Colonial BancGroup's ( CNB) profit rose 6.7% for the second quarter, helped by growth in net interest income.

The Montgomery-based bank earned $66.52 million, or 43 cents a share, in the quarter, compared with $62.33 million, or 41 cents a share, a year ago. Analysts polled by Thomson First Call were expected earnings of 43 cents a share.

Colonial's net interest income rose 10.1% to $192.09 million compared with the year-ago period, helped by growth in loans and in assets of the mortgage warehouse lending division.

Net interest margin, a measure of the profitability of a bank's deposit and investment operation, went up to 3.81% from 3.72% in the second quarter of 2005.

Average deposits, excluding brokered deposits, rose $2.2 billion, or 13% annualized, over the fourth quarter of 2005. Loans, excluding mortgage warehouse loans, increased $758 million, or 10.5% annualized, from the fourth quarter of 2005.

Non-interest income for the second quarter, excluding one time gains or losses fell 3% from a year ago to $44.9 million.

Colonial's nonperforming assets ratio declined to 0.18% at the end of the second quarter compared with 0.20% a year ago and 0.24% at the end of the first quarter 2006.

"Colonial's record earnings for the second quarter and the first six months of 2006 reflect our solid approach to the expansion of our franchise in growth markets with continued focus on strong organic growth, outstanding credit quality and efficient operations." the company said.

The bank's shares were trading at $25.61, up 38 cents, or 1.5%.
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