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

Dear Shareholder:

Twenty-five years ago, Colonial BancGroup was created with the purchase of one bank with $166 million in assets based in Birmingham, Alabama. For the next 14 years, we grew – but only within the borders of Alabama. While we stayed in one state, we built a strong ­foundation for our franchise with the basic principles that would prove to be rock-solid as we experienced exponential growth during the next eleven years.

We hired smart, hard-working people who love their jobs. They became ambassadors who got to know our customers on a daily basis. They grew with us to create a management team as deep and broad as any in the industry. Twenty-five years later, we continue to believe that our people are our greatest strength.

When interstate banking came along, we decided to expand out of our homestate. We adopted the philosophy that we would expand into America’s most dynamic growth markets. We were creating a bank franchise that would be built around population and new job growth, avoiding slow-growth states altogether.

Colonial Bank followed the road most traveled by ­people who were moving in search of good jobs. First, we went east to Atlanta. Then, in 1996, we bought our first bank in Florida. Later we went to Texas and Nevada, two of the fastest-growing states in the country.

Our growth has been as phenomenal as the states in which we operate. Today, we are the third-largest commercial bank headquartered in Alabama and the fifth-largest commercial bank in the State of Florida. Together, those states comprise 83% of our deposit franchise. In fact, our Florida franchise is bigger than our entire bank was just five years ago.

As we grew, we made another important decision. We kept in place local boards of directors that include business leaders. The local directors have helped us become an integral part of the communities we serve, and that is why we will always keep our local boards of directors.

Early on, we established a conservative credit culture. We make loans to people we know, and we do not sacrifice our credit standards. This philosophy has served us exceedingly well over the years. These lending decisions must first be approved by local loan committees, which include local directors, and not by individuals who might have significant lending authority. This is a key reason our credit quality remains remarkably strong. Even today, we have never been a bank to follow fads, particularly the unwise lending practices of some institutions in recent years.

As we expanded in additional states, we kept our community bank attitude. By that, I mean we want every customer, whether they’re deposit customers or loan customers, to feel they have someone they can talk to at their local Colonial Bank. They don’t have to make long-distance calls to Charlotte or Atlanta or New York. They can place a local call to get the assistance they need.

It is an attitude of personal service – the right way to treat people – which is every bit as appealing to the head of a large commercial organization as it is to the consumer checking account customer. While we are proud that we continue to maintain the personal touch that so many businesses have lost, we are not limited by it. In fact, Colonial is competitive with the biggest banks in America.

We’ve come a long way. Today, we have more than 300 branches with over $22 billion in assets. We recently joined an elite circle when we were recognized as one of only 18 banking institutions on Forbes Magazine’s Platinum 400 list of the best large publicly traded companies in America.

Another honor came when we were invited to ring the closing bell at the New York Stock Exchange on January 29 in honor of the 25th anniversary of the founding of Colonial BancGroup. I know our shareholders and employees share my pride in this national recognition of their hard work and dedication.

As we head into our second quarter-century, I feel extremely optimistic about the future of Colonial. We will continue to focus on increasing the number of customers in the bank and on deepening our relationships with those customers. We’ve built strong new lines of business that complement our core services.

We will continue to benefit from the depth and breadth of our management team and the local boards of directors who keep us in touch with their communities.

We believe our growth will come naturally as we follow the beliefs that have brought us so far. The population in our geographical footprint is expected to grow more than twice as fast as the United States as a whole over the next five years. Population growth and job growth drive the economy. Clearly, we picked the right places to do business – and the right ways to do business. Our high-growth areas are more robust than the national economy when times are good. Even if the economy is not as strong for the country as a whole, our states typically outperform.

We’re aware of concerns that some economists have voiced about the year ahead. But our philosophy remains the same as it was 25 years ago. The economy is going to have its ups and downs. It’s going to change. But the secret to a good bank is that it will play the cards that it is dealt. At Colonial, we simply believe we can play them better than our competition.

We started out as a community bank and, no matter how big we become, we will always maintain our original attitude toward the customer, while providing big bank services. Our small bank attitude is based on service. It’s an attitude of knowing our customers and providing prompt, courteous and efficient service. It is our commitment to this community banking philosophy that makes Colonial Bank a special place for our customers, employees and shareholders.

Thank you for your continued support.


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