10-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003, OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] FOR THE TRANSITION PERIOD FROM                          TO                          .

Commission file number: 0-25160

ALABAMA NATIONAL BANCORPORATION

(Exact name of registrant as specified in its charter)

Delaware	63-1114426
(State of incorporation	(I.R.S. Employer
or organization)	Identification No.)

1927 First Avenue North, Birmingham, AL 35203-4009

(Address of principal executive offices) (Zip Code)

(205) 583-3600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $1.00 par value

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  x     No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).     Yes  x     No  ¨

The aggregate market value of voting stock held by non-affiliates of the registrant at June 30, 2003 was $449,617,315.

As of March 9, 2004 the registrant had outstanding 15,351,340 shares of its common stock.

DOCUMENTS INCORPORATED BY REFERENCE IN THIS FORM 10-K:

The definitive Proxy Statement for the 2004 Annual Meeting of Alabama National BanCorporation’s Stockholders is incorporated by reference into Part III of this report.

TABLE OF CONTENTS

Item No.		Page No.
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS		2
PART I
1.	Business	3
	Executive Officers of the Registrant	12
2.	Properties	13
3.	Legal Proceedings	13
4.	Submission of Matters to a Vote of Security Holders	13
PART II
5.	Market for Registrant’s Common Equity and Related Stockholder Matters	14
6.	Selected Financial Data	15
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
7A.	Quantitative and Qualitative Disclosures about Market Risk	53
8.	Financial Statements and Supplementary Data	54
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	55
9A.	Controls and Procedures	55
PART III
10.	Directors and Executive Officers of the Registrant	55
11.	Compensation of Executive Officers and Directors	56
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters	56
13.	Certain Relationships and Related Transactions	56
14.	Principal Accountant Fees and Services	56
PART IV
15.	Exhibits, Financial Statement Schedules and Reports on Form 8-K	56
SIGNATURES		57

* Portions of the Proxy Statement for the Registrant’s Annual Meeting of Stockholders to be held on May 5, 2004 are incorporated by reference in Part III of this Form 10-K.

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SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

This Annual Report on Form 10-K, other periodic reports filed by Alabama National BanCorporation (the “Company” or “Alabama National”) under the Securities Exchange Act of 1934, as amended, and any other written or oral statements made by or on behalf of Alabama National may include “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 which reflect Alabama National’s current views with respect to future events and financial performance. Such forward looking statements are based on general assumptions and are subject to various risks, uncertainties, and other factors that may cause actual results to differ materially from the views, beliefs and projections expressed in such statements. These risks, uncertainties and other factors include, but are not limited to:

(1)    Possible changes in economic and business conditions that may affect the prevailing interest rates, the prevailing rates of inflation, or the amount of growth, stagnation, or recession in the global, U.S., and southeastern U.S. economies, the value of investments, collectibility of loans and the profitability of business entities;

(2)    Possible changes in monetary and fiscal policies, laws and regulations, and other activities of governments, agencies and similar organizations;

(3)    The effects of easing of restrictions on participants in the financial services industry, such as banks, securities brokers and dealers, investment companies and finance companies, and changes evolving from the enactment of the Gramm-Leach-Bliley Act which became effective in 2000, and attendant changes in patterns and effects of competition in the financial services industry;

(4)    The cost and other effects of legal and administrative cases and proceedings, claims, settlements and judgments;

(5) The impact of terrorist activities on the national economy and money markets, particularly in light of the September 11, 2001 terrorist attacks in New York City and Washington, D.C., and the impact of U.S. military operations in Iraq and elsewhere; and

(6) The ability of Alabama National to achieve the expected operating results related to the acquired operations of recently-completed and future acquisitions (if any), which depends on a variety of factors, including (i) the ability of Alabama National to achieve the anticipated cost savings and revenue enhancements with respect to the acquired operations, (ii) the assimilation of the acquired operations to Alabama National’s corporate culture, including the ability to instill Alabama National’s credit practices and efficient approach to the acquired operations, (iii) the continued growth of the markets in which Alabama National operates consistent with recent historical experience, (iv) the absence of material contingencies related to the acquired operations, including asset quality and litigation contingencies, and (v) Alabama National’s ability to expand into new markets and to maintain profit margins in the face of pricing pressures.

The words “believe,” “expect,” “anticipate,” “project” and similar expressions signify forward looking statements. Readers are cautioned not to place undue reliance on any forward looking statements made by or on behalf of Alabama National. Any such statement speaks only as of the date the statement was made. Alabama National undertakes no obligation to update or revise any forward looking statements.

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PART I

ITEM 1. BUSINESS

Alabama National BanCorporation (“Alabama National” or “ANB”) is a Delaware bank holding company with its principal place of business in Birmingham, Alabama, and its main office located at 1927 First Avenue North, Birmingham, Alabama 35203 (Telephone Number: (205) 583-3600). Alabama National is currently the parent of 14 banks (the “Banks”), summarized below.

Bank	Principal Markets	Total Assets at December 31, 2003
1.   National Bank of Commerce of   Birmingham (“NBC”)	Birmingham, Alabama Metropolitan Area	$	1,308,500,000
2.   First American Bank	Decatur/Huntsville/Athens and Auburn/    Opelika, Alabama	$	870,800,000
3.   Indian River National Bank	Indian River and Brevard Counties, Florida	$	541,600,000
4.   Georgia State Bank	Metropolitan Atlanta, Georgia	$	292,100,000
5.   First Gulf Bank	Baldwin County, Alabama	$	269,400,000
6.   Community Bank of Naples, N.A.	Naples, Florida	$	238,400,000
7.   Public Bank	Metropolitan Orlando and     Vero Beach, Florida	$	189,700,000
8.   Peoples State Bank of Groveland	Lake County, Florida	$	165,500,000
9.   Millennium Bank	Gainesville, Florida	$	136,000,000
10. Citizens & Peoples Bank, N.A.	Pensacola, Florida	$	114,000,000
11. Cypress Bank	Palm Coast, Florida	$	113,700,000
12. First Citizens Bank	Talladega, Alabama	$	112,800,000
13. Alabama Exchange Bank	Tuskegee, Alabama	$	81,900,000
14. Bank of Dadeville	Dadeville, Alabama	$	80,400,000

In addition, Alabama National is currently the ultimate parent of one securities brokerage firm, NBC Securities, Inc. (Birmingham, Alabama); one receivables factoring company, Corporate Billing, Inc. (Decatur, Alabama); and one insurance agency, ANB Insurance Services, Inc. (headquartered in Birmingham, Alabama).

Recent Developments

Acquisition of Cypress Bankshares, Inc.

Effective February 20, 2004, Alabama National acquired Cypress Bankshares, Inc., (“Cypress Bankshares”), a bank holding company headquartered in Palm Coast, Florida, with approximately $113.7 million in total assets as of December 31, 2003. Pursuant to the terms of the Cypress Bankshares acquisition, (i) the stockholders of Cypress Bankshares received an aggregate of 455,449 shares of Alabama National common stock and an aggregate of $1,893,387 in cash consideration, (ii) Cypress Bankshares was merged with and into Alabama National, and (iii) Cypress Bankshares’ wholly-owned subsidiary, Cypress Bank, became a wholly-owned subsidiary of Alabama National. The Cypress Bankshares acquisition was accounted for as a purchase.

Acquisition of Indian River Banking Company

Effective February 27, 2004, Alabama National acquired Indian River Banking Company, (“Indian River”), a bank holding company headquartered in Vero Beach, Florida, with approximately $541.6 million in total assets as of December 31, 2003. Pursuant to the terms of the Indian River acquisition, (i) the stockholders of Indian River received an aggregate of approximately 2,017,000 shares of Alabama National common stock and an aggregate of approximately $5,090,000 in cash consideration, (ii) Indian River was merged with and into Alabama National, and (iii) Indian River’s wholly-owned national bank subsidiary, Indian River National Bank, became a wholly-owned subsidiary of Alabama National. The Indian River acquisition was accounted for as a purchase.

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Subsidiary Banks

Alabama National operates through 14 subsidiary Banks which have a total of 78 banking offices and four insurance offices (where no banking is conducted) in the states of Alabama, Georgia and Florida. The Banks focus on traditional consumer, residential mortgage, commercial and real estate construction lending, and equipment leasing to customers in their market areas. The Banks also offer a variety of deposit programs to individuals and small businesses and other organizations at interest rates generally consistent with local market conditions. NBC offers trust services to corporations and individuals. Investment services and securities brokerage services are offered through NBC Securities, Inc. at a number of the locations of the Banks. In addition, the Banks offer individual retirement and KEOGH accounts, safe deposit and night depository facilities and additional services such as the sale of traveler’s checks, money orders and cashier’s checks.

Lending Activities

General

Through the Banks, Alabama National offers a range of lending services, including real estate, consumer and commercial loans, to individuals and small businesses and other organizations that are located in or conduct a substantial portion of their business in the Banks’ market areas. Alabama National’s total loans, net of unearned interest, at December 31, 2003, were approximately $2.7 billion, or approximately 75.7% of total earning assets. The interest rates charged on loans vary with the degree of risk, maturity and amount of the loan and are further subject to competitive pressures, money market rates, availability of funds and government regulations. Alabama National has no “foreign loans” or loans for “highly leveraged transactions,” as such terms are defined by applicable banking regulations.

Loan Portfolio

Real Estate Loans.    Loans secured by real estate are the primary component of Alabama National’s loan portfolio, constituting approximately $2.0 billion, or 76.3% of total loans, net of unearned interest, at December 31, 2003. The Banks often take real estate as an additional source of collateral to secure commercial and industrial loans. Such loans are classified as real estate loans rather than commercial and industrial loans if the real estate collateral is considered significant as a secondary source of repayment for the loan. The Banks’ real estate loan portfolio is comprised of commercial and residential mortgages. Residential mortgages held in the Banks’ loan portfolio, both fixed and variable, are made based upon amortization schedules of up to 30 years but generally have maturity dates of five years or less. The Banks’ commercial mortgages accrue at either variable or fixed rates. The variable rates approximate current market rates. Construction loans are made on a variable rate basis. Origination fees are normally charged for most loans secured by real estate. The Banks’ primary type of residential mortgage loan is the single-family first mortgage, typically structured with fixed or adjustable interest rates, based on market conditions. These loans usually have fixed rates for up to five years, with maturities of 25 to 30 years.

The Banks originate residential loans for sale into the secondary market. Such loans are made in accordance with underwriting standards set by the purchaser of the loan, normally as to loan-to-value ratio, interest rate and documentation. Such loans are generally made under a commitment to purchase from a loan purchaser. The Banks generally collect from the borrower or purchaser a combination of the origination fee, discount points and/or service release fee. During 2003, the Banks sold approximately $840 million in loans to such purchasers.

The Banks’ nonresidential mortgage loans include commercial, industrial and unimproved real estate loans. The Banks generally require nonresidential mortgage loans to have an 80% loan-to-value ratio and usually underwrite their commercial loans on the basis of the borrower’s cash flow and ability to service the debt from earnings, rather than on the basis of the value of the collateral. Terms on construction loans are usually less than twelve months, and the Banks typically require real estate mortgages and personal guarantees supported by financial statements and a review of the guarantor’s personal finances.

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Consumer Loans.    Consumer lending includes installment lending to individuals in the Banks’ market areas and generally consists of loans to purchase automobiles and other consumer durable goods. Consumer loans constituted $74.1 million, or 2.8% of Alabama National’s loan portfolio at December 31, 2003. Consumer loans are underwritten based on the borrower’s income, current debt level, past credit history and collateral. Consumer rates are both variable and fixed, with terms negotiable. Terms generally range from one to five years depending on the nature and condition of the collateral. Periodic amortization, generally monthly, is typically required.

Commercial and Financial Loans.    The Banks make loans for commercial purposes in various lines of business. These loans are typically made on terms up to five years at fixed or variable rates. The loans are secured by various types of collateral including accounts receivable, inventory or, in the case of equipment loans, the financed equipment. The Banks attempt to reduce their credit risk on commercial loans by underwriting the loan based on the borrower’s cash flow and its ability to service the debt from earnings, and by limiting the loan to value ratio. Historically, the Banks have typically loaned up to 80% on loans secured by accounts receivable, up to 50% on loans secured by inventory, and up to 100% on loans secured by equipment. The Banks also make some unsecured commercial loans and offer equipment leasing. Commercial and financial loans constituted $265.9 million, or 10.0% of Alabama National’s loan portfolio at December 31, 2003. Interest rates are negotiable based upon the borrower’s financial condition, credit history, management stability and collateral.

Credit Procedures and Review

Loan Approval.    Certain credit risks are inherent in making loans. These include prepayment risks, risks resulting from uncertainties in the future value of collateral, risks resulting from changes in economic and industry conditions and risks inherent in dealing with individual borrowers. In particular, longer maturities increase the risk that economic conditions will change and adversely affect collectibility.

Alabama National attempts to minimize loan losses through various means and uses standardized underwriting criteria. Alabama National has established a standardized loan policy for all of the Banks that may be modified based on local market conditions. In particular, on larger credits, Alabama National generally relies on the cash flow of a debtor as the source of repayment and secondarily on the value of the underlying collateral. In addition, Alabama National attempts to utilize shorter loan terms in order to reduce the risk of a decline in the value of such collateral.

Alabama National addresses repayment risks by adhering to internal credit policies and procedures which all of the Banks have adopted. These policies and procedures include officer and customer lending limits, a multi-layered loan approval process for larger loans, documentation examination and follow-up procedures for any exceptions to credit policies. The point in each Bank’s loan approval process at which a loan is approved depends on the size of the borrower’s credit relationship with such Bank. Each of the lending officers at each of the Banks has the authority to approve loans up to an approved loan authority amount as approved by each Bank’s Board of Directors. Loans in excess of the highest loan authority amount at each Bank must be approved by Alabama National’s President and Chief Operating Officer. In addition, loans in excess of a particular loan officer’s approval authority must be approved by a more senior officer at the particular Bank, the loan committee at such Bank, or both.

Loan Review.    Alabama National maintains a continuous loan review system for each of NBC and First American Bank and a scheduled review system for the other Banks. Under this system, each loan officer is directly responsible for monitoring the risk in his portfolio and is required to maintain risk ratings for each credit assigned. The risk rating system incorporates the basic regulatory rating system as set forth in the applicable regulatory asset quality examination procedures.

Alabama National’s Loan Review Department (“LRD”), which is wholly independent of the lending function, serves as a validation of each loan officer’s risk monitoring and rating system. LRD’s primary function

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is to provide the Board of Directors of each Bank with a thorough understanding of the credit quality of such Bank’s loan portfolio. Other review requirements are in place to provide management with early warning systems for problem credits as well as compliance with stated lending policies. LRD’s findings are reported, along with an asset quality review, to the Alabama National Board of Directors at each bi-monthly meeting.

Deposits

The principal sources of funds for the Banks are core deposits, consisting of demand deposits, interest-bearing transaction accounts, money market accounts, savings deposits and certificates of deposit. Transaction accounts include checking and negotiable order of withdrawal (NOW) accounts which customers use for cash management and which provide the Banks with a source of fee income and cross-marketing opportunities, as well as a low-cost source of funds. Time and savings accounts also provide a relatively stable and low-cost source of funding. The largest source of funds for the Banks are certificates of deposit. Certificates of deposit in excess of $100,000 are held primarily by customers in the Banks’ market areas. Alabama National does utilize brokered certificate of deposits to supplement in market funding sources when funding needs or pricing warrant the use of wholesale funding.

Deposit rates are reviewed weekly by senior management of each of the Banks. Management believes that the rates the Banks offer are competitive with those offered by other institutions in the Banks’ market areas. Alabama National focuses on customer service to attract and retain deposits.

Investment Services

NBC operates an investment department devoted primarily to handling correspondent banks’ investment needs. Services provided by the investment department include the sale of securities, asset/liability consulting, safekeeping and bond accounting.

Securities Brokerage and Trust Division

NBC’s wholly owned subsidiary, NBC Securities, Inc. (“NBC Securities”), is licensed as a broker-dealer. Started in 1995, NBC Securities provides investment services to individuals and institutions. These services include the sale of stocks, bonds, mutual funds, annuities, margin loans, other insurance products and financial advisory services. NBC Securities has a total of 68 investment representatives and advisors located in the following markets: Auburn/Opelika, Birmingham, Decatur, Fairhope, Foley, Gadsden, Gulf Shores, Huntsville, and Mobile, Alabama; Clermont, Naples, Pensacola, Sarasota and Tallahassee, Florida; Atlanta and Mableton, Georgia; Central City, Kentucky; and Franklin and Nashville, Tennessee. NBC also operates a trust division that manages the assets of both corporate and individual customers located primarily in the Birmingham, Alabama market. The division’s corporate trust services include managing and servicing retirement plan accounts such as pension, profit sharing and 401(k) plans.

Mortgage Lending Division

Substantially all of the Banks operate mortgage lending divisions that make home loans to individuals located in the markets served by the Banks. The majority of these loans are sold to corporate investors, who also service the loans.

Insurance Services Division

Alabama National’s First American Bank subsidiary purchased an existing insurance agency, Rankin Insurance Services, Inc., in 1999. Rankin Insurance, now operating under the name ANB Insurance Services, is a full service independent property and casualty insurance agency headquartered in Birmingham, Alabama. Agents are located at several of the Banks.

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Competition

The Banks encounter strong competition in making loans, acquiring deposits and attracting customers for investment and trust services. Competition among financial institutions is based upon interest rates offered on deposit accounts, interest rates charged on loans, other credit and service charges relating to loans, the quality and scope of the services rendered, the convenience of banking facilities and, in the case of loans to commercial borrowers, relative lending limits. The Banks compete with other commercial banks, savings and loan associations, credit unions, finance companies, mutual funds, insurance companies, brokerage and investment banking companies, and other financial intermediaries operating in Alabama and elsewhere. Many of these competitors, some of which are affiliated with large bank holding companies, have substantially greater resources and lending limits, and may offer certain services that the Banks do not currently provide. In addition, many of Alabama National’s non-bank competitors are not subject to the same extensive federal regulations that govern bank or thrift holding companies and federally insured banks or thrifts.

The Gramm-Leach-Bliley Act, effective March 11, 2000, permits bank holding companies to become financial holding companies and thereby affiliate with securities firms and insurance companies and engage in other activities that are financial in nature. See “Supervision and Regulation.” Under the Act, securities firms and insurance companies that elect to become financial holding companies may acquire banks and other financial institutions. The Gramm-Leach-Bliley Act, which represented at the time of enactment the most sweeping reform of financial services regulation in over sixty years, may significantly change the competitive environment in which Alabama National and the Banks conduct business. At this time, however, it is not possible to predict the full effect that the Act will have on Alabama National. One consequence may be increased competition from large financial services companies that will be permitted to provide many types of financial services, including bank products, to their customers.

The financial services industry is also likely to become more competitive as further technological advances enable more companies to provide financial services. These technological advances may diminish the importance of depository institutions and other financial intermediaries in the transfer of funds between parties.

The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the “IBBEA”) authorized bank holding companies to acquire banks and other bank holding companies without geographic limitations beginning September 30, 1995. In addition, beginning on June 1, 1997, the IBBEA authorized interstate mergers and consolidations of existing banks, provided that neither bank’s home state had opted out of interstate branching by May 31, 1997. The States of Alabama, Georgia and Florida have opted in to interstate branching. Interstate branching provides that once a bank has established branches in a state through an interstate merger, the bank may establish and acquire additional branches at any location in the state where any bank involved in the interstate merger could have established or acquired branches under applicable federal or state law.

Size gives the larger banks certain advantages in competing for business from large corporations. These advantages include higher lending limits and the ability to offer services in other areas of Alabama, Georgia, Florida and the southeast region. Some of Alabama National’s competitors still maintain substantially greater resources and lending limits than Alabama National. As a result, Alabama National has not generally attempted to compete for the banking relationships of large corporations, and generally concentrates its efforts on small to medium-sized businesses and individuals to which Alabama National believes it can compete effectively by offering quality, personal service. However, management believes it may be able to compete more effectively for the business of some large corporations, given its current growth pattern.

Management believes that the Banks’ commitment to their respective primary market areas, as well as their commitment to quality and personalized banking services, are factors that contribute to the Banks’ competitiveness. Management believes that Alabama National’s decentralized community banking strategy positions the Banks to compete successfully in their market areas.

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Market Areas and Growth Strategy

Through NBC, Alabama National serves the metropolitan Birmingham market, which includes portions of Jefferson, Shelby and St. Clair Counties. Alabama National’s First American Bank subsidiary serves Morgan, Limestone and Madison Counties in north Alabama and Lee County in east central Alabama. First American’s largest market presence is in the Decatur-Huntsville, Alabama market, which has demonstrated a growing economic base in recent years. First American entered the Lee County market, which includes the communities of Auburn and Opelika, with the December 2001 acquisition of Farmers National Bancshares, Inc. Lee County is also one of Alabama’s higher growth counties. Through First Gulf Bank, Alabama National serves Baldwin County, Alabama. Located between Mobile, Alabama and Pensacola, Florida, Baldwin County has a broad base of economic activity in the retail and service, agriculture, seafood, tourism and manufacturing industries. Baldwin County includes the popular tourism and retirement resort communities of Gulf Shores, Orange Beach and Fairhope. Shelby, Baldwin, Lee and St. Clair Counties have been named in statistical surveys as four of the fastest growing counties in Alabama.

In 1997, Alabama National expanded outside of Alabama with the opening of Citizens & Peoples Bank, N.A. in Escambia County, Florida. In 1998, Alabama National further expanded its presence in markets outside of Alabama with two acquisitions in Florida and one in Georgia. Public Bank is located in the fast-growing greater Orlando area, with offices in Altamonte Springs, Kissimmee and St. Cloud, Florida. Public Bank also expanded to the Atlantic Coast in September 2001 with the opening of its first branch office in Vero Beach, Florida, followed by the opening of a second branch office in Vero Beach in late 2002. Community Bank of Naples, N.A., located in Collier County, Florida, and Georgia State Bank, located in the greater-Atlanta counties of Cobb, Douglas and Paulding, are located in markets that are among the fastest growing in their respective states. Effective January 31, 2001, Alabama National expanded its presence in the greater-Orlando area with the acquisition of Peoples State Bank of Groveland (“Peoples State Bank”). Peoples State Bank serves customers in the communities of Groveland, Leesburg and Clermont, Florida. Effective June 19, 2003, Alabama National further expanded in Florida with the acquisition of Millennium Bank in Gainesville. Home to the University of Florida, Gainesville has experienced solid economic activity and good population growth.

During 2003, Alabama National announced the signing of definitive agreements for the acquisition of two additional Florida bank holding companies: Cypress Bankshares, Inc. (“Cypress Bank”) in Palm Coast and Indian River Banking Company (“Indian River”) in Vero Beach. Palm Coast, located in Flagler County, has experienced strong growth in population and bank deposits. Indian River serves the coastal Atlantic counties of Indian River and Brevard through eight locations in Vero Beach, Sebastian, Melbourne, Palm Bay and Rockledge, Florida. Both the Indian River and Cypress Bank acquisitions were closed in February 2004. See “Recent Developments.”

The other Banks, First Citizens, Alabama Exchange Bank and Bank of Dadeville, are located in non-metropolitan areas. Each of these three Banks, while experiencing minimal growth due to market growth that has not been significant, typically operates at a high level of profitability. As a result, these Banks tend to produce capital for growth in many of the high growth markets served by the other Banks. Alabama National’s strategy is to focus on maximization of profitability for these non-metropolitan banks, since market growth has not been as significant.

Due to continuing consolidation within the banking industry, as well as in the Southeastern United States, Alabama National may in the future seek to combine with other banks or thrifts (or their holding companies) that may be of smaller, equal or greater size than Alabama National. Alabama National currently intends to concentrate on acquisitions of additional banks or thrifts (or their holding companies) which operate in attractive market areas in Alabama, Florida and Georgia. In addition to price and terms, the factors considered by Alabama National in determining the desirability of a business acquisition or combination are financial condition, asset quality, earnings potential, quality of management, market area and competitive environment.

In addition to expansion through combinations with other banks or thrifts, Alabama National intends to continue to expand where possible through growth of its existing banks in their respective market areas. During

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1998, NBC formed a commercial leasing division which currently focuses on machinery and equipment leases to business customers. Also, Alabama National is exploring expansion into lines of business closely related to banking and will pursue such expansion if it believes such lines could be profitable without causing undue risk to Alabama National. During 1999, First American Bank acquired Rankin Insurance Services, Inc. (now known as ANB Insurance Services, Inc.), a full service independent property and casualty insurance agency headquartered in Decatur, Alabama. ANB Insurance Services completed the acquisition of two additional insurance agencies in 2002, one headquartered in Birmingham, Alabama, and one headquartered in Groveland, Florida. ANB Insurance Services has agents in most of the markets serviced by the Banks. Alabama National has also expanded its securities brokerage unit, NBC Securities, Inc., by locating investment representatives in offices of several Alabama National subsidiary banks as well as in offices of some correspondent banks. It has also added investment representatives in other non-bank locations when opportunities have arisen. While Alabama National plans to continue its growth as described above, there is no assurance that its efforts will be successful.

Employees

As of December 31, 2003, Alabama National and the Banks together had approximately 1,283 full-time equivalent employees. None of these employees is a party to a collective bargaining agreement. Alabama National considers its relations with its employees to be good.

Supervision and Regulation

Alabama National and the Banks are subject to state and federal banking laws and regulations which impose specific requirements and restrictions on, and provide for general regulatory oversight with respect to, virtually all aspects of operations. These laws and regulations are generally intended to protect depositors, not stockholders. To the extent that the following summary describes statutory or regulatory provisions, it is qualified in its entirety by reference to the particular statutory and regulatory provisions. Any change in applicable laws or regulations may have a material effect on the business and prospects of Alabama National.

Beginning with the enactment of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (“FIRREA”) and following in December 1991 with the Federal Deposit Insurance Corporation Improvement Act (“FDICIA”), numerous additional regulatory requirements have been placed on the banking industry and additional changes have been proposed. The operations of Alabama National and the Banks may be affected by legislative changes and the policies of various regulatory authorities. Alabama National is unable to predict the nature or the extent of the effect on its business and earnings that fiscal or monetary policies, economic control, or new federal or state legislation may have in the future.

As a bank holding company, Alabama National is subject to the regulation, examination and supervision of the Federal Reserve. The Banks are subject to supervision, examination and regulation by applicable state and federal banking agencies, including the Federal Reserve, the Office of the Comptroller of the Currency (the “OCC”) and the Federal Deposit Insurance Corporation (the “FDIC”). The Banks are also subject to various requirements and restrictions under federal and state law, including requirements to maintain allowances against deposits, restrictions on the types and amounts of loans that may be granted and the interest that may be charged thereon, and limitations on the types of investments that may be made and the types of services that may be offered. Various consumer laws and regulations also affect the operations of the Banks. In addition to the impact of regulation, commercial banks are affected significantly by the actions of the Federal Reserve as it attempts to control the money supply and credit availability in order to influence the economy.

Pursuant to the IBBEA, bank holding companies from any state may acquire banks located in any other state, subject to certain conditions, including concentration limits. A bank may establish branches across state lines by merging with a bank in another state (unless applicable state law prohibits such interstate mergers), provided certain conditions are met. A bank may also establish a de novo branch in a state in which the bank does not maintain a branch if that state expressly permits such interstate de novo branching and certain other conditions are met.

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There are a number of obligations and restrictions imposed on bank holding companies and their depository institution subsidiaries by federal law and regulatory policy that are designed to reduce potential loss exposure to the depositors of such depository institutions and to the FDIC insurance fund in the event the depository institution becomes in danger of default or is in default. For example, under a policy of the Federal Reserve with respect to bank holding company operations, a bank holding company is required to serve as a source of financial strength to its subsidiary depository institutions and commit resources to support such institutions in circumstances where it might not do so absent such policy. In addition, the “cross-guarantee” provisions of federal law require insured depository institutions under common control to reimburse the FDIC for any loss suffered or reasonably anticipated as a result of the default of a commonly controlled insured depository institution or for any assistance provided by the FDIC to a commonly controlled insured depository institution in danger of default.

The federal banking agencies have broad powers under current federal law to take prompt corrective action to resolve problems of insured depository institutions. The extent of these powers depends upon whether the institutions in question are “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” or “critically undercapitalized” as such terms are defined under regulations issued by each of the federal banking agencies. In general, the agencies measure capital adequacy within a framework that makes capital requirements sensitive to the risk profiles of individual banking companies. The guidelines define capital as either Tier 1 (primarily common shareholders’ equity) or Tier 2 (certain debt instruments and a portion of the allowance for loan losses). Alabama National and the Banks are subject to a minimum Tier 1 capital ratio (Tier 1 capital to risk-weighted assets) of 4%, a total capital ratio (Tier 1 plus Tier 2 to risk-weighted assets) of 8% and a Tier 1 leverage ratio (Tier 1 to average quarterly assets) of 3%. To be considered a “well capitalized” institution, the Tier 1 capital ratio, the total capital ratio, and the Tier 1 leverage ratio must equal or exceed 6%, 10% and 5%, respectively.

The Federal Reserve has adopted rules to incorporate market and interest rate risk components into its risk-based capital standards. Amendments to the risk-based capital requirements, incorporating market risk, became effective January 1, 1998. Under these market risk requirements, capital will be allocated to support the amount of market risk related to a financial institution’s ongoing trading activities.

The Banks are subject to the provisions of Section 23A of the Federal Reserve Act, which place limits on the amount of loans or extensions of credit to, investments in or certain other transactions with affiliates, and on the amount of advances to third parties collateralized by the securities or obligations of affiliates. In general, the Banks’ “affiliates” are Alabama National and Alabama National’s non-bank subsidiaries.

The Banks are also subject to the provisions of Section 23B of the Federal Reserve Act that, among other things, prohibit a bank from engaging in certain transactions with affiliates unless the transactions are on terms substantially the same, or at least as favorable to the bank, as those prevailing at the time for comparable transactions with non-affiliated companies.

The Banks are also subject to certain restrictions on extensions of credit to executive officers, directors, certain principal stockholders and their related interests. Such extensions of credit (i) must be made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with third parties and (ii) must not involve more than the normal risk of repayment or present other unfavorable features.

The Community Reinvestment Act (“CRA”) requires that, in connection with examinations of financial institutions within their respective jurisdictions, the Federal Reserve, the FDIC or the OCC shall evaluate the record of the financial institutions in meeting the credit needs of their local communities, including low and moderate income neighborhoods, consistent with the safe and sound operation of those institutions. The CRA does not establish specific lending requirements or programs for financial institutions nor does it limit an institution’s discretion to develop the types of products and services that it believes are best suited to its

10

particular community, consistent with the CRA. These factors are considered in evaluating mergers, acquisitions and applications to open a branch or facility. The CRA also requires all institutions to make public disclosure of their CRA ratings. Each of the Banks received at least a satisfactory rating in its most recent evaluation.

There are various legal and regulatory limits on the extent to which the Banks may pay dividends or otherwise supply funds to Alabama National. In addition, federal and state regulatory agencies also have the authority to prevent a bank or bank holding company from paying a dividend or engaging in any other activity that, in the opinion of the agency, would constitute an unsafe or unsound practice.

FDIC regulations require that management report on its responsibility for preparing its institution’s financial statements and for establishing and maintaining an internal control structure and procedures for financial reporting and compliance with designated laws and regulations concerning safety and soundness.

The FDIC currently uses a risk-based assessment system for insured depository institutions that takes into account the risks attributable to different categories and concentrations of assets and liabilities. The FDIC recently has proposed changes to its assessment system that are designed to require premium payments by a greater number of banks and other FDIC-insured depository institutions and that also would provide rebates to some institutions. If any of these changes were to take effect, the assessment obligations of the Banks could change.

The Gramm-Leach-Bliley Act, which became effective in 2000, permits bank holding companies to become financial holding companies and thereby affiliate with securities firms and insurance companies and engage in other activities that are financial in nature. A bank holding company may become a financial holding company by filing a declaration if each of its subsidiary banks is well capitalized under the FDICIA prompt corrective action provisions, is well managed, and has at least a satisfactory rating under the CRA. No regulatory approval will be required for a financial holding company to acquire a company, other than a bank or savings association, engaged in activities that are financial in nature or incidental to activities that are financial in nature, as determined by the Federal Reserve. At this time, Alabama National has not registered to become a financial holding company.

The Gramm-Leach-Bliley Act broadly defines “financial in nature” to include securities underwriting, dealing and market making; sponsoring mutual funds and investment companies; insurance underwriting and agency; merchant banking; and activities that the Federal Reserve has determined to be closely related to banking. The Act also permits the Federal Reserve, in consultation with the Department of Treasury, to determine that other activities are “financial in nature” and therefore permissible for financial holding companies. A national bank also may engage, subject to limitations on investment, in activities that are financial in nature (other than insurance underwriting, insurance company portfolio investment, merchant banking, real estate development and real estate investment) through a financial subsidiary of the bank, if the bank is well capitalized, well managed and has at least a satisfactory CRA rating. Subsidiary banks of a financial holding company or national banks with financial subsidiaries must continue to be well capitalized and well managed in order to continue to engage in activities that are financial in nature without regulatory actions or restrictions, which could include divestiture of the financial subsidiary or subsidiaries. In addition, a financial holding company or a bank may not acquire a company that is engaged in activities that are financial in nature unless each of the subsidiary banks of the financial holding company or the bank at issue has a CRA rating of satisfactory or better. Bank holding companies that have not become financial holding companies are prohibited from engaging in activities other than banking or managing or controlling banks or other permissible subsidiaries and from acquiring or retaining direct or indirect control of any company engaged in any activities other than those activities determined by the Federal Reserve to be so closely related to banking or managing or controlling banks as to be a proper incident thereto.

The Act preserves the role of the Federal Reserve as the umbrella supervisor for holding companies while at the same time incorporating a system of functional regulation designed to take advantage of the strengths of the

11

various federal and state regulators. In particular, the Act replaces the broad exemption from Securities and Exchange Commission regulation that banks previously enjoyed with more limited exemptions, and it reaffirms that states are the regulators for the insurance activities of all persons, including federally-chartered banks.

The Gramm-Leach-Bliley Act also establishes a minimum federal standard of financial privacy. In general, the applicable regulations issued by the various federal regulatory agencies prohibit affected financial institutions (including banks, insurance agencies and broker/dealers) from sharing information about their customers with non-affiliated third parties unless (1) the financial institution has first provided a privacy notice to the customer; (2) the financial institution has given the customer an opportunity to opt out of the disclosure; and (3) the customer has not opted out after being given a reasonable opportunity to do so.

On October 26, 2001, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA Patriot Act) was signed into law. The USA Patriot Act broadened the application of anti-money laundering regulations to apply to additional types of financial institutions, such as broker-dealers, and strengthened the ability of the U.S. government to detect and prosecute international money laundering and the financing of terrorism. The principal provisions of Title III of the USA Patriot Act require that regulated financial institutions, including state member banks: (i) establish an anti-money laundering program that includes training and audit components; (ii) comply with regulations regarding the verification of the identity of any person seeking to open an account; (iii) take additional required precautions with non-U.S. owned accounts; and (iv) perform certain verification and certification of money laundering risk for their foreign correspondent banking relationships. The USA Patriot Act also expanded the conditions under which funds in a U.S. interbank account may be subject to forfeiture and increased the penalties for violation of anti-money laundering regulations. Failure of a financial institution to comply with the USA Patriot Act’s requirements could have serious legal and reputational consequences for the institution. Alabama National has adopted policies, procedures and controls to address compliance with the requirements of the USA Patriot Act under the existing regulations and will continue to revise and update its policies, procedures and controls to reflect changes required by the USA Patriot Act and implementing regulations.

NBC Securities is a broker-dealer registered with the Securities and Exchange Commission and is a member of the National Association of Securities Dealers, Inc.

Executive Officers of the Registrant

The Executive Officers of Alabama National serve at the pleasure of the Board of Directors. Set forth below are the current Executive Officers of Alabama National and a brief explanation of their principal employment during the last five (5) years.

John H. Holcomb, III—Age 52—Chairman and Chief Executive Officer. Mr. Holcomb has served as Chairman and Chief Executive Officer of Alabama National since 1996. Mr. Holcomb has been Chief Executive Officer of NBC since 1990.

Victor E. Nichol, Jr.—Age 57—Vice Chairman. Mr. Nichol has served as Vice Chairman of Alabama National since 2000. Prior to such time, Mr. Nichol served as President and Chief Operating Officer of Alabama National beginning in 1996. Mr. Nichol has been Vice Chairman of NBC since 2000 and served as Executive Vice President of NBC from 1994 to 2000.

Dan M. David—Age 58—Vice Chairman. Mr. David has served as Vice Chairman of Alabama National since 1997 when First American Bancorp merged with and into Alabama National. Mr. David serves as Chairman and Chief Executive Officer of First American Bank, positions he has held since 1995. Mr. David served as Chairman and Chief Executive Officer of First American Bancorp from 1995 through 1997.

Richard Murray, IV—Age 41—President and Chief Operating Officer. Mr. Murray has served as President and Chief Operating Officer of Alabama National since 2000. Prior to such time, Mr. Murray served as

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Executive Vice President of Alabama National beginning 1998. Mr. Murray has served as Executive Vice President of NBC since 1997.

William E. Matthews, V—Age 39—Executive Vice President and Chief Financial Officer. Mr. Matthews has served as Executive Vice President and Chief Financial Officer of Alabama National and NBC since 1998. Prior to that date, Mr. Matthews served as Senior Vice President of NBC beginning in 1996.

John R. Bragg—Age 42—Executive Vice President. Mr. Bragg has served as Executive Vice President of Alabama National since 1998 and Executive Vice President of NBC since 1997. Mr. Bragg served as Senior Vice President of NBC from 1992 until 1997.

Shelly S. Williams—Age 41—Senior Vice President and Controller. Ms. Williams has served as Senior Vice President and Controller of Alabama National and NBC since 2000. Prior to such time, Ms. Williams served as Vice President and Controller of NBC from 1997 through 2000, and as Assistant Vice President and Assistant Controller of NBC from 1996 to 1997.

Company Website

Alabama National’s website address is www.alabamanational.com. Alabama National makes available free of charge through its website its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such material has been filed with or furnished to the Securities and Exchange Commission.

ITEM 2. PROPERTIES

Alabama National, through the Banks, currently operates 78 banking offices and four insurance offices. Of these offices, Alabama National, through the Banks, owns 62 banking offices without encumbrance and leases an additional 16 banking offices and its four insurance offices. Alabama National, through NBC, leases its principal administrative offices, which are located at 1927 First Avenue North, Birmingham, Alabama. See Notes 7 and 10 to the Consolidated Financial Statements of Alabama National and Subsidiaries included in this Annual Report on Form 10-K beginning at page F-1 for additional information regarding Alabama National’s premises and equipment.

ITEM 3. LEGAL PROCEEDINGS

Alabama National, in the normal course of business, is subject to various pending and threatened litigation. Although it is not possible to determine at this point in time, based on consultation with legal counsel, management does not anticipate that the ultimate liability, if any, resulting from such litigation will have a material effect on Alabama National’s financial condition and results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS

None.

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PART II

ITEM  5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

At March 9, 2004 Alabama National had approximately 2,572 stockholders of record (including shares held in “street” names by nominees who are record holders) and 15,351,340 shares of Alabama National Common Stock outstanding. Alabama National Common Stock is traded in the over-the-counter market and prices are quoted on the NASDAQ/NMS under the symbol “ALAB.”

The reported sales price range for Alabama National Common Stock and the dividends declared during each calendar quarter of 2002 and 2003 are shown below:

	High		Low		Dividends Declared
2002
First Quarter	$	37.00	$	31.60	$	.25
Second Quarter		44.27		35.45		25
Third Quarter		46.46		35.52		25
Fourth Quarter		48.23		39.74		25
2003
First Quarter	$	46.00	$	40.75	$	.285
Second Quarter		50.50		40.88		.285
Third Quarter		53.69		47.12		.285
Fourth Quarter		55.39		47.56		.285

As a bank holding company, Alabama National, except under extraordinary circumstances, will not generate earnings of its own, but will rely solely on dividends paid to it by the Banks as the source of income to meet its expenses and pay dividends. Under normal circumstances, Alabama National’s ability to pay dividends will depend entirely on the ability of the Banks to pay dividends to Alabama National. The Banks are subject to state and federal banking regulations, and the payment of dividends by the Banks is governed by such regulations.

The last reported sales price of Alabama National Common Stock as reported on the NASDAQ/NMS on March 9, 2004 was $52.10. The prices shown do not reflect retail mark-ups and mark-downs.

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ITEM  6. SELECTED FINANCIAL DATA

FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA

(Amounts in thousands, except ratios and per share data)

	Year Ended December 31,
	2003			2002			2001(1)			2000(1)			1999(1)
Income Statement Data:
Interest income	$	178,631		$	178,147		$	179,537		$	171,222		$	133,106
Interest expense		57,668			65,313			90,393			90,987			62,307
Net interest income		120,963			112,834			89,144			80,235			70,799
Provision for loan and lease losses		5,931			7,956			3,946			2,506			2,107
Net interest income after provision for loan and lease losses		115,032			104,878			85,198			77,729			68,692
Net securities gains (losses)		46			35			246			(119	)		196
Noninterest income		78,258			61,129			48,461			33,466			31,120
Noninterest expense		131,864			113,577			92,233			74,111			65,860
Income before income taxes		61,472			52,465			41,672			36,965			34,148
Provision for income taxes		20,398			16,735			13,232			11,421			10,817
Income before minority interest in earnings of consolidated subsidiary		41,074			35,730			28,440			25,544			23,331
Minority interest in earnings of consolidated subsidiary		28			28			25			26			25
Net income	$	41,046		$	35,702		$	28,415		$	25,518		$	23,306
Balance Sheet Data:
Total assets	$	3,820,112		$	3,316,168		$	2,843,467		$	2,358,285		$	2,025,503
Earning assets		3,512,744			3,034,980			2,612,806			2,140,562			1,811,312
Securities		810,227			700,333			567,688			386,059			353,923
Loans held for sale		16,415			51,030			36,554			5,226			8,615
Loans and leases, net of unearned income		2,659,440			2,191,394			1,964,169			1,710,810			1,403,489
Allowance for loan and lease losses		36,562			32,704			28,519			22,368			19,111
Deposits		2,753,749			2,330,395			2,066,759			1,807,095			1,529,251
Short-term debt		41,150			152,100			68,350			91,439			24,389
Long-term debt		332,427			240,065			209,631			83,926			124,005
Stockholders’ equity		279,418			234,492			207,886			171,604			146,280
Weighted Average Shares Outstanding—Diluted (2)		12,957			12,683			12,141			11,973			12,008
Per Common Share Data:
Net income—diluted	$	3.17		$	2.81		$	2.34		$	2.13		$	1.94
Book value (period end)		21.76			18.95			16.84			14.56			12.40
Tangible book value (period end) (6)		18.99			17.28			15.31			13.34			11.49
Dividends declared		1.14			1.00			0.92			0.84			0.72
Dividend payout ratio—diluted		35.96	%		35.59	%		39.32	%		39.44	%		37.11	%
Performance Ratios:
Return on average assets		1.14	%		1.18	%		1.12	%		1.17	%		1.26	%
Return on average equity		15.89			16.01			15.40			16.29			16.11
Net interest margin (3)		3.65			4.07			3.83			4.03			4.23
Net interest margin (taxable equivalent) (3)		3.68			4.11			3.88			4.08			4.30
Asset Quality Ratios:
Allowance for loan and lease losses to period end loans (4)		1.37	%		1.49	%		1.45	%		1.31	%		1.36	%
Allowance for loan and lease losses to period end nonperforming loans (5)		372.44			318.07			377.09			614.17			431.11
Net charge-offs to average loans and leases (4)		0.12			0.18			0.09			0.04			0.04
Nonperforming assets to period end loans and leases and foreclosed property (4)(5)		0.40			0.59			0.47			0.30			0.38
Capital and Liquidity Ratios:
Average equity to average assets		7.17	%		7.36	%		7.28	%		7.16	%		7.80	%
Leverage (4.00% required minimum)		7.73			7.52			7.61			6.83			7.23
Risk-based capital
Tier 1 (4.00% required minumum)		10.47			10.00			9.92			8.86			9.46
Total (8.00% required minimum)		11.73			11.26			11.17			10.11			10.70
Average loans and leases to average deposits		94.38			96.44			97.74			94.04			89.00

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(1) On January 31, 2001, Peoples State Bank of Groveland (“PSB”) merged with a newly formed subsidiary of Alabama National, whereby PSB became a wholly owned subsidiary of Alabama National (“the PSB Merger”). Because the merger was accounted for as a pooling-of-interests, the historical Five-Year Summary of Selected Financial Data for all periods have been restated to include the results of operations of PSB from the earliest period presented, except for dividends per common share.

(2) The weighted average common shares include those of PSB at the applicable exchange ratios.

(3) Net interest income divided by average earning assets.

(4) Does not include loans held for sale.

(5) Nonperforming loans and nonperforming assets include loans past due 90 days or more that are still accruing interest. It is Alabama National’s policy to place all loans on nonaccrual status when over ninety days past due.

(6) “Tangible book value per share” is computed by dividing tangible book value by the total number of common shares outstanding. “Tangible book value” equals book value less goodwill and other intangible assets. Management believes that this measure is useful because it provides book value exclusive of goodwill and other intangible assets and because it is a measure used by many investors as part of their analysis of Alabama National. The following table sets forth a reconciliation of book value per share to tangible book value per share:.

	Year Ended December 31,
	2003			2002			2001			2000			1999
Book value	$	279,418		$	234,492		$	207,886		$	171,604		$	146,280
Deduct: goodwill and other intangible assets		(35,587	)		(20,622	)		(18,875	)		(14,347	)		(10,730	)
Tangible book value		243,831			213,870			189,011			157,257			135,550
Book value per common share		21.76			18.95			16.84			14.56			12.40
Effect of goodwill and intangible assets per share		(2.77	)		(1.67	)		(1.53	)		(1.22	)		(0.91	)
Tangible book value per common share	$	18.99		$	17.28		$	15.31		$	13.34		$	11.49

ITEM  7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Basis of Presentation

The following is a discussion and analysis of the consolidated financial condition and results of operations of Alabama National as of the dates and for the periods indicated. All significant intercompany accounts and transactions have been eliminated. The accounting and reporting policies of Alabama National conform with accounting principles generally accepted in the United States of America and with general financial service industry practices.

The historical consolidated financial statements of Alabama National and the “FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA” derived from the historical consolidated financial statements of Alabama National are set forth elsewhere herein. This discussion should be read in conjunction with those consolidated financial statements and selected consolidated financial data and the other financial information included in this Annual Report.

Executive Overview

The purpose of this section is to provide a brief overview of 2003. Additional detail about the income statement and balance sheet is provided in the pages following this summary.

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Income Statement

Alabama National reported a 15.0% increase in net income for 2003 over 2002 levels, with diluted earnings per share growing 12.5% from $2.81 to $3.17. The increase in net income is higher than the increase in diluted earnings per share because Alabama National issued additional shares of stock during 2003 to acquire Millennium Bank and through the exercise of stock options by option holders.

The two components of revenue for Alabama National—net interest income and noninterest income—both grew in 2003 over 2002 levels, with the growth in noninterest income being much greater.

Noninterest income includes mortgage banking, securities brokerage and trust services, investment services, insurance services, and service charges and other fees associated with traditional retail and commercial banking. Noninterest income grew $17.1 million, or 28.0% during 2003. The areas of largest growth included mortgage banking (up $5.4 million), investment services (up $5.1 million), and securities brokerage and trust revenue (up $2.3 million). Mortgage banking and investment services revenue both benefited in 2003 from the decline in interest rates. The rate decline led to strong demand by mortgage customers, including refinances of existing mortgages and mortgages originated to finance home purchases. In the investment services division, the rate decline led to rapid repayment and calls of many securities owned by Alabama National’s customers, leading to demand from those customers for the purchase of new securities to replace the ones that were repaid or called.

Net interest income grew $8.1 million, or 7.2%, in 2003 despite a reduction in the Company’s net interest spread and net interest margin. The Federal Reserve’s actions to reduce interest rates resulted in a decline in earning asset yields that exceeded the decline in liability costs. As a result, the spread between the rate earned on loans, investments, and other earning assets and the rate paid on deposits and other interest-bearing liabilities compressed during the year. Alabama National was able to grow net interest income during 2003 in spite of this reduced spread due to its growth in earning assets and liabilities.

On the expense side, Alabama National’s noninterest expenses grew $18.3 million, or 16.1%. Some of this growth in noninterest expenses was associated with the expansion of the number of branch offices and associated personnel and other operating expenses associated with that expansion, including the Millennium acquisition. A portion of the expense growth was also due to increased commission-based compensation expenses caused by increased revenue in the investment services division, the mortgage banking division, and the securities brokerage and trust division.

Balance Sheet

Alabama National’s balance sheet expanded during 2003, with total assets growing $504 million or 15.2% over December 31, 2002 levels. The largest categories of asset growth occurred in loans and leases (up $468 million) and securities (up $110 million). Deposits grew $423 million during the year. In June, 2003, Alabama National completed the acquisition of Millennium Bank of Gainesville, Florida. This acquisition increased total assets, loans, and deposits by approximately $124 million, $69 million, and $91 million, respectively.

Asset Quality

Alabama National reported 2003 net charge-offs of $3.1 million, or 0.12% of average loans and leases, down from 2002’s $3.8 million (0.18% of average loans and leases). Nonperforming assets at December 31, 2003 were $10.5 million (0.40% of period end loans and leases and foreclosed property), down from year end 2002’s $12.8 million (0.59% of period end loans and leases and foreclosed property). Potential problem loans fell to $46.4 million at December 31, 2003 from year end 2002’s $50.3 million. As a result of these factors and management’s assessment of the inherent risk in the loan and lease portfolio, Alabama National’s provision for loan and lease losses declined from $8.0 million in 2002 to $5.9 million in 2003.

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Selected Bank Financial Data

Alabama National’s success is dependent upon the financial performance of its subsidiary banks (the “Banks”). Alabama National, with input from the management of each Bank, establishes operating goals for each Bank. The following tables summarize selected financial information for 2003 and 2002 for each of the Banks. Millennium Bank was acquired during June 2003 in a purchase business combination and accordingly only its operating activity since the date of acquisition is included in Alabama National’s results of operations.

SELECTED BANK FINANCIAL DATA

(Amounts in thousands, except ratios)

	December 31, 2003
	National Bank of Commerce			Alabama Exchange Bank			Bank of Dadeville			Citizens & Peoples Bank, N.A.			First American Bank			First Citizens Bank			First Gulf Bank			Peoples State Bank			Public Bank			Georgia State Bank			Community Bank of Naples, N.A.			Millennium Bank
Summary of Operations:
Interest income	$	54,632		$	4,113		$	4,092		$	5,672		$	47,551		$	5,369		$	11,677		$	8,665		$	8,889		$	13,689		$	11,943		$	3,034
Interest expense		18,641			820			1,039			1,588			14,877			1,600			3,217			2,986			3,023			4,728			3,126			901
Net interest income		35,991			3,293			3,053			4,084			32,674			3,769			8,460			5,679			5,866			8,961			8,817			2,133
Provision for loan and lease losses		2,975			120			—			223			675			25			592			395			225			240			427			34
Securities gains		—			—			4			2			27			4			—			—			—			6			—			3
Noninterest income		46,651			795			802			991			16,336			1,160			4,939			1,234			1,943			3,631			1,543			824
Noninterest expense		55,840			2,311			1,941			2,811			32,550			2,401			8,363			4,377			4,381			7,769			4,141			1,941
Net income		15,989			1,103			1,359			1,277			10,515			1,944			2,905			1,409			1,987			3,110			3,610			604
Balance Sheet Highlights:
At Period-End:
Total assets	$	1,308,452		$	81,862		$	80,389		$	114,002		$	870,778		$	112,767		$	269,393		$	165,456		$	189,720		$	292,101		$	238,355		$	135,970
Securities		281,691			35,170			30,610			19,729			108,791			57,282			41,917			38,893			51,275			92,583			19,538			32,669
Loans and leases, net of unearned income		875,785			40,025			43,441			85,221			677,395			47,714			201,541			109,795			123,249			172,909			202,483			79,078
Allowance for loan and lease losses		11,660			629			659			1,149			9,317			589			2,632			2,250			1,668			2,158			2,812			1,039
Deposits		761,377			67,605			63,608			91,414			687,502			83,731			208,191			141,008			159,644			222,363			173,223			100,449
Short-term debt		5,000			—			—			5,000			5,000			5,000			—			5,500			—			—			14,000			—
Long-term debt		131,034			5,000			5,000			3,000			58,000			11,000			22,000			4,000			8,000			23,000			16,000			—
Stockholders’ equity		96,115			6,334			5,682			7,771			80,093			7,495			17,855			11,471			13,041			20,329			18,666			25,996
Performance Ratios:
Return on average assets		1.22	%		1.37	%		1.97	%		1.21	%		1.27	%		1.89	%		1.23	%		0.90	%		1.16	%		1.27	%		1.60	%		0.86	%
Return on average equity		16.84			17.01			22.88			17.91			14.05			25.71			17.47			12.25			16.48			15.89			21.45			4.57
Net interest margin		2.93			4.50			4.37			4.18			4.35			3.98			3.81			3.85			3.67			3.66			4.34			3.66
Capital and Liquidity Ratios:
Average equity to average assets		7.22	%		8.05	%		7.84	%		6.75	%		9.04	%		7.31	%		7.01	%		7.30	%		7.05	%		7.39	%		7.45	%		18.77	%
Leverage (4.00% required minimum)		7.43			7.34			7.12			7.09			7.94			6.47			6.80			7.12			7.05			6.90			7.98			7.66
Risk-based capital
Tier 1 (4.00% required minimum)		10.02			13.69			12.73			9.16			9.89			13.28			9.19			10.24			9.25			10.65			10.00			11.15
Total (8.00% required minimum)		11.24			14.95			13.98			10.41			11.14			14.36			10.44			11.50			10.43			11.79			11.25			12.40
Average loans and leases to average deposits		109.08			56.09			70.04			93.56			98.09			52.64			93.90			76.46			76.54			78.96			115.76			73.79

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SELECTED BANK FINANCIAL DATA

(Amounts in thousands, except ratios)

	December 31, 2002
	National Bank of Commerce			Alabama Exchange Bank			Bank of Dadeville			Citizens & Peoples Bank, N.A.			First American Bank			First Citizens Bank			First Gulf Bank			Peoples State Bank			Public Bank			Georgia State Bank			Community Bank of Naples, N.A.
Summary of Operations:
Interest income	$	56,945		$	4,794		$	4,605		$	5,129		$	46,662		$	6,008		$	11,965		$	9,437		$	7,861		$	14,708		$	10,858
Interest expense		21,387			1,193			1,465			1,733			17,387			2,055			4,083			3,366			2,891			5,412			3,717
Net interest income		35,558			3,601			3,140			3,396			29,275			3,953			7,882			6,071			4,970			9,296			7,141
Provision for loan and lease losse		3,763			133			40			270			400			20			630			789			700			490			721
Securities gains		—			—			—			—			6			—			29			—			—			—			—
Noninterest income		36,464			643			733			795			12,624			917			3,668			1,284			2,131			2,569			1,233
Noninterest expense		47,392			2,370			1,823			2,349			27,850			2,334			7,108			4,000			3,952			6,601			3,552
Net income		14,292			1,190			1,402			988			9,258			1,901			2,524			1,733			1,525			3,179			2,581
Balance Sheet Highlights:
At Period-End:
Total assets	$	1,283,862		$	78,193		$	73,029		$	92,564		$	769,660		$	103,371		$	218,568		$	151,804		$	141,564		$	228,543		$	206,947
Securities		340,013			26,300			20,715			13,180			96,168			45,817			28,240			35,412			21,830			52,420			20,158
Loans and leases, net of unearned income		746,271			39,564			45,008			69,189			571,066			42,366			161,793			100,255			102,750			142,404			169,808
Allowance for loan and lease losses		10,417			668			644			975			9,335			615			2,263			1,810			1,564			2,013			2,400
Deposits		691,675			66,157			59,839			75,037			618,990			84,418			171,784			134,088			120,922			176,295			143,897
Short-term debt		60,000			—			—			4,000			28,000			7,000			17,000			4,000			—			—			13,000
Long-term debt		111,056			5,000			5,000			3,000			37,009			4,000			11,000			—			8,000			15,000			16,000
Stockholders’ equity		88,270			6,396			5,765			6,578			70,200			7,297			15,927			11,225			11,254			18,412			15,081
Performance Ratios:
Return on average assets		1.28	%		1.51	%		1.93	%		1.17	%		1.28	%		1.95	%		1.21	%		1.20	%		1.22	%		1.39	%		1.41	%
Return on average equity		16.70			18.18			23.66			16.62			13.95			25.19			16.79			16.01			15.76			18.31			20.54
Net interest margin		3.44			5.05			4.75			4.39			4.46			4.41			4.13			4.51			4.30			4.41			4.48
Capital and Liquidity Ratios:
Average equity to average assets		7.69	%		8.33	%		8.17	%		7.02	%		9.19	%		7.72	%		7.23	%		7.52	%		7.73	%		7.57	%		6.86	%
Leverage (4.00% required minimum)		7.51			7.27			7.91			7.17			7.48			7.00			7.30			7.15			8.05			7.45			7.40
Risk-based capital
Tier 1 (4.00% required minimum)		9.96			13.35			12.54			9.74			9.14			13.50			10.06			11.00			9.88			11.59			9.60
Total (8.00% required minimum)		11.14			14.61			13.79			11.00			10.39			14.71			11.31			12.26			11.13			12.85			10.85
Average loans and leases to average deposits		119.67			59.27			75.73			88.42			92.72			52.22			96.14			81.81			86.16			75.56			112.07

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Critical Accounting Policies and Estimates

Alabama National’s accounting policies are critical to understanding the results of operations and financial position as reported in the consolidated financial statements. Significant accounting policies utilized by Alabama National are discussed in more detail in the notes to the consolidated financial statements set forth beginning on page F-1 herein.

Some of the more complex technical accounting policies require management to make significant estimates and judgments that affect the valuation of reported assets and liabilities, including associated revenues, expenses, and disclosure. The following briefly describes the more complex policies involving a significant amount of judgments about valuation and the application of complex accounting standards and interpretations.

Allowance for Loan and Lease Losses

Alabama National records estimated probable inherent credit losses in the loan and lease portfolios as an allowance for loan and lease losses. The methodologies and assumptions for determining the adequacy of the overall allowance for loan and lease losses involve significant judgments to be made by management. Some of the more critical judgments supporting the amount of Alabama National’s allowance for loan and lease losses include judgments about: credit worthiness of borrowers, estimated value of underlying collateral, assumptions about cash flow, determination of loss factors for estimating credit losses, and the impact of current events, conditions, and other factors impacting the level of probable inherent losses. Under different conditions or using different assumptions, the actual amount of credit losses ultimately confirmed by Alabama National may be different than management’s estimates provided in the consolidated financial statements.

For a more complete discussion of the methodology employed to calculate the allowance for loan and lease losses, see Note 1 to Alabama National’s consolidated financial statements included in this Annual Report and “Provision and Allowance for Loan and Lease Losses.”

Mergers and Acquisitions

Alabama National’s growth in business and profitability over the past several years has been enhanced significantly by mergers and acquisitions. Prior to July 2001, certain of Alabama National’s acquisitions were accounted for using the pooling-of-interests business combination method of accounting. Effective July 1, 2001, Alabama National adopted SFAS No. 141, “Business Combinations,” which allows only the use of the purchase method of accounting. For purchase acquisitions, Alabama National is required to record the assets acquired, including identified intangible assets, and liabilities assumed at their fair value, which in many instances involves estimates based on third party valuations, such as appraisals, or internal valuations based on discounted cash flow analyses or other valuation techniques. The determination of the useful lives of intangible assets is subjective as is the appropriate amortization period for such intangible assets. These estimates also include the establishment of various accruals and allowances based on planned facilities dispositions and employee severance considerations, among other acquisition-related items. In addition, purchase acquisitions typically result in recording goodwill, which is subject to ongoing periodic impairment tests based on the fair value of net assets acquired compared to the carrying value of goodwill.

Income Taxes

The calculation of Alabama National’s income tax provision is complex and requires the use of estimates and judgments in its determination. As part of Alabama National’s overall business strategy, management must consider tax laws and regulations that apply to the specific facts and circumstances under consideration. This analysis includes evaluating the amount and timing of the realization of income tax liabilities or benefits. Management closely monitors tax developments in order to evaluate the effect they may have on Alabama National’s overall tax position.

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Pension and Other Postretirement Benefits

Alabama National is the sponsor of two defined benefit pension plans that have been frozen with regard to future benefit accruals and also offers postretirement benefit plans to employees. The calculation of obligations and related expenses under these plans requires the use of actuarial valuation methods and assumptions. Actuarial valuations and the determination of future market values of plan assets are subject to management judgment and may differ significantly if different assumptions are used. Please refer to Note 12 to Alabama National’s consolidated financial statements included in this annual report for disclosures related to Alabama National’s benefit plans.

Stock-based Compensation

Alabama National uses a fair value based method of accounting for stock based compensation costs. Compensation costs for stock-based compensation arrangements are measured at the grant date based on the fair value of the award and are recognized over the related service period. Accounting for stock-based compensation requires the use of an option-pricing model that takes into account the stock price at the grant date, the exercise price, the expected life of the option, the volatility of the underlying stock and the expected dividends on it, and the risk-free interest rate over the expected life of the option. Please refer to Note 12 to Alabama National’s consolidated financial statements included in this annual report for disclosures related to Alabama National’s stock-based compensation awards.

Other

There are other complex accounting standards that require Alabama National to employ significant judgment in interpreting and applying certain of the principles proscribed by those standards. These judgments include, but are not limited to, determination of whether a financial instrument or other contract meets the definition of a derivative in accordance with SFAS No. 133, the accounting for a transfer of financial assets and extinguishments of liabilities in accordance with SFAS No. 140, and the determination of asset impairment, including when such impairment is other-than-temporary. For a more complete discussion of the accounting policies, see Note 1 to Alabama National’s consolidated financial statements included in this annual report.

Results of Operations

Year ended December 31, 2003, compared with year ended December 31, 2002

Alabama National’s net income increased by $5.3 million, or 15.0%, to $41.0 million in the year ended December 31, 2003, from $35.7 million for the year ended December 31, 2002. Net income per diluted share increased to $3.17 for the year ended December 31, 2003, as compared to $2.81 recorded for the year ended December 31, 2002. Return on average assets during 2003 was 1.14%, compared with 1.18% during 2002, and return on average equity was 15.89% during 2003, compared with 16.01% during 2002.

Net interest income increased $8.1 million, or 7.2%, to $121.0 million in 2003, from $112.8 million in 2002, as interest income increased slightly by $0.5 million and interest expense decreased $7.6 million. The increase in net interest income is attributable to a decrease in the interest rate paid on deposits and other interest bearing liabilities and a $335.5 million increase in average loans to $2.46 billion during 2003, from $2.12 billion in 2002. During 2003, Alabama National was able to continue to decrease the rates paid on deposits as time deposits originated in higher interest rate environments matured and repriced at the current lower rates. Alabama National was able to absorb the effects of falling rates on its earning assets by continued robust growth in its earning assets, particularly loans. The increase in average loans is a result of continued strength in many of the economies in the markets served by Alabama National. In general, loans are Alabama National’s highest yielding earning asset and management continues to emphasize steady loan growth. During 2003, Alabama National also experienced substantial growth in its securities portfolio. Average securities totaled $791.6 million in 2003, compared to $589.3 in 2002. Average interest bearing liabilities increased $471.2 million, to $2.91 billion in 2003. Despite the increase in average interest bearing liabilities, interest expense decreased $7.6 million during

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2003. All categories of average interest-bearing liabilities increased during 2003. The largest increase was in average time deposits. During 2003, the average balance of time deposits increased $154.2 million, to $1.24 billion in 2003, compared to $1.09 billion in 2002. Interest-bearing transaction accounts also increased by $104.8 million during 2003.

Alabama National’s net interest spread and net interest margin were 3.44% and 3.65%, respectively, in 2003, compared to 3.79% and 4.07%, respectively, in 2002. The net interest margin for 2003 was negatively impacted by Federal Reserve Bank rate reductions of 50 basis points in the fourth quarter of 2002 and also by the additional 25 basis point reduction during the second quarter of 2003. Alabama National was able to immediately pass along much of the rate reductions to interest bearing transaction accounts, but time deposits can only reprice to current rates at maturity. In addition, the spread above noninterest bearing deposits declines with any rate reduction because the cost of this liability category does not change but the yield on earning assets reduces with such a rate reduction. See “Net Interest Income.”

Alabama National recorded a provision for loan and lease losses of $5.9 million during 2003, compared to $8.0 million in 2002. Management believes that both loan loss experience and asset quality indicate that the allowance for loan losses is maintained at an adequate level, although there can be no assurance that economic or regulatory factors will not require further increases in the allowance. Alabama National’s allowance for loan and lease losses as a percentage of period-end loans and leases (excluding loans held for sale) was 1.37% at December 31, 2003, compared with 1.49% at December 31, 2002. The allowance for loan and lease losses as a percentage of period-end nonperforming assets was 347.68% at December 31, 2003, compared with 254.49% at December 31, 2002. Alabama National experienced net charge-offs of $3.1 million in 2003, equating to a ratio of net charge-offs to average loans and leases of 0.12%, compared with net charge-offs of $3.8 million in 2002, equating to a ratio of net charge-offs to average loans and leases of 0.18%. See “Provision and Allowance for Loan and Lease Losses.”

Noninterest income, including net securities gains and losses, increased $17.1 million, or 28.0%, to a record $78.3 million in 2003, compared with $61.2 million in 2002. The revenue recorded by the investment services division, securities brokerage and trust division and mortgage division were all record amounts for Alabama National. Total revenue for the investment services division increased $5.1 million, or 37.8%, to $18.7 million in 2003, from $13.6 million in 2002. Total revenue earned from the mortgage division increased $5.4 million, or 50.0%, to $16.3 million in 2003, from $10.9 million in 2002. The securities brokerage and trust division experienced a revenue increase of $2.3 million, or 16.8%, to $15.9 million in 2003, from $13.6 million in 2002. The commissions generated by the insurance division totaled $3.5 million in 2003, compared with $2.8 million recorded in 2002. Service charges on deposit accounts increased by $2.0 million, or 16.6%, to $14.1 million in 2003, from $12.1 million in 2002. Earnings on bank owned life insurance totaled $2.7 million in 2003, compared with $3.0 million in 2002. Noninterest expense increased $18.3 million, or 16.1%, to $131.9 million in 2003, compared with $113.6 million during 2002. For a detailed discussion of these income and expense categories, see “Noninterest Income and Expense.”

Because of an increase in pre-tax income, income tax expense was $20.4 million in 2003, compared to $16.7 million for 2002. The effective tax rate for 2003 was 33.2%, compared to 31.9% for 2002. These effective tax rates are impacted by items of income and expense that are not subject to federal or state taxation. The effective rate in 2003 is higher than 2002 due to higher pre-tax income without a corresponding increase in income items not subject to federal or state taxation.

Year ended December 31, 2002, compared with year ended December 31, 2001

Alabama National’s net income increased by $7.3 million, or 25.6%, to $35.7 million in the year ended December 31, 2002, from $28.4 million for the year ended December 31, 2001. Return on average assets during 2002 was 1.18%, compared with 1.12% during 2001, and return on average equity was 16.01% during 2002, compared with 15.40% during 2001.

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Net interest income increased $23.7 million, or 26.6%, to $112.8 million in 2002, from $89.1 million in 2001, as interest income decreased by $1.4 million and interest expense decreased $25.1 million. The increase in net interest income is attributable to a decrease in the interest rate paid on deposits and a $311.1 million increase in average loans to $2.12 billion during 2002, from $1.81 billion in 2001. The increase in average loans is a result of continued management emphasis on loan growth and continued strength in some of the economies in the markets served by Alabama National. In general, loans are Alabama National’s highest yielding earning asset. Alabama National also experienced growth in its securities portfolio that contributed to the increase in net interest income in 2002. Average securities totaled $589.3 million in 2002, compared to $449.9 in 2001. Average interest bearing liabilities increased $394.1 million, to $2.44 billion in 2002. Despite the increase in average interest bearing liabilities, interest expense decreased $25.1 million during 2002. All categories of average interest-bearing liabilities increased during 2002. Average time deposits increased $140.0 million, to $1.09 billion in 2002, compared to $948.2 million in 2001. The interest rate paid on time deposits decreased 209 basis points to 3.59% in 2002. Also, average interest-bearing transaction accounts and savings and money market deposits increased a combined $153.1 million while the rate paid on these types of accounts decreased 139 basis points.

Alabama National’s net interest spread and net interest margin were 3.79% and 4.07%, respectively, in 2002, compared to 3.33% and 3.83%, respectively, in 2001. The increased net interest margin during 2002 is due to Alabama National’s ability to reprice most of its time deposits at lower rates during 2002. The Federal Reserve Bank reduced rates repeatedly during 2001, causing the rates paid on time deposits originated in higher interest rate environments to be significantly above current rates. As those time deposits matured, the funds either moved into transaction type deposit accounts or into other time deposit accounts at the lower current rates. The result is that the rate paid on interest-bearing liabilities decreased 175 basis points while the rate earned on earning assets decreased by only 129 basis points. See “Net Interest Income.”

Alabama National recorded a provision for loan and lease losses of $8.0 million during 2002, compared to $3.9 million in 2001. Management believes that both loan loss experience and asset quality indicate that the allowance for loan losses is maintained at an adequate level, although there can be no assurance that economic or regulatory factors will not require further increases in the allowance. Alabama National’s allowance for loan and lease losses as a percentage of period-end loans and leases (excluding loans held for sale) was 1.49% at December 31, 2002, compared with 1.45% at December 31, 2001. The allowance for loan and lease losses as a percentage of period-end nonperforming assets was 254.49% at December 31, 2002, compared with 308.55% at December 31, 2001. Alabama National experienced net charge-offs of $3.8 million in 2002, equating to a ratio of net charge-offs to average loans and leases of 0.18%, compared with net charge-offs of $1.7 million in 2001, equating to a ratio of net charge-offs to average loans and leases of 0.09%. See “Provision and Allowance for Loan and Lease Losses.”

Noninterest income, including net securities gains and losses, increased $12.5 million, or 25.6%, to $61.2 million in 2002, compared with $48.7 million in 2001. Each component of noninterest income experienced increases during 2002, except for investment services income which had a slight decrease. The most significant increases were recorded in service charge income, the securities and trust division, and the mortgage division. Total revenue earned from the mortgage division increased $3.4 million, or 46.1%, to $10.9 million in 2002, from $7.4 million in 2001. The securities brokerage and trust division experienced a revenue increase of $4.8 million, or 54.4%, to $13.6 million in 2002, from $8.8 million in 2001. The commissions generated by the insurance division totaled $2.8 million in 2002, compared with $2.1 million recorded in 2001. Service charges on deposit accounts increased by $2.6 million, or 27.2%, to $12.1 million in 2002, from $9.5 million in 2001. Earnings on bank owned life insurance totaled $3.0 million in 2002, compared with $2.4 million in 2001. Noninterest expense increased $21.3 million, or 23.1%, to $113.6 million in 2002, compared with $92.3 million during 2001. For a detailed discussion of these income and expense categories, see “Noninterest Income and Expense.”

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Alabama National, through two of its subsidiary banks, sponsors two defined benefit pension plans. Each of these plans has been frozen with regard to future benefit accruals and participation by new employees. During 2002, due to the current interest rate environment and poor performance of the equity markets, the discount rate and expected return on plan assets were lowered by management. The discount rate and expected return on plan assets were 6.00% and 7.00%, respectively, for 2002, compared to 6.50% and 9.00%, respectively for 2001. Due to these changes, the pension plans’ obligations exceeded the fair value of the plan assets and Alabama National chose to fully fund the obligations and contributed $1.4 million to the plans. As of December 31, 2002, the fair value of plan assets exceeds the projected and accumulated benefit obligation for each pension plan. See Note 12 to the Consolidated Financial Statements beginning on page F-1 included in this Annual Report on Form 10-K.

Income before the provision for income taxes increased $10.8 million, or 25.9%, to $52.4 million in 2002, from $41.6 million in 2001. Net income totaled $35.7 million in 2002, an increase of $7.3 million, or 25.6%, compared to $28.4 million during 2001.

Net Interest Income

The largest component of Alabama National’s net income is its net interest income—the difference between the income earned on assets and interest paid on deposits and borrowed funds used to support its assets. Net interest income is determined by the yield earned on Alabama National’s earning assets and rates paid on its interest-bearing liabilities, the relative amounts of earning assets and interest-bearing liabilities and the maturity and repricing characteristics of its earning assets and interest-bearing liabilities. Net interest income divided by average earning assets represents Alabama National’s net interest margin.

Average Balances, Income, Expenses and Rates

The following table depicts, on a taxable equivalent basis for the periods indicated, certain information related to Alabama National’s average balance sheet and its average yields on assets and average costs of liabilities. Such yields or costs are derived by dividing income or expense by the average daily balances of the associated assets or liabilities.

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AVERAGE BALANCES, INCOME AND EXPENSES AND RATES

(Amounts in thousands, except yields and rates)

	Year ended December 31,
	2003							2002							2001
	Average Balance			Income/ Expense		Yield/ Rate		Average Balance			Income/ Expense		Yield/ Rate		Average Balance			Income/ Expense		Yield/ Rate
A S S E T S :
Earning assets:
Loans and leases (1)(2)(3)	$	2,459,250		$	146,223	5.95	%	$	2,123,778		$	143,770	6.77	%	$	1,812,715		$	148,239	8.18	%
Securities:
Taxable		758,506			30,359	4.00			558,052			32,116	5.76			420,582			27,593	6.56
Tax exempt (2)		33,104			2,260	6.83			31,216			2,339	7.49			29,340			2,215	7.55
Cash balances in other banks		10,024			98	0.98			9,607			165	1.72			15,137			510	3.37
Funds sold		49,338			635	1.29			45,348			743	1.64			46,630			1,931	4.14
Trading account securities		2,536			94	3.71			2,059			81	3.93			2,021			119	5.89
Total earning assets(2)		3,312,758			179,669	5.42			2,770,060			179,214	6.47			2,326,425			180,607	7.76
Cash and due from banks		95,686							89,935							81,705
Premises and equipment		75,319							66,802							53,716
Other assets		155,386							134,192							97,829
Allowance for loan losses		(35,302	)						(31,183	)						(23,284	)
Total assets	$	3,603,847						$	3,029,806						$	2,536,391
L I A B I L I T I E S :
Interest-bearing liabilities:
Interest-bearing transaction accounts	$	509,343		$	4,376	0.86	%	$	404,587		$	5,228	1.29	%	$	316,004		$	8,166	2.58	%
Savings and money market deposits		471,725			4,359	0.92			391,008			5,457	1.40			326,474			9,355	2.87
Time deposits		1,242,100			33,496	2.70			1,087,937			39,087	3.59			948,242			53,891	5.68
Funds purchased		317,811			3,278	1.03			272,689			4,187	1.54			239,293			8,696	3.63
Other short-term borrowings		80,586			1,431	1.78			78,958			2,246	2.84			42,850			1,842	4.30
Long-term debt		285,456			10,728	3.76			200,686			9,108	4.54			168,857			8,443	5.00
Total interest-bearing liabilities		2,907,021			57,668	1.98			2,435,865			65,313	2.68			2,041,720			90,393	4.43
Demand deposits		382,498							318,724							263,876
Accrued interest and other liabilities		55,980							52,170							46,244
Stockholders' equity		258,348							223,047							184,551
Total liabilities and stockholders' equity	$	3,603,847						$	3,029,806						$	2,536,391
Net interest spread						3.44	%						3.79	%						3.33	%
Net interest income/margin on a taxable equivalent basis				$	122,001	3.68	%				$	113,901	4.11	%				$	90,214	3.88	%
Tax equivalent adjustment (2)					1,038							1,067							1,070
Net interest income/margin				$	120,963	3.65	%				$	112,834	4.07	%				$	89,144	3.83	%

(1) Average loans include nonaccrual loans. All loans and deposits are domestic.

(2) Tax equivalent adjustments are based on the assumed rate of 34%, and do not give effect to the disallowance for Federal income tax purposes of interest expense related to certain tax-exempt assets.

(3) Fees in the amount of $6.1 million, $5.3 million and $4.4 million are included in interest and fees on loans for 2003, 2002, and 2001, respectively.

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During 2003, Alabama National experienced an increase in net interest income of $8.1 million, or 7.2%, to $121.0 million, compared with $112.8 million in 2002. Net interest income increased primarily due to a decrease in the rates paid on interest bearing liabilities and an increase in the volume of average earning assets outstanding. During 2003, as time deposits originated in higher interest rate environments matured, Alabama National was able to reprice these time deposits at current market rates, which were lower due to the Federal Reserve Bank’s rate reductions during the fourth quarter of 2002 and second quarter of 2003. As a result, during 2003 the average rate paid on time deposits was 2.70%, as compared to 2002’s average rate of 3.59%. Each category of interest bearing liabilities experienced a decrease in the average rate during 2003 as compared to 2002, resulting in an overall decrease of 70 basis points in the rate paid on interest bearing liabilities from 2003 to 2002. The Federal Reserve Bank’s rate reductions also impacted the yield earned on interest earning assets. The average yield earned on earning assets decreased 105 basis points to 5.42% during 2003, compared to 6.47% during 2002. The average yield earned on loans decreased 82 basis points to 5.95%, but this decrease in yield was offset by an increase in average volume such that interest income from loans increased $2.5 million, despite the decreased yield. The net interest margin for 2003 was negatively impacted by accelerated repayment on securities owned by Alabama National, as the securities being repaid were at higher interest rates than the rates earned on Federal funds sold and new securities purchased. The average yield earned on securities owned by Alabama National decreased by 173 basis points to 4.12% in 2003, from 5.85% in 2002. During the fourth quarter of 2003, the net interest margin was 3.70%, which was an increase over the second and third quarters of 2003. Management anticipates the net interest margin to remain near current levels absent any rate changes by the Federal Reserve or significant changes in the general interest rate environment.

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Analysis of Changes in Net Interest Income

The following table sets forth, on a taxable equivalent basis, the effect which varying levels of earning assets and interest-bearing liabilities and the applicable rates had on changes in net interest income for 2003 and 2002. For purposes of this table, changes that are not solely attributable to volume or rate are allocated to volume and rate on a pro rata basis.

ANALYSIS OF CHANGES IN NET INTEREST INCOME

(Amounts in thousands)

	December 31,
	2003 Compared to 2002 Variance Due to								2002 Compared to 2001 Variance Due to
	Volume		Yield/Rate			Total			Volume			Yield/Rate			Total
Earning assets:
Loans and leases	$	21,102	$	(18,649	)	$	2,453		$	23,272		$	(27,741	)	$	(4,469	)
Securities:
Taxable		9,665		(11,422	)		(1,757	)		8,195			(3,672	)		4,523
Tax exempt		136		(215	)		(79	)		142			(18	)		124
Cash balances in other banks		7		(74	)		(67	)		(147	)		(198	)		(345	)
Funds sold		61		(169	)		(108	)		(52	)		(1,136	)		(1,188	)
Trading account securities		18		(5	)		13			2			(40	)		(38	)
Total interest income		30,989		(30,534	)		455			31,412			(32,805	)		(1,393	)
Interest-bearing liabilities:
Interest-bearing transaction accounts		1,149		(2,001	)		(852	)		1,873			(4,811	)		(2,938	)
Savings and money market deposits		998		(2,096	)		(1,098	)		1,587			(5,485	)		(3,898	)
Time deposits		5,010		(10,601	)		(5,591	)		7,100			(21,904	)		(14,804	)
Funds purchased		624		(1,533	)		(909	)		1,072			(5,581	)		(4,509	)
Other short-term borrowings		45		(860	)		(815	)		1,180			(776	)		404
Long-term debt		3,377		(1,757	)		1,620			1,491			(826	)		665
Total interest expense		11,203		(18,848	)		(7,645	)		14,303			(39,383	)		(25,080	)
Net interest income on a taxable equivalent basis	$	19,786	$	(11,686	)		8,100		$	17,109		$	6,578			23,687
Taxable equivalent adjustment							29									3
Net interest income						$	8,129								$	23,690

Interest Sensitivity and Market Risk

Interest Sensitivity

Alabama National monitors and manages the pricing and maturity of its assets and liabilities in order to diminish the potential adverse impact that changes in interest rates could have on net interest income. The principal monitoring technique employed by Alabama National is simulation analysis, which technique is augmented by “gap” analysis.

In simulation analysis, Alabama National reviews each individual asset and liability category and their projected behavior in various different interest rate environments. These projected behaviors are based upon management’s past experiences and upon current competitive environments, including the various environments in the different markets in which Alabama National competes. Using this projected behavior and differing rate scenarios as inputs, the simulation analysis generates as output projections of net interest income. Alabama National also periodically verifies the validity of this approach by comparing actual results with those that were projected in previous models. See “—Market Risk.”

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Another technique used by Alabama National in interest rate management is the measurement of the interest sensitivity “gap,” which is the positive or negative dollar difference between assets and liabilities that are subject to interest rate repricing within a given period of time. Interest rate sensitivity can be managed by repricing assets and liabilities, selling securities available for sale or trading securities, replacing an asset or liability at maturity or by adjusting the interest rate during the life of an asset or liability.

Alabama National evaluates interest sensitivity risk and then formulates guidelines regarding asset generation and repricing, and sources and prices of off-balance sheet commitments in order to decrease interest sensitivity risk. Alabama National uses computer simulations to measure the net income effect of various interest rate scenarios. The modeling reflects interest rate changes and the related impact on net income over specified periods of time.

The following table illustrates Alabama National’s interest rate sensitivity at December 31, 2003, assuming the relevant assets and liabilities are collected and paid, respectively, based upon historical experience rather than their stated maturities.

INTEREST SENSITIVITY ANALYSIS

(Amounts in thousands, except ratios)

	December 31, 2003
	Within One Month			After One Through Three Months			After Three Through Twelve Months			Within One Year			One Through Three Years			Greater Than Three Years			Total
A S S E T S :
Earning assets:
Loans and leases(1)	$	1,425,933		$	221,007		$	394,743		$	2,041,683		$	378,716		$	245,639		$	2,666,038
Securities(2)		58,600			123,695			128,969			311,264			184,147			296,596			792,007
Trading securities		109			—			—			109			—			—			109
Interest-bearing deposits in other banks		10,019			—			—			10,019			—			—			10,019
Funds sold		16,534			—			—			16,534			—			—			16,534
Total interest-earning assets	$	1,511,195		$	344,702		$	523,712		$	2,379,609		$	562,863		$	542,235		$	3,484,707
L I A B I L I T I E S :
Interest-bearing liabilities:
Interest-bearing deposits:
Demand deposits	$	244,432		$	—		$	—		$	244,432		$	—		$	284,334		$	528,766
Savings and money market deposits		277,069			—			—			277,069			—			244,371			521,440
Time deposits(3)		156,331			202,291			627,788			986,410			215,626			96,752			1,298,788
Funds purchased		358,393			—			—			358,393			—			—			358,393
Short-term borrowings(4)		37,581			—			5,000			42,581			—			—			42,581
Long-term debt		160,427			88,000			28,000			276,427			21,000			35,000			332,427
Total interest-bearing liabilities	$	1,234,233		$	290,291		$	660,788		$	2,185,312		$	236,626		$	660,457		$	3,082,395
Period gap	$	276,962		$	54,411		$	(137,076	)	$	194,297		$	326,237		$	(118,222	)
Cumulative gap	$	276,962		$	331,373		$	194,297		$	194,297		$	520,534		$	402,312		$	402,312
Ratio of cumulative gap to total interest-earning assets		7.95	%		9.51	%		5.58	%		5.58	%		14.94	%		11.55	%

(1) Excludes nonaccrual loans of $9.8 million

(2) Excludes investment in equity securities with a fair market value of $18.2 million

(3) Excludes matured certificates which have not been redeemed by the customer and on which no interest is accruing.

(4) Includes treasury, tax and loan accounts of $1.4 million

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Alabama National generally benefits from increasing market rates of interest when it has an asset-sensitive gap (a positive number) and generally benefits from decreasing market interest rates when it is liability sensitive (a negative number). As shown in the table above, Alabama National is asset sensitive on a cumulative basis throughout the one year time frame, although it is liability sensitive during the three through twelve month period. Alabama National is also asset sensitive during the one through three year time frame and liability sensitive in the greater than three years period, although it remains asset sensitive on a cumulative basis throughout all periods. The current asset sensitive position is similar to the 2002 year-end interest sensitivity analysis. The analysis presents only a static view of the timing and repricing opportunities, without taking into consideration that changes in interest rates do not affect all assets and liabilities equally. For example, rates paid on a substantial portion of core deposits may change contractually within a relatively short time frame, but those are viewed by management as significantly less interest sensitive than market-based rates such as those paid on non-core deposits. For this and other reasons, management relies more upon the simulation analysis (as noted above) in managing interest rate risk. Net interest income may be impacted by other significant factors in a given interest rate environment, including changes in the volume and mix of earning assets and interest-bearing liabilities.

Market Risk

Alabama National’s earnings are dependent, to a large degree, on its net interest income which is the difference between interest income earned on all earning assets, primarily loans and securities, and interest paid on all interest bearing liabilities, primarily deposits. Market risk is the risk of loss from adverse changes in market prices and rates. Alabama National’s market risk arises primarily from inherent interest rate risk in its lending, investing and deposit gathering activities. Alabama National seeks to reduce its exposure to market risk through actively monitoring and managing its interest rate risk. Management relies upon static “gap” analysis to determine the degree of mismatch in the maturity and repricing distribution of interest earning assets and interest bearing liabilities which quantifies, to a large extent, the degree of market risk inherent in Alabama National’s balance sheet. Gap analysis is further augmented by simulation analysis to evaluate the impact of varying levels of prevailing interest rates and the sensitivity of specific earning assets and interest bearing liabilities to changes in those prevailing rates. Simulation analysis consists of evaluating the impact on net interest income given changes from 200 basis points below (adjusted in the current period due to historically low interest rates) to 200 basis points above the current prevailing rates. Management makes certain assumptions as to the effect varying levels of interest rates have on certain earning assets and interest bearing liabilities, which assumptions consider both historical experience and consensus estimates of outside sources.

With respect to the primary earning assets, loans and securities, certain features of individual types of loans and specific securities introduce uncertainty as to their expected performance at varying levels of interest rates. In some cases, prepayment options exist whereby the borrower may elect to repay the obligation at any time. These prepayment options make anticipating the performance of those instruments difficult given changes in prevailing rates. At December 31, 2003, mortgage backed securities with a carrying value of $406.2 million, or 10.6% of total assets, and essentially every loan and lease, net of unearned income, (totaling $2.66 billion, or 69.6% of total assets), carried such prepayment options. Management believes that assumptions used in its simulation analysis about the performance of financial instruments with such prepayment options are appropriate. However, the actual performance of these financial instruments may differ from management’s estimates due to several factors, including the diversity and financial sophistication of the customer base, the general level of prevailing interest rates and the relationship to their historical levels, and general economic conditions. The difference between those assumptions and actual results, if significant, could cause the actual results to differ from those indicated by the simulation analysis.

Deposits totaled $2.75 billion, or 72.1%, of total assets at December 31, 2003. Since deposits are the primary funding source for earning assets, the associated market risk is considered by management in its simulation analysis. Generally, it is anticipated that deposits will be sufficient to support funding requirements. However, the rates paid for deposits at varying levels of prevailing interest rates have a significant impact on net

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interest income and therefore, must be quantified by Alabama National in its simulation analysis. Specifically, Alabama National’s spread, the difference between the rates earned on earning assets and rates paid on interest bearing liabilities, is generally higher when prevailing rates are higher. As prevailing rates reduce, the spread tends to compress, with severe compression at very low prevailing interest rates. This characteristic is called “spread compression” and adversely affects net interest income in the simulation analysis when anticipated prevailing rates are reduced from current rates. Management relies upon historical experience to estimate the degree of spread compression in its simulation analysis. Management believes that such estimates of possible spread compression are reasonable. However, if the degree of spread compression varies from that expected, the actual results could differ from those indicated by the simulation analysis.

The following tables illustrate the results of simulation analysis used by Alabama National to determine the extent to which market risk would affect net interest margin for the next twelve months if prevailing interest rates increased or decreased the specified amounts from current rates. Due to the current low interest rate environment, Alabama National has elected to model interest rate decreases of 25 and 50 basis points. (This would equate to federal funds rates of 0.75% and 0.50%, respectively.) As of year-end 2002, management did not prepare a scenario that decreased current rates by 50 basis points so the comparable scenario is not available for 2002. The current rates paid on interest-bearing accounts cannot decrease below zero, yet rates earned on loans can experience a decrease in the falling rate scenarios, and the interest rate spread would therefore compress. As noted above, however, management does not anticipate having the ability to reduce liability costs as successfully as if it were to experience a rate cut of a greater magnitude. As also noted above, this model uses estimates and assumptions in both balance sheet growth and asset and liability account rate reactions to changes in prevailing interest rates. Because of the inherent use of these estimates and assumptions in the simulation model used to derive this market risk information, the actual results of the future impact of market risk on Alabama National’s net interest margin may differ from that found in the tables.

MARKET RISK

(Amounts in thousands)

Change in Prevailing Interest Rates(1)	Year ended December 31, 2003
	Net Interest Income Amount		Change from Income Amount
+200 basis points	$	150,671	8.72	%
+100 basis points		144,794	4.48
0 basis points		138,592	—
-25 basis points		137,755	(0.60	)
-50 basis points		136,300	(1.65	)
Change in Prevailing Interest Rates(1)	Year ended December 31, 2002
	Net Interest Income Amount		Change from Income Amount
+200 basis points	$	132,477	9.85	%
+100 basis points		126,884	5.21
0 basis points		120,599	—
-25 basis points		119,609	(0.82	)
-100 basis points		107,155	(11.15	)
-200 basis points		100,608	(16.58	)

(1) Assumes an immediate and parallel rate change of this magnitude.

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Provision and Allowance for Loan and Lease Losses

Alabama National has policies and procedures for evaluating the overall credit quality of its loan and lease portfolio including timely identification of potential problem credits. On a monthly basis, management reviews the appropriate level for the allowance for loan and lease losses. This review and analysis is based on the results of the internal monitoring and reporting system, analysis of economic conditions in its markets and a review of historical statistical data, current trends regarding the volume and severity of past due and problem loans and leases, the existence and effect of concentrations of credit, and changes in national and local economic conditions for both Alabama National and other financial institutions. Management also considers in its evaluation of the adequacy of the allowance for loan and lease losses the results of regulatory examinations conducted for each Bank, including evaluation of Alabama National’s policies and procedures and findings from Alabama National’s independent loan review department.

The provision for loan and lease losses decreased by $2.0 million, or 25.5%, to $5.9 million in 2003, from $8.0 million in 2002. The decreased provision expense during 2003 is attributable to a reduction in net charge-offs during 2003 and also a reduction in total nonperforming assets. During 2003, net charge-offs decreased $0.7 million, or 18.6% to $3.1 million, compared to $3.8 million in 2002. As of December 31, 2003, nonperforming assets totaled $10.5 million, a $2.3 million decrease from year-end 2002 levels.

Management’s periodic evaluation of the adequacy of the allowance for loan and lease losses is based on Alabama National’s past loan and lease loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrowers’ ability to repay, estimated value of any underlying collateral, and an analysis of current economic conditions. Management believes the allowance for loan and lease losses, at its current level, adequately covers Alabama National’s exposure to loan and lease losses. While management believes that it has established the allowance in accordance with accounting principles generally accepted in the United States of America and has taken into account the views of its regulators and the current economic environment, there can be no assurance that in the future Alabama National’s regulators or its economic environment will not require further increases in the allowance.

A loan is impaired when, based on current information and events, it is probable that Alabama National will be unable to collect all amounts due according to the contractual terms of the loan agreement. Impaired loans are measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate, or as a practical expedient, at the loan’s observable market price or the fair value of the collateral if the loan is collateral-dependent. When the fair value of the impaired loan is less than the recorded investment in the loan, the impairment is recorded through a specific reserve allocation which is a component of the allowance for loan and lease losses.

Additions to the allowance for loan and lease losses, which are expensed as the provision for loan and lease losses on Alabama National’s income statement, are made periodically to maintain the allowance for loan and lease losses at an appropriate level as determined by management. Loan and lease losses and recoveries are charged or credited directly to the allowance for loan and lease losses.

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The following table presents the information associated with Alabama National’s allowance and provision for loan and lease losses for the dates indicated.

ALLOWANCE FOR LOAN AND LEASE LOSSES

(Amounts in thousands, except percentages)

	Year ended December 31,
	2003			2002			2001			2000			1999
Total loans and leases outstanding at end of period, net of unearned income(1)	$	2,659,440		$	2,191,394		$	1,964,169		$	1,710,810		$	1,403,489
Average amount of loans and leases outstanding, net of unearned income(1)	$	2,459,250		$	2,092,829		$	1,790,083		$	1,571,760		$	1,264,689
Allowance for loan and lease losses at beginning of period	$	32,704		$	28,519		$	22,368		$	19,111		$	17,465
Charge-offs:
Commercial, financial and agricultural		3,535			1,573			1,875			397			215
Real estate—mortgage		1,426			1,463			730			145			403
Consumer		858			3,200			754			884			694
Total charge-offs		5,819			6,236			3,359			1,426			1,312
Recoveries:
Commercial, financial and agricultural		821			991			949			167			188
Real estate—mortgage		478			754			226			228			348
Consumer		1,452			720			517			382			315
Total recoveries		2,751			2,465			1,692			777			851
Net charge-offs		3,068			3,771			1,667			649			461
Provision for loan and lease losses		5,931			7,956			3,946			2,506			2,107
Additions to allowance through acquisition		995			—			3,872			1,400			—
Allowance for loan and lease losses at period-end	$	36,562		$	32,704		$	28,519		$	22,368		$	19,111
Allowance for loan and lease losses to period-end loans(1)		1.37	%		1.49	%		1.45	%		1.31	%		1.36	%
Net charge-offs to average loans and leases(1)		0.12			0.18			0.09			0.04			0.04

(1) Does not include loans held for sale.

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Allocation of Allowance for Loan and Lease Losses

While no portion of the allowance is in any way restricted to any individual loan or group of loans and the entire allowance is available to absorb losses from any and all loans, the following table represents management’s allocation of the allowance for loan and lease losses to the specific loan categories.

	2003		2002
Commercial and financial	$	3,233	$	4,039
Real estate construction		5,715		4,421
Real estate residential mortgage		6,727		6,311
Real estate commercial mortgage		10,476		7,418
Consumer		993		1,341
Lease financing receivables		2,764		1,318
Other		1,345		1,398
Unallocated		5,309		6,458
Total allowance for loan and lease losses	$	36,562	$	32,704

Nonperforming Assets

The following table presents Alabama National’s nonperforming assets for the dates indicated.

NONPERFORMING ASSETS

(Amounts in thousands, except percentages)

	At December 31,
	2003			2002			2001			2000			1999
Nonaccrual loans	$	9,817		$	10,282		$	7,563		$	3,642		$	4,428
Restructured loans		—			—			—			—			5
Loans past due 90 days or more and still accruing		—			—			—			—			—
Total nonperforming loans		9,817			10,282			7,563			3,642			4,433
Other real estate owned		699			2,569			1,680			1,468			867
Total nonperforming assets	$	10,516		$	12,851		$	9,243		$	5,110		$	5,300
Allowance for loan and lease losses to period-end loans(1)		1.37	%		1.49	%		1.45	%		1.31	%		1.36	%
Allowance for loan and lease losses to period-end nonperforming loans		372.44			318.07			377.09			614.17			431.11
Allowance for loan and lease losses to period-end nonperforming assets.		347.68			254.49			308.55			437.73			360.58
Net charge-offs to average loans and leases(1)		0.12			0.18			0.09			0.04			0.04
Nonperforming assets to period-end loans and leases and foreclosed property(1)		0.40			0.59			0.47			0.30			0.38
Nonperforming loans and leases to period-end loans(1)		0.37			0.47			0.39			0.21			0.32

(1) Does not include loans held for sale.

Accrual of interest is discontinued on a loan when management believes, after considering economic and business conditions and collection efforts, that the borrower’s financial condition is such that collection of interest is doubtful. In addition to consideration of these factors, Alabama National has a consistent and continuing policy of placing all loans on nonaccrual status if they become 90 days or more past due. When a loan is placed on nonaccrual status, all interest which is accrued on the loan is reversed and deducted from earnings as a reduction of reported interest. No additional interest is accrued on the loan balance until collection of both

33

principal and interest becomes reasonably certain. When a problem loan is finally resolved, there may ultimately be an actual writedown or charge-off of the principal balance of the loan which would necessitate additional charges to the allowance for loan and lease losses. During the years ending December 31, 2003, 2002 and 2001, approximately $474,000, $540,000 and $406,000, respectively, in additional interest income would have been recognized in earnings if Alabama National’s nonaccrual loans had been current in accordance with their original terms.

Total nonperforming assets decreased $2.3 million, to $10.5 million at December 31, 2003, from $12.9 million at December 31, 2002. Other real estate owned decreased $1.9 million due to the sale of a substantial piece of other real estate during 2003. The allowance for loan and lease losses to period-end nonperforming assets was 347.68% at December 31, 2003, compared with 254.49% at December 31, 2002. This ratio will generally fluctuate from period to period depending upon nonperforming asset levels at period end.

Potential Problem Loans

A potential problem loan is one that management has concerns regarding the borrower’s future performance under terms of the loan contract. These loans are current as to principal and interest, and accordingly, they are not included in the nonperforming asset categories. Management monitors these loans closely in order to ensure that Alabama National’s interests are protected. At December 31, 2003, Alabama National had certain loans considered by management to be potential problem loans totaling $46.4 million, as compared with $50.3 million at December 31, 2002. Alabama National believes early identification of potential problem loans is an important factor in its ability to successfully collect such loans. As such, it encourages early identification of potential problem loans both with its loan officers and loan review staff. The level of potential problem loans is factored into the determination of the adequacy of the allowance for loan and lease losses.

Noninterest Income and Expense

Noninterest income

Alabama National relies on five distinct product lines for the production of recurring noninterest income: (1) traditional retail and commercial banking, (2) mortgage banking, (3) securities brokerage and trust services, (4) investment services, and (5) insurance services. Combined revenue associated with Alabama National’s five product lines totaled $68.4 million in 2003, compared with $52.9 million in 2002, an increase of $15.5 million, or 29.3%. An analysis of this increase is provided below.

The following table sets forth, for the periods indicated, the principal components of noninterest income.

NONINTEREST INCOME

(Amounts in thousands)

	Year ended December 31,
	2003		2002		2001
Service charges on deposit accounts	$	14,091	$	12,081	$	9,497
Investment services income		18,710		13,576		13,717
Securities brokerage and trust income		15,867		13,590		8,800
Origination and sale of mortgage loans		16,289		10,860		7,431
Insurance commissions		3,477		2,837		2,126
Bank owned life insurance		2,747		3,018		2,412
Securities gains		46		35		246
Other		7,077		5,167		4,478
Total noninterest income	$	78,304	$	61,164	$	48,707

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Service charges on deposit accounts increased $2.0 million to $14.1 million during 2003, a 16.6% increase over 2002’s total of $12.1 million. The increase for 2003 is attributable to an increased number of transaction accounts due to recent branch expansions, new accounts at existing branches, and increased fee-generating activity by customers. Also impacting 2003 totals is the June 2003 acquisition of Millennium Bank, which recorded service charge income of $279,000 during 2003. During the 2003 third quarter, other noninterest income includes $799,000 of income resulting from the liquidation and sale of a mutual insurance company in which Alabama National had been a policy holder. The other components of noninterest income will be discussed in more detail in “Segment Information.”

Noninterest Expense

The following table sets forth, for the periods indicated, the principal components of noninterest expense.

NONINTEREST EXPENSE

(Amounts in thousands)

	Year ended December 31,
	2003		2002		2000
Salaries and employee benefits	$	64,826	$	57,687	$	45,329
Commission based compensation		22,182		16,498		12,868
Occupancy and equipment expense, net		12,886		11,603		9,722
Amortization of goodwill		—		—		518
Amortization of other intangibles		1,041		832		627
Advertising		1,628		1,637		1,254
Banking assessments		943		785		771
Data processing expenses		1,759		1,596		1,562
Legal and professional fees		3,701		3,602		3,331
Postage and courier services		2,333		2,140		1,776
Supplies and printing		2,527		2,329		1,926
Telephone		1,754		1,435		1,224
Penalty on long-term debt repayment		822		—		—
Other		15,462		13,433		11,325
Total noninterest expense	$	131,864	$	113,577	$	92,233

Noninterest expense increased $18.3 million, or 16.1%, to $131.9 million in 2003, from $113.6 million in 2002. Salaries and employee benefits increased $7.1 million, or 12.4%, in 2003. The 2003 amount includes the salaries and employee benefit expense for Millennium Bank, totaling $1.2 million, which was acquired during the second quarter of 2003 and accounted for as a purchase transaction. Also contributing to the increase in salaries and employee benefits were general staffing increases concurrent with expansion of offices and business lines, increases in health insurance costs, and increases in 401(k) matching expenses. Performance based (or bonus) compensation increases in the salaries and employee benefits category were also higher in the 2003 due to the achievement of higher performance levels at virtually all of the Alabama National’s operating units. Commission based compensation increased $5.7 million, or 34.5%, in 2003. The increase in commission based compensation during 2003 is attributable to increased production in the mortgage division, securities brokerage and trust divisions and the investment services division, as a significant portion of the compensation in these divisions is production based. Net occupancy expense increased $1.3 million, or 11.1%, in 2003. The increase in 2003 is attributable to six full service branches and one limited service branch opened by Alabama National’s Banks during the latter part of 2002, expanded space needs for certain other operations, plus the effects of the purchase of Millennium Bank in June 2003. During the 2003 third quarter, Alabama National elected to prepay certain borrowings that carried relatively high interest rates from the Federal Home Loan Bank of Atlanta and incur the associated prepayment penalty in the pre-tax amount of $822,000.

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Segment Information

In addition to traditional commercial and consumer retail banking products, Alabama National offers investment services, securities brokerage and trust services, mortgage lending services and insurance services to its customers. Please refer to Note 19 to Alabama National’s consolidated financial statements included in this annual report for disclosures related to Alabama National’s operating segments. The results of the operating segments include certain income and expense items that are allocated by management to the operating segments. Further, the results of each operating segment are not necessarily the same as would be expected if these activities were conducted by a stand-alone entity because certain corporate overhead expenses are not allocated directly to each operating segment.

Investment Services

The following table sets forth, for the periods indicated, the summary of operations for the investment services division of Alabama National:

INVESTMENT SERVICES DIVISION

(Amounts in thousands)

	Year ended December 31,
	2003		2002		2001
Investment services revenue	$	18,710	$	13,576	$	13,717
Expenses and allocated charges		12,645		9,828		10,334
Net investment services income	$	6,065	$	3,748	$	3,383

National Bank of Commerce of Birmingham operates an investment department devoted primarily to handling correspondent banks’ investment needs. Investment services revenue consists primarily of commission income from the sale of fixed income securities to correspondent banks. A small portion of investment services revenue is generated from fee based services including asset/liability consulting, bond accounting and security safekeeping. Investment services revenue increased substantially to $18.7 million during 2003, from $13.6 million in 2002. The revenue recorded by the investment division during 2003 represents the highest revenue recorded for this division, exceeding the previous record year 2001 by $5.0 million. The revenue generated by the investment division is dependent upon the demand for fixed income securities by its customers, which are primarily correspondent community banks. Demand for these securities during 2003 was high due to increased liquidity of community banks resulting from decreased loan demand and increased cash flow from their existing securities portfolio. Alabama National has also expanded the number of correspondent banks using the services of the investment division. Investment services revenue remained relatively stable during 2002. During 2002, revenue totaled $13.6 million compared to $13.7 million earned during 2001.

Revenue from the investment division is subject to fluctuation caused by a number of factors, including perhaps most prominently the interest rate environment. The environment for this division has been extremely favorable during 2003. However, increases in interest rates from the current level or continued low interest rates will likely cause mortgage refinancing volumes to fall and mortgage-related security prepayments and calls to drop, reducing revenue in the investment division.

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Securities Brokerage and Trust Division

The following table sets forth, for the periods indicated, the summary of operations for the securities brokerage and trust division of Alabama National:

SECURITIES BROKERAGE AND TRUST DIVISION

(Amounts in thousands)

	Year ended December 31,
	2003		2002		2001
Securities brokerage and trust revenue	$	15,867	$	13,590	$	8,800
Interest income		978		1,132		1,858
Total securities brokerage and trust revenue		16,845		14,722		10,658
Interest expense		118		133		407
Expenses and allocated charges		14,983		13,036		8,836
Net securities brokerage and trust income	$	1,744	$	1,553	$	1,415

National Bank of Commerce of Birmingham has a wholly owned subsidiary, NBC Securities, Inc. (“NBC Securities”), that is a full service licensed broker-dealer. The trust department of NBC and NBC Securities manage the assets of both corporate and individual customers located primarily in the markets served by Alabama National. The revenue generated by this division consists primarily of commission income generated from the sale of equity securities and other investment products to individual and corporate customers, from fees paid for assets under management or custody and from fees related to investment consulting work performed for clients. NBC Securities also recognizes interest income from margin loans. Revenue for this division increased $2.3 million, or 16.8%, to $15.9 million in 2003. Revenue for this division increased $4.8 million, or 54.4%, to $13.6 million in 2002. The increase in revenue during both 2003 and 2002 is attributable to continued expansion in the number of customers and total customer assets under management by these departments, as well as an increase in the number of registered representatives. NBC Securities expanded its retail investment platform in 2002 with the addition of several registered representatives and the opening of several new offices during the year and 2003’s continued revenue increase reflected this expansion. Asset management fees recorded by the trust department of NBC and NBC Securities also increased during 2003 as a result of an increase in the total assets managed by these divisions. NBC Securities also benefited from increased customer demand for fixed rate annuity products during 2003 and 2002. The decrease in interest income in both 2003 and 2002 is due to decreased margin loan activity during each year. Consistent with the securities industry in general, NBC Securities had fewer customers using margin loans in 2003 than in 2002 and 2001. The additional registered representatives and new offices opened and variable overhead combined with higher commission expense on the higher revenue base led to an increase in the expenses and allocated charges for this division in 2003.

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Mortgage Lending Division

The following table sets forth, for the periods indicated, the summary of operations for the mortgage lending division of Alabama National:

MORTGAGE LENDING DIVISION

(Amounts in thousands)

	Year ended December 31,
	2003		2002		2001
Origination and sale of mortgage loans(1)	$	17,061	$	11,334	$	7,660
Interest income		2,462		1,631		1,117
Total revenue		19,523		12,965		8,777
Expenses and allocated charges		10,929		7,845		5,548
Net mortgage lending division income	$	8,594	$	5,120	$	3,229

(1) Includes intercompany income allocated to mortgage lending division totaling $772,000, $474,000 and $229,000 at December 31, 2003, 2002 and 2001, respectively.

Fees earned in connection with the origination and resale of mortgages increased $5.7 million, or 50.5%, to $17.1 million, from $11.3 million in 2002. During 2002, fees earned in connection with the origination and resale of mortgages increased $3.7 million, or 48.0%, to $11.3 million, from $7.7 million in 2001. The increased revenue for both 2003 and 2002 is primarily a result of historically low interest rates and the impact that the interest rate environment has on mortgage origination and refinancing activity. Expenses and allocated charges totaled $10.9 million and $7.8 million during 2003 and 2002, respectively. The increase is due to higher commission compensation and other expenses associated with a greater volume of origination activity.

Revenue from the mortgage lending division is subject to fluctuation caused by a number of factors, including perhaps most prominently the interest rate environment. The environment for this division has been extremely favorable during 2003. Increases in interest rates from the current level or continued low interest rates will likely cause mortgage refinancing volumes to decrease from 2002 and 2003 record levels, reducing revenue from the mortgage lending division.

Insurance Services Division

The following table sets forth, for the periods indicated, a summary of operations for the insurance services division of Alabama National:

INSURANCE SERVICES DIVISION

(Amounts in thousands)

	Year ended December 31,
	2003		2002			2001
Commission income	$	3,477	$	2,837		$	2,126
Other income		—		—			5
Total revenue		3,477		2,837			2,131
Expenses and allocated charges		3,298		2,870			2,113
Net insurance division income	$	179	$	(33	)	$	18

Commission income earned from the sale of insurance products increased $0.7 million, or 22.6 %, to $3.5 million, from $2.8 million during 2002. During the 2002 third quarter, Alabama National purchased two small insurance agencies and 2003’s results benefited from these acquisitions in addition to the continued expansion of the network of salesmen in many of the markets served by Alabama National. This expansion has resulted in increased expenses as new employees are hired and trained and as distribution networks are established. In

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addition, amortization of the intangible assets created in these acquisitions totaled $291,000 in 2003. During 2003, the insurance division began to see some of the results of recent expansions through increased revenue and a modest pre-tax income for 2003.

Earning Assets

Loans and Leases

Loans and leases are the largest category of earning assets and typically provide higher yields than the other types of earning assets. Associated with the higher loan yields are the inherent credit and liquidity risks which management attempts to control and counterbalance. Total loans and leases averaged $2.46 billion in 2003, compared to $2.12 billion in 2002, an increase of $335.5 million, or 15.8%. At December 31, 2003, total loans and leases, net of unearned income, were $2.66 billion, compared to $2.19 billion at the end of 2002, an increase of $468.0 million, or 21.4%. Excluding the loans acquired in the Millennium acquisition, which totaled $70.2 million, loans increased 18.2%.

The growth in Alabama National’s loan and lease portfolio is attributable to Alabama National’s ability to attract new customers while maintaining consistent underwriting standards. Loan growth is also impacted by general economic conditions that may result in increased loan demand from existing customers. The following table details the composition of the loan portfolio by category at the dates indicated.

COMPOSITION OF LOAN AND LEASE PORTFOLIO

(Amounts in thousands, except percentages)

	December 31,
	2003					2002					2001					2000					1999
	Amount			Percent of Total		Amount			Percent of Total		Amount			Percent of Total		Amount			Percent of Total		Amount			Percent of Total
Commercial and financial	$	265,923		9.99	%	$	253,569		11.56	%	$	247,613		12.59	%	$	275,107		16.07	%	$	268,829		19.14	%
Real estate:
Construction		530,024		19.91			311,259		14.19			231,369		11.76			185,814		10.85			154,023		10.96
Mortgage—residential		676,658		25.42			616,651		28.11			546,730		27.80			490,152		28.63			392,986		27.98
Mortgage—commercial		814,904		30.61			699,403		31.88			637,575		32.42			498,858		29.14			396,312		28.21
Mortgage—other		9,412		.35			5,672		.26			5,645		.29			4,238		.25			4,284		.30
Consumer		74,137		2.78			78,342		3.57			82,909		4.22			79,458		4.64			76,150		5.42
Lease financing receivables		77,857		2.92			80,113		3.65			73,924		3.76			58,668		3.43			22,046		1.57
Securities brokerage margin loans		15,407		.58			14,502		.66			16,302		.83			29,901		1.75			22,551		1.61
Other		198,036		7.44			134,191		6.12			124,564		6.33			89,700		5.24			67,517		4.81
Total gross loans and leases		2,662,358		100.00	%		2,193,702		100.00	%		1,966,631		100.00	%		1,711,896		100.00	%		1,404,698		100.00	%
Unearned income		(2,918	)				(2,308	)				(2,462	)				(1,086	)				(1,209	)
Total loans and leases, net of unearned income(1)		2,659,440					2,191,394					1,964,169					1,710,810					1,403,489
Allowance for loan and lease losses		(36,562	)				(32,704	)				(28,519	)				(22,368	)				(19,111	)
Total net loans and leases(1)	$	2,622,878				$	2,158,690				$	1,935,650				$	1,688,442				$	1,384,378

(1) Does not include loans held for sale.

In the context of this discussion, a “real estate mortgage loan” is defined as any loan, other than loans for construction purposes, secured by real estate, regardless of the purpose of the loan. It is common practice for financial institutions in Alabama National’s market areas, and for Alabama National in particular, to obtain a security interest or lien in real estate whenever possible, in addition to any other available collateral. This collateral is taken to reinforce the likelihood of the ultimate repayment of the loan and tends to increase the magnitude of the real estate loan portfolio component.

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The principal component of Alabama National’s loan portfolio is real estate mortgage loans. At year-end 2003, this category totaled $1.50 billion and represented 56.4% of the total loan portfolio, compared to $1.32 billion, or 60.3% of the total loan portfolio at year-end 2002.

Residential mortgage loans increased $60.0 million, or 9.7%, to $676.7 million at December 31, 2003, compared with $616.7 million at December 31, 2002. Commercial mortgage loans increased $115.5 million, or 16.5%, to $814.9 million at December 31, 2003. Increases in both of these categories of loans are primarily the result of Alabama National’s expertise in and appetite for these commercial and residential real estate loans. In addition, the general economic conditions in Alabama National’s markets, which generate such lending opportunities, are partially responsible for this growth.

Real estate construction loans increased $218.8 million, or 70.3%, to $530.0 million at December 31, 2003, compared with $311.3 million at December 31, 2002. Alabama National’s focus on the home construction market and strong commercial construction activity in markets it serves led to this increase.

Consumer loans, lease financing receivables and margin loan balances were relatively flat from December 31, 2003 as compared with 2002 year-end totals.

The repayment of loans is a source of additional liquidity for Alabama National. The following table sets forth Alabama National’s loans maturing within specific intervals at December 31, 2003.

LOAN MATURITY AND SENSITIVITY TO CHANGES IN INTEREST RATES

(Amounts in thousands)

	December 31, 2003
	One year or less		Over one year Through five Years		Over five years		Total
Commercial, financial and agricultural	$	158,648	$	94,824	$	12,451	$	265,923
Real estate—construction		337,582		162,492		29,950		530,024
Real estate—residential		96,930		183,721		396,007		676,658
Real estate—commercial		96,267		513,579		205,058		814,904
Consumer		26,348		45,424		2,365		74,137

	Predetermined Rates		Floating Rates
Maturing after one year but within five years	$	531,940	$	468,102
Maturing after five years		110,333		535,496
	$	642,273	$	1,003,598

The information presented in the above table is based upon the contractual maturities of the individual loans, including loans which may be subject to renewal at their contractual maturity. Renewal of such loans is subject to review and credit approval, as well as modification of terms upon their maturity. Consequently, management believes this treatment presents fairly the maturity and repricing structure of the loan portfolio.

Securities

Securities, including securities classified as held to maturity (or investment securities) and available for sale, represent a significant portion of Alabama National’s earning assets. Securities averaged $791.6 million during 2003, compared with $589.3 million during 2002, an increase of $202.3 million, or 34.3%. Growth in the securities portfolio is generally a function of growth in funding sources net of lending opportunities. During 2003, as loan demand experienced a relative decrease as compared with recent years, Alabama National had excess liquidity with which to purchase securities. Management attempts to maintain earning asset growth commensurate with its funding growth and with its overall growth plans. During 2003, Alabama National experienced increasing liquidity and a reduction in its rate of loan growth and increased the size of the securities portfolio through purchases. At December 31, 2003, the securities portfolio totaled $810.2 million, including securities held to maturity with an amortized cost of $271.0 million and securities available for sale with a market value of $539.2 million.

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The following tables set forth the carrying value of securities held by Alabama National at the dates indicated.

INVESTMENT SECURITIES

(Amounts in thousands)

	December 31,
	2003				2002				2001
	Cost		Market		Cost		Market		Cost		Market
U.S. Treasury securities	$	—	$	—	$	—	$	—	$	—	$	—
U.S. Government corporations and agencies.		23,962		24,012		42,211		42,225		2,252		2,327
State and political subdivisions		1,553		1,603		3,704		3,836		6,460		6,604
Mortgage backed securities		245,520		245,921		309,530		311,751		226,054		225,877
Total	$	271,035	$	271,536	$	355,445	$	357,812	$	234,766	$	234,808

AVAILABLE FOR SALE SECURITIES

(Amounts in thousands)

	December 31,
	2003				2002				2001
	Cost		Market		Cost		Market		Cost		Market
U.S. Treasury securities	$	350	$	351	$	350	$	356	$	599	$	618
U.S. Government corporations and agencies		318,536		317,552		99,861		100,793		25,852		26,687
State and political subdivisions		40,922		42,385		30,754		32,035		28,606		29,003
Mortgage backed securities		160,871		160,684		190,169		192,157		259,761		260,214
Equity		18,220		18,220		19,547		19,547		16,477		16,400
Total	$	538,899	$	539,192	$	340,681	$	344,888	$	331,295	$	332,922

The following tables show the scheduled maturity and average yields of securities owned by Alabama National at December 31, 2003.

INVESTMENT SECURITIES MATURITY DISTRIBUTION AND YIELDS

(Amounts in thousands, except yields)

	December 31, 2003
	Within one year				After one but Within five years				After five but Within ten years				After ten years			Other securities
	Amount		Yield(1)		Amount		Yield(1)		Amount		Yield(1)		Amount		Yield(1)	Amount		Yield(1)
U.S. Treasury securities	$	—			$	—			$	—			$	—		$	—
U.S. Government corporations and agencies						18,962	3.49	%		5,000	4.38	%
State and political subdivisions		340	8.39	%		632	8.33	%		581	7.40	%
Mortgage backed securities		—				—				—				—		$	245,520	4.12	%
Total	$	340	8.39	%	$	19,594	3.65	%	$	5,581	4.69	%	$	—		$	245,520	4.12	%

(1) Computed on a tax-equivalent basis utilizing a 34% tax rate, without giving effect to the disallowance for Federal income tax purposes of interest related to certain tax-exempt assets.

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SECURITIES AVAILABLE FOR SALE MATURITY DISTRIBUTION AND YIELDS

(Amounts in thousands, except yields)

	December 31, 2003
	Within one year				After one but Within five years				After five but Within ten years				After ten years				Other securities
	Amount		Yield(1)		Amount		Yield(1)		Amount		Yield(1)		Amount		Yield(1)		Amount		Yield(1)
U.S. Treasury securities	$	—			$	351	1.60	%	$	—			$	—			$	—
U.S. Government corporations and agencies		6,134	4.17	%		189,690	3.56	%		121,728	4.14	%
State and political subdivisions		1,465	7.34	%		7,964	6.76	%		15,898	6.05	%		17,058	5.75	%
Mortgage backed securities		—				—												160,684	4.32	%
Equity securities		—				—				—				—				18,220	3.50	%
Total	$	7,599	4.78	%	$	198,005	3.69	%	$	137,626	4.36	%	$	17,058	5.75	%	$	178,904	4.24	%

(1) Computed on a tax-equivalent basis utilizing a 34% tax rate, without giving effect to the disallowance for Federal income tax purposes of interest related to certain tax-exempt assets.

At December 31, 2003, mortgage-backed securities consisting of collateralized mortgage obligations and pass-through mortgage obligations had a carrying value totaling $406.2 million. These mortgage-backed securities include $245.5 million classified as investment securities and $160.7 million classified as securities available for sale. Management expects the annual repayment of the underlying mortgages to vary as a result of monthly repayment of principal and/or interest required under terms of the underlying promissory notes. Further, the actual rate of repayment is subject to changes depending upon the terms of the underlying mortgages, the relative level of mortgage interest rates, and the structure of the securities. When relative interest rates decline to levels below that of the underlying mortgages, acceleration of principal repayment is expected as some borrowers on the underlying mortgages refinance to lower rates. When the underlying rates on mortgage loans are comparable to, or in excess of, market rates, repayment more closely conforms to scheduled amortization in accordance with terms of the promissory note with additional repayment as a result of sales of homes collateralizing the mortgage loans constituting the security. Accordingly, management generally expects repayment of the collateralized mortgage obligations over a one to three year period, and repayment of the pass-through mortgage obligations over a two to four year period. These periods have shortened considerably due to the current interest rate environment.

Other attributes of securities are discussed in “Interest Sensitivity and Market Risk.”

Short-Term Investments

Alabama National utilizes overnight investment of funds in federal funds sold and securities purchased under agreements to resell to ensure that adequate liquidity will be maintained, while at the same time minimizing the level of uninvested cash reserves. Short-term investments are also utilized by Alabama National when the level of funds committed to lending and investment portfolio programs changes or the level of deposit generation changes. During 2003, federal funds sold and securities purchased under agreements to resell averaged $49.3 million, compared to $45.3 million during 2002, representing an increase of $4.0 million.

Trading Account Securities

An important aspect of investment department operations, but less so to Alabama National overall, are trading account securities, which represent securities owned by Alabama National prior to sale and delivery to Alabama National’s customers. Trading account securities averaged approximately $2.5 million and $2.0 million in 2003 and 2002, respectively. This small dollar amount reflects management’s policy of limiting positions in such securities to reduce its exposure to market and interest rate changes.

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Deposits and Other Interest-Bearing Liabilities

Average interest-bearing liabilities increased $471.2 million, or 19.3%, to $2.91 billion in 2003, from $2.44 billion in 2002. Average interest-bearing deposits increased $339.6 million, or 18.0%, to $2.22 billion in 2003, from $1.88 billion in 2002. This increase is attributable to competitive rate and product offerings by Alabama National and successful marketing efforts. Average Federal funds purchased and securities sold under agreements to repurchase increased $45.1 million, or 16.5%, to $317.8 million in 2003, from $272.7 million in 2002, due in part, to additional liquidity provided by downstream correspondent banks. Average short-term borrowings increased by $1.6 million, or 2.1%, to $80.6 million in 2003, compared to $79.0 million in 2002. Average long-term borrowings increased $84.8 million or 42.2%, to $285.5 million in 2003, from $200.7 million in 2002. The increase in the combined short and long-term average debt outstanding is due to utilizing more borrowing programs offered to Alabama National’s Federal Home Loan Bank member subsidiaries, plus Alabama National’s issuance of an additional $20.6 million junior subordinated debentures payable to an unconsolidated trust during 2003.

Deposits

Average total deposits increased $403.4 million, or 18.3%, to $2.61 billion during 2003, from $2.20 billion during 2002. At December 31, 2003, total deposits were $2.75 billion, compared with $2.33 billion at December 31, 2002. The June 2003 acquisition of Millennium Bank increased deposits by $91.4 million.

The following table sets forth the deposits of Alabama National by category at the dates indicated.

DEPOSITS

(Amounts in thousands, except percentages)

	December 31,
	2003				2002				2001				2000				1999
	Amount		Percent of Total		Amount		Percent of Total		Amount		Percent of Total		Amount		Percent of Total		Amount		Percent of Total
Demand	$	404,755	14.70	%	$	336,172	14.43	%	$	306,319	14.82	%	$	244,400	13.52	%	$	227,442	14.87	%
NOW		528,766	19.20			476,721	20.46			384,355	18.60			290,471	16.07			224,037	14.65
Savings and money market		521,440	18.94			378,361	16.24			373,309	18.06			312,886	17.31			315,291	20.62
Time less than $100,000		619,229	22.48			635,827	27.27			668,819	32.36			659,370	36.50			525,788	34.38
Time greater than $100,000		679,559	24.68			503,314	21.60			333,957	16.16			299,968	16.60			236,693	15.48
Total deposits	$	2,753,749	100.00	%	$	2,330,395	100.00	%	$	2,066,759	100.00	%	$	1,807,095	100.00	%	$	1,529,251	100.00	%

Core deposits, which exclude time deposits of $100,000 or more, provide for a relatively stable funding source that supports earning assets. Alabama National’s core deposits totaled $2.07 billion, or 75.3%, of total deposits at December 31, 2003, and totaled $1.83 billion, or 78.4%, of total deposits at December 31, 2002.

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Deposits, in particular core deposits, have historically been Alabama National’s primary source of funding and have enabled Alabama National to meet successfully both short-term and long-term liquidity needs. Management anticipates that such deposits will continue to be Alabama National’s primary source of funding in the future, although economic factors could affect this funding source. Alabama National’s loan-to-deposit ratio was 96.6% at December 31, 2003, and 94.0% at the end of 2002, and the ratio averaged 94.4% during 2003 and 96.4% during 2002. The maturity distribution of Alabama National’s time deposits in excess of $100,000 at December 31, 2003, is shown in the following table.

MATURITIES OF CERTIFICATES OF DEPOSIT AND OTHER TIME

DEPOSITS OF $100,000 OR MORE

(Amounts in thousands)

	December 31, 2003
	Within One Month		After One Through Three Months		After Three Through Six Months		After Six Through Twelve Months		One Through Three Years		Greater Than Three Years		Total
Certificates of deposit of $100,000 or more	$	80,274	$	101,124	$	103,935	$	135,922	$	76,228	$	44,374	$	541,857
Other time deposits of $100,000 or more		30,118		24,000		28,000		29,196		25,388		1,000		137,702
Total	$	110,392	$	125,124	$	131,935	$	165,118	$	101,616	$	45,374	$	679,559

Approximately 33.9% of Alabama National’s time deposits over $100,000 had scheduled maturities within three months. Large certificate of deposit customers tend to be sensitive to interest rate levels, making these deposits less reliable sources of funding for liquidity planning purposes than core deposits. Alabama National had $155.9 million in large certificates of deposit obtained through brokers outstanding at December 31, 2003, compared to $46.0 million at December 31, 2002. Alabama National’s use of brokered time deposits fluctuates depending upon funding needs and the pricing and maturity structure of brokered deposits versus other funding sources, including in-market time deposits.

Borrowed Funds

Borrowed funds include five broad categories; (1) Federal funds purchased and securities sold under agreements to repurchase, (2) treasury, tax and loan balances, (3) Federal Home Loan Bank (“FHLB”) borrowings, (4) borrowings from a third party bank, and (5) junior subordinated debentures. Because of a relatively high loan-to-deposit ratio, the existence and stability of these funding sources are critical to Alabama National’s maintenance of short-term and long-term liquidity.

Federal funds purchased and securities sold under agreements to repurchase represent both an input of excess funds from correspondent bank customers of Alabama National as well as a cash management tool offered to corporate customers. At December 31, 2003, these funds totaled $358.4 million, compared with $290.6 million at December 31, 2002. This balance will vary greatly depending on the liquidity of the downstream correspondent banks of Alabama National and the excess cash of its corporate customers.

At December 31, 2003, treasury, tax and loan balances totaled $1.4 million, compared to $0.6 million at December 31, 2002. Alabama National collects tax deposits from customers and is permitted to retain these balances until established collateral limits are exceeded or until the U.S. Treasury withdraws its balances.

Alabama National’s average borrowing from a third party bank under a $30 million credit facility (“the Credit Facility”) was $13.2 million during 2003, compared with $18.6 million during 2002. As of December 31, 2003, the outstanding balance under the Credit Facility was $1.7 million, leaving a remaining availability under the Credit Facility of $28.3 million. The Credit Facility bears interest at a rate that varies with LIBOR and is secured by a pledge

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of stock in the Banks. The Credit Facility is typically renewed on an annual basis and has a current maturity date of May 31, 2004. Alabama National has historically renewed the Credit Facility prior to its due date and anticipates doing so again in 2004.

All of the Banks are members of the FHLB. At December 31, 2003, the Banks had available FHLB lines of $671.5 million, under which $325.5 million was outstanding, including advances classified as short-term of $39.5 million and advances classified as long-term of $286.0 million. This compares to borrowings of $348.0 million at December 31, 2002, of which $133.0 million was short-term and $215.0 million was long-term.

On September 26, 2003, Alabama National, through its wholly owned unconsolidated subsidiary, Alabama National Statutory Trust III, issued Floating Rate Capital Securities, commonly known as trust preferred securities, in the principal amount of $20.0 million to third parties and subsequently loaned $20.6 million to Alabama National in the form of junior subordinated debentures. Due to the adoption of FIN 46 the trusts created to issue the trust preferred securities must be deconsolidated and accordingly the debt is classified as junior subordinated debentures. The junior subordinated debentures issued in 2003 are in addition to $25.8 million of junior subordinated debentures issued prior to 2003. The debentures pay distributions at a rate that varies with LIBOR. They are classified as long-term debt for the financial statements but are included as capital for regulatory purposes. The net proceeds of the junior subordinated debentures issued were used to reduce Alabama National’s balance under the Credit Facility and for general corporate expenses.

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The following table sets forth, for the periods indicated, the principal components of borrowed funds.

BORROWED FUNDS

(Amounts in thousands, except percentages)

	December 31,
	2003			2002			2001
Federal funds purchased and securities sold under agreements to repurchase:
Balance at end of period	$	358,393		$	290,637		$	240,060
Average balance outstanding		317,811			272,689			239,293
Maximum outstanding at any month’s end		369,172			353,361			319,333
Weighted average interest rate at period-end		1.01	%		1.02	%		1.56	%
Weighted average interest rate during the period		1.03			1.54			3.63
Treasury, tax and loan:
Balance at end of period	$	1,431		$	629		$	3,490
Average balance outstanding		1,027			1,022			1,263
Maximum outstanding at any month’s end		2,442			2,544			3,490
Weighted average interest rate at period-end		0.66	%		1.00	%		1.29	%
Weighted average interest rate during the period		0.81			1.35			3.25
Note Payable:
Balance at end of period	$	1,650		$	19,100		$	16,350
Average balance outstanding		13,218			18,616			28,081
Maximum outstanding at any month’s end		20,150			19,100			30,100
Weighted average interest rate at period-end		1.89	%		2.17	%		2.68	%
Weighted average interest rate during the period		2.00			2.57			4.82
Short-term advances from the Federal Home Loan Bank:
Balance at end of period	$	39,500		$	133,000		$	52,000
Average balance outstanding		66,341			59,320			13,506
Maximum outstanding at any month’s end		168,500			133,000			67,000
Weighted average interest rate at period-end		1.94	%		2.01	%		2.16	%
Weighted average interest rate during the period		1.75			2.96			3.31
Long-term advances from the Federal Home Loan Bank:
Balance at end of period	$	286,000		$	215,000		$	194,000
Average balance outstanding		255,085			185,103			168,116
Maximum outstanding at any month’s end		291,000			215,000			194,000
Weighted average interest rate at period-end		3.14	%		3.90	%		3.83	%
Weighted average interest rate during the period		3.64			4.44			4.99
Junior subordinated debentures payable to unconsolidated trusts:
Balance at end of period	$	46,393		$	25,000	(1)	$	15,000	(1)
Average balance outstanding		30,315			15,356			575
Maximum outstanding at any month’s end		46,393			25,000			15,000
Weighted average interest rate at period-end		4.44	%		4.87	%		5.60	%
Weighted average interest rate during the period		4.75			5.66			5.60
Capital leases:
Balance at end of period	$	34		$	56		$	77
Average balance outstanding		56			66			165
Maximum outstanding at any month’s end		63			75			191
Weighted average interest rate at period-end		9.55	%		9.55	%		9.55	%
Weighted average interest rate during the period		9.55			9.55			9.09

(1) Formerly classified as trust preferred securities

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Capital Resources and Liquidity Management

Capital Resources

Alabama National’s stockholders’ equity increased by $44.9 million from December 31, 2002, to $279.4 million at December 31, 2003. This increase was attributable to the following (in thousands):

Net income	$	41,046
Dividends		(14,369	)
Issuance of stock for option exercises and other stock based compensation		706
Purchase of treasury stock		(900	)
Change in unrealized gain or loss on securities available for sale, net of deferred taxes		(2,562	)
Issuance of stock in purchase business combination		19,526
Additional paid in capital related to stock based compensation		1,479
Net increase	$	44,926

Under the capital guidelines of their regulators, Alabama National and the Banks are currently required to maintain a minimum risk-based total capital ratio of 8%, with at least 4% being Tier I capital. Tier I capital consists of common stockholders’ equity, qualifying perpetual preferred stock and minority interests in equity accounts of consolidated subsidiaries, less goodwill. In addition, under the guidelines, Alabama National and the Banks must maintain a minimum Tier I leverage ratio of Tier I capital to total assets of at least 3%, but this minimum ratio is typically increased by 100 to 200 basis points for other than the highest rated institutions.

Alabama National exceeded its fully phased-in regulatory capital ratios at December 31, 2003, 2002 and 2001, as set forth in the following table.

ANALYSIS OF CAPITAL

(Amounts in thousands, except percentages)

	December 31,
	2003			2002			2001
Tier 1 Capital	$	289,181		$	236,717		$	203,527
Tier 2 Capital		34,537			29,617			25,654
Total qualifying capital (1)	$	323,718		$	266,334		$	229,181
Risk-adjusted total assets (including off-balance sheet exposures)	$	2,760,910		$	2,366,289		$	2,049,456
Tier 1 risk-based capital ratio (4.00% required minimum)		10.47	%		10.00	%		9.92	%
Total risk-based capital ratio (8.00% required minimum)		11.73			11.26			11.17
Tier 1 leverage ratio (4.00% required minimum)		7.73			7.52			7.61

(1) Does not include $2.0 million, $3.1 million and $2.9 million of the Company's allowance for loan losses at December 31, 2003, 2002 and 2001, respectively, in excess of 1.25% of risk-adjusted total assets.

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Each of the Banks is required to maintain minimum risk-based and leverage ratios similar to those required for Alabama National. Each of the banks exceeded these regulatory minimum capital ratios at December 31, 2003, as set forth in the following table:

BANK CAPITAL RATIOS

	Tier 1 Risk Based		Total Risk Based		Tier 1 Leverage
Alabama National BanCorporation	10.47	%	11.73	%	7.73	%
National Bank of Commerce of Birmingham	10.02		11.24		7.43
Alabama Exchange Bank	13.69		14.95		7.34
Bank of Dadeville	12.73		13.98		7.12
Citizens & Peoples Bank, N.A.	9.16		10.41		7.09
Community Bank of Naples, N.A.	10.00		11.25		7.98
First American Bank	9.89		11.14		7.94
First Citizens Bank	13.28		14.36		6.47
First Gulf Bank	9.19		10.44		6.80
Georgia State Bank	10.65		11.79		6.90
Public Bank	9.25		10.43		7.05
Peoples State Bank of Groveland	10.24		11.50		7.12
Millennium Bank	11.15		12.40		7.66
Required minimums	4.00		8.00		4.00

In addition to meeting the minimum regulatory ratios, the regulatory ratios of Alabama National’s subsidiary banks exceeded the ratios required for well-capitalized banks as defined by federal banking regulators. To be categorized as well-capitalized, Alabama National’s subsidiary banks must maintain Total Qualifying Capital, Tier I Capital and leverage ratios of at least 10%, 6% and 5%, respectively.

Liquidity Management

Liquidity management involves monitoring Alabama National’s sources and uses of funds in order to meet its day-to-day cash flow requirements while maximizing profits. Liquidity represents the ability of an entity to convert assets into cash or cash equivalents without significant loss and to raise additional funds by increasing liabilities.

Without proper liquidity management, Alabama National will not be able to perform the primary function of a financial intermediary and would, therefore, not be able to meet the needs of the communities it serves.

Increased liquidity in typical interest rate environments often involves decreasing profits by investing in earning assets with shorter maturities. Liquidity management is made more complex because different balance sheet components are subject to varying degrees of management control. For example, the timing of maturities of certain securities within the investment portfolio is very predictable and subject to a high degree of control at the time investment decisions are made. However, net deposit inflows and outflows are far less predictable and are not subject to nearly the same degree of control.

Assets included in Alabama National’s Consolidated Statements of Condition contribute to liquidity management. Federal funds sold and securities purchased under agreements to resell, Alabama National’s primary source of immediate liquidity, averaged $49.3 million during 2003 and were $16.5 million at December 31, 2003, and averaged $45.3 million during 2002 and were $78.0 million at December 31, 2002. If required in short-term liquidity management, these assets could be converted to cash immediately. Cash received from the repayment of investment securities and loans provides a repetitive source of cash that contributes to

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liquidity management. Unpledged securities, with a carrying value of approximately $272.2 million at December 31, 2003, provide Alabama National an opportunity to generate cash by, (1) providing additional collateral by selling securities under agreements to repurchase, (2) providing collateral to obtain public funds or (3) providing collateral to borrow directly from the Federal Reserve Bank or the Federal Home Loan Bank. See “Earning Assets—Loans” and “Earning Assets—Securities.”

Liquidity can also be managed using liabilities included in Alabama National’s Consolidated Statement of Condition, such as federal funds purchased and securities sold under agreements to repurchase and short-term borrowings. Combined federal funds purchased and securities sold under agreements to repurchase, treasury, tax and loan, and short-term borrowings averaged $398.4 million during 2003 and were $396.0 million at December 31, 2003, and averaged $351.6 million during 2002 and were $443.4 million at December 31, 2002. Overnight borrowing lines with upstream correspondent banks, totaling $188.0 million at December 31, 2003, of which $70.7 million was unused, provide additional sources of liquidity to Alabama National on an unsecured basis. The Federal Home Loan Bank provides secured and unsecured credit lines to all of Alabama National’s Banks totaling approximately $671.5 million as of year-end 2003. At December 31, 2003, advances under these lines totaled $325.5 million, including $39.5 million classified as short-term and $286.0 million classified as long-term. Long-term liquidity needs are met through Alabama National’s deposit base (approximately 75.3% of Alabama National’s deposits at December 31, 2003, are considered core deposits), and the repayment of loans and other investments as they mature. Alabama National is able to manage its long-term liquidity needs by adjusting the rates it pays on longer-term deposits, long-term borrowings and the amount and mix of longer-term investments in its portfolio.

One of the Banks, NBC, has pledged approximately $68.8 million in loans to the Federal Reserve Bank of Atlanta as collateral for a discount window credit facility, which management views as a backup liquidity facility. At December 31, 2003, NBC had access to approximately $55.1 million under this facility, with no outstanding borrowings.

Alabama National, as a stand-alone corporation, has more limited access to liquidity sources than its Banks and depends on dividends from its subsidiaries as its primary source of liquidity. Alabama National’s liquidity is diminished by required payments on its outstanding short-term debt and junior subordinated debentures. The ability of its subsidiaries to pay dividends is subject to general regulatory restrictions, which may, but are not expected to, have a material negative impact on the liquidity available to Alabama National. (See Note 18 to the Alabama National’s Consolidated Financial Statements included in this Annual Report beginning at page F-1). If circumstances warrant, Alabama National’s short-term liquidity needs can also be met by additional borrowings of approximately $28.3 million representing the unused portion of Alabama National’s credit facility with an unrelated bank. See “Deposits and Other Interest–Bearing Liabilities—Borrowed Funds.”

Contractual Obligations

Alabama National has contractual obligations to make future payments on debt and lease agreements. Long-term debt, capital leases and junior subordinated debentures are reflected on the consolidated statements of financial condition, whereas, operating lease obligations for office space and equipment are not recorded on the consolidated statements of financial condition. Alabama National has no unconditional purchase obligations or other long-term obligations other than as included in the following table. These types of obligations are more fully discussed in Notes 9 and 10 of the Consolidated Financial Statements included in this Annual Report beginning on page F-1. Total contractual obligations of Alabama National as of December 31, 2003, are as follows.

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CONTRACTUAL OBLIGATIONS

(Amounts in thousands)

	As of December 31, 2003
	Due in 1 year or less		Due after 1 year through 3 years		Due after 3 years through 5 years		Due after 5 years		Total
Long-term debt and capital leases	$	26	$	38,008	$	81,000	$	213,393	$	332,427
Junior subordinated debentures payable to unconsolidated trusts		—		—		—		46,393		46,393
Operating lease obligations		2,073		3,819		3,504		16,787		26,183
Total contractual obligations	$	2,099	$	41,827	$	84,504	$	276,573	$	405,003

Credit Extension Commitments

Many of Alabama National’s lending relationships, including those with commercial and consumer customers, contain both funded and unfunded elements. The unfunded component of these commitments is not recorded on Alabama National’s Consolidated Statements of Financial Condition. These commitments are more fully discussed in Note 11 of the Consolidated Financial Statements included in this Annual Report beginning on page F-1. The table below summarizes the total unfunded credit extension, or off-balance sheet, commitment amounts by expiration date.

CREDIT EXTENSION COMMITMENTS

(Amounts in thousands)

	As of December 31, 2003
	Expire in 1 year or less		Expire after 1 year through 3 years		Expire after 3 years through 5 years		Expire after 5 years		Total
Unfunded lines	$	389,671	$	118,425	$	46,429	$	149,679	$	704,204
Letters of credit		17,358		4,338		25		6,466		28,187
Total credit extension commitments	$	407,029	$	122,763	$	46,454	$	156,145	$	732,391

Off-Balance Sheet Arrangements

Alabama National’s significant off-balance sheet arrangements are primarily certain investments in low-income housing projects throughout its geographic area. Alabama National enters into such arrangements as a means of supporting local communities and recognizes tax credits relating to its investments. At December 31, 2003, Alabama National’s investments in such projects totaled $2.0 million. Alabama National acts as a limited partner in these investments and does not exert control over the operating or financial policies of the partnerships. Construction and permanent financing for these entities was obtained from independent third parties.

Alabama National has no remaining commitment to fund low income housing investments at December 31, 2003. Alabama National’s risk exposure relating to these entities is generally limited to the amount invested.

In the normal course of business, the Company is also a party to financial instruments to meet the financing needs of clients and to mitigate exposure to interest rate risk. Such financial instruments include commitments to extend credit and certain contractual agreements, including standby letters of credit and financial guarantee arrangements. See additional discussion of lending related commitments at Credit Extension Commitments above.

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Accounting Pronouncements

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment to FASB Statement No. 13, and Technical Corrections. SFAS No. 145 relates to the recording of gains and losses from the extinguishment of debt to be classified as operating income, as opposed to previous requirements which reflected such gains and losses as extraordinary items. SFAS No. 145 is effective for fiscal years beginning on or after May 15, 2002. Alabama National adopted SFAS No. 145 on January 1, 2003. The initial adoption of this standard did not have an impact on the financial condition or results of operations of Alabama National. Management does not believe the provisions of this standard will have a material impact on future operations of Alabama National. Due to the adoption of this statement the prepayment penalty incurred during the 2003 third quarter was recorded in noninterest expense rather than as an extraordinary item.

In August 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. SFAS No. 146 requires that a liability for a cost that is associated with an exit or disposal activity be recognized when the liability is incurred. This Statement nullifies the guidance of the Emerging Issues Task Force (“EITF”) in EITF Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)”. Under EITF Issue No. 94-3, an entity recognized a liability for an exit cost on the date that the entity committed itself to an exit plan. In SFAS No. 146, the Board acknowledges that an entity’s commitment to a plan does not, by itself, create a present obligation to other parties that meets the definition of a liability. SFAS No. 146 also establishes that fair value is the objective for the initial measurement of the liability. Alabama National adopted the provisions of this Statement effective January 1, 2003. The initial adoption of this standard did not have an impact on the financial condition or results of operations of Alabama National. Management does not believe the provisions of this standard will have a material impact on future operations of Alabama National.

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based Compensation—Transition and Disclosure, which amends SFAS No. 123, Accounting for Stock-Based Compensation. SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require more prominent and more frequent disclosures in financial statements about the effects of stock-based compensation. Alabama National had previously adopted all provisions of SFAS No. 123. Accordingly, the initial adoption of SFAS No. 148 did not have an impact on the financial condition or results of operations of Alabama National, nor does management believe the provisions of this standard will have a material impact on future operations of Alabama National.

In November 2002, the FASB issued Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (FIN 45), which covers guarantees such as standby letters of credit, performance guarantees, and direct and indirect guarantees of indebtedness of others, but not guarantees of funding. FIN 45 requires a guarantor to recognize, at the inception of a guarantee, a liability in an amount equal to the fair value of the obligation undertaken in issuing the guarantee, and requires disclosure about the maximum potential payments that might be required, as well as the collateral or other recourse obtainable. The recognition and measurement provisions of FIN 45 were effective on a prospective basis after December 31, 2002, and its adoption by Alabama National on January 1, 2003 has not had a material impact on the financial condition or results of operations of Alabama National. See Note 11, of the Consolidated Financial Statements included in this Annual Report beginning on page F-1, titled Commitments and Contingencies, for additional discussion of Alabama National’s financial guarantees as of December 31, 2003.

In January 2003, the FASB issued Interpretation No. 46 (“FIN 46”), Consolidation of Variable Interest Entities. FIN 46 states that if a business enterprise is the primary beneficiary of a variable interest entity, the assets, liabilities and results of the activities of the variable interest entity should be included in the consolidated financial statements of the business enterprise. This Interpretation explains how to identify variable interest

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entities and how an enterprise assesses its interests in a variable interest entity to decide whether to consolidate that entity. FIN 46 also requires existing unconsolidated variable interest entities to be consolidated by their primary beneficiaries if the entities do not effectively disperse risks among parties involved. Variable interest entities that effectively disperse risks will not be consolidated unless a single party holds an interest or combination of interests that effectively recombines risks that were previously dispersed. Due to significant implementation concerns, the FASB modified the wording of FIN 46 and issued FIN 46R in December 2003. FIN 46R deferred the effective date for the provisions of FIN 46 to entities other than Special Purpose Entities (“SPEs”) until financial statements are issued for periods ending after March 15, 2004. SPEs are subject to the provisions of either FIN 46 or FIN 46R as of December 15, 2003. Management has evaluated the Company’s investment in variable interest entities and potential variable interest entities or transactions, particularly in limited liability partnerships involved in low-income housing development (LIHTC) and trust preferred securities structures because these entities or transactions constitute Alabama National’s primary FIN 46 and FIN 46R exposure. Management determined that Alabama National is not the primary beneficiary of the LIHTC investments and accordingly the partnerships were not consolidated. Alabama National’s interest in these partnerships as of December 31, 2003 totaled $1,990,000.

During 2003, Alabama National also analyzed the impact of FIN 46 and FIN 46R on certain trusts of Alabama National and determined that certain trusts created by the Company to issue trust preferred securities would require deconsolidation due to the provisions of FIN 46 and FIN 46R. Accordingly, as of December 31, 2003 Alabama National was required to deconsolidate these trusts. This deconsolidation required Alabama National to record junior subordinated debentures payable to trusts of $46,393,000, eliminate the guaranteed beneficial interest in subordinated debentures of $45,000,000 and record Alabama National’s investment in the trusts of $1,393,000 in other assets. In July 2003, the Board of Governors of the Federal Reserve System issued a supervisory letter instructing bank holding companies to continue to include the trust preferred securities in Tier I capital for regulatory capital purposes until further notice. The Federal Reserve intends to review the regulatory implications of any accounting treatment changes and, if necessary, provide further appropriate guidance. However, there can be no assurance that the Federal Reserve will continue to allow institutions to include trust preferred securities in Tier I capital for regulatory purposes.

Currently, other than the impact described above from the deconsolidation of the trust preferred securities, the adoption of FIN 46 and FIN 46R did not have a material impact on Alabama National’s consolidated financial position or consolidated results of operations. Interpretive guidance relating to FIN 46 and FIN 46R is continuing to evolve and Alabama National’s management will continue to assess various aspects of consolidations and variable interest entity accounting as additional guidance becomes available.

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities. The Statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. The Statement is effective for contracts entered into or modified after June 30, 2003, with certain exceptions, and for hedging relationships designated after June 30, 2003. In addition, the provisions of the statement, with certain exceptions, were required to be applied prospectively. The initial implementation of the Statement did not have a material affect on Alabama National’s consolidated financial position or consolidated results of operations and management does not anticipate any such impact in the future.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. This Statement provides new rules on the accounting for certain financial instruments that, under previous guidance, issuers could account for as equity. Such financial instruments include mandatorily redeemable shares, instruments that require the issuer to buy back some of its shares in exchange for cash or other assets, or obligations that can be settled with shares, the monetary value of which is fixed. Most of the guidance in SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning

52

after June 30, 2003. The initial implementation of the Statement did not have a material affect on Alabama National’s consolidated financial position or consolidated results of operations and management does not anticipate any such impact in the future.

In December 2003, the FASB issued SFAS No. 132 (revised 2003), Employers’ Disclosures about Pension and Postretirement Benefits. This statement requires additional disclosures about the assets, obligations and cash flows of defined benefit pension and postretirement plans, as well as the expense recorded for such plans. As of December 31, 2003, Alabama National has disclosed the required elements related to its defined benefit pension plans in Note 12 of the Consolidated Financial Statements included in this Annual Report beginning on page F-1.

On December 11, 2003, the SEC Staff announced its intention to release a Staff Accounting Bulletin in order to clarify existing accounting practices relating to the valuation of issued loan commitments, including interest rate lock commitments, subject to Derivative Implementation Group Issue C-13, When a Loan Commitment is included in the Scope of Statement 133. The new guidance is expected to require all registrants to begin accounting for these commitments subject to SFAS No. 133 as written options that would be reported as liabilities until they are exercised or expire. The provisions of this interim guidance is expected to be effective for loan commitments entered into after March 31, 2004. Management intends to adopt the provisions of this guidance effective April 1, 2004 and does not anticipate that the adoption will have a materially adverse effect on either Alabama National’s consolidated financial position or consolidated results of operations.

Impact of Inflation

Unlike most industrial companies, the assets and liabilities of financial institutions such as Alabama National and its subsidiaries are primarily monetary in nature. Therefore, interest rates have a more significant effect on Alabama National’s performance than do the effects of changes in the general rate of inflation and change in prices. In addition, interest rates do not necessarily move in the same direction or in the same magnitude as the prices of goods and services. Management seeks to manage the relationships between interest-sensitive assets and liabilities in order to protect against wide interest rate fluctuations, including those resulting from inflation. See “Interest Sensitivity and Market Risk.”

Industry Developments

Certain recently enacted and proposed legislation could have an effect on both the costs of doing business and the competitive factors facing the financial institutions industry. Alabama National is unable at this time to assess the impact of this legislation on its financial condition or results of operations. See “Supervision and Regulation” in Item 1.

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information required by this item is contained in Item 7 herein under the heading “Interest Sensitivity and Market Risk.”

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements and Financial Statement Schedules of Alabama National BanCorporation and subsidiaries listed in ITEM 15 have been included in this Annual Report and should be referred to in their entirety. The Supplementary Financial Information required by Item 302 of Regulation S-K is set forth below.

SELECTED QUARTERLY FINANCIAL DATA

(Amounts in thousands, except per share data)

(Unaudited)

	2003 Quarters								2002 Quarters
	First		Second		Third		Fourth		First		Second		Third		Fourth
Summary of Operations:
Interest income	$	43,030	$	44,325	$	45,257	$	46,019	$	43,957	$	44,592	$	45,860	$	43,738
Interest expense		15,043		14,952		14,159		13,514		16,880		16,293		16,394		15,746
Net interest income		27,987		29,373		31,098		32,505		27,077		28,299		29,466		27,992
Provision for loan and lease losses		1,091		1,424		1,396		2,020		1,270		1,211		2,245		3,230
Securities gains		5		34		4		3		30		5		—		—
Noninterest income		18,740		21,502		21,868		16,148		13,197		13,361		16,183		18,388
Noninterest expense		31,491		34,337		35,625		30,439		26,455		27,586		30,174		29,390
Net income		9,525		10,164		10,581		10,776		8,608		8,782		9,018		9,294
Dividends on common stock		3,525		3,534		3,653		3,657		3,088		3,090		3,091		3,093
Per Common Share Data:
Book Value	$	19.44	$	21.02	$	21.23	$	21.76	$	17.22	$	17.92	$	18.48	$	18.95
Tangible book value (2)		17.79		18.14		18.38		18.99		15.66		16.35		16.84		17.28
Net income (diluted)		0.75		0.80		0.80		0.82		0.68		0.69		0.71		0.73
Dividends declared		0.285		0.285		0.285		0.285		0.25		0.25		0.25		0.25
Balance Sheet Highlights
At Period-End:
Total assets	$	3,575,147	$	2,891,969	$	3,852,941	$	3,820,112	$	2,950,062	$	3,144,348	$	3,229,836	$	3,316,168
Securities(1)		818,848		841,236		823,526		810,227		599,922		656,864		627,607		700,333
Loans held for sale		61,162		95,956		37,744		16,415		20,818		20,833		48,835		51,030
Loans and leases, net of unearned income		2,277,520		2,429,284		2,548,353		2,659,440		2,011,162		2,077,078		2,170,400		2,191,394
Allowance for loan and lease losses		33,247		35,595		36,979		36,562		29,613		30,680		32,674		32,704
Deposits		2,487,548		2,753,722		2,752,516		2,753,749		2,179,227		2,218,054		2,270,032		2,330,395
Short-term debt		95,200		59,150		61,150		36,150		91,100		72,100		77,100		152,100
Long-term debt		274,057		274,048		315,040		337,427		184,631		184,081		189,074		240,065
Stockholders’ equity		240,444		268,916		272,139		279,418		212,705		221,496		228,585		234,492

(1) Does not include trading securities.

(2) “Tangible book value per share” is computed by dividing tangible book value by the total number of common shares outstanding. “Tangible book Value” equals book value less goodwill and other intangible assets. Management believes that this measure is useful because it provides book value exclusive of goodwill and other

54

intangible assets and because it is a measure used by many investors as part of their analysis of Alabama National. The following table sets forth a reconciliation of book value per share to tangible book value per share:

	2003 Quarters												2002 Quarters
	First			Second			Third			Fourth			First			Second			Third			Fourth
Book value	$	240,444		$	268,916		$	272,139		$	279,418		$	21,705		$	221,496		$	228,585		$	234,492
Deduct: goodwill and other intangible assets		(20,389	)		(36,778	)		(36,475	)		(35,587	)		(19,209	)		(19,428	)		(20,379	)		(20,622	)
Tangible book value		220,055			232,138			235,664			243,831			193,496			202,068			208,206			213,870
Book value per common share		19.44			21.02			21.23			21.76			17.22			17.92			18.48			18.95
Effect of goodwill and intangible assets per share		(1.65	)		(2.88	)		(2.85	)		(2.77	)		(1.56	)		(1.57	)		(1.64	)		(1.67	)
Tangible book value per common share	$	17.79		$	18.14		$	18.38		$	18.99		$	15.66		$	16.35		$	16.84		$	17.28

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

As of December 31, 2003, the end of the period covered by this report, Alabama National carried out an evaluation, under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of Alabama National’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that Alabama National’s disclosure controls and procedures are effective in timely alerting them to material information relating to Alabama National that is required to be included in Alabama National’s periodic filings with the Securities and Exchange Commission.

There were no significant changes in Alabama National’s internal controls over financial reporting during the quarter ended December 31, 2003 that have materially affected, or are reasonably likely to materially affect, Alabama National’s internal control over financial reporting.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Alabama National has adopted a Code of Business Conduct and Ethics for directors, officers (including Alabama National’s Chief Executive Officer and senior financial officers) and employees, known as the Code of Business Conduct and Ethics. A copy of the Code of Business Conduct and Ethics is filed as an exhibit to this Annual Report on Form 10-K.

Other information required by this Item regarding Executive Officers is included in Part I of this Form 10-K under the caption “Executive Officers of the Registrant” in accordance with Instruction 3 of the Instructions to Paragraph (b) of Item 401 of Regulation S-K.

Other information required by this Item is incorporated by reference pursuant to General Instruction G(3) of Form 10-K from Alabama National’s definitive Proxy Statement for the 2004 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission pursuant to Regulation 14A.

55

ITEM 11. COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS

The information required by this Item is incorporated by reference pursuant to General Instruction G(3) of Form 10-K from Alabama National’s definitive Proxy Statement for the 2004 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission pursuant to Regulation 14A.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERS MATTERS

The information required by this Item relating to security ownership of certain beneficial owners and management and securities authorized for issuance under equity compensation plans is incorporated by reference pursuant to General Instruction G(3) of Form 10-K from Alabama National’s definitive Proxy Statement for the 2004 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission pursuant to Regulation 14A.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this Item is incorporated by reference pursuant to General Instruction G(3) of Form 10-K from Alabama National’s definitive Proxy Statement for the 2004 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission pursuant to Regulation 14A.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The information required by this Item is incorporated by reference pursuant to General Instruction G(3) of Form 10-K from Alabama National’s definitive Proxy Statement for the 2004 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission pursuant to Regulation 14A.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a)(1) and (a)(2)—Financial Statements and Financial Statement Schedules.

Financial Statements:    The Consolidated Financial Statements of Alabama National and its subsidiaries, included herein (beginning on page F-1), are as follows:

Report of Independent Auditors—PricewaterhouseCoopers LLP

Consolidated Statements of Condition—December 31, 2003 and 2002

Consolidated Statements of Income—Years ended December 31, 2003, 2002 and 2001

Consolidated Statements of Changes in Stockholders’ Equity—Years ended December 31, 2003, 2002 and 2001

Consolidated Statements of Cash Flows—Years ended December 31, 2003, 2002 and 2001

Notes to Consolidated Financial Statements

Financial Statement Schedules:    All schedules to the consolidated financial statements required by Article 9 of Regulation S-X are inapplicable and therefore have been omitted.

(a)(3) Exhibits.

The exhibits listed on the exhibit index beginning on page 59 of this Form 10-K are filed herewith or are incorporated herein by reference.

(b) Reports on Form 8-K.

1. Filing on Form 8-K to report third quarter earnings, filed on October 15, 2003, furnished under Item 12 of Form 8-K.

2. Filing on Form 8-K to report the execution of a definitive merger agreement between Alabama National and Indian River Banking Company, filed on October 23, 2003.

56

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this the 12th day of March, 2004.

ALABAMA NATIONAL BANCORPORATION
By:	/S/    JOHN H. HOLCOMB, III
	John H. Holcomb, III, Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Name	Title	Date
/S/    JOHN H. HOLCOMB, III         John H. Holcomb, III	Chairman and Chief Executive Officer (principal executive officer)	March 12, 2004
/S/    VICTOR E. NICHOL, JR.         Victor E. Nichol, Jr.	Vice Chairman and Director	March 12, 2004
/S/    DAN M. DAVID         Dan M. David	Vice Chairman and Director	March 12, 2004
/S/    RICHARD MURRAY, IV         Richard Murray, IV	President, Chief Operating Officer and Director	March 12, 2004
/S/    WILLIAM E. MATTHEWS, V         William E. Matthews, V	Executive Vice President and Chief Financial Officer	March 12, 2004
/S/    SHELLY S. WILLIAMS         Shelly S. Williams	Senior Vice President and Controller (principal accounting officer)	March 12, 2004
/S/    W. RAY BARNES         W. Ray Barnes	Director	March 12, 2004
/S/    GRIFFIN A. GREENE         Griffin A. Greene	Director	March 12, 2004
/S/    JOHN D. JOHNS         John D. Johns	Director	March 12, 2004
/S/    JOHN J. MCMAHON, JR.         John J. McMahon, Jr.	Director	March 12, 2004

57

Name	Title	Date
/S/    C. PHILLIP MCWANE         C. Phillip McWane	Director	March 12, 2004
/S/    G. RUFFNER PAGE, JR.         G. Ruffner Page, Jr.	Director	March 12, 2004
/S/    JOHN M. PLUNK         John M. Plunk	Director	March 12, 2004
/S/    W. STANCIL STARNES         W. Stancil Starnes	Director	March 12, 2004
/S/    WILLIAM D. MONTGOMERY         William D. Montgomery	Director	March 12, 2004
/S/    C. LLOYD NIX         C. Lloyd Nix	Director	March 12, 2004
/S/    JOHN V. DENSON         John V. Denson	Director	March 12, 2004

58

EXHIBIT INDEX

Exhibit Number	Description	Reference
3.1	Restated Certificate of Incorporation	(16	)
3.2	Amended and Restated ByLaws	(22	)
10.1	Lease Agreement dated June 1, 2000 between Woodward Properties, LLP and NBC	(11	)
10.1A	First Amendment to Lease Agreement dated December 31, 2001 between Woodward Properties, LLP and NBC	(18	)
10.1B	Second Amendment to Lease Agreement dated March 1, 2002 between Woodward Properties, LLP and NBC	(18	)
10.2	Credit Agreement between Alabama National BanCorporation and AmSouth Bank of Alabama dated as of December 29, 1995 relating to a $23,000,000 Revolving Loan	(3	)
10.2A	Promissory Note between Alabama National BanCorporation and AmSouth Bank of Alabama dated as of December 29, 1995 relating to a $23,000,000 Revolving Loan	(3	)
10.2B	Pledge Agreement between Alabama National BanCorporation and AmSouth Bank of Alabama dated as of December 29, 1995 relating to a $23,000,000 Revolving Loan	(3	)
10.2C	First Amendment to Credit Agreement between Alabama National BanCorporation and AmSouth Bank dated February 10, 1997	(5	)
10.2D	Second Amendment to Credit Agreement between Alabama National BanCorporation and AmSouth Bank dated January 19, 1998	(6	)
10.2E	Third Amendment to Credit Agreement between Alabama National BanCorporation and AmSouth Bank dated June 23, 1999	(7	)
10.2F	Fourth Amendment to Credit Agreement between Alabama National BanCorporation and AmSouth Bank dated June 20, 2000	(10	)
10.2G	Fifth Amendment to Credit Agreement between Alabama National BanCorporation and AmSouth Bank dated May 31, 2001	(14	)
10.2H	Sixth Amendment to Credit Agreement between Alabama National BanCorporation and AmSouth Bank dated May 31, 2002	(17	)
10.2I	Fourth AmSouth Bank Note Modification Agreement dated May 31, 2002(18)
10.2J	Seventh Amendment to Credit Agreement between Alabama National BanCorporation and AmSouth Bank dated May 31, 2003	(19	)
10.2K	Fifth AmSouth Bank Note Modification Agreement dated May 31, 2003	(19	)
10.3	Second Amendment and Restatement of the Alabama National BanCorporation Performance Share Plan	(9	)
10.4	Alabama National BanCorporation Plan for Deferral of Compensation for Directors Who Are Not Employees of the Company	(4	)
10.5	Alabama National BanCorporation Plan for the Deferral of Compensation by Key Employees and Employee-Directors of Peoples State Bank of Groveland	(18	)
10.6	Alabama National BanCorporation 1994 Stock Option Plan	(1	)
10.7	Form of Stock Option Agreement utilized in connection with the 1994 Stock Option Plan	(2	)
10.8	Alabama National BanCorporation Plan for the Deferral of Compensation by Non-Employee Directors of the Subsidiary Banks, and amendments thereto	(18	)
10.9	NBC Pension Plan (amended and restated effective January 1, 1997)	(8	)

59

Exhibit Number	Description	Reference
10.10	First American Bancorp Non-Qualified Stock Option Agreement with Dan M. David dated March 7, 1997	(6	)
10.11	Alabama National BanCorporation 1999 Long-Term Incentive Plan	(8	)
10.11A	Amendment Number One to Alabama National BanCorporation 1999 Long-Term Incentive Plan	(18	)
10.12	Alabama National BanCorporation Plan for the Deferral of Compensation by Key Employees	(13	)
10.13	Alabama National BanCorporation Employee Capital Accumulation Plan (amended and restated effective January 1, 2000)	(8	)
10.14	Non-Qualified Option Agreement dated as of January 1, 2000 between John R. Bragg and Alabama National BanCorporation	(12	)
10.15	Non-Qualified Option Agreement dated as of January 1, 2000 between John H. Holcomb, III and Alabama National BanCorporation	(12	)
10.16	Non-Qualified Option Agreement dated as of January 1, 2000 between William E. Matthews, V and Alabama National BanCorporation	(12	)
10.17	Non-Qualified Option Agreement dated as of January 1, 2000 between Richard Murray, IV and Alabama National BanCorporation	(12	)
10.18	Non-Qualified Option Agreement dated as of January 1, 2000 between Dan M. David and Alabama National BanCorporation	(12	)
10.19	Non-Qualified Option Agreement dated as of January 1, 2000 between Victor E. Nichol, Jr. and Alabama National BanCorporation	(12	)
10.20	Non-Qualified Option Agreement dated as of January 1, 2000 between Shelly S. Williams and Alabama National BanCorporation	(12	)
10.21	Employment Continuation Agreement dated as of September 21, 2000 between John R. Bragg and Alabama National BanCorporation	(12	)
10.22	Employment Continuation Agreement dated as of September 21, 2000 between John H. Holcomb, III and Alabama National BanCorporation	(12	)
10.23	Employment Continuation Agreement dated as of September 21, 2000 between William E. Matthews, V and Alabama National BanCorporation	(12	)
10.24	Employment Continuation Agreement dated as of September 21, 2000 between Richard Murray, IV and Alabama National BanCorporation	(12	)
10.25	Employment Continuation Agreement dated as of September 21,2000 between Victor E. Nichol, Jr. and Alabama National BanCorporation	(12	)
10.26	Employment Continuation Agreement dated as of September 21, 2000 between Dan M. David and Alabama National BanCorporation	(12	)
10.27	The Farmers National Bank of Opelika Key Personnel Stock Option Plan, effective date B October 28, 1992	(15	)
10.28	Second Amendment and Restatement of the Alabama National BanCorporation Annual Incentive Plan	(15	)
10.29	Alabama National BanCorporation Performance Share Plan for Certain Members of the Madison County Advisory Board of Directors of First American Bank	(18	)
10.30	Amended and Restated Alabama National BanCorporation Performance Share Plan for Certain Directors of Citizens’ and People’s Bank, N.A.	(18	)

60

Exhibit Number	Description	Reference
10.31	Amendment Number One to Amended and Restated Performance Share Plan for Certain Directors of Citizens’ and People’s Bank, N.A., dated October 16, 2002	(18	)
10.32	Millennium Bank Director’s Stock Option Plan, and amendments thereto	(22	)
10.33	Millennium Bank Officers’ and Employees’ Stock Option Plan, and amendments thereto	(22	)
10.34	Cypress Bank Director’s Stock Option Plan	(22	)
10.35	Cypress Bank Officer’s and Employee’s Stock Option Plan	(22	)
10.36	Indian River 1999 Director Fee Stock Option Plan, and amendments thereto	(22	)
10.37	Indian River Banking Company 1999 Stock Option Plan	(22	)
10.38	Amended and Restated Declaration of Trust among State Street Bank and Trust Company of Connecticut, N.A., Alabama National BanCorporation, and others dated December 18, 2001	(15	)
10.39	Indenture dated December 18, 2001 between Alabama National BanCorporation and State Street Bank and Trust Company of Connecticut, N.A.	(15	)
10.40	Guaranty Agreement dated December 18, 2001 between Alabama National BanCorporation and State Street Bank and Trust Company of Connecticut, N.A.	(15	)
10.41	Amended and Restated Declaration of Trust dated December 19, 2002 among State Street Bank and Trust Company of Connecticut, N.A., Alabama National BanCorporation, and others	(18	)
10.42	Indenture dated December 19, 2002 between Alabama National BanCorporation and State Street Bank and Trust Company of Connecticut, N.A.	(18	)
10.43	Guaranty Agreement dated December 19, 2002 between Alabama National BanCorporation and State Street Bank and Trust Company of Connecticut, N.A.	(18	)
10.44	Amended and Restated Declaration of Trust dated September 26, 2003, between Alabama National BanCorporation, U.S. Bank National Association, and others	(20	)
10.45	Indenture dated September 26, 2003, between Alabama National BanCorporation and U.S. Bank National Association	(20	)
10.46	Guarantee Agreement dated September 23, 2003, between Alabama National BanCorporation and U.S. Bank National Association	(20	)
10.47	Amended and Restated Trust Agreement dated September 30, 2002, among Indian River Banking Company, Wells Fargo Bank, National Association, and others	(22	)
10.47A	First Amendment to Amended and Restated Trust Agreement dated November 19, 2003, among Indian River Banking Company, Wells Fargo Bank, National Association, Alabama National BanCorporation and Others	(22	)
10.48	Indenture dated September 30, 2002, between Indian River Banking Company and Wells Fargo Bank, National Association	(22	)
10.48A	First Supplemental Indenture dated November 19, 2003 among Indian River Banking Company, Wells Fargo Bank, National Association, Alabama National BanCorporation	(22	)
10.49	Trust Preferred Securities Guarantee Agreement dated September 30, 2002, between Indian River Banking Company and Wells Fargo Bank, National Association	(22	)

61

Exhibit Number	Description	Reference
10.49A	First Amendment to Trust Preferred Securities Guarantee Agreement dated November 19, 2003 by and among Indian River Banking Company, Wells Fargo Bank, National Association, and Alabama National BanCorporation	(22	)
10.50	Agreement and Plan of Merger dated October 22, 2003 between Indian River Banking Company and Alabama National BanCorporation	(21	)
14.1	Alabama National BanCorporation Code of Business Conduct and Ethics	(22	)
21.1	Subsidiaries of Alabama National BanCorporation	(22	)
23.1	Consent of PricewaterhouseCoopers L.L.P.	(22	)
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	(22	)
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	(22	)
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	(22	)

(1) Filed as an Exhibit to Alabama National’s Annual Report on Registration Statement on Form S-1 (Registration No. 33-83800) and incorporated herein by reference.

(2) Filed as an Exhibit to Alabama National’s Annual Report on Form 10-K for the year ended December 31, 1994 and incorporated herein by reference.

(3) Filed as an Exhibit to Alabama National’s Annual Report on Form 10-K for the year ended December 31, 1995 and incorporated herein by reference.

(4) Filed as an Exhibit to Alabama National’s Annual Report on Form 10-K for the year ended December 31, 1996 and incorporated herein by reference.

(5) Filed as an Exhibit to Alabama National’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 and incorporated herein by reference.

(6) Filed as an Exhibit to Alabama National’s Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference.

(7) Filed as an Exhibit to Alabama National’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1999 and incorporated herein by reference.

(8) Filed as an Exhibit to Alabama National’s Annual Report on Form 10-K for the year ended December 31, 1999 and incorporated herein by reference.

(9) Filed as an Exhibit to Alabama National’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2000 and incorporated herein by reference.

(10) Filed as an Exhibit to Alabama National’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2000 and incorporated herein by reference.

(11) Filed as an Exhibit to Alabama National’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2000 and incorporated herein by reference.

(12) Filed as an Exhibit to Alabama National’s Annual Report on Form 10-K for the year ended December 31, 2000 and incorporated herein by reference.

(13) Filed as an Exhibit to Alabama National’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2001 and incorporated herein by reference.

(14) Filed as an Exhibit to Alabama National’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2001 and incorporated herein by reference.

62

(15) Filed as an Exhibit to Alabama National’s Annual Report on Form 10-K for the year ended December 31, 2001 and incorporated herein by reference.

(16) Filed as an Exhibit to Alabama National’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2002 and incorporated herein by reference.

(17) Filed as an Exhibit to Alabama National’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002 and incorporated herein by reference.

(18) Filed as an Exhibit to Alabama National’s Annual Report on Form 10-K for the year ended December 31, 2002 and incorporated herein by reference.

(19) Filed as an Exhibit to Alabama National’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003 and incorporated herein by reference.

(20) Filed as an Exhibit to Alabama National’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003 and incorporated herein by reference.

(21) Filed as Appendix A to Alabama National’s Registration Statement on Form S-4 (Registration No. 333-111417) and is incorporated herein by reference.

(22) Filed herewith.

63

Alabama National BanCorporation

and Subsidiaries

Consolidated Financial Statements

December 31, 2003 and 2002 and the

Three Years Ended December 31, 2003

Report of Independent Auditors

To the Stockholders and Board of Directors

Alabama National BanCorporation

In our opinion, the accompanying consolidated statements of financial condition and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows present fairly, in all material respects, the financial position of Alabama National BanCorporation and its subsidiaries (the Company) at December 31, 2003 and 2002, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Notes 1 and 3 to the consolidated financial statements, on January 1, 2002, the Company adopted Statement of Financial Accounting Standards, No. 142, Goodwill and Other Intangible Assets.

/s/    PRICEWATERHOUSECOOPERS LLP

Birmingham, Alabama

February 18, 2004, except for Note 22 as to which

    the date is February 27, 2004

F-1

Alabama National BanCorporation and Subsidiaries

Consolidated Statements of Financial Condition

(in thousands, except share data)

As of December 31, 2003 and 2002

	2003			2002
ASSETS
Cash and due from banks	$	123,086		$	99,561
Interest-bearing deposits in other banks		10,019			12,621
Federal funds sold and securities purchased under agreements to resell		16,534			77,957
Trading securities, at fair value		109			1,645
Investment securities (fair value $271,536 and $357,812 for 2003 and 2002, respectively)		271,035			355,445
Securities available for sale, at fair value		539,192			344,888
Loans held for sale		16,415			51,030
Loans and leases		2,662,358			2,193,702
Unearned income		(2,918	)		(2,308	)
Loans and leases, net of unearned income		2,659,440			2,191,394
Allowance for loan and lease losses		(36,562	)		(32,704	)
Net loans and leases		2,622,878			2,158,690
Property, equipment and leasehold improvements, net		77,291			72,337
Goodwill		30,964			15,925
Other intangible assets, net		4,623			4,697
Cash surrender value of life insurance		59,425			56,146
Receivables from investment division customers		12,966			28,987
Other assets		35,575			36,239
Total assets	$	3,820,112		$	3,316,168
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Deposits
Noninterest bearing	$	404,755		$	336,172
Interest bearing		2,348,994			1,994,223
Total deposits		2,753,749			2,330,395
Federal funds purchased and securities sold under agreements to repurchase		358,393			290,637
Treasury, tax and loan accounts		1,431			629
Accrued expenses and other liabilities		41,577			42,328
Payable for securities purchased for investment division customers		11,967			25,522
Short-term borrowings		41,150			152,100
Long-term debt		332,427			240,065
Total liabilities		3,540,694			3,081,676
Commitments and contingencies (see Notes 10 and 11)
Stockholders’ equity:
Common stock, $1 par; 27,500,000 shares authorized; 12,838,844 and 12,424,544 shares issued at December 31, 2003 and 2002, respectively		12,839			12,425
Additional paid-in capital		126,370			105,355
Retained earnings		140,028			115,281
Treasury stock at cost, 48,713 shares at December 31, 2002		—			(1,312	)
Accumulated other comprehensive income, net of tax		181			2,743
Total stockholders’ equity		279,418			234,492
Total liabilities and stockholders’ equity	$	3,820,112		$	3,316,168

The accompanying notes are an integral part of these consolidated financial statements.

F-2

Alabama National BanCorporation and Subsidiaries

Consolidated Statements of Income

(in thousands, except share data)

For the Years Ended December 31, 2003, 2002 and 2001

	2003		2002		2001
Interest income:
Interest and fees on loans	$	145,931	$	143,498	$	147,922
Interest on securities		31,873		33,660		29,055
Interest on deposits in other banks		98		165		510
Interest on trading securities		94		81		119
Interest on federal funds sold		635		743		1,931
Total interest income		178,631		178,147		179,537
Interest expense:
Interest on deposits		42,231		49,772		71,412
Interest on federal funds purchased		3,278		4,187		8,696
Interest on short-term borrowings		1,431		2,246		1,842
Interest on long-term borrowings		10,728		9,108		8,443
Total interest expense		57,668		65,313		90,393
Net interest income		120,963		112,834		89,144
Provision for loan and lease losses		5,931		7,956		3,946
Net interest income after provision for loan and lease losses		115,032		104,878		85,198
Noninterest income:
Service charges on deposit accounts		14,091		12,081		9,497
Investment services income		18,710		13,576		13,717
Securities brokerage and trust income		15,867		13,590		8,800
Gain on origination and sale of mortgages		16,289		10,860		7,431
Insurance commissions		3,477		2,837		2,126
Bank owned life insurance		2,747		3,018		2,412
Securities gains		46		35		246
Other		7,077		5,167		4,478
Total noninterest income		78,304		61,164		48,707
Noninterest expense:
Salaries and employee benefits		64,826		57,687		45,329
Commission based compensation		22,182		16,498		12,868
Occupancy and equipment expense, net		12,886		11,603		9,722
Amortization of intangibles		1,041		832		1,145
Legal and professional fees		3,701		3,602		3,331
Other		27,228		23,355		19,838
Total noninterest expense		131,864		113,577		92,233
Income before provision for income taxes and minority interest in earnings of consolidated subsidiaries		61,472		52,465		41,672
Provision for income taxes		20,398		16,735		13,232
Income before minority interest in earnings of consolidated subsidiaries		41,074		35,730		28,440
Minority interest in earnings of consolidated subsidiaries		28		28		25
Net income available for common shares	$	41,046	$	35,702	$	28,415
Weighted average common shares outstanding:
Basic		12,748		12,361		11,853
Diluted		12,957		12,683		12,141
Earnings per common share:
Basic	$	3.22	$	2.89	$	2.40
Diluted	$	3.17	$	2.81	$	2.34

The accompanying notes are an integral part of these consolidated financial statements.

F-3

Alabama National BanCorporation and Subsidiaries

Consolidated Statements of Comprehensive Income

(in thousands)

For the Years Ended December 31, 2003, 2002 and 2001

	2003			2002		2001
Net income	$	41,046		$	35,702	$	28,415
Other comprehensive income:
Unrealized (losses) gains on securities available for sale arising during the period		(3,868	)		2,615		3,100
Less: Reclassification adjustment for net gains included in net income		46			35		246
Other comprehensive (expense) income, before taxes		(3,914	)		2,580		2,854
Provision for (benefit of) income taxes related to items of other comprehensive income (expense)		(1,352	)		895		982
Other comprehensive income (loss)		(2,562	)		1,685		1,872
Comprehensive income	$	38,484		$	37,387	$	30,287

The accompanying notes are an integral part of these consolidated financial statements.

F-4

Alabama National BanCorporation and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

(in thousands, except share data)

For the Years Ended December 31, 2003, 2002 and 2001

	Shares	Common Stock		Additional Paid-In Capital			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss) Net of Taxes			Total Equity
Balance, December 31, 2000	11,921,628	$	11,922	$	86,115		$	77,812		$	(3,431	)	$	(814	)	$	171,604
Net income								28,415									28,415
Common stock dividends declared ($0.92 per share)								(11,003	)								(11,003	)
Issuance of stock in purchase business combinations	502,916		503		15,729												16,232
Cash in lieu of fractional shares and other					(10	)											(10	)
Exercise of stock options and issuance of shares related to deferred compensation plans					667			(2,302	)		2,007						372
Stock based compensation					1,123			(56	)								1,067
Purchase of treasury stock at cost											(663	)					(663	)
Change in unrealized gains on available for sale securities, net of taxes														1,872			1,872
Balance, December 31, 2001	12,424,544		12,425		103,624			92,866			(2,087	)		1,058			207,886
Net income								35,702									35,702
Common stock dividends declared ($1.00 per share)								(12,362	)								(12,362	)
Exercise of stock options and issuance of shares related to deferred compensation plans					271			(841	)		775						205
Stock based compensation					1,460			(84	)								1,376
Change in unrealized gains on available for sale securities, net of taxes														1,685			1,685
Balance, December 31, 2002	12,424,544		12,425		105,355			115,281			(1,312	)		2,743			234,492
Net income								41,046									41,046
Common stock dividends declared ($1.14 per share)								(14,369	)								(14,369	)
Issuance of stock in purchase business combinations	395,244		395		19,131												19,526
Exercise of stock options and issuance of shares related to deferred compensation plans	19,056		19		292			(1,817	)		2,212						706
Stock based compensation					1,592			(113	)								1,479
Purchase of treasury stock at cost											(900	)					(900	)
Change in unrealized gains (losses) on available for sale securities, net of taxes														(2,562	)		(2,562	)
Balance, December 31, 2003	12,838,844	$	12,839	$	126,370		$	140,028		$	—		$	181		$	279,418

The accompanying notes are an integral part of these consolidated financial statements.

F-5

Alabama National BanCorporation and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands)

For the Years Ended December 31, 2003, 2002 and 2001

	2003			2002			2001
Cash flows from operating activities:
Net income	$	41,046		$	35,702		$	28,415
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan and lease losses		5,931			7,956			3,946
Deferred tax provision		2,716			2,963			2,540
Depreciation and amortization		6,818			5,797			5,396
(Gain) loss on disposition and liquidation of assets and liabilities		(78	)		16			5
Securities gains		(46	)		(35	)		(246	)
Loss (gain) on disposal of other real estate		80			(572	)		(12	)
Write-down of other real estate owned		141			374			249
Income earned on bank owned life insurance		(2,747	)		(3,018	)		(2,412	)
Stock based compensation		1,488			1,453			1,103
Net amortization of securities		803			(350	)		(323	)
Net decrease (increase) in trading securities		1,536			(304	)		(764	)
Minority interest in earnings of consolidated subsidiaries		28			28			25
Change in loans held for sale		34,615			(14,476	)		(31,328	)
Decrease (increase) in other assets		15,415			(22,683	)		(1,142	)
(Decrease) increase in other liabilities		(15,524	)		20,803			9,310
Other		—			—			(19	)
Net cash provided by operating activities		92,222			33,654			14,743
Cash flows from investing activities:
Purchases of investment securities		(209,133	)		(401,806	)		(242,211	)
Proceeds from calls and maturities of investment securities		293,384			281,357			70,348
Purchases of securities available for sale		(968,263	)		(552,999	)		(382,780	)
Proceeds from sales of securities available for sale		52,574			15,508			25,001
Proceeds from calls and maturities of securities available for sale		741,110			528,260			397,444
Net decrease (increase) in interest-bearing deposits in other banks		2,602			(1,808	)		(3,183	)
Net decrease (increase) in federal funds sold and securities purchased under agreements to resell		69,905			(45,716	)		22,743
Net increase in loans		(406,150	)		(233,870	)		(154,358	)
Purchases of property, equipment and leasehold improvements		(6,734	)		(16,000	)		(8,898	)
Proceeds from sale of property and liquidation of assets		843			88			57
Proceeds from sale of other real estate owned		7,048			2,436			3,205
Costs capitalized on other real estate owned		—			(284	)		(180	)
Cash paid for bank owned life insurance		(700	)		—			(1,986	)
Net cash (paid) acquired in purchase acquisitions		(2,952	)		(551	)		7,062
Net cash used in investing activities		(426,466	)		(425,385	)		(267,736	)

The accompanying notes are an integral part of these consolidated financial statements.

F-6

Alabama National BanCorporation and Subsidiaries

Consolidated Statements of Cash Flow, Continued

(in thousands)

For the Years Ended December 31, 2003, 2002 and 2001

	2003			2002			2001
Cash flows from financing activities:
Net increase in deposits		331,947			263,636			84,177
Increase in federal funds purchased and securities sold under agreements to repurchase		60,397			50,577			73,480
Net (decrease) increase in short-term borrowings and capital leases		(115,148	)		80,889			(20,499	)
Proceeds from long-term debt		103,000			55,984			125,705
Repayments of long-term debt		(7,031	)		(25,550	)		—
Dividends on common stock		(14,369	)		(12,362	)		(11,003	)
Purchase of treasury stock		(900	)		—			(663	)
Other		(127	)		(144	)		(418	)
Net cash provided by financing activities		357,769			413,030			250,779
Increase (decrease) in cash and cash equivalents		23,525			21,299			(2,214	)
Cash and cash equivalents, beginning of year		99,561			78,262			80,476
Cash and cash equivalents, end of year	$	123,086		$	99,561		$	78,262
Supplemental disclosures of cash flow information:
Cash paid for interest	$	56,465		$	66,851		$	92,699
Cash paid for income taxes	$	17,528		$	15,169		$	9,796
Supplemental schedule of noncash investing activities:
Foreclosure of other real estate owned	$	5,258		$	2,874		$	2,465
Transfer of property to other real estate owned	$	—		$	—		$	465
Change in unrealized holding gains and losses on securities available for sale	$	(2,562	)	$	1,685		$	1,872
Assets acquired and liabilities assumed in merger transactions (Note 2)
Assets acquired in business combinations	$	122,727		$	1,453		$	187,649
Liabilities assumed in business combinations	$	99,956		$	—		$	178,479

The accompanying notes are an integral part of these consolidated financial statements.

F-7

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements

For the Years Ended December 31, 2003, 2002 and 2001

1. Nature of Business and Summary of Significant Accounting Policies

Alabama National BanCorporation and Subsidiaries (the Company) provides a full range of banking and bank-related services to individual and corporate customers through its twelve subsidiary banks located in Alabama, Georgia, and Florida.

Basis of Presentation and Principles of Consolidation

The accounting and reporting policies of the Company conform with accounting principles generally accepted in the United States of America and with general financial services industry practices. The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

In preparing the financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the statement of condition dates and revenues and expenses for the periods shown. Actual results could differ from those estimates. Estimates that are particularly susceptible to significant changes in the near term relate to the determination of the allowance for loan and lease losses, valuation of goodwill, other intangible assets and related impairment analyses, benefit plan obligations and expenses and income tax assets and liabilities.

Cash and Cash Equivalents

For purposes of reporting cash flows, cash and cash equivalents include cash on hand and due from banks.

Securities

Investment securities are stated at amortized cost as a result of management’s ability and intent to hold the securities until maturity. Premiums and discounts are amortized/accreted using the effective interest method.

Securities available for sale are those securities intended to be held for an indefinite period of time. The Company may sell these securities as part of its asset/liability strategy in response to changes in interest rates, changes in prepayment risk, or similar factors. Securities available for sale are recorded at fair value. Unrealized holding gains and losses on securities classified as available for sale are carried as a separate component of stockholders’ equity, net of taxes.

Trading securities, principally obligations of U.S. government agencies, are securities held for sale and are stated at fair value. Bond purchases and sales are recorded on the trade date. Accounts receivable from and accounts payable to bond customers represent security transactions entered into for which the securities have not been delivered as of the statement of condition dates. Unrealized holding gains and losses on securities classified as trading are reported in earnings during the period in which they occur.

Gains and losses on the sale of securities are computed using the specific identification method.

Loans and Leases

Interest income with respect to loans is recognized when earned. Loans are reported at their outstanding principal balances net of any unearned income, charge-offs, and unamortized deferred fees and costs. Loan origination fees and costs are deferred and recognized as adjustments to income over the life of the related loans. Unearned income is amortized to income using the interest method.

F-8

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

The Company provides equipment financing to its customers through a variety of lease arrangements. Leases are carried at the aggregate of lease payments to be received plus estimated residual value of the leased property, less unearned income.

A loan is impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Impaired loans are measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate, or as a practical expedient, at the loan’s observable market price or the fair value of the collateral if the loan is collateral-dependent. When the fair value of the impaired loan is less than the recorded investment in the loan, the impairment is recorded through a specific reserve allocation which is a component of the allowance for loan and lease losses.

Allowance for Loan and Lease Losses

The allowance for loan and lease losses is established through a provision for loan and lease losses charged to expense. Loans and leases are charged against the allowance for loan and lease losses when management believes the collection of principal is unlikely. The allowance is management’s estimate of probable inherent losses on existing loans and leases, based on evaluations of the collectibility of loans and prior loan loss experience. The evaluations take into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific loans and leases, and current economic conditions which may affect the borrower’s ability to pay. Accrual of interest is discontinued on a loan when management believes, after considering economic and business conditions and collection efforts, that the borrower’s financial condition is such that the collection of interest is doubtful. When a loan is placed on nonaccrual status, all interest which is accrued on the loan is reversed and deducted from earnings as a reduction of reported interest. Payments received on such loans are applied first to principal until the recoverability of the obligation is assured. Any remaining payments are then allocated as additional reductions of principal and interest income.

Property, Equipment, and Leasehold Improvements

Property, equipment, and leasehold improvements are stated at cost less accumulated depreciation and amortization. Depreciation is principally computed using the straight-line method over the estimated useful life of each type of asset. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful lives of the improvements or the terms of the related leases. Maintenance and repairs are expensed as incurred; improvements and betterments are capitalized. When items are retired or otherwise disposed of, the related costs and accumulated depreciation are removed from the accounts and any resulting gains or losses are credited or charged to income.

Other Real Estate

Other real estate, which primarily consists of property acquired by foreclosure, is recorded at the fair value less estimated selling costs. Other real estate is not depreciated. Losses, representing the difference between the sales price and the carrying value of the property, are recorded on the date of the sale, while gains on sales financed by the Company are deferred until the initial and continuing investment by the borrower equals or exceeds specified levels. Gains on all other sales are recorded when realized. Other real estate at December 31, 2003 and 2002 totaled $699,000 and $2,569,000, respectively.

Other Intangible Assets

Other intangible assets relate to core deposits and insurance customer lists. Other intangibles are amortized over a period based on the expected life of the intangible, generally five to ten years, using either the straight-line or accelerated methods of amortization.

Goodwill

The adoption of Statement of Financial Accounting Standards (SFAS) No. 142 resulted in the Company no longer amortizing goodwill. Prior to 2002, goodwill was amortized over periods ranging from 15 to 25

F-9

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

years. After January 1, 2002, the Company tests goodwill for impairment at least annually. There has been no impairment resulting from impairment tests.

Software Costs

Software costs, which primarily represent costs to acquire third party software packages, have a recorded cost of approximately $5,788,000 and $5,211,000 and related accumulated amortization of approximately $3,818,000 and $3,307,000 are included in other assets at December 31, 2003 and 2002, respectively. Amortization expense related to capitalized software costs totaled approximately $504,000, $421,000, and $338,000 during 2003, 2002, and 2001, respectively.

Income Taxes

There are two components of income tax expense: current and deferred. Current income tax expense reflects cash to be paid for taxes for the applicable period. Deferred income taxes are recognized due to temporary differences between the financial reporting basis and the income tax basis of assets and liabilities. Recognition of deferred tax assets is based on management’s belief that it is more likely than not that the tax benefit associated with certain temporary differences, tax operating loss carryforwards and tax credits will be realized. A valuation allowance is recorded for the amount of the deferred tax items for which it is more likely than not that realization will not occur.

Stock-Based Employee Compensation

The Company uses a fair value-based method of accounting for compensation costs. Compensation cost for stock-based employee compensation arrangements is measured at the grant date based on the value of the award and is recognized over the related service period. The Company has fully adopted and implemented the expense recognition provisions of SFAS No. 123, Accounting for Stock-Based Compensation, and has recorded compensation costs in accordance with these provisions. As such, there are no additional pro forma expenses or disclosure requirements. As discussed further under Recently Issued Accounting Standards, the issuance of SFAS No. 148, Accounting for Stock-Based Compensation – Transition and Disclosures, did not have an impact on the financial condition or results of operations of the Company.

Advertising Costs

The Company expenses the costs of advertising when those costs are incurred.

Collateral Requirements

The Company requires collateral for certain transactions with retail and commercial customers. Specifically, margin loans made for the purpose of borrowing against marketable investment securities generally do not exceed 50% of the total market value of a customer’s marginable securities portfolio at the time of the transaction and no more than 70% at anytime thereafter. Repurchase agreements, limited to commercial customers and correspondent banks, generally do not exceed the market value of securities used to secure such transactions at the time of the transaction or thereafter. Federal funds sold are made to correspondent banks on an unsecured basis and generally do not exceed limits established for each bank resulting from evaluation of the bank’s financial position.

Reclassifications

Certain reclassifications have been made to the prior year financial statements to conform with the 2003 presentation.

Recently Issued Accounting Standards

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment to FASB Statement No. 13, and Technical Corrections. SFAS No. 145 relates to the recording of

F-10

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

gains and losses from the extinguishment of debt to be classified as operating income, as opposed to previous requirements which reflected such gains and losses as extraordinary items. SFAS No. 145 is effective for fiscal years beginning on or after May 15, 2002. The Company adopted SFAS No. 145 on January 1, 2003. The initial adoption of this standard did not have an impact on the financial condition or results of operations of the Company. Management does not believe the provisions of this standard will have a material impact on future operations of the Company. Due to the adoption of this statement the FHLB prepayment penalty incurred during the 2003 third quarter was recorded in noninterest expense rather than as an extraordinary item.

In August 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. SFAS No. 146 requires that a liability for a cost that is associated with an exit or disposal activity be recognized when the liability is incurred. This Statement nullifies the guidance of the Emerging Issues Task Force (“EITF”) in EITF Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)”. Under EITF Issue No. 94-3, an entity recognized a liability for an exit cost on the date that the entity committed itself to an exit plan. In SFAS No. 146, the Board acknowledges that an entity’s commitment to a plan does not, by itself, create a present obligation to other parties that meets the definition of a liability. SFAS No. 146 also establishes that fair value is the objective for the initial measurement of the liability. The Company adopted the provisions of this Statement effective January 1, 2003. The initial adoption of this standard did not have an impact on the financial condition or results of operations of the Company. Management does not believe the provisions of this standard will have a material impact on future operations of the Company.

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure, which amends SFAS No. 123, Accounting for Stock-Based Compensation. SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require more prominent and more frequent disclosures in financial statements about the effects of stock-based compensation. The Company had previously adopted all provisions of SFAS No. 123. Accordingly, the initial adoption of SFAS No. 148 did not have an impact on the financial condition or results of operations of the Company, nor does management believe the provisions of this standard will have a material impact on future operations of the Company.

In November 2002, the FASB issued Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (FIN 45), which covers guarantees such as standby letters of credit, performance guarantees, and direct and indirect guarantees of indebtedness of others, but not guarantees of funding. FIN 45 requires a guarantor to recognize, at the inception of a guarantee, a liability in an amount equal to the fair value of the obligation undertaken in issuing the guarantee, and requires disclosure about the maximum potential payments that might be required, as well as the collateral or other recourse obtainable. The recognition and measurement provisions of FIN 45 were effective on a prospective basis after December 31, 2002, and its adoption by the Company on January 1, 2003 has not had a material impact on the financial condition or results of operations of the Company. See Note 11, Commitments and Contingencies for additional discussion of the Company’s financial guarantees as of December 31, 2003.

In January 2003, the FASB issued Interpretation No. 46 (“FIN 46”), Consolidation of Variable Interest Entities. FIN 46 states that if a business enterprise is the primary beneficiary of a variable interest entity, the assets, liabilities and results of the activities of the variable interest entity should be included in the

F-11

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

consolidated financial statements of the business enterprise. This Interpretation explains how to identify variable interest entities and how an enterprise assesses its interests in a variable interest entity to decide whether to consolidate that entity. FIN 46 also requires existing unconsolidated variable interest entities to be consolidated by their primary beneficiaries if the entities do not effectively disperse risks among parties involved. Variable interest entities that effectively disperse risks will not be consolidated unless a single party holds an interest or combination of interests that effectively recombines risks that were previously dispersed. Due to significant implementation concerns, the FASB modified the wording of FIN 46 and issued FIN 46R in December 2003. FIN 46R deferred the effective date for the provisions of FIN 46 to entities other than Special Purpose Entities (“SPEs”) until financial statements are issued for periods ending after March 15, 2004. SPEs are subject to the provisions of either FIN 46 or FIN 46R as of December 15, 2003. Management has evaluated the Company’s investment in variable interest entities and potential variable interest entities or transactions, particularly in limited liability partnerships involved in low-income housing development (LIHTC) and trust preferred securities structures because these entities or transactions constitute the Company’s primary FIN 46 and FIN 46R exposure. Management determined that the Company is not the primary beneficiary of the LIHTC investments and accordingly the partnerships were not consolidated. The Company’s interest in these partnerships as of December 31, 2003 was $1,990,000.

During 2003, the Company also analyzed the impact of FIN 46 and FIN 46R on certain trusts of the Company and determined that certain trusts created by the Company to issue trust preferred securities would require deconsolidation due to the provisions of FIN 46 and FIN 46R. Accordingly, as of December 31, 2003 the Company was required to deconsolidate these trusts. This deconsolidation required the Company to record junior subordinated debentures of $46,393,000, eliminate the guaranteed beneficial interest in subordinated debentures of $45,000,000 and record the Company’s investment in the trusts of $1,393,000 in other assets. In July 2003, the Board of Governors of the Federal Reserve System issued a supervisory letter instructing bank holding companies to continue to include the trust preferred securities in Tier I capital for regulatory capital purposes until further notice. The Federal Reserve intends to review the regulatory implications of any accounting treatment changes and, if necessary, provide further appropriate guidance. However, there can be no assurance that the Federal Reserve will continue to allow institutions to include trust preferred securities in Tier I capital for regulatory purposes.

Currently, other than the impact described above from the deconsolidation of the trust preferred securities, the adoption of FIN 46 and FIN 46R did not have a material impact on the Company’s consolidated financial position or consolidated results of operations. Interpretive guidance relating to FIN 46 and FIN 46R is continuing to evolve and the Company’s management will continue to assess various aspects of consolidations and variable interest entity accounting as additional guidance becomes available.

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities. The Statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. The Statement is effective for contracts entered into or modified after June 30, 2003, with certain exceptions, and for hedging relationships designated after June 30, 2003. In addition, the provisions of the statement, with certain exceptions, were required to be applied prospectively. The initial implementation of the Statement did not have a material affect on the Company’s consolidated financial position or consolidated results of operations and management does not anticipate any such impact in the future.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. This Statement provides new rules on the accounting for

F-12

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

certain financial instruments that, under previous guidance, issuers could account for as equity. Such financial instruments include mandatorily redeemable shares, instruments that require the issuer to buy back some of its shares in exchange for cash or other assets, or obligations that can be settled with shares, the monetary value of which is fixed. Most of the guidance in SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 30, 2003. The initial implementation of the Statement did not have a material affect on the Company’s consolidated financial position or consolidated results of operations and management does not anticipate any such impact in the future.

In December 2003, the FASB issued SFAS No.132 (revised 2003), Employers’ Disclosures about Pension and Postretirement Benefits. This statement requires additional disclosures about the assets, obligations and cash flows of defined benefit pension and postretirement plans, as well as the expense recorded for such plans. As of December 31, 2003, the Company has disclosed the required elements related to its defined benefit pension plans in Note 12 to these consolidated financial statements.

On December 11, 2003, the SEC Staff announced its intention to release a Staff Accounting Bulletin in order to clarify existing accounting practices relating to the valuation of issued loan commitments, including interest rate lock commitments, subject to Derivative Implementation Group Issue C-13, When a Loan Commitment is Included in the Scope of Statement 133. The new guidance is expected to require all registrants to begin accounting for these commitments subject to SFAS No. 133 as written options that would be reported as liabilities until they are exercised or expire. The provisions of this interim guidance is expected to be effective for loan commitments entered into after March 31, 2004. Management intends to adopt the provisions of this guidance effective April 1, 2004 and does not anticipate that the adoption will have a materially adverse effect on either the Company’s consolidated financial position or consolidated results of operations.

2. Business Combinations

On June 19, 2003, the Company acquired Millennium Bank in Gainesville, Florida (Millennium) in a business combination accounted for under the purchase method. The Company issued approximately 395,000 shares of common stock to existing Millennium shareholders at an exchange ratio of 0.63115 shares of the Company’s common stock for each share of Millennium common stock. In addition to the Company’s common stock, each shareholder electing to receive the Company’s common stock received cash of $1.52 for each share of Millennium common stock. The Millennium shareholders had the option to receive cash instead of the Company’s common stock, and Millennium shareholders making this election received $48.80 for each share of Millennium common stock. Total cash consideration paid was approximately $4.6 million. Upon completion of the acquisition, Millennium became a wholly owned subsidiary of the Company and continues to operate under its existing name, management and board of directors.

On December 14, 2001, the Company acquired Farmers National BancShares, Inc. (Farmers) in a business combination accounted for under the purchase method. The Company issued approximately 550,000 shares of common stock and common stock equivalents to existing Farmers shareholders at an exchange ratio of 0.53125 shares of the Company’s common stock for each share of Farmers stock. Subsequent to the completion of the acquisition, the operations of Farmers were merged into First American Bank, a subsidiary of the Company.

F-13

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

The following table summarizes the fair values of the assets acquired and liabilities assumed of Millennium and Farmers at the date of acquisition (in thousands):

	Millennium		Farmers
Cash	$	1,643	$	8,153
Securities		24,237		46,058
Federal funds sold and securities purchased under agreements to resell		8,482		24,724
Net loans		69,227		99,203
Other assets		3,831		11,248
Goodwill		15,982		5,232
Core deposit intangible		968		1,184
Total assets acquired		124,370		195,802
Deposits		91,407		175,486
Other liabilities		8,549		2,993
Total liabilities assumed		99,956		178,479
Net assets acquired	$	24,414	$	17,323

The acquisition of Millennium and Farmers resulted in the recognition of $16,950,000 and $6,416,000 of intangible assets, respectively. The Company allocated $968,000 and $1,184,000 of the total intangible to core deposits, respectively. This allocation was based upon the Company’s valuation of the core deposits of Millennium and Farmers. Factors considered in the valuation included: (1) the rate and maturity structure of the interest-bearing liabilities, (2) estimated retention rates for each deposit liability category and (3) the current interest rate environment. The core deposit intangible created is being amortized over the expected useful life not to exceed seven years. The remaining intangible was allocated to goodwill.

The following table presents unaudited proforma results of operations for the years ended December 31, 2003 and 2002, as if the Millennium acquisition had occurred at January 1, 2003 and 2002, respectively. Since no consideration is given to operational efficiencies and expanded products and services, the pro forma summary information does not necessarily reflect the results of operations as they actually would have been, if the Millennium acquisition had occurred at those dates:

	2003		2002
	(in thousands, except per share amount)
Total revenue*	$	201,861	$	178,412
Net income	$	41,414	$	36,209
Basic EPS	$	3.20	$	2.84
Diluted EPS	$	3.15	$	2.76

* Total revenue consists of net interest income and noninterest income

During 2002, the Company acquired two small insurance agencies in business combinations accounted for under the purchase method. The total acquisition price was approximately $1,453,000 and was allocated to an insurance customer list intangible asset. The insurance customer list intangible asset is being amortized on a straight-line basis over five years.

F-14

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

3. Goodwill and Other Acquired Intangible Assets

The changes in the carrying amounts of goodwill attributable to each of the Company’s operating segments for the years ended December 31, 2003 and 2002 are as follows (in thousands):

	Retail and Commercial Banking			Insurance Division
Balance, January 1, 2002	$	12,120		$	2,693
Other goodwill additions		1,112			—
Balance, December 31, 2002		13,232			2,693
Acquired goodwill		15,982			—
Other goodwill adjustments		(943	)		—
Balance, December 31, 2003	$	28,271		$	2,693

Each segment was tested for impairment on January 1, 2002, when the Company initially adopted SFAS No. 142 and on each of December 31, 2003 and 2002. The fair value of each reporting unit was estimated using the present value of expected future cash flows. The impairment test indicated that no impairment charge was required at either test date.

Intangible assets as of December 31, 2003 and 2002 are detailed in the following table (in thousands):

	As of December 31, 2003
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value
Amortizing intangible assets:
Core deposit intangibles	$	7,938	$	(4,342	)	$	3,596
Other customer intangibles		1,453		(426	)		1,027
Total amortizing intangible assets	$	9,391	$	(4,768	)	$	4,623
	As of December 31, 2002
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value
Amortizing intangible assets:
Core deposit intangibles	$	6,970	$	(3,591	)	$	3,379
Other customer intangibles		1,453		(135	)		1,318
Total amortizing intangible assets	$	8,423	$	(3,726	)	$	4,697

During the years ended December 31, 2003 and 2002, the Company recognized no amortization expense related to goodwill, and recognized $518,000 of goodwill amortization expense in the year ended December 31, 2001. The Company recognized $1,042,000, $832,000, and $627,000 of other intangible amortization expense for the years ended December 31, 2003, 2002 and 2001, respectively. Based upon the intangible assets as of December 31, 2003, aggregate amortization expense for the years ending December 31, 2004 through December 31, 2008 is estimated to be $1,086,000, $1,011,000, $956,000, $747,000 and $426,000, respectively.

F-15

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

The following table presents actual results and adjusted net income and adjusted earnings per share, assuming the nonamortization provisions of SFAS No. 142 were effective at the beginning of the periods presented (in thousands, except per share data):

	For the Year Ended December 31,
	2003		2002		2001
Net income:
Reported net income	$	41,046	$	35,702	$	28,415
Add back:
Goodwill amortization, net of taxes		—		—		342
Net income excluding goodwill amortization, net of taxes	$	41,046	$	35,702	$	28,757
Basic net income per common share:
Reported net income	$	3.22	$	2.89	$	2.40
Add back:
Goodwill amortization, net of taxes		—		—		.03
Net income excluding goodwill amortization, net of taxes	$	3.22	$	2.89	$	2.43
Weighted average shares outstanding (basic)		12,748		12,361		11,853
Diluted net income per common share:
Reported net income	$	3.17	$	2.81	$	2.34
Add back:
Goodwill amortization, net of taxes		—		—		.03
Net income excluding goodwill amortization, net of taxes	$	3.17	$	2.81	$	2.37
Weighted average shares outstanding (diluted)		12,957		12,683		12,141

F-16

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

4. Securities

The amortized costs and estimated market values of investment securities (carried at amortized cost) and securities available for sale (carried at market value) are as follows (in thousands):

	December 31, 2003
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Market Value
Investment securities:
U.S. treasury securities and obligations of U.S. government corporations and agencies	$	23,962	$	248	$	198	$	24,012
Obligations of states and political subdivisions		1,553		50		—		1,603
Mortgage-backed securities issued or guaranteed by U.S. government corporations and agencies		245,520		1,970		1,569		245,921
Totals	$	271,035	$	2,268	$	1,767	$	271,536
Securities available for sale:
U.S. treasury securities and obligations of U.S. government corporations and agencies	$	318,886	$	887	$	1,870	$	317,903
Obligations of states and political subdivisions		40,922		1,542		79		42,385
Mortgage-backed securities issued or guaranteed by U.S. government corporations and agencies		160,871		1,097		1,284		160,684
Equity securities		18,220		—		—		18,220
Totals	$	538,899	$	3,526	$	3,233	$	539,192

	December 31, 2002
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Market Value
Investment securities:
U.S. treasury securities and obligations of U.S. government corporations and agencies	$	42,211	$	14	$	—	$	42,225
Obligations of states and political subdivisions		3,704		132		—		3,836
Mortgage-backed securities issued or guaranteed by U.S. government corporations and agencies		309,530		2,225		4		311,751
Totals	$	355,445	$	2,371	$	4	$	357,812
Securities available for sale:
U.S. treasury securities and obligations of U.S. government corporations and agencies	$	100,211	$	938	$	—	$	101,149
Obligations of states and political subdivisions		30,754		1,304		23		32,035
Mortgage-backed securities issued or guaranteed by U.S. government corporations and agencies		190,169		2,110		122		192,157
Equity securities		19,547		—		—		19,547
Totals	$	340,681	$	4,352	$	145	$	344,888

F-17

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

Equity securities are comprised primarily of Federal Home Loan Bank and Federal Reserve Bank stock. These holdings are required under regulatory guidelines.

Maturities of securities at December 31, 2003 are summarized as follows (in thousands):

	Investment Securities				Available for Sale
	Amortized Cost		Market Value		Amortized Cost		Market Value
Due in one year or less	$	340	$	343	$	7,436	$	7,599
Due after one year through five years		19,594		19,625		198,723		198,005
Due after five years through ten years		5,581		5,647		137,114		137,626
Due after ten years		—		—		16,535		17,058
Mortgage-backed securities		245,520		245,921		160,871		160,684
Equity securities		—		—		18,220		18,220
Totals	$	271,035	$	271,536	$	538,899	$	539,192

Gross gains of $117,000, $35,000 and $246,000 were realized on the sale of securities during 2003, 2002 and 2001, respectively, and there were gross realized losses of $71,000 during 2003.

F-18

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

Information pertaining to securities with gross unrealized losses at December 31, 2003, aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:

	Less Than Twelve Months				Over Twelve Months				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Investment securities:
Debt securities:
U.S. treasury securities and obligations of U.S. government corporations and agencies	$	14,764	$	198	$	—	$	—	$	14,764	$	198
Obligations of states and political subdivisions		—		—		—		—		—		—
Mortgage-backed securities issued or guaranteed by U.S. government corporations and agencies		99,924		1,569		—		—		99,924		1,569
Total debt securities		114,688		1,767		—		—		114,688		1,767
Equity securities		—		—		—		—		—		—
Total investment securities	$	114,688	$	1,767	$	—	$	—	$	114,688	$	1,767
Securities Available for Sale:
Debt securities:
U.S. treasury securities and obligations of U.S. government corporations and agencies	$	114,096	$	1,870	$	—	$	—	$	114,096	$	1,870
Obligations of states and political subdivisions		3,529		78		126		1		3,655		79
Mortgage-backed securities issued or guaranteed by U.S. government corporations and agencies		89,824		1,282		149		2		89,973		1,284
Total debt securities		207,449		3,230		275		3		207,724		3,233
Equity securities		—		—		—		—		—		—
Total securities available for sale	$	207,449	$	3,230	$	275	$	3	$	207,724	$	3,233

F-19

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

Management evaluates securities for other-than-temporary impairment no less frequently than quarterly, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) length of time and the extent to which fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

As of December 31, 2003, three debt securities have been in a loss position for more than twelve months and a total of 134 debt securities that have been in a loss position for less than twelve months. The losses for all securities are a direct result of declining interest rates and the effect that declining rates has on the value of debt securities and not the credit worthiness of the issuers. Therefore the Company has not recognized any other-than-temporary impairments.

5. Loans and Leases

Major classifications of loans and leases at December 31, 2003 and 2002 are summarized as follows (in thousands):

	2003			2002
Commercial, financial, and agricultural	$	265,923		$	253,569
Real estate:
Construction		530,024			311,259
Mortgage—residential		676,658			616,651
Mortgage—commercial		814,904			699,403
Mortgage—other		9,412			5,672
Consumer		74,137			78,342
Lease financing receivables		77,857			80,113
Securities brokerage margin loans		15,407			14,502
Other		198,036			134,191
Gross loans and receivables		2,662,358			2,193,702
Less unearned income		(2,918	)		(2,308	)
Loans and leases, net of unearned income		2,659,440			2,191,394
Less allowance for loan and lease losses		(36,562	)		(32,704	)
Net loans and leases	$	2,622,878		$	2,158,690

In the normal course of business, loans are made to directors, officers, and their affiliates. Such loans are made on substantially the same terms as to other customers of the banks. The aggregate of such loans was $64,035,000 and $63,250,000 at December 31, 2003 and 2002, respectively. During 2003 and 2002, new loans of $40,348,000 and $47,130,000 were funded and reductions totaled $39,563,000 and $29,565,000, respectively.

Loans on which the accrual of interest has been discontinued or reduced amounted to approximately $9,817,000 and $10,282,000 at December 31, 2003 and 2002, respectively. If these loans had been current throughout their terms, gross interest income for the years ended December 31, 2003 and 2002, respectively, would have increased by approximately $474,000 and $540,000.

At December 31, 2003 and 2002, the recorded net investment in loans for which impairment has been recognized totaled $9,817,000 and $10,282,000, respectively. Management of the Company believes that the value of these impaired loans on the Company’s books is less than the recoverable value of the loans.

F-20

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

The Company did not recognize any material interest income on impaired loans during the portion of the year that they were impaired. The impaired loans at December 31, 2003 and 2002 were measured for impairment primarily using the fair value of the collateral. The average investment on these loans for the years ended December 31, 2003 and 2002 amounted to $7,965,000 and $7,981,000, respectively.

All of the loans identified as being impaired have been specifically allocated a portion of the allowance for loan and lease losses. This specifically allocated portion of the allowance totaled $2,041,000 and $704,000 at December 31, 2003 and 2002, respectively.

The Company grants real estate, commercial, and consumer loans to customers primarily in Alabama, Georgia, and Florida. Although the Company has a diversified loan portfolio, significant concentrations include loans collateralized by improved and undeveloped commercial and residential real estate.

6. Allowance for Loan and Lease Losses

A summary of the allowance for loan and lease losses for the years ended December 31, 2003, 2002 and 2001 is as follows (in thousands):

	2003			2002			2001
Balance, beginning of year	$	32,704		$	28,519		$	22,368
Loans charged off		(5,819	)		(6,236	)		(3,359	)
Recoveries		2,751			2,465			1,692
Net charge-offs		(3,068	)		(3,771	)		(1,667	)
Provision charged to operations		5,931			7,956			3,946
Additions to allowance through acquisition		995			—			3,872
Balance, end of year	$	36,562		$	32,704		$	28,519

7. Property, Equipment, and Leasehold Improvements

Major classifications of property, equipment, and leasehold improvements at December 31, 2003 and 2002 are summarized as follows (in thousands):

	Estimated Useful Lives	2003			2002
Land		$	21,641		$	19,365
Buildings and improvements	5—45 years		49,511			43,678
Leasehold improvements	10—30 years		7,602			7,334
Furniture, equipment, and vault	3—30 years		42,537			38,733
Construction in progress			1,475			4,369
			122,766			113,479
Less accumulated depreciation and amortization			(45,475	)		(41,142	)
Property, equipment, and leasehold improvements, net		$	77,291		$	72,337

F-21

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

8. Deposits

Deposits at December 31, 2003 and 2002 are summarized as follows (in thousands):

	2003		2002
Demand deposit accounts	$	404,755	$	336,172
NOW accounts		528,766		476,721
Savings and money market accounts		521,440		378,361
Time deposits less than $100,000		619,229		635,827
Time deposits of $100,000 or more		679,559		503,314
Total deposits	$	2,753,749	$	2,330,395

At December 31, 2003, the scheduled maturities of time deposits are as follows (in thousands):

2004	$	986,812
2005		170,576
2006		44,898
2007		42,043
2008		53,099
Thereafter		1,360
Total	$	1,298,788

Certain directors of the Company, including their families and affiliated companies, are deposit customers. Total deposits of these persons at December 31, 2003 and 2002 were approximately $40,600,000 and $31,157,000, respectively.

9. Short and Long-Term Borrowings

Federal funds purchased and securities sold under agreements to repurchase are summarized as follows (in thousands):

	2003		2002
Federal funds purchased	$	233,003	$	149,174
Securities sold under agreements to repurchase		125,390		141,463
Total federal funds purchased and securities sold under agreements to repurchase	$	358,393	$	290,637

Short-term borrowings are summarized as follows (in thousands):

	2003		2002
Note payable to third-party bank under secured master note agreement; rate varies with LIBOR and was 1.89125% and 2.16938% at December 31, 2003 and 2002, respectively; collateralized by the Company’s stock in subsidiary banks. Matures on May 31, 2004	$	1,650	$	19,100
FHLB open ended notes payable; rate varies daily based on the FHLB Daily Rate Credit interest price and was 1.15% and 1.30% at December 31, 2003 and 2002, respectively; collateralized by FHLB stock and certain first real estate mortgages		24,500		93,000
FHLB borrowings due at various maturities ranging from February 2, 2004 through December 4, 2004 at December 31, 2003; at December 31, 2002, maturities ranged from February 11, 2003 to December 3, 2003; bearing interest at fixed rates ranging from 1.79% to 5.715% at December 31, 2003 and at December 31, 2002 interest rates included fixed and variable rates ranging from 1.93% to 4.74%; collateralized by FHLB stock and certain first real estate mortgages		15,000		40,000
Total short-term borrowings	$	41,150	$	152,100

F-22

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

Long-term borrowings are summarized as follows (in thousands):

	2003		2002
FHLB borrowings due at various maturities ranging from November 10, 2005 through October 23, 2012 at December 31, 2003; at December 31, 2002, maturities ranged from February 2, 2004 to October 23, 2012; bearing interest at fixed rates ranging from 1.09% to 6.00% at December 31, 2003 and bearing interest ranging from 1.175% to 6.00% at December 31, 2002; convertible to variable rate advances at the option of the FHLB at dates ranging from January 7, 2004 to November 7, 2006; collateralized by FHLB stock and certain first real estate mortgages	$	258,000	$	215,000
FHLB borrowings due September 12, 2006; rate varies quarterly with LIBOR and was 0.52% at December 31, 2003; September 12, 2004 the advance will convert to a fixed rate of 2.54%; convertible at the option of the FHLB on September 12, 2004 to a variable rate advance		28,000		—
Trust preferred securities with maturities ranging from December 18, 2031 through December 19, 2032; bearing interest ranging from 4.66% to 5.01% at December 31, 2002		—		25,000
Junior subordinated debentures payable to unconsolidated trust due December 18, 2031; rate varies with LIBOR and was 4.77% at December 31, 2003		15,464		—
Junior subordinated debentures payable to unconsolidated trust due December 19, 2032; rate varies with LIBOR and was 4.42% at December 31, 2003		10,310		—
Junior subordinated debentures payable to unconsolidated trust due September 26, 2033; rate varies with LIBOR and was 4.2125% at December 31, 2003		20,619		—
Various notes payable and capital leases payable		34		65
Total long-term debt	$	332,427	$	240,065

As discussed under Recently Issued Accounting Standards, the Company adopted the provisions of FIN 46-R during 2003. As a result, the Company deconsolidated certain trust preferred structures. The recharacterization of these trusts are presented above. As a result, the Company now reflects its investment in the trusts and its payables to the trusts.

Aggregate maturities of long-term debt are as follows for fiscal years (in thousands):

2004	$	26
2005		10,008
2006		28,000
2007		25,000
2008		56,000
Thereafter		213,393
	$	332,427

F-23

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

The note payable to a third-party bank at December 31, 2003 is payable in full on May 31, 2004. Maximum borrowing under the secured master note agreement is $30,000,000 and interest is payable quarterly.

At December 31, 2003, the Company has approximately $346,010,000 of unused available credit with the FHLB in addition to the approximately $325,500,000 above, approximately $28,350,000 of unused available credit with a regional financial institution, and federal funds lines of approximately $188,000,000 with various correspondent banks, of which approximately $70,738,000 remains available.

The Company has also pledged approximately $68,828,000 in loans to the Federal Reserve Bank of Atlanta as collateral for a discount window credit facility. At December 31, 2003, the Company had access to approximately $55,062,000 under this facility, with no outstanding borrowings.

The FHLB has a blanket lien on the Company’s 1-4 family mortgage loans in the amount of the outstanding FHLB borrowings. In addition to the blanket lien on the Company’s 1-4 family mortgage loans, the Company has pledged available for sale securities as collateral for the outstanding debt. These securities had a carrying value of $60,206,000 at December 31, 2003.

Additional details regarding short-term borrowings, fed funds purchased and repurchase agreements is shown below (in thousands):

	2003			2002			2001
Average amount outstanding during the year	$	397,370		$	350,625		$	280,880
Maximum amount outstanding at any month end	$	451,153		$	442,737		$	371,371
Weighted average interest rate:
During year		1.18	%		1.83	%		3.73	%
End of year		1.11	%		1.37	%		1.71	%

10. Operating and Capital Leases

One of the Company’s subsidiary banks leases its main office building from a partnership, which is partially owned by certain directors and stockholders of the Company, under a noncancelable operating lease expiring in 2020. Rent expense under the terms of this related party lease was $1,012,000, $975,000 and $1,004,000, respectively, during 2003, 2002 and 2001. Leases classified as capital leases include branch offices with a net book value of approximately $30,000 at December 31, 2003. Additionally, several subsidiary banks lease branch offices and equipment under operating leases.

Minimum future rental payments for the capital and operating leases are as follows (in thousands):

	Capital Leases		Operating Leases
2004	$	27	$	2,073
2005		9		1,963
2006				1,856
2007				1,753
2008				1,751
Thereafter				16,787
Total minimum payments		36	$	26,183
Less amount representing interest		2
Net capital lease obligation	$	34

F-24

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

Rent expense charged to operations under operating lease agreements for the years ended December 31, 2003, 2002, and 2001 was approximately $2,276,000, $2,091,000 and $1,768,000, respectively.

11. Commitments and Contingencies

In the normal course of business, the Company makes commitments to meet the financing needs of its customers. These commitments include commitments to extend credit and standby letters of credit. These instruments include, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated statements of financial condition. The Company’s exposure to credit risk is the extent of nonperformance by the counter party to the financial instrument for commitments to extend credit and standby letters of credit and is represented by the contractual amount of those instruments. The Company uses the same credit policies and procedures in making commitments and conditional obligations as it does for loans.

At December 31, 2003 and 2002, unused commitments under lines of credit aggregated approximately $704,204,000 and $536,956,000, of which approximately $15,216,000 and $13,810,000 pertained to related parties, respectively. The Company evaluates each customer’s credit worthiness on an individual basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the borrower. Collateral held varies but may include accounts receivable, inventory, property, plant, and equipment, residential real estate and income-producing commercial properties.

The Company had approximately $28,187,000 and $31,125,000 in irrevocable standby letters of credit outstanding at December 31, 2003 and 2002, respectively, of which approximately $35,000 and $281,000 at December 31, 2003 and 2002, respectively, pertained to related parties. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The collateral varies but may include accounts receivable, inventory, property, plant, and equipment, and residential real estate for those commitments for which collateral is deemed necessary.

The Company, in the normal course of business, is subject to various pending and threatened litigation. Based on legal counsel’s opinion, management does not anticipate that the ultimate liability, if any, resulting from such litigation will have a material adverse effect on the Company’s financial condition or results of operations.

F-25

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

12. Employee Benefit Plans and Stock Based Compensation

The Company, through two of its subsidiary banks, sponsors two defined benefit pension plans. Each of these plans has been frozen with regard to future benefit accruals and participation by new employees.

The components of net pension expense (income) for the years ended December 31, 2003, 2002, and 2001 are as follows (in thousands):

	2003			2002			2001
Service cost	$	—		$	—		$	—
Interest cost		367			372			253
Expected return on plan assets		(439	)		(481	)		(370	)
Amortization of transition asset		(2	)		(2	)		(2	)
Recognized net actuarial loss		69			21			—
Net periodic pension benefit		(5	)		(90	)		(119	)
Settlement loss		25			62			—
Pension expense (income)	$	20		$	(28	)	$	(119	)

F-26

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

The reconciliation of the beginning and ending balances of the projected benefit obligation and plan assets, as well as disclosure of the plans’ funded status for the years ended December 31, 2003 and 2002, is as follows (in thousands):

	2003			2002
Change in plan assets
Fair value of plan assets at January 1	$	6,282		$	5,344
Actual return on plan assets		895			(67	)
Employer contributions		—			1,440
Benefits paid		(182	)		(180	)
Settlements		(214	)		(255	)
Fair value of plan assets at December 31	$	6,781		$	6,282
Change in benefit obligation
Projected benefit obligation at January 1	$	6,252		$	5,477
Service cost		—			—
Interest cost		367			372
Actuarial (gain) loss		(73	)		838
Benefits paid		(182	)		(180	)
Settlements		(214	)		(255	)
Projected benefit obligation at December 31	$	6,150		$	6,252
Funded status
Plan assets in excess of projected benefit obligation	$	631		$	30
Unrecognized net gain		1,113			1,737
Unrecognized net asset at date of initial application		—			(2	)
Accrued pension asset	$	1,744		$	1,765

Assumptions

Primary assumptions used to actuarially determine benefit obligations and net pension expense are as follows:

	Benefit Obligation
	2003		2002		2001
Discount rate	6.00	%	6.00	%	6.50	%
Salary increase rate	N/A		N/A		N/A
	Net Pension Expense (Income)
	2003		2002		2001
Discount rate	6.00	%	6.50	%	7.00	%
Expected long-term return on plan assets	7.00	%	8.57	%	9.00	%
Salary rate increase	N/A		N/A		N/A

F-27

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

The expected long-term return on plan assets assumption has been derived by applying the weighted-averaged target allocation to the expected return by asset category, shown in the table below. Overall, the expected return assumptions for each asset class utilized is generally based on expectation of future returns:

Plan Assets

The consolidated pension plan weighted-average asset allocations at December 31, 2003 and 2002, by asset category are as follows:

	Plan Assets at December 31,				Target Allocation		Expected Return By Category
	2003		2002				2003
Asset Category
Equity securities	58.8	%	30.2	%	51.8	%	9.0	%
Debt securities	39.8	%	35.9	%	46.2	%	5.0	%
Cash equivalents	1.4	%	33.9	%	2.0	%	2.0	%
Total/weighted average expected return	100	%	100	%	100	%	7.01	%

The target asset allocation shown above represents the weighted-average target allocation of total plan assets. Each plan’s stated investment policy allows for a range of percentages within each asset class that generally is 10% above and below the target. The stated investment goals are to generate a return in excess of 7.0% (the current long-term return assumption), to meet or exceed the rate of return of similarly balanced market indexes and to provide an appropriate amount of liquidity to meet distribution requirements of current and future retirees. The risk management practices employed by the plan’s investment policy include diversification criteria, requirements that fixed income investments be of investment quality, an annual assessment of investment managers, analysis of fund performance against benchmarks and substantiation that investment results are consistent with stated objectives, goals and guidelines. Finally, there are several categories of investments that are not eligible for investment without specific approval. These include: short sales, margin purchases, private placements, commodities, security loans, unregistered or restricted stock, warrants, real estate mortgages, real estate equity, options and futures.

Equity securities include Alabama National BanCorporation common stock in the amounts of $1.02 million (15.1% of total plan assets) and $.85 million (13.5% of total plan assets) at December 31, 2003 and 2002, respectively.

The Company does not anticipate making a contribution to its pension plans during 2004.

The Company has a qualified employee benefit plan under Section 401(k) of the Internal Revenue Code covering substantially all employees. Employees can contribute up to 15% of their salary to the plan on a pre-tax basis and the Company matches 100% of participants’ contributions up to the first 5.5% of each participant’s salary. The Company’s matching contribution charged to operations related to this plan, as well as other plans of merged banks, was approximately $2,224,000, $1,778,000 and $1,282,000 for the years ended December 31, 2003, 2002 and 2001, respectively.

F-28

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

The Company and certain subsidiary banks have deferred compensation plans for the benefit of the Company’s former chief executive officer. Payments under the plans commenced March 15, 1997 and March 15, 2002, and continue for a period of 15 years. In connection with the plans, the banks purchased single premium life insurance policies on the life of the officer. At December 31, 2003 and 2002, the cash surrender value of the policies was $2,741,000 and $2,630,000, respectively.

Additionally, the Company and several of its subsidiary banks own life insurance policies to provide for the payment of death benefits related to existing deferred compensation and supplemental income plans maintained for the benefit of certain presidents, employees and directors of such banks. The total cash surrender value of such policies at December 31, 2003 and 2002 was $13,366,000 and $12,084,000, respectively. The Company recorded expense of $967,000 $240,000, and $93,000 for the years ended December 31, 2003, 2002, and 2001, respectively, for these plans.

The Company sponsors a Performance Share Plan (the PSP) to offer long-term incentives in addition to current compensation to certain key executives. The criteria for payment of performance share awards is based upon a comparison of the Company’s average return on average equity for an award period to that of a comparison group of bank holding companies. If the Company’s results are below the median of the comparison group, no portion of the award is earned. If the Company’s results are at or above the 90^th percentile, the maximum award is earned. The vesting period for awards is four years. Under the plan, 400,000 shares have been reserved for issuances.

In accordance with the terms of the PSP, a base grant of 19,285, 19,675 and 23,600 shares (net of forfeitures) was made in each of the years ended December 31, 2003, 2002 and 2001, respectively. The market value per share was $43.88, $33.33 and $22.00 at each grant date for the years ended December 31, 2003, 2002 and 2001, respectively. During the years ended December 31, 2003, 2002, and 2001, 20,274, 22,859, and 22,186 shares, respectively, were awarded to participants. At December 31, 2003, outstanding awards of expected and maximum payouts were 126,599 and 136,635 shares, respectively. Expense recorded for the PSP was $888,000, $698,000 and $561,000 for the years ended December 31, 2003, 2002 and 2001, respectively.

The Company has a separate Performance Share Plan to provide long-term incentives to non-employee directors of a subsidiary bank (the 1997 Subsidiary PSP) and made a base grant of 20,000 shares, with a market value per share of $25.13, to vest over a sixty-three month period.

During 2003 a total of 18,261 shares were distributed under the 1997 subsidiary PSP. Since the measurement period ended on December 31, 2002, there was no expense recognized for the plan during 2003. Expense recorded for the 1997 subsidiary PSP was $84,000 for each of the years ended December 31, 2002 and 2001.

During 2000, the Company adopted a separate Performance Share Plan to provide long-term incentives to non-employee directors of a subsidiary bank (the 2000 Subsidiary PSP) and made a base grant of 20,000 shares, with a market value per share of $19.22 to vest over a sixty-four month period. The actual number of shares to be distributed in fiscal 2005 will depend on the subsidiary bank’s performance as well as certain conditions to be met by the directors. At December 31, 2003, the expected and maximum payout was 25,000 shares. Expense recorded for the 2000 Subsidiary PSP was $90,000 for each of the years ended December 31, 2003, 2002 and 2001.

F-29

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

During 1999, the Company adopted the 1999 Long Term Incentive Plan (the LTI Plan) which provides for the award of incentive and non-qualified stock options, stock appreciation rights, restricted stock and performance awards to eligible employees of the Company. The total number of shares of common stock reserved and available for distribution under the LTI Plan is 300,000 shares. Any awards under the LTI Plan will be in addition to awards made under the PSP. During 2000, the Company granted 160,500 non-qualified stock options under the LTI Plan, which vest over a sixty-month period. Net of forfeitures and exercises, 143,834 stock options were outstanding at December 31, 2003. Expense recorded for the LTI Plan was $143,000, $143,000 and $124,000 for the years ended December 31, 2003, 2002, and 2001, respectively.

In connection with the 2001 business combination of Farmers and the 2003 business combination of Millennium, the Company assumed certain stock options of the acquired banks. Additionally, the Company had stock option plans with outstanding options granted prior to January 1, 2001.

A summary of the status of the Company’s stock options as of December 31, 2003, 2002 and 2001, and the changes during each of the three years then ended is presented below:

	2003				2002				2001
	Shares			Weighted Average Exercise Price	Shares			Weighted Average Exercise Price	Shares			Weighted Average Exercise Price
Outstanding, January 1	278,921		$	18.53	326,820		$	18.78	379,406		$	14.12
Forfeited					(5,313	)		33.88	(15,000	)		18.88
Assumed in business combination	84,376			16.29					75,076			27.45
Exercised	(77,732	)		17.25	(42,586	)		18.52	(112,662	)		8.85
Outstanding, December 31	285,565		$	18.22	278,921		$	18.53	326,820		$	18.78
Options exercisable, December 31	188,565		$	17.88	133,421		$	18.16	181,320		$	18.71

F-30

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

The following table summarizes information about stock options outstanding at December 31, 2003:

	Options Outstanding
Exercise Price	Number Outstanding	Remaining Contractual Life	Options Exercisable
$5.03	2,110	March 2004	2,110
$9.39	3,982	August 2006	3,982
$10.00	13,829	November 2004	13,829
$13.00	6,833	November 2005	6,833
$14.92	1,408	September 2006	1,408
$15.10	38,943	November 2009	38,943
$15.56	24,994	March 2007	24,994
$16.61	530	December 2010	530
$16.61	132	March 2012	132
$17.42	1,408	September 2006	1,408
$18.12	19,869	September 2012	19,869
$18.88	143,834	December 2010	46,834
$18.95	1,408	September 2006	1,408
$26.78	1,408	September 2006	1,408
$30.00	22,938	December 2004	22,938
$30.02	1,408	September 2006	1,408
$47.06	531	September 2009	531
	285,565		188,565

During 2003, 2002 and 2001, the Company did not grant any stock options. Total compensation expense recorded for the stock option plans was $143,000, $143,000 and $124,000 for the years ended December 31, 2003, 2002 and 2001, respectively.

Additionally, the Company and four of its subsidiary banks maintain deferral of compensation plans for certain directors who are not employees of the Company. Under the plans, non-employee directors may choose to have all or part of the cash and/or stock equivalents they would normally receive as compensation deferred for future payment, at such time and in such manner as such directors specify at the time of the election, so long as any annuity payment period does not exceed ten years. The cash portion of the deferral of compensation account earns interest at a rate which approximates the Company’s short-term borrowing rate. As of December 31, 2003 and 2002, there were no deferred cash payments under directors deferral of compensation plans. Dividends earned on stock equivalent portions are credited to the deferral of compensation account in the form of additional stock equivalents. At December 31, 2003 and 2002, the amount deferred under the terms of these plans totaled $2,002,000 and $2,196,000, respectively. For the years ending December 31, 2003, 2002 and 2001, approximately $368,000, $437,000 and $402,000, respectively, was expensed under these plans.

One of the Company’s subsidiary banks has a deferred compensation plan whereby directors may elect to have all or a portion of their compensation deferred. Compensation eligible for deferral under the plan was $23,000, $13,000 and $17,000 in 2003, 2002 and 2001, respectively. At December 31, 2003 and 2002, amounts payable under the plan totaled $152,000 and $129,000, respectively.

F-31

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

In connection with the Farmers merger during 2001, the Company assumed an employee stock ownership plan with 401(k) provisions. Concurrent with the Farmers merger, the employee stock ownership plan was terminated. The Company has received the determination letter from the Internal Revenue Service and is in the process of final liquidation of the employee stock ownership plan.

13. Income Taxes

The components of the provision for income taxes consist of the following for the years ended December 31, 2003, 2002 and 2001 (in thousands):

	2003		2002		2001
Current
Federal	$	16,286	$	13,051	$	10,277
State		1,396		721		415
Total current expense		17,682		13,772		10,692
Deferred
Federal		2,312		2,429		2,260
State		404		534		280
Total deferred expense		2,716		2,963		2,540
Total provision for income taxes	$	20,398	$	16,735	$	13,232

Temporary differences and carryforwards which give rise to a significant portion of the Company’s deferred tax assets and liabilities as of December 31, 2003 and 2002 are as follows (in thousands):

	2003			2002
Deferred tax assets
Allowance for loan and lease losses	$	14,605		$	12,714
Net operating loss		1,877			2,149
Deferred compensation		3,444			3,784
Other		1,530			1,621
Total deferred tax assets		21,456			20,268
Deferred tax liabilities:
Depreciation		3,323			2,147
Leasing		15,614			13,203
Net unrealized gains on securities		111			1,447
Intangibles and purchase accounting adjustments		2,007			2,274
Other		588			579
Total deferred tax liabilities		21,643			19,650
Net deferred tax (liabilities) assets	$	(187	)	$	618

The Company did not establish a valuation allowance related to the net deferred tax asset recorded at December 31, 2003 and 2002 due to taxes paid within the carryback period being sufficient to offset future deductions resulting from the reversal of these temporary differences.

F-32

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

Total provision for income taxes differs from the amount which would be provided by applying the statutory federal income tax rate of 35% to pretax earnings as illustrated below for the years ended December 31, 2003, 2002 and 2001 (in thousands):

	2003			2002			2001
Provision for income taxes at statutory federal income tax rate	$	21,506		$	18,353		$	14,586
Increase (decrease) resulting from:
State income taxes, net of federal income tax benefit		1,170			813			708
Tax exempt income		(1,669	)		(1,746	)		(1,498	)
Goodwill amortization		—			—			164
Income tax credits		(861	)		(861	)		(861	)
Other, net		252			176			133
Total provision for income taxes	$	20,398		$	16,735		$	13,232

For federal income tax purposes, one of the Company’s subsidiaries has a net operating loss carryforward totaling $5,438,000 and $6,324,000 at December 31, 2003 and 2002, respectively, which will expire beginning in 2018. For state income tax purposes, two of the Company’s subsidiaries have net operating loss carryforwards and tax credits totaling $329,000 and $704,000 at December 31, 2003 and 2002, respectively.

14. Noninterest Expense

The following table sets forth, for the years ended December 31, 2003, 2002 and 2001, the principal components of noninterest expense (in thousands):

	2003		2002		2001
Salaries and employee benefits	$	64,826	$	57,687	$	45,329
Commission based compensation		22,182		16,498		12,868
Occupancy and equipment expense, net		12,886		11,603		9,722
Amortization of goodwill		—		—		518
Amortization of other intangibles		1,041		832		627
Advertising		1,628		1,637		1,254
Banking assessments		943		785		771
Data processing expenses		1,759		1,596		1,562
Legal and professional fees		3,701		3,602		3,331
Postage and courier services		2,333		2,140		1,776
Supplies and printing		2,527		2,329		1,926
Telephone		1,754		1,435		1,224
Penalty on long-term debt repayment		822		—		—
Other		15,462		13,433		11,325
Total noninterest expense	$	131,864	$	113,577	$	92,233

F-33

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

15. Earnings Per Share

The following table reflects the reconciliation of the basic EPS computation to the diluted EPS computation (in thousands, except per share data):

	Year Ended December 31
	2003		2002		2001
Basic Earnings Per Share:
Net income available to common shareholders	$	41,046	$	35,702	$	28,415
Weighted average basic common shares outstanding		12,748		12,361		11,853
Basic Earnings Per Share	$	3.22	$	2.89	$	2.40
Diluted Earnings Per Share:
Net income available to common shareholders	$	41,046	$	35,702	$	28,415
Weighted average common shares outstanding		12,748		12,361		11,853
Effect of dilutive securities		209		322		288
Weighted average diluted common shares outstanding		12,957		12,683		12,141
Diluted Earnings Per Share	$	3.17	$	2.81	$	2.34

16. Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value.

Cash, Due From Banks, Interest-Bearing Cash Balances, and Federal Funds Sold

Due to the short-term nature of these assets, the carrying amount is a reasonable estimate of fair value.

Investment, Available for Sale, and Trading Securities

Fair value is based on quoted market prices or dealer quotes.

Loans

The fair value of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

Deposits

The amount payable on demand at the reporting date is a reasonable estimate of fair value due to the short-term nature of demand deposit, savings accounts, and certain money market deposit liabilities. The fair value of fixed-maturity certificates of deposit is estimated by discounting the future cash flows using the rates currently offered for deposits of similar remaining maturities.

Federal Funds Purchased and Short-Term Borrowings

The carrying amount is a reasonable estimate of fair value.

F-34

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

Long-Term Debt

The fair value of the Company’s fixed rate borrowings are estimated using discounted cash flows, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. The carrying amount of the Company’s variable rate borrowings approximates their fair values.

The estimated fair values of financial instruments at December 31, 2003 and 2002 are as follows (in thousands):

	2003				2002
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Cash and due from banks	$	123,086	$	123,086	$	99,561	$	99,561
Interest-bearing deposits in other banks	$	10,019	$	10,019	$	12,621	$	12,621
Federal funds sold and securities purchased under agreements to resell	$	16,534	$	16,534	$	77,957	$	77,957
Investment securities and securities available for sale	$	810,227	$	810,728	$	700,333	$	702,700
Trading securities	$	109	$	109	$	1,645	$	1,645
Loans	$	2,675,855	$	2,718,756	$	2,242,424	$	2,309,815
Financial liabilities:
Deposits	$	2,753,749	$	2,763,347	$	2,330,395	$	2,339,974
Federal funds purchased; securities sold under agreements to resell; and treasury, tax, and loan account	$	359,824	$	359,824	$	291,266	$	291,266
Short-term borrowings	$	41,150	$	41,150	$	152,100	$	152,100
Long-term debt	$	332,427	$	344,543	$	240,065	$	241,467

F-35

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

17. Parent Company

The condensed financial information of the parent company only as of December 31, 2003 and 2002, and for the years ended December 31, 2003, 2002 and 2001 is presented as follows (in thousands):

	2003		2002
Balance Sheets
Assets:
Cash*	$	5,020	$	11,941
Securities available for sale		79		80
Investments in subsidiaries*		310,734		256,294
Goodwill		5,240		5,240
Other intangible assets		416		479
Other assets		11,995		9,993
Total assets	$	333,484	$	284,027
Liabilities and stockholders’ equity
Accounts payable	$	5,989	$	5,299
Accrued interest payable		34		136
Short-term borrowings		1,650		19,100
Long-term debt		46,393		25,000
Total liabilities		54,066		49,535
Stockholders’ equity:
Common stock		12,839		12,425
Additional paid-in capital		126,370		105,355
Retained earnings		140,028		115,281
Treasury stock		—		(1,312	)
Accumulated other comprehensive income, net of taxes		181		2,743
Total stockholders’ equity		279,418		234,492
Total liabilities and stockholders’ equity	$	333,484	$	284,027

* Eliminated in consolidation

F-36

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

	2003			2002			2001
Statements of Income
Income:
Dividends from subsidiaries*	$	15,159		$	16,803		$	13,001
Other		4			1			30
Total income		15,163			16,804			13,031
Expenses:
Interest expense		1,817			1,449			1,446
Other expenses		5,633			6,179			3,878
Total expenses		7,450			7,628			5,324
Income before equity in undistributed earnings of subsidiaries and taxes		7,713			9,176			7,707
Equity in undistributed earnings of subsidiaries*		30,625			23,742			18,983
Income before income taxes		38,338			32,918			26,690
Income tax benefit		(2,708	)		(2,784	)		(1,725	)
Net income	$	41,046		$	35,702		$	28,415

* Eliminated in consolidation

F-37

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

	2003			2002			2001
Statements of Cash Flows
Cash flows from operating activities:
Net income	$	41,046		$	35,702		$	28,415
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and depreciation expense		428			494			342
Equity in undistributed earnings of subsidiaries		(30,625	)		(23,742	)		(18,958	)
Deferred tax benefit		(246	)		(88	)		(475	)
Stock based compensation		1,488			1,453			1,103
Increase (decrease) in other assets and liabilities		(353	)		(438	)		61
Net cash provided by operating activities		11,738			13,381			10,488
Cash flows from investing activities:
Additional investment in subsidiaries		(1,850	)		(3,000	)		(1,591	)
Decrease in loans		—			563			—
Net cash paid in purchase acquisitions		(4,595	)		—			—
Purchases of fixed assets		(192	)		(2,355	)		—
Other		2			—			—
Net cash used in investing activities		(6,635	)		(4,792	)		(1,591	)
Cash flows from financing activities:
Dividends on common stock		(14,369	)		(12,362	)		(11,003	)
Net increase in borrowings		2,550			12,216			3,911
Purchase of treasury stock		(900	)		—			(663	)
Other		695			(144	)		(408	)
Net cash used in financing activities		(12,024	)		(290	)		(8,163	)
Net increase (decrease) in cash		(6,921	)		8,299			734
Cash, beginning of year		11,941			3,642			2,908
Cash, end of year	$	5,020		$	11,941		$	3,642

18. Regulatory

The subsidiary banks are required by law to maintain reserves in cash or deposits with the Federal Reserve Bank or other banks. At December 31, 2003, the required reserves totaled $24,656,000.

At December 31, 2003 and 2002, securities with carrying values of $352,380,000 and $313,428,000, respectively, were pledged to secure U.S. government deposits and other public funds for purposes as required or permitted by law.

The Company has a policy of collecting amounts from its subsidiaries sufficient to cover expenses of the Company and to service Company debt. Such amounts have been received in the form of dividends declared by the subsidiaries. Payment of dividends is subject to the financial condition of the subsidiaries and the Company’s judgment as to the desirability of utilizing alternative sources of funds. The payment of dividends by the subsidiary banks is also subject to various regulatory requirements. At December 31, 2003, $70,955,000 of the retained earnings of the subsidiary banks are available for payment of dividends to the Company under the various regulatory requirements, without special approval from the applicable regulators.

F-38

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

The Company is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory – and possibly additional discretionary – actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial condition and operations. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Company’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Company’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company maintain minimum amounts and ratios (set forth in the table below) of total qualifying capital and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier I capital (as defined) to average assets (as defined). Management believes, as of December 31, 2003, that the Company meets all capital adequacy requirements to which it is subject.

As of December 31, 2003, the most recent notification from the Federal Reserve Bank categorized the Company’s subsidiary banks as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized the subsidiary banks must maintain minimum total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the institution’s category.

At December 31, 2003, the regulatory capital ratios of the Company’s subsidiary banks exceeded the minimum ratios required for well-capitalized banks as defined by federal banking regulators. To be categorized as well-capitalized, the Company’s subsidiary banks must maintain minimum Total Qualifying Capital, Tier I Capital and leverage ratios of at least 10%, 6% and 5%, respectively.

F-39

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

The actual capital amounts and ratios of the Company, National Bank of Commerce and First American Bank (the Company’s two most significant subsidiaries) at December 31, 2003 and 2002 are presented in the table below (in thousands):

	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
As of December 31, 2003:
Total qualifying capital (to risk-weighted assets)
Alabama National BanCorporation	$	323,718	11.73	%	$	220,780	8.00	%	$	275,974	10.00	%
National Bank of Commerce	$	107,789	11.24	%	$	76,718	8.00	%	$	95,898	10.00	%
First American Bank	$	76,155	11.14	%	$	54,689	8.00	%	$	68,362	10.00	%
Tier I capital (to risk-weighted assets)
Alabama National BanCorporation	$	289,181	10.47	%	$	110,480	4.00	%	$	165,720	6.00	%
National Bank of Commerce	$	96,129	10.02	%	$	38,375	4.00	%	$	57,562	6.00	%
First American Bank	$	67,602	9.89	%	$	27,342	4.00	%	$	41,012	6.00	%
Tier I capital (to average assets)
Alabama National BanCorporation	$	289,181	7.73	%	$	149,641	4.00	%	$	187,051	5.00	%
National Bank of Commerce	$	96,129	7.43	%	$	51,752	4.00	%	$	64,690	5.00	%
First American Bank	$	67,602	7.94	%	$	34,056	4.00	%	$	42,571	5.00	%
As of December 31, 2002:
Total qualifying capital (to risk-weighted assets)
Alabama National BanCorporation	$	266,334	11.26	%	$	189,225	8.00	%	$	236,531	10.00	%
National Bank of Commerce	$	98,121	11.14	%	$	70,464	8.00	%	$	88,080	10.00	%
First American Bank	$	63,018	10.39	%	$	48,522	8.00	%	$	60,653	10.00	%
Tier I capital (to risk-weighted assets)
Alabama National BanCorporation	$	236,717	10.00	%	$	94,687	4.00	%	$	142,030	6.00	%
National Bank of Commerce	$	87,704	9.96	%	$	35,222	4.00	%	$	52,834	6.00	%
First American Bank	$	55,416	9.14	%	$	24,252	4.00	%	$	36,378	6.00	%
Tier I capital (to average assets)
Alabama National BanCorporation	$	236,717	7.52	%	$	125,913	4.00	%	$	157,392	5.00	%
National Bank of Commerce	$	87,704	7.51	%	$	46,713	4.00	%	$	58,391	5.00	%
First American Bank	$	55,416	7.48	%	$	29,634	4.00	%	$	37,043	5.00	%

F-40

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

19. Segment Reporting

In addition to traditional commercial and consumer retail banking products, the Company offers mortgage lending services, investment services, securities brokerage and trust services and insurance services to its customers. The securities brokerage and trust division includes a full service broker-dealer operation and also manages the assets and provides custodial and trust services for both corporate and individual customers located primarily in the Birmingham, Alabama market. The mortgage lending division makes home loans to individuals throughout the markets served by the Company. The majority of the loans made are sold to corporate investors, who also service the loans. The investment services division sells fixed income securities and provides trading services to both individual and corporate customers. The insurance division offers a full line of insurance products including life, and property and casualty insurance to individual and corporate customers primarily in the state of Alabama. These four divisions, along with the commercial and retail banking division, are considered the Company’s reportable segments for financial disclosure purposes.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies except that certain overhead expenses are not allocated among the segments. Additionally, the fixed assets utilized by the various divisions are not separately identified by management. Accordingly, the results of operations for the mortgage lending, investment services, securities brokerage and trust, and insurance segments are not indicative of the results which would be achieved if each of the segments were a separate company. Intersegment transactions are accounted for at fair market value.

The development and application of these methodologies is a dynamic process. In addition, unlike financial accounting, there is no authoritative literature for management accounting similar to generally accepted accounting principles. Consequently, reported results are not necessarily comparable with those presented by other financial institutions.

F-41

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

The Company’s reportable segments represent the distinct major product lines the Company offers and are viewed separately for strategic planning purposes by management. The following table is a reconciliation of the reportable segment revenues, expenses, and profit to the Company’s consolidated totals (in thousands):

	Investment Services Division		Securities Brokerage and Trust Division		Mortgage Lending Division(2)		Insurance Division			Retail and Commercial Banking		Corporate Overhead(1)			Elimination Entries			Total
Year ended December 31, 2003:
Interest income	$		$	978	$	2,462	$			$	175,426	$	(115	)	$	(120	)	$	178,631
Interest expense				118		825		3			55,140		1,702			(120	)		57,668
Net interest income		—		860		1,637		(3	)		120,286		(1,817	)		—			120,963
Provision for loan losses											5,931								5,931
Noninterest income		18,710		15,867		17,061		3,477			23,185		4						78,304
Noninterest expense		12,645		14,983		10,104		3,295			85,264		5,573						131,864
Net income before provision for income taxes and minority interest	$	6,065	$	1,744	$	8,594	$	179		$	52,276	$	(7,386	)	$	—		$	61,472
Total assets	$	13,235	$	32,013	$	16,833	$	4,998		$	3,747,137	$	5,896		$	—		$	3,820,112
Year ended December 31, 2002:
Interest income	$		$	1,132	$	1,631	$			$	175,612	$	(90	)	$	(138	)	$	178,147
Interest expense				133		641		4			63,314		1,359			(138	)		65,313
Net interest income				999		990		(4	)		112,298		(1,449	)					112,834
Provision for loan losses											7,956								7,956
Noninterest income		13,576		13,590		11,334		2,837			19,826		1						61,164
Noninterest expense		9,828		13,036		7,204		2,866			74,464		6,179						113,577
Net income before provision for income taxes and minority interest	$	3,748	$	1,553	$	5,120	$	(33	)	$	49,704	$	(7,627	)	$			$	52,465
Total assets	$	30,762	$	25,678	$	52,492	$	4,864		$	3,196,311	$	6,061		$	—		$	3,316,168
Year ended December 31, 2001:
Interest income	$		$	1,858	$	1,117	$	5		$	177,028	$	(59	)	$	(412	)	$	179,537
Interest expense				407		624		6			88,381		1,387			(412	)		90,393
Net interest income				1,451		493		(1	)		88,647		(1,446	)					89,144
Provision for loan losses											3,946								3,946
Noninterest income		13,717		8,800		7,660		2,126			16,374		30						48,707
Noninterest expense		10,334		8,836		4,924		2,107			61,528		4,504						92,233
Net income before provision for income taxes and minority interest	$	3,383	$	1,415	$	3,229	$	18		$	39,547	$	(5,920	)	$			$	41,672

(1) Corporate overhead is comprised primarily of compensation and benefits for certain members of management, merger related costs, interest on parent company debt, amortization of intangibles and other expenses.

(2) Mortgage lending includes allocated intercompany income totaling $772,000, $474,000 and $229,000 at December 31, 2003, 2002, and 2001, respectively.

F-42

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

20. Related Party Transactions

In addition to the previously disclosed related party transactions (see Notes 5, 8, 10 and 11), the Company received trust fees from related parties of approximately $429,000 in 2003, $444,000 in 2002 and $548,000 in 2001.

21. Treasury Stock Repurchase Plan

During the years ended December 31, 2003, 2002 and 2001, the Company repurchased a total of 20,000, 0 and 21,000 shares, respectively, under stock repurchase plans authorized by the Board of Directors of the Company. The stock repurchase plan authorized on January 26, 2003 expired on December 31, 2003.

22. Subsequent Events

On February 18, 2004, the Company announced the renewal of its share repurchase program that expired on December 31, 2003. The Board of Directors of the Company authorized the repurchase of up to 300,000 shares of its common stock.

On February 20, 2004, the company completed the acquisition of Cypress Bankshares, Inc. located in Palm Coast Florida, Florida. Under the terms of the agreement Cypress Bank will became a wholly owned subsidiary of the Company and will continue to operate under its existing name, management, and board of directors. The Company issued 455,449 shares of its common stock and paid cash totaling $1.9 million to Cypress shareholders. As of February 20, 2004, Cypress had total assets of approximately $111.4 million.

On February 27, 2004, the company completed the acquisition of Indian River Banking Company located in Vero Beach, Florida. Under the terms of the agreement Indian River National Bank will became a wholly owned subsidiary of the Company and will continue to operate under its existing name, management, and board of directors. The Company issued approximately 2,017,000 shares of its common stock and paid cash totaling $5.1 million to Indian River shareholders. As of February 27, 2004, Indian River had total assets of approximately $545.0 million.

F-43

Alabama National BanCorporation and Subsidiaries

Notes to Financial Statements—(Continued)

For the Years Ended December 31, 2003, 2002 and 2001

The following table summarizes the fair values of the assets acquired and liabilities assumed of Cypress and Indian River at the date of acquisition. The Company is in the process of finalizing the determination of fair value and certain intangible assets; thus the allocation of the purchase price is subject to refinement.

	Cypress		Indian River
	(In thousands)
	(Unaudited)
Cash	$	9,294	$	18,810
Securities		26,111		241,895
Federal funds sold and securities purchased under agreements to resell		959		384
Net loans		75,396		282,857
Other assets		7,475		11,766
Goodwill		16,863		73,261
Core deposit intangible		2,151		5,192
Total assets acquired		138,249		634,165
Deposits		104,250		444,911
Other liabilities		7,081		78,548
Total liabilities assumed		111,331		523,459
Net assets acquired	$	26,918	$	110,706

Because these acquisitions were consummated subsequent to December 31, 2003, the above assets and liabilities are not reflected in the accompanying Statement of Financial Condition.

F-44

EX-3.2

Exhibit 3.2

AMENDED & RESTATED

BY-LAWS

of

ALABAMA NATIONAL BANCORPORATION

(Effective February 18, 2004)

ARTICLE I

OFFICES

Section 1. Registered Office. The registered office of Alabama National BanCorporation (herein called the “Corporation”), in the State of Delaware shall be in the City of Wilmington, County of New Castle, State of Delaware.

Section 2. Principal Office. The principal office of the Corporation shall be in the City of Birmingham, County of Jefferson, State of Alabama.

Section 3. Other Offices. The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require.

ARTICLE II

MEETINGS OF STOCKHOLDERS

Section 1. Meetings. Meetings of stockholders may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed Waiver of Notice thereof.

Section 2. Annual Meeting. The annual meeting of the stockholders of the Corporation for the election of directors and for the transaction of such other business as may properly come before the meeting shall be held on such date and at such time and place as is determined by the Board of Directors of the Corporation each year and as is stated in the notice of the meeting.

Section 3. Notice of Annual Meetings. Written notice of annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting.

Section 4. Stockholder List. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of

stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

Section 5. Special Meetings. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the Certificate of Incorporation, may be called by the Chairman of the Board and shall be called by the President or Secretary at the request in writing of a majority of the Board of Directors. Such request shall state the purpose or purposes of the proposed meeting.

Section 6. Notice of Special Meetings. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the date of the meeting, to each stockholder entitled to vote at such meeting.

Section 7. Business at Special Meeting. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.

Section 8. Quorum; Adjournment. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the Certificate of Incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting, at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder or record entitled to vote at the meeting.

Section 9. Voting. When a quorum is present at any meeting of stockholders, (a) directors shall be elected by a plurality of the votes of the shares present in person or represented by a proxy at the meeting and entitled to vote on the election of directors, and (b) in all matters other than the election of directors, the vote of the holders of a majority of the stock having voting power present in person or

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represented by proxy shall decide any matter brought before such meeting, unless the question is one upon which by express provision of law or of the Certificate of Incorporation, a different vote is required in which case such express provision shall govern and control the decision of such matter.

Section 10. Voting In Person or By Proxy. Each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period.

ARTICLE III

DIRECTORS

Section 1. Powers of the Board. The business of the Corporation shall be managed by its Board of Directors (sometimes herein referred to as the “Board”) which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-Laws directed or required to be exercised or done by the stockholders.

Section 2 Meetings. The Board of Directors of the Corporation may hold meetings, both regular and special, either within or without the State of Delaware.

Section 3. Regular Meetings. A regular meeting of the Board of Directors shall be held without other notice than this By-Law immediately after, and at the same place as, the annual meeting of stockholders. The Board of Directors may provide, by resolution, the date, time and place, either within or without the State of Delaware, for the holding of additional regular meetings without notice other than such resolution.

Section 4. Special Meetings. Special meetings of the Board of Directors may be held at any date, time and place upon the call or at the request of the Chairman of the Board and shall be called by the Chairman of the Board at the request of at least sixty percent (60%) of the directors then serving on the Board of Directors.

Section 5. Notice. The person or persons calling a special meeting of the Board of Directors shall, at least two days before the meeting, give notice thereof by any usual means of communication. Such notice may be communicated, without limitation, in person; by telephone, facsimile, or other electronic transmission; or by mail or private carrier. Written notice of a directors meeting is effective at the earliest of the following:

(a) when received;

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(b) upon its deposit in the United States mail, as evidenced by the postmark, if mailed with postage thereon prepaid and correctly addressed;

(c) if by facsimile or other electronic transmission, by acknowledgment of the electronic transmission; or

(d) on the date shown on the confirmation of delivery issued by a private carrier, if sent by private carrier to the address of the director last known to the Corporation.

Oral notice is effective when actually communicated to the director. Notice of an adjourned meeting of directors need not be given if the time and place are fixed at the meeting being adjourned. The notice of any meeting of directors need not describe the purpose of the meeting unless otherwise required by the Delaware General Corporation Law (the “DGCL”).

Section 6. Waiver. A director may waive any notice required by the DGCL, the Certificate of Incorporation or these Bylaws before or after the date and time stated in the notice. The waiver must be in writing, signed by the director entitled to the notice, and filed with the minutes or corporate records, except that, notwithstanding the foregoing requirement of written waiver, a director’s attendance at or participation in a meeting waives any required notice to the director of the meeting unless the director at the beginning of the meeting expressly objects to holding the meeting or transacting business at the meeting because the meeting is not lawfully called or convened.

Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors or members of a committee of the Board of Directors need be specified in the notice or waiver of notice of such meeting unless so required by the Certificate of Incorporation.

Section 7. Quorum. At all meetings of the Board a majority of the directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the Certificate of Incorporation. If a quorum shall not be present at any meeting of the Board of Directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

Section 8. Participation By Conference Telephone. Members of the Board of Directors, or of any committee thereof, may participate in any meeting of the Board of Directors or of any such committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other; and participation in a meeting in such manner shall constitute presence in person at the meeting.

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Section 9. Voting. At all meetings of the Board of Directors each director shall have one vote and, except as otherwise provided herein or by law, all questions shall be determined by a majority vote of the directors present.

Section 10. Written Consent. Unless otherwise restricted by the Certificate of Incorporation or these By-Laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee.

Section 11. Compensation. Directors, by resolution of the Board of Directors, may be compensated as directors. Such compensation may include: a fixed salary or retainer; a fixed sum for attendance at each meeting of the Board of Directors; expenses for attendance at such meetings; or any combination of the foregoing. Members of committees of the Board of Directors, by resolutions of the Board of Directors, may be compensated in like manner. No such compensation to a director, as a director, shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.

Section 12. Vacancies. In the event of a vacancy occurring in the Board of Directors, whether as a result of the creation of a new directorship pursuant to Section A of Article FIFTH of the Certificate of Incorporation or the death, resignation, retirement, disqualification or removal of a director, the Nominating and Corporate Governance Committee shall propose to the remaining directors a slate of candidates for the vacant position.

ARTICLE IV

COMMITTEES OF THE BOARD OF DIRECTORS

Section 1. Executive Committee. The Board of Directors may create an Executive Committee of the Board of Directors to be comprised of at least three (3) directors appointed by a majority of the Board of Directors. The Executive Committee, between meetings of the Board of Directors and subject to such limitations as may be required by law or imposed by resolution of the Board of Directors, shall have and may exercise all of the authority of the Board of Directors in the management of the Corporation; provided, however, that the Executive Committee shall not have the power to amend or repeal any resolution of the Board of Directors that by its terms shall not be subject to amendment or repeal by the Executive Committee, or any resolution of the Board of Directors concerning the establishment or membership of the Executive Committee, and the Executive Committee shall not have the authority of the Board of Directors in reference to matters required by law to be passed upon by the full Board. Meetings of the

5

Executive Committee may be held at any time on call of its Chairman or any two members of the Executive Committee. A majority of the members shall constitute a quorum at all meetings. The Executive Committee shall act by majority vote of its members present when a quorum is established. The Executive Committee shall keep minutes of its proceedings and shall report its actions to the next succeeding meeting of the Board of Directors.

Section 2. Other Committees. The Board of Directors may from time to time, by resolution or resolutions passed by a majority of the entire Board, create or eliminate one or more other committees, including but not limited to Audit, Nominating and Corporate Governance, and Compensation committees, and appoint members of the Board of Directors to serve on them. Each committee shall consist of three or more of the directors of the Corporation. The Board of Directors shall at its discretion approve a charter describing the powers, authority, duties and responsibilities of each committee. The provisions of the DGCL and these Bylaws that govern meetings, action without meetings, notice and waiver of notice, and quorum and voting requirements of the Board of Directors, shall apply to committees and their members as well. To the extent specified by the Board of Directors, each committee may exercise the authority of the Board of Directors, except as to the matters which the DGCL specifically excepts from the authority of such committees. Nothing contained in this Section shall preclude the Board of Directors from establishing and appointing any committee, whether of directors or otherwise, not having or exercising the authority of the Board of Directors.

ARTICLE V

NOTICES

Section 1. Notices. Whenever written notice is required by law, the Certificate of Incorporation or these By-Laws, to be given to any director or stockholder, such notice may be given by mail or private carrier, addressed to such director or stockholder, at his or her address as it appears on the records of the Corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time, with respect to mail, when the same shall be deposited in the United States mail, or, with respect to a private carrier, the date shown on the confirmation of delivery issued by the private carrier. Written notice to directors may also be given (i) personally, which shall be deemed to be given when received, or (ii) by facsimile or other electronic transmission, which shall be deemed to be given by acknowledgment of the electronic transmission.

Section 2. Waivers of Notice. Whenever any notice is required to be given under the provisions of the DGCL, or of the Corporation’s Certificate of Incorporation, or of these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent to notice.

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ARTICLE VI

OFFICERS

Section 1. Number. The officers of the Corporation shall consist of a Chairman of the Board of Directors, one or more Vice Chairmen of the Board of Directors, a President, one or more Executive Vice Presidents, one or more Vice Presidents, a Treasurer, a Secretary, (or a Treasurer/Secretary if the Board of Directors so elects) and such Assistant Treasurers, Assistant Secretaries, and other officers as may from time to time be elected or appointed by the Board of Directors. Any two or more offices may be held by the same person. The failure of the Board of Directors to elect any officer other than a President and a Secretary shall not constitute a violation of these By-Laws. The Board of Directors may designate one of such officers as the Chief Executive Officer of the Corporation, and in the absence of such designation, the Chairman of the Board shall be the Chief Executive Officer.

Section 2. Election. The officers of the Corporation shall be elected annually by the Board of Directors at the regular meetings of the Board of Directors held after each annual meeting of the stockholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as conveniently may be. Each officer shall hold office until his successor shall have been duly elected and shall have qualified, or until his death, or until he shall resign or shall have been removed in the manner hereinafter provided. The Board of Directors at any meeting may appoint agents and employees to serve for such time and to have such duties and authority as the Board of Directors may determine. All agents and employees of the Corporation not appointed by the Board of Directors may be appointed by the Chairman of the Board, or by persons authorized by him to do so, to serve for such time and to have such duties as the appointing authority may determine.

Section 3. Removal. Any officer or agent elected or appointed by the Board of Directors may be removed, with or without cause, at any time, by the affirmative vote of the Board of Directors, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer or agent shall not of itself create any contract right in favor of such officer or agent.

Section 4. Vacancies. Vacancies occurring in any office filled by the Board of Directors because of death, resignation, removal, disqualification or otherwise, may be filled by the Board of Directors for the unexpired portion of the term. A vacancy in any other office for any reason shall be filled by the Board of Directors or any superior officer to whom authority in the premises may have been delegated by these By-Laws or by resolution of the Board of Directors.

7

Section 5. Chairman of the Board. The Chairman of the Board of Directors shall, subject to the control of the Board of Directors, in general supervise and control the business and affairs of the Corporation. He shall, when present, preside at all meetings of the stockholders and of the Board of Directors. He may sign, with the Secretary or an Assistant Secretary, certificates for shares of the Corporation, any deeds, mortgages, bonds, contracts, or other instruments which the Board of Directors has authorized to be executed, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or by these By-Laws to some other officer or agent of the Corporation, or shall be required by law to be otherwise signed or executed; and in general shall perform all duties incident to the office of the chief executive officer and such other duties as may be prescribed by the Board of Directors from time to time.

Section 6. Vice Chairman of the Board. The Vice Chairman of the Board (or in the event there be more than one Vice Chairman of the Board, the Vice Chairman in the order designated at the time of their election, or in the absence of any designation, then in the order of their election) shall, in the absence of the Chairman of the Board of Directors and when present, preside at meetings of the stockholders and of the Board of Directors. Any Vice Chairman may sign, with the Secretary or an Assistant Secretary, certificates for shares of the Corporation, any deeds, mortgages, bonds, contracts, or other instruments which the Board of Directors has authorized to be executed, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or by these By-Laws to some other officers or agent of the Corporation, or shall be required by law to be otherwise signed or executed; and shall perform such other duties as may be prescribed by the Board of Directors from time to time.

Section 7. President. The President of the Corporation shall be the chief operating officer of the Corporation and, subject to the control of the Board of Directors and the Chairman of the Board, shall in general supervise and control the day to day business and affairs of the Corporation. The President shall, in the absence of the Chairman of the Board of Directors and the Vice Chairman of the Board of Directors, preside at all meetings of the stockholders and of the Board of Directors. He may sign, with the Secretary or an Assistant Secretary, certificates for shares of the Corporation, any deeds, mortgages, bonds, contracts, or other instruments which the Board of Directors has authorized to be executed, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or by these By-Laws to some other officers or agent of the Corporation, or shall be required by law to be otherwise signed or executed; and in general shall perform all duties incident to the office of President and chief operating officer and such other duties as may be prescribed by the Board of Directors from time to time.

Section 8. Executive Vice President. In the absence of the President or in the event of his death, inability or refusal to act, the Executive Vice President (or in the event there be more than one Executive Vice President, the Executive Vice Presidents

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in the order designated at the time of their election, or in the absence of any designation, then in the order of their election) shall perform the duties of the President, and when so acting shall have all the powers of and be subject to all the restrictions upon the President. Any Executive Vice President may sign, with the Secretary or an Assistant Secretary, certificates for shares of the Corporation; and perform such other duties as from time to time may be assigned to him by the Chairman of the Board, by the President, or by the Board of Directors.

Section 9. Vice President. In the absence of the President and the Executive Vice President(s) (if any) or in the event of his and their death, inability or refusal to act, the Vice President (or in the event there be more than one Vice President, the Vice Presidents in the order designated at the time of their election, or in the absence of any designation, then in the order of their election) shall perform the duties of the President, and when so acting shall have all the powers of and be subject to all the restrictions upon the President. Any Vice President may sign, with the Secretary or an Assistant Secretary, certificates for shares of the Corporation, and shall perform such other duties as from time to time may be assigned to him by the Chairman of the Board, by the President, or by the Board of Directors.

Section 10. Secretary. The Secretary shall: (a) keep the minutes of the proceedings of the stockholders and of the Board of Directors in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these By-Laws or as required by law; (c) be custodian of the corporate records and of the seal of the Corporation and see that the seal of the Corporation is affixed to all documents the execution of which on behalf of the Corporation under its seal is duly authorized; (d) keep a register of the post office address of each stockholder which shall be furnished to the Secretary by such stockholder; (e) sign with the Chairman of the Board, President, an Executive Vice President, or a Vice President, certificates for shares of the Corporation, the issuance of which shall have been authorized by resolution of the Board of Directors; (f) have general charge of the stock transfer books of the Corporation; and (g) in general perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him by the Chairman of the Board, by the President, or by the Board of Directors.

Section 11. Treasurer. The Treasurer shall: (a) have charge and custody of and be responsible for all funds and securities of the Corporation; (b) receive and give receipts for moneys due and payable to the Corporation from any source whatsoever, and deposit all such moneys in the name of the Corporation in such banks, trust companies or other depositories as shall be selected by the Board of Directors; and (c) in general perform all of the duties as from time to time may be assigned to him by the Chairman of the Board, by the President, or by the Board of Directors. If required by the Board of Directors, the Treasurer shall give a bond for the faithful discharge of his duties in such sum and with such surety or sureties as the Board of Directors shall determine.

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Section 12. Assistant Treasurers. The Assistant Treasurers shall perform the duties of the Treasurer during his absence or incapacity. The Assistant Secretaries shall perform the duties of the Secretary during his absence or incapacity. The Assistant Secretaries may sign with the Chairman of the Board, the President, an Executive Vice President, or a Vice President certificates for shares of the Corporation the issuance of which shall have been authorized by a resolution of the Board of Directors, give bonds for the faithful discharge of their duties in such sums and with such sureties as the Board of Directors shall determine. The Assistant Secretaries and Assistant Treasurers, in general, shall perform such duties as shall be assigned to them by the Secretary or the Treasurer, respectively, or by the Chairman of the Board, by the President, or by the Board of Directors.

Section 13. Salaries. The salaries of the officers shall be fixed from time to time by the Compensation Committee of the Board of Directors and no officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the Corporation.

ARTICLE VII

MANAGEMENT AND CONSULTING AGREEMENTS

Section 1. Management Agreements. The Board of Directors shall be authorized to enter into agreements on behalf of the Corporation providing for the management (without limitation except as imposed by law) of the business and affairs of the Corporation by such person, firm, or corporation as the Board, in its discretion, may select.

Section 2. Consulting Agreements. The Board of Directors shall be authorized to contract from time to time for consulting services to be provided to the management of the Corporation.

ARTICLE VIII

CERTIFICATES OF STOCK

Section 1. Certificate. Shares of the Corporation’s capital stock may but need not be represented by certificates. Upon request, every holder of uncertificated shares shall be entitled to have a certificate. When shares are represented by certificates, the Corporation shall issue such certificates in such form as shall be required by the DGCL and as determined by the Board of Directors, to every stockholder of the Corporation for the fully paid shares owned by such stockholder. Each certificate shall be signed by, or in the name of, the Corporation by (i) the Chairman of the Board, the President, an Executive Vice President, or a Vice President of the Corporation and (ii) the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by him in the Corporation.

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Section 2. Transfer Agent; Registrar; Signature. The Board of Directors may from time to time appoint one or more transfer agents and one or more registrars for the shares of capital stock of the Corporation or any class thereof, which agents and registrars may establish rules and regulations for the issue, transfer and registration of certificates not inconsistent with these Bylaws. Where a certificate is (1) countersigned by a transfer agent other than the Corporation or its employee, or (2) countersigned and registered by a registrar other than the Corporation or its employee, any other signature on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. The Board may also make such additional rules and regulations as it may deem expedient concerning the issue, transfer and registration of certificates.

Section 3. Lost Certificates. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed.

Section 4. Replacement of Mutilated Certificates. A new certificate may be issued in lieu of any certificate previously issued that may be defaced or mutilated upon surrender for cancellation of a part of the old certificate sufficient in the opinion of the Secretary and the transfer agent or the registrar to duly identify the defaced or mutilated certificate and to protect the Corporation and the transfer agent or the registrar against loss or liability. Where sufficient identification is lacking, a new certificate may be issued upon compliance with the conditions set forth in Section 3 of this Article VIII.

Section 5. Stock Transfer Books and Transfer of Shares. The Corporation or its transfer agent shall keep a book or set of books to be known as the stock transfer books of the Corporation, containing the name of each stockholder of record of the Corporation, together with such stockholder’s address and the number and class or series of shares held by such stockholder. Upon surrender to the Corporation or

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the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. All certificates surrendered for transfer shall be canceled before new certificates for the transferred shares shall be issued.

Section 6. Record Date. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

Section 7. Registered Stockholders. Except as otherwise required by the law of Delaware, the Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be found to recognize any equitable or other claim to interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof.

ARTICLE IX

GENERAL PROVISIONS

Section 1. Dividends. Dividends upon the capital stock of the Corporation, subject to the provisions of the Certificate of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the Certificate of Incorporation.

Section 2. Reserves. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose as the directors shall think conducive to the interest of the Corporation, and the directors may modify or abolish any such reserve in the manner in which it was created.

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Section 3. Statement of the Business and Condition of the Corporation. The Board of Directors shall present at each annual meeting a full and clear statement of the business and condition of the Corporation.

Section 4. Checks; Demands for Money and Notes. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.

Section 5. Fiscal Year. The fiscal year of the Corporation shall be as established from time to time by the Board of Directors.

Section 6. Corporate Seal. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words “Corporate Seal, Delaware”. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.

ARTICLE X

INDEMNIFICATION

Section 1. To the extent permitted by the DGCL from time to time in effect and subject to the limits of applicable Federal law and regulation, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (or any predecessor of any such entities), including service with respect to employee benefit plans maintained or sponsored by the Corporation (or any predecessor), against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.

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Section 2. To the extent permitted by the DGCL from time to time in effect and subject to the limits of applicable Federal law and regulation, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation, as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (or any predecessor of any such entities), including service with respect to employee benefit plans maintained or sponsored by the Corporation (or any predecessor), against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Delaware Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Delaware Court of Chancery or such other court shall deem proper.

Section 3. To the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise, including the dismissal of an action without prejudice, the disposition of a claim or issue by partial summary judgment, or any other partial success, or the settlement of any action without admission of liability, in defense of any action, suit or proceeding referred to in Sections 1 or 2 of this Article X, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection therewith.

Section 4. Expenses incurred in defending or investigating a civil or criminal action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director, officer employee or agent to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation.

Section 5. The indemnification and advancement of expenses provided by, or granted pursuant to, the other portions of this Article X shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any By-Law, agreement, vote of stockholders or disinterested directors, court order or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. It is the policy of the Corporation that indemnification shall be made to the fullest extent permitted by law. All rights to indemnification under this Article X shall be deemed to be provided by a contract between the Corporation and the director,

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officer, employee or agent who serves in such capacity at any time while these By-Laws and other relevant provisions of the DGCL and other applicable law, if any, are in effect. Any repeal or modification thereof shall not effect any rights or obligations then existing.

Section 6. Any indemnification or advance shall be made promptly and in any event within forty-five (45) days, upon the written request of the director, officer, employee or agent, unless a determination is reasonably and promptly made that such director, officer, employee or agent failed to meet the applicable standard of conduct set forth in Sections 1 or 2 of this Article X. Such determination shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of Disinterested Directors (as hereinafter defined), (2) if such a quorum of the Board of Directors consisting of Disinterested Directors is not obtainable, or, even if obtainable, such quorum of Disinterested Directors so directs, by Independent Counsel (as hereinafter defined) in a written opinion, or (3) if a quorum of Disinterested Directors so directs, by the stockholders of the Corporation. If the request for indemnification involves an action, suit or proceeding that arises from the merger, consolidation, reorganization, liquidation, sale of all or substantially all of the assets, or other extraordinary transaction of the Corporation, the inquiry and resolution thereof required by this Section 6, at the option of the person seeking indemnification, shall be made by a neutral person mutually acceptable to the Corporation and the person seeking indemnification (the “Neutral Person”). If no disposition of such claim for indemnification is made within forty-five (45) days, a favorable determination of entitlement to indemnification shall be deemed to have been made. The director’s, officer’s, employee’s or agent’s expenses incurred in connection with successfully establishing his right to indemnification, in whole or in part, shall also be indemnified by the Corporation.

Section 7. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article X shall, unless otherwise provided, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such person.

Section 8. Neither the repeal or modification of this Article X nor the adoption of any provision of the Certificate of Incorporation or the By-Laws inconsistent with this Article X shall adversely affect the rights of any director, officer, employee or agent of the Corporation with respect to causes of action, suits or claims that accrue or arise prior to such repeal, modification or adoption of an inconsistent provision. If this Article X or any portion thereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each director, officer, employee and agent against expenses (including attorneys’ fees), judgments, fines (including excise taxes assessed on a person with respect to an employee benefit plan) and amounts paid in settlement with respect to any action, suit or proceeding whether civil, criminal, administrative or investigative, and whether internal or external, including a grand jury proceeding and an action or suit brought by or in the right of the Corporation, to the fullest extent permitted by applicable portions of this Article X that shall not have been invalidated, or by any other applicable law.

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Section 9. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article X.

Section 10. Upon resolution adopted by the Board of Directors, the Corporation may establish a trust or other designated account, grant a security interest or use other means (including, without limitation, a letter of credit), to ensure the payment of certain of its obligations arising under this Article X and/or agreements which may be entered into between the Corporation and its directors, officers, employees, and agents from time to time.

Section 11. For purposes of this Article X, references to “the Corporation” shall include, in addition to the resulting or surviving corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power to indemnify its directors, officers and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this Article X with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued; references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed against a person with respect to any employee benefit plan; references to “serving at the request of the Corporation” shall include any service as a director or officer of the Corporation which imposes duties on, or involves services by, such director or officer with respect to any employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation” as referred to in this Article X.

Section 12. For purposes of this Article X:

“Disinterested Director” means a director of the Corporation who is not and was not a party to the matter in respect of which indemnification is sought by the claimant.

“Independent Counsel” means a law firm, a member of a law firm, or an independent practitioner, that is experienced in matters of corporation law and

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shall include any person who, under the applicable standards of professional conduct then prevailing, would not have a conflict of interest in representing either the Corporation or the claimant in an action to determine the claimant’s rights under this Article X.

References to “serving at the request of the Corporation” shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation” as referred to in this Article.

ARTICLE XI

AMENDMENTS

Section 1. Alteration, Amendment, Repeal. To the extent permitted by the Certificate of Incorporation, these By-Laws may be altered, amended or repealed or new By-Laws may be adopted by the stockholders or by the Board of Directors at any regular meeting of the stockholders or of the Board of Directors or at any special meeting of the stockholders or of the Board of Directors if notice of such alteration, amendment, repeal or adoption of new By-Laws be contained in the notice of such special meeting.

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EX-10.32

Exhibit 10.32

MILLENNIUM BANK

DIRECTORS’ STOCK OPTION PLAN

ARTICLE I

Definitions

As used herein, the following terms have the meanings hereinafter set forth unless the context clearly indicates to the contrary:

(a) “Bank” shall mean Millennium Bank, a Florida corporation.

(b) “Board” or “Board of Directors” shall mean the board of directors of the Bank.

(c) “Director” shall mean any individual who is serving as a director of the Bank.

(d) “Option” shall mean an option to purchase Stock granted by the Bank pursuant to the provisions of this Plan.

(e) “Option Price” shall mean the purchase price of each share of Stock subject to Option, as defined in Section 5.2 hereof.

(f) “Optionee” shall mean a Director who has received an Option granted by the Bank hereunder.

(g) “Plan” shall mean this Millennium Bank Directors’ Stock Option Plan.

(h) “Service” shall mean the tenure of an individual as a director of the Bank.

(i) “Stock” shall mean the common stock of the Bank, par value $5.00 per share, or, in the event that the outstanding shares of Stock are hereafter changed into or exchanged for shares of a different class of stock or securities of the Bank or some other corporation, such other stock or securities.

(j) “Stock Option Agreement” shall mean the agreement between the Bank and the Optionee under which the Optionee may purchase Stock pursuant to the Plan.

(k) “Stock Option Committee” shall mean such Board committee as may be designated by the Board to administer the Plan.

ARTICLE II

The Plan

2.1 Name. This plan shall be known as the “Millennium Bank Directors’ Stock Option Plan.”

2.2 Purpose. The purpose of the Plan is to advance the interests of the Bank and its shareholders by affording to the Directors of the Bank an opportunity to increase their proprietary interest in the Bank and recognize their efforts in connection with the organization of the Bank by the grant of Options to such Directors under the terms set forth herein.

2.3 Effective Date. The Plan shall become effective on the later of the approval of this Plan by (i) the Florida Department of Banking and Finance, or (ii) by the holders of a majority of the outstanding shares of Stock.

2.4 Participants. Only non-employee Directors of the Bank shall be eligible to receive Options under the Plan.

ARTICLE III

Plan Administration

3.1 Stock Option Committee. This Plan shall be administered by the Stock Option Committee.

3.2 Power of the Stock Option Committee. The Stock Option Committee shall have full authority and discretion: (a) except with respect to Options covering the Directors and the shares of Stock specified on Exhibit A attached hereto, to determine, consistent with the provisions of this Plan, which of the Directors will be granted Options to purchase any shares of Stock which may be issued and sold hereunder as provided in Section 4.1 hereof to the extent such shares are not covered by the Options to be granted to the Directors specified on Exhibit A attached hereto, the times at which Options shall be granted, and the number of shares of Stock covered by each Option; (b) to construe and interpret the Plan; (c) to determine the terms and provisions of each respective Stock Option Agreement, which need not be identical; and (d) to make all other determinations and take all other actions deemed necessary or advisable for the proper administration of the Plan. All such actions and determinations shall be conclusively binding upon all persons for all purposes.

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ARTICLE IV

Shares of Stock Subject to Plan

4.1 Limitations. Subject to adjustment pursuant to the provisions of Section 4.3 hereof, the number of shares of Stock which may be issued and sold hereunder pursuant to Stock Option Agreements shall not exceed thirty-six thousand (36,000) shares. All of the thirty-six thousand (36,000) shares of Stock which may be issued and sold hereunder shall be covered by the Options specified on Exhibit A attached hereto, which Options shall be granted to the Directors (and, as to each such Director, shall cover the number of shares of Stock) specified on Exhibit A attached hereto on the Effective Date. Shares issued pursuant to the exercise of Options shall be issuable only from authorized and unissued shares.

4.2 Options Granted Under Plan. Shares of Stock with respect to which an Option granted hereunder shall have been exercised shall not again be available for Option hereunder. If Options granted hereunder shall terminate for any reason without being wholly exercised, then the Stock Option Committee shall have the discretion to grant new Options to Optionees hereunder covering the number of shares to which such terminated Options related.

4.3 Stock Adjustments; Mergers and Combinations. Notwithstanding any other provision in this Plan, if the outstanding shares of Stock are increased or decreased or changed into or exchanged for a different number or kind of shares or other securities of the Bank or of any other corporation by reason of any merger, sale of stock, consolidation, liquidation, recapitalization, reclassification, stock split up, combination of shares, or stock dividend, the total number of shares set forth in Section 4.1 shall be proportionately and appropriately adjusted by the Stock Option Committee. If the Bank continues in existence, the number and kind of shares that are subject to any Option and the Option Price per share shall be proportionately and appropriately adjusted without any change in the aggregate price to be paid therefor upon exercise of the Option. If the Bank will not remain in existence or a majority of its stock will be purchased or acquired by a single purchaser or group of purchasers acting together, then the Stock Option Committee may (i) declare that all Options shall terminate 30 days after the Stock Option Committee gives written notice to all Optionees of their immediate right to exercise all Options then outstanding (without regard to limitations on exercise otherwise contained in the Options), or (ii) notify all Optionees that all Options granted under the Plan shall apply with appropriate adjustments as determined by the Stock Option Committee to the securities of the successor corporation to which holders of the numbers of shares subject to such Options would have been entitled, or (iii) some combination of aspects of (i) and (ii). The determination by the Stock Option Committee as to the terms of any of the foregoing adjustments shall be conclusive and binding.

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ARTICLE V

Options

5.1 Option Grant and Agreement. Each Option granted hereunder shall be evidenced by minutes of a meeting of the Stock Option Committee authorizing the same and by a written Stock Option Agreement dated as of the date of grant and executed by the Bank and the Optionee, which Stock Option Agreement shall set forth such terms and conditions as may be determined by the Stock Option Committee to be consistent with the Plan; provided, however, that the Options to be granted to the Directors (and, as to each such Director, to cover the number of shares of Stock) specified on Exhibit A attached hereto shall not be required to be evidenced by minutes of a meeting of the Stock Option Committee authorizing the same.

5.2 Option Price. Subject to adjustment pursuant to the provisions of Section 4.3 hereof, the Option Price of each share of Stock subject to Option shall be the greater of Ten and 00/100 Dollars ($10.00) or the fair market value of the Stock on the date of grant. The Option Price of the Options set forth on Exhibit A shall be Ten Dollars and 00/100 Dollars ($10.00). If the Stock is publicly held and actively traded in an established market on the date of grant, then the fair market value of the Stock on the date of grant shall be determined by the Board of Directors by any reasonable method using market quotations. If the Stock is not publicly held and actively traded in an established market on the date of grant, then the fair market value of the Stock on the date of grant shall be determined in good faith by the Board of Directors using any reasonable method (and the book value of such shares may be substituted for the fair market value). Notwithstanding the foregoing, at no time shall the exercise price be less than the fair market value of the shares on the date the Option is granted or the par value thereof as determined by the Board of Directors.

5.3 Option Exercise. Options may be exercised in whole or in part from time to time with respect to whole shares only, within the period permitted for the exercise thereof. Notwithstanding any other provision in this Plan, no option granted under the Plan may be exercised more than ten (10) years after the date on which it is granted. Options shall be exercised by: (i) written notice of intent to exercise the Option with respect to a specific number of shares of Stock which is delivered by hand delivery or registered or certified mail, return receipt requested, to the Bank at its principal office; and (ii) payment in full (by a check or money order payable to “Millennium Bank”) to the Bank at such office of the amount of the Option Price for the number of shares of Stock with respect to which the Option is then being exercised. In addition to and at the time of payment of the Option Price, the Optionee shall pay to the Bank in cash the full amount of all federal, state, and local withholding or other employment taxes, if any, applicable to the taxable income of the Optionee resulting from such exercise, and any sales, transfer, or similar taxes imposed with respect to the issuance or transfer of shares of Stock in connection with such exercise.

5.4 Nontransferability of Option. No Option shall be transferred by an Optionee otherwise than by will or the laws of descent and distribution. During the lifetime of an Optionee, the Option shall be exercisable only by him or by his legal guardian or personal representative.

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5.5 Effect of Death, Disability, Retirement, or Other Termination of Service.

(a) If an Optionee’s Service with the Bank shall be terminated for any reason other than the retirement after age sixty-five (65) or the disability (as defined in Section 5.5(c) hereof) or death of the Optionee, then no Options held by such Optionee, which are unexercised in whole or in part, may be exercised on or after such termination of Service.

(b) If an Optionee’s Service with the Bank shall be terminated by reason of retirement after age sixty-five (65) or the death or disability (as defined in Section 5.5(c) hereof) of the Optionee, then the Optionee or personal representative or administrator of the estate of the Optionee or the person or persons to whom an Option granted hereunder shall have been validly transferred by the personal representative or administrator pursuant to the Optionee’s will or the laws of descent and distribution, as the case may be, shall have the right to exercise the Optionee’s Options for ninety (90) days after the date of such termination, but only to the extent that such Options were exercisable at the date of such termination.

(c) For purposes of this Section 5.5, the terms “disability” and “disabled” shall have the meaning set forth in the principal disability insurance policy or similar program then maintained by the Bank on behalf of its Directors or, if no such policy or program is then in existence, the meaning then used by the United States Government in determining persons eligible to receive disability payments under the social security system of the United States.

(d) No transfer of an Option by the Optionee by will or by the laws of descent and distribution shall be effective to bind the Bank unless the Bank shall have been furnished with written notice thereof and an authenticated copy of the will and/or such other evidence as the Bank may deem necessary to establish the validity of the transfer and the acceptance by the transferee or transferees of the terms and conditions of such Option.

5.6 Rights as Shareholder. An Optionee or a transferee of an Option shall have no rights as a shareholder with respect to any shares of Stock subject to such Option prior to the purchase of such shares by exercise of such Option as provided herein.

5.7 Investment Intent. Upon or prior to the exercise of all or any portion of an Option, the Optionee shall furnish to the Bank in writing such information or assurances as, in the Bank’s opinion, may be necessary to enable it to comply fully with the Securities Act of 1933, as amended, and the rules and regulations thereunder and any other applicable statutes, rules, and regulations. Without limiting the foregoing, if a registration statement is not in effect under the Securities Act of 1933, as amended, with respect to the shares of Stock to be issued upon exercise of an Option, the Bank shall have the right to require, as a condition to the exercise of such Option, that the Optionee

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represent to the Bank in writing that the shares to be received upon exercise of such Option will be acquired by the Optionee for investment and not with a view to distribution and that the Optionee agree, in writing, that such shares will not be disposed of except pursuant to an effective registration statement, unless the Bank shall have received an opinion of counsel reasonably acceptable to it to the effect that such disposition is exempt from the registration requirements of the Securities Act of 1933, as amended. The Bank shall have the right to endorse on certificates representing shares of Stock issued upon exercise of an Option such legends referring to the foregoing representations and restrictions or any other applicable restrictions on resale or disposition as the Bank, in its discretion, shall deem appropriate.

ARTICLE VI

Stock Certificates

The Bank shall not be required to issue or deliver any certificate for shares of Stock purchased upon the exercise of any Option granted hereunder or of any portion thereof, prior to fulfillment of all of the following conditions:

(a) The admission of such shares to listing on all stock exchanges on which the Stock is then listed, if any;

(b) The completion of any registration or other qualification of such shares under any federal or state law or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory agency, which the Bank shall in its sole discretion determine to be necessary or advisable;

(c) The obtaining of any approval or other clearance from any federal or state governmental agency which the Bank shall in its sole discretion determine to be necessary or advisable; and

(d) The lapse of such reasonable period of time following the exercise of the Option as the Bank from time to time may establish for reasons of administrative convenience.

ARTICLE VII

Termination, Amendment, and Modification of Plan

The Board may at any time terminate, and may at any time and from time to time and in any respect amend or modify, the Plan; provided, however, that no such action of the Board without approval of the shareholders of the Bank may increase the total number of shares of Stock subject to the Plan except as contemplated in Section 4.3 hereof or alter the class of persons eligible to receive Options under the Plan, and provided further that no termination, amendment, or modification of the Plan shall without the written consent of the Optionee of such Option adversely affect the rights of the Optionee with respect to an Option or the unexercised portion thereof.

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Notwithstanding any other provision of this Plan, the Bank’s primary federal bank regulator shall at any time have the right to direct the Bank to require Optionees to exercise their Options or forfeit their Options if the Bank=s capital falls below the minimum requirements, as determined by such federal bank regulator.

ARTICLE VIII

Miscellaneous

8.1 Service. Nothing in the Plan or in any Option granted hereunder or in any Stock Option Agreement relating thereto shall confer upon any Director the right to continue in the Service of the Bank.

8.2 Other Compensation Plans. The adoption of the Plan shall not affect any other stock option or incentive or other compensation plans in effect for the Bank, nor shall the Plan preclude the Bank from establishing any other forms of incentive or other compensation for directors of the Bank.

8.3 Plan Binding on Successors. The Plan shall be binding upon the successors and assigns of the Bank.

8.4 Singular, Plural; Gender. Whenever used herein, nouns in the singular shall include the plural, and the masculine pronoun shall include the feminine gender.

8.5 Applicable Law. This Plan shall be governed by and construed in accordance with the laws of the State of Florida.

8.6 Headings, etc., No Part of Plan. Headings of Articles and Sections hereof are inserted for convenience and reference; they constitute no part of the Plan.

8.7 Severability. If any provision or provisions of this Plan shall be held to be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

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IN WITNESS WHEREOF, the undersigned President and Chief Executive Officer of the Bank has signed this Plan for and on behalf of the Bank.

/s/ G. Andrew Williams

G. Andrew Williams

President and Chief Executive Officer

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EXHIBIT A

TO

MILLENNIUM BANK

DIRECTORS’ STOCK OPTION PLAN

Name of Director	Number of Shares Covered By Options Granted to the Director	Option Price
Carol R. Bosshardt		$	10.00
Barry P. Bullard		$	10.00
Robert O. Dale		$	10.00
Harry H. Daugherty		$	10.00
Miguel J. Diaz		$	10.00
Perry C. McGriff, Jr.		$	10.00
Loralee W. Miller		$	10.00
Brent G. Siegel		$	10.00
Larry N. Smith		$	10.00
Total	36,000

AMENDMENT NO. 1 TO MILLENNIUM BANK

DIRECTORS’ STOCK OPTION PLAN

THIS AMENDMENT NO. 1 TO THE MILLENNIUM BANK DIRECTORS’ STOCK OPTION PLAN (the “Amendment”) is made as of the 31st day of May, 2002.

W I T N E S S E T H     T H A T:

WHEREAS, the Board of Directors and the shareholders of Millennium Bank (the “Bank”) have authorized, adopted and approved an Directors’ Stock Option Plan (the “Plan”); and

WHEREAS, the Bank desires to amend the Plan in certain respects, and such amendment has been approved by the Board of Directors and the shareholders of the Bank.

NOW, THEREFORE, the Plan is hereby amended as follows:

1. Defined Terms. All terms used in this Amendment which are defined in the Plan shall have the meanings specified in the Plan, unless specifically defined herein.

2. Amendment of Section 4.1. Section 4.1 of the Plan shall be amended to provide that, subject to adjustment pursuant to the provisions of Section 4.3 of the Plan, the number of shares of Stock which may be issued and sold under the Plan pursuant to Stock Option Agreements shall not exceed Sixty Three Thousand (63,000) shares.

3. Effect of Amendment. Except as expressly modified by this Amendment, the terms, covenants, and conditions of the Plan shall remain in full force and effect.

IN WITNESS WHEREOF, the Bank has caused this Amendment to be duly executed by its officer thereunto duly authorized, all as of the date first above written.

MILLENNIUM BANK
By:	/s/ G. Andrew Williams
	G. Andrew Williams
	President and Chief Executive Officer

AMENDMENT NO. 2 TO MILLENNIUM BANK

DIRECTORS’ STOCK OPTION PLAN

THIS AMENDMENT NO. 2 TO THE MILLENNIUM BANK DIRECTORS’ STOCK OPTION PLAN (the “Amendment”) is made effective as of the              day of June, 2003.

Recitals

WHEREAS, the Millennium Bank Directors’ Stock Option Plan (as heretofore amended, the “Plan”) was originally adopted by Millennium Bank; and

WHEREAS, pursuant to that certain Agreement and Plan of Merger by and between Millennium Bank and Alabama National BanCorporation (the “Company”) dated as of January 28, 2003, the Company agreed to assume all obligations under the Plan and to convert all stock options granted under the Plan from options for the purchase of the common stock of Millennium Bank to options for the purchase of common stock of the Company, par value $1.00 per share (the “Stock”); and

WHEREAS, the Board of Directors of Millennium Bank now desires to amend the Plan to expand upon the methods of exercise of options available to participants under the Plan as described herein (the “Amendment”).

Amendments to the Plan

1. The definition of “Stock” in Article I, Section (i) shall be amended by deleting the existing language in its entirety and inserting in lieu thereof the definition assigned to such term in the recitals of this Amendment.

2. The term “Company” shall have the definition assigned to such term in the recitals of this Amendment.

3. The term “Fair Market Value” shall mean, unless otherwise determined by the Board of the Company, the closing price on the date of determination for a share of Stock as reported on the Nasdaq National Market, or if there were no sales on such date, the most recent prior date on which there were sales.

4. Section 5.3 of the Plan, entitled “Option Exercise,” shall be amended by deleting the existing language in its entirety and inserting in lieu thereof the following:

“5.3 Option Exercise. Options may be exercised in whole or in part from time to time with respect to whole shares only, within the period permitted for the exercise thereof. Notwithstanding any other provision in this Plan, no Option granted under the Plan may be exercised more than ten (10) years after the date on which it is granted. An Option may be exercised by giving

written notice to the Company specifying the number of whole shares of Stock to be purchased with the Option Price therefore to be payable in full either (A) in cash, (B) in previously owned whole shares of Stock (for which the holder of the Option has good title, free and clear of all liens and encumbrances) with their Fair Market Value determined as of the date of exercise, (C) by authorizing the Company to retain whole shares of Stock which would otherwise be issuable upon exercise of the Option with their Fair Market Value determined as of the date of exercise, or (D) a combination of (A), (B) and (C), and by executing such documents as the Company may reasonably request. Payment may also be made by delivering a properly executed notice together with irrevocable instructions to a broker to promptly deliver to the Company the amount of sale or loan proceeds needed to pay the Option Price attributable to the purchased shares. No shares of Stock shall be issued until the full Option Price has been paid. Promptly after the exercise of an Option and the payment in full of the Option Price, the Optionee shall be entitled to the issuance of a stock certificate evidencing his or her ownership of such Stock. In addition to and at the time of payment of the Option Price, the Optionee shall pay to the Company in cash the full amount of all federal, state and local withholding or other employment taxes, if any, applicable to the taxable income of the Optionee resulting from such exercise, and any sales, transfer, or similar taxes imposed with respect to the issuance or transfer of shares of Stock in connection with such exercise.”

5. Except as hereby amended, the Plan shall remain in full force and effect, as written.

6. Capitalized terms used in this Amendment and not otherwise defined herein have the respective meanings assigned to such terms in the Plan.

* * * * * *

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EX-10.33

Exhibit 10.33

MILLENNIUM BANK

OFFICERS’ AND EMPLOYEES’ STOCK OPTION PLAN

ARTICLE I

Definitions

As used herein, the following terms have the meanings hereinafter set forth unless the context clearly indicates to the contrary:

(a) “Bank” shall mean “Millennium Bank,” a Florida corporation.

(b) “Board” or “Board of Directors” shall mean the board of directors of the Bank.

(c) “Change of Control” shall be deemed to have occurred if an entity or person (including a “Group”) as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, becomes the beneficial owner (as defined in Rule 13d-3 promulgated thereunder) of shares of Bank Stock having 50% or more of the total number of votes that may be cast for the election of directors of the Bank (excluding any transaction which results in the formation for the Bank of a bank holding company owned by substantially all of the former shareholders of the Bank).

(d) “Code” shall mean the Internal Revenue Code of 1986, as amended, unless otherwise specifically provided herein.

(e) “Employee” shall mean any individual who is employed with the Bank as an officer or employee.

(f) “Incentive Stock Option” shall have the meaning given to it by Section 422 of the Code.

(g) “Nonemployee Director” shall mean a member of the Board who is not an Employee.

(h) “Nonstatutory Stock Option” shall mean any Option granted by the Bank pursuant to this Plan which is not an Incentive Stock Option.

(i) “Option” shall mean an option to purchase Stock granted by the Bank pursuant to the provisions of this Plan.

(j) “Option Price” shall mean the purchase price of each share of Stock subject to Option, as defined in Section 5.2 hereof.

(k) “Optionee” shall mean an Employee who has received an Option granted by the Bank hereunder.

(l) “Plan” shall mean this Millennium Bank Officers’ and Employees’ Stock Option Plan.

(m) “Service” shall mean the tenure of an individual as an Employee of the Bank.

(n) “Stock” shall mean the common stock of the Bank, par value $5.00 per share, or, in the event that the outstanding shares of Stock are hereafter changed into or exchanged for shares of a different class of stock or securities of the Bank or some other corporation, such other stock or securities.

(o) “Stock Option Agreement” shall mean the agreement between the Bank and the Optionee under which the Optionee may purchase Stock pursuant to the Plan.

(p) “Stock Option Committee” shall mean such Board committee as may be designated by the Board to administer the Plan; provided, however, that such committee shall be comprised solely of not less than two Nonemployee Directors, each of whom qualifies as a “Non-Employee Director” (as such term is used in Rule 16b-3 under the Securities Exchange Act of 1934, as amended).

ARTICLE II

The Plan

2.1 Name. This plan shall be known as the “Millennium Bank Officers’ and Employees’ Stock Option Plan.”

2.2 Purpose. The purpose of the Plan is to advance the interests of the Bank and its shareholders by affording to the Employees of the Bank an opportunity to acquire or increase their proprietary interest in the Bank by the grant of Options to such Employees under the terms set forth herein. By thus encouraging such Employees to become owners of Stock of the Bank, the Bank seeks to motivate, retain, and attract those highly competent individuals upon whose judgment, initiative, leadership, and continued efforts the success of the Bank in large measure depends.

2.3 Effective Date. The Plan shall become effective on the later of the approval of this Plan by (i) the Florida Department of Banking and Finance, or (ii) by the holders of a majority of the outstanding shares of Stock.

2.4 Participants. Only Employees of the Bank shall be eligible to receive Options under the Plan.

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ARTICLE III

Plan Administration

3.1 Stock Option Committee. This Plan shall be administered by the Stock Option Committee.

3.2 Power of the Stock Option Committee. The Stock Option Committee shall have full authority and discretion: (a) except with respect to Options covering the Employees and the shares of Stock specified on Exhibit A attached hereto, to determine, consistent with the provisions of this Plan, which of the Employees will be granted Options to purchase any shares of Stock which may be issued and sold hereunder as provided in Section 4.1 hereof to the extent such shares are not covered by the Options to be granted to the Employees specified on Exhibit A attached hereto, the times at which Options shall be granted, and the number of shares of Stock covered by each Option; (b) to determine whether the Options granted pursuant to this Plan shall be Incentive Stock Options or Nonstatutory Stock Options; (c) to construe and interpret the Plan; (d) to determine the terms and provisions of each respective Stock Option Agreement, which need not be identical; and (e) to make all other determinations and take all other actions deemed necessary or advisable for the proper administration of the Plan. All such actions and determinations shall be conclusively binding upon all persons for all purposes. Unless otherwise indicated by the Stock Option Committee, Options granted pursuant to this Plan shall be Incentive Stock Options.

ARTICLE IV

Shares of Stock Subject to Plan

4.1 Limitations. Subject to adjustment pursuant to the provisions of Section 4.3 hereof, the number of shares of Stock which may be issued and sold hereunder pursuant to Stock Option Agreements shall not exceed fifty-four thousand (54,000) shares. Of the fifty-four thousand (54,000) shares of Stock which may be issued and sold hereunder pursuant to Stock Option Agreements as provided in the foregoing sentence, forty thousand (40,000) shares shall be covered by the Options specified on Exhibit A attached hereto, which Options shall be Incentive Stock Options, and shall be granted to the Employees (and, as to each such Employee, shall cover the number of shares of Stock) specified on Exhibit A attached hereto on the Effective Date. Shares issued pursuant to the exercise of Options shall be solely authorized and unissued shares.

4.2 Options Granted Under Plan. Shares of Stock with respect to which an Option granted hereunder shall have been exercised shall not again be available for Option hereunder. If Options granted hereunder shall terminate for any reason without being wholly exercised, then the Stock Option Committee shall have the discretion to grant new Options to Optionees hereunder covering the number of shares to which such terminated Options related.

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4.3 Stock Adjustments; Mergers and Combinations. Notwithstanding any other provision in this Plan, if the outstanding shares of Stock are increased or decreased or changed into or exchanged for a different number or kind of shares or other securities of the Bank or of any other corporation by reason of any merger, sale of stock, consolidation, liquidation, recapitalization, reclassification, stock split up, combination of shares, or stock dividend, the total number of shares set forth in Section 4.1 shall be proportionately and appropriately adjusted by the Stock Option Committee. If the Bank continues in existence, the number and kind of shares that are subject to any Option and the Option Price per share shall be proportionately and appropriately adjusted without any change in the aggregate price to be paid therefor upon exercise of the Option. If the Bank will not remain in existence or a majority of its stock will be purchased or acquired by a single purchaser or group of purchasers acting together, then the Stock Option Committee may (i) declare that all Options shall terminate 30 days after the Stock Option Committee gives written notice to all Optionees of their immediate right to exercise all Options then outstanding (without regard to limitations on exercise otherwise contained in the Options), or (ii) notify all Optionees that all Options granted under the Plan shall apply with appropriate adjustments as determined by the Stock Option Committee to the securities of the successor corporation to which holders of the numbers of shares subject to such Options would have been entitled, or (iii) some combination of aspects of (i) and (ii). The determination by the Stock Option Committee as to the terms of any of the foregoing adjustments shall be conclusive and binding.

4.4 Acceleration of Option Exercise. Subject to Section 4.3, upon dissolution or liquidation of the Bank, any merger or combination in which the Bank is not a surviving corporation, or sale of substantially all of the assets of the Bank is involved, or upon any Change of Control, the Optionee shall have the right to exercise his Option thereafter in whole or in part notwithstanding the provisions of Section 5.3 hereof, to the extent that it shall not have been exercised.

ARTICLE V

Options

5.1 Option Grant and Agreement. Each Option granted hereunder shall be evidenced by minutes of a meeting of the Stock Option Committee authorizing the same and by a written Stock Option Agreement dated as of the date of grant and executed by the Bank and the Optionee, which Stock Option Agreement shall set forth such terms and conditions as may be determined by the Stock Option Committee to be consistent with the Plan and shall indicate whether the Option that it evidences is intended to be an Incentive Stock Option or a Nonstatutory Stock Option; provided, however, that the Options to be granted to the Employees (and, as to each such Employee, to cover the number of shares of Stock) specified on Exhibit A attached hereto shall not be required to be evidenced by minutes of a meeting of the Stock Option Committee authorizing the same.

5.2 Option Price. Subject to adjustment pursuant to the provisions of Section 4.3 hereof, the Option Price of each share of Stock subject to Option shall be the greater of Ten and 00/100 Dollars ($10.00) or the fair market value of the Stock on the date of grant. The Option Price of the Options set forth on Exhibit A shall be Ten and 00/100 Dollars ($10.00). If the Stock is publicly held and actively traded in an established market on the date of grant, then the fair market value of

4

the Stock on the date of grant shall be determined by the Board of Directors by any reasonable method using market quotations. If the Stock is not publicly held and actively traded in an established market on the date of grant, then the fair market value of the Stock on the date of grant shall be determined in good faith by the Board of Directors using any reasonable method (and the book value of such shares may be substituted for the fair market value). Notwithstanding the foregoing, at no time shall the exercise price be less than the fair market value of the shares on the date the Option is granted or the par value thereof as determined by the Board of Directors.

5.3 Option Exercise. Options may be exercised in whole or in part from time to time with respect to whole shares only, within the period permitted for the exercise thereof. Each Option shall become exercisable in the following manner:

(a) During the first year after the date of grant of such Option, no portion of the Option shall be exercisable;

(b) During the second year after the date of grant of such Option, such Option shall be exercisable only to the extent of twenty percent (20%) of the shares covered by such Option;

(c) During the third year after the date of grant of such Option, such Option shall be exercisable only to the extent of forty percent (40%) of the shares covered by such Option;

(d) During the fourth year after the date of grant of such Option, such Option shall be exercisable only to the extent of sixty percent (60%) of the shares covered by such Option;

(d) During the fifth year after the date of grant of such Option, such Option shall be exercisable only to the extent of eighty percent (80%) of the shares covered by such Option; and

(e) During the sixth and each succeeding year after the date of grant of such Option, such Option shall be exercisable as to all shares covered by such Option.

Notwithstanding any other provision in this Plan, no option granted under the Plan may be exercised more than ten (10) years after the date on which it is granted. Options shall be exercised by: (i) written notice of intent to exercise the Option with respect to a specific number of shares of Stock which is delivered by hand delivery or registered or certified mail, return receipt requested, to the Bank at its principal office; and (ii) payment in full (by a check or money order payable to “Millennium Bank”) to the Bank at such office of the amount of the Option Price for the number of shares of Stock with respect to which the Option is then being exercised. In addition to and at the time of payment of the Option Price, the Optionee shall pay to the Bank in cash the full amount of all federal, state, and local withholding or other employment taxes, if any, applicable to the taxable income of the Optionee resulting from such exercise, and any sales, transfer, or similar taxes imposed with respect to the issuance or transfer of shares of Stock in connection with such exercise.

5

5.4 Nontransferability of Option. No Option shall be transferred by an Optionee otherwise than by will or the laws of descent and distribution. During the lifetime of an Optionee, the Option shall be exercisable only by him or by his legal guardian or personal representative.

5.5 Effect of Death, Disability, Retirement, or Other Termination of Service.

(a) If an Optionee’s Service with the Bank shall be terminated for “cause,” as defined in Section 5.5(b) hereof, then no Options held by such Optionee, which are unexercised in whole or in part, may be exercised on or after the date on which such Optionee is first notified in writing by the Bank of such termination for cause.

(b) For purposes of this Section 5.5, termination for “cause” shall mean termination for the Optionee’s personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, violation of any law, rule, or regulation (other than traffic violations or similar offenses), violation of any agreement or order with any bank regulatory agency, or failure by the Optionee to perform his stated duties.

(c) If an Optionee’s Service with the Bank shall be terminated for any reason other than for cause (as defined in Section 5.5(b) hereof) and other than the retirement at age sixty-five (65) or the disability (as defined in Section 5.5(e) hereof) or death of the Optionee, then the Optionee shall have the right to exercise the Optionee’s Options for ninety (90) days after the date of such termination, but only to the extent that such Options were exercisable at the date of such termination.

(d) If an Optionee’s Service with the Bank shall be terminated by reason of retirement at age sixty-five (65) or the death or disability (as defined in Section 5.5(e) hereof) of the Optionee, then the Optionee or personal representative or administrator of the estate of the Optionee or the person or persons to whom an Option granted hereunder shall have been validly transferred by the personal representative or administrator pursuant to the Optionee’s will or the laws of descent and distribution, as the case may be, shall have the right to exercise the Optionee’s Options for one year after the date of such termination, but only to the extent that such Options were exercisable at the date of such termination.

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(e) For purposes of this Section 5.5, the terms “disability” and “disabled” shall have the meaning set forth in the principal disability insurance policy or similar program then maintained by the Bank on behalf of its employees or, if no such policy or program is then in existence, the meaning then used by the United States Government in determining persons eligible to receive disability payments under the social security system of the United States.

(f) No transfer of an Option by the Optionee by will or by the laws of descent and distribution shall be effective to bind the Bank unless the Bank shall have been furnished with written notice thereof and an authenticated copy of the will and/or such other evidence as the Bank may deem necessary to establish the validity of the transfer and the acceptance by the transferee or transferees of the terms and conditions of such Option.

5.6 Rights as Shareholder. An Optionee or a transferee of an Option shall have no rights as a shareholder with respect to any shares of Stock subject to such Option prior to the purchase of such shares by exercise of such Option as provided herein.

5.7 Investment Intent. Upon or prior to the exercise of all or any portion of an Option, the Optionee shall furnish to the Bank in writing such information or assurances as, in the Bank=s opinion, may be necessary to enable it to comply fully with the Securities Act of 1933, as amended, and the rules and regulations thereunder and any other applicable statutes, rules, and regulations. Without limiting the foregoing, if a registration statement is not in effect under the Securities Act of 1933, as amended, with respect to the shares of Stock to be issued upon exercise of an Option, the Bank shall have the right to require, as a condition to the exercise of such Option, that the Optionee represent to the Bank in writing that the shares to be received upon exercise of such Option will be acquired by the Optionee for investment and not with a view to distribution and that the Optionee agree, in writing, that such shares will not be disposed of except pursuant to an effective registration statement, unless the Bank shall have received an opinion of counsel reasonably acceptable to it to the effect that such disposition is exempt from the registration requirements of the Securities Act of 1933, as amended. The Bank shall have the right to endorse on certificates representing shares of Stock issued upon exercise of an Option such legends referring to the foregoing representations and restrictions or any other applicable restrictions on resale or disposition as the Bank, in its discretion, shall deem appropriate.

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ARTICLE VI

Incentive Stock Options

6.1 Requirements. All Incentive Stock Options granted pursuant to the terms of this Plan shall be subject to the additional limitations and restrictions as set forth in the Code and in this Article VI. Any Option granted pursuant to this Plan which does not fulfill all of the provisions of this Article VI shall not be an Incentive Stock Option and thus shall be a Nonstatutory Stock Option.

6.2 Grant Period. All Incentive Stock Options granted hereunder must be granted within ten (10) years from the earlier of: (a) the date the Plan is adopted by the Board; or (b) the date the Plan is approved by the shareholders of the Bank.

6.3 Eligibility. The Stock Option Committee shall determine which Employees shall receive Incentive Stock Options. No member of the Stock Option Committee is eligible to receive Incentive Stock Options. Incentive Stock Options may not be granted to any Employee who, at the time the Incentive Stock Option is granted, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Bank unless: (a) such Incentive Stock Option by its terms is not exercisable after the expiration of five (5) years from the date of its grant; and (b) the Option Price of the shares covered by such Incentive Stock Option is not less than one hundred and ten percent (110%) of the fair market value of such shares on the date that such Incentive Stock Option is granted.

6.4 Special Rule Regarding Exercisability. If, for any reason, any Option granted hereunder which is intended to be an Incentive Stock Option shall exceed the limitation on exercisability contained in the Code at any time, such Options shall nevertheless be exercisable, but: (a) any exercise of such Option shall be deemed to be an exercise of an Incentive Stock Option first until the portion of such Option qualifying as an Incentive Stock Option shall have been exercised in full; and (b) the portion of such Option in excess of the foregoing limitation on exercisability shall be deemed to be a Nonstatutory Stock Option.

ARTICLE VII

Nonstatutory Stock Options

The Stock Option Committee may grant Nonstatutory Stock Options under this Plan. Such Nonstatutory Stock Options must fulfill all of the requirements of all provisions of this Plan except for those contained in Article VI hereof. Subject to the approval and acceptance of the Stock Option Committee, any Employee who is granted a Nonstatutory Stock Option pursuant to this Plan shall be entitled to elect to surrender all or any part of such Nonstatutory Stock Option to the Bank and receive, in exchange, an Incentive Stock Option covering the same number of shares as those with respect to which the Nonstatutory Stock Option was surrendered. Any such election shall be valid and effective only upon its approval and acceptance by the Stock Option Committee.

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ARTICLE VIII

Stock Certificates

The Bank shall not be required to issue or deliver any certificate for shares of Stock purchased upon the exercise of any Option granted hereunder or of any portion thereof, prior to fulfillment of all of the following conditions:

(a) The admission of such shares to listing on all stock exchanges on which the Stock is then listed, if any;

(b) The completion of any registration or other qualification of such shares under any federal or state law or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory agency, which the Bank shall in its sole discretion determine to be necessary or advisable;

(c) The obtaining of any approval or other clearance from any federal or state governmental agency which the Bank shall in its sole discretion determine to be necessary or advisable; and

(d) The lapse of such reasonable period of time following the exercise of the Option as the Bank from time to time may establish for reasons of administrative convenience.

ARTICLE IX

Termination, Amendment, and Modification of Plan

The Board may at any time terminate, and may at any time and from time to time and in any respect amend or modify, the Plan; provided, however, that no such action of the Board without approval of the shareholders of the Bank may increase the total number of shares of Stock subject to the Plan except as contemplated in Section 4.3 hereof or alter the class of persons eligible to receive Options under the Plan, and provided further that no termination, amendment, or modification of the Plan shall without the written consent of the Optionee of such Option adversely affect the rights of the Optionee with respect to an Option or the unexercised portion thereof.

Notwithstanding any other provision of this Plan, the Bank’s primary federal bank regulator shall at any time have the right to direct the Bank to require Optionees to exercise their Options or forfeit their Options if the Bank’s capital falls below the minimum requirements, as determined by such federal bank regulator.

9

ARTICLE X

Miscellaneous

10.1 Service. Nothing in the Plan or in any Option granted hereunder or in any Stock Option Agreement relating thereto shall confer upon any Employee the right to continue in the Service of the Bank.

10.2 Other Compensation Plans. The adoption of the Plan shall not affect any other stock option or incentive or other compensation plans in effect for the Bank, nor shall the Plan preclude the Bank from establishing any other forms of incentive or other compensation for directors, officers, or employees of the Bank.

10.3 Plan Binding on Successors. The Plan shall be binding upon the successors and assigns of the Bank.

10.4 Singular, Plural; Gender. Whenever used herein, nouns in the singular shall include the plural, and the masculine pronoun shall include the feminine gender.

10.5 Applicable Law. This Plan shall be governed by and construed in accordance with the laws of the State of Florida.

10.6 Headings, etc., No Part of Plan. Headings of Articles and Sections hereof are inserted for convenience and reference; they constitute no part of the Plan.

10.7 Severability. If any provision or provisions of this Plan shall be held to be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

IN WITNESS WHEREOF, the undersigned President and Chief Executive Officer of the Bank has signed this Plan for and on behalf of the Bank.

/s/ G. Andrew Williams

G. Andrew Williams

President and Chief Executive Officer

Dated:                     , 1999

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EXHIBIT A

TO

MILLENNIUM BANK

OFFICERS’ AND EMPLOYEES’ STOCK OPTION PLAN

Name of Employee	Number of Shares Covered by Options Granted To the Employee	Option Price
G. Andrew Williams	20,000	$	10.00
Cynthia Delaporte	10,000	$	10.00
Robert L. Page	10,000	$	10.00
Total	40,000

AMENDMENT NO. 1 TO MILLENNIUM BANK

OFFICERS’ AND EMPLOYEES’ STOCK OPTION PLAN

THIS AMENDMENT NO. 1 TO THE MILLENNIUM BANK OFFICERS’ AND EMPLOYEES’ STOCK OPTION PLAN (the “Amendment”) is made as of the 31^st day of May, 2002.

W I T N E S S E T H     T H A T:

WHEREAS, the Board of Directors and the shareholders of Millennium Bank (the “Bank”) have authorized, adopted and approved an Officers’ and Employees’ Stock Option Plan (the “Plan”); and

WHEREAS, the Bank desires to amend the Plan in certain respects, and such amendment has been approved by the Board of Directors and the shareholders of the Bank.

NOW, THEREFORE, the Plan is hereby amended as follows:

1. Defined Terms. All terms used in this Amendment which are defined in the Plan shall have the meanings specified in the Plan, unless specifically defined herein.

2. Amendment of Section 4.1. Section 4.1 of the Plan shall be amended to provide that, subject to adjustment pursuant to the provisions of Section 4.3 of the Plan, the number of shares of Stock which may be issued and sold under the Plan pursuant to Stock Option Agreements shall not exceed Eighty Four Thousand Seven Hundred Thirty Three (84,733) shares.

3. Effect of Amendment. Except as expressly modified by this Amendment, the terms, covenants, and conditions of the Plan shall remain in full force and effect.

IN WITNESS WHEREOF, the Bank has caused this Amendment to be duly executed by its officer thereunto duly authorized, all as of the date first above written.

MILLENNIUM BANK
By:	/s/ G. Andrew Williams
	G. Andrew Williams
	President and Chief Executive Officer

EX-10.34

Exhibit 10.34

CYPRESS BANK

DIRECTORS’ STOCK OPTION PLAN

ARTICLE I

Definitions

As used herein, the following terms have the meanings hereinafter set forth unless the context clearly indicates to the contrary:

(a) “Bank” shall mean Cypress Bank, a Florida corporation.

(b) “Board” or “Board of Directors” shall mean the board of directors of the Bank.

(c) “Change of Control” shall be deemed to have occurred if an entity or person (including a “Group”) as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, becomes the beneficial owner (as defined in Rule 13d-3 promulgated thereunder) of Bank Stock having 50% or more of the total number of votes that may be cast for the election of directors of the Bank (excluding any transaction which results in the formation for the Bank of a bank holding company owned by substantially all of the former shareholders of the Bank).

(d) “Director” shall mean any individual who is serving as a director of the Bank.

(e) “Option” shall mean an option to purchase Stock granted by the Bank pursuant to the provisions of this Plan.

(f) “Option Price” shall mean the purchase price of each share of Stock subject to Option, as defined in Section 5.2 hereof.

(g) “Optionee” shall mean a Director who has received an Option granted by the Bank hereunder.

(h) “Plan” shall mean this Cypress Bank Directors’ Stock Option Plan.

(i) “Service” shall mean the tenure of an individual as a director of the Bank.

(j) “Stock” shall mean the common stock of the Bank, par value $5.00 per share, or, in the event that the outstanding shares of Stock are hereafter changed into or exchanged for shares of a different class of stock or securities of the Bank or some other corporation, such other stock or securities.

(k) “Stock Option Agreement” shall mean the agreement between the Bank and the Optionee under which the Optionee may purchase Stock pursuant to the Plan.

(l) “Stock Option Committee” shall mean such Board committee as may be designated by the Board to administer the Plan.

ARTICLE II

The Plan

2.1 Name. This plan shall be known as the “Cypress Bank Directors’ Stock Option Plan.”

2.2 Purpose. The purpose of the Plan is to advance the interests of the Bank and its shareholders by affording to the Directors of the Bank an opportunity to increase their proprietary interest in the Bank and recognize their efforts in connection with the organization of the Bank by the grant of Options to such Directors under the terms set forth herein.

2.3 Effective Date. The Plan shall become effective on the later of the approval of this Plan by (i) the Florida Department of Banking and Finance, or (ii) by the holders of a majority of the outstanding shares of Stock.

2.4 Participants. Only non-employee Directors of the Bank shall be eligible to receive Options under the Plan.

ARTICLE III

Plan Administration

3.1 Stock Option Committee. This Plan shall be administered by the Stock Option Committee.

3.2 Power of the Stock Option Committee. The Stock Option Committee shall have full authority and discretion: (a) except with respect to Options covering the Directors and the shares of Stock specified on Exhibit A attached hereto, to determine, consistent with the provisions of this Plan, which of the Directors will be granted Options to purchase any shares of Stock which may be issued and sold hereunder as provided in Section 4.1 hereof to the extent such shares are not covered by the Options to be granted to the Directors specified on Exhibit A attached hereto, the times at which Options shall be granted, and the number of shares of Stock covered by each Option; (b) to construe and interpret the Plan; (c) to determine the terms and provisions of each respective Stock Option Agreement, which need not be identical; and (d) to make all other determinations and take all other actions deemed necessary or advisable for the proper administration of the Plan. All such actions and determinations shall be conclusively binding upon all persons for all purposes.

ARTICLE IV

Shares of Stock Subject to Plan

4.1 Limitations. Subject to adjustment pursuant to the provisions of Section 4.3 hereof, the number of shares of Stock which may be issued and sold hereunder pursuant to Stock Option Agreements shall not exceed sixty-seven thousand two hundred (67,200) shares. All of the sixty-seven thousand two hundred (67,200) shares of Stock which may be issued and sold hereunder shall be covered by the Options specified on Exhibit A attached hereto, which Options shall be granted to the Directors (and, as to each such Director, shall cover the number of shares of Stock) specified on Exhibit A attached hereto on the Effective Date. Shares issued pursuant to the exercise of Options shall be issuable only from authorized and unissued shares.

4.2 Options Granted Under Plan. Shares of Stock with respect to which an Option granted hereunder shall have been exercised shall not again be available for Option hereunder. If Options granted hereunder shall terminate for any reason without being wholly exercised, then the Stock Option Committee shall have the discretion to grant new Options to Optionees hereunder covering the number of shares to which such terminated Options related.

4.3 Stock Adjustments; Mergers and Combinations. Notwithstanding any other provision in this Plan, if the outstanding shares of Stock are increased or decreased or changed into or exchanged for a different number or kind of shares or other securities of the Bank or of any other corporation by reason of any merger, sale of stock, consolidation, liquidation, recapitalization, reclassification, stock split up, combination of shares, or stock dividend, the total number of shares set forth in Section 4.1 shall be proportionately and appropriately adjusted by the Stock Option Committee. If the Bank continues in existence, the number and kind of shares that are subject to any Option and the Option Price per share shall be proportionately and appropriately adjusted without any change in the aggregate price to be paid therefor upon exercise of the Option. If the Bank will not remain in existence or a majority of its stock will be purchased or acquired by a single purchaser or group of purchasers acting together, then the Stock Option Committee may (i) declare that all Options shall terminate 30 days after the Stock Option Committee gives written notice to all Optionees of their immediate right to exercise all Options then outstanding (without regard to limitations on exercise otherwise contained in the Options), or (ii) notify all Optionees that all Options granted under the Plan shall apply with appropriate adjustments as determined by the Stock Option Committee to the securities of the successor corporation to which holders of the numbers of shares subject to such Options would have been entitled, or (iii) some combination of aspects of (i) and (ii). The determination by the Stock Option Committee as to the terms of any of the foregoing adjustments shall be conclusive and binding.

4.4 Acceleration of Option Exercise. Subject to Section 4.3, upon dissolution or liquidation of the Bank, any merger or combination in which the Bank is not a surviving corporation, or sale of substantially all of the assets of the Bank is involved, or upon any Change of Control, the Optionee shall have the right to exercise his Option thereafter in whole or in part notwithstanding the provisions of Section 5.3 hereof, to the extent that it shall not have been exercised.

ARTICLE V

Options

5.1 Option Grant and Agreement. Each Option granted hereunder shall be evidenced by minutes of a meeting of the Stock Option Committee authorizing the same and by a written Stock Option Agreement dated as of the date of grant and executed by the Bank and the Optionee, which Stock Option Agreement shall set forth such terms and conditions as may be determined by the Stock Option Committee to be consistent with the Plan; provided, however, that the Options to be granted to the Directors (and, as to each such Director, to cover the number of shares of Stock) specified on Exhibit A attached hereto shall not be required to be evidenced by minutes of a meeting of the Stock Option Committee authorizing the same.

5.2 Option Price. Subject to adjustment pursuant to the provisions of Section 4.3 hereof, the Option Price of each share of Stock subject to Option shall be the greater of Ten and 00/100 Dollars ($10.00) or the fair market value of the Stock on the date of grant. The Option Price of the Options set forth on Exhibit A shall be Ten Dollars and 00/100 Dollars ($10.00). If the Stock is publicly held and actively traded in an established market on the date of grant, then the fair market value of the Stock on the date of grant shall be determined by the Board of Directors by any reasonable method using market quotations. If the Stock is not publicly held and actively traded in an established market on the date of grant, then the fair market value of the Stock on the date of grant shall be determined in good faith by the Board of Directors using any reasonable method (and the book value of such shares may be substituted for the fair market value). Notwithstanding the foregoing, at no time shall the exercise price be less than the fair market value of the shares on the date the Option is granted or the par value thereof as determined by the Board of Directors.

5.3 Option Exercise. Options may be exercised in whole or in part from time to time with respect to whole shares only, within the period permitted for the exercise thereof. Each Option shall become exercisable in the following manner:

(a) During the first three years after the date of grant of such Option, no portion of the Option shall be exercisable;

(b) During the fourth year after the date of grant of such Option, such Option shall be exercisable only to the extent of fifty percent (50%) of the shares covered by such Option;

(c) During the fifth year after the date of grant of such Option, such Option shall be exercisable only to the extent of seventy-five percent (75%) of the shares covered by such Option; and

(d) During the sixth and each succeeding year after the date of grant of such Option, such Option shall be exercisable as to all shares covered by such Option.

Notwithstanding any other provision in this Plan, no option granted under the Plan may be exercised more than ten (10) years after the date on which it is granted. Options shall be exercised by: (i) written notice of intent to exercise the Option with respect to a specific number of shares of Stock which is delivered by hand delivery or registered or certified mail, return receipt requested, to the Bank at its principal office; and (ii) payment in full (by a check or money order payable to “Cypress Bank”) to the Bank at such office of the amount of the Option Price for the number of shares of Stock with respect to which the Option is then being exercised. In addition to and at the time of payment of the Option Price, the Optionee shall pay to the Bank in cash the full amount of all federal, state, and local withholding or other employment taxes, if any, applicable to the taxable income of the Optionee resulting from such exercise, and any sales, transfer, or similar taxes imposed with respect to the issuance or transfer of shares of Stock in connection with such exercise.

5.4 Nontransferability of Option. No Option shall be transferred by an Optionee otherwise than by will or the laws of descent and distribution. During the lifetime of an Optionee, the Option shall be exercisable only by him or by his legal guardian or personal representative.

5.5 Effect of Death, Disability, Retirement, or Other Termination of Service.

(a) If an Optionee’s Service with the Bank shall be terminated for any reason other than the retirement after age sixty-five (65) or the disability (as defined in Section 5.5(c) hereof) or death of the Optionee, then no Options held by such Optionee, which are unexercised in whole or in part, may be exercised on or after such termination of Service.

(b) If an Optionee’s Service with the Bank shall be terminated by reason of retirement after age sixty-five (65) or the death or disability (as defined in Section 5.5(c) hereof) of the Optionee, then the Optionee or personal representative or administrator of the estate of the Optionee or the person or persons to whom an Option granted hereunder shall have been validly transferred by the personal representative or administrator pursuant to the Optionee’s will or the laws of descent and distribution, as the case may be, shall have the right to exercise the Optionee’s Options for ninety (90) days after the date of such termination, but only to the extent that such Options were exercisable at the date of such termination.

(c) For purposes of this Section 5.5, the terms “disability” and “disabled” shall have the meaning set forth in the principal disability insurance policy or similar program then maintained by the Bank on behalf of its Directors or, if no such policy or program is then in existence, the meaning then used by the United States Government in determining persons eligible to receive disability payments under the social security system of the United States.

(d) No transfer of an Option by the Optionee by will or by the laws of descent and distribution shall be effective to bind the Bank unless the Bank shall have been furnished with written notice thereof and an authenticated copy of the will and/or such other evidence as the Bank may deem necessary to establish the validity of the transfer and the acceptance by the transferee or transferees of the terms and conditions of such Option.

5.6 Rights as Shareholder. An Optionee or a transferee of an Option shall have no rights as a shareholder with respect to any shares of Stock subject to such Option prior to the purchase of such shares by exercise of such Option as provided herein.

5.7 Investment Intent. Upon or prior to the exercise of all or any portion of an Option, the Optionee shall furnish to the Bank in writing such information or assurances as, in the Bank’s opinion, may be necessary to enable it to comply fully with the Securities Act of 1933, as amended, and the rules and regulations thereunder and any other applicable statutes, rules, and regulations. Without limiting the foregoing, if a registration statement is not in effect under the Securities Act of 1933, as amended, with respect to the shares of Stock to be issued upon exercise of an Option, the Bank shall have the right to require, as a condition to the exercise of such Option, that the Optionee represent to the Bank in writing that the shares to be received upon exercise of such Option will be acquired by the Optionee for investment and not with a view to distribution and that the Optionee agree, in writing, that such shares will not be disposed of except pursuant to an effective registration statement, unless the Bank shall have received an opinion of counsel reasonably acceptable to it to the effect that such disposition is exempt from the registration requirements of the Securities Act of 1933, as amended. The Bank shall have the right to endorse on certificates representing shares of Stock issued upon exercise of an Option such legends referring to the foregoing representations and restrictions or any other applicable restrictions on resale or disposition as the Bank, in its discretion, shall deem appropriate.

ARTICLE VI

Stock Certificates

The Bank shall not be required to issue or deliver any certificate for shares of Stock purchased upon the exercise of any Option granted hereunder or of any portion thereof, prior to fulfillment of all of the following conditions:

(a) The admission of such shares to listing on all stock exchanges on which the Stock is then listed, if any;

(b) The completion of any registration or other qualification of such shares under any federal or state law or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory agency, which the Bank shall in its sole discretion determine to be necessary or advisable;

(c) The obtaining of any approval or other clearance from any federal or state governmental agency which the Bank shall in its sole discretion determine to be necessary or advisable; and

(d) The lapse of such reasonable period of time following the exercise of the Option as the Bank from time to time may establish for reasons of administrative convenience.

ARTICLE VII

Termination, Amendment, and Modification of Plan

The Board may at any time terminate, and may at any time and from time to time and in any respect amend or modify, the Plan; provided, however, that no such action of the Board without approval of the shareholders of the Bank may increase the total number of shares of Stock subject to the Plan except as contemplated in Section 4.3 hereof or alter the class of persons eligible to receive Options under the Plan, and provided further that no termination, amendment, or modification of the Plan shall without the written consent of the Optionee of such Option adversely affect the rights of the Optionee with respect to an Option or the unexercised portion thereof.

Notwithstanding any other provision of this Plan, the Bank’s primary federal bank regulator shall at any time have the right to direct the Bank to require Optionees to exercise their Options or forfeit their Options if the Bank’s capital falls below the minimum requirements, as determined by such federal bank regulator.

ARTICLE VIII

Miscellaneous

8.1 Service. Nothing in the Plan or in any Option granted hereunder or in any Stock Option Agreement relating thereto shall confer upon any Director the right to continue in the Service of the Bank.

8.2 Other Compensation Plans. The adoption of the Plan shall not affect any other stock option or incentive or other compensation plans in effect for the Bank, nor shall the Plan preclude the Bank from establishing any other forms of incentive or other compensation for directors of the Bank.

8.3 Plan Binding on Successors. The Plan shall be binding upon the successors and assigns of the Bank.

8.4 Singular, Plural; Gender. Whenever used herein, nouns in the singular shall include the plural, and the masculine pronoun shall include the feminine gender.

8.5 Applicable Law. This Plan shall be governed by and construed in accordance with the laws of the State of Florida.

8.6 Headings, etc., No Part of Plan. Headings of Articles and Sections hereof are inserted for convenience and reference; they constitute no part of the Plan.

8.7 Severability. If any provision or provisions of this Plan shall be held to be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

IN WITNESS WHEREOF, the undersigned President and Chief Executive Officer of the Bank has signed this Plan for and on behalf of the Bank.

/s/ Bruce E. Page

Bruce E. Page

President and Chief Executive Officer

EXHIBIT A

TO

CYPRESS BANK

DIRECTORS’ STOCK OPTION PLAN

Name of Director	Number of Shares Covered by Options Granted to the Director	Option Price
Albert W. Baylor	7,000	$	10.00
Michael D. Chiumento	7,000	$	10.00
C. Scott Crews	7,000	$	10.00
Thomas L. Gibbs	7,000	$	10.00
Gerald P. Keyes	7,000	$	10.00
John J. Martin	4,200	$	10.00
James M. McNab	7,000	$	10.00
Michael G. Morello, Jr.	7,000	$	10.00
Edwin E. Prevatte, Jr.	7,000	$	10.00
William J. Scullion	7,000	$	10.00
Total	67,200

ASSUMPTION OF DIRECTORS’ STOCK OPTION PLAN

THIS ASSUMPTION OF STOCK OPTION PLAN (the “Assumption”) is made as of the 1^st day of June, 2003.

WITNESSETH THAT:

WHEREAS, Cypress Bank (the “Bank”) and Cypress Bankshares, Inc. (“Bankshares”) entered into an Agreement and Plan of Share Exchange (the “Agreement”) pursuant to which the Bank has been reorganized as a wholly-owned subsidiary of Bankshares through a share exchange transaction (the “Share Exchange”); and

WHEREAS, the Bank has in effect a Directors’ Stock Option Plan (the “Plan”); and

WHEREAS, Bankshares and the Bank desire to set forth in this Assumption the assumption by Bankshares of the Plan and the options issued thereunder (“Options”).

NOW, THEREFORE, the parties agree as follows:

1. Adoption of Recitals. The parties confirm that the foregoing recitals are true and accurate as of the date hereof and are reflective of the intent of the parties.

2. Assumption of Plan and Options. Effective June 1, 2003, Bankshares shall assume the Plan and the Options, and the obligations of the Bank in connection with the Plan and said Options, as if an original party thereto.

3. Additional Instruments. Bankshares and the Bank agree to provide from time to time any additional documents, agreements, instruments or writings that may be deemed necessary or appropriate by either party to evidence the assumption by Bankshares of the Plan and the Options.

IN WITNESS WHEREOF, Bankshares and the Bank have caused this Assumption to be duly executed all as of the date first above written.

CYPRESS BANKSHARES, INC.		CYPRESS BANK
By:	/s/ Bruce E. Page	By:	/s/ Bruce E. Page
	Bruce E. Page		Bruce E. Page
	Chief Executive Officer		Chief Executive Officer
By:	/s/ James E. Weite, Jr.	By:	/s/ James E. Weite, Jr.
	James E. Weite, Jr.		James E. Weite, Jr.
	President		President

EX-10.35

Exhibit 10.35

CYPRESS BANK

OFFICERS’ AND EMPLOYEES’ STOCK OPTION PLAN

ARTICLE I

Definitions

As used herein, the following terms have the meanings hereinafter set forth unless the context clearly indicates to the contrary:

(a) “Bank” shall mean “Cypress Bank,” a Florida corporation.

(b) “Board” or “Board of Directors” shall mean the board of directors of the Bank.

(c) “Change of Control” shall be deemed to have occurred if an entity or person (including a “Group”) as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, becomes the beneficial owner (as defined in Rule 13d-3 promulgated thereunder) of Bank Stock having 50% or more of the total number of votes that may be cast for the election of directors of the Bank (excluding any transaction which results in the formation for the Bank of a bank holding company owned by substantially all of the former shareholders of the Bank).

(d) “Code” shall mean the Internal Revenue Code of 1986, as amended, unless otherwise specifically provided herein.

(e) “Employee” shall mean any individual who is employed with the Bank as an officer or employee.

(f) “Incentive Stock Option” shall have the meaning given to it by Section 422 of the Code.

(g) “Nonemployee Director” shall mean a member of the Board who is not an Employee.

(h) “Nonstatutory Stock Option” shall mean any Option granted by the Bank pursuant to this Plan which is not an Incentive Stock Option.

(i) “Option” shall mean an option to purchase Stock granted by the Bank pursuant to the provisions of this Plan.

(j) “Option Price” shall mean the purchase price of each share of Stock subject to Option, as defined in Section 5.2 hereof.

(k) “Optionee” shall mean an Employee who has received an Option granted by the Bank hereunder.

(l) “Plan” shall mean this Cypress Bank Officers’ and Employees’ Stock Option Plan.

(m) “Service” shall mean the tenure of an individual as an Employee of the Bank.

(n) “Stock” shall mean the common stock of the Bank, par value $5.00 per share, or, in the event that the outstanding shares of Stock are hereafter changed into or exchanged for shares of a different class of stock or securities of the Bank or some other corporation, such other stock or securities.

(o) “Stock Option Agreement” shall mean the agreement between the Bank and the Optionee under which the Optionee may purchase Stock pursuant to the Plan.

(p) “Stock Option Committee” shall mean such Board committee as may be designated by the Board to administer the Plan; provided, however, that such committee shall be comprised solely of not less than two Nonemployee Directors, each of whom qualifies as a “Non-Employee Director” (as such term is used in Rule 16b-3 under the Securities Exchange Act of 1934, as amended).

ARTICLE II

The Plan

2.1 Name. This plan shall be known as the “Cypress Bank Officers’ and Employees’ Stock Option Plan.”

2.2 Purpose. The purpose of the Plan is to advance the interests of the Bank and its shareholders by affording to the Employees of the Bank an opportunity to acquire or increase their proprietary interest in the Bank by the grant of Options to such Employees under the terms set forth herein. By thus encouraging such Employees to become owners of Stock of the Bank, the Bank seeks to motivate, retain, and attract those highly competent individuals upon whose judgment, initiative, leadership, and continued efforts the success of the Bank in large measure depends.

2.3 Effective Date. The Plan shall become effective on the later of the approval of this Plan by (i) the Florida Department of Banking and Finance, or (ii) by the holders of a majority of the outstanding shares of Stock.

2.4 Participants. Only Employees of the Bank shall be eligible to receive Options under the Plan.

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ARTICLE III

Plan Administration

3.1 Stock Option Committee. This Plan shall be administered by the Stock Option Committee.

3.2 Power of the Stock Option Committee. The Stock Option Committee shall have full authority and discretion: (a) except with respect to Options covering the Employees and the shares of Stock specified on Exhibit A attached hereto, to determine, consistent with the provisions of this Plan, which of the Employees will be granted Options to purchase any shares of Stock which may be issued and sold hereunder as provided in Section 4.1 hereof to the extent such shares are not covered by the Options to be granted to the Employees specified on Exhibit A attached hereto, the times at which Options shall be granted, and the number of shares of Stock covered by each Option; (b) to determine whether the Options granted pursuant to this Plan shall be Incentive Stock Options or Nonstatutory Stock Options; (c) to construe and interpret the Plan; (d) to determine the terms and provisions of each respective Stock Option Agreement, which need not be identical; and (e) to make all other determinations and take all other actions deemed necessary or advisable for the proper administration of the Plan. All such actions and determinations shall be conclusively binding upon all persons for all purposes. Unless otherwise indicated by the Stock Option Committee, Options granted pursuant to this Plan shall be Incentive Stock Options.

ARTICLE IV

Shares of Stock Subject to Plan

4.1 Limitations. Subject to adjustment pursuant to the provisions of Section 4.3 hereof, the number of shares of Stock which may be issued and sold hereunder pursuant to Stock Option Agreements shall not exceed seventy-six thousand eight hundred (76,800) shares. Of the seventy-six thousand eight hundred (76,800) shares of Stock which may be issued and sold hereunder pursuant to Stock Option Agreements as provided in the foregoing sentence, forty-six thousand two hundred shares (46,200) shares shall be covered by the Options specified on Exhibit A attached hereto, which Options shall be Incentive Stock Options, and shall be granted to the Employees (and, as to each such Employee, shall cover the number of shares of Stock) specified on Exhibit A attached hereto on the Effective Date. Shares issued pursuant to the exercise of Options shall be solely authorized and unissued shares.

4.2 Options Granted Under Plan. Shares of Stock with respect to which an Option granted hereunder shall have been exercised shall not again be available for Option hereunder. If Options granted hereunder shall terminate for any reason without being wholly exercised, then the Stock Option Committee shall have the discretion to grant new Options to Optionees hereunder covering the number of shares to which such terminated Options related.

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4.3 Stock Adjustments; Mergers and Combinations. Notwithstanding any other provision in this Plan, if the outstanding shares of Stock are increased or decreased or changed into or exchanged for a different number or kind of shares or other securities of the Bank or of any other corporation by reason of any merger, sale of stock, consolidation, liquidation, recapitalization, reclassification, stock split up, combination of shares, or stock dividend, the total number of shares set forth in Section 4.1 shall be proportionately and appropriately adjusted by the Stock Option Committee. If the Bank continues in existence, the number and kind of shares that are subject to any Option and the Option Price per share shall be proportionately and appropriately adjusted without any change in the aggregate price to be paid therefor upon exercise of the Option. If the Bank will not remain in existence or a majority of its stock will be purchased or acquired by a single purchaser or group of purchasers acting together, then the Stock Option Committee may (i) declare that all Options shall terminate 30 days after the Stock Option Committee gives written notice to all Optionees of their immediate right to exercise all Options then outstanding (without regard to limitations on exercise otherwise contained in the Options), or (ii) notify all Optionees that all Options granted under the Plan shall apply with appropriate adjustments as determined by the Stock Option Committee to the securities of the successor corporation to which holders of the numbers of shares subject to such Options would have been entitled, or (iii) some combination of aspects of (i) and (ii). The determination by the Stock Option Committee as to the terms of any of the foregoing adjustments shall be conclusive and binding.

4.4 Acceleration of Option Exercise. Subject to Section 4.3, upon dissolution or liquidation of the Bank, any merger or combination in which the Bank is not a surviving corporation, or sale of substantially all of the assets of the Bank is involved, or upon any Change of Control, the Optionee shall have the right to exercise his Option thereafter in whole or in part notwithstanding the provisions of Section 5.3 hereof, to the extent that it shall not have been exercised.

ARTICLE V

Options

5.1 Option Grant and Agreement. Each Option granted hereunder shall be evidenced by minutes of a meeting of the Stock Option Committee authorizing the same and by a written Stock Option Agreement dated as of the date of grant and executed by the Bank and the Optionee, which Stock Option Agreement shall set forth such terms and conditions as may be determined by the Stock Option Committee to be consistent with the Plan and shall indicate whether the Option that it evidences is intended to be an Incentive Stock Option or a Nonstatutory Stock Option; provided, however, that the Options to be granted to the Employees (and, as to each such Employee, to cover the number of shares of Stock) specified on Exhibit A attached hereto shall not be required to be evidenced by minutes of a meeting of the Stock Option Committee authorizing the same.

5.2 Option Price. Subject to adjustment pursuant to the provisions of Section 4.3 hereof, the Option Price of each share of Stock subject to Option shall be the greater of Ten and 00/100 Dollars ($10.00) or the fair market value of the Stock on the date of grant. The Option

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Price of the Options set forth on Exhibit A shall be Ten and 00/100 Dollars ($10.00). If the Stock is publicly held and actively traded in an established market on the date of grant, then the fair market value of the Stock on the date of grant shall be determined by the Board of Directors by any reasonable method using market quotations. If the Stock is not publicly held and actively traded in an established market on the date of grant, then the fair market value of the Stock on the date of grant shall be determined in good faith by the Board of Directors using any reasonable method (and the book value of such shares may be substituted for the fair market value). Notwithstanding the foregoing, at no time shall the exercise price be less than the fair market value of the shares on the date the Option is granted or the par value thereof as determined by the Board of Directors.

5.3 Option Exercise. Options may be exercised in whole or in part from time to time with respect to whole shares only, within the period permitted for the exercise thereof. Each Option shall become exercisable in the following manner:

(a) During the first three years after the date of grant of such Option, no portion of the Option shall be exercisable;

(b) During the fourth year after the date of grant of such Option, such Option shall be exercisable only to the extent of forty percent (40%) of the shares covered by such Option;

(c) During the fifth year after the date of grant of such Option, such Option shall be exercisable only to the extent of sixty percent (60%) of the shares covered by such Option;

(d) During the sixth year after the date of grant of such Option, such Option shall be exercisable only to the extent of ninety percent (90%) of the shares covered by such Option;

(d) During the seventh year after the date of grant of such Option, such Option shall be exercisable only to the extent of ninety-five percent (95%) of the shares covered by such Option; and

(e) During the eighth and each succeeding year after the date of grant of such Option, such Option shall be exercisable as to all shares covered by such Option.

Notwithstanding any other provision in this Plan, no option granted under the Plan may be exercised more than ten (10) years after the date on which it is granted. Options shall be exercised by: (i) written notice of intent to exercise the Option with respect to a specific number of shares of Stock which is delivered by hand delivery or registered or certified mail, return receipt requested, to the Bank at its principal office; and (ii) payment in full (by a check or money order payable to “Cypress Bank”) to the Bank at such office of the amount of the Option Price for the number of shares of Stock with respect to which the Option is then being exercised. In addition to and at the time of payment of the Option Price, the Optionee shall pay to the Bank

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in cash the full amount of all federal, state, and local withholding or other employment taxes, if any, applicable to the taxable income of the Optionee resulting from such exercise, and any sales, transfer, or similar taxes imposed with respect to the issuance or transfer of shares of Stock in connection with such exercise.

5.4 Nontransferability of Option. No Option shall be transferred by an Optionee otherwise than by will or the laws of descent and distribution. During the lifetime of an Optionee, the Option shall be exercisable only by him or by his legal guardian or personal representative.

5.5 Effect of Death, Disability, Retirement, or Other Termination of Service.

(a) If an Optionee’s Service with the Bank shall be terminated for “cause,” as defined in Section 5.5(b) hereof, then no Options held by such Optionee, which are unexercised in whole or in part, may be exercised on or after the date on which such Optionee is first notified in writing by the Bank of such termination for cause.

(b) For purposes of this Section 5.5, termination for “cause” shall mean termination for the Optionee’s personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, violation of any law, rule, or regulation (other than traffic violations or similar offenses), violation of any agreement or order with any bank regulatory agency, or failure by the Optionee to perform his stated duties.

(c) If an Optionee’s Service with the Bank shall be terminated for any reason other than for cause (as defined in Section 5.5(b) hereof) and other than the retirement at age sixty-five (65) or the disability (as defined in Section 5.5(e) hereof) or death of the Optionee, then the Optionee shall have the right to exercise the Optionee’s Options for ninety (90) days after the date of such termination, but only to the extent that such Options were exercisable at the date of such termination.

(d) If an Optionee’s Service with the Bank shall be terminated by reason of retirement at age sixty-five (65) or the death or disability (as defined in Section 5.5(e) hereof) of the Optionee, then the Optionee or personal representative or administrator of the estate of the Optionee or the person or persons to whom an Option granted hereunder shall have been validly transferred by the personal representative or administrator pursuant to the Optionee’s will or the laws of descent and distribution, as the case may be, shall have the right to exercise the Optionee’s Options for one year after the date of such termination, but only to the extent that such Options were exercisable at the date of such termination.

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(e) For purposes of this Section 5.5, the terms “disability” and “disabled” shall have the meaning set forth in the principal disability insurance policy or similar program then maintained by the Bank on behalf of its employees or, if no such policy or program is then in existence, the meaning then used by the United States Government in determining persons eligible to receive disability payments under the social security system of the United States.

(f) No transfer of an Option by the Optionee by will or by the laws of descent and distribution shall be effective to bind the Bank unless the Bank shall have been furnished with written notice thereof and an authenticated copy of the will and/or such other evidence as the Bank may deem necessary to establish the validity of the transfer and the acceptance by the transferee or transferees of the terms and conditions of such Option.

5.6 Rights as Shareholder. An Optionee or a transferee of an Option shall have no rights as a shareholder with respect to any shares of Stock subject to such Option prior to the purchase of such shares by exercise of such Option as provided herein.

5.7 Investment Intent. Upon or prior to the exercise of all or any portion of an Option, the Optionee shall furnish to the Bank in writing such information or assurances as, in the Bank’s opinion, may be necessary to enable it to comply fully with the Securities Act of 1933, as amended, and the rules and regulations thereunder and any other applicable statutes, rules, and regulations. Without limiting the foregoing, if a registration statement is not in effect under the Securities Act of 1933, as amended, with respect to the shares of Stock to be issued upon exercise of an Option, the Bank shall have the right to require, as a condition to the exercise of such Option, that the Optionee represent to the Bank in writing that the shares to be received upon exercise of such Option will be acquired by the Optionee for investment and not with a view to distribution and that the Optionee agree, in writing, that such shares will not be disposed of except pursuant to an effective registration statement, unless the Bank shall have received an opinion of counsel reasonably acceptable to it to the effect that such disposition is exempt from the registration requirements of the Securities Act of 1933, as amended. The Bank shall have the right to endorse on certificates representing shares of Stock issued upon exercise of an Option such legends referring to the foregoing representations and restrictions or any other applicable restrictions on resale or disposition as the Bank, in its discretion, shall deem appropriate.

ARTICLE VI

Incentive Stock Options

6.1 Requirements. All Incentive Stock Options granted pursuant to the terms of this Plan shall be subject to the additional limitations and restrictions as set forth in the Code and in this Article VI. Any Option granted pursuant to this Plan which does not fulfill all of the provisions of this Article VI shall not be an Incentive Stock Option and thus shall be a Nonstatutory Stock Option.

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6.2 Grant Period. All Incentive Stock Options granted hereunder must be granted within ten (10) years from the earlier of: (a) the date the Plan is adopted by the Board; or (b) the date the Plan is approved by the shareholders of the Bank.

6.3 Eligibility. The Stock Option Committee shall determine which Employees shall receive Incentive Stock Options. No member of the Stock Option Committee is eligible to receive Incentive Stock Options. Incentive Stock Options may not be granted to any Employee who, at the time the Incentive Stock Option is granted, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Bank unless: (a) such Incentive Stock Option by its terms is not exercisable after the expiration of five (5) years from the date of its grant; and (b) the Option Price of the shares covered by such Incentive Stock Option is not less than one hundred and ten percent (110%) of the fair market value of such shares on the date that such Incentive Stock Option is granted.

6.4 Special Rule Regarding Exercisability. If, for any reason, any Option granted hereunder which is intended to be an Incentive Stock Option shall exceed the limitation on exercisability contained in the Code at any time, such Options shall nevertheless be exercisable, but: (a) any exercise of such Option shall be deemed to be an exercise of an Incentive Stock Option first until the portion of such Option qualifying as an Incentive Stock Option shall have been exercised in full; and (b) the portion of such Option in excess of the foregoing limitation on exercisability shall be deemed to be a Nonstatutory Stock Option.

ARTICLE VII

Nonstatutory Stock Options

The Stock Option Committee may grant Nonstatutory Stock Options under this Plan. Such Nonstatutory Stock Options must fulfill all of the requirements of all provisions of this Plan except for those contained in Article VI hereof. Subject to the approval and acceptance of the Stock Option Committee, any Employee who is granted a Nonstatutory Stock Option pursuant to this Plan shall be entitled to elect to surrender all or any part of such Nonstatutory Stock Option to the Bank and receive, in exchange, an Incentive Stock Option covering the same number of shares as those with respect to which the Nonstatutory Stock Option was surrendered. Any such election shall be valid and effective only upon its approval and acceptance by the Stock Option Committee.

ARTICLE VIII

Stock Certificates

The Bank shall not be required to issue or deliver any certificate for shares of Stock purchased upon the exercise of any Option granted hereunder or of any portion thereof, prior to fulfillment of all of the following conditions:

(a) The admission of such shares to listing on all stock exchanges on which the Stock is then listed, if any;

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(b) The completion of any registration or other qualification of such shares under any federal or state law or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory agency, which the Bank shall in its sole discretion determine to be necessary or advisable;

(c) The obtaining of any approval or other clearance from any federal or state governmental agency which the Bank shall in its sole discretion determine to be necessary or advisable; and

(d) The lapse of such reasonable period of time following the exercise of the Option as the Bank from time to time may establish for reasons of administrative convenience.

ARTICLE IX

Termination, Amendment, and Modification of Plan

The Board may at any time terminate, and may at any time and from time to time and in any respect amend or modify, the Plan; provided, however, that no such action of the Board without approval of the shareholders of the Bank may increase the total number of shares of Stock subject to the Plan except as contemplated in Section 4.3 hereof or alter the class of persons eligible to receive Options under the Plan, and provided further that no termination, amendment, or modification of the Plan shall without the written consent of the Optionee of such Option adversely affect the rights of the Optionee with respect to an Option or the unexercised portion thereof.

Notwithstanding any other provision of this Plan, the Bank’s primary federal bank regulator shall at any time have the right to direct the Bank to require Optionees to exercise their Options or forfeit their Options if the Bank’s capital falls below the minimum requirements, as determined by such federal bank regulator.

ARTICLE X

Miscellaneous

10.1 Service. Nothing in the Plan or in any Option granted hereunder or in any Stock Option Agreement relating thereto shall confer upon any Employee the right to continue in the Service of the Bank.

10.2 Other Compensation Plans. The adoption of the Plan shall not affect any other stock option or incentive or other compensation plans in effect for the Bank, nor shall the Plan preclude the Bank from establishing any other forms of incentive or other compensation for directors, officers, or employees of the Bank.

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10.3 Plan Binding on Successors. The Plan shall be binding upon the successors and assigns of the Bank.

10.4 Singular, Plural; Gender. Whenever used herein, nouns in the singular shall include the plural, and the masculine pronoun shall include the feminine gender.

10.5 Applicable Law. This Plan shall be governed by and construed in accordance with the laws of the State of Florida.

10.6 Headings, etc., No Part of Plan. Headings of Articles and Sections hereof are inserted for convenience and reference; they constitute no part of the Plan.

10.7 Severability. If any provision or provisions of this Plan shall be held to be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

IN WITNESS WHEREOF, the undersigned President and Chief Executive Officer of the Bank has signed this Plan for and on behalf of the Bank.

/s/ Bruce E. Page

Bruce E. Page

President and Chief Executive Officer

Dated: May 18, 1999

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EXHIBIT A

TO

CYPRESS BANK

OFFICERS’ AND EMPLOYEES’ STOCK OPTION PLAN

Name of Employee	Number of Shares Covered by Options Granted to the Employee	Option Price
Bruce E. Page	20,600	$	10.00
Robert Schackley	5,000	$	10.00
James E. Weite	20,600	$	10.00
Total	46,200

ASSUMPTION OF OFFICERS’ AND EMPLOYEES’ STOCK OPTION PLAN

THIS ASSUMPTION OF STOCK OPTION PLAN (the “Assumption”) is made as of the 1st day of June, 2003.

WITNESSETH THAT:

WHEREAS, Cypress Bank (the “Bank”) and Cypress Bankshares, Inc. (“Bankshares”) entered into an Agreement and Plan of Share Exchange (the “Agreement”) pursuant to which the Bank has been reorganized as a wholly-owned subsidiary of Bankshares through a share exchange transaction (the “Share Exchange”); and

WHEREAS, the Bank has in effect an Officers’ and Employees’ Stock Option Plan, as amended (the “Plan”); and

WHEREAS, Bankshares and the Bank desire to set forth in this Assumption the assumption by Bankshares of the Plan and the options issued thereunder (“Options”).

NOW, THEREFORE, the parties agree as follows:

1. Adoption of Recitals. The parties confirm that the foregoing recitals are true and accurate as of the date hereof and are reflective of the intent of the parties.

2. Assumption of Plan and Options. Effective June 1, 2003, Bankshares shall assume the Plan and the Options, and the obligations of the Bank in connection with the Plan and said Options, as if an original party thereto.

3. Additional Instruments. Bankshares and the Bank agree to provide from time to time any additional documents, agreements, instruments or writings that may be deemed necessary or appropriate by either party to evidence the assumption by Bankshares of the Plan and the Options.

IN WITNESS WHEREOF, Bankshares and the Bank have caused this Assumption to be duly executed all as of the date first above written.

CYPRESS BANKSHARES, INC.		CYPRESS BANK
By:	/s/ Bruce E. Page	By:	/s/ Bruce E. Page
	Bruce E. Page		Bruce E. Page
	Chief Executive Officer		Chief Executive Officer
By:	/s/ James E. Weite, Jr.	By:	/s/ James E. Weite, Jr.
	James E. Weite, Jr.		James E. Weite, Jr.
	President		President

EX-10.36

Exhibit 10.36

INDIAN RIVER BANKING COMPANY

VERO BEACH, FLORIDA

1999 DIRECTOR FEE STOCK OPTION PLAN

1. Purpose of the Plan. The Plan shall be known as the Indian River 1999 Director Fee Stock Option Plan. The purpose of the Plan is to provide additional incentive to Non-Employee Directors of the Company and Indian River and the Bank to promote the success of the business, by permitting them to receive options to purchase shares of Common Stock in lieu of cash compensation for service on committees of the boards of directors of the Company or any Parent or Subsidiary of the Company. This Plan shall set forth the manner by which Non-Employee Directors may elect to participate in the Plan, and the terms of the options.

2. Definitions. As used herein, the following definitions shall apply.

(a) “Bank” shall mean Indian River National Bank, Vero Beach, Florida, the wholly owned subsidiary of the Company.

(b) “Board” shall mean the Board of Directors of the Company.

(c) “Cash Compensation” shall mean the cash payments a Non-Employee Director is entitled to receive in a year for service on, and attendance at meeting of, committees of the board of directors of the Company or any Parent or Subsidiary of the Company.

(d) “Code” shall mean the Internal Revenue Code of 1986, as amended.

(e) “Common Stock” shall mean common stock, $1.00 par value per share, of the Company.

(f) “Company” shall mean Indian River Banking Company, a bank holding company.

(g) “Effective Date” shall mean the date specified in Section 9 hereof.

(h) “Employee” shall mean any person employed by the Company or any present or future Parent or Subsidiary of the Company in a capacity other than as a director of the Company or the Bank.

(i) “Non-Employee Director” shall mean each director of the Company and the Bank who is not an Employee and who is not Chairman of the Board.

(j) “Option” shall mean an option granted pursuant to this Plan.

(k) “Option Price” shall mean the exercise price per share of Common Stock for Options granted pursuant to the Plan.

(l) “Optioned Stock” shall mean stock subject to an Option granted pursuant to the Plan.

(m) “Optionee” shall mean any person who receives an Option.

(n) “Parent” shall mean any present or future corporation which would be a “parent corporation” as defined in Subsection 425(e) and (g) of the Code.

(o) “Participant” means any Non-Employee Director of the Company or the Bank who elects to receive Options in lieu of Cash Compensation in accordance with the provisions of Section 4(c) hereof.

(p) “Plan” shall mean the Indian River 1999 Director Fee Stock Option Plan.

(q) “Share” shall mean one share of the Common Stock.

(r) “Subsidiary” shall mean any present or future corporation which would be a “subsidiary corporation” as defined in Subsection 425(f) and (g) of the Code.

3. Shares Subject to the Plan. The number of Shares which may be subject to Options issued under this Plan shall not be fixed, but shall be determined based upon the elections of Participants and the number of committees of the boards of directors of the Company and the Bank upon which such Participants serve. Notwithstanding the foregoing, no Options shall be issuable hereunder to the extent that the Company does not have sufficient authorized and unissued shares of Common Stock available for the issuance of Shares upon exercise of the Options. Shares issuable upon the exercise of Options may be either authorized but unissued or treasury shares.

4. Administration and Operation of the Plan.

(a) The Plan shall be administered by the full Board.

(b) The Board is authorized (but only to the extent not contrary to the express provisions of the Plan or to resolutions adopted by the Board) to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to the Plan, and to make other determinations necessary or advisable for the administration of the Plan. In no event may the Board revoke outstanding Options without the consent of the Participant.

(c) (1) During the period commencing December 1 of each year, commencing in 1999, and ending on the earlier of (i) January 15 of the following year or (ii) the date of the first meeting of the Board in January of the following year, each Non-Employee Director of the Company and the Bank shall make a written election to either receive Options to purchase 100 Shares for each committee of the boards of directors of the Company or Bank such Participant

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serves on (subject to adjustment as set forth below), in lieu of Cash Compensation, or to receive such Cash Compensation. Non-employee Directors who fail to return a written election shall be deemed to have elected to receive Cash Compensation. Such election shall be irrevocable with respect to the year for which it is made.

(2) The number of Shares with respect to which Options shall be granted to Non-Employee Directors pursuant to this Section 4(c) shall be automatically adjusted to reflect any increase or decrease in the number of issued and outstanding shares of Common Stock resulting from the subdivision or combination of the Common Stock (whether by charter amendment, stock split in the form of a stock dividend, or otherwise), or the payment of a dividend on the Common Stock in additional shares of Common Stock, or other increase or decrease in the number of shares of Common Stock effected without the receipt of consideration by the Company.

(3) Not later than the first meeting of the Board in January of each year, the Board shall grant each participating director Options to purchase the number of Shares determined in accordance with Sections 4(c)(1) and 4(c)(2) for each committee on which such director serves. At such meeting, the Board shall reserve for issuance a number of Shares equal to the number of Optioned Shares subject to the Options granted.

(d) The Chairman and President of the Company and such other officers as shall be designated by the Board are hereby authorized to execute instruments evidencing grants on behalf of the Company and to cause them to be delivered to the Participants.

5. Eligibility Options may be granted hereunder only to Non-Employee Directors of the Company or the Bank. No director of the Company who is also an officer of the Company or Bank, shall be eligible to receive a grant of Options hereunder. Receipt of Options hereunder shall not preclude an award or grant of Options to Non-Employee Directors under any other Plan of the Company or of any Parent or Subsidiary of the Company.

6. Term of Plan. The Plan shall continue in effect for a term of ten (10) years from the Effective Date, unless sooner terminated pursuant to Section 11 hereof. No Option shall be granted under the Plan after ten (10) years from the Effective Date.

7. Terms and Conditions of Options. Each Option granted pursuant to the Plan shall be evidenced by an instrument in such form as the Board shall from time to time approve. Each and every Option granted pursuant to the Plan shall comply with, and be subject to, the following terms and conditions:

(a) Option Price. The price per share at which each Option granted under the Plan may be exercised shall not, as to any particular Option, be less than the fair market value of the Common Stock at the time such Option is granted. For such purposes, if the Common Stock is traded otherwise than on a national securities exchange or on The Nasdaq National Market at the time of the granting of an Option, then the price per share of the Optioned Stock shall be not less than the mean between the bid and asked price on the date the Option is granted or, if there be no bid and asked price on said date, then on the next prior business day on which there was a bid and asked price. If no such bid and asked price is available, then the price per share shall be determined

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by the Board in good faith in light of the circumstances. If the Common Stock is listed on a national securities exchange or on The Nasdaq National Market at the time of the granting of an Option, then the price per share shall be not less than the average of the highest and lowest selling price on such exchange on the date such Option is granted or, if there were no sales on said date, then the price shall be not less than the mean between the inside bid and inside asked price on such date.

(b) Payment.

(1) Full payment for each share of Common Stock purchased upon the exercise of any Option granted under the Plan shall be made at the time of exercise of each such Option and shall be paid in cash (in United States Dollars), Common Stock or a combination of cash and Common Stock. Common Stock utilized in full or partial payment of the exercise price shall be valued at its fair market value at the date of exercise, determined in accordance with Section 7(a) above. The Company shall accept full or partial payment in Common Stock only to the extent permitted by applicable law. No shares of Common Stock shall be issued until full payment therefor has been received by the Company, and no Optionee shall have any of the rights of a shareholder of the Company until shares of Common Stock are issued to him.

(2) Notwithstanding the foregoing, any Optionee may elect to receive upon the exercise of any Option for the full number of Shares to which such Option relates, the number of Shares determined by dividing (i) the difference between the aggregate fair market value of all shares issuable upon the exercise of the Options in full (as determined in accordance with Section a) hereof) and the aggregate Option Price for the exercise of the Option in full, by (ii) the price determined in accordance with Section 7(a). Shares received upon such election shall reflect the exercise in full of such Options and the full satisfaction of the Company’s obligations under said Option. Shares received upon such election shall be deemed to be Shares received upon the exercise of an Option for all purposes hereof.

(c) Term of Option.

The term of each Option granted pursuant to the Plan shall be ten (10) years from the date each such Option is granted.

(d) Exercise Generally.

No Option may be exercised unless the Optionee shall have been a director of the Company or the Bank at all times during the period beginning with the date of grant of any such Option and ending on the date three (3) months prior to the date of exercise of any such Option.

(e) Transferability.

Any Option granted pursuant to the Plan shall be exercised during any Optionee’s lifetime only by the Optionee to whom it was granted and shall not be assignable or transferable otherwise than by will or by the laws of descent and distribution.

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(f) Vesting.

All Options granted hereunder shall vest fully upon grant and shall be immediately exercisable.

(g) Termination of Options.

To the extent that any Option granted under the Plan to any Optionee whose service as director terminates shall not have been exercised within the applicable period set forth in Section 7(d), any such Option, and all rights to purchase or receive shares of Common Stock pursuant thereto, as the case may be, shall terminate on the last day of the applicable period.

8. Recapitalization, Merger, Consolidation, Change in Control and Similar Transactions.

(a) Adjustment.

Subject to any required action by the shareholders of the Company, the number of shares of Common Stock covered by each outstanding stock option, and the exercise price per share of Common Stock of each such stock option, shall be proportionately adjusted for any increase or decrease in the number of issued and outstanding shares of Common Stock resulting from a subdivision or consolidation of shares or the payment of a stock dividend (but only on the Common Stock) or any other increase or decrease in the number of such shares of Common Stock effected without the receipt of consideration by the Company.

(b) Extraordinary Corporate Action.

Subject to any required action by the shareholders of the Company, in the event of any Change in Control, recapitalization, merger, consolidation, exchange of shares, spin-off, reorganization, tender offer, liquidation or other extraordinary corporate action or event, the Board, in its sole discretion, shall have the power, prior or subsequent to such action or event to:

(1) appropriately adjust the number of shares of Common Stock subject to each stock option, the exercise price per share of Common Stock, and the consideration to be given or received by the Company upon the exercise of any outstanding Option;

(2) cancel any or all previously granted Options, provided that appropriate consideration, determined in the sole discretion of the Board, is paid to the Optionee in connection therewith; and/or

(3) make such other adjustments in connection with the Plan as the Board, in its sole discretion, deems necessary, desirable, appropriate or advisable.

For purposes of this Section, “Change in Control” shall mean any one of the following events occurring after the Effective Date: (1) the acquisition of ownership of, power to vote, or control of 25% or more of any class of voting securities of the Company or the Bank; (2)

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the exercise of a controlling influence over the management or policies of the Bank or the Company by any person or by persons acting as a “group” (within the meaning of Section 13(d) of the Securities Exchange Act of 1934) or (3) the failure of Continuing Directors to constitute at least two-thirds of the Board of Directors of the Company or the Bank (the “Company Board”) during any period of two consecutive years. A “change in control” does not include acquisition of ownership of, control of or power to vote voting securities of the Company by an employee benefit plan sponsored by the Company or the Bank; acquisition of voting securities by the Company through share repurchase or otherwise; or acquisition by an exchange of voting securities with a successor to the Company in a reorganization, such as a re-incorporation, that does not have the purpose or effect of significantly changing voting power or control. For purposes of this definition only, “Continuing Directors” includes only those individuals who were members of the Company Board at the Effective Date and those other individuals whose election or nomination for election as a member of the Company Board was approved by a vote of at least two-thirds of the Continuing Directors then in office, and “person” refers to an individual or a corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization or any other form of entity. The decision of the Board as to whether a Change in Control has occurred shall be conclusive and binding.

9. Effective Date. The Plan shall be deemed to be effective as of February 9, 2000 (the date of approval by Board) (the “Effective Date”).

10. Modification of Options. At any time and from time to time, the Board may authorize the execution of an instrument providing for the modification of any outstanding Option, provided no such modification, extension or renewal shall confer on the holder of said Option any right or benefit which could not be conferred on him by the grant of a new Option at such time, or shall not materially decrease the Optionee’s benefits under the Option without the consent of the holder of the Option, except as otherwise permitted under Section 8 hereof.

11. Amendment and Termination of the Plan.

(a) Action of the Board.

The Board may alter, suspend or discontinue the Plan at any time. Not in limitation of the foregoing, the Board of Directors may suspend, terminate or discontinue the Plan with respect to all grants of Options in any year at any time prior to the grant of Options for said year as contemplated by Section 4 hereof.

(b) Change in Applicable Law.

Notwithstanding any other provision contained in the Plan, in the event of a change in any Federal or state law, rule or regulation which would make the exercise of all or part of any previously granted Option unlawful or subject the Company to any penalty, the Board may restrict any such exercise without the consent of the Optionee or other holder thereof in order to comply with any such law, rule or regulation or to avoid any such penalty.

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12. Conditions Upon Issuance of Shares. Shares shall not be issued with respect to any Option granted under the Plan unless the issuance and delivery of such Shares shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, any applicable state securities law and the requirements of any stock exchange upon which the shares may then be listed.

The inability of the Company to obtain from any regulatory body or authority any approval deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder shall relieve the Company of any liability with respect to the non-issuance of such Shares.

As a condition to the exercise of an Option, the Company may require the person exercising the Option to make such representations and warranties as may be necessary to assure the availability of an exemption from the registration requirements of federal or state securities law.

13. Unsecured Obligation. No participant under the Plan shall have any interest in any fund or special asset of the Company by reason of the Plan or the grant of any Option to him under the Plan. No trust fund shall be created in connection with the Plan or any grant of any Option hereunder and there shall be no required funding of amounts which may become payable to any Participant.

14. Withholding Tax. Where a Participant or other person is entitled to receive Shares pursuant to the exercise of an Option pursuant to the Plan, the Company shall have the right to require the Participant or such other person to pay the Company the amount of any taxes which the Company is required to withhold with respect to such Shares, or, in lieu thereof, to retain, or sell without notice, a number of such Shares sufficient to cover the amount required to be withheld.

15. Governing Law. The Plan shall be governed by and construed in accordance with the laws of the State of Florida, except to the extent that Federal law shall be deemed to apply.

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Attachment I

INDIAN RIVER BANKING COMPANY

2000 AMENDMENTS TO 1999 DIRECTOR FEE STOCK OPTION PLAN

The 1999 Director Fee Stock Option Plan of Indian River Banking Company (“1999 Plan”) is hereby amended as follows:

Section 2(c) is hereby amended in its entirety to read as follows:

(c) “Cash Compensation” shall mean the cash payments a Non-Employee Director is entitled to receive in any three calendar year period beginning in the year in which a grant of options is made pursuant to Section 4(c), for that director’s service on, and attendance at meetings of, committees of the board of directors of the Company or any Parent or Subsidiary of the Company.

Section 4(c)(1) is hereby amended in its entirety to read as follows:

(c)(1) During the period commencing December 1 of every third year, commencing in 2000, and ending on the earlier of (i) January 15 of the following year or (ii) the date of the first meeting of the Board in January of the following year, each Non-Employee Director of the Company and the Bank shall make a written election to either receive Options to purchase 700 Shares for each committee of the boards of directors of the Company or Bank on which such Participant serves (subject to adjustment as set forth below), in lieu of Cash Compensation for the three calendar years beginning after such December 1, or to receive such Cash Compensation. Non-employee Directors who fail to return such a written election shall be deemed to have elected to receive Cash Compensation. Such election shall be irrevocable with respect to the years for which it is made.

Section 4(c)(3) is hereby amended in its entirety to read as follows:

(c)(3) Not later than the first meeting of the board in January of 2001 and January of each succeeding three year period, the Board shall grant each participating director Options to purchase the number of Shares determined in accordance with Sections 4(c)(1) and 4(c)(2) for each committee on which such director serves. At such meeting, the Board shall reserve for issuance a number of Shares equal to the number of Optioned Shares subject to the Options granted.

Section 7(e) is amended in its entirety to read as follows.

(d) Transferability.

Any Option granted pursuant to the Plan shall be exercised during any Optionee’s lifetime only by the Optionee to whom it was granted or by the holder thereof pursuant to a

transfer authorized by this Section 7(e). Any Option granted pursuant to the Plan shall not be assignable or transferable otherwise than by will or by the laws of descent and distribution, pursuant to the terms of a “qualified domestic relations order” (within the meaning of Section 414(p) of the Code), or, subject to the consent of the Board, in one or more transfers for estate or retirement planning purposes (i) to a trust or other entity formed for such purposes, or (ii) to a member of the Optionee’s immediate family (parents, spouse, children, siblings, brothers in law, and sisters in law).

Section 7(f) is hereby amended in its entirety to read as follows:

One-third of the Options granted hererunder shall vest fully upon grant, one-third of the Options granted hereunder shall vest fully upon the first anniversary date of the grant, and the remaining one-third of the Options granted hereunder shall vest fully upon the second anniversary date of the grant. All Options shall be immediately exercisable at the time they vest. No Options shall vest unless the Optionee is then serving as a Non-Employee Director.

Attachment II

INDIAN RIVER BANKING COMPANY

2003 AMENDMENTS TO 1999 DIRECTOR FEE STOCK OPTION PLAN

The 1999 Director Fee Stock Option Plan of Indian River Banking Company, as amended in 2000, is hereby further amended as follows:

Section 4(c)(1) is hereby amended in its entirety to read as follows:

(c)(1) During the period commencing December 1 of every third year, commencing in 2005, and ending on the earlier of (i) January 15 of the following year or (ii) the date of the first meeting of the Board in January of the following year, each Non-Employee Director of the Company and the Bank shall make a written election to either receive Options to purchase 2100 Shares (subject to adjustment as set forth below), in lieu of Cash Compensation for the three calendar years beginning after such December 1, or to receive such Cash Compensation. Non-employee Directors who fail to return a written election shall be deemed to have elected to receive Cash Compensation. Such election shall be irrevocable with respect to the years for which it is made.

Section 4(c)(3) is hereby amended in its entirety to read as follows:

(c)(3) Not later than the first meeting of the board in January of 2006 and January of each succeeding three year period, the Board shall grant each participating director Options to purchase the number of Shares determined in accordance with Sections 4(c)(1) and 4(c)(2). At such meeting, the Board shall reserve for issuance a number of Shares equal to the number of Optioned Shares subject to the Options granted.

EX-10.37

Exhibit 10.37

INDIAN RIVER BANKING COMPANY

1999 STOCK OPTION PLAN

1. Purpose of the Plan.

The purpose of this Indian River Banking Company 1999 Stock Option Plan (the “Plan”) is to advance the interests of Indian River Banking Company. (the “Company”) by providing directors and selected key employees of the Bank, the Company, and their affiliates with the opportunity to acquire shares of the Company’s common stock. By encouraging stock ownership, the Company seeks to attract, retain and motivate the best available personnel for positions of substantial responsibility; to provide additional incentive to directors and key employees of the Company, the Bank and their affiliates to promote the success of the business as measured by the value of its shares; and generally to increase the commonality of interests among directors, key employees, and other shareholders.

The Plan is intended to replace the Indian River Banking Company 1995 Stock Option Plan (the “1995 Plan”) upon this Plan’s approval by shareholders of the Company. Options issued under the 1995 Plan will continue in effect and will be subject to the requirements of the 1995 Plan, but no new options will be granted under the 1995 Plan after this Plan is approved by shareholders.

The Plan is not intended as an agreement or promise of employment. Neither the Plan, nor any Option granted pursuant to the Plan, confers on any person any right to continue in the employ of the Company. The right of the Company, the Bank, or any of their affiliates to terminate the employment of an Employee is not limited by the Plan or by any Option granted pursuant to the Plan unless such right is specifically described by the terms of any such Option.

2. Definitions.

(a) “Affiliate” means any “parent corporation” or “subsidiary corporation” of the Company as such terms are defined in Section 424(e) and (f), respectively, of the Code.

(b) “Agreement” means a written agreement entered into in accordance with Paragraph 5(c).

(c) “Bank” means the Indian River National Bank.

(d) “Board” means the Board of Directors of the Company.

(e) “Change in Control” means any one of the following events occurring after the Effective Date: (1) the acquisition of ownership of, power to vote, or control of 25% or more of any class of voting securities of the Company or the Bank; (2) the exercise of a controlling influence over the management or policies of the Bank or the Company by any person or by persons acting as a “group” (within the meaning of Section 13(d) of the Securities Exchange Act of 1934), or (3) the failure of Continuing Directors to constitute at least two-thirds of the Board of Directors of the Company or the Bank (the “Company Board”) during any period of two consecutive years. A “change in control” does not include acquisition of ownership of, control of or power to vote voting securities of the Company by an employee benefit plan sponsored by the Company or the Bank; acquisition of voting securities by the Company through share repurchase or otherwise; or acquisition by an exchange of voting securities with a successor to the Company in a reorganization,

such as a re-incorporation, that does not have the purpose or effect of significantly changing voting power or control. For purposes of this definition, only, “Continuing Directors” includes only those individuals who were members of the Company Board at the Effective Date and those other individuals whose election or nomination for election as a member of the Company Board was approved by a vote of at least two-thirds of the Continuing Directors then in office, and “person” refers to an individual or a corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization or any other form of entity. The decision of the Board as to whether a Change in Control has occurred shall be conclusive and binding.

(f) “Code” means the Internal Revenue Code of 1986, as amended.

(g) “Committee” means the Committee appointed by the Board in accordance with Paragraph 5(a) hereof.

(h) “Common Stock” means the common stock, par value $1.00 per share, of the Company.

(i) “Company” means Indian River Banking Company, a Florida corporation.

(j) “Continuous Service” means the absence of any interruption or termination of employment by the Company or any present or future Affiliate. Employment shall not be considered interrupted in the case of sick leave, military leave or any other leave of absence approved by the Company or in the case of transfers between locations of the Company or among the Company, the Bank, or any other Affiliate.

(k) “Director” means any member of the Board of Directors of the Company.

(l) “Effective Date” means the date specified in Paragraph 14 hereof.

(m) “Employee” means any person employed by the Company or by the Bank or any other present or future Affiliate.

(n) “Exercise Price” means the price per Optioned Share at which an Option may be exercised.

(o) “ISO” means an option to purchase Common Stock that meets the requirements set forth in the Plan, and which is intended to be and is identified as an “incentive stock option” within the meaning of Section 422 of the Code.

(p) “Market Value” means the fair market value of the Common Stock, as determined under Paragraph 7(b) hereof.

(q) “Non-Employee Director” means any member of the Board who, at the time discretion under the Plan is exercised, is a “Non-Employee Director” within the meaning of Rule 16b-3.

(r) “Non-ISO” means an option to purchase Common Stock that meets the requirements set forth in the Plan but which is not intended to be, and is not identified as, an ISO.

(s) “Offer to Effect a Change in Control” means any offer to buy or acquire, solicitation of an offer to sell, tender offer for, or request of invitation for tenders of, 25% or more of any class of voting securities of the Company for value. The decision of the

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Board as to whether an Offer to Effect a Change in Control has been made shall be conclusive and binding.

(t) “Option” means an option to purchase Shares, granted by the Board pursuant to this Plan, whether the option is an ISO or a Non-ISO.

(u) “Optioned Shares” means Shares subject to an Option granted pursuant to this Plan.

(v) “Optionee” means any person who receives an Option pursuant to this Plan.

(w) “Outstanding Shares” means the total shares of Common Stock which have been issued and which (a) are not held as treasury shares, and (b) have not been cancelled or retired by the Company.

(x) “Parent” shall mean any present or future corporation that would be a “parent corporation” as defined in Subsections 424(e) and (g) of the Code.

(y) “Plan” means the Indian River Banking Company 1999 Stock Option Plan.

(z) “Rule 16b-3” means Rule 16b-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the “Act”).

(aa) “Share” shall mean a share of Common Stock.

(bb) “Subsidiary” shall mean any present or future corporation which would be a “subsidiary corporation” as defined in Subsections 424(f) and (g) of the Code.

(cc) “Transaction” means (i) the liquidation or dissolution of the Company, (ii) a merger or consolidation in which the Company is not the surviving entity; or (iii) the sale or disposition of all or substantially all of the Company’s assets.

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3. Term of the Plan and Options.

(a) Term of the Plan. The Plan shall continue in effect for a term of ten years from the Effective Date unless sooner terminated pursuant to Paragraph 17. No Option may be granted under the Plan after ten years from the Effective Date.

(b) Term of Options. The Committee shall establish the term of each Option granted under the Plan. No Option may have a term that exceeds 10 years. No ISO granted to an Employee who owns Shares representing more than 10% of the outstanding shares of Common Stock at the time an ISO is granted may have a term that exceeds five years.

4. Shares Subject to the Plan.

(a) Except as otherwise required by Paragraph 11, the aggregate number of Shares deliverable upon the exercise of Options pursuant to the Plan shall not exceed 125,000 Shares. Such Shares may either be authorized but unissued Shares or Shares held in treasury to the extent allowed by Florida law.

(b) If Options should expire, become unexercisable, or be forfeited for any reason without having been exercised in full, the Optioned Shares shall, unless the Plan shall have been terminated, be available for the grant of additional Options under the Plan.

5. Administration of the Plan.

(a) Powers of the Board. Except as limited by the express provisions of the Plan or by resolutions adopted by the Board, the Board shall administer the Plan have sole and complete authority and discretion (i) to select Optionees and grant Options, (ii) to determine the form and content of Options to be issued in the form of Agreements under the Plan, (iii) to interpret the Plan, (iv) to prescribe, amend and rescind rules and regulations relating to the Plan, and (v) to make other determinations necessary or advisable for the administration of the Plan. The Committee shall have and may exercise such other power and authority as may be delegated to it by the Board from time to time. A majority of the entire Board shall constitute a quorum and the action of a majority of the members present at any meeting at which a quorum is present, or acts approved in writing by a majority of the Board without a meeting, shall be deemed the action of the Board. The Board may delegate any or all of its powers and responsibilities under this Plan to a Committee of the Board.

(b) Agreement. Each Option shall be evidenced by a written agreement containing such provisions as may be approved by the Board. Each such Agreement shall constitute a binding contract between the Company and the Optionee, and every Optionee, upon acceptance of such Agreement, shall be bound by the terms and restrictions of the Plan and of such Agreement. The terms of each such Agreement shall be in accordance with the Plan, but each Agreement may include such additional provisions and restrictions determined by the Board, in its discretion, provided that such additional provisions and restrictions are not inconsistent with the terms of the Plan. In particular, the Board shall set forth in each Agreement (i) the Exercise Price of an Option, (ii) the number of Shares subject to, and the expiration date of, the Option, (iii) the manner, time and rate (cumulative or otherwise) of exercise or vesting of such Option, and (iv) the restrictions, if any, to be placed upon such Option, or upon Shares which may be issued upon exercise of such Option. The Chairman of the Board and such other officers as shall be designated by the Board are hereby authorized to execute Agreements on behalf of the Company and to cause them to be delivered to the recipients of Options.

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(c) Effect of the Board’s Decisions. All decisions, determinations, and interpretations of the Board shall be final and conclusive on all persons affected thereby.

(d) Indemnification. In addition to such other rights of indemnification as they may have, the members of the Board shall be indemnified by the Company in connection with any claim, action, suit or proceeding relating to any action taken or failure to act under or in connection with the Plan or any Option, granted hereunder to the full extent provided for under the Company’s Articles of Incorporation or Bylaws with respect to the indemnification of Directors.

6. Grant of Options.

(a) General Rule. The Board, in its sole discretion, may grant ISOs or Non-ISOs to Employees of the Company or its Affiliates and may grant Non-ISOs to Directors or directors of Affiliates.

(b) Special Rules for ISOs. The aggregate Market Value, as of the date the Option is granted, of the Shares with respect to which ISOs are exercisable for the first time by an Employee during any calendar year (under all incentive stock option plans, as defined in Section 422 of the Code, of the Company or any present or future “parent” or “Subsidiary” of the Company) shall not exceed $100,000. Notwithstanding the prior provisions of this paragraph, the Board may grant Options in excess of the foregoing limitations, in which case such Options granted in excess of such limitation shall be Options which are Non-ISOs.

7. Exercise Price for Options.

(a) Limits on Board Discretion. The Exercise Price as to any particular Option granted under the Plan shall not be less than the Market Value of the Optioned Shares on the date of grant. In the case of an Employee who owns Shares representing more than 10% of the Company’s Outstanding Shares of Common Stock at the time an ISO is granted, the Exercise Price shall not be less than 110% of the Market Value of the Optioned Shares at the time the ISO is granted.

(b) Standards for Determining Exercise Price. If the Common Stock is listed on a national securities exchange (including the NASDAQ National Market) on the date in question, then the Market Value per Share shall be not less than the average of the highest and lowest selling price on such exchange on such date, or if there were no sales on such date, then the Exercise Price shall be not less than the mean between the bid and asked prices on such date. If the Common Stock is traded otherwise than on a national securities exchange on the date in question, then the Market Value per Share shall be not less than the mean between the bid and asked price on such date, or, if there is no bid and asked price on such date, then on the next prior business day on which there was a bid and asked price. If no such bid and asked price is available, then the Market Value per Share shall be its fair market value as determined by the Board, in its sole and absolute discretion.

(c) Reissuance of Options. Notwithstanding anything herein to the contrary, the Board shall have the authority to cancel outstanding Options with the consent of the Optionee and to grant new Options at a lower Option Price equal to the then fair market value per share of Common Stock in the event that the fair market value per share of Common Stock at any time prior to the date of exercise of outstanding Options falls below the Option Price of such Options.

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8. Exercise of Options.

(a) Generally. Any Option shall be exercisable at such times and under such conditions as shall be permissible under the terms of the Plan and of the Agreement. An Option may not be exercised for a fractional Share.

(b) Procedure for Exercise. An Optionee may exercise Options, subject to provisions relative to its termination and limitations on its exercise, only by (1) written notice of intent to exercise the Option with respect to a specified number of Shares, and (2) either payment to the Company (contemporaneously with delivery of such notice) in cash, in Common Stock, or a combination of cash and Common Stock, of the amount of the Exercise Price for the number of Shares with respect to which the Option is then being exercised, or a cashless exercise of the Option in accordance with Section 8(c) of this Plan. Each such notice (and payment where required) shall be delivered, or mailed by prepaid registered or certified mail, addressed to the Chief Financial Officer of the Company at the Company’s executive offices. Common Stock utilized in full or partial payment of the Exercise Price for Options shall be valued at its Market Value at the date of exercise.

(c) Any Optionee may elect to receive upon the proper exercise of any Option for the full number of Shares to which such Option relates, the number of Shares determined by dividing (i) the difference between the aggregate fair market value of all shares issuable upon the exercise of the Options in full (as determined in accordance with Section 7(b) of this Plan) and the aggregate Option Price for the exercise of the Option in full, by (ii) the price determined in accordance with Section 7(b). Shares received upon such election shall reflect the exercise in full of such Options and the full satisfaction of the Company’s obligations under said Option. Shares received upon such election shall be deemed to be Shares received upon the exercise of an Option for all purposes hereof.

(d) Notwithstanding the provisions of any Option that provides for its exercise in installments as designated by the Board, such Option shall become immediately exercisable upon the Optionee’s death or Permanent and Total Disability.

(e) Period of Exercisability-ISOs. An ISO may be exercised by an Optionee only while the Optionee is an Employee and has maintained Continuous Service from the date of the grant of the ISO, or within three months after termination of such Continuous Service (but not later than the date on which the Option would otherwise expire), except if the Employee’s Continuous Service terminates by reason of –

(1) “Just Cause” which for purposes hereof shall have the meaning set forth in any unexpired employment or severance agreement between the Optionee and the Company or any Affiliate (and, in the absence of any such agreement, means termination because of the Employee’s personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order), then the Optionee’s rights to exercise such ISO shall expire on the date of such termination;

(2) Death, then an ISO of the deceased Optionee may be exercised within two years from the date of his death (but not later than the date on which the Option

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would otherwise expire) by the personal representatives of his estate or person or persons to whom his rights under such ISO shall have passed by will or by laws of descent and distribution;

(3) Permanent and Total Disability (as such term is defined in Section 22(e)(3) of the Code), then an ISO may be exercised within one year from the date of such Permanent and Total Disability, but not later than the date on which the ISO would otherwise expire.

(f) Period of Exercisability-Non-ISOs. Except to the extent otherwise provided in the terms of an Agreement, a Non-ISO may be exercised by an Optionee only while such Optionee is an Employee, a Director, or a director of an Affiliate, or within three months after termination of such service (but not later than the date on which the Option would otherwise expire), except if the Optionee’s service terminates by reason of –

(1) “Just Cause” which for purposes hereof shall have the meaning set forth in any unexpired employment or severance agreement between the Optionee and the Company or any Affiliate (and, in the absence of any such agreement, means termination because of the Optionee’s personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order), then the Optionee’s rights to exercise such Non-ISO shall expire on the date of such termination; or

(2) Removal from the Board or the Bank Board pursuant to the respective Articles of Incorporation, then the Optionee’s rights to exercise such Non-ISO shall expire on the date of such removal.

(3) Death, then a Non-ISO of the deceased Optionee may be exercised within two years from the date of his death (but not later than the date on which the Option would otherwise expire) by the personal representatives of his estate or person or persons to whom his rights under such Non-ISO shall have passed by will or by laws of descent and distribution or otherwise shall have transferred pursuant to this Plan;

(4) Permanent and Total Disability (as such term is defined in Section 22(e)(3) of the Code), then a Non-ISO may be exercised within one year from the date of such Permanent and Total Disability, but not later than the date on which the ISO would otherwise expire.

(g) Effect of the Board’s Decisions. The Board’s determination whether an Optionee’s Continuous Service or service as a Director or director of an Affiliate has ceased, and the effective date thereof shall be final and conclusive on all persons affected thereby.

9. Conditions Upon Issuance of Shares.

(a) Compliance with Securities Laws. Shares of Common Stock shall not be issued with respect to any Option unless the issuance and delivery of such Shares shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, any applicable state securities law, and the requirements of any stock exchange upon which the Shares may then be listed. The Plan is

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intended to comply with Rule 16b-3, and any provision of the Plan than the Board determines in its sole and absolute discretion to be inconsistent with said Rule shall, to the extent of such inconsistency, be inoperative and null and void, and shall not affect the validity of the remaining provisions of the Plan.

(b) Special Circumstances. The inability of the Company to obtain approval from any regulatory body or authority deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder shall relieve the Company of any liability with respect to the non-issuance or sale of such Shares. As a condition to the exercise of an Option, the Company may require the person exercising the Option to make such representations and warranties as the Board determines may be necessary to assure the availability of an exemption from the registration requirements of federal or state securities law.

(c) Board Discretion. The Board shall have the discretionary authority to impose in Agreements such restrictions on Shares as it may deem appropriate or desirable, including but not limited to the authority to impose a right of first refusal or to establish repurchase rights or both of these restrictions.

10. Restrictions on Sale of Shares

(a) Six-Month Restriction. Shares of Common Stock that have been acquired upon exercise of an Option may not be sold or otherwise disposed of before the end of a six-month period beginning on the date the Option was granted. This restriction is in addition to any other restriction imposed by this Plan or by the Board pursuant to this Plan.

(b) Exceptions. The six-month restriction imposed by subparagraph (a) shall not apply to dispositions by bona fide gifts or to transfers by will or the laws of descent or distribution.

11. Effect of Changes in Control and Changes in Common Stock Subject to the Plan.

(a) Effects of Change in Control.

(1) Notwithstanding the provisions of any Option that provides for its exercise or vesting in installments, all Options shall be immediately exercisable and fully vested upon a Change in Control or the receipt of an Offer to Effect a Change in Control.

(2) At the time of a Change in Control, the Optionee shall, at the sole and absolute discretion of the Board, be entitled to receive a cash payment in an amount equal to the excess of the Market Value of the Shares subject to such Option over the Exercise Price of such Option, provided that in no event may an Option be cancelled in exchange for cash within the six-month period following the date of its grant. For purposes of calculating this payment, the Market Value shall be the Market Value at the date of the Change in Control or the highest Market Value in the five trading days after public announcement of an Offer to Effect a Change in Control, as determined by the Board.

(3) In the event there is a Transaction, all outstanding Options shall be surrendered. With respect to each Option so surrendered, the Board shall in its sole and absolute discretion determine whether the holder of each Option so surrendered shall receive—

(A) For each Share then subject to an outstanding Option, an Option for the number and kind of shares into which each Outstanding Share (other than Shares held by dissenting shareholders) is changed or exchanged, together with an appropriate adjustment to the Exercise Price; or

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(B) The number and kind of shares into which each Outstanding Share (other than Shares held by dissenting shareholders) is changed or exchanged in the Transaction that are equal in market value to the excess of the Market Value on the date of the Transaction of the Shares subject to the Option, over the Exercise Price of the Option; or

(C) A cash payment (from the Company or the successor corporation), in an amount equal to the excess of the Market Value on the date of the Transaction of the Shares subject to the Option, over the Exercise Price of the Option.

(4) The decision of the Board as to whether a Change in Control has occurred, or an Offer to Effect a Change in Control has been made shall be conclusive and binding.

(b) Recapitalizations, Stock Splits, Etc. The number and kind of shares reserved for issuance under the Plan, and the number and kind of shares subject to outstanding Options and the Exercise Price thereof, shall be proportionately adjusted for any increase, decrease, change or exchange of Shares for a different number or kind of shares or other securities of the Company which results from a merger, consolidation, recapitalization, reorganization, reclassification, stock dividend, split-up, combination of shares, or similar event in which the number or kind of shares is changed without the receipt or payment of consideration by the Company.

(c) Special Rule for ISOs. Any adjustment made pursuant to subparagraphs (a)(3)(A) or (b) of this Paragraph shall be made in such a manner as not to constitute a modification, within the meaning of Section 424(h) of the Code, of outstanding ISOs.

(d) Conditions and Restrictions on New, Additional, or Different Shares or Securities. If, by reason of any adjustment made pursuant to this Paragraph, an Optionee becomes entitled to new, additional, or different shares of stock or securities, such new, additional, or different shares of stock or securities shall thereupon be subject to all of the conditions and restrictions which were applicable to the Shares pursuant to the Option before the adjustment was made.

(e) Other Issuances. Except as expressly provided in this Paragraph, the issuance by the Company or an Affiliate of shares of stock of any class, or of securities convertible into Shares or stock of another class, for cash or property or for labor or services either upon direct sale or upon the exercise of rights or warrants to subscribe therefor, shall not affect, and no adjustment shall be made with respect to, the number, class, or Exercise Price of Shares then subject to Options or reserved for issuance under the Plan.

12. Non-Transferability of Options.

(a) ISOs may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent and distribution, or pursuant to the terms of a “qualified domestic relations order” (within the meaning of Section 414(p) of the Code and the regulations and rulings thereunder).

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(b) Non-ISO’s may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent and distribution, pursuant to the terms of a “qualified domestic relations order” (within the meaning of Section 414(p) of the Code and the regulations and rulings thereunder), or, in the sole discretion of the Board, in connection with a transfer for estate or retirement planning purposes to a trust established for such purposes.

13. Time of Granting Options. The date of grant of an Option shall, for all purposes, be the later of the date on which the Board makes the determination of granting such Option and the Effective Date. Notice of the determination shall be given to each Optionee to whom an Option is so granted within a reasonable time after the date of such grant.

14. Effective Date. The Plan shall be effective as of October 13, 1999. Option grants may be made before approval of the Plan by the shareholders of the Company, if the exercise of Options is conditioned upon shareholder approval of the Plan.

15. Approval by Shareholders. The Plan shall be approved by shareholders of the Company within twelve (12) months before or after the Effective Date.

16. Modification of Options. At any time, and from time to time, the Board may direct execution of an instrument providing for the modification of any outstanding Option, provided no such modification shall confer on the holder of said Option any right or benefit which could not be conferred on the Optionee by the grant of a new Option at such time, or impair the Option without the consent of the holder of the Option.

17. Amendment and Termination of the Plan. The Board may from time to time amend the terms of the Plan and, with respect to any Shares at the time not subject to Options, suspend or terminate the Plan; provided that shareholder approval shall be required to increase the number of Shares subject to the Plan provided in Paragraph 4 or to extend the terms of the Plan. No amendment, suspension, or termination of the Plan shall, without the consent of any affected holders of an Option, alter or impair any rights or obligations under any Option theretofore granted.

18. Reservation of Shares. During the term of the Plan, the Company will reserve and keep available a number of Shares sufficient to satisfy the requirements of the Plan.

19. Withholding Tax. The Company’s obligation to deliver Shares upon exercise of Options (or such earlier time that the Optionee makes an election under Section 83(b) of the Code) shall be subject to the Optionee’s satisfaction of all applicable federal, state, and local income and employment tax withholding obligations. The Board, in its discretion, may permit the Optionee to satisfy the obligation, in whole or in part, by irrevocably electing to have the Company withhold Shares, or to deliver to the Company Shares that the Optionee already owns, having a value equal to the amount required to be withheld. The value of Shares to be withheld, or delivered to the Company, shall be based on the Market Value of the Shares on the date the amount of tax to be withheld is to be determined. As an alternative, the Company may retain, or sell without notice, a number of such Shares sufficient to cover the amount required to be withheld.

20. No Employment or Other Rights. In no event shall eligibility to be granted an Option or the grant of an Option create or be deemed to create any legal or equitable right of a Director, Employee, director of any Affiliate, or any other party to continue service with the Company, the Bank, or any other Affiliate. No person shall have a right to be granted an Option or, having received an Option, the right to be granted an additional Option.

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21. Governing Law. The Plan shall be governed by and construed in accordance with the laws of the State of Florida, except to the extent that federal law shall be deemed to apply.

22. Successors and Assigns. The Plan shall be binding upon the Company’s successors and assigns.

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EX-10.47

Exhibit 10.47

INDIAN RIVER CAPITAL TRUST I

AMENDED AND RESTATED TRUST AGREEMENT

AMONG

INDIAN RIVER BANKING COMPANY, AS DEPOSITOR,

WELLS FARGO BANK, NATIONAL ASSOCIATION, AS PROPERTY TRUSTEE,

WELLS FARGO DELAWARE TRUST COMPANY, AS RESIDENT TRUSTEE,

AND

THE ADMINISTRATIVE TRUSTEES NAMED HEREIN

EFFECTIVE AS OF SEPTEMBER 30, 2002

TABLE OF CONTENTS

		Page
ARTICLE I	DEFINED TERMS	1
Section 1.1	Definitions	1
ARTICLE II	ESTABLISHMENT OF THE TRUST	11
Section 2.1	Name.	11
Section 2.2	Office of the Resident Trustee; Principal Place of Business of the Trust	11
Section 2.3	Initial Contribution of Trust Property; Organizational Expenses	11
Section 2.4	Issuance of the Trust Preferred Securities	11
Section 2.5	Issuance of the Common Securities; Subscription and Purchase of Debentures	12
Section 2.6	Declaration of Trust	12
Section 2.7	Authorization of Trustees to Enter into Certain Transactions	12
Section 2.8	Assets of Trust	16
Section 2.9	Title to Trust Property	16
ARTICLE III	PAYMENT ACCOUNT	16
Section 3.1	Payment Account	16
ARTICLE IV	DISTRIBUTIONS; REDEMPTION	16
Section 4.1	Distributions	16
Section 4.2	Redemption	19
Section 4.3	Subordination of Common Securities	21
Section 4.4	Payment Procedures	22
Section 4.5	Tax Returns and Reports	22
Section 4.6	Payment of Taxes, Duties, etc. of the Trust	22
Section 4.7	Payments Under Indenture	22
ARTICLE V	TRUST SECURITIES CERTIFICATES	22
Section 5.1	Initial Ownership	22
Section 5.2	The Trust Securities Certificates	23
Section 5.3	Execution, Authentication and Delivery of Trust Securities Certificates	23
Section 5.4	Registration of Transfer and Exchange of Trust Preferred Securities Certificates	24
Section 5.5	Mutilated, Destroyed, Lost or Stolen Trust Securities Certificates	28
Section 5.6	Person Deemed Securityholders	29

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TABLE OF CONTENTS

		Page
Section 5.7	Access to List of Securityholders’ Names and Addresses	29
Section 5.8	Maintenance of Office or Agency	29
Section 5.9	Appointment of Paying Agent	29
Section 5.10	Ownership of Common Securities by Depositor	30
Section 5.11	Trust Securities Certificates	30
Section 5.12	[Reserved]	31
Section 5.13	Rights of Securityholders	31
ARTICLE VI	ACTS OF SECURITYHOLDERS; MEETINGS; VOTING	32
Section 6.1	Limitations on Voting Rights	32
Section 6.2	Notice of Meetings	33
Section 6.3	Meetings of Holder/Holders of the Trust Preferred Securities	33
Section 6.4	Voting Rights	34
Section 6.5	Proxies, etc	34
Section 6.6	Securityholder Action by Written Consent	34
Section 6.7	Record Date for Voting and Other Purposes	34
Section 6.8	Acts of Securityholders	34
Section 6.9	Inspection of Records	35
ARTICLE VII	REPRESENTATIONS AND WARRANTIES	36
Section 7.1	Representations and Warranties of the Bank and the Property Trustee	36
Section 7.2	Representations and Warranties of the Delaware Bank and the Resident Trustee	37
Section 7.3	Representations and Warranties of Depositor	38
ARTICLE VIII	TRUSTEES	39
Section 8.1	Number of Trustees	39
Section 8.2	Certain Duties and Responsibilities.	39
Section 8.3	Certain Notices	41
Section 8.4	Certain Rights of the Property Trustee	41
Section 8.5	Not Responsible for Recitals or Issuance of Securities	43
Section 8.6	May Hold Securities	43
Section 8.7	Compensation; Indemnity; Fees	44
Section 8.8	Corporate Property Trustee Required; Eligibility of Trustees	44
Section 8.9	Conflicting Interests	45

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TABLE OF CONTENTS

		Page
Section 8.10	Co-Trustees and Separate Trustee	45
Section 8.11	Resignation and Removal; Appointment of Successor	47
Section 8.12	Acceptance of Appointment by Successor	48
Section 8.13	Merger, Conversion, Consolidation or Succession to Business	49
Section 8.14	Preferential Collection of Claims Against Depositor or Trust	49
Section 8.15	Reports by Property Trustee	49
Section 8.16	Reports to the Property Trustee	49
Section 8.17	Evidence of Compliance with Conditions Precedent	50
Section 8.18	Delegation of Power	50
Section 8.19	Voting	50
ARTICLE IX	TERMINATION, LIQUIDATION AND MERGER	51
Section 9.1	Termination Upon Expiration Date	51
Section 9.2	Early Termination	51
Section 9.3	Termination	51
Section 9.4	Liquidation	51
Section 9.5	Mergers, Consolidations, Amalgamations or Replacements of the Trust	53
ARTICLE X	MISCELLANEOUS PROVISIONS	54
Section 10.1	Limitation of Rights of Securityholders	54
Section 10.2	Amendment	55
Section 10.3	Severability	56
Section 10.4	Governing Law	56
Section 10.5	Payments Due on Non-Business Day	57
Section 10.6	Successors	57
Section 10.7	Headings	57
Section 10.8	Reports, Notices and Demands	57
Section 10.9	Agreement not to Petition	58
Section 10.10	Applicability of Trust Indenture Act; Conflict	58
Section 10.11	Acceptance of Terms of Trust Agreement, Guarantee and Indenture	59

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TABLE OF CONTENTS

		Page
EXHIBITS
Exhibit A	Form of Certificate of Trust of Indian River Capital Trust I
Exhibit B	Form of Common Security Certificate
Exhibit C	Form of Agreement as to Expenses and Liabilities
Exhibit D	Form of Floating Rate Cumulative Trust Preferred Security Certificate
Exhibit E	Form of Transferee Letter of Representations
Exhibit F	Form of Transferor Letter of Representations

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AMENDED AND RESTATED TRUST AGREEMENT

AMENDED AND RESTATED TRUST AGREEMENT, effective as of September 30, 2002, among (i) Indian River Banking Company, a Florida corporation (including any successors or assigns, the “Depositor”), (ii) Wells Fargo Bank, National Association, a national banking association with its principal place of business in the State of Delaware, as property trustee (the “Property Trustee” and, in its separate individual capacity and not in its capacity as Property Trustee, the “Bank”), (iii) Wells Fargo Delaware Trust Company with its principal place of business in the State of Delaware, as Resident Trustee (the “Resident Trustee,” and, in its separate individual capacity and not in its capacity as Resident Trustee, the “Delaware Bank”) (iv) Paul A. Beindorf, Diana L. Walker and Phillip L. Tasker, as administrative trustees (each an “Administrative Trustee” and together the “Administrative Trustees”) (the Property Trustee, the Resident Trustee and the Administrative Trustees referred to collectively as the “Trustees”), and (v) the several Holders (as hereinafter defined).

RECITALS

WHEREAS, the Depositor, the Resident Trustee, and Administrative Trustees, have heretofore duly declared and established a statutory trust pursuant to the Delaware Statutory Trust Act by the entering into of that certain Trust Agreement, effective as of September 30, 2002 (the “Original Trust Agreement”), and by the execution and filing by the Resident Trustee and the Administrative Trustees with the Secretary of State of the State of Delaware of the Certificate of Trust, filed on September 30, 2002, the form of which is attached as Exhibit A; and

WHEREAS, the parties hereto desire to amend and restate the Original Trust Agreement in its entirety as set forth herein to provide for, among other things, (i) the issuance of the Common Securities (as defined herein) by the Trust (as defined herein) to the Depositor; (ii) the issuance and sale of the Trust Preferred Securities (as defined herein) by the Trust pursuant to the Placement Agreement (as defined herein); (iii) the acquisition by the Trust from the Depositor of all of the right, title and interest in the Debentures (as defined herein); and (iv) the appointment or continuation, as applicable of the Trustees;

NOW THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each party, for the benefit of the other parties and for the benefit of the Securityholders (as defined herein), hereby amends and restates the Original Trust Agreement in its entirety and agrees as follows:

ARTICLE I

DEFINED TERMS

Section 1.1 Definitions.

For all purposes of this Trust Agreement, except as otherwise expressly provided or unless the context otherwise requires:

(a) the terms defined in this Article I have the meanings assigned to them in this Article I and include the plural as well as the singular;

(b) all other terms used herein that are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein;

(c) unless the context otherwise requires, any reference to an “Article” or a “Section” refers to an Article or a Section, as the case may be, of this Trust Agreement; and

(d) the words “herein”, “hereof” and “hereunder” and other words of similar import refer to this Trust Agreement as a whole and not to any particular Article, Section or other subdivision.

“Act” has the meaning specified in Section 6.8 hereof.

“Additional Amount” means, with respect to Trust Securities of a given Liquidation Amount and/or a given period, the amount of Deferred Interest accrued on interest in arrears and paid by the Depositor on a Like Amount of Debentures for such period, but shall not include Additional Sums, if any.

“Additional Interest” has the meaning specified in Section 1.1 of the Indenture.

“Additional Sums” has the meaning specified in Section 1.1 of the Indenture.

“Administrative Trustee” means each of Paul A. Beindorf and Phillip L. Tasker, solely in his or her capacity as Administrative Trustee of the Trust continued hereunder and not in his or her individual capacity, or such Administrative Trustee’s successor in interest in such capacity, or any successor administrative trustee appointed as herein provided.

“Affiliate” means, with respect to a specified Person, (a) any Person directly or indirectly owning, controlling or holding with power to vote 10% or more of the outstanding voting securities or other ownership interests of the specified Person, (b) any Person 10% or more of whose outstanding voting securities or other ownership interests are directly or indirectly owned, controlled or held with power to vote by the specified Person; (c) any Person directly or indirectly controlling, controlled by, or under common control with the specified Person; (d) a partnership in which the specified Person is a general partner; (e) any officer or director of the specified Person; and (f) if the specified Person is an individual, any entity of which the specified Person is an officer, director or general partner.

“Authenticating Agent” means an authenticating agent with respect to the Trust Preferred Securities appointed by the Property Trustee pursuant to Section 5.3 hereof.

“Bank” has the meaning specified in the Preamble to this Trust Agreement.

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“Bankruptcy Event” means, with respect to any Person:

(a) the entry of a decree or order by a court having jurisdiction in the premises adjudging such Person bankrupt or insolvent, or approving as properly filed a petition seeking liquidation or reorganization of or in respect of such Person under the United States Bankruptcy Code of 1978, as amended, or any other similar applicable federal or state law, and the continuance of any such decree or order unvacated and unstayed for a period of 90 days; or the commencement of an involuntary case under the United States Bankruptcy Code of 1978, as amended, in respect of such Person, which shall continue undismissed for a period of 90 days or entry of an order for relief in such case; or the entry of a decree or order of a court having jurisdiction in the premises for the appointment on the ground of insolvency or bankruptcy of a receiver, custodian, liquidator, trustee or assignee in bankruptcy or insolvency of such Person or of its property, or for the winding up or liquidation of its affairs, and such decree or order shall have remained in force unvacated and unstayed for a period of 90 days; or

(b) the institution by such Person of proceedings to be adjudicated a voluntary bankruptcy, or the consent by such Person to the filing of a bankruptcy proceeding against it, or the filing by such Person of a petition or answer or consent seeking liquidation or reorganization under the United States Bankruptcy Code of 1978, as amended, or other similar applicable Federal or State law, or the consent by such Person to the filing of any such petition or to the appointment on the ground of insolvency or bankruptcy of a receiver or custodian or liquidator or trustee or assignee in bankruptcy or insolvency of such Person or of its property, or a general assignment by such Person for the benefit of creditors.

“Bankruptcy Laws” has the meaning specified in Section 10.9 hereof.

“Board Resolution” means a copy of a resolution certified by the Secretary of the Depositor to have been duly adopted by the Depositor’s Board of Directors, or such committee of the Board of Directors or officers of the Depositor to which authority to act on behalf of the Board of Directors has been delegated, and to be in full force and effect on the date of such certification, and delivered to the appropriate Trustee.

“Business Day” means a day other than a Saturday or Sunday, a day on which banking institutions in Wilmington, Delaware or Minneapolis, Minnesota are authorized or required by law, executive order or regulation to remain closed, or a day on which the Property Trustee’s Corporate Trust Office or the Corporate Trust Office of the Debenture Trustee are closed for business.

“Calculation Agent” has the meaning specified in Section 4.1(d) hereof.

“Certificate of Trust” means the certificate of trust filed with the Secretary of State of the State of Delaware with respect to the Trust, as amended or restated from time to time.

“Change in 1940 Act Law” shall have the meaning set forth in the definition of “Investment Company Event.”

“Closing Date” means the date of execution and delivery of this Trust Agreement.

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“Code” means the Internal Revenue Code of 1986, as amended.

“Commission” means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time.

“Common Securities Certificate” means a certificate evidencing ownership of Common Securities, substantially in the form attached hereto as Exhibit B.

“Common Security” means an undivided common beneficial interest in the assets of the Trust, having a per share Liquidation Amount of $1,000 and having the rights provided therefor in this Trust Agreement, including the right to receive Distributions and a Liquidation Distribution as provided herein.

“Company” means Indian River Banking Company, a Florida corporation and registered bank holding company under the Bank Holding Company Act of 1956, as amended.

“Corporate Trust Office” means the office at which, at any particular time, the corporate trust business of the Property Trustee or the Debenture Trustee, as the case may be, shall be principally administered, which office at the date hereof, in each such case, is c/o Wells Fargo Bank, National Association, located at 919 Market Street, Suite 700, Wilmington, Delaware 19801, Attn: Corporate Trust Administration.

“Debenture Event of Default” means an “Event of Default” as defined in Section 7.1 of the Indenture.

“Debenture Redemption Date” means, with respect to any Debentures to be redeemed under the Indenture, the date fixed for redemption under the Indenture.

“Debenture Tax Event” means a “Tax Event” as specified in Section 1.1 of the Indenture.

“Debenture Trustee” means Wells Fargo Bank, National Association with its principal place of business in the State of Delaware and any successor thereto, acting not in its individual capacity but solely as trustee under the Indenture.

“Debentures” means the Seven Million Two Hundred Seventeen Thousand Dollars ($7,217,000) aggregate principal amount of the Floating Rate Junior Subordinated Deferrable Interest Debentures due November 7, 2032, issued by the Depositor pursuant to the Indenture.

“Deferred Interest” shall have the meaning set forth in Section 4.1 of the Indenture.

“Definitive Trust Preferred Securities Certificates” means Trust Preferred Securities Certificates issued in certificated, fully registered form as provided in Section 5.11 hereof.

“Delaware Bank” has the meaning specified in the Preamble to this Trust Agreement.

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“Delaware Statutory Trust Act” means the Delaware Statutory Trust Act, 12 Del.C. Section 3801, et seq, as it may be amended from time to time.

“Depositor” has the meaning specified in the Preamble to this Trust Agreement.

“Distribution Date” has the meaning specified in Section 4.1(a) hereof.

“Distribution Period” has the meaning set forth in Section 4.1(a) hereof.

“Distribution Reset Date” has the meaning set forth in Section 4.1(d) hereof.

“Distributions” means amounts payable in respect of the Trust Securities as provided in Section 4.1 hereof.

“Early Termination Date” has the meaning specified in Section 9.2 hereof.

“Event of Default” means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

(a) the occurrence of a Debenture Event of Default; or

(b) default by the Trust in the payment of any Distribution when it becomes due and payable, and continuation of such default for a period of 30 days; or

(c) default by the Trust in the payment of any Redemption Price of any Trust Security when it becomes due and payable; or

(d) default in the performance, or breach, in any material respect, of any covenant or warranty of the Trustees in this Trust Agreement (other than a covenant or warranty a default in the performance of which or the breach of which is dealt with in clause (b) or (c), above) and continuation of such default or breach for a period of 60 days after there has been given, by registered or certified mail, to the defaulting Trustee or Trustees by the Holders of at least 25% in aggregate Liquidation Amount of the Outstanding Trust Preferred Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder; or

(e) the occurrence of a Bankruptcy Event with respect to the Property Trustee and the failure by the Depositor to appoint a successor Property Trustee within 60 days thereof.

“Exchange Act” means the Securities Exchange Act of 1934 or any successor statute thereto, in each case as amended from time to time.

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“Expense Agreement” means the Agreement as to Expenses and Liabilities between the Depositor and the Trust, substantially in the form attached hereto as Exhibit C, as amended from time to time.

“Expiration Date” has the meaning specified in Section 9.1 hereof.

“Extended Interest Payment Period” has the meaning specified in Section 4.1 of the Indenture.

“Floating Distribution Rate” has the meaning specified in Section 4.1(b) hereof.

“Holder” or “Securityholder” means a Person in whose name a Trust Security is, or Trust Securities are, registered in the Securities Register; any such Person is a beneficial owner within the meaning of the Delaware Statutory Trust Act.

“Indenture” means the Indenture, effective as of September 30, 2002, between the Depositor and the Debenture Trustee, as trustee, as amended or supplemented from time to time.

“Initial Distribution Date” means the effective date of the Initial Purchaser’s transfer of all right, title and interest in and to the Trust Preferred Securities to any Person.

“Initial Distribution Payment Period” means the period of time commencing with the Closing Date and ending upon the date of transfer of the Trust Preferred Securities by the Initial Purchaser to any Person.

“Initial Purchaser” shall mean the Person that acquires the Trust Preferred Securities upon the original issuance thereof by the Trust.

“Investment Company Act” means the Investment Company Act of 1940 or any successor statute thereto, in each case as amended from time to time.

“Investment Company Event” means the receipt by the Trust and the Depositor of an Opinion of Counsel, rendered by a law firm having a recognized national securities law practice, to the effect that, as a result of the occurrence of a change in law or regulation or a change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority (a “Change in 1940 Act Law”), the Trust is or shall be considered an “investment company” that is required to be registered under the Investment Company Act, which Change in 1940 Act Law becomes effective on or after the date of original issuance of the Trust Preferred Securities under this Trust Agreement; provided, however, that the Depositor or the Administrative Trustees on behalf of the Trust shall have requested and received such an Opinion of Counsel with regard to such matters within a reasonable period of time after the Depositor or the Administrative Trustees on behalf of the Trust shall have become aware of the possible occurrence of any such event.

“LIBOR” means the London Interbank Offered Rate for three-month U.S. Dollar deposits in Europe as determined by the Calculation Agent according to Section 4.1.

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“Lien” means any lien, pledge, charge, encumbrance, mortgage, deed of trust, adverse ownership interest, hypothecation, assignment, security interest or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever.

“Like Amount” means (a) with respect to a redemption of Trust Securities, Trust Securities having an aggregate Liquidation Amount equal to the aggregate principal amount of Debentures to be contemporaneously redeemed in accordance with the Indenture and the proceeds of which shall be used to pay the Redemption Price of such Trust Securities; and (b) with respect to a distribution of Debentures to Holders of Trust Securities in connection with a dissolution or liquidation of the Trust, Debentures having a principal amount equal to the Liquidation Amount of the Trust Securities of the Holder to whom such Debentures are distributed. Each Debenture distributed pursuant to clause (b) above shall carry with it accrued interest in an amount equal to the accrued and unpaid interest then due on such Debentures.

“Liquidation Amount” means the stated amount of $1,000 per Trust Security.

“Liquidation Date” means the date on which Debentures are to be distributed to Holders of Trust Securities in connection with a dissolution and liquidation of the Trust pursuant to Section 9.4(a) hereof.

“Liquidation Distribution” has the meaning specified in Section 9.4(d) hereof.

“Majority in Liquidation Amount” means, with respect to the Trust Securities, except as provided in the terms of the Trust Preferred Securities or, if the Indenture is then required to be qualified under the Trust Indenture Act, by the Trust Indenture Act, Holder(s) of Outstanding Trust Securities voting together as a single class or, as the context may require, Holders of Outstanding Trust Preferred Securities or Holders of Outstanding Common Securities voting separately as a class, who are the record owners of more than 50% of the aggregate Liquidation Amount of all Outstanding Trust Securities of the relevant class.

“Maturity Date” means the date on which the Debentures mature and on which the principal shall be due and payable together with all accrued and unpaid interest thereon including Compounded Interest and Additional Interest (each as defined in the Indenture), if any.

“Officers’ Certificate” means a certificate signed by the Chief Executive Officer, President or an Executive Vice President and by the Treasurer or the Vice President—Finance or the Secretary, of the Depositor, and delivered to the appropriate Trustee. One of the officers signing an Officers’ Certificate given pursuant to Section 8.17 hereof shall be the principal executive, financial or accounting officer of the Depositor. Any Officers’ Certificate delivered with respect to compliance with a condition or covenant provided for in this Trust Agreement shall include:

(a) a statement that each officer signing the Officers’ Certificate has read the covenant or condition and the definitions relating thereto;

(b) a brief statement of the nature and scope of the examination or investigation undertaken by each officer in rendering the Officers’ Certificate;

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(c) a statement that each such officer has made such examination or investigation as, in such officer’s opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(d) a statement as to whether, in the opinion of each such officer, such condition or covenant has been complied with.

“Opinion of Counsel” means an opinion in writing of independent, outside legal counsel for the Trust, the Property Trustee, the Resident Trustee or the Depositor, who shall be reasonably acceptable to the Property Trustee.

“Original Trust Agreement” has the meaning specified in the Recitals to this Trust Agreement.

“Outstanding”, when used with respect to Trust Preferred Securities, means, as of the date of determination, all Trust Preferred Securities theretofore executed and delivered under this Trust Agreement, except:

(a) Trust Preferred Securities theretofore canceled by the Property Trustee or delivered to the Property Trustee for cancellation;

(b) Trust Preferred Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Property Trustee or any Paying Agent for the Holders of such Trust Preferred Securities; provided that, if such Trust Preferred Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Trust Agreement; and

(c) Trust Preferred Securities which have been paid or in exchange for or in lieu of which other Trust Preferred Securities have been executed and delivered pursuant to Sections 5.4, 5.5 and 5.11 hereof; provided, however, that in determining whether the Holders of the requisite Liquidation Amount of the Outstanding Trust Preferred Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Trust Preferred Securities owned by the Depositor, any Trustee or any Affiliate of the Depositor or any Trustee shall be disregarded and deemed not to be Outstanding, except that (a) in determining whether any Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Trust Preferred Securities that such Trustee knows to be so owned shall be so disregarded; and (b) the foregoing shall not apply at any time when all of the outstanding Trust Preferred Securities are owned by the Depositor, one or more of the Trustees and/or any such Affiliate. Trust Preferred Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Administrative Trustees the pledgee’s right to the Trust Preferred Securities of Depositor or any Affiliate of the Depositor.

“Paying Agent” means any paying agent or co-paying agent appointed pursuant to Section 5.9 hereof and shall initially be the Bank.

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“Payment Account” means a segregated non-interest-bearing corporate trust account maintained by the Property Trustee with the Bank in its trust department for the benefit of the Securityholders in which all amounts paid in respect of the Debentures shall be held and from which the Property Trustee shall make payments to the Securityholders in accordance with Sections 4.1 and 4.2 hereof.

“Person” means any individual, corporation, partnership, joint venture, trust, limited liability company, unincorporated organization or government or any agency or political subdivision thereof.

“Placement Agreement” means the Placement Agreement, effective as of September 30, 2002, among the Trust, the Depositor and the Placement Agent named therein.

“Preferred Securities Guarantee” means the Trust Preferred Securities Guarantee Agreement executed and delivered by the Depositor and Wells Fargo Bank, National Association, as trustee, contemporaneously with the execution and delivery of this Trust Agreement, for the benefit of the holders of the Trust Preferred Securities, as amended from time to time.

“Property Trustee” means the commercial bank or trust company identified as the “Property Trustee,” in the Preamble to this Trust Agreement solely in its capacity as Property Trustee of the Trust heretofore formed and continued hereunder and not in its individual capacity, or its successor in interest in such capacity, or any successor property trustee appointed as herein provided.

“Redemption Date” means, with respect to any Trust Security to be redeemed, the date fixed for such redemption by or pursuant to this Trust Agreement; provided that (i) each Redemption Date must fall on a Distribution Date, and (ii) each Debenture Redemption Date and the stated maturity of the Debentures shall be a Redemption Date for a Like Amount of Trust Securities.

“Redemption Price” means, with respect to any Trust Security, the Liquidation Amount of such Trust Security, plus accumulated and unpaid Distributions to the Redemption Date, plus the related amount of the premium, if any, paid by the Depositor upon the concurrent redemption of a Like Amount of Debentures, allocated on a pro rata basis (based on Liquidation Amounts) among the Trust Securities.

“Relevant Trustee” shall have the meaning specified in Section 8.11 hereof.

“Resale Restriction Termination Date” means, with respect to the offer, sale or other transfer of a Trust Preferred Security, (a) the date which is two years (or such shorter period of time as permitted by Rule 144(k) under the Securities Act) after the later of the original issue date of such Trust Preferred Security and the last date on which the Company or any Affiliate of the Company was the owner of such Trust Preferred Security (or any predecessor of the Trust Preferred Security) and (b) such later date, if any, as may be required by applicable laws.

“Resident Trustee” means the commercial bank or trust company identified as the “Resident Trustee” in the Preamble to this Trust Agreement solely in its capacity as Resident Trustee of the Trust continued hereunder and not in its individual capacity, or its successor in interest in such capacity, or any successor Resident Trustee appointed as herein provided.

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“Responsible Officer” when used with respect to the Property Trustee means any officer assigned to the Corporate Trust Office and having direct responsibility for the administration of this Trust Agreement, and also, with respect to a particular matter, any other officer of the Property Trustee to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject.

“Securities Register” and “Securities Registrar” shall have the respective meanings specified in Section 5.4 hereof.

“Securityholder” or “Holder” means a Person in whose name a Trust Security is, or Trust Securities are, registered in the Securities Register; any such Person is a beneficial owner within the meaning of the Delaware Statutory Trust Act.

“Three-Month LIBOR Rate” has the meaning specified in Section 4.1(d) hereof.

“Trust” means the Delaware Statutory Trust created by the filing of the Certificate of Trust with the Secretary of State of the State of Delaware and the execution of the Original Trust Agreement, and continued hereby and identified on the cover page to this Trust Agreement.

“Trust Agreement” means this Amended and Restated Trust Agreement, as the same may be modified, amended or supplemented in accordance with the applicable provisions hereof, including all exhibits hereto, including, for all purposes of this Trust Agreement and any such modification, amendment or supplement, the provisions of the Trust Indenture Act, if any, that are deemed to be a part of and govern this Trust Agreement and any such modification, amendment or supplement, respectively.

“Trust Indenture Act” means the Trust Indenture Act of 1939, as amended, as in force at the date as of which this instrument was executed; provided, however, that in the event the Trust Indenture Act of 1939, as amended, is amended after such date, “Trust Indenture Act” means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended.

“Trust Preferred Securities Certificate” means a certificate evidencing ownership of Trust Preferred Securities, substantially in the form attached hereto as Exhibit D.

“Trust Preferred Security” means an undivided preferred beneficial interest in the assets of the Trust, having a per share Liquidation Amount of $1,000 and having the rights provided therefor in this Trust Agreement, including the right to receive Distributions and a Liquidation Distribution as provided herein.

“Trust Property” means (a) the Debentures; (b) the rights of the Property Trustee, if any, under the Guarantee; (c) any cash on deposit in, or owing to, the Payment Account; (d) the Initial Contribution (as defined in Section 2.3); and (e) all proceeds and rights in respect of the foregoing and any other property and assets for the time being held or deemed to be held by the Property Trustee pursuant to the terms of this Trust Agreement.

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“Trust Security” means any one of the Common Securities or the Trust Preferred Securities.

“Trust Securities Certificate” means any one of the Common Securities Certificates or the Trust Preferred Securities Certificates.

“Trustees” means, collectively, the Property Trustee, the Resident Trustee and the Administrative Trustees.

ARTICLE II

ESTABLISHMENT OF THE TRUST

Section 2.1 Name.

The Trust continued hereby shall be known as “Indian River Capital Trust I,” as such name may be modified from time to time by the Administrative Trustees following written notice to the Holders of Trust Securities and the other Trustees, in which name the Trustees and the Depositor may engage in the transactions contemplated hereby, make and execute contracts and other instruments on behalf of the Trust and sue and be sued.

Section 2.2 Office of the Resident Trustee; Principal Place of Business of the Trust.

The address of the Resident Trustee is c/o Wells Fargo Delaware Trust Company, 919 Market Street, Suite 700, Wilmington, Delaware 19801, Attn: Corporate Trust Administration, or such other address as the Resident Trustee may designate by written notice to the Securityholders and the Depositor. The principal executive office of the Trust is 919 Market Street, Suite 700, Wilmington, Delaware 19801.

Section 2.3 Initial Contribution of Trust Property; Organizational Expenses.

The Resident Trustee and Administrative Trustees acknowledge receipt in trust from the Depositor in connection with the Original Trust Agreement of the sum of One Hundred Dollars ($100) (the “Initial Contribution”), which constituted the initial Trust Property; and the Property Trustee acknowledges receipt of all Trust Property pursuant to this Agreement. The Depositor shall pay organizational expenses of the Trust as they arise or shall, upon request of any Trustee, promptly reimburse such Trustee for any such expenses paid by such Trustee. The Depositor shall make no claim upon the Trust Property for the payment of such expenses.

Section 2.4 Issuance of the Trust Preferred Securities.

Contemporaneously with the execution and delivery of this Trust Agreement, an Administrative Trustee, on behalf of the Trust, shall execute and cause to be delivered in accordance with Sections 5.2 and 5.3 Trust Preferred Securities Certificates, registered in the name of the Persons entitled thereto in an aggregate amount of Seven Thousand (7,000) Trust Preferred Securities having an aggregate Liquidation Amount of Seven Million Dollars ($7,000,000) against receipt of the aggregate purchase price of such Trust Preferred Securities of Seven Million Dollars ($7,000,000), which amount such Administrative Trustee shall promptly deliver to the Property Trustee.

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Section 2.5 Issuance of the Common Securities; Subscription and Purchase of Debentures.

Contemporaneously with the execution and delivery of this Trust Agreement, an Administrative Trustee, on behalf of the Trust, shall execute and cause to be delivered to the Depositor in accordance with Sections 5.2 and 5.3, a Common Securities Certificate, registered in the name of the Depositor, in an aggregate amount of 217 Common Securities having an aggregate Liquidation Amount of Two Hundred Seventeen Thousand Dollars ($217,000) against payment by the Depositor of such amount. Contemporaneously therewith, an Administrative Trustee, on behalf of the Trust, shall subscribe to and purchase from the Depositor Debentures, registered in the name of the Property Trustee on behalf of the Trust and having an aggregate principal amount equal to Seven Million Two Hundred Seventeen Thousand Dollars ($7,217,000), and, in satisfaction of the purchase price for such Debentures, the Property Trustee, on behalf of the Trust, shall deliver to the Depositor the sum of Seven Million Two Hundred Seventeen Thousand Dollars ($7,217,000).

Section 2.6 Declaration of Trust.

The exclusive purposes and functions of the Trust are (a) to issue and sell Trust Securities and use the proceeds from such sale to acquire the Debentures; (b) to make distributions as provided herein; (c) to enter into the agreements, documents, and instruments necessary to accomplish (a) and (b); and (d) to engage in those activities necessary, advisable or incidental thereto. The Depositor hereby appoints, or confirms the appointment of, as the case may be, the Trustees as trustees of the Trust, to have all the rights, powers and duties to the extent set forth herein, and the Trustees hereby accept, or confirm their acceptance, as the case may be, of such appointments. The Property Trustee hereby declares that it shall hold the Trust Property in trust upon and subject to the conditions set forth herein for the benefit of the Securityholders. The Administrative Trustees shall have all rights, powers and duties set forth herein and in accordance with applicable law with respect to accomplishing the purposes of the Trust. The Resident Trustee shall not be entitled to exercise any powers, nor shall the Resident Trustee have any of the duties and responsibilities, of the Property Trustee or the Administrative Trustees set forth herein. The Resident Trustee shall be one of the Trustees of the Trust for the sole and limited purpose of fulfilling the residency requirements of applicable sections of the Delaware Statutory Trust Act.

Section 2.7 Authorization of Trustees to Enter into Certain Transactions.

(a) The Trustees shall conduct the affairs of the Trust in accordance with the terms of this Trust Agreement. Subject to the limitations set forth in paragraph (b) of this Section 2.7 and Article VIII hereof, and in accordance with the following provisions (i) and (ii), the Administrative Trustees shall have the authority to enter into all transactions and agreements determined by the Administrative Trustees to be appropriate in exercising the authority, express or implied, otherwise granted to the Administrative

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Trustees under this Trust Agreement, and to perform all acts in furtherance thereof, including without limitation, the acts set forth in the following provision (i):

(i) As among the Trustees, each Administrative Trustee, acting singly or jointly, shall have the power and authority to act on behalf of the Trust with respect to the following matters:

(A) the issuance and sale of the Trust Securities and the compliance with the Placement Agreement in connection therewith;

(B) to cause the Trust to enter into, and to execute, deliver and perform on behalf of the Trust, the Expense Agreement and such other agreements or documents as may be necessary or desirable in connection with the purposes and function of the Trust;

(C) assisting in the registration of the Trust Preferred Securities under state securities or blue sky laws, if required, and the qualification of this Trust Agreement as a trust indenture under the Trust Indenture Act, if required;

(D) the application for a taxpayer identification number for the Trust;

(E) the sending of notices (other than notices of default) and other information regarding the Trust Securities and the Debentures to the Securityholders in accordance with this Trust Agreement;

(F) the appointment of a Paying Agent, Authenticating Agent and Securities Registrar in accordance with this Trust Agreement;

(G) to acquire as trust assets Debentures with the proceeds of the sale of the Trust Securities;

(H) to the extent provided in this Trust Agreement, the winding up of the affairs of and liquidation of the Trust and the preparation, execution and filing of the certificate of cancellation with the Secretary of State of the State of Delaware;

(I) the taking of all action that may be necessary or appropriate for the preservation and the continuation of the Trust’s valid existence, rights, franchises and privileges as a statutory business trust under the laws of the State of Delaware and of each other jurisdiction in which such existence is necessary to protect the limited liability of the Holders of the Trust Preferred Securities or to enable the Trust to effect the purposes for which the Trust was created; and

(J) the taking of any action incidental to the foregoing as the Administrative Trustees may from time to time determine is necessary or advisable to give effect to the terms of this Trust Agreement for the benefit of the Securityholders (without consideration of the effect of any such action on any particular Securityholder).

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(ii) As among the Trustees, the Property Trustee shall have the power, duty and authority to act on behalf of the Trust with respect to the following matters:

(A) the establishment and maintenance of the Payment Account;

(B) the receipt of the Debentures;

(C) the collection of interest, principal and any other payments made in respect of the Debentures in the Payment Account;

(D) the distribution of amounts owed to the Securityholders in respect of the Trust Securities in accordance with the terms of this Trust Agreement;

(E) the exercise of all of the rights, powers and privileges of a holder of the Debentures;

(F) the sending of notices of default and other information regarding the Trust Securities and the Debentures to the Securityholders in accordance with this Trust Agreement;

(G) the distribution of the Trust Property in accordance with the terms of this Trust Agreement;

(H) to the extent provided in this Trust Agreement, the winding up of the affairs of and liquidation of the Trust;

(I) after an Event of Default, the taking of any action incidental to the foregoing as the Property Trustee may from time to time determine in good faith is necessary or advisable to give effect to the terms of this Trust Agreement and protect and conserve the Trust Property for the benefit of the Securityholders (without consideration of the effect of any such action on any particular Securityholder);

(J) registering transfers of the Trust Securities in accordance with this Trust Agreement; and

(K) engaging in such ministerial activities as shall be necessary or appropriate to effect the redemption of the Trust Securities to the extent the Debentures are redeemed or mature.

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Except as otherwise provided in this Section 2.7(a)(ii), the Property Trustee shall have none of the duties, liabilities, powers or the authority of the Administrative Trustees set forth in Section 2.7(a)(i).

(b) So long as this Trust Agreement remains in effect, the Trust (or the Trustees acting on behalf of the Trust) shall not undertake any business, activities or transaction except as expressly provided herein or contemplated hereby. In particular, the Trustees shall not, on behalf of the Trust (i) acquire any investments or engage in any activities not authorized by this Trust Agreement; (ii) sell, assign, transfer, exchange, mortgage, pledge, set-off or otherwise dispose of any of the Trust Property or interests therein, including to Securityholders, except as expressly provided herein; (iii) take any action that would cause the Trust to fail or cease to qualify as a “grantor trust” for United States federal income tax purposes; (iv) incur any indebtedness for borrowed money or issue any other debt; or (v) take or consent to any action that would result in the placement of a Lien on any of the Trust Property. The Administrative Trustees shall defend all claims and demands of all Persons at any time claiming any Lien on any of the Trust Property adverse to the interest of the Trust or the Securityholders in their capacity as Securityholders.

(c) In connection with the issue and sale of the Trust Preferred Securities, the Depositor shall have the right and responsibility, and is hereby authorized, to assist the Trust with respect to, or effect on behalf of the Trust, the following (and any actions taken by the Depositor in furtherance of the following prior to the date of this Trust Agreement are hereby ratified and confirmed in all respects):

(i) the determination of the states in which to take appropriate action to qualify or, register for sale all or part of the Trust Preferred Securities and to do any and all such acts, other than actions which must be taken by or on behalf of the Trust, and advise the Trustees of actions they must take on behalf of the Trust, and prepare for execution and filing any documents to be executed and filed by the Trust or on behalf of the Trust, as the Depositor deems necessary or advisable in order to comply with the applicable laws of any such States; and

(ii) the negotiation of the terms of, and the execution and delivery of, the Placement Agreement providing for the sale of the Trust Preferred Securities; and

(iii) the taking of any other actions necessary or desirable to carry out any of the foregoing activities.

(d) Notwithstanding anything herein to the contrary, the Administrative Trustees are authorized and directed to conduct the affairs of the Trust and to operate the Trust so that the Trust shall not be deemed to be an “investment company” required to be registered under the Investment Company Act, shall be classified as a “grantor trust” and not as an association taxable as a corporation for United States federal income tax purposes and so that the Debentures shall be treated as indebtedness of the Depositor for

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United States federal income tax purposes. In this regard, subject to Section 10.2 hereof, the Depositor and the Administrative Trustees are authorized to take any action and the Administrative Trustees are authorized to direct the Property Trustee in writing to take any action, not inconsistent with applicable law or this Trust Agreement, that each of the Depositor and the Administrative Trustees determines in their discretion to be necessary or desirable for such purposes. The Property Trustee shall take any action so directed by one or more of the Administrative Trustees.

Section 2.8 Assets of Trust.

The assets of the Trust shall consist of the Trust Property.

Section 2.9 Title to Trust Property.

Legal title to all Trust Property shall be vested at all times in the Property Trustee (in its capacity as such) and shall be held and administered by the Property Trustee for the benefit of the Securityholders in accordance with this Trust Agreement.

ARTICLE III

PAYMENT ACCOUNT

Section 3.1 Payment Account.

(a) On the Closing Date, the Property Trustee shall establish the Payment Account. The Property Trustee and any agent of the Property Trustee shall have exclusive control and sole right of withdrawal with respect to the Payment Account for the purpose of making deposits and withdrawals from the Payment Account in accordance with this Trust Agreement. All money and other property deposited or held from time to time in the Payment Account shall be held by the Property Trustee in the Payment Account for the exclusive benefit of the Securityholders and for distribution as herein provided, including (and subject to) any priority of payments provided for herein.

(b) The Property Trustee shall deposit in the Payment Account, promptly upon receipt, all payments of principal of or interest on, and any other payments or proceeds with respect to, the Debentures. Amounts held in the Payment Account shall not be invested by the Property Trustee pending distribution thereof.

ARTICLE IV

DISTRIBUTIONS; REDEMPTION

Section 4.1 Distributions.

(a) Distributions on the Trust Securities shall be cumulative, and shall accumulate whether or not there are funds of the Trust available for the payment of Distributions. Distributions shall accumulate from September 30, 2002, and, except during (i) the Initial Distribution Payment Period and (ii) any Extended Interest Payment

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Period with respect to the Debentures, shall be payable quarterly in arrears on February 7, May 7, August 7 and November 7 of each year, (each such quarter or lesser period ending after the Initial Distribution Payment Period, a “Distribution Period”). If any date on which a Distribution is otherwise payable on the Trust Securities is not a Business Day, then the payment of such Distribution shall be made on the next succeeding day that is a Business Day except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date (each date on which Distributions are payable in accordance with this Section 4.1(a), a “Distribution Date”).

(b) During the Initial Distribution Payment Period, distributions on the Trust Securities shall accumulate at the rate of 3.55% per annum over the Three Month LIBOR Rate in effect from time to time computed on the Liquidation Amount of the Trust Securities and shall be computed in accordance with Section 4.1(c). Commencing upon the Initial Distribution Date, the Distributions on the Trust Securities shall be payable at a floating rate (“Floating Distribution Rate”) equal to no more than 3.75% over the Three Month LIBOR Rate (the “Rate Premium”). The Rate Premium shall be determined on the Initial Distribution Date. The Floating Distribution Rate for each Distribution Period will be set pursuant to Section 4.1(d) of this Article IV; provided, that the initial Floating Distribution Rate will be set on the Initial Distribution Date. Notwithstanding anything to the contrary herein, in no event shall the Floating Distribution Rate exceed 12% prior to November 7, 2007.

(c) The amount of Distributions payable for the Initial Distribution Payment Period and any full Distribution Period shall be computed on the basis of a 360-day year and the actual number of days in the Initial Distribution Payment Period and such Distribution Period. During any Extended Interest Payment Period with respect to the Debentures, Distributions on the Trust Preferred Securities shall be deferred for a period equal to the Extended Interest Payment Period. The amount of Distributions payable for any period shall include the Additional Amounts, if any.

The “Three-Month LIBOR Rate” shall mean the rate determined in accordance with the following provisions:

(i) On the second LIBOR BUSINESS DAY (provided that on such day commercial banks are open for business (including dealings in foreign currency deposits) in London (a “LIBOR Banking Day”) preceding each of March 15, June 15, August 15 and November 15 (except with respect to the Initial Distribution Payment Period and the Distribution Period commencing the day after the Initial Distribution Date) (each such date, a “Distribution Reset Date”), Wells Fargo Bank, National Association (the “Calculation Agent”), will determine the Three-Month LIBOR Rate which shall be the rate for deposits in the London interbank market in U.S. dollars having a three-month maturity which appears on the Telerate Page 3750 as of 11:00 a.m., London time, on such Distribution Reset Date. “Telerate Page 3750” means the display on Page 3750 of the Bloomberg financial Markets Commodities News (or such other page as may replace

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that page on that service for the purpose of displaying London interbank offered rates of major banks for U.S. dollar deposits). If the Three-Month LIBOR Rate on such Distribution Reset Date does not appear on the Telerate Page 3750, such Three-Month LIBOR Rate will be determined as described in (ii) below. “LIBOR Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banking institutions in New York, New York or Wilmington, Delaware are authorized or obligated by law or executive order to be closed. If such rate is superseded on Telerate Page 3750 by a corrected rate before 12:00 noon (London time) on the same Distribution Reset Date, the corrected rate as so substituted will be the applicable LIBOR for that Distribution Reset Date.

(ii) If, on any Distribution Reset Date, such rate does not appear on Telerate Page 3750 as reported by Bloomberg Financial Markets Commodities News or such other page as may replace such Telerate Page 3750, the Calculation Agent shall determine the arithmetic mean of quotations of the Reference Banks (defined below) to leading banks in the London interbank market for three-month U.S. Dollar deposits in Europe (in an amount determined by the Calculation Agent) by reference to requests for quotations as of approximately 11:00 a.m. (London time) on the Distribution Reset Date made by the Calculation Agent to the Reference Banks. If, on any Distribution Reset Date, at least two of the Reference Banks provide such quotations, LIBOR shall equal the arithmetic mean of such quotations. If, on any Distribution Reset Date, only one or none of the Reference Banks provide such a quotation, LIBOR shall be deemed to be the arithmetic mean of the offered quotations that at least two leading banks in the City of New York (as selected by the Calculation Agent) are quoting on the relevant Distribution Reset Date for three-month U.S. Dollar deposits in Europe at approximately 11:00 a.m. (London time) (in an amount determined by the Calculation Agent). As used herein, “Reference Banks” means four major banks in the London interbank market selected by the Calculation Agent.

(iii) If the Calculation Agent is required but is unable to determine a rate in accordance with at least one of the procedures provided above, LIBOR shall be LIBOR in effect on the previous Distribution Reset Date (whether or not LIBOR for such period was in fact determined on such Distribution Reset Date).

(d) Distributions on the Trust Securities shall be made by the Property Trustee solely from the Payment Account and shall be payable on the Initial Distribution Date and each Distribution Date only to the extent that the Trust has funds on hand and immediately and legally available by 12:30 p.m. New York City time on the Initial Distribution Date and each Distribution Date in the Payment Account for the payment of such Distributions.

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(e) Distributions on the Trust Securities with respect to a Distribution Date shall be payable to the Holders thereof as they appear on the Securities Register on the relevant record date, which shall be the 15^th day of the month prior to the month in which the relevant Distribution Date occurs, which Distribution Dates correspond to the interest payment dates on the Debentures. The above notwithstanding, distribution on the Trust Securities with respect to the Initial Distribution Period shall be payable to the Initial Purchaser upon the Initial Distribution Date.

Section 4.2 Redemption

(a) On each Debenture Redemption Date and on the maturity of the Debentures, the Trust shall be required to redeem a Like Amount of Trust Securities at the Redemption Price.

(b) Notice of redemption shall be given by the Property Trustee by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date to each Holder of Trust Securities to be redeemed, at such Holder’s address appearing in the Securities Register. The Property Trustee shall have no responsibility for the accuracy of any CUSIP number, if any, contained in such notice. All notices of redemption shall state:

(i) the Redemption Date;

(ii) the Redemption Price;

(iii) the CUSIP number, if any;

(iv) if less than all the Outstanding Trust Securities are to be redeemed, the identification and the aggregate Liquidation Amount of the particular Trust Securities to be redeemed;

(v) that, on the Redemption Date, the Redemption Price shall become due and payable upon each such Trust Security to be redeemed and that Distributions thereon shall cease to accumulate on and after said date, except as provided in Section 4.2(d); and

(vi) the place or places at which Trust Securities are to be surrendered for the payment of the Redemption Price.

(c) The Trust Securities redeemed on each Redemption Date shall be redeemed at the Redemption Price with the proceeds from the contemporaneous redemption of Debentures. Redemptions of the Trust Securities shall be made and the Redemption Price shall be payable on each Redemption Date only to the extent that the Trust has immediately and legally available funds then on hand and legally available in the Payment Account for the payment of such Redemption Price.

(d) If the Property Trustee gives a notice of redemption in respect of any Trust Preferred Securities, then, by 12:00 noon, New York City time, on the Redemption Date,

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subject to Section 4.2(c), the Property Trustee, subject to Section 4.2(c), shall deposit with the Paying Agent funds sufficient to pay the applicable Redemption Price and shall give the Paying Agent irrevocable instructions and authority to pay the Redemption Price to the Holders thereof upon surrender of their Trust Preferred Securities Certificates. Notwithstanding the foregoing, Distributions payable on or prior to the Redemption Date for any Trust Securities called for redemption shall be payable to the Holders of such Trust Securities as they appear on the Securities Register for the Trust Securities on the relevant record dates for the related Distribution Dates. If notice of redemption shall have been given and funds deposited as required, then upon the date of such deposit, (i) all rights of Securityholders holding Trust Securities so called for redemption shall cease with respect to such Trust Securities, except the right of such Securityholders to receive the Redemption Price, without interest, (ii) such Trust Securities shall cease to be Outstanding, and (iii) any Trust Securities Certificates will be deemed to represent Debentures having a principal amount equal to the stated Liquidation Amount of the Trust Securities represented thereby and bearing accrued and unpaid interest in an amount equal to the accumulated and unpaid Distributions on such Trust Securities until such certificates are presented to the Securities Registrar for transfer or reissuance. In the event that any date on which any Redemption Price is payable is not a Business Day, then payment of the Redemption Price payable on such date shall be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay) except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day (and without any reduction of interest or any other payment in respect of any such acceleration), in each case with the same force and effect as if made on such date. In the event that payment of the Redemption Price in respect of any Trust Securities called for redemption is improperly withheld or refused and not paid either by the Trust or by the Depositor pursuant to the Preferred Securities Guarantee, Distributions on such Trust Securities shall continue to accumulate, at the then applicable rate, from the Redemption Date originally established by the Trust for such Trust Securities to the date such Redemption Price is actually paid, in which case the actual payment date shall be the date fixed for redemption for purposes of calculating the Redemption Price.

(e) Payment of the Redemption Price on the Trust Securities shall be made to the record holders thereof as they appear on the Securities Register for the Trust Securities on the relevant record date, which shall be the date 15 days prior to the relevant Redemption Date.

(f) Subject to Section 4.3(a), if less than all the Outstanding Trust Securities are to be redeemed on a Redemption Date, then the aggregate Liquidation Amount of Trust Securities to be redeemed shall be allocated on a pro rata basis (based on Liquidation Amounts) among the Common Securities and the Trust Preferred Securities. The particular Trust Preferred Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Property Trustee from the Outstanding Trust Preferred Securities not previously called for redemption, by such method (including, without limitation, by lot) as the Property Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to such Liquidation Amount or an integral multiple of such Liquidation Amount in excess

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thereof) of the Liquidation Amount of the Trust Preferred Securities of a denomination larger than such Liquidation Amount, provided, however, that in the event the redemption relates only to Trust Preferred Securities held by the Depositor being redeemed in exchange for a Like Amount of Debentures, the Property Trustee shall select the particular Trust Preferred Securities for redemption. The Property Trustee shall promptly notify the Securities Registrar in writing of the Trust Preferred Securities selected for redemption and, in the case of any Trust Preferred Securities selected for partial redemption, the Liquidation Amount thereof to be redeemed. For all purposes of this Trust Agreement, unless the context otherwise requires, all provisions relating to the redemption of Trust Preferred Securities shall relate, in the case of any Trust Preferred Securities redeemed or to be redeemed only in part, to the portion of the Liquidation Amount of Trust Preferred Securities which has been or is to be redeemed.

Section 4.3 Subordination of Common Securities.

(a) Payment of Distributions (including Additional Amounts, if applicable) on, and the Redemption Price of, the Trust Securities, as applicable, shall be made, subject to Section 4.2(f), pro rata among the Common Securities and the Trust Preferred Securities based on the Liquidation Amount of the Trust Securities; provided, however, that if on any Distribution Date or Redemption Date any Event of Default resulting from a Debenture Event of Default shall have occurred and be continuing, no payment of any Distribution (including Additional Amounts, if applicable) on, or Redemption Price of, any Common Security, and no other payment on account of the redemption, liquidation or other acquisition of Common Securities, shall be made unless payment in full in cash of all accumulated and unpaid Distributions (including Additional Amounts, if applicable) on all Outstanding Trust Preferred Securities for all Distribution Periods terminating on or prior thereto, or in the case of payment of the Redemption Price the full amount of such Redemption Price on all Outstanding Trust Preferred Securities then called for redemption, shall have been made or provided for, and all funds immediately and legally available to the Property Trustee shall first be applied to the payment in full in cash of all Distributions (including Additional Amounts, if applicable) on, or the Redemption Price of, Trust Preferred Securities then due and payable.

(b) In the case of the occurrence of any Event of Default resulting from a Debenture Event of Default, the Holder of the Common Securities shall be deemed to have waived any right to act with respect to any such Event of Default under this Trust Agreement until the effect of all such Events of Default with respect to the Trust Preferred Securities shall have been cured, waived or otherwise eliminated. Until any such Event of Default under this Trust Agreement with respect to the Trust Preferred Securities shall have been so cured, waived or otherwise eliminated, the Property Trustee shall act solely on behalf of the Holders of the Trust Preferred Securities and not the Holder of the Common Securities, and only the Holders of the Trust Preferred Securities shall have the right to direct the Property Trustee to act on their behalf.

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Section 4.4 Payment Procedures.

Payments of Distributions (including Additional Amounts, if applicable) in respect of the Trust Preferred Securities shall be made by check mailed to the address of the Person entitled thereto as such address shall appear on the Securities Register on the relevant record date. Payments in respect of the Common Securities shall be made in such manner as shall be mutually agreed between the Property Trustee and the Holder of the Common Securities.

Section 4.5 Tax Returns and Reports.

The Administrative Trustees shall prepare (or cause to be prepared), at the Depositor’s expense, and file all information returns and reports required to be filed by or in respect of the Trust by applicable taxing authorities. In this regard, the Administrative Trustees shall (a) prepare and file (or cause to be prepared and filed) the appropriate forms required to be filed in respect of the Trust in each taxable year of the Trust; and (b) prepare and furnish (or cause to be prepared and furnished) to each Securityholder the appropriate forms required to be furnished to such Securityholder or the information required to be provided on such forms. The Administrative Trustees shall provide the Depositor with a copy of all such returns and reports promptly after such filing or furnishing. The Property Trustee shall comply with all applicable withholding and backup withholding tax laws and information reporting requirements with respect to any payments to Securityholders under the Trust Securities.

Section 4.6 Payment of Taxes, Duties, etc. of the Trust.

Upon receipt under the Debentures of Additional Sums (as defined in Section 1.1 of the Indenture), the Property Trustee, at the written direction of an Administrative Trustee or the Depositor, shall promptly pay any taxes, duties or governmental charges of whatsoever nature (including withholding taxes) imposed on the Trust by the United States or any other taxing authority.

Section 4.7 Payments Under Indenture.

Any amount payable hereunder to any record holder of Trust Preferred Securities shall be reduced by the amount of any corresponding payment such Holder has directly received under the Indenture pursuant to Section 5.13(b) or (c) hereof.

ARTICLE V

TRUST SECURITIES CERTIFICATES

Section 5.1 Initial Ownership.

Upon the creation of the Trust and the contribution by the Depositor pursuant to Section 2.3 hereof and until the issuance of the Trust Securities, and at any time during which no Trust Securities are Outstanding, the Depositor shall be the sole beneficial owner of the Trust.

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Section 5.2 The Trust Securities Certificates.

Subject to Sections 5.4(h) and (i), the Trust Preferred Securities Certificates shall be issued in minimum denominations of the Liquidation Amount and integral multiples of such Liquidation Amount in excess thereof, and the Common Securities Certificates shall be issued in denominations of the Liquidation Amount and integral multiples thereof. The Trust Securities Certificates shall be executed on behalf of the Trust by manual or facsimile signature of at least one Administrative Trustee. Trust Securities Certificates bearing the manual or facsimile signatures of individuals who were, at the time when such signatures shall have been affixed, authorized to sign on behalf of the Trust, shall be validly issued and entitled to the benefits of this Trust Agreement, notwithstanding that such individuals or any of them shall have ceased to be so authorized prior to the delivery of such Trust Securities Certificates or did not hold such offices at the date of delivery of such Trust Securities Certificates. A transferee of a Trust Securities Certificate shall become a Securityholder, and shall be entitled to the rights and subject to the obligations of a Securityholder hereunder, upon due registration of such Trust Securities Certificate in such transferee’s name pursuant to Sections 5.4, 5.11 and 5.13 hereof.

Section 5.3 Execution, Authentication and Delivery of Trust Securities Certificates.

(a) On the Closing Date, the Administrative Trustees shall cause Trust Securities Certificates, in an aggregate Liquidation Amount as provided in Sections 2.4 and 2.5 hereof, to be executed on behalf of the Trust by the manual or facsimile signature of at least one of the Administrative Trustees, cause the Common Securities Certificate to be delivered to the Depositor, and cause the Trust Preferred Securities Certificates to be delivered to the Property Trustee and upon receipt of such delivery the Property Trustee shall authenticate such Trust Preferred Securities Certificates and deliver such Trust Preferred Securities Certificates, upon written order of the Administrative Trustees on behalf of the Trust, as set forth below, in authorized denominations.

(b) A Trust Preferred Securities Certificate shall not be valid until authenticated by the manual signature of an authorized signatory of the Property Trustee. The signature shall be conclusive evidence that the Trust Preferred Securities Certificate has been authenticated under this Trust Agreement. Each Trust Preferred Security Certificate shall be effective the date of its authentication.

Upon the written order of the Trust signed by one of the Administrative Trustees, the Property Trustee shall authenticate and make available for delivery the Trust Preferred Securities Certificates.

The Property Trustee may appoint an Authenticating Agent acceptable to the Trust to authenticate the Trust Preferred Securities Certificates. An Authenticating Agent may authenticate the Trust Preferred Securities Certificates whenever the Property Trustee may do so. Each reference in this Trust Agreement to authentication by the Property Trustee includes authentication by such agent. An Authenticating Agent has the same rights as the Property Trustee to deal with the Company or the Trust.

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Section 5.4 Registration of Transfer and Exchange of Trust Preferred Securities Certificates.

(a) The Depositor shall keep or cause to be kept, at the office or agency maintained pursuant to Section 5.8 hereof, a register or registers for the purpose of registering Trust Securities Certificates and transfers and exchanges of Trust Securities Certificates (herein referred to as the “Securities Register”) in which the registrar designated by the Depositor (the “Securities Registrar”), subject to such reasonable regulations as it may prescribe, shall provide for the registration of Trust Preferred Securities Certificates and Common Securities Certificates (subject to Section 5.10 hereof in the case of the Common Securities Certificates) and registration of transfers and exchanges of Trust Preferred Securities Certificates as herein provided. The Securities Registrar shall not be required to register the transfer of any Trust Preferred Securities that have been called for redemption. The Property Trustee shall be the initial Securities Registrar.

(b) Upon surrender for registration of transfer of any Trust Preferred Securities Certificate at the office or agency maintained pursuant to Section 5.8 hereof, the Administrative Trustees or any one of them shall, if the requirements for such transfer, as set forth herein and on the Trust Preferred Securities Certificate, are met, execute by manual or facsimile signature and deliver and the Property Trustee shall, upon written order of one of the Administrative Trustees on behalf of the Trust, authenticate and make available for delivery, in the name of the designated transferee or transferees, one or more new Trust Preferred Securities Certificates in authorized denominations of a like aggregate Liquidation Amount effective the date of execution by such Administrative Trustee or Trustees. At the option of a Holder, Trust Preferred Securities Certificates may be exchanged for other Trust Preferred Securities Certificates in authorized denominations of the same class and of a like aggregate Liquidation Amount upon surrender of the Trust Preferred Securities Certificates to be exchanged at the office or agency maintained pursuant to Section 5.8 hereof. The procedures for exchanges shall be the same for transfers as set forth in this Subsection 5.4(b).

(c) The Trust Preferred Securities Certificates shall bear certain legends identifying certain restrictions regarding the transfer of the Trust Preferred Securities represented thereby, the first of which is referred to herein as the “Restricted Securities Legend.” The legends shall not be removed; provided, however, that the Restricted Securities Legend may be removed if the Administrative Trustees receive such satisfactory evidence, which may include an Opinion of Counsel, as may be reasonably required by the Administrative Trustees, that neither the Restricted Securities Legend nor the restrictions on transfer set forth therein are required to ensure that transfers thereof comply with the provisions of the Securities Act. Upon provision of such satisfactory evidence, the Property Trustee, at the written direction of the Administrative Trustees, shall authenticate and deliver Trust Preferred Securities Certificates that do not bear the Restricted Securities Legend.

(d) Except as permitted by Section 5.4(c) above, each Trust Preferred Security Certificate shall bear the legends in substantially the following form and a Trust Preferred

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Security Certificate shall not be transferred except in compliance with such legends, unless otherwise determined by the Administrative Trustees, upon the advice of counsel, in accordance with applicable law:

THIS TRUST PREFERRED SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAWS. NEITHER THIS TRUST PREFERRED SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. PRIOR TO (i) THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(k) UNDER THE SECURITIES ACT) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE TRUST OR ANY AFFILIATE OF THE TRUST WAS THE OWNER OF THIS TRUST PREFERRED SECURITY (OR ANY PREDECESSOR OF THIS TRUST PREFERRED SECURITY) OR (ii) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAWS (THE “RESALE RESTRICTION TERMINATION DATE”) THE HOLDER OF THIS TRUST PREFERRED SECURITY BY ITS ACCEPTANCE HEREOF AGREES FOR THE BENEFIT OF THE TRUST TO OFFER, SELL OR OTHERWISE TRANSFER THIS TRUST PREFERRED SECURITY ONLY (A) TO THE TRUST OR AN AFFILIATE OF THE TRUST, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THIS TRUST PREFERRED SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A (“RULE 144A”) PROMULGATED UNDER THE SECURITIES ACT, TO A PERSON THE HOLDER REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A, (D) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS TRUST PREFERRED SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL “ACCREDITED INVESTOR,” FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE TRUST’S AND THE ADMINISTRATIVE TRUSTEES’ RIGHTS PRIOR TO ANY SUCH OFFER, SALE, TRANSFER OR OTHER DISPOSITION (i) PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY BY THE HOLDER OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER

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INFORMATION SATISFACTORY TO THE TRUST AND THE ADMINISTRATIVE TRUSTEES TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS CERTIFICATE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE PROPERTY TRUSTEE AND THE SECURITIES REGISTRAR IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY PRIOR TO THE RESALE RESTRICTION TERMINATION DATE. THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE CERTIFICATE OF TRANSFER RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THE CERTIFICATE OF TRANSFER TO THE PROPERTY TRUSTEE AND THE SECURITIES REGISTRAR. THIS LEGEND WILL BE REMOVED UPON REQUEST OF THE HOLDER AFTER THE EARLIER OF (i) THE TRANSFER OF THE TRUST PREFERRED SECURITY EVIDENCED HEREBY PURSUANT TO CLAUSE (B) ABOVE OR (ii) THE RESALE RESTRICTION TERMINATION DATE. THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS TRUST PREFERRED SECURITY OF THE RESALE RESTRICTIONS REFERRED TO HEREIN.

PRIOR TO THE RESALE RESTRICTION TERMINATION DATE, THIS TRUST PREFERRED SECURITY MAY BE TRANSFERRED OR EXCHANGED ONLY IN A MINIMUM AGGREGATE LIQUIDATION AMOUNT OF NOT LESS THAN $100,000. ANY ATTEMPTED TRANSFER OF THIS TRUST PREFERRED SECURITY IN AN AGGREGATE LIQUIDATION AMOUNT OF LESS THAN $100,000 PRIOR TO THE RESALE RESTRICTION TERMINATION DATE SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. AFTER SUCH RESALE RESTRICTION TERMINATION DATE, ANY ATTEMPTED TRANSFER OF THIS TRUST PREFERRED SECURITY IN AN AGGREGATE LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF THIS TRUST PREFERRED SECURITY FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RIGHT TO RECEIVE DISTRIBUTIONS ON THIS TRUST PREFERRED SECURITY, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS TRUST PREFERRED SECURITY.

IN CONNECTION WITH ANY TRANSFER., THE HOLDER WILL DELIVER TO THE SECURITIES REGISTRAR SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE REQUIRED BY THE AMENDED AND RESTATED TRUST AGREEMENT TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

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(e) Every Trust Preferred Securities Certificate presented or surrendered for registration of transfer or exchange shall be duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Property Trustee and the Securities Registrar duly executed by the Holder or his attorney duly authorized in writing, and, in the case of Trust Preferred Securities Certificates bearing the Restricted Securities Legends, accompanied by certification(s) in a form substantially similar to the Letters of Representations attached as Exhibit E and Exhibit F, as applicable, and evidence reasonably satisfactory to the Property Trustee or the Securities Registrar as to the compliance with the restrictions set forth in the Restricted Securities Legend. When Trust Preferred Securities Certificates are presented to the Securities Registrar to register the transfer of such certificates or to exchange such certificates which become mutilated, destroyed, defaced, stolen or lost, for an equal number of Trust Preferred Securities Certificates, the Securities Registrar shall register the transfer or make the exchange as requested if its reasonable requirements for such transactions are met. Each Trust Preferred Securities Certificate surrendered for registration of transfer or exchange shall be canceled and subsequently disposed of by the Property Trustee in accordance with its customary practice.

The Trust shall not be required to (i) issue, register the transfer of, or exchange any Trust Preferred Securities during a period beginning at the opening of business 15 calendar days before the date of mailing of a notice of redemption of any Trust Preferred Securities called for redemption and ending at the close of business on the day of such mailing; or (ii) register the transfer of or exchange any Trust Preferred Securities so selected for redemption, in whole or in part, except the unredeemed portion of any such Trust Preferred Securities being redeemed in part.

(f) No service charge shall be made for any registration of transfer or exchange of Trust Preferred Securities Certificates but the Securities Registrar may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer or exchange of Trust Preferred Securities Certificates.

(g) Trust Preferred Securities may only be transferred, in whole or in part, in accordance with the terms and conditions set forth in this Trust Agreement. Any transfer or purported transfer of any Trust Preferred Security not made in accordance with this Trust Agreement shall be null and void. A Trust Preferred Security may be transferred, in whole or in part, to a Person who takes delivery in the form of another Trust Preferred Security as provided in this Section 5.4.

(h) Prior to the Resale Restriction Termination Date, Trust Preferred Securities may only be transferred in a minimum aggregate Liquidation Amount of $100,000. Any attempted transfer of Trust Preferred Securities having an aggregate Liquidation Amount of less than $100,000 shall be deemed to be void and of no legal effect whatsoever. Any such purported transferee shall be deemed not to be a Holder of such Trust Preferred Securities for any purpose, including, but not limited to, the receipt of Distributions on such Trust Preferred Securities, and such purported transferee shall be deemed to have no interest whatsoever in such Trust Preferred Securities.

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(i) Subsequent to the Resale Restriction Termination Date, Trust Preferred Securities may only be transferred in a minimum aggregate Liquidation Amount of $100,000. Any attempted transfer of Trust Preferred Securities subsequent to the Resale Restriction Termination Date having an aggregate Liquidation Amount of less than $100,000 shall be deemed to be void and of no legal effect whatsoever. Any such purported transferee shall be deemed not to be a Holder of such Trust Preferred Securities for any purpose, including, but not limited to, the receipt of Distributions on such Trust Preferred Securities, and such purported transferee shall be deemed to have no interest whatsoever in such Trust Preferred Securities.

(j) Upon issuance of the Trust Preferred Securities to the Initial Purchaser, it is understood and agreed by all Parties hereto that the Initial Purchaser is proposed to be the interim holder of the Trust Preferred Securities and is purchasing such securities to facilitate consummation of the transactions contemplated herein and in the documents ancillary hereto; therefore, any provision in this Trust Agreement to the contrary not withstanding, the Initial Purchaser shall be permitted to transfer title in and to the Trust Preferred Securities to any entity, provided the Initial Purchaser takes reasonable steps to ensure that any such transfer is exempt from registration under the Securities Act of 1933, as amended, and rules promulgated thereunder, and for purposes of any such transfer, each party to this Trust Agreement hereby waives any and all rights to receive (i) an Opinion of Counsel, Certificate of Transfer or any other Opinion, Certificate or information to which they are otherwise entitled under this Section 5.4 or elsewhere in this Trust Agreement, or (ii) to restrict in any way the Initial Purchaser’s transfer of the Trust Preferred Securities in the aforesaid manner. Furthermore, upon the Initial Purchaser’s submission of the Trust Preferred Certificate to the Property Trustee for cancellation, an Administrative Trustee shall cause to be prepared, authenticated (as set forth in Section 5.3) and delivered to the acquirer thereof, a new Trust Securities Certificate for Seven Thousand (7,000) Trust Preferred Securities having an aggregate Liquidation Amount of Seven Million Dollars ($7,000,000).

Section 5.5 Mutilated, Destroyed, Lost or Stolen Trust Securities Certificates.

If (a) any mutilated Trust Securities Certificate shall be surrendered to the Trust or in the case of the Trust Preferred Securities to the Property Trustee or the Securities Registrar, or if the Trust or, in the case of the Trust Preferred Securities the Property Trustee or the Securities Registrar, shall receive evidence to its satisfaction of the destruction, loss or theft of any Trust Securities Certificate; and (b) there shall be delivered to the Administrative Trustees or in the case of the Trust Preferred Securities to the Property Trustee such security or indemnity as may be required by them to save each of them harmless, then in the absence of notice that such Trust Securities Certificate shall have been acquired by a bona fide purchaser, the Administrative Trustees, or any one of them, on behalf of the Trust shall execute and make available for delivery, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Trust Securities Certificate, a new Trust Securities Certificate of like class, tenor and denomination. In connection with the issuance of any new Trust Securities Certificate under this Section 5.5, the Administrative Trustees or the Securities Registrar may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. Any duplicate Trust Securities Certificate issued pursuant to this Section 5.5 shall constitute conclusive evidence of an undivided beneficial interest in the assets of the Trust, as if originally issued, whether or not the lost, stolen or destroyed Trust Securities Certificate shall be found at any time.

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Section 5.6 Person Deemed Securityholders.

The Trustees, the Paying Agent and the Securities Registrar shall treat the Person in whose name any Trust Securities Certificate shall be registered in the Securities Register as the owner of such Trust Securities Certificate for the purpose of receiving Distributions and for all other purposes whatsoever, and none of the Trustees, the Paying Agent or the Securities Registrar shall be bound by any notice to the contrary.

Section 5.7 Access to List of Securityholders’ Names and Addresses.

At any time when the Property Trustee is not also acting as the Securities Registrar, the Administrative Trustees or the Depositor shall furnish or cause to be furnished to the Property Trustee (a) within five Business Days of each record date, a list, in such form as the Property Trustee may reasonably require, of the names and addresses of the Securityholders as of the most recent record date; and (b) promptly after receipt by any Administrative Trustee or the Depositor of a request therefor from the Property Trustee in order to enable the Property Trustee to discharge its obligations under this Trust Agreement, in each case to the extent such information is in the possession or control of the Administrative Trustees or the Depositor and is not identical to a previously supplied list or has not otherwise been received by the Property Trustee in its capacity as Securities Registrar. The rights of the Securityholders to communicate with other Securityholders with respect to their rights under this Trust Agreement or under the Trust Securities, and the corresponding rights of the Property Trustee shall be as provided in the Trust Indenture Act. Each Holder, by receiving and holding a Trust Securities Certificate shall be deemed to have agreed not to hold the Depositor, the Property Trustee or the Administrative Trustees accountable by reason of the disclosure of its name and address, regardless of the source from which such information was derived.

Section 5.8 Maintenance of Office or Agency.

The Trust shall maintain, or cause to be maintained, in location(s) designated by the Administrative Trustees, an office or offices or agency or agencies where Trust Preferred Securities Certificates may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Trustees in respect of the Trust Securities Certificates may be served. The Administrative Trustees initially designate the Corporate Trust Office of the Property Trustee, as the principal corporate trust office for such purposes. The Administrative Trustees shall give prompt written notice to the Depositor, to the Property Trustee and to the Securityholders of any change in the location of the Securities Register or any such office or agency.

Section 5.9 Appointment of Paying Agent.

The Paying Agent shall make Distributions to Securityholders from the Payment Account and shall report the amounts of such Distributions to the Property Trustee and the Administrative Trustees. Any Paying Agent shall have the revocable power to withdraw funds from the Payment

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Account for the purpose of making the Distributions referred to above. The Administrative Trustees may revoke such power and remove the Paying Agent if such Administrative Trustees determine in their sole discretion that it would be in the best interests of the Trust or that the Paying Agent shall have failed to perform its obligations under this Trust Agreement in any material respect. The Paying Agent shall initially be the Property Trustee, and any co-paying agent chosen by the Property Trustee, and acceptable to the Administrative Trustees and the Depositor. Any Person acting as Paying Agent shall be permitted to resign as Paying Agent upon 30 days’ written notice to the Administrative Trustees, the Property Trustee and the Depositor. In the event that the Property Trustee shall no longer be the Paying Agent or a successor Paying Agent shall resign or its authority to act be revoked, the Administrative Trustees shall appoint a successor that is acceptable to the Property Trustee and the Depositor to act as Paying Agent. The Administrative Trustees shall cause such successor Paying Agent or any additional Paying Agent appointed by the Administrative Trustees to execute and deliver to the Trustees an instrument in which such successor Paying Agent or additional Paying Agent shall agree with the Trustees that as Paying Agent, such successor Paying Agent or additional Paying Agent shall hold all sums, if any, held by it for payment to the Securityholders in trust for the benefit of the Securityholders entitled thereto until such sums shall be paid to such Securityholders. The Paying Agent shall return all unclaimed funds to the Property Trustee and, upon removal of a Paying Agent, such Paying Agent shall also return all funds in its possession to the Property Trustee. The provisions of Sections 8.2, 8.4 and 8.7 hereof shall apply to the Property Trustee also in its role as Paying Agent, for so long as the Property Trustee shall act as Paying Agent and, to the extent applicable, to any other Paying Agent appointed hereunder. Any reference in this Agreement to the Paying Agent shall include any co-paying agent unless the context requires otherwise.

Section 5.10 Ownership of Common Securities by Depositor.

On the Closing Date, the Depositor shall acquire and retain beneficial and record ownership of all of the Common Securities then issued by the Trust, in an amount equal to at least 3% of the total capital of the Trust. To the fullest extent permitted by law, any attempted transfer of the Common Securities (other than a transfer in connection with a merger or consolidation of the Depositor into another corporation pursuant to Section 12.1 of the Indenture) shall be void. The Administrative Trustees shall cause each Common Securities Certificate issued to the Depositor to contain a legend stating “TO THE EXTENT PERMITTED BY APPLICABLE LAW THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT IN COMPLIANCE WITH SECTION 5.10 OF THE TRUST AGREEMENT.”

Section 5.11 Trust Securities Certificates.

(a) Trust Preferred Securities Certificates representing a specified number of Trust Preferred Securities shall be issued to the Persons entitled thereto in the form of Definitive Trust Preferred Securities Certificates.

(b) A single Common Securities Certificate representing the Common Securities shall be issued to the Depositor in the form of a definitive Common Securities Certificate.

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(c) Nothing in this Section 5.11 withstanding, if at any time subsequent to the date of issuance of the Definitive Trust Preferred Securities Certificates, a majority (based upon Liquidation Amounts) of the Trust Securities then Outstanding request registration of such Definitive Trust Preferred Securities Certificates with the Depository Trust Company (“DTC”), then all Holders shall submit the Definitive Trust Preferred Securities Certificates to the Administrative Trustees and the Administrative Trustees shall collect and otherwise do all things reasonably required to so register such Trust Preferred Securities with the DTC as book-entry only non-certificated Trust Preferred Securities (“Registration”). Upon Registration, whether or not the Definitive Trust Preferred Securities Certificates have been submitted to the Administrative Trustees pursuant to this Section 5.11(c), all Definitive Trust Preferred Securities Certificates shall be deemed cancelled and all Trust Securities then Outstanding shall be issued as book-entry only non-certificated Trust Preferred Securities. In the event the Trust Preferred Securities are to become book-entry in accordance with this Section 5.11(c), the Depositor and the Administrative Trustees shall be authorized to amend this Agreement, as provided in Section 10.2(b), with the consent of the Securities Registrar, such consent not to be unreasonably withheld, so as to permit the issuance of a global Trust Preferred Certificate that (i) shall represent, and shall be denominated in an amount equal to the aggregate principal amount of the outstanding Trust Preferred Securities, (ii) shall be registered in the name of DTC or its nominee, (iii) shall be executed and authenticated in accordance with such amendment and delivered by the Administrative Trustees to DTC or pursuant to its instruction, and (iv) shall bear a legend substantially as set forth in such amendment. Such amendment shall contain such other provisions as are customary for declarations of trust containing securities that may be issued in book-entry form.

Section 5.12 [Reserved].

Section 5.13 Rights of Securityholders.

(a) The legal title to the Trust Property is vested exclusively in the Property Trustee (in its capacity as such) in accordance with Section 2.9 hereof, and the Securityholders shall not have any right or title therein other than the undivided beneficial interest in the assets of the Trust conferred by their Trust Securities and they shall have no right to call for any partition or division of property, profits or rights of the Trust except as described below. The Trust Securities shall be personal property giving only the rights specifically set forth therein and in this Trust Agreement. The Trust Securities shall have no preemptive or similar rights. When issued and delivered to Holders of the Trust Preferred Securities against payment of the purchase price therefor, the Trust Preferred Securities shall be fully paid and nonassessable preferred undivided beneficial interests in the assets of the Trust. The Holders of the Trust Preferred Securities, in their capacities as such, shall be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware.

(b) For so long as any Trust Preferred Securities remain Outstanding, if, upon a Debenture Event of Default, the Debenture Trustee fails or the holders of not less than 25% in principal amount of the outstanding Debentures fail to declare the principal of all

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of the Debentures to be immediately due and payable, the Holders of at least 25% in Liquidation Amount of the Trust Preferred Securities then Outstanding shall have such right by a notice in writing to the Depositor and the Debenture Trustee; and upon any such declaration such principal amount of and the accrued interest on all of the Debentures shall become immediately due and payable, provided that the payment of principal and interest on such Debentures shall remain subordinated to the extent provided in the Indenture.

(c) For so long as any Trust Preferred Securities remain Outstanding, upon a Debenture Event of Default arising from the failure to pay interest or principal on the Debentures, the Holders of any Trust Preferred Securities then Outstanding shall, to the fullest extent permitted by law, have the right to directly institute proceedings for enforcement of payment to such Holders of principal of or interest on the Debentures having a principal amount equal to the Liquidation Amount of the Trust Preferred Securities of such Holders.

ARTICLE VI

ACTS OF SECURITYHOLDERS; MEETINGS; VOTING

Section 6.1 Limitations on Voting Rights.

(a) Except as otherwise provided in this Section 6.1, in Sections 5.13, 8.11 and 10.2 hereof and in the Indenture and as otherwise required by law, no Holder of Trust Preferred Securities shall have any right to vote or in any manner otherwise control the administration, operation and management of the Trust or the obligations of the parties hereto, nor shall anything herein set forth, or contained in the terms of the Trust Securities Certificates, be construed so as to constitute the Securityholders from time to time as partners or members of an association.

(b) So long as any Debentures are held by the Property Trustee on behalf of the Trust, the Trustees shall not (i) direct the time, method and place of conducting any proceeding for any remedy available to the Debenture Trustee, or executing any trust or power conferred on the Debenture Trustee with respect to such Debentures; (ii) waive any past default which is waivable under Article VII of the Indenture; (iii) exercise any right to rescind or annul a declaration that the principal of all the Debentures shall be due and payable; or (iv) consent to any amendment, modification or termination of the Indenture or the Debentures, where such consent shall be required, without, in each case, obtaining the prior approval of the Holders of at least a Majority in Liquidation Amount of all Outstanding Trust Preferred Securities; provided, however, that where a consent under the Indenture would require the consent of each holder of outstanding Debentures affected thereby, no such consent shall be given by the Property Trustee without the prior written consent of each Holder of Outstanding Trust Preferred Securities. The Trustees shall not revoke any action previously authorized or approved by a vote of the Holders of the Outstanding Trust Preferred Securities, except by a subsequent vote of the Holders of the Outstanding Trust Preferred Securities. The Property Trustee shall notify each Holder of the Outstanding Trust Preferred Securities of any notice of default received from the

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Debenture Trustee with respect to the Debentures. In addition to obtaining the foregoing approvals of the Holders of the Trust Preferred Securities, prior to taking any of the foregoing actions, the Trustees shall, at the expense of the Depositor, obtain an Opinion of Counsel experienced in such matters to the effect that the Trust shall continue to be classified as a grantor trust and not as an association taxable as a corporation for United States federal income tax purposes on account of such action.

(c) If any proposed amendment to the Trust Agreement provides for, or the Trustees otherwise propose to effect, (i) any action that would adversely affect in any material respect the powers, preferences or special rights of the Holders of the Trust Preferred Securities, whether by way of amendment to the Trust Agreement or otherwise; or (ii) the dissolution, winding-up or termination of the Trust, other than pursuant to the terms of this Trust Agreement, then the Holders of Outstanding Trust Preferred Securities as a class shall be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of the Holders of at least a Majority in Liquidation Amount of the Outstanding Trust Preferred Securities. No amendment to this Trust Agreement may be made if, as a result of such amendment, the Trust would cease to be classified as a grantor trust or would be classified as an association taxable as a corporation for United States federal income tax purposes.

Section 6.2 Notice of Meetings.

Notice of all meetings of the Holder/Holders of the Trust Preferred Securities, stating the time, place and purpose of the meeting, shall be given by the Administrative Trustees pursuant to Section 10.8 hereof to each Holder of the Trust Preferred Securities of record, at his registered address, at least 15 days and not more than 90 days before the meeting. At any such meeting, any business properly before the meeting may be so considered whether or not stated in the notice of the meeting. Any adjourned meeting may be held as adjourned without further notice.

Section 6.3 Meetings of Holder/Holders of the Trust Preferred Securities.

(a) No annual meeting of Securityholders is required to be held. The Administrative Trustees, however, shall call a meeting of Securityholders to vote on any matter in respect of which Holder/Holders of the Trust Preferred Securities are entitled to vote upon the written request of the Holders of the Trust Preferred Securities of 25% of the Outstanding Trust Preferred Securities (based upon their aggregate Liquidation Amount) and the Administrative Trustees or the Property Trustee may, at any time in their discretion, call a meeting of Holders of the Trust Preferred Securities to vote on any matters as to which the Holders of the Trust Preferred Securities are entitled to vote.

(b) Holders of record of 50% of the Outstanding Trust Preferred Securities (based upon their aggregate Liquidation Amount), present in person or by proxy, shall constitute a quorum at any meeting of Securityholders.

(c) If a quorum is present at a meeting, an affirmative vote by the Holders of the Trust Preferred Securities of record present, in person or by proxy, holding not less than a majority of the Trust Preferred Securities (based upon their aggregate Liquidation

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Amount) held by the Holders of the Trust Preferred Securities of record present, either in person or by proxy, at such meeting shall constitute the action of the Securityholders, unless this Trust Agreement requires a greater number of affirmative votes.

Section 6.4 Voting Rights.

Securityholders shall be entitled to one vote for each $1,000 of Liquidation Amount represented by their Trust Securities (with any fractional multiple thereof rounded up or down as the case may be to the closest integral multiple) in respect of any matter as to which such Securityholders are entitled to vote.

Section 6.5 Proxies, etc.

At any meeting of Securityholders, any Securityholder entitled to vote thereat may vote by proxy, provided that no proxy, shall be voted at any meeting unless it shall have been placed on file with the Administrative Trustees, or with such other officer or agent of the Trust as the Administrative Trustees may direct, for verification prior to the time at which such vote shall be taken. Only Holders shall be entitled to vote. When Trust Securities are held jointly by several persons, any one of them may vote at any meeting in person or by proxy in respect of such Trust Securities, but if more than one of them shall be present at such meeting in person or by proxy, and such joint owners or their proxies so present disagree as to any vote to be cast, such vote shall not be received in respect of such Trust Securities. A proxy purporting to be executed by or on behalf of a Securityholder shall be deemed valid unless challenged at or prior to its exercise, and, the burden of proving invalidity shall rest on the challenger. No proxy shall be valid more than three years after its date of execution.

Section 6.6 Securityholder Action by Written Consent.

Any action which may be taken by Securityholders at a meeting may be taken without a meeting if Securityholders holding not less than a majority of all Outstanding Trust Securities (based upon their aggregate Liquidation Amount) entitled to vote in respect of such action, or such larger proportion thereof (based upon their aggregate Liquidation Amount) as shall be required by any express provision of this Trust Agreement, shall consent to the action in writing.

Section 6.7 Record Date for Voting and Other Purposes.

For the purposes of determining the Securityholders who are entitled to notice of and to vote at any meeting or by written consent, or to participate in any Distribution on the Trust Securities in respect of which a record date is not otherwise provided for in this Trust Agreement, or for the purpose of any other action, the Administrative Trustees or the Property Trustee may from time to time fix a date, not more than 90 days prior to the date of any meeting of Securityholders or the payment of Distribution or other action, as the case may be, as a record date for the determination of the identity of the Securityholders of record for such purposes.

Section 6.8 Acts of Securityholders.

(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Trust Agreement to be given, made or taken by

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Securityholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Securityholders in person or by an agent duly appointed in writing; and, except as otherwise expressly provided herein, such action shall become effective when such instrument or instruments are delivered to an Administrative Trustee. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Securityholders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Trust Agreement and conclusive in favor of the Trustees, if made in the manner provided in this Section 6.8.

(b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which any Trustee receiving the same deems sufficient.

(c) The ownership of Trust Preferred Securities shall be proved by the Securities Register.

(d) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Securityholder of any Trust Security shall bind every future Securityholder of the same Trust Security and the Securityholder of every Trust Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustees or the Trust in reliance thereon, whether or not notation of such action is made upon such Trust Security.

(e) Without limiting the foregoing, a Securityholder entitled hereunder to take any action hereunder with regard to any particular Trust Security may do so with regard to all or any part of the Liquidation Amount of such Trust Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such Liquidation Amount.

(f) A Securityholder may institute a legal proceeding directly against the Depositor under the Guarantee to enforce its rights under the Preferred Securities Guarantee without first instituting a legal proceeding against the Guarantee Trustee (as defined in the Preferred Securities Guarantee), the Trust or any Person.

Section 6.9 Inspection of Records.

Upon reasonable notice to the Administrative Trustees and the Property Trustee, the records of the Trust shall be open to inspection at the principal executive office of the Trust (as indicated in Section 2.2 hereof) by Holders of the Trust Securities during normal business hours for any purpose reasonably related to such Securityholder’s interest as a Securityholder.

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ARTICLE VII

REPRESENTATIONS AND WARRANTIES

Section 7.1 Representations and Warranties of the Bank and the Property Trustee.

The Bank and the Property Trustee, each severally on behalf of and as to itself, as of the date hereof, and each successor Property Trustee at the time of the successor Property Trustee’s acceptance of its appointment as Property Trustee hereunder (in the case of a successor Property Trustee, the term “Bank” as used herein shall be deemed to refer to such successor Property Trustee in its separate capacity), hereby represents and warrants (as applicable) for the benefit of the Depositor and the Securityholders that:

(a) the Bank is a national banking association with its principal place of business in the State of Florida and is duly organized and validly existing under the laws of the United States of America or, with respect to a successor Property Trustee, either a national banking association or a state chartered bank and trust company;

(b) the Bank and Property Trustee have full power, authority and legal right to execute, deliver and perform their obligations under this Trust Agreement and have taken all necessary action to authorize the execution, delivery and performance by each of them of this Trust Agreement;

(c) this Trust Agreement has been duly authorized, executed and delivered by the Property Trustee and constitutes the valid and legally binding agreement of the Property Trustee enforceable against it in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles;

(d) the execution, delivery and performance by the Property Trustee of this Trust Agreement has been duly authorized by all necessary corporate or other action on the part of the Property Trustee and does not require any approval of stockholders of the Bank and such execution, delivery and performance shall not (i) violate the Bank’s charter or by-laws; (ii) violate any provision of, or constitute, with or without notice or lapse of time, a default under, or result in the creation or imposition of, any Lien on any properties included in the Trust Property pursuant to the provisions of, any indenture, mortgage, credit agreement, license or other agreement or instrument to which the Property Trustee or the Bank is a party or by which it is bound; or (iii) violate any law, governmental rule or regulation of the United States or the State of Florida, as the case may be, governing the banking or trust powers of the Bank or the Property Trustee (as appropriate in context) or any order, judgment or decree applicable to the Property Trustee or the Bank;

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(e) neither the authorization, execution or delivery by the Property Trustee of this Trust Agreement nor the consummation of any of the transactions by the Property Trustee contemplated herein or therein requires the consent or approval of, the giving of notice to, the registration with or the taking of any other action with respect to any governmental authority or agency under any existing federal law governing the banking or trust powers of the Bank or the Property Trustee, as the case may be, under the laws of the United States or the State of Florida, other than the filing of a Certificate of Trust with the Secretary of State of the State of Delaware;

(f) there are no proceedings pending or, to the best of the Property Trustee’s knowledge, threatened against or affecting the Bank or the Property Trustee in any court or before any governmental authority, agency or arbitration board or tribunal which, individually or in the aggregate, would materially and adversely affect the Trust or would question the right, power and authority of the Property Trustee to enter into or perform its obligations as one of the Trustees under this Trust Agreement; and

(g) the Property Trustee is a Person eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus of at least $50,000,000.

Section 7.2 Representations and Warranties of the Delaware Bank and the Resident Trustee.

The Delaware Bank and the Resident Trustee, each severally on behalf of and as to itself, as of the date hereof, and each successor Resident Trustee at the time of the successor Resident Trustee’s acceptance of appointment as Resident Trustee hereunder (the term “Delaware Bank” being used to refer to such successor Resident Trustee in its separate corporate capacity), hereby represents and warrants (as applicable) for the benefit of the Depositor and the Securityholders that:

(a) the Delaware Bank is either a national banking association or Delaware banking corporation duly organized, validly existing and in good standing under applicable laws of the United States of America and the State of Delaware;

(b) the Resident Trustee has full power, authority and legal right to execute, deliver and perform its obligations under this Trust Agreement and has taken all necessary action to authorize the execution, delivery and performance by it of this Trust Agreement;

(c) this Trust Agreement has been duly authorized, executed and delivered by the Resident Trustee and constitutes the valid and legally binding agreement of the Resident Trustee enforceable against it in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors, rights and to general equity principles;

(d) the execution, delivery and performance by the Resident Trustee of this Trust Agreement has been duly authorized by all necessary corporate or other action on the part of the Resident Trustee and does not require any approval of stockholders of the

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Delaware Bank and such execution, delivery and performance shall not (i) violate the Delaware Bank’s charter or by-laws; (ii) violate any provision of, or constitute, with or without notice or lapse of time, a default under, or result in the creation or imposition of, any Lien on any properties included in the Trust Property pursuant to the provisions of, any indenture, mortgage, credit agreement, license or other agreement or instrument to which the Delaware Bank or the Resident Trustee is a party or by which it is bound; or (iii) violate any law, governmental rule or regulation of the United States or the State of Florida, as the case may be, governing the banking or trust powers of the Delaware Bank or the Resident Trustee (as appropriate in context) or any order, judgment or decree applicable to the Delaware Bank or the Resident Trustee;

(e) neither the authorization, execution or delivery by the Resident Trustee of this Trust Agreement nor the consummation of any of the transactions by the Resident Trustee contemplated herein or therein requires the consent or approval of, the giving of notice to, the registration with or the taking of any other action with respect to any governmental authority or agency under any existing federal law governing the banking or trust powers of the Delaware Bank or the Resident Trustee, as the case may be, under the laws of the United States or the State of Florida, other than the filing of the Certificate of Trust with the Secretary of State of the State of Delaware; and

(f) there are no proceedings pending or, to the best of the Resident Trustee’s knowledge, threatened against or affecting the Delaware Bank or the Resident Trustee in any court or before any governmental authority, agency or arbitration board or tribunal which, individually or in the aggregate, would materially and adversely affect the Trust or would question the right, power and authority of the Resident Trustee to enter into or perform its obligations as one of the Trustees under this Trust Agreement.

Section 7.3 Representations and Warranties of Depositor.

The Depositor hereby represents and warrants for the benefit of the Securityholders that:

(a) the Trust Securities Certificates issued on the Closing Date on behalf of the Trust have been duly authorized and, shall have been, duly and validly executed, issued and delivered by the Administrative Trustees pursuant to the terms and provisions of, and in accordance with the requirements of, this Trust Agreement and the Securityholders shall be, as of such date, entitled to the benefits of this Trust Agreement; and

(b) there are no taxes, fees or other governmental charges payable by the Trust (or the Trustees on behalf of the Trust) under the laws of the State of Delaware or any political subdivision thereof in connection with the execution, delivery and performance by the Bank, the Property Trustee or the Resident Trustee, as the case may be, of this Trust Agreement.

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ARTICLE VIII

TRUSTEES

Section 8.1 Number of Trustees.

The number of Trustees initially shall be Four (4), and:

(a) at any time before the issuance of any Trust Securities, the Company may, by written instrument, increase or decrease the number of Trustees; and

(b) after the issuance of any Trust Securities, the number of Trustees may be increased or decreased by vote of the Holders of a Majority in Liquidation Amount of the Common Securities voting as a class at a meeting of the Holders of the Common Securities or pursuant to written consent; provided, however, that, the number of Trustees shall in no event be less than Four (4); provided further that (1) one Resident Trustee, which, in the case of a natural person, shall be a person who is a resident of the State of Delaware or that, if not a natural person, is an entity which has its principal place of business in the State of Delaware; (2) there shall be at least one Trustee who is an officer of the Company and who shall serve as an Administrative Trustee; and (3) one Trustee shall be the Property Trustee, and such Property Trustee may also serve as Resident Trustee if it meets the applicable requirements.

(c) If a Trustee ceases to hold office for any reason and the number of Administrative Trustees is not reduced pursuant to Section 8.1(a) or (b), or if the number of Trustees is increased pursuant to Section 8.1(a) or (b), a vacancy shall occur. The vacancy shall be filled with a Trustee appointed in accordance with Section 8.11 hereof.

(d) The death, resignation, retirement, removal, bankruptcy, incompetence or incapacity to perform the duties of a Trustee shall not operate to terminate, dissolve or annul the Trust. Whenever a vacancy in the number of Administrative Trustees shall occur, until such vacancy is filled by the appointment of an Administrative Trustee in accordance with Section 8.11 hereof, the Administrative Trustees in office, regardless of their number (and notwithstanding any other provision of this Agreement), shall have all the powers granted to the Administrative Trustees and shall discharge all the duties imposed upon the Administrative Trustees by this Trust Agreement.

Section 8.2 Certain Duties and Responsibilities.

(a) The duties and responsibilities of the Trustees shall be as provided by this Trust Agreement and, in the case of the Property Trustee, also by the Trust Indenture Act, if applicable. Notwithstanding the foregoing, no provision of this Trust Agreement shall require any Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. No Administrative Trustee nor the Resident Trustee shall be liable for its act or omissions hereunder except as a result of its own gross negligence or willful misconduct. The

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Property Trustee’s liability shall be determined under the Trust Indenture Act, if applicable, and as provided by this Trust Agreement. Whether or not therein expressly so provided, every provision of this Trust Agreement relating to the conduct or affecting the liability of or affording protection to the Trustees shall be subject to the provisions of this Section 8.2. To the extent that, at law or in equity, a Trustee has duties (including fiduciary duties) and liabilities relating thereto to the Trust or to the Securityholders, such Trustee shall not be liable to the Trust or to any Securityholder for such Trustee’s good faith reliance on the provisions of this Trust Agreement. The provisions of this Trust Agreement, to the extent that they restrict the duties and liabilities of a Trustee otherwise existing at law or in equity, are agreed by the Depositor and the Securityholders to replace such other duties and liabilities of a Trustee, as the case may be.

(b) All payments made by the Property Trustee or a Paying Agent in respect of the Trust Securities shall be made only from the revenue and proceeds from the Trust Property and only to the extent that there shall be sufficient revenue or proceeds from the Trust Property to enable the Property Trustee or a Paying Agent to legally make payments in accordance with the terms hereof. Each Securityholder, by its acceptance of a Trust Security, agrees that it shall look solely to the revenue and proceeds from the Trust Property to the extent legally available for distribution to it as herein provided and that the Trustees are not personally liable to it for any amount distributable in respect of any Trust Security or for any other liability in respect of any Trust Security. This Section 8.2(b) does not limit the liability of the Trustees expressly set forth elsewhere in this Trust Agreement or, in the case of the Property Trustee, in the Trust Indenture Act, if applicable.

(c) No provision of this Trust Agreement shall be construed to relieve the Property Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

(i) the Property Trustee shall not be liable for any error of judgment made in good faith by an authorized officer of the Property Trustee, unless it shall be proved that the Property Trustee was negligent in ascertaining the pertinent facts;

(ii) the Property Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a majority in Liquidation Amount of the Trust Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Property Trustee, or exercising any trust or power conferred upon the Property Trustee under this Trust Agreement;

(iii) the Property Trustee’s sole duty with respect to the custody, safe keeping and physical preservation of the Debentures and the Payment Account shall be to deal with such property in a similar manner as the Property Trustee deals with similar property for its own account, subject to the protections and limitations on liability afforded to the Property Trustee under this Trust Agreement and the Trust Indenture Act, if applicable;

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(iv) the Property Trustee shall not be liable for any interest on any money received by it except as it may otherwise agree with the Depositor and money held by the Property Trustee need not be segregated from other funds held by it except in relation to the Payment Account maintained by the Property Trustee pursuant to Section 3.1 hereof and except to the extent otherwise required by law; and

(v) the Property Trustee shall not be responsible for monitoring the compliance by the Administrative Trustees or the Depositor with their respective duties under this Trust Agreement, nor shall the Property Trustee be liable for the negligence, default or misconduct of the Administrative Trustees or the Depositor.

Section 8.3 Certain Notices.

(a) Within five Business Days after a Responsible Officer of the Property Trustee has actual knowledge of the occurrence of any Event of Default, the Property Trustee shall transmit, in the manner and to the extent provided in Section 10.8 hereof, notice of such Event of Default to the Securityholders, the Administrative Trustees and the Depositor, unless such Event of Default shall have been cured or waived. For purposes of this Section 8.3, the term “Event of Default” means any event that is, or after notice or lapse of time or both would become, an Event of Default.

(b) The Administrative Trustees shall transmit, to the Securityholders in the manner and to the extent provided in Section 10.8 hereof, notice of the Depositor’s election to begin or further extend an Extended Interest Payment Period on the Debentures (unless such election shall have been revoked) within the time specified for transmitting such notice to the holders of the Debentures pursuant to the Indenture as originally executed.

Section 8.4 Certain Rights of the Property Trustee.

(a) the Property Trustee may rely and shall be protected in acting or refraining from acting in good faith upon any resolution, Opinion of Counsel, certificate, written representation of a Holder or transferee, certificate of auditors or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, appraisal, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

(b) if (i) in performing its duties under this Trust Agreement the Property Trustee is required to decide between alternative courses of action; or (ii) in construing any of the provisions of this Trust Agreement, the Property Trustee finds the same ambiguous or inconsistent with other provisions contained herein; or (iii) the Property Trustee is unsure of the application of any provision of this Trust Agreement, then, except as to any matter as to which the Holders are entitled to vote under the terms of this

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Trust Agreement, the Property Trustee shall deliver a notice to the Depositor requesting written instructions of the Depositor as to the course of action to be taken and the Property Trustee shall take such action, or refrain from taking such action, as the Property Trustee shall be instructed in writing to take, or to refrain from taking, by the Depositor; provided, however, that if the Property Trustee does not receive such instructions of the Depositor within ten (10) Business Days after it has delivered such notice, or such reasonably shorter period of time set forth in such notice (which to the extent practicable shall not be less than two (2) Business Days), it may, but shall be under no duty to, take or refrain from taking such action not inconsistent with this Trust Agreement as it shall deem advisable and in the best interests of the Securityholders, in which event the Property Trustee shall have no liability except for its own bad faith, negligence or willful misconduct;

(c) any direction or act of the Depositor or the Administrative Trustees contemplated by this Trust Agreement shall be sufficiently evidenced by an Officers’ Certificate;

(d) whenever in the administration of this Trust Agreement, the Property Trustee shall deem it desirable that a matter be established before undertaking, suffering or omitting any action hereunder, the Property Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and conclusively rely upon an Officer’s Certificate which, upon receipt of such request, shall be promptly delivered by the Depositor or the Administrative Trustees;

(e) the Property Trustee shall have no duty to see to any recording, filing or registration of any instrument (including any financing or continuation statement, or, except as provided in Section 4.5 hereof or any filing under tax or securities laws) or any rerecording, refiling or reregistration thereof;

(f) the Property Trustee may consult with counsel of its choice (which counsel may be counsel to the Depositor or any of its Affiliates, and may include any of its employees) and the written advice of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon and, in accordance with such advice, the Property Trustee shall have the right at any time to seek instructions concerning the administration of this Trust Agreement from any court of competent jurisdiction;

(g) the Property Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Trust Agreement at the request or direction of any of the Securityholders pursuant to this Trust Agreement, unless such Securityholders shall have offered to the Property Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction;

(h) the Property Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, debenture, note or other evidence

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of indebtedness or other paper or document, but the Property Trustee may make such further inquiry or investigation into such facts or matters as it may determine in its sole discretion to be appropriate;

(i) the Property Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through its agents or attorneys, provided that the Property Trustee shall be responsible for its own negligence or recklessness with respect to selection of any agent or attorney appointed by it hereunder;

(j) whenever in the administration of this Trust Agreement the Property Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder the Property Trustee (i) may request instructions from the Holders of the Trust Securities which instructions may only be given by the Holders of the same proportion in Liquidation Amount of the Trust Securities as would be entitled to direct the Property Trustee under the terms of the Trust Securities in respect of such remedy, right or action; (ii) may refrain from enforcing such remedy or right or taking such other action until such instructions are received; and (iii) shall be protected in acting in accordance with such instructions; and

(k) except as otherwise expressly provided by this Trust Agreement, the Property Trustee shall not be under any obligation to take any action that is discretionary under the provisions of this Trust Agreement. No provision of this Trust Agreement shall be deemed to impose any duty or obligation on the Property Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it, in any jurisdiction in which it shall be illegal, or in which the Property Trustee shall be unqualified or incompetent in accordance with applicable law, to perform any such act or acts, or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Property Trustee shall be construed to be a duty.

Section 8.5 Not Responsible for Recitals or Issuance of Securities.

The Recitals contained herein and in the Trust Securities Certificates shall be taken as the statements of the Trust, and the Trustees do not assume any responsibility for their correctness. The Trustees shall not be accountable for the use or application by the Depositor of the proceeds of the Debentures.

Section 8.6 May Hold Securities.

Any Trustee or any other agent of any Trustee or the Trust, in its individual or any other capacity, may become the owner or pledgee of Trust Securities and, subject to Sections 8.9 and 8.14 hereof and except as provided in the definition of the term “Outstanding” in Article I, may otherwise deal with the Trust with the same rights it would have if it were not a Trustee or such other agent.

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Section 8.7 Compensation; Indemnity; Fees.

The Depositor agrees:

(a) to pay to the Trustees from time to time reasonable compensation for all services rendered by them hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust), in the case of the Property Trustee, as set forth in a written agreement between the Depositor and the Property Trustee;

(b) except as otherwise expressly provided herein, to reimburse the Trustees upon request for all documented reasonable expenses, disbursements and advances incurred or made by the Trustees in accordance with any provision of this Trust Agreement (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to such Trustee’s negligence, bad faith or willful misconduct (or, in the case of the Administrative Trustees or the Resident Trustee, any such expense, disbursement or advance as may be attributable to its, his or her gross negligence, bad faith or willful misconduct); and

(c) to indemnify each of the Trustees or any predecessor Trustee for, and to hold the Trustees harmless against, any loss, damage, claims, liability, penalty or expense of any kind or nature whatsoever, arising out of or in connection with the acceptance or administration of this Trust Agreement, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder, except any such expense, disbursement or advance as may be attributable to such Trustee’s negligence, bad faith or willful misconduct (or, in the case of the Administrative Trustees or the Resident Trustee, any such expense, disbursement or advance as may be attributable to its, his or her gross negligence, bad faith or willful misconduct).

No Trustee, other than the Property Trustee, may claim any Lien or charge on any Trust Property as a result of any amount due and unpaid pursuant to this Section 8.7.

Section 8.8 Corporate Property Trustee Required; Eligibility of Trustees.

(a) There shall at all times be a Property Trustee hereunder with respect to the Trust Securities. The Property Trustee shall be a Person that is eligible pursuant to the Trust Indenture Act, as applicable, to act as such and has a combined capital and surplus of at least $50,000,000. If any such Person publishes reports of condition at least annually, pursuant to law or to the requirements of its supervising or examining authority, then for the purposes of this Section 8.8, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Property Trustee with respect to the Trust Securities shall cease to be eligible in accordance with the provisions of this Section 8.8, it shall resign immediately in the manner and with the effect hereinafter specified in this Article VIII. The Property Trustee and the Resident Trustee may be the same Person.

(b) There shall at all times be one or more Administrative Trustees hereunder with respect to the Trust Securities. Each Administrative Trustee shall be either a natural person who is at least 21 years of age or a legal entity that shall act through one or more persons authorized to bind that entity.

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(c) There shall at all times be a Resident Trustee with respect to the Trust Securities. The Resident Trustee shall either be (i) a natural person who is at least 21 years of age and a resident of the State of Delaware; or (ii) a legal entity with its principal place of business in the State of Delaware and that otherwise meets the requirements of applicable Delaware law that shall act through one or more persons authorized to bind such entity.

Section 8.9 Conflicting Interests.

If the Property Trustee has or shall acquire any “conflicting interest” within the meaning of Section 310(b) of the Trust Indenture Act, the Property Trustee and the Holder of the Common Securities (as if it were the obligor referred to in Section 310(b) of the Trust Indenture Act) shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act, if the Trust Indenture Act is then applicable to the Indenture.

Section 8.10 Co-Trustees and Separate Trustee.

(a) Unless an Event of Default shall have occurred and be continuing, at any time or times, for the purpose of meeting the legal requirements of the Trust Indenture Act, if then applicable, or of any jurisdiction in which any part of the Trust Property may at the time be located, the Depositor shall have power to appoint, and upon the written request of the Property Trustee, the Depositor shall for such purpose join with the Property Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to appoint, one or more Persons approved by the Property Trustee either to act as co-trustee, jointly with the Property Trustee, of all or any part of such Trust Property, or to the extent required by law to act as separate trustee of any such property, in either case with such powers as may be provided in the instrument of appointment, and to vest in such Person or Persons in the capacity aforesaid, any property, title, right or power deemed necessary or desirable, subject to the other provisions of this Section 8.10. If the Depositor does not join in such appointment within 15 days after the receipt by it of a request so to do, or in case a Debenture Event of Default has occurred and is continuing, the Property Trustee alone shall have power to make such appointment. Any co-trustee or separate trustee appointed pursuant to this Section 8.10 shall either be (i) a natural person who is at least 21 years of age and a resident of the United States; or (ii) a legal entity with its principal place of business in the United States that shall act through one or more persons authorized to bind such entity.

(b) Should any written instrument from the Depositor be required by any co-trustee or separate trustee so appointed for more fully confirming to such co-trustee or separate trustee such property, title, right, or power, any and all such instruments shall, conform to the terms set forth herein.

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(c) Every co-trustee or separate trustee shall, to the extent permitted by law, but to such extent only, be appointed subject to the following terms, namely:

(i) The Trust Securities shall be executed and delivered and all rights, powers, duties and obligations hereunder in respect of the custody of securities, cash and other personal property held by, or required to be deposited or pledged with, the Trustees specified hereunder, shall be exercised, solely by such Trustees and not by such co-trustee or separate trustee.

(ii) The rights, powers, duties and obligations hereby conferred or imposed upon the Property Trustee in respect of any property covered by such appointment shall be conferred or imposed upon and exercised or performed by the Property Trustee or by the Property Trustee and such co-trustee or separate trustee jointly, as shall be provided in the instrument appointing such co-trustee or separate trustee, except to the extent that under any law of any jurisdiction in which any particular act is to be performed, the Property Trustee shall be incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations shall be exercised and performed by such co-trustee or separate trustee.

(iii) The Property Trustee at any time, by an instrument in writing executed by it, with the written concurrence of the Depositor, may accept the resignation of or remove any co-trustee or separate trustee appointed under this Section 8.10, and, in case a Debenture Event of Default has occurred and is continuing, the Property Trustee shall have the power to accept the resignation of, or remove, any such co-trustee or separate trustee without the concurrence of the Depositor. Upon the written request of the Property Trustee, the Depositor shall join with the Property Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to effectuate such resignation or removal. A successor to any co-trustee or separate trustee so resigned or removed may be appointed in the manner provided in this Section 8.10.

(iv) No co-trustee or separate trustee hereunder shall be personally liable by reason of any act or omission of the Property Trustee or any other trustee hereunder.

(v) The Property Trustee shall not be liable by reason of any act of a co-trustee or separate trustee.

(vi) Any Act of Holders delivered to the Property Trustee shall be deemed to have been delivered to each such co-trustee and separate trustee.

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Section 8.11 Resignation and Removal; Appointment of Successor.

(a) No resignation or removal of any Trustee (the “Relevant Trustee”) and no appointment of a successor Trustee pursuant to this Article VIII shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 8.12 hereof.

(b) Subject to the immediately preceding paragraph, the Relevant Trustee may resign at any time with respect to the Trust Securities by giving written notice thereof to the Securityholders. If the instrument of acceptance by the successor Trustee required by Section 8.12 shall not have been delivered to the Relevant Trustee within 30 days after the giving of such notice of resignation, the Relevant Trustee may petition, at the expense of the Depositor, any court of competent jurisdiction for the appointment of a successor Relevant Trustee with respect to the Trust Securities.

(c) Unless a Debenture Event of Default shall have occurred and be continuing, any Trustee may be removed at any time by Act of the Holder of Common Securities. If a Debenture Event of Default shall have occurred and be continuing, the Property Trustee or the Resident Trustee, or both of them, may be removed at such time by Act of the Holders of a Majority in Liquidation Amount of the Trust Preferred Securities, delivered to the Relevant Trustee (in its individual capacity and on behalf of the Trust). An Administrative Trustee may be removed by the Holder of the Common Securities at any time.

(d) If any Trustee shall resign, be removed or become incapable of acting as Trustee, or if a vacancy shall occur in the office of any Trustee for any cause, at a time when no Debenture Event of Default shall have occurred and be continuing, the Holder of the Common Securities, by Act of the Holder of the Common Securities delivered to the retiring Trustee, shall promptly appoint a successor Trustee or Trustees with respect to the Trust Securities and the Trust, and the successor Trustee shall comply with the applicable requirements of Section 8.12 hereof. If the Property Trustee or the Resident Trustee shall resign, be removed or become incapable of continuing to act as the Property Trustee or the Resident Trustee, as the case may be, at a time when a Debenture Event of Default shall have occurred and is continuing, the Holders, by Act of the Securityholders of a Majority in Liquidation Amount of the Trust Preferred Securities then Outstanding delivered to the retiring Relevant Trustee, shall promptly appoint a successor Relevant Trustee or Trustees with respect to the Trust Securities and the Trust, and such successor Trustee shall comply with the applicable requirements of Section 8.12 hereof. If an Administrative Trustee shall resign, be removed or become incapable of acting as Administrative Trustee, at a time when a Debenture Event of Default shall have occurred and be continuing, the Holder of the Common Securities, by Act of the Holder of the Common Securities delivered to an Administrative Trustee, shall promptly appoint a successor Administrative Trustee or Administrative Trustees with respect to the Trust Securities and the Trust, and such successor Administrative Trustee or Administrative Trustees shall comply with the applicable requirements of Section 8.12 hereof. If no successor Relevant Trustee with respect to the Trust Securities shall have been so appointed by the Holder of the Common Securities or the Holders of the Trust Preferred

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Securities and accepted appointment in the manner required by Section 8.12 hereof, any Securityholder who has been a Securityholder of Trust Securities for at least the past six (6) consecutive months on behalf of himself and all others similarly situated may petition a court of competent jurisdiction for the appointment of a successor Relevant Trustee with respect to the Trust Securities.

(e) The Administrative Trustees shall give notice of each resignation and each removal of a Trustee and each appointment of a successor Trustee to all Securityholders in the manner provided in Section 10.8 hereof and shall give notice to the Depositor. Each notice shall include the name of the successor Relevant Trustee and the address of its Corporate Trust Office if it is the Property Trustee.

(f) Notwithstanding the foregoing or any other provision of this Trust Agreement, in the event any Administrative Trustee or a Resident Trustee who is a natural person dies or becomes, in the opinion of the Depositor, incompetent or incapacitated, the vacancy created by such death, incompetence or incapacity may be filled by (a) the unanimous act of the remaining Administrative Trustees if there are at least two of them; or (b) otherwise by the Depositor (with the successor in each case being a Person who satisfies the eligibility requirement for Administrative Trustees or Resident Trustee, as the case may be, set forth in Section 8.8 hereof).

Section 8.12 Acceptance of Appointment by Successor.

(a) In case of the appointment hereunder of a successor Relevant Trustee with respect to the Trust Securities and the Trust, the retiring Relevant Trustee and each successor Relevant Trustee with respect to the Trust Securities shall execute and deliver an instrument hereto wherein each successor Relevant Trustee shall accept such appointment and which shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Relevant Trustee all the rights, powers, trusts and duties of the retiring Relevant Trustee with respect to the Trust Securities and the Trust and upon the execution and delivery of such instrument the resignation or removal of the retiring Relevant Trustee shall become effective to the extent provided therein and each such successor Relevant Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Relevant Trustee with respect to the Trust Securities and the Trust; but, on request of the Trust or any successor Relevant Trustee such retiring Relevant Trustee shall duly assign, transfer and deliver to such successor Relevant Trustee all Trust Property, all proceeds thereof and money held by such retiring Relevant Trustee hereunder with respect to the Trust Securities and the Trust.

(b) Upon request of any such successor Relevant Trustee, the Trust shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Relevant Trustee all such rights, powers and trusts referred to in the immediately preceding paragraph, as the case may be.

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(c) No successor Relevant Trustee shall accept its appointment unless at the time of such acceptance such successor Relevant Trustee shall be qualified and eligible under this Article VIII.

Section 8.13 Merger, Conversion, Consolidation or Succession to Business.

Any Person into which the Property Trustee, the Resident Trustee or any Administrative Trustee may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which such Relevant Trustee shall be a party, or any Person succeeding to all or substantially all the corporate trust business of such Relevant Trustee, shall be the successor of such Relevant Trustee hereunder, provided such Person shall be otherwise qualified and eligible under this Article VIII, without the execution or filing of any paper or any further act on the part of any of the parties hereto.

Section 8.14 Preferential Collection of Claims Against Depositor or Trust.

If and when the Property Trustee or the Resident Trustee shall be or become a creditor of the Depositor or the Trust (or any other obligor upon the Debentures or the Trust Securities), the Property Trustee or the Resident Trustee, as the case may be, shall be subject to and shall take all actions necessary in order to comply with the provisions of the Trust Indenture Act, if applicable, regarding the collection of claims against the Depositor or Trust (or any such other obligor).

Section 8.15 Reports by Property Trustee.

(a) The Property Trustee shall transmit to Securityholders such reports concerning the Property Trustee and its actions under this Trust Agreement as may be required pursuant to the Trust Indenture Act, if then applicable, at the times and in the manner provided pursuant thereto (it being understood that, with respect to Section 313 thereof, no such report shall be required if none of the events set forth in such Section has occurred during the period to which such report would relate).

(b) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Property Trustee with the Depositor.

(c) The Property Trustee covenants and agrees to transmit by mail, first class postage prepaid, to the Holders of Trust Preferred Securities, as their names and addresses appear on the Securities Register, any information, documents and reports required to be transmitted by the Company pursuant to subsection (b) of Section 8.16 hereof, as soon as practicable after the receipt of such information from the Company.

Section 8.16 Reports to the Property Trustee.

(a) If applicable, the Depositor and the Administrative Trustees on behalf of the Trust shall provide to the Property Trustee such documents, reports and information as required by Section 314 of the Trust Indenture Act, if applicable, and the compliance certificate required by Section 314(a) of the Trust Indenture Act in the form, in the manner and at the times required by Section 314 of the Trust Indenture Act.

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(b) The Company covenants and agrees to transmit to the Property Trustee in the same form as filed with the Federal Reserve (i) its annual audited consolidated financial statements within 90 days following the end of its fiscal year and (ii) its quarterly consolidated financial statements within 45 days after the end of the first three fiscal quarters of each fiscal year; provided, however, that if subsequent to the date hereof, the Company shall become subject to the reporting obligations under Section 13(a) or Section 15(d) of the Exchange Act, the Company shall instead transmit to the Property Trustee the information, documents and reports the Company is required to file with the Securities and Exchange Commission pursuant to Section 13(a) or Section 15(d) of the Exchange Act.

Section 8.17 Evidence of Compliance with Conditions Precedent.

If at any time after the date hereof the Indenture is required to be qualified under the Trust Indenture Act, each of the Depositor and the Administrative Trustees on behalf of the Trust shall provide to the Property Trustee such evidence of compliance with any conditions precedent, if any, provided for in this Trust Agreement that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)(1) of the Trust Indenture Act shall be given in the form of an Officers’ Certificate.

Section 8.18 Delegation of Power.

(a) Any Administrative Trustee may, by power of attorney consistent with applicable law, delegate to any other natural person over the age of 21 his or her power for the purpose of executing any documents contemplated in Section 2.7(a) hereof; and

(b) The Administrative Trustees shall have power to delegate from time to time to such of their number or to the Depositor the doing of such things and the execution of such instruments either in the name of the Trust or the names of the Administrative Trustees or otherwise as the Administrative Trustees may deem expedient, to the extent such delegation is not prohibited by applicable law or contrary to the provisions of this Trust Agreement, as set forth herein.

Section 8.19 Voting.

Except as otherwise provided in this Trust Agreement, the consent or approval of the Administrative Trustees shall require consent or approval by not less than a majority of the Administrative Trustees, unless there are only two, in which case both must consent.

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ARTICLE IX

TERMINATION, LIQUIDATION AND MERGER

Section 9.1 Termination Upon Expiration Date.

Unless earlier dissolved, the Trust shall automatically dissolve on the date which is one month from receipt of final payment due under the Indenture (the “Expiration Date”) and thereafter shall distribute the Trust Property in accordance with Section 9.4 hereof.

Section 9.2 Early Termination.

The first to occur of any of the following events is an “Early Termination Event”, at which time the Trust shall dissolve and commence winding up its affairs:”

(a) the occurrence of a Bankruptcy Event in respect of, or the dissolution or liquidation of, the Depositor;

(b) delivery of written direction to the Property Trustee by the Depositor at any time (which direction is wholly optional and within the discretion of the Depositor, subject to Depositor having received prior approval of the Board of Governors of the Federal Reserve System if so required under applicable guidelines, policies or regulations thereof) to dissolve the Trust and distribute the Debentures to the Securityholders in exchange for the Trust Securities in accordance with Section 9.4 hereof;

(c) the redemption of all of the Trust Preferred Securities in connection with the redemption of all of the Debentures (whether upon a Debenture Redemption Date or the maturity of the Debentures); or

(d) the existence of an order for dissolution of the Trust shall have been entered by a court of competent jurisdiction.

Section 9.3 Termination.

The respective obligations and responsibilities of the Trustees and the Trust created and continued hereby shall terminate upon the latest to occur of the following: (a) the distribution by the Property Trustee to Securityholders upon the liquidation of the Trust pursuant to Section 9.4 hereof, or upon the redemption of all of the Trust Securities pursuant to Section 4.2 hereof, of all amounts required to be distributed hereunder upon the final payment of the Trust Securities; (b) the payment of any expenses owed by the Trust; (c) the discharge of all administrative duties of the Administrative Trustees, including the performance of any tax reporting obligations with respect to the Trust or the Securityholders; and (d) the filing of a Certificate of Cancellation by the Administrative Trustees under the Delaware Statutory Trust Act.

Section 9.4 Liquidation.

(a) If an Early Termination Event specified in clause (a), (b), or (d) of Section 9.2 hereof occurs or upon the Expiration Date, the Trust shall be liquidated by the

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Trustees in accordance with their respective duties hereunder as provided herein as expeditiously as the Trustees determine to be possible by distributing, after satisfaction of liabilities to creditors of the Trust as provided by applicable law, to each Securityholder a Like Amount of Debentures, subject to Section 9.4(d) below. Notice of liquidation shall be given by the Property Trustee by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Liquidation Date to each Holder of Trust Securities at such Holder’s address appearing in the Securities Register. All notices of liquidation shall:

(i) state the Liquidation Date;

(ii) state that from and after the Liquidation Date, the Trust Securities shall no longer be deemed to be Outstanding and any Trust Securities Certificates not surrendered for exchange shall be deemed to represent a Like Amount of Debentures; and

(iii) provide such information with respect to the mechanics by which Holders may exchange Trust Securities Certificates for Debentures, or, if Section 9.4(d) hereof applies, receive a Liquidation Distribution, as the Administrative Trustees or the Property Trustee shall in good faith deem appropriate.

(b) Except where Section 9.2(c) or 9.4(d) hereof applies, in order to effect the liquidation of the Trust and distribution of the Debentures to Securityholders, the Property Trustee shall establish a record date for such distribution (which shall be not more than 45 days prior to the Liquidation Date) and, either itself acting as exchange agent or through the appointment of a separate exchange agent, shall establish such procedures as it shall deem appropriate to effect the distribution of Debentures in exchange for the Outstanding Trust Securities Certificates.

(c) Except where Section 9.2(c) or 9.4(d) hereof applies, after the Liquidation Date, (i) the Trust Securities shall no longer be deemed to be Outstanding; (ii) certificates representing a Like Amount of Debentures shall be issued to Holders of Trust Securities Certificates upon surrender of such certificates to the Administrative Trustees or their agent for exchange; (iii) any Trust Securities Certificates not so surrendered for exchange shall be deemed to represent a Like Amount of Debentures, accruing interest at the rate provided for in the Debentures from the last Distribution Date on which a Distribution was made on such Trust Securities Certificates until such certificates are so surrendered (and until such certificates are so surrendered, no payments of interest or principal shall be made to Holders of Trust Securities Certificates with respect to such Debentures); and (iv) all rights of Securityholders holding Trust Securities shall cease, except the right of such Securityholders to receive Debentures upon surrender of Trust Securities Certificates.

(d) In the event that, notwithstanding the other provisions of this Section 9.4, whether because of an order for dissolution entered by a court of competent jurisdiction or otherwise, distribution of the Debentures in the manner provided herein is determined

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in good faith by the Property Trustee not to be practical, the Trust Property shall be liquidated, and the Trust shall be dissolved, wound-up or terminated, by the Property Trustee in such manner as the Property Trustee determines in good faith. In such event, on the date of the dissolution of the Trust, Securityholders shall be entitled to receive out of the assets of the Trust available for distribution to Securityholders, after satisfaction of liabilities to creditors of the Trust as provided by applicable law, an amount equal to the Liquidation Amount per Trust Security plus accumulated and unpaid Distributions thereon to the date of payment (such amount being the “Liquidation Distribution”). If, upon any such dissolution, the Liquidation Distribution can be paid only in part because the Trust has insufficient assets available to pay in full the aggregate Liquidation Distribution, then, subject to the next succeeding sentence, the amounts payable by the Trust on the Trust Securities shall be paid on a pro rata basis (based upon Liquidation Amounts). The Holder of the Common Securities shall be entitled to receive Liquidation Distributions upon any such dissolution pro rata (determined as aforesaid) with Holders of Trust Preferred Securities, except that, if a Debenture Event of Default has occurred and is continuing, the Trust Preferred Securities shall have a priority over the Common Securities.

Section 9.5 Mergers, Consolidations, Amalgamations or Replacements of the Trust.

The Trust may not merge with or into, consolidate, amalgamate, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to any corporation or other Person, except pursuant to this Section 9.5. At the request of the Depositor, with the consent of the Administrative Trustees and without the consent of the Holders of the Trust Preferred Securities, the Property Trustee or the Resident Trustee, the Trust may merge with or into, consolidate, amalgamate, be replaced by or convey, transfer or lease its properties and assets substantially as an entirety to a trust organized as such under the laws of any state; provided, that:

(a) such successor entity either:

(i) expressly assumes all of the obligations of the Trust with respect to the Trust Preferred Securities; or

(ii) substitutes for the Trust Preferred Securities other securities having substantially the same terms as the Trust Preferred Securities (the “Successor Securities”) so long as the Successor Securities rank the same as the Trust Preferred Securities rank in priority with respect to distributions and payments upon liquidation, redemption and otherwise.

(b) the Depositor expressly appoints a trustee of such successor entity possessing substantially the same powers and duties as the Property Trustee as the holder of the Debentures;

(c) the Successor Securities are listed or traded, or any Successor Securities shall be listed or traded upon notification of issuance, on any national securities exchange or other organization on which the Trust Preferred Securities are then listed or quoted, if any;

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(d) such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the Holders of the Trust Preferred Securities (including any Successor Securities) in any material respect;

(e) such successor entity has a purpose substantially identical to that of the Trust;

(f) prior to such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, the Depositor has received an Opinion of Counsel to the effect that:

(i) such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the Holders of the Trust Preferred Securities (including any Successor Securities) in any material respect; and

(ii) following such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, neither the Trust nor such successor entity shall be required to register as an “investment company” under the Investment Company Act; and

(g) the Depositor owns all of the common securities of such successor entity and guarantees the obligations of such successor entity under the Successor Securities at least to the extent provided by the Preferred Securities Guarantee.

Notwithstanding the foregoing, the Trust shall not, except with the consent of Holders of 100% in Liquidation Amount of the Trust Preferred Securities, consolidate, amalgamate, merge with or into, or be replaced by or convey, transfer or lease its properties and assets substantially as an entirety to any other Person or permit any other Person to consolidate, amalgamate, merge with or into, or replace it if such consolidation, amalgamation, merger or replacement would cause the Trust or the successor entity to be classified as other than a grantor trust for United States federal income tax purposes.

ARTICLE X

MISCELLANEOUS PROVISIONS

Section 10.1 Limitation of Rights of Securityholders.

The death or incapacity of any Person having an interest, beneficial or otherwise, in Trust Securities shall not operate to terminate this Trust Agreement, nor entitle the legal representatives or heirs of such Person or any Securityholder for such Person, to claim an accounting, take any action or bring any proceeding in any court for a partition or winding-up of the arrangements contemplated hereby, nor otherwise affect the rights, obligations and liabilities of the parties hereto or any of them.

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Section 10.2 Amendment.

(a) This Trust Agreement may be amended from time to time by the Administrative Trustees and the Depositor, without the consent of any Securityholders, the Property Trustee or the Resident Trustee, (i) as provided in Section 8.12 hereof with respect to acceptance of appointment by a successor Trustee; (ii) to cure any ambiguity, correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Trust Agreement, that shall not be inconsistent with the other provisions of this Trust Agreement; or (iii) to modify, eliminate or add to any provisions of this Trust Agreement to such extent as shall be necessary to ensure that the Trust shall be classified for United States federal income tax purposes as a grantor trust at all times that any Trust Securities are outstanding or to ensure that the Trust shall not be required to register as an “investment company” under the Investment Company Act; provided, however, that in the case of clause (ii), such action shall not adversely affect in any material respect the interests of any Securityholder, and any amendments of this Trust Agreement shall become effective when notice thereof is given to the Securityholders, the Property Trustee and the Resident Trustee.

(b) Except as provided in Section 6.1(c) or Section 10.2(c) hereof, any provision of this Trust Agreement may be amended by the Administrative Trustees and the Depositor (i) with the consent of Securityholders representing not less than a majority (based upon Liquidation Amounts) of the Trust Securities then Outstanding; and (ii) upon receipt by the Trustees of an Opinion of Counsel to the effect that such amendment or the exercise of any power granted to the Trustees in accordance with such amendment shall not affect the Trust’s status as a grantor trust for United States federal income tax purposes or the Trust’s exemption from status of an “investment company” under the Investment Company Act.

(c) In addition to and notwithstanding any other provision in this Trust Agreement, without the consent of each affected Securityholder (such consent being obtained in accordance with Section 6.3 or Section 6.6 hereof), this Trust Agreement may not be amended to (i) change the amount or timing of any Distribution on the Trust Securities or otherwise adversely affect the amount of any Distribution required to be made in respect of the Trust Securities as of a specified date; or (ii) restrict the right of a Securityholder to institute suit for the enforcement of any such payment on or after such date; notwithstanding any other provision herein, without the unanimous consent of the Securityholders (such consent being obtained in accordance with Section 6.3 or 6.6 hereof), this paragraph (c) of this Section 10.2 may not be amended.

(d) Notwithstanding any other provisions of this Trust Agreement, no Trustee shall enter into or consent to any amendment to this Trust Agreement which would cause the Trust to fail or cease to qualify for the exemption from status of an “investment company” under the Investment Company Act or to fail or cease to be classified as a grantor trust for United States federal income tax purposes.

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(e) Notwithstanding anything in this Trust Agreement to the contrary, without the consent of the Depositor, this Trust Agreement may not be amended in a manner which imposes any additional obligation on the Depositor.

(f) In the event that any amendment to this Trust Agreement is made, the Administrative Trustees shall promptly provide to the Depositor a copy of such amendment.

(g) Notwithstanding any other provision of this Trust Agreement, without the consent of the Property Trustee and/or the Resident Trustee, as applicable, this Trust Agreement may not be amended in any manner, and neither the Property Trustee nor the Resident Trustee shall be required to enter into any amendment to this Trust Agreement, which affects the rights, privileges, powers, duties, obligations or immunities of the Property Trustee or the Resident Trustee under this Trust Agreement or the Trust Securities. The Property Trustee shall be entitled to receive an Opinion of Counsel and an Officers’ Certificate stating that any proposed amendment to this Trust Agreement is in compliance with this Trust Agreement.

Section 10.3 Severability.

In case any provision in this Trust Agreement or in the Trust Securities Certificates shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Section 10.4 Governing Law.

THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE SECURITYHOLDERS, THE TRUST AND THE TRUSTEES WITH RESPECT TO THIS TRUST AGREEMENT AND THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF). PROVIDED, HOWEVER, THAT THERE SHALL NOT BE APPLICABLE TO THE PARTIES HEREUNDER OR THIS TRUST AGREEMENT ANY PROVISION OF THE LAWS (COMMON OR STATUTORY) OR THE STATE OF DELAWARE PERTAINING TO TRUSTS THAT RELATE TO OR REGULATE, IN A MANNER INCONSISTENT WITH THE TERMS HEREOF, (A) THE FILING WITH ANY COURT OR GOVERNMENTAL BODY OR AGENCY OF TRUSTEE ACCOUNTS OR SCHEDULES OF TRUSTEE FEES AND CHARGES, (B) AFFIRMATIVE REQUIREMENTS TO POST BONDS FOR TRUSTEES, OFFICERS, AGENTS OR EMPLOYEES OF A TRUST, (C) THE NECESSITY FOR OBTAINING COURT OR OTHER GOVERNMENTAL APPROVAL CONCERNING THE ACQUISITION, HOLDING OR DISPOSITION OF REAL OR PERSONAL PROPERTY, (D) FEES OR OTHER SUMS PAYABLE TO TRUSTEES, OFFICERS, AGENTS OR EMPLOYEES OF A TRUST, (E) THE ALLOCATION OF RECEIPTS AND EXPENDITURES TO INCOME OR PRINCIPAL (F) RESTRICTIONS OR LIMITATIONS ON THE

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PERMISSIBLE NATURE, AMOUNT OR CONCENTRATION OF TRUST INVESTMENTS OR REQUIREMENTS RELATING TO THE TITLING, STORAGE OR OTHER MANNER OF HOLDING OR INVESTING TRUST ASSETS OR (G) THE ESTABLISHMENT OF FIDUCIARY OR OTHER STANDARDS OF RESPONSIBILITY OR LIMITATIONS ON THE ACTS OR POWERS OF TRUSTEES THAT ARE INCONSISTENT WITH THE LIMITATIONS OR AUTHORITIES AND POWERS OF THE TRUSTEES HEREUNDER AS SET FORTH OR REFERENCED IN THIS TRUST AGREEMENT. SECTION 3540 OF TITLE 12 OF THE DELAWARE CODE SHALL NOT APPLY TO THE TRUST. THE PARTIES HERETO HEREBY CONSENT TO (i) THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF DELAWARE AND (ii) SERVICE OF PROCESS BY MAIL IN ACCORDANCE WITH SECTION 10.8 HEREOF.

Section 10.5 Payments Due on Non-Business Day.

If the date fixed for any payment on any Trust Security shall be a day that is not a Business Day, then such payment need not be made on such date but may be made on the next succeeding day which is a Business Day, except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as though made on the date fixed for such payment.

Section 10.6 Successors.

This Trust Agreement shall be binding upon and shall inure to the benefit of any successor to the Depositor, the Trust or the Relevant Trustee(s), including any successor by operation of law. Except in connection with a consolidation, merger or sale involving the Depositor that is permitted under Article XII of the Indenture and pursuant to which the assignee agrees in writing to perform the Depositor’s obligations hereunder, the Depositor shall not assign its obligations hereunder.

Section 10.7 Headings.

The Article and Section headings are for convenience only and shall not affect the construction of this Trust Agreement.

Section 10.8 Reports, Notices and Demands.

Any report, notice, demand or other communication which by any provision of this Trust Agreement is required or permitted to be given or served to or upon any Securityholder or the Depositor may be given or served in writing by deposit thereof, first-class postage prepaid, in the United States mail, hand delivery or facsimile transmission, in each case, addressed, (a) in the case of a Holder of the Trust Preferred Securities, to such Holder of the Trust Preferred Securities as such Securityholder’s name and address may appear on the Securities Register; and (b) in the case of the Holder of the Common Securities or the Depositor, to

Indian River Banking Company,

958 20th Place Vero Beach, Florida 32960,

Attention: Phillip L. Tasker,

Facsimile no.: (772) 563-2353.

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Any notice to Holders of the Trust Preferred Securities shall also be given to such owners as have, within two years preceding the giving of such notice, filed their names and addresses with the Property Trustee for that purpose. Such notice, demand or other communication to or upon a Securityholder shall be deemed to have been sufficiently given or made, for all purposes, upon hand delivery, mailing or transmission.

Any notice, demand or other communication which by any provision of this Trust Agreement is required or permitted to be given or served to or upon the Trust, the Resident Trustee, the Property Trustee or the Administrative Trustees shall be given in writing addressed (until another address is published by the Trust) as follows: (a) with respect to the Property Trustee to Wells Fargo Bank, National Association, 919 Market Street, Suite 700, Wilmington, Delaware 19801, Attention: Corporate Trust Administration; (b) with respect to the Resident Trustee, to Wells Fargo Delaware Trust Company at 919 Market Street, Suite 700, Wilmington, Delaware 19801; and (c) with respect to the Trust or the Administrative Trustees, to them at the address above for notices to the Depositor, marked “Attention: Administrative Trustees of Capital Trust.” Such notice, demand or other communication to or upon the Trust, the Property Trustee, the Resident Trustee or the Administrative Trustees shall be deemed to have been sufficiently given or made only upon actual receipt of the writing by the Trust, the Property Trustee, the Resident Trustee or the Administrative Trustees.

Section 10.9 Agreement not to Petition.

Each of the Trustees and the Depositor agrees for the benefit of the Securityholders that, until at least one year and one day after the Trust has been terminated in accordance with Article IX, they shall not file, or join in the filing of, a petition against the Trust under any bankruptcy, insolvency, reorganization or other similar law (including, without limitation, the United States Bankruptcy Code of 1978, as amended, collectively, “Bankruptcy Laws”) or otherwise join in the commencement of any proceeding against the Trust under any Bankruptcy Law. In the event the Depositor or any of the Trustees takes action in violation of this Section 10.9, the Property Trustee agrees, for the benefit of Securityholders, that at the expense of the Depositor (which expense shall be paid prior to the filing), it shall file an answer with the bankruptcy court or otherwise properly contest the filing of such petition by the Depositor or such Trustee against the Trust or the commencement of such action and raise the defense that the Depositor or such Trustee has agreed in writing not to take such action and should be estopped and precluded therefrom. The provisions of this Section 10.9 shall survive the termination of this Trust Agreement.

Section 10.10 Applicability of Trust Indenture Act; Conflict.

(a) Unless and until the Indenture is required to be qualified under the Trust Indenture Act so that the provisions thereof are applicable, (i) the provisions of the Trust Indenture Act do not apply to this Trust Agreement and are not given effect; and (ii) notwithstanding any other provision of this Trust Agreement (including without limitation Sections 8.2(c), 8.4(b) and (i), 8.7(b) and 8.7(c) hereof), no Trustee shall be liable for its own simple negligence, but shall only be liable for its own gross negligence.

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(b) The Property Trustee shall be the only Trustee which is a trustee for the purposes of the Trust Indenture Act.

(c) If any provision hereof limits, qualifies or conflicts with another provision hereof which is required to be included in this Trust Agreement by any of the provisions of the Trust Indenture Act, and the Trust Indenture Act is then applicable to this Trust Agreement, such required provision shall control. If any provision of this Trust Agreement modifies or excludes any provision of the Trust Indenture Act which may be so modified or excluded, the latter provision shall be deemed to apply to this Trust Agreement as so modified or to be excluded, as the case may be. The application of the Trust Indenture Act to this Trust Agreement shall not affect the nature of the Trust Securities as equity securities representing undivided beneficial interests in the assets of the Trust.

Section 10.11 Acceptance of Terms of Trust Agreement, Guarantee and Indenture.

THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY OR ON BEHALF OF A SECURITYHOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE BY THE SECURITYHOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT AND AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER TERMS OF THE GUARANTEE AND THE INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT OF THE TRUST, SUCH SECURITYHOLDER AND SUCH OTHERS THAT THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE TRUST AND SUCH SECURITYHOLDER AND SUCH OTHERS. WITHOUT LIMITING THE FOREGOING, BY ACCEPTANCE OF A TRUST PREFERRED SECURITY, EACH HOLDER THEREOF SHALL BE DEEMED TO HAVE AGREED TO TREAT, FOR ALL UNITED STATES FEDERAL INCOME TAX AND FINANCIAL ACCOUNTING PURPOSES, THE DEBENTURES AS INDEBTEDNESS OF THE COMPANY AND THE TRUST PREFERRED SECURITIES AS EVIDENCING AN UNDIVIDED PREFERRED BENEFICIAL OWNERSHIP INTEREST IN THE DEBENTURES.

[Remainder of Page Left Intentionally Blank]

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IN WITNESS WHEREOF, this Trust Agreement is dated as set forth below and effective as of the day and year first above written.

Indian River Banking Company
By:	/s/ Paul A. Beindorf
Name:	Paul A. Beindorf
Title:	President & CEO
Date:	September 26, 2002
Wells Fargo Bank, National Association, as Property Trustee
By:	/s/ Edward L. Truitt, Jr.
Name:	Edward L. Truitt, Jr.
Title:	Vice President
Date:
Wells Fargo Delaware Trust Company, as Resident Trustee
By:	/s/ Edward L. Truitt, Jr.
Name:	Edward L. Truitt, Jr.
Title:	Vice President
Date:
/s/ Paul A. Beindorf
Paul A. Beidorf, As Administrative Trustee

[SIGNATURE PAGE TO AMENDED AND RESTATED TRUST AGREEMENT]

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/s/ Diana L. Walker

Diana L. Walker, As Administrative Trustee

/s/ Phillip Tasker

Philip Tasker, As Administrative Trustee

[SIGNATURE PAGE TO AMENDED AND RESTATED TRUST AGREEMENT]

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EXHIBIT A

FORM OF CERTIFICATE OF TRUST

OF

INDIAN RIVER CAPITAL TRUST I

THIS CERTIFICATE OF TRUST OF Indian River Capital Trust I (the “Trust”), is being duly executed and filed by the undersigned, as trustees, to form a statutory trust under the Delaware Statutory Trust Act, 12 Del.C. §§ 3801, et seq. (the “Act).

1. NAME. The name of the statutory trust formed hereby is Indian River Capital Trust I.

2. RESIDENT TRUSTEE. The name and business address of the trustee of the Trust meeting the requirements of Section 3807 of the Act is Wells Fargo Delaware Trust Company, 919 N. Market Street, 7^th Floor, Wilmington, Delaware 19801, Attention: Corporate Trust Administration.

3. EFFECTIVE DATE. This Certificate of Trust will be effective upon filing.

IN WITNESS WHEREOF, each of the undersigned, being a trustee of the Trust, has executed this Certificate of Trust in accordance with the Act.

Paul A. Beindorf, as Administrative Trustee

Diana L. Walker, as Administrative Trustee

Phillip L. Tasker, as Administrative Trustee

WELLS FARGO DELAWARE TRUST

COMPANY, as Resident Trustee

By:

Name:

Title:

A-1

EXHIBIT B

FORM OF COMMON SECURITY CERTIFICATE

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.

TO THE EXTENT PERMITTED BY APPLICABLE LAW THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT IN ACCORDANCE WITH SECTION 5.10 OF THE TRUST AGREEMENT.

Certificate Number                 

Number of Common Securities: 217

Certificate Evidencing Common Securities

of

Indian River Capital Trust I

Common Securities

Indian River Capital Trust I, a statutory business trust created under the laws of the State of Delaware (the “Trust”), hereby certifies that Indian River Banking Company (the “Holder”) is the registered owner of 217 common securities of the Trust representing undivided common beneficial interests in the assets of the Trust and designated the Common Securities (the “Common Securities”). The designations, rights, privileges, restrictions, preferences, and other terms and provisions of the Common Securities are set forth in, and this certificate and the Common Securities represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Amended and Restated Trust Agreement of the Trust effective as of September 30, 2002, as the same may be amended from time to time (the “Trust Agreement”), including the designation of the terms of the Common Securities as set forth therein. The Trust shall furnish a copy of the Trust Agreement to the Holder without charge upon written request to the Trust at its principal place of business or registered office.

Upon receipt of this certificate, the Holder is bound by the Trust Agreement and is entitled to the benefits thereunder.

B-1

IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has executed this certificate effective as of September 30, 2002.

Indian River Capital Trust I
By:
Name:
Title:	Administrative Trustee
Indian River Banking Company
By:
Name:
Title:

B-2

EXHIBIT C

FORM OF AGREEMENT AS TO EXPENSES AND LIABILITIES

AGREEMENT AS TO EXPENSES AND LIABILITIES (this “Agreement”) effective as of September 30, 2002, between Indian River Banking Company, a Florida corporation (the “Company”), and Indian River Capital Trust I, a Delaware statutory trust (the “Trust”).

RECITALS

WHEREAS, the Trust intends to issue its common securities (the “Common Securities”) to, and receive Floating Rate Junior Subordinated Deferrable Interest Debentures due November 7, 2032 (the “Debentures”) from the Company, and to issue and sell Preferred Securities (the “Trust Preferred Securities”) with such powers, preferences and special rights and restrictions as are set forth in the Amended and Restated Trust Agreement of the Trust effective as of September 30, 2002, as the same may be amended from time to time (the “Trust Agreement”).

NOW, THEREFORE, in consideration of the purchase by each holder of the Trust Preferred Securities, which purchase the Company hereby agrees shall benefit the Company and which purchase the Company acknowledges shall be made in reliance upon the execution and delivery of this Agreement, the Company, including in its capacity as holder of the Common Securities, and the Trust hereby agree as follows:

ARTICLE 1

Section 1.1 Guarantee by the Company.

Subject to the terms and conditions hereof, the Company, including in its capacity as holder of the Common Securities, hereby irrevocably and unconditionally guarantees to each person or entity to whom the Trust is now or hereafter becomes indebted or liable (the “Beneficiaries”) the full payment when and as due, of any and all Obligations (as hereinafter defined) to such Beneficiaries. As used herein, “Obligations” means any costs, expenses or liabilities of the Trust other than obligations of the Trust to pay to holders of any Trust Preferred Securities or other similar interests in the Trust the amounts due such holders pursuant to the terms of the Trust Preferred Securities or such other similar interests, as the case may be. This Agreement is intended to be for the benefit of, and to be enforceable by, all such Beneficiaries, whether or not such Beneficiaries have received notice hereof.

Section 1.2 Term of Agreement.

This Agreement shall terminate and be of no further force and effect upon the later of (a) the date on which full payment has been made of all amounts payable to all holders of all the Trust Preferred Securities (whether upon redemption, liquidation, exchange or otherwise); and (b) the date on which there are no Beneficiaries remaining; provided, however, that this Agreement shall continue to be effective or shall be reinstated, as the case may be, if at any time any holder of Trust Preferred Securities or any Beneficiary must restore payment of any sums paid under the Trust Preferred Securities, under any obligation, under the Trust Preferred

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Securities Guarantee Agreement effective September 30, 2002 by the Company and Wells Fargo Bank, National Association, as guarantee trustee or under this Agreement for any reason whatsoever. This Agreement is continuing, irrevocable, unconditional and absolute.

Section 1.3 Waiver of Notice.

The Company hereby waives notice of acceptance of this Agreement and of any obligation to which it applies or may apply, and the Company hereby waives presentment, demand for payment, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands.

Section 1.4 No Impairment.

The obligations, covenants, agreements and duties of the Company under this Agreement shall in no way be affected or impaired by reason of the happening from time to time of any of the following:

(a) the extension of time for the payment by the Trust of all or any portion of the obligations or for the performance of any other obligation under, arising out of, or in connection with, the obligations;

(b) any failure, omission, delay or lack of diligence on the part of the Beneficiaries to enforce, assert or exercise any right, privilege, power or remedy conferred on the Beneficiaries with respect to the obligations or any action on the part of the Trust granting indulgence or extension of any kind; or

(c) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement composition or readjustment of debt of, or other similar proceedings affecting, the Trust or any of the assets of the Trust. There shall be no obligation of the Beneficiaries to give notice to, or obtain the consent of, the Company with respect to the happening of any of the foregoing.

Section 1.5 Enforcement.

A Beneficiary may enforce this Agreement directly against the Company, and the Company waives any right or remedy to require that any action be brought against the Trust or any other person or entity before proceeding against the Company.

ARTICLE 2

(i) Section Binding Effect.

All guarantees and agreements contained in this Agreement shall bind the successors, assigns, receivers, trustees and representatives of the Company and shall inure to the benefit of the Beneficiaries.

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(ii) Section Amendment.

So long as there remains any Beneficiary or any Trust Preferred Securities of any series are outstanding, this Agreement shall not be modified or amended in any manner adverse to such Beneficiary or to any of the holders of the Trust Preferred Securities.

(iii) Notices.

Any notice, request or other communication required or permitted to be given hereunder shall be given in writing by delivering the same by facsimile transmission (confirmed by mail), telex, or by registered or certified mail, addressed as follows (and if so given, shall be deemed given when mailed or upon receipt of an answer back, if sent by telex):

Indian River Capital Trust I

919 Market Street, Suite 700

Wilmington, Delaware 19801

Facsimile No.: (302) 575-2006

Attention: Administrative Trustee

Indian River Banking Company

958 20th Place Vero Beach, FL 32960

Facsimile No.:(772) 563-2353

Attention: Phillip L. Tasker

(iv) This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of New York (without regard to conflict of laws principles). The parties hereto consent to (i) the non-exclusive jurisdiction of the courts of the State of Delaware and (ii) service of process by mail in accordance with Section 2.3 hereof

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, this Agreement is to be effective as of September 30, 2002.

Indian River Banking Company

By:

Name:

Title:

Date:

Indian River Capital Trust I

By:

Name:

Title:

Date:

[Signature Page to Agreement as to Expenses and Liabilities]

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EXHIBIT D

FORM OF

FLOATING RATE CUMULATIVE TRUST PREFERRED

SECURITY CERTIFICATE

OF INDIAN RIVER CAPITAL TRUST I

THIS TRUST PREFERRED SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAWS. NEITHER THIS TRUST PREFERRED SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. PRIOR TO (i) THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(k) UNDER THE SECURITIES ACT) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE TRUST OR ANY AFFILIATE OF THE TRUST WAS THE OWNER OF THIS TRUST PREFERRED SECURITY (OR ANY PREDECESSOR OF THIS TRUST PREFERRED SECURITY) OR (ii) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAWS (THE “RESALE RESTRICTION TERMINATION DATE”), THE HOLDER OF THIS TRUST PREFERRED SECURITY BY ITS ACCEPTANCE HEREOF AGREES FOR THE BENEFIT OF THE TRUST TO OFFER, SELL OR OTHERWISE TRANSFER THIS TRUST PREFERRED SECURITY ONLY (A) TO THE TRUST OR AN AFFILIATE OF THE TRUST, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THIS TRUST PREFERRED SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A (“RULE 144A”) PROMULGATED UNDER THE SECURITIES ACT, TO A PERSON THE HOLDER REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A, (D) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS TRUST PREFERRED SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL “ACCREDITED INVESTOR,” FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE TRUST’S AND THE ADMINISTRATIVE TRUSTEES’ RIGHT PRIOR TO ANY SUCH OFFER, SALE, TRANSFER OR OTHER DISPOSITION, (i) PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY BY THE HOLDER OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO THE TRUST AND THE ADMINISTRATIVE TRUSTEE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT

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SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS CERTIFICATE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE PROPERTY TRUSTEE AND THE SECURITIES REGISTRAR IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY PRIOR TO THE RESALE RESTRICTION TERMINATION DATE. THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE CERTIFICATE OF TRANSFER RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THE CERTIFICATE OF TRANSFER TO THE PROPERTY TRUSTEE AND THE SECURITIES REGISTRAR. THIS LEGEND WILL BE REMOVED UPON REQUEST OF THE HOLDER AFTER THE EARLIER OF (i) THE TRANSFER OF THE TRUST PREFERRED SECURITY EVIDENCED HEREBY PURSUANT TO CLAUSE (B) ABOVE OR (ii) THE RESALE RESTRICTION TERMINATION DATE. THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS TRUST PREFERRED SECURITY OF THE RESALE RESTRICTIONS REFERRED TO HEREIN.

PRIOR TO THE RESALE RESTRICTION TERMINATION DATE, THIS TRUST PREFERRED SECURITY MAY BE TRANSFERRED OR EXCHANGED ONLY IN A MINIMUM AGGREGATE LIQUIDATION AMOUNT OF NOT LESS THAN $100,000. ANY ATTEMPTED TRANSFER OF THIS TRUST PREFERRED SECURITY IN AN AGGREGATE LIQUIDATION AMOUNT OF LESS THAN $100,000 PRIOR TO THE RESALE RESTRICTION TERMINATION DATE SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. AFTER SUCH RESALE RESTRICTION TERMINATION DATE, ANY ATTEMPTED TRANSFER OF THIS TRUST PREFERRED SECURITY IN AN AGGREGATE LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF THIS TRUST PREFERRED SECURITY FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RIGHT TO RECEIVE DISTRIBUTIONS ON THIS TRUST PREFERRED SECURITY, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS TRUST PREFERRED SECURITY.

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE SECURITIES REGISTRAR SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE REQUIRED BY THE AMENDED AND RESTATED TRUST AGREEMENT TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

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Certificate Number        

Number of Trust Preferred Securities: Seven Thousand (7,000)

Certificate Evidencing Trust Preferred Securities

of

Indian River Capital Trust I

Floating Rate Cumulative Trust Preferred Securities

(liquidation amount $1,000 per Trust Preferred Security)

Indian River Capital Trust I, a statutory business trust created under the laws of the State of Delaware (the “Trust”), hereby certifies that Bear, Stearns Securities Corp. (the “Holder”) is the registered owner of Seven Thousand (7,000) preferred securities of the Trust representing undivided beneficial interests in the assets of the Trust and designated the Floating Rate Cumulative Trust Preferred Securities (liquidation amount $1,000 per Trust Preferred Security) (the “Trust Preferred Securities”). The Trust Preferred Securities are transferable on the books and records of the Trust, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer as provided in Section 5.4 of the Trust Agreement (as defined herein). The designations, rights, privileges, restrictions, preferences, and other terms and provisions of the Trust Preferred Securities are set forth in, and this certificate and the Trust Preferred Securities represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Amended and Restated Trust Agreement of the Trust effective as of September 26, 2002, as the same may be amended from time to time (the “Trust Agreement”), including the designation of the terms of Trust Preferred Securities as set forth therein. The Holder is entitled to the benefits of the Trust Preferred Securities Guarantee Agreement entered into by Indian River Banking Company, a Florida corporation, and Wells Fargo Bank, National Association, as guarantee trustee, effective as of September 26, 2002, as the same may be amended from time to time (the “Preferred Securities Guarantee”), to the extent provided therein. The Trust shall furnish a copy of the Trust Agreement and the Preferred Securities Guarantee to the Holder without charge upon written request to the Trust at its principal place of business.

Capitalized terms used herein but not otherwise defined shall have the meanings assigned them in the Trust Agreement. Upon receipt of this certificate, the Holder is bound by the Trust Agreement and is entitled to the benefits thereunder.

Unless the Certificate of Authentication has been manually executed by the Property Trustee or the Authenticating Agent, this certificate is not valid or effective.

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IN WITNESS WHEREOF, the Administrative Trustees of the Trust have executed this Certificate this September 26, 2002.

Indian River Capital Trust I

By:

_______________________________________, as

Administrative Trustee

By:

_______________________________________, as

Administrative Trustee

By:

_______________________________________, as

Administrative Trustee

PROPERTY TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Floating Rate Cumulative Trust Preferred Securities referred to in the within-mentioned Trust Agreement.

Wells Fargo Bank, National Association, as
Property Trustee/Authenticating Agent
By
	AUTHORIZED SIGNATORY

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[REVERSE OF CERTIFICATE]

The Trust Preferred Securities represent undivided preferred beneficial interests in the Trust Property. Distributions payable on the Trust Preferred Securities shall be cumulative, and shall accumulate whether or not there are funds of the Trust available for the payment of Distributions. The Initial Distribution Payment Period shall accumulate from September 26, 2002 to the Initial Distribution Date at the rate of          above the Three Month LIBOR Rate (the “Initial Rate”). Other than (i) the Initial Distribution Date and (ii) any Extended Interest Payment Period with respect to the Debentures, distributions shall be payable quarterly in arrears on February 7, May 7, August 7 and November 7 of each year (each a “Distribution Date”) at the rate per annum of          above the Three-Month LIBOR Rate (the “Floating Distribution Rate”). The Initial and Floating Distribution Rates shall be multiplied by the Aggregate Liquidation Amount of the Trust Preferred Securities outstanding as of each Distribution Date. If a Distribution Date is not a Business Day, then the payment of such Distribution shall be made on the next succeeding day that is a Business Day except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day. In no event shall the Floating Distribution Rate exceed 12.5% prior to June 30, 2007.

The “Three-Month LIBOR Rate” shall mean the rate determined in accordance with the following provisions:

(i) On the second LIBOR Business Day (provided that on such day commercial banks are open for business (including dealings in foreign currency deposits) in London (a “LIBOR Banking Day”) preceding each of March 15, June 15, September 15 and December 15 (except with respect to the Initial Distribution Payment Period and the Distribution Period commencing the day after the Initial Distribution Date) (each such date, a “Distribution Reset Date”), Wells Fargo Bank, National Association (the “Calculation Agent”), will determine the Three-Month LIBOR Rate which shall be the rate for deposits in the London interbank market in U.S. dollars having a three-month maturity which appears on the Telerate Page 3750 as of 11:00 a.m., London time, on such Distribution Reset Date. “Telerate Page 3750” means the display on Page 3750 of the Bloomberg Financial Markets Commodities News (or such other page as may replace that page on that service for the purpose of displaying London interbank offered rates of major banks for U.S. dollar deposits). If the Three-Month LIBOR Rate on such Distribution Reset Date does not appear on the Telerate Page 3750, such Three-Month LIBOR Rate will be determined as described in (ii) below. “LIBOR Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banking institutions in New York, New York or Wilmington, Delaware are authorized or obligated by law or executive order to be closed. If such rate is superseded on Telerate Page 3750 by a corrected rate before 12:00 noon (London time) on the same Distribution Reset Date, the corrected rate as so substituted will be the applicable LIBOR for that Distribution Reset Date.

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(ii) If, on any Distribution Reset Date, such rate does not appear on Telerate Page 3750 as reported by Bloomberg Financial Markets Commodities News or such other page as may replace such Telerate Page 3750, the Calculation Agent shall determine the arithmetic mean of quotations of the Reference Banks (defined below) to leading banks in the London interbank market for three-month U.S. Dollar deposits in Europe (in an amount determined by the Calculation Agent by reference to requests for quotations as of approximately 11:00 a.m. (London time) on the Distribution Reset Date made by the Calculation Agent to the Reference Banks. If, on any Distribution Reset Date, at least two of the Reference Banks provide such quotations, LIBOR shall equal the arithmetic mean of such quotations. If, on any Distribution Reset Date, only one or none of the Reference Banks provide such a quotation, LIBOR shall be deemed to be the arithmetic mean of the offered quotations that at least two leading banks in the City of New York (as selected by the Calculation Agent) are quoting on the relevant Distribution Reset Date for three-month U.S. Dollar deposits in Europe at approximately 11:00 a.m. (London time) (in an amount determined by the Calculation Agent). As used herein, “Reference Banks” means four major banks in the London interbank market selected by the Calculation Agent.

(iii) If the Calculation Agent is required but is unable to determine a rate in accordance with at least one of the procedures provided above, LIBOR shall be LIBOR in effect on the previous Distribution Reset Date (whether or not LIBOR for such period was in fact determined on such Distribution Reset Date).

The amount payable for any Distribution Period shall be computed on the basis of a 360-day year and the actual number of days in such Distribution Period. In the event that any date on which distribution is payable is not a Business Day, then payment shall be made on the next succeeding day that is a Business Day except that, if such Business Day is in the next succeeding calendar year, payment will be made on the immediately preceding Business Day.

The Company shall have the right, at any time and from time to time during the term of the Debentures so long as no Debenture Event of Default has occurred and is continuing, to defer payments of interest by extending the interest payment period of such Debentures for a period not exceeding 20 consecutive quarters (the “Extended Interest Payment Period”), during which Extended Interest Payment Period the payment of interest due and payable shall be deferred; provided that no Extended Interest Payment Period may extend beyond the Maturity Date of the Debentures or end on a date other than an Interest Payment Date for the Debentures. As a consequence of such deferral, Distributions on the Trust Preferred Securities will also be deferred for a period equal to the Extended Interest Payment Period. Notwithstanding such deferral, Distributions, the payment of which has been deferred because of the extension of the interest payment period pursuant to the Indenture will continue to accumulate with interest thereon (to the extent permitted by applicable law but not at a rate greater than the rate at which interest is then accruing on the Debentures) at the Floating Distribution Rate as in effect during each quarter of the Extended Interest Payment Period, compounded quarterly. At the end of the

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Extended Interest Payment Period, the Company shall calculate (and deliver such calculation to the Property Trustee) and pay all Distributions accrued and unpaid on the Trust Securities that shall be payable to the Holders in whose names the Trust Securities are registered in the Securities Register on the first record date after the end of the Extended Interest Payment Period. Before the termination of any Extended Interest Payment Period, the Company may further extend such period so long as no Event of Default under the Indenture has occurred and is continuing, provided that such period together with all such further extensions thereof shall not exceed 20 consecutive quarters, or extend beyond the Maturity Date of the Debentures or end on a date other than an Interest Payment Date for the Debentures. Upon the termination of any Extended Interest Payment Period and upon the payment of all Deferred Interest (as defined in the Indenture) then due, the Company may commence a new Extended Interest Payment Period, subject to the foregoing requirements. No Distributions on the Trust Securities shall be due and payable during an Extended Interest Payment Period, except at the end thereof, but the Company may prepay at any time all or any portion of the Distributions accrued during an Extended Interest Payment Period.

The Floating Distribution Rate and amount of Distributions to be paid on the Trust Securities for each Distribution Period will be determined by the calculation agent (“Calculation Agent”). Wells Fargo Bank, National Association shall be the initial Calculation Agent. All calculations made by the Calculation Agent shall, in the absence of manifest error, be conclusive for all purposes and binding on the Company and the Holders of the Trust Securities. In the event that any then acting Calculation Agent shall be unable or unwilling to act, or that such Calculation Agent shall fail duly to establish the Floating Distribution Rate for any Distribution Period, or that the Company proposes to remove such Calculation Agent, or that the Calculation Agent proposes to terminate its service as Calculation Agent, the Company shall appoint another Person which is a bank, trust company, investment banking firm or other financial institution, to act as the Calculation Agent. The Calculation Agent shall certify the Floating Distribution Rate on each Distribution Reset Date and shall provide a copy of such certification to the Property Trustee as soon as practicable following each Distribution Reset Date. The Property Trustee shall provide written notice of the Floating Distribution Rate as certified by the Calculation Agent to each holder of Trust Securities as set forth in the Securities Register for the Trust Securities no later than five Business Days following each Distribution Reset Date.

Distributions on the Trust Securities shall be made by the Property Trustee solely from the Payment Account and shall be payable on each Distribution Date only to the extent that the Trust has funds on hand and legally immediately available by 12:30 p.m. on each Distribution Date in the Payment Account for the payment of such Distributions.

Distributions on the Trust Securities with respect to a Distribution Date shall be payable to the Holders thereof as they appear on the Securities Register on the relevant record date, which shall be the 15^th day of the month prior to the month in which the relevant Distribution Date occurs, which Distribution Dates correspond to the interest payment dates on the Debentures.

The Trust will furnish without charge to any registered Holder of Trust Preferred Securities who so requests, a copy of the Trust Agreement and the Preferred Securities Guarantee. Any such request should be in writing and addressed to Indian River Capital Trust I, 919 Market Street, Suite 700

Wilmington, Delaware 19801, or to the Securities Registrar (as defined in the Trust Agreement).

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The following abbreviations, when used in the inscription on the face of this Certificate, shall be construed as though they were written out in full according to applicable laws or regulations:

TEN CON	- as tenants in common
TEN ENT	- as tenants in the entireties
JT TEN	- as joint tenants with right of survival
UNIF GIFT MIN ACT	- under Uniform Gift to Minors Act and not as tenants

Additional abbreviations may also be used though not in the above list.

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto:

(Please insert social security or other identifying number of assignee)

(insert address and zip code of assignee)

the within Certificate and all rights and interests represented by the Trust Preferred Securities evidenced thereby, and hereby irrevocably constitutes and appoints attorney to transfer the said Trust Preferred Securities on the books of the within-named Trust with full power of substitution in the premises.

Date:	Signature:
	Note: The signature(s) to this assignment must correspond with the name(s) as written upon the face of this Certificate in every particular, without alteration or enlargement, or any change whatever.

Signature(s) Guaranteed:

NOTICE: Signature(s) must be guaranteed by an “eligible guarantor institution” that is a member or participant in a “signature guarantee program” (i.e., the Securities Transfer Agents Medallion Program, the Stock Exchange Medallion Program or the New York Stock Exchange, Inc. Medallion Signature Program).

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CERTIFICATE OF TRANSFER

Wells Fargo Bank, National Association,

as Property Trustee and Securities Registrar

Re: Trust Preferred Securities (the “Securities”) of Indian River Capital Trust I (the “Trust”)

This letter relates to $                 liquidation amount of the Securities beneficially owned in the name of                      (the “Transferor”). The Transferor has requested a transfer of such beneficial interest to such Person as the Transferor instructs the Property Trustee.

In connection with such request, the Transferor hereby certifies that if such transfer is being requested prior to (X) the date which is two years (or such other shorter period of time as permitted by Rule 144(k) under the Securities Act of 1933, as amended (the “Securities Act”)) after the later of (i) the original issue date of the Securities or (ii) the last date on which the Trust or any affiliate of the Trust was the owner of the Securities (or any predecessor of the Securities) or (Y) such later date, if any, as may be required by applicable laws, then the transfer of the Securities is being made:

[CHECK ONE]

1.	¨	to the Trust or an affiliate of the Trust;
		Or
2.	¨	pursuant to a registration statement which has been declared effective under the Securities Act;
		Or
3.	¨	pursuant to and in accordance with Rule 144A under the Securities Act (“Rule 144A”), and, accordingly, the Transferor hereby further certifies that the Securities are being transferred to a Person that the Transferor reasonably believes is a “Qualified Institutional Buyer” as defined in Rule 144A that is purchasing for its own account or for the account of a Qualified Institutional Buyer in compliance with Rule 144A;
		Or
4.	¨	to an institutional “accredited investor” within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Securities Act that is acquiring the Securities for its own account, or for the account of such an institutional “accredited investor,” for investment purposes and not with a view to or for offer or sale in connection with, any distribution in violation of the Securities Act;

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		Or
5.	¨	pursuant to any available exemption from the registration requirements of the Securities Act;
		and the Securities are being transferred in compliance with any applicable blue sky securities laws of any state of the United States or any other applicable jurisdiction.

Unless one of the boxes is checked, the Securities Registrar will refuse to register any of the Securities evidenced by this Certificate in the name of any Person other than the Holder hereof; provided, however, that if box (4) or (5) is checked, the Securities Registrar may require, prior to registering any such transfer of the Securities, such legal opinions, certifications and other information as the Trust and Administrative Trustees have reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. If box (4) is checked, the transferee must also provide to the Securities Registrar a Transferee Letter of Representations in the form attached to the Trust Agreement. After the date that a registration statement with respect to the Securities represented by this Certificate has been filed and so long as such registration statement has been declared effective under the Securities Act and so long as such registration statement continues to be effective, only then may the Securities Registrar permit transfers for which box (2) has been checked.

This certificate and the statements contained herein are made for your benefit and the benefit of the Trust.

[Insert Name of Transferor]

By:

Name:

Title:

Dated:

cc: Indian River Capital Trust I

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EXHIBIT E

FORM OF TRANSFEREE LETTER OF REPRESENTATIONS

(TO BE EXECUTED BY TRANSFEREES OTHER THAN

QUALIFIED INSTITUTIONAL BUYERS)

Indian River Capital Trust I

c/o Indian River Banking Company

958 20th Place

Vero Beach, Florida 32960

Ladies and Gentlemen:

In connection with the proposed transfer to us of Floating Rate Trust Preferred Securities (the “Trust Preferred Securities”) of Indian River Capital Trust I (the “Trust”), we confirm that:

1. We understand that the Trust Preferred Securities have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or other applicable securities laws, and may not be offered, sold or otherwise transferred except as permitted in the following sentence. We agree on our behalf and on behalf of any investor account for which we are purchasing Trust Preferred Securities to offer, sell or otherwise transfer such Trust Preferred Securities prior to the date which is two years after the later of the date of original issue thereof and the last date on which the Trust or any “affiliate” as defined in the Securities Act of the Trust was the owner of such Trust Preferred Securities (or any predecessor thereto) (the “Resale Restriction Termination Date”) only (a) to Indian River Banking Company (the “Company”), (b) pursuant to a registration statement which has been declared effective under the Securities Act, (c) so long as the Trust Preferred Securities are eligible for resale pursuant to Rule 144A under the Securities Act, to a person we reasonably believe is a “qualified institutional buyer” (a “QIB”) as defined in Rule 144A under the Securities Act that purchases for its own account or for the account of a QIB to whom notice is given that the transfer is being made in reliance on Rule 144A, (d) to an institutional “accredited investor” (an “Accredited Investor”) within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Securities Act that is acquiring the Trust Preferred Securities for its own account or for the account of such an Institutional Accredited Investor for investment purposes and not with a view to, or for offer and sale in connection with, any distribution in violation of the Securities Act or (e) pursuant to any other available exemption from the registration requirements under the Securities Act, subject to the right of the Trust and Company prior to any such offer, sale or transfer (i) pursuant to clause (d) or (e) above to require the delivery of an opinion of counsel, certifications and/or other information satisfactory to each of them and (ii) in each of the foregoing cases, to require that the transferor deliver to the Property Trustee and the Securities Registrar a Certificate of Transfer in the form appearing on the Trust Preferred Securities Certificate.

2. We are purchasing for our own account, or we are an Institutional Accredited Investor purchasing for the account of another Institutional Accredited Investor, for investment purposes and not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act or any other applicable securities laws and we have such

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knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Trust Preferred Securities, and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment for an indefinite period.

3. Prior to the Resale Restriction Termination Date, in the event that we purchase any Trust Preferred Securities or any Debentures, we will acquire such Trust Preferred Securities having an aggregate stated liquidation amount of not less than $100,000, or such Debentures having an aggregate principal amount of not less than $100,000, for our own account and for each separate account for which we are acting.

4. Subsequent to the Resale Restriction Termination Date, in the event that we purchase any Trust Preferred Securities or any Debentures, we will acquire such Trust Preferred Securities having an aggregate stated liquidation amount of not less than $100,000 or such Debentures having an aggregate principal amount of not less than $100,000, for our own account and for each separate account for which we are acting.

5. You and the Company are entitled to rely upon this letter and you are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.

6. We are not an employee benefit plan within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or a plan to which Section 4975 of the Internal Revenue Code of 1986 (“Code”) is applicable, a trustee or other person acting on behalf of such employee benefit plan or plan, or any other person or entity using the assets of any employee benefit plan or plan to finance such purchase, and such purchase will not result in a prohibited transaction under Section 406 of ERISA or Section 4975 of the Code for which there is no applicable statutory or administrative exemption. We make this representation to the trustees of the Trust and to the Company.

THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

Very truly yours,

Name of Purchaser:

By:

Date:

The Trust Preferred Securities will be registered in the name of the beneficial owner as follows:

Name:

Address:

Taxpayer ID Number:

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EXHIBIT F

FORM OF TRANSFEROR LETTER OF REPRESENTATIONS

(TO BE EXECUTED FOR TRANSFERS TO QUALIFIED INSTITUTIONAL BUYERS)

Indian River Capital Trust I

919 Market Street, Suite 700

Wilmington, Delaware 19801

Date: September 30, 2002

Ladies and Gentlemen:

Reference is hereby made to the Amended and Restated Trust Agreement, effective as of September 26, 2002 (the “Trust Agreement”) among Paul A. Beindorf and Phillip L. Tasker, as Administrative Trustees, Wells Fargo Delaware Trust Company as Resident Trustee, Wells Fargo Bank, National Association, as Property Trustee, Indian River Banking Company, as Depositor (the “Company”), and the holders from time to time of undivided preferred beneficial interests in the assets of Indian River Capital Trust I. Capitalized terms used but not defined herein shall have the meanings given them in the Trust Agreement.

This letter relates to $                 aggregate liquidation amount of Trust Preferred Securities which are held in the name of                                  (the “Transferor”).

In connection with such request, and with respect to such Trust Preferred Securities, the Transferor does hereby certify that such Trust Preferred Securities are being transferred in accordance with (i) the transfer restrictions set forth on the Trust Preferred Securities Certificate and (ii) Rule 144A under the Securities Act of 1933, as amended (“Rule 144A”), to a transferee that the Transferor reasonably believes is purchasing the Trust Preferred Securities for its own account or an account with respect to which the transferee exercises sole investment discretion and the transferee and any such account is a “qualified institutional buyer” within the meaning of Rule 144A, in a transaction meeting the requirements of Rule 144A and in accordance with applicable securities laws of any state of the United States or any other jurisdiction.

You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy here of to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby.

(Name of Transferor)

By:

Name:

Title:

F-1

EX-10.47A

Exhibit 10.47A

FIRST AMENDMENT TO AMENDED AND RESTATED

TRUST AGREEMENT

BY AND AMONG

INDIAN RIVER BANKING COMPANY, as Depositor,

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Property Trustee,

WELLS FARGO DELAWARE TRUST COMPANY, as Resident Trustee,

THE ADMINISTRATIVE TRUSTEES NAMED HEREIN

and

ALABAMA NATIONAL BANCORPORATION

Dated as of November 19, 2003

Amended and Restated Trust Agreement

Dated as of September 30, 2002

FIRST AMENDMENT TO AMENDED AND RESTATED

TRUST AGREEMENT

THIS FIRST AMENDMENT TO AMENDED AND RESTATED TRUST AGREEMENT (this “Amendment”) is made as of this 19th day of November 2003, by and among Indian River Banking Company, a Florida corporation (“IRBC” or, before the Effective Time, the “Depositor”), as original depositor, Alabama National BanCorporation, a Delaware corporation (“ANB” or, after the Effective Time, the “Depositor”), as successor depositor, Wells Fargo Bank, National Association, a national banking association (the “Property Trustee”), as property trustee, Wells Fargo Delaware Trust Company (the “Resident Trustee”), as resident trustee, Paul A. Beindorf, Diana L. Walker and Phillip L. Tasker (each an “Administrative Trustee” and together the “Administrative Trustees”), as administrative trustees (the Property Trustee, the Resident Trustee and the Administrative Trustees referred to collectively as the “Trustees”).

WHEREAS, IRBC and the Trustees have entered into an Amended and Restated Trust Agreement, dated as of September 30, 2002 (the “Trust Agreement”), related to the issuance of preferred securities and common securities by Indian River Capital Trust I on September 30, 2002;

WHEREAS, IRBC and ANB have entered into an Agreement and Plan of Merger, dated as of October 22, 2003, that provides for the merger (the “Merger”) of IRBC with and into ANB;

WHEREAS, the Merger will become effective (a) on the date and at the time that the later of the following shall occur: (i) the Certificate of Merger reflecting the Merger shall be accepted for filing by the Secretary of State of Delaware, and (ii) the Articles of Merger reflecting the Merger shall be accepted for filing by the Secretary of State of Florida, or (b) on the date and at the time as may be otherwise specified by the parties to the Merger in the Certificate of Merger and the Articles of Merger (the time and date when the Merger becomes effective is referred to herein as the “Effective Time”);

WHEREAS, at the Effective Time, the separate corporate existence of IRBC will cease and ANB will continue as the surviving corporation following the Merger;

WHEREAS, as set forth in Section 10.6 of the Trust Agreement, the Merger is a consolidation, merger or sale involving the Depositor that is permitted under Article XII of the Indenture, and ANB desires to agree in writing to perform the Depositor’s obligations under the Trust Agreement;

WHEREAS, this Amendment has been duly authorized by all necessary action on the part of IRBC and ANB.

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NOW, THEREFORE, in consideration of the premises set forth herein and other good and valuable consideration, IRBC, ANB and the Trustees agree as follows for the equal and ratable benefit of the Holders:

ARTICLE I

DEFINITIONS; INTERPRETATION

1.1. Definitions. Capitalized terms that are defined in the preamble or the recitals hereto shall have such meanings throughout this Amendment. Capitalized terms used but not defined in this Amendment shall have the meanings assigned thereto in the Trust Agreement. The meanings assigned to all defined terms used in this Amendment shall be equally applicable to both the singular and plural forms of such defined terms. The term “Trust Agreement” as used herein means the Amended and Restated Trust Agreement, as amended and supplemented by this Amendment, or as otherwise supplemented or amended from time to time by one or more amendments thereto or hereto entered into pursuant to the applicable provisions of the Amended and Restated Trust Agreement.

1.2. Interpretation. References in the Trust Agreement (including references in the Trust Agreement as amended or supplemented hereby) to “this Trust Agreement” (and indirect references such as “hereunder,” “herein” and “hereof”) shall be deemed references to the Trust Agreement as amended and supplemented hereby. All of the covenants, agreements and provisions of this Amendment shall be deemed to be and construed as part of the Trust Agreement to the same effect as if fully set forth therein and shall be fully enforceable in the manner provided in the Trust Agreement. Except as otherwise provided in this Amendment, all of the covenants, agreements and provisions of the Trust Agreement shall remain in full force and effect.

ARTICLE II

MERGER

Assumption by ANB. ANB, as the surviving corporation of the Merger, shall become fully responsible as of the Effective Time, without any further action, for the due and punctual performance and observance of all of the obligations of the Trust Agreement to be kept or performed by the Depositor. Upon such assumption, ANB shall succeed to and be substituted for IRBC with the same effect as if it had been named in the Trust Agreement as the original depositor, and IRBC thereupon shall be relieved of any further liability or obligation under the Trust Agreement. Upon and following the Effective Time, the parties hereto agree that all references to the “Depositor” in the Trust Agreement shall be deemed references to ANB, until a successor replaces it pursuant to the applicable provisions of the Trust Agreement and thereafter the “Depositor” shall mean such successor.

ARTICLE III

MISCELLANEOUS

3.1. Date and Time of Effectiveness. This Amendment shall become a legally effective and binding instrument at and as of the Effective Time.

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3.2. Trust Preferred Securities Deemed Conformed. Beginning at the Effective Time, the provisions of each Trust Preferred Security then outstanding shall be deemed to be conformed, without the necessity for any reissuance or exchange of such Trust Preferred Security or any other action on the part of the Holders, IRBC, ANB or the Trustee, so as to reflect this Amendment.

3.3. Successors. All agreements of IRBC, ANB and the Trustees in this Amendment and in the Trust Agreement shall bind their respective successors.

3.4. Benefits of Amendment. Nothing in this Amendment, express or implied, shall give to any person, other than the parties hereto and their successors hereunder, any agent and the Holders, any benefit or any legal or equitable right, remedy or claim under this Amendment or the Trust Agreement.

3.5. Separability. In case any provision in this Amendment, or in the Trust Agreement, shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby, it being intended that all of the provisions hereof shall be enforceable to the full extent permitted by law.

3.6. Trustee Responsibility. The Trustees assume no duties, responsibilities or liabilities by reason of this Amendment other than as set forth in the Trust Agreement. The Trustees assume no responsibility for the correctness of the statements herein contained, which shall be taken as statements of IRBC and ANB. This Amendment is executed and accepted by the Trustees subject to all of the terms and conditions of its acceptance of the trust under the Trust Agreement, as fully as if said terms and conditions were herein set forth in full.

3.7. Headings. The Article and Section headings of this Amendment have been inserted for convenience of reference only, are not to be considered a part of this Amendment and shall in no way modify or restrict any of the terms or provisions hereof.

3.8. Counterparts. This Amendment may be executed in counterparts, each of which shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

3.9. Governing Law. This Amendment shall be governed by and construed in accordance with the internal laws of the State of Delaware, without regard to its choice of law provisions.

[Signature Pages Follow]

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IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to Amended and Restated Trust Agreement to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written.

Attest : (SEAL)	INDIAN RIVER BANKING COMPANY
/s/ Diana L. Walker	By:	/s/ Paul A. Beindorf
Diana L. Walker		Paul A. Beindorf
Secretary		Chief Executive Officer

Attest : (SEAL)	WELLS FARGO BANK, NATIONAL ASSOCIATION, as property trustee
/s/ Ann Roberts Dukart	By:	/s/ Edward L. Truitt, Jr.
Name: Ann Roberts Dukart		Name: Edward L. Truitt, Jr.
Title: Vice President		Title: Vice President

Attest : (SEAL)	WELLS FARGO DELAWARE TRUST COMPANY, as resident trustee
/s/ Ann Roberts Dukart	By:	/s/ Edward L. Truitt, Jr.
Name: Ann Roberts Dukart		Name: Edward L. Truitt, Jr.
Title: Vice President		Title: Vice President

Attest : (SEAL)	ALABAMA NATIONAL BANCORPORATION
/s/ Kimberly Moore	By:	/s/ William E. Matthews, V
Kimberly Moore		Name: William E. Matthews, V
Secretary		Title: EVP & CFO

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	ADMINISTRATIVE TRUSTEES:
Attest: (SEAL)
/s/ Macy N. Swift	By:	/s/ Paul A. Beindorf
Name: Macy N. Swift		Name: Paul A. Beindorf
Title: VP		Title: Administrative Trustee

Attest: (SEAL)
/s/ Macy N. Swift	By:	/s/ Diana L. Walker
Name: Macy N. Swift		Name: Diana L. Walker
Title: VP		Title: Administrative Trustee

Attest: (SEAL)
/s/ Macy N. Swift	By:	/s/ Phillip Tasker
Name: Macy N. Swift		Name: Phillip Tasker
Title: VP		Title: Administrative Trustee

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EX-10.48

Exhibit 10.48

INDENTURE

BY AND BETWEEN

INDIAN RIVER BANKING COMPANY

AND

WELLS FARGO BANK, NATIONAL ASSOCIATION,

AS TRUSTEE

FLOATING RATE JUNIOR SUBORDINATED DEFERRABLE

INTEREST DEBENTURES DUE NOVEMBER 7, 2032

EFFECTIVE AS OF SEPTEMBER 30, 2002

TABLE OF CONTENTS

		Page
ARTICLE I	DEFINITIONS	2
Section 1.1	Definitions of Terms	2
ARTICLE II	ISSUE, DESCRIPTION, TERMS, CONDITIONS, REGISTRATION AND EXCHANGE OF THE DEBENTURES	10
Section 2.1	Designation and Principal Amount	10
Section 2.2	Maturity	10
Section 2.3	Form and Payment	10
Section 2.4	Initial Interest Payment Period	11
Section 2.5	Interest	11
Section 2.6	Execution and Authentications	14
Section 2.7	Registration of Transfer and Exchange	14
Section 2.8	Temporary Debentures	17
Section 2.9	Mutilated, Destroyed, Lost or Stolen Debentures	18
Section 2.10	Cancellation	19
Section 2.11	Benefit of Indenture	19
Section 2.12	Authentication Agent	19
ARTICLE III	REDEMPTION OF DEBENTURES	20
Section 3.1	Special Event Redemption	20
Section 3.2	Optional Redemption by Company	20
Section 3.3	Notice of Redemption	21
Section 3.4	Payment Upon Redemption	22
Section 3.5	No Sinking Fund	23
ARTICLE IV	EXTENSION OF INTEREST PAYMENT PERIOD	23
Section 4.1	Extension of Interest Payment Period	23
Section 4.2	Notice of Extension	24
Section 4.3	Limitation on Transactions	24
ARTICLE V	PARTICULAR COVENANTS OF THE COMPANY	25
Section 5.1	Payment of Principal and Interest	25
Section 5.2	Maintenance of Agency	25
Section 5.3	Paying Agents	25

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TABLE OF CONTENTS

(continued)

		Page
Section 5.4	Appointment to Fill Vacancy in Office of Trustee	27
Section 5.5	Compliance with Consolidation Provisions	27
Section 5.6	Limitation on Transactions	27
Section 5.7	Covenants as to the Trust	28
Section 5.8	Covenants as to Purchases	28
Section 5.9	Waiver of Usury, Stay or Extension Laws	28
ARTICLE VI	DEBENTUREHOLDERS’ LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE	28
Section 6.1	Company to Furnish Trustee Names and Addresses of Debentureholders	28
Section 6.2	Preservation of Information Communications with Debentureholders	29
Section 6.3	Reports by the Company	29
Section 6.4	Reports by the Trustee	30
ARTICLE VII	REMEDIES OF THE TRUSTEE AND DEBENTUREHOLDERS ON EVENT OF DEFAULT	30
Section 7.1	Events of Default	30
Section 7.2	Collection of Indebtedness and Suits for Enforcement by Trustee	32
Section 7.3	Application of Money Collected	33
Section 7.4	Limitation on Suits	34
Section 7.5	Rights and Remedies Cumulative; Delay or Omission not Waiver	35
Section 7.6	Control by Debentureholders	35
Section 7.7	Undertaking to Pay Costs	36
Section 7.8	Direct Action; Right of Set-Off	36
ARTICLE VIII	FORM OF DEBENTURE AND ORIGINAL ISSUE	36
Section 8.1	Form of Debenture	36
Section 8.2	Original Issue of Debentures	36
ARTICLE IX	CONCERNING THE TRUSTEE	37
Section 9.1	Certain Duties and Responsibilities of the Trustee	37
Section 9.2	Notice of Defaults	38

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TABLE OF CONTENTS

(continued)

		Page
Section 9.3	Certain Rights of Trustee	38
Section 9.4	Trustee Not Responsible for Recitals, etc	40
Section 9.5	May Hold Debentures	40
Section 9.6	Moneys Held in Trust	40
Section 9.7	Compensation and Reimbursement	40
Section 9.8	Reliance on Officers’ Certificate	41
Section 9.9	Disqualification; Conflicting Interests	41
Section 9.10	Corporate Trustee Required; Eligibility	41
Section 9.11	Resignation and Removal; Appointment of Successor	41
Section 9.12	Acceptance of Appointment by Successor	43
Section 9.13	Merger, Conversion, Consolidation or Succession to Business	43
Section 9.14	Preferential Collection of Claims Against the Company	44
ARTICLE X	CONCERNING THE DEBENTUREHOLDERS	44
Section 10.1	Evidence of Action by Holders	44
Section 10.2	Proof of Execution by Debentureholders	45
Section 10.3	Who May be Deemed Owners	45
Section 10.4	Certain Debentures Owned by Company Disregarded	45
Section 10.5	Actions Binding on Future Debentureholders	46
ARTICLE XI	SUPPLEMENTAL INDENTURES	46
Section 11.1	Supplemental Indentures Without the Consent of Debentureholders	46
Section 11.2	Supplemental Indentures with Consent of Debentureholders	47
Section 11.3	Effect of Supplemental Indentures	47
Section 11.4	Debentures Affected by Supplemental Indentures	48
Section 11.5	Execution of Supplemental Indentures	48
ARTICLE XII	SUCCESSOR CORPORATION	48
Section 12.1	Company May Consolidate, etc	48
Section 12.2	Successor Person Substituted	49
Section 12.3	Evidence of Consolidation, etc. to Trustee	49

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TABLE OF CONTENTS

(continued)

		Page
ARTICLE XIII	SATISFACTION AND DISCHARGE	50
Section 13.1	Satisfaction and Discharge of Indenture	50
Section 13.2	Discharge of Obligations	50
Section 13.3	Deposited Money to be Held in Trust	51
Section 13.4	Payment of Money Held by Paying Agents	51
Section 13.5	Repayment to Company	51
ARTICLE XIV	IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS	51
Section 14.1	No Recourse	51
ARTICLE XV	MISCELLANEOUS PROVISIONS	52
Section 15.1	Effect on Successors and Assigns	52
Section 15.2	Actions by Successor	52
Section 15.3	Surrender of Company Powers	52
Section 15.4	Notices	52
Section 15.5	Governing Law	52
Section 15.6	Treatment of Debentures as Debt	53
Section 15.7	Compliance Certificates and Opinions	53
Section 15.8	Payments on Business Days	53
Section 15.9	Application of Trust Indenture Act; Conflict	53
Section 15.10	Counterparts	54
Section 15.11	Severability	54
Section 15.12	Assignment	54
Section 15.13	Acknowledgment of Rights; Right of Set Off	54
ARTICLE XVI	SUBORDINATION OF DEBENTURES	55
Section 16.1	Agreement to Subordinate	55
Section 16.2	Default on Senior Debt, Subordinated Debt or Additional Senior Obligations	55
Section 16.3	Liquidation; Dissolution; Bankruptcy	56
Section 16.4	Subrogation	57
Section 16.5	Trustee to Effectuate Subordination	58
Section 16.6	Notice by the Company	58
Section 16.7	Rights of the Trustee; Holders of Senior Indebtedness	59

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TABLE OF CONTENTS

(continued)

		Page
Section 16.8	Subordination may not be Impaired	59

EXHIBIT

Exhibit A Floating Rate Junior Subordinated Deferrable Interest Debenture of Indian River Banking Company

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INDENTURE

THIS INDENTURE, effective as of September 30, 2002, between Indian River Banking Company, a Florida corporation (the “Company”) and Wells Fargo Bank, National Association, a national banking association with its principal place of business in the State of Delaware (the “Trustee”);

RECITALS:

WHEREAS, for its lawful corporate purposes, the Company has duly authorized the execution and delivery of this Indenture to provide for the issuance of securities to be known as Floating Rate Junior Subordinated Deferrable Interest Debentures due November 7, 2032 (hereinafter referred to as the “Debentures”), the form and substance of such Debentures and the terms, provisions and conditions thereof to be set forth as provided in this Indenture;

WHEREAS, Indian River Capital Trust I, a Delaware statutory business trust (the “Trust”), has offered in a private placement up to Seven Million Dollars ($7,000,000) aggregate liquidation amount of its Trust Preferred Securities (as defined herein) and proposes to invest the proceeds from such offering, together with the proceeds of the issuance and sale by the Trust to the Company of up to Two Hundred Seventeen Thousand Dollars ($217,000) aggregate liquidation amount of its Common Securities (as defined herein), in up to Seven Million Two Hundred Seventeen Thousand Dollars ($7,217,000) aggregate principal amount of the Debentures;

WHEREAS, the Company has requested that the Trustee execute and deliver this Indenture;

WHEREAS, all requirements necessary to make this Indenture a valid instrument in accordance with its terms, and to make the Debentures, when executed by the Company and authenticated and delivered by the Trustee, the valid obligations of the Company, have been performed, and the execution and delivery of this Indenture have been duly authorized in all respects;

WHEREAS, to provide the terms and conditions upon which the Debentures are to be authenticated, issued and delivered, the Company has duly authorized the execution of this Indenture; and

WHEREAS, all things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done.

NOW, THEREFORE, in consideration of the premises set forth herein and the purchase of the Debentures by the holders thereof, it is mutually covenanted and agreed as follows for the equal and ratable benefit of the holders of the Debentures as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions of Terms.

The terms defined in this Section 1.1 (except as otherwise expressly provided in this Indenture or unless the context otherwise requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section 1.1 and shall include the plural as well as the singular. All other terms used in this Indenture that are defined in the Trust Indenture Act, or that are by reference in the Trust Indenture Act and defined in the Securities Act (except as herein otherwise expressly provided or unless the context otherwise requires), shall have the meanings assigned to such terms in the Trust Indenture Act and in the Securities Act as in force at the date of the execution of this instrument and as may be amended from time to time. All accounting terms used herein and not expressly defined shall have the meanings assigned to such terms in accordance with Generally Accepted Accounting Principles.

“Accelerated Maturity Date” means if the Company elects to accelerate the Maturity Date in accordance with Sections 2.2 (b) and 2.2(c), the date selected by the Company which is prior to the Scheduled Maturity Date, but is on an Interest Payment Date after November 7, 2007.

“Additional Interest” means interest earned and to be paid on interest that was not timely paid.

“Additional Senior Obligations” means all indebtedness of the Company whether incurred on or prior to the date of this Indenture or thereafter incurred, for claims in respect of derivative products such as interest and foreign exchange rate contracts, commodity contracts and similar arrangements; provided, however, that Additional Senior Obligations does not include claims in respect of Senior Debt or Subordinated Debt or obligations which, by their terms, are expressly stated to be not superior in right of payment to the Debentures or to rank pari passu in right of payment with the Debentures. For purposes of this definition, “claim” shall have the meaning assigned thereto in Section 101(4) of the United States Bankruptcy Code of 1978, as amended.

“Additional Sums” shall have the meaning set forth in Section 2.5 (g) hereof.

“Administrative Trustees” shall have the meaning set forth in the Trust Agreement.

“Affiliate” means, with respect to a specified Person, (i) any Person directly or indirectly owning, controlling or holding with power to vote 10% or more of the outstanding voting securities or other ownership interests of the specified Person; (ii) any Person 10% or more of whose outstanding voting securities or other ownership interests are directly or indirectly owned, controlled or held with power to vote by the specified Person; (iii) any Person directly or indirectly controlling, controlled by, or under common control with the specified Person; (iv) a partnership in which the specified Person is a general partner; (v) any officer or director of the specified Person; and (vi) if the specified Person is an individual, any entity of which the specified Person is an officer, director or general partner.

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“Authenticating Agent” means an authenticating agent with respect to the Debentures appointed by the Trustee pursuant to Section 2.12 hereof.

“Bankruptcy Law” means Title 11, U.S. Code, or any similar federal or state law for the relief of debtors.

“Board of Directors” means the Board of Directors of the Company or any duly authorized committee of such Board or any other duly designated officers of the Company.

“Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification.

“Business Day” means, with respect to the Debentures, any day other than a Saturday or a Sunday or a day on which federal or state banking institutions in Delaware or Minnesota are authorized or required by law, executive order or regulation to close, or a day on which the Corporate Trust Office of the Trustee or the Property Trustee is closed for business.

“Calculation Agent” shall have the meaning set forth in Section 2.5(d)(i) hereof.

“Capital Treatment Event” means the receipt by the Company and the Trust of an Opinion of Counsel, rendered by a law firm having a recognized national bank regulatory practice, to the effect that, as a result of (a) any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision thereof or therein, or (b) any official or administrative pronouncement or action or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or which pronouncement or decision is announced on or after the date of issuance of the Trust Preferred Securities under the Trust Agreement, there is more than an insubstantial risk of impairment of the Company’s ability to treat the Trust Preferred Securities (or any substantial portion thereof) as Tier 1 capital (or the then equivalent thereof), for purposes of the capital adequacy guidelines of the Federal Reserve (or any successor thereto), as then in effect and applicable to the Company; provided, however, that the Trust or the Company shall have requested and received such an Opinion of Counsel with regard to such matters within a reasonable period of time after the Trust or the Company shall have become aware of the probable occurrence of any such event.

“Certificate” means a certificate signed by the principal executive officer, the principal financial officer, the principal accounting officer, the treasurer or any vice president of the Company. The Certificate need not comply with the provisions of Section 15.7 hereof.

“Change in 1940 Act Law” shall have the meaning set forth in the definition of “Investment Company Event.”

“Commission” means the Securities and Exchange Commission.

“Common Securities” means undivided common beneficial interests in the assets of the Trust that rank pari passu with the Trust Preferred Securities; provided, however, that upon the occurrence of an Event of Default, the rights of holders of Common Securities to payment in respect of distributions and payments upon liquidation, redemption and otherwise are subordinated to the rights of holders of Trust Preferred Securities.

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“Company” means Indian River Banking Company, a corporation duly organized and validly existing under the laws of the State of Florida, and, subject to the provisions of Article XII, shall also include its successors and assigns. “Compounded Interest” shall have the meaning set forth in Section 4.1 hereof.

“Corporate Trust Office” means the office of the Trustee or the Property Trustee at which, at any particular time, its corporate trust business shall be principally administered, which office at the date hereof is located at 919 Market Street, Suite 700, Wilmington, Delaware 19801, Attention: Corporate Trust Administration.

“Custodian” means any receiver, trustee, assignee, liquidator, or similar official under any Bankruptcy Law.

“Debentures” shall have the meaning set forth in the Recitals hereto.

“Debentureholder,” “holder of Debentures,” “registered holder,” or other similar term, means the Person or Persons in whose name or names a particular Debenture shall be registered on the books of the Company or the Trustee kept for that purpose in accordance with the terms of this Indenture.

“Debenture Register” shall have the meaning set forth in Section 2.7(b) hereof.

“Debt” means with respect to any Person, whether recourse is to all or a portion of the assets of such Person and whether or not contingent, (i) every obligation of such Person for money borrowed; (ii) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (iii) every reimbursement obligation of such Person with respect to letters of credit, bankers’ acceptances or similar facilities issued for the account of such Person; (iv) every obligation of such Person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or accrued liabilities arising in the ordinary course of business); (v) every capital lease obligation of such Person; and (vi) every obligation of the type referred to in clauses (i) through (v) of another Person and all dividends of another Person the payment of which, in either case, such Person has guaranteed or is responsible or liable, directly or indirectly, as obligor or otherwise.

“Default” means any event, act or condition that with notice or lapse of time, or both, would constitute an Event of Default.

“Deferred Interest” shall have the meaning set forth in Section 4.1 hereof.

“Dissolution Event” means that as a result of the occurrence and continuation of a Special Event, the Trust is to be dissolved in accordance with the Trust Agreement and the Debentures held by the Property Trustee are to be distributed to the holders of the Trust Securities issued by the Trust pro rata in accordance with the Trust Agreement.

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“Event of Default” means, with respect to the Debentures, any event specified in Section 7.1, which has continued for the period of time, if any, and after the giving of the notice, if any, therein designated.

“Exchange Act,” means the Securities Exchange Act of 1934 or any successor statute thereto, in each case as amended from time to time.

“Extended Interest Payment Period” shall have the meaning set forth in Section 4.1 hereof.

“Federal Reserve” means the Board of Governors of the Federal Reserve System.

“Floating Interest Rate” shall have the meaning set forth in Section 2.5(a) hereof.

“Generally Accepted Accounting Principles” means such accounting principles as are generally accepted at the time of any computation required hereunder.

“Governmental Obligations” means securities that are (i) direct obligations of the United States of America for the payment of which its full faith and credit is pledged; or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America, the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America that, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any such Governmental Obligation or a specific payment of principal of or interest on any such Governmental Obligation held by such custodian for the account of the holder of such depository receipt; provided, however, that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the Governmental Obligation or the specific payment of principal of or interest on the Governmental Obligation evidenced by such depositary receipt.

“Herein,” “hereof,” and “hereunder,” and other words of similar import, refer to this Indenture as a whole and not to any particular Article, Section or other subdivision.

“Indenture” means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into in accordance with the terms hereof.

“Initial Interest Payment Date” means the date of the Initial Purchaser’s transfer of the Trust Preferred Securities.

“Initial Interest Payment Period” means the period of time commencing the date of issuance of the Trust Preferred Securities and this Indenture and ending upon the effective date of the transfer of the Trust Preferred Securities by the Initial Purchaser.

“Initial Purchaser” shall mean the person that acquires the Trust Preferred Securities upon the original issuance thereof by the Trust.

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“Interest Payment Date” has the meaning specified in Section 2.5(a) hereof.

“Interest Payment Period” has the meaning specified in Section 2.5(a) hereof.

“Interest Reset Date” has the meaning specified in Section 2.5(d) hereof.

“Investment Company Act,” means the Investment Company Act of 1940 or any successor statute thereto, in each case as amended from time to time.

“Investment Company Event” means the receipt by the Trust and the Company of an Opinion of Counsel, rendered by a law firm having a recognized national securities law practice, to the effect that, as a result of the occurrence of a change in law or regulation or a change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority (a “Change in 1940 Act Law”), the Trust is or shall be considered an “investment company” that is required to be registered under the Investment Company Act, which Change in 1940 Act Law becomes effective on or after the date of original issuance of the Trust Preferred Securities under the Trust Agreement; provided, however, that the Trust or the Company shall have requested and received such an Opinion of Counsel with regard to such matters within a reasonable period of time after the Trust or the Company shall have become aware of a Change in 1940 Act Law.

“LIBOR” means the London Interbank Offered Rate for U.S. Dollar deposits in Europe as determined by the Calculation Agent according to Section 2.5(d) hereof.

“Maturity Date” means the date on which the Debentures mature and on which the principal shall be due and payable together with all accrued and unpaid interest thereon including Compounded Interest and Additional Interest, if any.

“Ministerial Action” shall have the meaning set forth in Section 3.1 hereof.

“Officers’ Certificate” means a certificate signed by the Chief Executive Officer, President or a Vice President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Company that is delivered to the Trustee in accordance with the terms hereof. Each such certificate shall include the statements provided for in Section 15.7, if and to the extent required by the provisions thereof.

“Opinion of Counsel” means an opinion in writing of independent, outside legal counsel for the Company that is delivered to the Trustee in accordance with the terms hereof. Each such opinion shall include the statements provided for in Section 15.7, if and to the extent required by the provisions thereof.

“Outstanding” when used with reference to the Debentures, means, subject to the provisions of Section 10.4, as of any particular time, all Debentures theretofore authenticated and delivered by the Trustee under this Indenture, except (i) Debentures theretofore canceled by the Trustee or any Paying Agent, or delivered to the Trustee or any Paying Agent for cancellation or that have previously been canceled; (ii) Debentures or portions thereof for the payment or redemption of which money or Governmental Obligations in the necessary amount shall have been deposited in trust with the Trustee or with any Paying Agent (other than the Company) or

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shall have been set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent); provided, however, that if such Debentures or portions of such Debentures are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as provided in Article III or provision satisfactory to the Trustee shall have been made for giving such notice; and (iii) Debentures in lieu of or in substitution for which other Debentures shall have been authenticated and delivered pursuant to the terms of Section 2.7; provided, however, that in determining whether the holders of the requisite percentage of Debentures have given any such request, notice, consent or waiver hereunder, Debentures held by the Company or any Affiliate of the Company shall not be included; provided, further, that the Trustee shall be protected in acting or relying upon any request, notice, consent or waiver unless a Responsible Officer of the Trustee shall have actual knowledge that the holder of any such Debenture is the Company or an Affiliate thereof.

“Paying Agent” means any paying agent or co-paying agent appointed pursuant to Section 5.3 hereof.

“Person” means any individual, corporation, partnership, trust, limited liability company, joint venture, joint-stock company, unincorporated organization or other entity or government or any agency or political subdivision thereof.

“Predecessor Debenture” means every previous Debenture evidencing all or a portion of the same debt as that evidenced by such particular Debenture; and, for the purposes of this definition, any Debenture authenticated and delivered under Section 2.9 in lieu of a lost, destroyed or stolen Debenture shall be deemed to evidence the same debt as the lost, destroyed or stolen Debenture.

“Property Trustee” has the meaning set forth in the Trust Agreement.

“Resale Restriction Termination Date” means, with respect to the offer, sale or other transfer of a Debenture, (a) the date which is two years (or such shorter period of time as permitted by Rule 144(k) under the Securities Act) after the later of the original issue date of such Debenture and the last date on which the Company or any Affiliate of the Company was the owner of such Debenture (or any predecessor of the Debenture) and (b) such later date, if any, as may be required by applicable laws.

“Redemption Date” shall have the meaning set forth in Section 3.2(a) hereof.

“Redemption Price” shall have the meaning set forth in Section 3.1 hereof.

“Responsible Officer” when used with respect to the Trustee means any officer within the Corporate Trust Office of the Trustee with direct responsibility for the administration of this Indenture, including any vice president, any assistant vice president, any assistant secretary or any other officer or assistant officer of the Trustee customarily performing functions similar to those performed by the Persons who at the time shall be such officers or to whom such corporate trust matter is referred because of that officer’s knowledge of and familiarity with the particular subject.

“Scheduled Maturity Date” means November 7, 2032.

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“Securities Act,” means the Securities Act of 1933 or any successor statute thereto, in each case as amended from time to time.

“Senior Debt” means the principal of (and premium, if any) and interest, if any (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company whether or not such claim for post-petition interest is allowed in such proceeding), on all Debt, whether incurred on or prior to the date of this Indenture or thereafter incurred, unless, in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that such obligations are not superior in right of payment to the Debentures or to other Debt which is pari passu with, or subordinated to, the Debentures; provided, however, that Senior Debt shall not be deemed to include (i) any Debt of the Company owed which when incurred and without respect to any election under Section 1111(b) of the United States Bankruptcy Code of 1978, as amended, was without recourse to the Company; (ii) Debt which by its terms is subordinated to trade accounts payable or accrued liabilities arising in the ordinary course of business; and (iii) Debt which constitutes Subordinated Debt.

“Senior Indebtedness” shall have the meaning set forth in Section 16.1 hereof.

“Special Event” means a Tax Event, an Investment Company Event or a Capital Treatment Event.

“Subordinated Debt” means the principal of (and premium, if any) and interest, if any (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company whether or not such claim for post-petition interest is allowed in such proceeding), on Debt, whether incurred on or prior to the date of this Indenture or thereafter incurred, which is by its terms expressly provided to be junior and subordinate to Senior Debt of the Company (other than the Debentures); provided, however, that Subordinated Debt will not be deemed to include (i) any Debt of the Company which when incurred and without respect to any election under Section 1111(b) of the United States Bankruptcy Code of 1978, as amended, was without recourse to the Company, (ii) any Debt which by its terms is subordinated to trade accounts payable or accrued liabilities arising in the ordinary course of business; (iii) Debt which constitutes Senior Debt and (iv) any Debt of the Company under debt securities (and guarantees in respect of these debt securities) initially issued to any trust, or a trustee of a trust, partnership or other entity affiliated with the Company that is, directly or indirectly, a financing vehicle of the Company in connection with the issuance by that entity of preferred securities or other securities which are intended to qualify for Tier 1 capital treatment for purposes of the capital adequacy guidelines of the Federal Reserve, as then in effect.

“Subsidiary” means, with respect to any Person, (i) any corporation at least a majority of whose outstanding Voting Stock shall at the time be owned, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries; (ii) any general partnership, limited liability company, joint venture or similar entity, at least a majority of whose outstanding partnership or similar interests shall at the time be owned by such Person, or by one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries; and (iii) any limited partnership of which such Person or any of its Subsidiaries is a general partner.

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“Tax Event” means the receipt by the Company and the Trust of an Opinion of Counsel, rendered by a law firm having a recognized federal tax law practice, to the effect that, as a result of any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, or as a result of any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or which pronouncement or decision is announced on or after the date of issuance of the Trust Preferred Securities under the Trust Agreement, there is more than an insubstantial risk that (i) the Trust is, or shall be within 90 days after the date of such Opinion of Counsel, subject to United States federal income tax with respect to income received or accrued on the Debentures; (ii) interest payable by the Company on the Debentures is not, or within 90 days after the date of such Opinion of Counsel, shall not be, deductible by the Company, in whole or in part, for United States federal income tax purposes; or (iii) the Trust is, or shall be within 90 days after the date of such Opinion of Counsel, subject to more than a de minimis amount of other taxes, duties, assessments or other governmental charges; provided, however, that the Trust or the Company shall have requested and received such an Opinion of Counsel with regard to such matters within a reasonable period of time after the Trust or the Company shall have become aware of the occurrence or the possible occurrence of any of the events described in clauses (i) through (iii) above.

“Three-Month LIBOR” shall have the meaning set forth in Section 2.5(d) hereof.

“Trust” means Indian River Capital Trust I, a Delaware statutory business trust.

“Trust Agreement” means the Amended and Restated Trust Agreement, effective as of September 30, 2002, of the Trust, as amended from time to time.

“Trust Preferred Securities” means undivided preferred beneficial interests in the assets of the Trust that rank pari passu with Common Securities issued by the Trust; provided, however, that upon the occurrence of an Event of Default, the rights of holders of Common Securities to payment in respect of distributions and payments upon liquidation, redemption and otherwise are subordinated to the rights of holders of Trust Preferred Securities.

“Trust Preferred Securities Guarantee” means any guarantee that the Company may enter into with the Trustee or other Persons that operates directly or indirectly for the benefit of holders of Trust Preferred Securities.

“Trustee” means Wells Fargo Bank, National Association and, subject to the provisions of Article IX, shall also include its successors and assigns in each such Person’s capacity as trustee hereunder, and, if at any time there is more than one Person acting in such capacity hereunder, “Trustee” shall mean each such Person.

“Trust Indenture Act,” means the Trust Indenture Act of 1939 or any successor statute thereto, in each case as amended from time to time.

“Trust Securities” means the Common Securities and Trust Preferred Securities, collectively.

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“Voting Stock,” as applied to stock of any Person, means shares, interests, participations or other equivalents in the equity interest (however designated) in such Person having ordinary voting power for the election of a majority of the directors (or the equivalent) of such Person, other than shares, interests, participations or other equivalents having such power only by reason of the occurrence of a contingency.

ARTICLE II

ISSUE, DESCRIPTION, TERMS, CONDITIONS,

REGISTRATION AND EXCHANGE OF THE DEBENTURES

Section 2.1 Designation and Principal Amount.

There is hereby authorized Debentures designated the “Floating Rate Junior Subordinated Deferrable Interest Debentures due November 7, 2032,” limited in aggregate principal amount to Seven Million Two Hundred Seventeen Thousand Dollars ($7,217,000) which amount shall be as set forth in any written order of the Company for the authentication and delivery of Debentures pursuant to Section 2.6.

Section 2.2 Maturity.

(a) The Maturity Date shall be either:

(i) the Scheduled Maturity Date; or

(ii) if the Company elects to accelerate the Maturity Date to be a date prior to the Scheduled Maturity Date in accordance with Sections 2.2(b) and 2.2(c), the Accelerated Maturity Date.

(b)       The Company may at any time before the day which is 90 days before the Scheduled Maturity Date and after November 7, 2007, elect to shorten the Maturity Date only once to the Accelerated Maturity Date provided that the Company has received the prior approval of the Federal Reserve if then required under applicable capital guidelines, policies or regulations of the Federal Reserve.

(c)       If the Company elects to accelerate the Maturity Date in accordance with Section 2.2(b), the Company shall give notice to the Trustee and the Trust (unless the Property Trustee is not the holder of the Debentures, in which case the Trustee will give notice to the holders of the Debentures) of the acceleration of the Maturity Date and the Accelerated Maturity Date at least 30 days and no more than 180 days before the Accelerated Maturity Date.

Section 2.3 Form and Payment.

The Debentures shall be issued in certificated form, registered in the name of the holder thereof, without interest coupons. The Debentures, including the Certificate of Authentication, shall be substantially in the form of Exhibit A hereto. Prior to the Resale Restriction Termination Date, the Debentures will be issued and may only be transferred in a minimum

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aggregate principal amount of $100,000. Subsequent to the Resale Restriction Termination Date, the Debentures may only be transferred in a minimum aggregate principal amount of $100,000. Any attempted transfer not in accordance with the preceding two sentences shall be void and of no effect whatsoever.

Principal and interest on the Debentures issued in certificated form shall be payable, the transfer of such Debentures shall be registrable and such Debentures shall be exchangeable for Debentures bearing identical terms and provisions at or through the office or agency of the Trustee; provided, however, that payment of interest may be made at the option of the Company by check mailed to the holder at such address as shall appear in the Debenture Register or by wire transfer to an account maintained by the holder as specified in the Debenture Register, provided that the holder provides proper transfer instructions by the regular record date. Notwithstanding the foregoing, so long as the holder of any Debentures is the Property Trustee, the payment of principal of and interest (including Compounded Interest and Additional Interest, if any) on such Debentures held by the Property Trustee shall be made at such place and to such account as may be designated by the Property Trustee.

Section 2.4 Initial Interest Payment Period. During the Initial Interest Payment Period, the Debenture shall accrue interest at the rate of 3.55% per annum over the Three-Month LIBOR Rate (as defined in Section 2.5(d) below). Interest during the Initial Interest Payment Period shall be computed in accordance with Section 2.5(c) of this Indenture and shall be paid upon the Initial Interest Payment Date in the manner set forth in Section 2.3 of this Indenture.

Section 2.5 Interest.

(a) [Commencing upon the Initial Interest Payment Period, payment on the Debentures shall be payable at a floating rate (the “Floating Interest Rate”) equal to no more than 3.75% over the Three Month LIBOR Rate (the “Rate Premium”). The Rate Premium shall be determined on the Initial Interest Payment Date. Interest shall be calculated at the Floating Interest Rate from the Initial Interest Payment Date until the principal thereof becomes due and payable, and on any overdue principal and (to the extent that payment of such interest is enforceable under applicable law) on any overdue installment of interest at the Floating Interest Rate, compounded quarterly, payable (subject to the provisions of Section 2.4 and Article IV) quarterly in arrears on February 7, May 7, August 7 and November 7 each year (each such date, an “Interest Payment Date,” and each quarterly period, an “Interest Payment Period”), commencing on day following the date of expiration of the Initial Interest Payment Period to the Person in whose name such Debenture or any Predecessor Debenture is registered, at the close of business on the regular record date for such interest installment, which shall be the 15^th of the month of preceding Interest Payment Date. The first Distribution Date shall be on February 7, 2003.

(b) The Floating Interest Rate for each Interest Payment Period will be set on the second London business day preceding each Interest Payment Date; provided, that the initial Floating Interest Rate will be set on the second London business day preceding the Initial Interest Payment Date. If the Interest Reset Date is not a Business Day, then such Interest Reset Date shall be the next succeeding day which is a Business Day. In no event shall the Floating Interest Rate exceed 12% prior to November 7, 2007.

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(c) The amount of interest payable for the Initial Interest Payment Period and any Interest Payment Period shall be computed on the basis of a 360-day year and the actual number of days in such Initial Interest Payment Period or Interest Payment Period. In the event that any date on which interest is payable on the Debentures is not a Business Day, then payment of interest payable on such date shall be made on the next succeeding day which is a Business Day except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the date such payment was originally payable.

(d) The “Three-Month LIBOR Rate” shall mean the rate determined in accordance with the following provisions:

(i) On the second London Business Day (provided that on such day commercial banks are open for business (including dealings in foreign currency deposits) in London (a “LIBOR Banking Day”) preceding each March 15, June 15, September 15 and November 15 (except with respect to the Initial Interest Payment Period and the Interest Payment Period commencing the day after the Initial Interest Payment Date) (each such date, an “Interest Reset Date”), Wells Fargo Bank, National Association (the “Calculation Agent”), will determine the Three-Month LIBOR Rate which shall be the rate for deposits in the London interbank market in U.S. dollars having a three-month maturity which appears on the Telerate Page 3750 as of 11:00 a.m., London time, on such Interest Reset Date. “Telerate Page 3750” means the display on Page 3750 of the Bloomberg Financial Markets Commodities News (or such other page as may replace that page on that service for the purpose of displaying London interbank offered rates of major banks for U.S. dollar deposits). If the Three-Month LIBOR Rate on such Interest Reset Date does not appear on the Telerate Page 3750, such Three-Month LIBOR Rate will be determined as described in (ii) below. “LIBOR Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banking institutions in New York, New York or Wilmington, Delaware are authorized or obligated by law or executive order to be closed. If such rate is superseded on Telerate Page 3750 by a corrected rate before 12:00 noon (London time) on the same Interest Reset Date, the corrected rate as so substituted will be the applicable LIBOR for that Interest Reset Date.

(ii) If, on any Interest Reset Date, such rate does not appear on Telerate Page 3750 as reported by Bloomberg Financial Markets Commodities News or such other page as may replace such Telerate Page 3750, the Calculation Agent shall determine the arithmetic mean of quotations of the Reference Banks (defined below) to leading banks in the London interbank market for three-month U.S. Dollar deposits in Europe (in an amount determined

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by the Calculation Agent by reference to requests for quotations as of approximately 11:00 a.m. (London time) on the Interest Reset Date made by the Calculation Agent to the Reference Banks. If, on any Interest Reset Date, only one or none of the Reference Banks provide such a quotation, LIBOR shall be deemed to be the arithmetic mean of the offered quotations that at least two leading banks in the City of New York (as selected by the Calculation Agent) are quoting on the relevant Interest Reset Date for three-month U.S. Dollar deposits in Europe at approximately 11:00 a.m. (London time) (in an amount determined by the Calculation Agent). As used herein, “Reference Banks” means four major banks in the London interbank market selected by the Calculation Agent.

(iii) If the Calculation Agent is required but is unable to determine a rate in accordance with at least one of the procedures provided above, LIBOR shall be LIBOR in effect on the previous Interest Reset Date (whether or not LIBOR for such period was in fact determined on such Interest Reset Date)

(e) The Floating Interest Rate and amount of interest to be paid on the debentures for the Initial Interest Payment Period and each Interest Payment Period will be determined by the Calculation Agent. All calculations made by the Calculation Agent shall, in the absence of manifest error, be conclusive for all purposes and binding on the Company and the holders of this Debenture. In the event that any then acting Calculation Agent shall be unable or unwilling to act, or that such Calculation Agent shall fail duly to establish the Floating Interest Rate for any Interest Payment Period, or that the Company proposes to remove such Calculation Agent, or that the Calculation Agent proposes to terminate its services as Calculation Agent, the Company shall appoint another Person, which is a bank, trust company, investment banking firm or other financial institution, to act as the Calculation Agent. The Trustee shall provide written notice of the Floating Interest Rate as certified by the Calculation Agent to each holder of Debentures as set forth in the Debenture Register no later than five Business Days following each Interest Reset Date.

(f) If, at any time while the Trust or the Property Trustee is the holder of any Debentures, the Trust or the Property Trustee is subject to or is required to pay any taxes, duties, assessments or governmental charges of whatever nature (including withholding taxes) imposed by the United States, or any other taxing authority, then, in any case, the Company shall pay as additional amounts (“Additional Sums”) on the Debentures held by the Trust or the Property Trustee, such additional amounts as shall be required so that the net amounts received and retained by the Trust and the Property Trustee after the withholding or paying of such taxes, duties, assessments or other governmental charges shall be equal to the amounts the Trust and the Property Trustee would have received and retained had no such taxes, duties, assessments or other government charges been imposed.

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(h) The Floating Interest Rate will in no event be higher than the maximum rate permitted by the law of the State of Florida, or, if higher, the law of the United States of America.

Section 2.6 Execution and Authentications.

(a) The Debentures shall be signed on behalf of the Company by its Chief Executive Officer, President or one of its Vice Presidents, under its corporate seal, if any, attested by its Secretary or one of its Assistant Secretaries. Signatures may be in the form of a manual or facsimile signature. The Company may use the facsimile signature of any Person who shall have been a Chief Executive Officer, President or Vice President thereof, or of any Person who shall have been a Secretary or Assistant Secretary thereof, notwithstanding the fact that at the time the Debentures shall be authenticated and delivered or disposed of such Person shall have ceased to be the Chief Executive Officer, President or a Vice President, or the Secretary or an Assistant Secretary, of the Company (and any such signature shall be binding on the Company). The corporate seal of the Company, if any, may be in the form of a facsimile of such seal and may be impressed, affixed, imprinted or otherwise reproduced on the Debentures. The Debentures may contain such notations, legends or endorsements required by law, stock exchange rule or usage. Each Debenture shall be dated the date of its authentication by the Trustee. A Debenture shall not be valid until authenticated manually by an authorized signatory of the Trustee, or by an Authenticating Agent. Such signature shall be conclusive evidence that the Debenture so authenticated has been duly authenticated and delivered hereunder and that the holder is entitled to the benefits of this Indenture.

(b) At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Debentures executed by the Company to the Trustee for authentication, together with a written order of the Company for the authentication and delivery of such Debentures signed by its Chief Executive Officer, President or any Vice President and its Treasurer or any Assistant Treasurer, and the Trustee in accordance with such written order shall authenticate and deliver such Debentures.

(c) In authenticating such Debentures and accepting the additional responsibilities under this Indenture in relation to such Debentures, the Trustee shall be entitled to receive, and (subject to Section 9.1(b)) shall be fully protected in relying upon, an Opinion of Counsel stating that the form and terms thereof have been established in conformity with the provisions of this Indenture.

(d) The Trustee shall not be required to authenticate such Debentures if the issue of such Debentures pursuant to this Indenture shall affect the Trustee’s own rights, duties or immunities under the Debentures and this Indenture or otherwise in a manner that is not reasonably acceptable to the Trustee.

Section 2.7 Registration of Transfer and Exchange.

(a) Subject to Section 2.3, Debentures may be exchanged upon presentation thereof at the office or agency of the Company designated for such purpose in

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Wilmington, Delaware or at the office of the Debenture Registrar, for other Debentures and for a like aggregate principal amount in denominations of integral multiples of $1,000, upon payment of a sum sufficient to cover any tax or other governmental charge in relation thereto, all as provided in this Section 2.7. In respect of any Debentures so surrendered for exchange, the Company shall execute, the Trustee, upon written order of the Company, shall authenticate and such office or agency shall deliver in exchange therefore the Debenture or Debentures that the Debentureholder making the exchange shall be entitled to receive, bearing numbers not contemporaneously outstanding.

(b) The Company shall keep, or cause to be kept, at its office or agency designated for such purpose in Wilmington, Delaware or at the office of the Debenture Registrar or such other location designated by the Company a register or registers (herein referred to as the “Debenture Register”) in which, subject to such reasonable regulations as it may prescribe, the Company shall register the Debentures and the transfers of Debentures as provided in this Article II and which at all reasonable times shall be open for inspection by the Trustee. The registrar for the purpose of registering Debentures and transfer of Debentures as herein provided shall initially be the Trustee and thereafter as may be appointed by the Company as authorized by Board Resolution (the “Debenture Registrar”). Subject to Section 2.3, upon surrender for transfer of any Debenture at the office or agency of the Company designated for such purpose, the Company shall execute, the Trustee, upon written order of the Company, shall authenticate and such office or agency shall deliver in the name of the transferee or transferees a new Debenture or Debentures for a like aggregate principal amount. All Debentures presented or surrendered for exchange or registration of transfer, as provided in this Section 2.7, shall be accompanied (if so required by the Company or the Debenture Registrar) by a written instrument or instruments of transfer, in form satisfactory to the Company or the Debenture Registrar, duly executed by the registered holder or by such holder’s duly authorized attorney in writing.

(c) Notwithstanding anything herein to the contrary, Debentures may not be transferred except in compliance with the restricted securities legends set forth below, unless otherwise determined by the Company, upon the advice of legal counsel, in accordance with applicable law:

THIS DEBENTURE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAWS. NEITHER THIS DEBENTURE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. PRIOR TO (X) THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(k) UNDER THE SECURITIES ACT) AFTER THE LATER OF (i) THE ORIGINAL ISSUE DATE HEREOF OR (ii) THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS DEBENTURE (OR ANY PREDECESSOR OF THIS DEBENTURE) AND (Y) SUCH LATER DATE,

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IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAWS (THE “RESALE RESTRICTION TERMINATION DATE”), THE HOLDER OF THIS DEBENTURE BY ITS ACCEPTANCE HEREOF AGREES FOR THE BENEFIT OF THE COMPANY TO OFFER, SELL OR OTHERWISE TRANSFER THIS DEBENTURE ONLY (A) TO THE COMPANY OR AN AFFILIATE OF THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THIS DEBENTURE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A (“RULE 144A”) PROMULGATED UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A, (D) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS DEBENTURE FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL “ACCREDITED INVESTOR,” FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE, TRANSFER OR OTHER DISPOSITION (i) PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY BY THE HOLDER OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO THE COMPANY TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS DEBENTURE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE AND THE REGISTRAR IN CONNECTION WITH ANY TRANSFER OF THIS DEBENTURE PRIOR TO THE RESALE RESTRICTION TERMINATION DATE. THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE CERTIFICATE OF TRANSFER RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THE CERTIFICATE OF TRANSFER TO THE TRUSTEE AND THE REGISTRAR. THIS LEGEND WILL BE REMOVED UPON REQUEST OF THE HOLDER AFTER THE EARLIER OF (i) THE TRANSFER OF THE DEBENTURE EVIDENCED HEREBY PURSUANT TO CLAUSE (B) ABOVE OR (ii) THE RESALE RESTRICTION TERMINATION DATE. THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS DEBENTURE OF THE RESALE RESTRICTIONS REFERRED TO HEREIN.

PRIOR TO THE RESALE RESTRICTION TERMINATION DATE, THIS DEBENTURE MAY BE TRANSFERRED OR EXCHANGED ONLY IN A MINIMUM AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000. ANY

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ATTEMPTED TRANSFER OF THIS DEBENTURE IN AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000 PRIOR TO THE RESALE RESTRICTION TERMINATION DATE SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. AFTER SUCH RESALE RESTRICTION TERMINATION DATE, ANY ATTEMPTED TRANSFER OF THIS DEBENTURE IN AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF THIS DEBENTURE FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RIGHT TO RECEIVE INTEREST PAYMENTS ON THIS DEBENTURE, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS DEBENTURE.

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE REQUIRED BY THE INDENTURE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

(d) No service charge shall be made for any exchange or registration of transfer of Debentures, or issue of new Debentures in case of partial redemption, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge in relation thereto. Other than exchanges pursuant to Section 2.8, the Company shall not be required (i) to issue, exchange or register the transfer of any Debentures during a period beginning at the opening of 15 business days before the day of the mailing of a notice of redemption of less than all the Outstanding Debentures and ending at the close of business on the day of such mailing; nor (ii) to register the transfer of or exchange any Debentures or portions thereof called for redemption.

(e) Nothing herein withstanding, the Property Trustee shall not be authorized, other than in the case of Default, to cause the transfer of a Debenture issued hereunder except (i) upon prior consent and authorization by the Administrative Trustees or (ii) upon order of a court of competent jurisdiction.

(f) Debentures may only be transferred, in whole or in part, in accordance with the terms and conditions set forth in this Indenture. Any transfer or purported transfer of any Debenture not made in accordance with this Indenture shall be null and void.

Section 2.8 Temporary Debentures.

Pending the preparation of definitive Debentures, the Company may execute, and the Trustee shall authenticate and deliver, temporary Debentures (printed, lithographed, or typewritten). Such temporary Debentures shall be substantially in the form of the definitive Debentures in lieu of which they are issued, but with such omissions, insertions and variations as may be appropriate for temporary Debentures, all as may be determined by the Company. Every temporary Debenture shall be executed by the Company and be authenticated by the Trustee upon the same conditions and in substantially the same manner, and with like effect, as the

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definitive Debentures. Without unnecessary delay the Company shall execute and shall furnish definitive Debentures and thereupon any or all temporary Debentures may be surrendered in exchange therefor (without charge to the holders), at the office or agency of the Company designated for that purpose in Wilmington, Delaware or such other office or agency as the Company shall designate for that purpose pursuant to Section 5.2 hereof, and the Trustee shall authenticate, upon written order of the Company, and such office or agency shall deliver in exchange for such temporary Debentures an equal aggregate principal amount of definitive Debentures, unless the Company advises the Trustee to the effect that definitive Debentures need not be authenticated and furnished until further notice from the Company. Until so exchanged, the temporary Debentures shall be entitled to the same benefits under this Indenture as definitive Debentures authenticated and delivered hereunder.

Section 2.9 Mutilated, Destroyed, Lost or Stolen Debentures.

(a) In case any temporary or definitive Debenture shall become mutilated or be destroyed, lost or stolen, the Company (subject to the next succeeding sentence) shall execute, and upon the Company’s written order and request the Trustee (subject as aforesaid) shall authenticate and deliver, a new Debenture bearing a number not contemporaneously outstanding, in exchange and substitution for the mutilated Debenture, or in lieu of and in substitution for the Debenture so destroyed, lost, stolen or mutilated. In every case the applicant for a substituted Debenture shall furnish to the Company and the Trustee such security or indemnity as may be required by them to hold each of them harmless, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Company and the Trustee evidence to their satisfaction of the destruction, loss or theft of the applicant’s Debenture and of the ownership thereof. The Trustee may authenticate any such substituted Debenture and deliver the same upon the written order and request or authorization of the Chief Executive Officer, President or any Vice President and the Treasurer or any Assistant Treasurer of the Company. Upon the issuance of any substituted Debenture, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. In case any Debenture that has matured or is about to mature shall become mutilated or be destroyed, lost or stolen, the Company may, instead of issuing a substitute Debenture, pay or authorize the payment of the same (without surrender thereof except in the case of a mutilated Debenture) if the applicant for such payment shall furnish to the Company and the Trustee such security or indemnity as they may require to hold them harmless, and, in case of destruction, loss or theft, evidence to the satisfaction of the Company and the Trustee of the destruction, loss or theft of such Debenture and of the ownership thereof.

(b) Every replacement Debenture issued pursuant to the provisions of this Section 2.9 shall constitute an additional contractual obligation of the Company whether or not the mutilated, destroyed, lost or stolen Debenture shall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Debentures duly issued hereunder. All Debentures shall be held and owned upon the express condition that the foregoing provisions are exclusive with respect to the replacement or payment of mutilated,

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destroyed, lost or stolen Debentures, and shall preclude (to the extent lawful) any and all other rights or remedies, notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender.

Section 2.10 Cancellation.

All Debentures surrendered for the purpose of payment, redemption, exchange or registration of transfer shall, if surrendered to the Company or any Paying Agent, be delivered to the Trustee for cancellation, or, if surrendered to the Trustee, shall be canceled by it, and no Debentures shall be issued in lieu thereof except as expressly required or permitted by any of the provisions of this Indenture. On request of the Company at the time of such surrender, the Trustee shall deliver to the Company canceled Debentures held by the Trustee. In the absence of such request the Trustee may dispose of canceled Debentures in accordance with its standard procedures and deliver a certificate of disposition to the Company. If the Company shall otherwise acquire any of the Debentures, however, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Debentures unless and until the same are delivered to the Trustee for cancellation.

Section 2.11 Benefit of Indenture.

Nothing in this Indenture or in the Debentures, express or implied, shall give or be construed to give to any Person, other than the parties hereto and the holders of the Debentures (and, with respect to the provisions of Article XVI, the holders of the Senior Indebtedness) any legal or equitable right, remedy or claim under or in respect of this Indenture, or under any covenant, condition or provision herein contained; all such covenants, conditions and provisions being for the sole benefit of the parties hereto and of the holders of the Debentures (and, with respect to the provisions of Article XVI, the holders of the Senior Indebtedness).

Section 2.12 Authentication Agent.

(a) So long as any of the Debentures remain Outstanding there may be an Authenticating Agent for any or all such Debentures, and the Trustee shall have the right to appoint such Authenticating Agent. Said Authenticating Agent shall be authorized to act on behalf of the Trustee to authenticate Debentures issued upon exchange, transfer or partial redemption thereof, and Debentures so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. All references in this Indenture to the authentication of Debentures by the Trustee shall be deemed to include authentication by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall be a corporation that has a combined capital and surplus, as most recently reported or determined by it, sufficient under the laws of any jurisdiction under which it is organized or in which it is doing business to conduct a trust business, and that is otherwise authorized under such laws to conduct such business and is subject to supervision or examination by federal or state authorities. If at any time any Authenticating Agent shall cease to be eligible in accordance with these provisions, it shall resign immediately.

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(b) Any Authenticating Agent may at any time resign by giving written notice of resignation to the Trustee and to the Company. The Trustee may at any time (and upon request by the Company shall) terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and to the Company. Upon resignation, termination or cessation of eligibility of any Authenticating Agent, the Trustee may appoint an eligible successor Authenticating Agent acceptable to the Company. Any successor Authenticating Agent, upon acceptance of its appointment hereunder, shall become vested with all the rights, powers and duties of its predecessor hereunder as if originally named as an Authenticating Agent pursuant hereto.

ARTICLE III

REDEMPTION OF DEBENTURES

Section 3.1 Special Event Redemption.

If, prior to November 7, 2007, a Special Event has occurred and is continuing, then, notwithstanding Section 3.2(a) but subject to Section 3.2(b), the Company shall have the right upon not less than 30 days’ nor more than 60 days’ notice to the holders of the Debentures to redeem the Debentures, in whole but not in part, for cash within 180 days following the occurrence of such Special Event (the “180-Day Period”) at a redemption price equal to One Hundred Three Percent (103%) of the principal amount to be redeemed plus any accrued and unpaid interest thereon to the date of such redemption (the “Redemption Price”), provided that if at the time there is available to the Company the opportunity to eliminate, within the 180-Day Period, a Tax Event by taking some ministerial action (a “Ministerial Action”), such as filing a form or making an election, or pursuing some other similar reasonable measure which has no adverse effect on the Company, the Trustee, the Trust or the holders of the Trust Securities issued by the Trust, the Company shall pursue such Ministerial Action in lieu of redemption. The Redemption Price shall be paid prior to 12:00 noon, New York time, on the date of such redemption or such earlier time as the Company determines, provided that the Company shall deposit with the Trustee an amount sufficient to pay the Redemption Price by 10:00 a.m., New York time, on the date such Redemption Price is to be paid.

Section 3.2 Optional Redemption by Company.

(a) Subject to the provisions of Section 3.2(b), except as otherwise may be specified in this Indenture, the Company shall have the right to redeem the Debentures, in whole or in part, from time to time, on any Interest Payment Date after November 7, 2007 (each a “Redemption Date”), at a Redemption Price equal to 100% of the principal amount to be redeemed plus any accrued and unpaid interest thereon to the Redemption Date. Any redemption pursuant to this Section 3.2(a) shall be made upon not less than 30 days’ nor more than 60 days’ notice to the holder of the Debentures, at the Redemption Price. If the Debentures are only partially redeemed pursuant to this Section 3.2, the Debentures shall be redeemed pro rata or by lot or in such other manner as the Trustee shall in good faith deem appropriate and fair in its sole discretion. The Redemption Price shall be paid prior to 12:00 noon, New York time, on the Redemption Date or at such earlier time as the Company determines provided that the Company shall deposit with the Trustee an amount sufficient to pay the Redemption Price by 10:00 a.m., New York time, on the Redemption Date.

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(b) Any redemption of Debentures pursuant to Section 3.1 or Section 3.2 shall be subject to the Company obtaining the prior approval of the Federal Reserve, if such approval is then required under the applicable capital guidelines, policies or regulations of the Federal Reserve, and any other required regulatory approvals.

(c) If a partial redemption of the Debentures would result in the delisting of the Trust Preferred Securities issued by the Trust from any national securities exchange or other organization on which the Trust Preferred Securities are then listed, if any, the Company shall not be permitted to effect such partial redemption and may only redeem the Debentures in whole.

(d) Subject to the provisions of this Section 3.2, the Company shall have the right to redeem Debentures in a principal amount equal to the Liquidation Amount (as defined in the Trust Agreement) of any Trust Preferred Securities purchased and beneficially owned by the Company, plus an additional principal amount of Debentures equal to the Liquidation Amount (as defined in the Trust Agreement) of that number of Common Securities that bears the same proportion to the total number of Common Securities then outstanding as the number of Trust Preferred Securities to be redeemed bears to the total number of Trust Preferred Securities then outstanding. Such Debentures shall be redeemed pursuant to this Section 3.2(d) only in exchange for and upon surrender by the Company to the Property Trustee of the Trust Preferred Securities and a proportionate amount of Common Securities, whereupon the Property Trustee shall cancel the Trust Preferred Securities and Common Securities so surrendered and a Like Amount (as defined in the Trust Agreement) of Debentures shall be extinguished by the Trustee and shall no longer be deemed Outstanding.

Section 3.3 Notice of Redemption.

In case the Company shall desire to exercise such right to redeem all or, as the case may be, a portion of the Debentures in accordance with the right reserved so to do, the Company shall, or shall cause the Trustee to upon receipt of at least 45 days’ written notice from the Company (which notice shall, in the event of a partial redemption, include a representation to the effect that such partial redemption will not result in the delisting of the Trust Preferred Securities as described in Section 3.2(c) above), give notice of such redemption to holders of the Debentures to be redeemed by mailing, first class postage prepaid, a notice of such redemption not less than 30 days and not more than 180 days before the date fixed for redemption to such holders at their last addresses as they shall appear upon the Debenture Register unless a shorter period is specified in the Debentures to be redeemed. Any notice that is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the registered holder receives the notice. In any case, failure duly to give such notice to the holder of any Debenture designated for redemption in whole or in part, or any defect in the notice, shall not affect the validity of the proceedings for the redemption of any other Debentures. In the case of any redemption of Debentures prior to the expiration of any

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restriction on such redemption provided in the terms of such Debentures or elsewhere in this Indenture, the Company shall furnish the Trustee with an Officers’ Certificate evidencing compliance with any such restriction. Each such notice of redemption shall specify the date fixed for redemption and the Redemption Price and shall state that payment of the Redemption Price shall be made at the office or agency of the Company or at the Corporate Trust Office of the Trustee, upon presentation and surrender of such Debentures, that interest accrued to the date fixed for redemption shall be paid as specified in said notice and that from and after said date interest shall cease to accrue. If less than all the Debentures are to be redeemed, the notice to the holders of the Debentures shall specify the particular Debentures to be redeemed. If the Debentures are to be redeemed in part only, the notice shall state the portion of the principal amount thereof to be redeemed and shall state that on and after the redemption date, upon surrender of such Debenture, a new Debenture or Debentures in principal amount equal to the unredeemed portion thereof will be issued to the holder. If less than all the Debentures are to be redeemed, the Company shall give the Trustee at least 45 days’ notice in advance of the date fixed for redemption as to the aggregate principal amount of Debentures to be redeemed, and thereupon the Trustee shall select, pro rata or by lot or in such other manner as it shall in good faith deem appropriate and fair in its sole discretion, the portion or portions (equal to $1,000 or any integral multiple thereof) of the Debentures to be redeemed and shall thereafter promptly notify the Company in writing of the numbers of the Debentures to be redeemed, in whole or in part. The Company may, if and whenever it shall so elect pursuant to the terms hereof, by delivery of instructions signed on its behalf by its Chief Executive Officer, its President or any Vice President, instruct the Trustee or any Paying Agent to call all or any part of the Debentures for redemption and to give notice of redemption in the manner set forth in this Section 3.3, such notice to be in the name of the Company or its own name as the Trustee or such Paying Agent may deem advisable. In any case in which notice of redemption is to be given by the Trustee or any such Paying Agent, the Company shall deliver or cause to be delivered to, or permit to remain with, the Trustee or such Paying Agent, as the case may be, such Debenture Register, transfer books or other records, or suitable copies or extracts therefrom, sufficient to enable the Trustee or such Paying Agent to give any notice by mail that may be required under the provisions of this Section 3.3.

Section 3.4 Payment Upon Redemption.

(a) If the giving of notice of redemption shall have been completed as above provided, the Debentures or portions of Debentures to be redeemed specified in such notice shall become due and payable on the date and at the place stated in such notice at the applicable Redemption Price, and interest on such Debentures or portions of Debentures shall cease to accrue on and after the date fixed for redemption, unless the Company shall default in the payment of such Redemption Price with respect to any such Debenture or portion thereof. On presentation and surrender of such Debentures on or after the date fixed for redemption at the place of payment specified in the notice, said Debentures shall be paid and redeemed at the Redemption Price (but if the date fixed for redemption is an Interest Payment Date, the interest installment payable on such date shall be payable to the registered holder at the close of business on the applicable record date).

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(b) Upon presentation of any Debenture that is to be redeemed in part only, the Company shall execute and the Trustee or the Authenticating Agent, upon written order of the Company, shall authenticate and the office or agency where the Debenture is presented shall deliver to the holder thereof, at the expense of the Company, a new Debenture of authorized denomination in principal amount equal to the unredeemed portion of the Debenture so presented.

Section 3.5 No Sinking Fund.

The Debentures are not entitled to the benefit of any sinking fund.

ARTICLE IV

EXTENSION OF INTEREST PAYMENT PERIOD

Section 4.1 Extension of Interest Payment Period.

The Company shall have the right, at any time and from time to time during the term of the Debentures so long as no Event of Default has occurred and is continuing, to defer payments of interest by extending the interest payment period of such Debentures for a period not exceeding 20 consecutive quarters (the “Extended Interest Payment Period”), during which Extended Interest Payment Period no interest shall be due and payable; provided that no Extended Interest Payment Period may extend beyond the Maturity Date or end on a date other than an Interest Payment Date. To the extent permitted by applicable law, interest, the payment of which has been deferred because of the extension of the interest payment period pursuant to this Section 4.1, shall bear interest thereon at the Floating Interest Rate in effect for each period compounded quarterly for each quarter of the Extended Interest Payment Period (“Compounded Interest”). At the end of the Extended Interest Payment Period, the Company shall calculate (and deliver such calculation to the Trustee) and pay all interest accrued and unpaid on the Debentures, including any Additional Interest and Compounded Interest (together, “Deferred Interest”) that shall be payable to the holders of the Debentures in whose names the Debentures are registered in the Debenture Register on the first record date after the end of the Extended Interest Payment Period. Before the termination of any Extended Interest Payment Period, the Company may further extend such period so long as no Event of Default has occurred and is continuing, provided that such period together with all such further extensions thereof shall not exceed 20 consecutive quarters, or extend beyond the Maturity Date of the Debentures or end on a date other than an Interest Payment Date. Upon the termination of any Extended Interest Payment Period and upon the payment of all Deferred Interest then due, the Company may commence a new Extended Interest Payment Period, subject to the foregoing requirements. No interest shall be due and payable during an Extended Interest Payment Period, except at the end thereof, but the Company may prepay at any time all or any portion of the interest accrued during an Extended Interest Payment Period.

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Section 4.2 Notice of Extension.

(a) If the Property Trustee is the only registered holder of the Debentures at the time the Company selects an Extended Interest Payment Period, the Company shall give written notice to the Administrative Trustees, the Property Trustee and the Trustee of its selection of such Extended Interest Payment Period two Business Days before the earlier of (i) the next succeeding date on which Distributions on the Trust Securities issued by the Trust are payable; or (ii) the date the Trust is required to give notice of the record date, or the date such Distributions are payable, to any applicable self-regulatory organization or to holders of the Trust Preferred Securities issued by the Trust.

(b) If the Property Trustee is not the only holder of the Debentures at the time the Company selects an Extended Interest Payment Period, the Company shall give the holders of the Debentures and the Trustee written notice of its selection of such Extended Interest Payment Period at least two Business Days before the earlier of (i) the next succeeding Interest Payment Date; or (ii) the date the Company is required to give notice of the record or payment date of such interest payment to any applicable self-regulatory organization, if any, or to holders of the Debentures.

(c) The quarter in which any notice is given pursuant to paragraphs (a) or (b) of this Section 4.2 shall be counted as one of the 20 quarters permitted in the maximum Extended Interest Payment Period permitted under Section 4.1.

Section 4.3 Limitation on Transactions.

If (i) the Company shall exercise its right to defer payment of interest as provided in Section 4.1; or (ii) there shall have occurred and be continuing any Event of Default, then

(a) the Company shall not, and will not permit any Subsidiary to, declare or pay any dividends on, make any distributions with respect to, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock (other than (1) dividends or distributions in shares of, or options, warrants or rights to subscribe for or purchase shares of, common stock of the Company or such Subsidiary, (2) any declaration of a dividend in connection with the implementation of a shareholder’s rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto, (3) purchases of common stock of the Company related to the issuance of such common stock under any of the Company’s employee benefit plans for its directors, officers or employees, (4) as a result of a reclassification of any class or series of the Company’s capital stock solely into another class or series of the Company’s capital stock, or (5) declarations or payments of dividends or distributions payable by a Subsidiary of the Company to the Company or to any of the Company’s Subsidiaries);

(b) the Company shall not, and will not permit any Subsidiary to, make any payment of interest, principal or premium, if any, or repay, repurchase or redeem any debt securities issued by the Company which rank pari passu with or junior to the Debentures;

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(c) the Company shall not make any guarantee payments with respect to any guarantee by the Company of the debt securities of any Subsidiary of the Company if such guarantee ranks pari passu with or junior to the Debentures; provided, however, that notwithstanding the foregoing the Company may make payments pursuant to its obligations under the Trust Preferred Securities Guarantee; and

(d) the Company shall not redeem, purchase or acquire less than all of the Outstanding Debentures or any of the Trust Preferred Securities.

ARTICLE V

PARTICULAR COVENANTS OF THE COMPANY

Section 5.1 Payment of Principal and Interest.

The Company shall duly and punctually pay or cause to be paid the principal of and interest on the Debentures at the time and place and in the manner provided herein.

Section 5.2 Maintenance of Agency.

So long as any of the Debentures remain Outstanding, the Company shall maintain, or shall cause to be maintained, an office or agency in Wilmington, Delaware, and at such other location or locations as may be designated as provided in this Section 5.2, where (i) Debentures may be presented for payment; (ii) Debentures may be presented as hereinabove authorized for registration of transfer and exchange; and (iii) notices and demands to or upon the Company in respect of the Debentures and this Indenture may be given or served, such designation to continue with respect to such office or agency until the Company shall, by written notice signed by its Chief Executive Officer, President or an Executive Vice President and delivered to the Trustee, designate some other office or agency for such purposes or any of them. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, notices and demands. In addition to any such office or agency, the Company may from time to time designate one or more offices or agencies outside of Wilmington, Delaware where the Debentures may be presented for registration or transfer and for exchange in the manner provided herein, and the Company may from time to time rescind such designation as the Company may deem desirable or expedient; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain any such office or agency in Wilmington, Delaware for the purposes above mentioned. The Company shall give the Trustee prompt written notice of any such designation or rescission thereof.

Section 5.3 Paying Agents.

(a) The Trustee shall be the initial Paying Agent. If the Company shall appoint one or more Paying Agents for the Debentures, other than the Trustee, the Company shall cause each such Paying Agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section 5.3:

(i) that it shall hold all sums held by it as such agent for the payment of the principal of or interest on the Debentures (whether such sums have been paid to it by the Company or by any other obligor of such Debentures) in trust for the benefit of the Persons entitled thereto;

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(ii) that it shall give the Trustee notice of any failure by the Company (or by any other obligor of such Debentures) to make any payment of the principal of or interest on the Debentures when the same shall be due and payable;

(iii) that it shall, at any time during the continuance of any failure referred to in the preceding paragraph (a)(ii) above, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent; and

(iv) that it shall perform all other duties of Paying Agent as set forth in this Indenture.

(b) If the Company shall act as its own Paying Agent with respect to the Debentures, it shall on or before each due date of the principal of or interest on such Debentures, set aside, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay such principal or interest so becoming due on Debentures until such sums shall be paid to such Persons or otherwise disposed of as herein provided and shall promptly notify the Trustee of such action, or any failure (by it or any other obligor on such Debentures) to take such action. Whenever the Company shall have one or more Paying Agents for the Debentures, it shall, prior to each due date of the principal of or interest on any Debentures, deposit with the Paying Agent a sum sufficient to pay the principal or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal or interest, and (unless such Paying Agent is the Trustee) the Company shall promptly notify the Trustee of this action or failure so to act.

(c) Notwithstanding anything in this Section 5.3 to the contrary, (i) the agreement to hold sums in trust as provided in this Section 5.3 is subject to the provisions of Section 13.3 and 13.4; and (ii) the Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same terms and conditions as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.

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Section 5.4 Appointment to Fill Vacancy in Office of Trustee.

The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, shall appoint, in the manner provided in Section 9.11, a Trustee, so that there shall at all times be a Trustee hereunder.

Section 5.5 Compliance with Consolidation Provisions.

The Company shall not, while any of the Debentures remain Outstanding, consolidate with, or merge into, or sell or convey all or substantially all of its property to any other company unless the provisions of Article XII hereof are complied with.

Section 5.6 Limitation on Transactions.

If Debentures are issued to the Trust or a trustee of the Trust in connection with the issuance of Trust Securities by the Trust and (i) there shall have occurred any event that would constitute an Event of Default; (ii) the Company shall be in default with respect to any of its obligations under the Trust Preferred Securities Guarantee relating to the Trust; or (iii) the Company shall have given notice of its election to defer payments of interest on such Debentures by extending the interest payment period as provided in this Indenture and such period, or any extension thereof, shall be continuing, then

(a) the Company shall not, and will not permit any Subsidiary to, declare or pay any dividends on, make any distributions with respect to, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock (other than (1) dividends or distributions in shares of, or options, warrants or rights to subscribe for or purchase shares of, common stock of the Company or such Subsidiary, (2) any declaration of a dividend in connection with the implementation of a shareholder’s rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto, (3) purchases of common stock of the Company related to the issuance of such common stock under any of the Company’s employee benefit plans for its directors, officers or employees, (4) as a result of a reclassification of any class or series of the Company’s capital stock solely into another class or series of the Company’s capital stock, or (5) declarations or payments of dividends or distributions payable by a Subsidiary of the Company to the Company or to any of the Company’s Subsidiaries);

(b) the Company shall not, and will not permit any Subsidiary to, make any payment of interest, principal or premium, if any, or repay, repurchase or redeem any debt securities issued by the Company which rank pari passu with or junior to the Debentures;

(c) the Company shall not make any guarantee payments with respect to any guarantee by the Company of the debt securities of any Subsidiary of the Company if such guarantee ranks pari passu with or junior in interest to the Debentures; provided, however, that the Company may make payments pursuant to its obligations under the Trust Preferred Securities Guarantee; and

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(d) the Company shall not redeem, purchase or acquire less than all of the Outstanding Debentures or any of the Trust Preferred Securities.

Section 5.7 Covenants as to the Trust.

For so long as the Trust Securities of the Trust remain outstanding, the Company shall (i) maintain 100% direct or indirect ownership of the Common Securities of the Trust; provided, however, that any permitted successor of the Company under this Indenture may succeed to the Company’s ownership of the Common Securities; (ii) not voluntarily terminate, wind up or liquidate the Trust, except upon prior approval of the Federal Reserve if then so required under applicable capital guidelines, policies or regulations of the Federal Reserve; and (iii) use its reasonable efforts to cause the Trust (a) to remain a business trust (and to avoid involuntary dissolution, termination, winding up or liquidation), except in connection with a distribution of Debentures, the redemption of all of the Trust Securities of the Trust or certain mergers, consolidations or amalgamations, each as permitted by the Trust Agreement and (b) to otherwise continue not to be treated as an association taxable as a corporation or partnership for United States federal income tax purposes. In connection with the distribution of the Debentures to the holders of the Trust Preferred Securities issued by the Trust upon a Dissolution Event, the Company shall use its reasonable efforts to list such Debentures on any applicable stock exchange or self-regulatory organization as the Trust Preferred Securities are then listed, if any.

Section 5.8 Covenants as to Purchases.

Except upon the exercise by the Company of its right to redeem the Debentures pursuant to Section 3.1 upon the occurrence and continuation of a Special Event, the Company shall not purchase any Debentures, in whole or in part, held by the Property Trustee on behalf of the Trust prior to November 7, 2007.

Section 5.9 Waiver of Usury, Stay or Extension Laws.

The Company shall not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performances of this Indenture, and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

ARTICLE VI

DEBENTUREHOLDERS’ LISTS AND REPORTS

BY THE COMPANY AND THE TRUSTEE

Section 6.1 Company to Furnish Trustee Names and Addresses of Debentureholders.

The Company shall furnish or cause to be furnished to the Trustee (a) on a quarterly basis on each regular record date (as described in Section 2.5) a list, in such form as the Trustee may

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reasonably require, of the names and addresses of the holders of the Debentures as of such regular record date, provided that the Company shall not be obligated to furnish or cause to furnish such list at any time that the list shall not differ in any respect from the most recent list furnished to the Trustee by the Company (in the event the Company fails to provide such list on a quarterly basis, the Trustee shall be entitled to rely on the most recent list provided by the Company); and (b) at such other times as the Trustee may request in writing within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished; provided, however, that, in either case, no such list need be furnished if the Trustee shall be the Debenture Registrar.

Section 6.2 Preservation of Information Communications with Debentureholders.

(a) The Trustee shall preserve, in as current a form as is reasonably practicable, all information as to the names and addresses of the holders of Debentures contained in the most recent list furnished to it as provided in Section 6.1 and as to the names and addresses of holders of Debentures received by the Trustee in its capacity as Debenture Registrar (if acting in such capacity).

(b) The Trustee may destroy any list furnished to it as provided in Section 6.1 upon receipt of a new list so furnished.

(c) Debentureholders may communicate with other Debentureholders with respect to their rights under this Indenture or under the Debentures, subject to Section 312(b) of the Trust Indenture Act if applicable.

Section 6.3 Reports by the Company.

(a) The Company covenants and agrees to transmit to the Trustee such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants provided for in this Indenture as may be required from time to time by such rules and regulations, including Section 314(a)(4) of the Trust Indenture Act, if applicable.

(b) The Company covenants and agrees to transmit to the Trustee in the same form as filed with the Federal Reserve (i) its annual audited consolidated financial statements within 90 days following the end of its fiscal year, (ii) its quarterly consolidated financial statements within 45 days after the end of the first three fiscal quarters of each fiscal year (each a “Quarter”), and (iii) the following financial data for each Quarter, within 45 days after the end of each Quarter, and for each fiscal year, within 90 days after the end of each fiscal year:

Capital: ratio of “Tier 1 Capital” to risk weighted assets;

Asset Quality: ratio of nonperforming assets to loans and other real estate owned, ratio of reserves to nonperforming loans, and ratio of net charge-offs to loans;

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Earnings: return on assets, net interest margin, and efficiency ratio; and

Liquidity: ratio of loans to assets, ratio of loans to deposits, total assets, and net income.

Section 6.4 Reports by the Trustee.

(a) On or before July 15 in each year in which any of the Debentures are Outstanding, the Trustee shall transmit by mail, first class postage prepaid, to the Debentureholders, as their names and addresses appear upon the Debenture Register, a brief report dated as of the preceding May 15, if and to the extent required under Section 313(a) of the Trust Indenture Act, if applicable (it being understood that no such report shall be required if none of the events set forth in Section 313(a) of the Trust Indenture Act has occurred during the period to which such report would relate).

(b) The Trustee shall comply with Sections 313(b) and 313(c) of the Trust Indenture Act, if applicable.

(c) A copy of each such report shall, at the time of such transmission to Debentureholders, be filed by the Trustee with the Company, with each stock exchange or applicable self-regulatory organization upon which any Debentures are listed (if so listed) and also with the Commission. The Company agrees to notify the Trustee when any Debentures become listed on any stock exchange or other applicable self-regulatory organization.

(d) If at any time following the date hereof the Property Trustee no longer holds the Debentures, the Trustee covenants and agrees to transmit by mail, first class postage prepaid, to the Debentureholders, as their names and addresses appear upon the Debenture Register, any information, documents and reports required to be transmitted to the Trustee pursuant to Section 6.3 as soon as practicable after the receipt of such information from the Company.

ARTICLE VII

REMEDIES OF THE TRUSTEE AND DEBENTUREHOLDERS

ON EVENT OF DEFAULT

Section 7.1 Events of Default.

(a) Whenever used herein with respect to the Debentures, “Event of Default” means any one or more of the following events that has occurred and is continuing:

(i) the Company defaults in the payment of any installment of interest upon any of the Debentures, as and when the same shall become due and payable, and continuance of such default for a period of 30 days; provided, however, that a valid extension of an interest payment period by the Company in accordance with the terms of this Indenture shall not constitute a default in the payment of interest for this purpose;

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(ii) the Company defaults in the payment of the principal on the Debentures as and when the same shall become due and payable whether at maturity, upon redemption, by declaration or otherwise;

(iii) the Company fails to observe or perform any other of its covenants or agreements with respect to the Debentures for a period of 90 days after the date on which written notice of such failure, requiring the same to be remedied and stating that such notice is a “Notice of Default” hereunder, shall have been given to the Company by the Trustee, by registered or certified mail, or to the Company and the Trustee by the holders of at least 25% in principal amount of the Debentures at the time Outstanding;

(iv) the Company pursuant to or within the meaning of any Bankruptcy Law (1) commences a voluntary case; (2) consents to the entry of an order for relief against it in an involuntary case; (3) consents to the appointment of a Custodian of it or for all or substantially all of its property; or (4) makes a general assignment for the benefit of its creditors;

(v) a court of competent jurisdiction enters an order under any Bankruptcy Law that (1) is for relief against the Company in an involuntary case; (2) appoints a Custodian of the Company for all or substantially all of its property; or (3) orders the liquidation of the Company, and the order or decree remains unstayed and in effect for 90 days; or

(vi) the Trust shall have voluntarily or involuntarily dissolved, wound-up its business or otherwise terminated its existence except in connection with (1) the distribution of Debentures to holders of Trust Securities in liquidation of their interests in the Trust; (2) the redemption of all of the outstanding Trust Securities of the Trust; or (3) certain mergers, consolidations or amalgamations, each as permitted by the Trust Agreement.

(b) In each and every such case referred to in items (i) through (vi) of Section 7.1(a), unless the principal of all the Debentures shall have already become due and payable, either the Trustee or the holders of not less than 25% in aggregate principal amount of the Debentures then Outstanding hereunder, by notice in writing to the Company (and to the Trustee if given by such Debentureholders) may declare the principal of all the Debentures to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, notwithstanding anything contained in this Indenture or in the Debentures.

(c) At any time after the principal of the Debentures shall have been so declared due and payable, and before any judgment or decree for the payment of the money due shall have been obtained or entered as hereinafter provided, the holders of a

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majority in aggregate principal amount of the Debentures then Outstanding hereunder, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if: (i) the Company has paid or deposited with the Trustee a sum sufficient to pay all matured installments of interest upon all the Debentures and the principal of any and all Debentures that shall have become due otherwise than by acceleration (with interest upon such principal, and, to the extent that such payment is enforceable under applicable law, upon overdue installments of interest, at the rate per annum expressed in the Debentures to the date of such payment or deposit) and the amount payable to the Trustee under Section 9.7; and (ii) any and all Events of Default under this Indenture, other than the nonpayment of principal on Debentures that shall not have become due by their terms, shall have been remedied or waived as provided in Section 7.6. No such rescission and annulment shall extend to or shall affect any subsequent default or impair any right consequent thereon.

(d) In case the Trustee shall have proceeded to enforce any right with respect to Debentures under this Indenture and such proceedings shall have been discontinued or abandoned because of such rescission or annulment or for any other reason or shall have been determined adversely to the Trustee, then and in every such case the Company and the Trustee shall be restored respectively to their former positions and rights hereunder, and all rights, remedies and powers of the Company and the Trustee shall continue as though no such proceedings had been taken.

Section 7.2 Collection of Indebtedness and Suits for Enforcement by Trustee.

(a) The Company covenants that (i) in case it shall default in the payment of any installment of interest on any of the Debentures, and such default shall have continued for a period of 90 Business Days; or (ii) in case it shall default in the payment of the principal of any of the Debentures when the same shall have become due and payable, whether upon maturity of the Debentures or upon redemption or upon declaration or otherwise, then, upon demand of the Trustee, the Company shall pay to the Trustee, for the benefit of the holders of the Debentures, the whole amount that then shall have become due and payable on all such Debentures for principal or interest, or both, as the case may be, with interest upon the overdue principal and (to the extent that payment of such interest is enforceable under applicable law; and, if the Debentures are held by the Trust or a trustee of the Trust, without duplication of any other amounts paid by the Trust or trustee in respect thereof) upon overdue installments of interest at the rate per annum expressed in the Debentures; and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, and the amount payable to the Trustee under Section 9.7.

(b) If the Company shall fail to pay such amounts set forth in section 7.2(a) forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any action or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceeding to judgment or final decree, and may enforce any such judgment or final decree against the Company or other obligor upon the Debentures and collect any money adjudged or decreed to be payable in the manner provided by law out of the property of the Company or other obligor upon the Debentures, wherever situated.

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(c) In case of any receivership, insolvency, liquidation, bankruptcy, reorganization, readjustment, arrangement, composition or judicial proceedings affecting the Company or the creditors or property of either, the Trustee shall have power to intervene in such proceedings and take any action therein that may be permitted by the court and shall (except as may be otherwise provided by law) be entitled to file such proofs of claim and other papers and documents as may be necessary or advisable in order to have the claims of the Trustee and of the holders of the Debentures allowed for the entire amount due and payable by the Company under this Indenture at the date of institution of such proceedings and for any additional amount that may become due and payable by the Company after such date, and to collect and receive any money or other property payable or deliverable on any such claim, and to distribute the same after the deduction of the amount payable to the Trustee under Section 9.7; and any receiver, assignee or trustee in bankruptcy or reorganization is hereby authorized by each of the holders of the Debentures to make such payments to the Trustee, and, in the event that the Trustee shall consent to the making of such payments directly to such Debentureholders, to pay to the Trustee any amount due it under Section 9.7.

(d) All rights of action and of asserting claims under this Indenture, or under any of the terms established with respect to the Debentures, may be enforced by the Trustee without the possession of any of such Debentures, or the production thereof at any trial or other proceeding relative thereto, and any such suit or proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for payment to the Trustee of any amounts due under Section 9.7, be for the ratable benefit of the holders of the Debentures. If an Event of Default hereunder occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall in good faith deem most effectual to protect and enforce any of such rights, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture, or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law. Nothing contained herein shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Debentureholder any plan of reorganization, arrangement, adjustment or composition affecting the Debentures or the rights of any holder thereof or to authorize the Trustee to vote in respect of the claim of any Debentureholder in any such proceeding.

Section 7.3 Application of Money Collected.

Any money or other assets collected by the Trustee pursuant to this Article VII with respect to the Debentures shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money or other assets on account of principal or interest, upon presentation of the Debentures, and notation thereon the payment, if only partially paid, and upon surrender thereof if fully paid:

FIRST: To the payment of reasonable costs and expenses of collection and of all amounts payable to the Trustee under Section 9.7;

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SECOND: To the payment of all Senior Indebtedness of the Company if and to the extent required by Article XVI; and

THIRD: To the payment of the amounts then due and unpaid upon the Debentures for principal and interest, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Debentures for principal and interest, respectively.

Section 7.4 Limitation on Suits.

(a) Except as set forth in this Indenture, no holder of any Debenture shall have any right by virtue or by availing of any provision of this Indenture to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Indenture or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (i) such holder previously shall have given to the Trustee written notice of an Event of Default and of the continuance thereof with respect to the Debentures specifying such Event of Default, as hereinbefore provided; (ii) the holders of not less than 25% in aggregate principal amount of the Debentures then Outstanding shall have made written request upon the Trustee to institute such action, suit or proceeding in its own name as trustee hereunder; (iii) such holder or holders shall have offered to the Trustee such reasonable security or indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby; and (iv) the Trustee for 60 days after its receipt of such notice, request and offer of security or indemnity, shall have failed to institute any such action, suit or proceeding, and during such 60 day period, the holders of a majority in principal amount of the Debentures do not give the Trustee a direction inconsistent with the request.

(b) Notwithstanding anything contained herein to the contrary or any other provisions of this Indenture, the right of any holder of the Debentures to receive payment of the principal of and interest on the Debentures, as therein provided, on or after the respective due dates expressed in such Debenture (or in the case of redemption, on the redemption date), or to institute suit for the enforcement of any such payment on or after such respective dates or redemption date, shall not be impaired or affected without the consent of such holder and by accepting a Debenture hereunder it is expressly understood, intended and covenanted by the taker and holder of every Debenture with every other such taker and holder and the Trustee, that no one or more holders of the Debentures shall have any right in any manner whatsoever by virtue or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of the holders of any other of such Debentures, or to obtain or seek to obtain priority over or preference to any other such holder, or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all holders of Debentures. For the protection and enforcement of the provisions of this Section 7.4, each and every Debentureholder and the Trustee shall be entitled to such relief as can be given either at law or in equity.

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Section 7.5 Rights and Remedies Cumulative; Delay or Omission not Waiver.

(a) Except as otherwise expressly provided herein, all powers and remedies given by this Article VII to the Trustee or to the Debentureholders shall, to the extent permitted by law, be deemed cumulative and not exclusive of any other powers and remedies available to the Trustee or the holders of the Debentures, by judicial proceedings or otherwise, to enforce the performance or observance of the covenants and agreements contained in this Indenture or otherwise established with respect to such Debentures.

(b) No delay or omission of the Trustee or of any holder of any of the Debentures to exercise any right or power accruing upon any Event of Default occurring and continuing as aforesaid shall impair any such right or power, or shall be construed to be a waiver of any such default or an acquiescence therein; and, subject to the provisions of Section 7.4, every power and remedy given by this Article VII or by law to the Trustee or the Debentureholders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Debentureholders.

Section 7.6 Control by Debentureholders.

The holders of a majority in aggregate principal amount of the Debentures at the time Outstanding, determined in accordance with Article X, shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee; provided, however, that such direction shall not be in conflict with any rule of law or with this Indenture. Subject to the provisions of Section 9.1(b), the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith shall, by a Responsible Officer or Officers of the Trustee, determine that the proceeding so directed would involve the Trustee in personal liability. The holders of a majority in aggregate principal amount of the Debentures at the time Outstanding affected thereby, determined in accordance with Article X, may on behalf of the holders of all of the Debentures waive any past default in the performance of any of the covenants contained herein and its consequences, except (i) a default in the payment of the principal of or interest on, any of the Debentures as and when the same shall become due by the terms of such Debentures otherwise than by acceleration (unless such default has been cured and a sum sufficient to pay all matured installments of interest and principal has been deposited with the Trustee (in accordance with Section 7.1(c)); (ii) a default in the covenants contained in Section 5.7; or (iii) in respect of a covenant or provision hereof which cannot be modified or amended without the consent of the holder of each Outstanding Debenture affected; provided, however, that if the Debentures are held by the Trust or a trustee of the Trust, such waiver or modification to such waiver shall not be effective until the holders of a majority in liquidation preference of Trust Securities shall have consented to such waiver or modification to such waiver; provided further, that if the consent of the holder of each Outstanding Debenture is required, such waiver shall not be effective until each holder of the Trust Securities of the Trust shall have consented to such waiver. Upon any such waiver, the default covered thereby shall be deemed to be cured for all purposes of this Indenture and the Company, the Trustee and the holders of the Debentures shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.

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Section 7.7 Undertaking to Pay Costs.

All parties to this Indenture agree, and each holder of any Debentures by such holder’s acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 7.7 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Debentureholder, or group of Debentureholders holding more than 10% in aggregate principal amount of the Outstanding Debentures, to any suit instituted by any Debentureholder for the enforcement of the payment of the principal of or interest on the Debentures, on or after the respective due dates expressed in such Debenture or established pursuant to this Indenture or to any suit instituted against the Trustee unless it shall have been finally adjudicated in such suit that the Trustee was negligent, committed an act of willful misconduct, or acted in bad faith.

Section 7.8 Direct Action; Right of Set-Off.

In the event that an Event of Default has occurred and is continuing and such event is attributable to the failure of the Company to pay interest on or principal of the Debentures on an Interest Payment Date or Maturity Date, as applicable, then a holder of Trust Preferred Securities may institute a legal proceeding directly against the Company for enforcement of payment to such holder of the principal of or interest on such Debentures having a principal amount equal to the aggregate Liquidation Amount of the Trust Preferred Securities of such holder (a “Direct Action”). In connection with such Direct Action, the Company will have a right of set-off under this Indenture to the extent of any payment made by the Company to such holder of the Trust Preferred Securities with respect to such Direct Action.

ARTICLE VIII

FORM OF DEBENTURE AND ORIGINAL ISSUE

Section 8.1 Form of Debenture.

The Debenture and the Trustee’s Certificate of Authentication to be endorsed thereon are to be substantially in the forms contained as Exhibit A to this Indenture, attached hereto and incorporated herein by reference.

Section 8.2 Original Issue of Debentures.

Debentures in the aggregate principal amount of Seven Million Two Hundred Seventeen Thousand Dollars ($7,217,000) may, upon execution of this Indenture, be executed by the Company and delivered to the Trustee for authentication. The Trustee shall thereupon authenticate and deliver said Debentures to or upon the written order of the Company, signed by its Chief Executive Officer, President, or any Vice President and its Treasurer or an Assistant Treasurer, without any further action by the Company.

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ARTICLE IX

CONCERNING THE TRUSTEE

Section 9.1 Certain Duties and Responsibilities of the Trustee.

(a) The Trustee, prior to the occurrence of an Event of Default and after the curing of all Events of Default that may have occurred, shall undertake to perform with respect to the Debentures such duties and only such duties as are specifically set forth in this Indenture. In case an Event of Default has occurred that has not been cured or waived, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent Person would exercise or use under the circumstances in the conduct of its own affairs. No implied covenants shall be read into this Indenture against the Trustee.

(b) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

(i) prior to the occurrence of an Event of Default and after the curing or waiving of all such Events of Default that may have occurred:

(A) the duties and obligations of the Trustee shall with respect to the Debentures be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable with respect to the Debentures except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

(B) in the absence of bad faith on the part of the Trustee, the Trustee may with respect to the Debentures conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture;

(ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts;

(iii) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the

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holders of not less than a majority in principal amount of the Debentures at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture with respect to the Debentures; and

(iv) none of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if there is reasonable ground for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this Indenture or adequate indemnity against such risk is not reasonably assured to it.

Section 9.2 Notice of Defaults.

Within five (5) Business Days after actual knowledge by a Responsible Officer of the Trustee of the occurrence of any default hereunder with respect to the Debentures, the Trustee shall transmit by mail to all holders of the Debentures, as their names and addresses appear in the Debenture Register, notice of such default, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal or interest (including any Additional Interest) on any Debenture, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of the directors and/or Responsible Officers of the Trustee determines in good faith that the withholding of such notice is in the interests of the holders of such Debentures; and provided, further, that in the case of any default of the character specified in Section 7.1(a)(iii), no such notice to holders of Debentures need be sent until at least 30 days after the occurrence thereof. For the purposes of this Section 9.2, the term “default” means any event which is, or after notice or lapse of time or both, would become, an Event of Default with respect to the Debentures.

Section 9.3 Certain Rights of Trustee.

Except as expressly set forth in Section 9.1(b):

(a) The Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, security or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

(b) Any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by a Board Resolution or an instrument signed in the name of the Company by its President or any Vice President and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer thereof (unless other evidence in respect thereof is specifically prescribed herein);

(c) The Trustee shall not be deemed to have knowledge of a default or an Event of Default, other than an Event of Default specified in Section 7.1(a)(i) or (ii),

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unless and until it receives written notification of such Event of Default from the Company or by holders of at least 25% of the aggregate principal amount of the Debentures at the time Outstanding;

(d) The Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or suffered or omitted hereunder in good faith and in reliance thereon;

(e) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Debentureholders, pursuant to the provisions of this Indenture, unless such Debentureholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that may be incurred therein or thereby; nothing contained herein shall, however, relieve the Trustee of the obligation, upon the occurrence of an Event of Default of which a Responsible Officer of the Trustee has actual knowledge (that is continuing and has not been cured or waived) to exercise with respect to the Debentures such of the rights and powers vested in it by this Indenture, and to use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs;

(f) The Trustee shall not be liable for any action taken or omitted to be taken by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture;

(g) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, security, or other papers or documents, unless requested in writing so to do by the holders of not less than a majority in principal amount of the Outstanding Debentures, determined as provided in Article X; provided, however, that if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the Trustee may require reasonable indemnity against such costs, expenses or liabilities as a condition to so proceeding. The reasonable expense of every such examination shall be paid by the Company or, if paid by the Trustee, shall be repaid by the Company upon demand; and

(h) The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder.

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Section 9.4 Trustee Not Responsible for Recitals, etc.

(a) The Recitals contained herein and in the Debentures shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness of the same.

(b) The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Debentures.

(c) The Trustee shall not be accountable for the use or application by the Company of any of the Debentures or of the proceeds of such Debentures, or for the use or application of any money paid over by the Trustee in accordance with any provision of this Indenture, or for the use or application of any money received by any Paying Agent other than the Trustee.

Section 9.5 May Hold Debentures.

The Trustee or any Paying Agent or Debenture Registrar, in its individual or any other capacity, may become the owner or pledgee of Debentures with the same rights it would have if it were not Trustee, Paying Agent or Debenture Registrar.

Section 9.6 Moneys Held in Trust.

Subject to the provisions of Section 13.5, all money received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except such as it may agree with the Company to pay thereon.

Section 9.7 Compensation and Reimbursement.

(a) The Company covenants and agrees to pay to the Trustee, and the Trustee shall be entitled to, such reasonable compensation (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust), as the Company and the Trustee may from time to time agree in writing, for all services rendered by it in the execution of the trusts hereby created and in the exercise and performance of any of the powers and duties hereunder of the Trustee, and, except as otherwise expressly provided herein, the Company shall pay or reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its counsel and of all Persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence or bad faith. The Company also covenants to indemnify the Trustee (and its officers, agents, directors and employees) for, and to hold it harmless against, any loss, liability, claim, action, suit, cost or expense incurred without negligence or bad faith on the part of the Trustee and arising out of or in connection with the acceptance or administration of this Indenture, including the reasonable costs and expenses of defending itself against any claim of liability in the premises.

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(b) The obligations of the Company under this Section 9.7 to compensate and indemnify the Trustee and to pay or reimburse the Trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder. Such additional indebtedness shall be secured by a lien prior to that of the Debentures upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the holders of particular Debentures.

Section 9.8 Reliance on Officers’ Certificate.

Except as expressly set forth in Section 9.1(b), whenever in the administration of the provisions of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting to take any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and established by an Officers’ Certificate delivered to the Trustee and such certificate, in the absence of negligence or bad faith on the part of the Trustee, shall be full warrant to the Trustee for any action taken, suffered or omitted to be taken by it under the provisions of this Indenture upon the faith thereof.

Section 9.9 Disqualification; Conflicting Interests.

If the Trustee has or shall acquire any “conflicting interest” within the meaning of Section 310(b) of the Trust Indenture Act, the Trustee and the Company shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act, if the Trust Indenture Act is then applicable to this Indenture.

Section 9.10 Corporate Trustee Required; Eligibility.

There shall at all times be a Trustee with respect to the Debentures issued hereunder which shall at all times be a corporation or national banking association organized and doing business under the laws of the United States of America or any State or Territory thereof or of the District of Columbia, or a corporation or other Person permitted to act as trustee by the Commission, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, and subject to supervision or examination by federal, state, territorial, or District of Columbia authority. If such Person publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section 9.10, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Company may not, nor may any Person directly or indirectly controlling, controlled by, or under common control with the Company, serve as Trustee. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 9.10, the Trustee shall resign immediately in the manner and with the effect specified in Section 9.11.

Section 9.11 Resignation and Removal; Appointment of Successor.

(a) The Trustee or any successor hereafter appointed, may at any time resign by giving written notice thereof to the Company and by transmitting notice of resignation

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by mail, first class postage prepaid, to the Debentureholders, as their names and addresses appear upon the Debenture Register. Upon receiving such notice of resignation, the Company shall promptly appoint a successor trustee with respect to this Indenture and Debentures by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee. If no successor trustee shall have been so appointed and have accepted appointment within 30 days after the mailing of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor trustee with respect to this Indenture and Debentures, or any Debentureholder who has been a bona fide holder of a Debenture or Debentures for at least six months may, subject to the provisions of Sections 9.9 and 9.10, on behalf of himself and all others similarly situated, petition any such court for the appointment of a successor trustee. Such court may thereupon after such notice, if any, as it may deem proper and prescribe, appoint a successor trustee.

(b) In case at any time any one of the following shall occur:

(i) the Trustee shall fail to comply with the provisions of Section 9.9 after written request therefor by the Company or by any Debentureholder who has been a bona fide holder of a Debenture or Debentures for at least six months; or

(ii) the Trustee shall cease to be eligible in accordance with the provisions of Section 9.10 and shall fail to resign after written request therefor by the Company or by any such Debentureholder; or

(iii) the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or commence a voluntary bankruptcy proceeding, or a receiver of the Trustee; or

(iv) of its property shall be appointed or consented to, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation;

then, in any such case, the Company may remove the Trustee with respect to this Indenture and all Debentures and appoint a successor trustee by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee, or, subject to the provisions of Section 9.10, unless the Trustee’s duty to resign is stayed as provided herein, any Debentureholder who has been a bona fide holder of a Debenture or Debentures for at least six months may, on behalf of that holder and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee. Such court may thereupon after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee.

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(c) The holders of a majority in aggregate principal amount of the Debentures at the time Outstanding may at any time remove the Trustee by so notifying the Trustee and the Company and may appoint a successor Trustee with the consent of the Company.

(d) Any resignation or removal of the Trustee and appointment of a successor trustee with respect to this Indenture and Debentures pursuant to any of the provisions of this Section 9.11 shall become effective upon acceptance of appointment by the successor trustee as provided in Section 9.12.

(e) Any successor trustee appointed pursuant to this Section 9.11 may be appointed with respect to this Indenture and Debentures, and at any time there shall be only one Trustee with respect to this Indenture and Debentures.

Section 9.12 Acceptance of Appointment by Successor.

(a) In the case of the appointment hereunder of a successor trustee with respect to the Debentures, every successor trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor trustee all the rights, powers, and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor trustee all property and money held by such retiring Trustee hereunder.

(b) Upon request of any successor trustee, the Company shall execute any and all instruments for more full and certain vesting in and confirming to such successor trustee all such rights, powers and trusts referred to in paragraph (a) of this Section 9.12.

(c) No successor trustee shall accept its appointment unless at the time of such acceptance such successor trustee shall be qualified and eligible under this Article IX.

(d) Upon acceptance of appointment by a successor trustee as provided in this Section 9.12, the Company shall transmit notice of the succession of such trustee hereunder by mail, first class postage prepaid, to the Debentureholders, as their names and addresses appear upon the Debenture Register. If the Company fails to transmit such notice within ten days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be transmitted at the expense of the Company.

Section 9.13 Merger, Conversion, Consolidation or Succession to Business.

Any Person into which the Trustee may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any Person succeeding to the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided that such Person shall be qualified under the provisions of Section 9.9 and eligible under the provisions of Section 9.10, without the

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execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding. In case any Debentures shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Debentures so authenticated with the same effect as if such successor Trustee had itself authenticated such Debentures.

Section 9.14 Preferential Collection of Claims Against the Company.

The Trustee shall comply with Section 311(a) of the Trust Indenture Act, if applicable, excluding any creditor relationship described in Section 311(b) of the Trust Indenture Act. A Trustee who has resigned or been removed shall be subject to Section 311(a) of the Trust Indenture Act to the extent applicable and included therein.

ARTICLE X

CONCERNING THE DEBENTUREHOLDERS

Section 10.1 Evidence of Action by Holders.

(a) Whenever in this Indenture it is provided that the holders of a majority or specified percentage in aggregate principal amount of the Debentures may take any action (including the making of any demand or request, the giving of any notice, consent or waiver or the taking of any other action), the fact that at the time of taking any such action the holders of such majority or specified percentage have joined therein may be evidenced by any instrument or any number of instruments of similar tenor executed by such holders of Debentures in Person or by agent or proxy appointed in writing.

(b) If the Company shall solicit from the Debentureholders any request, demand, authorization, direction, notice, consent, waiver or other action, the Company may, at its option, as evidenced by an Officers’ Certificate, fix in advance a record date for the determination of Debentureholders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other action, but the Company shall have no obligation to do so. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other action may be given before or after the record date, but only the Debentureholders of record at the close of business on the record date shall be deemed to be Debentureholders for the purposes of determining whether Debentureholders of the requisite proportion of Outstanding Debentures have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other action, and for that purpose the Outstanding Debentures shall be computed as of the record date; provided, however, that no such authorization, agreement or consent by such Debentureholders on the record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than six months after the record date.

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Section 10.2 Proof of Execution by Debentureholders.

Subject to the provisions of Section 9.1(b), proof of the execution of any instrument by a Debentureholder (such proof shall not require notarization) or his agent or proxy and proof of the holding by any Person of any of the Debentures shall be sufficient if made in the following manner:

(a) The fact and date of the execution by any such Person of any instrument may be proved in any reasonable manner acceptable to the Trustee or the Company.

(b) The ownership of Debentures shall be proved by the Debenture Register of such Debentures or by a certificate of the Debenture Registrar thereof.

(c) The Trustee or the Company may require such additional proof of any matter referred to in this Section 10.2 as it shall deem necessary.

Section 10.3 Who May be Deemed Owners.

Prior to the due presentment for registration of transfer of any Debenture, the Company, the Trustee, any Paying Agent, any Authenticating Agent and any Debenture Registrar may deem and treat the Person in whose name such Debenture shall be registered upon the books of the Company as the absolute owner of such Debenture (whether or not such Debenture shall be overdue and notwithstanding any notice of ownership or writing thereon made by anyone other than the Debenture Registrar) for the purpose of receiving payment of or on account of the principal of and interest on such Debenture (subject to Section 2.3) and for all other purposes; and neither the Company nor the Trustee nor any Paying Agent nor any Authenticating Agent nor any Debenture Registrar shall be affected by any notice to the contrary.

Section 10.4 Certain Debentures Owned by Company Disregarded.

In determining whether the holders of the requisite aggregate principal amount of Debentures have concurred in any direction, consent or waiver under this Indenture, the Debentures that are owned by the Company or any other obligor on the Debentures or by any Person directly or indirectly controlling or controlled by or under common control with the Company or any other obligor on the Debentures shall be disregarded and deemed not to be Outstanding for the purpose of any such determination, except that (i) for the purpose of determining whether the Trustee shall be protected in relying on any such direction, consent or waiver, only Debentures that the Trustee actually knows are so owned shall be so disregarded; and (ii) for the purposes of this Section 10.4, the Trust shall be deemed to not be controlled by the Company. The Debentures so owned that have been pledged in good faith may be regarded as Outstanding for the purposes of this Section 10.4, if the pledgee shall establish to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Debentures and that the pledgee is not a Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any such other obligor. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee.

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Section 10.5 Actions Binding on Future Debentureholders.

At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 10.1, of the taking of any action by the holders of the majority or percentage in aggregate principal amount of the Debentures specified in this Indenture in connection with such action, any holder of a Debenture that is shown by the evidence to be included in the Debentures the holders of which have consented to such action may, by filing written notice with the Trustee, and upon proof of holding as provided in Section 10.2, revoke such action so far as concerns such Debenture. Except as aforesaid, any such action taken by the holder of any Debenture shall be conclusive and binding upon such holder and upon all future holders and owners of such Debenture, and of any Debenture issued in exchange therefor, on registration of transfer thereof or in place thereof, irrespective of whether or not any notation in regard thereto is made upon such Debenture. Any action taken by the holders of the majority or percentage in aggregate principal amount of the Debentures specified in this Indenture in connection with such action shall be conclusively binding upon the Company, the Trustee and the holders of all the Debentures.

ARTICLE XI

SUPPLEMENTAL INDENTURES

Section 11.1 Supplemental Indentures Without the Consent of Debentureholders .

In addition to any supplemental indenture otherwise authorized by this Indenture, the Company and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act as then in effect, if applicable), without the consent of the Debentureholders, for one or more of the following purposes:

(a) to cure any ambiguity, defect, or inconsistency herein, or in the Debentures;

(b) to comply with Article X;

(c) to provide for uncertificated Debentures in addition to or in place of certificated Debentures;

(d) to add to the covenants of the Company for the benefit of the holders of all or any of the Debentures or to surrender any right or power herein conferred upon them to add to, delete from, or revise the conditions, limitations, and restrictions on the authorized amount, terms, or purposes of issue, authentication, and delivery of Debentures, as herein set forth;

(e) to make any change that does not adversely affect the rights of any Debentureholder in any material respect;

(f) to provide for the issuance of and establish the form and terms and conditions of the Debentures, to establish the form of any certifications required to be

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furnished pursuant to the terms of this Indenture or of the Debentures, or to qualify or maintain the qualification of this Indenture under the Trust Indenture Act, if applicable; or

(g) to evidence a consolidation or merger involving the Company as permitted under Section 12.1.

The Trustee is hereby authorized to join with the Company in the execution of any such supplemental indenture, and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to enter into any such supplemental indenture that affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise. Any supplemental indenture authorized by the provisions of this Section 11.1 may be executed by the Company and the Trustee without the consent of the holders of any of the Debentures at the time Outstanding, notwithstanding any of the provisions of Section 11.2.

Section 11.2 Supplemental Indentures with Consent of Debentureholders.

With the consent (evidenced as provided in Section 10.1) of the holders of not less than a majority in aggregate principal amount of the Debentures at the time Outstanding, the Company, when authorized by Board Resolutions, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act as then in effect, if applicable) for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner not covered by Section 11.1 the rights of the holders of the Debentures under this Indenture; provided, however, that no such supplemental indenture shall without the consent of the holders of each Debenture then Outstanding and affected thereby, (i) extend the fixed maturity of any Debentures, reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, without the consent of the holder of each Debenture so affected; or (ii) reduce the aforesaid percentage of Debentures, the holders of which are required to consent to any such supplemental indenture; provided further, that if the Debentures are held by the Trust or a trustee of the Trust, such supplemental indenture shall not be effective until the holders of a majority in liquidation preference of Trust Securities of the Trust shall have consented to such supplemental indenture; provided further, that if the consent of the holder of each Outstanding Debenture is required, such supplemental indenture shall not be effective until each holder of the Trust Securities of the Trust shall have consented to such supplemental indenture. It shall not be necessary for the consent of the Debentureholders affected thereby under this Section 11.2 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof.

Section 11.3 Effect of Supplemental Indentures.

Upon the execution of any supplemental indenture pursuant to the provisions of this Article XI, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company and the holders of Debentures shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes.

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Section 11.4 Debentures Affected by Supplemental Indentures.

Debentures affected by a supplemental indenture, authenticated and delivered after the execution of such supplemental indenture pursuant to the provisions of this Article XI, may bear a notation in form approved by the Company, provided such form meets the requirements of any national securities exchange or automated quotation service upon which the Debentures may be listed or quoted, as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Debentures so modified as to conform, in the opinion of the Board of Directors of the Company, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Company, authenticated by the Trustee (upon written order of the Company) and delivered in exchange for the Debentures then Outstanding.

Section 11.5 Execution of Supplemental Indentures.

(a) Upon the request of the Company, accompanied by its Board Resolutions authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Debentureholders required to consent thereto as aforesaid, the Trustee shall join with the Company in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture. The Trustee, subject to the provisions of Sections 9.1(b), may receive an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to this Article XI is authorized or permitted by, and conforms to, the terms of this Article XI and that it is proper for the Trustee under the provisions of this Article XI to join in the execution thereof.

(b) Promptly after the execution by the Company and the Trustee of any supplemental indenture pursuant to the provisions of this Section 11.5, the Trustee shall transmit by mail, first class postage prepaid, a notice, setting forth in general terms the substance of such supplemental indenture, to the Debentureholders as their names and addresses appear upon the Debenture Register. Any failure of the Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.

ARTICLE XII

SUCCESSOR CORPORATION

Section 12.1 Company May Consolidate, etc.

Nothing contained in this Indenture or in any of the Debentures shall prevent any consolidation or merger of the Company with or into any other Person (whether or not affiliated with the Company, as the case may be), or successive consolidations or mergers in which the Company, as the case may be, or its successor or successors shall be a party or parties, or shall

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prevent any sale, conveyance, transfer or other disposition of the property of the Company, as the case may be, or its successor or successors as an entirety, or substantially as an entirety, to any other Person (whether or not affiliated with the Company, as the case may be, or its successor or successors) authorized to acquire and operate the same; provided, however, the Company hereby covenants and agrees that, (i) upon any such consolidation, merger, sale, conveyance, transfer or other disposition, the due and punctual payment, in the case of the Company, of the principal of and interest on all of the Debentures, according to their tenor and the due and punctual performance and observance of all the covenants and conditions of this Indenture to be kept or performed by the Company as the case may be, shall be expressly assumed, by supplemental indenture (which shall conform to the provisions of the Trust Indenture Act, to the extent the Trust Indenture Act is then applicable to this Indenture or such supplemental indenture) satisfactory in form to the Trustee in its good faith and executed and delivered to the Trustee by the entity formed by such consolidation, or into which the Company, as the case may be, shall have been merged, or by the entity which shall have acquired such property; (ii) in case the Company consolidates with or merges into another Person or conveys or transfers its properties and assets substantially as an entirety to any Person, the successor Person is organized under the laws of the United States or any state or the District of Columbia; and (iii) immediately after giving effect thereto, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing.

Section 12.2 Successor Person Substituted.

(a) In case of any such consolidation, merger, sale, conveyance, transfer or other disposition and upon the assumption by the successor Person, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee in good faith, of, in the case of the Company, the due and punctual payment of the principal of and interest on all of the Debentures Outstanding and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the Company, as the case may be, such successor Person shall succeed to and be substituted for the Company, with the same effect as if it had been named as the Company herein, and thereupon the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Debentures.

(b) In case of any such consolidation, merger, sale, conveyance, transfer or other disposition such changes in phraseology and form (but not in substance) may be made in the Debentures thereafter to be issued as may be appropriate.

(c) Nothing contained in this Indenture or in any of the Debentures shall prevent the Company from merging into itself or acquiring by purchase or otherwise all or any part of the property of any other Person (whether or not affiliated with the Company).

Section 12.3 Evidence of Consolidation, etc. to Trustee.

The Trustee, subject to the provisions of Section 9.1(b), may receive an Opinion of Counsel as conclusive evidence that any such consolidation, merger, sale, conveyance, transfer or other disposition, and any such assumption, comply with the provisions of this Article XII.

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ARTICLE XIII

SATISFACTION AND DISCHARGE

Section 13.1 Satisfaction and Discharge of Indenture.

If at any time: (a) the Company shall have delivered to the Trustee for cancellation all Debentures theretofore authenticated (other than any Debentures that shall have been destroyed, lost or stolen and that shall have been replaced or paid as provided in Section 2.9) and the principal and accrued interest of all Debentures for whose payment money or Governmental Obligations have theretofore been deposited in trust or segregated and held in trust by the Company (and thereupon repaid to the Company or discharged from such trust, as provided in Section 13.5); or (b) all such Debentures not theretofore delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and the Company shall deposit or cause to be deposited with the Trustee as trust funds the entire amount in money or Governmental Obligations sufficient or a combination thereof, sufficient in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay at maturity or upon redemption all Debentures not theretofore delivered to the Trustee for cancellation, including principal and interest due or to become due to such date of maturity or date fixed for redemption, as the case may be, and if the Company shall also pay or cause to be paid all other sums payable hereunder by the Company; then this Indenture shall thereupon cease to be of further effect except for the provisions of Sections 2.3, 2.7, 2.9, 5.1, 5.2, 5.3, 9.7 and 9.10, that shall survive until the date of maturity or redemption date, as the case may be, and Section 13.5, that shall survive to such date and thereafter, and the Trustee, on demand of the Company and at the cost and expense of the Company, shall execute proper instruments acknowledging satisfaction of and discharging this Indenture.

Section 13.2 Discharge of Obligations.

If at any time all Debentures not heretofore delivered to the Trustee for cancellation or that have not become due and payable as described in Section 13.1 shall have been paid by the Company by depositing irrevocably with the Trustee as trust funds money or an amount of Governmental Obligations sufficient in the opinion of a nationally recognized certified public accounting firm to pay at maturity or upon redemption all Debentures not theretofore delivered to the Trustee for cancellation, including principal and interest due or to become due to such date of maturity or date fixed for redemption, as the case may be, and if the Company shall also pay or cause to be paid all other sums payable hereunder by the Company, then after the date such moneys or Governmental Obligations, as the case may be, are deposited with the Trustee, the obligations of the Company under this Indenture shall cease to be of further effect except for the provisions of Sections 2.3, 2.7, 2.9, 5.1, 5.2, 5.3, 9.6, 9.7, 9.10 and 13.5 that shall survive until such Debentures shall mature and be paid. Thereafter, Sections 9.7 and 13.5 shall survive.

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Section 13.3 Deposited Money to be Held in Trust.

All money or Governmental Obligations deposited with the Trustee pursuant to Sections 13.1 or 13.2 shall be held in trust and shall be available for payment as due, either directly or through any Paying Agent (including the Company acting as its own Paying Agent), to the holders of the Debentures for the payment or redemption of which such moneys or Governmental Obligations have been deposited with the Trustee.

Section 13.4 Payment of Money Held by Paying Agents.

In connection with the satisfaction and discharge of this Indenture, all moneys or Governmental Obligations then held by any Paying Agent under the provisions of this Indenture shall, upon demand of the Company, be paid to the Trustee and thereupon such Paying Agent shall be released from all further liability with respect to such money or Governmental Obligations.

Section 13.5 Repayment to Company.

Any money or Governmental Obligations deposited with any Paying Agent or the Trustee, or then held by the Company in trust, for payment of principal of or interest on the Debentures that are not applied but remain unclaimed by the holders of such Debentures for at least two years after the date upon which the principal of or interest on such Debentures shall have respectively become due and payable, shall be repaid to the Company, as the case may be, on May 31 of each year or (if then held by the Company) shall be discharged from such trust; and thereupon the Paying Agent and the Trustee shall be released from all further liability with respect to such moneys or Governmental Obligations, and the holder of any of the Debentures entitled to receive such payment shall thereafter, as an unsecured general creditor, look only to the Company for the payment thereof.

ARTICLE XIV

IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS

AND DIRECTORS

Section 14.1 No Recourse.

No recourse under or upon any obligation, covenant or agreement of this Indenture, or of the Debentures, or for any claim based thereon or otherwise in respect thereof, shall be had against any incorporator, stockholder, officer or director, past, present or future, as such, of the Company or of any predecessor or successor Person, either directly or through the Company or any such predecessor or successor Person, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that this Indenture and the obligations issued hereunder are solely corporate (or other entity, as the case may be) obligations, and that no such personal liability whatever shall attach to, or is or shall be incurred by, the incorporators, stockholders, officers or directors as such, of the Company or of any predecessor or successor Person, or any of them, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Debentures or implied therefrom; and that

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any and all such personal liability of every name and nature, either at common law or in equity or by constitution or statute, and any and all such rights and claims against, every such incorporator, stockholder, officer or director as such, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Debentures or implied therefrom, are hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issuance of such Debentures.

ARTICLE XV

MISCELLANEOUS PROVISIONS

Section 15.1 Effect on Successors and Assigns.

All the covenants, stipulations, promises and agreements in this Indenture contained by or on behalf of the Company shall bind its respective successors and assigns, whether so expressed or not.

Section 15.2 Actions by Successor.

Any act or proceeding by any provision of this Indenture authorized or required to be done or performed by any board, committee or officer of the Company shall and may be done and performed with like force and effect by the corresponding board, committee or officer of any Person that shall at the time be the lawful successor of the Company.

Section 15.3 Surrender of Company Powers.

The Company by instrument in writing executed by appropriate authority of its Board of Directors and delivered to the Trustee may surrender any of the powers reserved to the Company, and thereupon such power so surrendered shall terminate both as to the Company, as the case may be, and as to any successor Person.

Section 15.4 Notices.

Except as otherwise expressly provided herein any notice or demand that by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the holders of Debentures to or on the Company may be given or served by being deposited first class postage prepaid in a post-office letterbox addressed to the Company’s Chief Executive Officer. Any notice, election, request or demand by the Company or any Debentureholder to or upon the Trustee shall be deemed to have been sufficiently given or made, for all purposes, if given or made in writing at the Corporate Trust Office of the Trustee.

Section 15.5 Governing Law.

This Indenture and each Debenture shall be deemed to be a contract made under the internal laws of the State of New York and for all purposes shall be construed in accordance with the laws of said State, without regard to its choice of law provisions. Any action or proceeding arising out of this Indenture, as supplemented or amended, in any way shall be brought and enforced exclusively in the applicable United States District Court in the State of New York or in the event such court lacks jurisdiction, in the applicable New York State Court.

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Section 15.6 Treatment of Debentures as Debt.

It is intended that the Debentures shall be treated as indebtedness and not as equity for federal income tax purposes. The provisions of this Indenture shall be interpreted to further this intention.

Section 15.7 Compliance Certificates and Opinions.

(a) Upon any application or demand by the Company to the Trustee to take any action under any of the provisions of this Indenture, the Company shall furnish to the Trustee an Officers’ Certificate stating that all conditions precedent provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent have been complied with, except that in the case of any such application or demand as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or demand, no additional certificate or opinion need be furnished.

(b) Each certificate or opinion of the Company provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant in this Indenture shall include (i) a statement that the Person making such certificate or opinion has read such covenant or condition; (ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (iii) a statement that, in the opinion of such Person, he has made such examination or investigation as, in the opinion of such Person, is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (iv) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with; provided, however, that each such certificate shall comply with the provisions of Section 314 of the Trust Indenture Act, if applicable.

Section 15.8 Payments on Business Days.

In any case where the date of maturity of interest or principal of any Debenture or the date of redemption of any Debenture shall not be a Business Day, then payment of interest or principal may (subject to Section 2.5(c)) be made on the next succeeding Business Day with the same force and effect as if made on the nominal date of maturity or redemption.

Section 15.9 Application of Trust Indenture Act; Conflict.

(a) Unless and until this Indenture is required to be qualified under the Trust Indenture Act, (i) the provisions of this Indenture that expressly relate to the Trust Indenture Act do not apply and shall not be given effect; and (ii) notwithstanding any other provision of this Indenture (including without limitation Sections 7.7, 9.1(b), 9.7(a) and 9.8 hereof), no Trustee shall be liable for its own simple negligence, but shall only be liable for its own gross negligence.

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(b) If the Indenture is required to be qualified under the Trust Indenture Act at any time, then if and to the extent that any provision of this Indenture limits, qualifies or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control.

Section 15.10 Counterparts.

This Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument.

Section 15.11 Severability.

In case any one or more of the provisions contained in this Indenture or in the Debentures shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Indenture or of the Debentures, but this Indenture and the Debentures shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein or therein.

Section 15.12 Assignment.

The Company shall have the right at all times to assign any of its respective rights or obligations under this Indenture to a direct or indirect wholly owned Subsidiary of the Company, provided that, in the event of any such assignment, the Company shall remain liable for all such obligations. Subject to the foregoing, this Indenture is binding upon and inures to the benefit of the parties thereto and their respective successors and assigns. This Indenture may not otherwise be assigned by the parties hereto.

Section 15.13 Acknowledgment of Rights; Right of Set Off.

(a) The Company acknowledges that, with respect to any Debentures held by the Trust or a trustee of the Trust, if the Property Trustee fails to enforce its rights under this Indenture as the holder of the Debentures held as the assets of the Trust, any holder of Trust Preferred Securities may, to the extent permitted under applicable law, institute legal proceedings directly against the Company to enforce such Property Trustee’s rights under this Indenture without first instituting any legal proceedings against such Property Trustee or any other person or entity. Notwithstanding the foregoing, if an Event of Default has occurred and is continuing and such event is attributable to the failure of the Company to pay interest or principal on the Debentures on the date such interest or principal is otherwise payable (or in the case of redemption, on the redemption date), the Company acknowledges that a holder of Trust Preferred Securities may directly institute a proceeding against the Company for enforcement of payment to such holder of the principal of or interest on the Debentures having a principal amount equal to the aggregate liquidation amount of the Trust Preferred Securities of such holder on or after the respective due date specified in the Debentures.

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(b) Notwithstanding anything to the contrary contained in this Indenture, the Company shall have the right to setoff any payment it is otherwise required to make hereunder in respect of any Trust Securities to the extent that the Company has previously made, or is concurrently making, a payment to the holder of any such Trust Securities under the Trust Preferred Securities Guarantee or in connection with a proceeding for enforcement of payment of the principal of or interest on the Debentures directly brought by holders of any such Trust Securities.

ARTICLE XVI

SUBORDINATION OF DEBENTURES

Section 16.1 Agreement to Subordinate.

The Company covenants and agrees, and each holder of Debentures issued hereunder by such holder’s acceptance thereof likewise covenants and agrees, that all Debentures shall be issued subject to the provisions of this Article XVI; and each holder of a Debenture, whether upon original issue or upon transfer or assignment thereof, accepts and agrees to be bound by such provisions. The payment by the Company of the principal of and interest on all Debentures issued hereunder shall, to the extent and in the manner hereinafter set forth, be subordinated and junior in right of payment to the prior payment in full of all Senior Debt, Subordinated Debt and Additional Senior Obligations of the Company (collectively, “Senior Indebtedness”) to the extent provided herein, whether outstanding at the date of this Indenture or thereafter incurred. No provision of this Article XVI shall prevent the occurrence of any default or Event of Default hereunder. In no event shall the Debentures be subordinate to the Company’s (i) trade accounts payable, or (ii) accrued liabilities arising in the ordinary course of business; however, the Debentures shall in all cases be subordinate to (i) any debt of the Company to any of its subsidiaries and (ii) any debt of the Company to any of its employees.

Section 16.2 Default on Senior Debt, Subordinated Debt or Additional Senior Obligations.

In the event and during the continuation of any default by the Company in the payment of principal, premium, interest or any other payment due on any Senior Indebtedness, or in the event that the maturity of any Senior Indebtedness has been accelerated because of a default, then, in either case, no payment shall be made by the Company with respect to the principal (including redemption payments) of or interest on the Debentures. In the event that, notwithstanding the foregoing, any payment shall be received by the Trustee when such payment is prohibited by the preceding sentence of this Section 16.2, such payment shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of Senior Indebtedness or their respective representatives, or to the trustee or trustees under any indenture pursuant to which any of such Senior Indebtedness may have been issued, as their respective interests may appear, but only to the extent that the holders of the Senior Indebtedness (or their representative or representatives or a trustee) notify the Trustee in writing within 90 days of such payment of the amounts then due and owing on the Senior Indebtedness and only the amounts specified in such notice to the Trustee shall be paid to the holders of Senior Indebtedness.

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Section 16.3 Liquidation; Dissolution; Bankruptcy.

(a) Upon any payment by the Company or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to creditors upon any dissolution or winding-up or liquidation or reorganization of the Company, whether voluntary or involuntary or in bankruptcy, insolvency, receivership or other proceedings, all amounts due upon all Senior Indebtedness of the Company shall first be paid in full, or payment thereof provided for in money in accordance with its terms, before any payment is made by the Company on account of the principal or interest on the Debentures; and upon any such dissolution or winding-up or liquidation or reorganization, any payment by the Company, or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to which the holders of the Debentures or the Trustee would be entitled to receive from the Company, except for the provisions of this Article XVI, shall be paid by the Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making such payment or distribution, or by the holders of the Debentures or by the Trustee under this Indenture if and to the extent received by them or it, directly to the holders of Senior Indebtedness of the Company (pro rata to such holders on the basis of the respective amounts of Senior Indebtedness held by such holders, as calculated by the Company) or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing such Senior Indebtedness may have been issued, as their respective interests may appear, to the extent necessary to pay such Senior Indebtedness in full, in money or money’s worth, after giving effect to any concurrent payment or distribution to or for the holders of such Senior Indebtedness, before any payment or distribution is made to the holders of Debentures or to the Trustee.

(b) In the event that, notwithstanding the foregoing, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, prohibited by the foregoing, shall be received by the Trustee before all Senior Indebtedness of the Company is paid in full, or provision is made for such payment in money in accordance with its terms, such payment or distribution shall be held in trust for the benefit of and shall be paid over or delivered to the holders of such Senior Indebtedness or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing such Senior Indebtedness may have been issued, and their respective interests may appear, as calculated by the Company, for application to the payment of all Senior Indebtedness of the Company, as the case may be, remaining unpaid to the extent necessary to pay such Senior Indebtedness in full in money in accordance with its terms, after giving effect to any concurrent payment or distribution to or for the benefit of the holders of such Senior Indebtedness.

(c) For purposes of this Article XVI, the words “cash, property or securities” shall not be deemed to include shares of stock of the Company as reorganized or readjusted, or securities of the Company or any other Person provided for by a plan of reorganization or readjustment, the payment of which is subordinated at least to the extent provided in this Article XVI with respect to the Debentures to the payment of all Senior Indebtedness of the Company, as the case may be, that may at the time be

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outstanding, provided that (i) such Senior Indebtedness is assumed by the new Person, if any, resulting from any such reorganization or readjustment; and (ii) the rights of the holders of such Senior Indebtedness are not, without the consent of such holders, altered by such reorganization or readjustment. The consolidation of the Company with, or the merger of the Company into, another Person or the liquidation or dissolution of the Company following the conveyance or transfer of its property as an entirety, or substantially as an entirety, to another Person upon the terms and conditions provided for in Article XII shall not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of this Section 16.3 if such other Person shall, as a part of such consolidation, merger, conveyance or transfer, comply with the conditions stated in Article XII. Nothing in Section 16.2 or in this Section 16.3 shall apply to claims of, or payments to, the Trustee under or pursuant to Section 9.7.

Section 16.4 Subrogation.

(a) Subject to the payment in full of all Senior Indebtedness of the Company, the rights of the holders of the Debentures shall be subrogated to the rights of the holders of such Senior Indebtedness to receive payments or distributions of cash, property or securities of the Company, as the case may be, applicable to such Senior Indebtedness until the principal of and interest on the Debentures shall be paid in full; and, for the purposes of such subrogation, no payments or distributions to the holders of such Senior Indebtedness of any cash, property or securities to which the holders of the Debentures or the Trustee would be entitled except for the provisions of this Article XVI, and no payment pursuant to the provisions of this Article XVI to or for the benefit of the holders of such Senior Indebtedness by holders of the Debentures or the Trustee, shall, as between the Company, its creditors (other than holders of Senior Indebtedness), and the holders of the Debentures, be deemed to be a payment by the Company to or on account of such Senior Indebtedness. It is understood that the provisions of this Article XVI are and are intended solely for the purposes of defining the relative rights of the holders of the Debentures, on the one hand, and the holders of such Senior Indebtedness on the other hand.

(b) Nothing contained in this Article XVI or elsewhere in this Indenture or in the Debentures is intended to or shall impair, as between the Company, its creditors (other than the holders of Senior Indebtedness of the Company), and the holders of the Debentures, the obligation of the Company, which is absolute and unconditional, to pay to the holders of the Debentures the principal of and interest on the Debentures as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the holders of the Debentures and creditors of the Company, as the case may be, other than the holders of Senior Indebtedness, as the case may be, nor shall anything herein or therein prevent the Trustee or the holder of any Debenture from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article XVI of the holders of such Senior Indebtedness in respect of cash, property or securities of the Company, as the case may be, received upon the exercise of any such remedy.

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(c) Upon any payment or distribution of assets of the Company referred to in this Article XVI, the Trustee, subject to the provisions of Section 9.1(b), and the holders of the Debentures shall be entitled to conclusively rely upon any order or decree made by any court of competent jurisdiction in which such dissolution, winding-up, liquidation or reorganization proceedings are pending, or a certificate of the receiver, trustee in bankruptcy, liquidation trustee, agent or other Person making such payment or distribution, delivered to the Trustee or to the holders of the Debentures, for the purposes of ascertaining the Persons entitled to participate in such distribution, the holders of Senior Indebtedness and other indebtedness of the Company, as the case may be, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article XVI.

Section 16.5 Trustee to Effectuate Subordination.

Each holder of Debentures by such holder’s acceptance thereof authorizes and directs the Trustee on such holder’s behalf to take such action as the Company advises the Trustee in writing is necessary or appropriate to effectuate the subordination provided in this Article XVI and appoints the Trustee such holder’s attorney-in-fact for any and all such purposes.

Section 16.6 Notice by the Company.

(a) The Company shall give prompt written notice to a Responsible Officer of the Trustee of any fact known to the Company that would prohibit the making of any payment of money to or by the Trustee in respect of the Debentures pursuant to the provisions of this Article XVI. Notwithstanding the provisions of this Article XVI or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment of money to or by the Trustee in respect of the Debentures pursuant to the provisions of this Article XVI, unless and until a Responsible Officer of the Trustee shall have received written notice thereof from the Company or a holder or holders of Senior Indebtedness or from any trustee therefore; and before the receipt of any such written notice, the Trustee, subject to the provisions of Section 9.1(b), shall be entitled in all respects to assume that no such facts exist; provided, however, that if the Trustee shall not have received the notice provided for in this Section 16.6 at least two Business Days prior to the date upon which by the terms hereof any money may become payable for any purpose (including, without limitation, the payment of the principal of or interest on any Debenture), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such money and to apply the same to the purposes for which they were received, and shall not be affected by any notice to the contrary that may be received by it within two Business Days prior to such date.

(b) The Trustee, subject to the provisions of Section 9.1(b), shall be entitled to conclusively rely on the delivery to it of a written notice by a Person representing himself to be a holder of Senior Indebtedness (or a trustee on behalf of such holder) to establish that such notice has been given by a holder of such Senior Indebtedness or a trustee on behalf of any such holder or holders. In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder

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of such Senior Indebtedness to participate in any payment or distribution pursuant to this Article XVI, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of such Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article XVI, and, if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.

Section 16.7 Rights of the Trustee; Holders of Senior Indebtedness.

(a) The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article XVI in respect of any Senior Indebtedness at any time held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. The Trustee’s right to compensation and reimbursement of expenses as set forth in Section 9.7 shall not be subject to the subordination provisions of the Article XVI.

(b) With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article XVI, and no implied covenants or obligations with respect to the holders of such Senior Indebtedness shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of such Senior Indebtedness and, subject to the provisions of Section 9.1(b), the Trustee shall not be liable to any holder of such Senior Indebtedness if it shall in good faith pay over or deliver to holders of Debentures, the Company or any other Person money or assets to which any holder of such Senior Indebtedness shall be entitled by virtue of this Article XVI or otherwise.

Section 16.8 Subordination may not be Impaired.

(a) No right of any present or future holder of any Senior Indebtedness of the Company to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or otherwise be charged with.

(b) Without in any way limiting the generality of the foregoing paragraph, the holders of Senior Indebtedness of the Company may, at any time and from time to time, without the consent of or notice to the Trustee or the holders of the Debentures, without incurring responsibility to the holders of the Debentures and without impairing or releasing the subordination provided in this Article XVI or the obligations hereunder of the holders of the Debentures to the holders of such Senior Indebtedness, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, such Senior Indebtedness, or otherwise amend or supplement in any manner such Senior Indebtedness or any instrument evidencing the

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same or any agreement under which such Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing such Senior Indebtedness; (iii) release any Person liable in any manner for the collection of such Senior Indebtedness; and (iv) exercise or refrain from exercising any rights against the Company and any other Person.

[Signature Page Follows]

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IN WITNESS WHEREOF, this Indenture is dated as set forth below and effective as of the day and year first above written.

Indian River Banking Company
By:	/s/ Paul A. Beindorf
Name:	Paul A. Beindorf
Title:	President
Date:	September 26, 2002
Wells Fargo Bank, National Association, AS TRUSTEE
By:	/s/ Edward L. Truit, Jr.
Name:	Edward L. Truit, Jr.
Title:	Vice President
Date:

[Signature Page to Indenture]

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EXHIBIT A

FLOATING RATE JUNIOR SUBORDINATED

DEFERRABLE INTEREST DEBENTURE

OF INDIAN RIVER BANKING COMPANY

THIS DEBENTURE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAWS. NEITHER THIS DEBENTURE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. PRIOR TO (X) THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(k) UNDER THE SECURITIES ACT) AFTER THE LATER OF (i) THE ORIGINAL ISSUE DATE HEREOF OR (ii) THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS DEBENTURE (OR ANY PREDECESSOR OF THIS DEBENTURE) AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAWS (THE “RESALE RESTRICTION TERMINATION DATE”), THE HOLDER OF THIS DEBENTURE BY ITS ACCEPTANCE HEREOF AGREES FOR THE BENEFIT OF THE COMPANY TO OFFER, SELL OR OTHERWISE TRANSFER THIS DEBENTURE ONLY (A) TO THE COMPANY OR AN AFFILIATE OF THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THIS DEBENTURE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A (“RULE 144A”) PROMULGATED UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A, (D) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS DEBENTURE FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL “ACCREDITED INVESTOR,” FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE, TRANSFER OR OTHER DISPOSITION (i) PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY BY THE HOLDER OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO THE COMPANY TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS DEBENTURE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE AND THE DEBENTURE

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REGISTRAR IN CONNECTION WITH ANY TRANSFER OF THIS DEBENTURE PRIOR TO THE RESALE RESTRICTION TERMINATION DATE. THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE CERTIFICATE OF TRANSFER RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THE CERTIFICATE OF TRANSFER TO THE TRUSTEE AND THE DEBENTURE REGISTRAR. THIS LEGEND WILL BE REMOVED UPON REQUEST OF THE HOLDER AFTER THE EARLIER OF (i) THE TRANSFER OF THE DEBENTURE EVIDENCED HEREBY PURSUANT TO CLAUSE (B) ABOVE OR (ii) THE RESALE RESTRICTION TERMINATION DATE. THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS DEBENTURE OF THE RESALE RESTRICTIONS REFERRED TO HEREIN.

PRIOR TO THE RESALE RESTRICTION TERMINATION DATE, THIS DEBENTURE MAY BE TRANSFERRED OR EXCHANGED ONLY IN A MINIMUM AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000. ANY ATTEMPTED TRANSFER OF THIS DEBENTURE IN AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000 PRIOR TO THE RESALE RESTRICTION TERMINATION DATE SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. AFTER SUCH RESALE RESTRICTION TERMINATION DATE, ANY ATTEMPTED TRANSFER OF THIS DEBENTURE IN AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF THIS DEBENTURE FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RIGHT TO RECEIVE INTEREST PAYMENTS ON THIS DEBENTURE, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS DEBENTURE.

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE REQUIRED BY THE INDENTURE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

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INDIAN RIVER BANKING COMPANY

FLOATING RATE JUNIOR SUBORDINATED DEFERRABLE INTEREST

DEBENTURE

DUE NOVEMBER 7, 2032

No.                                          Seven Million Two Hundred Seventeen Thousand Dollars ($7,217,000)

Indian River Banking Company, a Florida corporation (the “Company,” which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to, Wells Fargo Bank, National Association or any successor thereto, as property trustee of Indian River Capital Trust I or registered assigns, the principal sum of Seven Million Two Hundred Seventeen Thousand Dollars ($7,217,000) on November 7, 2032 (the “Stated Maturity”), and to pay interest on said principal sum from (i) September 30, 2002, to the date of transfer (the “Initial Interest Payment Date”) of all right, title and interest in and to the Floating Rate Cumulative Trust Preferred Securities (“Trust Preferred”) by the initial purchaser thereof (“Initial Purchaser”) (the “Initial Interest Payment Period”) at the rate of 3.55% per annum over the Three-Month LIBOR Rate (the “Initial Rate”) or (ii) from the most recent interest payment date to which interest has been paid or duly provided for, quarterly (subject to deferral as set forth herein) in arrears on February 7, May 7, August 7, and November 7 of each year (each such date, an “Interest Payment Date”). The first Distribution Date shall be on February 7, 2003. Commencing upon the Initial Interest Payment Date, payment on the Debentures shall be payable at a floating rate (the “Floating Interest Rate”) equal to no more than 3.75% over the Three-Month LIBOR Rate (the “Rate Premium”). The Rate Premium shall be determined on the Initial Interest Payment Date. Both the Floating Interest Rate and Initial Rate shall be applied to the aggregate principal amount of the Debentures outstanding as of such Initial Interest Payment Date or Interest Payment Date, as applicable, until the principal hereof shall have become due and payable, and on any overdue principal and (without duplication and to the extent that payment of such interest is enforceable under applicable law) on any overdue installment of interest at the same rate per annum compounded quarterly. Notwithstanding anything to the contrary above, in no event shall the Initial Rate or Floating Interest Rate exceed 12.5% prior to November 7, 2007.

The “Three-Month LIBOR Rate” shall mean the rate determined in accordance with the following provisions:

(i) On the second LIBOR Business Day (provided that on such day commercial banks are open for business (including dealings in foreign currency deposits) in London (a “LIBOR Banking Day”) preceding each February 15, May 15, August 15, and November 15 (except with respect to the Initial Interest Payment Period and the Interest Payment Period commencing the day after the Initial Interest Payment Date) (each such date, an “Interest Reset Date”), Wells Fargo Bank, National Association (the “Calculation Agent”), will determine the Three-Month LIBOR Rate which shall be the rate for deposits in the London interbank market in U.S. dollars having a three-month maturity which appears on

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the Telerate Page 3750 as of 11:00 a.m., London time, on such Interest Reset Date. “Telerate Page 3750” means the display on Page 3750 of the Bloomberg Financial Markets Commodities News (or such other page as may replace that page on that service for the purpose of displaying London interbank offered rates of major banks for U.S. dollar deposits). If the Three-Month LIBOR Rate on such Interest Reset Date does not appear on the Telerate Page 3750, such Three-Month LIBOR Rate will be determined as described in (ii) below. “LIBOR Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banking institutions in New York, New York or Wilmington, Delaware are authorized or obligated by law or executive order to be closed. If such rate is superseded on Telerate Page 3750 by a corrected rate before 12:00 noon (London time) on the same Interest Reset Date, the corrected rate as so substituted will be the applicable LIBOR for that Interest Reset Date.

(ii) If, on any Interest Reset Date, such rate does not appear on Telerate Page 3750 as reported by Bloomberg Financial Markets Commodities News or such other page as may replace such Telerate Page 3750, the Calculation Agent shall determine the arithmetic mean of quotations of the Reference Banks (defined below) to leading banks in the London interbank market for three-month U.S. Dollar deposits in Europe (in an amount determined by the Calculation Agent by reference to requests for quotations as of approximately 11:00 a.m. (London time) on the Interest Reset Date made by the Calculation Agent to the Reference Banks. If, on any Interest Reset Date, at least two of the Reference Banks provide such quotations, LIBOR shall equal the arithmetic mean of such quotations. If, on any Interest Reset Date, only one or none of the Reference Banks provide such a quotation, LIBOR shall be deemed to be the arithmetic mean of the offered quotations that at least two leading banks in the City of New York (as selected by the Calculation Agent) are quoting on the relevant Interest Reset Date for three-month U.S. Dollar deposits in Europe at approximately 11:00 a.m. (London time) (in an amount determined by the Calculation Agent). As used herein, “Reference Banks” means four major banks in the London interbank market selected by the Calculation Agent.

(iii) If the Calculation Agent is required but is unable to determine a rate in accordance with at least one of the procedures provided above, LIBOR shall be LIBOR in effect on the previous Interest Reset Date (whether or not LIBOR for such period was in fact determined on such Interest Reset Date).

The amount payable for the Initial Interest Payment Period and any Interest Payment Period shall be computed on the basis of a 360-day year and the actual number of days in such Initial Interest Payment Period and Interest Payment Period. In the event that any date on which interest is payable on this Debenture is not a Business Day, then payment of interest payable on such date shall be made on the next succeeding day that is a Business Day except that, if such Business Day is in the next succeeding calendar year, payment of such interest will be made on the immediately preceding Business Day. The interest installment so payable, and punctually paid or duly provided for, on the Initial Interest Payment Period and any Interest Payment Date shall, be paid to the Person in whose name this Debenture (or one or more Predecessor Debentures, as defined in said Indenture) is registered as provided in the Indenture.

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The amount of interest for each day that a Debenture is outstanding (the “Daily Interest Amount”) will be calculated by dividing the Initial Rate or Floating Interest Rate in effect for such day by 360 and multiplying the result by the principal amount of such Debenture. The Initial Rate or Floating Interest Rate will in no event be higher than the maximum rate permitted by the law of the State of Florida, or, if higher, the law of the United States of America.

The principal of and the interest on this Debenture shall be payable at or through the office or agency of the Trustee maintained for that purpose in any coin or currency of the United States of America that at the time of payment is legal tender for payment of public and private debts; provided, however, that payment of interest may be made at the option of the Company by check mailed to the registered holder at such address as shall appear in the Debenture Register. Notwithstanding the foregoing, so long as the holder of this Debenture is the Property Trustee, the payment of the principal of and interest on this Debenture shall be made at such place and to such account as may be designated by the Property Trustee.

The Floating Interest Rate and amount of interest to be paid on the Debentures for the Initial Interest Payment Period and each Interest Payment Period will be determined by the Calculation Agent. All calculations made by the Calculation Agent shall, in the absence of manifest error, be conclusive for all purposes and binding on the Company and the holders of this Debenture. In the event that any then acting Calculation Agent shall be unable or unwilling to act, or that such Calculation Agent shall fail duly to establish the Floating Interest Rate for any Interest Payment Period, or that the Company proposes to remove such Calculation Agent, or that the Calculation Agent proposes to terminate its service as Calculation Agent, the Company shall appoint another Person, which is a bank, trust company, investment banking firm or other financial institution, to act as the Calculation Agent. The Calculation Agent shall certify the Floating Interest Rate on each Interest Reset Date and shall provide a copy of such certification to the Trustee under the Indenture and to the Property Trustee as soon as practicable following each Interest Reset Date. The Trustee will provide written notice of the Floating Interest Rate as certified by the Calculation Agent to the holder of this Debenture within five Business Days following each Interest Reset Date.

Subject to the Company having received prior approval of the Federal Reserve if then required under applicable capital guidelines, policies or regulations of the Federal Reserve, the Company may redeem this Debenture prior to the Stated Maturity in the manner and at the times set forth in the Indenture.

The payment by the Company of the principal and interest on the indebtedness evidenced by this Debenture is, to the extent and in the manner provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Indebtedness. This Debenture is issued subject to the provisions of the Indenture with respect thereto. Each holder of this Debenture, by accepting the same, (a) agrees to and shall be bound by such provisions; (b) authorizes and directs the Trustee on his or her behalf to take such action as the Company advises the Trustee in writing is necessary or appropriate to acknowledge or effectuate the subordination so provided; and (c) appoints the Trustee his or her attorney-in-fact for any and all

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such purposes. Each holder hereof, by his or her acceptance hereof, hereby waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Indebtedness, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions.

This Debenture shall not be entitled to any benefit under the Indenture hereinafter referred to, be valid or become obligatory for any purpose until the Certificate of Authentication hereon shall have been signed by or on behalf of the Trustee.

Capitalized terms used and not defined in this Debenture shall have the meanings assigned in the Indenture.

The provisions of this Debenture are continued on the reverse side hereof and such continued provisions shall for all purposes have the same effect as though fully set forth at this place.

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IN WITNESS WHEREOF, the Company has caused this instrument to be effective September 30, 2002.

Indian River Banking Company
By:	/s/ Paul A. Beindorf
Name:	Paul A. Beindorf
Title:	President & CEO

Attest:

By:	/s/ Kitty L. Ruehman
Name:	Kitty L. Ruehman
Title:	Secretary

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CERTIFICATE OF AUTHENTICATION

This is one of the Debentures described in the within-mentioned Indenture.

Wells Fargo Bank, National Association, as Trustee or Authenticating Agent
By:	/s/ Edward L. Truitt, Jr.
	Authorized Signatory

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FLOATING RATE JUNIOR SUBORDINATED

DEFERRABLE INTEREST DEBENTURE

(CONTINUED)

This Debenture is one of the subordinated debentures of the Company (herein sometimes referred to as the “Debentures”), specified in the Indenture, all issued or to be issued under and pursuant to an Indenture effective as of September 30, 2002 (the “Indenture”) duly executed and delivered between the Company and Wells Fargo Bank, National Association, as Trustee (the “Trustee”), to which Indenture reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the holders of the Debentures and of the terms upon which the Debentures are, and are to be, authenticated and delivered. The Debentures are limited in aggregate principal amount as specified in the Indenture.

Because of the occurrence and continuation of a Special Event, in certain circumstances, this Debenture may become due and payable at the principal amount together with any interest accrued thereon (the “Redemption Price”). The Redemption Price shall be paid prior to 12:00 noon, Eastern Standard Time, on the date of such redemption or at such earlier time as the Company determines. The Company shall have the right as set forth in the Indenture to redeem this Debenture at the option of the Company, without premium or penalty, (i) in whole or in part, at any time on or after June 30, 2007 (an “Optional Redemption”), or (ii) in whole, but not in part, at any time in certain circumstances upon the occurrence of a Special Event, at a Redemption Price equal to of the principal amount plus any accrued but unpaid interest hereon, to the date of such redemption. Any redemption pursuant to this paragraph shall be made upon not less than 30 days’ nor more than 60 days’ notice, at the Redemption Price. The Redemption Price shall be paid at the time and in the name provided therefor in the Indenture. If the Debentures are only partially redeemed by the Company pursuant to an Optional Redemption, the Debentures shall be redeemed pro rata or by lot or by any other method utilized by the Trustee as described in the Indenture.

In the event of redemption of this Debenture in part only, a new Debenture or Debentures for the unredeemed portion hereof shall be issued in the name of the holder hereof upon the cancellation hereof. In case an Event of Default, as defined in the Indenture, shall have occurred and be continuing, the principal of all of the Debentures may be declared, and upon such declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture.

The Indenture contains provisions permitting the Company and the Trustee, with the consent of the holders of not less than a majority in aggregate principal amount of the Debentures at the time Outstanding, as defined in the Indenture, to execute supplemental indentures for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or of modifying in any manner the rights of the holders of the Debentures; provided, however, that no such supplemental indenture shall, except as provided in the Indenture (i) extend the fixed maturity of

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the Debentures, reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, without the consent of the holder of each Debenture so affected thereby; or (ii) reduce the aforesaid percentage of Debentures, the holders of which are required to consent to any such supplemental indenture, without the consent of the holders of each Debenture then Outstanding and so affected thereby. The Indenture also contains provisions permitting the holders of a majority in aggregate principal amount of the Debentures at the time outstanding, on behalf of all of the holders of the Debentures, to waive any past default in the performance of any of the covenants contained in the Indenture, or established pursuant to the Indenture, and its consequences, except a default in the payment of the principal of or interest on any of the Debentures. Any such consent or waiver by the registered holder of this Debenture (unless revoked as provided in the Indenture) shall be conclusive and binding upon such holder and upon all future holders and owners of this Debenture and of any Debenture issued in exchange herefor or in place hereof (whether by registration of transfer or otherwise), irrespective of whether or not any notation of such consent or waiver is made upon this Debenture.

No reference herein to the Indenture and no provision of this Debenture or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal and interest on this Debenture at the time (subject to the Company’s right to defer payment of interest during an Extended Interest Payment Period as described herein) and place and at the rate and in the money herein prescribed.

As further described in the Indenture, the Company shall have the right at any time during the term of the Debentures and from time to time to defer payments of interest by extending the interest payment period of such Debentures for up to 20 consecutive quarters (each, an “Extended Interest Payment Period”), at the end of which period the Company shall pay all interest then accrued and unpaid (together with interest thereon at the rate specified for the Debentures to the extent that payment of such interest is enforceable under applicable law). Before the termination of any such Extended Interest Payment Period, so long as no Event of Default shall have occurred and be continuing, the Company may further extend such Extended Interest Payment Period, provided that such Extended Interest Payment Period together with all such further extensions thereof shall not exceed 20 consecutive quarters, extend beyond the Stated Maturity or end on a date other than an Interest Payment Date. At the termination of any such Extended Interest Payment Period and upon the payment of all accrued and unpaid interest and any additional amounts then due and subject to the foregoing conditions, the Company may commence a new Extended Interest Payment Period.

As provided in the Indenture and subject to certain limitations therein set forth, this Debenture is transferable by the registered holder hereof on the Debenture Register at the office or agency of the Company designated for such purpose upon surrender of this Debenture for registration of transfer accompanied by a written instrument or instruments of transfer in form satisfactory to the Company duly executed by the registered holder hereof or his attorney duly authorized in writing, and thereupon one or more new Debentures of authorized denominations and for the same aggregate principal amount shall be issued to the designated transferee or transferees. No service charge shall be made for any such transfer, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in relation thereto.

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Prior to due presentment for registration of transfer of this Debenture, the Company, the Trustee, any Paying Agent and the Debenture Registrar may deem and treat the registered holder hereof as the absolute owner hereof (whether or not this Debenture shall be overdue and notwithstanding any notice of ownership or writing hereon made by anyone other than the Debenture Registrar) for the purpose of receiving payment of or on account of the principal hereof and interest due hereon and for all other purposes, and neither the Company nor the Trustee nor any Paying Agent nor any Debenture Registrar shall be affected by any notice to the contrary (by anyone other than the Debenture Registrar).

No recourse shall be had for the payment of the principal of or the interest on this Debenture, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture, against any incorporator, stockholder, officer or director, past, present or future, as such, of the Company or of any predecessor or successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issuance hereof, expressly waived and released.

Subject to Section 2.3 of the Indenture, the Debentures are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof.

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EX-10.48A

Exhibit 10.48A

FIRST SUPPLEMENTAL INDENTURE

BY AND AMONG

INDIAN RIVER BANKING COMPANY,

ALABAMA NATIONAL BANCORPORATION

and

WELLS FARGO BANK, NATIONAL ASSOCIATION, Trustee

Dated as of November 19, 2003

Supplement to Indenture

Dated as of September 30, 2002

Floating Rate Junior Subordinated Deferrable Interest Debentures due 2032

FIRST SUPPLEMENTAL INDENTURE

THIS FIRST SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”) is made as of this 19^th day of November, 2003, by and among Indian River Banking Company, a Florida corporation (“IRBC” or, before the Effective Time, the “Company”), as original issuer, Alabama National BanCorporation, a Delaware corporation (“ANB” or, after the Effective Time, the “Company”), as successor issuer, and Wells Fargo Bank, National Association, a national banking association (the “Trustee”), as trustee.

WHEREAS, IRBC and the Trustee have entered into an Indenture, dated as of September 30, 2002 (the “Original Indenture”), pursuant to which the Company issued, and the Trustee authenticated and delivered, the Company’s Floating Rate Junior Subordinated Deferrable Interest Debentures, due November 7, 2032, which are, as of the date hereof, currently outstanding in the aggregate principal amount of $7,217,000 (the “Debentures”);

WHEREAS, IRBC and ANB have entered into an Agreement and Plan of Merger, dated as of October 22, 2003, that provides for the merger (the “Merger”) of IRBC with and into ANB;

WHEREAS, the Merger will become effective (a) on the date and at the time that the later of the following shall occur: (i) the Certificate of Merger reflecting the Merger shall be accepted for filing by the Secretary of State of Delaware, and (ii) the Articles of Merger reflecting the Merger shall be accepted for filing by the Secretary of State of Florida, or (b) on the date and at the time as may be otherwise specified by the parties to the Merger in the Certificate of Merger and the Articles of Merger (the time and date when the Merger becomes effective is referred to herein as the “Effective Time”);

WHEREAS, at the Effective Time, the separate corporate existence of IRBC will cease and ANB will continue as the surviving corporation following the Merger;

WHEREAS, pursuant to Section 12.1 of the Original Indenture, the Company may merge into another corporation only if (i) the successor corporation expressly assumes by supplemental indenture the due and punctual payment of the principal of and interest on all of the Debentures, according to their tenor and the due and punctual performance and observance of all the covenants and conditions in the Original Indenture to be kept or performed by the Company; (ii) the successor corporation is a corporation organized and existing under the laws of the United States or any state or the District of Columbia; and (iii) immediately after giving effect to the Merger, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing;

WHEREAS, ANB has previously issued to subsidiary trusts of ANB in connection with the issuance by such trusts of capital and common securities, the following debentures: (i) floating rate junior subordinated deferrable interest debentures due 2031 currently outstanding in the aggregate principal amount of $15,464,000, (ii) floating rate junior subordinated deferrable interest debentures due 2032 currently outstanding in the aggregate principal amount of $10,310,000, and (iii) floating rate junior subordinated deferrable interest debentures due 2033 currently outstanding in the aggregate principal amount of $20,619,000 (collectively, the “ANB Debentures”); and issued guarantees in respect of the related capital securities issued by such trusts;

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WHEREAS, an event of default may occur under the indentures relating to the ANB Debentures as a result of the assumption by ANB of the Debentures pursuant to this Supplemental Indenture, unless the Debentures are expressly pari passu with the ANB Debentures;

WHEREAS, no adverse effect in any material respect in the rights of the Debentureholders will result if the Debentures are pari passu with the ANB Debentures;

WHEREAS the parties hereto desire to permit the Merger and preclude an inadvertent event of default under the ANB Debentures;

WHEREAS, (i) ANB desires to assume pursuant to this Supplemental Indenture, as of the Effective Time, the due and punctual payment of the principal of and interest on all of the Debentures, according to their tenor and the due and punctual performance and observance of all the covenants and conditions in the Original Indenture to be kept or performed by the Company, (ii) ANB is a corporation organized and existing under the laws of the State of Delaware, which is a state of the United States, and (iii) immediately after giving effect to the Merger, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing; and

WHEREAS, this Supplemental Indenture has been duly authorized by all necessary action on the part of IRBC and ANB.

NOW, THEREFORE, in consideration of the premises set forth herein and other good and valuable consideration, IRBC, ANB and the Trustee agree as follows for the equal and ratable benefit of the Debentureholders:

ARTICLE I

DEFINITIONS; INTERPRETATION

1.1. Definitions. Capitalized terms that are defined in the preamble or the recitals hereto shall have such meanings throughout this Supplemental Indenture. Capitalized terms used but not defined in this Supplemental Indenture shall have the meanings assigned thereto in the Original Indenture. The meanings assigned to all defined terms used in this Supplemental Indenture shall be equally applicable to both the singular and plural forms of such defined terms. The term “Indenture” as used herein means the Original Indenture, as amended and supplemented by this Supplemental Indenture, or as otherwise supplemented or amended from time to time by one or more indentures supplemental thereto or hereto entered into pursuant to the applicable provisions of the Indenture.

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1.2. Interpretation. References in the Original Indenture (including references in the Original Indenture as amended or supplemented hereby) to “this Indenture” (and indirect references such as “hereunder,” “herein” and “hereof”) shall be deemed references to the Original Indenture as amended and supplemented hereby. All of the covenants, agreements and provisions of this Supplemental Indenture shall be deemed to be and construed as part of the Original Indenture to the same effect as if fully set forth therein and shall be fully enforceable in the manner provided in the Original Indenture. Except as otherwise provided in this Supplemental Indenture, all of the covenants, agreements and provisions of the Original Indenture shall remain in full force and effect.

ARTICLE II

THE MERGER

2.1. Assumption by ANB. ANB, as the surviving corporation of the Merger, shall become fully responsible as of the Effective Time, without any further action, for: (i) the due and punctual payment of the principal and interest on all of the Debentures, according to their tenor and the Indenture; and (ii) the due and punctual performance and observance of all of the covenants and conditions of the Indenture to be kept or performed by the Company. Upon such assumption, ANB shall succeed to and be substituted for IRBC with the same effect as if it had been named in the Indenture as the original issuer, and IRBC thereupon shall be relieved of any further liability or obligation under the Indenture or upon the Debentures. Upon and following the Effective Time, the parties hereto agree that all references to the “Company” in the Indenture and the Debentures shall be deemed references to ANB, until a successor replaces it pursuant to the applicable provisions of the Indenture and thereafter the “Company” shall mean such successor.

2.2. Representations, Warranties and Covenants Regarding the Merger. ANB represents, warrants and covenants to the Trustee that ANB is a corporation duly organized and validly existing under the laws of the State of Delaware. IRBC represents, warrants and covenants to the Trustee that as of the date hereof, no Event of Default has occurred that is continuing. IRBC and ANB jointly and severally represent, warrant and covenant to the Trustee that immediately after giving effect to the Merger and the assumption contemplated by Section 2.1 hereof, no Event of Default, or event which after notice or lapse of time or both would become an Event of Default, shall have occurred and be continuing.

ARTICLE III

RANKING

3.1. In order to provide that the Debentures are pari passu with the ANB Debentures and the guarantees issued by ANB in respect thereof, Section 16.1 of the Original Indenture is amended by adding the following at the end thereof:

“Notwithstanding anything to the contrary herein, the Debentures shall rank pari passu in right of payment with the Company’s (i) floating rate junior subordinated deferrable interest debentures due 2031, (ii) floating rate junior subordinated deferrable interest debentures due 2032, and (iii) floating rate junior subordinated deferrable interest debentures due 2033, and the guarantees issued by the Company in respect thereof.”

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3.2. In order to provide that the Debentures shall not constitute “Senior Debt”, the definition of Senior Debt in Section 1.1 of the Original Indenture is amended by adding the following at the end thereof:

“Notwithstanding anything to the contrary herein, the Debentures shall not constitute Senior Debt”.

3.3. In order to provide that the Debentures shall not constitute “Subordinated Debt”, the definition of Subordinated Debt in Section 1.1 of the Original Indenture is amended by adding the following at the end thereof:

“Notwithstanding anything to the contrary herein, the Debentures shall not constitute Subordinated Debt”.

ARTICLE IV

MISCELLANEOUS

4.1. Conflict with the Trust Indenture Act. If any provision of this Supplemental Indenture modifies or excludes any provision of the Trust Indenture Act that is required under such act to be part of and govern the Indenture, the latter provision of the Trust Indenture Act shall control. If any provision hereof modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision of the Trust Indenture Act shall be deemed to apply to this Supplemental Indenture, as so modified or excluded, as the case may be.

4.2. Date and Time of Effectiveness. This Supplemental Indenture shall become a legally effective and binding instrument at and as of the Effective Time.

4.3. Debentures Deemed Conformed. Beginning at the Effective Time, the provisions of each Debenture then outstanding shall be deemed to be conformed, without the necessity for any reissuance or exchange of such Debenture or any other action on the part of the Debentureholders, IRBC, ANB or the Trustee, so as to reflect this Supplemental Indenture.

4.4. Successors. All agreements of IRBC, ANB and the Trustee in this Supplemental Indenture and in the Indenture shall bind their respective successors.

4.5. Benefits of Supplemental Indenture. Nothing in this Supplemental Indenture, express or implied, shall give to any person, other than the parties hereto and their successors hereunder, any agent and the Debentureholders, any benefit or any legal or equitable right, remedy or claim under this Supplemental Indenture or the Indenture.

4.6. Separability. In case any provision in this Supplemental Indenture, or in the Indenture, shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby, it being intended that all of the provisions hereof shall be enforceable to the full extent permitted by law.

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4.7. Trustee Responsibility. The Trustee assumes no duties, responsibilities or liabilities by reason of this Supplemental Indenture other than as set forth in the Original Indenture. The Trustee assumes no responsibility for the correctness of the statements herein contained, which shall be taken as statements of IRBC and ANB. This Supplemental Indenture is executed and accepted by the Trustee subject to all of the terms and conditions of its acceptance of the trust under the Original Indenture, as fully as if said terms and conditions were herein set forth in full.

4.8. Headings. The Article and Section headings of this Supplemental Indenture have been inserted for convenience of reference only, are not to be considered a part of this Supplemental Indenture and shall in no way modify or restrict any of the terms or provisions hereof.

4.9. Counterparts. This Supplemental Indenture may be executed in counterparts, each of which shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

4.10. Governing Law. This Supplemental Indenture shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to its choice of law provisions.

[Signature Page Follows]

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IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written.

Attest : (SEAL)	INDIAN RIVER BANKING COMPANY
/s/ Diana L. Walker	By:	/s/ Paul A. Beindorf
Diana L. Walker		Paul A. Beindorf
Secretary		Chief Executive Officer
Attest : (SEAL)	ALABAMA NATIONAL BANCORPORATION
/s/ Kimberly Moore	By:	/s/ William E. Matthews, V
Kimberly Moore		Name: William E. Matthews, V
Secretary		Title: EVP & CFO
Attest : (SEAL)	WELLS FARGO BANK, NATIONAL ASSOCIATION, as trustee
/s/ Ann Roberts Dukart	By:	/s/ Edward L. Truitt, Jr.
Name: Ann Roberts Dukart		Name: Edward L. Truitt, Jr.
Title: Vice President		Title: Vice President

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EX-10.49

Exhibit 10.49

TRUST PREFERRED SECURITIES GUARANTEE AGREEMENT

BY AND BETWEEN

INDIAN RIVER BANKING COMPANY AND

WELLS FARGO BANK, NATIONAL ASSOCIATION

EFFECTIVE AS OF SEPTEMBER 30, 2002

TABLE OF CONTENTS

		Page
ARTICLE I DEFINITIONS AND INTERPRETATION		1
Section 1.1	Definitions and Interpretation	1
ARTICLE II TRUST INDENTURE ACT		5
Section 2.1	Indenture Act; Application	5
Section 2.2	Lists of Holders of Securities	5
Section 2.3	Reports by the Trust Preferred Guarantee Trustee	5
Section 2.4	Reports to Trust Preferred Guarantee Trustee	6
Section 2.5	Evidence of Compliance with Conditions Precedent	6
Section 2.6	Event of Default; Waiver	6
Section 2.7	Event of Default; Notice	6
Section 2.8	Conflicting Interests	7
ARTICLE III POWERS, DUTIES AND RIGHTS OF TRUST PREFERRED GUARANTEE TRUSTEE		7
Section 3.1	Powers and Duties of the Trust Preferred Guarantee Trustee	7
Section 3.2	Certain Rights of Trust Preferred Guarantee Trustee	9
Section 3.3	Not Responsible for Recitals or Issuance of Guarantee	11
ARTICLE IV TRUST PREFERRED GUARANTEE TRUSTEE		11
Section 4.1	Trust Preferred Guarantee Trustee; Eligibility	11
Section 4.2	Appointment, Removal and Resignation of Trust Preferred Guarantee Trustees	12
ARTICLE V GUARANTEE		13
Section 5.1	Guarantee	13
Section 5.2	Waiver of Notice and Demand	13
Section 5.3	Obligations not Affected	13
Section 5.4	Rights of Holders	14
Section 5.5	Guarantee of Payment	14
Section 5.6	Subrogation	14
Section 5.7	Independent Obligations	15
ARTICLE VI LIMITATION OF TRANSACTIONS; SUBORDINATION		15

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TABLE OF CONTENTS

(continued)

		Page
Section 6.1	Limitation of Transactions	15
Section 6.2	Ranking	16
ARTICLE VII TERMINATION		16
Section 7.1	Termination	16
ARTICLE VIII INDEMNIFICATION		16
Section 8.1	Exculpation	16
Section 8.2	Indemnification	17
ARTICLE IX MISCELLANEOUS		17
Section 9.1	Successors and Assigns	17
Section 9.2	Amendments	17
Section 9.3	Notices	18
Section 9.4	Benefit	18
Section 9.5	Governing Law	18

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TRUST PREFERRED SECURITIES GUARANTEE AGREEMENT

THIS TRUST PREFERRED SECURITIES GUARANTEE AGREEMENT (this “Trust Preferred Securities Guarantee”), effective as of September 30, 2002, is executed and delivered by Indian River Banking Company, a Florida corporation (the “Guarantor”), and Wells Fargo Bank, National Association, as trustee (the “Trust Preferred Guarantee Trustee”), for the benefit of the Holders (as defined herein) from time to time of the Trust Preferred Securities (as defined herein) of Indian River Capital Trust I, a Delaware statutory business trust (the “Trust”).

RECITALS

WHEREAS, pursuant to an Amended and Restated Trust Agreement (the “Trust Agreement”), effective as of September 30, 2002, among the trustees of the Trust named therein, the Guarantor, as depositor, and the holders from time to time of undivided beneficial interests in the assets of the Trust, the Trust is issuing on the date hereof up to Seven Thousand (7,000) preferred securities, having an aggregate liquidation amount of Seven Million Dollars ($7,000,000), and such preferred securities being designated the Floating Rate Cumulative Trust Preferred Securities (the “Trust Preferred Securities”);

WHEREAS, as incentive for the Holders to purchase the Trust Preferred Securities, the Guarantor desires irrevocably and unconditionally to agree, to the extent set forth in this Trust Preferred Securities Guarantee, to pay to the Holders of the Trust Preferred Securities the Guarantee Payments (as defined herein) and to make certain other payments on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the purchase by each Holder of Trust Preferred Securities, which purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and delivers this Trust Preferred Securities Guarantee for the benefit of the Holders.

ARTICLE I

DEFINITIONS AND INTERPRETATION

Section 1.1 Definitions and Interpretation.

In this Trust Preferred Securities Guarantee, unless the context otherwise requires:

(a) capitalized terms used herein but not defined in the preamble above have the respective meanings assigned to them in this Section 1.1;

(b) terms defined in the Trust Agreement as of the date of execution of this Trust Preferred Securities Guarantee have the same meaning when used in this Trust Preferred Securities Guarantee, unless otherwise defined in this Trust Preferred Securities Guarantee;

(c) a term defined anywhere in this Trust Preferred Securities Guarantee has the same meaning throughout;

(d) all references to “the Trust Preferred Securities Guarantee” or “this Trust Preferred Securities Guarantee” are to this Trust Preferred Securities Guarantee as modified, supplemented or amended from time to time;

(e) all references in this Trust Preferred Securities Guarantee to Articles and Sections are to Articles and Sections of this Trust Preferred Securities Guarantee, unless otherwise specified;

(f) a term defined in the Trust Indenture Act (as defined below) has the same meaning when used in this Trust Preferred Securities Guarantee, unless otherwise defined in this Trust Preferred Securities Guarantee or unless the context otherwise requires; and

(g) a reference to the singular includes the plural and vice versa.

“Affiliate” has the same meaning as given to that term in Rule 405 of the Securities Act of 1933, as amended, or any successor rule thereunder.

“Business Day” means any day other than a Saturday, Sunday, a day on which federal or state banking institutions in Vero Beach, Florida, Wilmington, Delaware or Minneapolis, Minnesota are authorized or required by law, executive order or regulation to close or a day on which the Corporate Trust Office of the Trust Preferred Guarantee Trustee is closed for business.

“Corporate Trust Office” means the office of the Trust Preferred Guarantee Trustee at which the corporate trust business of the Trust Preferred Guarantee Trustee shall, at any particular time, be principally administered, which office at the date of execution of this Agreement is located at 919 Market Street, Suite 700 Wilmington, Delaware 19801, Attention: Corporate Trust Administration.

“Covered Person” means any Holder or beneficial owner of Trust Preferred Securities.

“Debentures” means the Floating Rate Junior Subordinated Deferrable Interest Debentures due November 7, 2032, of the Debenture Issuer held by the Property Trustee (as defined in the Trust Agreement) on behalf of the Trust.

“Debenture Issuer” means Indian River Banking Company, issuer of the Debentures under the Indenture.

“Event of Default” means a default by the Guarantor on any of its payment or other obligations under this Trust Preferred Securities Guarantee.

“Guarantee Payments” means the following payments or distributions, without duplication, with respect to the Trust Preferred Securities, to the extent not paid or made by the Trust: (i) any accumulated and unpaid Distributions (as defined in the Trust Agreement) that are required to be paid on such Trust Preferred Securities, to the extent the Trust shall have funds legally available therefor, (ii) the redemption price, including all accumulated and unpaid Distributions to the date of redemption (the “Redemption Price”), to the extent the Trust has funds legally available therefor, with respect to any Trust Preferred Securities called for redemption by the Trust, and (iii) upon a voluntary or involuntary dissolution, winding-up or

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termination of the Trust (other than in connection with the distribution of Debentures to the Holders in exchange for Trust Preferred Securities as provided in the Trust Agreement), the lesser of (a) the aggregate of the liquidation amount and all accumulated and unpaid Distributions on the Trust Preferred Securities to the date of payment, to the extent the Trust shall have funds legally available therefor, and (b) the amount of assets of the Trust remaining legally available for distribution to Holders in liquidation of the Trust (the “Liquidation Distribution”).

“Holder” shall mean any holder, as registered on the books and records of the Trust, of any Trust Preferred Securities; provided, however, that, in determining whether the holders of the requisite percentage of Trust Preferred Securities have given any request, notice, consent or waiver hereunder, “Holder” shall not include the Guarantor or the Trust Preferred Guarantee Trustee; provided, further, that the Trust Preferred Guarantee Trustee shall be protected in acting on any such request, notice, consent or waiver unless a Responsible Officer of the Trust Preferred Guarantee Trustee shall have actual knowledge that the holder of such Trust Preferred Securities is the Guarantor.

“Indemnified Person” means the Trust Preferred Guarantee Trustee, any Affiliate of the Trust Preferred Guarantee Trustee, or any officers, directors, shareholders, members, partners, employees, representatives, nominees, custodians or agents of the Trust Preferred Guarantee Trustee.

“Indenture” means the Indenture effective as of September 30, 2002, among the Debenture Issuer and Wells Fargo Bank, National Association, as trustee, and any indenture supplemental thereto pursuant to which certain subordinated debt securities of the Debenture Issuer are to be issued to the Property Trustee on behalf of the Trust.

“Liquidation Amount” means the stated value of $1,000 per Trust Preferred Security.

“Liquidation Distribution” has the meaning provided therefor in the definition of Guarantee Payments.

“List of Holders” has the meaning provided therefor in Section 2.2(a) hereof.

“Majority in Liquidation Amount of the Trust Preferred Securities” means the Holders of more than 50% of the Liquidation Amount of the Outstanding (as defined in the Trust Agreement) Trust Preferred Securities.

“Officers’ Certificate” means, with respect to any Person, a certificate signed by two authorized officers of such Person, at least one of whom shall be the principal executive officer, principal financial officer, principal accounting officer, treasurer or any vice president of such Person. Any Officers’ Certificate delivered with respect to compliance with a condition or covenant provided for in this Trust Preferred Securities Guarantee shall include:

(a) a statement that each officer signing the Officers’ Certificate has read the covenant or condition and the definition relating thereto;

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(b) a brief statement of the nature and scope of the examination or investigation undertaken by each officer in rendering the Officers’ Certificate;

(c) a statement that each such officer has made such examination or investigation as, in such officer’s opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(d) a statement as to whether, in the opinion of each such officer, such condition or covenant has been complied with.

“Person” means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association, or government or any agency or political subdivision thereof, or any other entity of whatever nature.

“Redemption Price” has the meaning provided therefor in the definition of Guarantee Payments.

“Responsible Officer” means, with respect to the Trust Preferred Guarantee Trustee, any officer within the Corporate Trust Office of the Trust Preferred Guarantee Trustee with direct responsibility for the administration of this Trust Preferred Securities Guarantee, including any vice-president, any assistant vice-president, any assistant secretary or other officer or assistant officer of the Trust Preferred Guarantee Trustee customarily performing functions similar to those performed by any of the Persons who at the time shall be such officers, or to whom a corporate trust matter is referred because of that officer’s knowledge of and familiarity with the particular subject.

“Securities Register” and “Securities Registrar” have the meanings provided for each in the Trust Agreement.

“Successor Trust Preferred Guarantee Trustee” means a successor Trust Preferred Guarantee Trustee possessing the qualifications to act as Trust Preferred Guarantee Trustee under Section 4.1 hereof.

“Trust Agreement” has the meaning provided therefor in the Recitals hereof.

“Trust Indenture Act” means the Trust Indenture Act of 1939 or any successor statute thereto, in each case as amended from time to time.

“Trust Preferred Guarantee Trustee” means Wells Fargo Bank, National Association, in its capacity as trustee under this Trust Preferred Securities Guarantee until a Successor Trust Preferred Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of this Trust Preferred Securities Guarantee and thereafter means each such Successor Trust Preferred Guarantee Trustee.

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ARTICLE II

TRUST INDENTURE ACT

Section 2.1 Indenture Act; Application.

(a) Unless and until the Indenture is required to be qualified under the Trust Indenture Act so that the provisions thereof are applicable (i) the provisions of the Trust Indenture Act do not apply to this Trust Preferred Securities Guarantee and are not given effect; and (ii) notwithstanding any other provision set forth herein, the Trust Preferred Guarantee Trustee shall not be liable for its own simple negligence, but shall only be liable for its own gross negligence.

(b) If and to the extent that any provision of this Trust Preferred Securities Guarantee limits, qualifies or conflicts with the duties imposed by Section 310 to 317, inclusive, of the Trust Indenture Act, and the Indenture is then required to be qualified under the Trust Indenture Act so that the provisions thereof are applicable, such imposed duties shall control.

Section 2.2 Lists of Holders of Securities.

(a) In the event the Trust Preferred Guarantee Trustee is not also the Securities Registrar, the Guarantor shall provide the Trust Preferred Guarantee Trustee with a list, in such form as the Trust Preferred Guarantee Trustee may reasonably require, of the names and addresses of the Holders (“List of Holders”) as of the date (i) within five (5) Business Days after March 15, June 15, September 15 and December 15, and (ii) at any other time within 30 days of receipt by the Guarantor of a written request for a List of Holders as of a date no more than 15 days before such List of Holders is given to the Trust Preferred Guarantee Trustee; provided, that the Guarantor shall not be obligated to provide such List of Holders at any time the List of Holders does not differ from the most recent List of Holders given to the Trust Preferred Guarantee Trustee by the Guarantor. The Trust Preferred Guarantee Trustee may destroy any List of Holders previously given to it on receipt of a new List of Holders.

(b) If applicable, the Trust Preferred Guarantee Trustee shall comply with its obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.

Section 2.3 Reports by the Trust Preferred Guarantee Trustee.

(a) On or before July 15^th in each year in which any of the Trust Preferred Securities are Outstanding, the Trust Preferred Guarantee Trustee shall transmit by mail, first class postage prepaid, to the Holders, as their names and addresses appear upon the Securities Register, a brief report dated as of the preceding May 15, if and to the extent required under Section 313(a) of the Trust Indenture Act, if applicable (it being understood that no such report shall be required if none of the events set forth in Section 313(a) of the Trust Indenture Act has occurred during the period to which such report would relate).

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(b) The Trust Preferred Guarantee shall comply with Sections 313(b) and 313(c) of the Trust Indenture Act, if applicable.

(c) A copy of each such report shall, at the time of such transmission to the Holders, be filed by the Trust Preferred Guarantee Trustee with the Company, with each stock exchange or applicable self-regulatory organization upon which any Trust Preferred Securities are listed (if so listed) and also with the Securities and Exchange Commission. The Company agrees to notify the Trust Preferred Guarantee Trustee when any Trust Preferred Securities become listed on any stock exchange or other applicable self-regulatory organization.

Section 2.4 Reports to Trust Preferred Guarantee Trustee.

If applicable, the Guarantor shall provide to the Trust Preferred Guarantee Trustee such documents, reports and information as required by Section 314 (if any) and the compliance certificate required by Section 314 of the Trust Indenture Act in the form, in the manner and at the times required by Section 314 of the Trust Indenture Act.

Section 2.5 Evidence of Compliance with Conditions Precedent.

If applicable, the Guarantor shall provide to the Trust Preferred Guarantee Trustee such evidence of compliance with any conditions precedent provided for in this Trust Preferred Securities Guarantee that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)(1) of the Trust Indenture Act may be given in the form of an Officers’ Certificate.

Section 2.6 Event of Default; Waiver.

The Holders of a Majority in Liquidation Amount of Trust Preferred Securities may, by vote, on behalf of the Holders of all of the Trust Preferred Securities, waive any past Event of Default and its consequences. Upon such waiver, any such Event of Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Trust Preferred Securities Guarantee, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon.

Section 2.7 Event of Default; Notice.

The Trust Preferred Guarantee Trustee shall, within ninety (90) days after the occurrence of an Event of Default, transmit by mail, first class postage prepaid, to the Holders of the Trust Preferred Securities, notices of all Events of Default actually known to a Responsible Officer of the Trust Preferred Guarantee Trustee, unless such defaults have been cured before the giving of such notice; provided, that, except in the case of a default by Guarantor on any of its payment obligations, the Trust Preferred Guarantee Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of the directors and/or Responsible Officers of the Trust Preferred Guarantee Trustee in good faith determines that the withholding of such notice is in the interests of the Holders of the Trust Preferred Securities.

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The Trust Preferred Guarantee Trustee shall not be deemed to have knowledge of any Event of Default unless the Trust Preferred Guarantee Trustee shall have received written notice of such Event of Default, or a Responsible Officer of the Trust Preferred Guarantee Trustee charged with the administration of the Trust Agreement shall have obtained actual knowledge of such Event of Default.

Section 2.8 Conflicting Interests.

The Trust Agreement shall be deemed to be specifically described in this Trust Preferred Securities Guarantee for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act, if applicable.

ARTICLE III

POWERS, DUTIES AND RIGHTS OF TRUST PREFERRED GUARANTEE TRUSTEE

Section 3.1 Powers and Duties of the Trust Preferred Guarantee Trustee.

(a) This Trust Preferred Securities Guarantee shall be held by the Trust Preferred Guarantee Trustee for the benefit of the Holders of the Trust Preferred Securities, and the Trust Preferred Guarantee Trustee shall not transfer this Trust Preferred Securities Guarantee to any Person except a Holder of Trust Preferred Securities exercising his or her rights pursuant to Section 5.4(b) hereof or to a Successor Trust Preferred Guarantee Trustee on acceptance by such Successor Trust Preferred Guarantee Trustee of its appointment to act as Successor Trust Preferred Guarantee Trustee. The right, title and interest of the Trust Preferred Guarantee Trustee shall automatically vest in any Successor Trust Preferred Guarantee Trustee, and such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered pursuant to the appointment of such Successor Trust Preferred Guarantee Trustee.

(b) If an Event of Default actually known to a Responsible Officer of the Trust Preferred Guarantee Trustee has occurred and is continuing, the Trust Preferred Guarantee Trustee shall enforce this Trust Preferred Securities Guarantee for the benefit of the Holders of the Trust Preferred Securities.

(c) The Trust Preferred Guarantee Trustee, before the occurrence of any Event of Default and after the curing of all Events of Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Trust Preferred Securities Guarantee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.6 hereof) and is actually known to a Responsible Officer of the Trust Preferred Guarantee Trustee, the Trust Preferred Guarantee Trustee shall exercise such of the rights and powers vested in it by this Trust Preferred Securities Guarantee, and use the same degree of care and skill in its exercise thereof, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. No implied covenants shall be read into the Trust Preferred Securities Guarantee against the Trust Preferred Guarantee Trustee.

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(d) No provision of this Trust Preferred Securities Guarantee shall be construed to relieve the Trust Preferred Guarantee Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

(i) prior to the occurrence of any Event of Default and after the curing or waiving of all such Events of Default that may have occurred:

(A) the duties and obligations of the Trust Preferred Guarantee Trustee shall be determined solely by the express provisions of this Trust Preferred Securities Guarantee, and the Trust Preferred Guarantee Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Trust Preferred Securities Guarantee, and no implied covenants or obligations shall be read into this Trust Preferred Securities Guarantee against the Trust Preferred Guarantee Trustee; and

(B) in the absence of bad faith on the part of the Trust Preferred Guarantee Trustee, the Trust Preferred Guarantee Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Trust Preferred Guarantee Trustee and conforming to the requirements of this Trust Preferred Securities Guarantee; but in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Trust Preferred Guarantee Trustee, the Trust Preferred Guarantee Trustee shall be under a duty to examine the same to determine in good faith whether or not they conform to the requirements of this Trust Preferred Securities Guarantee;

(ii) the Trust Preferred Guarantee Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Trust Preferred Guarantee Trustee, unless it shall be proved that the Trust Preferred Guarantee Trustee was negligent in ascertaining the pertinent facts upon which such judgment was made;

(iii) the Trust Preferred Guarantee Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a Majority in Liquidation Amount of the Trust Preferred Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Trust Preferred Guarantee Trustee, or exercising any trust or power conferred upon the Trust Preferred Guarantee Trustee under this Trust Preferred Securities Guarantee; and

(iv) no provision of this Trust Preferred Securities Guarantee shall require the Trust Preferred Guarantee Trustee to expend or risk its own funds or

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otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if the Trust Preferred Guarantee Trustee shall have reasonable grounds for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this Trust Preferred Securities Guarantee or indemnity, reasonably satisfactory to the Trust Preferred Guarantee Trustee, against such risk or liability is not reasonably assured to it.

Section 3.2 Certain Rights of Trust Preferred Guarantee Trustee.

(a) Subject to the provisions of Section 3.1(d) hereof:

(i) The Trust Preferred Guarantee Trustee may conclusively rely, and shall be fully protected in acting or refraining from acting upon, any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document reasonably believed by it to be genuine and to have been signed, sent or presented by the proper party or parties.

(ii) Any direction or act of the Guarantor contemplated by this Trust Preferred Securities Guarantee shall be sufficiently evidenced by an Officers’ Certificate.

(iii) Whenever, in the administration of this Trust Preferred Securities Guarantee, the Trust Preferred Guarantee Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting any action hereunder, the Trust Preferred Guarantee Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and conclusively rely upon an Officers’ Certificate which, upon receipt of such request, shall be promptly delivered by the Guarantor.

(iv) The Trust Preferred Guarantee Trustee shall have no duty to see to any recording, filing or registration of any instrument (or any rerecording, refiling or reregistration thereof).

(v) The Trust Preferred Guarantee Trustee may consult with counsel, and the written advice or opinion of such counsel with respect to legal matters shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with such advice or opinion. Such counsel may be counsel to the Guarantor or any of its Affiliates and may include any of its employees. The Trust Preferred Guarantee Trustee shall have the right at any time to seek instructions concerning the administration of this Trust Preferred Securities Guarantee from any court of competent jurisdiction.

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(vi) The Trust Preferred Guarantee Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Trust Preferred Securities Guarantee at the request or direction of any Holder, unless such Holder shall have provided to the Trust Preferred Guarantee Trustee such security and indemnity, reasonably satisfactory to the Trust Preferred Guarantee Trustee, against the costs, expenses (including reasonable attorneys’ fees and expenses and the expenses of the Trust Preferred Guarantee Trustee’s agents, nominees or custodians) and liabilities that might be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Trust Preferred Guarantee Trustee; provided that, nothing contained in this Section 3.2(a)(vi) shall be taken to relieve the Trust Preferred Guarantee Trustee, upon the occurrence and during the continuance of an Event of Default, of which the Trust Preferred Guarantee has actual knowledge, of its obligation to exercise the rights and powers vested in it by this Trust Preferred Securities Guarantee.

(vii) The Trust Preferred Guarantee Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trust Preferred Guarantee Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit.

(viii) The Trust Preferred Guarantee Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, nominees, custodians or attorneys, and the Trust Preferred Guarantee Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder.

(ix) Any action taken by the Trust Preferred Guarantee Trustee or its agents hereunder shall bind the Holders of the Trust Preferred Securities, and the signature of the Trust Preferred Guarantee Trustee or its agents alone shall be sufficient and effective to perform any such action. No third party shall be required to inquire as to the authority of the Trust Preferred Guarantee Trustee to so act or as to its compliance with any of the terms and provisions of this Trust Preferred Securities Guarantee, both of which shall be conclusively evidenced by the Trust Preferred Guarantee Trustee’s or its agent’s taking such action.

(x) Whenever in the administration of this Trust Preferred Securities Guarantee the Trust Preferred Guarantee Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Trust Preferred Guarantee Trustee (i) may request instructions from the Holders of a Majority in Liquidation

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Amount of the Trust Preferred Securities, (ii) may refrain from enforcing such remedy or right or taking such other action until such instructions are received, and (iii) shall be protected in conclusively relying on or acting in good faith in accordance with such instructions.

(b) No provision of this Trust Preferred Securities Guarantee shall be deemed to impose any duty or obligation on the Trust Preferred Guarantee Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it in any jurisdiction in which it shall be illegal, or in which the Trust Preferred Guarantee Trustee shall be unqualified or incompetent in accordance with applicable law, to perform any such act or acts or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Trust Preferred Guarantee Trustee shall be construed to be a duty.

Section 3.3 Not Responsible for Recitals or Issuance of Guarantee.

The recitals contained in this Guarantee shall be taken as the statements of the Guarantor, and the Trust Preferred Guarantee Trustee does not assume any responsibility for their correctness. The Trust Preferred Guarantee Trustee makes no representation as to the validity or sufficiency of this Trust Preferred Securities Guarantee.

ARTICLE IV

TRUST PREFERRED GUARANTEE TRUSTEE

Section 4.1 Trust Preferred Guarantee Trustee; Eligibility.

(a) There shall at all times be a Trust Preferred Guarantee Trustee which shall:

(i) not be an Affiliate of the Guarantor; and

(ii) be an entity organized and doing business under the laws of the United States of America or any State or Territory thereof or of the District of Columbia, or a Person permitted by the Securities and Exchange Commission to act as a resident trustee under the Trust Indenture Act, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, and subject to supervision or examination by applicable federal, state, territorial or District of Columbia authority. If such Person publishes reports of condition at least annually, pursuant to law or to the requirements of its supervising or examining authority referred to above, then, for the purposes of this Section 4.1(a)(ii), the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.

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(b) If at any time the Trust Preferred Guarantee Trustee shall cease to be eligible to so act under Section 4.1(a), the Trust Preferred Guarantee Trustee shall immediately resign in the manner and with the effect set out in Section 4.2(c).

(c) If the Trust Preferred Guarantee Trustee has or shall acquire any “conflicting interest” within the meaning of Section 310(b) of the Trust Indenture Act and the provisions of the Trust Indenture Act are then applicable, the Trust Preferred Guarantee Trustee and Guarantor shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act.

Section 4.2 Appointment, Removal and Resignation of Trust Preferred Guarantee Trustees.

(a) Subject to Section 4.2(b), the Trust Preferred Guarantee Trustee may be appointed or removed without cause at any time by the Guarantor.

(b) The Trust Preferred Guarantee Trustee shall not be removed in accordance with Section 4.2(a) until a Successor Trust Preferred Guarantee Trustee has been appointed and has accepted such appointment by written instrument executed by such Successor Trust Preferred Guarantee Trustee and delivered to the Guarantor and the Trust Preferred Guarantee Trustee.

(c) The Trust Preferred Guarantee Trustee appointed to office shall hold office until a Successor Trust Preferred Guarantee Trustee shall have been appointed or until its removal or resignation. The Trust Preferred Guarantee Trustee may at any time resign from office (without need for prior or subsequent accounting) by an instrument in writing executed by the Trust Preferred Guarantee Trustee and delivered to the Guarantor, which resignation shall not take effect until a Successor Trust Preferred Guarantee Trustee has been appointed and has accepted such appointment by instrument in writing executed by such Successor Trust Preferred Guarantee Trustee and delivered to the Guarantor and the resigning Trust Preferred Guarantee Trustee.

(d) If no Successor Trust Preferred Guarantee Trustee shall have been appointed and accepted appointment as provided in this Section 4.2 within 60 days after delivery to the Guarantor of an instrument of resignation, the resigning Trust Preferred Guarantee Trustee may petition any court of competent jurisdiction for appointment of a Successor Trust Preferred Guarantee Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper, appoint a Successor Trust Preferred Guarantee Trustee.

(e) No Trust Preferred Guarantee Trustee shall be liable for the acts or omissions to act of any Successor Trust Preferred Guarantee Trustee.

(f) Upon termination of this Trust Preferred Securities Guarantee or removal or resignation of the Trust Preferred Guarantee Trustee pursuant to this Section 4.2, the Guarantor shall pay to the Trust Preferred Guarantee Trustee all documented fees and expenses accrued to the date of such termination, removal or resignation.

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ARTICLE V

GUARANTEE

Section 5.1 Guarantee.

The Guarantor irrevocably and unconditionally agrees to pay in full to the Holders the Guarantee Payments (without duplication of amounts theretofore paid by the Trust), as and when due, regardless of any defense, right of set-off or counterclaim that the Trust may have or assert. The Guarantor’s obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by the Guarantor to the Holders or by causing the Trust to pay such amounts to the Holders.

Section 5.2 Waiver of Notice and Demand.

The Guarantor hereby waives notice of acceptance of this Trust Preferred Securities Guarantee and of any liability to which it applies or may apply, presentment, demand for payment, any right to require a proceeding first against the Trust or any other Person before proceeding against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands.

Section 5.3 Obligations not Affected.

The obligations, covenants, agreements and duties of the Guarantor under this Trust Preferred Securities Guarantee shall in no way be affected or impaired by reason of the happening from time to time of any of the following:

(a) the release or waiver, by operation of law or otherwise, of the performance or observance by the Trust of any express or implied agreement, covenant, term or condition relating to the Trust Preferred Securities to be performed or observed by the Trust;

(b) the extension of time for the payment by the Trust of all or any portion of the Distributions, Redemption Price, Liquidation Distribution or any other sums payable under the terms of the Trust Preferred Securities or the extension of time for the performance of any other obligation under, arising out of, or in connection with, the Trust Preferred Securities (other than an extension of time for payment of Distributions, Redemption Price, Liquidation Distribution or other sum payable that results from the extension of any interest payment period on the Debentures permitted by the Indenture);

(c) any failure, omission, delay or lack of diligence on the part of the Holders to enforce, assert or exercise any right, privilege, power or remedy conferred on the Holders pursuant to the terms of the Trust Preferred Securities, or any action on the part of the Trust granting indulgence or extension of any kind;

(d) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Trust or any of the assets of the Trust;

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(e) any invalidity of, or defect or deficiency in, the Trust Preferred Securities;

(f) any failure or omission to receive any regulatory approval or consent required in connection with the Trust Preferred Securities (or the common equity securities issued by the Trust), including the failure to receive any approval of the Board of Governors of the Federal Reserve System required for the redemption of the Trust Preferred Securities;

(g) the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or

(h) any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a guarantor, it being the intent of this Section 5.3 that the obligations of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances.

There shall be no obligation of the Holders to give notice to, or obtain consent of, the Guarantor with respect to the happening of any of the foregoing.

Section 5.4 Rights of Holders.

(a) Subject to Section 5.4(b), the Holders of a Majority in Liquidation Amount of the Trust Preferred Securities have the right to direct the time, method and place of conducting of any proceeding for any remedy available to the Trust Preferred Guarantee Trustee in respect of this Trust Preferred Securities Guarantee or exercising any trust or power conferred upon the Trust Preferred Guarantee Trustee under this Trust Preferred Securities Guarantee.

(b) Any Holder of Trust Preferred Securities may institute and prosecute a legal proceeding directly against the Guarantor to enforce its rights under this Trust Preferred Securities Guarantee, without first instituting and prosecuting a legal proceeding against the Trust, the Trust Preferred Guarantee Trustee or any other Person.

Section 5.5 Guarantee of Payment.

This Trust Preferred Securities Guarantee creates a guarantee of payment and not of collection.

Section 5.6 Subrogation.

The Guarantor shall be subrogated to all (if any) rights of the Holders against the Trust in respect of any amounts paid to such Holders by the Guarantor under this Trust Preferred Securities Guarantee; provided, however, that the Guarantor shall not (except to the extent required by mandatory provisions of law) be entitled to enforce or exercise any right that it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases

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as a result of payment under this Trust Preferred Securities Guarantee, if, at the time of any such payment, any amounts are due and unpaid under this Trust Preferred Securities Guarantee. If any amount shall be paid to the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such amount in trust for the Holders and to pay over such amount to the Holders.

Section 5.7 Independent Obligations.

The Guarantor acknowledges that its obligations hereunder are independent of the obligations of the Trust with respect to the Trust Preferred Securities, and that the Guarantor shall be liable as principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Trust Preferred Securities Guarantee notwithstanding the occurrence of any event referred to in subsections (a) through (h), inclusive, of Section 5.3 hereof.

ARTICLE VI

LIMITATION OF TRANSACTIONS; SUBORDINATION

Section 6.1 Limitation of Transactions.

So long as any of the Trust Preferred Securities remain outstanding, if there shall have occurred an Event of Default under this Trust Preferred Securities Guarantee, an event of default under the Indenture, an event of default under the Trust Agreement or during an Extended Interest Payment Period (as defined in the Indenture), then

(a) the Guarantor shall not, and will not permit any Subsidiary to, declare or pay any dividends on, make any distributions with respect to, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock (other than (1) dividends or distributions in shares of, or options, warrants or rights to subscribe for or purchase shares of, common stock of the Guarantor or such Subsidiary, (2) any declaration of a dividend in connection with the implementation of a shareholder’s rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto, (3) purchases of common stock of the Guarantor related to the issuance of such common stock under any of the Guarantor’s employee benefit plans for its directors, officers or employees, (4) as a result of a reclassification of any class or series of the Guarantor’s capital stock solely into another class or series of the Guarantor’s capital stock, or (5) declarations or payments of dividends or distributions payable by a Subsidiary of the Guarantor to the Guarantor or any of its Subsidiaries);

(b) the Guarantor shall not, and will not permit any Subsidiary to, make any payment of interest, principal or premium, if any, or repay, repurchase or redeem any debt securities issued by the Guarantor which rank pari passu with or junior to the Debentures;

(c) the Guarantor shall not make any guarantee payments with respect to any guarantee by the Guarantor of the debt securities of any Subsidiary of the Guarantor if such guarantee ranks pari passu with or junior in interest to the Debentures; provided, however, that the Guarantor may make payments pursuant to its obligations under the Trust Preferred Securities Guarantee; and

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(d) the Guarantor shall not redeem, purchase or acquire less than all of the Outstanding (as defined in the Indenture) Debentures or any of the Trust Preferred Securities.

Section 6.2 Ranking.

This Trust Preferred Securities Guarantee will constitute an unsecured obligation of the Guarantor and will rank subordinate and junior in right of payment to all Senior Debt, Subordinated Debt and Additional Senior Obligations, each as defined in the Indenture, of the Guarantor, to the extent and in the manner set forth in the Indenture, and the applicable provisions of the Indenture will apply, in all relevant respects, to the obligations of the Guarantor hereunder.

ARTICLE VII

TERMINATION

Section 7.1 Termination.

This Trust Preferred Securities Guarantee shall terminate (a) upon full payment of the Redemption Price of all Trust Preferred Securities, (b) upon full payment of the amounts payable in accordance with the Trust Agreement upon dissolution and liquidation of the Trust, or (c) upon distribution of the Debentures to the Holders of the Trust Preferred Securities. Notwithstanding the foregoing, this Trust Preferred Securities Guarantee shall continue to be effective or shall be reinstated, as the case may be, if at any time any Holder of Trust Preferred Securities must restore payment of any sums paid under the Trust Preferred Securities or under this Trust Preferred Securities Guarantee.

ARTICLE VIII

INDEMNIFICATION

Section 8.1 Exculpation.

(a) No Indemnified Person shall be liable, responsible or accountable in damages or otherwise to the Guarantor or any Covered Person for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Indemnified Person in good faith in accordance with this Trust Preferred Securities Guarantee and in a manner that such Indemnified Person reasonably believed to be within the scope of the authority conferred on such Indemnified Person by this Trust Preferred Securities Guarantee or by law, except that an Indemnified Person shall be liable for any such loss, damage or claim incurred by reason of such Indemnified Person’s negligence or willful misconduct with respect to such acts or omissions.

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(b) An Indemnified Person shall be fully protected in relying in good faith upon the records of the Guarantor and upon such information, opinions, reports or statements presented to the Guarantor or the Indemnified Person by any Person as to matters the Indemnified Person reasonably believes are within such other Person’s professional or expert competence and who the Indemnified Person reasonably believes has been selected with reasonable care by or on behalf of the Guarantor, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits, losses, or any other facts pertinent to the existence and amount of assets from which Distributions to Holders of Trust Preferred Securities might properly be paid.

Section 8.2 Indemnification.

The Guarantor agrees to indemnify each Indemnified Person for, and to hold each Indemnified Person harmless against, any loss, liability or expense incurred without negligence or willful misconduct on its part, arising out of or in connection with this Trust Preferred Securities Guarantee and the acceptance or administration of the trust or trusts hereunder, including the costs and expenses (including reasonable legal fees and expenses) of defending itself against, or investigating, any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder, except as may be otherwise prohibited by applicable law or regulation. The obligation to indemnify as set forth in this Section 8.2 shall survive the termination of this Trust Preferred Securities Guarantee.

ARTICLE IX

MISCELLANEOUS

Section 9.1 Successors and Assigns.

All guarantees and agreements contained in this Trust Preferred Securities Guarantee shall bind the successors, assigns, receivers, trustees and representatives of the Guarantor and shall inure to the benefit of the Holders of the Trust Preferred Securities then outstanding.

Section 9.2 Amendments.

Except with respect to any changes that do not materially adversely affect the rights of Holders (in which case no consent of Holders will be required), this Trust Preferred Securities Guarantee may only be amended by the Guarantor with the prior approval of the Holders of at least a Majority in Liquidation Amount of the Trust Preferred Securities. The provisions of Article VI of the Trust Agreement with respect to meetings of Holders apply to the giving of such approval. Prior to the execution of any amendment to this Trust Preferred Securities Guarantee, the Trust Preferred Guarantee Trustee shall be entitled to receive and conclusively rely on an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Trust Preferred Securities Guarantee and that all conditions precedent to such execution and delivery have been satisfied. The Trust Preferred Guarantee Trustee may, but shall not be obligated to, enter into any such amendment which affects the Trust Preferred Guarantee Trustee’s rights, duties or immunities under this Trust Preferred Securities Guarantee, provided, however, that no such amendment shall be effective without the consent of the Trust Preferred Guarantee Trustee.

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Section 9.3 Notices.

All notices provided for in this Trust Preferred Securities Guarantee shall be in writing, duly signed by the party giving such notice, and shall be delivered, telecopied or mailed by registered or certified mail, as follows:

(a) If given to the Trust Preferred Guarantee Trustee, at the Trust Preferred Guarantee Trustee’s mailing address set forth below (or such other address as the Trust Preferred Guarantee Trustee may give notice of to the Holders of the Trust Preferred Securities and the Guarantor):

Wells Fargo Bank, National Association

919 Market Street, Suite 700

Wilmington, Delaware 19801

Attention: Corporate Trust Administration

(b) If given to the Guarantor, at the Guarantor’s mailing address set forth below (or such other address as the Guarantor may give notice of to the Holders of the Trust Preferred Securities and the Trust Preferred Guarantee Trustee):

Indian River Banking Company

958 20th Place

Vero Beach, Florida 32960

Attention: Chief Executive Officer

(c) If given to any Holder of Trust Preferred Securities, at the address set forth on the books and records of the Trust. All such notices shall be deemed to have been given when received in person, telecopied with receipt confirmed, or mailed by first class mail, postage prepaid except that if a notice or other document is refused delivery or cannot be delivered because of a changed address of which no notice was given, such notice or other document shall be deemed to have been delivered on the date of such refusal or inability to deliver.

Section 9.4 Benefit.

This Trust Preferred Securities Guarantee is solely for the benefit of the Holders of the Trust Preferred Securities and the Trust Preferred Guarantee Trustee and, subject to Section 3.1(a) and Section 4.2 hereof, as applicable is not separately transferable from the Trust Preferred Securities.

Section 9.5 Governing Law.

THIS TRUST PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF

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THE STATE OF NEW YORK WITHOUT REGARD TO ITS CHOICE OF LAW PROVISIONS. THE PARTIES HERETO CONSENT TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF NEW YORK.

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, this Trust Preferred Securities Guarantee is dated as set forth below and effective as of September 30, 2002.

Indian River Banking Company, as Guarantor
By:	/s/ Paul A. Beindorf
Name:	Paul A. Beindorf
Title:	President & CEO
Date:	September 26, 2002
Wells Fargo Bank, National Association, as
Trust Preferred Guarantee Trustee
By:	/s/ Edward L. Truitt, Jr.
Name:	Edward L. Truitt, Jr.
Title:	Vice President
Date:

[Signature Page to Trust Preferred Securities Guarantee Agreement]

EX-10.49A

Exhibit 10.49A

FIRST AMENDMENT TO TRUST PREFERRED SECURITIES

GUARANTEE AGREEMENT

BY AND AMONG

INDIAN RIVER BANKING COMPANY,

WELLS FARGO BANK, NATIONAL ASSOCIATION, Trustee

and

ALABAMA NATIONAL BANCORPORATION

Dated as of November 19, 2003

Trust Preferred Securities Guarantee Agreement

Dated as of September 30, 2002

FIRST AMENDMENT TO TRUST PREFERRED SECURITIES

GUARANTEE AGREEMENT

THIS FIRST AMENDMENT TO TRUST PREFERRED SECURITIES GUARANTEE AGREEMENT (this “Amendment”) is made as of this 19th day of November, 2003, by and among Indian River Banking Company, a Florida corporation (“IRBC” or, before the Effective Time, the “Guarantor”), as original guarantor, Alabama National BanCorporation, a Delaware corporation (“ANB” or, after the Effective Time, the “Guarantor”), as successor guarantor, and Wells Fargo Bank, National Association, a national banking association (the “Trustee”), as trustee.

WHEREAS, IRBC and the Trustee have entered into a Trust Preferred Securities Guarantee Agreement, dated as of September 30, 2002 (the “Trust Preferred Securities Guarantee”), pursuant to which IRBC agreed to guarantee the payments and distributions with respect to the 7,000 preferred securities issued by Indian River Capital Trust I on September 30, 2002 (the “Trust Preferred Securities”);

WHEREAS, IRBC and ANB have entered into an Agreement and Plan of Merger, dated as of October 22, 2003, that provides for the merger (the “Merger”) of IRBC with and into ANB;

WHEREAS, the Merger will become effective (a) on the date and at the time that the later of the following shall occur: (i) the Certificate of Merger reflecting the Merger shall be accepted for filing by the Secretary of State of Delaware, and (ii) the Articles of Merger reflecting the Merger shall be accepted for filing by the Secretary of State of Florida, or (b) on the date and at the time as may be otherwise specified by the parties to the Merger in the Certificate of Merger and the Articles of Merger (the time and date when the Merger becomes effective is referred to herein as the “Effective Time”);

WHEREAS, at the Effective Time, the separate corporate existence of IRBC will cease and ANB will continue as the surviving corporation following the Merger, and ANB will by operation of law, and pursuant to the provisions of the Trust Preferred Securities Guarantee, be the successor to the obligations of IRBC under the Trust Preferred Securities Guarantee;

WHEREAS, ANB has previously issued to subsidiary trusts of ANB in connection with the issuance by such trusts of capital and common securities, the following debentures: (i) floating rate junior subordinated deferrable interest debentures due 2031 currently outstanding in the aggregate principal amount of $15,464,000, (ii) floating rate junior subordinated deferrable interest debentures due 2032 currently outstanding in the aggregate principal amount of $10,310,000, and (iii) floating rate junior subordinated deferrable interest debentures due 2033 currently outstanding in the aggregate principal amount of $20,619,000 (collectively, the “ANB Debentures”); and issued guarantees in respect of the related capital securities issued by such trusts;

WHEREAS, an event of default may occur under the indentures relating to the ANB Debentures as a result of the assumption by ANB of the Trust Preferred Securities Guarantee pursuant to the Merger, unless the Trust Preferred Securities Guarantee is expressly pari passu with the ANB Debentures;

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WHEREAS, no adverse effect in any material respect in the rights of the Holders will result if the Trust Preferred Securities Guarantee is pari passu with the ANB Debentures;

WHEREAS the parties hereto desire to permit the Merger and preclude an inadvertent event of default under the ANB Debentures; and

WHEREAS, this Amendment has been duly authorized by all necessary action on the part of IRBC and ANB.

NOW, THEREFORE, in consideration of the premises set forth herein and other good and valuable consideration, IRBC, ANB and the Trustee agree as follows for the equal and ratable benefit of the Holders:

ARTICLE I

DEFINITIONS; INTERPRETATION

1.1. Definitions. Capitalized terms that are defined in the preamble or the recitals hereto shall have such meanings throughout this Amendment. Capitalized terms used but not defined in this Amendment shall have the meanings assigned thereto in the Trust Preferred Securities Guarantee. The meanings assigned to all defined terms used in this Amendment shall be equally applicable to both the singular and plural forms of such defined terms. The term “Trust Preferred Securities Guarantee” as used herein means the Trust Preferred Securities Guarantee, as amended and supplemented by this Amendment, or as otherwise supplemented or amended from time to time by one or more amendments thereto or hereto entered into pursuant to the applicable provisions of the Trust Preferred Securities Guarantee.

1.2. Interpretation. References in the Trust Preferred Securities Guarantee (including references in the Trust Preferred Securities Guarantee as amended or supplemented hereby) to “this Trust Preferred Securities Guarantee” (and indirect references such as “hereunder,” “herein” and “hereof”) shall be deemed references to the Trust Preferred Securities Guarantee as amended and supplemented hereby. All of the covenants, agreements and provisions of this Amendment shall be deemed to be and construed as part of the Trust Preferred Securities Guarantee to the same effect as if fully set forth therein and shall be fully enforceable in the manner provided in the Trust Preferred Securities Guarantee. Except as otherwise provided in this Amendment, all of the covenants, agreements and provisions of the Trust Preferred Securities Guarantee shall remain in full force and effect.

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ARTICLE II

MERGER

Assumption by ANB. ANB, as the surviving corporation of the Merger, shall become fully responsible as of the Effective Time, without any further action, for the due and punctual performance and observance of all of the covenants and conditions of the Trust Preferred Securities Guarantee to be kept or performed by the Guarantor. Upon such assumption, ANB shall succeed to and be substituted for IRBC with the same effect as if it had been named in the Trust Preferred Securities Guarantee as the original guarantor, and IRBC thereupon shall be relieved of any further liability or obligation under the Trust Preferred Securities Guarantee. Upon and following the Effective Time, the parties hereto agree that all references to the “Guarantor” in the Trust Preferred Securities Guarantee shall be deemed references to ANB, until a successor replaces it pursuant to the applicable provisions of the Trust Preferred Securities Guarantee and thereafter the “Guarantor” shall mean such successor.

ARTICLE III

RANKING

In order to provide that the Trust Preferred Securities Guarantee is pari passu with the ANB Debentures and the guarantees issued by ANB in respect thereof, Section 6.2 of the Trust Preferred Securities Guarantee is amended by adding the following at the end thereof:

“Notwithstanding anything to the contrary herein, the Trust Preferred Securities Guarantee shall rank pari passu in right of payment with the Guarantor’s (i) floating rate junior subordinated deferrable interest debentures due 2031, (ii) floating rate junior subordinated deferrable interest debentures due 2032, and (iii) floating rate junior subordinated deferrable interest debentures due 2033, and the guarantees issued by the Guarantor in respect thereof.”

ARTICLE IV

MISCELLANEOUS

4.1. Date and Time of Effectiveness. This Amendment shall become a legally effective and binding instrument at and as of the Effective Time.

4.2. Trust Preferred Securities Deemed Conformed. Beginning at the Effective Time, the provisions of each Trust Preferred Security then outstanding shall be deemed to be conformed, without the necessity for any reissuance or exchange of such Trust Preferred Security or any other action on the part of the Holders, IRBC, ANB or the Trustee, so as to reflect this Amendment.

4.3. Successors. All agreements of IRBC, ANB and the Trustee in this Amendment and in the Trust Preferred Securities Guarantee shall bind their respective successors.

4.4. Benefits of Amendment. Nothing in this Amendment, express or implied, shall give

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to any person, other than the parties hereto and their successors hereunder, any agent and the Holders, any benefit or any legal or equitable right, remedy or claim under this Amendment or the Trust Preferred Securities Guarantee.

4.5. Separability. In case any provision in this Amendment, or in the Trust Preferred Securities Guarantee, shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby, it being intended that all of the provisions hereof shall be enforceable to the full extent permitted by law.

4.6. Trustee Responsibility. The Trustee assumes no duties, responsibilities or liabilities by reason of this Amendment other than as set forth in the Trust Preferred Securities Guarantee. The Trustee assumes no responsibility for the correctness of the statements herein contained, which shall be taken as statements of IRBC and ANB. This Amendment is executed and accepted by the Trustee subject to all of the terms and conditions of its acceptance of the trust under the Trust Preferred Securities Guarantee, as fully as if said terms and conditions were herein set forth in full.

4.7. Headings. The Article and Section headings of this Amendment have been inserted for convenience of reference only, are not to be considered a part of this Amendment and shall in no way modify or restrict any of the terms or provisions hereof.

4.8. Counterparts. This Amendment may be executed in counterparts, each of which shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

4.9. Governing Law. This Amendment shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to its choice of law provisions.

[Signature Page Follows]

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IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to Trust Preferred Securities Guarantee to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written.

Attest : (SEAL)	INDIAN RIVER BANKING COMPANY
/s/ Diana L. Walker	By:	/s/ Paul A. Beindorf
Diana L. Walker		Paul A. Beindorf
Secretary		Chief Executive Officer
Attest : (SEAL)	WELLS FARGO BANK,
	NATIONAL ASSOCIATION, as trustee
/s/ Ann Roberts Dukart	By:	/s/ Edward L. Pruitt, Jr.
Name: Ann Robert Dukart	Name:	Edward L. Pruitt, Jr.
Title: Vice President	Title:	Vice President
Attest : (SEAL)	ALABAMA NATIONAL
	BANCORPORATION
/s/ Kimbery Moore	By:	/s/ William E. Matthews, V
Kimberly Moore	Name:	William E. Matthews, V
Secretary	Title:	EVP & CFO

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EX-14.1

Exhibit 14.1

ALABAMA NATIONAL BANCORPORATION

CODE OF BUSINESS CONDUCT AND ETHICS

ADOPTED BY THE BOARD OF DIRECTORS ON AUGUST 20, 2003

Introduction

This Code of Business Conduct and Ethics covers a wide range of business practices and procedures. It does not cover every issue that may arise, but it sets out basic principles to guide all employees of Alabama National BanCorporation and each of its subsidiaries (the “Company”). All of our employees must conduct themselves accordingly and seek to avoid even the appearance of improper behavior. The Code should also be provided to and followed by the Company’s agents and representatives, including consultants.

If a law conflicts with a policy in this Code, you must comply with the law. If you have any questions about these conflicts, you should ask your supervisor how to handle the situation.

Those who violate the standards in this Code will be subject to disciplinary action, up to and including termination of employment. If you are in a situation which you believe may violate or lead to a violation of this Code, follow the guidelines described in Section 14 of this Code.

1. Compliance with Laws, Rules and Regulations

Obeying the law, both in letter and in spirit, is the foundation on which this Company’s ethical standards are built. All employees must respect and obey the laws of the cities, states and countries in which we operate. Although not all employees are expected to know the details of these laws, it is important to know enough to determine when to seek advice from supervisors, managers or other appropriate personnel.

If requested, the Company will hold information and training sessions to promote compliance with laws, rules and regulations, including insider-trading laws.

2. Conflicts of Interest

A “conflict of interest” exists when a person’s private interest interferes in any way with the interests of the Company. A conflict situation can arise when an employee, officer or director takes actions or has interests that may make it difficult to perform his or her Company work objectively and effectively. Conflicts of interest may also arise when an employee, officer or director, or members of his or her family, receives improper personal benefits as a result of his or her position in the Company. Loans to, or guarantees of obligations of, employees and their family members may create conflicts of interest. Since our Company is in the business of making loans, a loan by one of our banks to an employee of the Company will not necessarily cause a conflict of interest. Loans to employees of the Company that do not involve more than our normal risk of collectibility, and that are made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for loans to unrelated parties, should typically not create a conflict of interest.

It is almost always a conflict of interest for a Company employee to work simultaneously for a competitor, customer or supplier. You are not allowed to work for a competitor as a consultant or board member. The best policy is to avoid any direct or indirect business connection with our customers,

suppliers or competitors, except on our behalf. Conflicts of interest are prohibited as a matter of Company policy, except under guidelines approved by the Board of Directors. Conflicts of interest may not always be clear-cut, so if you have a question, you should consult with higher levels of management. Any employee, officer or director who becomes aware of a conflict or potential conflict should bring it to the attention of a supervisor, manager or other appropriate personnel or consult the procedures described in Section 14 of this Code.

3. Insider Trading

Employees who have access to confidential information are not permitted to use or share that information for stock trading purposes or for any other purpose except the conduct of our business. All non-public information about the Company should be considered confidential information. To use non-public information for personal financial benefit or to “tip” others who might make an investment decision on the basis of this information is not only unethical but also illegal. If you have any questions, please consult the Company’s Chief Financial Officer, who serves as the Insider Trading Compliance Officer of the Company.

4. Corporate Opportunities

Employees, officers and directors are prohibited from taking for themselves personally opportunities that are discovered through the use of corporate property, information or position without the consent of the Board of Directors. No employee may use corporate property, information, or position for improper personal gain, and no employee may compete with the Company directly or indirectly. Employees, officers and directors owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises.

5. Competition and Fair Dealing

We seek to outperform our competition fairly and honestly. Stealing proprietary information, possessing trade secret information that was obtained without the owner’s consent, or inducing such disclosures by past or present employees of other companies is prohibited. Each employee should endeavor to respect the rights of and deal fairly with the Company’s customers, suppliers, competitors and employees. No employee should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other intentional unfair-dealing practice.

The purpose of business entertainment and gifts in a commercial setting is to create good will and sound working relationships, not to gain unfair advantage with customers. No gift or entertainment should ever be offered, given, provided or accepted by any Company employee, family member of an employee or agent unless it: (1) is not a cash gift, (2) is consistent with customary business practices, (3) is not excessive in value, (4) cannot be construed as a bribe or payoff and (5) does not violate any laws or regulations. Please discuss with your supervisor any gifts or proposed gifts which you are not certain are appropriate.

6. Discrimination and Harassment

The diversity of the Company’s employees is a tremendous asset. We are firmly committed to providing equal opportunity in all aspects of employment and will not tolerate any illegal discrimination or harassment of any kind. Examples include derogatory comments based on racial or ethnic characteristics and unwelcome sexual advances.

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7. Health and Safety

The Company strives to provide each employee with a safe and healthy work environment. Each employee has responsibility for maintaining a safe and healthy workplace for all employees by following safety and health rules and practices and reporting accidents, injuries and unsafe equipment, practices or conditions.

Violence and threatening behavior are not permitted. Employees should report to work in condition to perform their duties, free from the influence of illegal drugs or alcohol. The use of illegal drugs in the workplace will not be tolerated.

8. Record-Keeping

The Company requires honest and accurate recording and reporting of information in order to make responsible business decisions. For example, only the true and actual number of hours worked should be reported.

Many employees regularly use business expense accounts, which must be documented and recorded accurately. If you are not sure whether a certain expense is legitimate, ask your supervisor or your controller.

All of the Company’s books, records, accounts and financial statements must be maintained in reasonable detail, must appropriately reflect the Company’s transactions and must conform both to applicable legal requirements and to the Company’s system of internal controls. Unrecorded or “off the books” funds or assets should not be maintained unless permitted by applicable law or regulation.

Business records and communications often become public, and we should avoid exaggeration, derogatory remarks, guesswork, or inappropriate characterizations of people and companies that can be misunderstood. This applies equally to e-mail, internal memos, and final response. Records should always be retained or destroyed according to the Company’s record retention policies.

9. Confidentiality

Employees must maintain the confidentiality of confidential information entrusted to them by the Company or its customers, except when disclosure is authorized by an executive officer of the Company or required by laws or regulations. Confidential information includes all non-public information that might be of use to competitors, or harmful to the Company or its customers, if disclosed. It also includes information that suppliers and customers have entrusted to us. The obligation to preserve confidential information continues even after employment ends. In connection with this obligation, every employee should have executed a confidentiality agreement when he or she began his or her employment with the Company.

10. Protection and Proper Use of Company Assets

All employees should endeavor to protect the Company’s assets and ensure their efficient use. Theft, carelessness, and waste have a direct impact on the Company’s profitability. Any suspected incident of fraud or theft should be immediately reported for investigation. Company equipment should not be used for non-Company business, though incidental personal use may be permitted.

The obligation of employees to protect the Company’s assets includes its proprietary information. Proprietary information includes intellectual property such as trade secrets, patents, trademarks, and

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copyrights, as well as business, marketing and service plans, engineering and manufacturing ideas, designs, databases, records, salary information and any unpublished financial data and reports. Unauthorized use or distribution of this information would violate Company policy. It could also be illegal and result in civil or even criminal penalties.

11. Payments to Government Personnel

The U.S. Foreign Corrupt Practices Act prohibits giving anything of value , directly or indirectly, to officials of foreign governments or foreign political candidates in order to obtain or retain business. It is strictly prohibited to make illegal payments to government officials of any country,

In addition, the U.S. government has a number of laws and regulations regarding business gratuities which may be accepted by u.s. Government personnel. The promise, offer or delivery to an official or employee of the U.S. government of a gift, favor or other gratuity in violation of these rules would not only violate Company policy but could also be a criminal offense. State and local governments, as well as foreign governments, may have similar rules. The Company’s Chief Financial Officer can provide guidance to you in this area.

12. Waivers of the Code of Business Conduct and Ethics

Any waiver of this Code for executive officers or directors may be made only by the Board or a Board committee and will be promptly disclosed as required by law or stock exchange regulation.

13. Reporting any Illegal or Unethical Behavior

Employees are encouraged to talk to supervisors, managers or other appropriate personnel about observed illegal or unethical behavior and when in doubt about the best course of action in a particular situation. It is the policy of the Company not to allow retaliation for reports of misconduct by others made in good faith by employees. Employees are expected to cooperate in internal investigations of misconduct.

Employees must read the Company’s Employee Complaint Procedures for Accounting and Auditing Matters, which describes the Company’s procedures for the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters. Any employee may submit a good faith concern regarding questionable accounting or auditing matters without fear of dismissal or retaliation of any kind.

14. Compliance Procedures

We must all work to ensure prompt and consistent action against violations of this Code. However, in some situations it is difficult to know if a violation has occurred. Since we cannot anticipate every situation that will arise, it is important that we have a way to approach a new question or problem. These are the steps to keep in mind:

• Make sure you have all the facts. In order to reach the right solutions, we must be as fully informed as possible.

• Ask yourself: What specifically am I being asked to do? Does it seem unethical or improper? This will enable you to focus on the specific question you are faced with, and the alternatives you have. Use your judgment and common sense; if something seems unethical or improper, it probably is.

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• Clarify your responsibility and role. In most situations, there is shared responsibility. Are your colleagues informed? It may help to get others involved and discuss the problem.

• Discuss the problem with your supervisor. This is the basic guidance for all situations. In many cases, your supervisor will be more knowledgeable about the question, and will appreciate being brought into the decision-making process. Remember that it is your supervisor’s responsibility to help solve problems.

• Seek help from Company resources. In the rare case where it may not be appropriate to discuss an issue with your supervisor, or where you do not feel comfortable approaching your supervisor with your question, discuss it locally with your office manager or your Human Resources manager.

• You may report ethical violations in confidence and without fear of retaliation. If your situation requires that your identity be kept secret, your anonymity will be protected. The Company does not permit retaliation of any kind against employees for good faith reports of ethical violations.

• Always ask first. Act later: If you are unsure of what to do in any situation, seek guidance before you act.

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CODE OF ETHICS FOR CEO AND SENIOR FINANCIAL OFFICERS

The Company has a Code of Business Conduct and Ethics applicable to all directors and employees of the Company. The CEO and all senior financial officers, including the CFO and principal accounting officer, are bound by the provisions set forth therein relating to ethical conduct, conflicts of interest and compliance with law. In addition to the Code of Business Conduct and Ethics, the CEO and senior financial officers are subject to the following additional specific policies:

1. The CEO and all senior financial officers are responsible for full, fair, accurate, timely and understandable disclosure in the periodic reports required to be filed by the Company with the SEC. Accordingly, it is the responsibility of the CEO and each senior financial officer promptly to bring to the attention of the Disclosure Committee any material information of which he or she may become aware that affects the disclosures made by the Company in its public filings or otherwise assist the Disclosure Committee in fulfilling its responsibilities as specified in the Company’s Disclosure Controls and Procedures Policy.

2. The CEO and each senior financial officer shall promptly bring to the attention of the Disclosure Committee and the Audit Committee any information he or she may have concerning (a) significant deficiencies in the design or operation of internal controls which could adversely affect the Company’s ability to record, process, summarize and report financial data or (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s financial reporting, disclosures or internal controls.

3. The CEO and each senior financial officer shall promptly bring to the attention of the CEO and to the Audit Committee any information he or she may have concerning any violation of the Company’s Code of Business Conduct and Ethics, including any actual or apparent conflicts of interest between personal and professional relationships, involving any management or other employees who have a significant role in the Company’s financial reporting, disclosures or internal controls.

4. The CEO and each senior financial officer shall promptly bring to the attention of the CEO and to the Audit Committee any information he or she may have concerning evidence of a material violation of the securities or other laws, rules or regulations applicable to the Company and the operation of its business, by the Company or any agent thereof, or of violation of the Code of Business Conduct and Ethnics or of these additional procedures.

5. The Board of Directors shall determine, or designate appropriate persons to determine, appropriate actions to be taken in the event of violations of the Code of Business Conduct and Ethics or of these additional procedures by the CEO and the Company’s senior financial officers. Such actions shall be reasonably designed to deter wrongdoing and to promote accountability for adherence to the Code of Business Conduct and Ethics and to these additional procedures, and shall include written notices to the individual involved that the Board has determined that there has been a violation, censure by the Board, demotion or re-assignment of the individual involved, suspension with or without pay or benefits (as determined by the Board) and termination of the individual’s employment. In determining what action is appropriate in a particular case, the Board of Directors or such designee shall take into account all relevant information, including the nature and severity of the violation, whether the violation was a single occurrence or repeated occurrences, whether the violation appears to have been intentional or inadvertent, whether the individual in question had been advised prior to the violation as to the proper course of action and whether or not the individual in question had committed other violations in the past.

6

EX-21.1

Exhibit 21.1

SUBSIDIARIES OF ALABAMA NATIONAL

Name of Subsidiary	State of Organization
National Bank of Commerce of Birmingham	National Bank
NBC Securities, Inc.	Alabama
NBC Investments, Inc.	Nevada
NBC Joint Ventures, Inc.	Alabama
Bank of Dadeville	Alabama
TBD Investments, Inc.	Nevada
Ashland Insurance, Inc.	Alabama
Alabama Exchange Bank	Alabama
Tuskegee Loan Company, Inc.	Alabama
AEB Investments, Inc.	Nevada
First Gulf Bank .	Alabama
First Citizens Bank	Alabama
Clay County Finance Company, Inc.	Alabama
FCB Investments, Inc.	Nevada
First American Bank	Alabama
Corporate Billing, Inc.	Alabama
FAB Investments, Inc.	Nevada
ANB Insurance Services, Inc.	Alabama
Bill Eyerly Insurance, Inc	Florida
Citizens & Peoples Bank, National Association	National Bank
Public Bank	Florida
Georgia State Bank	Georgia
GEO Investments, Inc.	Nevada
Community Bank of Naples, National Association	National Bank
CBN Investments, Inc.	Nevada
Peoples State Bank of Groveland	Florida
Millennium Bank	Florida
Cypress Bank	Florida
Indian River National Bank	National Bank
Indian River Title Company, LLC	Florida
IRNB Insurance Services LLC	Florida
Alabama National Statutory Trust I	Connecticut
Alabama National Statutory Trust II	Connecticut
Alabama National Statutory Trust III	Connecticut
Indian River Capital Trust I	Delaware

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the registration statements of Alabama National BanCorporation listed below of our report dated February 18, 2004, except for Note 22 as to which the date is February 27, 2004, relating to the financial statements of Alabama National BanCorporation, which appears in this Form 10-K.

Registration Statements on Form S-8:

333-07951	333-27285	333-47748
333-59364	333-70205	333-70207
333-70209	333-76032	333-76301
333-76303	333-76305	333-76307
333-76309	333-76311	333-76313
333-76315	333-76317	333-102234
333-106314	333-106315	333-111318
333-111319	333-113248	333-113249
333-111323	333-111324

/s/ PRICEWATERHOUSECOOPERS LLP

PricewaterhouseCoopers LLP

Birmingham, Alabama

March 11, 2004

EX-31.1

Exhibit 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John H. Holcomb, III, certify that:

1.    I have reviewed this annual report on Form 10-K of Alabama National BanCorporation;

2.    Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.    Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 12, 2004 By:    /s/    JOHN H. HOLCOMB, III John H. Holcomb, III Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, William E. Matthews, V, certify that:

1.    I have reviewed this annual report on Form 10-K of Alabama National BanCorporation;

2.    Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.    Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material witnesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 12, 2004 By:    /s/    WILLIAM E. MATTHEWS, V                  William E. Matthews, V Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Alabama National BanCorporation (“Alabama National”) on Form 10-K for the period ended December 31, 2003, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), John H. Holcomb, III, Chief Executive Officer of Alabama National, and William E. Matthews, V, Chief Financial Officer of Alabama National, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:

(1)    The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Alabama National.

Dated: March 12, 2004

/s/    JOHN H. HOLCOMB, III

John H. Holcomb

Chief Executive Officer

/s/    WILLIAM E. MATTHEWS, V

William E. Matthews, V

Chief Financial Officer