Colonial Bank Struggling to Stay Afloat

Company needs capital

Colonial Bank’s parent company needs to raise money by the end of the month, according to an informal agreement it made with banking regulators.

Colonial BancGroup, the bank’s owner, entered into the agreement after Colonial Bank lost $880 million last year and then said it would accept $533 million in federal bailout money.

Shaky possibilities

According to the agreement that was revealed in its U.S. Securities & Exchange Commission report, Colonial Bank must raise $300 million in private capital by March 31. The report does not list any consequences if it fails to do so. Colonial has said that it has some sort of deal with Texas company SunTx, but the agreement is nonbinding.

How to lose $880 million

Much of Colonial Bank’s losses were caused when the bank charged off $642 million in bad personal loans and other types of loans. The bank has said that it must raise the $300 million in private capital in order to have access to the $533 million in bailout money.

One good move, sort of

To Colonial Bank’s credit, as it was hemorrhaging money it had the foresight to reduce executive salaries, which in past years have been far more than generous. For instance, one high-ranking executive was paid $645,701 in 2008, compared to $962,870the year before. ... click here to read the rest of the article titled "Colonial Bank Struggling to Stay Afloat"