Scott A. Jaggers, CFA, Sr. Analyst

October 4, 2004

Mamta Mohta, CA, B.Com, Analyst

Scott A. Jaggers, CFA, Sr. Analyst

North Wacker Drive  Chicago, IL 60606

Alabama National BanCorporation (ALAB – NASDAQ)

Note to reader: updated comments since last report are highlighted.

Overview

ANB is a bank holding company operating 78 locations through fourteen bank subsidiaries in Alabama, Florida and Georgia. At March 31, 2004, ANB had assets of $4.95 billion. ANB provides full banking services to individuals and businesses. Brokerage services are provided to customers through NBC's wholly owned subsidiary, NBC Securities, Inc. Investments are not bank guaranteed, not FDIC insured and may lose value. Insurance services are provided through ANB Insurance Services, Inc., a wholly owned subsidiary of First American Bank.

ALAB operates on a calendar year basis.

• decentralized / community banking model
• mix of de novo and acquisition-driven growth
• conservative management / conservative underwriting

• headwind from mortgage banking and bond activities
• further margin pressure possible
• acquisition / integration risk

Sales

The tables herein are current as of 8/1/04. Please refer to the separately published spreadsheet for additional detail and updated forecasts.

Prior to the Q2 earnings release, the consensus was calling for 31.5% growth in NII in 2004, with a 9.3% decrease in total non-interest. Following the release, the NII forecast fell slightly to 31.2%, and the non-interest forecast improved to -5.4%. NII is expected to be growing at 20.2% in '05, with non-interest growth expected to slow to -6.7%.

Both deposit growth and loan growth have been strongrecently.

Non-interest income has been on the decline. Only service charges on deposit accounts are up year-on-year.

Margins

Prior to Q2 earnings, the consensus was calling for a 35.2% pre-tax margin in Q3 and a 34.9% margin for ’04. Afterward, the Q3 expectation remained at 35.2%and ’04 slightly fell to 34.6%. Expectations rise noticeably for 2005.

Please refer to the separately published spreadsheet for additional detail and updated forecasts.

Earnings Per Share

Q3 consensusremained unchanged at $0.85 and ’04 increased slightly to $3.36 from $3.35 following the Q2 earnings release.

Please refer to the separately published spreadsheet for additional detail and updated forecasts.

Target Price / Valuation

There were no upgrades or downgrades on Q2 results. One of 4 target prices was increased.

Please refer to the separately published spreadsheet for additional detail and updated forecasts.

Upcoming Events

Individual Analyst Opinions

POSITIVE RATINGS

Raymond James – Stock is rated Strong Buy.

Sterne, Agee & Leach – Stock is rated Buy.(initiated 8/19/2004). “WE ARE LAUNCHING COVERAGE OF ALABAMANATIONAL BANCORPORATION WITH A BUY RATINGAND A $67 TARGET PRICEWe believe ALAB merits a premiumvaluation based on the Bank’s attractive marketcoverage, seasoned and well-regarded managementteam, and earnings growth prospects.The Company operates a decentralizedbanking franchise, with growth coming from bothorganic and acquisition opportunities. Thedecentralization involves maintaining separate bankingsubsidiaries. After a bit of a slowdown in2004, we look for earnings momentum to resume. Weexpect EPS in 2005 to increase over 11%, reflecting arebound from 2004 where per share results sufferedmostly from an early third quarter issuance ofcommon stock. Approximately 52% of the franchise operates in Alabama, with the center of gravity in Birmingham. Florida accounts for about 42% of the franchise, with the remainder located in Georgia.”

NEUTRAL RATINGS

FTN Midwest Res. – Stock is rated Neutral (downgraded 9/9/04). “We are downgrading ALAB to NEUTRAL from BUY as our revised price target of $63 provides limited appreciation potential vis-à-vis the current price… Given a multitude of growth opportunities in FL, Atlanta and north AL, we are less valuation sensitive to stocks such as ALAB; however, with the shares trading at 16.2x our FY05 estimate versus 15.1x for the small cap index and 15.8x for the FTN Growth Bank Index, multiple expansion will be less important in driving near-term returns, and it may clip returns if sector valuations compress… FY04 remains a transition growth year as institutional fixed income and mortgage slow before loan driven earning asset growth on a higher margin more than offsets via accelerating spread revenue growth.”

Keefe Bruyette – Stock is rated Market-Perform.

Sandler O’Neill – Stock is rated Hold.(initiated 8/20/2004). “We are initiating coverage of Alabama National BanCorporation (ALAB) with a HOLD rating and a 12-month price target of $62.00 per share. Our 2004E EPS is $3.36 and our 2005E EPS is $3.76. The Birmingham, Alabama-based company, with nearly $5 billion in assets, operates through 14 subsidiary banks in Alabama, Florida, and Georgia. Favorable investment considerations include a consistent track record for double-digit EPS growth, ongoing expansion of the footprint into faster growing Florida, an effective decentralized model, a very conservative credit culture, and a highly motivated management team. While we believe that ALAB deserves to trade at its current P/E premium to peers, at this time we think the potential for materialoutperformance relative to the bank group is limited, given an ongoing slowdown in certain fee businesses (mortgage; fixed income), the simultaneous integration of several acquisitions, and the negative impact of recent CRE paydowns on loan growth.”

Suntrust RH. – Stock is rated Neutral. "ALAB reported diluted 2Q04 EPS of $0.84, $0.07 above our estimate. Upside was primarily due to higher-than-expected fee income as well as lower-than-expected loan loss provision. ALAB’s acquisition of Coquina Bank closed July 9th. ALAB plans to merge Coquina and Cypress Banks into one subsidiary in August due to their overlapping markets. One new branch was opened in 2Q04 in north Naples, and an additional Atlanta branch is expected to open sometime during 3Q04.It appears management remains committed to opening three to five de novo branches per year. Excluding the Indian River and Cypress Bank acquisitions, which closed in February, loan growth YTD was 12.6% annualized and almost 8% annualized versus 2Q04. Fee income growth was exceptionally robust, in particular mortgage income and service charge revenue. NIM remained flat at 3.64% this quarter. However, all three of ALAB’s recent acquisitions had margins greater than 4%, and we are modeling ALAB’s NIM to reach 3.75% by the end of the year. ALAB ranked 32 out of 110 banks on our recent screen of small-cap bank interest sensitivity. We maintain Neutral rating. Given slowdown in mortgage business and bond division, as well as some dilution from recent acquisitions, we believe ALAB’s earnings growth should only be in the mid-single digits this year. However, we continue to favor ALAB as a long-term holding given its consistent performance, steadily improving footprint and pristine asset quality. We are raising our EPS estimates to account for 2Q04 upside, which should be offset by secondary offering shares (timing not yet announced)."

NEGATIVE RATINGS

Hoefer & Arnett– Stock is rated Reduce.

NO COVERAGE

Morgan Keegan– coverage discontinued (8/19/2004) due to analyst departure.

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