A bad day for Auburn’s Bobby Lowder

Did Colonial violate SEC rules?
Bobby Lowder’s Colonial Bancgroup (CNB) may have violated securities rules when it filed its December 2 statements a financial website reported. According to TheStreet.com, “And while the company’s failure to disclose that the TARP approval was contingent on the private capital-raising in the Dec. 2 filing might have been an oversight, some lawyers believe Colonial could be a violation of an SEC rule that bars companies from making untrue statements or omitting material facts that would keep financial statements from being misleading.”

Where is that Auburn Creed when you need it?

The bank could face severe capital issues too. From TheStreet.com, “Even though the company emphasized it had increased reserves and was well capitalized with leverage and risk-based capital ratios of 6.13% and 13.16%, the ratio of nonperforming assets to total assets was rising to 4.83% as of Dec. 31, up from 4.43% in September. Meanwhile, net loan charge-offs for the fourth quarter were $415 million. The annualized pace of net charge-offs to average loans was 11.15%. Colonial’s ratio of loan loss reserves to total loans was 2.24% as of Dec. 31.

If this level of loan losses continues over the next few quarters, Colonial will easily blow through its capital, even including the $853 million it expects to raise.”

What does this mean for Auburn and its board of trustees? Paul Davis is urging Lowder to “take his money and go home.” Davis wrote in his column, “The same week that the Montgomery banker was announced as one of Alabama’s most influential men, the federal government and Colonial Bank shareholders have selected him as one the nation’s worst bankers…I don’t know if Colonial Bank is going away. But I surely do hope that Lowder does.”