A meeting between Alabama banking regulators and Colonial Bank scheduled for Wednesday, August 12, was canceled, which was set to talk about the possible takeover of the company by the FDIC.
The reason it was canceled was because a secret meeting was held on Monday instead, between the Alabama Banking Department and Colonial Banking officials.
Just last week the bank, which is based in Alabama, disclosed it was being investigated for criminal conduct in connection to their mortgage warehouse lending division.
Evidently all of this is related to the extraordinary shocking news today that the bank won’t be able to file their second-quarter financial report because of irregularities in their accounting department, which they say they are in the middle of investigating.
What’s extraordinary about it is company officials say they now have no idea how much money it may have lost in the second quarter, and also have no idea who much money they have now.
“The Company has been informed that the alleged accounting irregularities relate to more than one year’s audited financial statements and regulatory financial reporting, and the Company’s Board of Directors and Audit Committee are making every effort to determine the impact of these alleged accounting irregularities on the Company’s financial statements and regulatory financial reporting,” Colonial said.
It’s almost a surety that Colonial Bancgroup will fail, which would make it the largest bank failure so far in 2009.
Colonial has a total of 335 branches in Texas, Nevada, Georgia, Alabama and Florida, with an approximate $26 billion in assets, if you can count on the accuracy of that number, which evidently has no way of being confirmed with the accounting regularities.
This sounds like it’s going to become a debacle before it’s through, even more than it already is. With the assertion this has been going on for over a year, and they were audited figures, it could get ugly very quickly for those involved.
