MONTGOMERY, Ala. -- Colonial BancGroup plans to acquire Colonial Mortgage Co. for 2.27 million shares of common stock and about $17 million of debt assumption.
Colonial BancGroup valued the deal at about $67 million.
Robert E. Lowder, chairman, chief executive, and president of the banking company, and his brothers, James K. and Thomas H. Lowder, own a large interest in it and all of the mortgage company.
The banking company hired Bear, Stearn & Co. as it adviser on the deal, while the mortgage company used Lehman Brothers Inc.
Goal: Fee Income
"The addition of a mortgage company is consistent with BancGroup's objective of adding fee income to its earnings stream," said Clinton O. Hold-brooks of Pell City, Ala., chairman of a special committee acting on the banking company's behalf. "We believe that Colonial Mortgage will contribute significant noninterest income to BancGroup and will enhabnce the value of BancGroup's stock."
Colonial Mortgage says it is one of the largest privately owned mortgage companies in the United States, with a servicing portfolio of more than $5 billion. It operates 20 offices, including six in Alabama. It is engaged in retail and wholesale mortgage banking, producing about $2.6 billion worth of product in 1993.
The parties are preparing a definitive agreement, which would need approval by the board of the banking company and its shareholders.
