In July 2000, we announced definite plans to exit the mortgage servicing business. As of December 31, 2000, all sales of servicing rights and transfers of the underlying loans were complete. The financial results for this line of business have been separately reported as discontinued operations in all periods presented.

The Future of Colonial
Looking ahead, there is no doubt we face considerable competition in all of our markets. Yet we believe we have the right blueprint to succeed and provide the value you deserve as our shareholders. We intend to increase our noninterest income by expanding our existing customer relationships while creating new ones. We are determined to hire team-centered, sales-oriented people who have their customers’ success as their primary objective. Moreover, we remain committed to growth and improving shareholder value.

Sincerely,

Robert E. Lowder
Chairman of the Board and
Chief Executive Officer