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UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

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FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED September 30, 2002

COMMISSION FILE NUMBER 1-13508

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

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

One Commerce StreetMontgomery, 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 o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

YES x   NO o

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

| | ClassCommon Stock, $2.50 Par
Value |  | Outstanding at October 31, 2002123,691,328 | 
| | ---------------------------------- |  | ------------------------------------------ | 

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THE COLONIAL BANCGROUP, INC.INDEX

|         |  |                       |  |                                                                                                                                                                                 | PageNumber
|-------- |  | --------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------
|         |  |                       |  |                                                                                                                                                                                 |           
|PART I.  |  | FINANCIAL INFORMATION | 
|         |  |                       |  |                                                                                                                                                                                 |           
|         |  | Item 1.               |  | Financial Statements (Unaudited)                                                                                                                                                |           
|         |  |                       |  |                                                                                                                                                                                 |           
|         |  |                       |  | Consolidated Statements of Condition  September 30, 2002, December 31, 2001 and September 30, 2001                                                                             | 4         
|         |  |                       |  |                                                                                                                                                                                 |           
|         |  |                       |  | Consolidated Statements of Income  Nine months ended September 30, 2002 and September 30, 2001, and three months ended September 30, 2002 and September 30, 2001               | 5         
|         |  |                       |  |                                                                                                                                                                                 |           
|         |  |                       |  | Consolidated Statements of Comprehensive Income  Nine months ended September 30, 2002 and September 30, 2001, and three months ended September 30, 2002 and September 30, 2001 | 6         
|         |  |                       |  |                                                                                                                                                                                 |           
|         |  |                       |  | Consolidated Statements of Cash Flows  Nine months ended September 30, 2002 and September 30, 2001                                                                             | 7-8       
|         |  |                       |  |                                                                                                                                                                                 |           
|         |  |                       |  | Notes to Consolidated Financial Statements  September 30, 2002                                                                                                                 | 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                                                                                                                      | 35        
|         |  |                       |  |                                                                                                                                                                                 |           
|         |  | Item 4.               |  | Controls and Procedures                                                                                                                                                         | 35        
|         |  |                       |  |                                                                                                                                                                                 |           
|PART II. |  | OTHER INFORMATION     | 
|         |  |                       |  |                                                                                                                                                                                 |           
|         |  | Item 1.               |  | Legal Proceedings                                                                                                                                                               | 35        
|         |  |                       |  |                                                                                                                                                                                 |           
|         |  | Item 2.               |  | Changes in Securities and Use of Proceeds                                                                                                                                       | 36        
|         |  |                       |  |                                                                                                                                                                                 |           
|         |  | Item 3.               |  | Defaults Upon Senior Securities                                                                                                                                                 | 36        
|         |  |                       |  |                                                                                                                                                                                 |           
|         |  | Item 4.               |  | Submission of Matters to a Vote of Security Holders                                                                                                                             | 36        
|         |  |                       |  |                                                                                                                                                                                 |           
|         |  | Item 5.               |  | Other Information                                                                                                                                                               | 36        
|         |  |                       |  |                                                                                                                                                                                 |           
|         |  | Item 6.               |  | Exhibits and Reports on Form 8-K                                                                                                                                                | 36        

|               |   
|-------------- | --
|SIGNATURES     | 36
|               |   
|CERTIFICATIONS | 37



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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) an inability of the company to realize elements of its strategic plans for 2002 and beyond; (ii) increases in competitive pressure in the banking industry; (iii) economic conditions affecting real estate values and transations in
BancGroups market and/or general economic conditions, either nationally or regionally, that are less favorable than expected; (iv) expected cost savings from recent acquisitions are not fully realized; (v) changes in the interest rate
environment which may reduce or expand margins or adversely affect critical estimates as applied and projected returns on investments; (vi) managements assumptions and estimates underlying critical accounting policies prove to be inadequate or
materially incorrect or are not borne out by subsequent events; and (vii) changes which may occur in the regulatory environment. When used in this report, the words believes, estimates, plans, expects,
should, may, might, outlook, anticipates, and similar expressions as they relate to BancGroup (including its subsidiaries) or its management are intended to identify forward-looking
statements. Forward-looking statements speak only as to the date they are made. BancGroup does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are
made.



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Item1. Financial Statements (Unaudited)

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

|                                                                                                                                                                                                                 |  | September 30,2002 |            | December 31,2001 |   | September 30,2001 |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ---------- | ---------------- | - | ----------------- | -
|                                                                                                                                                                                                                 |  |                   |            |                  |   |                   |  
|                                                                                                                                                                                                                 |  |                   |            |                  |   |                   |  
|ASSETS:                                                                                                                                                                                                          |  |                   |            |                  |   |                   |  
|Cash and due from banks                                                                                                                                                                                          |  | $                 | 323,944    |                  | $ | 373,024           |  
|Interest-bearing deposits in banks and federal funds sold                                                                                                                                                        |  |                   | 126,940    |                  |   | 15,084            |  
|Securities available for sale                                                                                                                                                                                    |  |                   | 2,547,853  |                  |   | 1,852,439         |  
|Investment securities                                                                                                                                                                                            |  |                   | 24,248     |                  |   | 30,055            |  
|Mortgage loans held for sale                                                                                                                                                                                     |  |                   | 154,752    |                  |   | 35,453            |  
|Loans, net of unearned income                                                                                                                                                                                    |  |                   | 11,196,422 |                  |   | 10,367,665        |  
|Less: Allowance for loan losses                                                                                                                                                                                  |  |                   | (136,360   | )                |   | (122,200          | )
|                                                                                                                                                                                                                 |  |                   |            |                  |   |                   |  
|Loans, net                                                                                                                                                                                                       |  |                   | 11,060,062 |                  |   | 10,245,465        |  
|Premises and equipment, net                                                                                                                                                                                      |  |                   | 224,986    |                  |   | 198,983           |  
|Intangible assets, net                                                                                                                                                                                           |  |                   | 259,841    |                  |   | 113,898           |  
|Other real estate owned                                                                                                                                                                                          |  |                   | 20,712     |                  |   | 15,553            |  
|Accrued interest and other assets                                                                                                                                                                                |  |                   | 345,387    |                  |   | 305,149           |  
|                                                                                                                                                                                                                 |  |                   |            |                  |   |                   |  
|TOTAL ASSETS:                                                                                                                                                                                                    |  | $                 | 15,088,725 |                  | $ | 13,185,103        |  
|                                                                                                                                                                                                                 |  |                   |            |                  |   |                   |  
|                                                                                                                                                                                                                 |  |                   |            |                  |   |                   |  
|LIABILITIES AND SHAREHOLDERS EQUITY:                                                                                                                                                                            |  |                   |            |                  |   |                   |  
|Deposits                                                                                                                                                                                                         |  | $                 | 9,155,951  |                  | $ | 8,322,979         |  
|Short term borrowings                                                                                                                                                                                            |  |                   | 2,748,976  |                  |   | 2,128,133         |  
|Subordinated debt                                                                                                                                                                                                |  |                   | 286,356    |                  |   | 265,550           |  
|Trust preferred securities                                                                                                                                                                                       |  |                   | 194,946    |                  |   | 70,000            |  
|FHLB long term debt                                                                                                                                                                                              |  |                   | 1,562,405  |                  |   | 1,361,938         |  
|Other long term debt                                                                                                                                                                                             |  |                   |           |                  |   | 88,652            |  
|Other liabilities                                                                                                                                                                                                |  |                   | 86,834     |                  |   | 83,077            |  
|                                                                                                                                                                                                                 |  |                   |            |                  |   |                   |  
|Total liabilities                                                                                                                                                                                                |  |                   | 14,035,468 |                  |   | 12,320,329        |  
|                                                                                                                                                                                                                 |  |                   |            |                  |   |                   |  
|                                                                                                                                                                                                                 |  |                   |            |                  |   |                   |  
|SHAREHOLDERS EQUITY:                                                                                                                                                                                            |  |                   |            |                  |   |                   |  
|Common Stock, $2.50 par value; 200,000,000 shares authorized;     123,649,591, 115,244,185, and 114,888,150 shares issued at     September 30, 2002, December
31, 2001, and September 30,     2001, respectively |  |                   | 309,124    |                  |   | 288,110           |  
|Treasury stock (2,423,512 shares at September 30, 2001)                                                                                                                                                          |  |                   |           |                  |   |                  |  
|Additional paid in capital                                                                                                                                                                                       |  |                   | 200,591    |                  |   | 102,980           |  
|Retained earnings                                                                                                                                                                                                |  |                   | 526,553    |                  |   | 467,163           |  
|Unearned compensation                                                                                                                                                                                            |  |                   | (3,080     | )                |   | (3,159            | )
|Accumulated other comprehensive income, net of taxes                                                                                                                                                             |  |                   | 20,069     |                  |   | 9,680             |  
|                                                                                                                                                                                                                 |  |                   |            |                  |   |                   |  
|Total shareholders equity                                                                                                                                                                                       |  |                   | 1,053,257  |                  |   | 864,774           |  
|                                                                                                                                                                                                                 |  |                   |            |                  |   |                   |  
|TOTAL LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                                                                                       |  | $                 | 15,088,725 |                  | $ | 13,185,103        |  
|                                                                                                                                                                                                                 |  |                   |            |                  |   |                   |  

See Notes to the Unaudited Condensed Consolidated Financial Statements



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

|                                                                                                                                                                                             |  | Nine Months EndedSeptember 30, |         | Three Months EndedSeptember 30, |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------ | ------- | ------------------------------- | -
|                                                                                                                                                                                             |  |                                |         |                                 |  
|                                                                                                                                                                                             |  | 2002                           |         | 2001                            |  
|                                                                                                                                                                                             |  |                                |         |                                 |  
|                                                                                                                                                                                             |  |                                |         |                                 |  
|INTEREST INCOME:                                                                                                                                                                             |  |                                |         |                                 |  
|Interest and fees on loans                                                                                                                                                                   |  | $                              | 497,058 |                                 | $
|Interest and dividends on securities                                                                                                                                                         |  |                                | 85,488  |                                 |  
|Other interest                                                                                                                                                                               |  |                                | 715     |                                 |  
|                                                                                                                                                                                             |  |                                |         |                                 |  
|Total interest income                                                                                                                                                                        |  |                                | 583,261 |                                 |  
|                                                                                                                                                                                             |  |                                |         |                                 |  
|                                                                                                                                                                                             |  |                                |         |                                 |  
|INTEREST EXPENSE:                                                                                                                                                                            |  |                                |         |                                 |  
|Interest on deposits                                                                                                                                                                         |  |                                | 141,345 |                                 |  
|Interest on short-term borrowings                                                                                                                                                            |  |                                | 26,116  |                                 |  
|Interest on long-term debt                                                                                                                                                                   |  |                                | 74,170  |                                 |  
|                                                                                                                                                                                             |  |                                |         |                                 |  
|Total interest expense                                                                                                                                                                       |  |                                | 241,631 |                                 |  
|                                                                                                                                                                                             |  |                                |         |                                 |  
|                                                                                                                                                                                             |  |                                |         |                                 |  
|NET INTEREST INCOME                                                                                                                                                                          |  |                                | 341,630 |                                 |  
|Provision for loan losses                                                                                                                                                                    |  |                                | 24,777  |                                 |  
|                                                                                                                                                                                             |  |                                |         |                                 |  
|Net Interest Income After Provision for Loan Losses                                                                                                                                          |  |                                | 316,853 |                                 |  
|                                                                                                                                                                                             |  |                                |         |                                 |  
|                                                                                                                                                                                             |  |                                |         |                                 |  
|NONINTEREST INCOME:                                                                                                                                                                          |  |                                |         |                                 |  
|Service charges on deposit accounts                                                                                                                                                          |  |                                | 33,058  |                                 |  
|Financial Planning Services                                                                                                                                                                  |  |                                | 8,276   |                                 |  
|Electronic banking                                                                                                                                                                           |  |                                | 6,182   |                                 |  
|Mortgage origination                                                                                                                                                                         |  |                                | 8,885   |                                 |  
|Securities gains, net                                                                                                                                                                        |  |                                | 1,639   |                                 |  
|Other income                                                                                                                                                                                 |  |                                | 14,314  |                                 |  
|                                                                                                                                                                                             |  |                                |         |                                 |  
|Total noninterest income                                                                                                                                                                     |  |                                | 72,354  |                                 |  
|                                                                                                                                                                                             |  |                                |         |                                 |  
|                                                                                                                                                                                             |  |                                |         |                                 |  
|NONINTEREST EXPENSE:                                                                                                                                                                         |  |                                |         |                                 |  
|Salaries and employee benefits                                                                                                                                                               |  |                                | 120,045 |                                 |  
|Occupancy expense of bank premises, net                                                                                                                                                      |  |                                | 28,753  |                                 |  
|Furniture and equipment expenses                                                                                                                                                             |  |                                | 22,533  |                                 |  
|Amortization of intangible assets                                                                                                                                                            |  |                                | 1,767   |                                 |  
|Merger related expenses                                                                                                                                                                      |  |                                | 398     |                                 |  
|Other expenses                                                                                                                                                                               |  |                                | 53,773  |                                 |  
|                                                                                                                                                                                             |  |                                |         |                                 |  
|Total noninterest expense                                                                                                                                                                    |  |                                | 227,269 |                                 |  
|                                                                                                                                                                                             |  |                                |         |                                 |  
|                                                                                                                                                                                             |  |                                |         |                                 |  
|INCOME FROM CONTINUING OPERATIONS BEFORE     INCOME TAXES                                                                                                                                    |  |                                | 161,938 |                                 |  
|Applicable income taxes                                                                                                                                                                      |  |                                | 55,869  |                                 |  
|                                                                                                                                                                                             |  |                                |         |                                 |  
|                                                                                                                                                                                             |  |                                |         |                                 |  
|INCOME FROM CONTINUING OPERATIONS                                                                                                                                                            |  |                                | 106,069 |                                 |  
|                                                                                                                                                                                             |  |                                |         |                                 |  
|Discontinued Operations:                                                                                                                                                                     |  |                                |         |                                 |  
|Net loss from discontinued operations and loss on disposal, net of        income taxes of ($371) for the nine months ended and for the
       three months ended September 30, 2002 and 2001 |  |                                | (705    | )                               |  
|                                                                                                                                                                                             |  |                                |         |                                 |  
|                                                                                                                                                                                             |  |                                |         |                                 |  
|NET INCOME                                                                                                                                                                                   |  | $                              | 105,364 |                                 | $
|                                                                                                                                                                                             |  |                                |         |                                 |  
|                                                                                                                                                                                             |  |                                |         |                                 |  
|EARNINGS PER SHARE:                                                                                                                                                                          |  |                                |         |                                 |  
|INCOME FROM CONTINUING OPERATIONS:                                                                                                                                                           |  |                                |         |                                 |  
|Basic                                                                                                                                                                                        |  | $                              | 0.90    |                                 | $
|Diluted                                                                                                                                                                                      |  | $                              | 0.89    |                                 | $
|NET INCOME                                                                                                                                                                                   |  |                                |         |                                 |  
|Basic                                                                                                                                                                                        |  | $                              | 0.89    |                                 | $
|Diluted                                                                                                                                                                                      |  | $                              | 0.88    |                                 | $

See Notes to the Unaudited Condensed Consolidated Financial Statements



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

|                                                                                                          |  | Nine Months EndedSeptember 30, |         | Three Months EndedSeptember 30, |  
|--------------------------------------------------------------------------------------------------------- |  | ------------------------------ | ------- | ------------------------------- | -
|                                                                                                          |  |                                |         |                                 |  
|                                                                                                          |  | 2002                           |         | 2001                            |  
|                                                                                                          |  |                                |         |                                 |  
|NET INCOME                                                                                                |  | $                              | 105,364 |                                 | $
|OTHER COMPREHENSIVE INCOME, NET OF TAXES:                                                                 |  |                                |         |                                 |  
|Unrealized gains (losses) on securities available for sale arising        during the period, net of taxes |  |                                | 11,462  |                                 |  
|Less: reclassification adjustment for net (gains) included         in net income                          |  |                                | (1,073  | )                               |  
|                                                                                                          |  |                                |         |                                 |  
|COMPREHENSIVE INCOME                                                                                      |  | $                              | 115,753 |                                 | $
|                                                                                                          |  |                                |         |                                 |  

See Notes to the Unaudited Condensed Consolidated Financial Statements



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

|                                                                                                       |  | Nine Months EndedSeptember 30, |            
|------------------------------------------------------------------------------------------------------ |  | ------------------------------ | -----------
|                                                                                                       |  |                                |            
|                                                                                                       |  | 2002                           |            
|                                                                                                       |  |                                |            
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                                              |  | $                              | 9,121      
|                                                                                                       |  |                                |            
|Cash flows from investing activities:                                                                  |  |                                |            
|Proceeds from maturities and calls of securities available for sale                                    |  |                                | 585,685    
|Proceeds from sales of securities available for sale                                                   |  |                                | 110,854    
|Purchase of securities available for sale                                                              |  |                                | (1,319,725)
|Proceeds from maturities of investment securities                                                      |  |                                | 8,637      
|Net (increase) in loans                                                                                |  |                                | (297,441)  
|Cash received in bank acquisitions                                                                     |  |                                | 56,541     
|Capital expenditures                                                                                   |  |                                | (54,403)   
|Proceeds from sale of other real estate owned                                                          |  |                                | 9,628      
|Purchase of investment securities                                                                      |  |                                | (108)      
|Proceeds from sale of fixed assets                                                                     |  |                                | 17,589     
|                                                                                                       |  |                                |            
|                                                                                                       |  |                                |            
|NET CASH (USED) IN INVESTING ACTIVITIES                                                                |  |                                | (882,743)  
|                                                                                                       |  |                                |            
|                                                                                                       |  |                                |            
|Cash flows from financing activities:                                                                  |  |                                |            
|Net (decrease) increase in demand, savings, and time deposits                                          |  |                                | 213,473    
|Net increase in federal funds purchased, repurchase agreements and other short-term         borrowings |  |                                | 535,303    
|Proceeds from issuance of long-term debt                                                               |  |                                | 337,121    
|Repayment of long-term debt                                                                            |  |                                | (165,471)  
|Proceeds from issuance of trust preferred securities                                                   |  |                                | 100,000    
|Proceeds from issuance of common stock                                                                 |  |                                | 2,447      
|Proceeds from sale of treasury stock                                                                   |  |                                |           
|Purchase of treasury stock                                                                             |  |                                | (40,501)   
|Dividends paid ($0.13 and $0.12 per share for 2002 and 2001, respectively)                             |  |                                | (45,974)   
|                                                                                                       |  |                                |            
|                                                                                                       |  |                                |            
|NET CASH PROVIDED BY FINANCING ACTIVITIES                                                              |  |                                | 936,398    
|                                                                                                       |  |                                |            
|                                                                                                       |  |                                |            
|Net increase in cash and cash equivalents                                                              |  |                                | 62,776     
|                                                                                                       |  |                                |            
|Cash and cash equivalents at beginning of year                                                         |  |                                | 388,108    
|                                                                                                       |  |                                |            
|                                                                                                       |  |                                |            
|Cash and cash equivalents at September 30                                                              |  | $                              | 450,884    
|                                                                                                       |  |                                |            

See Notes to the Unaudited Condensed Consolidated Financial Statements



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

|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:      |  | Nine Months EndedSeptember 30, |        
|------------------------------------------------------ |  | ------------------------------ | -------
|                                                       |  |                                |        
|                                                       |  | 2002                           |        
|                                                       |  |                                |        
|Cash paid during the year for:                         |  |                                |        
|Interest                                               |  | $                              | 245,505
|Income taxes                                           |  |                                | 64,160 
|Non-cash investing activities:                         |  |                                |        
|Transfer of loans to other real estate                 |  | $                              | 13,025 
|Securitization of residential mortgage loans           |  |                                |       
|Assets (non-cash) acquired in business combination     |  |                                | 785,756
|Liabilities assumed in business combination            |  |                                | 687,765
|Reissuance of treasury stock for business combination  |  |                                | 40,501 
|Origination of loans for the sale of other real estate |  |                                | 110    
|Non-cash financing activities:                         |  |                                |        
|Reissuance of treasury stock for stock plans           |  | $                              |       
|Conversion of subordinated debentures                  |  |                                | 174    

See Notes to the Unaudited Condensed Consolidated Financial Statements.



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THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIESNOTES 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 2001 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 2001 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 September 30,
2002 and 2001 and the results of operations and cash flows for the interim periods ended September 30, 2002 and 2001. All 2002 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: CONTINGENCIES

BancGroup and its subsidiaries are from time to time defendants
in legal actions from normal business activities. Management does not anticipate that the ultimate liability arising from litigation outstanding at September 30, 2002 will have a materially adverse effect on BancGroups financial
statements.

NOTE C: BUSINESS COMBINATIONS

BancGroup completed the acquisition of Mercantile Bancorp, Inc. (Mercantile) and its wholly owned subsidiary
bank, First Mercantile Bank, N.A. (Mercantile Bank), on March 28, 2002. Mercantile Bank operated four branch offices in Dallas, Texas and one in Austin, Texas. At March 28, 2002, Mercantile had $354 million in assets, $282 million in
loans and mortgage loans held for sale, and $302 million in deposits. BancGroup issued 4,652,809 shares of its common stock to shareholders of Mercantile. As a result of this transaction, BancGroup recorded $69.3 million of total intangibles
including $15.0 million in core deposits.

BancGroup completed the acquisition of Palm Beach National Holding Company (Palm Beach) and its wholly owned subsidiary, Palm Beach National Bank & Trust
Company (PBN Bank), on September 3, 2002. Palm Beach operated eight branch offices in Palm Beach County, Florida, and at September 3, 2002, had approximately $355 million in assets, $285 million in loans, and $315 million in deposits.
BancGroup issued 6,118,967 shares of its common stock to shareholders of Palm Beach. As a result of this transaction, BancGroup recorded $70.9 million of total intangibles including $11.3 million in core deposits.

NOTE D: RECENT ACCOUNTING PRONOUNCEMENTS

On June 29, 2001, the Financial Accounting Standards Board issued SFAS No. 141, Business Combinations. This statement is effective for all business
combinations initiated after June 30, 2001. This statement supercedes Accounting Principles Board Opinion No. 16, Business Combinations. SFAS No. 141 requires the purchase method of accounting be used for all business combinations
initiated after June 30, 2001, establishes specific criteria for the recognition of intangible assets separately from



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goodwill, and requires unallocated negative goodwill to be written off immediately as an extraordinary gain instead of being deferred and amortized.

On June 29, 2001, the Financial Accounting Standards Board issued SFAS No. 142, Goodwill and Other Intangible Assets. This statement is effective for fiscal years beginning after December 15, 2001. SFAS No. 142
requires that goodwill and indefinite lived intangible assets no longer be amortized, that goodwill will be tested for impairment at least annually, that intangible assets deemed to have an indefinite life will be tested for impairment at least
annually, and that the amortization period of intangible assets with finite lives will no longer be limited to forty years. Colonial adopted SFAS 142 on January 1, 2002. (See additional discussion in Note I)

In
June 2001, the Financial Accounting Standards Board issued SFAS No. 143, Accounting for Asset Retirement Obligations. This statement is effective for fiscal years beginning after June 15, 2002, with early adoption permitted. SFAS No. 143
addresses the recognition and measurement of obligations associated with the retirement of tangible long-lived assets resulting from acquisition, construction, development, or the normal operation of a long-lived asset. SFAS No. 143 requires that
the fair value of an asset retirement obligation be recognized as a liability in the period in which it is incurred. The asset retirement obligation is to be capitalized as part of the carrying amount of the long-lived asset and the expense is to be
recognized over the useful life of the long-lived asset. BancGroup adopted SFAS No. 143 on June 15, 2002. The implementation of SFAS No. 143 did not have a material effect on BancGroups financials.

In
August 2001, the Financial Accounting Standards Board issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. The effective date for this statement is January 1, 2002 and supersedes SFAS No. 121. SFAS No. 144
carries forward from SFAS No. 121 the fundamental guidance related to the recognition and measurement of an impairment loss related to assets to be held and used and provides guidance related to the disposal of long-lived assets to be abandoned or
disposal by sale. BancGroup adopted SFAS No. 144 on January 1, 2002. The implementation of SFAS No. 144 did not have a material effect on BancGroups financials.

In April 2002, the Financial Accounting
Standards Board issued SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. Management is currently evaluating the impact that SFAS No. 145 will have on
BancGroups financials, but as a result of very limited applicability, does not expect the adoption will have a material effect.

In October 2002, the Financial Accounting Standards Board issued SFAS No.
147, Acquisitions of Certain Financial Institutions. This statement is effective October 1, 2002 and amends FASB Statements



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No. 72 and 144 and FASB Interpretation No. 9. SFAS No. 147 stipulates that the acquisition of all or part of a financial institution will now be accounted for under
SFAS No. 141 and 142. SFAS No. 147 also stipulated that the core deposit intangible assets, related to the acquisition of financial institutions, will now be subjected to the impairment testing requirements of SFAS No. 144. Management has adopted
SFAS No. 147 and its immaterial impact is reflected in BancGroups financials.

NOTE E: 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:

|(in thousands, except per share amounts) |  | Nine Months Ended September 30, |         | Three Months Ended September 30, | 
|---------------------------------------- |  | ------------------------------- | ------- | -------------------------------- | 
|                                         |  |                                 |         |                                  | 
|2002                                     |  | Income                          |         | Shares                           | 
|                                         |  |                                 |         |                                  | 
|Basic EPS                                |  |                                 |         |                                  | 
|Net Income                               |  | $                               | 105,364 |                                  | 
|Effect of dilutive securities:           |  |                                 |         |                                  | 
|Options                                  |  |                                 |         |                                  | 
|Convertible debentures                   |  |                                 | 116     |                                  | 
|                                         |  |                                 |         |                                  | 
|Diluted EPS                              |  | $                               | 105,480 |                                  | 
|                                         |  |                                 |         |                                  | 
|                                         |  |                                 |         |                                  | 
|2001                                     |  |                                 |         |                                  | 
|Basic EPS                                |  |                                 |         |                                  | 
|Net income                               |  | $                               | 90,183  |                                  | 
|Effect of dilutive securities            |  |                                 |         |                                  | 
|Options                                  |  |                                 |         |                                  | 
|Convertible debentures                   |  |                                 | 136     |                                  | 
|                                         |  |                                 |         |                                  | 
|Diluted EPS                              |  | $                               | 90,319  |                                  | 
|                                         |  |                                 |         |                                  | 

NOTE F: SEGMENT INFORMATION

Through its wholly owned subsidiary, Colonial Bank, BancGroup has one distinct line of business, Commercial
Banking. Colonial Bank provides general banking services in 267 branches throughout 6 states.

NOTE G: LONG TERM BORROWINGS

During March 2002, BancGroup issued $100
million in Trust Preferred Securities through a statutory business trust. These securities bear interest of 8.32% and are subject to redemption by BancGroup, in whole or in part, at any time after



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##### Table of Contents

March 2007, until maturity in April 2032. In connection with this issuance, BancGroup executed an interest rate swap whereby BancGroup receives a fixed rate and pays a
floating rate, effectively converting the fixed rate notes to floating. The result of this interest rate swap created an effective floating rate on the notes of 3 month LIBOR + 1.40%. As of September 30, 2002, the net effective floating rate was
3.26%. The proceeds from this issuance are being used for general corporate purposes as well as a previously announced stock repurchase program.

NOTE H: DERIVATIVES:

BancGroup maintains positions in derivative financial instruments to manage interest rate risk and facilitate asset/liability management strategies. Currently, the only derivative instruments being utilized are interest rate swaps, all of
which qualify for shortcut accounting, according to Statement of Financial Accounting Standards No. 133, and are designated as fair value hedges.

The aforementioned interest rate swaps were executed in order to
convert fixed rate subordinated debt, trust-preferred debt and certain fixed rate loans to floating rates. Because each swap meets all of the requirements for shortcut accounting, BancGroup assumes no ineffectiveness. Therefore, no gains or losses
were recognized in 2002 as the gain/(loss) on the underlying asset was offset by an equal amount related to the market value of the associated swap.

NOTE I: INTANGIBLE ASSETS

Under SFAS No. 142 goodwill and other intangible assets with indefinite useful lives will no longer be amortized, but instead are tested for impairment as of the date of adoption and at least annually. The standard also
requires that intangible assets with finite useful lives be amortized over their respective estimated useful lives to their estimated residual values, and be reviewed for impairment if a triggering event occurs, as described by SFAS No. 121.

Amortizable intangible assets at September 30, 2002 are as follows (in thousands):

|                                    |  | Gross CarryingAmount |        | AccumulatedAmortization |   | Net CarryingAmount |  
|----------------------------------- |  | -------------------- | ------ | ----------------------- | - | ------------------ | -
|                                    |  |                      |        |                         |   |                    |  
|Core deposits and other intangibles |  | $                    | 35,590 |                         | $ | (2,490             | )
|                                    |  |                      |        |                         |   |                    |  

Aggregate amortization expense for the nine months ended September 30, 2002 was $1,767,000. Aggregate annual amortization expense of currently recorded core deposits and other
intangibles for December 31, 2002 is estimated to be $2.8 million and $4.4 million for years ended December 31, 2003 through 2006.



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##### Table of Contents

The changes in the carrying amount of goodwill for the nine months ended September 30, 2002 are as follows (in thousands):

|Balance at January 1, 2002                                                      |  | $ | 112,704 | 
|------------------------------------------------------------------------------- |  | - | ------- | 
|Acquisitions (primarily related to First Mercantile and Palm Beach, see note C) |  |   | 114,037 | 
|                                                                                |  |   |        
|Balance at September 30, 2002                                                   |  | $ | 226,741 | 

The following table presents net income and earnings per share as reported and adjusted to exclude tax effected amortization of goodwill that is no longer
being amortized (in thousands, except per share amounts).

|                                    |  | Three Months EndedSeptember 30, |        | Nine Months EndedSeptember 30, |  
|----------------------------------- |  | ------------------------------- | ------ | ------------------------------ | -
|                                    |  |                                 |        |                                |  
|                                    |  | 2002                            |        | 2001                           |  
|                                    |  |                                 |        |                                |  
|Reported net income                 |  | $                               | 35,130 |                                | $
|Goodwill amortization, net of tax   |  |                                 |       |                                | $
|                                    |  |                                 |        |                                |  
|Adjusted net income                 |  | $                               | 35,130 |                                | $
|                                    |  |                                 |        |                                |  
|                                    |  |                                 |        |                                |  
|Reported basic earnings per share   |  | $                               | 0.29   |                                | $
|Goodwill amortization, net of tax   |  |                                 |       |                                | $
|                                    |  |                                 |        |                                |  
|Adjusted basic earnings per share   |  | $                               | 0.29   |                                | $
|                                    |  |                                 |        |                                |  
|                                    |  |                                 |        |                                |  
|Reported diluted earnings per share |  | $                               | 0.29   |                                | $
|Goodwill amortization, net of tax   |  |                                 |       |                                | $
|                                    |  |                                 |        |                                |  
|Adjusted diluted earnings per share |  | $                               | 0.29   |                                | $
|                                    |  |                                 |        |                                |  

NOTE J: DISCONTINUED OPERATIONS

In July 2000 BancGroup announced definitive plans to exit the mortgage servicing business and discontinue
operations of mortgage servicing as a separate business unit. As of December 31, 2000 all loan servicing transfers were completed and the mortgage servicing rights removed from the Companys balance sheet. Due to the volume of loans transferred
and the costs and complexity in providing certain documentation, the Company revised its estimate of the cost to complete disposition of this business, resulting in charges of $705,000 and $613,000, net of tax expense, in the third quarters of 2002
and 2001, respectively. Currently, substantially all receivables associated with these sales have been collected and provision has been made for the Companys best estimate of any costs associated with documentation deficiencies and related
indemnifications.



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##### Table of Contents

|Item 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

CRITICAL ACCOUNTING POLICIES:

Accounting policies involving significant estimates and assumptions by management, which have, or could have, a material impact on the carrying value of certain assets and impact comprehensive income, are considered critical accounting
policies. BancGroup recognizes the following as critical accounting policies: Accounting for Acquisitions, Accounting for Allowance for Loan Losses, and Accounting for Income Taxes.

Accounting for
Acquisitions.BancGroups growth in business, profitability and market share over the past several years has been enhanced significantly by mergers and acquisitions. BancGroups acquisition strategy has historically
utilized the pooling-of-interest and purchase business combination methods of accounting. Effective July 1, 2001, BancGroup adopted SFAS No. 141, Business Combinations, which allows only the use of the purchase combination method of accounting. For
acquisitions under the purchase method, BancGroup is required to record assets acquired and liabilities assumed at their fair value, which in many instances involves estimates based on third party, internal, or other valuation techniques. These
estimates also include the establishment of various accruals for planned facilities dispositions and employee benefit related considerations, among other acquisition-related items. In addition, purchase acquisitions typically result in goodwill or
other intangible assets, which are subject to ongoing periodic impairment tests. These tests, based on the fair value of net assets acquired compared to the carrying value of goodwill and other intangibles, also contain estimates such as discount
rate and time periods in their calculations. Furthermore, the determination of which intangible assets have finite lives is subjective, as well as the determination of the amortization period for such intangible assets.

Accounting for Allowance for Loan Losses. Managements ongoing evaluation of the adequacy and allocation of the allowance considers both impaired and unimpaired loans and takes into
consideration the Banks past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrowers ability to repay, estimated value of any underlying collateral, the reviews of regulators, and
an analysis of current economic conditions. While management believes that it has exercised prudent judgment and applied reasonable assumptions which have resulted in an allowance presented in accordance with generally accepted accounting
principles, there can be no assurance that in the future, adverse economic conditions, increased nonperforming loans, regulatory concerns, or other factors will not require further increases in, or re-allocation of the allowance.

Accounting for Income Taxes.BancGroup uses the asset and liability method of accounting for income taxes. Determination of the deferred and current provision requires analysis by management of
certain transactions and the related tax laws and regulations. Management exercises significant judgment in



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##### Table of Contents

evaluating the amount and timing of recognition of the resulting tax liabilities and assets. Those judgments and estimates are re-evaluated on a continual basis as
regulatory and business factors change.

FINANCIAL CONDITION:

Ending balances of total assets, securities, mortgage loans held for sale, net loans, deposits, and long
and short term debt changed for the nine months and twelve months ended September 30, 2002, respectively, as follows:

|(Dollars in thousands)        |  | December 31, 2001to September 30, 2002Increase (Decrease) |           | September 30, 2001to September 30, 2002Increase (Decrease) | 
|----------------------------- |  | --------------------------------------------------------- | --------- | ---------------------------------------------------------- | 
|                              |  |                                                           |           |                                                            | 
|                              |  | Amount                                                    |           | %                                                          | 
|                              |  |                                                           |           |                                                            | 
|Assets:                       |  |                                                           |           |                                                            | 
|Total Assets                  |  |                                                           | 1,903,622 |                                                            | 
|Securities                    |  |                                                           | 689,607   |                                                            | 
|Mortgage loans held for sale  |  |                                                           | 119,299   |                                                            | 
|Loans, net of unearned income |  |                                                           | 828,757   |                                                            | 
|Total Deposits                |  |                                                           | 832,972   |                                                            | 
|Short-term debt               |  |                                                           | 620,843   |                                                            | 
|Long-term debt                |  |                                                           | 257,567   |                                                            | 

Assets:

BancGroups assets have increased 18.0% since September 30, 2001 and 14.4% since December
31, 2001. The growth from September 30, 2001 is primarily the result of increases in securities, internal loan growth throughout BancGroups banking regions as well as the Mortgage Warehouse Lending unit, the purchase of 13 branches from Union
Planters, the acquisition of Mercantile Bancorp in Texas and Palm Beach National Holding Company in Florida. The growth from December 31, 2001 is primarily the result of increases in securities, loans in the Mortgage Warehouse Lending unit and the
acquisitions of Mercantile and Palm Beach. Other assets include approximately $10.3 million invested in certain non-banking entities including two Atlanta based real estate developments and an interest in a company providing internet and ACH
services to banks. The Company continually investigates non-banking investment opportunities.

Securities:

Investment securities and securities available for sale have
increased $633.7 million (32.7%) and $689.6 million (36.6%) from September 30, 2001 and December 31, 2001, respectively. These increases are the result of an effort to maintain earning asset growth during a period of slow to declining loan growth.
Selectively purchasing short average life securities has enabled BancGroup to take advantage of spreads to short-term funding costs. The short-term funding of investment purchases mitigates the risk to falling rates. Securities purchased have
consisted primarily of mortgage-backed securities and collateralized mortgage obligations and have been subject to accelerated prepayments in the quarter ended September 30, 2002.



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##### Table of Contents

Loans and Mortgage Loans Held for Sale:

Loans net of unearned income, have increased $1,217.3 million (12.2%) and $828.8
million (8.0%) from September 30, 2001 and December 31, 2001, respectively. The increase in loans from September 30, 2001 and December 31, 2001 was primarily due to an increase in Real Estate Construction loans mostly from acquisitions, of $589.2
million and $432.5 million respectively, as well as an increase in Mortgage Warehouse Lending loans, of $607.9 million and $168.9 million respectively. The volume in the mortgage warehouse lending unit has been abnormally high in the third quarter
due to increases in mortgage refinancing activity resulting from all time lows in mortgage rates. The increase in mortgage loans held for sale of $130.1 million and $119.3 million from September 30, 2001 and December 31, 2001, respectively, is also
due to the significant increase in mortgage refinancing activity. The following table reflects the change in loan mix as of September 30, 2002.

|GROSS LOANS BY CATEGORY(Dollars in thousands) |  | September 30,2002 |            | December 31,2001 |   | September 30,2001 | 
|--------------------------------------------- |  | ----------------- | ---------- | ---------------- | - | ----------------- | 
|                                              |  |                   |            |                  |   |                   | 
|Commercial, financial, and agricultural       |  | $                 | 1,084,934  |                  | $ | 1,145,409         | 
|Real estate-commercial                        |  |                   | 3,613,631  |                  |   | 3,417,517         | 
|Real estate-construction                      |  |                   | 2,728,157  |                  |   | 2,295,675         | 
|Real estate-residential                       |  |                   | 1,983,186  |                  |   | 1,942,821         | 
|Installment and consumer                      |  |                   | 244,167    |                  |   | 240,836           | 
|Mortgage warehouse lending                    |  |                   | 1,455,330  |                  |   | 1,286,399         | 
|Other                                         |  |                   | 87,214     |                  |   | 39,019            | 
|                                              |  |                   |            |                  |   |                   | 
|Total Loans                                   |  | $                 | 11,196,619 |                  | $ | 10,367,676        | 
|                                              |  |                   |            |                  |   |                   | 

Residential real estate loans represent 17.7% of total loans at September 30, 2002 compared to 18.7% at December 31, 2001 and 20.7% at September 30, 2001. This decrease is primarily
due to a drop in demand for adjustable rate mortgages as more borrowers are looking for long-term fixed rate loans, which the Company originates, but sells in the secondary market. Substantially all of these loans are adjustable rate first mortgages
on single-family, owner-occupied properties, and therefore, have minimal credit risk and lower interest rate sensitivity. BancGroup has a history of successfully lending in the residential real estate market and its quality ratios remain favorable
in this portfolio segment.

Commercial loans collateralized by real estate and construction loans increased approximately $196.1 million and $432.5 million, respectively from December 31, 2001. Commercial loans
collateralized by real estate increased $164.4 million from September 30, 2001 while construction loans increased $589.2 million from the same period. These increases result mostly from acquisitions as well as internal loan growth.



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##### Table of Contents

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. Our diversity, in addition to our emphasis on quality underwriting, serves 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 September 30, 2002.



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##### Table of Contents

CONSTRUCTION & COMMERCIAL REAL ESTATEGEOGRAPHIC DIVERSITY AND INDUSTRY DISTRIBUTIONSEPTEMBER 30,
2002

|(Dollars in thousands) |  | Construction |           | Commercial Real Estate |  
|---------------------- |  | ------------ | --------- | ---------------------- | -
|                       |  |              |           |                        |  
|Average Loan Size      |  | $            | 517       |                        | $
|Geographic Diversity   |  |              |           |                        |  
|Alabama                |  | $            | 324,914   |                        | $
|Georgia                |  |              | 443,765   |                        |  
|Florida                |  |              | 1,282,210 |                        |  
|Texas                  |  |              | 384,032   |                        |  
|Nevada                 |  |              | 154,486   |                        |  
|Other                  |  |              | 138,750   |                        |  
|                       |  |              |           |                        |  
|Total                  |  | $            | 2,728,157 |                        | $

|Industry Distribution  |  | % of Industry Distribution to |    
|---------------------- |  | ----------------------------- | ---
|                       |  |                               |    
|                       |  | ConstructionPortfolio         |    
|                       |  |                               |    
|Developments (w/Land)  |  |                               | 39 
|1-4 Family Residential |  |                               | 21 
|Condominiums           |  |                               | 12 
|Multi-Family           |  |                               | 8  
|Retail                 |  |                               | 6  
|Office                 |  |                               | 4  
|Other (13 types)       |  |                               | 10 
|                       |  |                               |    
|Total Construction     |  |                               | 100
|                       |  |                               |    

|Industry Distribution        |  | % of Industry Distribution to   |    
|---------------------------- |  | ------------------------------- | ---
|                             |  |                                 |    
|                             |  | Commercial Real EstatePortfolio |    
|                             |  |                                 |    
|Retail                       |  |                                 | 19 
|Office                       |  |                                 | 16 
|Multi-Family                 |  |                                 | 13 
|Lodging                      |  |                                 | 11 
|Office/Warehouse             |  |                                 | 7  
|Nursing Home                 |  |                                 | 4  
|Other (11 types)             |  |                                 | 30 
|                             |  |                                 |    
|Total Commercial Real Estate |  |                                 | 100
|                             |  |                                 |    

Characteristics of the 75 Largest Construction and Commercial Real Estate Loans

|                                               |  | Construction |           | Commercial Real Estate |  
|---------------------------------------------- |  | ------------ | --------- | ---------------------- | -
|                                               |  |              |           |                        |  
|75 Largest Loans Total (in thousands)          |  | $            | 1,035,154 |                        | $
|% of 75 largest loans to category total        |  |              | 38.0      | %                      |  
|Average Loan to Value Ratio (75 largest loans) |  |              | 68        | %                      |  
|Debt Coverage Ratio (75 largest loans)         |  |              | N/A       |                        |  

|Substantially all Construction and Commercial Real Estate loans have personal guarantees of the principals involved. Owner-occupied Commercial Real Estate portfolio totals represented 23% of the total Commercial Real Estate
portfolio at September 30, 2002.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

|Outstanding loans in our international division, located in our South Florida Region, represent 0.8% of our total outstanding loans at September 30, 2002. This exposure is spread among approximately 22 banking institutions in six
Latin American/Caribbean countries. The banks are primarily top tier institutions. These transactions are trade related involving letters of credit as well as participations in commercial paper back up lines.                                                                                                                                                                                                                  | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 
|BancGroup does not have a syndicated lending department. However, the Company has 25 credits with total commitments (funded and unfunded) of $514 million that fall within the bank regulatory definition of a Shared National
Credit (generally defined as a total loan commitment in excess of $20 million that is shared by three or more lenders). The largest outstanding amount to any single borrower is approximately $51 million (which is a mortgage warehouse
facility), with the smallest credit being approximately $138,000 (not counting the credits with unfunded balances). As of September 30, 2002, $303 million of these commitments were funded. | 

|Although by definition these commitments are considered Shared National Credits, BancGroups loan officers have established long-term relationships with each of these borrowers. These commitments are comprised of the
following:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 17% - commercial real estate projects located within existing markets,
|- |  | ----------------------------------------------------------------------

| |  | 12% - international credits which are primarily unfunded short-term commitments to tier one correspondent banks,
|- |  | ----------------------------------------------------------------------------------------------------------------

| |  | 62% - mortgage warehouse lines to eight large institutions (the mortgage warehouse lending department conducts its own audits of these borrowers), and
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 9% - operating facilities to two large national corporations headquartered in the Florida markets and one large Alabama corporation headquartered in Montgomery, Alabama.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Management believes that these are sound participations involving credits that fit within Colonial Banks lending philosophy and meet its conservative underwriting guidelines.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

|ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES | 
|------------------------------------------- | 

|Allocations of the allowance for loan losses are made on an individual loan basis for all loans rated less than satisfactory 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.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(Dollars in thousands)Balance at end of periodApplicable to: |  | September 30,2002 |         | Percent ofLoans toTotal Loans |  | December 31,2001 |   | Percent ofLoans toTotal Loans |         | September 30,2001 |  | Percent ofLoans toTotal Loans |  
|------------------------------------------------------------ |  | ----------------- | ------- | ----------------------------- |  | ---------------- | - | ----------------------------- | ------- | ----------------- |  | ----------------------------- | -
|                                                             |  |                   |         |                               |  |                  |   |                               |         |                   |  |                               |  
|Commercial, financial, and     agricultural                  |  | $                 | 34,253  |                               |  | 9.7              | % | $                             | 33,326  |                   |  | 11.1                          | %
|Real estate-commercial                                       |  |                   | 57,003  |                               |  | 32.3             | % |                               | 50,393  |                   |  | 33.0                          | %
|Real estate-construction                                     |  |                   | 23,740  |                               |  | 24.4             | % |                               | 17,256  |                   |  | 22.1                          | %
|Real estate-residential                                      |  |                   | 9,916   |                               |  | 17.7             | % |                               | 9,714   |                   |  | 18.7                          | %
|Installment and consumer                                     |  |                   | 2,872   |                               |  | 2.2              | % |                               | 2,390   |                   |  | 2.3                           | %
|Mortgage warehouse     lending                               |  |                   | 3,638   |                               |  | 13.0             | % |                               | 3,216   |                   |  | 12.4                          | %
|Other                                                        |  |                   | 4,938   |                               |  | 0.7              | % |                               | 5,905   |                   |  | 0.4                           | %
|                                                             |  |                   |         |                               |  |                  |   |                               |         |                   |  |                               |  
|TOTAL                                                        |  | $                 | 136,360 |                               |  | 100.0            | % | $                             | 122,200 |                   |  | 100.0                         | %
|                                                             |  |                   |         |                               |  |                  |   |                               |         |                   |  |                               |  

|The ratio of annualized net charge-offs to average loans was 0.27%, 0.34%, and 0.37% for the third quarter of 2002, the fourth quarter of 2001, and the third quarter of 2001, respectively. The ratio of annualized net charge-offs to
average loans was 0.24% year to date at September 30, 2002 compared to 0.28% for all of 2001 and 0.27% year to date at September 30, 2001, respectively. As a result of the Companys localized lending strategies and early identification of
potential problem loans, BancGroups net charge-offs have been consistently low compared to industry and peer data.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

SUMMARY OF LOAN LOSS EXPERIENCE

|(Dollars in thousands)                                                      |  | September 30,2002 |         | December 31,2001 |   | September 30,2001 |  
|--------------------------------------------------------------------------- |  | ----------------- | ------- | ---------------- | - | ----------------- | -
|                                                                            |  |                   |         |                  |   |                   |  
|Allowance for loan losses  January 1                                       |  | $                 | 122,200 |                  | $ | 110,055           |  
|                                                                            |  |                   |         |                  |   |                   |  
|Charge-offs:                                                                |  |                   |         |                  |   |                   |  
|Commercial, financial, and agricultural                                     |  |                   | 10,628  |                  |   | 14,731            |  
|Real estate-commercial                                                      |  |                   | 3,384   |                  |   | 9,354             |  
|Real estate-construction                                                    |  |                   | 1,306   |                  |   | 292               |  
|Real estate-residential                                                     |  |                   | 3,527   |                  |   | 3,148             |  
|Installment and consumer                                                    |  |                   | 2,595   |                  |   | 4,049             |  
|Other                                                                       |  |                   | 861     |                  |   | 1,155             |  
|                                                                            |  |                   |         |                  |   |                   |  
|Total charge-offs                                                           |  |                   | 22,301  |                  |   | 32,729            |  
|                                                                            |  |                   |         |                  |   |                   |  
|                                                                            |  |                   |         |                  |   |                   |  
|Recoveries:                                                                 |  |                   |         |                  |   |                   |  
|Commercial, financial, and agricultural                                     |  |                   | 914     |                  |   | 698               |  
|Real estate-commercial                                                      |  |                   | 948     |                  |   | 404               |  
|Real estate-construction                                                    |  |                   | 62      |                  |   | 9                 |  
|Real estate-residential                                                     |  |                   | 455     |                  |   | 565               |  
|Installment and consumer                                                    |  |                   | 1,173   |                  |   | 1,999             |  
|Other                                                                       |  |                   | 297     |                  |   | 330               |  
|                                                                            |  |                   |         |                  |   |                   |  
|Total recoveries                                                            |  |                   | 3,849   |                  |   | 4,005             |  
|                                                                            |  |                   |         |                  |   |                   |  
|                                                                            |  |                   |         |                  |   |                   |  
|Net charge-offs                                                             |  |                   | 18,452  |                  |   | 28,724            |  
|Allowance added from bank acquisitions                                      |  |                   | 7,835   |                  |   | 1,296             |  
|Addition to allowance charged to operating expense                          |  |                   | 24,777  |                  |   | 39,573            |  
|                                                                            |  |                   |         |                  |   |                   |  
|                                                                            |  |                   |         |                  |   |                   |  
|Allowance for loan losses-end of period                                     |  | $                 | 136,360 |                  | $ | 122,200           |  
|                                                                            |  |                   |         |                  |   |                   |  
|                                                                            |  |                   |         |                  |   |                   |  
|Net charge-offs as a percent of average net loans - (annualized     basis): |  |                   |         |                  |   |                   |  
|Quarter to date                                                             |  |                   | 0.27    | %                |   | 0.34              | %
|Year to date                                                                |  |                   | 0.24    | %                |   | 0.28              | %

|The following schedule reflects BancGroups 237% coverage of nonperforming loans (nonaccrual and renegotiated) by the allowance for loan losses at September 30, 2002. While management has not targeted any specific coverage
ratio in excess of 100%, management is committed to maintaining adequate reserve levels to absorb estimated future losses in the current loan portfolio.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

NONPERFORMING ASSETS ARE SUMMARIZED BELOW

|(Dollars in thousands)                                                                                                                                               |  | September 30,2002 |        | December 31,2001 |   | September 30,2001 |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------ | ---------------- | - | ----------------- | -
|                                                                                                                                                                     |  |                   |        |                  |   |                   |  
|Aggregate loans for which interest is not being accrued                                                                                                              |  | $                 | 56,336 |                  | $ | 49,675            |  
|Aggregate loans renegotiated to provide a reduction or deferral of     interest or principle because of deterioration in the financial     condition of the
borrower |  |                   | 1,191  |                  |   | 1,507             |  
|                                                                                                                                                                     |  |                   |        |                  |   |                   |  
|Total nonperforming loans *                                                                                                                                          |  |                   | 57,527 |                  |   | 51,182            |  
|Other real estate owned and repossessions                                                                                                                            |  |                   | 20,712 |                  |   | 15,553            |  
|                                                                                                                                                                     |  |                   |        |                  |   |                   |  
|Total nonperforming assets *                                                                                                                                         |  | $                 | 78,239 |                  | $ | 66,735            |  
|                                                                                                                                                                     |  |                   |        |                  |   |                   |  
|Aggregate loans contractually past due 90 days for which interest is     being accrued                                                                               |  | $                 | 25,696 |                  | $ | 28,249            |  
|Net charge-offs quarter-to-date                                                                                                                                      |  | $                 | 7,167  |                  | $ | 8,602             |  
|Net charge-offs year-to-date                                                                                                                                         |  | $                 | 18,452 |                  | $ | 28,724            |  
|Total nonperforming assets as a percent of net loans and other          real estate                                                                                  |  |                   | 0.70   | %                |   | 0.64              | %
|Allowance as a percent of net loans                                                                                                                                  |  |                   | 1.22   | %                |   | 1.18              | %
|Allowance as a percent of nonperforming assets *                                                                                                                     |  |                   | 174    | %                |   | 183               | %
|Allowance as a percent of nonperforming loans *                                                                                                                      |  |                   | 237    | %                |   | 239               | %

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

Nonperforming assets increased to $78.2 million or 0.70% of net
loans and other real estate at September 30, 2002, compared to $66.7 million or 0.64% at December 31, 2001. The increase primarily resulted from classifying as nonperforming the Companys outstanding portfolio ($15 million) of credits to
Argentine banks. The 2002 Shared National Credit Examination by the Federal Reserve and other regulatory agencies required all banks to classify such loans as nonperforming. Management continuously monitors and evaluates recoverability of problem
assets and adjusts loan loss reserves accordingly. The loan loss reserve was 1.22% of loans at September 30, 2002 compared to 1.18% at December 31, 2001 and 1.16% at September 30, 2001. Fluctuations from year to year in the balances of nonperforming
assets are attributable to several factors including changing economic conditions in various markets, nonperforming assets obtained in various acquisitions and the disproportionate impact of larger (over $1,000,000) individual credits.

Management, through its loan officers, internal credit review staff and external examinations by regulatory agencies, has identified approximately $295 million of loans, which have been placed, on a classified loan list. The
increase from the $288 million reported last quarter is primarily due to loans from the acquisition of Palm Beach National. The status of these loans is reviewed at least monthly 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



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##### Table of Contents

amounts through increases in reserves allocated to the loans or charge-offs. As of September 30, 2002, substantially all of these loans are current with their existing
repayment terms. Management believes that classification of such 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 loans has been adequately addressed at the present time.

Nonperforming 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 September 30, 2002 was $52.6 million and these loans had a corresponding valuation allowance of $20.8 million.

LIQUIDITY:

BancGroup has addressed its liquidity and interest rate sensitivity through its policies and structure for asset/liability management. BancGroup has an 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 maintenance of 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.

Core deposit growth is a primary focus of BancGroups funding and liquidity strategy. Efforts to emphasize relationship deposit growth are having a positive impact. Average
retail deposits in the third quarter 2002, excluding broker and time deposits, grew 19% over the same quarter in 2001, and 9% growth excluding acquisitions.The non-interest bearing portion of these
retail deposits grew 6% excluding acquisitions over the same period and improved the non-interest bearing deposit mix from 16% to 17% of total retail deposits. As there was a decreased emphasis on higher cost time deposits versus more
core deposits, average retail time deposits decreased 5% compared to third quarter 2001, a 10% decrease excluding acquisitions. As a result of the decrease in time deposits, the non-time deposit share of retail deposits increased to 50%
in third quarter 2002 from 45% in third quarter 2001.



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##### Table of Contents

In addition to funding growth through core deposits, BancGroup has worked to expand the availability of short and long term wholesale funding sources. As of September
30, 2002 the Bank utilized 67% vs. 57% at December 31, 2001 of the total wholesale funding sources (primarily Federal Home Loan Bank borrowings), estimated to be available. This increased utilization was a result of the increase in Mortgage
Warehouse loans due to a refinancing boom caused by low mortgage rates. These floating rate loans were funded with short-term wholesale funds. Once refinancing activity subsides the funding utilization ratio is expected to decrease. Management
believes its liquidity sources and funding strategies are adequate given the nature of its asset base and current loan demand.

INTEREST RATE SENSITIVITY:

ALMCOs
goal is to minimize volatility in the net interest margin from changes in interest rates by taking an active role in managing the level, mix, repricing characteristics and maturities of assets and liabilities. 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 simulation modeling under multiple rate scenarios.

The following table represents
the output from the Companys most recent simulation model based on the balance sheet as of September 30, 2002, when the Fed Funds Rate was 1.75%, 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. Given the 50 basis point reduction in the Fed funds rate on November 6, 2002, a down 50 basis point rate shock has been added as well. This twelve month
projection of Net Interest Income under these scenarios is compared to the twelve month Net Interest Income projection with rates unchanged.

|                    |  |                |      | Percentage Change in 12 Month Projected Net Interest Income | 
|------------------- |  | -------------- | ---- | ----------------------------------------------------------- | 
|                    |  | Fed Funds Rate |      | vs. Net Interest Income assuming no changes (1)             | 
|                    |  |                |      |                                                             | 
|                    |  |                |      |                                                             | 
|Basis Points change |  |                |      |                                                             | 
|+200                |  |                | 3.75 | %                                                           | 
|+100                |  |                | 2.75 |                                                             | 
|No Change           |  |                | 1.75 |                                                             | 
|-   50              |  |                | 1.25 |                                                             | 
|- 100               |  |                | .75  |                                                             | 
|                    |  |                |      |                                                             | 

| |  |  | (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.
| |  |  | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

This table shows
that under these rate shock scenarios, net interest income would benefit from rising rates,



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##### Table of Contents

however, the risk to declining rates is acceptable considering the overall level of interest rates. The initial impact of a rate decline will be greater in the first
quarter after a rate drop, and will improve as the liability side of the balance sheet has more time to adjust down to the new lower rate levels. The projections in the table are based on rate shocks where all rate indices are changed by the same
amount. Therefore these simulations do not take into account the risk of yield curve shifts or change in the basis risk or spread between various rate indices. They also do not take into account balance sheet volume and mix changes that might occur
due to changes in rates or yield curve slope. Additionally, interest rate floors have been written into approximately $2 billion of floating rate loans. However competitive pressures may not allow the bank to realize the full benefit of these
floors, therefore this benefit is not included in the declining scenarios.



---

##### Table of Contents

The following table summarizes BancGroups Maturity / Rate Sensitivity or Gap at September 30, 2002.

(Dollars in
millions)

|                                              |  | 0-90 days |       | 0-365 days |  
|--------------------------------------------- |  | --------- | ----- | ---------- | -
|                                              |  |           |       |            |  
|Rate Sensitive Assets (RSA)                   |  | $         | 8,300 |            | $
|Rate Sensitive Liabilities (RSL)              |  |           | 5,034 |            |  
|Cumulative Gap (RSA-RSL)                      |  |           | 3,266 |            |  
|Cumulative Gap Ratio (Cum Gap / Total Assets) |  |           | 22    | %          |  

The last two lines of the proceeding table represents interest rate sensitivity gap which is the difference between rate sensitive assets and rate
sensitive liabilities. BancGroups somewhat asset-sensitive position is primarily the result of growth in floating rate loans and run off in fixed rate loans and securities.

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 and prepayment
assumptions. Furthermore, the balances reflect contractual repricing of the deposits and managements position on repricing certain deposits where management discretion is permitted. 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 ADEQUACY AND 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 within 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.



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##### Table of Contents

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 September 30, 2002 are
stated below:

|Capital (in thousands):                                                                                                                                                             |  |   |            | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | ---------- | 
|Tier I Capital:                                                                                                                                                                     |  |   |            | 
|Shareholders equity (excluding unrealized gain on securities available for sale intangibles, and8% of equity investments in nonfinancial entities plus Trust Preferred Securities) |  | $ | 951,346    | 
|                                                                                                                                                                                    |  |   |           
|Tier II Capital:                                                                                                                                                                    |  |   |            | 
|Allowable loan loss reserve                                                                                                                                                         |  |   | 136,360    | 
|Subordinated debt                                                                                                                                                                   |  |   | 261,071    | 
|45% of net unrealized gains on available for sale equity securities                                                                                                                 |  |   | 168        | 
|                                                                                                                                                                                    |  |   |           
|Total Capital                                                                                                                                                                       |  | $ | 1,348,945  | 
|                                                                                                                                                                                    |  |   |            | 
|Risk Adjusted Assets (in thousands)                                                                                                                                                 |  | $ | 12,060,548 | 
|Total Assets (in thousands)                                                                                                                                                         |  | $ | 15,088,725 | 

|                              |  | September 30, 2002 |        | December 31, 2001 | 
|----------------------------- |  | ------------------ | ------ | ----------------- | 
|                              |  |                    |        |                   | 
|Tier I leverage ratio         |  |                    | 6.93%  |                   | 
|Risk Adjusted Capital Ratios: |  |                    |        |                   | 
|Tier I Capital Ratio          |  |                    | 7.89%  |                   | 
|Total Capital Ratio           |  |                    | 11.18% |                   | 

BancGroup has increased capital gradually through normal earnings retention as well as through stock registrations to capitalize acquisitions. In addition to these sources, the
Tier I Capital Ratio and Total Capital Ratio have been increased from the issuance of $100 million of Trust Preferred Securities during the first quarter of 2002. These securities provide additional flexibility for liquidity, capital management and
growth.

Management continuously monitors its capital levels in order to ensure it is taking the necessary steps to support future internally generated growth and fund the quarterly dividend rates that were $0.13
per share each quarter of 2002 and are anticipated to be the same or slightly higher in 2003.



---

##### Table of Contents

AVERAGE VOLUME AND RATE(UNAUDITED)

|(Dollars in thousands)                                                                                       |  | Three Months Ended September 30, |           
|------------------------------------------------------------------------------------------------------------ |  | -------------------------------- | ----------
|                                                                                                             |  |                                  |           
|                                                                                                             |  | 2002                             |           
|                                                                                                             |  |                                  |           
|                                                                                                             |  | AverageVolume                    |           
|                                                                                                             |  |                                  |           
|ASSETS                                                                                                       |  |                                  |           
|Loans, net (1)                                                                                               |  | $                                | 9,488,834 
|Mortgage warehouse lending                                                                                   |  |                                  | 1,076,290 
|Mortgage loans held for sale                                                                                 |  |                                  | 42,623    
|Investment securities and         securities available for sale and        other interest-earning
assets (2) |  |                                  | 2,521,772 
|                                                                                                             |  |                                  |           
|Total interest-earning assets (1)                                                                            |  |                                  | 13,129,519
|                                                                                                             |  |                                  |           
|                                                                                                             |  |                                  |           
|Non-earning assets                                                                                           |  |                                  | 884,225   
|                                                                                                             |  |                                  |           
|Total assets                                                                                                 |  | $                                | 14,013,744
|                                                                                                             |  |                                  |           
|                                                                                                             |  |                                  |           
|LIABILITIES AND      SHAREHOLDERS EQUITY:                                                                   |  |                                  |           
|Interest-bearing non-time deposits                                                                           |  | $                                | 2,954,052 
|Time deposits                                                                                                |  |                                  | 4,413,896 
|Short-term borrowings                                                                                        |  |                                  | 2,131,628 
|Long-term debt                                                                                               |  |                                  | 2,005,537 
|                                                                                                             |  |                                  |           
|Total interest-bearing liabilities                                                                           |  |                                  | 11,505,113
|                                                                                                             |  |                                  |           
|Noninterest-bearing demand         deposits                                                                  |  |                                  | 1,442,664 
|Other liabilities                                                                                            |  |                                  | 74,249    
|                                                                                                             |  |                                  |           
|Total liabilities                                                                                            |  |                                  | 13,022,026
|Shareholders equity                                                                                         |  |                                  | 991,718   
|                                                                                                             |  |                                  |           
|Total liabilities and shareholders      equity                                                              |  | $                                | 14,013,744
|                                                                                                             |  |                                  |           
|                                                                                                             |  |                                  |           
|RATE DIFFERENTIAL                                                                                            |  |                                  |           
|                                                                                                             |  |                                  |           
|NET INTEREST INCOME AND NET YIELD ON     INTEREST-EARNING ASSETS (3)                                         |  |                                  |           
|                                                                                                             |  |                                  |           

| |  |  | (1) |  | Loans classified as non-accruing are included in the average volume calculation. Interest earned and average rates on non-taxable loans are reflected on a tax equivalent basis. This interest is included in the total
interest for loans. Tax equivalent interest earned is actual interest earned times 145%.
| |  |  | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | (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 equal to actual interest earned times 145%. Tax equivalent
average rate is tax equivalent interest earned divided by average volume.
| |  |  | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | (3) |  | Net interest income divided by average total interest-earning assets
| |  |  | --- |  | --------------------------------------------------------------------



---

##### Table of Contents

AVERAGE VOLUME AND RATE(UNAUDITED)

|(Dollars in thousands)                                                                                       |  | Nine Months Ended September 30, |           
|------------------------------------------------------------------------------------------------------------ |  | ------------------------------- | ----------
|                                                                                                             |  |                                 |           
|                                                                                                             |  | 2002                            |           
|                                                                                                             |  |                                 |           
|                                                                                                             |  | AverageVolume                   |           
|                                                                                                             |  |                                 |           
|                                                                                                             |  |                                 |           
|ASSETS                                                                                                       |  |                                 |           
|Loans, net (1)                                                                                               |  | $                               | 9,330,396 
|Mortgage warehouse lending                                                                                   |  |                                 | 925,632   
|Mortgage loans held for sale                                                                                 |  |                                 | 27,873    
|Investment securities and securities         available for sale and other        interest-earning
assets (2) |  |                                 | 2,209,461 
|                                                                                                             |  |                                 |           
|                                                                                                             |  |                                 |           
|Total interest-earning assets (1)                                                                            |  |                                 | 12,493,362
|                                                                                                             |  |                                 |           
|                                                                                                             |  |                                 |           
|Non-earning assets                                                                                           |  |                                 | 833,565   
|                                                                                                             |  |                                 |           
|                                                                                                             |  |                                 |           
|Total assets                                                                                                 |  | $                               | 13,326,927
|                                                                                                             |  |                                 |           
|                                                                                                             |  |                                 |           
|LIABILITIES AND SHAREHOLDERS      EQUITY:                                                                   |  |                                 |           
|Interest-bearing non-time deposits                                                                           |  | $                               | 2,847,220 
|Time deposits                                                                                                |  |                                 | 4,268,096 
|Short-term borrowings                                                                                        |  |                                 | 1,870,025 
|Long-term debt                                                                                               |  |                                 | 1,917,182 
|                                                                                                             |  |                                 |           
|                                                                                                             |  |                                 |           
|Total interest-bearing liabilities                                                                           |  |                                 | 10,902,523
|                                                                                                             |  |                                 |           
|Noninterest-bearing demand deposits                                                                          |  |                                 | 1,396,336 
|Other liabilities                                                                                            |  |                                 | 82,004    
|                                                                                                             |  |                                 |           
|Total liabilities                                                                                            |  |                                 | 12,380,863
|Shareholders equity                                                                                         |  |                                 | 946,064   
|                                                                                                             |  |                                 |           
|                                                                                                             |  |                                 |           
|Total liabilities and shareholders equity                                                                   |  | $                               | 13,326,927
|                                                                                                             |  |                                 |           
|                                                                                                             |  |                                 |           
|RATE DIFFERENTIAL                                                                                            |  |                                 |           
|                                                                                                             |  |                                 |           
|NET INTEREST INCOME AND NET      YIELD ON INTEREST-EARNING     ASSETS (3)                                    |  |                                 |           
|                                                                                                             |  |                                 |           

| |  |  | (1) |  | Loans classified as non-accruing are included in the average volume calculation. Interest earned and average rates on non-taxable loans are reflected on a tax equivalent basis. This interest is included in the total
interest for loans. Tax equivalent interest earned is actual interest earned times 145%.
| |  |  | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | (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 equal to actual interest earned times 145%. Tax equivalent
average rate is tax equivalent interest earned divided by average volume.
| |  |  | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | (3) |  | Net interest income divided by average total interest-earning assets
| |  |  | --- |  | --------------------------------------------------------------------



---

##### Table of Contents

ANALYSIS OF INTEREST INCREASES / (DECREASES)(UNAUDITED)

|(Dollars in thousands)                                                                  |  | Three Months Ended September 30, 2002Change from 2001 |        
|--------------------------------------------------------------------------------------- |  | ----------------------------------------------------- | -------
|                                                                                        |  |                                                       |        
|                                                                                        |  |                                                       |        
|                                                                                        |  | Total                                                 |        
|                                                                                        |  |                                                       |        
|INTEREST INCOME:                                                                        |  |                                                       |        
|Loans, net                                                                              |  | $                                                     | (25,225
|Mortgage Warehouse Lending                                                              |  |                                                       | (422   
|Mortgage loans held for sale                                                            |  |                                                       | 268    
|Investment securities and securities for sale and other interest-earning         assets |  |                                                       | 2,597  
|                                                                                        |  |                                                       |        
|                                                                                        |  |                                                       |        
|Total interest income(2)                                                                |  |                                                       | (22,782
|                                                                                        |  |                                                       |        
|                                                                                        |  |                                                       |        
|INTEREST EXPENSE:                                                                       |  |                                                       |        
|Interest-bearing deposits                                                               |  | $                                                     | (30,333
|Short-term borrowings                                                                   |  |                                                       | (2,786 
|Long-term debt                                                                          |  |                                                       | (460   
|                                                                                        |  |                                                       |        
|                                                                                        |  |                                                       |        
|Total interest expense                                                                  |  |                                                       | (33,579
|                                                                                        |  |                                                       |        
|                                                                                        |  |                                                       |        
|Net interest income                                                                     |  | $                                                     | 10,797 
|                                                                                        |  |                                                       |        

| |  |  | (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.
| |  |  | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



---

##### Table of Contents

ANALYSIS OF INTEREST INCREASES / (DECREASES)(UNAUDITED)

|(Dollars in thousands)                                                                  |  | Nine Months Ended September 30, 2002Change from 2001 |         
|--------------------------------------------------------------------------------------- |  | ---------------------------------------------------- | --------
|                                                                                        |  |                                                      |         
|                                                                                        |  |                                                      |         
|                                                                                        |  | Total                                                |         
|                                                                                        |  |                                                      |         
|INTEREST INCOME:                                                                        |  |                                                      |         
|Loans, net                                                                              |  | $                                                    | (114,247
|Mortgage Warehouse Lending                                                              |  |                                                      | (4,184  
|Mortgage loans held for sale                                                            |  |                                                      | 370     
|Investment securities and securities for sale and other interestearning         assets |  |                                                      | 6,868   
|                                                                                        |  |                                                      |         
|                                                                                        |  |                                                      |         
|Total interest income(2)                                                                |  |                                                      | (111,193
|                                                                                        |  |                                                      |         
|                                                                                        |  |                                                      |         
|INTEREST EXPENSE:                                                                       |  |                                                      |         
|Interest-bearing deposits                                                               |  | $                                                    | (118,832
|Short-term borrowings                                                                   |  |                                                      | (29,811 
|Long-term debt                                                                          |  |                                                      | 8,233   
|                                                                                        |  |                                                      |         
|                                                                                        |  |                                                      |         
|Total interest expense                                                                  |  |                                                      | (140,410
|                                                                                        |  |                                                      |         
|                                                                                        |  |                                                      |         
|Net interest income                                                                     |  | $                                                    | 29,217  
|                                                                                        |  |                                                      |         

---

| |  |  | (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 is the foremost component of
BancGroups earnings and represents the difference or spread between interest and fee income generated from earning assets and the interest expense paid on deposits and borrowed funds. Interest rate volatility in addition to changes in the
volume and mix of earning assets and interest bearing liabilities can significantly impact net interest income.

Net interest income on a tax equivalent basis increased $10.8 million to $116.6 million for the
quarter ended September 30, 2002 from $105.8 million for the quarter ended September 30, 2001. Net interest income on a tax equivalent basis increased $29.2 million to $343.9 million for the nine months ended September 30, 2002 from $314.6 million
for the same period in 2001. The net interest margin declined 3 basis points to 3.53% for the third quarter of 2002 versus 3.56% for the third quarter of 2001. Year to date



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net interest margin improved 10 basis points to 3.67% at September 30, 2002 from 3.57% at September 30, 2001.

The average rate on
loans was 6.53% for the third quarter of 2002 compared to 7.85% for the third quarter of 2001. Additionally, the average rate of investment securities was 4.93 % for the third quarter of 2002 compared to 6.29% for the third quarter of 2001. Sharp
declines in mortgage and treasury rates have resulted in record prepayments on loans and investment securities. These prepayments have resulted in lower security yields due to reinvestment of funds at lower yields, as well as accelerated
amortization of premiums paid to acquire securities. During the same period, the rate on average interest-bearing liabilities was 2.84% for the third quarter of 2002 compared to 4.45% for the third quarter of 2001.

The 50 basis point cut in the fed funds rate announced by the Federal Reserve in November 2002 will hurt the margin. Some of the short term negative impact will be offset in later months as the CD portfolio, which has an average remaining
term at September 30, 2002 of 12 months, will reprice to lower levels. Additionally, current low mortgage rates have increased refinancing activity. Because of this, mortgage warehouse volumes have increased, and as this low risk line of business
has a lower margin, it will increase net interest income while having a negative impact on the net interest margin ratio. Lower mortgage rates have also resulted in continued increase of prepayments on mortgage backed loans and securities, thus
lowering the yield on both these portfolios, these trends are also expected to continue.



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LOAN LOSS PROVISION:

The provision for loan losses for the quarter ended September 30, 2002 was $6,803,000 compared to
$7,901,000 for the same period in 2001. Year to date loan loss provision was $24,777,000 and $24,843,000 for the nine months ended September 30, 2002 and 2001, respectively. The Company continues to focus its efforts on relationship based lending to
known customers in its local market areas.

The reduction in loan loss provision during the third quarter 2002 was primarily the result of flat loan growth in the Companys regional banks, excluding Mortgage
Warehouse Lending and acquisitions. With this reduction, BancGroup maintained a 237% coverage of nonperforming loans compared to 239% at December 31, 2001 and 194% at September 30, 2001. See managements discussion of loan quality and the
allowance for loan losses presented in the Financial Condition section of this report.

NONINTEREST INCOME:

Noninterest income excluding securities gains increased
$4.3 million (20.5%) and $8.9 million (14.3%) for the three months and nine months ended September 30, 2002 compared to the same period in 2001. Sources of noninterest income include financial planning services, electronic banking services, mortgage
origination income, and cash management services which are included in service charges on deposit accounts.

Financial planning services experienced a $1.2 million (61%) increase in fee income during the three
months ended September 30, 2002 over the same period in 2001 and a $1.8 million (27%) increase for the nine months ended September 30, 2002 over 2001. As a result of investor uncertainty in the economy, the Company has experienced a decline in sales
of investments to customers; however, this decline was more than offset by an increase in fixed rate annuity sales.

BancGroup continues to expand electronic banking services through its ATM network, business
and personal check card services, and internet banking. Noninterest income from electronic banking services increased $523,000 (31%) for the three months ended September 30, 2002 when compared to the same period in 2001 and $1.3 million (27%) for
the nine months ended September 30, 2002 over 2001 through increased penetration of its customer base and the introduction of the Colonial Bank Business Check Card.

Mortgage origination fees increased $2.0
million (103%) for the three months ended September 30, 2002 compared to the three months ended September 30, 2001 and $3.5 million (64%) for the nine months ended September 30, 2002 over 2001. These increases are due to additional production of
one-to-four family mortgage loans sold in the secondary market resulting from increases in refinancing activity. As stated earlier, in the third quarter 2002 mortgage rates reached the lowest level in 41 years.

Service charges on deposit accounts increased $698,000 (7%) for the three months ended September 30, 2002 over the same period in 2001 and $2.2 million (7%) for the nine months ended September 30, 2002



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over 2001. These increases are the result of an increase in normal deposit account related fees which includes an increase in cash management fees of approximately
$201,000 (28%) for the third quarter and $553,000 (27%) year to date over the same periods in 2001. BancGroup also had additional branches in operation, 26 of which were acquired, for the three months and nine months ended September 30, 2002 as
compared to the same periods in 2001.

NONINTEREST EXPENSES:

In support of the Companys sales culture, BancGroup continues to make strategic investments in its
product and service offerings, technology systems, sales incentives and branch network to enhance the Companys competitive presence in existing markets. Some of these investments include improved automation of branch delivery systems, enhanced
internet banking and wire transfer systems and an image processing system. BancGroups philosophy is to make strategic investments in the tools employees need to optimize its customers financial success. Accordingly, noninterest expense
excluding amortization of intangibles increased 7% for the quarter ended September 30, 2002 and 2% for the nine months ended September 30, 2002 as compared to the same periods in 2001. These comparisons also exclude $6.4 million and $12.7 million in
additional operating expenses from acquired banks.

BancGroups net overhead (total noninterest expense less noninterest income, excluding security gains, and amortization of intangibles) was $54.4 million
for the three months ended September 30, 2002 compared to $46.5 million for the three months ended September 30, 2001, respectively. Year to date net overhead was $154.8 million at September 30, 2002 compared to $142.3 million at September 30,
2001.

Total noninterest expense increased $11.0 million for the third quarter of 2002 compared to the third quarter of 2001 and year to date noninterest expense increased $17.7 million over the same period in
2001. Annualized noninterest expense excluding amortization of intangibles to average assets was 2.27% for the three months ended September 30, 2002 compared to 2.15% for the three months ended September 30, 2001. Year to date annualized noninterest
expense excluding amortization of intangibles to average assets was 2.26% for the nine months ended September 30, 2002 compared to 2.19% at September 30, 2001.

The increase in bank related expenses is primarily
due to an increase of approximately $7.0 million and $12.9 million for the three months and nine months ended September 30, 2002 over the same periods in 2001, respectively, in salaries and employee benefits. These salary increases are the result of
acquisitions completed during the current and previous year, additional branches opened, normal salary increases, additional incentive and production related compensation, and increased pension costs.

In order
to improve the Companys market presence, three of its regional headquarters were relocated in 2001. The Company also acquired 13 branches from Union Planters in October 2001, First Mercantile



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##### Table of Contents

Bank with five branches in March 2002 and completed the acquisition of Palm Beach National Holding Company with eight branches in September 2002. Primarily as a result
of these efforts, occupancy and equipment expense for the three months and nine months ended September 30, 2002 increased $1.8 million and $3.4 million, respectively, when compared to the same periods in 2001.

Intangible asset amortization decreased $1.2 million and $3.6 million for the three months and nine months ended September 30, 2002, respectively, over the same periods in 2001 due primarily to the implementation of SFAS No. 142 discussed in
Note I  Intangible Assets.

The remaining increases in other expense of $3.4 million and $5.1 million for the three months and nine months ended September 30, 2002 over the same periods in 2001,
respectively, are the result of the aforementioned acquisitions, improvements to the data communications network, and other normal operating expense.

In July of 2001 Colonial launched the Eagle project. The
objective of the Eagle project is to implement retail delivery solutions that should enhance our ability to produce sales, provide exceptional service and promote profitable customer relationships while gaining operational efficiencies. We began
implementation of new retail delivery systems in September 2002 with additional Internet banking capabilities and an enhanced call center. This will be followed in 2003 with new branch service delivery and loan delivery systems.

PROVISION FOR INCOME TAXES:

BancGroups provision for income taxes is based on an approximate 34.5% and 36.0%, estimated annual effective tax rate for the years 2002 and 2001,
respectively. The provision for income taxes for the three months ended September 30, 2002 and 2001 was $18.9 million and $17.5 million, respectively. The year to date provision for income taxes ended September 30, 2002 and 2001 was $55.9 million
and $51.2 million, respectively.

|Item 3. | Quantitative and Qualitative Disclosures About Market Risk.
|------- | -----------------------------------------------------------

The information required by this item is included in Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations.

Item 4.        
Controls and Procedures.

The Companys management, including the Chief Executive Officer and Chief Financial Officer, evaluated the Companys disclosure controls and
procedures (as defined in Rule 13a-14(c) under the Securities and Exchange Act of 1934, as amended) within 90 days prior to the filing date of this quarterly report. Based on this evaluation, the Chief Executive Officer and the Chief Financial
Officer concluded that the Companys disclosure controls and procedures are effective. There were no significant changes in internal controls (including any corrective actions with regard to significant deficiencies or material weaknesses in
the Companys internal controls) that could significantly affect the disclosure controls and procedures since the date of the evaluation. See the certifications by the Companys Chief Executive Officer and Chief Financial Officer following
the signature page of this Report.

Part II      Other Information

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



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##### Table of Contents

|Item 2: | Changes in Securities and Use of Proceeds - N/A
|------- | -----------------------------------------------

|Item 3: | Defaults Upon Senior Securities - N/A
|------- | -------------------------------------

|Item 4: | Submission of Matters to a Vote of Security Holders  N/A
|------- | ---------------------------------------------------------

|Item 5: | Other Information Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, a certification of the Quarterly Report on Form 10-Q has been
submitted to the Securities and Exchange Commission by each of the Chief Executive Officer and the Chief Financial Officer of BancGroup.
|------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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 furnished on October 15, 2002 as Regulation F-D Disclosure in regard to third quarter 2002 earnings.                                                                                                                            
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    | 
| | 2. |  | Form 8-K  was furnished on September 9, 2002 as Regulation F-D Disclosure in regard to presentations made by management to institutional investors.                                                                                           
| |    | 
| | 3. |  | Form 8-K  was furnished on August 14, 2002 as Regulation F-D Disclosure in regard to correspondence transmitted to the Securities and Exchange Commission on August 14, 2002 in compliance with Section 906 of the
Sarbanes-Oxley Act of 2002.
| |    |  |                                                                                                                                                                                                                                                
| | 4. |  | Form 8-K  was furnished on July 16, 2002 as Regulation F-D Disclosure in regard to second quarter 2002 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: November 14, 2002 |  | By:                         
|                        |  |                             
|                        |  |                             



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##### Table of Contents

CERTIFICATIONS*

I,Flake Oakley, certify that:

| | 1. |  | I have reviewed this quarterly report on Form 10-Q of The Colonial BancGroup, Inc.;                                                                                                                                                                                                                                      
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    | 
| | 2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements made, not misleading with respect to the period covered by this quarterly report;
| |    | 
| | 3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this quarterly report;              
| |    | 
| | 4. |  | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                

| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    | 
| | b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the Evaluation Date); and                                                                                                  
| |    | 
| | c) |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluations as of the Evaluation Date;                                                                                                                       

| | 5. |  | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of registrants board of directors (or persons
performing the equivalent function):
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    | 
| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and                                                                                                                                        

| | 6. |  | The registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date:   October 14, 2002

| |  | /s/ W. Flake
Oakley
| |  | -------------------

| |  | W. Flake OakleyChief Financial
Officer
| |  | --------------------------------------



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##### Table of Contents

CERTIFICATIONS*

I,Robert E. Lowder, certify
that:

| | 1. |  | I have reviewed this quarterly report on Form 10-Q of The Colonial BancGroup, Inc.;                                                                                                                                                                                                                                      
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    | 
| | 2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements made, not misleading with respect to the period covered by this quarterly report;
| |    | 
| | 3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this quarterly report;              
| |    | 
| | 4. |  | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                

| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    | 
| | b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the Evaluation Date); and                                                                                                  
| |    | 
| | c) |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluations as of the Evaluation Date;                                                                                                                       

| | 5. |  | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of registrants board of directors (or persons
performing the equivalent function):
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    | 
| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and                                                                                                                                        

| | 6. |  | The registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date:   October 14, 2002

| |  | /s/ Robert E. Lowder
| |  | --------------------

| |  | Robert E. LowderChief Executive Officer
| |  | ---------------------------------------