Colonial BancGroup Announces Record EPS of $1.72, a 13% Increase over 2005.

MONTGOMERY, Ala. -- 2006 Highlights:

* Strong Earnings Per Share of $1.72, up 13% over 2005

* Strong Earnings Per Share of $0.43 for the fourth quarter, up 8% over 2005

* Record Net Income of $266 million for 2006, up 16% over 2005

* Excellent credit quality - net charge-offs of 0.12%; nonperforming assets ratio of 0.16%

* Net interest income increased 6% over 2005

* Strong organic average deposit growth of 13% over 2005

* Solid period end loan growth of 5% over 2005

* Forbes Platinum 400 List of Best Large Companies in America

The Colonial BancGroup, Inc. (NYSE: CNB) Chairman, CEO and President, Robert E. Lowder, announced today that the Company had record earnings for the year ended December 31, 2006 of $1.72 per diluted share, a 13% increase over the $1.52 earned in 2005. Net income for the year was a record $266 million, a 16% increase over 2005 net income.

Diluted earnings per share were $0.43 in the fourth quarter of 2006 compared to $0.40 per share in the fourth quarter of 2005, an 8% increase. Net income for the fourth quarter of 2006 was $66 million, an 8% increase over net income for the fourth quarter of 2005.

"Colonial's record-breaking performance in 2006 was the result of concentrating on the basics: making loans to customers who we know without sacrificing our credit standards, increasing the number of customers served by our branch network and providing more products and services to our customers," said Mr. Lowder.

Colonial's net interest income increased 6% over 2005, driven by a strong increase in average loans, excluding mortgage warehouse, of 12%. This increase was offset partially by a $386 million, or 11%, reduction in average investment securities. The net interest margin for 2006 was 3.71% compared to 3.75% for 2005. Net interest margin compression was caused primarily by increased funding costs from a shift in deposits toward higher rate certificates of deposit from no and low cost products as well as increased deposit pricing.

Colonial's average deposits grew organically by $1.7 billion, or 13%, in 2006 compared to 2005. "Colonial's strong average deposit growth reflects the power to attract customers and geographic reach in high growth areas of our franchise. Colonial now has a top five market share among commercial banks in both Florida and Alabama which together comprise 83% of our deposit franchise," said Mr. Lowder.

Period end loans, excluding mortgage warehouse loans, grew $781 million, or 5%, from December 31, 2005 to December 31, 2006. "As I mentioned in the third quarter report, there is an evident decrease in loan demand from borrowers who meet our credit criteria. Therefore, loan growth may be slower than in the past. Colonial will not sacrifice its underwriting standards for the sake of growth. Our credit quality metrics are a testament to our commitment to this principle," said Lowder. Colonial's net charge-offs were 0.12% of average loans for 2006, an improvement from 0.14% of average loans for 2005. The nonperforming assets ratio at December 31, 2006 was 0.16% of period end loans and nonperforming assets compared to 0.21% at December 31, 2005. Nonperforming assets were $25 million at December 31, 2006, reflecting a $6.8 million, or 21%, decrease from December 31, 2005. The allowance for loan losses was $175 million, up from $171 million at December 31, 2005. The allowance represented 1.13% of total loans and 1247% of nonperforming loans at December 31, 2006.

Noninterest income for 2006 grew 8% over 2005 with strong increases in retail banking fees, up 10%, and mortgage warehouse fees, up 58%. The Company also had continued improvement in fees from financial planning services and mortgage banking which increased 6% and 11%, respectively, over 2005. Noninterest income in the fourth quarter of 2006 grew 12% over the fourth quarter of 2005 and 8% over the third quarter of 2006. The increase from the third quarter was also driven by a strong increase in retail banking fees which increased 8%, or 33% annualized, over the third quarter 2006 primarily from an increase in NSF fees.

Noninterest expenses were well controlled and increased less than 1% over 2005. Colonial's efficiency ratio improved to 55.39% in 2006 compared to 57.06% in 2005.

"Although banking in 2006 took place in a difficult operating environment, Colonial reported record earnings and maintained excellent credit quality. We expect 2007 to be another challenging year for the industry. As such, Colonial has taken steps to proactively address net interest margin compression and expenses in 2007. In February, the Company plans to redeem its 1997 trust preferred securities totaling $70 million which bear interest at 8.92%. We also are implementing several balance sheet strategies to lessen the impact of the inverted yield curve on the Company's net interest margin. Additionally, Colonial has conducted a review of staffing levels and has centralized several support functions to increase efficiency and to leverage expertise within the Company. Although we will continue to focus on expense control throughout 2007, our overall strategic plan for the franchise includes opening 30-40 new branches over the next two years. We will, as always, be alert to acquisition opportunities in our existing footprint which are accretive in a reasonable amount of time and which augment our franchise," said Mr. Lowder.

The Colonial BancGroup, Inc. recently received significant recognition when it was included on the Forbes Magazine Platinum 400 list of the best publicly traded companies in America. "We are proud to be associated with such a fine group of companies. Forbes included only 18 banks in the United States in its selection, and I know that our shareholders and employees will be pleased at this recognition of their hard work and dedication," said Mr. Lowder.

Colonial BancGroup operates over 300 branches in Florida, Alabama, Georgia, Nevada and Texas with more than $22 billion in assets. The Company's common stock is traded on the New York Stock Exchange under the symbol CNB.

Colonial management has scheduled a conference call on January 17, 2007 at 3 p.m. ET to discuss the earnings results for the fourth quarter. Individuals are encouraged to listen to the live webcast and view a slide presentation that will be available on Colonial's web site at www.colonialbank.com. The webcast will be hosted under "Events and Presentations" located under the "Investor Relations" section of the website. To participate in the Q&A session of the conference call, dial [phone] or [phone] Toll International, (Leader: Lisa Free). A replay of the conference call should be available beginning at 6 p.m. ET on January 17, 2007 and ending at midnight on January 24, 2007 by dialing [phone] (Domestic Toll-Free) or [phone] (Toll International). The passcode for both numbers is 6242384.

This release includes "forward-looking statements" within the meaning of the federal securities laws. Words such as "believes," "estimates," "plans," "expects," "should," "may," "might," "outlook," "potential" and "anticipates," the negative of these terms and similar expressions, as they relate to BancGroup (including its subsidiaries or its management), are intended to identify forward-looking statements. The forward-looking statements in this release are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by the statements. In addition to factors mentioned elsewhere in this release or previously disclosed in BancGroup's SEC reports (accessible on the SEC's website at www.sec.gov or on BancGroup's website at www.colonialbank.com), the following factors, among others, could cause actual results to differ materially from forward-looking statements and future results could differ materially from historical performance. These factors are not exclusive:

* deposit attrition, customer loss, or revenue loss in the ordinary course of business;

* increases in competitive pressure in the banking industry;

* costs or difficulties related to the integration of the businesses of BancGroup and institutions it acquires are greater than expected;

* the inability of BancGroup to realize elements of its strategic plans for 2007 and beyond;

* changes in the interest rate environment which expand or reduce margins or adversely affect critical estimates as applied and projected returns on investments;

* economic conditions affecting real estate values and transactions in BancGroup's market and/or general economic conditions, either nationally or regionally, that are less favorable then expected;

* natural disasters in BancGroup's primary market areas which result in prolonged business disruption or materially impair the value of collateral securing loans;

* management's assumptions and estimates underlying critical accounting policies prove to be inadequate or materially incorrect or are not borne out by subsequent events;

* the impact of recent and future federal and state regulatory changes;

* current and future litigation, regulatory investigations, proceedings or inquiries;

* strategies to manage interest rate risk may yield results other than those anticipated;

* changes which may occur in the regulatory environment;

* a significant rate of inflation (deflation);

* acts of terrorism or war; and

* changes in the securities markets.

Many of these factors are beyond BancGroup's control. The reader is cautioned not to place undue reliance on any forward looking statements made by or on behalf of BancGroup. Any such statement speaks only as of the date the statement was made or as of such date that may be referenced within the statement. BancGroup does not undertake any obligation to update or revise any forward-looking statements.

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