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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Colonial Bancgroup | NYSE:CNB | NYSE | Ordinary Share |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 0.00 | - |
The Colonial BancGroup, Inc. (NYSE: CNB) today reported results for the quarter ended June 30, 2009. A summary of the results is presented below.
ColonialBancGroup
ColonialBank
Tier I Risk-Based Capital ratio 5.44% 6.46% Total Risk-Based Capital ratio 9.43% 9.21% Tier I Leverage ratio 3.49% 4.18%"During the second quarter, we took aggressive action related to capital strategies, liquidity, credit quality and expense reduction. Going forward, we believe these actions put our company in a better position to reinforce its value as a gateway to over 400,000 business and household customers who currently bank with Colonial. Our loyal employee force of over 4,500 resourceful individuals and our branch network of over 350 locations continue to serve as a solid foundation for Colonial’s multi-state franchise in spite of difficult economic and regulatory conditions,” said Lewis Beville, Colonial’s CEO and President.
Capital Action Plan
Colonial is actively pursuing a variety of strategic capital alternatives including, but not limited to the following:
Colonial has engaged Citigroup Global Markets Inc. (Citi), as its financial advisor. Since Citi’s engagement on July 9, 2009, Colonial has held private management meetings with potential strategic acquisition candidates and private equity investment firms. Colonial can give no assurances as to whether any of these candidates or firms will enter into a long term agreement with Colonial or whether any other candidates will emerge in the future, and Colonial does not expect to make any further statement about the outcome of such meetings unless an agreement satisfactory to Colonial can be reached.
On July 14, 2009, Colonial announced the signing of an asset purchase agreement with Global Consumer Acquisition Corporation (GCAC) for the sale of 21 Colonial Bank branch offices located in Nevada. Upon the closing of the transaction, GCAC is expected to acquire the branch network including approximately $492 million in deposits and approximately $440 million in loans, for a deposit premium of approximately $28 million or 5.7% of total deposits. The transaction is expected to close on or before September 30, 2009 and is subject to GCAC shareholder and regulatory approval. For a full description of the transaction please refer to a copy of the asset purchase agreement attached to the Current Report on Form 8-K filed by Colonial BancGroup, Inc. on July 14, 2009 with the SEC. The 8-K can be accessed through the Company’s website at www.colonialbank.com or at the SEC’s website at www.sec.gov.
In December 2008, Colonial launched the Colonial 1st program which is an on-going, company-wide review of business practices with goals of enhancing the customer experience and improving the Company’s overall efficiency. Over 4,000 ideas were generated from 30 cross-functional teams from throughout the Company. Colonial plans to implement approximately 700 of those ideas which are expected to generate pre-tax savings of $25 million in 2009 and over $50 million in 2010. As part of the Colonial 1st program, during July 2009, Colonial reduced the overall staffing level by approximately 3% through the elimination of 136 positions company-wide. The total number of employees decreased from 4,930 at December 31, 2008 to 4,627 currently, a 6% decrease.
Termination of Agreement
As previously announced, Colonial signed a stock purchase agreement, as amended, with investors led by Taylor, Bean & Whitaker Mortgage Corp. (TBW) for a $300 million equity investment in Colonial. The transaction was subject to regulatory approvals and certain other conditions, and the terms of the agreement included a provision under which either Colonial or TBW, on behalf of all investors, could terminate if the transaction did not close by July 31, 2009. Since the regulatory approval process with the OTS remained pending as of July 31, 2009 and all of the conditions necessary for closing did not occur as of that date, and since there could be no assurance that the required regulatory approvals or other conditions would be satisfied in the future, both Colonial and TBW elected on July 31, 2009 to mutually terminate the stock purchase agreement. “We are disappointed that the transaction with TBW was not completed by July 31, 2009; however, we have shifted our focus to the alternatives described in the Capital Action Plan,” said Mr. Beville.
Regulatory Update
Colonial is operating under C&D orders with the Federal Reserve, FDIC and the State of Alabama which require that Colonial Bank maintain certain capital levels. As of June 30, 2009, Colonial Bank was not in compliance with the capital requirements for the Tier I Leverage Ratio and Total Risk-Based Capital Ratio. In connection with its efforts to comply with the regulatory orders and requirements, the Board of Directors has retained Promontory Financial Group to advise and assist in satisfying regulatory requirements and expectations. For more information about the C&D orders, refer to the Current Reports on Form 8-K filed by Colonial BancGroup, Inc, on June 9, 2009 and July 27, 2009 which are available on the SEC’s website and in the investor relations portion of Colonial’s website.
Going Concern Assessment
As a result of the above described regulatory actions and the current uncertainties associated with Colonial’s ability to increase its capital levels to meet regulatory requirements, management has concluded that there is substantial doubt about Colonial’s ability to continue as a going concern. The Company expects to update its 2008 financial statements contained in the Company's Annual Report on Form 10-K, prior to filing its June 30, 2009 Form 10-Q. The Company is working to implement the Capital Action Plan described above which includes strategies to increase capital or to sell the Company in order to address the uncertainties giving rise to the going concern assessment.
About Colonial
Colonial BancGroup operates 355 branches in Florida, Alabama, Georgia, Nevada and Texas with over $25 billion in assets. The Company’s common stock is traded on the New York Stock Exchange under the symbol CNB and is located online at www.colonialbank.com. In some newspapers, the stock is listed as ColBgp.
This release includes “forward-looking statements” within the meaning of the federal securities laws. Words such as “believes,” “estimates,” “plans,” “expects,” “should,” “may,” “might,” ”could,” “outlook,” “potential,” “would” and “anticipates,” and the negative of these terms and similar expressions, as they relate to The Colonial BancGroup, Inc. (BancGroup) (including its subsidiaries or its management), are intended to identify forward-looking statements. 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 such statements.
In addition to factors mentioned elsewhere in this release or previously disclosed in BancGroup’s SEC reports (accessible on the SEC’s website at www.sec.gov or on BancGroup’s website at www.colonialbank.com), the following factors, among others, could cause actual results to differ materially from forward-looking statements and future results could differ materially from historical performance. These factors are not exclusive:
Many of these factors are beyond BancGroup’s control. The reader is cautioned not to place undue reliance on any forward looking statements made by or on behalf of BancGroup. Any such statement speaks only as of the date the statement was made or as of such date that may be referenced within the statement. BancGroup does not undertake any obligation to update or revise any forward-looking statements.
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES FINANCIAL HIGHLIGHTS (Unaudited)Statement of Condition Summary (Dollars in millions)
June 30,2009 March 31,2009 June 30,2008As Adjusted (1) % ChangeMarch '09to June '09 % ChangeJune '08to June '09 Assets $ 25,496 $ 26,440 $ 26,031 -4% -2% Cash and deposits in banks 1,540 2,451 553 -37% 178% Loans, net of unearned income 13,541 14,119 15,469 -4% -12% Allowance for loan losses 500 450 247 11% 102% Securities 4,165 3,327 3,454 25% 21% Intangible assets, net 370 449 1,066 -18% -65% Deposits 20,027 20,257 18,349 -1% 9% Shareholders' equity 925 1,576 2,715 -41% -66% Three Months Ended Six Months Ended Key Ratios: June 30,2009 March 31,2009 % ChangeMarch '09to June '09 June 30,2009 June 30,2008As Adjusted (1) % ChangeJune '08to June '09 Colonial BancGroup Capital Ratios: Tier I risk-based capital ratio 5.44 % * 7.33 % -26 % 5.44 % * 10.12 % -46 % Total risk-based capital ratio 9.43 % * 11.56 % -18 % 9.43 % * 14.16 % -33 % Tier I leverage ratio 3.49 % * 5.02 % -30 % 3.49 % * 7.38 % -53 % Tangible common equity ratio (2) (3) 1.04 % 3.21 % -68 % 1.04 % 5.43 % -81 % Tangible capital ratio (3) 2.21 % 4.34 % -49 % 2.21 % 6.60 % -67 % Colonial Bank Capital Ratios: Tier I risk-based capital ratio 6.46 % * 8.02 % -19 % 6.46 % * 9.88 % -35 % Total risk-based capital ratio 9.21 % * 10.78 % -15 % 9.21 % * 12.65 % -27 % Tier I leverage ratio 4.18 % * 5.54 % -25 % 4.18 % * 7.20 % -42 % Net interest margin 1.97 % 2.04 % -3 % 2.00 % 2.91 % -31 % Loans to deposits ratio 67.61 % 69.70 % -3 % 67.61 % 84.30 % -20 % Dividends paid per common share $ - $ - 0 % $ - $ 0.285 -100 % Tangible book value per common share (3) $ 1.29 $ 4.12 -69 % $ 1.29 $ 6.72 -81 % Three Months Ended Six Months EndedEarnings Summary (In thousands, except per share amounts)
June 30,2009 March 31,2009 % ChangeMarch '09to June '09 June 30,2009 June 30,2008As Adjusted (1) % ChangeJune '08to June '09 Net Income: Net interest income $ 117,473 $ 117,812 0 % $ 235,285 $ 356,048 -34 % Provision for loan losses 294,092 257,220 14 % 551,312 114,543 381 % Core noninterest income (3) 53,254 50,449 6 % 103,703 104,370 -1 % Securities gains (losses), net - (837 ) 100 % (837 ) 9,100 -109 % Total noninterest income 53,254 49,612 7 % 102,866 113,470 -9 % Professional services 15,140 10,442 45 % 25,582 13,445 90 % FDIC insurance and other regulatory fees 29,609 11,208 164 % 40,817 8,976 355 % Losses and expenses on other real estate 43,143 7,002 516 % 50,145 5,275 851 % Other core noninterest expenses (3) 139,652 141,924 -2 % 281,576 289,620 -3 % Goodwill impairment 75,000 28,477 163 % 103,477 - 100 % Severance expense - - 0 % - 786 -100 %Net losses (gains) related to the early extinguishment of debt
(3,110 ) (20,320 ) -85 % (23,430 ) 10,043 -333 % Total noninterest expense 299,434 178,733 68 % 478,167 328,145 46 % Income (loss) before income taxes (422,799 ) (268,529 ) -57 % (691,328 ) 26,830 -2677 % Income tax expense (benefit) 182,869 (100,165 ) 283 % 82,704 317 25990 % Net Income (Loss) $ (605,668 ) $ (168,364 ) -260 % $ (774,032 ) $ 26,513 -3019 % Net Income (Loss) Attributable to Colonial BancGroup $ (608,276 ) $ (173,700 ) -250 % $ (781,976 ) $ 15,841 -5036 % Earnings (Loss) Per Share - Diluted $ (3.02 ) $ (0.86 ) -251 % $ (3.89 ) $ 0.09 -4422 % Average diluted shares outstanding 201,219 200,953 201,087 172,857 (1)Amounts for periods prior to 2009 have been restated to reflect the adoption of SFAS 160, Noncontrolling Interests in Consolidated Financial Statements. Under SFAS 160, REIT preferred securities are included in total shareholders' equity and the related dividends are excluded from net income (loss).
(2) This ratio excludes the REIT preferred securities included in total shareholders' equity. (3) Represents non-GAAP measures. * Estimated
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