##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED September 30, 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 November 10 , 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
    
    
    32Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    69Item 4.
    
    Controls and Procedures
    
    
    71PART II
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    71Item 1A.
    
    Risk Factors
    
    
    71Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    81Item 3.
    
    Defaults Upon Senior Securities
    
    
    81Item 5.
    
    Other Information
    
    
    81Item 6.
    
    Exhibits
    
    
    81SIGNATURES
    
    
    
    
    82EX-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)
 September 30,
    
    
    December 31,2010
    
    
    2009(Unaudited)ASSETSCash and due from banks
    
    $
    66,937
    
    
    $
    74,020Interest-bearing deposits in other banks
    
    
    195,212
    
    
    
    23,714Federal funds sold
    
    
    1,946
    
    
    
    2,036Total cash and cash equivalents
    
    
    264,095
    
    
    
    99,770Investment securities available-for-sale
    
    
    261,002
    
    
    
    286,310Tax lien certificates
    
    
    19,849
    
    
    
    19,292Mortgage loans held-for-sale
    
    
    63,884
    
    
    
    71,879Loans, net of unearned income
    
    
    2,415,862
    
    
    
    2,472,697Allowance for loan losses
    
    
    (151,362
    )
    
    
    (41,884
    )Net loans
    
    
    2,264,500
    
    
    
    2,430,813Premises and equipment, net
    
    
    102,097
    
    
    
    104,022Accrued interest receivable
    
    
    13,693
    
    
    
    15,581Stock in FHLB
    
    
    16,907
    
    
    
    18,212Cash surrender value of life insurance
    
    
    51,277
    
    
    
    50,142Core deposit and other intangible assets
    
    
    13,772
    
    
    
    16,694Other real estate
    
    
    58,766
    
    
    
    41,618Other assets
    
    
    36,659
    
    
    
    67,536Total assets
    
    $
    3,166,501
    
    
    $
    3,221,869LIABILITIES AND STOCKHOLDERS EQUITYDeposits:Noninterest-bearing
    
    $
    276,473
    
    
    $
    257,744Interest-bearing
    
    
    2,500,357
    
    
    
    2,398,829Total deposits
    
    
    2,776,830
    
    
    
    2,656,573Advances from FHLB
    
    
    216,325
    
    
    
    218,322Security repurchase agreements
    
    
    726
    
    
    
    841Notes payable
    
    
    45,201
    
    
    
    45,917Subordinated debentures, net
    
    
    81,518
    
    
    
    84,170Accrued expenses and other liabilities
    
    
    30,497
    
    
    
    24,342Total liabilities
    
    
    3,151,097
    
    
    
    3,030,165Commitments and contingenciesStockholders equity:Preferred stock, par value $.001 per share; shares authorized 5,000,000:Series B, cumulative convertible preferred stock, 111, -0- and -0-
shares issued and outstanding as of September 30, 2010 and 2009
and December 31, 2009, respectively
    
    
    
    
    
    
    Series C, cumulative convertible preferred stock, 3, -0- and -0-
shares issued and outstanding as of September 30, 2010 and 2009
and December 31, 2009, respectively
    
    
    
    
    
    
    Common stock, par value $.001 per share; shares authorized 200,000,000,
20,000,000 and 200,000,000 at September 30, 2010 and 2009 and December
31, 2009, respectively;
shares issued 12,560,457, 11,624,279 and 11,673,837, respectively;
outstanding 12,560,457, 11,624,279 and 11,667,794, respectively
    
    
    13
    
    
    
    12Surplus  preferred
    
    
    12,428
    
    
    
     warrants
    
    
    9,827
    
    
    
    8,646 common
    
    
    325,158
    
    
    
    322,043Accumulated deficit
    
    
    (329,030
    )
    
    
    (130,889
    )Accumulated other comprehensive loss
    
    
    (2,853
    )
    
    
    (7,825
    )Unearned ESOP stock
    
    
    (129
    )
    
    
    (263
    )Unearned restricted stock
    
    
    (10
    )
    
    
    (20
    )Total stockholders equity
    
    
    15,404
    
    
    
    191,704Total liabilities and stockholders equity
    
    $
    3,166,501
    
    
    $
    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)
 For the
    
    
    For theThree Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Interest income:Interest and fees on loans
    
    $
    34,108
    
    
    $
    36,783
    
    
    $
    106,662
    
    
    $
    107,693Interest on taxable securities
    
    
    2,299
    
    
    
    3,362
    
    
    
    7,835
    
    
    
    11,148Interest on tax-exempt securities
    
    
    302
    
    
    
    432
    
    
    
    928
    
    
    
    1,295Interest on federal funds sold
    
    
    1
    
    
    
    1
    
    
    
    4
    
    
    
    8Interest and dividends on other investments
    
    
    542
    
    
    
    471
    
    
    
    1,307
    
    
    
    1,289Total interest income
    
    
    37,252
    
    
    
    41,049
    
    
    
    116,736
    
    
    
    121,433Interest expense:Interest on deposits
    
    
    10,843
    
    
    
    13,315
    
    
    
    33,821
    
    
    
    42,317Interest on other borrowed funds
    
    
    2,505
    
    
    
    2,619
    
    
    
    7,568
    
    
    
    7,558Interest on subordinated debentures
    
    
    2,384
    
    
    
    1,202
    
    
    
    7,169
    
    
    
    3,602Total interest expense
    
    
    15,732
    
    
    
    17,136
    
    
    
    48,558
    
    
    
    53,477Net interest income
    
    
    21,520
    
    
    
    23,913
    
    
    
    68,178
    
    
    
    67,956Provision for loan losses
    
    
    102,106
    
    
    
    5,169
    
    
    
    161,596
    
    
    
    14,602Net interest (loss) income after provision for loan losses
    
    
    (80,586
    )
    
    
    18,744
    
    
    
    (93,418
    )
    
    
    53,354Noninterest income:Service charges and fees on deposits
    
    
    2,268
    
    
    
    2,595
    
    
    
    6,819
    
    
    
    7,506Mortgage banking income
    
    
    6,198
    
    
    
    1,506
    
    
    
    10,875
    
    
    
    5,468Investment securities gains (losses)Gain on sale of securities
    
    
    3
    
    
    
    5,644
    
    
    
    1,861
    
    
    
    5,644Total other-than-temporary impairment losses (OTTI)
    
    
    (174
    )
    
    
    (3,478
    )
    
    
    (1,057
    )
    
    
    (20,669
    )Portion of OTTI recognized in other comprehensive
loss
    
    
    (135
    )
    
    
    (45
    )
    
    
    48
    
    
    
    5,519Investment securities gains (losses)
    
    
    (306
    )
    
    
    2,121
    
    
    
    852
    
    
    
    (9,506
    )Change in fair value of derivatives
    
    
    (1,481
    )
    
    
    435
    
    
    
    (1,510
    )
    
    
    170Increase in cash surrender value of life insurance
    
    
    576
    
    
    
    568
    
    
    
    1,702
    
    
    
    1,623Gain on exchange of subordinated debt for common stock
    
    
    
    
    
    
    
    
    
    
    507
    
    
    
    Other income
    
    
    552
    
    
    
    1,254
    
    
    
    3,302
    
    
    
    3,811Total noninterest income
    
    
    7,807
    
    
    
    8,479
    
    
    
    22,547
    
    
    
    9,072Noninterest expenses:Salaries and employee benefits
    
    
    14,062
    
    
    
    12,234
    
    
    
    42,102
    
    
    
    36,976Occupancy, furniture and equipment
    
    
    5,012
    
    
    
    4,478
    
    
    
    14,625
    
    
    
    13,397Amortization of core deposit intangibles
    
    
    870
    
    
    
    985
    
    
    
    2,609
    
    
    
    2,956FDIC assessments
    
    
    2,613
    
    
    
    921
    
    
    
    5,846
    
    
    
    3,310Foreclosure losses
    
    
    6,187
    
    
    
    1,337
    
    
    
    12,122
    
    
    
    3,656Other expenses
    
    
    7,398
    
    
    
    5,687
    
    
    
    20,180
    
    
    
    17,207Total noninterest expenses
    
    
    36,142
    
    
    
    25,642
    
    
    
    97,484
    
    
    
    77,502Loss before income taxes
    
    
    (108,921
    )
    
    
    1,581
    
    
    
    (168,355
    )
    
    
    (15,076
    )Income tax expense (benefit)
    
    
    26,972
    
    
    
    701
    
    
    
    27,000
    
    
    
    (6,686
    )Net loss
    
    
    (135,893
    )
    
    
    880
    
    
    
    (195,355
    )
    
    
    (8,390
    )Preferred stock dividends and amortization
    
    
    (1,887
    )
    
    
    (1,167
    )
    
    
    (2,786
    )
    
    
    (3,477
    )Net loss applicable to common stockholders
    
    $
    (137,780
    )
    
    $
    (287
    )
    
    $
    (198,141
    )
    
    $
    (11,867
    )Weighted average common shares outstanding
    
    
    12,531
    
    
    
    10,984
    
    
    
    12,164
    
    
    
    10,373Weighted average common shares outstanding, assuming dilution
    
    
    12,531
    
    
    
    10,984
    
    
    
    12,164
    
    
    
    10,373Basic net loss per common share
    
    $
    (11.00
    )
    
    $
    (0.03
    )
    
    $
    (16.29
    )
    
    $
    (1.14
    )Diluted net loss per common share
    
    $
    (11.00
    )
    
    $
    (0.03
    )
    
    $
    (16.29
    )
    
    $
    (1.14
    )
  4




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##### Table of Contents



SUPERIOR BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY (UNAUDITED)

(Dollars in thousands)
 AccumulatedOther
    
    
    Unearned
    
    
    Unearned
    
    
    TotalPreferred
    
    
    Common
    
    
    Surplus
    
    
    Accumulated
    
    
    Comprehensive
    
    
    ESOP
    
    
    Restricted
    
    
    StockholdersStock
    
    
    Stock
    
    
    Preferred
    
    
    Warrants
    
    
    Common
    
    
    Deficit
    
    
    (Loss) Gain
    
    
    Stock
    
    
    Stock
    
    
    EquityBalance at December 31, 2009
    
    $
    
    
    
    $
    12
    
    
    $
    
    
    
    $
    8,646
    
    
    $
    322,043
    
    
    $
    (130,889
    )
    
    $
    (7,825
    )
    
    $
    (263
    )
    
    $
    (20
    )
    
    $
    191,704Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (195,355
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (195,355
    )Other comprehensive gain, net of tax
expense of $2.6 million unrealized gain
on securities available for sale, arising
during the period, net of
reclassification adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,489
    
    
    
    
    
    
    
    
    
    
    
    4,489Change in accumulated loss on cash flow
hedging instrument, net of tax of $0.3
million
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    483
    
    
    
    
    
    
    
    
    
    
    
    483Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (190,383
    )Cumulative preferred stock dividend, net of
amortization
    
    
    
    
    
    
    
    
    
    
    2,258
    
    
    
    
    
    
    
    
    
    
    
    (2,786
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (528
    )Exchange of trust preferred debt for
849,156 shares of common stock
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    2,883
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,884Compensation expense related to stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    204
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    204Issuance of 111 shares Series B preferred
stock and 792,859 warrants
    
    
    
    
    
    
    
    
    
    
    9,887
    
    
    
    1,164
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,051Issuance of 3 shares Series C preferred
stock and 21,429 warrants
    
    
    
    
    
    
    
    
    
    
    283
    
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    300Amortization of unearned restricted
stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    10Issuance of 43,507 shares related to
board compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    155
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    155Release of 2,954 shares by ESOP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (127
    )
    
    
    
    
    
    
    
    
    
    
    134
    
    
    
    
    
    
    
    7Balance at September 30, 2010
    
    $
    
    
    
    $
    13
    
    
    $
    12,428
    
    
    $
    9,827
    
    
    $
    325,158
    
    
    $
    (329,030
    )
    
    $
    (2,853
    )
    
    $
    (129
    )
    
    $
    (10
    )
    
    $
    15,404
  5




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##### Table of Contents



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

(Dollars in thousands)
 Nine Months EndedSeptember 30,2010
    
    
    2009Net cash provided by (used in) operating activities
    
    $
    26,141
    
    
    $
    (23,537
    )Investing activitiesProceeds from sales of investment securities available-for-sale
    
    
    89,130
    
    
    
    157,614Proceeds from maturities of investment securities available-for-sale
    
    
    60,577
    
    
    
    57,334Purchase of investment securities available-for-sale
    
    
    (117,055
    )
    
    
    (162,586
    )Net increase in loans
    
    
    (38,946
    )
    
    
    (164,713
    )Redemptions of tax lien certificates
    
    
    14,318
    
    
    
    29,909Purchase of tax lien certificates
    
    
    (14,875
    )
    
    
    (30,823
    )Purchase of premises and equipment
    
    
    (3,403
    )
    
    
    (6,616
    )Proceeds from sale of premises and equipment
    
    
    
    
    
    
    376Proceeds from sale of foreclosed assets
    
    
    18,661
    
    
    
    11,149Decrease in stock of FHLB
    
    
    1,305
    
    
    
    3,199Net cash provided by (used in) investing activities
    
    
    9,712
    
    
    
    (105,157
    )Financing activitiesNet increase in deposits
    
    
    120,147
    
    
    
    277,130Decrease in FHLB advances
    
    
    (1,997
    )
    
    
    (145,033
    )Proceeds from note payable
    
    
    
    
    
    
    38,575Principal payment on note payable
    
    
    (1,067
    )
    
    
    Net decrease in other borrowed funds
    
    
    (204
    )
    
    
    Proceeds from exchange of subordinated debt for common stock
    
    
    193
    
    
    
    Proceeds from issuance of common stock
    
    
    
    
    
    
    3,299Proceeds from issuance of preferred stock
    
    
    11,400
    
    
    
    Cash dividends paid
    
    
    
    
    
    
    (2,395
    )Net cash provided by financing activities
    
    
    128,472
    
    
    
    171,576Net increase in cash and cash equivalents
    
    
    164,325
    
    
    
    42,882Cash and cash equivalents at beginning of period
    
    
    99,770
    
    
    
    89,448Cash and cash equivalents at end of period
    
    $
    264,095
    
    
    $
    132,330
  6




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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
 7




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##### Table of Contents



, ASU No. 2010-20  Receivables (Topic 310)  Disclosures about the Credit
Quality of Financing Receivables and the Allowance for Credit Losses (ASU 2010-20)
 Note 3  Investment Securities
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value(Dollars in thousands)Investment securities available-for-saleU.S. Agency securities
    
    $
    18,255
    
    
    $
    341
    
    
    $
    
    
    
    $
    18,596Mortgage-backed securities (MBS):U.S. Agency pass-through
    
    
    102,425
    
    
    
    3,280
    
    
    
    7
    
    
    
    105,698U.S. Agency collateralized mortgage obligation (CMO)
    
    
    81,183
    
    
    
    2,596
    
    
    
    
    
    
    
    83,779Private-label CMO
    
    
    15,264
    
    
    
    239
    
    
    
    2,234
    
    
    
    13,269Total MBS
    
    
    198,872
    
    
    
    6,115
    
    
    
    2,241
    
    
    
    202,746State, county and municipal securities
    
    
    29,415
    
    
    
    960
    
    
    
    208
    
    
    
    30,167Corporate obligations:Corporate debt
    
    
    4,082
    
    
    
    
    
    
    
    82
    
    
    
    4,000Pooled trust preferred securities
    
    
    8,080
    
    
    
    
    
    
    
    4,501
    
    
    
    3,579Single issue trust preferred securities
    
    
    5,000
    
    
    
    
    
    
    
    3,225
    
    
    
    1,775Total corporate obligations
    
    
    17,162
    
    
    
    
    
    
    
    7,808
    
    
    
    9,354Equity securities
    
    
    113
    
    
    
    26
    
    
    
    
    
    
    
    139Total investment securities available-for-sale
    
    $
    263,817
    
    
    $
    7,442
    
    
    $
    10,257
    
    
    $
    261,002
   Securities Available-for-SaleAmortized
    
    
    EstimatedCost
    
    
    Fair Value(Dollars in thousands)Due in one year or less
    
    $
    285
    
    
    $
    286Due after one year through five years
    
    
    7,403
    
    
    
    7,401Due after five years through ten years
    
    
    23,202
    
    
    
    23,735Due after ten years
    
    
    34,055
    
    
    
    26,834Mortgage-backed securities
    
    
    198,872
    
    
    
    202,746$
    263,817
    
    
    $
    261,002
  8




---



##### 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 ImpairedMBSU.S. Agency pass-through
    
    $
    74
    
    
    $
    
    
    
    $
    239
    
    
    $
    7
    
    
    $
    313
    
    
    $
    7U.S. Agency CMO
    
    
    38
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38
    
    
    
    Private-label CMO
    
    
    
    
    
    
    
    
    
    
    5,903
    
    
    
    850
    
    
    
    5,903
    
    
    
    850Total MBS
    
    
    112
    
    
    
    
    
    
    
    6,142
    
    
    
    857
    
    
    
    6,254
    
    
    
    857State, county and municipal securities
    
    
    1,585
    
    
    
    79
    
    
    
    970
    
    
    
    129
    
    
    
    2,555
    
    
    
    208Corporate obligations:Corporate debt
    
    
    
    
    
    
    
    
    
    
    4,000
    
    
    
    82
    
    
    
    4,000
    
    
    
    82Single issue trust preferred securities
    
    
    
    
    
    
    
    
    
    
    1,775
    
    
    
    3,225
    
    
    
    1,775
    
    
    
    3,225Total corporate obligations
    
    
    
    
    
    
    
    
    
    
    5,775
    
    
    
    3,307
    
    
    
    5,775
    
    
    
    3,307Total temporarily impaired securities
    
    
    1,697
    
    
    
    79
    
    
    
    12,887
    
    
    
    4,293
    
    
    
    14,584
    
    
    
    4,372Other-than-temporarily ImpairedMBSPrivate-label CMO
    
    
    
    
    
    
    
    
    
    
    3,094
    
    
    
    1,384
    
    
    
    3,094
    
    
    
    1,384Corporate obligationsPooled trust preferred securities
    
    
    
    
    
    
    
    
    
    
    3,579
    
    
    
    4,501
    
    
    
    3,579
    
    
    
    4,501Total OTTI securities
    
    
    
    
    
    
    
    
    
    
    6,673
    
    
    
    5,885
    
    
    
    6,673
    
    
    
    5,885Total temporarily and
other-than-temporarily impaired
    
    $
    1,697
    
    
    $
    79
    
    
    $
    19,560
    
    
    $
    10,178
    
    
    $
    21,257
    
    
    $
    10,257
 
 (1)
    
    Unrealized losses are included in other comprehensive loss, net of unrealized gains and
applicable income taxes. 9




---



##### Table of Contents



Less than
    
    Greater Than12 Months
    
    12 Months
    
    TotalTemporarily ImpairedMortgage-backed securities:U.S. Agency residential
    
    
    2
    
    
    
    1
    
    
    
    3U.S. Agency CMO
    
    
    1
    
    
    
    
    
    
    
    1Private-label CMO
    
    
    
    
    
    
    5
    
    
    
    5Total MBS
    
    
    3
    
    
    
    6
    
    
    
    9State, county and municipal securities
    
    
    6
    
    
    
    3
    
    
    
    9Corporate obligations:Corporate debt
    
    
    
    
    
    
    3
    
    
    
    3Single issue trust preferred securities
    
    
    
    
    
    
    1
    
    
    
    1Total corporate obligations
    
    
    
    
    
    
    4
    
    
    
    4Total temporarily impaired securities
    
    
    9
    
    
    
    13
    
    
    
    22Other-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
    
    
    9
    
    
    
    18
    
    
    
    27
 10




---



##### Table of Contents



Other-Than-Temporary Impairment (OTTI)
      11




---



##### Table of Contents



Mortgage-backed securities
  Credit Support
    
    NetRating
    
    
    
    Coverage
    
    UnrealizedMoody/Fitch
    
    Count
    
    Ratios (1)
    
    (Loss) GainA1/NR
    
    1
    
    2.61
    
    $
    (162
    )Aaa/NR
    
    1
    
    4.73
    
    
    NR/AAA
    
    1
    
    3.08
    
    
    111NR/AA
    
    1
    
    3.26
    
    
    (143
    )B2/AA
    
    1
    
    N/A
    
    
    (452
    )B2/NR
    
    1
    
    3.99
    
    
    (56
    )NR/BBB
    
    1
    
    2.17
    
    
    (37
    )Caa2/CCC (2)
    
    1
    
    0.75
    
    
    (1,384
    )NR/C (2)
    
    2
    
    0.00-0.25
    
    
    128Total
    
    10
    
    
    
    $
    (1,995
    )
 
 (1)
    
    The Credit Support Coverage Ratio determines the multiple of credit support, and it is 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 below).  Discount
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Year-to-DateMargin
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Actual
    
    
    OTTIPrice
    
    
    Basis
    
    
    
    
    
    
    Cumulative
    
    
    Average
    
    
    60+ Days
    
    
    CreditSecurity
    
    (%)
    
    
    Points
    
    
    Yield
    
    
    Default
    
    
    Security
    
    
    Delinquent
    
    
    Portion
    
    
    Other
    
    
    TotalCMO 1
    
    
    10.76
    
    
    
    1756
    
    
    
    18%
    
    
    
    55.09%
    
    
    
    50%
    
    
    
    16.27%
    
    
    $
    (54
    )
    
    $
    (85
    )
    
    $
    (139
    )CMO 2
    
    
    17.57
    
    
    
    1629
    
    
    
    17%
    
    
    
    49.04%
    
    
    
    45%
    
    
    
    27.72%
    
    
    
    
    
    
    
    
    
    
    
    CMO 4
    
    
    63.01
    
    
    
    1440
    
    
    
    16%
    
    
    
    29.38%
    
    
    
    45%
    
    
    
    16.67%
    
    
    
    (97
    )
    
    
    74
    
    
    
    (23
    )$
    (151
    )
    
    $
    (11
    )
    
    $
    (162
    )
   12




---



##### Table of Contents



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.
    13




---



##### 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
    
    $
    2,135
    
    
    $
    896
    
    
    $
    (1,239
    )
    
    $
    
    
    
    $
    
    
    
    $
    MM Community Funding Ltd
    
    Pooled
    
    B
    
    
    1,957
    
    
    
    789
    
    
    
    (1,168
    )
    
    
    (20
    )
    
    
    (117
    )
    
    
    (137
    )Preferred Term
Securities V
    
    Pooled
    
    MEZ
    
    
    1,145
    
    
    
    808
    
    
    
    (337
    )
    
    
    (61
    )
    
    
    37
    
    
    
    (24
    )Tpref Funding III Ltd
    
    Pooled
    
    B-2
    
    
    2,843
    
    
    
    1,086
    
    
    
    (1,757
    )
    
    
    (174
    )
    
    
    43
    
    
    
    (131
    )Emigrant Capital Trust
(1)
    
    Single
    
    Sole
    
    
    5,000
    
    
    
    1,775
    
    
    
    (3,225
    )
    
    
    
    
    
    
    
    
    
    
    $
    13,080
    
    
    $
    5,354
    
    
    $
    (7,726
    )
    
    $
    (255
    )
    
    $
    (37
    )
    
    $
    (292
    )
 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
    
    C
    
    
    21
    
    
    
    21
    %
    
    
    18
    %
    
    
    0
    %MM Community Funding Ltd
    
    C
    
    
    7
    
    
    
    25
    %
    
    
    29
    %
    
    
    0
    %Preferred Term Securities V
    
    CCC
    
    
    2
    
    
    
    5
    %
    
    
    36
    %
    
    
    0
    %Tpref Funding III Ltd
    
    C
    
    
    22
    
    
    
    28
    %
    
    
    20
    %
    
    
    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
    
    $
    44.79
    
    
    Swap + 1800
    
    9.48% FixedMM Community Funding Ltd
    
    
    15.77
    
    
    LIBOR + 1500
    
    LIBOR + 310Preferred Term Securities V
    
    
    58.85
    
    
    LIBOR + 1600
    
    LIBOR + 210Tpref Funding III Ltd
    
    
    27.16
    
    
    LIBOR + 1200
    
    LIBOR + 190Emigrant Capital Trust (1)
    
    
    35.50
    
    
    LIBOR + 1162
    
    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 1162 basis points was derived from
implied credit spreads from certain publicly traded trust preferred securities within the
issuers 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.    14




---



##### Table of Contents



For the Three
    
    
    For the NineMonths Ended
    
    
    Months EndedSeptember 30, 2010
    
    
    September 30, 2010(Dollars in thousands)Balance at beginning of period
    
    $
    8,924
    
    
    $
    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
    
    
    309
    
    
    
    405Reductions for securities where there is an intent to sell or requirement to sell
    
    
    
    
    
    
    (154
    )Reductions for securities that are in total default
    
    
    (1,434
    )
    
    
    (1,434
    )Reductions for increases in cash flows expected to be collected
    
    
    (447
    )
    
    
    (488
    )Balance at end of period
    
    $
    7,352
    
    
    $
    7,352
  Stock in the Federal Home Loan Bank of Atlanta (FHLB Atlanta)
   Note 4  Allowance for Loan Losses
  For The Three Months Ended
    
    For The Nine Months EndedSeptember 30,
    
    September 30,2010
    
    2009
    
    2010
    
    2009(Dollars in thousands)Beginning allowance for loan losses
    
    $
    79,425
    
    
    $
    33,504
    
    
    $
    41,884
    
    
    $
    28,850Provision for loan losses
    
    
    102,106
    
    
    
    5,169
    
    
    
    161,596
    
    
    
    14,602Total charge-offs
    
    
    30,422
    
    
    
    4,546
    
    
    
    52,837
    
    
    
    9,868Total recoveries
    
    
    (253
    )
    
    
    (209
    )
    
    
    (719
    )
    
    
    (752
    )Net charge-offs
    
    
    30,169
    
    
    
    4,337
    
    
    
    52,118
    
    
    
    9,116Ending allowance for loan losses
    
    $
    151,362
    
    
    $
    34,336
    
    
    $
    151,362
    
    
    $
    34,336Total loans, net of unearned income
    
    $
    2,415,862
    
    
    $
    2,434,534Allowance for loan losses to total
loans, net of unearned income
    
    
    6.27
    %
    
    
    1.41
    %
 15




---



##### Table of Contents



Note 5  Debt
     Note 6  Derivative Financial Instruments
   Interest Rate Swaps
   16




---



##### Table of Contents



Fair Value Hedges
  Cash Flow Hedges
  Interest Rate Lock Commitments
  Forward Sales Commitments
  Forward Purchase Commitments
  Assets and Liabilities Recorded at
Fair Value on a Recurring Basis
 17




---



##### Table of Contents



September 30, 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
    
    
    $
    374
    
    
    $
    2,777
    
    
    $
    228Interest rate derivatives designated as hedges of cash flows:Interest rate swaps on subordinated debenture
    
    
    
    
    
    
    
    
    
    
    22,000
    
    
    
    (766
    )Non-hedging derivatives:Brokered certificates of deposit interest rate swap
    
    
    723
    
    
    
    97
    
    
    
    723
    
    
    
    59Mortgage loan held for sale interest rate lock commitment
    
    
    93,891
    
    
    
    825
    
    
    
    41,038
    
    
    
    (370
    )Mortgage loan forward sales commitments
    
    
    147,598
    
    
    
    305
    
    
    
    
    
    
    
    Mortgage loan forward purchase commitments
    
    
    45,321
    
    
    
    (115
    )
    
    
    
    
    
    
    Commercial loan interest rate swap with loan customer
    
    
    3,690
    
    
    
    407
    
    
    
    3,766
    
    
    
    323Commercial loan interest rate swap with financial institution
    
    
    3,690
    
    
    
    (407
    )
    
    
    3,766
    
    
    
    (323
    )
  Weighted-AverageInterest
    
    InterestRate
    
    RatePaid
    
    ReceivedInterest rate swaps:Fair value hedge on brokered certificates of deposit interest rate swap
    
    
    0.43
    %
    
    
    4.70
    %Non-hedging interest rate swap on commercial loan
    
    
    6.73
    
    
    
    6.73
 Gains, Losses and Derivative Cash Flows
   For the
    
    For theThree Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2010
    
    2009
    
    2010
    
    2009(Dollars in thousands)Interest rate swap on brokered certificates of deposit:Amount of gain included in interest expense on deposits
    
    $
    30
    
    
    $
    29
    
    
    $
    89
    
    
    $
    79Amount of loss included in other noninterest income
    
    
    (5
    )
    
    
    (12
    )
    
    
    (5
    )
    
    
    (492
    )
 18




---



##### Table of Contents



For the
    
    For theThree Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2010
    
    2009
    
    2010
    
    2009(Dollars in thousands)Interest rate swap on subordinated debenture:Net loss included in interest expense on subordinated debt
    
    $
    (105
    )
    
    $
    (142
    )
    
    $
    (420
    )
    
    $
    (301
    )Amount of gain (loss) recognized in other comprehensive income
    
    
    575
    
    
    
    (138
    )
    
    
    384
    
    
    
    66Amount of loss recognized in other income
    
    
    (975
    )
    
    
    
    
    
    
    (1,129
    )
    
    
    
   For the
    
    For theThree Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2010
    
    2009
    
    2010
    
    2009(Dollars in thousands)Non-hedging derivatives:Brokered certificates of deposit interest rate swap
    
    $
    21
    
    
    $
    19
    
    
    $
    62
    
    
    $
    (53
    )Mortgage loan held for sale interest rate lock commitment
    
    
    195
    
    
    
    428
    
    
    
    1,195
    
    
    
    715Mortgage loan forward sales commitments
    
    
    956
    
    
    
    
    
    
    
    (305
    )
    
    
    Mortgage loan forward purchase commitments
    
    
    324
    
    
    
    
    
    
    
    (115
    )
    
    
    Net settlement of forward purchase and sale commitments
    
    
    (2,323
    )
    
    
    
    
    
    
    (2,323
    )
    
    
    
 Counterparty Credit Risk
   19




---



##### Table of Contents



Note 7  Segment Reporting
   Total
    
    
    
    
    
    
    SuperiorAlabama
    
    
    Florida
    
    
    Alabama and
    
    
    Administrative
    
    
    BancorpRegion
    
    
    Region
    
    
    Florida
    
    
    and Other
    
    
    Combined(Dollars in thousands)Three Months Ended September 30, 2010Net interest income
    
    $
    10,278
    
    
    $
    9,071
    
    
    $
    19,349
    
    
    $
    2,171
    
    
    $
    21,520Provision for loan losses (1)
    
    
    5,158
    
    
    
    36,396
    
    
    
    41,554
    
    
    
    60,552
    
    
    
    102,106Noninterest income
    
    
    2,042
    
    
    
    427
    
    
    
    2,469
    
    
    
    5,338
    
    
    
    7,807Noninterest expense
    
    
    9,674
    
    
    
    9,258
    
    
    
    18,932
    
    
    
    17,210
    
    
    
    36,142Operating loss
    
    $
    (2,512
    )
    
    $
    (36,156
    )
    
    $
    (38,668
    )
    
    $
    (70,253
    )
    
    
    (108,921
    )Income tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,972Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (135,893
    )Total assets
    
    $
    1,040,934
    
    
    $
    1,222,415
    
    
    $
    2,263,349
    
    
    $
    930,152
    
    
    $
    3,193,501Three Months Ended September 30, 2009Net interest income
    
    $
    9,870
    
    
    $
    9,828
    
    
    $
    19,698
    
    
    $
    4,215
    
    
    $
    23,913Provision for loan losses (1)
    
    
    1,398
    
    
    
    3,536
    
    
    
    4,934
    
    
    
    235
    
    
    
    5,169Noninterest income
    
    
    2,241
    
    
    
    483
    
    
    
    2,724
    
    
    
    5,755
    
    
    
    8,479Noninterest expense
    
    
    8,737
    
    
    
    5,911
    
    
    
    14,648
    
    
    
    10,994
    
    
    
    25,642Operating profit (loss)
    
    $
    1,976
    
    
    $
    864
    
    
    $
    2,840
    
    
    $
    (1,259
    )
    
    $
    1,581Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    701Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    880Total assets
    
    $
    1,067,866
    
    
    $
    1,222,358
    
    
    $
    2,290,224
    
    
    $
    936,346
    
    
    $
    3,226,570Nine Months Ended September 30, 2010Net interest income
    
    $
    30,368
    
    
    $
    30,741
    
    
    $
    61,109
    
    
    $
    7,069
    
    
    $
    68,178Provision for loan losses (1)
    
    
    8,020
    
    
    
    55,365
    
    
    
    63,385
    
    
    
    98,211
    
    
    
    161,596Noninterest income
    
    
    6,015
    
    
    
    1,317
    
    
    
    7,332
    
    
    
    15,215
    
    
    
    22,547Noninterest expense
    
    
    27,992
    
    
    
    22,664
    
    
    
    50,656
    
    
    
    46,828
    
    
    
    97,484Operating profit (loss)
    
    $
    371
    
    
    $
    (45,971
    )
    
    $
    (45,600
    )
    
    $
    (122,755
    )
    
    $
    (168,355
    )Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (195,355
    )Nine Months Ended September 30, 2009Net interest income
    
    $
    26,861
    
    
    $
    28,294
    
    
    $
    55,155
    
    
    $
    12,801
    
    
    $
    67,956Provision for loan losses (1)
    
    
    4,434
    
    
    
    6,499
    
    
    
    10,933
    
    
    
    3,669
    
    
    
    14,602Noninterest income
    
    
    6,518
    
    
    
    1,512
    
    
    
    8,030
    
    
    
    1,042
    
    
    
    9,072Noninterest expense
    
    
    26,162
    
    
    
    17,479
    
    
    
    43,641
    
    
    
    33,861
    
    
    
    77,502Operating profit (loss)
    
    $
    2,783
    
    
    $
    5,828
    
    
    $
    8,611
    
    
    $
    (23,687
    )
    
    $
    (15,076
    )Income tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,686
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (8,390
    )
 
 (1)
    
    Provision for loan losses for Alabama and Florida segments primarily represents
charge-offs during the periods presented. Any provision in excess of charge-offs initially
flows through Administrative and Other. 20




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##### Table of Contents



Note 8 Net Loss per Common Share
  For the
    
    
    For theThree Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Numerator:Net (loss) income
    
    $
    (135,893
    )
    
    $
    880
    
    
    $
    (195,355
    )
    
    $
    (8,390
    )Less preferred stock dividends and amortization
    
    
    (1,887
    )
    
    
    (1,167
    )
    
    
    (2,786
    )
    
    
    (3,477
    )For basic and diluted, net loss applicable to
common stockholders
    
    $
    (137,780
    )
    
    $
    (287
    )
    
    $
    (198,141
    )
    
    $
    (11,867
    )Denominator:For basic, weighted average common shares
outstanding
    
    
    12,531
    
    
    
    10,984
    
    
    
    12,164
    
    
    
    10,373Effect of dilutive stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Average common shares outstanding, assuming
dilution
    
    
    12,531
    
    
    
    10,984
    
    
    
    12,164
    
    
    
    10,373Basic net loss per common share
    
    $
    (11.00
    )
    
    $
    (0.03
    )
    
    $
    (16.29
    )
    
    $
    (1.14
    )Diluted net loss per common share
    
    $
    (11.00
    )
    
    $
    (0.03
    )
    
    $
    (16.29
    )
    
    $
    (1.14
    )
   21




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##### Table of Contents



Note 9  Comprehensive Loss
  Pre-Tax
    
    
    Income Tax
    
    
    Net ofAmount
    
    
    Expense
    
    
    Income Tax(Dollars in thousands)Three Months Ended September 30, 2010Unrealized gain on available-for-sale securities
    
    $
    2,406
    
    
    $
    (890
    )
    
    $
    1,516Reclassification adjustment for losses realized in net loss
    
    
    306
    
    
    
    (113
    )
    
    
    193Unrealized loss on derivatives
    
    
    (75
    )
    
    
    28
    
    
    
    (47
    )Reclassification adjustment for losses realized in net loss
    
    
    975
    
    
    
    (361
    )
    
    
    614Net unrealized gain
    
    $
    3,612
    
    
    $
    (1,336
    )
    
    $
    2,276Three Months Ended September 30, 2009Unrealized gain on available-for-sale securities
    
    $
    3,119
    
    
    $
    (1,154
    )
    
    $
    1,965Reclassification adjustment for gains realized in net loss
    
    
    (2,121
    )
    
    
    785
    
    
    
    (1,336
    )Unrealized loss on derivatives
    
    
    (219
    )
    
    
    81
    
    
    
    (138
    )Net unrealized gain
    
    $
    779
    
    
    $
    (288
    )
    
    $
    491Nine Months Ended September 30, 2010Unrealized gain on available-for-sale securities
    
    $
    7,977
    
    
    $
    (2,951
    )
    
    $
    5,026Reclassification adjustment for gains realized in net loss
    
    
    (852
    )
    
    
    315
    
    
    
    (537
    )Unrealized loss on derivatives
    
    
    (363
    )
    
    
    135
    
    
    
    (228
    )Reclassification adjustment for losses realized in net loss
    
    
    1,129
    
    
    
    (418
    )
    
    
    711Net unrealized gain
    
    $
    7,891
    
    
    $
    (2,919
    )
    
    $
    4,972Nine Months Ended September 30, 2009Unrealized loss on available-for-sale securities
    
    $
    (8,936
    )
    
    $
    3,306
    
    
    $
    (5,630
    )Reclassification adjustment for losses realized in net loss
    
    
    9,506
    
    
    
    (3,517
    )
    
    
    5,989Unrealized gain on derivatives
    
    
    106
    
    
    
    (39
    )
    
    
    67Net unrealized gain
    
    $
    676
    
    
    $
    (250
    )
    
    $
    426
 Note 10  Income Taxes
   22




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##### Table of Contents



Note 11  Stock Incentive Plan
    2010
    
    2009Risk-free interest rate
    
    
    2.57
    %
    
    
    2.57
    %Volatility factor
    
    
    55.79
    
    
    
    55.38Expected term (in years)
    
    
    5.00
    
    
    
    5.00Dividend yield
    
    
    0.00
    
    
    
    0.00
 23




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##### Table of Contents



Weighted-Weighted-
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual
    
    
    IntrinsicFor the Nine Months Ended September 30, 2010
    
    Number
    
    
    Price
    
    
    Term
    
    
    ValueUnder option, beginning of period
    
    
    925,647
    
    
    $
    26.85Granted
    
    
    5,000
    
    
    
    3.44Exercised
    
    
    
    
    
    
    Forfeited
    
    
    (25,119
    )
    
    
    14.62Under option, end of period
    
    
    905,528
    
    
    $
    27.06
    
    
    
    4.96
    
    
    $
    Exercisable at end of period
    
    
    613,028
    
    
    $
    31.91
    
    
    
    2.63
    
    
    $
    Weighted-average fair value per option of
options granted during the period
    
    $
    3.44
  Note 12  Fair Value Measurements
  24




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##### Table of Contents



Assets and Liabilities Recorded at Fair Value on a Recurring Basis
  Quoted Prices in
    
    
    
    
    
    SignificantActive Markets for
    
    Significant Other
    
    UnobservableCarrying
    
    Identical Assets
    
    Observable Inputs
    
    InputsValue
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)(Dollars in thousands)September 30, 2010Investment securities available-for-saleU.S. Agency securities
    
    $
    18,596
    
    
    $
    
    
    
    $
    18,596
    
    
    $
    MBSU.S. Agency MBS pass-through
    
    
    105,698
    
    
    
    
    
    
    
    105,698
    
    
    
    U.S. Agency CMO
    
    
    83,779
    
    
    
    
    
    
    
    83,779
    
    
    
    Private-label CMO
    
    
    13,269
    
    
    
    
    
    
    
    7,129
    
    
    
    6,140Total MBS
    
    
    202,746
    
    
    
    
    
    
    
    196,606
    
    
    
    6,140State, county and municipal securities
    
    
    30,167
    
    
    
    
    
    
    
    28,645
    
    
    
    1,522Corporate obligationsCorporate debt
    
    
    4,000
    
    
    
    
    
    
    
    4,000
    
    
    
    Pooled trust preferred securities
    
    
    3,579
    
    
    
    
    
    
    
    
    
    
    
    3,579Single issue trust preferred securities
    
    
    1,775
    
    
    
    
    
    
    
    
    
    
    
    1,775Total corporate obligations
    
    
    9,354
    
    
    
    
    
    
    
    4,000
    
    
    
    5,354Equity securities
    
    
    139
    
    
    
    139
    
    
    
    
    
    
    
    Total investment securities
available-for-sale
    
    
    261,002
    
    
    
    139
    
    
    
    247,847
    
    
    
    13,016Derivative assets
    
    
    1,876
    
    
    
    
    
    
    
    1,876
    
    
    
    Total recurring basis measured assets
    
    $
    262,878
    
    
    $
    139
    
    
    $
    249,723
    
    
    $
    13,016Derivative liabilities
    
    $
    1,000
    
    
    $
    
    
    
    $
    1,000
    
    
    $
    Total recurring basis measured liabilities
    
    $
    1,000
    
    
    $
    
    
    
    $
    1,000
    
    
    $
    
 25




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##### Table of Contents



Quoted Prices in
    
    
    
    
    
    SignificantActive Markets for
    
    Significant Other
    
    UnobservableCarrying
    
    Identical Assets
    
    Observable Inputs
    
    InputsValue
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)(Dollars in thousands)December 31, 2009Investment securities available-for-saleU.S. Agency securities
    
    $
    53,681
    
    
    $
    
    
    
    $
    53,681
    
    
    $
    MBSU.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 obligationsCorporate 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
 26




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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 SecuritiesSeptember 30,2010
    
    
    2009(Dollars in thousands)Balance at January 1
    
    $
    13,329
    
    
    $
    18,497Transfer into level 3 category during the year
    
    
    
    
    
    
    13,978Total gains (losses) (realized and unrealized)Included in earnings  investment security loss
    
    
    (405
    )
    
    
    (15,150
    )Included in other comprehensive loss
    
    
    1,783
    
    
    
    (1,554
    )Other changes due to principal payments
    
    
    (1,691
    )
    
    
    (1,192
    )Balance at September 30
    
    $
    13,016
    
    
    $
    14,579Total 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 September 30
    
    $
    (405
    )
    
    $
    (15,150
    )
 27




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##### Table of Contents



Assets Recorded at Fair Value on a Nonrecurring Basis
  Quoted PricesinActive Marketsfor
    
    Significant Other
    
    SignificantIdentical
    
    Observable
    
    UnobservableCarrying
    
    Assets
    
    Inputs
    
    InputsValue
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)(Dollars in thousands)September 30, 2010Mortgage loans held-for-sale
    
    $
    63,884
    
    
    $
    
    
    
    $
    63,884
    
    
    $
    Impaired loans, net of specific allowance
    
    
    192,850
    
    
    
    
    
    
    
    
    
    
    
    192,850Other foreclosed real estate
    
    
    58,766
    
    
    
    
    
    
    
    
    
    
    
    58,766Other real estate held-for-sale
    
    
    3,258
    
    
    
    
    
    
    
    
    
    
    
    3,258Total nonrecurring basis measured assets
    
    $
    318,758
    
    
    $
    
    
    
    $
    63,884
    
    
    $
    254,874December 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
  Other Foreclosed Real Estate
  28




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##### Table of Contents



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
  Subordinated debentures
  Limitations
  29




---



##### Table of Contents



September 30, 2010
    
    December 31, 2009Carrying
    
    Fair
    
    Carrying
    
    FairAmount
    
    Value
    
    Amount
    
    Value(Dollars in thousands)Financial assets:Cash and due from banks
    
    $
    66,937
    
    
    $
    66,937
    
    
    $
    74,020
    
    
    $
    74,020Interest-bearing deposits in other banks
    
    
    195,212
    
    
    
    195,212
    
    
    
    23,714
    
    
    
    23,714Federal funds sold
    
    
    1,946
    
    
    
    1,946
    
    
    
    2,036
    
    
    
    2,036Securities available for sale
    
    
    261,002
    
    
    
    261,002
    
    
    
    286,310
    
    
    
    286,310Tax lien certificates
    
    
    19,849
    
    
    
    19,849
    
    
    
    19,292
    
    
    
    19,292Mortgage loans held for sale
    
    
    63,884
    
    
    
    63,884
    
    
    
    71,879
    
    
    
    71,879Net loans
    
    
    2,264,500
    
    
    
    2,297,632
    
    
    
    2,430,813
    
    
    
    2,440,026Stock in FHLB
    
    
    16,907
    
    
    
    16,907
    
    
    
    18,212
    
    
    
    18,212Accrued interest receivable
    
    
    51,277
    
    
    
    51,277
    
    
    
    50,142
    
    
    
    50,142Derivative assets
    
    
    1,876
    
    
    
    1,876
    
    
    
    610
    
    
    
    610Financial liabilities:Deposits
    
    
    2,776,830
    
    
    
    2,799,858
    
    
    
    2,656,573
    
    
    
    2,671,504Advances from FHLB
    
    
    216,325
    
    
    
    235,785
    
    
    
    218,322
    
    
    
    233,028Security repurchase agreements
    
    
    726
    
    
    
    726
    
    
    
    841
    
    
    
    841Note payable
    
    
    45,201
    
    
    
    46,898
    
    
    
    45,917
    
    
    
    45,917Subordinated debentures
    
    
    81,518
    
    
    
    59,801
    
    
    
    84,170
    
    
    
    51,609Derivative liabilities
    
    
    1,000
    
    
    
    1,000
    
    
    
    1,459
    
    
    
    1,459
 Note 13  Stockholders Equity
     30




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##### Table of Contents



Note 14  Subsequent Event
    
    
    The Bank shall cease and desist from any action for or toward causing,
bringing about, participating in, counseling, or aiding and abetting
unsafe or unsound banking practices that resulted in certain
occurrences specified in the Bank Order.
    
    No later than March 31, 2011, the Bank shall achieve, and maintain
thereafter, a Tier 1 (Core) Capital Ratio of at least 10.0% and a
Total Risk-Based Capital Ratio of at least 14.0% after funding an
adequate allowance for loan losses.
    
    Within 60 days of the Effective Date, the Bank shall adopt and submit
to the OTS a written capital plan to achieve and maintain the
foregoing capital levels, specifying target dates to reach those
capital levels. If the Bank fails to achieve the required capital
levels in the prescribed time frame or otherwise fails to meet its
capital plan, then within 15 days the Bank shall prepare a contingency
plan, which shall detail actions to be taken specified in the Bank
Order.
    
    Effective immediately, the Bank (i) will not originate or purchase or
commit to originate or purchase, any new construction, multifamily,
non-residential, land or commercial mortgage loans (Covered Loans),
nor may the Bank renew or modify an existing Covered Loans without
meeting specified conditions; (ii) will not without the prior written
approval of the OTS increase its total assets during any quarter in
excess of an amount equal to net interest credited on deposit
liabilities during the prior quarter; and (iii) will limit its acceptance or extension of brokered deposits.
    
    Within 60 days of the Effective Date, the Bank shall (i) submit to the
OTS a business plan through 2012 for achieving profitability and a
business plan to reduce the Banks level of problem assets, (ii)
revise its policies, procedures and methodology relating to the timely
 31




---



##### Table of Contents



establishment and maintenance of an adequate allowance for
loan  losses; (iii) revise its
written internal asset review and classification program to address
all corrective action set forth in the 2010 OTS Examination, which,
among other things, will provide for the appointment of a qualified,
experienced and independent third party to conduct annual reviews of
the Banks loan portfolio and assessments of the Banks internal asset
review process; (iv) revise its program for controlling risks
associated with concentrations of credit; and (v) revise its
Enterprise Risk Management Plan, and within 90 days of the Effective
Date, the Bank shall submit to the OTS an assessment of the Banks
board and management prepared by an independent third party.
    
    The Bank is to implement a liquidity funding plan that is
to include the designation of specific actions that will
be taken to reduce the Banks dependency on volatile
funding sources and a detailed cash flow analysis.
    
    Effective immediately, the Bank shall (i) not make any golden
parachute payments or prohibited indemnification payment unless the
Bank has complied with 12. C.F.R. Part 359 and 12 C.F.R Section
545.121; (ii) comply with the OTS prior notification requirements for
changes in directors and senior executive officers set forth in 12
C.F.R. Part 563, Subpart H; (iii) not enter into, extend or revise any
contractual arrangement relating to compensation or benefits with any
senior executive officer or director; and (iv) not enter into any
arrangement or contract with a third party service provider that is
significant or outside the Banks normal course of business without
obtaining written non-objection from the OTS.
    
    
    Within 60 days of the Effective Date, the Corporation shall submit to
the OTS (i) a plan to maintain and enhance the Corporations capital
and the Banks capital and ensure that the Bank complies with the
requirement imposed on it in the Bank Order; and (ii) a business plan
through calendar year 2012 for achieving profitability.
    
    The Corporation shall (i) not accept from the Bank or declare or pay
any dividends or capital distributions; (ii) not incur or increase any
debt without the prior written non-objection of the OTS; (iii) not
make any golden parachute payment or any prohibited indemnification
payment unless the Corporation complies with 12 C.F.R. Part 359; (iv)
comply with the OTSs prior notification requirements for changes in
directors and senior executive officers set forth in 12 C.F.R. Part
563, Subpart H; (v) not enter into, renew or extend any
contractual arrangements related to compensation or benefits with any
director or senior executive officer of the Corporation without first
providing prior written notice to the OTS; and (vi) not enter
into any arrangement or contract with a third party service provider
that is significant or outside the normal course of business without
obtaining written non-objection from the OTS.
   
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Basis of Presentation
  32




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##### Table of Contents



Forward-Looking Statements
      Overview
 st
       33




---



##### Table of Contents



Certain
Factors Contributing to Our Recent Results and Our Response to Those
Factors
 The
Economic Downturn
 Efforts
to Deleverage and Add Capital.
  34




---



##### Table of Contents



Events Specific to the Third Quarter of 2010
  Need
for Additional Capital
 35




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##### Table of Contents



Recent Developments
    
    
    Superior Bank shall cease and desist from any action
for or toward causing, bringing about, participating
in, counseling, or aiding and abetting unsafe or
unsound banking practices, which resulted in certain
occurrences that are specified in the Superior Bank Order.
    
    No later than March 31, 2011, Superior Bank shall achieve, and
maintain thereafter, a Tier 1 (Core) Capital Ratio of at least
10.0% and a Total Risk-Based Capital Ratio of at least 14.0% after
funding an adequate allowance for loan losses.
    
    Within 60 days of the Effective Date, Superior Bank
shall adopt and submit to the OTS a written capital
plan to achieve and maintain the foregoing capital
levels specifying target dates to reach certain
capital levels. If Superior Bank fails to achieve the
required capital levels in the prescribed time frame
or otherwise fails to meet its capital plan, then
within 15 days Superior Bank shall prepare a contingency
plan, which shall detail further actions to be taken
to achieve (i) merger with, or acquisition by another federally
insured depository institution, or (ii) voluntary dissolution.
    
    Beginning on the Effective Date, Superior Bank (i)
will not originate or purchase or commit to originate
or purchase, any new construction, multifamily,
non-residential, land or commercial mortgage loans
(Covered Loans), nor may Superior Bank renew or modify
an existing Covered Loans without meeting specified
conditions; and (ii) will not, without the prior
written approval of the OTS, increase its total
assets during any quarter in excess of an amount
equal to net interest credited on deposit liabilities
during the prior quarter.
    
    Within 60 days of the Effective Date, Superior Bank
(i) shall submit to the OTS a business plan through
2012 for achieving profitability and a business plan
to reduce Superior Banks level of problem assets, (ii)
shall revise its policies, procedures  and methodology
relating to the timely establishment and maintenance of an adequate
allowance for loan  losses; (iii) shall revise its written
internal asset review and classification program to
address all corrective action set forth in the OTSs
2010 Examination, which, among other things, will
provide for the appointment of a qualified,
experienced and independent third party to conduct
annual reviews of Superior Banks loan portfolio and
assessments of the Banks internal asset review
process; (iv) shall revise its program for
controlling risks associated with concentrations of
credit; (v) shall revise its Enterprise Risk
Management Plan; and (vi) within 90 days of the
Effective Date, Superior Bank shall submit to the OTS an
assessment of Superior Banks board and management
prepared by an independent third party.
    
    Superior Bank is to implement a liquidity funding plan that is to
include the designation of specific actions that will be taken to
reduce Superior Banks dependency on volatile funding sources and a
detailed cash flow analysis.
    
    Beginning on the Effective Date, Superior Bank (i)
shall not make any golden parachute payments or
prohibited indemnification payment unless Superior Bank
has complied with 12. C.F.R. Part 359 and 12 C.F.R
Section 545.121; (ii) shall comply with the OTS prior
notification requirements for changes in directors
and senior executive officers set forth in 12 C.F.R.
Part 563, Subpart H; (iii) shall not enter into,
extend or revise any contractual arrangement relating
to compensation or benefits with any senior executive
officer or director; and (iv) shall not enter into
any arrangement or contract with a third party
service provider that is significant or outside Superior
Banks normal course of business without obtaining
written non-objection from the OTS.
  36




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##### Table of Contents




    
    Within 60 days of the Effective Date, we shall
submit to the OTS (i) a plan to maintain and enhance
our capital and Superior Banks capital and ensure that
Superior Bank complies with the requirements imposed on it
in the Superior Bank Order to Cease and Desist summarized above; and (ii) a
business plan through calendar year 2012 for
achieving profitability.
    
    We (i) shall not accept from Superior Bank or declare or pay any
dividends or capital distributions; (ii) shall not incur or
increase any debt without the prior written non-objection of the
OTS; (iii) shall not make any golden parachute payment or any
prohibited indemnification payment unless the Company complies
with 12 C.F.R. Part 359; (iv) shall comply with the OTSs prior
notification requirements for changes in directors and senior
executive officers set forth in 12 C.F.R. Part 563, Subpart H; (v) shall not enter into, renew or extend any contractual
arrangements related to compensation or benefits with any of our
directors or senior executive officers without first providing
prior written notice to the OTS; and (vi) not enter into any
arrangement or contract with a third party service provider that is
significant or outside the normal course of business without
obtaining written non-objection from the OTS.
    Liquidity and Capital
   Recent Accounting Pronouncements
  Results of Operations
    37




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##### Table of Contents



For the
    
    For theThree Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2010
    
    2009
    
    2010
    
    2009(Dollars in thousands, except per share data)Net (loss) income
    
    $
    (135,893
    )
    
    $
    880
    
    
    $
    (195,355
    )
    
    $
    (8,390
    )Net loss applicable to common shareholders
    
    
    (137,780
    )
    
    
    (287
    )
    
    
    (198,141
    )
    
    
    (11,867
    )Net loss per common share (diluted)
    
    
    (11.00
    )
    
    
    (0.03
    )
    
    
    (16.29
    )
    
    
    (1.14
    )Net interest margin
    
    
    2.77
    %
    
    
    3.36
    %
    
    
    2.99
    %
    
    
    3.23
    %Net interest spread
    
    
    2.65
    
    
    
    3.17
    
    
    
    2.86
    
    
    
    3.04Return on average assets
    
    
    (16.25
    )
    
    
    0.11
    
    
    
    (7.88
    )
    
    
    (0.36
    )Return on average stockholders equity
    
    
    (379.45
    )
    
    
    1.44
    
    
    
    (149.31
    )
    
    
    (4.54
    )Common book value per share
    
    $
    (.55
    )
    
    $
    14.82
    
    
    $
    (.55
    )
    
    $
    14.82
 38




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##### Table of Contents



Three Months Ended September 30,2010
    
    
    2009Average
    
    
    Income/
    
    
    Yield/
    
    
    Average
    
    
    Income/
    
    
    Yield/Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate(Dollars in thousands)ASSETSInterest-earning assets:Loans, net of unearned income (1)
    
    $
    2,519,036
    
    
    $
    34,108
    
    
    
    5.37
    %
    
    $
    2,487,262
    
    
    $
    36,783
    
    
    
    5.87
    %Investment securitiesTaxable
    
    
    236,996
    
    
    
    2,299
    
    
    
    3.85
    
    
    
    256,194
    
    
    
    3,362
    
    
    
    5.21Tax-exempt (2)
    
    
    29,341
    
    
    
    458
    
    
    
    6.19
    
    
    
    41,384
    
    
    
    655
    
    
    
    6.28Total investment securities
    
    
    266,337
    
    
    
    2,757
    
    
    
    4.11
    
    
    
    297,578
    
    
    
    4,017
    
    
    
    5.36Federal funds sold
    
    
    1,579
    
    
    
    1
    
    
    
    0.25
    
    
    
    1,849
    
    
    
    1
    
    
    
    0.21Other investments
    
    
    256,520
    
    
    
    542
    
    
    
    0.84
    
    
    
    66,766
    
    
    
    471
    
    
    
    2.80Total interest-earning assets
    
    
    3,043,472
    
    
    
    37,408
    
    
    
    4.88
    
    
    
    2,853,455
    
    
    
    41,272
    
    
    
    5.74Noninterest-earning assets:Cash and due from banks
    
    
    66,015
    
    
    
    
    
    
    
    
    
    
    
    61,211Premises and equipment
    
    
    102,534
    
    
    
    
    
    
    
    
    
    
    
    105,327Accrued interest and other assets
    
    
    188,257
    
    
    
    
    
    
    
    
    
    
    
    171,092Allowance for loan losses
    
    
    (81,635
    )
    
    
    
    
    
    
    
    
    
    
    (33,780
    )Total assets
    
    $
    3,318,643
    
    
    
    
    
    
    
    
    
    
    $
    3,157,305LIABILITIES AND STOCKHOLDERS EQUITYInterest-bearing liabilities:Demand deposits
    
    $
    600,576
    
    
    $
    1,538
    
    
    
    1.02
    %
    
    $
    649,622
    
    
    $
    2,129
    
    
    
    1.30
    %Savings deposits
    
    
    360,376
    
    
    
    896
    
    
    
    0.99
    
    
    
    257,163
    
    
    
    872
    
    
    
    1.35Time deposits
    
    
    1,565,726
    
    
    
    8,409
    
    
    
    2.13
    
    
    
    1,400,972
    
    
    
    10,312
    
    
    
    2.92Other borrowings
    
    
    265,775
    
    
    
    2,505
    
    
    
    3.74
    
    
    
    279,528
    
    
    
    2,619
    
    
    
    3.72Subordinated debentures (2)
    
    
    81,296
    
    
    
    2,828
    
    
    
    13.80
    
    
    
    60,743
    
    
    
    1,204
    
    
    
    7.86Total interest-bearing liabilities
    
    
    2,873,749
    
    
    
    16,176
    
    
    
    2.23
    
    
    
    2,648,028
    
    
    
    17,136
    
    
    
    2.57Noninterest-bearing liabilities:Demand deposits
    
    
    277,453
    
    
    
    
    
    
    
    
    
    
    
    251,696Accrued interest and other liabilities
    
    
    25,367
    
    
    
    
    
    
    
    
    
    
    
    14,391Total liabilities
    
    
    3,176,569
    
    
    
    
    
    
    
    
    
    
    
    2,914,115Stockholders equity
    
    
    142,074
    
    
    
    
    
    
    
    
    
    
    
    243,190Total liabilities and
stockholders equity
    
    $
    3,318,643
    
    
    
    
    
    
    
    
    
    
    $
    3,157,305Net interest income/net interest spread
    
    
    
    
    
    
    21,232
    
    
    
    2.65
    %
    
    
    
    
    
    
    24,136
    
    
    
    3.17
    %Net yield on earning assets
    
    
    
    
    
    
    
    
    
    
    2.77
    %
    
    
    
    
    
    
    
    
    
    
    3.36
    %Taxable equivalent adjustment (2):Investment securities
    
    
    
    
    
    
    (156
    )
    
    
    
    
    
    
    
    
    
    
    (223
    )Interest expense on subordinated debentures
    
    
    
    
    
    
    444
    
    
    
    
    
    
    
    
    
    
    
    Net interest income
    
    
    
    
    
    $
    21,520
    
    
    
    
    
    
    
    
    
    
    $
    23,913
 39




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##### Table of Contents



Nine Months Ended September 30,2010
    
    
    2009Average
    
    
    Income/
    
    
    Yield/
    
    
    Average
    
    
    Income/
    
    
    Yield/Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate(Dollars in thousands)ASSETSInterest-earning assets:Loans, net of unearned income (1)
    
    $
    2,541,124
    
    
    $
    106,662
    
    
    
    5.61
    %
    
    $
    2,446,491
    
    
    $
    107,693
    
    
    
    5.89
    %Investment securitiesTaxable
    
    
    249,816
    
    
    
    7,835
    
    
    
    4.19
    
    
    
    282,666
    
    
    
    11,148
    
    
    
    5.27Tax-exempt (2)
    
    
    29,793
    
    
    
    1,406
    
    
    
    6.31
    
    
    
    41,062
    
    
    
    1,962
    
    
    
    6.39Total investment securities
    
    
    279,609
    
    
    
    9,241
    
    
    
    4.42
    
    
    
    323,728
    
    
    
    13,110
    
    
    
    5.41Federal funds sold
    
    
    2,158
    
    
    
    4
    
    
    
    0.25
    
    
    
    4,176
    
    
    
    8
    
    
    
    0.26Other investments
    
    
    189,288
    
    
    
    1,307
    
    
    
    0.92
    
    
    
    65,422
    
    
    
    1,289
    
    
    
    2.63Total interest-earning assets
    
    
    3,012,179
    
    
    
    117,214
    
    
    
    5.20
    
    
    
    2,839,817
    
    
    
    122,100
    
    
    
    5.75Noninterest-earning assets:Cash and due from banks
    
    
    69,712
    
    
    
    
    
    
    
    
    
    
    
    71,085Premises and equipment
    
    
    102,548
    
    
    
    
    
    
    
    
    
    
    
    105,309Accrued interest and other assets
    
    
    186,716
    
    
    
    
    
    
    
    
    
    
    
    161,194Allowance for loan losses
    
    
    (55,864
    )
    
    
    
    
    
    
    
    
    
    
    (30,948
    )Total assets
    
    $
    3,315,291
    
    
    
    
    
    
    
    
    
    
    $
    3,146,457LIABILITIES AND STOCKHOLDERS EQUITYInterest-bearing liabilities:Demand deposits
    
    $
    640,799
    
    
    $
    5,653
    
    
    
    1.18
    %
    
    $
    654,703
    
    
    $
    6,495
    
    
    
    1.33
    %Savings deposits
    
    
    334,368
    
    
    
    2,986
    
    
    
    1.19
    
    
    
    230,969
    
    
    
    2,697
    
    
    
    1.56Time deposits
    
    
    1,523,135
    
    
    
    25,183
    
    
    
    2.21
    
    
    
    1,387,712
    
    
    
    33,125
    
    
    
    3.19Other borrowings
    
    
    267,517
    
    
    
    7,568
    
    
    
    3.78
    
    
    
    301,595
    
    
    
    7,558
    
    
    
    3.35Subordinated debentures (2)
    
    
    83,335
    
    
    
    8,502
    
    
    
    13.64
    
    
    
    60,796
    
    
    
    3,602
    
    
    
    7.92Total interest-bearing liabilities
    
    $
    2,849,154
    
    
    
    49,892
    
    
    
    2.34
    
    
    $
    2,635,775
    
    
    
    53,477
    
    
    
    2.71Noninterest-bearing liabilities:Demand deposits
    
    
    269,618
    
    
    
    
    
    
    
    
    
    
    
    243,094Accrued interest and other liabilities
    
    
    21,913
    
    
    
    
    
    
    
    
    
    
    
    18,715Total liabilities
    
    
    3,140,685
    
    
    
    
    
    
    
    
    
    
    
    2,897,584Stockholders equity
    
    
    174,606
    
    
    
    
    
    
    
    
    
    
    
    248,873Total liabilities and stockholders equity
    
    $
    3,315,291
    
    
    
    
    
    
    
    
    
    
    $
    3,146,457Net interest income/net interest spread
    
    
    
    
    
    
    67,322
    
    
    
    2.86
    %
    
    
    
    
    
    
    68,623
    
    
    
    3.04
    %Net yield on earning assets
    
    
    
    
    
    
    
    
    
    
    2.99
    %
    
    
    
    
    
    
    
    
    
    
    3.23
    %Taxable equivalent adjustment (2):Investment securities
    
    
    
    
    
    
    (477
    )
    
    
    
    
    
    
    
    
    
    
    (667
    )Interest expense on subordinated debentures
    
    
    
    
    
    
    1,333
    
    
    
    
    
    
    
    
    
    
    
    Net interest income
    
    
    
    
    
    $
    68,178
    
    
    
    
    
    
    
    
    
    
    $
    67,956
 
 (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%. 40




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##### Table of Contents



Increase (Decrease) inThree Months Ended September 30,
    
    
    Nine Months Ended September 30,2010 vs. 2009
    
    
    2010 vs. 2009Average
    
    
    Income/
    
    
    Yield/
    
    
    Average
    
    
    Income/
    
    
    Yield/Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate(Dollars in thousands)ASSETSInterest-earning assets:Loans, net of unearned income
    
    $
    31,774
    
    
    $
    (2,675
    )
    
    
    (0.50
    )%
    
    $
    94,633
    
    
    $
    (1,031
    )
    
    
    (0.28
    )%Investment securitiesTaxable
    
    
    (19,198
    )
    
    
    (1,063
    )
    
    
    (1.36
    )
    
    
    (32,850
    )
    
    
    (3,313
    )
    
    
    (1.08
    )Tax-exempt
    
    
    (12,043
    )
    
    
    (197
    )
    
    
    (0.09
    )
    
    
    (11,269
    )
    
    
    (556
    )
    
    
    (0.08
    )Total investment securities
    
    
    (31,241
    )
    
    
    (1,260
    )
    
    
    (1.25
    )
    
    
    (44,119
    )
    
    
    (3,869
    )
    
    
    (0.99
    )Federal funds sold
    
    
    (270
    )
    
    
    
    
    
    
    0.04
    
    
    
    (2,018
    )
    
    
    (4
    )
    
    
    (0.01
    )Other investments
    
    
    189,754
    
    
    
    71
    
    
    
    (1.96
    )
    
    
    123,866
    
    
    
    18
    
    
    
    (1.71
    )Total interest-earning assets
    
    $
    190,017
    
    
    
    (3,864
    )
    
    
    (0.86
    )
    
    $
    172,362
    
    
    
    (4,886
    )
    
    
    (0.55
    )Interest-bearing liabilities:Demand deposits
    
    $
    (49,046
    )
    
    $
    (591
    )
    
    
    (0.28
    )%
    
    $
    (13,904
    )
    
    $
    (842
    )
    
    
    (0.15
    )%Savings deposits
    
    
    103,213
    
    
    
    24
    
    
    
    (0.36
    )
    
    
    103,399
    
    
    
    289
    
    
    
    (0.37
    )Time deposits
    
    
    164,754
    
    
    
    (1,903
    )
    
    
    (0.79
    )
    
    
    135,423
    
    
    
    (7,942
    )
    
    
    (0.98
    )Other borrowings
    
    
    (13,753
    )
    
    
    (114
    )
    
    
    0.02
    
    
    
    (34,078
    )
    
    
    10
    
    
    
    0.43Subordinated debentures
    
    
    20,553
    
    
    
    1,624
    
    
    
    5.94
    
    
    
    22,539
    
    
    
    4,900
    
    
    
    5.72Total interest-bearing liabilities
    
    $
    225,721
    
    
    
    (960
    )
    
    
    (0.34
    )
    
    $
    213,379
    
    
    
    (3,585
    )
    
    
    (0.37
    )Net interest income/net interest spread
    
    
    
    
    
    
    (2,904
    )
    
    
    (0.52
    )%
    
    
    
    
    
    
    (1,301
    )
    
    
    (0.18
    )%Net yield on earning assets
    
    
    
    
    
    
    
    
    
    
    (0.59
    )%
    
    
    
    
    
    
    
    
    
    
    (0.24
    )%Taxable equivalent adjustment:Investment securities
    
    
    
    
    
    
    67
    
    
    
    
    
    
    
    
    
    
    
    190Interest expense on subordinated debentures
    
    
    
    
    
    
    444
    
    
    
    
    
    
    
    
    
    
    
    1,333Net interest income
    
    
    
    
    
    $
    (2,393
    )
    
    
    
    
    
    
    
    
    
    $
    222
 41




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##### Table of Contents



Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2010 vs. 2009 (1)
    
    
    2010 vs. 2009 (1)Increase
    
    
    Changes Due To
    
    
    Increase
    
    
    Changes Due To(Decrease)
    
    
    Rate
    
    
    Volume
    
    
    (Decrease)
    
    
    Rate
    
    
    Volume(Dollars in thousands)
    
    
    (Dollars in thousands)Increase (decrease) in:Income from interest-earning assets:Interest and fees on loans
    
    $
    (2,675
    )
    
    $
    (3,144
    )
    
    $
    469
    
    
    $
    (1,031
    )
    
    $
    (5,166
    )
    
    $
    4,135Interest on securities:Taxable
    
    
    (1,063
    )
    
    
    (826
    )
    
    
    (237
    )
    
    
    (3,313
    )
    
    
    (2,114
    )
    
    
    (1,199
    )Tax-exempt
    
    
    (197
    )
    
    
    (9
    )
    
    
    (188
    )
    
    
    (556
    )
    
    
    (24
    )
    
    
    (532
    )Interest on federal funds
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4
    )
    
    
    
    
    
    
    (4
    )Interest on other investments
    
    
    71
    
    
    
    (515
    )
    
    
    586
    
    
    
    18
    
    
    
    (1,241
    )
    
    
    1,259Total interest income
    
    
    (3,864
    )
    
    
    (4,494
    )
    
    
    630
    
    
    
    (4,886
    )
    
    
    (8,545
    )
    
    
    3,659Expense from interest-bearing liabilities:Interest on demand deposits
    
    
    (591
    )
    
    
    (438
    )
    
    
    (153
    )
    
    
    (842
    )
    
    
    (709
    )
    
    
    (133
    )Interest on savings deposits
    
    
    24
    
    
    
    (271
    )
    
    
    295
    
    
    
    289
    
    
    
    (736
    )
    
    
    1,025Interest on time deposits
    
    
    (1,903
    )
    
    
    (3,017
    )
    
    
    1,114
    
    
    
    (7,942
    )
    
    
    (10,932
    )
    
    
    2,990Interest on other borrowings
    
    
    (114
    )
    
    
    14
    
    
    
    (128
    )
    
    
    10
    
    
    
    914
    
    
    
    (904
    )Interest on subordinated debentures
    
    
    1,624
    
    
    
    1,121
    
    
    
    503
    
    
    
    4,900
    
    
    
    3,238
    
    
    
    1,662Total interest expense
    
    
    (960
    )
    
    
    (2,591
    )
    
    
    1,631
    
    
    
    (3,585
    )
    
    
    (8,225
    )
    
    
    4,640Net interest income
    
    $
    (2,904
    )
    
    $
    (1,903
    )
    
    $
    (1,001
    )
    
    $
    (1,301
    )
    
    $
    (320
    )
    
    $
    (981
    )
 
 (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. 42




---



##### Table of Contents



Noninterest income
  Three Months Ended September 30,2010
    
    
    2009
    
    
    % Change(Dollars in thousands)Service charges and fees on deposits
    
    $
    2,268
    
    
    $
    2,595
    
    
    
    (12.60
    )%Mortgage banking income
    
    
    6,198
    
    
    
    1,506
    
    
    
    311.55Investment securities gains (losses)
    
    
    (306
    )
    
    
    2,121
    
    
    NCMChange in fair value of derivatives
    
    
    (1,481
    )
    
    
    435
    
    
    
    (440.46
    )Increase in cash surrender value of life insurance
    
    
    576
    
    
    
    568
    
    
    
    1.41Gain on exchange of subordinated debt for common stock
    
    
    
    
    
    
    
    
    
    NCMOther noninterest income
    
    
    552
    
    
    
    1,254
    
    
    
    (55.98
    )Total
    
    $
    7,807
    
    
    $
    8,479
    
    
    NCM
%
 Nine Months Ended September 30,2010
    
    
    2009
    
    
    % Change(Dollars in thousands)Service charges and fees on deposits
    
    $
    6,819
    
    
    $
    7,506
    
    
    
    (9.15
    )%Mortgage banking income
    
    
    10,875
    
    
    
    5,468
    
    
    
    98.88Investment securities gains (losses)
    
    
    852
    
    
    
    (9,506
    )
    
    NCMChange in fair value of derivatives
    
    
    (1,510
    )
    
    
    170
    
    
    NCMIncrease in cash surrender value of life insurance
    
    
    1,702
    
    
    
    1,623
    
    
    
    4.87Gain on exchange of subordinated debt for common stock
    
    
    507
    
    
    
    
    
    
    NCMOther noninterest income
    
    
    3,302
    
    
    
    3,811
    
    
    
    (13.36
    )Total
    
    $
    22,547
    
    
    $
    9,072
    
    
    NCM
%
 
  43




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##### Table of Contents



Noninterest expenses
  Three Months Ended September 30,%2010
    
    
    2009
    
    
    Change(Dollars in thousands)Noninterest ExpensesSalaries and employee benefits
    
    $
    14,062
    
    
    $
    12,234
    
    
    
    14.94
    %Occupancy, furniture and equipment expense
    
    
    5,012
    
    
    
    4,478
    
    
    
    11.92Amortization of core deposit intangibles
    
    
    870
    
    
    
    985
    
    
    
    (11.68
    )FDIC assessments
    
    
    2,613
    
    
    
    921
    
    
    
    183.71Foreclosure losses
    
    
    6,187
    
    
    
    1,337
    
    
    
    362.75Professional fees
    
    
    2,545
    
    
    
    815
    
    
    
    212.27Insurance expense
    
    
    908
    
    
    
    682
    
    
    
    33.14Postage, stationery and supplies
    
    
    671
    
    
    
    777
    
    
    
    (13.64
    )Communications expense
    
    
    752
    
    
    
    760
    
    
    
    (1.05
    )Advertising expense
    
    
    588
    
    
    
    615
    
    
    
    (4.39
    )Other operating expense
    
    
    1,934
    
    
    
    2,038
    
    
    
    (5.10
    )Total
    
    $
    36,142
    
    
    $
    25,642
    
    
    
    40.95
    %
 Nine Months Ended September 30,%2010
    
    
    2009
    
    
    Change(Dollars in thousands)Noninterest ExpensesSalaries and employee benefits
    
    $
    42,102
    
    
    $
    36,976
    
    
    
    13.86
    %Occupancy, furniture and equipment expense
    
    
    14,625
    
    
    
    13,397
    
    
    
    9.17Amortization of core deposit intangibles
    
    
    2,609
    
    
    
    2,956
    
    
    
    (11.74
    )FDIC assessment
    
    
    5,846
    
    
    
    3,310
    
    
    
    76.62Foreclosure losses
    
    
    12,122
    
    
    
    3,656
    
    
    
    231.56Professional fees
    
    
    5,363
    
    
    
    2,607
    
    
    
    105.72Insurance expense
    
    
    2,435
    
    
    
    1,903
    
    
    
    27.96Postage, stationery and supplies
    
    
    2,135
    
    
    
    2,264
    
    
    
    (5.70
    )Communications expense
    
    
    2,187
    
    
    
    2,322
    
    
    
    (5.81
    )Advertising expense
    
    
    1,885
    
    
    
    1,952
    
    
    
    (3.43
    )Other operating expense
    
    
    6,175
    
    
    
    6,159
    
    
    
    0.26Total
    
    $
    97,484
    
    
    $
    77,502
    
    
    
    25.78
    %
 44




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##### Table of Contents



Income tax
     Provision for Loan Losses and Loan Charge-offs
  45




---



##### Table of Contents



For The Three Months EndedSeptember 30,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,2010
    
    
    2010
    
    
    2009
    
    
    2009(Dollars in thousands)Beginning allowance for loan losses
    
    $
    79,425
    
    
    $
    43,190
    
    
    $
    33,504
    
    
    $
    34,336Provision for loan losses
    
    
    102,106
    
    
    
    50,363
    
    
    
    5,169
    
    
    
    13,947Total charge-offs
    
    
    30,422
    
    
    
    14,633
    
    
    
    4,546
    
    
    
    6,793Total recoveries
    
    
    (253
    )
    
    
    (505
    )
    
    
    (209
    )
    
    
    (394
    )Net charge-offs
    
    
    30,169
    
    
    
    14,128
    
    
    
    4,337
    
    
    
    6,399Ending allowance for loan losses
    
    $
    151,362
    
    
    $
    79,425
    
    
    $
    34,336
    
    
    $
    41,884Total loans, net of unearned income
    
    $
    2,415,862
    
    
    $
    2,482,560
    
    
    $
    2,434,534
    
    
    $
    2,472,697Allowance for loan losses to total loans, net of unearned income
    
    
    6.27
    %
    
    
    3.20
    %
    
    
    1.41
    %
    
    
    1.69
    %
 For The Nine Months Ended
    
    
    Year EndedSeptember 30,
    
    
    September 30,
    
    
    December 31,2010
    
    
    2009
    
    
    2009(Dollars in thousands)Beginning allowance for loan losses
    
    $
    41,884
    
    
    $
    28,850
    
    
    $
    28,850Provision for loan losses
    
    
    161,596
    
    
    
    14,602
    
    
    
    28,550Total charge-offs
    
    
    52,837
    
    
    
    9,868
    
    
    
    16,661Total recoveries
    
    
    (719
    )
    
    
    (752
    )
    
    
    (1,145
    )Net charge-offs
    
    
    52,118
    
    
    
    9,116
    
    
    
    15,516Ending allowance for loan losses
    
    $
    151,362
    
    
    $
    34,336
    
    
    $
    41,884
  Results of Segment Operations
  For the
    
    
    For theThree Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009(Dollars in thousands)Alabama region
    
    $
    (2,512
    )
    
    $
    1,976
    
    
    $
    371
    
    
    $
    2,783Florida region
    
    
    (36,156
    )
    
    
    864
    
    
    
    (45,971
    )
    
    
    5,828Administrative and other
    
    
    (70,253
    )
    
    
    (1,259
    )
    
    
    (122,755
    )
    
    
    (23,687
    )Income tax expense (benefit)
    
    
    26,972
    
    
    
    701
    
    
    
    27,000
    
    
    
    (6,686
    )Consolidated net (loss) benefit
    
    $
    (135,893
    )
    
    $
    880
    
    
    $
    (195,355
    )
    
    $
    (8,390
    )
 46




---



##### Table of Contents



Alabama Region
      Florida Region
      47




---



##### Table of Contents



Fair Value Measurements
    Financial Condition
  Short-term liquid assets
  48




---



##### Table of Contents



Investment Securities
   Investment Portfolio
  Available-for-SaleSeptember 30,
    
    
    December 31,
    
    
    Percent2010
    
    
    2009
    
    
    Change(Dollars in thousands)Investment securities available-for-sale:U.S. agency securities
    
    $
    18,596
    
    
    $
    53,681
    
    
    
    (65.4
    )%MBSU.S. Agency pass-through
    
    
    105,698
    
    
    
    163,724
    
    
    
    (35.4
    )U.S. Agency collateralized mortgage obligation (CMO)
    
    
    83,779
    
    
    
    12,759
    
    
    NCMPrivate-label CMO
    
    
    13,269
    
    
    
    16,191
    
    
    
    (18.0
    )Total MBS
    
    
    202,746
    
    
    
    192,674
    
    
    
    5.2State, county and municipal securities
    
    
    30,167
    
    
    
    31,462
    
    
    
    (4.1
    )Corporate obligationsCorporate debt
    
    
    4,000
    
    
    
    4,000
    
    
    
    Pooled trust preferred securities
    
    
    3,579
    
    
    
    3,203
    
    
    
    11.7Single issue trust preferred securities
    
    
    1,775
    
    
    
    977
    
    
    
    81.7Total corporate obligations
    
    
    9,354
    
    
    
    8,180
    
    
    
    14.4Equity securities
    
    
    139
    
    
    
    313
    
    
    
    (55.6
    )Total investment securities available-for-sale
    
    $
    261,002
    
    
    $
    286,310
    
    
    
    (8.8
    )%
 49




---



##### 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 ImpairedMBSU.S. Agency pass-through
    
    $
    74
    
    
    $
    
    
    
    $
    239
    
    
    $
    7
    
    
    $
    313
    
    
    $
    7U.S. Agency CMO
    
    
    38
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38
    
    
    
    Private-label CMO
    
    
    
    
    
    
    
    
    
    
    5,903
    
    
    
    850
    
    
    
    5,903
    
    
    
    850Total MBS
    
    
    112
    
    
    
    
    
    
    
    6,142
    
    
    
    857
    
    
    
    6,254
    
    
    
    857State, county and municipal securities
    
    
    1,585
    
    
    
    79
    
    
    
    970
    
    
    
    129
    
    
    
    2,555
    
    
    
    208Corporate obligations:Corporate debt
    
    
    
    
    
    
    
    
    
    
    4,000
    
    
    
    82
    
    
    
    4,000
    
    
    
    82Single issue trust preferred securities
    
    
    
    
    
    
    
    
    
    
    1,775
    
    
    
    3,225
    
    
    
    1,775
    
    
    
    3,225Total corporate obligations
    
    
    
    
    
    
    
    
    
    
    5,775
    
    
    
    3,307
    
    
    
    5,775
    
    
    
    3,307Total temporarily impaired securities
    
    
    1,697
    
    
    
    79
    
    
    
    12,887
    
    
    
    4,293
    
    
    
    14,584
    
    
    
    4,372Other-than-temporarily ImpairedMBSPrivate-label CMO
    
    
    
    
    
    
    
    
    
    
    3,094
    
    
    
    1,384
    
    
    
    3,094
    
    
    
    1,384Corporate obligationsPooled trust preferred securities
    
    
    
    
    
    
    
    
    
    
    3,579
    
    
    
    4,501
    
    
    
    3,579
    
    
    
    4,501Total OTTI securities
    
    
    
    
    
    
    
    
    
    
    6,673
    
    
    
    5,885
    
    
    
    6,673
    
    
    
    5,885Total temporarily and
other-than-temporarily impaired
    
    $
    1,697
    
    
    $
    79
    
    
    $
    19,560
    
    
    $
    10,178
    
    
    $
    21,257
    
    
    $
    10,257
 
 (1)
    
    Unrealized losses are included in other comprehensive income (loss), net of unrealized
gains and applicable income taxes. Other-Than-Temporary-Impairment
     50




---



##### Table of Contents



Mortgage-backed securities
  Credit Support
    
    
    NetRating
    
    
    
    
    
    Coverage
    
    
    UnrealizedMoody/Fitch
    
    Count
    
    
    Ratios (1)
    
    
    (Loss) GainA1/NR
    
    
    1
    
    
    
    2.61
    
    
    $
    (162
    )Aaa/NR
    
    
    1
    
    
    
    4.73
    
    
    
    NR/AAA
    
    
    1
    
    
    
    3.08
    
    
    
    111NR/AA
    
    
    1
    
    
    
    3.26
    
    
    
    (143
    )B2/AA
    
    
    1
    
    
    
    N/A
    
    
    
    (452
    )B2/NR
    
    
    1
    
    
    
    3.99
    
    
    
    (56
    )NR/BBB
    
    
    1
    
    
    
    2.17
    
    
    
    (37
    )Caa2/CCC (2)
    
    
    1
    
    
    
    0.75
    
    
    
    (1,384
    )NR/C (2)
    
    
    2
    
    
    
    0.00-0.25
    
    
    
    128Total
    
    
    10
    
    
    
    
    
    
    $
    (1,995
    )
 
 (1)
    
    The Credit Support Coverage Ratio 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.  51




---



##### Table of Contents



Discount
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Year-to-DateMargin
    
    
    
    
    
    
    
    
    
    
    
    
    
    Actual
    
    
    OTTIPrice
    
    Basis
    
    
    
    
    
    Cumulative
    
    Average
    
    60+ Days
    
    CreditSecurity
    
    (%)
    
    Points
    
    Yield
    
    Default
    
    Security
    
    Delinquent
    
    Portion
    
    
    Other
    
    
    TotalCMO 1
    
    
    10.76
    
    
    
    1756
    
    
    
    18%
    
    
    
    55.09%
    
    
    
    50%
    
    
    
    16.27%
    
    
    $
    (54
    )
    
    $
    (85
    )
    
    $
    (139
    )CMO 2
    
    
    17.57
    
    
    
    1629
    
    
    
    17%
    
    
    
    49.04%
    
    
    
    45%
    
    
    
    27.72%
    
    
    
    
    
    
    
    
    
    
    
    CMO 4
    
    
    63.01
    
    
    
    1440
    
    
    
    16%
    
    
    
    29.38%
    
    
    
    45%
    
    
    
    16.67%
    
    
    
    (97
    )
    
    
    74
    
    
    
    (23
    )$
    (151
    )
    
    $
    (11
    )
    
    $
    (162
    )
   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.
   52




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##### 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
    
    $
    2,135
    
    
    $
    896
    
    
    $
    (1,239
    )
    
    $
    
    
    
    $
    
    
    
    $
    MM Community Funding Ltd
    
    Pooled
    
    B

    
    
    1,957
    
    
    
    789
    
    
    
    (1,168
    )
    
    
    (20
    )
    
    
    (117
    )
    
    
    (137
    )Preferred Term Securities V
    
    Pooled
    
    MEZ
    
    
    1,145
    
    
    
    808
    
    
    
    (337
    )
    
    
    (61
    )
    
    
    37
    
    
    
    (24
    )Tpref Funding III Ltd
    
    Pooled
    
    B-2
    
    
    2,843
    
    
    
    1,086
    
    
    
    (1,757
    )
    
    
    (174
    )
    
    
    43
    
    
    
    (131
    )Emigrant Capital Trust (1)
    
    Single
    
    Sole
    
    
    5,000
    
    
    
    1,775
    
    
    
    (3,225
    )
    
    
    
    
    
    
    
    
    
    
    $
    13,080
    
    
    $
    5,354
    
    
    $
    (7,726
    )
    
    $
    (255
    )
    
    $
    (37
    )
    
    $
    (292
    )
 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
    
    C
    
    21
    
    
    21
    %
    
    
    18
    %
    
    
    0
    %MM Community Funding Ltd
    
    C
    
    7
    
    
    25
    %
    
    
    29
    %
    
    
    0
    %Preferred Term Securities V
    
    CCC
    
    2
    
    
    5
    %
    
    
    36
    %
    
    
    0
    %Tpref Funding III Ltd
    
    C
    
    22
    
    
    28
    %
    
    
    20
    %
    
    
    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
    
    $
    44.79
    
    
    Swap + 1800
    
    9.48% FixedMM Community Funding Ltd
    
    
    15.77
    
    
    LIBOR + 1500
    
    LIBOR + 310Preferred Term Securities V
    
    
    58.85
    
    
    LIBOR + 1600
    
    LIBOR + 210Tpref Funding III Ltd
    
    
    27.16
    
    
    LIBOR + 1200
    
    LIBOR + 190Emigrant Capital Trust (1)
    
    
    35.50
    
    
    LIBOR + 1162
    
    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 1162 basis points was derived from
implied credit spreads from certain publicly traded trust preferred securities within the
issuers 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.  53




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##### Table of Contents



For the Three
    
    
    For the NineMonths Ended
    
    
    Months EndedSeptember 30, 2010
    
    
    September 30, 2010(Dollars in thousands)Balance at beginning of period
    
    $
    8,924
    
    
    $
    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
    
    
    309
    
    
    
    405Reductions for securities where there is an intent to sell or requirement to sell
    
    
    
    
    
    
    (154
    )Reductions for securities that are in total default
    
    
    (1,434
    )
    
    
    (1,434
    )Reductions for increases in cash flows expected to be collected
    
    
    (447
    )
    
    
    (488
    )Balance at end of period
    
    $
    7,352
    
    
    $
    7,352
  Loans
 Composition of Loan Portfolio, Yield Changes and Diversification
  54




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##### Table of Contents



Distribution of Loans by Category
 September 30, 2010
    
    
    December 31, 2009Percent of
    
    
    
    
    
    
    Percent ofAmount
    
    
    Total
    
    
    Amount
    
    
    Total(Dollars in thousands)Commercial and industrial
    
    $
    177,905
    
    
    
    7.36
    %
    
    $
    213,329
    
    
    
    8.62
    %Real estate  construction and land development
    
    
    632,792
    
    
    
    26.16
    
    
    
    680,445
    
    
    
    27.48Real estate  mortgagesSingle-family
    
    
    699,428
    
    
    
    28.92
    
    
    
    691,364
    
    
    
    27.93Commercial
    
    
    820,483
    
    
    
    33.92
    
    
    
    801,813
    
    
    
    32.39Other
    
    
    31,242
    
    
    
    1.29
    
    
    
    28,885
    
    
    
    1.17Consumer
    
    
    56,160
    
    
    
    2.32
    
    
    
    58,785
    
    
    
    2.37Other
    
    
    817
    
    
    
    0.03
    
    
    
    969
    
    
    
    0.04Total loans
    
    
    2,418,827
    
    
    
    100.00
    %
    
    
    2,475,590
    
    
    
    100.00
    %Unearned income
    
    
    (2,965
    )
    
    
    
    
    
    
    (2,893
    )Allowance for loan losses
    
    
    (151,362
    )
    
    
    
    
    
    
    (41,884
    )Net loans
    
    $
    2,264,500
    
    
    
    
    
    
    $
    2,430,813
  September 30,
    
    December 31,
    
    Percent2010
    
    2009
    
    Change(Dollars in thousands)Total loans, net of unearned income
    
    $
    2,415,862
    
    
    $
    2,472,697
    
    
    
    (2.3
    )%Alabama segment
    
    
    969,673
    
    
    
    996,545
    
    
    
    (2.7
    )Florida segment
    
    
    1,176,382
    
    
    
    1,213,202
    
    
    
    (3.0
    )Other
    
    
    269,807
    
    
    
    262,950
    
    
    
    2.6
  55




---



##### Table of Contents



Residential
    
    
    CommercialDevelopment
    
    
    Development
    
    
    Total(Dollars in thousands)Real estate  construction and land developmentAs of September 30, 2010Alabama segment
    
    $
    153,994
    
    
    $
    74,520
    
    
    $
    228,514Florida segment
    
    
    109,471
    
    
    
    264,379
    
    
    
    373,850Other
    
    
    6,171
    
    
    
    24,257
    
    
    
    30,428Total
    
    $
    269,636
    
    
    $
    363,156
    
    
    $
    632,792As 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 September 30, 2010Alabama segment
    
    $
    425,650
    
    
    $
    307,787Florida segment
    
    
    225,971
    
    
    
    467,987Other
    
    
    47,807
    
    
    
    44,709Total
    
    $
    699,428
    
    
    $
    820,483As 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
  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.
 56




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##### Table of Contents



ASC 310-35
 Impaired Loans
 57




---



##### Table of Contents



Summary of Loan Loss Experience
 Three Months Ended
    
    
    Nine Months Ended
    
    
    Year EndedSeptember 30,
    
    
    September 30,
    
    
    December 31,2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2009(Dollars in thousands)Allowance for loan losses at beginning of period
    
    $
    79,425
    
    
    $
    33,504
    
    
    $
    41,884
    
    
    $
    28,850
    
    
    $
    28,850Charge-offs:Commercial and industrial
    
    
    2,085
    
    
    
    299
    
    
    
    5,020
    
    
    
    496
    
    
    
    1,390Real estate  construction and land development
    
    
    22,076
    
    
    
    1,751
    
    
    
    35,171
    
    
    
    2,806
    
    
    
    4,870Real estate  mortgageSingle-family
    
    
    4,198
    
    
    
    1,396
    
    
    
    8,001
    
    
    
    2,764
    
    
    
    5,372Commercial
    
    
    1,003
    
    
    
    85
    
    
    
    1,952
    
    
    
    933
    
    
    
    1,094Other
    
    
    57
    
    
    
    
    
    
    
    57
    
    
    
    186
    
    
    
    210Consumer
    
    
    964
    
    
    
    966
    
    
    
    2,404
    
    
    
    2,368
    
    
    
    3,346Other
    
    
    39
    
    
    
    49
    
    
    
    232
    
    
    
    315
    
    
    
    379Total charge-offs
    
    
    30,422
    
    
    
    4,546
    
    
    
    52,837
    
    
    
    9,868
    
    
    
    16,661Recoveries:Commercial and industrial
    
    
    11
    
    
    
    36
    
    
    
    70
    
    
    
    144
    
    
    
    161Real estate  construction and land development
    
    
    42
    
    
    
    9
    
    
    
    62
    
    
    
    35
    
    
    
    68Real estate  mortgageSingle-family
    
    
    55
    
    
    
    27
    
    
    
    146
    
    
    
    59
    
    
    
    71Commercial
    
    
    1
    
    
    
    35
    
    
    
    31
    
    
    
    40
    
    
    
    277Other
    
    
    13
    
    
    
    13
    
    
    
    74
    
    
    
    230
    
    
    
    251Consumer
    
    
    91
    
    
    
    51
    
    
    
    225
    
    
    
    134
    
    
    
    186Other
    
    
    40
    
    
    
    38
    
    
    
    111
    
    
    
    110
    
    
    
    131Total recoveries
    
    
    253
    
    
    
    209
    
    
    
    719
    
    
    
    752
    
    
    
    1,145Net charge-offs
    
    
    30,169
    
    
    
    4,337
    
    
    
    52,118
    
    
    
    9,116
    
    
    
    15,516Provision for loan losses
    
    
    102,106
    
    
    
    5,169
    
    
    
    161,596
    
    
    
    14,602
    
    
    
    28,550Allowance for loan losses at end of period
    
    $
    151,362
    
    
    $
    34,336
    
    
    $
    151,362
    
    
    $
    34,336
    
    
    $
    41,884Loans at end of period, net of unearned income
    
    $
    2,415,862
    
    
    $
    2,434,534
    
    
    $
    2,415,862
    
    
    $
    2,434,534
    
    
    $
    2,472,697Average loans, net of unearned income
    
    
    2,467,685
    
    
    
    2,422,871
    
    
    
    2,490,827
    
    
    
    2,384,287
    
    
    
    2,401,805Ratio of ending allowance to ending loans
    
    
    6.27
    %
    
    
    1.41
    %
    
    
    6.27
    %
    
    
    1.41
    %
    
    
    1.69
    %Ratio of net charge-offs to average loans (1)
    
    
    4.85
    
    
    
    0.71
    
    
    
    2.79
    
    
    
    0.51
    
    
    
    0.65Net charge-offs as a percentage of:Provision for loan losses
    
    
    29.55
    
    
    
    83.90
    
    
    
    32.25
    
    
    
    62.43
    
    
    
    54.35Allowance for loan losses (1)
    
    
    79.08
    
    
    
    50.10
    
    
    
    45.87
    
    
    
    35.36
    
    
    
    37.04Allowance for loan losses as a percentage of nonperforming loans
    
    
    65.40
    
    
    
    22.50
    
    
    
    65.40
    
    
    
    22.50
    
    
    
    26.25
 
 (1)
    
    Annualized. 58




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##### Table of Contents



Three Months Ended September 30, 2010 compared to Three Months Ended June 30, 2010
   Nine Months Ended September 30, 2010 compared to the Nine Months Ended September 30, 2009
   Allocation of the Allowance for Loan Losses
   59




---



##### Table of Contents



Allocation of the Allowance for Loan Losses
 September 30, 2010
    
    
    June 30, 2010
    
    
    December 31, 2009Percent
    
    
    
    
    
    
    Percent
    
    
    
    
    
    
    Percentof Loans
    
    
    
    
    
    
    of Loans
    
    
    
    
    
    
    of Loansin Each
    
    
    
    
    
    
    in Each
    
    
    
    
    
    
    in EachCategory
    
    
    
    
    
    
    Category
    
    
    
    
    
    
    Categoryto Total
    
    
    
    
    
    
    to Total
    
    
    
    
    
    
    to TotalAmount
    
    
    Loans
    
    
    Amount
    
    
    Loans
    
    
    Amount
    
    
    Loans(Dollars in thousands)Commercial and industrial
    
    $
    7,278
    
    
    
    7.4
    %
    
    $
    5,975
    
    
    
    7.5
    %
    
    $
    2,356
    
    
    
    8.6
    %Real estate  construction and land development
    
    
    83,651
    
    
    
    26.2
    
    
    
    43,392
    
    
    
    27.4
    
    
    
    17,971
    
    
    
    27.5Real estate  mortgagesSingle-family
    
    
    23,602
    
    
    
    28.9
    
    
    
    16,860
    
    
    
    28.2
    
    
    
    12,342
    
    
    
    27.9Commercial
    
    
    34,337
    
    
    
    33.9
    
    
    
    11,142
    
    
    
    33.3
    
    
    
    7,019
    
    
    
    32.4Other
    
    
    696
    
    
    
    1.3
    
    
    
    209
    
    
    
    1.3
    
    
    
    371
    
    
    
    1.2Consumer
    
    
    1,798
    
    
    
    2.3
    
    
    
    1,847
    
    
    
    2.3
    
    
    
    1,825
    
    
    
    2.4Total
    
    $
    151,362
    
    
    
    100.0
    %
    
    $
    79,425
    
    
    
    100.0
    %
    
    $
    41,884
    
    
    
    100.0
    %
    60




---



##### Table of Contents



Nonperforming Assets
  September 30,
    
    
    December 31,2010
    
    
    2009(Dollars in thousands)Nonaccrual
    
    $
    272,028
    
    
    $
    155,631Accruing loans 90 days or more delinquent
    
    
    5,425
    
    
    
    3,920Total nonperforming loans
    
    
    277,453
    
    
    
    159,551Other real estate owned assets
    
    
    58,766
    
    
    
    41,618Repossessed assets
    
    
    394
    
    
    
    380Total nonperforming assets
    
    $
    336,613
    
    
    $
    201,549Restructured and performing under restructured terms, net of specific allowance
    
    $
    117,650
    
    
    $
    110,777Nonperforming loans as a percentage of loans
    
    
    11.48
    %
    
    
    6.45
    %Nonperforming assets as a percentage of loans plus nonperforming assets
    
    
    13.60
    %
    
    
    8.01
    %Nonperforming assets as a percentage of total assets
    
    
    10.63
    %
    
    
    6.26
    %
 61




---



##### Table of Contents



September 30,
    
    
    December 31,2010
    
    
    2009(Dollars in thousands)Commercial and industrial
    
    $
    3,434
    
    
    $
    1,797Real estate  construction and land developmentResidential
    
    
    116,582
    
    
    
    23,818Commercial
    
    
    51,939
    
    
    
    49,240Real estate  mortgagesSingle-family
    
    
    51,172
    
    
    
    52,323Commercial
    
    
    53,002
    
    
    
    30,343Other
    
    
    200
    
    
    
    436Consumer
    
    
    1,124
    
    
    
    734Other
    
    
    
    
    
    
    860Total nonperforming loans
    
    $
    277,453
    
    
    $
    159,551
  .
  September 30,
    
    
    December 31,2010
    
    
    2009(Dollars in thousands)Acreage
    
    $
    4,860
    
    
    $
    2,251Commercial buildings
    
    
    14,542
    
    
    
    5,226Residential condominiums
    
    
    1,340
    
    
    
    2,730Residential single-family homes
    
    
    21,981
    
    
    
    15,696Residential lots
    
    
    11,090
    
    
    
    14,613Other
    
    
    4,953
    
    
    
    1,102Other real estate owned
    
    $
    58,766
    
    
    $
    41,618
  62




---



##### Table of Contents



Impaired Loans
    September 30, 2010
    
    
    December 31, 2009Oustanding
    
    
    Specific
    
    
    Oustanding
    
    
    SpecificBalance
    
    
    Allowance
    
    
    Balance
    
    
    Allowance(Dollars in thousands)Commercial and industrial
    
    $
    2,433
    
    
    $
    1,272
    
    
    $
    3,032
    
    
    $
    1,053Real estate  construction and land developmentResidential
    
    
    90,477
    
    
    
    28,926
    
    
    
    31,912
    
    
    
    3,044Commercial, including raw land
    
    
    119,800
    
    
    
    30,009
    
    
    
    82,356
    
    
    
    3,675Real estate  mortgagesSingle-family
    
    
    61,620
    
    
    
    12,318
    
    
    
    53,229
    
    
    
    5,005Commercial
    
    
    137,081
    
    
    
    29,925
    
    
    
    109,222
    
    
    
    1,686Other
    
    
    2,135
    
    
    
    596
    
    
    
    500
    
    
    
    62Consumer
    
    
    
    
    
    
    
    
    
    
    97
    
    
    
    2Total
    
    $
    413,546
    
    
    $
    103,046
    
    
    $
    280,348
    
    
    $
    14,527
    63




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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
    
    
    474
    
    
    
    89
    
    
    
    801
    
    
    
    188Real estate  mortgagesSingle-family
    
    
    11,599
    
    
    
    1,444
    
    
    
    3,799
    
    
    
    826Commercial
    
    
    7,044
    
    
    
    1,024
    
    
    
    
    
    
    
    Consumer
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    19,117
    
    
    $
    2,557
    
    
    $
    4,600
    
    
    $
    1,014FloridaCommercial and industrial
    
    $
    393
    
    
    $
    393
    
    
    $
    
    
    
    $
    Real estate  construction and land development
    
    
    31,185
    
    
    
    4,152
    
    
    
    14,984
    
    
    
    8,789Real estate  mortgagesSingle-family
    
    
    13,184
    
    
    
    1,526
    
    
    
    1,940
    
    
    
    571Commercial
    
    
    82,062
    
    
    
    19,663
    
    
    
    16,181
    
    
    
    3,279Consumer
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    126,824
    
    
    $
    25,734
    
    
    $
    33,105
    
    
    $
    12,639TotalCommercial and industrial
    
    $
    393
    
    
    $
    393
    
    
    $
    
    
    
    $
    Real estate  construction and land development
    
    
    31,659
    
    
    
    4,241
    
    
    
    15,785
    
    
    
    8,977Real estate  mortgagesSingle-family
    
    
    24,783
    
    
    
    2,970
    
    
    
    5,739
    
    
    
    1,397Commercial
    
    
    89,106
    
    
    
    20,687
    
    
    
    16,181
    
    
    
    3,279Consumer
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    145,941
    
    
    $
    28,291
    
    
    $
    37,705
    
    
    $
    13,653
 Potential Problem Loans
  64




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##### Table of Contents



Deposits
     September 30,
    
    
    December 31,
    
    
    Percent2010
    
    
    2009
    
    
    Change(Dollars in thousands)Noninterest-bearing demand
    
    $
    276,473
    
    
    $
    257,744
    
    
    
    7.3
    %Alabama segment
    
    
    147,189
    
    
    
    137,160
    
    
    
    7.3Florida segment
    
    
    116,177
    
    
    
    103,621
    
    
    
    12.1Other
    
    
    13,107
    
    
    
    16,963
    
    
    
    (22.7
    )Interest-bearing demand
    
    
    583,409
    
    
    
    690,677
    
    
    
    (15.5
    )Alabama segment
    
    
    354,640
    
    
    
    385,246
    
    
    
    (7.9
    )Florida segment
    
    
    227,016
    
    
    
    233,740
    
    
    
    (2.9
    )Other
    
    
    1,753
    
    
    
    71,691
    
    
    
    (97.6
    )Savings
    
    
    342,451
    
    
    
    284,430
    
    
    
    20.4Alabama segment
    
    
    173,499
    
    
    
    151,263
    
    
    
    14.7Florida segment
    
    
    166,674
    
    
    
    131,185
    
    
    
    27.1Other
    
    
    2,278
    
    
    
    1,982
    
    
    
    14.9Time deposits
    
    
    1,574,497
    
    
    
    1,423,722
    
    
    
    10.6Alabama segment
    
    
    762,631
    
    
    
    663,510
    
    
    
    14.9Florida segment
    
    
    658,766
    
    
    
    555,262
    
    
    
    18.6Other
    
    
    153,100
    
    
    
    204,950
    
    
    
    (25.3
    )Total deposits
    
    $
    2,776,830
    
    
    $
    2,656,573
    
    
    
    4.5
    %Alabama segment
    
    $
    1,437,959
    
    
    $
    1,337,179
    
    
    
    7.5
    %Florida segment
    
    $
    1,168,633
    
    
    $
    1,023,808
    
    
    
    14.1
    %Other
    
    $
    170,238
    
    
    $
    295,586
    
    
    
    (42.4
    )%
 Borrowings
   65




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Stockholders Equity
 Overview
  Stockholders Equity
 Other Comprehensive Income
  66




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Pre-Tax
    
    
    Income Tax
    
    
    Net ofAmount
    
    
    Expense
    
    
    Income Tax(Dollars in thousands)Three Months Ended September 30, 2010Unrealized gain on available-for-sale securities
    
    $
    2,406
    
    
    $
    (890
    )
    
    $
    1,516Reclassification adjustment for losses realized in net loss
    
    
    306
    
    
    
    (113
    )
    
    
    193Unrealized loss on derivatives
    
    
    (75
    )
    
    
    28
    
    
    
    (47
    )Reclassification adjustment for losses realized in net loss
    
    
    975
    
    
    
    (361
    )
    
    
    614Net unrealized gain
    
    $
    3,612
    
    
    $
    (1,336
    )
    
    $
    2,276Three Months Ended September 30, 2009Unrealized gain on available-for-sale securities
    
    $
    3,119
    
    
    $
    (1,154
    )
    
    $
    1,965Reclassification adjustment for gains realized in net loss
    
    
    (2,121
    )
    
    
    785
    
    
    
    (1,336
    )Unrealized loss on derivatives
    
    
    (219
    )
    
    
    81
    
    
    
    (138
    )Net unrealized gain
    
    $
    779
    
    
    $
    (288
    )
    
    $
    491Nine Months Ended September 30, 2010Unrealized gain on available-for-sale securities
    
    $
    7,977
    
    
    $
    (2,951
    )
    
    $
    5,026Reclassification adjustment for gains realized in net loss
    
    
    (852
    )
    
    
    315
    
    
    
    (537
    )Unrealized loss on derivatives
    
    
    (363
    )
    
    
    135
    
    
    
    (228
    )Reclassification adjustment for losses realized in net loss
    
    
    1,129
    
    
    
    (418
    )
    
    
    711Net unrealized gain
    
    $
    7,891
    
    
    $
    (2,919
    )
    
    $
    4,972Nine Months Ended September 30, 2009Unrealized loss on available-for-sale securities
    
    $
    (8,936
    )
    
    $
    3,306
    
    
    $
    (5,630
    )Reclassification adjustment for losses realized in net loss
    
    
    9,506
    
    
    
    (3,517
    )
    
    
    5,989Unrealized gain on derivatives
    
    
    106
    
    
    
    (39
    )
    
    
    67Net unrealized gain
    
    $
    676
    
    
    $
    (250
    )
    
    $
    426
  67




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Regulatory Capital
  To Be WellFor
    
    Capitalized UnderCapital Adequacy
    
    Prompt CorrectiveActual
    
    Purposes
    
    ActionAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio(Dollars in thousands)Superior BankSeptember 30, 2010Tier 1 Core Capital (to Adjusted Total Assets)
    
    $
    82,988
    
    
    
    2.63
    %
    
    $
    126,090
    
    
    
    4.00
    %
    
    $
    157,613
    
    
    
    5.00
    %Total Capital (to Risk Weighted Assets)
    
    
    123,933
    
    
    
    5.04
    
    
    
    196,661
    
    
    
    8.00
    
    
    
    245,827
    
    
    
    10.00Tier 1 Capital (to Risk Weighted Assets)
    
    
    82,988
    
    
    
    3.38
    
    
    NA
    
    NA
    
    
    147,496
    
    
    
    6.00Tangible Capital (to Adjusted Total Assets)
    
    
    82,988
    
    
    
    2.63
    
    
    
    47,284
    
    
    
    1.50
    
    
    NA
    
    NA
  Liquidity
      68




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   Interest Rate Sensitivity
  69




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Sensitivity Measurement
   Interest Rate Exposures
  Change (in Basis Points)
    
    Increase in Net Interest Incomein Interest Rates
    
    September 30, 2010
    
    December 31, 2009(12-Month Projection)
    
    Amount
    
    Percent
    
    Amount
    
    Percent(Dollars in thousands)+ 200 BP (1)
    
    $
    792
    
    
    
    0.85
    %
    
    $
    2,200
    
    
    
    2.30
    %- 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.  Change (in Basis Points) in Interest Rates
    
    NPV Ratio+ 200 BP
    
    
    7.78
    %+ 100 BP
    
    
    7.220 BP
    
    
    6.44- 100 BP
    
    
    6.46
  70




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ITEM 4. CONTROLS AND PROCEDURES
 CEO and CFO Certification
  Evaluation of Disclosure Controls and Procedures
    
 PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
   
 ITEM 1A. RISK FACTORS
 Risks Relating To Our Business
 We are currently subject to Orders to Cease and Desist which may adversely affect our business.
  
    
    Superior Bank must cease and desist from any action for or toward
causing, bringing about, participating in, counseling, or aiding and
abetting unsafe or unsound banking practices that resulted in certain
occurrences specified in the Superior Bank Order.
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
    
    No later than March 31, 2011, Superior Bank must achieve, and maintain
thereafter, a Tier 1 (Core) Capital Ratio of at least 10.0% and a
Total Risk-Based Capital Ratio of at least 14.0% after funding an
adequate allowance for loan losses.
    
    Within 60 days of the Effective Date, Superior Bank must adopt and
submit to the OTS a written capital plan to achieve and maintain the
foregoing capital levels specifying target dates to reach certain
capital levels. If Superior Bank fails to achieve the required
capital levels in the prescribed time frame or otherwise fails to meet
its capital plan, then within 15 days Superior Bank shall prepare a
contingency plan, which shall detail actions to be taken to achieve
(i) merger or acquisition by another federally insured depository institution or (ii) voluntary dissolution.
    
    Beginning with the Effective Date, Superior Bank (i) will not
originate or purchase or commit to originate or purchase any new
construction, multifamily, non-residential, land or commercial
mortgage loans (Covered Loans), nor may Superior Bank renew or
modify an existing Covered Loans without meeting specified conditions;
and (ii) will not without the prior written approval of the OTS
increase its total assets during any quarter in excess of an amount
equal to net interest credited on deposit liabilities during the prior
quarter.
    
    Within 60 days of the Effective Date, Superior Bank must (i) submit to
the OTS a business plan through 2012 for achieving profitability and a
business plan to reduce Superior Banks level of problem assets, (ii)
revise its policies, procedures and methodology relating to the timely
establishment and maintenance of an adequate allowance for loan losses; (iii) revise its
written internal asset review and classification program to address
all corrective action set forth in the 2010 OTS Examination, which,
among other things, will provide for the appointment of a qualified,
experienced and independent third party to conduct annual reviews of
Superior Banks loan portfolio and assessments of Superior Banks
internal asset review process; (iv) revise its program for controlling
risks associated with concentrations of credit; (v) revise its
Enterprise Risk Management Plan; and (vi) within 90 days of the
Effective Date, Superior Bank shall submit to the OTS an assessment of
Superior Banks board and management prepared by an independent third
party.
    
    Superior Bank must implement a liquidity funding plan that is to
include the designation of specific actions that will be taken to
reduce Superior Banks dependency on volatile funding sources and a
detailed cash flow analysis.
    
    Beginning with the Effective Date, Superior Bank (i) will not make any
golden parachute payments or prohibited indemnification payment
unless the Bank has complied with 12. C.F.R. Part 359 and 12 C.F.R
Section 545.121; (ii) will comply with the OTS prior notification
requirements for changes in directors and senior executive officers;
(iii) will not enter into, extend or revise any contractual
arrangement relating to compensation or benefits with any senior
executive officer or director; and (iv) will not enter into any
arrangement or contract with a third party service provider that is
significant or outside Superior Banks normal course of business without
obtaining written non-objection from the OTS.
  
    
    We must cease and desist from any action for or toward causing,
bringing about, participating in counseling, or aiding and abetting
unsafe or unsound banking practices that resulted in certain
occurrences specified in the Order issued to us.
    
    Within 60 days of the Effective Date, we must submit to the OTS (i) a
plan to maintain and enhance our capital and Superior Banks capital
and ensure that Superior Bank complies with the requirement imposed on
it in the Superior Bank Order; and (ii) a business plan through calendar year
2012 for achieving profitability.
    
    We must (i) not accept from Superior Bank or declare or pay any
dividends or capital distributions; (ii) not incur or increase any
debt without the prior written non-objection of the OTS; (iii) not
make any golden parachute payment or any prohibited indemnification
payment unless we comply with 12 C.F.R. Part 359; (iv)
comply with the OTSs prior notification requirements for changes in
directors and senior executive officers; (v) not enter into, renew
or extend any contractual arrangements related to compensation or
benefits with any director or senior executive officer without first
providing prior written notice to the OTS; and (vi) not enter
into any arrangement or contract with a third party service provider
that is significant or outside our normal course of business without
obtaining written non-objection from the OTS.
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We have deferred interest on our outstanding subordinated debentures (and the related trust
preferred securities) and anticipate that we will continue to defer this interest for the
foreseeable future.
 We depend on cash dividends from Superior Bank to meet our obligations but the Orders prohibit such
dividends without prior approval of the OTS.
 We may fail to raise additional capital to meet regulatory requirements.
 We incurred a net loss in our last fiscal year and for the first nine months of the current fiscal
year and losses may continue in the future.
 The current economic environment poses significant challenges for us and our industry and could
adversely affect our financial condition and results of operations.
 
    
    Economic conditions that negatively affect housing prices and the job
market have caused, and may continue to cause, the credit quality of
our loan portfolios to deteriorate, and that deterioration in credit
quality has had, and could continue to have, a negative effect on our
business.
    
    Market developments may affect consumer confidence levels and may
cause adverse changes in payment patterns, causing increases in
delinquencies and default rates on loans and other credit facilities.
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
    
    Market conditions can change rapidly in the current economic
environment, and, if they do, the processes we use to estimate our
allowance for loan losses and reserves may no longer be reliable.
    
    The value of our securities portfolio may decline.
    
    Our industry faces increased regulation, and compliance with such
regulatory changes has increased our costs and the complexity of
our compliance processes and may continue to do so.
    
    Natural and environmental disasters, such as hurricanes or oil
spills, have adversely affected and may continue to adversely
affect the local economies in which we operate, with the potential
for further deterioration in credit quality in those markets as
well as a general reduction in business activity. (See Managements Discussion and Analysis of Financial
Condition and Results of Operations  Certain
Factors Contributing to Our Recent Results and Our Response to Those
Factors elsewhere herein.)
  Our allowance for loan losses may not be adequate to cover actual losses.
 
    
    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 conditions; and
    
    mergers and acquisitions.
  Further deterioration of local economic conditions where we operate could have a continuing
negative effect on us.
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
    
    loan delinquencies may increase;
    
    problem assets and foreclosures may increase;
    
    demand for our products and services may decline; and
    
    collateral for loans we make, especially loans secured by real estate,
may decline in value, in turn reducing a customers borrowing power,
and reducing the value of assets and collateral associated with our
loans.
  Liquidity needs could adversely affect our results of operations and financial condition.
 Changes in monetary policy and interest rates could adversely affect our profitability.
   Non-performing assets take significant time to resolve and adversely affect our results of
operations and financial condition.
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A significant portion of our loan portfolio is secured by real estate, and events that negatively
affect the real estate market could hurt our business.
 An increase in loan prepayments may adversely affect our profitability.
 Events in our geographic markets could adversely affect us.
   We face substantial competition.
 We are subject to extensive regulation.
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Recently enacted financial reform legislation will, among other things, tighten capital standards,
create a new Consumer Financial Protection Bureau and result in new regulations that are expected
to increase our costs of operations.
        Additional regulatory requirements especially those imposed under ARRA, EESA or other legislation
intended to strengthen the U.S. financial system, could adversely affect us.
 We may become subject to more stringent capital requirements
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The imposition of certain restrictions on our executive compensation as a result of our decision to
participate in the CPP may have material adverse effects on our business and results of operations.
 Higher FDIC deposit insurance premiums and assessments could adversely affect our financial
condition.
 We are dependent upon the services of our management team.
 Changes in accounting policies and practices, as may be adopted by regulatory agencies, the
Financial Accounting Standards Board, or other authoritative bodies, could materially affect our
reported financial condition and results of operations.
 The accuracy of our financial statements and related disclosures could be affected because we are
exposed to conditions or assumptions different from the judgments, assumptions or estimates used in
our critical accounting policies.
 Future losses could result in the recording of additional valuation allowance against our deferred tax
assets (DTA).
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Issuances or sales of common stock or other equity securities could result in an ownership change
as defined for U.S. federal income tax purposes. If an ownership change were to occur, our
ability to fully utilize a significant portion of our U.S. federal and state tax net operating
losses and certain built-in losses that have not been recognized for tax purposes could be impaired
as a result of the operation of Section 382 of the Internal Revenue Code.
  Our financial condition and outlook may be adversely affected by damage to our reputation.
 We will realize additional future losses if the proceeds we receive upon liquidation of assets are
less than the carrying value of such assets.
 The failures of other financial institutions could adversely affect us.
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An interruption or breach in security with respect to our information systems, as well as
information systems of our outsourced service providers, could have a material adverse effect on
us.
 Risks Related To an Investment in Our Common Stock
 Certain regulatory enforcement actions or certain restructuring transactions
 could result in our currently outstanding stock being cancelled or otherwise losing all its value.
 Our common stock is equity and is subordinate to our existing and future indebtedness and preferred
stock.
 Our stock price may be volatile due to limited trading volume and general market conditions.
  Our common stock could be delisted if we do not comply with listing standards
 Our ability to pay dividends and to repurchase shares of common stock is restricted.
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The exercise of our warrants would dilute existing stockholders ownership interest.
 We may issue additional shares of common stock or equity derivative securities that will dilute the
percentage ownership interest of existing stockholders and the book value per share of our common
stock
 
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 5. OTHER INFORMATION
  
 ITEM 6. 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.
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SIGNATURES
  Date: November 15, 2010
    By:
    /s/ C. Stanley BaileyC. Stanley BaileyChief Executive OfficerDate: November 15, 2010
    By:
    /s/ James A. WhiteJames A. WhiteChief Financial Officer
(Principal Financial Officer) 82