Colonial Bank announces plan to bolster finances

By Steve Green

Wednesday, April 1, 2009 | 9 a.m.

The owner of Colonial Bank, which has 20 branches in Nevada, late Tuesday announced a plan to bolster its finances with a $300 million equity investment and a deal to obtain $536 million in government bailout money.

Under the plan, Colonial BancGroup of Montgomery, Ala., would likely convert from a commercial bank to a savings and loan, or thrift. Thrifts typically focus on home loans and savings accounts.

Colonial Chairman and Chief Executive Robert Lowder announced the $300 million investment by investors led by Taylor, Bean & Whitaker Mortgage Co.

The bank, which lost $880.5 million last year because of bad loans, was required to obtain the equity investment in order to quality for the government to buy shares in the bank for $536 million under its TARP, or troubled assets, program.

Colonial said it plans to continue to operate as a stand-alone publicly-traded company with an independent board of directors and management team. The new investors would own about 75 percent of Colonial's common stock.

"We are pleased to announce this proposed equity investment and to welcome TBW and the (other) investors as shareholders. This transaction should strengthen our financial position and allow Colonial to continue to offer its customers high quality banking services," Lowder said in a statement.

TBW is privately-owned and is a savings and loan holding company regulated by the Office of Thrift Supervision through its ownership of Platinum Community Bancshares, the holding company for Platinum Community Bank, a federal savings bank headquartered in Rolling Meadows, Ill.

Colonial said in its annual report that in Nevada, where it has about a dozen branches in the Las Vegas area, its loans and other assets totaled $976 million at the end of 2008; and deposits totaled $833 million. The Nevada assets at year end included $432 million in construction loans and $200 million in real estate loans. Because of a provision for loan losses totaling $87.7 million, the bank in Nevada lost $86.2 million in 2008 vs. a profit of $29.4 million in 2007, Colonial said.

Colonial BancGroup, with $26 billion in assets, has 351 branches in Florida, Alabama, Georgia, Nevada and Texas.