##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2007
 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
 (Exact Name of Registrant as Specified in its Charter)
 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 þ o
  o þ
  Class
    
    Outstanding as of June 30, 2007Common stock, $.001 par value
    
    34,670,907




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##### 



TABLE OF CONTENTS
 PART I FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTS
    
    
    2ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
    
    
    11ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
    
    
    29ITEM 4. CONTROLS AND PROCEDURES
    
    
    29PART II. OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGS
    
    
    29ITEM 1A. RISK FACTORS
    
    
    30ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    31ITEM 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    31ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    31ITEM 5. OTHER INFORMATION
    
    
    31ITEM 6. EXHIBITS
    
    
    31SIGNATURES
    
    
    32EX-31.01 SECTION 302 CERTIFICATION OF THE PEOEX-31.02 SECTION 302 CERTIFICATION OF THE PFOEX-32.01 SECTION 906 CERTIFICATION OF THE PEOEX-32.02 SECTION 906 CERTIFICATION OF THE PFO




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##### Table of Contents



SUPERIOR BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share data)
 June 30,
    
    
    December 31,2007
    
    
    2006(UNAUDITED)ASSETSCash and due from banks
    
    $
    49,664
    
    
    $
    49,783Interest-bearing deposits in other banks
    
    
    4,718
    
    
    
    10,994Federal funds sold
    
    
    12,843
    
    
    
    25,185Investment securities available for sale
    
    
    322,739
    
    
    
    354,716Tax lien certificates
    
    
    18,457
    
    
    
    16,313Mortgage loans held for sale
    
    
    23,213
    
    
    
    24,433Loans, net of unearned income
    
    
    1,719,808
    
    
    
    1,639,528Less: Allowance for loan losses
    
    
    (19,147
    )
    
    
    (18,892
    )Net loans
    
    
    1,700,661
    
    
    
    1,620,636Premises and equipment, net
    
    
    89,620
    
    
    
    94,626Accrued interest receivable
    
    
    14,405
    
    
    
    14,387Stock in FHLB
    
    
    12,798
    
    
    
    12,382Cash surrender value of life insurance
    
    
    41,273
    
    
    
    40,598Goodwill and other intangibles
    
    
    128,976
    
    
    
    129,520Other assets
    
    
    50,926
    
    
    
    47,417TOTAL ASSETS
    
    $
    2,470,293
    
    
    $
    2,440,990LIABILITIES AND STOCKHOLDERS EQUITYDeposits:Noninterest-bearing
    
    $
    182,807
    
    
    $
    191,323Interest-bearing
    
    
    1,701,998
    
    
    
    1,679,518TOTAL DEPOSITS
    
    
    1,884,805
    
    
    
    1,870,841Advances from FHLB
    
    
    187,840
    
    
    
    187,840Federal funds borrowed and security repurchase agreements
    
    
    20,586
    
    
    
    23,415Notes payable
    
    
    5,958
    
    
    
    5,545Junior subordinated debentures owed to unconsolidated subsidiary trusts
    
    
    43,770
    
    
    
    44,006Capital lease obligation
    
    
    3,772
    
    
    
    3,798Accrued expenses and other liabilities
    
    
    44,609
    
    
    
    29,458TOTAL LIABILITIES
    
    
    2,191,340
    
    
    
    2,164,903STOCKHOLDERS EQUITYCommon stock, par value $.001 per share; authorized 60,000,000
shares; shares issued 34,752,583 and 34,732,345, respectively;
outstanding 34,670,907 and 34,651,669, respectively
    
    
    35
    
    
    
    35Surplus
    
    
    254,207
    
    
    
    253,815Retained earnings
    
    
    30,205
    
    
    
    26,491Accumulated other comprehensive loss
    
    
    (2,876
    )
    
    
    (1,452
    )Treasury stock, at cost
    
    
    (716
    )
    
    
    (716
    )Unearned ESOP stock
    
    
    (1,902
    )
    
    
    (2,086
    )TOTAL STOCKHOLDERS EQUITY
    
    
    278,953
    
    
    
    276,087TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    2,470,293
    
    
    $
    2,440,990
  2




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SUPERIOR BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands, except per share data)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006INTEREST INCOMEInterest and fees on loans
    
    $
    34,986
    
    
    $
    20,254
    
    
    $
    69,297
    
    
    $
    38,672Interest on taxable securities
    
    
    4,096
    
    
    
    2,749
    
    
    
    8,535
    
    
    
    5,510Interest on tax-exempt securities
    
    
    138
    
    
    
    90
    
    
    
    266
    
    
    
    167Interest on federal funds sold
    
    
    156
    
    
    
    51
    
    
    
    283
    
    
    
    86Interest and dividends on other investments
    
    
    691
    
    
    
    464
    
    
    
    1,429
    
    
    
    822Total interest income
    
    
    40,067
    
    
    
    23,608
    
    
    
    79,810
    
    
    
    45,257INTEREST EXPENSEInterest on deposits
    
    
    18,780
    
    
    
    9,767
    
    
    
    36,249
    
    
    
    18,180Interest on other borrowed funds
    
    
    2,770
    
    
    
    2,648
    
    
    
    6,019
    
    
    
    5,120Interest on subordinated debentures
    
    
    1,004
    
    
    
    780
    
    
    
    1,996
    
    
    
    1,541Total interest expense
    
    
    22,554
    
    
    
    13,195
    
    
    
    44,264
    
    
    
    24,841NET INTEREST INCOME
    
    
    17,513
    
    
    
    10,413
    
    
    
    35,546
    
    
    
    20,416Provision for loan losses
    
    
    1,000
    
    
    
    700
    
    
    
    1,705
    
    
    
    1,300NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
    
    
    16,513
    
    
    
    9,713
    
    
    
    33,841
    
    
    
    19,116NONINTEREST INCOMEService charges and fees on deposits
    
    
    1,894
    
    
    
    1,129
    
    
    
    3,684
    
    
    
    2,160Mortgage banking income
    
    
    1,132
    
    
    
    708
    
    
    
    2,082
    
    
    
    1,238Investment securities gains
    
    
    
    
    
    
    
    
    
    
    242
    
    
    
    Change in fair value of derivatives
    
    
    118
    
    
    
    (33
    )
    
    
    (34
    )
    
    
    37Increase in cash surrender value of life insurance
    
    
    452
    
    
    
    359
    
    
    
    900
    
    
    
    780Other income
    
    
    942
    
    
    
    664
    
    
    
    1,750
    
    
    
    1,114TOTAL NONINTEREST INCOME
    
    
    4,538
    
    
    
    2,827
    
    
    
    8,624
    
    
    
    5,329NONINTEREST EXPENSESSalaries and employee benefits
    
    
    10,168
    
    
    
    5,798
    
    
    
    20,236
    
    
    
    11,666Occupancy, furniture and equipment expense
    
    
    2,995
    
    
    
    1,739
    
    
    
    6,142
    
    
    
    3,586Amortization of intangibles
    
    
    304
    
    
    
    
    
    
    
    609
    
    
    
    Merger-related costs
    
    
    107
    
    
    
    51
    
    
    
    426
    
    
    
    72Other expenses
    
    
    4,484
    
    
    
    3,072
    
    
    
    8,670
    
    
    
    6,141TOTAL NONINTEREST EXPENSES
    
    
    18,058
    
    
    
    10,660
    
    
    
    36,083
    
    
    
    21,465Income before income taxes
    
    
    2,993
    
    
    
    1,880
    
    
    
    6,382
    
    
    
    2,980INCOME TAX EXPENSE
    
    
    1,024
    
    
    
    606
    
    
    
    2,116
    
    
    
    856NET INCOME
    
    $
    1,969
    
    
    $
    1,274
    
    
    $
    4,266
    
    
    $
    2,124BASIC NET INCOME PER COMMON SHARE
    
    $
    0.06
    
    
    $
    0.06
    
    
    $
    0.12
    
    
    $
    0.11DILUTED NET INCOME PER COMMON SHARE
    
    $
    0.06
    
    
    $
    0.06
    
    
    $
    0.12
    
    
    $
    0.10Weighted average common shares outstanding
    
    
    34,452
    
    
    
    20,129
    
    
    
    34,445
    
    
    
    20,073Weighted average common shares outstanding, assuming dilution
    
    
    34,940
    
    
    
    20,757
    
    
    
    34,989
    
    
    
    20,716
  3




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SUPERIOR BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
(Dollars in thousands)
 Six Months EndedJune 30,2007
    
    
    2006NET CASH PROVIDED BY OPERATING ACTIVITIES
    
    $
    9,518
    
    
    $
    549CASH FLOWS FROM INVESTING ACTIVITIES:Net decrease in interest-bearing deposits in other banks
    
    
    6,276
    
    
    
    4,581Net decrease (increase) in federal funds sold
    
    
    12,342
    
    
    
    (9,055
    )Proceeds from sales of securities available for sale
    
    
    2,400
    
    
    
    Proceeds from maturities of investment securities available for sale
    
    
    45,040
    
    
    
    7,412Purchases of investment securities available for sale
    
    
    (12,451
    )
    
    
    (2,887
    )Purchase of tax lien certificates
    
    
    (2,144
    )
    
    
    (5,765
    )Net increase in loans
    
    
    (71,556
    )
    
    
    (118,460
    )Proceeds from sales of premises and equipment
    
    
    1,223
    
    
    
    1,104Purchases of premises and equipment
    
    
    (4,483
    )
    
    
    (6,049
    )Proceeds from sale of repossessed assets
    
    
    1,943
    
    
    
    1,070Increase in stock in FHLB
    
    
    (416
    )
    
    
    (881
    )Other investing activities, net
    
    
    72
    
    
    
    7Net cash used by investing activities
    
    
    (21,754
    )
    
    
    (128,923
    )CASH FLOWS FROM FINANCING ACTIVITIES:Net increase
in deposits
    
    
    14,503
    
    
    
    97,593Net (decrease) increase in FHLB advances and other borrowed funds
    
    
    (2,829
    )
    
    
    17,569Proceeds
from notes payable
    
    
    500
    
    
    
    Payments made on notes payable
    
    
    (87
    )
    
    
    (105
    )Proceeds from sale of common stock
    
    
    30
    
    
    
    941Net cash provided by financing activities
    
    
    12,117
    
    
    
    115,998Net decrease in cash and due from banks
    
    
    (119
    )
    
    
    (12,376
    )CASH AND DUE FROM BANKS AT BEGINNING OF PERIOD
    
    
    49,783
    
    
    
    35,088CASH AND DUE FROM BANKS AT END OF PERIOD
    
    $
    49,664
    
    
    $
    22,712
  4




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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Note 1  Basis of Presentation
   Note 2  Recent Accounting Pronouncements
 FASB Interpretation No. 48
 Accounting for Uncertainty in Income
Taxes Accounting for
Income Taxes
    Statement of Financial Accounting Standards No. 157
 Fair Value
Measurements
 5




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Statement of Financial Accounting Standards No. 159
  Note 3  Acquisitions
   Pro forma Results of Operations
  Six Months Ended(Dollars in thousands, except per share data)
    
    June 30, 2006Pro forma net interest income and noninterest
income after provision for loan losses
    
    $
    42,987Pro forma net income
    
    
    5,175Pro forma earnings per common share  basic
    
    $
    0.15Pro forma earnings per common share  diluted
    
    $
    0.15
 Peoples Community Bancshares, Inc.
  6




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Note 4  Segment Reporting
   Alabama
    
    FloridaRegion
    
    Region
    
    CombinedThree months ended June 30, 2007Net interest income
    
    $
    13,118
    
    
    $
    4,395
    
    
    $
    17,513Provision for loan losses
    
    
    685
    
    
    
    315
    
    
    
    1,000Noninterest income
    
    
    4,188
    
    
    
    350
    
    
    
    4,538Noninterest expense (1)
    
    
    15,155
    
    
    
    2,903
    
    
    
    18,058Income tax expense
    
    
    500
    
    
    
    524
    
    
    
    1,024Net income
    
    
    966
    
    
    
    1,003
    
    
    
    1,969Total assets
    
    
    1,920,501
    
    
    
    549,792
    
    
    
    2,470,293Three months ended June 30, 2006Net interest income
    
    $
    6,536
    
    
    $
    3,877
    
    
    $
    10,413Provision for loan losses
    
    
    243
    
    
    
    457
    
    
    
    700Noninterest income
    
    
    2,579
    
    
    
    248
    
    
    
    2,827Noninterest expense (1)
    
    
    9,585
    
    
    
    1,075
    
    
    
    10,660Income tax (benefit) expense
    
    
    (222
    )
    
    
    828
    
    
    
    606Net (loss) income
    
    
    (491
    )
    
    
    1,765
    
    
    
    1,274Total assets
    
    
    1,214,545
    
    
    
    316,682
    
    
    
    1,531,227Six months ended June 30, 2007Net interest income
    
    $
    26,502
    
    
    $
    9,044
    
    
    $
    35,546Provision for loan losses
    
    
    1,326
    
    
    
    379
    
    
    
    1,705Noninterest income
    
    
    7,962
    
    
    
    662
    
    
    
    8,624Noninterest expense (1)
    
    
    30,203
    
    
    
    5,880
    
    
    
    36,083Income tax expense
    
    
    978
    
    
    
    1,138
    
    
    
    2,116Net income
    
    
    1,957
    
    
    
    2,309
    
    
    
    4,266Six months ended June 30, 2006Net interest income
    
    $
    12,895
    
    
    $
    7,521
    
    
    $
    20,416Provision for loan losses
    
    
    1,032
    
    
    
    268
    
    
    
    1,300Noninterest income
    
    
    4,835
    
    
    
    494
    
    
    
    5,329Noninterest expense (1)
    
    
    19,298
    
    
    
    2,167
    
    
    
    21,465Income tax (benefit) expense
    
    
    (928
    )
    
    
    1,784
    
    
    
    856Net (loss) income
    
    
    (1,672
    )
    
    
    3,796
    
    
    
    2,124
 
 (1)
    
    Noninterest expense for the Alabama region includes all
expenses for the holding company and all administrative expenses of
the bank, which have not been prorated to the Florida region. 7




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Note 5  Net Income per Common Share
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Numerator:For basic and diluted, net income
    
    $
    1,969
    
    
    $
    1,274
    
    
    $
    4,266
    
    
    $
    2,124Denominator:For basic, weighted average common shares outstanding
    
    
    34,452
    
    
    
    20,129
    
    
    
    34,445
    
    
    
    20,073Effect of dilutive stock options and restricted stock
    
    
    488
    
    
    
    628
    
    
    
    544
    
    
    
    643Average diluted common shares outstanding
    
    
    34,940
    
    
    
    20,757
    
    
    
    34,989
    
    
    
    20,716Basic net income per common share
    
    $
    .06
    
    
    $
    .06
    
    
    $
    .12
    
    
    $
    .11Diluted net income per common share
    
    $
    .06
    
    
    $
    .06
    
    
    $
    .12
    
    
    $
    .10
 Note 6  Comprehensive Income (Loss)
  Note 7  Income Taxes
  Note 8  Stockholders Equity
   8




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2007
    
    2006Risk free interest rate
    
    
    4.37
    %
    
    
    4.92
    %Volatility factor
    
    
    29
    %
    
    
    47
    %Weighted average life of options (in years)
    
    
    5.00
    
    
    
    7.00Dividend yield
    
    
    0.00
    %
    
    
    0.00
    %
  Weighted-Weighted-
    
    
    AverageAverage
    
    
    RemainingExercise
    
    
    Contractual
    
    
    AggregateNumber
    
    
    Price
    
    
    Term
    
    
    Intrinsic ValueUnder option, January 1, 2007
    
    
    3,042,597
    
    
    $
    8.07Granted
    
    
    21,096
    
    
    
    11.22Exercised
    
    
    (5,000
    )
    
    
    (6.25
    )Forfeited
    
    
    (18,500
    )
    
    
    (10.46
    )Under option, June 30, 2007
    
    
    3,040,193
    
    
    $
    8.09
    
    
    
    6.90
    
    
    $
    6,747,155Exercisable at end of period
    
    
    2,847,597
    
    
    $
    7.90
    
    
    
    6.33
    
    
    $
    6,747,155Weighted-average fair value per
option of options granted during
the period
    
    $
    3.83
  Note 9  Property Classified as Held-for-Sale
     9




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Note 10 Subsequent Events
 Stock Repurchase Plan
  Junior Subordinated Debentures Owed to Unconsolidated Subsidiary Trusts
    Acquisition
  Purchase of Branch Facilities
  Sale-Leaseback Transaction
  10




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
          11




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Three-Months
    
    Six-MonthsEnded June 30,
    
    Ended June 30,2007
    
    2006
    
    2007
    
    2006(Dollars in thousands,
except per share data)Superior Bancorp and SubsidiariesNet income
    
    $
    1,969
    
    
    $
    1,274
    
    
    $
    4,266
    
    
    $
    2,124Net income per common share (diluted)
    
    
    0.06
    
    
    
    0.06
    
    
    
    0.12
    
    
    
    0.10Net interest margin
    
    
    3.39
    %
    
    
    3.18
    %
    
    
    3.46
    %
    
    
    3.19
    %Net interest spread
    
    
    3.06
    %
    
    
    2.97
    %
    
    
    3.14
    %
    
    
    2.99
    %Return on average assets
    
    
    0.32
    %
    
    
    0.35
    %
    
    
    0.35
    %
    
    
    0.30
    %Return on average stockholders equity
    
    
    2.83
    %
    
    
    4.84
    %
    
    
    3.10
    %
    
    
    4.06
    %Return on
average tangible equity
    
    
    5.26
    %
    
    
    5.45
    %
    
    
    5.79
    %
    
    
    4.58
    %Book value per share
    
    $
    8.05
    
    
    $
    5.25
    
    
    $
    8.05
    
    
    $
    5.25Tangible book value per share
    
    
    4.33
    
    
    
    4.66
    
    
    
    4.33
    
    
    
    4.66Banking Subsidiary, Superior BankNet income
    
    $
    3,160
    
    
    $
    2,126
    
    
    $
    6,444
    
    
    $
    3,757Return on average assets
    
    
    0.53
    %
    
    
    0.59
    %
    
    
    0.54
    %
    
    
    0.53
    %Return on average stockholders equity
    
    
    4.10
    %
    
    
    6.69
    %
    
    
    4.22
    %
    
    
    5.96
    %Return on tangible equity
    
    
    7.04
    %
    
    
    7.39
    %
    
    
    7.26
    %
    
    
    6.59
    %
  12




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Net Interest Income.
 Increase (Decrease) inSecond Quarter 2007 vs 2006
    
    
    First Six Months of 2007 vs 2006Average
    
    
    Income/
    
    
    Yield/
    
    
    Average
    
    
    Income/
    
    
    Yield/Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate(Dollars in thousands)ASSETSInterest-earning assets:Loans, net of unearned income
    
    $
    645,512
    
    
    $
    14,732
    
    
    
    0.54
    %
    
    $
    658,201
    
    
    $
    30,625
    
    
    
    0.69
    %Investment securitiesTaxable
    
    
    90,285
    
    
    
    1,347
    
    
    
    0.33
    
    
    
    99,067
    
    
    
    3,025
    
    
    
    0.40Tax-exempt
    
    
    4,266
    
    
    
    73
    
    
    
    0.29
    
    
    
    4,266
    
    
    
    151
    
    
    
    0.45Total investment securities
    
    
    94,551
    
    
    
    1,420
    
    
    
    0.56
    
    
    
    103,333
    
    
    
    3,176
    
    
    
    0.40Federal funds sold
    
    
    7,720
    
    
    
    105
    
    
    
    0.26
    
    
    
    6,806
    
    
    
    197
    
    
    
    0.59Other investments
    
    
    14,729
    
    
    
    227
    
    
    
    0.05
    
    
    
    16,183
    
    
    
    607
    
    
    
    0.74Total interest-earning assets
    
    $
    762,512
    
    
    
    16,484
    
    
    
    0.54
    
    
    $
    784,523
    
    
    
    34,605
    
    
    
    0.69Interest-bearing liabilities:Demand deposits
    
    $
    211,187
    
    
    
    2,642
    
    
    
    0.88
    
    
    $
    199,512
    
    
    
    4,994
    
    
    
    0.88Savings deposits
    
    
    24,329
    
    
    
    123
    
    
    
    1.01
    
    
    
    23,339
    
    
    
    221
    
    
    
    0.92Time deposits
    
    
    434,361
    
    
    
    6,248
    
    
    
    0.51
    
    
    
    454,290
    
    
    
    12,854
    
    
    
    0.58Other borrowings
    
    
    (685
    )
    
    
    122
    
    
    
    0.25
    
    
    
    14,179
    
    
    
    899
    
    
    
    0.49Subordinated debentures
    
    
    11,867
    
    
    
    224
    
    
    
    (0.60
    )
    
    
    11,922
    
    
    
    456
    
    
    
    (0.55
    )Total interest-bearing liabilities
    
    $
    681,059
    
    
    
    9,359
    
    
    
    0.45
    
    
    $
    703,242
    
    
    
    19,424
    
    
    
    0.54Net interest income/net interest spread
    
    
    
    
    
    
    7,125
    
    
    
    0.09
    %
    
    
    
    
    
    
    15,181
    
    
    
    0.15
    %Net yield on earning assets
    
    
    
    
    
    
    
    
    
    
    0.21
    %
    
    
    
    
    
    
    
    
    
    
    0.27
    %Taxable equivalent adjustment:Investment securities
    
    
    
    
    
    
    25
    
    
    
    
    
    
    
    
    
    
    
    51Net interest income
    
    
    
    
    
    $
    7,100
    
    
    
    
    
    
    
    
    
    
    $
    15,130
  Three
Months Ended June 30,2007
    
    
    2006Average
    
    
    Income/
    
    
    Yield/
    
    
    Average
    
    
    Income/
    
    
    Yield/Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate(Dollars in thousands)ASSETSInterest-earning assets:Loans, net of unearned income (1)
    
    $
    1,693,341
    
    
    $
    34,986
    
    
    
    8.29
    %
    
    $
    1,047,829
    
    
    $
    20,254
    
    
    
    7.75
    %Investment securitiesTaxable
    
    
    317,434
    
    
    
    4,096
    
    
    
    5.18
    
    
    
    227,149
    
    
    
    2,749
    
    
    
    4.85Tax-exempt (2)
    
    
    13,588
    
    
    
    209
    
    
    
    6.16
    
    
    
    9,322
    
    
    
    136
    
    
    
    5.87Total investment securities
    
    
    331,022
    
    
    
    4,305
    
    
    
    5.22
    
    
    
    236,471
    
    
    
    2,885
    
    
    
    4.66Federal funds sold
    
    
    11,748
    
    
    
    156
    
    
    
    5.34
    
    
    
    4,028
    
    
    
    51
    
    
    
    5.08Other investments
    
    
    45,614
    
    
    
    691
    
    
    
    6.08
    
    
    
    30,885
    
    
    
    464
    
    
    
    6.03Total interest-earning assets
    
    
    2,081,725
    
    
    
    40,138
    
    
    
    7.73
    
    
    
    1,319,213
    
    
    
    23,654
    
    
    
    7.19Noninterest-earning assets:Cash and due from banks
    
    
    43,635
    
    
    
    
    
    
    
    
    
    
    
    25,828Premises and equipment
    
    
    95,099
    
    
    
    
    
    
    
    
    
    
    
    57,465Accrued interest and other assets
    
    
    229,238
    
    
    
    
    
    
    
    
    
    
    
    78,501Allowance for loan losses
    
    
    (18,867
    )
    
    
    
    
    
    
    
    
    
    
    (12,232
    )Total assets
    
    $
    2,430,830
    
    
    
    
    
    
    
    
    
    
    $
    1,468,775
 13




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##### Table of Contents



Three
Months Ended June 30,2007
    
    
    2006Average
    
    
    Income/
    
    
    Yield/
    
    
    Average
    
    
    Income/
    
    
    Yield/Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate(Dollars in thousands)LIABILITIES AND STOCKHOLDERS EQUITYInterest-bearing liabilities:Demand deposits
    
    $
    519,646
    
    
    $
    4,830
    
    
    
    3.73
    %
    
    $
    308,459
    
    
    $
    2,188
    
    
    
    2.85Savings deposits
    
    
    44,211
    
    
    
    133
    
    
    
    1.21
    
    
    
    19,882
    
    
    
    10
    
    
    
    0.20Time deposits
    
    
    1,116,713
    
    
    
    13,817
    
    
    
    4.96
    
    
    
    682,352
    
    
    
    7,569
    
    
    
    4.45Other borrowings
    
    
    211,593
    
    
    
    2,770
    
    
    
    5.25
    
    
    
    212,278
    
    
    
    2,648
    
    
    
    5.00Subordinated debentures
    
    
    43,826
    
    
    
    1,004
    
    
    
    9.19
    
    
    
    31,959
    
    
    
    780
    
    
    
    9.79Total interest-bearing liabilities
    
    
    1,935,989
    
    
    
    22,554
    
    
    
    4.67
    
    
    
    1,254,930
    
    
    
    13,195
    
    
    
    4.22Noninterest-bearing liabilities:Demand deposits
    
    
    179,366
    
    
    
    
    
    
    
    
    
    
    
    93,705Accrued interest and other liabilities
    
    
    36,780
    
    
    
    
    
    
    
    
    
    
    
    14,663Stockholders equity
    
    
    278,695
    
    
    
    
    
    
    
    
    
    
    
    105,477Total liabilities and stockholders equity
    
    $
    2,430,830
    
    
    
    
    
    
    
    
    
    
    $
    1,468,775Net interest income/net interest spread
    
    
    
    
    
    
    17,584
    
    
    
    3.06
    %
    
    
    
    
    
    
    10,459
    
    
    
    2.97
    %Net yield on earning assets
    
    
    
    
    
    
    
    
    
    
    3.39
    %
    
    
    
    
    
    
    
    
    
    
    3.18
    %Taxable equivalent adjustment:Investment securities (2)
    
    
    
    
    
    
    71
    
    
    
    
    
    
    
    
    
    
    
    46Net interest income
    
    
    
    
    
    $
    17,513
    
    
    
    
    
    
    
    
    
    
    $
    10,413
 
 (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 and yields are presented on a fully taxable equivalent basis using a tax rate
of 34 percent. 14




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##### Table of Contents



Three Months Ended June 30, (1)2007 vs. 2006Increase
    
    
    Changes Due To(Decrease)
    
    
    Rate
    
    
    Volume(Dollars in thousands)Increase (decrease) in:Income from interest-earning assets:Interest and fees on loans
    
    $
    14,732
    
    
    $
    1,497
    
    
    $
    13,235Interest on securities:Taxable
    
    
    1,347
    
    
    
    197
    
    
    
    1,150Tax-exempt
    
    
    73
    
    
    
    7
    
    
    
    66Interest on federal funds
    
    
    105
    
    
    
    3
    
    
    
    102Interest on other investments
    
    
    227
    
    
    
    4
    
    
    
    223Total interest income
    
    
    16,484
    
    
    
    1,708
    
    
    
    14,776Expense from interest-bearing liabilities:Interest on demand deposits
    
    
    2,642
    
    
    
    821
    
    
    
    1,821Interest on savings deposits
    
    
    123
    
    
    
    99
    
    
    
    24Interest on time deposits
    
    
    6,248
    
    
    
    953
    
    
    
    5,295Interest on other borrowings
    
    
    122
    
    
    
    130
    
    
    
    (8
    )Interest on subordinated debentures
    
    
    224
    
    
    
    (50
    )
    
    
    274Total interest expense
    
    
    9,359
    
    
    
    1,953
    
    
    
    7,406Net interest income
    
    $
    7,125
    
    
    $
    (245
    )
    
    $
    7,370
 
 (1)
    
    The change in interest due to both rate and volume has been allocated to volume and rate
changes in proportion to the relationship of the absolute dollar amounts of the changes in
each. 15




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##### Table of Contents



Six Months Ended June 30,2007
    
    
    2006Average
    
    
    Income/
    
    
    Yield/
    
    
    Average
    
    
    Income/
    
    
    Yield/Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate(Dollars in thousands)ASSETSInterest-earning assets:Loans, net of unearned income (1)
    
    $
    1,680,439
    
    
    $
    69,297
    
    
    
    8.32
    %
    
    $
    1,022,238
    
    
    $
    38,672
    
    
    
    7.63
    %Investment securitiesTaxable
    
    
    328,691
    
    
    
    8,535
    
    
    
    5.24
    
    
    
    229,624
    
    
    
    5,510
    
    
    
    4.84Tax-exempt (2)
    
    
    13,155
    
    
    
    403
    
    
    
    6.19
    
    
    
    8,889
    
    
    
    253
    
    
    
    5.74Total investment securities
    
    
    341,846
    
    
    
    8,938
    
    
    
    5.27
    
    
    
    238,513
    
    
    
    5,763
    
    
    
    4.87Federal funds sold
    
    
    10,326
    
    
    
    283
    
    
    
    5.52
    
    
    
    3,520
    
    
    
    86
    
    
    
    4.93Other investments
    
    
    46,844
    
    
    
    1,429
    
    
    
    6.15
    
    
    
    30,661
    
    
    
    822
    
    
    
    5.41Total interest-earning assets
    
    
    2,079,455
    
    
    
    79,947
    
    
    
    7.75
    
    
    
    1,294,932
    
    
    
    45,343
    
    
    
    7.06Noninterest-earning assets:Cash and due from banks
    
    
    43,478
    
    
    
    
    
    
    
    
    
    
    
    27,241Premises and equipment
    
    
    95,118
    
    
    
    
    
    
    
    
    
    
    
    56,850Accrued interest and other assets
    
    
    227,630
    
    
    
    
    
    
    
    
    
    
    
    77,683Allowance for loan losses
    
    
    (18,883
    )
    
    
    
    
    
    
    
    
    
    
    (12,169
    )Total assets
    
    $
    2,426,798
    
    
    
    
    
    
    
    
    
    
    $
    1,444,537LIABILITIES AND STOCKHOLDERS EQUITYInterest-bearing liabilities:Demand deposits
    
    $
    517,918
    
    
    $
    9,333
    
    
    
    3.63
    %
    
    $
    318,406
    
    
    $
    4,338
    
    
    
    2.75Savings deposits
    
    
    43,813
    
    
    
    239
    
    
    
    1.10
    
    
    
    20,474
    
    
    
    18
    
    
    
    0.18Time deposits
    
    
    1,103,274
    
    
    
    26,677
    
    
    
    4.88
    
    
    
    648,984
    
    
    
    13,824
    
    
    
    4.30Other borrowings
    
    
    226,316
    
    
    
    6,019
    
    
    
    5.36
    
    
    
    212,137
    
    
    
    5,120
    
    
    
    4.87Subordinated debentures
    
    
    43,881
    
    
    
    1,996
    
    
    
    9.17
    
    
    
    31,959
    
    
    
    1,541
    
    
    
    9.72Total
interest - bearing liabilities
    
    
    1,935,202
    
    
    
    44,264
    
    
    
    4.61
    
    
    
    1,231,960
    
    
    
    24,841
    
    
    
    4.07Noninterest-bearing liabilities:Demand deposits
    
    
    179,465
    
    
    
    
    
    
    
    
    
    
    
    92,583Accrued interest and other liabilities
    
    
    34,568
    
    
    
    
    
    
    
    
    
    
    
    14,576Stockholders equity
    
    
    277,563
    
    
    
    
    
    
    
    
    
    
    
    105,418Total liabilities and stockholders equity
    
    $
    2,426,798
    
    
    
    
    
    
    
    
    
    
    $
    1,444,537Net interest income/net interest spread
    
    
    
    
    
    
    35,683
    
    
    
    3.14
    %
    
    
    
    
    
    
    20,502
    
    
    
    2.99
    %Net yield on earning assets
    
    
    
    
    
    
    
    
    
    
    3.46
    %
    
    
    
    
    
    
    
    
    
    
    3.19
    %Taxable equivalent adjustment:Investment securities (2)
    
    
    
    
    
    
    137
    
    
    
    
    
    
    
    
    
    
    
    86Net interest income
    
    
    
    
    
    $
    35,546
    
    
    
    
    
    
    
    
    
    
    $
    20,416
 
 (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 and yields are presented on a fully taxable equivalent basis using a tax rate
of 34 percent. 16




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##### Table of Contents



Six Months Ended June 30, (1)2007 vs. 2006Increase
    
    
    Changes Due To(Decrease)
    
    
    Rate
    
    
    Volume(Dollars in thousands)Increase (decrease) in:Income from interest-earning assets:Interest and fees on loans
    
    $
    30,625
    
    
    $
    3,772
    
    
    $
    26,853Interest on securities:Taxable
    
    
    3,025
    
    
    
    486
    
    
    
    2,539Tax-exempt
    
    
    150
    
    
    
    20
    
    
    
    130Interest on federal funds
    
    
    197
    
    
    
    11
    
    
    
    186Interest on other investments
    
    
    607
    
    
    
    125
    
    
    
    482Total interest income
    
    
    34,604
    
    
    
    4,414
    
    
    
    30,190Expense from interest-bearing liabilities:Interest on demand deposits
    
    
    4,995
    
    
    
    1,689
    
    
    
    3,306Interest on savings deposits
    
    
    221
    
    
    
    181
    
    
    
    40Interest on time deposits
    
    
    12,853
    
    
    
    2,076
    
    
    
    10,777Interest on other borrowings
    
    
    899
    
    
    
    540
    
    
    
    359Interest on subordinated debentures
    
    
    455
    
    
    
    (92
    )
    
    
    547Total interest expense
    
    
    19,423
    
    
    
    4,394
    
    
    
    15,029Net interest income
    
    $
    15,181
    
    
    $
    20
    
    
    $
    15,161
 
 (1)
    
    The change in interest due to both rate and volume has been allocated to volume and rate
changes in proportion to the relationship of the absolute dollar amounts of the changes in
each. Noninterest income
 Three-months Ended June 30,2007
    
    
    2006
    
    
    % Change(Dollars in thousands)Service charges and fees on deposits
    
    $
    1,894
    
    
    $
    1,129
    
    
    
    67.72
    %Mortgage banking income
    
    
    1,132
    
    
    
    708
    
    
    
    59.75Change in fair value of derivatives
    
    
    118
    
    
    
    (33
    )
    
    
    (456.9
    )Increase in cash surrender value of life insurance
    
    
    452
    
    
    
    359
    
    
    
    25.85Other noninterest income
    
    
    942
    
    
    
    664
    
    
    
    41.78Total
    
    $
    4,538
    
    
    $
    2,827
    
    
    
    60.52
    %
 Six-months Ended June 30,2007
    
    
    2006
    
    
    % Change(Dollars in thousands)Service charges and fees on deposits
    
    $
    3,684
    
    
    $
    2,160
    
    
    
    70.52
    %Mortgage banking income
    
    
    2,082
    
    
    
    1,238
    
    
    
    68.17Investment securities gains
    
    
    242
    
    
    
    
    
    
    
    Change in fair value of derivatives
    
    
    (34
    )
    
    
    37
    
    
    
    (191.71
    )Increase in cash surrender value of life insurance
    
    
    900
    
    
    
    780
    
    
    
    15.32Other noninterest income
    
    
    1,750
    
    
    
    1,114
    
    
    
    57.16Total
    
    $
    8,624
    
    
    $
    5,329
    
    
    
    61.83
    %
 17




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##### Table of Contents



Noninterest expenses
 Three-months Ended June 30,2007
    
    
    2006
    
    
    % Change(Dollars in thousands)Noninterest ExpensesSalaries and employee benefits
    
    $
    10,168
    
    
    $
    5,798
    
    
    
    75.37
    %Occupancy, furniture and equipment expense
    
    
    2,995
    
    
    
    1,739
    
    
    
    72.23Amortization of intangibles
    
    
    304
    
    
    
    
    
    
    
    Merger related costs
    
    
    107
    
    
    
    51
    
    
    
    109.80Professional fees
    
    
    559
    
    
    
    670
    
    
    
    (16.59
    )Insurance expense
    
    
    540
    
    
    
    374
    
    
    
    44.43Postage, stationery and supplies
    
    
    548
    
    
    
    289
    
    
    
    89.69Communications expense
    
    
    460
    
    
    
    149
    
    
    
    208.74Advertising expense
    
    
    568
    
    
    
    260
    
    
    
    118.38Other operating expense
    
    
    1,809
    
    
    
    1,330
    
    
    
    36.01Total
    
    $
    18,058
    
    
    $
    10,660
    
    
    
    69.40
    %Selected Key RatiosNoninterest expense to average assets (1)
    
    
    2.91
    %
    
    
    2.89
    %Efficiency ratio (1)
    
    
    80.23
    
    
    
    80.36
 
 (1)
    
    In calculating the selected key ratios, noninterest expense has been adjusted for amortization
of intangibles, merger related costs and other losses on the sale of assets. 18




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##### Table of Contents



Six-months Ended June 30,2007
    
    
    2006
    
    
    % Change(Dollars in thousands)Noninterest ExpensesSalaries and employee benefits
    
    $
    20,236
    
    
    $
    11,666
    
    
    
    73.46
    %Occupancy, furniture and equipment expense
    
    
    6,142
    
    
    
    3,586
    
    
    
    71.28Amortization of intangibles
    
    
    609
    
    
    
    
    
    
    
    Merger related costs
    
    
    426
    
    
    
    72
    
    
    
    491.67Professional fees
    
    
    1,020
    
    
    
    1,257
    
    
    
    (18.85
    )Insurance expense
    
    
    540
    
    
    
    374
    
    
    
    44.43Postage, stationery and supplies
    
    
    1,174
    
    
    
    539
    
    
    
    117.93Communications expense
    
    
    980
    
    
    
    373
    
    
    
    162.52Advertising expense
    
    
    1,224
    
    
    
    553
    
    
    
    121.16Other operating expense
    
    
    3,732
    
    
    
    3,045
    
    
    
    22.56Total
    
    $
    36,083
    
    
    $
    21,465
    
    
    
    68.10
    %Selected Key RatiosNoninterest expense to
average assets (1)
    
    
    2.91
    %
    
    
    2.98
    %Efficiency ratio
(1)
    
    
    79.50
    
    
    
    83.24
 
 (1)
    
    In calculating the selected key ratios, noninterest expense has been adjusted for amortization
of intangibles, merger related costs and other losses on the sale of assets. Income
tax expense
 Provision for Loan Losses
 19




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##### Table of Contents



Short-term liquid assets
 Investment Securities
  Investment Portfolio
 Available for SaleJune 30,
    
    
    December 31,
    
    
    Percent2007
    
    
    2006
    
    
    Change(Dollars in thousands)U.S. Treasury and agencies
    
    $
    95,359
    
    
    $
    111,852
    
    
    
    (14.75
    )%State and political subdivisions
    
    
    14,179
    
    
    
    12,942
    
    
    
    9.56Mortgage-backed securities
    
    
    176,702
    
    
    
    184,453
    
    
    
    (4.20
    )Corporate debt and other securities
    
    
    36,499
    
    
    
    45,469
    
    
    
    (19.73
    )Total investment securities
    
    $
    322,739
    
    
    $
    354,716
    
    
    
    (9.01
    )%
 20




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##### Table of Contents



Loans
  
 June 30, 2007
    
    
    December 31, 2006Percent of
    
    
    
    
    
    
    Percent ofAmount
    
    
    Total
    
    
    Amount
    
    
    TotalCommercial and industrial
    
    $
    164,945
    
    
    
    9.58
    %
    
    $
    172,872
    
    
    
    10.53
    %Real estate  construction and land development
    
    
    594,410
    
    
    
    34.53
    
    
    
    547,772
    
    
    
    33.37Real estate  mortgageSingle-family
    
    
    488,025
    
    
    
    28.35
    
    
    
    456,341
    
    
    
    27.80Commercial
    
    
    378,285
    
    
    
    21.98
    
    
    
    362,542
    
    
    
    22.09Other
    
    
    42,100
    
    
    
    2.45
    
    
    
    46,895
    
    
    
    2.86Consumer
    
    
    52,431
    
    
    
    3.05
    
    
    
    54,462
    
    
    
    3.32Other
    
    
    995
    
    
    
    .06
    
    
    
    438
    
    
    
    .03Total loans
    
    
    1,721,191
    
    
    
    100.0
    %
    
    
    1,641,322
    
    
    
    100.0
    %Unearned income
    
    
    (1,383
    )
    
    
    
    
    
    
    (1,794
    )Allowance for loan losses
    
    
    (19,147
    )
    
    
    
    
    
    
    (18,892
    )Net loans
    
    $
    1,700,661
    
    
    
    
    
    
    $
    1,620,636
  Property and Equipment
    21




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##### Table of Contents



Deposits
   June 30,
    
    
    December 31,
    
    
    Percent2007
    
    
    2006
    
    
    Change(Dollars in thousands)Non-interest bearing demand
    
    $
    182,807
    
    
    $
    191,323
    
    
    
    (4.45
    )%Alabama segment
    
    
    142,389
    
    
    
    146,705
    
    
    
    (2.94
    )Florida segment
    
    
    40,418
    
    
    
    44,618
    
    
    
    (9.41
    )Interest-bearing demand
    
    
    532,688
    
    
    
    552,887
    
    
    
    (3.65
    )Alabama segment
    
    
    411,914
    
    
    
    440,299
    
    
    
    (6.45
    )Florida segment
    
    
    120,774
    
    
    
    112,588
    
    
    
    7.27Savings
    
    
    44,964
    
    
    
    42,717
    
    
    
    5.26Alabama segment
    
    
    32,125
    
    
    
    28,394
    
    
    
    13.14Florida segment
    
    
    12,839
    
    
    
    14,323
    
    
    
    (10.36
    )Time deposits
    
    
    1,124,346
    
    
    
    1,083,914
    
    
    
    3.73Alabama segment
    
    
    786,010
    
    
    
    742,753
    
    
    
    5.82Florida segment
    
    
    338,336
    
    
    
    341,161
    
    
    
    (.83
    )Total deposits
    
    $
    1,884,805
    
    
    $
    1,870,841
    
    
    
    0.75
    %Alabama segment
    
    $
    1,372,438
    
    
    $
    1,358,151
    
    
    
    1.05
    %Florida segment
    
    $
    512,367
    
    
    $
    512,690
    
    
    
    (0.06
    )%
 22




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##### Table of Contents



Borrowings
 Accrued Expenses and Other Liabilities
 Junior Subordinated Debentures Owed to Unconsolidated Subsidiary Trusts
    Allowance for Loan Losses
    23




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24




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##### Table of Contents



SUMMARY OF LOAN LOSS EXPERIENCE
 Three-Months
    
    
    Six-MonthsEnded
    
    
    Ended
    
    
    Year EndedJune 30,
    
    
    June 30,
    
    
    December 31,2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2006(Dollars in Thousands)Allowance for loan losses at
beginning of period
    
    $
    18,977
    
    
    $
    11,999
    
    
    $
    18,892
    
    
    $
    12,011
    
    
    $
    12,011Allowance of acquired bank
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,697Charge-offs:Commercial and industrial
    
    
    327
    
    
    
    334
    
    
    
    437
    
    
    
    615
    
    
    
    1,450Real estate  construction and
land development
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    44
    
    
    
    378Real estate  mortgageSingle-family
    
    
    189
    
    
    
    175
    
    
    
    449
    
    
    
    450
    
    
    
    625Commercial
    
    
    5
    
    
    
    81
    
    
    
    19
    
    
    
    95
    
    
    
    416Other
    
    
    4
    
    
    
    
    
    
    
    206
    
    
    
    11
    
    
    
    15Consumer
    
    
    537
    
    
    
    184
    
    
    
    937
    
    
    
    404
    
    
    
    860Other
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    2
    
    
    
    2Total charge-offs
    
    
    1,063
    
    
    
    777
    
    
    
    2,049
    
    
    
    1,621
    
    
    
    3,746Recoveries:Commercial and industrial
    
    
    86
    
    
    
    137
    
    
    
    256
    
    
    
    218
    
    
    
    465Real estate  construction and
land development
    
    
    1
    
    
    
    120
    
    
    
    8
    
    
    
    121
    
    
    
    126Real estate  mortgageSingle-family
    
    
    30
    
    
    
    24
    
    
    
    57
    
    
    
    56
    
    
    
    102Commercial
    
    
    2
    
    
    
    30
    
    
    
    20
    
    
    
    54
    
    
    
    363Other
    
    
    11
    
    
    
    14
    
    
    
    58
    
    
    
    46
    
    
    
    73Consumer
    
    
    101
    
    
    
    64
    
    
    
    198
    
    
    
    126
    
    
    
    301Other
    
    
    2
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    Total recoveries
    
    
    233
    
    
    
    389
    
    
    
    599
    
    
    
    621
    
    
    
    1,430Net charge-offs
    
    
    830
    
    
    
    388
    
    
    
    1,450
    
    
    
    1,000
    
    
    
    2,316Provision for loan losses
    
    
    1,000
    
    
    
    700
    
    
    
    1,705
    
    
    
    1,300
    
    
    
    2,500Allowance for loan losses at end
of period
    
    $
    19,147
    
    
    $
    12,311
    
    
    $
    19,147
    
    
    $
    12,311
    
    
    $
    18,892Loans at end of period, net of
unearned income
    
    $
    1,719,808
    
    
    $
    1,080,713
    
    
    $
    1,719,808
    
    
    $
    1,080,713
    
    
    $
    1,639,528Average loans, net of unearned
income
    
    
    1,693,341
    
    
    
    1,047,829
    
    
    
    1,680,439
    
    
    
    1,022,238
    
    
    
    1,176,844Ratio of ending allowance to
ending loans
    
    
    1.11
    %
    
    
    1.14
    %
    
    
    1.11
    %
    
    
    1.14
    %
    
    
    1.15
    %Ratio of net charge-offs to
average loans (1)
    
    
    0.20
    %
    
    
    0.15
    %
    
    
    0.17
    %
    
    
    0.20
    %
    
    
    0.20
    %Net charge-offs as a percentage of:Provision for loan losses
    
    
    83.00
    %
    
    
    55.43
    %
    
    
    85.04
    %
    
    
    76.92
    %
    
    
    92.64
    %Allowance for loan losses (1)
    
    
    17.39
    %
    
    
    12.64
    %
    
    
    15.27
    %
    
    
    16.38
    %
    
    
    12.26
    %Allowance for loan losses as a
percentage of nonperforming loans
    
    
    160.64
    %
    
    
    258.04
    %
    
    
    160.64
    %
    
    
    258.09
    %
    
    
    219.88
    %
 
 (1)
    
    Annualized. 25




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##### Table of Contents



Nonperforming
Assets
 NONPERFORMING ASSETS
 June 30,
    
    
    December 31,2007
    
    
    2006(Dollars in thousands)Nonaccrual
    
    $
    11,020
    
    
    $
    7,773Accruing loans 90 days or more delinquent
    
    
    397
    
    
    
    514Restructured
    
    
    502
    
    
    
    305Total nonperforming loans
    
    
    11,919
    
    
    
    8,592Other real
estate owned assets and repossessed assets
    
    
    1,125
    
    
    
    1,821Total nonperforming assets
    
    $
    13,044
    
    
    $
    10,413Nonperforming loans as a percentage of loans
    
    
    0.69
    %
    
    
    0.52
    %Nonperforming assets as a percentage of loans plus nonperforming assets
    
    
    0.76
    %
    
    
    0.63
    %Nonperforming assets as a percentage of total assets
    
    
    0.53
    %
    
    
    0.43
    %
   June 30,
    
    
    December 31,2007
    
    
    2006(Dollars in thousands)Commercial and industrial
    
    $
    1,138
    
    
    $
    704Real estate  construction and land development
    
    
    2,720
    
    
    
    2,067Real estate  mortgagesSingle-family
    
    
    3,599
    
    
    
    2,805Commercial
    
    
    2,830
    
    
    
    1,765Other
    
    
    575
    
    
    
    688Consumer
    
    
    1,057
    
    
    
    559Other
    
    
    
    
    
    
    4Total nonperforming loans
    
    $
    11,919
    
    
    $
    8,592
  26




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##### Table of Contents



Impaired Loans
 Outstanding
    
    
    SpecificBalance
    
    
    Allowance(Dollars in thousands)Commercial and industrial
    
    $
    1,221
    
    
    $
    114Real estate  construction and land development
    
    
    2,766
    
    
    
    548Real estate  mortgagesCommercial
    
    
    3,082
    
    
    
    470Other
    
    
    551
    
    
    
    73Total
    
    $
    7,620
    
    
    $
    1,205
 Potential Problem Loans
  Stock
Repurchase Plan.
 Regulatory Capital.
 To Be WellFor Capital
    
    
    Capitalized UnderAdequacy
    
    
    Prompt CorrectiveActual
    
    
    Purposes
    
    
    ActionAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioAs of June 30, 2007Tier 1 Core Capital
(to Adjusted Total
Assets)Corporation
    
    $
    178,377
    
    
    
    7.66
    %
    
    $
    93,152
    
    
    
    4.00
    %
    
    $
    116,440
    
    
    
    5.00
    %Superior Bank
    
    
    181,960
    
    
    
    7.85
    
    
    
    92,702
    
    
    
    4.00
    
    
    
    115,878
    
    
    
    5.00Total Capital (to Risk
Weighted Assets)Corporation
    
    
    196,113
    
    
    
    10.63
    
    
    
    147,628
    
    
    
    8.00
    
    
    
    184,534
    
    
    
    10.00
    %Superior Bank
    
    
    199,697
    
    
    
    10.89
    
    
    
    146,728
    
    
    
    8.00
    
    
    
    183,410
    
    
    
    10.00Tier 1 Capital (to
Risk Weighted Assets)Corporation
    
    
    178,377
    
    
    
    9.67
    
    
    
    N/A
    
    
    
    N/A
    
    
    $
    110,721
    
    
    
    6.00
    %Superior Bank
    
    
    181,960
    
    
    
    9.92
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    110,046
    
    
    
    6.00Tangible Capital (to
Adjusted Total Assets)Superior Bank
    
    
    181,960
    
    
    
    7.85
    
    
    
    34,763
    
    
    
    1.50
    
    
    
    N/A
    
    
    
    N/A
 27




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##### Table of Contents



Forward-Looking Statements
    28




---



##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   
 ITEM 4. CONTROLS AND PROCEDURES
       29




---



##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  30




---



##### Table of Contents



ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  1.
    
    The stockholders voted as follows to
elect the following persons as
directors, each to hold office for a
one-year term:
 NAME
    
    FOR
    
    WITHHELDC. Stanley Bailey
    
    
    26,031,085
    
    
    
    676,951Roger D. Barker
    
    
    25,790,894
    
    
    
    917,142K. Earl Durden
    
    
    25,872,603
    
    
    
    835,433Rick D. Gardner
    
    
    26,111,653
    
    
    
    596,383Thomas E. Jernigan, Jr.
    
    
    25,946,011
    
    
    
    762,025James Mailon Kent, Jr.
    
    
    25,879,094
    
    
    
    828,942James M. Link
    
    
    26,077,265
    
    
    
    630,771D. Dewey Mitchell
    
    
    26,111,832
    
    
    
    596,204Barry Morton
    
    
    26,111,500
    
    
    
    596,536Robert R. Parrish, Jr.
    
    
    26,087,293
    
    
    
    620,743C. Marvin Scott
    
    
    26,106,364
    
    
    
    601,672James C. White, Sr.
    
    
    25,970,125
    
    
    
    737,911
 2.
    
    The stockholders voted to
approve an amendment to our
Restated Certificate of
Incorporation to increase the
number of authorized shares of
our common stock to 60 million,
as follows:
 FOR
    
    AGAINST
    
    ABSTAIN25,756,687
    
    739,944
    
    211,405
 
 ITEM 5. OTHER INFORMATION
  
 ITEM 6. EXHIBITS
  31.01
    
    Certification of principal executive officer pursuant to Rule 13a-14(a).31.02
    
    Certification of principal financial officer pursuant to 13a-14(a).32.01
    
    Certification of principal executive officer pursuant to 18 U.S.C. Section 1350.32.02
    
    Certification of principal financial officer pursuant to 18 U.S.C. Section 1350.
 31




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##### Table of Contents



SUPERIOR BANCORP
(Registrant)Date: August 9, 2007
    By:
    /s/ C. Stanley BaileyC. Stanley BaileyChief Executive OfficerDate: August 9, 2007
    By:
    /s/ Mark TarnakowMark TarnakowChief Financial Officer
(Principal Financial Officer) 32