Did Colonial violate SEC rules?
Bobby Lowderâ€™s Colonial Bancgroup (CNB) may have violated securities rules when it filed its December 2 statements a financial website reported. According to TheStreet.com, â€œAnd 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.â€
Where is that Auburn Creed when you need it?
The bank could face severe capital issues too. From TheStreet.com, â€œEven 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.â€
What does this mean for Auburn and its board of trustees? Paul Davis is urging Lowder to â€œtake his money and go home.â€ Davis wrote in his column, â€œThe same week that the Montgomery banker was announced as one of Alabamaâ€™s most influential men, the federal government and Colonial Bank shareholders have selected him as one the nationâ€™s worst bankers…I donâ€™t know if Colonial Bank is going away. But I surely do hope that Lowder does.â€