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) |
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)) |
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 Corporations 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 Bancorps Current Report on Form 8-K dated August 31, 2006, is hereby incorporated herein by reference. |
SUPERIOR BANCORP | ||||
Date:
October 31, 2006
|
By: | /s/Rick D. Gardner | ||
Rick D. Gardner | ||||
Chief Operating Officer |
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 | |||||||||||||||||||
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: |
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: |
(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 Kensingtons 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. |