Colonial Bancgroup, a $9.2 billion-asset banking company, said Friday that it will take $62 million in writedowns and other charges in the fourth quarter.
The company also intends to eliminate 220 jobs, about 5% of its staff. The measures will reduce pretax earnings per share by about 33 cents, chief executive officer Robert E. Lowder said.
The company said it is taking a $30 million writedown in the value of mortgage servicing rights on the books of its Colonial Mortgage Co. subsidiary. It said falling interest rates sparked an increase in mortgage prepayments in October and November. Future prepayments are also likely to be greater than expected.
The writedowns prompted the company to take $32 million in acquisition, restructuring and other one-time charges, Mr. Lowder said. Included is a $10 million increase in loan-loss provisions and $8.8 million in charges associated with recent acquisitions.
Colonial's shares closed Friday at $11.25, down 31.25 cents.