<PAGE>

               UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                            ----------------------
                                   FORM 10-Q


                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


FOR THE QUARTER ENDED MARCH 31, 2001         COMMISSION FILE NUMBER 1-13508


                          THE COLONIAL BANCGROUP, INC.
             (Exact name of registrant as specified in its charter)

                  DELAWARE                                  63-0661573
------------------------------------------           ------------------------
      (State or other jurisdiction of                   (I.R.S. Employer
       incorporation or organization)                  Identification No.)

                              One Commerce Street
                           Montgomery, Alabama 36104
                    ---------------------------------------
                   (Address of principle executive offices)

                                (334) 240-5000
                       --------------------------------
                        (Registrant's telephone number)



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to the filing requirements for
at least the past 90 days.

               YES [X]    NO [_]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.

                  Class                          Outstanding at April 30, 2001
------------------------------------------     ---------------------------------
      Common Stock, $2.50 Par Value                       110,676,810
<PAGE>

                         THE COLONIAL BANCGROUP, INC.
                                     INDEX

<TABLE>
<CAPTION>
                                                                                                                          Page
                                                                                                                         Number
<S>                                                                                                                      <C>
           PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements (Unaudited)

           Consolidated Statements of Condition - March 31, 2001, December 31, 2000 and March 31, 2000                          4

           Consolidated Statements of Income -Three months ended March 31, 2001 and March 31, 2000                              5

           Consolidated Statements of Comprehensive Income - Three months ended March 31, 2001 and March 31 2000                6

           Consolidated Statements of Cash Flows - Three months ended March 31, 2001 and March 31, 2000                         7

           Notes to Consolidated Financial Statements - March 31, 2001                                                          9

Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations                               14

Item 3.    Quantitative and Qualitative Disclosures about Market Risk                                                          28

           PART II. OTHER INFORMATION

Item 1.    Legal Proceedings                                                                                                   28

Item 6.    Exhibits and Reports on Form 8-K                                                                                    29

           SIGNATURES                                                                                                          29
</TABLE>

                                       2
<PAGE>

CAUTIONARY STATEMENT PURSUANT TO SAFE HARBOR PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995:

This report contains "forward-looking statements" within the meaning of the
federal securities laws. The forward-looking statements in this report are
subject to risks and uncertainties that could cause actual results to differ
materially from those expressed in or implied by the statements. Factors that
may cause actual results to differ materially from those contemplated by such
forward-looking statements include, among other things, the following
possibilities: (i) deposit attrition, customer loss, or revenue loss in the
ordinary course of business; (ii) increases in competitive pressure in the
banking industry;  (iii) changes in the interest rate environment which reduce
margins; (iv) general economic conditions, either nationally or regionally, that
are less favorable than expected, resulting in, among other things, a
deterioration in credit quality, (v) changes which may occur in the regulatory
environment; (vi) a significant rate of inflation (deflation); and (vii) changes
in the securities markets.  When used in this Report, the words "believes,"
"estimates," "plans," "expects," "should," "may," "might," "outlook," and
"anticipates," and similar expressions as they relate to BancGroup (including
its subsidiaries), or its management are intended to identify forward-looking
statements.

                                       3
<PAGE>

                 THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CONDITION
                                  (Unaudited)
                (Dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                March 31,     December 31,     March 31,
                                                                  2001           2000            2000
                                                             --------------------------------------------
<S>                                                             <C>            <C>            <C>
ASSETS:
Cash and due from banks                                         $   290,371    $   348,891    $   330,456
Interest-bearing deposits in banks and federal funds sold             7,516         15,855         24,517
Securities available for sale                                     1,461,208      1,449,386      1,602,881
Investment securities                                                41,881         44,310         57,246
Mortgage loans held for sale                                         20,811          9,866         23,291
Loans, net of unearned income                                     9,879,577      9,416,770      8,550,412
Less: Allowance for possible loan losses                           (113,613)      (107,165)       (98,095)
                                                             --------------------------------------------
Loans, net                                                        9,765,964      9,309,605      8,452,317
Premises and equipment, net                                         184,588        184,831        189,865
Excess of cost over tangible and identified intangible               93,224         74,393         78,287
  assets acquired, net
Mortgage servicing rights                                                 -              -         86,982
Other real estate owned                                               9,680          8,928          6,391
Accrued interest and other assets                                   273,794        281,572        370,718
                                                             --------------------------------------------
TOTAL ASSETS:                                                   $12,149,037    $11,727,637    $11,222,951
                                                             ============================================

LIABILITIES AND SHAREHOLDERS EQUITY:
Deposits                                                        $ 8,274,669    $ 8,143,017    $ 8,129,586
FHLB short-term borrowings                                          425,000        425,000        350,000
Other short-term borrowings                                       1,471,356      1,463,328      1,047,134
Subordinated debt                                                   111,865        111,900        112,016
Trust preferred securities                                           70,000         70,000         70,000
FHLB long-term debt                                                 796,832        547,022        572,364
Other long-term debt                                                102,325        102,325        134,755
Other liabilities                                                   107,663        108,193        112,131
                                                             --------------------------------------------
TOTAL LIABILITIES                                                11,359,710     10,970,785     10,527,986
                                                             --------------------------------------------

SHAREHOLDERS' EQUITY:
Preference Stock, $2.50 par value; 1,000,000 shares
 authorized, none issued                                                 --             --             --
Common Stock, $2.50 par value; 200,000,000 shares
  authorized; 113,071,807, 113,081,198, and 112,844,273
  shares issued at March 31, 2001, December 31, 2000, and
  March 31, 2000, respectively                                      282,680        282,703        282,111
Treasury stock;  2,419,251, 2,773,752, and 1,416,876 at March
  31, 2001, December 31, 2000, and March 31, 2000,
  respectively                                                      (22,973)       (26,467)       (13,104)
Additional paid in capital                                          119,832        118,600        118,298
Retained earnings                                                   405,643        390,442        344,116
Unearned compensation                                                (4,924)        (2,541)        (3,838)
Accumulated other comprehensive income (loss), net of taxes           9,069         (5,885)       (32,618)
                                                             --------------------------------------------
TOTAL SHAREHOLDERS' EQUITY                                          789,327        756,852        694,965
                                                             --------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                      $12,149,037    $11,727,637    $11,222,951
                                                             ============================================
</TABLE>

    See Notes to the Unaudited Condensed Consolidated Financial Statements

                                       4
<PAGE>

                 THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                  (Unaudited)
               (Dollars in thousands, except per share amounts)


<TABLE>
<CAPTION>
                                                                            Three Months Ended
                                                                                 March 31,
                                                                   ------------------------------------
                                                                           2001                    2000
                                                                   ------------         ---------------
<S>                                                                <C>                  <C>
INTEREST INCOME:
   Interest and fees on loans                                      $    208,469         $       180,993
   Interest and dividends on securities                                  25,521                  26,685
   Other interest income                                                    738                     503
                                                                   ------------         ---------------
Total interest income                                                   234,728                 208,181
                                                                   ------------         ---------------

INTEREST EXPENSE:
   Interest on deposits                                                  93,431                  77,786
   Interest on short-term borrowings                                     23,245                  18,771
   Interest on long-term debt                                            18,214                  14,305
                                                                   ------------         ---------------
Total interest expense                                                  134,890                 110,862
                                                                   ------------         ---------------

NET INTEREST INCOME                                                      99,838                  97,319
Provision for possible loan losses                                        9,464                   5,547
                                                                   ------------         ---------------
Net Interest Income After Provision for Possible Loan Losses             90,374                  91,772
                                                                   ------------         ---------------

NONINTEREST INCOME:
   Service charges on deposit accounts                                    9,286                   9,274
   Wealth management                                                      2,242                   2,561
   Electronic banking                                                     1,531                   1,282
   Mortgage origination                                                   1,613                   1,196
   Securities gains (losses), net                                         1,143                       8
   Other income                                                           4,635                   4,126
                                                                   ------------         ---------------
Total noninterest income                                                 20,450                  18,447
                                                                   ------------         ---------------

NONINTEREST EXPENSE:
   Salaries and employee benefits                                        33,911                  30,852
   Occupancy expense of bank premises, net                                8,085                   7,301
   Furniture and equipment expenses                                       7,158                   6,980
   Amortization of intangibles                                            1,631                   1,302
   Other expense                                                         15,599                  15,683
                                                                   ------------         ---------------
Total noninterest expense                                                66,384                  62,118
                                                                   ------------         ---------------

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES                    44,440                  48,101
Applicable income taxes                                                  15,998                  17,568
                                                                   ------------         ---------------
INCOME FROM CONTINUING OPERATIONS                                        28,442                  30,533

DISCONTINUED OPERATIONS:
  Income/(Loss) from discontinued operations, net of
   income
    taxes of  $0 and ($358) for the three
    months ended March 31, 2001 and 2000                                      -                    (592)
                                                                   ------------         ---------------
NET INCOME                                                         $     28,442         $        29,941
                                                                   ============         ===============
EARNINGS PER SHARE:
INCOME FROM CONTINUING OPERATIONS:
        Basic                                                      $       0.26         $          0.27
        Diluted                                                    $       0.26         $          0.27
  NET INCOME
        Basic                                                      $       0.26         $          0.27
        Diluted                                                    $       0.26         $          0.27
</TABLE>

    See Notes to the Unaudited Condensed Consolidated Financial Statements

                                       5
<PAGE>

                 THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                  (Unaudited)
               (Dollars in thousands, except per share amounts)


<TABLE>
<CAPTION>
                                                                    Three Months Ended
                                                                         March 31,
                                                            ----------------------------------
                                                                   2001                   2000
                                                            -----------             ----------
<S>                                                         <C>                     <C>
Net Income                                                  $    28,442             $   29,941
OTHER COMPREHENSIVE INCOME, NET OF TAXES:
 Unrealized gains (losses) on securities
  available for sale
   arising during the period, net of taxes                       15,686                 (3,841)
 Less:  reclassification adjustment for net
  (gains) losses
   included in net income                                          (732)                    (5)
                                                            -----------             ----------
COMPREHENSIVE INCOME                                        $    43,396             $   26,095
                                                            ===========             ==========
</TABLE>

    See Notes to the Unaudited Condensed Consolidated Financial Statements

                                       6
<PAGE>

                 THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
                                  (Unaudited)
               (Dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                                              Three Months Ended
                                                                                                  March 31,
                                                                                     ----------------------------------
                                                                                       2001                     2000
                                                                                     ----------------------------------
<S>                                                                                  <C>                      <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES                                            $  30,828                $  91,950
                                                                                     ----------------------------------
Cash flows from investing activities:
  Proceeds from maturities of securities available for sale                            107,883                   46,530
  Proceeds from sales of securities available for sale                                  26,968                   15,193
  Purchase of securities available for sale                                           (121,806)                (181,234)
  Proceeds from maturities of investment securities                                      2,228                    4,413
  Net increase in loans                                                               (419,125)                (324,200)
  Cash received in branch acquisition                                                   32,801                       --
  Capital expenditures                                                                  (5,318)                  (5,405)
  Proceeds from sale of other real estate owned                                          1,829                    1,363
  Other, net                                                                                24                        9
                                                                                     ----------------------------------
NET CASH USED IN INVESTING ACTIVITIES                                                 (374,516)                (443,331)
                                                                                     ----------------------------------

Cash flows from financing activities:
  Net increase in demand, savings, and time deposits                                    28,770                  161,608
  Net increase in federal funds purchased, repurchase
    agreements and other short-term borrowings                                         138,026                  203,705
  Proceeds from issuance of long-term debt                                             250,000                       --
  Repayment of long-term debt                                                         (130,189)                    (404)
  Proceeds from issuance of common stock                                                 3,464                    2,834
  Purchase of treasury stock                                                                --                  (17,901)
  Dividends paid ($0.12 and $0.11 per share for
    2001 and 2000, respectively)                                                       (13,242)                 (12,403)
                                                                                     ----------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                              276,829                  337,439
                                                                                     ----------------------------------
Net decrease in cash and cash equivalents                                              (66,859)                 (13,942)
Cash and cash equivalents at beginning of year                                         364,746                  368,915
                                                                                     ----------------------------------
Cash and cash equivalents at March 31                                                $ 297,887                $ 354,973
                                                                                     ==================================
</TABLE>

    See Notes to the Unaudited Condensed Consolidated Financial Statements

                                       7
<PAGE>

                 THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
                                  (Unaudited)
               (Dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                       Three Months Ended
                                                                                             March 31,
                                                                                  ------------------------------
                                                                                     2001                 2000
                                                                                  ------------------------------
<S>                                                                               <C>                   <C>
Cash paid during the  year for:

  Interest                                                                         $145,148             $119,989

  Income taxes                                                                     $ 15,998               14,200

Non-cash investing activities:

  Transfer of loans to other real estate                                           $ 10,909             $  2,623
  Origination of loans from the sale of other real estate                          $  3,085             $  2,326


Non-cash financing activities:
  Conversion of subordinated debentures                                            $     35             $     32

  Reissuance of shares of treasury stock for stock plans                           $  3,003             $  4,797
</TABLE>

    See Notes to the Unaudited Condensed Consolidated Financial Statements.

                                       8
<PAGE>

                 THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
      NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE A: ACCOUNTING POLICIES

The Colonial BancGroup, Inc. and its subsidiaries ("BancGroup" or the "Company")
have not changed their accounting and reporting policies from those stated in
the 2000 annual report on Form 10-K. These unaudited interim financial
statements should be read in conjunction with the audited financial statements
and footnotes included in BancGroup's 2000 annual report on Form 10-K.

In the opinion of BancGroup, the accompanying unaudited condensed consolidated
financial statements contain all adjustments (consisting only of normal
recurring accruals) necessary to present fairly the financial position as of
March 31, 2001 and 2000 and the results of operations and cash flows for the
interim periods ended March 31, 2001 and 2000. All 2001 interim amounts are
subject to year-end audit, and the results of operations for the interim period
herein are not necessarily indicative of the results of operations to be
expected for the year.

NOTE B: COMMITMENTS AND CONTINGENCIES

BancGroup and its subsidiaries are from time to time defendants in legal actions
arising from normal business activities. Management does not anticipate that the
ultimate liability arising from litigation outstanding at March 31, 2001 will
have a materially adverse effect on BancGroup's financial statements.

NOTE C: RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financials Accounting Standards Board issued SFAS No. 133
"Accounting for Derivative Instruments and Hedging Activities" which establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, (collectively referred to as
derivatives) and for hedging activities. It requires that entities recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. If certain conditions are
met, a derivative may be specifically designated as (a) a hedge of the exposure
to changes in the fair value of a recognized asset or liability or an
unrecognized firm commitment, (b) a hedge of the exposure to variable cash flows
of a forecasted transaction, or (c) a hedge of the foreign currency exposure of
a net investment in a foreign operation, an unrecognized firm commitment, an
available-for-sale security, or a foreign-currency-denominated forecasted
transaction. The accounting for changes in the fair value of a derivative (that
is, gains and losses) depends on the intended use of the derivative and the
resulting designation.

                                       9
<PAGE>

Under this Statement, an entity that elects to apply hedge accounting is
required to establish at the inception of the hedge the method it will use for
assessing the effectiveness of the hedging derivative and the measurement
approach for determining the ineffective aspect of the hedge. Those methods must
be consistent with the entity's approach to managing risk.

On September 23, 1999, the Financial Accounting Standards Board issued SFAS No.
137, "Accounting for Derivative Instruments and Hedging Activities -- Deferral
of the Effective Date of FASB Statement No. 133," an amendment to delay the
effective date of SFAS No. 133. The effective date for this statement was
delayed from fiscal years beginning after June 15, 1999 to fiscal years
beginning after June 15, 2000. BancGroup had no significant derivative position
or exposure in 2000 or the first quarter of 2001; therefore, there was no impact
as a result of the implementation of SFAS No. 133 and SFAS No. 137.

On September 29, 2000, the Financial Accounting Standards Board issued SFAS No.
140, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities, a Replacement of FASB Statement No. 125." The
effective date for this statement is for transfers that occur after April 1,
2001. Management has determined that the implementation of SFAS No. 140 will not
have a material impact on BancGroup's financial statements.

NOTE D: DISCONTINUED OPERATIONS

As noted in prior quarters, in July 2000 the Company decided to exit the
mortgage servicing business and discontinue the operations of mortgage servicing
as a separate business unit.  As of December 31, 2000, all loan transfers were
completed and the mortgage servicing rights removed from the Company's balance
sheet.  In addition, the escrow and custodial deposits related to those
servicing rights have been transferred out of Colonial Bank resulting in a $168
million reduction in average noninterest bearing deposits from March 31, 2000 to
March 31, 2001.  At March 31, 2001, the balance sheet of the Company includes
approximately $7.4 million in receivables and other advances related to the
various transfers of servicing.  These receivable and advance balances represent
the expected recoverable amounts once all documentation supporting the
transferred loans is provided to the new servicer. The anticipated costs of
providing the necessary documents have been accrued. However, due to the volume
of loans transferred and the costs and complexity in providing certain
documentation, the Company's current estimate of recoverable amounts or costs
may be revised for future periods.

                                      10
<PAGE>

NOTE E: MORTGAGE SERVICING RIGHTS

An analysis of mortgage servicing rights (MSR's) and the related valuation
reserve is as follows:

<TABLE>
<CAPTION>
                                                                       Three Months Ended
                                                                            March 31
                                                                    -------------------------
                                                                        2001          2000
                                                                    -------------------------
          (Dollars in thousands)
          <S>                                                       <C>             <C>
          MORTGAGE SERVICING RIGHTS
          Balance, January 1                                        $         -     $ 265,888
          Additions, net                                                      -           920
          Sales                                                               -      (162,380)
          Scheduled amortization                                              -        (8,568)
          Hedge losses applied                                                -         1,720
                                                                    -----------     ---------
          Balance, March 31                                                   -        97,580
                                                                    -----------     ---------

          VALUATION RESERVE
          Balance, January 1                                                  -        27,483
          Reductions                                                          -       (17,185)
          Additions                                                           -           300
                                                                    -----------     ---------
          Balance, March 31                                                   -        10,598
                                                                    -----------     ---------
          Mortgage Servicing Rights, net                            $         -     $  86,982
                                                                    ===========     =========
</TABLE>

As a result of the previously discussed plan to exit the mortgage servicing
business, all hedges related to MSR's were liquidated during the third quarter
of 2000.

NOTE F: EARNINGS PER SHARE

The following table reflects a reconciliation of the numerator and denominator
of the basic EPS computation to the numerator and denominator of the diluted EPS
computation:

<TABLE>
<CAPTION>
          (Dollars in  thousands, except per share amounts)                          Three Months Ended March 31, 2001
                                                                             ------------------------------------------------
                                                                                                                 Per Share
                                                                                Income          Shares            Amount
                                                                             -----------    --------------    ---------------
          <S>                                                                <C>            <C>               <C>
          Basic EPS

           Income from continuing operations                                     $28,442           110,502              $0.26

          Effect of dilutive securities:

              Options                                                                                  352

              Convertible debentures                                                  48               585

------------------------------------------------------------------------------------------------------------------------------
          Diluted EPS                                                            $28,490           111,439              $0.26
------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                      11
<PAGE>

<TABLE>
<CAPTION>
          (Dollars in  thousands, except per share amounts)                      Three Months Ended March 31, 2000
                                                                               -------------------------------------
                                                                                                        Per Share
                                                                     Income            Shares            Amount
                                                                  -------------    --------------    ---------------
          <S>                                                     <C>              <C>               <C>
          Basic EPS
           Income from continuing operations                            $30,533           111,948              $0.27
          Effect of dilutive securities
            Options                                                                           255
            Convertible debentures                                           46               608
          ----------------------------------------------------------------------------------------------------------
          Diluted EPS                                                   $30,579           112,811              $0.27
          ----------------------------------------------------------------------------------------------------------
</TABLE>

     NOTE G: SEGMENT INFORMATION

     Through its wholly owned subsidiary Colonial Bank, BancGroup has previously
     segmented its operations into two distinct lines of business: Commercial
     Banking and Mortgage Banking (which has been discontinued as a line of
     business effective July 2000). Colonial Bank operates 239 branches
     throughout six states.

     Operating results and asset levels of the two segments reflect those which
     are specifically identifiable or which are based on an internal allocation
     method. The two segments are designed around BancGroup's organizational and
     management structure and while the assignments and allocations have been
     consistently applied for all periods presented, the results are not
     necessarily comparable to similar information published by other financial
     institutions.

     The following table reflects the approximate amounts of consolidated
     revenues, expense, and assets for the quarters ended March 31, for each
     segment (Dollars in thousands):

<TABLE>
<CAPTION>
                                                                                                        Discontinued
                                                                        Continuing Operations            Operations
                                                              ------------------------------------------------------
QUARTER ENDED MARCH 31, 2001                                    Commercial       Corporate                 Mortgage   Consolidated
                                                                 Banking          Other*       Totals      Banking      BancGroup
                                                              --------------------------------------------------------------------
<S>                                                             <C>            <C>             <C>        <C>         <C>
Net interest income                                              $ 101,652         $ (1,814)  $ 99,838            --     $  99,838
Provision for possible loan losses                                   9,464               --      9,464            --         9,464
Noninterest income                                                  20,458               (8)    20,450            --        20,450
Depreciation and Amortization                                        8,108             (109)     7,999            --         7,999
Noninterest expense                                                 57,173            1,212     58,385            --        58,385
                                                              --------------------------------------------------------------------
 Income from continuing Operations before income
 taxes                                                              47,365           (2,925)    44,440            --        44,440

Applicable income taxes                                             16,813             (815)    15,998            --        15,998
                                                              --------------------------------------------------------------------
   INCOME FROM CONTINUING  OPERATIONS                               30,552           (2,110)    28,442            --        28,442

Income (Loss) from Discontinued Operations and
loss on disposal (net of taxes)                                         --               --         --            --            --

                                                              --------------------------------------------------------------------
          NET INCOME                                             $  30,552         $ (2,110)  $ 28,442            --     $  28,442
                                                              --------------------------------------------------------------------
</TABLE>

                                      12
<PAGE>

<TABLE>
<CAPTION>
                                                                                                   Discontinued
                                                                      Continuing Operations         Operations
                                                               ------------------------------------------------
QUARTER ENDED MARCH 31, 2000                                     Commercial  Corporate                Mortgage    Consolidated
                                                                  Banking      Other*     Total       Banking       BancGroup
                                                               ---------------------------------------------------------------
<S>                                                              <C>         <C>          <C>      <C>            <C>
Net interest income                                                 $98,987    $(1,668)   $97,319         $  --        $97,319
Provision for possible loan losses                                    5,547         --      5,547            --          5,547
Noninterest income                                                   18,455         (8)    18,447            --         18,447
Depreciation and Amortization                                         8,010       (102)     7,908            --          7,908
Noninterest expense                                                  53,129      1,081     54,210            --         54,210
                                                               ---------------------------------------------------------------
 Income from continuing Operations before income                     50,756     (2,655)    48,101            --         48,101
 taxes
Applicable income taxes                                              18,283       (715)    17,568            --         17,568
                                                               ---------------------------------------------------------------
 INCOME FROM CONTINUING OPERATIONS                                   32,473     (1,940)    30,533            --         30,533

 Income (Loss) from Discontinued Operations and
 loss on disposal (net of taxes)                                         --         --         --          (592)          (592)
                                                               ---------------------------------------------------------------
     NET INCOME                                                     $32,473    $(1,940)   $30,533         $(592)       $29,941
                                                               ---------------------------------------------------------------
</TABLE>

* Includes elimination's of certain intercompany transactions.


          NOTE H: BUSINESS ACQUISITIONS AND COMBINATIONS

          On January 13, 2001, Colonial Bank acquired two branches in Nevada
          from First Security Bank in a branch divestiture resulting from their
          merger with Wells Fargo. Through this acquisition, the Company
          purchased $49.5 million in loans and assumed $102.9 million in
          deposits at a purchase price of $70.2 million.

                                      13
<PAGE>

   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
   --------------------------------------------------------------------------
                                  OPERATIONS
                                  ----------

FINANCIAL CONDITION:

Ending balances of total assets, securities, mortgage loans held for sale, net
loans, mortgage servicing rights, deposits, and long term debt changed for the
three months and twelve months ended March 31, 2001, respectively, as follows
(Dollars in thousands):

<TABLE>
<CAPTION>

                                                December 31, 2000                      March 31, 2000
                                                to March 31, 2001                     to March 31, 2001
                                               Increase  (Decrease)                  Increase (Decrease)
                                    ----------------------------------------------------------------------------
                                            Amount               %                Amount               %
                                    ----------------------------------------------------------------------------
<S>                                        <C>                   <C>              <C>                  <C>
     Assets:
         Bank                                  $445,006               3.8%         $1,152,405              10.3%
         Mortgage Banking                       (23,798)            -67.8%           (226,518)            -95.2%
         Other                                      192               1.5%                199               1.6%
                                    ----------------------------------------------------------------------------
     Total Assets                               421,400               3.6%            926,086               8.3%
     Securities                                   9,393               0.6%           (157,038)             -9.5%
     Mortgage loans held for sale                10,945             110.9%             (2,480)            -10.7%
     Loans, net of unearned income              462,807               4.9%          1,329,165              15.6%
     Mortgage servicing rights                       --                 0%            (86,982)           -100.0%
     Deposits                                   131,652               1.6%            145,083               1.8%
     Long-term debt                             249,774              30.1%            191,886              21.6%
</TABLE>

Assets:

BancGroup's total assets have increased 8.3% and 3.6% since March 31, 2000 and
December 31, 2000, respectively. This growth resulted primarily from internal
loan growth throughout BancGroup's banking regions partially offset by the
decline in mortgage banking assets due to the discontinuance of this line of
business as discussed in Note D to the consolidated financial statements.

Securities:

Investment securities and securities available for sale have decreased $157.0
million (-9.5%) and increased $9.4 million (0.6%) from March 31, 2000 and
December 31, 2000, respectively. These fluctuations were due to normal business
activities.

Loans and Mortgage Loans Held for Sale:

Loans, net of unearned income, have increased $1.3 billion (15.6%) and $462.8
million (4.9%) from March 31, 2000 and December 31, 2000, respectively. This
increase is primarily due to 15% internal loan growth from March 31, 2000 and
18% annualized internal loan growth from December 31, 2000. The Mortgage
Warehouse Lending unit, which generates lines of credit secured by single-family
residential

                                      14
<PAGE>

loans in the process of being sold, contributed $458.7 million and $267.5
million of this growth from March 31, 2000 and December 31, 2000, respectively.
Internal loan growth excluding the Mortgage Warehouse Lending Unit was 9%
annualized from December 31, 2000 compared to 14% for the full year of 2000. In
addition to internal growth, $49.5 million of the increase in loans was the
result of the acquisition of two branches in Nevada, as discussed in Note H of
the consolidated financial statements.

<TABLE>
<CAPTION>
     GROSS LOANS BY CATEGORY                         March 31,         December 31,        March 31,
     (In thousands)                                    2001                2000              2000
                                                    --------------------------------------------------
     <S>                                             <C>               <C>                 <C>
     Commercial, financial, and agricultural            $ 1,254,944       $ 1,221,131      $ 1,163,781
     Real estate-commercial                               3,268,950         3,174,483        2,661,897
     Real estate-construction                             1,810,132         1,693,958        1,560,371
     Real estate-residential                              2,541,015         2,562,708        2,566,887
     Installment and consumer                               263,837           272,124          292,481
     Mortgage warehouse lending                             644,484           376,995          185,816
     Other                                                   96,246           115,413          119,309
                                                    --------------------------------------------------
     Total Loans                                        $ 9,879,608       $ 9,416,812      $ 8,550,542
                                                    ==================================================
</TABLE>

Commercial loans collaterialized by real estate and construction loans increased
approximately $94.5 million and $116.2 million, respectively from December 31,
2000 and $607.1 million and $249.8 million, respectively, from March 31, 2000.
Commercial, financial, and agricultural loans increased $33.8 million and $91.2
million from December 31, 2000 and March 31, 2000, respectively. Mortgage
Warehouse Lending's loan growth was due primarily to declines in mortgage
interest rates which significantly increased the volume of mortgage loan
applications for new and refinanced borrowing. BancGroup's loans are
concentrated in various areas in Alabama, the metropolitan Atlanta market in
Georgia as well as BancGroup's markets in Florida, Nevada, and Texas.

BancGroup does not have a syndicated lending department; however, the Company
has commitments (including unfunded amounts) that fall within the regulatory
definition of a "shared national credit". These commitments total approximately
$460.0 million, up from $193.0 million at December 31, 2000. Substantially all
of this increase was attributed to the growth within our Mortgage Warehouse
Lending unit. The quality of these credits remains strong, with no credits being
adversely rated.

Management believes that any existing distribution of loans, whether
geographically, by industry, or by borrower, does not expose BancGroup to
unacceptable levels of risk. The current distribution of loans remains diverse
in location, size, and collateral function. These differences, in addition to
our emphasis on quality underwriting, serve to reduce the risk of losses. The
following chart reflects the geographic diversity, and industry distribution of
Construction and Commercial Real Estate loans as of March 31, 2001.

                                      15
<PAGE>

    CONSTRUCTION & COMMERCIAL REAL ESTATE GEOGRAPHIC DIVERSITY AND INDUSTRY
                                 DISTRIBUTION
<TABLE>
<CAPTION>
                                          Construction                            Commercial Real Estate
                                        --------------                           ----------------------
<S>                                       <C>                                     <C>
Average Loan Size                           $  663,576                                       $  407,467
(Dollars in Thousands)
Geographic Diversity
   Alabama                                  $  235,500                                       $  891,159
   Georgia                                     396,181                                          417,702
   Florida                                     824,392                                        1,430,050
   Texas                                       154,749                                           99,973
   Nevada                                       95,699                                          139,748
   Other                                        63,070                                          303,347
                                        --------------                           ----------------------
Total                                       $1,769,591                                       $3,281,979
</TABLE>

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Industry Distribution   % of Industry Distribution to                                      % of Industry Distribution to
                        ------------------------------                                     -----------------------------

                         Construction           Total                                      Commercial  Real            Total
                          Portfolio           Portfolio                                    Estate Portfolio          Portfolio
                        -------------         ----------                                   ----------------          ---------
<S>                     <C>                   <C>                                          <C>                       <C>
   Residential                    29%                 5%              Retail                            17%                 6%
   Developments                   21%                 4%              Office                            17%                 6%
   Multi-Family                   10%                 2%              Lodging                           11%                 3%
   Condominium                     9%                 2%              Multi-Family                      10%                 3%
   Office                          7%                 1%              Land Only                          7%                 2%
   Retail                          6%                 1%              Warehouse                          6%                 2%
   Other (13 types)               18%                 3%              Other (11 types)                  32%                11%
                        -------------         ----------                                   ----------------          ---------
                                                                   Total Commercial Real
 Total Construction              100%                18%           Estate                              100%                33%
                        -------------         ----------                                   ----------------          ---------
</TABLE>

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Characteristics of the 75 Largest Loans
                                                                  Construction                           Commercial Real Estate
                                                                  ------------                           ----------------------
<S>                                                             <C>                                      <C>
75 Largest Loans Total                                          $       800,685                                $       678,924
   % of 75 largest loans to category total                                 44.7%                                          20.7%
   Average Loan to Value Ratio (75
     largest loans)                                                          71%                                            69%
  Debt Coverage Ratio (75 largest loans)                                     N/A                                          1.35x
</TABLE>

--------------------------------------------------------------------------------

Substantially all Construction and Commercial Real Estate loans have personal
guarantees of the borrower. Owner occupied Commercial Real Estate portfolio
totals represented 30% of the total Commercial Real Estate portfolio at March
31, 2001.

                                      16
<PAGE>

     ALLOCATION OF THE ALLOWANCE FOR POSSIBLE LOAN LOSSES

     Allocations of the allowance for possible loan losses are made on an
     individual loan basis for all identified potential problem loans with a
     percentage allocation for the remaining portfolio. The allocation of the
     remaining allowance represents an approximation of the reserves for each
     category of loans based on management's evaluation of the respective
     historical charge-off experience and risk within each loan type.

<TABLE>
<CAPTION>
                                                      Percent of                   Percent of              Percent of
                                           March 31,   Loans to     December 31,   Loans to    March 31,    Loans to
(Dollars In thousands)                          2001  Total Loans        2000      Total Loans     2000    Total Loans
                                        -----------------------------------------------------------------------------
<S>                                       <C>           <C>         <C>            <C>         <C>           <C>
Commercial, financial, and agricultural    $ 32,503         12.7%      $ 27,861         13.0%   $ 26,647         13.6%
Real estate-commercial                       44,909         33.1%        43,843         33.7%     34,146         31.1%
Real estate-construction                     15,344         18.3%        15,909         18.0%     16,804         18.3%
Real estate-mortgage                         12,705         25.7%        12,814         27.2%     12,835         30.0%
Installment and consumer                      2,514          2.7%         2,927          2.9%      3,840          3.4%
Mortgage warehouse lending                    1,611          6.6%           942          4.0%        465          2.2%
Other                                         4,027          0.9%         2,869          1.2%      3,358          1.4%
                                        -----------------------------------------------------------------------------
TOTAL                                      $113,613        100.0%      $107,165        100.0%   $ 98,095        100.0%
                                        =============================================================================
</TABLE>

     SUMMARY OF LOAN LOSS EXPERIENCE

<TABLE>
<CAPTION>
                                                                  March 31,      December 31,       March 31,
     (Dollars In thousands)                                         2001             2000             2000
                                                               ----------------------------------------------
    <S>                                                          <C>               <C>               <C>
     Allowance for possible loan losses - January 1              $  107,165         $ 95,993        $  95,993

     Charge-offs:
       Commercial, financial, and agricultural                        2,737           10,493            1,982
       Real estate-commercial                                           201            3,240              571
       Real estate-construction                                          45              529               37
       Real estate-residential                                          652            3,260              601
       Installment and consumer                                         839            4,345            1,072
       Other                                                            173            1,119              272
                                                               ----------------------------------------------
     Total charge-offs                                                4,647           22,986            4,535
                                                               ----------------------------------------------
     Recoveries:
       Commercial, financial, and agricultural                          115            1,210              325
       Real estate-commercial                                           191              627              129
       Real estate-construction                                           7               62                1
       Real estate-residential                                          194              440               88
       Installment and consumer                                         497            1,856              422
       Other                                                             60              283              125
                                                               ----------------------------------------------
     Total recoveries                                                 1,064            4,478            1,090
                                                               ==============================================
</TABLE>
                                      17
<PAGE>

<TABLE>
<CAPTION>
                                                            March 31,      December 31,       March 31,

                                                              2001             2000             2000
                                                         -----------------------------------------------
<S>                                                       <C>              <C>              <C>
Net charge-offs                                                  3,583           18,508            3,445
Addition to allowance for branch acquisition                       567                -                -
Addition to allowance charged to operating expense               9,464           29,680            5,547
                                                         -----------------------------------------------
Allowance for possible loan losses-end of period            $  113,613       $  107,165        $  98,095
                                                         ===============================================
</TABLE>

Nonperforming assets were 0.53% of net loans and other real estate at March 31,
2001. Nonperforming assets have increased $1.3 million from December 31, 2000.
The increase in nonperforming assets primarily resulted from a $585,000 increase
in nonaccrual loans and a $752,000 increase in other real estate.  Management
continuously monitors and evaluates recoverability of problem assets and adjusts
loan loss reserves accordingly. Loan loss reserve is 1.15% of loans at March 31,
2001 and 1.14% at December 31, 2000 compared to 1.15% at March 31, 2000.

NONPERFORMING ASSETS ARE SUMMARIZED BELOW

<TABLE>
<CAPTION>
                                                           March 31,       December 31,       March 31,
(Dollars In thousands)                                        2001             2000             2000
                                                         -----------------------------------------------
<S>                                                       <C>              <C>               <C>
Nonaccrual loans                                            $   41,209       $   40,624       $  34,937
Restructured loans                                               1,147            1,161           1,252
                                                         -----------------------------------------------
  Total nonperforming loans *                                   42,356           41,785          36,189

Other real estate owned and in substance foreclosures            9,680            8,928           6,391
                                                         -----------------------------------------------
  Total nonperforming assets *                              $   52,036       $   50,713       $  42,580
                                                         ===============================================

Aggregate loans contractually past due 90 days              $   16,739       $    9,841       $  12,693
    for which interest is being accrued
Net charge-offs year-to-date                                $    3,583       $   18,508       $   3,445


RATIOS
 PERIOD END:
   Total nonperforming assets as a percent of net
     loans and other real estate                                  0.53%            0.54%           0.50%
   Allowance as a percent of net loans                            1.15%            1.14%           1.15%
   Allowance as a percent of nonperforming assets *                218%             211%            230%
   Allowance as a percent of nonperforming loans *                 268%             256%            271%
 FOR THE PERIOD ENDED:
  Net charge-offs as a percent of average net loans -
   (annualized basis):
  Quarter to date                                                 0.15%            0.21%           0.16%
</TABLE>

* Does not include loans contractually past due 90 days or more which are still
  accruing interest.

                                      18

<PAGE>

Management, through its loan officers internal credit review staff, and external
examinations by regulatory agencies, has identified approximately $194.9 million
of potential problem loans not included above. The status of these loans is
reviewed at least quarterly by loan officers and annually by BancGroup's
centralized credit review function and by regulatory agencies. In connection
with such reviews, collateral values are updated where considered necessary. If
collateral values are judged insufficient or other sources of repayment
inadequate, the loans are reduced to estimated recoverable amounts through
increases in reserves allocated to the loans or charge-offs. As of March 31,
2001, substantially all of these loans are current with their existing repayment
terms. Management believes that classification of such loans as potential
problem loans well in advance of their reaching a delinquent status allows the
Company the greatest flexibility in correcting problems and providing adequate
reserves. Given the reserves and the ability of the borrowers to comply with the
existing repayment terms, management believes any exposure from these potential
problem loans has been adequately addressed at the present time. Management does
expect nonperforming assets and net charge-offs to increase in the near term
over the balances recorded as of March 31, 2001. However, nonperforming assets
to total loans is not expected to exceed 0.75% and net charge-offs to average
loans is not expected to exceed 0.25% for the year.

The above nonperforming loans and potential problem loans represent all material
credits for which management has serious doubts as to the ability of the
borrowers to comply with the loan repayment terms. Management also expects that
the resolution of these problem credits as well as other performing loans will
not materially impact future operating results, liquidity or capital resources.
The recorded investment in impaired loans at March 31, 2001 was $36.5 million
and these loans had a corresponding valuation allowance of $15.7 million.

LIQUIDITY:

BancGroup has addressed its liquidity and interest rate sensitivity through its
policies and structure for asset/liability management. It has created the
Asset/Liability Management Committee ("ALMCO"), the objective of which is to
optimize the net interest margin while assuming reasonable business risks. ALMCO
annually establishes operating constraints for critical elements of BancGroup's
business, such as liquidity and interest rate sensitivity. ALMCO constantly
monitors performance and takes action in order to meet its objectives.

A prominent focus of ALMCO is maintaining adequate liquidity. Liquidity is the
ability of an organization to meet its financial commitments and obligations on
a timely basis. These commitments and obligations include credit needs of
customers, withdrawals by depositors, repayment of debt when due and payment of
operating expenses and dividends.

                                      19
<PAGE>

Core deposit growth is a primary focus of BancGroup's funding and liquidity
strategy.  Average retail deposits grew at an annualized rate of 10% for the
first quarter of 2001 compared to 9% for 2000. This growth continues to be
primarily from the Company's high growth markets, with Florida contributing 86%
and 69% of the growth in the first quarter of 2001 and in 2000, respectively.
Deposit growth will continue to be a primary strategic objective of the Company.

In addition to funding growth through core deposits, BancGroup has worked to
expand the availability of wholesale funding sources.  The following table
estimates the total wholesale funding sources that BancGroup believes would be
available to it, along with what portion of those sources were used as of March
31, 2001.  It should be noted that these are estimates, these funding sources
are not guaranteed lines.

            Estimated Wholesale Funding Sources as of March 31, 2001
                                 $ in millions

===============================================================================
                         Total         Outstanding            Available
-------------------------------------------------------------------------------
FHLB Advances*           $2,230          $1,300                 $  930

Fed Funds lines           1,757             943                    814

Brokered Deposits         1,049             449                    600
-------------------------------------------------------------------------------
       Total             $5,036          $2,692                 $2,344
===============================================================================
*  Based on Residential and Commercial Real Estate loans pledged at 03/31/01.

Management believes its liquidity sources and funding strategies are adequate
given the nature of its asset base and current loan demand.

INTEREST RATE SENSITIVITY:

The Federal Reserve has lowered the target fed funds rate a total of 200 basis
points in four 50 basis point moves since December 31, 2000.  The latest move on
April 18, 2001 was the second action taken between FOMC (Federal Open Market
Committee) meetings this year.  The Federal Reserve actions have been dramatic
and appear to be designed to re-stimulate growth in the economy and head off the
potential for a recession.

ALMCO's goal is to minimize volatility in the net interest margin by taking an
active role in managing the level, mix, repricing characteristics and maturities
of assets and liabilities and by analyzing and taking action to manage mismatch
and basis risk. ALMCO monitors the impact of changes in interest rates on net
interest income using several tools, including static rate sensitivity reports,
or Gap reports, and income simulations modeling under multiple rate scenarios.

                                      20
<PAGE>

The following table represents the output from the Company's simulation model
and measures the impact on net interest income of an immediate and sustained
change in interest rates in 100 basis point increments for the 12 calendar
months following the date of the change.

<TABLE>
<CAPTION>
                                                  Percentage Change in Net Interest Income (1)
                                                  --------------------------------------------
                                                  As of December 31, 2000       As of March 31, 2001
                                                  -----------------------       --------------------
<S>                                                 <C>                            <C>
Fed Funds Rate under Stable Environment                  6.00%                         5.00%
Basis Points change from stable.....
------------------------------------

+200................................                      (3)%                          (3)%
+100................................                      (2)                           (1)
-100...............................                        1                             0
-200...............................                        1                            (2)
------------------------------------------------------------------------------------------------------
</TABLE>

(1) The computation of prospective effects of hypothetical interest rate changes
  are based on numerous assumptions, including relative levels of market
  interest rates, loan prepayments and deposit decay rates, and should not be
  relied upon as indicative of actual results. Further, the computations do not
  contemplate any actions BancGroup could undertake in response to changes in
  interest rates.

The rate shock results in the simulation model as of December 31, 2000 reflect
that BancGroup's net interest income would benefit from the 200 basis point rate
decline experienced thus far in 2001 versus if rates had not changed.  The
results as of March 31, 2001 are very similar, net interest income for the next
12 months will be best under the stable scenario (100 basis points below year-
end levels) or under another 100 basis point decline (200 basis points below
year-end).  As of March 31, 2001 net interest income is lower under a more
dramatic immediate rate decrease of 200 basis points to a 3.00% fed funds rate,
than under the stable scenario, due to the rate compression which occurs in
historically low rate environments. These results also reflect that currently
BancGroup's largest interest rate risk exposure is to an immediate and sustained
rate increase of 200 basis points. Overall interest rate risk is well within the
constraints set by ALMCO.

The following table summarizes BancGroup's Maturity / Rate Sensitivity or Gap at
March 31, 2001.
                         (Dollars in millions)

                                      0-90 days                      0-365 days
                                      ---------                      -----------
Rate Sensitive Assets (RSA)            $5,014                         $ 6,477
Rate Sensitive Liabilities (RSL)        3,933                           7,526
Cumulative Gap (RSA-RSL)                1,080                          (1,049)
Cumulative Gap Ratio
(Cum. Gap / Total Assets)                 8.9%                         (8.6%)

The last two lines of the proceeding table represent interest rate sensitivity
gap which is the difference between rate sensitive assets and rate sensitive
liabilities. The interest sensitivity schedule reflects an 8.9% positive
cumulative gap at three months but a (8.6%) negative cumulative gap at 12
months. Gap
                                      21
<PAGE>

schedules have limitations as discussed in the following paragraph. Given
these limitations, what may be inferred from these results is that as of March
31, 2001 BancGroup's earning in the first three months after a rate decrease
will not perform as well as if rates stayed unchanged. However, over the course
of 12 months as liabilities reprice at lower rate levels, earnings are
positively impacted by the rate decline. These results are consistent with the
income simulation results discussed earlier. The March 31, 2001 stable rate
scenario, with fed funds at 5.00%, is currently the most positive outcome, since
the full impact of the rate declines since January 2001 have not yet been fully
reflected in the assets and liabilities as of March 31, 2001. Therefore, a
simulation with stable rates will include the additional downward repricing of
the liabilities over the course of the next 12 months.

In reviewing the table, it should be noted that the balances are shown for a
specific point in time and, because the interest sensitivity position is
dynamic, it can change significantly over time. For all interest earning assets
and interest bearing liabilities, variable rate assets and liabilities are
reflected in the time interval of the assets or liabilities' earliest repricing
date. Fixed rate assets and liabilities have been allocated to various time
intervals based on contractual repayment. Furthermore, the balances reflect
contractual repricing of the deposits and management's position on repricing
certain deposits where management discretion is permitted. Prepayment
assumptions are applied at a constant rate based on the Company's historical
experience. Certain demand deposit accounts and regular savings accounts have
been classified as repricing beyond one year in accordance with regulatory
guidelines. While these accounts are subject to immediate withdrawal, experience
and analysis have shown them to be relatively rate insensitive.

CAPITAL RESOURCES:

Management is committed to maintaining capital at a level sufficient to protect
shareholders and depositors, provide for reasonable growth and fully comply with
all regulatory requirements. Management's strategy to achieve these goals is to
retain sufficient earnings while providing a reasonable return to shareholders
in the form of dividends and return on equity. The Company's dividend payout
ratio target range is 30-45%. Dividend rates are determined by the Board of
Directors in consideration of several factors including current and projected
capital ratios, liquidity and income levels and other bank dividend yields and
payment ratios.

The amount of a cash dividend, if any, rests with the discretion of the Board of
Directors of BancGroup as well as upon applicable statutory constraints such as
the Delaware law requirement that dividends may be paid only out of capital
surplus or net profits for the fiscal year in which the dividend is declared or
the preceding fiscal year.

                                      22
<PAGE>

BancGroup also has access to equity capital markets through both public and
private issuances. Management considers these sources and related return in
addition to internally generated capital in evaluating future expansion or
acquisition opportunities.

The Federal Reserve Board has issued guidelines identifying minimum Tier I
leverage ratios relative to total assets and minimum capital ratios relative to
risk-adjusted assets. The minimum leverage ratio is 3% but is increased from 100
to 200 basis points based on a review of individual banks by the Federal
Reserve. The minimum risk adjusted capital ratios established by the Federal
Reserve are 4% for Tier I and 8% for total capital. BancGroup's actual capital
ratios and the components of capital and risk adjusted asset information
(subject to regulatory review) as of March 31, 2001 are stated below:


<TABLE>
<CAPTION>
Capital (Dollars in thousands):
<S>                                                                    <C>
  Tier I Capital:

          Shareholders' equity (as adjusted for unrealized loss on
          securities available for sale, less intangibles plus
          Trust Preferred Securities)                                    $        757,035

  Tier II Capital:
          Allowable loan loss reserve                                             113,613
          Subordinated debt                                                       111,865
                                                                         -----------------
 Total Capital                                                           $        982,513
                                                                         =================

 Risk Adjusted Assets (Dollars in thousands)                             $      9,771,609

<CAPTION>
 Capitol Ratios:
                                                     March 31, 2001       December 31, 2000
                                                     --------------       -----------------
<S>                                                  <C>                  <C>
  Tier I leverage ratio (minimum 3%)                          6.40%                   6.63%
  Risk Adjusted Capital Ratios:
            Tier I Capital Ratio (minimum 4%)                 7.75%                   8.21%
            Total Capital Ratio (minimum 8%)                 10.05%                  10.58%
</TABLE>


BancGroup has increased capital gradually through normal earnings retention as
well as through stock registrations to capitalize acquisitions. The decreases in
the risk adjusted ratios shown above were primarily due to asset growth. The
reduction in capital due to outstanding treasury stock was $23.0 million and
$26.5 million at March 31, 2001 and December 31, 2000, respectively.

Management continuously monitors its capital levels in order to insure it is
taking the necessary steps to support future internally generated growth and
fund the quarterly dividend rates that are currently $0.12 per share each
quarter.

                                      23
<PAGE>

<TABLE>
<CAPTION>

AVERAGE VOLUME AND RATE
(UNAUDITED)
(Dollars in thousands)                                                      Three Months Ended March 31,
                                                                            ----------------------------
                                                                    2001                                     2000
                                                      ---------------------------------     ------------------------------------
                                                         Average                                Average
                                                         Volume     Interest     Rate            Volume      Interest     Rate
                                                      ---------------------------------     ------------------------------------
<S>                                                  <C>           <C>            <C>         <C>             <C>          <C>
ASSETS
  Loans, net                                          $ 9,660,125   $ 208,439      8.73%       $ 8,354,096    $180,641      8.69%
  Mortgage loans held for sale                             11,987         195      6.51%            25,736         528      8.21%
  Investment securities and securities
   available
     for sale and other interest-earning assets         1,592,557      26,905      6.76%         1,656,234      27,887      6.74%
                                                      -----------------------                  -----------------------
  Total interest-earning assets(1)                     11,264,669     235,539      8.45%        10,036,066     209,056      8.37%
                                                                    ---------                               ----------

  Nonearning assets                                       664,459                                  965,925
                                                      -----------                              -----------
    Total assets                                      $11,929,128                              $11,001,991
                                                      ===========                              ===========

LIABILITIES AND SHAREHOLDERS' EQUITY:
  Interest-bearing deposits                           $ 7,116,844      93,432      5.32%       $ 6,593,888      77,786      4.75%
  Short-term borrowings                                 1,623,323      23,244      5.81%         1,319,528      18,772      5.72%
  Long-term debt                                        1,210,291      18,401      6.17%           989,922      15,554      6.32%
                                                      -----------------------                  -----------------------
  Total interest-bearing liabilities                    9,950,458     135,077      5.51%         8,903,338     112,112      5.06%
                                                      -----------------------                  -----------------------
  Noninterest-bearing demand deposits                   1,100,535                                1,290,912
  Other liabilities                                       108,420                                  111,729
                                                      -----------                              -----------
  Total liabilities                                    11,159,413                               10,305,979
  Shareholders' equity                                    769,715                                  696,012
                                                      -----------                              -----------
Total liabilities and shareholders' equity            $11,929,128                              $11,001,991
                                                      ===========                              ===========

RATE DIFFERENTIAL                                                                  2.94%                                    3.31%

NET YIELD ON INTEREST-EARNING ASSETS                                $ 100,462      3.59%                      $ 96,944      3.87%
                                                                    =========                                 ========
</TABLE>


(1) Interest earned and average rates on obligations of states and political
    subdivisions are reflected on a tax equivalent basis. Tax equivalent
    interest earned is equal to actual interest earned times 145%. The taxable
    equivalent adjustment has given effect to the disallowance of interest
    expense deductions, for federal income tax purposes, related to certain tax-
    free assets.

                                      24
<PAGE>


ANALYSIS OF INTEREST INCREASES (DECREASES)
(UNAUDITED)

<TABLE>
<CAPTION>
(Dollars in thousands)                                  Three Months Ended March 31, 2001
                                                                Change from 2000
                                                                           Attributed to (1)
                                                  Total               Volume              Rate
                                               -------------       ------------        ----------
<S>                                           <C>                 <C>                 <C>
INTEREST INCOME:
   Total loans, net                            $      27,798       $      27,009       $      789
   Mortgage loans held for sale                         (333)               (241)             (92)
   Investment securities and securities
   for sale and other interest-earning
    assets                                              (982)             (1,063)              81
                                               -------------       -------------      -----------
Total interest income(2)                              26,483              25,705              778
                                               -------------       -------------      -----------

INTEREST EXPENSE:
  Interest-bearing deposits                    $      15,646             $ 6,257      $     9,389
  Short-term borrowings                                4,472               4,188              284
  Long-term debt                                       2,847               3,184             (337)
                                               -------------       -------------      -----------
Total interest expense                                22,965              13,629            9,336
                                               -------------       -------------      -----------
Net interest income                            $       3,518       $      12,076      $    (8,558)
                                               =============       =============      ============
</TABLE>

(1)  Increases (decreases) are attributed to volume changes and rate changes on
     the following basis: Volume Change = change in volume times old rate. Rate
     Change = change in rate times old volume. The Rate/Volume Change = change
     in volume times change in rate, and it is allocated between Volume Change
     and Rate Change at the ratio that the absolute value of each of those
     components bear to the absolute value of their total.
(2)  Interest earned and average rates on obligations of states and political
     subdivisions are reflected on a tax equivalent basis. Tax equivalent
     interest earned is: actual interest earned times 145%. Tax equivalent
     average rate is: tax equivalent interest earned divided by average volume.

NET INTEREST INCOME:

Net interest income from continuing operations on a tax equivalent basis
increased $2.5 million to $100.6 million for the quarter ended March 31, 2001
from $98.1 million for the quarter ended March 31, 2000. Net interest margins
decreased to 3.59% for the first quarter of 2001 compared to 3.62% for the
fourth quarter of 2000, and 3.87% for the first quarter of 2000. The three 50
basis point reductions in the Fed Funds Rate by the Federal Reserve during the
first quarter have had a slightly negative impact on the margin due to the
Company's asset sensitive position in the first three months following rate
changes. The Company is liability sensitive after the first three months of a
rate change and therefore should benefit from rate reductions after that time
frame.

                                      25
<PAGE>

In addition to the Fed rate changes and its effect on the repricing of loans and
deposit products, margins were impacted by the growth in loans, specifically
mortgage warehouse loans. The growth in warehouse loans of $267.5 million and
$458.7 million from December 31, 2000 and March 31, 2000, respectively, resulted
in an increase of $676,000 and $2.2 million in net interest income for the same
periods. However, mortgage warehouse loans have lower margins due to their
relatively low credit risk, which resulted in a six basis point reduction in the
margin compared to the fourth quarter of 2000.

The rate on average interest bearing deposits was 5.32% for the first quarter of
2001 compared to 5.50% and 4.75% for the fourth quarter and first quarter of
2000, respectively. During this same time, the average rate on loans was 8.73%
for the first quarter of 2001 compared to 9.08% and 8.69% for the fourth quarter
and first quarter of 2000, respectively. Although rates on deposits have
declined, they reprice more slowly than loan rates primarily due to market
competition and the effect of fixed rates on certificates of deposits.

First quarter reductions in the Federal Funds Rate by the Federal Reserve should
have a modest benefit over the remainder of 2001 in the net interest margin.
Future rate reductions however may postpone a portion of the benefit for
Colonial until 2002 due to the Company's interest rate sensitivity position.

LOAN LOSS PROVISION:

The provision for possible loan losses for the first quarter ended March 31,
2001 was $9.46 million compared to $5.55 million for the same period in 2000.
The increased provision reflects management's conservative approach to concerns
over a slowing national economy and the related impact on credit quality.

The current allowance for possible loan losses provides a 268% coverage of
nonperforming loans compared to 256% at December 31, 2000 and 271% at March 31,
2000. See management's discussion on loan quality and the allowance for possible
loan losses presented in the Financial Condition section of this report.

NONINTEREST INCOME:

Noninterest income increased $2.0 million for the three months ended March 31,
2001 compared to the same period in 2000. These increases are primarily
attributable to additional fee income related to mortgage origination fees,
electronic banking fees, and securities gains.

                                      26
<PAGE>

The increase in mortgage origination fees is the result of additional production
of one-to-four family mortgage loans sold in the secondary market. This increase
in production is directly related to the decrease in mortgage rates in the first
quarter of 2001.

BancGroup continues to expand electronic banking services through its ATM
network, check card services, and internet banking. Non-interest income from
electronic banking services increased approximately 20% for the three months
ended March 31, 2001 compared to the same period in 2000 while income from
traditional banking services such as service charges remained level. Wealth
management experienced a $319,000 decrease in fee income from security sales due
to the recent volatility in the equity market and the overall outlook on the
economy. Noninterest income also included $1.1 million related to gains on the
sales of securities.

NONINTEREST EXPENSES:

BancGroup's net overhead (total noninterest expense less noninterest income,
excluding security gains) was $47.1 million for the three months ended March 31,
2001 compared to $43.7 million for the three months ended March 31, 2000.

Noninterest expense increased $4.3 million for the first quarter of 2001
compared to the first quarter of 2000. Noninterest expense to average assets
improved to 2.23% from 2.26% for the same period in 2000.

The increase in bank related expenses is primarily due to an increase of
approximately $3.1 million for the three months ended March 31, 2001 over the
same period in 2000 in salaries and employee benefits. These salary increases
are due to normal salary increases, additional incentive related compensation,
and increased pension costs. Occupancy and equipment expense for the first
quarter of 2001 increased $962,000 when compared to the same period in 2000.
This increase is due to increased rent expense, higher utility cost, and
improvements and expansions of bank facilities as well as improved technology
equipment and software. Intangible asset amortization increased $329,000 due to
the purchase of two branches in Nevada in January of 2001 (See Note H to the
Consolidated Financial Statements).

PROVISION FOR INCOME TAXES:

BancGroup's provision for income taxes is based on an approximate 36.0% and
36.5%, estimated annual effective tax rate for the years 2001 and 2000,
respectively. The provision for income taxes for the three months ended March
31, 2001 and 2000 was $16.0 million and $17.6 million, respectively.

                                      27
<PAGE>

Item III    Quantitative and Qualitative Disclosures About Market Risk

The information required by this item is included in Item II. Management's
Discussion and Analysis of Financial Condition and Results of Operations.

Part II                             Other Information

ITEM 1:    Legal Proceedings - See Note B - COMMITMENTS AND CONTINGENCIES AT
           PART 1

ITEM 2:    Changes in Securities - N/A

ITEM 3:    Defaults Upon Senior Securities - N/A

ITEM 4:    Submission of Matters to a Vote of Security Holders

On April 18, 2001, the annual meeting of the shareholders of Colonial BancGroup
was held. The following are the results of the votes cast by shareholders
present at such meeting, by proxy or in person, for such proposals.

     1)      Election of the following directors:

             For a Term Expiring in 2004.

                                                 For        Withhold
                                            ----------------------------
             Robert S. Craft                  89,654,664       2,500,644
             Clinton O. Holdbrooks            89,665,132       2,490,176
             Harold D. King                   89,649,880       2,505,428
             Robert E. Lowder                 84,913,288       7,242,020
             John C. H. Miller, Jr.           89,466,337       2,688,971
             James W. Rane                    89,642,339       2,515,969

             For a Term Expiring in 2002

             Augustus K. Clements, III        89,655,053       2,500,255

                                      28
<PAGE>

             In addition to the foregoing, the following directors will continue
             to serve:

             Term Expires in 2003         Term Expires in 2002
             --------------------         --------------------
             Lewis E. Beville             William Britton
             Jerry J. Chesser             Patrick F. Dye
             John Ed Mathison             Milton E. McGregor
             Joe D. Mussafer              William E. Powell, III
             Frances E. Roper             Simual Sippial
             Edward V. Welch


<TABLE>
<CAPTION>
                                                                          For         Against        Abstain
<S>                                                                     <C>           <C>            <C>
2)           To adopt The Colonial BancGroup, Inc. 2001 Long-Term
             Incentive Plan.                                           52,762,246    21,157,535     18,235,527
</TABLE>


ITEM 5:          Other Information - None

ITEM 6:          Exhibits and Reports on Form 8-K

   (a)  Exhibits required by Item 601 of Regulation S-K - None

   (b)  Reports on Form 8-K

          1. Form 8-K - Was filed under Item 9 as Regulation FD disclosure on
             January 29, 2001 in regard to presentations to analysts between
             January 29, 2001 and February 22, 2001.

          2. Form 8-K - Was filed on January 17, 2001 in regard to fourth
             quarter and year-end earnings.


                                   SIGNATURE


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                                    THE COLONIAL BANCGROUP, INC.


Date: May 15, 2001                  By: /s/ W. Flake Oakley, IV
                                    ---------------------------
                                    W. Flake Oakley, IV
                                    its Chief Financial Officer

                                      29