DEAR SHAREHOLDERS: During a year of great volatility in markets and world events, I am pleased to report that Colonial turned in its best ever earnings performance in 2003 and an outstanding stock performance with a total shareholder return on our common stock of 51.2% for the year. Your Company posted record net income of $149.9 million and record earnings per share of $1.20. We saw our efforts to enhance our retail banking franchise bear fruit, completed the acquisition of Sarasota Bancorporation and announced the signing of an agreement to acquire P.C.B. Bancorp, Inc., headquartered in Clearwater, Florida. Based on pro forma combined year-end financials, these acquisitions should position Colonial with 44% of assets, 55% of non-time deposits and 41% of its retail branches in the state of Florida.

Opportunity is what Colonial – and this annual report – is all about. We are not a mature bank; we are still growing. We are poised to take advantage of enormous growth opportunities because of our strategic locations in many of the most attractive markets in the United States, including Florida, Georgia, Texas and Nevada. During the past few years we have made a concerted effort to build a solid infrastructure and transform our culture to one that is sales and service focused. We are just now beginning to reap the benefits from these strategic initiatives. We are finding more opportunities to grow our relationships with our existing customer base as well as to expand our presence in our chosen markets in many of the fastest-growing areas of the country. As strong testimony to the success of our growth strategy, Colonial is now the seventh-largest bank in deposits and branch locations in Florida.

We achieved significant non-time deposit and noninterest income growth in 2003. Colonial’s non-time deposits grew $917 million, or 19% during the year. Total deposits increased $449 million or 5% reflecting a reduction in time deposit balances as low interest rates caused customers to seek other investment alternatives such as annuities. Noninterest income for the year was $127 million, an increase of 25%, primarily as the result of increases in revenues from service charges on deposit accounts, as well as increased financial planning services, mortgage origination income and electronic banking services.