Feds investigating Colonial Bank

BOCA RATON — Troubled Colonial BancGroup said Friday that it has been told that it is under investigation by the Justice Department for alleged accounting irregularities in its mortgage warehouse lending division.

The Alabama-based bank said it has been informed that the alleged accounting irregularities relate to more than one year’s audited financial statements and regulatory financial reporting. It said the bank’s board and audit committee are attempting to determine the effect the alleged accounting irregularities might have had on the Company’s financial statements. It also said it intends to cooperate with the investigation.

Colonial has branches throughout South Florida, including Boca Raton, Boynton Beach, Deerfield Beach and Coral Springs.

Earlier this year, Colonial produced documents subpoenaed by the federal inspector general for the Troubled Asset Relief Program.

Also, the SEC has issued subpoenas to Colonial for documents related to, among other things, BancGroup’s disclosures related to its participation in the TARP and the bank’s disclosures respecting accounting for loan loss reserves.

On Wednesday, the Alabama State Banking Department gave notice to Colonial Bank it will meet next week to ask Colonial to consent to the appointment of the FDIC as receiver if the state deems it necessary.

The bank said in the meantime, it continues to explore ways to meet capital requirements.