June 11, 2009 – 7:39 am

Montgomery, Alabama, based Colonial Bank has been slapped with an FDIC cease-and-desist order. The bank also caught the ire of the State of Alabama Banking Department, which ordered it to improve its capital ratio. The regulatory action complicates merger deals already in the pipeline.

Taylor, Bean & Whitaker’s deal with Colonial may not be such a sure thing afterall. Forbes today reported the FDIC and the Alabama State Banking Dept. have issued a Cease and Desist order against Colonial Bancgroup. Fitch Ratings had downgraded Colonial “deeper into junk status” the day before.

“Because of the order, the likelihood of Colonial BancGroup executing the investment deal may be “negatively impacted,” Fitch said in a statement.”

For more information visit the official FDIC web page.