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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, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO ____________
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 26, 1999 based on the closing price of $12.3750
per share for Common Stock was $1,268,807,104. (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 26, 1999 were 111,455,608.
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, 1998 Part II,
as specifically referred to herein. and Part IV
Portions of Definitive Proxy Statement Part III
for 1999 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 136 branches in Alabama, 82 branches in Florida, 19
branches in Georgia, three branches in Tennessee, three branches in Texas and
seven branches in Nevada. 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 four divisional offices and six regional
offices that originate loans in 35 states. CMC services approximately $14.7
billion in residential loans for third parties in 45 states. 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. InterWest
Mortgage, a wholly owned subsidiary of CMC, based in Reno, Nevada was acquired
as part of the Interwest Bancorp acquisition on October 14, 1998. Interwest
Mortgage operates full-service mortgage loan origination offices in three
states. Another Colonial Bank subsidiary, CBG, Inc. owns certain trade names and
trademarks which it licenses to BancGroup, Colonial Bank and CMC for use in
their businesses. At December 31, 1998, Colonial Bank accounted for
approximately 99.9% 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.
Colonial 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, mortgage banks, factors, insurance companies and
other financial institutions.
BancGroup has three directly and wholly owned nonbanking subsidiaries that
are currently active. The Colonial BancGroup Building Corporation was
established primarily to own and lease the buildings and land used by Colonial
Bank. Colonial Capital II, a Delaware business trust, issued $70 million in
trust preferred securities in 1997, which are guaranteed by BancGroup. Colonial
Asset Management, Inc. is an investment adviser registered under the Investment
Adviser's Act of 1940.
BancGroup and its subsidiaries employ approximately 3,666 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 (28%), residential real estate loans (34%) and real
estate construction (commercial and residential) (14%). BancGroup's growth in
loans over the past several years has been concentrated in commercial and
residential real estate loans. In 1998, BancGroup experienced growth in
commercial loans as well. The lending activities of Colonial Bank are dependent
upon demand 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 loan production 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, Georgia, Florida, Nevada
and Texas and are dependent upon economic conditions in those states. The
Alabama economy experiences a generally slow but steady rate of growth, while
Georgia, Florida, Texas and Nevada are experiencing higher rates of growth, with
the Las Vegas metropolitan area experiencing significant 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,
warehouses, 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-to-value ratios for these loans do not exceed 80% to 85%. The principal
risks associated with these loans are related to the borrowers' ability to
complete the project, 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, Industrial, and Agricultural. Loans classified as commercial,
industrial, and agricultural consist of secured and unsecured credit lines and
equipment loans for various industrial, agricultural, commercial, retail, or
service businesses.
The risks associated with loans in this category are generally related to the
earnings capacity of and the 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, if the borrower's or guarantor's credit worthiness,
the borrower's other banking relationships, the bank's lending experience with
the borrower, or other potential sources of repayment support granting an
exception to the policy.
- - Consumer. 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
borrower, as well as the value of the collateral for secured loans. Consumer
loans are sometimes made on an unsecured basis or with loan-to-value ratios in
excess of 80%.
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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 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
13% 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.
Colonial Asset Management, Inc. is a registered investment adviser under
the Investment Adviser's Act of 1940. It is regulated by the Securities Exchange
Commission.
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
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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 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.
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, 1998, BancGroup's total risk-based capital ratio was 9.85%,
including 8.50% 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, 1998, BancGroup's leverage capital ratio was 6.22%. 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
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in the lower capital category. As of December 31, 1998, the most recent
notification from the Federal Deposit Insurance Corporation categorized Colonial
Bank as well capitalized under the regulatory framework for prompt corrective
action.
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 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, 1998, at pages 24 through 50 under the captions
"Selected Financial Data, Selected Quarterly Financial Data 1998-1997" 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.
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ITEM 2. PROPERTIES
The principal executive offices of BancGroup, Colonial Bank, and CMC 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 stockholder. These leased premises comprise 68,142 square
feet of office space.
As of December 31, 1998, Colonial Bank owned 165 and leased 85 of their
full-service banking offices. See Notes 8 and 13 of the Consolidated Financial
Statements included in the Annual Report to Shareholders, which is incorporated
herein by reference. Colonial Asset Management, Inc. leased offices in Ponte
Vedra Beach, Florida.
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.
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 76 of the Annual Report to Shareholders for the year ended December 31,
1998, and is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
"Selected Financial Data" and "Selected Quarterly Financial Data 1998-1997"
on pages 24 through 26 of the Annual Report to Shareholders for the year ended
December 31, 1998, 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 27 through 50 of the Annual Report to Shareholders for the
year ended December 31, 1998, is incorporated herein by reference.
"Year 2000 Readiness Disclosure" on pages 36 and 37 of the Annual Report to
Shareholders for the year ended December 31, 1998, 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 27 through 50 of the Annual Report to Shareholders for the
year ended December 31, 1998, 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 1998 at pages 51 through 75 are incorporated herein by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
None
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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 17, 1999, under the
captions "Election of Directors" and "Section 16 (a) Beneficial Ownership
Reporting Compliance," and is incorporated herein by reference.
EXECUTIVE OFFICERS OF THE REGISTRANT
NAME, AGE AND YEAR BECAME POSITION AND OFFICES HELD WITH PRESENT AND PRINCIPAL OCCUPATION
EXECUTIVE OFFICER BANCGROUP AND SUBSIDIARIES FOR THE LAST FIVE YEARS
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Robert E. Lowder............... Chairman of the Board and Chief Chairman of the Board and Chief
56, 1981 Executive Officer, Colonial Executive Officer, Colonial
BancGroup; Chairman of the BancGroup; Chairman of the
Board and Chief Executive Board and Chief Executive
Officer, Colonial Bank; Officer, Colonial Bank;
Director, Birmingham Region; Chairman of the Board,
Director, Huntsville Region; Colonial Mortgage Co.;
Director, Northwest Region; Chairman of the Board and
Director, East Central Region; President, Colonial
Director, Gulf Coast Region; Broadcasting until July 1,
Director, Montgomery Region; 1998, Montgomery, AL
Director, Central Florida
Region; Director, South
Florida Region; Director, Bay
Area Region; Director,
Southwest Florida Region;
Chairman of the Board, Atlanta
Region; Director, Nevada
Region; Director, Dallas
Region; Director, Central
Georgia Region; Chairman,
Executive Committee, Colonial
BancGroup; Chairman of the
Board, Colonial Mortgage Co.
P.L. "Mac" McLeod, Jr.......... President, Colonial BancGroup; President, Colonial BancGroup
50, 1997 Chairman of the Board, since August 1997; President and
Montgomery Region; CEO, Colonial Bank Montgomery
Director, North Georgia Region 1984 to August 1997,
Region; President, Colonial Montgomery, AL
Bank; Chairman, Colonial
Asset Management, Inc.;
Director, CBG, Inc.
W. Flake Oakley, IV............ Executive Vice President, Chief Chief Financial Officer,
45, 1989 Financial Officer, Treasurer Secretary and Treasurer,
and Secretary of Colonial BancGroup, since June 1991;
BancGroup; Executive Vice Chief Financial Officer and
President, Chief Financial Treasurer since October, 1990;
Officer, Treasurer, Cashier Senior Vice President and
and Secretary of Colonial Controller from April 1989 to
Bank; Director and Secretary, October 1990, Montgomery, AL
Colonial Asset Management,
Inc.
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NAME, AGE AND YEAR BECAME POSITION AND OFFICES HELD WITH PRESENT AND PRINCIPAL OCCUPATION
EXECUTIVE OFFICER BANCGROUP AND SUBSIDIARIES FOR THE LAST FIVE YEARS
------------------------- ------------------------------ --------------------------------
Young J. Boozer, III........... Executive Vice President -- Risk Executive Vice President since
50, 1986 Management; Executive Vice 1986; Executive Vice
President, Colonial BancGroup President -- Risk Management,
Building Corp. BancGroup since 1998;
President, Colonial Investment
Services, Inc. (a subsidiary
of Colonial Bank) 1993 to
1997, Montgomery, AL
Michelle Condon................ Executive Vice Executive Vice
44, 1995 President -- Retail Banking President -- Retail 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 17, 1999 under the caption "Executive Compensation" and is
incorporated herein by reference.
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 17, 1999, 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 17, 1999, 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) changes
in mortgage servicing rights prepayment assumptions; (vi) general economic
conditions, either nationally or regionally, that are less favorable then
expected, resulting in, among other things, a deterioration in credit quality,
vendor representations, technological advancements, and economic factors
including liquidity availability; (vii) changes which may occur in the
regulatory environment; (viii) a significant rate of inflation (deflation); (ix)
changes in the securities markets and (x) events specifically relating to Year
2000 readiness. 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.
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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, 1998;
Consolidated Statements of Condition as of December 31, 1998 and 1997.
Consolidated Statements of Income for the years ended December 31, 1998,
1997, and 1996.
Consolidated Statements of Comprehensive Income for the years ended
December 31, 1998, 1997 and 1996.
Consolidated Statements of Changes in Shareholders' Equity for the years
ended December 31, 1998, 1997, and 1996.
Consolidated Statements of Cash Flows for the years ended December 31,
1998, 1997, and 1996.
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.
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 to Article 4 of Registrant's Restated Certificate
of Incorporation, dated May 15, 1998, filed as Exhibit 4.2
to the Registrant's Registration Statement on Form S-4 (File
No. 333-56241), effective June 22, 1998, 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 May 15, 1998, filed as Exhibit 4.2
to the Registrant's Registration Statement on Form S-4 (File
No. 333-56241), effective June 22, 1998, 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.
9
11
EXHIBITS AND DESCRIPTION
- ------------------------
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, as
amended, filed as Exhibit 10.1 to Registrant's Registration
Statement on Form S-8 (File No. 333-71841), effective
February 5, 1999, and incorporated herein by reference.
10.4 -- 1992 Nonqualified Stock Option Plan of the Registrant as
amended, filed as Exhibit 10.2 to Registrant's Registration
Statement on Form S-8 (File No. 333-71841), effective
February 5, 1999, and incorporated herein by reference.
10.5 -- General Security Agreement by and between the Registrant and
Barclay's Bank PLC, National Association, dated December 30,
1998 and Promissory Note, dated December 30, 1998.
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.
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 1998 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 PricewaterhouseCoopers LLP.
Exhibit 24 -- Power of Attorney.
(b) Registrant's Current Reports on Form 8-K dated October 1, 1998, December 2,
1998 and December 21, 1998, and incorporated herein by reference.
10
12
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 5th day of March, 1999.
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 Executive
Robert E. Lowder 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 **
- -----------------------------------------------------
William Britton
* Director **
- -----------------------------------------------------
Jerry J. Chesser
* Director **
- -----------------------------------------------------
Augustus K. Clements, III
* Director **
- -----------------------------------------------------
Robert C. Craft
Director
- -----------------------------------------------------
Patrick F. Dye
* Director **
- -----------------------------------------------------
James L. Hewitt
* Director **
- -----------------------------------------------------
Clinton O. Holdbrooks
* Director **
- -----------------------------------------------------
Harold D. King
11
13
SIGNATURE TITLE DATE
--------- ----- ----
* Director **
- -----------------------------------------------------
John Ed Mathison
* Director **
- -----------------------------------------------------
Milton E. McGregor
* Director **
- -----------------------------------------------------
John C. H. Miller, Jr.
Director
- -----------------------------------------------------
Joe D. Mussafer
* Director **
- -----------------------------------------------------
William E. Powell
* 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 5, 1999
12
14
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 to Article 4 of Registrant's Restated Certificate
of Incorporation, dated May 15, 1998, filed as Exhibit 4.2
to the Registrant's Registration Statement on Form S-4
(File No. 333-56241), effective June 22, 1998, 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 May 15, 1998, filed as Exhibit 4.2
to the Registrant's Registration Statement on Form S-4
(File No. 333-56241), effective June 22, 1998, 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, as
amended, filed as Exhibit 10.1 to Registrant's
Registration Statement on Form S-8 (File No. 333-71841),
effective February 5, 1999, and incorporated herein by
reference.................................................
10.4 -- 1992 Nonqualified Stock Option Plan of the Registrant, filed
as Exhibit 10.2 to Registrant's Registration Statement on
Form S-8 (File No. 333-71841), effective February 5, 1999,
and incorporated herein by reference......................
13
15
10.5 -- General Security Agreement by and between the Registrant and
Barclay's Bank LLP dated December 30, 1998 and Promissory
Note dated December 30, 1998..............................
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..........
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 1998 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 PricewaterhouseCoopers LLP.......................
Exhibit 24 -- Power of Attorney
(b) Registrant's Current Reports on Form 8-K dated October 1, 1998, December 2,
1998 and December 21, 1998, and incorporated herein by reference.
14
16
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, 1998
COMMISSION FILE NO. 0-07945
THE COLONIAL BANCGROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)