After a year on the sidelines, Colonial BancGroup is once again on the prowl for acquisitions.

The Montgomery, Ala., company bowed out of the merger game late last year, after taking a $9.8 million restructuring charge to digest all that it had bought - 27 banks in four years. Management promised to do no more deals until it got its house in order.

The $10.6 billion-asset company trimmed 220 jobs and closed 10 branches. It also started building a back-office processing center in Orlando to support the 14 banks it had bought in Florida during its binge.

W. Flake Oakley, chief financial officer, said the company is looking for deals in Dallas, South Florida, and metropolitan Atlanta. "We plan to take advantage of acquisition opportunities to enhance our franchise," he said.

Colonial has about $230 million of assets in Dallas but would like to build a $1 billion operation there. In Florida, where it has $2.8 billion of assets, the Sarasota and Naples markets are attractive, Mr. Oakley said, as are those along the state's Atlantic coast from Melbourne to West Palm Beach.

Despite past merger integration problems, analysts remain upbeat about Colonial's prospects. They point out that, after losing $3.8 million in last year's fourth quarter, the company has earned more than $28 million in each of the first three quarters of this year.

Colonial has traditionally bought community banks - 20 of the 27 mid-'90s deals were for companies with less than $200 million of assets. But analysts speculated that this time around the company could pursue targets with as much as $500 million of assets.

Peyton N. Green, a senior analyst at Sterne, Agee & Leach in Atlanta, said he expects Colonial's next round of deals to be much easier for the company to handle.

"A few years ago they were buying their way into new areas, which is usually more difficult," he explained. "They have accomplished what they promised they would internally and are now focused on building their presence in established markets. I am optimistic they can do it."

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