Colonial Bancgroup

Colonial BancGroup Inc. was a bank holding company headquartered in Montgomery, Alabama, United States that failed in 2009. It was a financial services company that, through its subsidiaries, provided diversified services, including retail and commercial banking, wealth management services, mortgage banking and insurance. The company was in the top 50 largest banks in the US prior to its failure and its subsidiary, Colonial Bank, operated 346 branches in the states of Alabama, Georgia, Florida, Nevada and Texas.

The company ran into problems after it was revealed that it had bought $1 billion in mortgages from Taylor, Bean & Whitaker that Taylor Bean had forged, in one of the biggest fraud cases in history. On June 3, 2011 it filed for chapter 11 bankruptcy. The banking assets and branches were sold to BB&T bank under a Federal Deposit Insurance Corporation (FDIC) brokered deal.

The Bank was founded in 1974 in Montgomery, Alabama as Southland Bancorporation. The company changed its name to The Colonial BancGroup, Inc. in 1981.

The principal activity of the BancGroup was to supervise and coordinate the business of its subsidiaries, and to provide them with capital and services. The BancGroup derived substantially all of its income from dividends received from Colonial Bank, its banking subsidiary. The BancGroup's subsidiary Colonial Brokerage, Inc. provided full service and discount brokerage services and investment advice. The BancGroup had interests in several residential and commercial real estate developments located in the southeastern United States, as well as two in the central Texas area.

On January 31, 2006, Colonial Bank sold its interest in Goldleaf Technologies, Inc., which provides Internet and automated clearing house services to community banks.

At the end of the fourth quarter of 2008, Colonial Bancgroup had a Texas ratio of 53.4%, up from a figure of 25% in the first quarter of 2008.

Between 2004 and 2009 management at Taylor, Bean & Whitaker fraudulently sold $400 million worth of fake mortgages to Colonial with the help of a Colonial bank executive. The fraud scheme was between 2002 and 2009, and involved Catherine Kissick, former senior vice president of Colonial Bank and head of Colonial Bank's Mortgage Warehouse Lending Division, and her co-conspirators, including former Taylor, Bean & Whitaker Chairman Lee Farkas, whereby they defrauded various entities and individuals, including Colonial Bank, Colonial BancGroup, Taylor, Bean & Whitaker, the Troubled Asset Relief Program, and the investing public.

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