Colonial BancGroup Completes Sale of $350 Million of Common Stock

The Colonial BancGroup, Inc. (NYSE: CNB)announced today it has completed the previously announced public offering of 43.7 million shares of its common stock at $8.00 per share for total gross proceeds of $350 million. All of the shares were sold directly by Colonial. The number of shares sold includes 5.7 million shares as a result of the exercise of the underwriters’ over-allotment option. Net proceeds of approximately $333 million from the offering will be used for general corporate purposes, including investments in subsidiaries.

Lehman Brothers Inc. was the sole book-running manager for the offering. Credit Suisse Securities (USA) LLC, SunTrust Robinson Humphrey and Morgan Keegan & Company, Inc. were the co-managers for the offering.

The offering was made under Colonial BancGroup’s existing shelf registration statement filed with the Securities and Exchange Commission.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any offer or sale of the shares of common stock in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any jurisdiction. Any offer, solicitation or sale will be made only by means of the prospectus supplement and the accompanying base prospectus.

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 The Colonial BancGroup, Inc. (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 such 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:

• losses to our loan portfolio are greater than estimated or expected;
• an inability to raise additional capital on terms and conditions that are satisfactory;
• the impact of current economic conditions on our ability to borrow additional funds to meet our liquidity needs;
• 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;
• changes in the interest rate environment which expand or reduce margins or adversely affect critical estimates as applied and projected returns on investments;
• deposit attrition, customer loss, or revenue loss in the ordinary course of business;
• increases in competitive pressure in the banking industry and from non-banks;
• 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 2008 and beyond;
• 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.