A Tale of Absence and Woe: Colonial Bank’s Headquarters

What’s that gigantic building on the way to Atlanta?

No, not the one that looks like a plantation home. That’s Mt. Meigs, which opened in 1911 as the “Alabama Reform School for Juvenile Negro Law-Breakers.” It’s a prison for children, is run by DYS, should in no way be confused (as I once did) with that other place that starts with an “M” where wayward youths get sent (Marion Military Academy, which is in the opposite geographic direction and is run by the Department of Postsecondary Education).

So, no, not the mansion-looking thing. That other huge building out there on the way to Atlanta.

Why, it’s the former headquarters of Colonial Bank!

Remember them? They were one of the biggest employers in the area. They were a holding company (Colonial Bancgroup) valued at, oh, about $26 billion. They were one of the 25 largest banks in the United States. And they went under in 2009, the 6th largest bank failure in American history! And it was right here in lil’ ol’ Montgomery, Alabama.

Well, there were 346 branches, many of which were not in Alabama, and then all those real estate investments, which weren’t in Montgomery either. But the headquarters was here … and it’s still there! A big ol’ empty building that is probably feeling the warm intra-state feeling of solidarity with Jefferson County, just about 100 miles to the north, which filed the largest municipal bankruptcy in American history. That’s right, Alabama: Creating lesson plans for business schools around the world!

Anyway, you may or may not have given too much attention to the story behind that Class A, 200,000 sq. ft. office building as you zip past it on the Interstate. We’re here to tell you the facts, nonetheless!

It’s been renamed, of course, as have all of the branches of the failed bank. Those were mostly snapped up by a bank based in Winston-Salem, NC, called BB&T (which stands for Branch Banking and Trust). The new name of the corporate monolith that we still have here in Montgomery? It’s the Capitol Commerce Center now, reflecting a burst of creativity from the branding department.

A commercial real estate firm is trying to find some tenants for the new building. We’re talking between $21 and $26/RSF, with almost the whole thing rentable. When we checked, only about 10,000 sq. ft. had been rented, some of it to the FDIC, which, probably not coincidentally, paid about $2.8 billion into the dying company. In fact, the FDIC owned the place for a little while, before selling to an automotive magnate from Arkansas named Larry Crain. He once owned a failure of an NBA D-League team! Go Rimrockers! When Crain bought the building, he also got $110,000 of items, including a Josephine jewel box, a Chippendale 1860 table and a Louis XVI console that is (or was) evidently located in the building.

The Colonial Bank HQ, while glaringly visible from the Interstate, is oddly hard to find on Google maps, so we’ll do the exploring for you. When we checked the place out, the pond out front smelled like a cesspool. The fountain came across as something purchased on the cheap from a corporate HQ supply catalog. The parking lot, which holds 632 vehicles (360 in a garage), was more full than we expected given the sparse tenancy of the buidling. All in all, it looks like it’d be a horrible place to work. It’s way out from anything interesting. Sure, the Hellscape of the east side of Montgomery is creeping in that direction, but we actually see that as a drawback and try to stay as far away from Chantilly Parkway as possible. But even if you’re into that sort of big box sprawl and monocultural semi-casual dining, if your job requires that you clock in at the Capitol Commerce Center, odds are that you’re not going out to The Shoppes at Eastchase on your lunch break. You’re stuck in this giant corporate box. And you probably don’t get to play with the Josephine jewel box or the Chippendale 1860 table and the Louis XVI console (whatever that is).

Now, we’re not going to rant too much about the sordid tale of Colonial’s fall. It’s a fascinating tale that involves what most people say was over-investment in construction projects in Florida and Nevada. We’d argue firmly with those who say that the collapse was an unfortunate product of unpredictable market forces (“the bubbles just burst”), especially because we’re talking about everything ranging from TARP money to a cease and desist order from the FDIC which was described by the South Florida Business Journal as follows:

In a strongly worded criticism of the bank’s leadership, the federal order said Colonial Bank must cease and desist from operating with “inadequate management and board of directors oversight.”

The order also called the bank’s method of reserving for future loan losses inadequate, which could mean Colonial Bank might have to lower its capital levels further to boost these reserves.

Within 60 days of the order, the bank must review its management team, especially the senior executive officer to “determine whether these individuals possess the ability, experience and other qualifications to perform present and anticipated duties.”

Ouch.

Oh, and there was some business with Lee Farkas and a former senior vice president (Catherine Kissick) and the head of Colonial’s Mortgage Warehouse Lending Division (Teresa Kelly). Something about what the government said were $1.5 billion in “worthless” and “fake” mortgages. Also, false reporting in financial statements, which investors always appreciate. And did you know that banks get to pick who they want to regulate them? They can switch, as Colonial did, back and forth between state and federal regulation, which helps explain why the whole economy damn near collapsed (and may yet still).

Good times!

And if you’ve read this far, you’re in for an even juicier twist.

The whole thing was run by the guy that ESPN named “the most powerful booster in all of college sports.”

There is a lot to enjoy about this ad. The pic of the three grinning brothers, looking like they just got away with something; the ad copy, calling the bank a muscular child; the assurance that "dad" lurks in the background. From the May 1982 issue of Alabama Magazine.

If you aren’t from here, you may not appreciate the significance of this fact. Imagine if someone was some blend of mafia don and Pope. You begin to have an idea of what it means to be the private citizen with the most influence over college sports in a state that is beyond obsessed with college sports. And ESPN didn’t mean “most powerful booster in Alabama.” They meant of all the college-football-loving weirdos in the nation, of all the rich white guys that are pouring tens (if not hundreds) of millions of their personal wealth into (usually) state-supported institutions, Bobby Lowder had the most clout at his school.

Lowder was appointed to the Auburn Board of Trustees by George Wallace in 1983. He was on the board from then until this past year, when (after a bit of a political kerfuffle), he was re-appointed and then un-appointed by Gov. Robert Bentley. ESPN called Lowder, “the ultimate campus puppeteer” and “the George Steinbrenner of college sports, only without official ownership papers.” That may not mean anything to you, but here, where college football is life or death, it means many people had very strong opinions about Mr. Lowder, long before his bank tanked and blasted a crater in the economy.

CNN did a lengthy profile of Lowder in 2009, covering lots of bases, starting with him being born as the son of the guy who built ALFA into one of the single most powerful political players in the state. The story of how the Alabama Farm Bureau became ALFA, a name that causes state legislators to get wobbly in the knees? That’s a tale for another post. But know that Lowder was born into power and kept hold of it from that giant, now-empty building where, we’re told, he had Israeli embassy level security. Well, kept hold of power from 2006 (when the building was built) until 2009, when Colonial vacated the thing.

And here, thinking about that big empty building and all of the people that once worked there, it’s probably worth noting that the Lowder name retains considerable currency in Montgomery circles because not just of Bobby, but also his two brothers, the twins, Jimmy and Tom. Check out this fawning Central Alabama Business Journal article from 2004 for more on the structures of their various holdings.

And then there’s Anna, who, with her husband Harvi Sahota, operate the Hampstead Institute — which is sort of an Institute-meets-housing development thing waaaay out on the east side. It’s on 416 acres in the middle of nowhere, but nobody I’ve ever talked to thinks that it’s actually a “sustainable community.” It’s more like an art project where people will drive their SUVs back into town before retreating to their “neighborhood” that nobody can walk to.

But it’s still a family affair. The Lowder New Homes website links to Hampstead’s bizarre crest at the bottom of this page, but we’ll save the ruminations on that project for some other time. Needless to say that the link here goes to townofhampstead.com, even though it isn’t really a town.

And the City of Montgomery, which partners with Hampstead to run the downtown urban farm, also decided that this area would be the perfect place to build a new high school, shelling out $1.95 million to buy some land on which to build the new school. This article from 5/3/11 says the land was owned by ALFA, the company founded by Ed Lowder, but this article from 5/16/11 quotes a guy named Mac McLeod, described as president of Hampstead LLC’s parent company, Colonial Co.

McLeod, unsurprisingly, sees the land deal as beneficial to Hampstead and hopes that it spurs further development.

Because we all know the good thing about development. Once you build a big building, it’s there — whether it’s occupied or not.

The inner sanctum. The Lowder Board Room.

The Robert Lowder Board Room. Birthplace of innovation.

Executive dining room.

The executive dining room. No expense spared on furniture.

The fainting couch for when the feds show up.

Entry hall. Expensive wood.

The lobby.

Stairway to power.

Top flight security desk, not currently occupied.

There’s a neato touchscreen computer in the lobby that shows you all the available space that you can rent. The FDIC will be your neighbor!