For Banks, More Trouble Just Around the Bend

Colonial Bank

Colonial Bank of Montgomery, Alabama (held by Colonial BancGroup (CNB Quote) was next, with a ratio of nonperforming CRE and CCL to total assets of 1.56% as of Sept. 30.

Despite reporting net charge-offs of $121 million during the third quarter, the $26 billion institution's total nonperforming assets ratio increased to 2.75% as of Sept. 30, from 1.69% in June. Colonial's net loss of $61.5 million for the quarter reflected the institution's $159 million provision for loan losses during the quarter. While the provision for the quarter exceeded the net charge-offs, the institution still appeared under-reserved as of Sept. 30, since the annualized ratio of year-to-date net charge-offs to average loans was 1.71%, while the ratio of reserves to total loans was 1.65%.

With similar loan quality performance over the coming quarters, provisions will continue to be elevated and the net losses will continue.

On Nov. 13, the holding company released a statement saying its application to receive TARP money was still pending. Morgan Keegan analyst Robert Patten upgraded the stock to outperform the next day, saying that even if Colonial BancGroup didn't receive a capital infusion via TARP, the company could still be sold at a price close to $4.50.

On Tuesday, the company announced preliminary approval for $550 in TARP money, and shares closed at $3.08, a gain of 54% on the day.