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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC
 FORM 10-Q/A
 (Amendment No. 1)
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED March 31, 2009
 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.)
 
 
  þ o
  o o
  Large accelerated filer o
Accelerated filer þ
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company o  o þ
  Class
    
    Outstanding as of March 31, 2009Common stock, $.001 par value
    
    10,099,893




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Explanatory Note
     Restatement Effects  Condensed Consolidated Statements of Financial Condition (Unaudited) (In Thousands)
 As of March 31, 2009As
    
    As OriginallyRestated
    
    Filed
    
    DifferenceInvestment securities available for sale
    
    $
    328,708
    
    
    $
    338,590
    
    
    $
    (9,882
    )Other assets
    
    
    58,383
    
    
    
    53,470
    
    
    
    4,913Total assets
    
    
    3,129,469
    
    
    
    3,134,438
    
    
    
    (4,969
    )Accrued
expenses and other liabilities
    
    
    24,907
    
    
    
    24,240
    
    
    
    667Accumulated deficit
    
    
    (134,621
    )
    
    
    (131,733
    )
    
    
    (2,888
    )Accumulated other comprehensive loss
    
    
    (9,550
    )
    
    
    (6,803
    )
    
    
    (2,747
    )Total stockholders equity
    
    
    245,434
    
    
    
    251,070
    
    
    
    (5,636
    )Total liabilities and stockholders equity
    
    
    3,129,469
    
    
    
    3,134,438
    
    
    
    (4,969
    )
 2




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Restatement Effects  Condensed Consolidated Statements of Operations (Unaudited) (In Thousands)
 Three Months EndedMarch 31, 2009As
    
    As OriginallyRestated
    
    Filed
    
    DifferenceTotal other-than-temporary
impairment losses
    
    $
    (10,504
    )
    
    $
    (1,777
    )
    
    $
    (8,727
    )Portion of OTTI recognized in other
comprehensive income
    
    
    4,659
    
    
    
    1,453
    
    
    
    3,206Investment securities (loss) gain
    
    
    (5,845
    )
    
    
    (324
    )
    
    
    (5,521
    )Loss before income taxes
    
    
    (6,422
    )
    
    
    (901
    )
    
    
    (5,521
    )Income tax benefit
    
    
    (2,848
    )
    
    
    (215
    )
    
    
    (2,633
    )Net loss
    
    
    (3,574
    )
    
    
    (686
    )
    
    
    (2,888
    )Net loss applicable to common shareholders
    
    
    (4,717
    )
    
    
    (1,829
    )
    
    
    (2,888
    )Basic net loss per common share
    
    $
    (0.47
    )
    
    $
    (0.18
    )
    
    $
    (0.29
    )Diluted net loss per common share
    
    $
    (0.47
    )
    
    $
    (0.18
    )
    
    $
    (0.29
    )
   
    
    Item 1  Financial Statements
    
    Item 2  Managements Discussion and Analysis of Financial Condition and Results
of Operations
   3




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##### 



TABLE OF CONTENTS
 PART I FINANCIAL INFORMATION
    
    
    5ITEM 1. FINANCIAL STATEMENTS
    
    
    5ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
    
    
    23ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
    
    
    46ITEM 4. CONTROLS AND PROCEDURES
    
    
    46PART II. OTHER INFORMATION
    
    
    47ITEM 1. LEGAL PROCEEDINGS
    
    
    47ITEM 1A. RISK FACTORS
    
    
    47ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    47ITEM 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    47ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    47ITEM 5. OTHER INFORMATION
    
    
    47ITEM 6. EXHIBITS
    
    
    48SIGNATURES
    
    
    49EX-31.1EX-31.2EX-32.1EX-32.2
  4




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SUPERIOR BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share data)
 March 31,
    
    
    December 31,2009
    
    
    2008(UNAUDITED)ASSETSCash and due from banks
    
    $
    77,498
    
    
    $
    74,237Interest-bearing deposits in other banks
    
    
    39,309
    
    
    
    10,042Federal funds sold
    
    
    2,455
    
    
    
    5,169Total cash and cash equivalents
    
    
    119,262
    
    
    
    89,448Investment securities available for sale
    
    
    328,708
    
    
    
    347,142Tax lien certificates
    
    
    18,804
    
    
    
    23,786Mortgage loans held for sale
    
    
    40,628
    
    
    
    22,040Loans, net of unearned income
    
    
    2,359,299
    
    
    
    2,314,921Allowance for loan losses
    
    
    (29,871
    )
    
    
    (28,850
    )Net loans
    
    
    2,329,428
    
    
    
    2,286,071Premises and equipment, net
    
    
    105,521
    
    
    
    104,085Accrued interest receivable
    
    
    15,108
    
    
    
    14,794Stock in FHLB
    
    
    19,337
    
    
    
    21,410Cash surrender value of life insurance
    
    
    48,718
    
    
    
    48,291Core deposit and other intangible assets
    
    
    19,963
    
    
    
    21,052Other real estate
    
    
    25,609
    
    
    
    19,971Other assets
    
    
    58,383
    
    
    
    54,611Total assets
    
    $
    3,129,469
    
    
    $
    3,052,701LIABILITIES AND STOCKHOLDERS EQUITYDeposits:Noninterest-bearing
    
    $
    253,447
    
    
    $
    212,732Interest-bearing
    
    
    2,254,218
    
    
    
    2,130,256TOTAL DEPOSITS
    
    
    2,507,665
    
    
    
    2,342,988Advances from FHLB
    
    
    243,322
    
    
    
    361,324Federal funds borrowed and security repurchase agreements
    
    
    1,737
    
    
    
    3,563Notes payable
    
    
    45,575
    
    
    
    7,000Subordinated debentures, net
    
    
    60,829
    
    
    
    60,884Accrued expenses and other liabilities
    
    
    24,907
    
    
    
    25,703Total liabilities
    
    
    2,884,035
    
    
    
    2,801,462Commitments and contingenciesStockholders equity:Preferred stock, par value $.001 per share; shares authorized 5,000,000:Series A, fixed rate cumulative perpetual preferred stock, 69,000
shares issued and outstanding at March 31, 2009 and December 31, 2008,
respectively
    
    
    
    
    
    
    Common stock, par value $.001 per share; shares authorized 15,000,000;
shares issued 10,427,981 and 10,403,087 respectively; outstanding
10,099,893 and 10,074,999 respectively
    
    
    10
    
    
    
    10Surplus  preferred
    
    
    63,259
    
    
    
    62,978 warrants
    
    
    8,646
    
    
    
    8,646 common
    
    
    329,600
    
    
    
    329,461Accumulated deficit
    
    
    (134,621
    )
    
    
    (129,904
    )Accumulated other comprehensive loss
    
    
    (9,550
    )
    
    
    (7,925
    )Treasury stock, at cost  322,045 and 321,485 shares, respectively
    
    
    (11,341
    )
    
    
    (11,373
    )Unearned ESOP stock
    
    
    (398
    )
    
    
    (443
    )Unearned restricted stock
    
    
    (171
    )
    
    
    (211
    )Total stockholders equity
    
    
    245,434
    
    
    
    251,239Total liabilities and stockholders equity
    
    $
    3,129,469
    
    
    $
    3,052,701
  5




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SUPERIOR BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Amounts in thousands, except per share data)
 Three Months EndedMarch 31,2009
    
    
    2008INTEREST INCOMEInterest and fees on loans
    
    $
    34,952
    
    
    $
    37,346Interest on taxable securities
    
    
    4,009
    
    
    
    4,052Interest on tax-exempt securities
    
    
    428
    
    
    
    430Interest on federal funds sold
    
    
    5
    
    
    
    80Interest and dividends on other investments
    
    
    362
    
    
    
    644Total interest income
    
    
    39,756
    
    
    
    42,552INTEREST EXPENSEInterest on deposits
    
    
    14,893
    
    
    
    20,253Interest on other borrowed funds
    
    
    2,342
    
    
    
    2,792Interest on subordinated debentures
    
    
    1,193
    
    
    
    1,015Total interest expense
    
    
    18,428
    
    
    
    24,060NET INTEREST INCOME
    
    
    21,328
    
    
    
    18,492Provision for loan losses
    
    
    3,452
    
    
    
    1,872NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
    
    
    17,876
    
    
    
    16,620NONINTEREST INCOMEService charges and fees on deposits
    
    
    2,387
    
    
    
    2,103Mortgage banking income
    
    
    1,691
    
    
    
    1,266Total other-than-temporary impairment losses (OTTI) (see Note 3)
    
    
    (10,504
    )
    
    NAPortion of OTTI recognized in other comprehensive income (loss)
    
    
    4,659
    
    
    NAInvestment securities (loss) gain
    
    
    (5,845
    )
    
    
    402Change in fair value of derivatives
    
    
    (199
    )
    
    
    1,050Increase in cash surrender value of life insurance
    
    
    515
    
    
    
    552Other income
    
    
    1,216
    
    
    
    1,228TOTAL NONINTEREST INCOME
    
    
    (235
    )
    
    
    6,601NONINTEREST EXPENSESSalaries and employee benefits
    
    
    12,309
    
    
    
    12,141Occupancy, furniture and equipment expense
    
    
    4,416
    
    
    
    4,060Amortization of core deposit intangibles
    
    
    985
    
    
    
    896Merger-related costs
    
    
    
    
    
    
    108Other expenses
    
    
    6,353
    
    
    
    5,059TOTAL NONINTEREST EXPENSES
    
    
    24,063
    
    
    
    22,264(Loss) income before income taxes
    
    
    (6,422
    )
    
    
    957INCOME TAX (BENEFIT) EXPENSE
    
    
    (2,848
    )
    
    
    262NET (LOSS) INCOME
    
    
    (3,574
    )
    
    
    695Preferred stock dividends and amortization
    
    
    1,143
    
    
    
    NET (LOSS) INCOME APPLICABLE TO COMMON STOCKHOLDERS
    
    $
    (4,717
    )
    
    $
    695BASIC NET (LOSS) INCOME PER COMMON SHARE
    
    $
    (0.47
    )
    
    $
    0.07DILUTED NET (LOSS) INCOME PER COMMON SHARE
    
    $
    (0.47
    )
    
    $
    0.07Weighted average common shares outstanding
    
    
    10,053
    
    
    
    10,011Weighted average common shares outstanding, assuming dilution
    
    
    10,053
    
    
    
    10,045
  6




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SUPERIOR BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
(Dollars in thousands)
 Three Months EndedMarch 31,2009
    
    
    2008NET CASH USED BY OPERATING ACTIVITIES
    
    $
    (14,082
    )
    
    $
    (5,316
    )CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from sales of securities available for sale
    
    
    
    
    
    
    17,368Proceeds from maturities of investment securities available for sale
    
    
    15,335
    
    
    
    71,607Purchases of investment securities available for sale
    
    
    (5,290
    )
    
    
    (54,930
    )Redemption of tax lien certificates
    
    
    7,401
    
    
    
    4,323Purchase of tax lien certificates
    
    
    (2.419
    )
    
    
    (793
    )Net increase in loans
    
    
    (54,732
    )
    
    
    (55,890
    )Purchases of premises and equipment
    
    
    (3,365
    )
    
    
    (4,245
    )Proceeds from sale of premises and equipment
    
    
    77
    
    
    
    4,249Proceeds from sale of repossessed assets
    
    
    1,993
    
    
    
    2,898Decrease (increase) in stock in FHLB
    
    
    2,074
    
    
    
    (4,281
    )Net cash used by investing activities
    
    
    (38,926
    )
    
    
    (19,694
    )CASH FLOWS FROM FINANCING ACTIVITIES:Net increase in deposits
    
    
    164,809
    
    
    
    (34,641
    )Net (decrease) increase in FHLB advances and other borrowed funds
    
    
    (119,890
    )
    
    
    79,519Proceeds from notes payable
    
    
    38,575
    
    
    
    Preferred cash dividend paid
    
    
    (672
    )
    
    
    Net cash provided by financing activities
    
    
    82,822
    
    
    
    44,878Net increase in cash and cash equivalents
    
    
    29,814
    
    
    
    19,868CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    
    
    89,448
    
    
    
    63,351CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    119,262
    
    
    $
    83,219
  7




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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Note 1  Basis of Presentation
       Restatement Effects  Condensed Consolidated Statements of Financial Condition (Unaudited) (In
Thousands)
 As of March 31, 2009As
    
    As OriginallyRestated
    
    Filed
    
    DifferenceInvestment securities available for sale
    
    $
    328,708
    
    
    $
    338,590
    
    
    $
    (9,882
    )Other assets
    
    
    58,383
    
    
    
    53,470
    
    
    
    4,913Total assets
    
    
    3,129,469
    
    
    
    3,134,438
    
    
    
    (4,969
    )Accrued expenses and other liabilities
    
    
    24,907
    
    
    
    24,240
    
    
    
    667Accumulated deficit
    
    
    (134,621
    )
    
    
    (131,733
    )
    
    
    (2,888
    )Accumulated other comprehensive loss
    
    
    (9,550
    )
    
    
    (6,803
    )
    
    
    (2,747
    )Total stockholders equity
    
    
    245,434
    
    
    
    251,070
    
    
    
    (5,636
    )Total liabilities and stockholders equity
    
    
    3,129,469
    
    
    
    3,134,438
    
    
    
    (4,969
    )
 Restatement Effects  Condensed Consolidated Statements of Operations (Unaudited) (In Thousands)
 Three Months EndedMarch 31, 2009As
    
    As OriginallyRestated
    
    Filed
    
    DifferenceTotal other-than-temporary impairment losses
    
    $
    (10,504
    )
    
    $
    (1,777
    )
    
    $
    (8,727
    )Portion of OTTI recognized in other comprehensive income
    
    
    4,659
    
    
    
    1,453
    
    
    
    3,206Investment securities (loss) gain
    
    
    (5,845
    )
    
    
    (324
    )
    
    
    (5,521
    )Loss before income taxes
    
    
    (6,422
    )
    
    
    (901
    )
    
    
    (5,521
    )Income tax benefit
    
    
    (2,848
    )
    
    
    (215
    )
    
    
    (2,633
    )Net loss
    
    
    (3,574
    )
    
    
    (686
    )
    
    
    (2,888
    )Net loss applicable to common shareholders
    
    
    (4,717
    )
    
    
    (1,829
    )
    
    
    (2,888
    )Basic net loss per common share
    
    $
    (0.47
    )
    
    $
    (0.18
    )
    
    $
    (0.29
    )Diluted net loss per common share
    
    $
    (0.47
    )
    
    $
    (0.18
    )
    
    $
    (0.29
    )
 Note 2  Recent Accounting Pronouncements
  
    
    FSP SFAS 157-4 Determining Fair Value When the Volume and Level of Activity for the
Assets or Liability Have Significantly Decreased and Identifying Transactions That Are Not
Orderly (FSP 157-4)provides guidelines for making fair value measurements more
consistent with the principles presented in SFAS 157, Fair Value Measurements (SFAS
157).It emphasizes that even if there has been a significant decrease in the volume and
level of activity for the asset or liability and regardless of the valuation technique used,
the objective of a fair value measurement remains the same. Fair value is the price that
would be received in a sale of an asset or paid to transfer a liability in an orderly
transaction (that is, not a forced liquidation or distressed sale), between market
participants at the measurement date under current market conditions.
    
    FSP SFAS 115-2 and SFAS 124-2, Recognition and Presentation of Other-than-temporary
impairments (FSP 115-2 and 124-2)provides additional guidance designed to create greater
clarity and consistency in accounting for and presenting impairment losses on securities. It
amends OTTI impairment guidance for debt securities to make the guidance more operational
and to improve the presentation and disclosure of OTTI on debt and equity securities in the
financial statements. It does not amend existing recognition and measurement guidance
related to OTTI of equity securities.
    
    FSP SFAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial
Instruments (FSP 107-1 and APB 28-1)enhances consistency in financial reporting by
increasing the frequency of fair value disclosures.
  8




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Statement of Financial Accounting Standards No. 161
 Disclosures About Derivative Instruments and Hedging
Activities, an Amendment of FASB Statement No. 133 Accounting for Derivative Instruments and Hedging Activities
 Note 3  Investment Securities
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value(In Thousands)Investment securities available for sale:U.S. agency securities
    
    $
    8,945
    
    
    $
    112
    
    
    $
    15
    
    
    $
    9,042Mortgage-backed securities (MBS):U.S. Agency MBS  residential
    
    
    221,890
    
    
    
    6,900
    
    
    
    11
    
    
    
    228,779U.S. Agency MBS  collateralized mortgage obligation (CMO)
    
    
    14,404
    
    
    
    259
    
    
    
    
    
    
    
    14,663Private-label  CMO
    
    
    28,925
    
    
    
    43
    
    
    
    5,522
    
    
    
    23,446Total MBS
    
    
    265,219
    
    
    
    7,202
    
    
    
    5,533
    
    
    
    266,888State, county and municipal securities
    
    
    41,360
    
    
    
    320
    
    
    
    1,407
    
    
    
    40,273Corporate obligations:Corporate debt
    
    
    5,927
    
    
    
    
    
    
    
    217
    
    
    
    5,710Pooled trust preferred securities
    
    
    13,537
    
    
    
    
    
    
    
    8,300
    
    
    
    5,237Single issue trust preferred securities
    
    
    5,000
    
    
    
    
    
    
    
    3,621
    
    
    
    1,379Total corporate obligations
    
    
    24,464
    
    
    
    
    
    
    
    12,138
    
    
    
    12,326Equity securities
    
    
    563
    
    
    
    
    
    
    
    384
    
    
    
    179Total investment securities available for sale
    
    $
    340,551
    
    
    $
    7,634
    
    
    $
    19,477
    
    
    $
    328,708
   Securities AvailableFor SaleAmortized
    
    
    EstimatedCost
    
    
    Fair Value(In Thousands)Due in one year or less
    
    $
    250
    
    
    $
    252Due after one year through five years
    
    
    9,936
    
    
    
    9,795Due after five years through ten years
    
    
    8,364
    
    
    
    8,595Due after ten years
    
    
    56,782
    
    
    
    43,178Mortgage-backed securities
    
    
    265,219
    
    
    
    266,888$
    340,551
    
    
    $
    328,708
  9




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March 31, 2009Less Than 12 Months
    
    
    More Than 12 Months
    
    
    TotalUnrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    UnrealizedFair Value
    
    
    Losses (1)
    
    
    Fair Value
    
    
    Losses (1)
    
    
    Fair Value
    
    
    Losses (1)(In thousands)Temporarily
ImpairedU.S. Agency securities:
    
    $
    5,274
    
    
    $
    15
    
    
    $
    
    
    
    $
    
    
    
    $
    5,274
    
    
    $
    15Mortgage-backed securities:U.S. Agency MBS  residential
    
    
    73
    
    
    
    
    
    
    
    242
    
    
    
    11
    
    
    
    315
    
    
    
    11Private-label  CMO
    
    
    1,936
    
    
    
    838
    
    
    
    15,328
    
    
    
    4,678
    
    
    
    17,264
    
    
    
    5,516Total MBS
    
    
    2,009
    
    
    
    838
    
    
    
    15,570
    
    
    
    4,689
    
    
    
    17,579
    
    
    
    5,527State, county and municipal securities
    
    
    19,474
    
    
    
    1,044
    
    
    
    4,347
    
    
    
    363
    
    
    
    23,821
    
    
    
    1,407Corporate obligations:Corporate debt
    
    
    
    
    
    
    
    
    
    
    5,710
    
    
    
    217
    
    
    
    5,710
    
    
    
    217Pooled trust preferred securities
    
    
    
    
    
    
    
    
    
    
    1,742
    
    
    
    3,641
    
    
    
    1,742
    
    
    
    3,641Single issue trust preferred securities
    
    
    
    
    
    
    
    
    
    
    1,379
    
    
    
    3,621
    
    
    
    1,379
    
    
    
    3,621Total corporate obligations
    
    
    
    
    
    
    
    
    
    
    8,831
    
    
    
    7,479
    
    
    
    8,831
    
    
    
    7,479Equity securities
    
    
    
    
    
    
    
    
    
    
    179
    
    
    
    384
    
    
    
    179
    
    
    
    384Total temporarily impaired securities
    
    
    26,757
    
    
    
    1,897
    
    
    
    28,927
    
    
    
    12,915
    
    
    
    55,684
    
    
    
    14,812Other-than-temporarily
ImpairedMortgage-backed
securities (MBS)Private-label  CMO
    
    
    
    
    
    
    
    
    
    
    2,585
    
    
    
    6
    
    
    
    2,585
    
    
    
    6Corporate
obligations:Pooled trust preferred securities
    
    
    
    
    
    
    
    
    
    
    3,495
    
    
    
    4,659
    
    
    
    3,495
    
    
    
    4,659Total OTTI securities
    
    
    
    
    
    
    
    
    
    
    6,080
    
    
    
    4,665
    
    
    
    6,080
    
    
    
    4,665Total temporarily and
other-than-temporarily impaired
    
    $
    26,757
    
    
    $
    1,897
    
    
    $
    35,007
    
    
    $
    17,580
    
    
    $
    61,764
    
    
    $
    19,477
 
 (1)
    
     Unrealized losses are included in other comprehensive income (loss), net of unrealized
gains and applicable income taxes. 10




---



##### Table of Contents



March 31, 2009Total Number of SecuritiesLess Than 12
    
    Greater ThanMonths
    
    12 Months
    
    TotalTemporarily ImpairedU.S. Agency securities:
    
    
    1
    
    
    
    
    
    
    
    1Mortgage-backed securities:U.S. Agency MBS  residential
    
    
    2
    
    
    
    7
    
    
    
    9Private-label  CMO
    
    
    4
    
    
    
    1
    
    
    
    5Total MBS
    
    
    6
    
    
    
    8
    
    
    
    14State, county and municipal securities
    
    
    51
    
    
    
    12
    
    
    
    63Corporate obligations:Corporate debt
    
    
    
    
    
    
    4
    
    
    
    4Pooled trust preferred securities
    
    
    
    
    
    
    3
    
    
    
    3Single issue trust preferred securities
    
    
    
    
    
    
    1
    
    
    
    1Total corporate obligations
    
    
    
    
    
    
    8
    
    
    
    8Equity securities
    
    
    
    
    
    
    4
    
    
    
    4Total temporarily impaired securities
    
    
    58
    
    
    
    32
    
    
    
    90Other-than-temporarily ImpairedMortgage-backed
securities (MBS)Private-label  CMO
    
    
    
    
    
    
    1
    
    
    
    1Corporate obligations:Pooled trust preferred securities
    
    
    
    
    
    
    2
    
    
    
    2Total OTTI securities
    
    
    
    
    
    
    3
    
    
    
    3Total temporarily and other-than-temporarily impaired
    
    
    58
    
    
    
    35
    
    
    
    93
 Other-Than-Temporary-Impairment
 Accounting for Certain Investments in Debt and Equity
Securities Recognition of Interest Income and Impairment on Purchased
Beneficial Interests and Beneficial Interests that Continue to be Held by a Transfer in Securitized
Financial Assets
    11




---



##### Table of Contents



Credit Support
    
    
    NetRating
    
    
    
    
    
    Coverage
    
    
    UnrealizedMoody/Fitch
    
    Count
    
    
    Ratios (1)
    
    
    LossA1/AAA
    
    
    1
    
    
    
    3.04
    
    
    $
    (2,514
    )Aa1/AAA
    
    
    1
    
    
    
    N/A
    
    
    
    (122
    )Aa2/NR
    
    
    1
    
    
    
    6.57
    
    
    
    (562
    )Aaa/AAA
    
    
    1
    
    
    
    15.11
    
    
    
    (2
    )Aaa/NR
    
    
    2
    
    
    
    4.58 - 16.40
    
    
    
    (485
    )NR/AAA
    
    
    3
    
    
    
    4.01 - 5.87
    
    
    
    (1,831
    )NR/CCC (2)
    
    
    2
    
    
    
    0.98 - 1.26
    
    
    
    (2
    )Ca/NR (2)
    
    
    1
    
    
    
    0.37
    
    
    
    39Total
    
    
    12
    
    
    
    
    
    
    $
    (5,479
    )
 
 (1)
    
    The Credit Support Coverage Ratio, which is the ratio that determines the multiple of credit
support, based on assumptions for the performance of the loans within the delinquency
pipeline. The assumptions used are: Current Collateral Support/ ((60 day delinquencies x.60) +
(90 day delinquencies x.70) + (foreclosures x 1.00) + (other real estate x 1.00)) x .40 for
loss severity.(2)
    
    Includes all private-label CMOs which have been reduced by OTTI charges in previous periods.
There was no OTTI impairment charges recognized for this portfolio in the quarter ended March
31, 2009.    12




---



##### Table of Contents




    
    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
  .
   YTDOther-than-temporary Impairment(OTTI)Single/
    
    Class/
    
    Amortized
    
    Fair
    
    Unrealized
    
    CreditName
    
    
    
    
    
    Pooled
    
    Tranche
    
    Cost
    
    Value
    
    Loss
    
    Portion
    
    Other
    
    TotalMM Caps Funding I Ltd
    
    
    
    
    
    Pooled
    
    
    B
    
    
    $
    2,168
    
    
    $
    1,015
    
    
    $
    (1,153
    )
    
    $
    
    
    
    $
    
    
    
    $
    MM
CommunityFunding Ltd
    
    
    
    
    
    Pooled
    
    
    M
    
    
    
    4,199
    
    
    
    2,124
    
    
    
    (2,075
    )
    
    
    (801
    )
    
    
    (2,075
    )
    
    
    (2,876
    )Preferred TermSecurities V
    
    
    
    
    
    Pooled
    
    
    M
    
    
    
    1,379
    
    
    
    539
    
    
    
    (840
    )
    
    
    
    
    
    
    
    
    
    
    Tpref Funding III Ltd
    
    
    
    
    
    Pooled
    
    
    B-2
    
    
    
    3,955
    
    
    
    1,371
    
    
    
    (2,584
    )
    
    
    (44
    )
    
    
    (2,584
    )
    
    
    (2,628
    )Trapeza 2007-13A LLC
    
    
    
    
    
    Pooled
    
    
    D
    
    
    
    1,836
    
    
    
    188
    
    
    
    (1,648
    )
    
    
    
    
    
    
    
    
    
    
    New South Capital Corp
    
    
    (1
    )
    
    Single
    
    Sole
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,000
    )
    
    
    
    
    
    
    (5,000
    )Emigrant Capital Trust
    
    
    (2
    )
    
    Single
    
    Sole
    
    
    5,000
    
    
    
    1,379
    
    
    
    (3,621
    )
    
    
    
    
    
    
    
    
    
    
    $
    18,537
    
    
    $
    6,616
    
    
    $
    (11,921
    )
    
    $
    (5,845
    )
    
    $
    (4,659
    )
    
    $
    (10,504
    )
 13




---



##### Table of Contents



Original Collateral
    
    Performing CollateralPercent of Actual
    
    Percent of Expected
    
    (3)Lowest
    
    Performing
    
    Deferrals and
    
    Deferrals and
    
    ExcessName
    
    
    
    
    
    Rating
    
    Banks
    
    Defaults
    
    Defaults
    
    SubordinationMM Caps Funding I Ltd
    
    
    
    
    
    Ca
    
    
    26
    
    
    
    9
    %
    
    
    16
    %
    
    
    8
    %MM Community Funding Ltd
    
    
    
    
    
    Caa2
    
    
    14
    
    
    
    4
    %
    
    
    30
    %
    
    
    0
    %Preferred Term Securities V
    
    
    
    
    
    Ba3
    
    
    4
    
    
    
    0
    %
    
    
    33
    %
    
    
    26
    %Tpref Funding III Ltd
    
    
    
    
    
    Ca
    
    
    29
    
    
    
    11
    %
    
    
    35
    %
    
    
    0
    %Trapeza 2007-13A LLC
    
    
    
    
    
    
    C
    
    
    
    51
    
    
    
    8
    %
    
    
    19
    %
    
    
    5
    %New South Capital Corp
    
    
    (1
    )
    
    NR
    
    NA
    
    NA
    
    NA
    
    NAEmigrant Capital Trust
    
    
    (2
    )
    
    BB-
    
    NA
    
    NA
    
    NA
    
    NA
 CurrentFair Value (Price
    
    Discount Margin
    
    YieldName
    
    to Par)
    
    (Basis Points)
    
    (Basis Points)MM Caps Funding I Ltd
    
    $
    50.77
    
    
    Swap + 1575
    
    9.48% FixedMM Community Funding Ltd
    
    
    42.48
    
    
    LIBOR + 1175
    
    LIBOR + 310Preferred Term Securities V
    
    
    39.15
    
    
    LIBOR + 1225
    
    LIBOR + 210Tpref Funding III Ltd
    
    
    34.27
    
    
    LIBOR + 1225
    
    LIBOR + 190Trapeza 2007-13A LLC
    
    
    9.37
    
    
    LIBOR + 1600
    
    LIBOR + 120
 
 (1)
    
    Management received notification in April 2009 that interest payments on this issue will be
deferred for up to 20 quarters. In addition, New Souths external auditor issued a going
concern opinion on May 2, 2009. Management determined that there was not sufficient positive
evidence that this issue will ever pay principal or interest. Therefore, OTTI was recognized
on the full amount of the security during the first quarter of 2009.(2)
    
    There has been no notification of deferral or default on this issue. An analysis of the
company indicates there is adequate capital and liquidity to service the debt. This particular
issue was priced by an independent pricing service.(3)
    
    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.    For the Three-Months EndedMarch 31, 2009Balance at beginning of period
    
    $
    Amounts related to credit losses for which an OTTI was not previously recognized
    
    
    5,845Reductions for securities sold during the period
    
    
    Increases in credit loss for which an OTTI was previously recognized when the
investor does not intend to sell the security and it is not more likely than not
that the entity will be required to sell the security before recovery of its
amortized cost
    
    
    Reductions for securities where there is an intent to sale or requirement to sale
    
    
    Reductions for increases in cash flows expected to be collected
    
    
    Balance at end of period
    
    $
    5,845
 14




---



##### Table of Contents



Note 4  Notes Payable
  Note payable to bank, borrowed under $10,000,000 line of credit, due September 3, 2009;
interest is based on the lenders base rate, secured by 100% of the outstanding Superior Bank
stock
    
    $
    7,000Senior note guaranteed under the TLGP, due March 30, 2012, 2.625% fixed rate due semi-annually
    
    
    40,000Less: Discount, FDIC guarantee premium and other issuance costs
    
    
    (1,425
    )Total notes payable
    
    $
    45,575
   Note 5  Derivative Financial Instruments
   Interest Rate Swaps
   Fair Value Hedges
  15




---



##### Table of Contents



Cash Flow Hedges
  Interest Rate Lock Commitments
   March 31, 2009
    
    December 31, 2008Notional
    
    Estimated
    
    Notional
    
    EstimatedAmount
    
    Fair Value
    
    Amount
    
    Fair ValueInterest rate derivatives designated as hedges of fair value:Interest rate swap on brokered certificates of deposit
    
    $
    2,777
    
    
    $
    355
    
    
    $
    5,334
    
    
    $
    799Interest rate derivatives designated as hedges of cash flows:Interest rate swaps on subordinated debenture
    
    
    22,000
    
    
    
    (985
    )
    
    
    22,000
    
    
    
    (954
    )Non-hedging interest rate derivatives:Brokered certificates of deposit interest rate swap
    
    
    723
    
    
    
    92
    
    
    
    1,166
    
    
    
    164Mortgage loan held for sale interest rate lock commitment
    
    
    97,687
    
    
    
    159
    
    
    
    92,721
    
    
    
    (117
    )Commercial loan interest rate swap
    
    
    3,838
    
    
    
    447
    
    
    
    3,861
    
    
    
    462Commercial loan interest rate swap
    
    
    3,838
    
    
    
    (447
    )
    
    
    3,861
    
    
    
    (462
    )
  Weighted-AverageInterest
    
    InterestRate
    
    RatePaid
    
    ReceivedInterest rate swaps:Fair value hedge on brokered certificates of deposit interest rate swap
    
    
    1.26
    %
    
    
    4.70
    %Cash flow hedge interest rate swaps on subordinated debentures
    
    
    4.42
    
    
    
    2.65Non-hedging interest rate swap on commercial loan
    
    
    6.73
    
    
    
    6.73
 Gains, Losses and Derivative Cash Flows
  16




---



##### Table of Contents



Three Months EndedMarch 31,2009
    
    2008Interest rate swap on brokered certificates of deposit:Amount of gain (loss) included in interest expense on deposits
    
    $
    23
    
    
    $
    11Amount of gain (loss) included in other noninterest income
    
    
    (430
    )
    
    
    25
  Three Months EndedMarch 31,2009
    
    2008Interest rate swap on subordinated debenture:Net gain (loss) included in interest expense on subordinated debt
    
    $
    (55
    )
    
    $
    Amount of gain (loss) recognized in other comprehensive income
    
    
    (29
    )
    
    
    
    Three Months EndedMarch 31,2009
    
    2008Non-hedging interest rate derivatives:Brokered certificates of deposit interest rate swap
    
    $
    (45
    )
    
    $
    131Mortgage loan held for sale interest rate lock commitment
    
    
    276
    
    
    
    216Interest rate floors
    
    
    
    
    
    
    678
 Counterparty Credit Risk
   17




---



##### Table of Contents



Note 6  Segment Reporting
   Total
    
    
    
    
    
    
    SuperiorAlabama
    
    
    Florida
    
    
    Alabama and
    
    
    Administrative
    
    
    BancorpRegion
    
    
    Region
    
    
    Florida
    
    
    and Other
    
    
    CombinedThree months ended March 31, 2009Net interest income
    
    $
    7,547
    
    
    $
    9,071
    
    
    $
    16,618
    
    
    $
    4,710
    
    
    $
    21,328Provision for loan losses
    
    
    1,612
    
    
    
    1,478
    
    
    
    3,090
    
    
    
    362
    
    
    
    3,452Noninterest income
    
    
    2,071
    
    
    
    515
    
    
    
    2,586
    
    
    
    (2,821
    )
    
    
    (235
    )Noninterest expense
    
    
    8,312
    
    
    
    5,736
    
    
    
    14,048
    
    
    
    10,015
    
    
    
    24,063Operating (loss) profit
    
    $
    (306
    )
    
    $
    2,372
    
    
    $
    2,066
    
    
    $
    (8,488
    )
    
    
    (6,422
    )Income tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,848
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (3,574
    )Total assets
    
    $
    1,050,658
    
    
    $
    1,147,653
    
    
    $
    2,198,311
    
    
    $
    931,158
    
    
    $
    3,129,469Three months ended March 31, 2008Net interest income
    
    $
    6,998
    
    
    $
    9,621
    
    
    $
    16,619
    
    
    $
    1,873
    
    
    $
    18,492Provision for loan losses
    
    
    855
    
    
    
    858
    
    
    
    1,713
    
    
    
    159
    
    
    
    1,872Noninterest income
    
    
    1,862
    
    
    
    450
    
    
    
    2,312
    
    
    
    4,289
    
    
    
    6,601Noninterest expense
    
    
    7,626
    
    
    
    5,486
    
    
    
    13,112
    
    
    
    9,152
    
    
    
    22,264Operating profit (loss)
    
    $
    379
    
    
    $
    3,727
    
    
    $
    4,106
    
    
    $
    (3,149
    )
    
    
    957Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    262Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    695Total assets
    
    $
    993,808
    
    
    $
    1,155,201
    
    
    $
    2,149,009
    
    
    $
    814,890
    
    
    $
    2,963,899
 Note 7 Net (Loss) Income per Common Share
  Three Months EndedMarch 31,2009
    
    
    2008Numerator:Net (loss)income
    
    $
    (3,574
    )
    
    $
    695Less preferred dividends and amortization
    
    
    (1,143
    )
    
    
    For basic and diluted, net (loss)income applicable to common stockholders
    
    $
    (4,717
    )
    
    $
    695Denominator:For basic, weighted average common shares outstanding
    
    
    10,053
    
    
    
    10,011Effect of dilutive stock options
    
    
    
    
    
    
    34Average common shares outstanding, assuming dilution
    
    
    10,053
    
    
    
    10,045Basic net (loss)income per common share
    
    $
    (0.47
    )
    
    $
    0.07Diluted net (loss)income per common share
    
    $
    (0.47
    )
    
    $
    0.07
 18




---



##### Table of Contents



Note 8  Comprehensive (Loss) Income
  Pre-Tax
    
    
    
    
    
    
    Net ofAmount
    
    
    Income Tax
    
    
    Income Tax(In thousands)2009Unrealized loss on available for sale securities, net of total OTTI
    
    $
    (8,394
    )
    
    $
    3,105
    
    
    $
    (5,289
    )Less reclassification adjustment for OTTI realized in net loss
    
    
    5,845
    
    
    
    (2,163
    )
    
    
    3,682Unrealized loss on derivatives
    
    
    (29
    )
    
    
    11
    
    
    
    (18
    )Net unrealized loss
    
    $
    (2,578
    )
    
    $
    (953
    )
    
    $
    (1,625
    )2008Unrealized gain on available for sale securities
    
    $
    1,731
    
    
    $
    (687
    )
    
    $
    1,044Less reclassification adjustment for gains realized in net income
    
    
    (402
    )
    
    
    149
    
    
    
    (253
    )Net unrealized gain
    
    $
    1,329
    
    
    $
    (538
    )
    
    $
    791
 Note 9  Income Taxes
  Note 10  Stock Incentive Plan
   19




---



##### Table of Contents



2009
    
    2008Risk free interest rate
    
    NA
    
    
    4.50
    %Volatility factor
    
    NA
    
    
    29.11
    %Weighted average life of options (in years)
    
    NA
    
    
    5.00Dividend yield
    
    NA
    
    
    0.00
    %
  Weighted-Weighted-
    
    
    AverageAverage
    
    
    RemainingExercise
    
    
    Contractual
    
    
    AggregateNumber
    
    
    Price
    
    
    Term
    
    
    Intrinsic ValueUnder option, January 1, 2009
    
    
    848,922
    
    
    $
    29.94Granted
    
    
    
    
    
    
    Forfeited
    
    
    (18,625
    )
    
    
    32.70Under option, March 31, 2009
    
    
    830,297
    
    
    $
    29.88
    
    
    
    5.89
    
    
    $
    Exercisable at end of period
    
    
    634,028
    
    
    $
    31.72
    
    
    
    3.84
    
    
    $
    Weighted-average fair value per option of options granted during the period
    
    $
    
  Note 11  Fair Value Measurements
   20




---



##### Table of Contents



Assets and Liabilities Recorded at Fair Value on a Recurring Basis
  Quoted Prices in
    
    
    
    
    
    
    SignificantFair Value at
    
    
    Active Markets for
    
    
    Significant Other
    
    
    UnobservableMarch 31,
    
    
    Identical Assets
    
    
    Observable Inputs
    
    
    Inputs2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Available for sale securities
    
    $
    328,708
    
    
    $
    179
    
    
    $
    320,077
    
    
    $
    8,452Derivative assets
    
    
    1,054
    
    
    
    
    
    
    
    1,054
    
    
    
    Total recurring basis measured assets
    
    $
    329,762
    
    
    $
    179
    
    
    $
    321,131
    
    
    $
    8,452Derivative liabilities
    
    $
    1,431
    
    
    $
    
    
    
    $
    1,431
    
    
    $
    Total recurring basis measured liabilities
    
    $
    1,431
    
    
    $
    
    
    
    $
    1,431
    
    
    $
    
 Valuation Techniques  Recurring Basis
 Securities Available for Sale
 Derivative financial instruments
 Changes in Level 3 fair value measurements
  Level 3 assets measured at fair value on a recurring basis
 Available for(in thousands)
    
    Sale SecuritiesBalance at December 31, 2008
    
    $
    18,497Total gains (losses) (realized and unrealized)Included in earnings  investment security loss
    
    
    (5,845
    )Included in other comprehensive income
    
    
    (4,175
    )Other changes due to principal payments
    
    
    (25
    )Balance at March 31, 2009
    
    $
    8,452Total amount of loss for the period year-to-date included
in earnings attributable to the change in unrealized gains
(losses) related to assets held at March 31, 2009
    
    $
    (5,845
    )
 21




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##### Table of Contents



Assets Recorded at Fair Value on a Nonrecurring Basis
  Quoted PricesinFair Value
    
    
    Active Markets for
    
    
    Significant Other
    
    
    Significantat
    
    
    Identical
    
    
    Observable
    
    
    UnobservableMarch 31,
    
    
    Assets
    
    
    Inputs
    
    
    Inputs2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Mortgage loans held for sale
    
    $
    40,628
    
    
    $
    
    
    
    $
    40,628
    
    
    $
    Impaired loans, net of specific allowance
    
    
    54,927
    
    
    
    
    
    
    
    
    
    
    
    54,927Other real estate
    
    
    25,609
    
    
    
    
    
    
    
    
    
    
    
    25,609Total nonrecurring basis measured assets
    
    $
    121,164
    
    
    $
    
    
    
    $
    40,628
    
    
    $
    80,536
 Valuation Techniques  Nonrecurring Basis
 Mortgage Loans Held for Sale.
 Impaired Loans.
 Other Real Estate.
 22




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Basis of Presentation
   Overview
        23




---



##### Table of Contents



Recent Accounting Pronouncements
  
    
    FSP SFAS 157-4 Determining Fair Value When the Volume and Level of Activity for the
Assets or Liability Have Significantly Decreased and Identifying Transactions That Are Not
Orderly (FSP 157-4)provides guidelines for making fair value measurements more
consistent with the principles presented in SFAS 157, Fair Value Measurements(SFAS
157), It emphasizes that even if there has been a significant decrease in the volume and
level of activity for the asset or liability and regardless of the valuation technique used,
the objective of a fair value measurement remains the same. Fair value is the price that
would be received to sell an asset or paid to transfer a liability in an orderly transaction
(that is, not a forced liquidation or distressed sale), between market participants at the
measurement date under current market conditions.
    
    FSP SFAS 115-2 and SFAS 124-2, Recognition and Presentation of Other-than-temporary
impairments (FSP 115-2 and 124-2)provides additional guidance designed to create greater
clarity and consistency in accounting for and presenting impairment losses on securities. It
amends OTTI impairment guidance for debt securities to make the guidance more operational
and to improve the presentation and disclosure of OTTI on debt and equity securities in the
financial statements. It does not amend existing recognition and measurement guidance
related to OTTI of equity securities.
    
    FSP SFAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial
Instruments (FSP 107-1 and APB 28-1)enhances consistency in financial reporting by
increasing the frequency of fair value disclosures.
  24




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##### Table of Contents



Statement of Financial Accounting Standards No. 161
 Disclosures About Derivative Instruments and Hedging
Activities, an Amendment of FASB Statement No. 133 Accounting for Derivative Instruments and Hedging Activities
 Results of Operations
  Three MonthsEnded March 31,2009
    
    2008(Dollars in thousands, except per share data)Net (loss) income
    
    $
    (3,574
    )
    
    $
    695Net (loss) income applicable to common shareholders
    
    
    (4,717
    )
    
    
    695Net (loss) income per common share (diluted)
    
    
    (0.47
    )
    
    
    0.07Net interest margin
    
    
    3.12
    %
    
    
    3.04
    %Net interest spread
    
    
    2.91
    %
    
    
    2.76
    %Return on average assets
    
    
    (0.46
    )%
    
    
    0.10
    %Return on average tangible assets
    
    
    (0.46
    )%
    
    
    0.10
    %Return on average stockholders equity
    
    
    (5.64
    )%
    
    
    0.80
    %Return on average tangible equity
    
    
    (6.14
    )%
    
    
    1.70
    %Common book value per share
    
    $
    17.18
    
    
    $
    35.00Tangible common book value per share
    
    
    15.20
    
    
    
    16.44
  25




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##### Table of Contents



Net Interest Income.
 Increase (Decrease) inFirst Quarter 2009 vs 2008Average
    
    
    Income/
    
    
    Yield/Balance
    
    
    Expense
    
    
    Rate(Dollars in Thousands)ASSETSInterest-earning assets:Loans, net of unearned income
    
    $
    321,833
    
    
    $
    (2,394
    )
    
    
    (1.33
    )%Investment securitiesTaxable
    
    
    (5,222
    )
    
    
    (43
    )
    
    
    0.07Tax-exempt
    
    
    308
    
    
    
    (3
    )
    
    
    (0.03
    )Total investment securities
    
    
    (4,914
    )
    
    
    (46
    )
    
    
    0.07Federal funds sold
    
    
    (2,301
    )
    
    
    (75
    )
    
    
    (3.09
    )Other investments
    
    
    12,082
    
    
    
    (282
    )
    
    
    (3.13
    )Total interest-earning assets
    
    $
    326,700
    
    
    
    (2,797
    )
    
    
    (1.17
    )Interest-bearing liabilities:Demand deposits
    
    $
    (34,619
    )
    
    
    (2,881
    )
    
    
    (1.63
    )Savings deposits
    
    
    141,768
    
    
    
    688
    
    
    
    0.25Time deposits
    
    
    110,013
    
    
    
    (3,167
    )
    
    
    (1.30
    )Other borrowings
    
    
    65,510
    
    
    
    (450
    )
    
    
    (1.34
    )Subordinated debentures
    
    
    7,145
    
    
    
    178
    
    
    
    0.35Total interest-bearing liabilities
    
    $
    289,817
    
    
    
    (5,632
    )
    
    
    (1.32
    )Net interest income/net interest spread
    
    
    
    
    
    
    2,835
    
    
    
    0.15
    %Net yield on earning assets
    
    
    
    
    
    
    
    
    
    
    0.08
    %Taxable equivalent adjustment:Investment securities
    
    
    
    
    
    
    (1
    )Net interest income
    
    
    
    
    
    $
    2,836
 26




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##### Table of Contents



Three Months Ended March 31,2009
    
    
    2008Average
    
    
    Income/
    
    
    Yield/
    
    
    Average
    
    
    Income/
    
    
    Yield/Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate(Dollars in thousands)ASSETSInterest-earning assets:Loans, net of unearned income (1)
    
    $
    2,392,145
    
    
    $
    34,952
    
    
    
    5.93
    %
    
    $
    2,070,312
    
    
    $
    37,346
    
    
    
    7.26
    %Investment securitiesTaxable
    
    
    301,973
    
    
    
    4,009
    
    
    
    5.38
    
    
    
    307,195
    
    
    
    4,052
    
    
    
    5.31Tax-exempt (2)
    
    
    40,280
    
    
    
    649
    
    
    
    6.53
    
    
    
    39,972
    
    
    
    652
    
    
    
    6.56Total investment securities
    
    
    342,253
    
    
    
    4,658
    
    
    
    5.52
    
    
    
    347,167
    
    
    
    4,704
    
    
    
    5.45Federal funds sold
    
    
    7,240
    
    
    
    5
    
    
    
    0.28
    
    
    
    9,541
    
    
    
    80
    
    
    
    3.37Other investments
    
    
    57,751
    
    
    
    362
    
    
    
    2.54
    
    
    
    45,669
    
    
    
    644
    
    
    
    5.67Total interest-earning assets
    
    
    2,799,389
    
    
    
    39,977
    
    
    
    5.79
    
    
    
    2,472,689
    
    
    
    42,774
    
    
    
    6.96Noninterest-earning assets:Cash and due from banks
    
    
    70,192
    
    
    
    
    
    
    
    
    
    
    
    56,657Premises and equipment
    
    
    105,079
    
    
    
    
    
    
    
    
    
    
    
    103,624Accrued interest and other assets
    
    
    153,517
    
    
    
    
    
    
    
    
    
    
    
    287,435Allowance for loan losses
    
    
    (29,123
    )
    
    
    
    
    
    
    
    
    
    
    (22,814
    )Total assets
    
    $
    3,099,054
    
    
    
    
    
    
    
    
    
    
    $
    2,897,591LIABILITIES AND STOCKHOLDERS EQUITYInterest-bearing liabilities:Demand deposits
    
    $
    641,529
    
    
    $
    2,195
    
    
    
    1.39
    %
    
    $
    676,148
    
    
    $
    5,076
    
    
    
    3.02
    %Savings deposits
    
    
    199,161
    
    
    
    921
    
    
    
    1.88
    
    
    
    57,393
    
    
    
    233
    
    
    
    1.63Time deposits
    
    
    1,359,453
    
    
    
    11,777
    
    
    
    3.51
    
    
    
    1,249,440
    
    
    
    14,944
    
    
    
    4.81Other borrowings
    
    
    333,376
    
    
    
    2,342
    
    
    
    2.85
    
    
    
    267,866
    
    
    
    2,792
    
    
    
    4.20Subordinated debentures
    
    
    60,852
    
    
    
    1,193
    
    
    
    7.95
    
    
    
    53,707
    
    
    
    1,015
    
    
    
    7.60Total interest-bearing liabilities
    
    
    2,594,371
    
    
    
    18,428
    
    
    
    2.88
    
    
    
    2,304,554
    
    
    
    24,060
    
    
    
    4.20Noninterest-bearing liabilities:Demand deposits
    
    
    231,547
    
    
    
    
    
    
    
    
    
    
    
    216,745Accrued interest and other liabilities
    
    
    21,547
    
    
    
    
    
    
    
    
    
    
    
    24,942Stockholders equity
    
    
    251,589
    
    
    
    
    
    
    
    
    
    
    
    351,350Total liabilities and stockholders equity
    
    $
    3,099,054
    
    
    
    
    
    
    
    
    
    
    $
    2,897,591Net interest income/net interest spread
    
    
    
    
    
    
    21,549
    
    
    
    2.91
    %
    
    
    
    
    
    
    18,714
    
    
    
    2.76
    %Net yield on earning assets
    
    
    
    
    
    
    
    
    
    
    3.12
    %
    
    
    
    
    
    
    
    
    
    
    3.04
    %Taxable equivalent adjustment:Investment securities (2)
    
    
    
    
    
    
    221
    
    
    
    
    
    
    
    
    
    
    
    222Net interest income
    
    
    
    
    
    $
    21,328
    
    
    
    
    
    
    
    
    
    
    $
    18,492
 
 (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%. 27




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##### Table of Contents



Three Months Ended March 31,2009 vs. 2008 (1)Increase
    
    
    Changes Due To(Decrease)
    
    
    Rate
    
    
    Volume(Dollars in thousands)Increase (decrease) in:Income from interest-earning assets:Interest and fees on loans
    
    $
    (2,394
    )
    
    $
    (7,528
    )
    
    $
    5,134Interest on securitiesTaxable
    
    
    (43
    )
    
    
    41
    
    
    
    (84
    )Tax-exempt
    
    
    (3
    )
    
    
    (5
    )
    
    
    2Interest on federal funds
    
    
    (75
    )
    
    
    (59
    )
    
    
    (16
    )Interest on other investments
    
    
    (282
    )
    
    
    (419
    )
    
    
    137Total interest income
    
    
    (2,797
    )
    
    
    7,970
    
    
    
    5,173Expense from interest-bearing liabilities:Interest on demand deposits
    
    
    (2,881
    )
    
    
    (2,631
    )
    
    
    (250
    )Interest on savings deposits
    
    
    688
    
    
    
    40
    
    
    
    648Interest on time deposits
    
    
    (3,167
    )
    
    
    (4,357
    )
    
    
    1,190Interest on other borrowings
    
    
    (450
    )
    
    
    (1,022
    )
    
    
    572Interest on subordinated debentures
    
    
    178
    
    
    
    46
    
    
    
    132Total interest expense
    
    
    (5,632
    )
    
    
    (7,924
    )
    
    
    2,292Net interest income
    
    $
    2,835
    
    
    $
    (46
    )
    
    $
    2,881
 
 (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. Noninterest income
 Three Months Ended March 31,2009
    
    
    2008
    
    
    % Change(Dollars in thousands)Service charges and fees on deposits
    
    $
    2,387
    
    
    $
    2,103
    
    
    
    13.50
    %Mortgage banking income
    
    
    1,691
    
    
    
    1,266
    
    
    
    33.57Investment securities (losses) gains
    
    
    (5,845
    )
    
    
    402
    
    
    NCMChange in fair value of derivatives
    
    
    (199
    )
    
    
    1,050
    
    
    
    (118.95
    )Increase in cash surrender value of life insurance
    
    
    515
    
    
    
    552
    
    
    
    (6.70
    )Other noninterest income
    
    
    1,216
    
    
    
    1,228
    
    
    
    (0.98
    )Total
    
    $
    (235
    )
    
    $
    6,601
    
    
    
    (103.56
    )%
 
 NCM  not considered meaningful.  28




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##### Table of Contents



Noninterest expenses
 Three Months Ended March 31,2009
    
    
    2008
    
    
    % Change(Dollars in thousands)Noninterest ExpensesSalaries and employee benefits
    
    $
    12,309
    
    
    $
    12,141
    
    
    
    1.4
    %Occupancy, furniture and equipment expense
    
    
    4,416
    
    
    
    4,060
    
    
    
    8.8Amortization of core deposit intangibles
    
    
    985
    
    
    
    896
    
    
    
    9.9Merger-related costs
    
    
    
    
    
    
    108
    
    
    NAProfessional fees
    
    
    765
    
    
    
    436
    
    
    
    75.3Insurance expense
    
    
    1,067
    
    
    
    640
    
    
    
    66.6Postage, stationery and supplies
    
    
    727
    
    
    
    779
    
    
    
    (6.7
    )Communications expense
    
    
    802
    
    
    
    670
    
    
    
    19.7Advertising expense
    
    
    551
    
    
    
    713
    
    
    
    (22.8
    )Other operating expense
    
    
    2,441
    
    
    
    1,821
    
    
    
    34.3Total
    
    $
    24,063
    
    
    $
    22,264
    
    
    
    8.1
    %
 Income tax (benefit) expense
 Provision for Loan Losses and Loan Charge-offs.
  Three Months EndedMarch 31,
    
    
    March 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2008(Dollars in thousands)Beginning allowance for loan losses
    
    $
    28,850
    
    
    $
    22,868
    
    
    $
    27,670Provision for loan losses
    
    
    3,452
    
    
    
    1,872
    
    
    
    2,969Total charge-offs
    
    
    2,809
    
    
    
    1,745
    
    
    
    1,971Total recoveries
    
    
    (378
    )
    
    
    (278
    )
    
    
    (182
    )Net charge-offs
    
    
    2,431
    
    
    
    1,467
    
    
    
    1,789Ending allowance for loan losses
    
    $
    29,871
    
    
    $
    23,273
    
    
    $
    28,850Total loans, net of unearned income
    
    $
    2,359,299
    
    
    $
    2,066,192
    
    
    $
    2,314,921Ratio: Allowance for loan losses to total loans, net of unearned income
    
    
    1.27
    %
    
    
    1.13
    %
    
    
    1.25
    %
  29




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##### Table of Contents



Results of Segment Operations
  2009
    
    
    2008(In thousands)Alabama region
    
    $
    (306
    )
    
    $
    379Florida region
    
    
    2,372
    
    
    
    3,727Administrative and other
    
    
    (8,488
    )
    
    
    (3,149
    )Income tax (benefit) expense
    
    
    (2,848
    )
    
    
    262Consolidated net (loss) income
    
    $
    (3,574
    )
    
    $
    695
 Alabama Region.
     Florida Region.
     30




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##### Table of Contents



Fair Value Measurements
   Financial Condition
  Short-term liquid assets
 Investment Securities
 31




---



##### Table of Contents



Investment Portfolio
 Available for SaleMarch 31,
    
    
    December 31,
    
    
    Percent2009
    
    
    2008
    
    
    Change(Dollars in thousands)Investment securities available for sale:U.S. agency securities
    
    $
    9,042
    
    
    $
    3,843
    
    
    
    135.3
    %Mortgage-backed securities (MBS):U.S. Agency MBS  residential
    
    
    228,779
    
    
    
    237,508
    
    
    
    (3.7
    )U.S. Agency MBS  collateralized mortgage obligation (CMO)
    
    
    14,663
    
    
    
    16,186
    
    
    
    (9.4
    )Private-label  CMO
    
    
    23,446
    
    
    
    26,430
    
    
    
    (11.3
    )Total MBS
    
    
    266,888
    
    
    
    280,124
    
    
    
    (4.7
    )State, county and municipal securities
    
    
    40,273
    
    
    
    40,622
    
    
    
    (0.9
    )Corporate obligations:Corporate debt
    
    
    5,710
    
    
    
    5,746
    
    
    
    (0.6
    )Pooled trust preferred securities
    
    
    5,237
    
    
    
    9,939
    
    
    
    (47.3
    )Single issue trust preferred securities
    
    
    1,379
    
    
    
    6,704
    
    
    
    (79.4
    )Total corporate obligations
    
    
    12,326
    
    
    
    22,389
    
    
    
    (44.9
    )Equity securities
    
    
    179
    
    
    
    164
    
    
    
    9.1Total investment securities available for sale
    
    $
    328,708
    
    
    $
    347,142
    
    
    
    (5.3
    )%
  March 31, 2009Less Than 12 Months
    
    
    More Than 12 Months
    
    
    TotalUnrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    UnrealizedFair Value
    
    
    Losses (1)
    
    
    Fair Value
    
    
    Losses (1)
    
    
    Fair Value
    
    
    Losses (1)(In thousands)Temporarily ImpairedU.S. Agency securities:
    
    $
    5,274
    
    
    $
    15
    
    
    $
    
    
    
    $
    
    
    
    $
    5,274
    
    
    $
    15Mortgage-backed securities:U.S. Agency MBS  residential
    
    
    73
    
    
    
    
    
    
    
    242
    
    
    
    11
    
    
    
    315
    
    
    
    11Private-label  CMO
    
    
    1,936
    
    
    
    838
    
    
    
    15,328
    
    
    
    4,678
    
    
    
    17,264
    
    
    
    5,516Total MBS
    
    
    2,009
    
    
    
    838
    
    
    
    15,570
    
    
    
    4,689
    
    
    
    17,579
    
    
    
    5,527State, county and municipal securities
    
    
    19,474
    
    
    
    1,044
    
    
    
    4,347
    
    
    
    363
    
    
    
    23,821
    
    
    
    1,407Corporate obligations:Corporate debt
    
    
    
    
    
    
    
    
    
    
    5,710
    
    
    
    217
    
    
    
    5,710
    
    
    
    217Pooled trust preferred securities
    
    
    
    
    
    
    
    
    
    
    1,742
    
    
    
    3,641
    
    
    
    1,742
    
    
    
    3,641Single issue trust preferred securities
    
    
    
    
    
    
    
    
    
    
    1,379
    
    
    
    3,621
    
    
    
    1,379
    
    
    
    3,621Total corporate obligations
    
    
    
    
    
    
    
    
    
    
    8,831
    
    
    
    7,479
    
    
    
    8,831
    
    
    
    7,479Equity securities
    
    
    
    
    
    
    
    
    
    
    179
    
    
    
    384
    
    
    
    179
    
    
    
    384Total temporarily impaired securities
    
    
    26,757
    
    
    
    1,897
    
    
    
    28,927
    
    
    
    12,915
    
    
    
    55,684
    
    
    
    14,812Other-than-temporarily ImpairedMortgage-backed
securities (MBS)Private-label  CMO
    
    
    
    
    
    
    
    
    
    
    2,585
    
    
    
    6
    
    
    
    2,585
    
    
    
    6Corporate obligations:Pooled trust preferred securities
    
    
    
    
    
    
    
    
    
    
    3,495
    
    
    
    4,659
    
    
    
    3,495
    
    
    
    4,659Total OTTI securities
    
    
    
    
    
    
    
    
    
    
    6,080
    
    
    
    4,665
    
    
    
    6,080
    
    
    
    4,665Total temporarily and
other-than-temporarily impaired
    
    $
    26,757
    
    
    $
    1,897
    
    
    $
    35,007
    
    
    $
    17,580
    
    
    $
    61,764
    
    
    $
    19,477
 
 (1)
    
     Unrealized losses are included in other comprehensive income (loss), net of unrealized
gains and applicable income taxes. Other-Than-Temporary Impairment
  32




---



##### Table of Contents



Accounting for Certain
Investments in Debt and Equity Securities Recognition of Interest Income and
Impairment on Purchased Beneficial Interests and Beneficial Interests that Continue to be Held by a
Transfer in Securitized Financial Assets
       Credit SupportRating
    
    
    
    
    
    Coverage
    
    
    UnrealizedMoody/Fitch
    
    Count
    
    
    Ratios (1)
    
    
    LossA1/AAA
    
    
    1
    
    
    
    3.04
    
    
    $
    (2,514
    )Aa1/AAA
    
    
    1
    
    
    
    N/A
    
    
    
    (122
    )Aa2/NR
    
    
    1
    
    
    
    6.57
    
    
    
    (562
    )Aaa/AAA
    
    
    1
    
    
    
    15.11
    
    
    
    (2
    )Aaa/NR
    
    
    2
    
    
    
    4.58 - 16.40
    
    
    
    (485
    )NR/AAA
    
    
    3
    
    
    
    4.01 - 5.87
    
    
    
    (1,831
    )NR/CCC(2)
    
    
    2
    
    
    
    0.98 - 1.26
    
    
    
    (2
    )Ca/NR (2)
    
    
    1
    
    
    
    0.37
    
    
    
    39Total
    
    
    12
    
    
    
    
    
    
    $
    (5,479
    )
 33




---



##### Table of Contents



(1)
    
    The Credit Support Coverage Ratio, which is the ratio that determines the multiple of credit
support, based on assumptions for the performance of the loans within the delinquency
pipeline. The assumptions used are: Current Collateral Support/ ((60 day delinquencies x.60) +
(90 day delinquencies x.70) + (foreclosures x 1.00) + (other real estate x 1.00)) x .40 for
loss severity.(2)
    
    Includes all private-label CMOs which have been reduced by OTTI charges in previous
periods. There was no OTTI impairment charges recognized for this portfolio in the quarter
ended March 31, 2009.     
    
    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
  .
  34




---



##### Table of Contents



YTDOther-than-temporary Impairment(OTTI)Single/
    
    Class/
    
    Amortized
    
    Fair
    
    Unrealized
    
    CreditName
    
    
    
    
    
    Pooled
    
    Tranche
    
    Cost
    
    Value
    
    Loss
    
    Portion
    
    Other
    
    TotalMM Caps Funding I Ltd
    
    
    
    
    
    Pooled
    
    
    B
    
    
    $
    2,168
    
    
    $
    1,015
    
    
    $
    (1,153
    )
    
    $
    
    
    
    $
    
    
    
    $
    MM Community Funding Ltd
    
    
    
    
    
    Pooled
    
    
    M
    
    
    
    4,199
    
    
    
    2,124
    
    
    
    (2,075
    )
    
    
    (801
    )
    
    
    (2,075
    )
    
    
    (2,876
    )Preferred Term Securities V
    
    
    
    
    
    Pooled
    
    
    M
    
    
    
    1,379
    
    
    
    539
    
    
    
    (840
    )
    
    
    
    
    
    
    
    
    
    
    Tpref Funding III Ltd
    
    
    
    
    
    Pooled
    
    
    B-2
    
    
    
    3,955
    
    
    
    1,371
    
    
    
    (2,584
    )
    
    
    (44
    )
    
    
    (2,584
    )
    
    
    (2,628
    )Trapeza 2007-13A LLC
    
    
    
    
    
    Pooled
    
    
    D
    
    
    
    1,836
    
    
    
    188
    
    
    
    (1,648
    )
    
    
    
    
    
    
    
    
    
    
    New South Capital Corp
    
    
    (1
    )
    
    Single
    
    Sole
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,000
    )
    
    
    
    
    
    
    (5,000
    )Emigrant Capital Trust
    
    
    (2
    )
    
    Single
    
    Sole
    
    
    5,000
    
    
    
    1,379
    
    
    
    (3,621
    )
    
    
    
    
    
    
    
    
    
    
    $
    18,537
    
    
    $
    6,616
    
    
    $
    (11,921
    )
    
    $
    (5,845
    )
    
    $
    (4,659
    )
    
    $
    (10,504
    )
 Original Collateral
    
    Performing CollateralPercent of Actual
    
    Percent of Expected
    
    (3)Lowest
    
    Performing
    
    Deferrals and
    
    Deferrals and
    
    ExcessName
    
    
    
    
    
    Rating
    
    Banks
    
    Defaults
    
    Defaults
    
    SubordinationMM Caps Funding I Ltd
    
    
    
    
    
    Ca
    
    
    26
    
    
    
    9
    %
    
    
    16
    %
    
    
    8
    %MM Community Funding Ltd
    
    
    
    
    
    Caa2
    
    
    14
    
    
    
    4
    %
    
    
    30
    %
    
    
    0
    %Preferred Term Securities V
    
    
    
    
    
    Ba3
    
    
    4
    
    
    
    0
    %
    
    
    33
    %
    
    
    26
    %Tpref Funding III Ltd
    
    
    
    
    
    Ca
    
    
    29
    
    
    
    11
    %
    
    
    35
    %
    
    
    0
    %Trapeza 2007-13A LLC
    
    
    
    
    
    
    C
    
    
    
    51
    
    
    
    8
    %
    
    
    19
    %
    
    
    5
    %New South Capital Corp
    
    
    (1
    )
    
    NR
    
    NA
    
    NA
    
    NA
    
    NAEmigrant Capital Trust
    
    
    (2
    )
    
    BB-
    
    NA
    
    NA
    
    NA
    
    NA
 CurrentFair Value (Price
    
    Discount Margin
    
    YieldName
    
    to Par)
    
    (Basis Points)
    
    (Basis Points)MM Caps Funding I Ltd
    
    $
    50.77
    
    
    Swap + 1575
    
    9.48% FixedMM Community Funding Ltd
    
    
    42.48
    
    
    LIBOR + 1175
    
    LIBOR + 310Preferred Term Securities V
    
    
    39.15
    
    
    LIBOR + 1225
    
    LIBOR + 210Tpref Funding III Ltd
    
    
    34.27
    
    
    LIBOR + 1225
    
    LIBOR + 190Trapeza 2007-13A LLC
    
    
    9.37
    
    
    LIBOR + 1600
    
    LIBOR + 120
 
 (1)
    
    Management received notification in April 2009 that interest payments on this issue will be
deferred for up to 20 quarters. In addition, New Souths external auditor issued a going
concern opinion on May 2, 2009. Management determined that there was not sufficient positive
evidence that this issue will ever pay principal or interest. Therefore, OTTI was recognized
on the full amount of the security during the first quarter of 2009.(2)
    
    There has been no notification of deferral or default on this issue. An analysis of the
company indicates there is adequate capital and liquidity to service the debt. This particular
issue was priced by an independent pricing service.(3)
    
    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.  35




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##### Table of Contents



For the Three-Months EndedMarch 31, 2009Balance at beginning of period
    
    $
    Amounts related to credit losses for which an OTTI was not previously recognized
    
    
    5,845Reductions for securities sold during the period
    
    
    Increases in credit loss for which an OTTI was previously recognized when the
investor does not intend to sell the security and it is not more likely than not
that the entity will be required to sell the security before recovery of its
amortized cost
    
    
    Reductions for securities where there is an intent to sale or requirement to sale
    
    
    Reductions for increases in cash flows expected to be collected
    
    
    Balance at end of period
    
    $
    5,845
  Loans
 Composition of Loan Portfolio, Yield Changes and Diversification.
  36




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##### Table of Contents



Distribution of Loans by Category
(Dollars in thousands)
 March 31, 2009
    
    
    December 31, 2008Percent of
    
    
    
    
    
    
    Percent ofAmount
    
    
    Total
    
    
    Amount
    
    
    TotalCommercial and industrial
    
    $
    201,635
    
    
    
    8.54
    %
    
    $
    207,372
    
    
    
    8.95
    %Real estate  construction and land development (1)
    
    
    662,268
    
    
    
    28.05
    
    
    
    637,587
    
    
    
    27.52Real estate  mortgagesSingle-family
    
    
    659,840
    
    
    
    27.94
    
    
    
    655,216
    
    
    
    28.28Commercial
    
    
    743,890
    
    
    
    31.50
    
    
    
    726,704
    
    
    
    31.37Other
    
    
    30,202
    
    
    
    1.28
    
    
    
    31,187
    
    
    
    1.34Consumer
    
    
    59,379
    
    
    
    2.51
    
    
    
    57,877
    
    
    
    2.50Other
    
    
    4,186
    
    
    
    0.18
    
    
    
    972
    
    
    
    0.04Total loans
    
    
    2,361,400
    
    
    
    100.0
    %
    
    
    2,316,915
    
    
    
    100.0
    %Unearned income
    
    
    (2,101
    )
    
    
    
    
    
    
    (1,994
    )Allowance for loan losses
    
    
    (29,871
    )
    
    
    
    
    
    
    (28,850
    )Net loans
    
    $
    2,329,428
    
    
    
    
    
    
    $
    2,286,071
 
 (1)
    
    A further analysis of the components of our real estate construction and land development
loans as of March 31, 2009 and December 31, 2008 is as follows: Residential
    
    
    CommercialDevelopment
    
    
    Development
    
    
    Other
    
    
    Total(Dollars in thousands)As of March 31, 2009Alabama segment
    
    $
    185,591
    
    
    $
    79,260
    
    
    $
    16,456
    
    
    $
    281,307Florida segment
    
    
    156,778
    
    
    
    198,109
    
    
    
    12,416
    
    
    
    367,303Other
    
    
    196
    
    
    
    13,462
    
    
    
    
    
    
    
    13,658Total
    
    $
    342,565
    
    
    $
    290,831
    
    
    $
    28,872
    
    
    $
    662,268As of December 31, 2008Alabama segment
    
    $
    173,579
    
    
    $
    76,315
    
    
    $
    17,830
    
    
    $
    267,724Florida segment
    
    
    141,003
    
    
    
    201,688
    
    
    
    13,573
    
    
    
    356,264Other
    
    
    122
    
    
    
    13,477
    
    
    
    
    
    
    
    13,599Total
    
    $
    314,704
    
    
    $
    291,480
    
    
    $
    31,403
    
    
    $
    637,587
  March 31,
    
    December 31,
    
    Percent2009
    
    2008
    
    Change(Dollars in thousands)Total loans, net of unearned income
    
    $
    2,359,299
    
    
    $
    2,314,921
    
    
    
    1.92
    %Alabama segment
    
    
    958,135
    
    
    
    935,232
    
    
    
    2.45Florida segment
    
    
    1,091,967
    
    
    
    1,060,994
    
    
    
    2.92Other
    
    
    309,197
    
    
    
    318,695
    
    
    
    (2.98
    )
 Allowance for Loan Losses
 Overview.
 37




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##### Table of Contents



SFAS 5.
 
    
    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.
 SFAS 114.
 Allocation of the Allowance for Loan Losses.
   38




---



##### Table of Contents



Allocation of the Allowance for Loan Losses
 March 31,
    
    
    December 31,2009
    
    
    2008Percent of
    
    
    
    
    
    
    Percent ofLoans in Each
    
    
    
    
    
    
    Loans in EachCategory to
    
    
    
    
    
    
    Category toAmount
    
    
    Total Loans
    
    
    Amount
    
    
    Total Loans(Dollars in thousands)Commercial and industrial
    
    $
    1,214
    
    
    
    8.5
    %
    
    $
    2,136
    
    
    
    8.9
    %Real estate  construction and land development
    
    
    13,065
    
    
    
    28.1
    
    
    
    12,168
    
    
    
    27.5Real estate  mortgagesSingle-family
    
    
    8,345
    
    
    
    27.9
    
    
    
    7,159
    
    
    
    28.3Commercial
    
    
    5,190
    
    
    
    31.5
    
    
    
    5,440
    
    
    
    31.3Other
    
    
    250
    
    
    
    1.3
    
    
    
    247
    
    
    
    1.3Consumer
    
    
    1,807
    
    
    
    2.7
    
    
    
    1,700
    
    
    
    2.7Total
    
    $
    29,871
    
    
    
    100.0
    %
    
    $
    28,850
    
    
    
    100.0
    %
     39




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##### Table of Contents



Summary of Loan Loss Experience.
 Summary of Loan Loss Experience
 Three MonthsEnded
    
    
    Year EndedMarch 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2008(Dollars in Thousands)Allowance for loan losses at beginning of period
    
    $
    28,850
    
    
    $
    22,868
    
    
    $
    22,868Charge-offs:Commercial and industrial
    
    
    56
    
    
    
    152
    
    
    
    504Real estate  construction and land development
    
    
    924
    
    
    
    3
    
    
    
    2,095Real estate  mortgagesSingle-family
    
    
    547
    
    
    
    612
    
    
    
    2,460Commercial
    
    
    340
    
    
    
    362
    
    
    
    411Other
    
    
    179
    
    
    
    106
    
    
    
    241Consumer
    
    
    695
    
    
    
    435
    
    
    
    2,490Other
    
    
    68
    
    
    
    75
    
    
    
    243Total charge-offs
    
    
    2,809
    
    
    
    1,745
    
    
    
    8,444Recoveries:Commercial and industrial
    
    
    67
    
    
    
    138
    
    
    
    646Real estate  construction and land development
    
    
    20
    
    
    
    2
    
    
    
    44Real estate  mortgageSingle-family
    
    
    11
    
    
    
    19
    
    
    
    89Commercial
    
    
    3
    
    
    
    16
    
    
    
    128Other
    
    
    198
    
    
    
    14
    
    
    
    71Consumer
    
    
    42
    
    
    
    46
    
    
    
    181Other
    
    
    37
    
    
    
    43
    
    
    
    155Total recoveries
    
    
    378
    
    
    
    278
    
    
    
    1,314Net charge-offs
    
    
    2,431
    
    
    
    1,467
    
    
    
    7,130Provision for loan losses
    
    
    3,452
    
    
    
    1,872
    
    
    
    13,112Allowance for loan losses at end of period
    
    $
    29,871
    
    
    $
    23,273
    
    
    $
    28,850Loans at end of period, net of unearned income
    
    $
    2,359,299
    
    
    $
    2,066,192
    
    
    $
    2,314,921Average loans, net of unearned income
    
    
    2,342,025
    
    
    
    2,032,730
    
    
    
    2,147,524Ratio of ending allowance to ending loans
    
    
    1.27
    %
    
    
    1.13
    %
    
    
    1.25
    %Ratio of net charge-offs to average loans (1)
    
    
    0.42
    
    
    
    0.29
    
    
    
    0.33Net charge-offs as a percentage of:Provision for loan losses
    
    
    70.43
    
    
    
    78.37
    
    
    
    54.38Allowance for loan losses (1)
    
    
    33.01
    
    
    
    25.28
    
    
    
    24.71Allowance for loan losses as a percentage of nonperforming loans
    
    
    40.24
    
    
    
    75.42
    
    
    
    44.12
 
 (1)
    
    Annualized. 40




---



##### Table of Contents



Nonperforming Assets.
 Nonperforming Assets
 March 31,
    
    
    December 31,2009
    
    
    2008(Dollars in thousands)Nonaccrual
    
    $
    68,311
    
    
    $
    54,712Accruing loans 90 days or more delinquent
    
    
    5,923
    
    
    
    8,033Total nonperforming loans
    
    
    74,234
    
    
    
    62,745Other real estate owned assets
    
    
    25,609
    
    
    
    19,971Repossessed assets
    
    
    374
    
    
    
    332Total nonperforming assets
    
    $
    100,217
    
    
    $
    83,048Restructured and performing under restructured terms
    
    $
    12,265
    
    
    $
    2,643Nonperforming loans as a percentage of loans
    
    
    3.15
    %
    
    
    2.72
    %Nonperforming assets as a percentage of loans plus nonperforming assets
    
    
    4.20
    %
    
    
    3.56
    %Nonperforming assets as a percentage of total assets
    
    
    3.20
    %
    
    
    2.72
    %
  March 31,
    
    
    December 31,2009
    
    
    2008(Dollars in thousands)Commercial and industrial
    
    $
    457
    
    
    $
    166Real estate  construction and land development
    
    
    21,182
    
    
    
    20,976Real estate  mortgagesSingle-family
    
    
    30,875
    
    
    
    22,730Commercial
    
    
    16,786
    
    
    
    14,686Other
    
    
    3,843
    
    
    
    2,981Consumer
    
    
    615
    
    
    
    723Other
    
    
    476
    
    
    
    483Total nonperforming loans
    
    $
    74,234
    
    
    $
    62,745
  41




---



##### Table of Contents



March 31,
    
    
    December 31,2009
    
    
    2008(Dollars in thousands)Real estate  construction and land development
    
    $
    13,523
    
    
    $
    13,915Real estate  mortgagesSingle-family
    
    
    10,979
    
    
    
    4,505Commercial
    
    
    1,107
    
    
    
    896Other
    
    
    374
    
    
    
    987Other real estate owned and repossessed assets
    
    $
    25,983
    
    
    $
    20,303
 Impaired Loans.
  March 31, 2009
    
    
    December 31, 2008Outstanding
    
    
    Specific
    
    
    Outstanding
    
    
    SpecificBalance
    
    
    Allowance
    
    
    Balance
    
    
    Allowance(Dollars in thousands)Commercial and industrial
    
    $
    462
    
    
    $
    177
    
    
    $
    515
    
    
    $
    42Real estate  construction and land development
    
    
    23,150
    
    
    
    2,476
    
    
    
    18,155
    
    
    
    1,570Real estate  mortgagesSingle-family
    
    
    24,741
    
    
    
    4,037
    
    
    
    18,063
    
    
    
    2,251Commercial
    
    
    24,496
    
    
    
    975
    
    
    
    15,615
    
    
    
    1,173Other
    
    
    2,537
    
    
    
    133
    
    
    
    532
    
    
    
    70Total
    
    $
    75,386
    
    
    $
    7,798
    
    
    $
    52,880
    
    
    $
    5,106
 Potential Problem Loans.
 Changes in Lending Policies and Procedures, Including Underwriting Standards.
 42




---



##### Table of Contents



Deposits
   March 31,
    
    
    December 31,
    
    
    Percent2009
    
    
    2008
    
    
    Change(Dollars in thousands)Noninterest-bearing demand
    
    $
    253,447
    
    
    $
    212,732
    
    
    
    19.1
    %Alabama segment
    
    
    126,961
    
    
    
    98,133
    
    
    
    29.4Florida segment
    
    
    80,017
    
    
    
    72,250
    
    
    
    10.8Other
    
    
    46,469
    
    
    
    42,349
    
    
    
    9.7Interest-bearing demand
    
    
    669,478
    
    
    
    632,430
    
    
    
    5.9Alabama segment
    
    
    320,593
    
    
    
    327,387
    
    
    
    (2.1
    )Florida segment
    
    
    208,806
    
    
    
    185,239
    
    
    
    12.7Other
    
    
    140,079
    
    
    
    119,804
    
    
    
    16.9Savings
    
    
    215,981
    
    
    
    185,522
    
    
    
    16.4Alabama segment
    
    
    119,964
    
    
    
    106,946
    
    
    
    12.2Florida segment
    
    
    93,923
    
    
    
    76,449
    
    
    
    22.9Other
    
    
    2,094
    
    
    
    2,127
    
    
    
    (1.5
    )Time deposits
    
    
    1,368,759
    
    
    
    1,312,304
    
    
    
    4.3Alabama segment
    
    
    671,798
    
    
    
    608,056
    
    
    
    10.5Florida segment
    
    
    532,047
    
    
    
    490,266
    
    
    
    8.5Other
    
    
    164,914
    
    
    
    213,982
    
    
    
    (22.9
    )Total deposits
    
    $
    2,507,665
    
    
    $
    2,342,988
    
    
    
    7.0
    %Alabama segment
    
    $
    1,239,316
    
    
    $
    1,140,522
    
    
    
    8.7
    %Florida segment
    
    $
    914,793
    
    
    $
    824,204
    
    
    
    11.0
    %Other
    
    $
    353,556
    
    
    $
    378,262
    
    
    
    (6.5
    )%
 Borrowings
  Stockholders Equity
 Overview.
 43




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##### Table of Contents



Other Comprehensive Income.
 Pre-Tax
    
    
    Income Tax
    
    
    Net ofAmount
    
    
    Expense
    
    
    Income Tax(In thousands)2009Unrealized loss on available for sale securities, net of total OTTI
    
    $
    (8,394
    )
    
    $
    3,105
    
    
    $
    (5,289
    )Less reclassification adjustment for OTTI realized in net loss
    
    
    5,845
    
    
    
    (2,163
    )
    
    
    3,682Unrealized loss on derivatives
    
    
    (29
    )
    
    
    11
    
    
    
    (18
    )Net unrealized loss
    
    $
    (2,578
    )
    
    $
    (953
    )
    
    $
    (1,625
    )
  Regulatory Capital.
 To Be WellFor Capital
    
    Capitalized UnderAdequacy
    
    Prompt CorrectiveActual
    
    Purposes
    
    ActionSuperior Bank
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioAs of March 31, 2009Tier 1 Core Capital (to Adjusted Total Assets)
    
    $
    257,674
    
    
    
    8.37
    %
    
    $
    123,130
    
    
    
    4.00
    %
    
    $
    153,912
    
    
    
    5.00
    %Total Capital (to Risk Weighted Assets)
    
    
    289,538
    
    
    
    11.18
    
    
    
    207,234
    
    
    
    8.00
    
    
    
    259,043
    
    
    
    10.00Tier 1 Capital (to Risk Weighted Assets)
    
    
    257,674
    
    
    
    9.95
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    155,426
    
    
    
    6.00Tangible Capital (to Adjusted Total Assets)
    
    
    257,674
    
    
    
    8.37
    
    
    
    46,174
    
    
    
    1.50
    
    
    
    N/A
    
    
    
    N/A
  To Be WellFor Capital
    
    
    Capitalized UnderAdequacy
    
    
    Prompt CorrectiveActual
    
    
    Purposes
    
    
    ActionSuperior Bancorp
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioAs of March 31, 2009Tier 1 Core Capital (to Adjusted Total Assets)
    
    $
    250,761
    
    
    
    8.14
    %
    
    $
    123,263
    
    
    
    4.00
    %
    
    $
    154,079
    
    
    
    5.00
    %Total Capital (to Risk Weighted Assets)
    
    
    282,625
    
    
    
    11.13
    %
    
    
    203,187
    
    
    
    8.00
    
    
    
    253,984
    
    
    
    10.00Tier 1 Capital (to Risk Weighted Assets)
    
    
    250,761
    
    
    
    9.87
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    152,930
    
    
    
    6.00Tangible Capital (to Adjusted Total Assets)
    
    
    250,761
    
    
    
    8.14
    
    
    
    46,224
    
    
    
    1.50
    
    
    
    N/A
    
    
    
    N/A
 Liquidity
    44




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##### Table of Contents



Forward-Looking Statements
      45




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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   March 31,
    
    December 31,12-Month Gap
    
    2009
    
    2008Interest-bearing liabilities in excess of interest-earning assets based on repricing date
    
    $
    (187,000
    )
    
    $
    (297,000
    )Cumulative 12-month Gap Ratio
    
    
    .91
    
    
    
    .86
 Increase (Decrease) in Net Interest IncomeChange (in Basis Points) in Interest
    
    March 31, 2009
    
    December 31, 2008Rates (12-Month Projection)
    
    Amount
    
    Percent
    
    Amount
    
    Percent+200 BP (1)
    
    $
    2,700
    
    
    
    2.9
    %
    
    $
    1,200
    
    
    
    1.7
    %- 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
    
    
    
    
    
    ChangeInterest Rates
    
    EVE
    
    Amount
    
    Percent(Dollars in thousands)+ 200 BP
    
    $
    339,249
    
    
    $
    19,297
    
    
    
    6.0
    %+ 100 BP
    
    
    331,601
    
    
    
    11,649
    
    
    
    3.60 BP
    
    
    319,952
    
    
    
    
    
    
    
    - 100 BP
    
    
    310,285
    
    
    
    (9,667
    )
    
    
    (3.0
    )
  
 ITEM 4. CONTROLS AND PROCEDURES
   46




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##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
  47




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##### Table of Contents



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 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.
 48




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##### Table of Contents



Date: November 9, 2009
    By:
    /s/ C. Stanley BaileyC. Stanley BaileyChief Executive OfficerDate: November 9, 2009
    By:
    /s/ James A. WhiteJames A. WhiteChief Financial Officer
(Principal Financial Officer) 49