This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Corus, Colonial on the Brink

Colonial's Confusing Communications

The federal raid at Colonial comes as the company faces scrutiny for its litany of confusing announcements related to its application for government bailout funds.

According to published reports, federal agents from the Federal Bureau of Investigation, Treasury Department and Department of Housing and Urban Development were seen carying boxes from Colonial's office. The office of the TARP Inspector General would only confirm that agents served a search warrant in Orlando and at one other Florida location, according to WESH News in Orlando. According to, federal agents also raided the offices of Taylor, Bean & Whitaker Mortgage, which in March had agreed to invest $300 million in Colonial.

Colonial BancGroup had total assets of $25 billion as of June 30 and operates 352 branches in Florida, Alabama, Georgia, Nevada and Texas. The company announced a second-quarter net loss of $606 million, or $3.02 per common share. This left the company's main subsidiary, Colonial Bank, adequately capitalized with a Tier 1 leverage ratio of 4.18% and a total risk-based capital ratio of 9.21%.

Colonial has a major residential lending operation, with $12.4 billion in first mortgage originations in 2008.

Colonial is operating under a cease and desist order with the Fed, FDIC and State of Alabama. An earlier memorandum of understanding between the holding company and FDIC and state regulators required Colonial Bank to achieve and maintain respective Tier 1 leverage and total risk-based capital ratios of at least 8% and 12% by March 31. These ratios normally need to be at least 5% and 10% for a bank to be considered well-capitalized.

Colonial made several attempts to raise capital, publicized in several ill-advised announcements made by the company. For starters, Colonial said on Dec. 2 in a Securities and Exchange Commission filing that the Treasury had approved its application to receive a capital infusion of $553 million via the Troubled Asset Relief Program, or TARP.

Not until Jan. 27 did Colonial share an important feature of its "approval" for TARP money -- the company was first required to raise $300 million in new capital from other sources.

Then on March 31, Colonial announced a deal with wholesale mortgage lender Taylor, Bean & Whitaker to raise $300 million. The company didn't actually receive any money that day, since the investor group wouldn't fork over the money until receiving confirmation from Colonial that the TARP money would be received.
3 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
JPM $62.00 2.00%
AAPL $110.76 0.34%
FB $93.98 2.10%
GOOG $641.28 2.30%
TSLA $246.00 -0.63%


Chart of I:DJI
DOW 16,776.43 +304.06 1.85%
S&P 500 1,987.05 +35.69 1.83%
NASDAQ 4,781.2640 +73.4890 1.56%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs