Paul Davis: Colonial, Bobby Lowder’s power continues to dwindle

“How are the mighty fallen in the middle of the battle! O Jonathan, you were slain in your high places….” 2:Samuel 1

It is over. Bobby Lowder’s Colonial Bank is dead along with his powerful control over Auburn University. That’s terrible news for the thousands of Colonial Bank employees but wonderful news for Auburn University.

Friday’s stock price was around 40 cents. With 19 shares, you could buy a Happy Meal at McDonald’s.

The Federal Deposit Insurance Corporation is preparing to seize control of the bank and now is seeking a buyer to take over what was once a major player in banking circles in the south.
Some agents were told to pack an extra suitcase and be prepared to move into Colonial’s headquarters on a moment’s notice.

Lowder was forced out in May and has lost much of his absolute control at Auburn University. He had personally selected a majority of the board and almost brought the University down before he drove his bank out of business.

The high-handed tactics at Auburn brought probation from the Southern Association of College and Schools for his micro-management of the University, for his shutting down academic programs and for stepping out of bounds in hiring and firing Auburn coaches – a job which is supposed to be handled by the university president.

However, Lowder was always the president, hiding behind a curtain.

John Dean once told President Nixon, “There’s a cancer growing on the presidency.”

Ditto for Auburn. Nixon’s cancer was Watergate. Auburn’s cancer is Lowder.

He stepped down at Colonial in May as federal and state bank examiners stepped in. As the situation now stands, some of those involved in the Colonial meltdown may have broken state and federal laws. Criminal indictments are expected. Some bank executives may be headed to jail.

“How are the mighty fallen in the middle of the battle! O Jonathan, you were slain in your high places….”

Lowder is now coming home to his beloved Auburn. He is building a mansion in the scholarly neighborhood of Pinedale, home to many present and former Auburn professors and administrators.
There goes the neighborhood.

Drive by and look at the place. During the past week, from 30 to 40 cars and trucks have crowded the block in a mad scramble to finish work on the house.

It’s rather a sad spectacle. Without his big money, his big bank, his big jet, his powerful control of the AU board, I doubt he will find many real friends. Money does buy friends, but those so bought are as plastic as Colonial credit cards.

Coming to Auburn, he has said he can remain more focused on family and Auburn University. Maybe the family side will work out; being more focused, involved in Auburn will not.

That focus may have played a role in the loss of his bank. His input at AU is not wanted and he will quickly get that message. His power on the “new” board is all but gone.

He lost the left side of his brain with the recent death of Jack Miller, Lowder’s $4 million-per-year Mobile lawyer. Gone is his chief ally in the Alabama Senate, Lowell Barron, and an Auburn trustee about as slimy as Lowder. Death claimed two good guys on the board, Jack Venable and Charlie Glover.

Retired from the board is Earlon McWhorter, one of Lowder’s largest bank customers, and Paul Spina, who sat on one of Lowder’s regional bank boards.

Lowder had even bought himself a governor by the name of Don Siegelman whose first act in office was to repay a debt by reappointing Lowder to the AU Board. Siegelman has since been sent to federal prison for corruption while in office.

Lowder started Colonial in Birmingham. It grew like Jack’s beanstalk. Colonial has about $26 billion in total assets. If Colonial fails, it would represent the third-largest bank failure — in total assets — of the current banking crisis, surpassed only by Washington Mutual and IndyMac Bank.

Colonial is facing a criminal investigation into its lending and accounting practices by the U.S. Justice Department and the Securities and Exchange Commission. It also lost $606 million in the second quarter.

BB&T (Branch Banking and Trust) of North Carolina is looking at a purchase of Colonial if the price is right.

* The reward for BB&T: Colonial has the No. 4 deposits market share in Alabama, where BB&T has a token presence, and the No. 6 market share in Florida, where BB&T is 17th, according to the latest FDIC data. Colonial also has branches in Georgia and Texas and is selling its 21 branches in Nevada.
BB&T has a stated goal of wanting at least a top-five market share in each of the 11 states where it competes.

* The risk for BB&T: Colonial could become as dicey a takeover target for BB&T as Golden West Financial Corp. proved to be for Wachovia Corp. Golden West’s toxic exotic mortgages weighed so hard on Wachovia’s financial health that it ultimately cost the bank its independence last year.
The Alabama State Banking Board is expected to ask Colonial’s management for permission to allow the Federal Deposit Insurance Corp. to take over the bank if deemed necessary. If the bank fails, the FDIC would find a new owner for it as quickly as possible.

“How are the mighty fallen in the middle of the battle! O Jonathan, you were slain in your high places….”

Paul Davis writes a Sunday column for the Opelika-Auburn News. You may contact him at