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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE #0-07945
THE COLONIAL BANCGROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 63-0661573
(State of Incorporation) (IRS Employer Identification No.)
ONE COMMERCE STREET
POST OFFICE BOX 1108
MONTGOMERY, AL 36101 (334) 240-5000
(Address of principal executive offices) (Telephone No.)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
COMMON STOCK, PAR VALUE $2.50 REGISTERED ON THE NEW YORK STOCK EXCHANGE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
7 1/2% CONVERTIBLE SUBORDINATED DEBENTURES, DUE 2011
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to the
Form 10-K. [ ]
The aggregate market value of the voting stock of the registrant held by
non-affiliates as of February 27, 1998 based on the closing price of $34.00 per
share for Common Stock was $1,334,377,090. (For purposes of calculating this
amount, all directors, officers and principal shareholders of the registrant are
treated as affiliates).
Shares of Common Stock outstanding at February 27, 1998 were 48,092,093.
DOCUMENTS INCORPORATED BY REFERENCE
DOCUMENT PART OF FORM 10-K
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Portions of Annual Report to Shareholders Part I,
for fiscal year ended December 31, 1997 Part II,
as specifically referred to herein. and Part IV
Portions of Definitive Proxy Statement Part III
for 1998 Annual Meeting as specifically
referred to herein.
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PART I
ITEM 1. BUSINESS
GENERAL
The Registrant, The Colonial BancGroup, Inc., is hereinafter referred to as
"BancGroup".
BancGroup, a Delaware corporation, was organized in 1974 and is a bank
holding company under the Bank Holding Act of 1956, as amended (the "BHCA").
BancGroup was originally organized as Southland Bancorporation, and its name was
changed in 1981. In 1997, pursuant to the Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994, BancGroup consolidated its banking
subsidiaries located in Georgia, Florida and Tennessee into its banking
subsidiary in Alabama, Colonial Bank ("Colonial Bank").
Colonial Bank has 125 branches in Alabama, 52 branches in Florida, 14
branches in Georgia and 5 branches in Tennessee. Colonial Bank conducts a
general commercial banking business in its respective service areas and offers
banking services such as the receipt of demand, savings and time deposits credit
card services, safe deposit box services, the purchase and sale of investment
securities and the extension of credit through personal, commercial and mortgage
loans. Colonial Bank is active as a correspondent bank for unaffiliated banks.
Colonial Mortgage Company ("CMC") is a subsidiary of Colonial Bank and is a
mortgage banking company. CMC operates retail offices in Alabama and 4 regional
offices covering 44 states and the District of Columbia which service
approximately $12.9 billion in residential loans. CMC's retail operation offers
conventional, government and jumbo loan products directly to borrowers. CMC's
wholesale operation offers somewhat limited products comprised of conventional
and jumbo loan products to various mortgage brokers. CMC offers a wholesale
government program from its home office in Montgomery, Alabama. CMC has
relationships with all housing agencies such as VA, the Department of Housing
and Urban Development, FHA, FHLMC and FNMA. CMC underwrites, closes and sells
loans according to the guidelines required by these agencies.
At December 31, 1997, BancGroup's banking subsidiary accounted for
approximately 98% of BancGroup's consolidated assets. The principal activity of
BancGroup is to supervise and coordinate the business of its subsidiaries and to
provide them with capital and services. BancGroup derives substantially all of
its income from dividends received from Colonial Bank. Various statutory
provisions and regulatory policies limit the amount of dividends Colonial Bank
may pay without regulatory approval. In addition, federal statutes restrict the
ability of Colonial Bank to make loans to BancGroup.
BancGroup's affiliate bank encounters intense competition in its commercial
banking business, generally from other banks located in its respective
metropolitan and service areas. Colonial Bank competes for interest bearing
funds with other banks and with many issuers of commercial paper and other
securities which are not banks. In the case of larger customers, competition
exists with banks in other metropolitan areas of the United States, many of
which are larger in terms of capital resources and personnel. In the conduct of
certain aspects of its commercial banking business, Colonial Bank competes with
savings and loan associations, credit unions, factors, insurance companies and
other financial institutions.
BancGroup has three direct nonbanking subsidiaries. The Colonial BancGroup
Building Corporation was established primarily to own and lease the buildings
and land used by the banking affiliate of BancGroup. Dadeland Software Services,
Inc. was acquired simultaneously with the Dadeland BancShares, Inc. merger on
September 15, 1997 and owns a 20% interest in a joint venture which provides
data processing, computer software, and related consulting services to banks and
other financial institutions. Colonial Capital II, a Delaware business trust,
issued $70 million in trust preferred securities, which are guaranteed by
BancGroup, in 1997.
BancGroup employs approximately 2,955 persons. BancGroup's principal
offices are located at and its mailing address is: One Commerce Street, Post
Office Box 1108, Montgomery, Alabama 36101. Its telephone number is (334)
240-5000.
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LENDING ACTIVITIES
BancGroup's commercial banking loan portfolio is comprised primarily of
commercial real estate loans (27%) and residential real estate loans (42%).
BancGroup's growth in loans over the past several years has been concentrated in
commercial and residential real estate loans. The lending activities of Colonial
Bank are dependent upon the demands within the local markets of its branches.
Based on this demand, loans collateralized by commercial and residential real
estate have been the fastest growing component of Colonial Bank's loan
portfolio.
BancGroup, through the branches and offices of Colonial Bank, makes loans
for a range of business and personal uses in response to local demands for
credit. Loans are concentrated in Alabama, Tennessee, Georgia and Florida and
are dependent upon economic conditions in those states. The Alabama economy
experiences a generally slow but steady rate of growth, while Georgia and
Florida are experiencing higher rates of growth. The following broad categories
of loans have varying risks and underwriting standards.
- - Commercial Real Estate. Loans classified as commercial real estate loans are
loans which are collateralized by real estate and substantially dependent upon
cash flow from income-producing improvements attached to the real estate. For
BancGroup, these primarily consist of apartments, hotels, office buildings,
shopping centers, amusement/recreational facilities, one to four family
residential housing developments, and health service facilities.
Loans within this category are underwritten based on projected cash flows and
loan-to-appraised-value ratios of 80% or less. The risks associated with
commercial real estate loans primarily relate to real estate values in local
market areas, the equity investments of borrowers, and the borrowers'
experience and expertise. BancGroup has diversified its portfolio of
commercial real estate loans with less than 10% of its total loan portfolio
concentrated in any of the above-mentioned income producing activities.
- - Real Estate Construction. Construction loans include loans to finance single
family and multi-family residential as well as nonresidential real estate.
Loan values for these loans are from 80% to 85% of completed appraised values.
The principal risks associated with these loans are related to the borrowers'
ability to complete the project and local market demand, the sales market,
presales or preleasing, and permanent loan commitments. BancGroup evaluates
presale requirements, preleasing rates, permanent loan take-out commitments,
as well as other factors in underwriting construction loans.
- - Real Estate Mortgages. These loans consist of loans made to finance one to
four family residences and home equity loans on residences. BancGroup may loan
up to 95% of appraised value on these loans without other collateral or
security. The principal risks associated with one to four family residential
loans are the borrowers' debt coverage ratios and real estate values.
- - Commercial, Financial, and Agricultural. Loans classified as commercial,
financial, and agricultural consist of secured and unsecured credit lines and
equipment loans for various industrial, agricultural, commercial, retail, or
service businesses.
The risk associated with loans in this category are generally related to the
earnings capacity and cash flows generated from the individual business
activities of the borrowers. Collateral consists primarily of business
equipment, inventory, and accounts receivables with loan-to-value ratios of
less than 80%. Credit may be extended on an unsecured basis or in excess of
80% of collateral value in circumstances as described in the paragraph below.
- - Installment and Consumer. Installment and consumer loans are loans to
individuals for various purposes. Automobile loans and unsecured loans make up
the majority of these loans. The principal source of repayment is the earning
capacity of the individual borrowers as well as the value of the collateral
for secured loans. Installment and consumer loans are sometimes made on an
unsecured basis or with loan-to-value ratios in excess of 80%.
Collateral values referenced above are monitored by loan officers through
property inspections, reference to broad measures of market values, as well as
current experience with similar properties or collateral. Loans with
loan-to-value ratios in excess of 80% have potentially higher risks which are
offset by other factors
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including the borrower's or guarantors' credit worthiness, the borrower's other
banking relationships, the bank's lending experience with the borrower, and any
other potential sources of repayment.
Colonial bank funds loans primarily with customer deposits approximately
10% of which are considered more rate sensitive or volatile than other deposits.
CERTAIN REGULATORY CONSIDERATIONS
BancGroup is a registered bank holding company subject to supervision and
regulation by the Board of Governors of the Federal Reserve System (the "Federal
Reserve"). As such, it is subject to the BHCA and many of the Federal Reserve's
regulations promulgated thereunder.
Colonial Bank, an Alabama state chartered bank that is a member of the
Federal Reserve System, is subject to supervision and examination by the Federal
Reserve and the Alabama State Banking Department (the "Department"). The
deposits of Colonial Bank are insured by the FDIC to the extent provided by law.
The FDIC assesses deposit insurance premiums the amount of which may, in the
future, depend in part on the condition of Colonial Bank. Moreover, the FDIC may
terminate deposit insurance of Colonial Bank under certain circumstances. Both
the Federal Reserve and the Department have jurisdiction over a number of the
same matters, including lending decisions, branching and mergers.
One limitation under the BHCA and the Federal Reserve's regulations
requires that BancGroup obtain prior approval of the Federal Reserve before
BancGroup acquires, directly or indirectly, more than 5% of any class of voting
securities of another bank. Prior approval also must be obtained before
BancGroup acquires all or substantially all of the assets of another bank, or
before it merges or consolidates with another bank holding company. BancGroup
may not engage in "non-banking" activities unless it demonstrates to the Federal
Reserve's satisfaction that the activity in question is closely related to
banking and a proper incident thereto. Because BancGroup is a registered bank
holding company, persons seeking to acquire 25% or more of any class of its
voting securities must receive the approval of the Federal Reserve. Similarly,
under certain circumstances, persons seeking to acquire between 10% and 25% also
may be required to obtain prior Federal Reserve approval.
In 1989, Congress expressly authorized the acquisition of savings
associations by bank holding companies. BancGroup must obtain the prior approval
of the Federal Reserve (among other agencies) before making such an acquisition,
and must demonstrate that the likely benefits to the public of the proposed
transaction (such as greater convenience, increased competition, or gains in
efficiency) outweigh potential burdens (such as an undue concentration of
resources, decreased or unfair competition, conflicts of interest, or unsound
banking practices).
As a result of enactment in 1991 of the FDIC Improvement Act, banks are
subject to increased reporting requirements and more frequent examinations by
the bank regulatory agencies. The agencies also have the authority to dictate
certain key decisions that formerly were left to management, including
compensation standards, loan underwriting standards, asset growth, and payment
of dividends. Failure to comply with these standards, or failure to maintain
capital above specified levels set by the regulators, could lead to the
imposition of penalties or the forced resignation of management. If a bank
becomes critically undercapitalized, the banking agencies have the authority to
place an institution into receivership or require that the bank be sold to, or
merged with, another financial institution.
In September 1994, Congress enacted the Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994. This legislation, among other things, amended
the BHCA to permit bank holding companies, subject to certain limitations, to
acquire either control or substantial assets of a bank located in states other
than that bank holding company's home state regardless of state law
prohibitions. This legislation became effective on September 29, 1995. In
addition, this legislation also amended the Federal Deposit Insurance Act to
permit, beginning on June 1, 1997 (or earlier where state legislatures provided
express authorization), the merger of insured banks with banks in other states.
The officers and directors of BancGroup and Colonial Bank are subject to
numerous insider transaction restrictions, including limits on the amount and
terms of transactions involving Colonial Bank, on the one
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hand, and its principal stockholders, officers, directors, and affiliates on the
other. There are a number of other laws that govern the relationship between
Colonial Bank and its customers. For example, the Community Reinvestment Act is
designed to encourage lending by banks to persons in low and moderate income
areas. The Home Mortgage Disclosure Act and the Equal Credit Opportunity Act
attempt to minimize lending decisions based on impermissible criteria, such as
race or gender. The Truth-in-Lending Act and the Truth-in-Savings Act require
banks to provide certain disclosure of relevant terms related to loans and
savings accounts, respectively. Anti-tying restrictions (which prohibit, for
instance, conditioning the availability or terms of credit on the purchase of
another banking product) further restrict Colonial Bank's relationships with its
customers.
The bank regulatory agencies have broad enforcement powers over depository
institutions under their jurisdiction, including the power to terminate deposit
insurance, to impose fines and other civil and criminal penalties, and to
appoint a conservator or receiver if any of a number of conditions are met. The
Federal Reserve has broad enforcement powers over bank holding companies,
including the power to impose substantial fines and civil penalties.
The Federal Reserve has established a Year 2000 Supervision Program and
published guidelines for implementing procedures to bring computer software
programs and processing systems into Year 2000 compliance. In compliance with
the guidelines of the Federal Reserve, BancGroup has established a full time
Year 2000 task force to address all Year 2000 compliance issues as well as
enhancements to computer and communications systems resulting from upgrades
initiated in response to Year 2000 issues. Currently BancGroup is in the process
of implementing its plans to bring all major computer systems into Year 2000
compliant status by the last quarter of 1998. Testing of all systems and changes
will begin in the last quarter of 1998 and continue through the full year of
1999. The major computer systems involved are:
- Colonial Bank's mainframe based systems: These systems are provided by
third-party vendors of national stature. Upgrades to these systems are in
progress and are intended to bring the systems into Year 2000 compliant
status and provide enhancements to current capabilities. The costs
associated with these upgrades are part of BancGroup's ongoing operating
costs.
- Colonial Mortgage Company's (CMC) servicing and production systems: CMC's
systems are primarily in-house systems and are currently being rewritten
to Year 2000 compliant status. The cost of the rewrites is estimated to be
$1.0 million and is incremental to BancGroup's ongoing operating costs.
This cost is expected to be incurred through September 30, 1998. In
addition, CMC's computer hardware is being upgraded to Year 2000 compliant
status. This upgrade will also provide additional capacity for the
servicing systems as well as an enhanced capability for production. The
additional annual cost of the mainframe upgrade (approximately $240,000)
is expected to be absorbed through growth in the servicing portfolio and
through increased production.
- Branch automation operating systems: Colonial Bank's branch automation
operating systems are being converted to Windows NT from OS/2. This
conversion along with establishment of an intranet and increased capacity
of communication lines is the most cost effective method of bringing the
operating system to Year 2000 compliant status while allowing for more
efficient flow of information to and from the branches and providing the
highest assurance of continuing vendor support for BancGroup's branch
automation solution. The incremental operating cost for these upgrades
(approximately $400,000 annually) is expected to be absorbed through
operational efficiencies and increased revenue. BancGroup will incur a
one-time pretax charge during the first quarter of 1998 of approximately
$2 million to write-off the remaining book value of the current branch
automation equipment that is not Windows NT compatible.
BancGroup incurred $432,000 in costs during 1997 related to assessing the
status of BancGroup's systems and defining its strategy to bring all systems
into Year 2000 compliance. BancGroup expects to incur certain additional
third-party costs totaling approximately $300,000 in 1998 relating to the
completion of the assessment of BancGroup's systems and the definition of its
strategy to bring all systems into Year 2000 compliance. These costs have been
and will continue to be expensed as incurred and are not significant to
BancGroup's on-going operating costs.
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The above reflects management's current assessment and estimates. Various
factors could cause actual results to differ materially from those contemplated
by such assessments, estimates and forward-looking statements. Some of these
factors may be beyond the control of BancGroup, including but not limited to,
vendor representations, technological advancements, economic factors and
competitive considerations.
Management's evaluation of Year 2000 compliance and technological upgrades
is an on-going process involving continual evaluation. Unanticipated problems
could develop and alternative solutions may be available that could cause
current solutions to be more difficult or costly than currently anticipated.
PAYMENT OF DIVIDENDS AND OTHER RESTRICTIONS
BancGroup is a legal entity separate and distinct from its subsidiaries,
including Colonial Bank. There are various legal and regulatory limitations on
the extent to which BancGroup's subsidiaries, including among other things, can
finance, or otherwise supply funds to, BancGroup. Specifically, dividends from
Colonial Bank are the principal source of BancGroup's cash revenues and there
are certain legal restrictions under federal and state law on the payment of
dividends by banks. The relevant regulatory agencies also have authority to
prohibit Colonial Bank from engaging in what, in the opinion of such regulatory
body, constitutes an unsafe or unsound banking practice. The payment of
dividends could, depending upon the financial condition of Colonial Bank, be
deemed to constitute such an unsafe or unsound practice.
In addition, Colonial Bank and its subsidiaries are subject to limitations
under Section 23A of the Federal Reserve Act with respect to extensions of
credit to, investments in, and certain other transactions with, BancGroup and
its other subsidiaries. Furthermore, loans and extensions of credit are also
subject to various collateral requirements.
CAPITAL ADEQUACY
The Federal Reserve has adopted minimum risk-based and leverage capital
guidelines for bank holding companies. The minimum required ratio of total
capital to risk-weighted assets (including certain off-balance-sheet items, such
as standby letters of credit) is 8%, of which 4% must consist of Tier 1 capital.
As of December 31, 1997, BancGroup's total risk-based capital ratio was 11.30%,
including 9.93% of Tier 1 capital. The minimum required leverage capital ratio
(Tier 1 capital to average total assets) is 3% for banking organizations that
meet certain specified criteria, including that they have the highest regulatory
rating. A minimum leverage ratio of an additional 100 to 200 basis points is
required for banking organizations not meeting these criteria. As of December
31, 1997, BancGroup's leverage capital ratio was 7.47%. Failure to meet capital
guidelines can subject a banking organization to a variety of enforcement
remedies, including restrictions on its operations and activities.
As regards depository institutions, federal banking statutes establish five
capital categories ("well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized" and "critically
undercapitalized"), and impose significant restrictions on the operations of an
institution that is not at least adequately capitalized. Under certain
circumstances, an institution may be downgraded to a category lower than that
warranted by its capital levels, and subjected to the supervisory restrictions
applicable to institutions in the lower capital category.
An undercapitalized depository institution is subject to restrictions in a
number of areas, including capital distributions, payments of management fees
and expansion. In addition, an undercapitalized depository institution is
required to submit a capital restoration plan. A depository institution's
holding company must guarantee the capital plan up to an amount equal to the
lesser of 5% of the depository institution's assets at the time it becomes
undercapitalized or the amount needed to restore the capital of the institution
to the levels required for the institution to be classified as adequately
capitalized at the time the institution fails to comply with the plan. A
depository institution is treated as if it is significantly undercapitalized if
it fails in any material respect to implement a capital restoration plan.
Significantly undercapitalized depository institutions may be subject to a
number of additional significant requirements and restrictions, including
requirements to sell sufficient voting stock to become adequately
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capitalized, to improve management, to restrict asset growth, to prohibit
acceptance of correspondent bank deposits, to restrict senior executive
compensation and to limit transactions with affiliates. Critically
undercapitalized depository institutions are further subject to restrictions on
paying principal or interest on subordinated debt, making investments,
expanding, acquiring or selling assets, extending credit for highly-leveraged
transactions, paying excessive compensation, amending their charters or bylaws
and making any material changes in accounting methods. In general, a receiver or
conservator must be appointed for a depository institution within 90 days after
the institution is deemed to be critically undercapitalized.
SUPPORT OF SUBSIDIARY BANK
Under Federal Reserve Board policy, BancGroup is expected to act as a
source of financial strength to, and to commit resources to support, Colonial
Bank. This support may be required at times when, absent such Federal Reserve
Board policy, BancGroup might not otherwise be inclined to provide it. In the
event of a bank holding company's bankruptcy, any commitment by the bank holding
company to a federal bank regulatory agency to maintain the capital of a
subsidiary bank will be assumed by the bankruptcy trustee and entitled to a
priority of payment.
FDIC INSURANCE ASSESSMENTS
Colonial Bank is subject to FDIC deposit insurance assessments. The FDIC
applies a risk-based assessment system that places financial institutions in one
of nine risk categories with premium rates, based on capital levels and
supervisory criteria, ranging from 0.00% to 0.27% of deposits. The FDIC has the
authority to raise or lower assessment rates on insured deposits in order to
achieve certain designated reserve ratios in the deposit insurance funds.
It should be noted that supervision, regulation, and examination of
BancGroup and Colonial Bank are intended primarily for the protection of
depositors, not security holders.
ADDITIONAL INFORMATION
Additional information, including statistical information concerning the
business of BancGroup, is set forth in BancGroup's Annual Report to Shareholders
for the year ended December 31, 1997, at pages 22 through 48 under the captions
"Selected Financial Data, Selected Quarterly Data 1997-1996" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations", and
is incorporated herein by reference.
EXECUTIVE OFFICERS AND DIRECTORS
Pursuant to general instruction G, information regarding executive officers
of BancGroup is contained herein at Item 10.
ITEM 2. PROPERTIES
The principal executive offices of BancGroup, Colonial Bank, and Colonial
Mortgage are located in Montgomery, Alabama in the Colonial Financial Center and
are leased from G.C. Associates I, Joint Venture, a partnership owned 50% by
affiliates of BancGroup's principal stockholders. These leased premises comprise
68,142 square feet of office space.
As of December 31, 1997, Colonial Bank owned 140 and leased 56 of their
full-service banking offices. See Notes 7 and 12 of the Consolidated Financial
Statements included in the Annual Report to Shareholders, which is incorporated
herein by reference.
ITEM 3. LEGAL PROCEEDINGS
In the opinion of BancGroup, based on review and consultation with legal
counsel, the outcome of any litigation presently pending is not anticipated to
have a material adverse effect on BancGroup's consolidated financial statements
or results of operations.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS
"Market Price of and Dividends Declared on Common Stock" is contained on
page 71 of the Annual Report to Shareholders for the year ended December 31,
1997, and is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
"Selected Financial Data" and "Selected Quarterly Financial Data 1997-1996"
on pages 22 through 24 of the Annual Report to Shareholders for the year ended
December 31, 1997 are incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 25 through 48 of the Annual Report to Shareholders for the
year ended December 31, 1997 is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 44 through 46 of the Annual Report to Shareholders for the
year ended December 31, 1997 is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements set forth in BancGroup's Annual Report to
Shareholders for 1997 at pages 49 through 70 are incorporated herein by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item as to BancGroup's directors is
contained in BancGroup's proxy statement dated March 13, 1998, under the
captions "Election of Directors" and "Section 16 (a) Beneficial Ownership
Reporting Compliance," and is incorporated herein by reference.
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EXECUTIVE OFFICERS OF THE REGISTRANT
NAME, AGE AND YEAR BECAME POSITION AND OFFICES HELD WITH BANCGROUP PRESENT AND PRINCIPAL OCCUPATION FOR
EXECUTIVE OFFICER AND SUBSIDIARIES THE LAST FIVE YEARS
- --------------------------- ---------------------------------------- ------------------------------------
Robert E. Lowder........... Chairman of the Board and Chief Chairman of the Board and Chief
55, 1981 Executive Officer, Colonial BancGroup; Executive Officer, Colonial
Chairman of the Board and Chief BancGroup; Chairman of the Board
Executive Officer, Colonial Bank; and Chief Executive Officer,
Director, Birmingham Region; Director, Colonial Bank; Chairman of the
Huntsville Region; Director, Northwest Board, Colonial Mortgage Co.;
Region; Director, East Central Region; Chairman of the Board and
Director, Gulf Coast Region; Director, President, Colonial Broadcasting,
Montgomery Region; Director, Central Montgomery, AL
Florida Region; Director, South
Florida Region; Director, Bay Area
Region; Director, Southwest Florida
Region; Director, Atlanta Region;
Chairman of the Board, Colonial
Mortgage Co.
P.L. "Mac" McLeod, Jr...... President, Colonial BancGroup; Director, President, Colonial BancGroup since
49, 1997 Montgomery Region; Director, North August 1997; President and CEO,
Georgia Region Colonial Bank Montgomery Region
1984 to August 1997, Montgomery,
AL
W. Flake Oakley, IV........ Executive Vice President, Chief Chief Financial Officer, Secretary
44, 1989 Financial Officer, Treasurer and and Treasurer, BancGroup, since
Secretary June 1991; Chief Financial Officer
and Treasurer since October, 1990;
Senior Vice President and
Controller from April 1989 to
October 1990, BancGroup,
Montgomery, AL
Young J. Boozer, III....... Executive Vice President -- Risk Executive Vice President -- Risk
49, 1986 Management -- Executive Vice Management, BancGroup; President,
President, Colonial BancGroup Building Colonial Investment Services 1993
Corp. to 1997, Montgomery, AL
Michelle Condon............ Executive Vice President -- Retail Executive Vice President -- Retail
43, 1995 Banking Banking, BancGroup since 1995;
Colonial Bank -- Vice President,
Budgeting & Planning, Colonial
Bank 1990 to 1995, Montgomery, AL
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is contained in BancGroup's proxy
statement dated March 13, 1998 under the caption "Executive Compensation" and is
incorporated herein by reference.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is contained in BancGroup's proxy
statement dated March 13, 1998 under the caption "Voting Securities and
Principal Stockholders" and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is contained in BancGroup's proxy
statement dated March 13, 1998 under the captions "Compensation Committee
Interlocks and Insider Participation" and "Executive Compensation" and is
incorporated herein by reference.
CAUTIONARY STATEMENT PURSUANT TO SAFE HARBOR PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995:
This report contains "forward-looking statements" within the meaning of the
federal securities laws. The forward-looking statements in this report are
subject to risks and uncertainties that could cause actual results to differ
materially from those expressed in or implied by the statements. Factors that
may cause actual results to differ materially from those contemplated by such
forward-looking statements include, among other things, the following
possibilities: (i) deposit attrition, customer loss, or revenue loss in the
ordinary course of business; (ii) increases in competitive pressure in the
banking industry; (iii) costs or difficulties related to the integration of the
businesses of BancGroup and the institutions acquired are greater than expected;
(iv) changes in the interest rate environment which reduce margins (v) general
economic conditions, either nationally or regionally, that are less favorable
then expected, resulting in, among other things, a deterioration in credit
quality; (vi) changes which may occur in the regulatory environment; (vii) a
significant rate of inflation (deflation); and (viii) changes in the securities
markets. When used in this Report, the words "believes," "estimates," "plans,"
"expects," "should," "may," "might," "outlook," and "anticipates," and similar
expressions as they relate to BancGroup (including its subsidiaries), or its
management are intended to identify forward-looking statements.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
The following financial statements are incorporated herein by reference
from Registrant's Annual Report to Shareholders for the fiscal year ended
December 31, 1997;
Consolidated Statements of Condition as of December 31, 1997 and 1996.
Consolidated Statements of Income for the years ended December 31, 1997,
1996 and 1995.
Consolidated Statements of Changes in Shareholders' Equity for the years
ended December 31, 1997, 1996 and 1995.
Consolidated Statements of Cash Flows for the years ended December 31,
1997, 1996 and 1995.
Notes to Consolidated Financial Statements, including Parent Company
only information.
Report of Independent Accountants.
2. Financial Statements Schedules
The financial statement schedules required to be included pursuant to this
Item are not included herein because they are not applicable or the required
information is shown in the financial statements or notes thereto which are
incorporated by reference at subsection 1 of this Item, above.
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3. Exhibits
EXHIBITS AND DESCRIPTION
------------------------
Exhibit 3 -- Articles of Incorporation and Bylaws:
3.1 -- Restated Certificate of Incorporation of the Registrant,
filed as Exhibit 4.1 to the Registrant's Current Report on
Form 8-K, dated February 21, 1995, and incorporated herein
by reference.
3.2 -- Amendment of Registrant's Restated Certificate of
Incorporation, dated April 16, 1997, filed as Exhibit
4(A)(2) to the Registrant's Registration Statement on Form
S-4 (File No. 333-26217), effective May 9, 1997, and
incorporated herein by reference.
3.3 -- Bylaws of the Registrant, as amended, filed as Exhibit 4.2
to the Registrant's Current Report on Form 8-K, dated
February 21, 1995, and incorporated herein by reference.
Exhibit 4 -- Instruments defining the rights of security holders:
4.1 -- Article 4 of the Restated Certificate of Incorporation of
the Registrant filed as Exhibit 4.1 to the Registrant's
Current Report on Form 8-K, dated February 21, 1995, and
incorporated herein by reference.
4.2 -- Amendment to Article 4 of Registrant's Restated Certificate
of Incorporation, dated April 16, 1997, filed as Exhibit
4(A)(2) to the Registrant's Registration Statement on Form
S-4 (File No. 333-26217), effective May 9, 1997, and
incorporated herein by reference.
4.3 -- Article II of the Bylaws of the Registrant filed as Exhibit
4.2 to the Registrant's Current Report on Form 8-K, dated
February 21, 1995, and incorporated herein by reference.
4.4 -- Dividend Reinvestment and Common Stock Purchase Plan of the
Registrant dated January 15, 1986, and Amendment No, 1
thereto dated as of June 10, 1986, filed as Exhibit 4(C) to
the Registrant's Registration Statement on Form S-4 (File
No, 33-07015), effective July 15, 1986, and incorporated
herein by reference.
4.5 -- All instruments defining the rights of holders of long-term
debt of the Corporation and its subsidiaries. Not filed
pursuant to clause 4(iii) of Item 601(b) of Regulation S-K;
to be furnished upon request of the Commission.
Exhibit 10 -- Material Contracts:
10.1 -- Second Amendment and Restatement of 1982 Incentive Stock
Plan of the Registrant, filed as Exhibit 4-1 to the
Registrant's Registration Statement on Form S-8 (File No.
33-41036), effective June 4, 1991, and incorporated herein
by reference.
10.2 -- Second Amendment and Restatement to 1982 Nonqualified Stock
Option Plan of the Registrant filed as Exhibit 4-2 to the
Registrant's Registration Statement on Form S-8 (File No.
33-41036), effective June 4, 1991, and incorporated herein
by reference.
10.3 -- 1992 Incentive Stock Option Plan of the Registrant, filed as
Exhibit 4-1 to Registrant's Registration Statement on Form
S-8 (File No. 33-47770), effective May 8, 1992, and
incorporated herein by reference.
10.4 -- 1992 Nonqualified Stock Option Plan of the Registrant, filed
as Exhibit 4-2 to Registrant's Registration Statement on
Form S-8 (File No. 33-47770), effective May 8, 1992, and
incorporated herein by reference.
10.5 -- Amended and Restated Loan Agreement by and between the
Registrant and SunTrust Bank, Central Florida, National
Association, dated December 20, 1996, filed as Exhibit
10(B)(2) to the Registrant's Registration Statement on Form
S-4, (File No. 333-20291), and incorporated herein by
reference.
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EXHIBITS AND DESCRIPTION
------------------------
10.6 -- The Colonial BancGroup, Inc. First Amended and Restated
Restricted Stock Plan for Directors, as amended, included as
Exhibit 10(C)(1) to the Registrant's Registration Statement
on Form S-4 (File No. 33-52952), and incorporated herein by
reference.
10.7 -- The Colonial BancGroup, Inc. Stock Bonus and Retention Plan,
included as Exhibit 10(C)(2) to the Registrant's
Registration Statement as Form S-4 (File No. 33-52952), and
incorporated herein by reference.
10.8 -- Indenture dated as of January 29, 1997 between The Colonial
BancGroup, Inc. and Wilmington Trust Company, as Debenture
Trustee dated as of, included as Exhibit 4(A) to
Registrant's Registration Statement on Form S-4 (File No.
333-22135), and incorporated herein by reference.
10.9 -- Agreement and Plan of Merger between The Colonial BancGroup,
Inc. and ASB Bancshares, Inc., dated as of August 28, 1997,
included as Appendix A to the Prospectus in Registrant's
Registration Statement on Form S-4 (File No. 333-39271), and
incorporated herein by reference.
10.10 -- Agreement and Plan of Merger between The Colonial BancGroup,
Inc. and South Florida Banking Corp., dated as of September
4, 1997, included as Appendix A to the Prospectus in
Registrant's Registration Statement on Form S-4 (File No.
333-39283), and incorporated herein by reference.
10.11 -- Agreement and Plan of Merger between The Colonial BancGroup,
Inc. and United American Holding Corporation, dated as of
September 8, 1997, included as Appendix A to the Prospectus
in Registrant's Registration Statement on Form S-4 (File No.
333-39277), and incorporated herein by reference.
10.12 -- Agreement and Plan of Merger between The Colonial BancGroup,
Inc. and First Central Bank, dated as of September 9, 1997,
included as Appendix A to the Prospectus in Registrant's
Registration Statement on Form S-4 (File No. 333-39267), and
incorporated herein by reference.
Exhibit 11 -- Statement Regarding Computation of Earnings Per Share.
Exhibit 12 -- Statement Regarding Computation of Ratio of Earnings to
Fixed Charges.
Exhibit 13 -- Portions of the 1997 Annual Report to Security Holders.
(Such annual report, except for those portions expressly
incorporated by reference in this report, is furnished
solely for the information of the Commission and is not
deemed to be filed as part of this report).
Exhibit 21 -- List of subsidiaries of the Registrant.
Exhibit 23 -- Consents of experts and counsel:
23.1 -- Consent of Coopers & Lybrand L.L.P.
Exhibit 24 -- Power of Attorney.
Exhibit 27 -- Financial Data Schedule (for SEC use only).
(b)(1) Registrant's Current Reports on Form 8-K dated October 30, 1997 and
November 17, 1997, and incorporated herein by reference.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Montgomery, Alabama, on the 30 day of March, 1998.
THE COLONIAL BANCGROUP, INC.
By: /s/ ROBERT E. LOWDER
------------------------------------
Robert E. Lowder
Its Chairman of the Board of
Directors and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ ROBERT E. LOWDER Chairman of the Board of **
- ------------------------------------------------ Directors and Chief
Robert E. Lowder Executive Officer
/s/ W. FLAKE OAKLEY, IV Chief Financial Officer, **
- ------------------------------------------------ Secretary and Treasurer
W. Flake Oakley, IV (Principal Financial Officer
and Principal Accounting
Officer)
* Director **
- ------------------------------------------------
Lewis Beville
* Director **
- ------------------------------------------------
Young J. Boozer
* Director **
- ------------------------------------------------
William Britton
* Director **
- ------------------------------------------------
Jerry J. Chesser
* Director **
- ------------------------------------------------
Augustus K. Clements, III
* Director **
- ------------------------------------------------
Robert C. Craft
* Director **
- ------------------------------------------------
Patrick F. Dye
* Director **
- ------------------------------------------------
Clinton O. Holdbrooks
* Director **
- ------------------------------------------------
D. B. Jones
* Director **
- ------------------------------------------------
Harold D. King
* Director **
- ------------------------------------------------
John Ed Mathison
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SIGNATURE TITLE DATE
--------- ----- ----
* Director **
- ------------------------------------------------
Milton E. McGregor
* Director **
- ------------------------------------------------
John C. H. Miller, Jr.
* Director **
- ------------------------------------------------
Joe D. Mussafer
* Director **
- ------------------------------------------------
William E. Powell
* Director **
- ------------------------------------------------
J. Donald Prewitt
* Director **
- ------------------------------------------------
Jack H. Rainer
* Director **
- ------------------------------------------------
Jimmy Rane
* Director **
- ------------------------------------------------
Frances E. Roper
* Director **
- ------------------------------------------------
Simuel Sippial
* Director **
- ------------------------------------------------
Ed V. Welch
* The undersigned, acting pursuant to a power of attorney, has signed this
Annual Report on Form 10-K for and on behalf of the persons indicated above as
such persons' true and lawful attorney-in-fact and in their names, places and
stead, in the capacities indicated above and on the date indicated below.
/s/ W. FLAKE OAKLEY, IV
- --------------------------------------
W. Flake Oakley, IV
Attorney-in-Fact
** Dated: March 30, 1998
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EXHIBIT INDEX
Exhibit 3 -- Articles of Incorporation and Bylaws:
3.1 -- Restated Certificate of Incorporation of the Registrant,
filed as Exhibit 4.1 to the Registrant's Current Report on
Form 8-K, dated February 21, 1995, and incorporated herein
by reference..............................................
3.2 -- Amendment of Registrant's Restated Certificate of
Incorporation, dated April 16, 1997, filed as Exhibit
4(A)(2) to the Registrant's Registration Statement on Form
S-4 (File No. 333-26217), effective May 9, 1997, and
incorporated herein by reference.
3.3 -- Bylaws of the Registrant, as amended, filed as Exhibit 4.2
to the Registrant's Current Report on Form 8-K, dated
February 21, 1995, and incorporated herein by reference...
Exhibit 4 -- Instruments defining the rights of security holders:
4.1 -- Article 4 of the Restated Certificate of Incorporation of
the Registrant filed as Exhibit 4.1 to the Registrant's
Current Report on Form 8-K, dated February 21, 1995, and
incorporated herein by reference..........................
4.2 -- Amendment to Article 4 of Registrant's Restated Certificate
of Incorporation, dated April 16, 1997, filed as Exhibit
4(A)(2) to the Registrant's Registration Statement on Form
S-4 (File No. 333-26217), effective May 9, 1997, and
incorporated herein by reference.
4.3 -- Article II of the Bylaws of the Registrant filed as Exhibit
4.2 to the Registrant's Current Report on Form 8-K, dated
February 21, 1995, and incorporated herein by reference...
4.4 -- Dividend Reinvestment and Class A Common Stock Purchase Plan
of the Registrant dated January 15, 1986, and Amendment
No. 1 thereto dated as of June 10, 1986, filed as Exhibit
4(C) to the Registrant's Registration Statement on Form
S-4 (File No. 33-07015), effective July 15, 1986, and
incorporated herein by
reference.................................................
4.5 -- All instruments defining the rights of holders of long-term
debt of the Corporation and its subsidiaries. Not filed
pursuant to clause 4(iii) of Item 601(b) of Regulation
S-K; to be furnished upon request of the Commission.......
Exhibit 10 -- Material Contracts:
10.1 -- Second Amendment and Restatement of 1982 Incentive Stock
Plan of the Registrant, filed as Exhibit 4-1 to the
Registrant's Registration Statement on Form S-8 (File No.
33-41036), effective June 4, 1991, and incorporated herein
by reference..............................................
10.2 -- Second Amendment and Restatement to 1982 Nonqualified Stock
Option Plan of the Registrant filed as Exhibit 4-2 to the
Registrant's Registration Statement on Form S-8 (File No.
33-41036), effective June 4, 1991, and incorporated herein
by reference..............................................
10.3 -- 1992 Incentive Stock Option Plan of the Registrant, filed as
Exhibit 4-1 to Registrant's Registration Statement on Form
S-8 (File No. 33-47770), effective May 8, 1992, and
incorporated herein by reference..........................
10.4 -- 1992 Nonqualified Stock Option Plan of the Registrant, filed
as Exhibit 4-2 to Registrant's Registration Statement on
Form S-8 (File No. 33-47770), effective May 8, 1992, and
incorporated herein by reference..........................
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10.5 -- Amended and Restated Loan Agreement by and between the
Registrant and SunTrust Bank, Central Florida, National
Association, dated December 20, 1996, filed as Exhibit
10(B)(2) to the Registrant's Registration Statement on
Form S-4 (File No. 333-20291), and incorporated herein by
reference.................................................
10.6 -- The Colonial BancGroup, Inc. First Amended and Restated
Restricted Stock Plan for Directors, as amended, included
as Exhibit 10(C)(1) to the Registrant's Registration
Statement as Form S-4 (File No. 33-52952), and
incorporated herein by reference..........................
10.7 -- The Colonial BancGroup, Inc. Stock Bonus and Retention Plan,
included as Exhibit 10(C)(2) to the Registrant's
Registration Statement as Form S-4 (File No. 33-52952),
and incorporated herein by reference......................
10.8 -- Indenture dated as of January 29, 1997 between The Colonial
BancGroup, Inc. and Wilmington Trust Company, as Debenture
Trustee dated as of, included as Exhibit 4(A) to
Registrant's Registration Statement on Form S-4 (File No.
333-22135), and incorporated herein by reference.
10.9 -- Agreement and Plan of Merger between The Colonial BancGroup,
Inc. and ASB Bancshares, Inc., dated as of August 28,
1997, included as Appendix A to the Prospectus in
Registrant's Registration Statement on Form S-4 (File No.
333-39271), and incorporated herein by reference.
10.10 -- Agreement and Plan of Merger between The Colonial BancGroup,
Inc. and South Florida Banking Corp., dated as of
September 4, 1997, included as Appendix A to the
Prospectus in Registrant's Registration Statement on Form
S-4 (File No. 333-39283), and incorporated herein by
reference.
10.11 -- Agreement and Plan of Merger between The Colonial BancGroup,
Inc. and United American Holding Corporation, dated as of
September 8, 1997, included as Appendix A to the
Prospectus in Registrant's Registration Statement on Form
S-4 (File No. 333-39277), and incorporated herein by
reference.
10.12 -- Agreement and Plan of Merger between The Colonial BancGroup,
Inc. and First Central Bank, dated as of September 9,
1997, included as Appendix A to the Prospectus in
Registrant's Registration Statement on Form S-4 (File No.
333-39267), and incorporated herein by reference.
Exhibit 11 -- Statement Regarding Computation of Earnings Per Share.......
Exhibit 12 -- Statement Regarding Computation of Ratio of Earnings to
Fixed Charges.............................................
Exhibit 13 -- Portions of the 1997 Annual Report to Security Holders.
(Such annual report, except for those portions expressly
incorporated by reference in this report, is furnished
solely for the information of the Commission and is not
deemed to be filed as part of this report.)...............
Exhibit 21 -- List of subsidiaries of the Registrant......................
Exhibit 23 -- Consents of experts and counsel:
23.1 -- Consent of Coopers & Lybrand L.L.P..........................
Exhibit 24 -- Power of Attorney...........................................
Exhibit 27 -- Financial Data Schedule (for SEC use only)..................
(b)(1) Registrant's Current Reports on Form 8-K dated October 30, 1997 and
November 17, 1997 and incorporated herein by reference.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
EXHIBITS TO FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
COMMISSION FILE NO. 0-07945
THE COLONIAL BANCGROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)