]
ETA- rats, intended for the "So you think it's bad now" thread.

Alluded to in an earlier post. Good ol boy CEO spent a lot of time micromanaging a state university and its athletic program. (from al.com)

Colonial BancGroup said Friday there is "substantial doubt" about its survival, after a fifth straight quarterly loss, mounting loan delinquencies and the collapse of a $300 million investment deal that was supposed to shore up the balance sheet.

Montgomery-based Colonial said it had a loss of $606 million, or $3.02 a share, in the quarter. A year ago, it had a profit of $26.5 million, or 9 cents a share.

The company said it has hired New York-based Citigroup to advise on a sale or merger.

"Management has concluded there is substantial doubt about the Colonial's ability to survive as a going concern," the bank said in a statement.

The rug came out from under Colonial's recovery plans after proposed $300 million investment spearheaded by Florida-based mortgage lender Taylor Bean & Whitaker failed this month.

Progress toward closing the investment stalled and didn't meet Friday's closing deadline, Colonial said. The investment was needed so Colonial could obtain $550 million in government bailout funds.

Massive losses from unpaid loans made to home and condo developers in Nevada and Florida have endangered Colonial's future.

Losses continue to mount and now come to $1.6 billion over the past five quarters. Colonial, with 355 branches in five states, set aside $294 million in the second quarter as a provision for loan losses, up from $79 million a year ago, as customers stopped making payments. Loans not collecting payments as agreed rose to 12.9 percent of total loans, almost three times higher than December.

Regulators have seized 68 U.S. banks so far in 2009, the worst year for bank failures since the Great Depression. The Federal Deposit Insurance Corp. steps in when banks no longer have an adequate cushion between loans to customers and deposits in the vault.

"The crickets are chirping when it comes to Colonial," said Tony Plath, a banking professor at the University of North Carolina Charlotte. "It is just a matter of waiting for regulators at the FDIC to assist them in merging into another, healthier financial institution."

The FDIC can seize banks and sell the assets and liabilities to other lenders, with no interruption in service or losses by insured depositors. Plath said Winston-Salem-based BB&T Corp. and Atlanta-based SunTrust Banks Inc. are the most likely companies to take over for Colonial. Attempts to reach officials with the companies were unsuccessful.

Former Chief Executive Officer and Auburn University trustee Bobby Lowder said in June he would retire from bank he founded in 1981. He was replaced by Lewis Beville, an insurance agency executive and Colonial director since 1997.

Colonial, which has $26 billion in assets, declined 1 cent to close at 61 cents Friday. Shares have fallen 91 percent in the past year. The second-quarter loss is almost six times the company's market value of $124 million.

"Colonial is not insolvent, but it is clearly very weak," said John Kottmeyer, a banking professor at Samford University. "They are going the wrong direction and the next step would clearly seem to be some intervention by the regulators."
Link Posted: 8/1/2009 9:42:50 AM EST
We knew in Nov that a second wave of defaults and bank failures was to arrive mid year. Holy wind-farm BatMan––its mid year.
Link Posted: 8/1/2009 9:56:36 AM EST
Massive losses from unpaid loans made to home and condo developers in Nevada and Florida have endangered Colonial's future.


yeah- 'cause no one saw Fl. and Nv. real estate and espcially condos were vastly overvalued...
Link Posted: 8/1/2009 10:05:59 AM EST
If only Coach Tubberville had held on for one more year

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