Regulators watching Colonial Bank closely

MONTGOMERY, AL (WSFA) - Montgomery-based Colonial Banc Group is being watched closely by bank regulators.

The company entered into what's called "an informal memorandum of understanding" with the State Banking Department, the FDIC, and the Federal Reserve bank of Atlanta.

Colonial agreed to improve key parts of its balance sheets by March 31.

The bank reported an $880 million loss in the fourth quarter of 2008 and is still trying to raise $300 million in capital in order qualify for federal TARP funds.

Colonial is also facing a long list of class action lawsuits regarding it's announcement of being eligible for TARP money.

Colonial's stock closed Tuesday at $.37 per share, down from a high of just under $27 per share in May of 2006.