Colonial demonstrated its flexibility in 2003 following a dramatic shift in market conditions between the first three quarters and the last quarter of the year. In the first seven months of the year, we generated exceptional volume in our mortgage warehouse lending unit, culminating in a record $1.9 billion in warehouse loans outstanding at the end of July. But in the last few months of the year, as long-term interest rates rose, mortgage lending activity decreased dramatically. The slowdown in mortgage lending over the latter part of 2003 caused a 41% decline in the Company’s mortgage warehouse loan balances from year-end 2002, resulting in a decline of 1% in total loan balances at year-end 2003. However, we were pleased with the 6% loan growth, excluding these mortgage warehouse balances, for the year from our regional banks. We were able to achieve this loan growth without sacrificing credit quality as our nonperforming assets as a percent of net loans and ORE were 0.65% and net charge-offs as a percent of average net loans were 0.31% for the year 2003. Credit quality continues to be a priority for Colonial and you will find that our ratios are still among the best for banks with over $10 billion in assets.

In addition, our net interest margin remained constant throughout most of 2003 at 3.42% but improved to 3.53% in the fourth quarter of the year. This reflects an 18 basis point increase from a year earlier and an 11 basis point increase from the previous quarter.

For the past 20 years, we have been known primarily for our focus in commercial real estate lending. But in 2003, we began to realize the full power of our retail banking franchise. Our mix of deposits improved significantly with non-time deposits as a percentage of total deposits increasing from 53.1% at year-end 2002 to 60.1% at year-end 2003, thus improving the Company’s cost of funding. We conducted a very successful deposit campaign, emphasizing our new Secure Access Money Market Account while using branch sales initiatives and advertising to attract $500 million in deposits. The campaign did more than just promote a single product; it provided solutions and built relationships with our customers. And finally, we launched a successful home equity line campaign through our retail branch network that increased that product by 47.5% in 2003.