Fla. failures led to the fall of Colonial

When regulators seized Colonial BancGroup Friday and its assets were sold to North Carolina-based BB&T, Colonial became the largest bank failure of the year. How did the bank go from being one of Alabama's great success stories to being one of the state's most spectacular failures?
Its records and reports to stockholders show the path that brought about that transformation.

Colonial BancGroup's beginning, the 1981 acquisition of Southland Bancorporation and its $166 million in assets, was far less dramatic than its ending.

Bobby Lowder founded the bank and led it. He served as chairman, CEO and president until stepping down three months ago.

For about 15 years, Colonial bought up one Alabama bank after another before taking its first steps outside its home state.

Lowder and his brothers divided the family business of insurance, real estate, construction and banking.

In the mid-1990s, Colonial moved away from its slow growth in Alabama to a rapid expansion in other states where it saw the possibility of making construction loans to pay for building booms.

In 1996, Colonial broke into the Florida market when it purchased Southern Banking Corp., a $232 million operation. Later that year Colonial went into Georgia, purchasing Commercial Bancorp of Georgia, a bank with $233 million in assets.

Once Colonial went into other states, it formed Colonial BancGroup, a holding company that owned the various Colonial Bank operations.

During the next two years, Colonial continued to gobble up Florida banks, with a few in Alabama and Georgia. Between 1996 and 1998, Colonial acquired 14 Florida banks with combined assets of almost $2.4 billion.

By then, Colonial had established itself in a market that would eventually play a key role in its failure.

After buying TB&T Inc., a $111 million Texas bank in 1998, Colonial took a three-year breather from acquisitions. link.....