Colonial BancGroup down on cease-and-desist order (AP)
Wed, 10 Jun 2009 17:41:07 Etc/GM
The stock's precipitous slide also comes as Fitch Ratings on Tuesday downgraded the Montgomery, Ala.-based bank deeper into junk status, citing the regulatory order.
Shares of Colonial plunged 33 cents, or 27.3 percent, to 88 cents in afternoon trading. The stock has ranged from 29 cents to $13.35 over the past year.
The order, issued by the Federal Deposit Insurance Corp. and the Alabama State Banking Department, requires the bank to increase capital levels and reduce problem assets, among other things.
The bank, which operates 353 branches in Florida, Alabama, Georgia, Nevada and Texas, and has more than $26 billion in assets, has been trying to stabilize its capital position within the past year.
In March, Colonial BancGroup said investors led by Taylor, Bean & Whitaker Mortgage Co. agreed to make a $300 million equity investment in the bank, just in time for Colonial to meet a deadline to qualify for $550 million in federal bailout funds.
Taylor, Bean & Whitaker is a savings and loan holding company regulated by the Office of Thrift Supervision through its ownership of Platinum Community Bancshares, the holding company for Illinois federal savings bank Platinum Community Bank.
In December 2008, the Colonial said it received preliminary approval to receive funds under the Treasury's Troubled Asset Relief Program, or TARP, in which the government buys preferred stock in U.S. banks in hopes that they will resume more normal lending. A condition of that deal was that Colonial would raise $300 million from private investors.
Because of the order, the likelihood of Colonial BancGroup executing the investment deal may be "negatively impacted," Fitch said in a statement. The ratings agency lowered the bank's long-term issuer default rating to "CCC" from "B-."
source: http://biz.yahoo.com/ap/090610/us_colonial_bancgroup_mover.html?.v=1