UPDATE 4-Colonial Q1 lags Street; to cut dividend, offer stock
(Adds annalysts' comments, updates share movement)
By Sweta Singh
BANGALORE, April 21 (Reuters) - Colonial BancGroup Inc CNB.N reported quarterly profit far below Wall Street estimates, slashed its dividend by half and set plans to raise capital by offering additional stock, amidst challenging real estate and commercial markets.
Many analysts expect small and medium-sized banks to cut dividends and offer additional stock to improve their capital position as regulatory concerns mount and slump in housing market continues.
Shares of the financial services company fell as much as 14 percent to a 52-week low of $8.55, before recovering some losses to trade down 9 percent at $9.03 in midday trade on the New York Stock Exchange.
"Our decision to reduce our common dividend was not taken lightly," Chief Executive Robert Lowder said in a statement. "The common stock offering will provide more capital than would be required to remain well capitalized even under very severe credit scenarios."
Colonial, which operates more than half its branches in Florida, cut its dividend to 9.5 cents a share from 19 cents.
Further dividend cuts in 2008 "can not be ruled out, given the continued rise of losses throughout the sector," Stifel Nicolaus & Co analyst David Bishop told Reuters.
The dividend reduction will help the regional bank save up to $60 million annually, it said. Continuación...