SUPR Superior Bancorp (MM)

- Net income of $880,000 vs. $5.7 million loss in the second quarter 2009. - Deposits were up approximately 12% during 2009 to $2.6 billion. - Loans increased 5% during 2009 to $2.4 billion. - Net interest margin improved to 3.36%, up 15 basis points from the second quarter 2009. - Total Risk Based Capital increased to 11.27% from 11.07% in the second quarter. 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. DATASOURCE: Superior Bancorp CONTACT: Jim White, Chief Financial Officer, Superior Bancorp, +1-205-327-3656 Web Site: http://www.superiorbank.com/

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