First Family Financial Corporation
Corporate Office
2801 South Bay Street
Eustis, Florida 32726-6503

July 25, 1996

Dear Valued Shareholder:

     On Wednesday,  July 17, 1996 your Board of Directors  voted to enter into a
definitive  agreement to merge First Family  Financial  Corporation,  Inc.  into
Colonial BancGroup,  Inc. Under this agreement,  First Family Bank, a subsidiary
of First Family Financial  Corporation will become a wholly-owned  subsidiary of
Colonial BancGroup. Colonial will pay $23.50 per share, half in cash and half in
stock, for First Family Financial Corporation's outstanding stock, a total value
of $12.8  million.  The merger is subject to approvals by  Regulators  and First
Family Financial shareholders, and should be completed by year end.

     The  management  of  your  bank  feels  that a  partnership  with  Colonial
BancGroup is both strategically and financially compelling.

     Though  First  Family  had a  very  successful  year  with  net  income  of
$1,417,000,  strategically,  many industry  experts  believe that it will become
increasingly  difficult  for a small bank with  limited  capital to co-exist and
prosper  in the  future  financial  arena  with  mega-banks  and large  non-bank
financial intermediaries.  Furthermore,  regulatory changes brought about in the
course of rebuilding  the FDIC's  Savings  Association  Insurance  Fund have put
Savings Banks like First Family at a competitive disadvantage.  Currently, First
Family  pays 23 cents  per each  $100 of  deposits  for FDIC  deposit  insurance
coverage, whereas, most commercial banks pay no deposit insurance premiums since
the Bank  Insurance  Fund is fully  capitalized.  In  addition,  Congress is now
considering  legislation that would impose a one-time  assessment to resolve the
shortfall  in  the  Savings   Association   Insurance  Fund.  Based  on  current
projections,  that  assessment  could result in a $1.258 million charge to First
Family's Capital account. In anticipation of this regulatory  assessment,  First
Family  took strong  positive  steps  throughout  the 1995 - 1996 fiscal year to
bolster the capital  account.  During the latter part of 1995,  our industry was
allowed a one time opportunity to reclassify investment  securities.  Our action
resulted  in  $335,000  of  gains  realized  on  the  sale  of  mortgage  backed
securities.  In  addition,  in early 1996 we sold  approximately  $19 million of
mortgage loan servicing which netted First Family over $208,000.

     Colonial  BancGroup  is  a  multi-bank  holding  company  headquartered  in
Montgomery,  Alabama with assets of $4.5 billion and 127 full service offices in
Alabama,  Florida,  Georgia and  Tennessee.  Recently,  Colonial  completed  the
acquisition of Southern Bank of Central Florida,  a large  independent  bank, in
Orlando, Florida.

     In  addition  to an  extensive  Bank branch  network,  which also  includes
branches in Wal-Mart  Supercenters,  and 67 automated teller machines in Alabama
Wal-Mart stores,  Colonial BancGroup is the parent company of Colonial Mortgage,
one of the 10 largest mortgage banking companies in the United States. C olonial
Mortgage has 21 offices in 11 states from Seattle to Orlando. It services a loan
portfolio approximating $10 billion. Combining a mortgage firm with an extensive
bank branching  network  produces a financial  group with a strong focus on home
mortgages and other real estate  lending.  This represents a good fit with First
Family Bank's home lending mission.

     A  partnership  with  Colonial  BancGroup  will be good for First  Family's
shareholders,  customers  and  employees.  In addition to a cash  payout,  First
Family   shareholders  will  receive  Colonial  BancGroup  stock.  First  Family
shareholders then have the option to retain the stock which is listed and traded
on the New York  Stock  Exchange  under  the  symbol  CNB.  We are  proud of the
services First Family has provided to our community over the past 60 years,  and
we are pleased that Colonial has a strong reputation for community banking.  For
our  employees,   a  partnership   with  Colonial   presents   expanded   career
opportunities.

     Finally,  since our conversion to a stock company, our major focus has been
the  enhancement  of  shareholder  value.  The Directors and Management of First
Family believe that a merger with Colonial BancGroup supports this goal.

As always, thank you for your support.


Very truly yours,


David M. Shepherd
- -----------------
David M. Shepherd
President and Chief Executive Officer

DMS/ss

A copy  of the  press  release  announcing  the  merger  is  attached  for  your
information.