Colonial BancGroup, Inc. (NASDAQOTH:CBCGQ.PK)

Colonial is well placed in Florida and will be either bought out or will succeed as it is. Lots of competition in Florida, but with Tarp funds in place, it will make this company look more attractive to buyers in the future.

worst 30days caps

mortgage investment/regional banks

The company is set to withstand the finacial downturn. The area that they operate in will not feel the effects of a recession as much as the rest of the country.

The Fear Trade: Investors Pile into Gold and Treasuries
The Dow suffered its biggest one-day point drop in history (although not even close on a percentage loss basis) as investors moved out of stocks into traditional safe havens such as Treasuries and gold (GLD). The failure of Congress to approve the $700B bailout package stunned investors as lawmakers worked through the weekend and practically around the clock to put together a plan that was widely expected to pass. The Senate will return Wednesday night while the House meets again this Thursday following the Jewish New Year holiday recession.

In other signs of worry over a worsening global economic recession, the U.S. Oil Fund (USO) lost more than 10%, the Baltic Dry Index slipped to multi-year lows, the iShares Emerging Markets Index (EEM) was down over 11%, and the Market Vectors Steel ETF (SLX) was down over 16%. Very few stocks closed in the green today, but among stocks that I track BioSante Pharma (BPAX) surged by over 16% on over four times its average volume without any news releases to account for the move.

I plan to focus on the small and micro-cap biotech space since these companies trade in their own universe for the most part based on their clinical development activities regardless of the economy. I own shares of Cytori Therapeutics (CYTX), which had a mid-day surge in the midst of the market sell-off, but still ended the day in the red on light volume. Overall, I am still very cautious on the market and will keep most of my money in cash until the market stabilizes as the velocity of today's downturn around mid-day was unsettling.

Lots of short here.... bail out should force the cover.

will wheater the storm

Financials have one more quarter of difficult times ahead then... BAM - to the moon baby!!

stats geek

mediocre performer

Like all regional banks, they have too much exposure to poorly secured loans. They also secured an additional bank system that was heavily exposed. I have made good money with this management group in the past and I feel they will overcome this and, as they are aggressive, will be back leading their area again soon. ( there is some local feelings against the management due to their involvement in Auburn University in Alabama.

Good solid bank run down by the shorts

Colonial Bank is caught in the bank stocks skid row syndrome at present but will weather the times and keep right on ticking like the energizer bunny.

I think there are some good values in US banks. Here is one.

The Colonial Bancgroup is a $24B asset bank with about 328 retail branches, mostly in Florida though with significant numbers in Georgia and Texas.

It is trading below $5.00. I estimate the value to be about $16, so it is "on sale" at a 70% discount to my estimate. It pays a $0.40 annual dividend, so you may pick up 8% a year while waiting for the price to recover. (Though I expect the bank may further reduce or eliminate the dividend to preserve capital).

This bank's 2007 earnings were depressed by a significant (and I think courageous) move to increase loss reserves. They have no sub-prime exposure and the CEO and other insiders have been buying heavily at and below $8 a share. My impression of the management team, gleaned from reading SEC filings and listening to investor calls, is that they are straight people in touch with the details of their business.

The bank is making money and, at this point, is well capitalized. With a billion dollar market cap (even at $5 a share), this is not a small company.

I expect the bank to report increases in its non-accrual loans through the rest of this year, but I don't expect those increases to exceed reserves. The bank also has significant exposure to construction and development loans (about 37% of all its loans). These types of loans have not been a source of trouble for the bank yet, but that may change. This is not a no-brainer.

I expect to be in this for 3 years to get to my target of $16. If it works out that way, that is a better than 40% annual return before dividends.

I do not know how low this stock will go before it recovers, but I am buying at prices below $5.00.

This stock was picked by TMFHamp for the 2008 Stockpicking Contest.

Your data on CNB is only part of the story. CNB is headed for sell or doom. But first, some facts:

1) CNB has a significant presence in Florida and Alabama. The other 3 states have relatively little overall impacty on the company.

2) CNB is a commercial bank. True they did not participate in subprime mortgage lending or speculating, however they are a commercial bank. This type of bank lends on commercial projects as, far and away, their primary source of revenue. Their retail franchise is only a side-effect of the commercial lending area.

3) Commercial lending trends follow residential lending trends. Therefore, once we hit the bottom of the residential lending crisis, we will have several months until we hit the bottom of the commercial lending crisis.

4) The CEO is the largest shareholder in the company. OF COURSE he bought stock at the recent re-issue, he is trying to show wall street and other investors he 'believes' in his company. In reality the 65 year old Lowder is trying to rebuild his own wealth.

5) The executive team is a group of sub-par Montomery, AL based bankers with little knowledge of the real world. (Just look at the website of this company. Can you say 1990..) They continue to try and outsmart everyone with the 'no-subprime' line, but you have to see past that as just a smoke screen. Sub-prime will not bring them down, bad commercial loans in FL and NV will. Especially commercial loans to build condo's.

6) The company has sold one significant piece of its business each year for the last several to mitigate losses and 'continue it's track record of growth'. But is it really growth when you have to sell a part of your company to meet estimates? Does this say something about it's strategic planning abilities?

It is very clear that the CEO believes he will live forever. He is 65 and has no succession plan and NONE of his executive team is qualified to run the company. In his mico-manage style, all loans north of $2 million need his blessing!!! For a $25 Billion bank!?! Maybe he should invest some time in the people around him and technology before looking to pad his own wallet.

I predict 2 outcomes:

1) The company will be sold, upon the CEO's death or otherwise. The JPMorgan's or US Bank's of the world would be a nice business line and geographical fit.

2) As commercial credit tightens (and consumer credit at CNB) commercial clients will use their cash to pay for the loans they have outstanding, since they can't sell their product and banks will not let them refinance the debt. Consumers will move their deposits to a bank with a brand name and some stability. Bye-Bye liquidity and capital. The bank will be forced to sell as they will be unable to make money from their bread an butter, commercial lending. I expect the fed to step in and halt lending in this case.

Remember, even a stock trading at book value of assets, or below, is still predicated on the quality of the assets. In this case the bulk assets are; commercial loans and real estate in FL.

I wouldn't touch this stock with your 10 foot pole.

This stock is being accused of guilt by association. Colonial's not involved in a lot of the things that are killing regional and national banks, and when the market returns, Colonial will be a leader in returns. Bonus: Insiders are buying like crazy for the past few months, with massive accumulation around the 8-10 dollar mark...

value pick

insiders cheap