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Colonial BancGroup Inc.'s (CNB) second-quarter loss widened, and a key financing deal fell through, causing the bank to say there is now "substantial doubt" about its ability to remain a going concern.

In after-hours trading, Colonial shares were down 11% at 55 cents. The shares are nearly double their March low but still well off the 52-week high of $13.35 in September.

Colonial has suffered heavy losses from construction loans in Florida and other tumbling real estate markets. Now its regulatory problems, and the collapse of a deal that would have infused $300 million into the company, make it critically important to find an investor.

The company said it has met with private-equity firms, but couldn't assure that it would reach any deal. The Federal Reserve ordered Colonial to submit a capital plan by Aug. 21.

In June, the Federal Deposit Insurance Corp. and Alabama Banking Department took oversight of Colonial's banking subsidiary. Regulators slaped the bank with a cease and desist order, saying the bank operated with "inadequate" management and board oversight, capital, loan loss reserve, liquidity, among a slew of other short comings.

Regulators ordered it to take steps to fix its financial condition and performance. The orders followed the departure of Robert Lowder, the company's combative chief executive who built the bank into a $26 billion institution.

Colonial is pursuing options to stay afloat, including the sale or merger of the company. Two weeks ago it announced the sale of 21 Nevada branches. Other options are selling more branches and problem assets, swapping bank-level debt for senior debt, and seeking private capital.

However, Colonial suffered a disappointment as its sale of $300 million in equity to Taylor Bean Whitaker Mortgage Corp. fell apart because the Office of Thrift Supervision didn't complete its approval in time. Raising capital was a condition for Colonial to get capital under the Troubled Asset Relief Program, but the complicated deal required the bank change from a bank to a thrift.

Its quarterly loss widened to $606 million, or $3.02 a share, from $168 million, or 86 cents a share. The latest quarter included charges of $1.87 a share related to a valuation allowance on deferred tax assets and a goodwill write-down.

Net charge-offs surged to 7.02% of average loans from 3.72% in the first quarter.

-By Jay Miller, Dow Jones Newswires; 212-416-2355; jay.miller@dowjones.com