##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED March 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD FROM  TO
 Commission File number 0-25033
 Superior Bancorp
  Delaware
    
    63-1201350(State or Other Jurisdiction of Incorporation)
    
    (IRS Employer Identification No.)
 17
North 20th Street, Birmingham, Alabama 35203
 (Registrants Telephone Number, Including Area Code)
  þ o
  o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
  o þ
  Class
    
    Outstanding as of May 7, 2010Common stock, $.001 par value
    
    12,560,457




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##### 



TABLE OF CONTENTS
 PagePART I   FINANCIAL INFORMATIONItem 1.     Financial Statements
    
    
    3Item 2.     Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    29Item 3.     Quantitative and Qualitative Disclosures about Market Risk
    
    
    61Item 4.     Controls and Procedures
    
    
    62PART II  OTHER INFORMATIONItem 1.     Legal Proceedings
    
    
    63Item 1A.  Risk Factors
    
    
    63Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    63Item 3.     Defaults Upon Senior Securities
    
    
    63Item 4.     Other Information
    
    
    63Item 5.     Exhibits
    
    
    63SIGNATURES
    
    
    64EX-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



SUPERIOR BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share data)
 March 31,
    
    
    December 31,2010
    
    
    2009(Unaudited)ASSETSCash and due from banks
    
    $
    50,529
    
    
    $
    74,020Interest-bearing deposits in other banks
    
    
    113,531
    
    
    
    23,714Federal funds sold
    
    
    2,129
    
    
    
    2,036Total cash and cash equivalents
    
    
    166,189
    
    
    
    99,770Investment securities available-for-sale
    
    
    324,823
    
    
    
    286,310Tax lien certificates
    
    
    15,832
    
    
    
    19,292Mortgage loans held-for-sale
    
    
    54,367
    
    
    
    71,879Loans, net of unearned income
    
    
    2,505,465
    
    
    
    2,472,697Allowance for loan losses
    
    
    (43,190
    )
    
    
    (41,884
    )Net loans
    
    
    2,462,275
    
    
    
    2,430,813Premises and equipment, net
    
    
    102,485
    
    
    
    104,022Accrued interest receivable
    
    
    15,181
    
    
    
    15,581Stock in FHLB
    
    
    18,212
    
    
    
    18,212Cash surrender value of life insurance
    
    
    50,616
    
    
    
    50,142Core deposit and other intangible assets
    
    
    15,720
    
    
    
    16,694Other real estate
    
    
    46,679
    
    
    
    41,618Other assets
    
    
    71,978
    
    
    
    67,536Total assets
    
    $
    3,344,357
    
    
    $
    3,221,869LIABILITIES AND STOCKHOLDERS EQUITYDeposits:Noninterest-bearing
    
    $
    263,546
    
    
    $
    257,744Interest-bearing
    
    
    2,489,832
    
    
    
    2,398,829Total deposits
    
    
    2,753,378
    
    
    
    2,656,573Advances from FHLB
    
    
    218,323
    
    
    
    218,322Security repurchase agreements
    
    
    1,201
    
    
    
    841Notes payable
    
    
    46,032
    
    
    
    45,917Subordinated debentures, net
    
    
    84,413
    
    
    
    84,170Accrued expenses and other liabilities
    
    
    53,857
    
    
    
    24,342Total liabilities
    
    
    3,157,204
    
    
    
    3,030,165Commitments and contingenciesStockholders equity:Preferred stock, par value $.001 per share; shares authorized 5,000,000:Series A, fixed rate cumulative perpetual preferred stock, -0- shares
issued and outstanding as of March 31, 2010 and December 31, 2009,
respectively
    
    
    
    
    
    
    Common stock, par value $.001 per share; shares authorized 200,000,000;
shares issued 11,687,406 and 11,673,837, respectively; outstanding
11,687,406 and 11,667,794, respectively
    
    
    12
    
    
    
    12Surplus  warrants
    
    
    8,646
    
    
    
    8,646 common
    
    
    322,189
    
    
    
    322,043Accumulated deficit
    
    
    (136,630
    )
    
    
    (130,889
    )Accumulated other comprehensive loss
    
    
    (6,829
    )
    
    
    (7,825
    )Unearned ESOP stock
    
    
    (219
    )
    
    
    (263
    )Unearned restricted stock
    
    
    (16
    )
    
    
    (20
    )Total stockholders equity
    
    
    187,153
    
    
    
    191,704Total liabilities and stockholders equity
    
    $
    3,344,357
    
    
    $
    3,221,869
  3




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##### Table of Contents



SUPERIOR BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(Dollars in thousands, except per share data)
 Three Months EndedMarch 31,2010
    
    
    2009Interest income:Interest and fees on loans
    
    $
    36,342
    
    
    $
    34,952Interest on taxable securities
    
    
    2,911
    
    
    
    4,009Interest on tax-exempt securities
    
    
    312
    
    
    
    428Interest on federal funds sold
    
    
    1
    
    
    
    5Interest and dividends on other investments
    
    
    372
    
    
    
    362Total interest income
    
    
    39,938
    
    
    
    39,756Interest expense:Interest on deposits
    
    
    11,525
    
    
    
    14,893Interest on other borrowed funds
    
    
    2,522
    
    
    
    2,342Interest on subordinated debentures
    
    
    2,386
    
    
    
    1,193Total interest expense
    
    
    16,433
    
    
    
    18,428Net interest income
    
    
    23,505
    
    
    
    21,328Provision for loan losses
    
    
    9,127
    
    
    
    3,452Net interest income after provision for loan losses
    
    
    14,378
    
    
    
    17,876Noninterest income:Service charges and fees on deposits
    
    
    2,216
    
    
    
    2,387Mortgage banking income
    
    
    2,010
    
    
    
    1,691Investment securities lossesTotal other-than-temporary impairment losses (OTTI)
    
    
    (200
    )
    
    
    (10,504
    )Portion of OTTI recognized in other comprehensive
loss
    
    
    2
    
    
    
    4,659Investment securities loss
    
    
    (198
    )
    
    
    (5,845
    )Change in fair value of derivatives
    
    
    210
    
    
    
    (199
    )Increase in cash surrender value of life insurance
    
    
    568
    
    
    
    515Other income
    
    
    1,406
    
    
    
    1,216Total noninterest income (loss)
    
    
    6,212
    
    
    
    (235
    )Noninterest expenses:Salaries and employee benefits
    
    
    14,200
    
    
    
    12,309Occupancy, furniture and equipment
    
    
    4,763
    
    
    
    4,416Amortization of core deposit intangibles
    
    
    870
    
    
    
    985FDIC assessments
    
    
    1,380
    
    
    
    457Foreclosure losses
    
    
    2,577
    
    
    
    569Other expenses
    
    
    6,019
    
    
    
    5,327Total noninterest expenses
    
    
    29,809
    
    
    
    24,063Loss before income taxes
    
    
    (9,219
    )
    
    
    (6,422
    )Income tax benefit
    
    
    (3,479
    )
    
    
    (2,848
    )Net loss
    
    
    (5,740
    )
    
    
    (3,574
    )Preferred stock dividends and amortization
    
    
    
    
    
    
    1,143Net loss applicable to common stockholders
    
    $
    (5,740
    )
    
    $
    (4,717
    )Weighted average common shares outstanding
    
    
    11,645
    
    
    
    10,053Weighted average common shares outstanding, assuming dilution
    
    
    11,645
    
    
    
    10,053Basic net loss per common share
    
    $
    (0.49
    )
    
    $
    (0.47
    )Diluted net loss per common share
    
    $
    (0.49
    )
    
    $
    (0.47
    )
  4




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##### Table of Contents



SUPERIOR BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)

(Dollars in thousands)
 Three Months EndedMarch 31,2010
    
    
    2009Net cash provided by (used in) operating activities
    
    $
    20,226
    
    
    $
    (14,082
    )Investing activitiesProceeds from maturities of investment securities available-for-sale
    
    
    29,989
    
    
    
    15,335Purchase of investment securities available-for-sale
    
    
    (37,262
    )
    
    
    (5,290
    )Net increase in loans
    
    
    (52,596
    )
    
    
    (54,732
    )Redemptions of tax lien certificates
    
    
    4,236
    
    
    
    7,401Purchase of tax lien certificates
    
    
    (776
    )
    
    
    (2,419
    )Purchase of premises and equipment
    
    
    (234
    )
    
    
    (3,365
    )Proceeds from sale of premises and equipment
    
    
    
    
    
    
    77Proceeds from sale of foreclosed assets
    
    
    5,720
    
    
    
    1,993Decrease in stock of FHLB
    
    
    
    
    
    
    2,074Net cash used in investing activities
    
    
    (50,923
    )
    
    
    (38,926
    )Financing activitiesNet increase in deposits
    
    
    96,785
    
    
    
    164,809Decrease in FHLB advances
    
    
    
    
    
    
    (119,890
    )Proceeds from note payable
    
    
    
    
    
    
    38,575Net increase in other borrowed funds
    
    
    331
    
    
    
    Cash dividends paid
    
    
    
    
    
    
    (672
    )Net cash provided by financing activities
    
    
    97,116
    
    
    
    82,822Net increase in cash and cash equivalents
    
    
    66,419
    
    
    
    29,814Cash and cash equivalents at beginning of period
    
    
    99,770
    
    
    
    89,448Cash and cash equivalents at end of period
    
    $
    166,189
    
    
    $
    119,262
  5




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##### Table of Contents



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Note 1  Basis of Presentation
   Reclassifications
  Note 2  Recent Accounting Pronouncements
 Accounting Standards
Codification (ASC) 860 Accounting for Transfers of Financial Assets (Topic 860) Accounting Standards Update (ASU) No.
2009-16  Transfers and Servicing  Accounting for Transfers of Financial Assets (ASU 2009 -16) Accounting for Transfers of Financial Assets
 ASU No. 2009-17  Consolidation  Improvements to Financial Reporting
by Enterprises Involved with Variable Interest Entities (ASU 2009-17)
 , ASU No. 2010-06  Fair Value Measurements and Disclosures  Improving
Disclosures about Fair Value Measurements (ASU 2010-06) Fair Value Measurements and Disclosures
 6




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##### Table of Contents



Note 3  Investment Securities
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value(Dollars in thousands)Investment securities available-for-saleU.S. Agency securities
    
    $
    37,105
    
    
    $
    93
    
    
    $
    318
    
    
    $
    36,880Mortgage-backed securities (MBS):U.S. Agency pass-through
    
    
    176,551
    
    
    
    3,111
    
    
    
    209
    
    
    
    179,453U.S. Agency collateralized mortgage obligation (CMO)
    
    
    52,318
    
    
    
    174
    
    
    
    164
    
    
    
    52,328Private-label CMO
    
    
    17,973
    
    
    
    181
    
    
    
    2,958
    
    
    
    15,196Total MBS
    
    
    246,842
    
    
    
    3,466
    
    
    
    3,331
    
    
    
    246,977State, county and municipal securities
    
    
    31,216
    
    
    
    331
    
    
    
    372
    
    
    
    31,175Corporate obligations:Corporate debt
    
    
    4,120
    
    
    
    
    
    
    
    120
    
    
    
    4,000Pooled trust preferred securities
    
    
    8,180
    
    
    
    
    
    
    
    4,809
    
    
    
    3,371Single issue trust preferred securities
    
    
    5,000
    
    
    
    
    
    
    
    2,938
    
    
    
    2,062Total corporate obligations
    
    
    17,300
    
    
    
    
    
    
    
    7,867
    
    
    
    9,433Equity securities
    
    
    563
    
    
    
    
    
    
    
    205
    
    
    
    358Total investment securities available-for-sale
    
    $
    333,026
    
    
    $
    3,890
    
    
    $
    12,093
    
    
    $
    324,823
   Securities Available-for-saleAmortized
    
    
    EstimatedCost
    
    
    Fair Value(Dollars in thousands)Due in one year or less
    
    $
    280
    
    
    $
    280Due after one year through five years
    
    
    7,286
    
    
    
    7,212Due after five years through ten years
    
    
    41,958
    
    
    
    41,780Due after ten years
    
    
    36,660
    
    
    
    28,574Mortgage-backed securities
    
    
    246,842
    
    
    
    246,977$
    333,026
    
    
    $
    324,823
  7




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##### Table of Contents



Less than 12 Months
    
    More than 12 Months
    
    TotalFair
    
    Unrealized
    
    Fair
    
    Unrealized
    
    Fair
    
    UnrealizedValue
    
    Losses (1)
    
    Value
    
    Losses (1)
    
    Value
    
    Losses (1)(Dollars in thousands)Temporarily ImpairedU.S. Agency securities
    
    $
    22,998
    
    
    $
    318
    
    
    $
    
    
    
    $
    
    
    
    $
    22,998
    
    
    $
    318Mortgage-backed securities:U.S. Agency pass-through
    
    
    13,955
    
    
    
    201
    
    
    
    239
    
    
    
    8
    
    
    
    14,194
    
    
    
    209U.S. Agency CMO
    
    
    9,969
    
    
    
    164
    
    
    
    
    
    
    
    
    
    
    
    9,969
    
    
    
    164Private-label CMO
    
    
    
    
    
    
    
    
    
    
    11,215
    
    
    
    1,337
    
    
    
    11,215
    
    
    
    1,337Total MBS
    
    
    23,924
    
    
    
    365
    
    
    
    11,454
    
    
    
    1,345
    
    
    
    35,378
    
    
    
    1,710State, county and municipal securities
    
    
    8,581
    
    
    
    196
    
    
    
    2,061
    
    
    
    176
    
    
    
    10,642
    
    
    
    372Corporate obligations:Corporate debt
    
    
    
    
    
    
    
    
    
    
    4,000
    
    
    
    120
    
    
    
    4,000
    
    
    
    120Single issue trust preferred securities
    
    
    
    
    
    
    
    
    
    
    2,062
    
    
    
    2,938
    
    
    
    2,062
    
    
    
    2,938Total corporate obligations
    
    
    
    
    
    
    
    
    
    
    6,062
    
    
    
    3,058
    
    
    
    6,062
    
    
    
    3,058Equity securities
    
    
    
    
    
    
    
    
    
    
    358
    
    
    
    205
    
    
    
    358
    
    
    
    205Total temporarily impaired securities
    
    
    55,503
    
    
    
    879
    
    
    
    19,935
    
    
    
    4,784
    
    
    
    75,438
    
    
    
    5,663Other-than-temporarily ImpairedMortgage-backed securities:Private-label CMO
    
    
    
    
    
    
    
    
    
    
    3,017
    
    
    
    1,621
    
    
    
    3,017
    
    
    
    1,621Corporate obligations:Pooled trust preferred securities
    
    
    
    
    
    
    
    
    
    
    3,371
    
    
    
    4,809
    
    
    
    3,371
    
    
    
    4,809Total OTTI securities
    
    
    
    
    
    
    
    
    
    
    6,388
    
    
    
    6,430
    
    
    
    6,388
    
    
    
    6,430Total temporarily and other-than-temporarily impaired
    
    $
    55,503
    
    
    $
    879
    
    
    $
    26,323
    
    
    $
    11,214
    
    
    $
    81,826
    
    
    $
    12,093
 
 (1)
    
    Unrealized losses are included in other comprehensive loss, net of unrealized gains and
applicable income taxes. 8




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##### Table of Contents



Less than
    
    Greater Than12 Months
    
    12 Months
    
    TotalTemporarily ImpairedU.S. Agency securities
    
    
    4
    
    
    
    
    
    
    
    4Mortgage-backed securities:U.S. Agency pass-through
    
    
    3
    
    
    
    1
    
    
    
    4U.S. Agency CMO
    
    
    1
    
    
    
    
    
    
    
    1Private-label CMO
    
    
    
    
    
    
    7
    
    
    
    7Total MBS
    
    
    4
    
    
    
    8
    
    
    
    12State, county and municipal securities
    
    
    24
    
    
    
    7
    
    
    
    31Corporate obligations:Corporate debt
    
    
    
    
    
    
    3
    
    
    
    3Single issue trust preferred securities
    
    
    
    
    
    
    1
    
    
    
    1Total corporate obligations
    
    
    
    
    
    
    4
    
    
    
    4Equity securities
    
    
    
    
    
    
    3
    
    
    
    3Total temporarily impaired securities
    
    
    32
    
    
    
    22
    
    
    
    54Other-than-temporarily ImpairedMortgage-backed securities:Private-label CMO
    
    
    
    
    
    
    1
    
    
    
    1Corporate obligations:Pooled trust preferred securities
    
    
    
    
    
    
    4
    
    
    
    4Total OTTI securities
    
    
    
    
    
    
    5
    
    
    
    5Total temporarily and other-than-temporarily impaired
    
    
    32
    
    
    
    27
    
    
    
    59
 Other-Than-Temporary
Impairment (OTTI)
     9




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Mortgage-backed securities
  Credit Support
    
    
    NetRating
    
    
    
    
    
    Coverage
    
    
    UnrealizedMoody/Fitch
    
    Count
    
    
    Ratios (1)
    
    
    (Loss) GainA1/NR
    
    
    1
    
    
    
    3.04
    
    
    $
    (114
    )Aaa/NR
    
    
    1
    
    
    
    3.76
    
    
    
    (1
    )NR/AAA
    
    
    1
    
    
    
    3.04
    
    
    
    (154
    )NR/AA
    
    
    1
    
    
    
    2.90
    
    
    
    (313
    )Baa2-/AA
    
    
    1
    
    
    
    N/A
    
    
    
    (582
    )B2-/NR
    
    
    1
    
    
    
    4.09
    
    
    
    (116
    )NR/BBB
    
    
    1
    
    
    
    2.62
    
    
    
    (57
    )Caa1-/CCC (2)
    
    
    1
    
    
    
    1.24
    
    
    
    (1,621
    )NR/C (2)
    
    
    2
    
    
    
    0.08 - 0.36
    
    
    
    181Total
    
    
    10
    
    
    
    
    
    
    $
    (2,777
    )
 
 (1)
    
    The Credit Support Coverage Ratio, which is the ratio that determines the multiple of credit
support, based on assumptions for the performance of the loans within the delinquency
pipeline. The assumptions used are: Current Collateral Support/ ((60 day delinquencies x.60) +
(90 day delinquencies x.70) + (foreclosures x 1.00) + (other real estate x 1.00)) x .40 for
loss severity.(2)
    
    Includes all private-label CMOs that have OTTI. See discussion that follows. 10




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##### Table of Contents



Discount
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Year-to-DateMargin
    
    
    
    
    
    
    
    
    
    
    
    
    
    Actual
    
    OTTIPrice
    
    Basis
    
    
    
    
    
    Cumulative
    
    Average
    
    60+ Days
    
    CreditSecurity
    
    (%)
    
    Points
    
    Yield
    
    Default
    
    Security
    
    Delinquent
    
    Portion
    
    Other
    
    TotalCMO 1
    
    
    18.45
    
    
    
    1710
    
    
    
    18
    %
    
    
    58.33
    %
    
    
    50
    %
    
    
    9.30
    %
    
    
    $ 
    
    
    
    $ 
    
    
    
    $ CMO 2
    
    
    20.30
    
    
    
    1608
    
    
    
    17
    %
    
    
    49.07
    %
    
    
    45
    %
    
    
    28.33
    %
    
    
    
    
    
    
    
    
    
    
    CMO 4
    
    
    60.34
    
    
    
    1387
    
    
    
    17
    %
    
    
    27.16
    %
    
    
    45
    %
    
    
    15.82
    %
    
    
    (21
    )
    
    
    
    
    
    
    (21
    )$(21
    )
    
    
    $ 
    
    
    
    $(21
    )
   State, county and municipal securities
   11




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##### Table of Contents



Trust preferred securities
  
    
    Detailed credit and structural evaluation for each piece of collateral in the CDO;
    
    Collateral performance projections for each piece of collateral in the CDO (default,
recovery and prepayment/amortization probabilities);
    
    Terms of the CDO structure, as laid out in the indenture;
    
    The cash flow waterfall (for both interest and principal);
    
    Overcollateralization and interest coverage tests;
    
    Events of default/liquidation;
    
    Mandatory auction call;
    
    Optional redemption;
    
    Hedge agreements; and
    
    Discounted cash flow modeling.
    12




---



##### Table of Contents



Year-to-DateOther-than-temporary-impairmentSingle/
    
    Class/
    
    Amortized
    
    
    Fair
    
    
    Unrealized
    
    
    CreditName
    
    Pooled
    
    Tranche
    
    Cost
    
    
    Value
    
    
    Loss
    
    
    Portion
    
    
    Other
    
    
    TotalMM Caps Funding I Ltd
    
    Pooled
    
    MEZ
    
    $
    1,940
    
    
    $
    902
    
    
    $
    (1,038
    )
    
    $
    
    
    
    $
    
    
    
    $
    MM Community Funding Ltd
    
    Pooled
    
    B
    
    
    2,028
    
    
    
    839
    
    
    
    (1,189
    )
    
    
    
    
    
    
    
    
    
    
    Preferred Term Securities V
    
    Pooled
    
    MEZ
    
    
    1,209
    
    
    
    403
    
    
    
    (806
    )
    
    
    (24
    )
    
    
    
    


    (24
    )Tpref Funding III Ltd
    
    Pooled
    
    B-2
    
    
    3,027
    
    
    
    1,227
    
    
    
    (1,800
    )
    
    
    
    
    
    
    
    
    
    
    Emigrant Capital Trust (1)
    
    Single
    
    Sole
    
    
    5,000
    
    
    
    2,062
    
    
    
    (2,938
    )
    
    
    
    
    
    
    
    
    
    
    $
    13,204
    
    
    $
    5,433
    
    
    $
    (7,771
    )
    
    $
    (24
    )
    
    $
    
    
    
    $
    (24
    )
 Original Collateral -
    
    Performing Collateral -Percent of Actual
    
    Percent of ExpectedLowest
    
    Performing
    
    Deferrals and
    
    Deferrals and
    
    ExcessName
    
    Rating
    
    Banks
    
    Defaults
    
    Defaults
    
    Subordination (2)MM Caps Funding I Ltd
    
    Ca
    
    
    22
    
    
    
    17
    %
    
    
    18
    %
    
    
    0
    %MM Community Funding Ltd
    
    Ca
    
    
    8
    
    
    
    21
    %
    
    
    39
    %
    
    
    0
    %Preferred Term Securities V
    
    Ba3
    
    
    1
    
    
    
    5
    %
    
    
    44
    %
    
    
    0
    %Tpref Funding III Ltd
    
    Ca
    
    
    24
    
    
    
    24
    %
    
    
    28
    %
    
    
    0
    %Emigrant Capital Trust (1)
    
    NR
    
    NA
    
    NA
    
    NA
    
    NA
 Fair Value
    
    Discount Margin
    
    YieldName
    
    (Price to Par)
    
    (Basis Points)
    
    (Basis Points)MM Caps Funding I Ltd
    
    $
    43.04
    
    
    Swap + 1700
    
    9.48% FixedMM Community Funding Ltd
    
    
    16.78
    
    
    LIBOR + 1500
    
    LIBOR + 310Preferred Term Securities V
    
    
    29.34
    
    
    LIBOR + 1400
    
    LIBOR + 210Tpref Funding III Ltd
    
    
    30.67
    
    
    LIBOR + 1200
    
    LIBOR + 190Emigrant Capital Trust (1)
    
    
    41.24
    
    
    LIBOR + 1123
    
    LIBOR + 200
 
 (1)
    
    There has been no notification of deferral or default on this issue. An analysis of the
company, including discussion with its management, indicates there is adequate capital and
liquidity to service the debt. The discount margin of 1123 basis points was derived from
implied credit spreads from certain publicly traded trust preferred securities within the
issuers peer group.(2)
    
    Excess subordination represents the additional defaults in excess of both the current and
projected defaults the issue can absorb before the security experiences any credit impairment.
Excess subordination is calculated by determining what level of defaults an issue can
experience before the security has any credit impairment and then subtracting both the current
and projected future defaults.  13




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##### Table of Contents



For theThree Months EndedMarch 31, 2010(Dollars in thousands)Balance at beginning of period
    
    $
    8,869Amounts related to credit losses for which an OTTI was not previously recognized
    
    
    154Increases in credit loss for which an OTTI was previously recognized when the investor
does not intend to sell the security and it is not more likely than not that the entity will
be required to sell the security before recovery of its amortized cost
    
    
    45Reductions for securities where there is an intent to sell or requirement to sell
    
    
    (154
    )Reductions for increases in cash flows expected to be collected
    
    
    (28
    )Balance at end of period
    
    $
    8,886
  Stock in the Federal Home Loan Bank of Atlanta (FHLB Atlanta)
   
    
    The significance of the decline in net assets of FHLB Atlanta as compared to the capital
stock amount for FHLB Atlanta and the length of time this decline has persisted;
    
    Commitments by FHLB Atlanta to make payments required by law or regulation and the level
of such payments in relation to the operating performance of FHLB Atlanta;
    
    The impact of legislative and regulatory changes on financial institutions and,
accordingly, on the customer base of FHLB Atlanta; and
    
    The liquidity position of FHLB Atlanta.
  14




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##### Table of Contents



Note 4  Notes Payable
  Note payable to bank, borrowed under $7,000,000 line of credit, due
September 3, 2010; interest is based on Wall Street prime plus 1.25 but not less than 4.5%,
secured by 100% of the outstanding Superior Bank stock
    
    $
    7,000Senior note guaranteed under the TLGP, due March 30, 2012, 2.625% fixed rate due
semi-annually
    
    
    40,000Less: Discount, FDIC guarantee premium and other issuance costs
    
    
    (968
    )Total notes payable
    
    $
    46,032
  Note 5  Derivative Financial Instruments
   Interest Rate Swaps
   15




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##### Table of Contents



Fair Value Hedges
  Cash Flow Hedges
  Interest Rate Lock Commitments
  Assets and Liabilities Recorded at Fair Value on a
Recurring Basis
 March 31, 2010
    
    December 31, 2009Estimated
    
    
    
    
    
    EstimatedNotional
    
    Fair
    
    Notional
    
    FairAmount
    
    Value
    
    Amount
    
    Value(Dollars in thousands)Interest rate derivatives designated as hedges of fair value:Interest rate swap on brokered certificates of deposit
    
    $
    2,777
    
    
    $
    260
    
    
    $
    2,777
    
    
    $
    228Interest rate derivatives designated as hedges of cash flows:Interest rate swaps on subordinated debenture
    
    
    22,000
    
    
    
    (924
    )
    
    
    22,000
    
    
    
    (766
    )Non-hedging interest rate derivatives:Brokered certificates of deposit interest rate swap
    
    
    723
    
    
    
    68
    
    
    
    723
    
    
    
    59Mortgage loan held for sale interest rate lock commitment
    
    
    65,365
    
    
    
    (177
    )
    
    
    41,038
    
    
    
    (370
    )Commercial loan interest rate swap
    
    
    3,740
    
    
    
    347
    
    
    
    3,766
    
    
    
    323Commercial loan interest rate swap
    
    
    3,740
    
    
    
    (347
    )
    
    
    3,766
    
    
    
    (323
    )
 16




---



##### Table of Contents



Weighted-AverageInterest
    
    InterestRate
    
    RatePaid
    
    ReceivedInterest rate swaps:Fair value hedge on brokered certificates of deposit interest rate swap
    
    
    0.30
    %
    
    
    4.70
    %Cash flow hedge interest rate swaps on subordinated debentures
    
    
    4.42
    
    
    
    1.59Non-hedging interest rate swap on commercial loan
    
    
    6.73
    
    
    
    6.73
 Gains, Losses and Derivative Cash Flows
   For theThree Months EndedMarch 31,2010
    
    2009(Dollars in thousands)Interest rate swap on brokered certificates of deposit:Amount of gain included in interest expense on deposits
    
    $
    30
    
    
    $
    23Amount of gain (loss) included in other noninterest income
    
    
    1
    
    
    
    (430
    )
  For theThree Months EndedMarch 31,2010
    
    2009(Dollars in thousands)Interest rate swap on subordinated debenture:Net loss included in interest expense on subordinated debt
    
    $
    (156
    )
    
    $
    (55
    )Amount of loss recognized in other comprehensive income
    
    
    (99
    )
    
    
    (29
    )
   17




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##### Table of Contents



For theThree Months EndedMarch 31,2010
    
    2009(Dollars in thousands)Non-hedging interest rate derivatives:Brokered certificates of deposit interest rate swap
    
    $
    16
    
    
    $
    (45
    )Mortgage loan held for sale interest rate lock commitment
    
    
    193
    
    
    
    276Commercial loan interest rate swap
    
    
    
    
    
    
    
 Counterparty Credit Risk
   18




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##### Table of Contents



Note 6  Segment Reporting
   Total
    
    
    
    
    
    
    SuperiorAlabama
    
    
    Florida
    
    
    Alabama and
    
    
    Administrative
    
    
    BancorpRegion
    
    
    Region
    
    
    Florida
    
    
    and Other
    
    
    Combined(Dollars in thousands)Three Months Ended March 31, 2010Net interest income
    
    $
    10,148
    
    
    $
    10,727
    
    
    $
    20,875
    
    
    $
    2,630
    
    
    $
    23,505Provision for loan losses
    
    
    973
    
    
    
    7,218
    
    
    
    8,191
    
    
    
    936
    
    
    
    9,127Noninterest income
    
    
    1,964
    
    
    
    452
    
    
    
    2,416
    
    
    
    3,796
    
    
    
    6,212Noninterest expense
    
    
    8,741
    
    
    
    6,956
    
    
    
    15,697
    
    
    
    14,112
    
    
    
    29,809Operating profit (loss)
    
    $
    2,398
    
    
    $
    (2,995
    )
    
    $
    (597
    )
    
    $
    (8,622
    )
    
    
    (9,219
    )Income tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,479
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (5,740
    )Total assets
    
    $
    1,056,322
    
    
    $
    1,283,070
    
    
    $
    2,339,392
    
    
    $
    1,004,965
    
    
    $
    3,344,357Three Months Ended March 31, 2009Net interest income
    
    $
    8,060
    
    
    $
    9,071
    
    
    $
    17,131
    
    
    $
    4,197
    
    
    $
    21,328Provision for loan losses
    
    
    1,612
    
    
    
    1,478
    
    
    
    3,090
    
    
    
    362
    
    
    
    3,452Noninterest income
    
    
    2,071
    
    
    
    515
    
    
    
    2,586
    
    
    
    (2,821
    )
    
    
    (235
    )Noninterest expense
    
    
    8,312
    
    
    
    5,736
    
    
    
    14,048
    
    
    
    10,015
    
    
    
    24,063Operating profit (loss)
    
    $
    207
    
    
    $
    2,372
    
    
    $
    2,579
    
    
    $
    (9,001
    )
    
    $
    (6,422
    )Income tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,848
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (3,574
    )Total assets
    
    $
    1,096,855
    
    
    $
    1,147,653
    
    
    $
    2,244,508
    
    
    $
    884,961
    
    
    $
    3,129,469
 19




---



##### Table of Contents



Note 7 Net Loss per Common Share
  For theThree Months EndedMarch 31,2010
    
    
    2009Numerator:Net loss
    
    $
    (5,740
    )
    
    $
    (3,574
    )Less preferred stock dividends and amortization
    
    
    
    
    
    
    1,143For basic and diluted, net loss applicable to common stockholders
    
    $
    (5,740
    )
    
    $
    (4,717
    )Denominator:For basic, weighted average common shares outstanding
    
    
    11,645
    
    
    
    10,053Effect of dilutive stock options
    
    
    
    
    
    
    Average common shares outstanding, assuming dilution
    
    
    11,645
    
    
    
    10,053Basic net loss per common share
    
    $
    (0.49
    )
    
    $
    (0.47
    )Diluted net loss per common share
    
    $
    (0.49
    )
    
    $
    (0.47
    )
   Note 8  Comprehensive Loss
  Pre-Tax
    
    
    Income Tax
    
    
    Net ofAmount
    
    
    Expense
    
    
    Income Tax(Dollars in thousands)Three Months Ended March 31, 2010Unrealized gain on available-for-sale securities
    
    $
    1,540
    
    
    $
    (570
    )
    
    $
    970Reclassification adjustment for losses realized in net loss
    
    
    198
    
    
    
    (73
    )
    
    
    125Unrealized loss on derivatives
    
    
    (158
    )
    
    
    59
    
    
    
    (99
    )Net unrealized gain
    
    $
    1,580
    
    
    $
    (584
    )
    
    $
    996Three Months Ended March 31, 2009Unrealized loss on available-for-sale securities
    
    $
    (8,394
    )
    
    $
    3,105
    
    
    $
    (5,289
    )Reclassification adjustment for losses realized in net loss
    
    
    5,845
    
    
    
    (2,163
    )
    
    
    3,682Unrealized loss on derivatives
    
    
    (29
    )
    
    
    11
    
    
    
    (18
    )Net unrealized loss
    
    $
    (2,578
    )
    
    $
    953
    
    
    $
    (1,625
    )
 Note 9  Income Taxes
  20




---



##### Table of Contents



Note 10  Stock Incentive Plan
    2010
    
    2009Risk-free interest rate
    
    
    2.57
    %
    
    NAVolatility factor
    
    
    55.79
    
    
    NAExpected term (in years)
    
    
    5.00
    
    
    NADividend yield
    
    
    0.00
    
    
    NA
 21




---



##### Table of Contents



Weighted-Weighted-
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual
    
    
    IntrinsicFor the Three Months Ended March 31, 2010
    
    Number
    
    
    Price
    
    
    Term
    
    
    ValueUnder option, beginning of period
    
    
    925,647
    
    
    $
    26.85Granted
    
    
    5,000
    
    
    
    3.44Exercised
    
    
    
    
    
    
    Forfeited
    
    
    (10,744
    )
    
    
    5.82Under option, end of period
    
    
    919,903
    
    
    $
    26.97
    
    
    
    5.64
    
    
    $
    37Exercisable at end of period
    
    
    625,153
    
    
    $
    31.76
    
    
    
    2.92
    
    
    $
    Weighted-average fair value per option of options granted during the period
    
    $
    3.44
  Note 11  Fair Value Measurements
  22




---



##### Table of Contents



Assets and Liabilities Recorded at Fair Value on a Recurring Basis
  Quoted Prices in
    
    
    
    
    
    SignificantActive Markets for
    
    Significant Other
    
    UnobservableFair
    
    Identical Assets
    
    Observable Inputs
    
    InputsValue
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)March 31, 2010
    
    (Dollars in thousands)Investment securities available-for-saleU.S. Agency securities
    
    $
    36,880
    
    
    $
    
    
    
    $
    36,880
    
    
    $
    Mortgage-backed securities (MBS):U.S. Agency MBS pass-through
    
    
    179,453
    
    
    
    
    
    
    
    179,453
    
    
    
    U.S. Agency CMO
    
    
    52,328
    
    
    
    
    
    
    
    52,328
    
    
    
    Private-label CMO
    
    
    15,196
    
    
    
    
    
    
    
    8,302
    
    
    
    6,894Total MBS
    
    
    246,977
    
    
    
    
    
    
    
    240,083
    
    
    
    6,894State, county and municipal securities
    
    
    31,175
    
    
    
    
    
    
    
    29,517
    
    
    
    1,658Corporate obligations:Corporate debt
    
    
    4,000
    
    
    
    
    
    
    
    4,000
    
    
    
    Pooled trust preferred securities
    
    
    3,371
    
    
    
    
    
    
    
    
    
    
    
    3,371Single issue trust preferred securities
    
    
    2,062
    
    
    
    
    
    
    
    
    
    
    
    2,062Total corporate obligations
    
    
    9,433
    
    
    
    
    
    
    
    4,000
    
    
    
    5,433Equity securities
    
    
    358
    
    
    
    358
    
    
    
    
    
    
    
    Total investment securities available-for-sale
    
    
    324,823
    
    
    
    358
    
    
    
    310,480
    
    
    
    13,985Derivative assets
    
    
    675
    
    
    
    
    
    
    
    675
    
    
    
    Total recurring basis measured assets
    
    $
    325,498
    
    
    $
    358
    
    
    $
    311,155
    
    
    $
    13,985Derivative liabilities
    
    $
    1,448
    
    
    $
    
    
    
    $
    1,448
    
    
    $
    Total recurring basis measured liabilities
    
    $
    1,448
    
    
    $
    
    
    
    $
    1,448
    
    
    $
    
 23




---



##### Table of Contents



Quoted Prices in
    
    
    
    
    
    SignificantActive Markets for
    
    Significant Other
    
    UnobservableFair
    
    Identical Assets
    
    Observable Inputs
    
    InputsValue
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)December 31, 2009
    
    (Dollars in thousands)Investment securities available-for-saleU.S. Agency securities
    
    $
    53,681
    
    
    $
    
    
    
    $
    53,681
    
    
    $
    Mortgage-backed securities (MBS):U.S. Agency pass-through
    
    
    163,724
    
    
    
    
    
    
    
    163,724
    
    
    
    U.S. Agency CMO
    
    
    12,759
    
    
    
    
    
    
    
    12,759
    
    
    
    Private-label CMO
    
    
    16,191
    
    
    
    
    
    
    
    8,771
    
    
    
    7,420Total MBS
    
    
    192,674
    
    
    
    
    
    
    
    185,254
    
    
    
    7,420State, county and municipal securities
    
    
    31,462
    
    
    
    
    
    
    
    29,733
    
    
    
    1,729Corporate obligations:Corporate debt
    
    
    4,000
    
    
    
    
    
    
    
    4,000
    
    
    
    Pooled trust preferred securities
    
    
    3,203
    
    
    
    
    
    
    
    
    
    
    
    3,203Single issue trust preferred securities
    
    
    977
    
    
    
    
    
    
    
    
    
    
    
    977Total corporate obligations
    
    
    8,180
    
    
    
    
    
    
    
    4,000
    
    
    
    4,180Equity securities
    
    
    313
    
    
    
    313
    
    
    
    
    
    
    
    Total investment securities available-for-sale
    
    
    286,310
    
    
    
    313
    
    
    
    272,668
    
    
    
    13,329Derivative assets
    
    
    610
    
    
    
    
    
    
    
    610
    
    
    
    Total recurring basis measured assets
    
    $
    286,920
    
    
    $
    313
    
    
    $
    273,278
    
    
    $
    13,329Derivative liabilities
    
    $
    1,459
    
    
    $
    
    
    
    $
    1,459
    
    
    $
    Total recurring basis measured liabilities
    
    $
    1,459
    
    
    $
    
    
    
    $
    1,459
    
    
    $
    
 Valuation Techniques  Recurring Basis
 Securities Available-for-Sale
 Trust Preferred Securities Mortgage-backed Securities
 24




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##### Table of Contents



Derivative financial instruments
  Changes in Level 3 fair value measurements
  Level 3 Assets Measured at Fair Value on a Recurring Basis
 Available-for-Sale SecuritiesMarch 31,2010
    
    
    2009(Dollars in thousands)Balance at January 1
    
    $
    13,329
    
    
    $
    18,497Transfer into level 3 category during the year
    
    
    
    
    
    
    Total gains (losses) (realized and unrealized)Included in earnings  investment security loss
    
    
    (45
    )
    
    
    (5,845
    )Included in other comprehensive loss
    
    
    1,389
    
    
    
    (4,175
    )Other changes due to principal payments
    
    
    (688
    )
    
    
    (25
    )Balance at March 31
    
    $
    13,985
    
    
    $
    8,452Total amount of loss for the period year-to-date included in earnings attributable to the change in unrealized gains (losses) related to assets held at March 31
    
    $
    (45
    )
    
    $
    (5,845
    )
 25




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##### Table of Contents



Assets Recorded at Fair Value on a Nonrecurring Basis
  Quoted PricesinActive Markets
 for
    
    Significant Other
    
    SignificantIdentical
    
    Observable
    
    UnobservableFair
    
    Assets
    
    Inputs
    
    InputsValue
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)(Dollars in thousands)March 31, 2010Mortgage loans held for sale
    
    $
    54,367
    
    
    $
    
    
    
    $
    54,367
    
    
    $
    Impaired loans, net of specific allowance
    
    
    143,653
    
    
    
    
    
    
    
    
    
    
    
    143,653Other foreclosed real estate
    
    
    46,679
    
    
    
    
    
    
    
    
    
    
    
    46,679Other real estate held for sale
    
    
    3,342
    
    
    
    
    
    
    
    
    
    
    
    3,342Total nonrecurring basis measured assets
    
    $
    248,041
    
    
    $
    
    
    
    $
    54,367
    
    
    $
    193,674December 31, 2009Mortgage loans held for sale
    
    $
    71,879
    
    
    $
    
    
    
    $
    71,879
    
    
    $
    Impaired loans, net of specific allowance
    
    
    155,545
    
    
    
    
    
    
    
    
    
    
    
    155,545Other foreclosed real estate
    
    
    41,618
    
    
    
    
    
    
    
    
    
    
    
    41,618Other real estate held for sale
    
    
    3,349
    
    
    
    
    
    
    
    
    
    
    
    3,349Total nonrecurring basis measured assets
    
    $
    272,391
    
    
    $
    
    
    
    $
    71,879
    
    
    $
    200,512
 Valuation Techniques  Nonrecurring Basis
 Mortgage Loans Held for Sale
  Impaired Loans
  26




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##### Table of Contents



Other Foreclosed Real Estate
  Other Real Estate Held for Sale
   Tax lien certificates
  Net loans
  Deposits
  Advances
from FHLB Atlanta
  Federal funds borrowed and security repurchase agreements
  Notes payable
  27




---



##### Table of Contents



Subordinated debentures
  Limitations
   March 31, 2010
    
    December 31, 2009Carrying
    
    Fair
    
    Carrying
    
    FairAmount
    
    Value
    
    Amount
    
    Value(Dollars in thousands)Financial assets:Cash and due from banks
    
    $
    50,529
    
    
    $
    50,529
    
    
    $
    74,020
    
    
    $
    74,020Interest-bearing deposits in other banks
    
    
    113,531
    
    
    
    113,531
    
    
    
    23,714
    
    
    
    23,714Federal funds sold
    
    
    2,129
    
    
    
    2,129
    
    
    
    2,036
    
    
    
    2,036Securities available for sale
    
    
    324,823
    
    
    
    324,823
    
    
    
    286,310
    
    
    
    286,310Tax lien certificates
    
    
    15,832
    
    
    
    15,832
    
    
    
    19,292
    
    
    
    19,292Mortgage loans held for sale
    
    
    54,367
    
    
    
    54,367
    
    
    
    71,879
    
    
    
    71,879Net loans
    
    
    2,462,275
    
    
    
    2,462,166
    
    
    
    2,430,813
    
    
    
    2,440,026Stock in FHLB
    
    
    18,212
    
    
    
    18,212
    
    
    
    18,212
    
    
    
    18,212Accrued interest receivable
    
    
    50,616
    
    
    
    50,616
    
    
    
    50,142
    
    
    
    50,142Derivative assets
    
    
    675
    
    
    
    675
    
    
    
    610
    
    
    
    610Financial liabilities:Deposits
    
    
    2,753,378
    
    
    
    2,768,140
    
    
    
    2,656,573
    
    
    
    2,671,504Advances from FHLB
    
    
    218,323
    
    
    
    232,869
    
    
    
    218,322
    
    
    
    233,028Security repurchase agreements
    
    
    1,201
    
    
    
    1,201
    
    
    
    841
    
    
    
    841Note payable
    
    
    46,032
    
    
    
    47,191
    
    
    
    45,917
    
    
    
    45,917Subordinated debentures
    
    
    84,413
    
    
    
    59,207
    
    
    
    84,170
    
    
    
    51,609Derivative liabilities
    
    
    1,448
    
    
    
    1,448
    
    
    
    1,459
    
    
    
    1,459
 Note 12  Stockholders Equity
   28




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##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Basis of Presentation
   Recent Developments
   Overview
 st
  29




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##### Table of Contents



Liquidity and Capital
  30




---



##### Table of Contents



Recent Accounting Pronouncements
  Results of Operations
  For theThree Months EndedMarch 31,2010
    
    2009(Dollars in thousands, except per share data)Net loss
    
    $
    (5,740
    )
    
    $
    (3,574
    )Net loss applicable to common shareholders
    
    
    (5,740
    )
    
    
    (4,717
    )Net loss per common share (diluted)
    
    
    (0.49
    )
    
    
    (0.47
    )Net interest margin
    
    
    3.19
    %
    
    
    3.12
    %Net interest spread
    
    
    3.06
    
    
    
    2.91Return on average assets
    
    
    (0.71
    )
    
    
    (0.46
    )Return on average stockholders equity
    
    
    (12.14
    )
    
    
    (5.64
    )Common book value per share
    
    $
    15.27
    
    
    $
    17.18
 31




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##### Table of Contents



Three Months Ended March 31,2010
    
    
    2009Average
    
    
    Income/
    
    
    Yield/
    
    
    Average
    
    
    Income/
    
    
    Yield/Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate(Dollars in thousands)ASSETSInterest-earning assets:Loans, net of unearned income (1)
    
    $
    2,538,559
    
    
    $
    36,342
    
    
    
    5.81
    %
    
    $
    2,392,145
    
    
    $
    34,952
    
    
    
    5.93
    %Investment securitiesTaxable
    
    
    253,784
    
    
    
    2,911
    
    
    
    4.65
    
    
    
    301,973
    
    
    
    4,009
    
    
    
    5.38Tax-exempt (2)
    
    
    30,267
    
    
    
    473
    
    
    
    6.34
    
    
    
    40,280
    
    
    
    649
    
    
    
    6.53Total investment securities
    
    
    284,051
    
    
    
    3,384
    
    
    
    4.83
    
    
    
    342,253
    
    
    
    4,658
    
    
    
    5.52Federal funds sold
    
    
    2,212
    
    
    
    1
    
    
    
    0.18
    
    
    
    7,240
    
    
    
    5
    
    
    
    0.28Other investments
    
    
    128,139
    
    
    
    372
    
    
    
    1.18
    
    
    
    57,751
    
    
    
    362
    
    
    
    2.54Total interest-earning assets
    
    
    2,952,961
    
    
    
    40,099
    
    
    
    5.51
    
    
    
    2,799,389
    
    
    
    39,977
    
    
    
    5.79Noninterest-earning assets:Cash and due from banks
    
    
    73,857
    
    
    
    
    
    
    
    
    
    
    
    70,192Premises and equipment
    
    
    102,910
    
    
    
    
    
    
    
    
    
    
    
    105,079Accrued interest and other assets
    
    
    184,704
    
    
    
    
    
    
    
    
    
    
    
    153,517Allowance for loan losses
    
    
    (41,809
    )
    
    
    
    
    
    
    
    
    
    
    (29,123
    )Total assets
    
    $
    3,272,623
    
    
    
    
    
    
    
    
    
    
    $
    3,099,054LIABILITIES AND STOCKHOLDERS EQUITYInterest-bearing liabilities:Demand deposits
    
    $
    665,268
    
    
    $
    2,054
    
    
    
    1.25
    %
    
    $
    641,529
    
    
    $
    2,195
    
    
    
    1.39
    %Savings deposits
    
    
    297,552
    
    
    
    973
    
    
    
    1.33
    
    
    
    199,161
    
    
    
    921
    
    
    
    1.88Time deposits
    
    
    1,482,018
    
    
    
    8,498
    
    
    
    2.33
    
    
    
    1,359,453
    
    
    
    11,777
    
    
    
    3.51Other borrowings
    
    
    268,973
    
    
    
    2,522
    
    
    
    3.80
    
    
    
    333,376
    
    
    
    2,342
    
    
    
    2.85Subordinated debentures (2)
    
    
    84,255
    
    
    
    2,830
    
    
    
    13.62
    
    
    
    60,852
    
    
    
    1,193
    
    
    
    7.95Total interest-bearing liabilities
    
    $
    2,798,066
    
    
    
    16,877
    
    
    
    2.45
    
    
    $
    2,594,371
    
    
    
    18,428
    
    
    
    2.88Noninterest-bearing liabilities:Demand deposits
    
    
    262,139
    
    
    
    
    
    
    
    
    
    
    
    231,547Accrued interest and other liabilities
    
    
    20,722
    
    
    
    
    
    
    
    
    
    
    
    21,547Total liabilities
    
    
    3,080,927
    
    
    
    
    
    
    
    
    
    
    
    2,847,465Stockholders equity
    
    
    191,696
    
    
    
    
    
    
    
    
    
    
    
    251,589Total liabilities and stockholders equity
    
    $
    3,272,623
    
    
    
    
    
    
    
    
    
    
    $
    3,099,054Net interest income/net interest spread
    
    
    
    
    
    
    23,222
    
    
    
    3.06
    %
    
    
    
    
    
    
    21,549
    
    
    
    2.91
    %Net yield on earning assets
    
    
    
    
    
    
    
    
    
    
    3.19
    %
    
    
    
    
    
    
    
    
    
    
    3.12
    %Taxable equivalent adjustment (2):Investment securities
    
    
    
    
    
    
    (161
    )
    
    
    
    
    
    
    
    
    
    
    (221
    )Interest expense on subordinated debentures
    
    
    
    
    
    
    444
    
    
    
    
    
    
    
    
    
    
    
    Net interest income
    
    
    
    
    
    $
    23,505
    
    
    
    
    
    
    
    
    
    
    $
    21,328
 
 (1)
    
    Nonaccrual loans are included in loans, net of unearned income. No adjustment has been made
for these loans in the calculation of yields.(2)
    
    Interest income/expense and yields are presented on a fully taxable equivalent basis using a
tax rate of 34%. 32




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##### Table of Contents



Increase (Decrease) inFirst Quarter2010 vs. 2009Average
    
    
    Income/
    
    
    Yield/Balance
    
    
    Expense
    
    
    Rate(Dollars in thousands)ASSETSInterest-earning assets:Loans, net of unearned income
    
    $
    146,414
    
    
    $
    1,390
    
    
    
    (0.12
    )%Investment securitiesTaxable
    
    
    (48,189
    )
    
    
    (1,098
    )
    
    
    (0.73
    )Tax-exempt
    
    
    (10,013
    )
    
    
    (176
    )
    
    
    (0.19
    )Total investment securities
    
    
    (58,202
    )
    
    
    (1,274
    )
    
    
    (0.69
    )Federal funds sold
    
    
    (5,028
    )
    
    
    (4
    )
    
    
    (0.10
    )Other investments
    
    
    70,388
    
    
    
    10
    
    
    
    (1.36
    )Total interest-earning assets
    
    $
    153,572
    
    
    
    122
    
    
    
    (0.28
    )Interest-bearing liabilities:Demand deposits
    
    $
    23,739
    
    
    $
    (141
    )
    
    
    (0.14
    )%Savings deposits
    
    
    98,391
    
    
    
    52
    
    
    
    (0.55
    )Time deposits
    
    
    122,565
    
    
    
    (3,279
    )
    
    
    (1.18
    )Other borrowings
    
    
    (64,403
    )
    
    
    180
    
    
    
    0.95Subordinated debentures
    
    
    23,403
    
    
    
    1,637
    
    
    
    5.67Total interest-bearing liabilities
    
    $
    203,695
    
    
    
    (1,551
    )
    
    
    (0.43
    )Net interest income/net interest spread
    
    
    
    
    
    
    1,673
    
    
    
    0.15
    %Net yield on earning assets
    
    
    
    
    
    
    
    
    
    
    0.07
    %Taxable equivalent adjustment:Investment securities
    
    
    
    
    
    
    60Interest expense on subordinated debentures
    
    
    
    
    
    
    444Net interest income
    
    
    
    
    
    $
    2,177
 33




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##### Table of Contents



Three Months Ended March 31,2010 vs. 2009 (1)Increase
    
    
    Changes Due To(Decrease)
    
    
    Rate
    
    
    Volume(Dollars in thousands)Increase (decrease) in:Income from interest-earning assets:Interest and fees on loans
    
    $
    1,390
    
    
    $
    (718
    )
    
    $
    2,108Interest on securities:Taxable
    
    
    (1,098
    )
    
    
    (505
    )
    
    
    (593
    )Tax-exempt
    
    
    (176
    )
    
    
    (18
    )
    
    
    (158
    )Interest on federal funds
    
    
    (4
    )
    
    
    (1
    )
    
    
    (3
    )Interest on other investments
    
    
    10
    
    
    
    (266
    )
    
    
    276Total interest income
    
    
    122
    
    
    
    (1,508
    )
    
    
    1,630Expense from interest-bearing liabilities:Interest on demand deposits
    
    
    (141
    )
    
    
    (104
    )
    
    
    (37
    )Interest on savings deposits
    
    
    52
    
    
    
    (320
    )
    
    
    372Interest on time deposits
    
    
    (3,279
    )
    
    
    (4,258
    )
    
    
    979Interest on other borrowings
    
    
    180
    
    
    
    687
    
    
    
    (507
    )Interest on subordinated debentures
    
    
    1,637
    
    
    
    1,064
    
    
    
    573Total interest expense
    
    
    (1,551
    )
    
    
    (2,931
    )
    
    
    1,380Net interest income
    
    $
    1,673
    
    
    $
    1,423
    
    
    $
    250
 
 (1)
    
    The change in interest due to both rate and volume has been allocated to rate and volume
changes in proportion to the relationship of the absolute dollar amounts of the changes in
each. 34




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##### Table of Contents



Noninterest income (loss)
  Three Months Ended March 31,2010
    
    
    2009
    
    

%Change(Dollars in thousands)Service charges and fees on deposits
    
    $
    2,216
    
    
    $
    2,387
    
    
    
    (7.16
    )%Mortgage banking income
    
    
    2,010
    
    
    
    1,691
    
    
    
    18.86Investment securities losses
    
    
    (198
    )
    
    
    (5,845
    )
    
    
    (96.61
    )Change in fair value of derivatives
    
    
    210
    
    
    
    (199
    )
    
    NCMIncrease in cash surrender value of life insurance
    
    
    568
    
    
    
    515
    
    
    
    10.29Other noninterest income
    
    
    1,406
    
    
    
    1,216
    
    
    
    15.63Total
    
    $
    6,212
    
    
    $
    (235
    )
    
    NCM
    %
 
  35




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##### Table of Contents



Noninterest expenses
  Three Months Ended March 31,2010
    
    
    2009
    
    

%Change(Dollars in thousands)Noninterest ExpensesSalaries and employee benefits
    
    $
    14,200
    
    
    $
    12,309
    
    
    
    15.36
    %Occupancy, furniture and equipment expense
    
    
    4,763
    
    
    
    4,416
    
    
    
    7.86Amortization of core deposit intangibles
    
    
    870
    
    
    
    985
    
    
    
    (11.68
    )FDIC assessments
    
    
    1,380
    
    
    
    457
    
    
    NCMForeclosure losses
    
    
    2,577
    
    
    
    569
    
    
    NCMProfessional fees
    
    
    1,380
    
    
    
    765
    
    
    
    80.39Insurance expense
    
    
    739
    
    
    
    1,067
    
    
    
    (30.74
    )Postage, stationery and supplies
    
    
    720
    
    
    
    727
    
    
    
    (0.96
    )Communications expense
    
    
    655
    
    
    
    802
    
    
    
    (18.33
    )Advertising expense
    
    
    672
    
    
    
    551
    
    
    
    21.96Other operating expense
    
    
    1,853
    
    
    
    1,415
    
    
    
    30.95Total
    
    $
    29,809
    
    
    $
    24,063
    
    
    
    23.88
    %
 
  Income tax
    36




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##### Table of Contents



Provision for Loan Losses and Loan Charge-offs
   For The Three Months EndedMarch 31,
    
    
    March 31,
    
    
    December 31,2010
    
    
    2009
    
    
    2009(Dollars in thousands)Beginning allowance for loan losses
    
    $
    41,884
    
    
    $
    28,850
    
    
    $
    34,336Provision for loan losses
    
    
    9,127
    
    
    
    3,452
    
    
    
    13,947Total charge-offs
    
    
    8,087
    
    
    
    2,809
    
    
    
    6,793Total recoveries
    
    
    (266
    )
    
    
    (378
    )
    
    
    (394
    )Net charge-offs
    
    
    7,821
    
    
    
    2,431
    
    
    
    6,399Ending allowance for loan losses
    
    $
    43,190
    
    
    $
    29,871
    
    
    $
    41,884Total loans, net of unearned income
    
    $
    2,505,465
    
    
    $
    2,359,299
    
    
    $
    2,472,697Allowance for loan losses to total loans, net of unearned income
    
    
    1.72
    %
    
    
    1.27
    %
    
    
    1.69
    %
  Results of Segment Operations
  For theThree Months EndedMarch 31,2010
    
    
    2009(Dollars in thousands)Alabama region
    
    $
    2,398
    
    
    $
    207Florida region
    
    
    (2,995
    )
    
    
    2,372Administrative and other
    
    
    (8,622
    )
    
    
    (9,001
    )Income tax benefit
    
    
    (3,479
    )
    
    
    (2,848
    )Consolidated net loss
    
    $
    (5,740
    )
    
    $
    (3,574
    )
 37




---



##### Table of Contents



Alabama Region
      Florida Region
      Fair Value Measurements
  38




---



##### Table of Contents



Financial Condition
  Short-term liquid assets
  Investment Securities
   39




---



##### Table of Contents



Investment Portfolio
  Available-for-SaleMarch 31,
    
    
    December 31,
    
    
    Percent2010
    
    
    2009
    
    
    Change(Dollars in thousands)Investment securities available-for-sale:U.S. agency securities
    
    $
    36,880
    
    
    $
    53,681
    
    
    
    (31.3
    )%Mortgage-backed securities (MBS):U.S. Agency pass-through
    
    
    179,453
    
    
    
    163,724
    
    
    
    9.6U.S. Agency collateralized mortgage obligation (CMO)
    
    
    52,328
    
    
    
    12,759
    
    
    
    310.1Private-label CMO
    
    
    15,196
    
    
    
    16,191
    
    
    
    (6.1
    )Total MBS
    
    
    246,977
    
    
    
    192,674
    
    
    
    28.2State, county and municipal securities
    
    
    31,175
    
    
    
    31,462
    
    
    
    (0.9
    )Corporate obligations:Corporate debt
    
    
    4,000
    
    
    
    4,000
    
    
    
    Pooled trust preferred securities
    
    
    3,371
    
    
    
    3,203
    
    
    
    5.2Single issue trust preferred securities
    
    
    2,062
    
    
    
    977
    
    
    
    111.1Total corporate obligations
    
    
    9,433
    
    
    
    8,180
    
    
    
    15.3Equity securities
    
    
    358
    
    
    
    313
    
    
    
    14.4Total investment securities available-for-sale
    
    $
    324,823
    
    
    $
    286,310
    
    
    
    13.5
    %
 40




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##### Table of Contents



Less than 12 Months
    
    More than 12 Months
    
    TotalFair
    
    Unrealized
    
    Fair
    
    Unrealized
    
    Fair
    
    UnrealizedValue
    
    Losses (1)
    
    Value
    
    Losses (1)
    
    Value
    
    Losses (1)(Dollars in thousands)Temporarily ImpairedU.S. Agency securities
    
    $
    22,998
    
    
    $
    318
    
    
    $
    
    
    
    $
    
    
    
    $
    22,998
    
    
    $
    318Mortgage-backed securities:U.S. Agency pass-through
    
    
    13,955
    
    
    
    201
    
    
    
    239
    
    
    
    8
    
    
    
    14,194
    
    
    
    209U.S. Agency CMO
    
    
    9,969
    
    
    
    164
    
    
    
    
    
    
    
    
    
    
    
    9,969
    
    
    
    164Private-label CMO
    
    
    
    
    
    
    
    
    
    
    11,215
    
    
    
    1,337
    
    
    
    11,215
    
    
    
    1,337Total MBS
    
    
    23,924
    
    
    
    365
    
    
    
    11,454
    
    
    
    1,345
    
    
    
    35,378
    
    
    
    1,710State, county and municipal securities
    
    
    8,581
    
    
    
    196
    
    
    
    2,061
    
    
    
    176
    
    
    
    10,642
    
    
    
    372Corporate obligations:Corporate debt
    
    
    
    
    
    
    
    
    
    
    4,000
    
    
    
    120
    
    
    
    4,000
    
    
    
    120Single issue trust preferred securities
    
    
    
    
    
    
    
    
    
    
    2,062
    
    
    
    2,938
    
    
    
    2,062
    
    
    
    2,938Total corporate obligations
    
    
    
    
    
    
    
    
    
    
    6,062
    
    
    
    3,058
    
    
    
    6,062
    
    
    
    3,058Equity securities
    
    
    
    
    
    
    
    
    
    
    358
    
    
    
    205
    
    
    
    358
    
    
    
    205Total temporarily impaired securities
    
    
    55,503
    
    
    
    879
    
    
    
    19,935
    
    
    
    4,784
    
    
    
    75,438
    
    
    
    5,663Other-than-temporarily ImpairedMortgage-backed securities:Private-label CMO
    
    
    
    
    
    
    
    
    
    
    3,017
    
    
    
    1,621
    
    
    
    3,017
    
    
    
    1,621Corporate obligations:Pooled trust preferred securities
    
    
    
    
    
    
    
    
    
    
    3,371
    
    
    
    4,809
    
    
    
    3,371
    
    
    
    4,809Total OTTI securities
    
    
    
    
    
    
    
    
    
    
    6,388
    
    
    
    6,430
    
    
    
    6,388
    
    
    
    6,430Total temporarily and
other-than-temporarily impaired
    
    $
    55,503
    
    
    $
    879
    
    
    $
    26,323
    
    
    $
    11,214
    
    
    $
    81,826
    
    
    $
    12,093
 
 (1)
    
    Unrealized losses are included in other comprehensive income (loss), net of unrealized
gains and applicable income taxes. Other-Than-Temporary-Impairment
    41




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##### Table of Contents



Mortgage-backed securities
  Credit Support
    
    
    NetRating
    
    
    
    
    
    Coverage
    
    
    UnrealizedMoody/Fitch
    
    Count
    
    
    Ratios (1)
    
    
    LossA1/NR
    
    
    1
    
    
    
    3.04
    
    
    $
    (114
    )Aaa/NR
    
    
    1
    
    
    
    3.76
    
    
    
    (1
    )NR/AAA
    
    
    1
    
    
    
    3.04
    
    
    
    (154
    )NR/AA
    
    
    1
    
    
    
    2.90
    
    
    
    (313
    )Baa2-/AA
    
    
    1
    
    
    
    N/A
    
    
    
    (582
    )B2-/NR
    
    
    1
    
    
    
    4.09
    
    
    
    (116
    )NR/BBB
    
    
    1
    
    
    
    2.62
    
    
    
    (57
    )Caa1-/CCC (2)
    
    
    1
    
    
    
    1.24
    
    
    
    (1,621
    )NR/C (2)
    
    
    2
    
    
    
    0.08 - 0.36
    
    
    
    181Total
    
    
    10
    
    
    
    
    
    
    $
    (2,777
    )
 
 (1)
    
    The Credit Support Coverage Ratio, which is the ratio that determines the multiple of credit
support, based on assumptions for the performance of the loans within the delinquency
pipeline. The assumptions used are: Current Collateral Support/ ((60 day delinquencies x.60) +
(90 day delinquencies x.70) + (foreclosures x 1.00) + (other real estate x 1.00)) x .40 for
loss severity.(2)
    
    Includes all private-label CMOs that have OTTI. See discussion that follows. 42




---



##### Table of Contents



Discount
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    

    
    
    Year-to-DateMargin
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Actual
    

    OTTIPrice
    
    
    Basis
    
    
    
    
    
    
    Cumulative
    
    
    Average
    
    
    60+ Days
    

    CreditSecurity
    
    
    (%)
    
    
    Points
    
    
    Yield
    
    
    Default
    
    
    Security
    
    
    Delinquent
    

    Portion
    
    
    Other
    
    
    TotalCMO 1
    
    
    18.45
    
    
    
    1710
    
    
    
    18%
    
    
   58.33%
    
    
    50%
    
    
9.30%
    
    $
    
    
    
    $
    
    
    
    $
    CMO 2
    
    
    20.30
    
    
    
    1608
    
    
    
   17%
    
    
    49.07%
    
    
    45%
    
    
28.33%
    
    
    
    
    
    
    
    
    
    
    CMO 4
    
    
    60.34
    
    
    
    1387
    
    
    
    17%
    
    
    27.16%
    
    
45%
    
    
    15.82%
    
    
    (21
    )
    
    
    
    
    
    
    (21
    )$
    (21
    )
    
    $
    
    
    
    $
    (21
    )
   State, county and municipal securities
   Trust preferred securities
  
    
    Detailed credit and structural evaluation for each piece of collateral in the CDO;
 
    
    Collateral performance projections for each piece of collateral in the CDO (default,
recovery and prepayment/amortization probabilities);
 
    
    Terms of the CDO structure, as laid out in the indenture;
 
    
    The cash flow waterfall (for both interest and principal);
 
    
    Overcollateralization and interest coverage tests;
 
    
    Events of default/liquidation;
 
    
    Mandatory auction call;
 
    
    Optional redemption;
 
    
    Hedge agreements; and
 
    
    Discounted cash flow modeling.
 43




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44




---



##### Table of Contents



Year-to-DateOther-than-temporary-impairmentSingle/
    
    Class/
    
    Amortized
    
    
    Fair
    
    
    Unrealized
    
    
    CreditName
    
    Pooled
    
    Tranche
    
    Cost
    
    
    Value
    
    
    Loss
    
    
    Portion
    
    
    Other
    
    
    TotalMM Caps Funding I Ltd
    
    Pooled
    
    MEZ
    
    $
    1,940
    
    
    $
    902
    
    
    $
    (1,038
    )
    
    $
    
    
    
    $
    
    
    
    $
    MM Community Funding Ltd
    
    Pooled
    
    B
    
    
    2,028
    
    
    
    839
    
    
    
    (1,189
    )
    
    
    
    
    
    
    
    
    
    
    Preferred Term Securities V
    
    Pooled
    
    MEZ
    
    
    1,209
    
    
    
    403
    
    
    
    (806
    )
    
    
    (24
    )
    
    
    
    
    
    
    (24
    )Tpref Funding III Ltd
    
    Pooled
    
    B-2
    
    
    3,027
    
    
    
    1,227
    
    
    
    (1,800
    )
    
    
    
    
    
    
    
    
    
    
    Emigrant Capital Trust (1)
    
    Single
    
    Sole
    
    
    5,000
    
    
    
    2,062
    
    
    
    (2,938
    )
    
    
    
    
    
    
    
    
    
    
    $
    13,204
    
    
    $
    5,433
    
    
    $
    (7,771
    )
    
    $
    (24
    )
    
    $
    
    
    
    $
    (24
    )
 Original Collateral -
    
    Performing Collateral -Percent of Actual
    
    Percent of ExpectedLowest
    
    Performing
    
    Deferrals and
    
    Deferrals and
    
    ExcessName
    
    Rating
    
    Banks
    
    Defaults
    
    Defaults
    
    Subordination (2)MM Caps Funding I Ltd
    
    Ca
    
    
    22
    
    
    
    17
    %
    
    
    18
    %
    
    
    0
    %MM Community Funding Ltd
    
    Ca
    
    
    8
    
    
    
    21
    %
    
    
    39
    %
    
    
    0
    %Preferred Term Securities
V
    
    Ba3
    
    
    1
    
    
    
    5
    %
    
    
    44
    %
    
    
    0
    %Tpref Funding III Ltd
    
    Ca
    
    
    24
    
    
    
    24
    %
    
    
    28
    %
    
    
    0
    %Emigrant Capital Trust (1)
    
    NR
    
    NA
    
    NA
    
    NA
    
    NA
 Fair Value
    
    Discount Margin
    
    YieldName
    
    (Price to Par)
    
    (Basis Points)
    
    (Basis Points)MM Caps Funding I Ltd
    
    $
    43.04
    
    
    Swap + 1700
    
    9.48% FixedMM Community Funding Ltd
    
    
    16.78
    
    
    LIBOR + 1500
    
    LIBOR + 310Preferred Term Securities V
    
    
    29.34
    
    
    LIBOR + 1400
    
    LIBOR + 210Tpref Funding III Ltd
    
    
    30.67
    
    
    LIBOR + 1200
    
    LIBOR + 190Emigrant Capital Trust (1)
    
    
    41.24
    
    
    LIBOR + 1123
    
    LIBOR + 200
 
 (1)
    
    There has been no notification of deferral or default on this issue. An analysis of the
company, including discussion with its management, indicates there is adequate capital and
liquidity to service the debt. The discount margin of 1123 basis points was derived from
implied credit spreads from certain publicly traded trust preferred securities within the
issuers peer group.(2)
    
    Excess subordination represents the additional defaults in excess of both the current and
projected defaults the issue can absorb before the security experiences any credit impairment.
Excess subordination is calculated by determining what level of defaults an issue can
experience before the security has any credit impairment and then subtracting both the current
and projected future defaults.  45




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##### Table of Contents



For theThree Months EndedMarch 31, 2010(Dollars in thousands)Balance at beginning of period
    
    $
    8,869Amounts related to credit losses for which an OTTI was not previously recognized
    
    
    154Reductions for securities sold during the period
    
    
    Increases in credit loss for which an OTTI was previously recognized when the
investor
does not intend to sell the security and it is not more likely than not that
the entity will
be required to sell the security before recovery of its amortized cost
    
    
    45Reductions
for securities where there is an intent to sale or requirement to sale
    
    
    (154
    )Reductions for increases in cash flows expected to be collected
    
    
    (28
    )Balance at end of period
    
    $
    8,886
  Stock in the Federal Home Loan Bank of Atlanta (FHLB Atlanta)
   
    
    The significance of the decline in net assets of FHLB Atlanta as compared to the capital
stock amount for FHLB Atlanta and the length of time this decline has persisted;
 
    
    Commitments by FHLB Atlanta to make payments required by law or regulation and the level
of such payments in relation to the operating performance of FHLB Atlanta;
 
    
    The impact of legislative and regulatory changes on financial institutions and,
accordingly, on the customer base of FHLB Atlanta; and
 
    
    The liquidity position of FHLB Atlanta.
  46




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##### Table of Contents



Loans
 Composition of Loan Portfolio, Yield Changes and Diversification
   Distribution of Loans by Category
 March 31, 2010
    
    
    December 31, 2009Percent of
    
    
    
    
    
    
    Percent ofAmount
    
    
    Total
    
    
    Amount
    
    
    Total(Dollars in thousands)
    
    
    (Dollars in thousands)Commercial and industrial
    
    $
    203,488
    
    
    
    8.11
    %
    
    $
    213,329
    
    
    
    8.62
    %Real estate 
construction and land
development
    
    
    693,851
    
    
    
    27.66
    
    
    
    680,445
    
    
    
    27.48Real estate  mortgagesSingle-family
    
    
    703,968
    
    
    
    28.06
    
    
    
    691,364
    
    
    
    27.93Commercial
    
    
    823,260
    
    
    
    32.82
    
    
    
    801,813
    
    
    
    32.39Other
    
    
    27,655
    
    
    
    1.10
    
    
    
    28,885
    
    
    
    1.17Consumer
    
    
    55,476
    
    
    
    2.21
    
    
    
    58,785
    
    
    
    2.37Other
    
    
    873
    
    
    
    0.04
    
    
    
    969
    
    
    
    0.04Total loans
    
    
    2,508,571
    
    
    
    100.00
    %
    
    
    2,475,590
    
    
    
    100.00
    %Unearned income
    
    
    (3,106
    )
    
    
    
    
    
    
    (2,893
    )Allowance for loan losses
    
    
    (43,190
    )
    
    
    
    
    
    
    (41,884
    )Net loans
    
    $
    2,462,275
    
    
    
    
    
    
    $
    2,430,813
 47




---



##### Table of Contents



March 31,
    
    December 31,
    
    Percent2010
    
    2009
    
    Change(Dollars in thousands)Total loans, net of unearned income
    
    $
    2,505,465
    
    
    $
    2,472,697
    
    
    
    1.3
    %Alabama segment
    
    
    992,702
    
    
    
    996,545
    
    
    
    (0.4
    )Florida segment
    
    
    1,232,388
    
    
    
    1,213,202
    
    
    
    1.6Other
    
    
    280,375
    
    
    
    262,950
    
    
    
    6.6
  Residential
    
    
    CommercialDevelopment
    
    
    Development
    
    
    Total(Dollars in thousands)Real estate  construction and land developmentAs of March 31, 2010Alabama segment
    
    $
    164,316
    
    
    $
    101,325
    
    
    $
    265,641Florida segment
    
    
    129,730
    
    
    
    273,524
    
    
    
    403,254Other
    
    
    7,856
    
    
    
    17,100
    
    
    
    24,956Total
    
    $
    301,902
    
    
    $
    391,949
    
    
    $
    693,851As of December 31, 2009Alabama segment
    
    $
    163,978
    
    
    $
    102,339
    
    
    $
    266,317Florida segment
    
    
    129,590
    
    
    
    265,767
    
    
    
    395,357Other
    
    
    7,856
    
    
    
    10,915
    
    
    
    18,771Total
    
    $
    301,424
    
    
    $
    379,021
    
    
    $
    680,445
 Single-family
    
    
    Commercial(Dollars in thousands)Real estate  mortgagesAs of March 31, 2010Alabama segment
    
    $
    470,601
    
    
    $
    307,154Florida segment
    
    
    194,456
    
    
    
    485,039Other
    
    
    38,911
    
    
    
    31,067Total
    
    $
    703,968
    
    
    $
    823,260As of December 31, 2009Alabama segment
    
    $
    461,365
    
    
    $
    296,520Florida segment
    
    
    189,245
    
    
    
    475,218Other
    
    
    40,754
    
    
    
    30,075Total
    
    $
    691,364
    
    
    $
    801,813
 Allowance for Loan Losses
 Overview
  48




---



##### Table of Contents



ASC 450-20
  
    
    trends in volume;
 
    
    effects of changes in credit concentrations;
 
    
    levels of and trends in delinquencies, classified loans and non-performing assets;
 
    
    levels of and trends in charge-offs and recoveries;
 
    
    changes in lending policies and underwriting guidelines;
 
    
    national and local economic trends and condition; and
 
    
    mergers and acquisitions.
 ASC 310-35
 Impaired
Loans
 49




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##### Table of Contents



Summary of Loan Loss Experience
 Three Months Ended
    
    
    Year EndedMarch 31,
    
    
    December 31,2010
    
    
    2009
    
    
    2009(Dollars in thousands)Allowance for loan losses at beginning of period
    
    $
    41,884
    
    
    $
    28,850
    
    
    $
    28,850Charge-offs:Commercial and industrial
    
    
    55
    
    
    
    56
    
    
    
    1,390Real estate  construction and land development
    
    
    5,592
    
    
    
    924
    
    
    
    4,870Real estate  mortgageSingle-family
    
    
    1,052
    
    
    
    547
    
    
    
    5,372Commercial
    
    
    542
    
    
    
    340
    
    
    
    1,094Other
    
    
    
    
    
    
    179
    
    
    
    210Consumer
    
    
    704
    
    
    
    695
    
    
    
    3,346Other
    
    
    142
    
    
    
    68
    
    
    
    379Total charge-offs
    
    
    8,087
    
    
    
    2,809
    
    
    
    16,661Recoveries:Commercial and industrial
    
    
    32
    
    
    
    67
    
    
    
    161Real estate  construction and land development
    
    
    16
    
    
    
    20
    
    
    
    68Real estate  mortgageSingle-family
    
    
    55
    
    
    
    11
    
    
    
    71Commercial
    
    
    24
    
    
    
    3
    
    
    
    277Other
    
    
    47
    
    
    
    198
    
    
    
    251Consumer
    
    
    70
    
    
    
    42
    
    
    
    186Other
    
    
    22
    
    
    
    37
    
    
    
    131Total recoveries
    
    
    266
    
    
    
    378
    
    
    
    1,145Net charge-offs
    
    
    7,821
    
    
    
    2,431
    
    
    
    15,516Provision for loan losses
    
    
    9,127
    
    
    
    3,452
    
    
    
    28,550Allowance for loan losses at end of period
    
    $
    43,190
    
    
    $
    29,871
    
    
    $
    41,884Loans at end of period, net of unearned
    
    $
    2,505,465
    
    
    $
    2,359,299
    
    
    $
    2,472,697Average loans, net of unearned income
    
    
    2,492,209
    
    
    
    2,342,025
    
    
    
    2,401,805Ratio of ending allowance to ending loans
    
    
    1.72
    %
    
    
    1.27
    %
    
    
    1.69
    %Ratio of net
charge-offs to average loans(1)
    
    
    1.27
    
    
    
    0.42
    
    
    
    0.65Net charge-offs as a percentage of:Provision for loan losses
    
    
    85.70
    
    
    
    70.43
    
    
    
    54.35Allowance
for loan losses(1)
    
    
    73.44
    
    
    
    33.01
    
    
    
    37.04Allowance for loan losses as a percentage of nonperforming loans
    
    
    24.27
    
    
    
    40.24
    
    
    
    26.25
 
 (1)
    
    Annualized. 50




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51




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##### Table of Contents



Allocation of the Allowance for Loan Losses
    Allocation of the Allowance for Loan Losses
 March 31, 2010
    
    
    December 31, 2009Percent
    
    
    
    
    
    
    Percentof Loans
    
    
    
    
    
    
    of Loansin Each
    
    
    
    
    
    
    in EachCategory
    
    
    
    
    
    
    Categoryto Total
    
    
    
    
    
    
    to TotalAmount
    
    
    Loans
    
    
    Amount
    
    
    Loans(Dollars in thousands)Commercial and industrial
    
    $
    2,473
    
    
    
    8.1
    %
    
    $
    2,356
    
    
    
    8.6
    %Real estate  construction and land development
    
    
    22,224
    
    
    
    27.7
    
    
    
    17,971
    
    
    
    27.5Real estate  mortgagesSingle-family
    
    
    11,988
    
    
    
    28.1
    
    
    
    12,342
    
    
    
    27.9Commercial
    
    
    4,585
    
    
    
    32.8
    
    
    
    7,019
    
    
    
    32.4Other
    
    
    133
    
    
    
    1.1
    
    
    
    371
    
    
    
    1.2Consumer
    
    
    1,787
    
    
    
    2.2
    
    
    
    1,825
    
    
    
    2.4Total
    
    $
    43,190
    
    
    
    100.0
    %
    
    $
    41,884
    
    
    
    100.0
    %
   52




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##### Table of Contents



Nonperforming Assets
  March 31,
    
    
    December 31,2010
    
    
    2009(Dollars in thousands)Nonaccrual
    
    $
    167,490
    
    
    $
    155,631Accruing loans 90 days or more delinquent
    
    
    10,477
    
    
    
    3,920Total nonperforming loans
    
    
    177,967
    
    
    
    159,551Other real estate owned assets
    
    
    46,679
    
    
    
    41,618Repossessed assets
    
    
    375
    
    
    
    380Total nonperforming assets
    
    $
    225,021
    
    
    $
    201,549Restructured and performing under restructured terms, net of specific allowance
    
    $
    133,707
    
    
    $
    110,777Nonperforming loans as a percentage of loans
    
    
    7.10
    %
    
    
    6.45
    %Nonperforming assets as a percentage of loans plus nonperforming assets
    
    
    8.82
    %
    
    
    8.01
    %Nonperforming assets as a percentage of total assets
    
    
    6.73
    %
    
    
    6.26
    %
 53




---



##### Table of Contents



March 31,
    
    
    December 31,2010
    
    
    2009(Dollars in thousands)Commercial and industrial
    
    $
    2,981
    
    
    $
    1,797Real estate  construction and land developmentResidential
    
    
    34,459
    
    
    
    23,818Commercial
    
    
    54,542
    
    
    
    49,240Real estate  mortgagesSingle-family
    
    
    50,836
    
    
    
    52,323Commercial
    
    
    33,530
    
    
    
    30,343Other
    
    
    336
    
    
    
    436Consumer
    
    
    629
    
    
    
    734Other
    
    
    654
    
    
    
    860Total nonperforming loans
    
    $
    177,967
    
    
    $
    159,551
  .
  March 31,
    
    
    December 31,2010
    
    
    2009(Dollars in thousands)Acreage
    
    $
    2,177
    
    
    $
    2,251Commercial buildings
    
    
    8,012
    
    
    
    5,226Residential condominiums
    
    
    1,568
    
    
    
    2,730Residential single-family homes
    
    
    19,384
    
    
    
    15,696Residential lots
    
    
    14,736
    
    
    
    14,613Other
    
    
    802
    
    
    
    1,102Other real estate owned
    
    $
    46,679
    
    
    $
    41,618
 54




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##### Table of Contents



Impaired Loans
   March 31, 2010
    
    
    December 31, 2009Oustanding
    
    
    Specific
    
    
    Oustanding
    
    
    SpecificBalance
    
    
    Allowance
    
    
    Balance
    
    
    Allowance(Dollars in thousands)Commercial and industrial
    
    $
    2,085
    
    
    $
    1,243
    
    
    $
    3,032
    
    
    $
    1,053Real estate  construction and land developmentResidential
    
    
    41,424
    
    
    
    4,188
    
    
    
    31,912
    
    
    
    3,044Commercial
    
    
    70,166
    
    
    
    7,765
    
    
    
    82,356
    
    
    
    3,675Real estate  mortgagesSingle-family
    
    
    56,890
    
    
    
    5,771
    
    
    
    53,229
    
    
    
    5,005Commercial
    
    
    119,267
    
    
    
    2,161
    
    
    
    109,222
    
    
    
    1,686Other
    
    
    219
    
    
    
    59
    
    
    
    500
    
    
    
    62Consumer
    
    
    
    
    
    
    
    
    
    
    97
    
    
    
    2Total
    
    $
    290,051
    
    
    $
    21,187
    
    
    $
    280,348
    
    
    $
    14,527
    55




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##### Table of Contents



RestructuredPerforming
    
    
    Not-Performingin accordance
    
    
    in accordancewith restructured terms
    
    
    with restructured termsOustanding
    
    
    Specific
    
    
    Oustanding
    
    
    SpecificBalance
    
    
    Allowance
    
    
    Balance
    
    
    Allowance(Dollars in thousands)Alabama:Commercial and industrial
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Real estate  construction and land development
    
    
    2,728
    
    
    
    1
    
    
    
    252
    
    
    
    Real estate  mortgagesSingle-family
    
    
    12,803
    
    
    
    350
    
    
    
    1,748
    
    
    
    238Commercial
    
    
    22,769
    
    
    
    360
    
    
    
    152
    
    
    
    Consumer
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    38,300
    
    
    $
    711
    
    
    $
    2,152
    
    
    $
    238FloridaCommercial and industrial
    
    $
    908
    
    
    $
    865
    
    
    $
    303
    
    
    $
    7Real estate  construction and land development
    
    
    27,528
    
    
    
    566
    
    
    
    
    
    
    
    Real estate  mortgagesSingle-family
    
    
    5,880
    
    
    
    912
    
    
    
    3,211
    
    
    
    410Commercial
    
    
    64,667
    
    
    
    522
    
    
    
    
    
    
    
    Consumer
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    98,983
    
    
    $
    2,865
    
    
    $
    3,514
    
    
    $
    417TotalCommercial and industrial
    
    $
    908
    
    
    $
    865
    
    
    $
    303
    
    
    $
    7Real estate  construction and land development
    
    
    30,256
    
    
    
    567
    
    
    
    252
    
    
    
    Real estate  mortgagesSingle-family
    
    
    18,683
    
    
    
    1,262
    
    
    
    4,959
    
    
    
    648Commercial
    
    
    87,436
    
    
    
    882
    
    
    
    152
    
    
    
    Consumer
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    137,283
    
    
    $
    3,576
    
    
    $
    5,666
    
    
    $
    655
 Potential Problem Loans
  56




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##### Table of Contents



High Loan-to-Value (LTV)
  Past Due and NonaccrualPercent
    
    
    
    
    
    Percent
    
    
    
    
    
    Percent
    
    
    
    
    
    Percent
    
    
    
    
    
    Percentof Loans
    
    
    
    
    
    of Loans
    
    
    
    
    
    of Loans
    
    
    
    
    
    of Loans
    
    
    
    
    
    of Loansto
    
    
    
    
    
    to
    
    
    
    
    
    to
    
    
    
    
    
    to
    
    
    
    
    
    toTotal
    
    Total
    
    
    
    
    
    Total
    
    
    
    
    
    Total
    
    
    
    
    
    Total
    
    
    
    
    
    TotalOutstanding
    
    Single-
    
    30 -
    
    Single-
    
    90 days
    
    Single-
    
    Non-
    
    Single-
    
    
    
    
    
    Single-Balance
    
    family
    
    89 days
    
    family
    
    or  more
    
    family
    
    accrual
    
    family
    
    Total
    
    family(Dollars in thousands)90% up to 100% LTV
    
    $
    32,734
    
    
    
    4.7
    %
    
    $
    516
    
    
    
    0.1
    %
    
    $
    
    
    
    
    
    
    
    $
    1,982
    
    
    
    0.3
    %
    
    $
    2,498
    
    
    
    0.4
    %100% and greater LTV
    
    
    5,894
    
    
    
    0.9
    
    
    
    293
    
    
    
    0.0
    
    
    
    124
    
    
    
    0.0
    
    
    
    651
    
    
    
    0.1
    
    
    
    1,068
    
    
    
    0.1Total
    
    $
    38,628
    
    
    
    5.6
    
    
    $
    809
    
    
    
    0.1
    
    
    $
    124
    
    
    
    0.0
    
    
    $
    2,633
    
    
    
    0.4
    
    
    $
    3,566
    
    
    
    0.5
 57




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##### Table of Contents



Deposits
     March 31,
    
    
    December 31,
    
    
    Percent2010
    
    
    2009
    
    
    Change(Dollars in thousands)Noninterest-bearing demand
    
    $
    263,546
    
    
    $
    257,744
    
    
    
    2.3
    %Alabama segment
    
    
    136,615
    
    
    
    137,160
    
    
    
    (0.4
    )Florida segment
    
    
    118,299
    
    
    
    103,621
    
    
    
    14.2Other
    
    
    8,632
    
    
    
    16,963
    
    
    
    (49.1
    )Interest-bearing demand
    
    
    669,152
    
    
    
    690,677
    
    
    
    (3.1
    )Alabama segment
    
    
    382,242
    
    
    
    385,246
    
    
    
    (0.8
    )Florida segment
    
    
    243,171
    
    
    
    233,740
    
    
    
    4.0Other
    
    
    43,739
    
    
    
    71,691
    
    
    
    (39.0
    )Savings
    
    
    321,921
    
    
    
    284,430
    
    
    
    13.2Alabama segment
    
    
    166,675
    
    
    
    151,263
    
    
    
    10.2Florida segment
    
    
    153,253
    
    
    
    131,185
    
    
    
    16.8Other
    
    
    1,993
    
    
    
    1,982
    
    
    
    0.6Time deposits
    
    
    1,498,759
    
    
    
    1,423,722
    
    
    
    5.3Alabama segment
    
    
    709,287
    
    
    
    663,510
    
    
    
    6.9Florida segment
    
    
    596,549
    
    
    
    555,262
    
    
    
    7.4Other
    
    
    192,923
    
    
    
    204,950
    
    
    
    (5.9
    )Total deposits
    
    $
    2,753,378
    
    
    $
    2,656,573
    
    
    
    3.6
    %Alabama segment
    
    $
    1,394,819
    
    
    $
    1,337,179
    
    
    
    4.3
    %Florida segment
    
    $
    1,111,272
    
    
    $
    1,023,808
    
    
    
    8.5
    %Other
    
    $
    247,287
    
    
    $
    295,586
    
    
    
    (16.3
    )%
 Borrowings
   58




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##### Table of Contents



Accrued Expenses and Other Liabilities
  Stockholders Equity
 Overview
  Recent Developments
 Other Comprehensive Income
  Pre-Tax
    
    
    Income Tax
    
    
    Net ofAmount
    
    
    Expense
    
    
    Income Tax(Dollars in thousands)Three Months Ended March 31, 2010Unrealized gain on available-for-sale securities
    
    $
    1,540
    
    
    $
    (570
    )
    
    $
    970Reclassification adjustment for losses realized in net loss
    
    
    198
    
    
    
    (73
    )
    
    
    125Unrealized loss on derivatives
    
    
    (158
    )
    
    
    59
    
    
    
    (99
    )Net unrealized gain
    
    $
    1,580
    
    
    $
    (584
    )
    
    $
    996Three Months Ended March 31, 2009Unrealized loss on available-for-sale securities
    
    $
    (8,394
    )
    
    $
    3,105
    
    
    $
    (5,289
    )Reclassification adjustment for losses realized in net loss
    
    
    5,845
    
    
    
    (2,163
    )
    
    
    3,682Unrealized loss on derivatives
    
    
    (29
    )
    
    
    11
    
    
    
    (18
    )Net unrealized loss
    
    $
    (2,578
    )
    
    $
    953
    
    
    $
    (1,625
    )
  59




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##### Table of Contents



Regulatory Capital
  To Be WellFor
    
    Capitalized UnderCapital Adequacy
    
    Prompt CorrectiveActual
    
    Purposes
    
    ActionAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio(Dollars in thousands)Superior BankMarch 31, 2010Tier 1 Core Capital (to Adjusted Total Assets)
    
    $
    237,763
    
    
    
    7.18
    %
    
    $
    132,459
    
    
    
    4.00
    %
    
    $
    165,574
    
    
    
    5.00
    %Total Capital (to Risk Weighted Assets)
    
    
    269,766
    
    
    
    10.11
    
    
    
    213,384
    
    
    
    8.00
    
    
    
    266,730
    
    
    
    10.00Tier 1 Capital (to Risk Weighted Assets)
    
    
    237,763
    
    
    
    8.91
    
    
    NA
    
    NA
    
    
    160,038
    
    
    
    6.00Tangible Capital (to Adjusted Total Assets)
    
    
    237,763
    
    
    
    7.18
    
    
    
    49,672
    
    
    
    1.50
    
    
    NA
    
    NA
 Liquidity
      Forward-Looking Statements
    60




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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   Interest Rate Sensitivity
  Sensitivity Measurement
   61




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##### Table of Contents



Interest Rate Exposures
  Change (in Basis Points)
    
    Increase in Net Interest Incomein Interest Rates
    
    March 31, 2010
    
    December 31, 2009(12-Month Projection)
    
    Amount
    
    Percent
    
    Amount
    
    Percent(Dollars in thousands)+ 200 BP (1)
    
    $
    1,139
    
    
    
    1.1
    %
    
    $
    2,200
    
    
    
    2.3
    %- 200 BP (2)
    
    NCM
    
    NCM
    
    NCM
    
    NCM
 
 (1)
    
    Results are within our asset and liability management policy.(2)
    
    Not considered meaningful in the current rate environment.  ChangeChange (in Basis Points) in Interest Rates
    
    EVE
    
    Amount
    
    Percent(Dollars in thousands)+ 200 BP
    
    $
    300,342
    
    
    $
    7,154
    
    
    
    2.4
    %+ 100 BP
    
    
    299,116
    
    
    
    5,922
    
    
    
    2.00 BP
    
    
    293,184
    
    
    
    
    
    
    
    - 100 BP
    
    
    297,447
    
    
    
    4,251
    
    
    
    1.5
  
 ITEM 4. CONTROLS AND PROCEDURES
 CEO and CFO Certification
  Evaluation of Disclosure Controls and Procedures
   62




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##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. OTHER INFORMATION
 
 ITEM 5. EXHIBITS
  31.1
    
    Certification of principal executive officer pursuant to Rule 13a-14(a).31.2
    
    Certification of principal financial officer pursuant to Rule 13a-14(a).32.1
    
    Certification of principal executive officer pursuant to 18 U.S.C. Section 1350.32.2
    
    Certification of principal financial officer pursuant to 18 U.S.C. Section 1350.
 63




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##### Table of Contents



SIGNATURES
  Date: May 10, 2010
    By:
    /s/ C. Stanley BaileyC. Stanley BaileyChief Executive OfficerDate: May 10, 2010
    By:
    /s/ James A. WhiteJames A. WhiteChief Financial Officer
(Principal Financial Officer) 64