SUPERIOR BANCORP
 

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
AMENDMENT NO. 1 TO
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): August 31, 2006
SUPERIOR BANCORP
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
         
0-25033       63-1201350
(Commission File Number)       (IRS Employer Identification No.)
         
17 North 20th Street, Birmingham, Alabama
(Address of Principal Executive Offices) 		      35203
(Zip Code)
(205) 327-1400
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:
o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425
 
o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

 

 

Section 2 — Financial Information
Item 2.01. Completion of Acquisition or Disposition of Assets.
     On August 31, 2006, Superior Bancorp completed the acquisition of Kensington Bankshares, Inc., which was merged with and into Superior Bancorp. As a result of the merger, Superior Bancorp will operate the 12 banking locations in the State of Florida previously owned by Kensington Bankshares. The combination of the two community bank holding companies creates a banking franchise totaling $1.8 billion in assets that serves its customers through 38 banking offices from Huntsville, Alabama to Tampa, Florida.
     As a result of the merger, Kensington Bankshares shareholders will receive 1.60 shares of Superior Bancorp common stock for each share of Kensington Bankshares stock they own. Based on Superior Bancorp’s closing share price on August 31, the total value of the merger is $72.6 million.
     Prior to completion of the merger, there were no material relationships among Superior Bancorp or any of its affiliates and Kensington Bankshares or any of its affiliates except in respect of the merger.
     This Amendment No. 1 to Current Report on Form 8-K is being filed to include the pro forma financial information described under Item 9.01(b) below.
Section 7 — Regulation FD
Item 7.01. Regulation FD Disclosure.
     On August 31, 2006, Superior Bancorp issued a press release announcing the completion of the Kensington Bankshares merger. The text of the press release is attached to this report as Exhibit 99. This information is furnished pursuant to Item 7.01 of Form 8-K and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, unless we specifically incorporate it by reference in a documents filed under the Securities Act of 1933 or the Securities Exchange Act of 1934. By filing this report on Form 8-K and furnishing this information, we make no admission as to the materiality of any information in this report that is required to be disclosed solely by reason of Regulation FD.

 

 

Section 9 — Financial Statements and Exhibits
Item 9.01. Financial Statements and Exhibits.
     (a)   Financial Statements of businesses acquired
     The financial statements of Kensington Bankshares, Inc. required by Item 9.01(a) of Form 8-K have been filed under Item 7 of Kensington Bankshares, Inc.’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 2005 and Part I, Item 1 of Kensington Bankshares, Inc.’s Quarterly Report on Form 10-QSB for the quarterly period ended June 30, 2006 (Commission File No. 2-78572) and are hereby incorporated herein by reference.
     (b)   Pro Forma Financial Information
     The pro forma financial information required by Item 9.01(b) of Form 8-K is included in this Amendment No. 1 on Form 8-K/A to Current Report on Form 8-K immediately following the signature page hereto.
     (c)   Exhibits
         
 
  Exhibit 2   Agreement and Plan of Merger between Kensington Bankshares, Inc. and The Banc Corporation, dated March 6, 2006, filed as Exhibit 10 to The Banc Corporation’s Current Report on Form 8-K dated March 6, 2006, is hereby incorporated herein by reference.
 
        
 
  Exhibit 99   Press Release of Superior Bancorp dated August 31, 2006, filed as Exhibit 99 to Superior Bancorp’s Current Report on Form 8-K dated August 31, 2006, is hereby incorporated herein by reference.

 

 

SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 on Form 8-K/A to Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.
         
    SUPERIOR BANCORP
 
        
Date: October 31, 2006
  By:   /s/Rick D. Gardner
 
       
 
      Rick D. Gardner
 
      Chief Operating Officer

 

 

UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
     The following unaudited pro forma condensed consolidated financial information is based on the historical financial statements of Superior Bancorp and Kensington Bankshares and has been prepared to illustrate the effects of the merger of Kensington Bankshares with and into Superior Bancorp. The unaudited pro forma condensed consolidated statement of financial condition as of June 30, 2006 and the unaudited pro forma condensed consolidated statements of operations for the six months ended June 30, 2006 and for the year ended December 31, 2005 give effect to this merger, accounted for under the purchase method of accounting.
     The unaudited pro forma condensed consolidated statement of operations for the six months ended June 30, 2006 has been derived from the unaudited interim financial statements of Superior Bancorp and Kensington Bankshares included or incorporated by reference in the reports filed by such companies with the Securities and Exchange Commission. The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2005 is based on the audited financial statements of Superior Bancorp and Kensington Bankshares included or incorporated by reference in such reports. These unaudited pro forma condensed consolidated statements of operations give effect to the transaction as if it had been consummated as of January 1, 2005. The unaudited pro forma condensed consolidated financial statements do not give effect to any anticipated cost savings or revenue enhancements in connection with the transaction.
     The unaudited pro forma condensed consolidated financial statements should be considered together with the historical financial statements of Superior Bancorp and Kensington Bankshares, including the respective notes to those statements, included or incorporated by reference in the reports filed by such companies with the SEC. The pro forma information is based on certain assumptions described in the accompanying Note to Unaudited Condensed Consolidated Pro Forma Financial Information and does not necessarily indicate the consolidated financial position or the results of operations in the future or the consolidated financial position or the results of operations that would have been realized had the merger transaction been consummated during the periods or as of the date for which the pro forma information is presented.

 

 

Superior Bancorp and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statement of Financial Condition
As of June 30, 2006
                                         
    Historical                      
                    Pro Forma                
            Kensington     Acquisition                
    Superior Bancorp     Bankshares     Adjustments             Pro Forma Combined  
    (In thousands, except per share data)  
Assets
                                        
Cash and due from banks
   $ 22,712     $ 3,721     $ (1,447 )     b     $ 24,886  
 
                     (100 )     c          
Interest bearing deposits in other banks
     5,191       —       —               5,191  
Federal funds sold
     9,055       7,355       —               16,410  
Investment securities
     233,554       184,132       (6,189 )     b       411,497  
Tax lien certificates
     6,054       —       —               6,054  
Mortgage loans held for sale
     23,142       —       —               23,142  
Loans, net of unearned income
     1,080,713       136,414       (492 )     b       1,216,635  
Less: Allowance for loan losses
     (12,311 )     (1,011 )     —               (13,322 )
                   
Net loans
     1,068,402       135,403       (492 )             1,203,313  
                   
Premises and equipment, net
     59,452       5,798       (160 )     b       65,090  
Accrued interest receivable
     7,593       2,660       —               10,253  
Stock in FHLB
     11,847       —       —               11,847  
Cash surrender value of life insurance
     39,841       —       —               39,841  
Goodwill and intangible assets
     11,998       —       3,500       b       60,993  
 
                     45,495       b          
Other assets
     32,386       833       1,945       b       35,164  
                   
Total assets
   $ 1,531,227     $ 339,902     $ 42,552             $ 1,913,681  
                   
 
                                        
Liabilities and Stockholders’ Equity
                                        
Deposits
   $ 1,140,265     $ 279,088     $ (968 )     b     $ 1,418,385  
Advances from FHLB
     201,090       —       —       b       201,090  
Federal funds borrowed and security repurchase agreements
     30,975       30,696       —               61,671  
Long-term debt
     3,650       —       —               3,650  
Junior subordinated debentures owed to unconsolidated subsidiary trusts
     31,959       —       —               31,959  
Accrued expenses and other liabilities
     17,358       1,394       1,010       b       19,762  
                   
Total liabilities
     1,425,297       311,178       42               1,736,517  
 
                                        
Stockholders’ Equity
                                        
Common stock
     20       37       (37 )     a       26  
 
                     6       b          
Surplus
     88,986       21,112       7,612       a       160,214  
 
                     42,604       b          
 
                     (100 )     c          
Retained earnings
     23,618       7,575       (7,575 )     a       23,618  
Accumulated other comprehensive loss
     (4,949 )     —       —               (4,949 )
Treasury stock, at cost
     (310 )     —       —               (310 )
Unearned ESOP stock
     (1,435 )     —       —               (1,435 )
                   
Total stockholders’ equity
     105,930       28,724       42,510               177,164  
                   
 
                                        
Total liabilities and stockholders’ equity
   $ 1,531,227     $ 339,902     $ 42,552             $ 1,913,681  
                   
 
                                        
Number of common shares outstanding
     20,171       3,711       6,230       b       26,401  
                   
Total book value per common share
   $ 5.25     $ 7.74                     $ 6.71  
                           
Tangible book value per common share
   $ 4.66     $ 7.74                     $ 4.40  
                           
 
                                        
Equivalent pro forma book value per common share for Superior common shares exchanged for Kensington Bankshares common shares
                                   $ 10.74  
 
                                      
 
                                        
a — To eliminate equity of Kensington Bankshares.
 
                                        
b — To record issuance of common stock and cash payments to purchase 100% of Kensington Bankshares; to record assets acquired and liabilities assumed at their estimated fair market values and related merger and transaction costs. See Note 1 to Unaudited Proforma Condensed Consolidated Financial Information for detail.
 
                                        
c — To record estimated direct costs of issuing common stock.
 
                                        
Professional fees
   $ 50                                  
Printing costs
     50                                  
 
                                      
 
   $ 100                                  
 
                                      

 

 

Superior Bancorp and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Six-Months Ended June 30, 2006
                                         
    Historical                      
                    Pro Forma                
            Kensington     Acquisition             Pro Forma  
    Superior Bancorp     Bankshares     Adjustments             Combined  
    (In thousands, except per share data)  
 
                                        
Interest income
   $ 45,257     $ 9,901     $ 701       a     $ 55,821  
 
                     (38 )     d          
Interest expense
     24,841       5,076       —               29,917  
                   
 
                                        
Net interest income
     20,416       4,825       663               25,904  
 
                                        
Provision for loan losses
     1,300       —       —               1,300  
                   
 
                                        
Net interest income after provision for loan losses
     19,116       4,825       663               24,604  
 
                                        
Noninterest income
     5,329       169       —               5,498  
 
                                        
Noninterest expenses
                                        
Salaries and employee benefits
     11,671       1,509       —               13,180  
Occupancy, furniture and equipment expense
     3,586       552       (16 )     f       4,122  
Other operating expenses
     6,208       925       375       b       7,508  
                   
 
                                        
Noninterest expenses
     21,465       2,986       359               24,810  
                   
 
                                        
Income before income taxes
     2,980       2,008       304               5,292  
 
                                        
Income tax expense
     856       710       112       c       1,678  
                   
 
                                        
Net income
   $ 2,124     $ 1,298     $ 192             $ 3,614  
                   
 
                                        
Basic net income per common share
   $ 0.11     $ 0.35                     $ 0.14  
                           
Diluted net income per common share
   $ 0.10     $ 0.35                     $ 0.13  
                           
 
                                        
Weighted average common shares outstanding
     20,073       3,711       6,230       e       26,303  
                   
Weighted average common shares outstanding, assuming dilution
     20,716       3,725       6,230       e       26,946  
                   
 
                                        
 
                                        
Pro forma equivalent net income per common share for Superior common shares exchanged for Kensington Bankshares common shares
Basic
                                   $ 0.22  
 
                                      
Diluted
                                   $ 0.21  
 
                                      
 
                                        
a — To record amortization of fair value adjustment of loans and investments over a 3 to 5 year period using straight-line and accelerated methods which approximate the interest method.
 
                                        
b — To record amortization of core deposit intangible over a 7 year period using an accelerated method.
                                         
    Amortization            
 
   Year 1           $ 875                  
 
   Year 2             750                  
 
   Year 3             625                  
 
   Year 4             500                  
 
   Year 5             375                  
 
   Year 6             250                  
 
   Year 7             125                  
                             
 
                   $ 3,500                  
                             
 
                                        
c — To record the tax effect of adjustments at a 37% marginal tax rate.
 
                                        
d — Adjust interest income for loss of earnings due to cash payments at the federal funds rate of 5%.
 
                                        
e — Common stock issued to acquire Kensington Bankshares.
 
                                        
f — To record reduction in depreciation expense related to decrease in carrying value of equipment and software:

 

 

Superior Bancorp and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 2005
                                         
    Historical                      
                    Pro Forma                
            Kensington     Acquisition             Pro Forma  
    Superior Bancorp     Bankshares     Adjustments             Combined  
    (In thousands, except per share data)                  
Interest income
   $ 77,280     $ 16,058     $ 1,484       a     $ 94,745  
 
                     (77 )     e          
 
                                        
Interest expense
     38,255       6,247       968       b       45,470  
                   
 
                                        
Net interest income
     39,025       9,811       439               49,275  
 
                                        
Provision for loan losses
     3,500       —       —               3,500  
                   
 
                                        
Net interest income after provision for loan losses
     35,525       9,811       439               45,775  
 
                                        
Noninterest income
     14,697       257       —               14,954  
 
                                        
Noninterest expenses
                                        
Salaries and employee benefits
     23,104       3,017       —               26,121  
Occupancy, furniture and equipment expense
     7,680       1,330       (32 )     g       8,978  
Management separation costs
     15,467       —       —               15,467  
Other operating expenses
     14,369       1,083       875       c       16,327  
                   
 
                                        
Noninterest expenses
     60,620       5,430       843               66,893  
                   
 
                                        
Income (loss) before income taxes
     (10,398 )     4,638       (404 )             (6,164 )
 
                                        
Income tax expense (benefit)
     (4,612 )     1,758       (149 )     d       (3,003 )
                   
 
                                        
Net income (loss)
     (5,786 )     2,880       (255 )             (3,161 )
Preferred stock dividends
     305       —       —               305  
Effect of early conversion of preferred stock
     2,006       —       —               2,006  
                   
Net income (loss) available to common shareholders
   $ (8,097 )   $ 2,880     $ (255 )           $ (5,472 )
                   
 
                                        
Basic net income (loss) per common share
   $ (0.42 )   $ 0.78                     $ (0.22 )
                           
Diluted net income (loss) per common share
   $ (0.42 )   $ 0.78                     $ (0.22 )
                           
 
                                        
Weighted average common shares outstanding
     19,154       3,710       6,230       f       25,384  
                   
Weighted average common shares outstanding, assuming dilution
     19,154       3,710       6,230       f       25,384  
                   
 
                                        
Pro forma equivalent net loss per common share for Superior common shares exchanged for Kensington Bankshares common shares
 
                                        
Basic
                                   $ (0.35 )
 
                                      
Diluted
                                   $ (0.35 )
 
                                      
 
                                        
a — To record amortization of fair value adjustment of loans and investments over a 3 to 5 year period using straight-line and accelerated methods which approximate the interest method.
 
                                        
b — To record amortization of fair value adjustment of deposits over a 1 year period using an accelerated method which approximates the interest method.
 
                                        
c — To record amortization of core deposit intangible over a 7 year period using an accelerated method.
 
                                        
d — To record the tax effect of adjustments at a 37% marginal tax rate.
 
                                        
e — Adjust interest income for loss of earnings due to cash payments at the federal funds rate of 5%.
 
                                        
f — Common stock issued to acquire Kensington Bankshares.
 
                                        
g — To record reduction in depreciation expense related to decrease in carrying value of equipment and software:

 

 

Note 1 — Unaudited Pro Forma Condensed Consolidated Financial Information
                 
(In thousands, except per share data)
                
 
                
Pro forma outstanding shares of acquired corporation
     3,711          
Exchange ratio per merger agreement
     1.6000          
 
              
Superior Bancorp shares to be issued for outstanding shares
     5,938          
Superior Bancorp shares to be issued for outstanding options
     292       b  
 
              
Total Superior Bancorp shares to be issued
     6,230          
Fair value of Superior Bancorp stock
   $ 11.45       a  
 
              
Fair value of stock to be issued
   $ 71,334          
Pro forma transaction costs
     528       c  
 
              
Total pro forma purchase price
     71,862          
 
              
 
                
Net assets of acquired corporation per historical financial statements
     28,724          
 
                
Increase (decrease) in net assets to be acquired to reflect certain pro forma premerger transactions
                
Merger costs
     (919 )     d  
 
              
 
                
Pro forma net assets to be acquired
     27,805          
 
              
 
                
Purchase accounting adjustments to carrying value of asset or liability:(k)
                
Investments
     (6,189 )        
Loans
     (492 )        
Equipment and software
     (160 )        
Core deposit intangible
     3,500       e  
Other assets — Florida bank charter to be sold
     1,100          
Deposits
     968          
Contractual obligations
     (760 )     f  
Severance benefits
     (250 )        
Other assets — deferred income taxes
     845       g  
 
              
 
                
Net pro forma purchase accounting adjustments
     (1,438 )        
 
              
 
                
Goodwill
   $ 45,495          
 
              
 
                
a — Based on the closing stock price several days prior to and after the agreement was reached and announced.        
 
                
b — Pro forma amount of shares to be exchanged for Kensington’s Bankshares stock options.        
 
                
Per Option Value as defined in agreement
                
Dollar per option
   $ 18.288          
Less: Weighted average exercise price per option
     8.140          
 
              
Per Option Value
   $ 10.148          
 
                
Total stock options outstanding
     329          
 
              
 
                
Total stock options outstanding times Per Option Value
   $ 3,339          
Divided by per share amount per merger agreement
     11.43          
 
              
 
                
Total shares to be exchanged for options
     292          
 
              
 
                
c — The following pro forma merger costs are expected to be incurred by Superior Bancorp:        
 
                
Professional fees
   $ 150          
Investment banking
     267          
Consulting
     111          
 
              
 
                
 
   $ 528          
 
              
 
                
d — The following pro forma merger costs are expected to be incurred by Kensington Bankshares:        
 
                
Professional fees
   $ 163          
Investment banking
     756          
 
              
 
                
 
   $ 919          
 
              
 
                
e — Estimated to be approximately 4.0% of non-time deposits for Kensington Bankshares.        
 
                
f — Pro forma contractual obligations related to data processing.        
 
                
g — Assumes 37% marginal tax rate.        
 
                
h — These purchase accounting adjustments are preliminary estimates and are subject to change primarily as a result of changes in market interest rates.