Published:
Superior Bancorp Reports Third Quarter 2009 Results
BIRMINGHAM, Ala., Nov. 3 /PRNewswire-FirstCall/ -- Superior Bancorp (Nasdaq: SUPR) today reported its third quarter 2009 results. A summary of the results is provided below and in the attached financial data.
As of and for the Quarters Ended
--------------------------------
(Dollars in thousands, except September 30, September 30,
per share data 2009 2008
-------------------------------------------------------------------
Total assets $3,226,570 $3,103,677
Total loans, net of unearned income 2,434,534 2,219,041
Total deposits 2,619,961 2,225,529
Stockholders' equity 244,730 341,873
Net interest income 23,913 21,626
Net income (loss) 880 (6,508)
Net loss available to common stockholders (287) (6,508)
Net loss per common share (0.03) (0.65)
Total branches 72 76
Earnings Performance
"We are pleased to report profitable operations for our third quarter, 2009, especially in this very difficult economy," Chairman and CEO Stan Bailey commented. "The quarter's results inc significant progress on several fronts, even as we continue to address certain credit challenges reflective of the current economic recession."
"Our interest margin rose to 3.36%, reflecting our continued progress in repricing both our loan portfolio and our deposits. All fee income categories rose except for mortgage banking, our expenses declined significantly as part of our previously announced efficiency program, our credit costs remained reasonable compared to average industry results, our regulatory capital ratio increased and we absorbed the cost of the market value risk in our investment portfolio while reporting a profitable quarter. Looking back on our third quarter, we made considerable progress," Bailey concluded.
Comparison of Third Quarter 2009 with Second Quarter 2009
Net interest income increased significantly, rising from $22.7 million to $23.9 million. As noted above, the margin rose to 3.36% from 3.21%, with both being constrained to similar degrees by the effects of loans that were placed on non-accrual - approximating 0.15% in both quarters. A significant portion of the increase in net interest income was associated with margin improvement as our average deposit pricing declined approximately 0.16%. Our loan portfolio increased 1.5% from the second quarter to the third, offset by a similar decline in loans held for sale, as the mortgage pipeline was reduced due to lower production activity.
The third quarter included a gain from securities sales of $5.6 million due to repositioning of a portion of the securities portfolio. Also included in this quarter's results were write downs associated with trust preferred securities and certain private-label mortgage-backed securities in our portfolio totaling $3.5 million for other-than-temporary impairments (OTTI), and a provision for loan losses and OREO expenses totaling $6.5 million.
Total noninterest income, excluding both the securities transactions and the OTTI loss, declined approximately $0.3 million from the second quarter, due exclusively to lower mortgage activity, as all other income categories rose.
Total noninterest expense declined $2.2 million, approximately half of which was due to the FDIC special assessment in the second quarter, and the balance being attributable to a concerted effort to reduce expenses at Superior, including the closure of 5 branches during the quarter. These expense reduction measures should continue to be beneficial in future quarters.
Credit Quality
Loans 30-89 days past due (DPD) and still accruing was 1.64% of total loans at quarter end compared to 1.50% on June 30, 2009. Non-performing loans, including loans 90 DPD and still accruing, increased to $153 million or 6.3 % of total loans in the quarter compared to 4.91 % of total loans at June 30, 2009. Of the non-performing loans, 31% is in Alabama, 63% in Florida and 6% elsewhere. Our other real estate owned portfolio of $42 million consists of 62% in Alabama and 38% in Florida.
Net charge offs for the quarter were $4.3 million, or an annualized rate of 0.72% of total loans.
The provision for loan losses for the quarter was $5.2 million compared to a provision of $6.0 million in the prior quarter. The allowance for loan losses stands at $34.3 million, 1.41% of loans, up from $33.5 million at the prior quarter's end.
Balance Sheet, Capital and Liquidity
An investment securities repositioning program implemented during the third quarter allowed us to reinvest in lower "risk based" assets, freeing up some $12 million in regulatory capital. As the result of this strategy and improved operating earnings during the quarter, our total risk based capital ratio increased to 11.27% for the quarter. We continue to focus on maintaining our capital ratios at appropriately high levels given the current conditions in the economy.
Additionally, as discussed below, we recorded OTTI charges in this and previous quarters that reduced the market risk and book value of the trust preferred securities in our portfolio from approximately $24 million at December 31, 2008 to approximately $14 million at September 30, 2009. While reducing the carrying value of these assets had a significant impact on earnings, it is clear that their fair value is significantly diminished in the current environment, and that reduction was appropriate under these conditions.
Superior Bank's liquidity continues to be strong, and our reliance on brokered deposits and borrowings remains at a low level. Deposits at our 22 de novo branches opened since 2006 rose to $430 million, a new record level, and represent a steady source of core funding that enables us to continue to grow Superior with relationship-based funding.
Regulatory Reform
Besides the economy, the greatest risk of uncertainty for the banking industry continues to be the regulatory reform initiatives being undertaken by the U. S. Congress and our numerous regulatory agencies. While fully recognizing that the activities of the mostly investment banking and non-bank financial institutions became major catalysts for our current economic challenges, Congress is proposing an over-reactive, sweeping "broad brush" solution resulting in the Government's intent to increase regulations, oversight and involvement in the daily business activities best left to experienced bank management teams and their boards of directors. It will result in additional burdensome disclosures and red tape for our customers and additional cost to our shareholders. For the vast majority of well-run community banks, it is totally unnecessary.
Earnings Restatement
In consultation with our external auditors and with the approval of our Audit Committee, we intend to restate our previously reported results for the first and second quarters of 2009 to increase our charges for previously recorded OTTI within the trust preferred securities. We intend to file our amended Forms 10-Q/A on or about November 9, 2009. During the first and second quarters of 2009, our rated trust preferred securities portfolio experienced significant rating downgrades. After further review and in consultation with an external valuation firm, it was determined that the credit spreads used in our initial valuations did not reflect then- current market rates for these types of instruments. Considering the continued credit deterioration, related disruption of the market for these instruments and the complexity of the instrument structures, we revised the interest rate and default assumptions used in determining fair value and determined the need to recognize additional OTTI adjustments.
In addition, we determined that a $5 million trust preferred security of a privately held company with respect to which contemporaneous financial information was difficult to obtain, was fully impaired during the first quarter 2009. Accordingly, we revised our OTTI credit charge to recognize a loss on the full amount of the security. The impact on net income from the restatements was ($2.9 million), or ($0.29) per common share for the first quarter, and ($1.9 million), or ($0.19) per common share for the second quarter. Additional detail on the effect of the restatements on the March 31 and June 30, 2009 condensed consolidated financial statements and earnings per share is included in the attached schedules.
About Superior Bancorp
Superior Bancorp is a $3.2 billion thrift holding company headquartered in Birmingham, Alabama. The principal subsidiary of Superior Bancorp is Superior Bank, a southeastern community bank and the third largest U. S. banking institution headquartered in Alabama. Superior Bank currently has 72 branches, with 44 locations throughout the state of Alabama and 28 locations in Florida. Superior Bank also operates 23 consumer finance offices in North Alabama as 1st Community Credit and Superior Financial Services.
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by us or on our behalf. Some of the disclosures in this release, including any statements preceded by, followed by or which include the words "may," "could," "should," "will," "would," "hope," "might," "believe," "expect," "anticipate," "estimate," "intend," "plan," "assume" or similar expressions constitute forward-looking statements. These forward-looking statements, implicitly and explicitly, include the assumptions underlying the statements and other information with respect to our beliefs, plans, objectives, goals, expectations, anticipations, estimates, intentions, financial condition, results of operations, future performance and business, including our expectations and estimates with respect to our revenues, expenses, earnings, return on equity, return on assets, efficiency ratio, asset quality, the adequacy of our allowance for loan losses and other financial data and capital and performance ratios. Although we believe that the expectations reflected in our forward-looking statements are reasonable, these statements involve risks and uncertainties which are subject to change based on various important factors (some of which are beyond our control). Such forward looking statements should, therefore, be considered in light of various important factors set forth from time to time in our reports and registration statements filed with the SEC. The following factors, among others, could cause our financial performance to differ materially from our goals, plans, objectives, intentions, expectations and other forward-looking statements: (1) the strength of the United States economy in general and the strength of the regional and local economies in which we conduct operations; (2) the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; (3) inflation, interest rate, market and monetary fluctuations; (4) our ability to successfully integrate the assets, liabilities, customers, systems and management we acquire or merge into our operations; (5) our timely development of new products and services in a changing environment, including the features, pricing and quality compared to the products and services of our competitors; (6) the willingness of users to substitute competitors' products and services for our products and services; (7) the impact of changes in financial services policies, laws and regulations, including laws, regulations and policies concerning taxes, banking, securities and insurance, and the application thereof by regulatory bodies; (8) our ability to resolve any legal proceeding on acceptable terms and its effect on our financial condition or results of operations; (9) technological changes; (10) changes in consumer spending and savings habits; (11) the effect of natural disasters, such as hurricanes, in our geographic markets; (12) regulatory, legal or judicial proceedings; (13) the continuing instability in the domestic and international capital markets; (14) the effects of new and proposed laws relating to financial institutions and credit transactions; and (15) the effects of policy initiatives that have been and may continue to be introduced by the new Presidential administration and related regulatory actions.
Superior Bancorp disclaims any intent or obligation to update forward-looking statements.
More information on Superior Bancorp and its subsidiaries may be obtained over the Internet, http://www.superiorbank.com, or by calling 1-877-326-BANK (2265).
SUPERIOR BANCORP AND SUBSIDIARIES
UNAUDITED SUMMARY EFFECTS OF RESTATEMENT
(Dollars in thousands, except per share data)
Restatement Effects - Condensed Consolidated Statements of Financial
Condition (Unaudited)
As of March 31, 2009 As of June 30, 2009
---------------------------- ---------------------------
As As
Originally Differ- Originally Differ-
Restated Filed ence Restated Filed ence
-------- ---------- ------- -------- ---------- -------
Investment
securities
available for
sale $328,708 $338,590 ($9,882) $306,301 $315,551 ($9,250)
Accrued interest
receivable - - - 16,025 16,210 (185)
Other assets 58,383 53,470 4,913 66,165 62,819 3,346
Total assets 3,129,469 3,134,438 (4,969) 3,209,421 3,215,510 (6,089)
Accrued
interest
payable and
other
liabilities 24,906 24,240 666 - - -
Accumulated
deficit (134,621) (131,733) (2,888) (141,483) (136,662) (4,821)
Accumulated
other
comprehensive
loss (9,550) (6,803) (2,747) (7,791) (6,723) (1,268)
Total
stockholders'
equity 245,434 251,070 (4,969) 240,681 246,770 (6,089)
Total
liabilities
and
stockholders'
equity 3,129,469 3,134,438 (4,969) 3,209,421 3,215,510 (6,089)
Restatement Effects - Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Three Months Ended
March 31, 2009 June 30, 2009
------------------------------ --------------------------
As As
Originally Differ- Originally Differ-
Restated Filed ence Restated Filed ence
-------- ----- ------ -------- ---------- -------
Net interest
income $- $- $- $22,717 $22,915 ($198)
Total other-
than-temporary
impairment
losses (7,629) (1,777) (5,852) (6,685) (5,853) (832)
Portion of OTTI
recognized
in other
comprehensive
income 1,784 1,453 331 904 1,776 (872)
Investment
securities
(loss) gain (5,845) (324) (5,521) (5,781) (4,077) (1,704)
Loss before
income taxes (6,422) (901) (5,521) (10,233) (8,331) (1,902)
Income tax
benefit (2,848) (215) (2,633) (4,539) (4,596) 30
Net loss (3,574) (686) (2,888) (5,694) (3,762) (1,932)
Net loss
applicable to
common
shareholders (4,717) (1,829) (2,888) (6,681) (4,929) (1,932)
Basic net loss
per common share (0.47) (0.18) (0.29) (0.68) (0.49) (0.19)
Diluted net loss
per common share (0.47) (0.18) (0.29) (0.68) (0.49) (0.19)
Six-Months Ended
June 30, 2009
-----------------------------------
As
Originally
Restated Filed Difference
-------- ----------- ----------
Net interest income $80,386 $80,584 ($198)
Total other-than-temporary
impairment losses (17,189) (7,631) (9,558)
Portion of OTTI recognized in other
comprehensive income 5,563 3,230 2,333
Investment securities (loss) gain (11,626) (4,401) (7,225)
Loss before income taxes (16,655) (9,232) (7,423)
Income tax benefit (7,387) (4,784) (2,603)
Net loss (9,268) (4,448) (4,820)
Net loss applicable to
common shareholders (11,578) (6,758) (4,820)
Basic net loss per common share (1.15) (0.67) (0.48)
Diluted net loss per common share (1.15) (0.67) (0.48)
Superior Bancorp and Subsidiaries
Condensed Consolidated Statements of Financial Condition
(Dollars In Thousands)
September 30,
---------------------- December 31,
2009 2008 2008
----------- --------- -----------
(Unaudited) (Unaudited)
Assets
Cash and due from banks $57,364 $88,035 $74,237
Interest-bearing deposits in other banks 73,976 6,564 10,042
Federal funds sold 990 3,038 5,169
Total cash and cash equivalents 132,330 97,637 89,448
Investment securities available
for sale 296,881 334,502 347,142
Tax lien certificates 24,700 18,877 23,786
Mortgage loans held for sale 58,704 15,292 22,040
Loans, net of unearned income 2,434,534 2,219,041 2,314,921
Less: Allowance for loan losses (34,336) (27,670) (28,850)
Net loans 2,400,198 2,191,371 2,286,071
Premises and equipment, net 104,764 104,003 104,085
Accrued interest receivable 15,540 15,188 14,794
Stock in FHLB 18,212 24,965 21,410
Cash surrender value of life insurance 49,655 47,789 48,291
Goodwill and other intangibles 17,784 184,442 21,052
Other real estate 42,259 24,522 19,971
Other assets 65,543 45,089 54,611
Total assets $3,226,570 $3,103,677 $3,052,701
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing $255,196 $220,553 $212,732
Interest-bearing 2,364,765 2,004,976 2,130,256
Total deposits 2,619,961 2,225,529 2,342,988
Advances from FHLB 218,321 440,327 361,324
Federal funds borrowed and security
repurchase agreements 1,652 5,989 3,563
Notes payable 45,801 10,000 7,000
Subordinated debentures 60,720 60,940 60,884
Accrued expenses and other liabilities 35,385 19,019 25,703
Total liabilities 2,981,840 2,761,804 2,801,462
Stockholders' Equity
Preferred stock, par value $.001
per share; shares authorized
5,000,000:
Series A, fixed rate cumulative
perpetual preferred stock;
69,000 shares issued and
outstanding at September 30, 2009
and December 31, 2008, respectively - - -
Common stock, par value $.001 per
share; shares authorized 20,000,000;
shares issued 11,624,279, 10,391,748
and 10,403,087, respectively;
outstanding 11,624,279, 10,064,941
and 10,074,999, respectively 12 10 10
Surplus - preferred 63,868 - 62,978
- warrants 8,646 - 8,646
- common 321,840 331,860 329,461
Accumulated (deficit) retained
earnings (141,770) 28,586 (129,904)
Accumulated other comprehensive loss (7,501) (6,441) (7,925)
Treasury stock, at cost - (11,370) (11,373)
Unearned ESOP stock (308) (487) (443)
Unearned restricted stock (57) (285) (211)
Total stockholders' equity 244,730 341,873 251,239
Total liabilities and stockholders'
Equity $3,226,570 $3,103,677 $3,052,701
Superior Bancorp and Subsidiaries
Condensed Consolidated Statements of Operations
(Amounts In Thousands, Except Per Share Data)
Three Months Ended Nine Months Ended
September 30, September 30, Year Ended
------------------ ----------------- December 31,
2009 2008 2009 2008 2008
------------------ ----------------- ------------
(Unaudited) (Unaudited)
Interest income
Interest and
fees on loans $36,783 $36,664 $107,693 $110,717 $147,162
Interest on
investment
securities:
Taxable 3,362 4,106 11,148 12,302 16,310
Exempt from
Federal income
tax 432 430 1,295 1,291 1,716
Interest on federal
funds sold 1 17 8 114 122
Interest and
dividends on
other investments 471 663 1,289 2,039 2,578
Total interest
income 41,049 41,880 121,433 126,463 167,888
Interest expense
Interest on deposits 13,315 16,010 42,317 52,972 68,405
Interest on FHLB
advances and
other borrowings 2,619 3,290 7,558 9,098 12,104
Interest on
subordinated debt 1,202 954 3,602 2,887 4,094
Total interest
expense 17,136 20,254 53,477 64,957 84,603
Net interest
income 23,913 21,626 67,956 61,506 83,285
Provision for loan
losses 5,169 2,305 14,602 10,143 13,112
Net interest
Income after
provision
for loan losses 18,744 19,321 53,354 51,363 70,173
Noninterest income
Service charges and
fees on deposits 2,595 2,425 7,506 6,721 9,295
Mortgage banking
income 1,506 820 5,468 3,117 3,972
Gain on sale of
investment
securities 5,644 NA 5,644 NA NA
Total other-than-
temporary impairment
("OTTI") losses (1,426) NA (18,616) NA NA
Portion of OTTI
recognized in
(transferred from)
other comprehensive
income (2,097) NA 3,466 NA NA
Investment
securities gains
(losses) 2,121 (8,541) (9,506) (7,072) (8,453)
Change in fair
value of derivatives 435 141 170 773 1,240
Increase in cash
surrender value of
life insurance 568 583 1,623 1,689 2,274
Gain on extinguishment
of liabilities - - - 2,918 2,918
Other income 1,254 1,359 3,811 4,247 5,521
Total noninterest
income 8,479 (3,213) 9,072 12,393 16,767
Noninterest expenses
Salaries and
employee benefits 12,234 12,379 36,976 36,577 49,672
Occupancy,
furniture and
equipment expense 4,478 4,434 13,397 12,614 17,197
Amortization of
core deposit
intangibles 985 896 2,956 2,688 3,585
Goodwill impairment
charge - - - - 160,306
FDIC assessment 921 433 3,310 657 1,105
Foreclosure losses 1,337 190 3,656 552 908
Other operating
expenses 5,687 5,576 17,207 16,358 21,905
Total noninterest
expenses 25,642 23,908 77,502 69,446 254,678
Income (loss)
before
income taxes 1,581 (7,800) (15,076) (5,690) (167,738)
Income tax expense
(benefit) 701 (1,292) (6,686) (719) (4,588)
Net income (loss) 880 (6,508) (8,390) (4,971) (163,150)
Preferred stock
dividends and
amortization 1,167 - 3,477 - 311
Net loss applicable
to common
shareholders $(287) $(6,508) $(11,867) $(4,971)$(163,461)
Basic loss per
common share $(0.03) $(0.65) $(1.14) $(0.50) $(16.31)
Diluted loss per
common share $(0.03) $(0.65) $(1.14) $(0.50) $(16.31)
Weighted average
common shares
outstanding 10,984 10,023 10,373 10,017 10,021
Weighted average
common shares
outstanding,
assuming dilution 10,984 10,023 10,373 10,017 10,021
SUPERIOR BANCORP AND SUBSIDIARIES
UNAUDITED SUMMARY CONSOLIDATED FINANCIAL DATA
(Dollars in thousands, except per share data)
As of and for As of and for As of and for
the Three Months the Nine Months the Year
Ended Ended Ended
September 30, September 30, December 31,
-------------------- --------------------- -----------
2009 2008 2009 2008 2008
--------- ---------- ---------- ---------- -----------
Selected Average
Balances :
Total assets $3,157,306 $3,053,069 $3,143,657 $2,980,931 $3,010,045
Total liabilities 2,914,116 2,705,133 2,896,711 2,630,594 2,659,816
Loans, net of
unearned income 2,422,871 2,181,873 2,384,287 2,112,800 2,147,524
Mortgage loans held
for sale 64,391 19,846 62,203 29,453 25,251
Investment securities 297,578 349,783 320,502 350,551 346,046
Total interest-earning
assets 2,853,456 2,610,556 2,836,591 2,548,882 2,576,505
Noninterest-bearing
deposits 251,696 219,037 243,094 218,478 218,486
Interest-bearing
deposits 2,307,757 2,018,972 2,273,384 1,994,935 2,009,918
Advances from FHLB 228,679 374,562 262,757 320,685 335,393
Federal funds
borrowed
and security
repurchase agreements 1,644 8,602 2,265 8,393 7,513
Subordinated
debentures 60,743 54,660 60,796 53,996 55,736
Total interest-
bearing
liabilities 2,648,029 2,470,127 2,635,776 2,391,262 2,421,892
Stockholders' equity 243,190 347,935 246,946 350,337 350,229
Per Share Data:
Net (loss) income
- basic $(0.03) $(0.65) $(1.14) $(0.50) $(16.31)
- diluted (5) $(0.03) $(0.65) $(1.14) $(0.50) $(16.31)
Weighted average
common shares
outstanding - basic 10,984 10,023 10,373 10,017 10,021
Weighted average
common shares
outstanding -
diluted (5) 10,984 10,023 10,373 10,017 10,021
Common book
value per share
at period end $14.82 $33.97 $14.82 $33.97 $17.83
Tangible common book
value per share at
period end $13.29 $15.64 $13.29 $15.64 $15.74
Preferred shares
outstanding at
period end 69 - 69 - 69
Common shares
outstanding at
period end 11,624 10,064 11,624 10,064 10,075
Performance Ratios and
Other Data:
Return on average
assets(1) 0.11% (0.85)% (0.36)% (0.22)% (5.42)%
Return on average
tangible assets(1) 0.11 (0.90) (0.36) (0.24) (5.78)
Return on
average
stockholders'
equity(1) 1.44 (7.44) (4.54) (1.90) (46.58)
Return on average
tangible equity(1) 1.55 (15.88) (4.93) (4.04) (99.05)
Net interest
margin(1)(2)(3) 3.36 3.33 3.23 3.26 3.27
Net interest
spread(1)(3)(4) 3.17 3.16 3.04 3.03 3.06
Average loan to
average
deposit ratio 97.18 98.38 97.22 96.79 97.50
Average interest-
earning assets
to average
interest-bearing
liabilities 107.76 105.69 107.62 106.59 106.38
Intangible assets -
goodwill $- $162,390 $- $162,390 $-
- core deposit
intangible
("CDI")
and other
intangibles 17,784 22,052 17,784 22,052 21,052
Assets Quality Ratios:
Nonaccrual loans $143,507 $51,451 $143,507 $51,451 $54,712
Accruing loans
90 days or more
delinquent 9,102 8,268 9,102 8,268 8,033
Other real estate
owned and
repossessed assets 42,764 24,787 42,764 24,787 20,303
Total
nonperforming
assets ("NPAs") 195,373 84,506 195,373 84,506 83,048
Restructured
loans, not
included in total
NPAs 21,743 1,818 21,743 1,818 2,643
Net loan charge-offs 4,336 1,877 9,115 5,341 7,130
Allowance for loan
losses to
nonperforming loans 22.50% 46.33% 22.50% 46.33% 45.98%
Allowance for loan
losses to loans,
net of unearned
income 1.41% 1.25% 1.41% 1.25% 1.25%
NPA to loans plus
NPAs, net of
unearned income 7.89% 3.77% 7.89% 3.77% 3.56%
NPAs to total assets 6.06% 2.72% 6.06% 2.72% 2.72%
Net loan charge-
offs to average
loans(1) 0.71% 0.34% 0.51% 0.34% 0.33%
Net loan charge-
offs as a
percentage of:
Provision for
loan losses 83.90% 81.48% 62.43% 52.66% 54.38%
Allowance for
loan losses(1) 50.10% 27.00% 35.36% 25.78% 24.71%
(1)- Annualized for the three and nine-month periods ended September 30,
2009 and 2008.
(2)- Net interest income divided by average earning assets.
(3)- Calculated on a taxable equivalent basis.
(4)- Yield on average interest-earning assets less rate on average
interest-bearing liabilities.
(5)- Common stock equivalents of 67,422 and 73,825, and 92,086 and 55,494
shares were not included in computing diluted earnings per share for
the three and nine-month periods ending September 30, 2009 and 2008,
respectively, and 65,226 shares for the year ended December 31, 2008
because their effects were antidilutive.
SOURCE Superior Bancorp
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