Attached files
| file | filename |
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| 8-K - SUPERIOR BANCORP | v201023_8k.htm |
| EX-10.3 - SUPERIOR BANCORP | v201023_ex10-3.htm |
| EX-10.1 - SUPERIOR BANCORP | v201023_ex10-1.htm |
| EX-99.1 - SUPERIOR BANCORP | v201023_ex99-1.htm |
| EX-10.2 - SUPERIOR BANCORP | v201023_ex10-2.htm |
UNITED
STATES OF AMERICA
Before
the
OFFICE
OF THRIFT SUPERVISION
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In
the Matter of
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Order
No.: SE-10-048
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SUPERIOR
BANCORP
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Effective
Date: November 2, 2010
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Birmingham,
Alabama
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OTS
Docket No. H4235
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ORDER TO CEASE AND
DESIST
WHEREAS, Superior Bancorp,
Birmingham, Alabama, OTS Docket No. H4235 (Holding Company), by and through its
Board of Directors (Board), has executed a Stipulation and Consent to Issuance
of Order to Cease and Desist (Stipulation); and
WHEREAS, the Holding
Company, by
executing the Stipulation, has consented and agreed to the issuance of this
Order to Cease and Desist (Order) by the Office of Thrift Supervision (OTS)
pursuant to 12 U.S.C. § 1818(b); and
WHEREAS, pursuant to delegated
authority, the OTS Regional Director for the Southeast Region (Regional
Director) is authorized to issue Orders to Cease and Desist where a savings and
loan holding company has consented to the issuance of an order.
Superior
Bancorp
Order to
Cease and Desist
Page 1 of
12
NOW, THEREFORE, IT IS ORDERED
that:
Cease and
Desist.
1. The
Holding Company, its institution-affiliated parties,1 and its successors and
assigns, shall cease and desist from any action (alone or with others) for or
toward causing, bringing about, participating in, counseling, or the aiding and
abetting the unsafe or unsound banking practices that resulted in:
(a) operating
with insufficient liquidity to meet debt obligations;
(b) operating
its wholly owned savings association subsidiary, Superior Bank, Tampa, Florida,
OTS # 18010 (Association), with an inadequate level of capital protection for
the volume, type and quality of assets held by the Association;
(c) operating
the Association with inadequate earnings to augment capital and support
reserves;
(d) operating
the Association with an excessive level of adversely classified loans and
assets; and
(e) operating
the Association with an excessive concentration of commercial real estate and
construction loans.
Capital
Plan.
2. Within
sixty (60) days, the Holding Company shall submit for Regional Director review
and non-objection a written plan to maintain and enhance the capital of the
Holding Company and the Association and to ensure that the Association complies
with the capital requirements imposed by the Order to Cease and Desist issued by
the OTS effective November 2, 2010 (Capital Plan). The Capital Plan
shall:
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(a)
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address
the requirements and restrictions imposed by this
Order;
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1 The term
“institution-affiliated party” is defined at 12 U.S.C. §
1813(u).
Superior
Bancorp
Order to
Cease and Desist
Page 2 of
12
(b) identify
the specific sources of additional capital and the timeframes and methods by
which additional capital will be raised and infused into the Association, if
necessary, including specific target dates and capital levels;
(c) establish
an alternative strategy including, but not limited to, seeking a merger or
acquisition partner for the Holding Company and/or the Association, to be
implemented immediately if the Holding Company’s primary strategy to raise and
infuse additional capital is unsuccessful; and
(d) require
the Board to review, on a monthly basis, the Holding Company’s compliance with
its Capital Plan and the Association’s compliance with its Capital
Plan.
3. Upon
receipt of written non-objection from the Regional Director, the Holding Company
shall implement and adhere to the Capital Plan. A copy of the Capital
Plan and the Board meeting minutes reflecting the Board’s adoption thereof shall
be provided to the Regional Director within twenty (20) days after the Board
meeting.
Business
Plan.
4. Within
sixty (60) days , the Holding Company shall submit a comprehensive business plan
for the remainder of calendar year 2010 and calendar years 2011 and 2012 (Business Plan) to the
Regional Director for review and non-objection. Thereafter, the
Holding Company shall submit an updated three year Business Plan at least ninety
(90) days prior to the end of each calendar year. At a minimum, the
Business Plan shall conform to applicable laws, regulations and regulatory
guidance and include:
(a) plans
to improve the Holding Company’s core earnings, reduce expenses, and achieve
profitability on a consistent basis throughout the term of the Business
Plan;
Superior
Bancorp
Order to
Cease and Desist
Page 3 of
12
(b) strategies
for ensuring that the Holding Company has the financial and personnel resources
necessary to implement and adhere to the Business Plan, adequately support the
Holding Company’s risk profile, maintain compliance with applicable regulatory
requirements, and comply with this Order;
(c) quarterly
pro forma financial projections (balance sheet, regulatory capital ratios, and
income statement) for each quarter covered by the Business Plan;
and
(d) identification
of all relevant assumptions made in formulating the Business Plan and a
requirement that documentation supporting such assumptions be retained by the
Holding Company.
5. Upon
receipt of written notice of non-objection from the Regional Director, the
Holding Company shall implement and adhere to the Business Plan. A
copy of the Business Plan and the Board meeting minutes reflecting the Board’s
adoption thereof shall be provided to the Regional Director within twenty (20)
days after the Board meeting.
6. Any
material modifications2 to the Business Plan must
receive the prior written non-objection of the Regional Director. The
Holding Company shall submit proposed material modifications to the Regional
Director at least forty-five (45) days prior to implementation.
7. Within
thirty (30) days after the end of each quarter, after implementation of the
Business Plan, the Board shall review quarterly variance reports on the Holding
Company’s compliance with the Business Plan (Variance Reports). The
Variance Reports shall:
2 A
modification shall be considered material under this Section of the Order if the
Holding Company plans to: (a) engage in any activity that is inconsistent with
the Business Plan; or (b) exceed the level of any activity contemplated in the
Business Plan or fail to meet target amounts established in the Business Plan by
more than ten percent (10%), unless the activity involves assets risk-weighted
fifty percent (50%) or less, in which case a variance of more than twenty-five
percent (25%) shall be deemed to be a material modification.
Superior
Bancorp
Order to
Cease and Desist
Page 4 of
12
(a) identify
variances in the Holding Company’s actual performance during the preceding
quarter as compared to the projections set forth in the Business
Plan;
(b) contain
an analysis and explanation of identified variances; and
(c) discuss
the specific measures taken or to be taken to address
identified variances.
8. A
copy of the Variance Reports and Board meeting minutes shall be provided to the
Regional Director within twenty (20) days after the Board meeting.
Association
Oversight.
9. Effective
immediately, the Holding Company shall ensure the Association’s compliance with
applicable laws, rules, regulations, and agency guidance and the terms of the
Order to Cease and Desist issued by the OTS against the Association on November
2, 2010.
Enterprise Risk
Management.
10. Within
sixty (60) days, the Holding Company shall revise the Enterprise Risk Management
Plan to address deficiencies and weaknesses noted in the April 26, 2010
examination (2010 Examination). The Enterprise Risk Management Plan
shall, at a minimum:
(a)
require the development and adoption of policies and procedure that ensure that
risk considerations are factored into decision-making ;
(b)
require the development of strong risk management, audit,
and compliance functions that are separate and independent from the operating
and lending functions; and
(c)
provide for monitoring the strength of controls and the
adequacy of management’s adherence to policies, controls, and regulations, and
making all necessary adjustments.
Superior
Bancorp
Order to
Cease and Desist
Page 5 of
12
Management Assessment
Report.
11. Within
ninety (90) days, the Holding Company shall submit to the Regional Director for
review a written assessment of the Holding Company’s board and management
structure prepared by an independent third-party (Management
Study). The Management Study shall address the adequacy
and suitability of the Holding Company’s management (at both
board and executive levels) for the size, complexity, operations and risk
profile of the Holding Company , and specifically address the management and
staffing of the Holding Company enterprise risk management
functions. The Management Study shall address the requirements
imposed by this Order and shall evaluate and determine responsibility for the
strategic decisions made to grow the Association and increase the Association’s
loan portfolios.
12. Within
sixty (60) days of receipt of the Management Study, the Holding Company shall
implement all recommendations of the Management Study or, within the same
timeframe, provide the Regional Director with a detailed written explanation for
each recommendation that was rejected by the Holding Company.
Dividends.
13. Effective
immediately, the Holding Company shall neither accept nor request that the
Association make or pay any dividends or other capital distributions, as that
term is defined in 12 C.F.R. § 563.141, or commit to make or pay dividends or
any other capital distributions, without receiving the prior written
non-objection of the Regional Director. The Holding Company’s written
request for non-objection shall be submitted to the Regional Director at least
forty-five (45) days prior to the anticipated date of the proposed dividend
payment or distribution of capital.
14. Effective
immediately, the Holding Company shall not declare or pay any dividends or other
capital distributions, as that term is defined in 12 C.F.R. § 563.141, without
the prior written non-objection of the Regional Director. The Holding
Company’s written request for non-objection shall be submitted to the Regional
Director at least forty-five (45) days prior to the anticipated date of the
proposed dividend payment or distribution of capital.
Superior
Bancorp
Order to
Cease and Desist
Page 6 of
12
Debt
Limitations.
15. Effective
immediately, the Holding Company shall not: (a) incur, issue, renew, repay, or
rollover any debt,3
increase any current lines of credit, or otherwise incur any additional debt
without receiving the prior written non-objection of the Regional Director; or
(b) authorize or permit any subsidiary of the Holding Company to incur, issue,
renew, repay, or rollover any debt, increase any current lines of credit, or
otherwise incur any additional debt without receiving the prior written
non-objection of the Regional Director. All written requests to the
Regional Director shall include, at a minimum: a statement regarding the purpose
of the debt; a copy of the debt agreement; the planned source(s) for debt
repayment; and an analysis of the cash flow resources available to meet such
debt repayment. The Holding Company’s written request for
non-objection shall be submitted to the Regional Director at least forty-five
(45) days prior to the anticipated date of the proposed debt issuance, renewal,
or rollover; the proposed increase in any current lines of credit; the proposed
guarantee of the debt of any entity; or any other incurrence of additional
debt.
3 For purposes of this Paragraph of the
Order, the term “debt” includes, but is not limited to: loans, bonds, cumulative
preferred stock, hybrid capital instruments such as subordinated debt or trust
preferred securities, and guarantees of debt; and does not include: liabilities
that are incurred in the ordinary course of business to acquire goods and
services and that are normally recorded as accounts payable under generally
accepted accounting principles.
Superior
Bancorp
Order to
Cease and Desist
Page 7 of
12
Directorate and Management
Changes.
16. Effective
immediately, the Holding Company shall comply with the prior notification
requirements for changes in directors and Senior Executive Officers4 set forth in 12 C.F.R.
Part 563, Subpart H.
Employment Contracts and
Compensation Arrangements.
17. Effective
immediately, the Holding Company shall not enter into, renew, extend or revise
any contractual arrangement relating to compensation or benefits for any Senior
Executive Officer or director of the Holding Company, unless it first provides
the Regional Director with not less than forty-five (45) days prior written
notice of the proposed transaction. The notice to the Regional
Director shall include a copy of the proposed employment contract or
compensation arrangement or a detailed, written description of the compensation
arrangement to be offered to such officer or director, including all benefits
and perquisites. The Board shall ensure that any contract, agreement
or arrangement submitted to the Regional Director fully complies with the
requirements of 12 C.F.R. Part 359, 12 C.F.R. §§ 563.39 and 563.161(b), 12
C.F.R. Part 570 – Appendix A, and the Interagency Guidance on Sound Incentive
Compensation Policies contained in OTS Chief Executive Officer Memorandum No.
354.
Golden Parachute and
Indemnification Payments.
18. Effective
immediately, the Holding Company shall not make any golden parachute
payment5 or
prohibited indemnification payment6 unless, with respect to
each such payment, the Holding Company has complied with the requirements of 12
C.F.R. Part 359.
6 The term
“prohibited indemnification payment” is defined at 12 C.F.R. §
359.1(l).
Superior
Bancorp
Order to
Cease and Desist
Page 8 of
12
Third Party
Contracts.
19. Effective
immediately, the Holding Company shall not enter into any arrangement or
contract with a third party service provider that is significant to the overall
operation or financial condition of the Holding Company7 or outside the Holding
Company’s normal course of business unless, with respect to each such contract,
the Holding Company has: (a) provided the Regional Director with a minimum of
forty-five (45) days prior written notice of such arrangement or contract and a
written determination that the arrangement or contract complies with the
standards and guidelines set forth in Thrift Bulletin 82a (TB 82a); and (b)
received written notice of non-objection from the Regional
Director.
20. Effective
immediately, the Holding Company shall provide the Regional Director with
written notice of all arrangements or contracts with third party service
providers consistent with the requirements of 12 U.S.C. §
1464(d)(7)(D)(ii). Such notice shall be provided to the Regional
Director not later than forty-five (45) days after the earlier of: (a) the date
on which the Holding Company enters into the contract; or (b) the date on which
the performance of the service is initiated. The Board shall review
all arrangements or contracts with third party service providers covered by this
Paragraph to ensure compliance with the standards and guidelines set forth in TB
82a.
Board Oversight of
Compliance with Order.
21. Within
thirty (30) days, the Board shall designate a committee to monitor and
coordinate the Holding Company’s compliance with the provisions of this Order
(Compliance Committee). The Compliance Committee shall be comprised
of three (3) or more directors, the majority of whom shall be independent8 directors.
7 A
contract will be considered significant to the overall operation or financial
condition of the Holding Company where the annual contract amount equals or
exceeds two percent (2%) of the Holding Company’s total capital, where there is
a foreign service provider, or where it involves information technology that is
critical to the Holding Company’s daily operations without regard to the
contract amount.
8 For
purposes of this Order, an individual who is “independent” with respect to the
Holding Company shall be any individual who:
(a) is not
employed in any capacity by the Holding Company, its subsidiaries, or its
affiliates, other than as a director;
(b) does not
own or control more than ten percent (10%) of the outstanding shares of the
Holding Company or any of its affiliates;
(c) is not
related by blood or marriage to any officer or director of the Holding Company
or any of its affiliates, or to any shareholder owning more than ten percent
(10%) of the outstanding shares of the Holding Company or any of its affiliates,
and who does not otherwise share a common financial interest with any such
officer, director or shareholder;
(d) is not
indebted, directly or indirectly, to the Holding Company or any of its
affiliates, including the indebtedness of any entity in which the individual has
a substantial financial interest, in an amount exceeding 10 percent (10%) of the
Association’s total Tier 1 (Core) capital; and
(e) has not
served as a consultant, advisor, underwriter, or legal counsel to the Holding
Company or any of its affiliates.
Superior
Bancorp
Order to
Cease and Desist
Page 9
of 12
22. Within thirty (30) days after the end of each quarter, beginning with the quarter ending December 31, 2010, the Oversight Committee shall submit a written compliance progress report to the Board (Compliance Tracking Report). The Compliance Tracking Report shall, at a minimum:
(a) separately
list each corrective action required by this Order;
(b) identify
the required or anticipated completion date for each corrective action;
and
(c) discuss
the current status of each corrective action, including the action(s) taken or
to be taken to comply with each corrective action.
23. Within
forty-five (45) days after the end of each quarter, beginning with the quarter
ending December 31, 2010, the Board shall review the Compliance Tracking
Report and all reports required to prepared by this Order. Following
its review, the Board shall adopt a resolution: (a) certifying that each
director has reviewed the Compliance Tracking Report and all required reports;
and (b) documenting any corrective actions adopted by the Board. A
copy of the Compliance Tracking Report and the Board resolution shall be
provided to the Regional Director within ten (10) days after the Board
meeting.
Superior
Bancorp
Order to
Cease and Desist
Page 10
of 12
Effective Date,
Incorporation of Stipulation.
24. This
Order is effective on the Effective Date as shown on the first
page. The Stipulation is made a part hereof and is incorporated
herein by this reference.
Duration.
25. This
Order shall remain in effect until terminated, modified, or suspended by written
notice of such action by the OTS, acting by and through its authorized
representatives.
Time
Calculations.
26. Calculation
of time limitations for compliance with the terms of this Order run from the
Effective Date and shall be based on calendar days, unless otherwise
noted.
27. The
Regional Director, or an OTS authorized representative, may extend any of the
deadlines set forth in the provisions of this Order upon written request by the
Holding Company that includes reasons in support for any such
extension. Any OTS extension shall be made in writing.
Submissions and
Notices.
28. All
submissions, including any reports, to the OTS that are required by or
contemplated by this Order shall be submitted within the specified
timeframes.
29. Except
as otherwise provided herein, all submissions, requests, communications,
consents, or other documents relating to this Order shall be in writing and sent
by first class U.S. mail (or by reputable overnight carrier, electronic
facsimile transmission, or hand delivery by messenger) addressed as
follows:
Superior
Bancorp
Order to
Cease and Desist
Page 11
of 12
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(a)
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To
the OTS:
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Regional Director
Office of
Thrift Supervision
1475
Peachtree St., NE
Atlanta,
Georgia 30309
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(b)
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To
the Holding Company:
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c/o C.
Stanley Bailey, Chairman
Superior
Bancorp
17 North
20th
Street
Birmingham,
Alabama 35203
No Violations
Authorized.
30. Nothing
in this Order or the Stipulation shall be construed as allowing the Holding
Company, its Board, officers, or employees to violate any law, rule, or
regulation.
IT
IS SO ORDERED.
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OFFICE
OF THRIFT SUPERVISION
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By:
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/s/ James G. Price
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James
G. Price
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Regional
Director, Southeast Region
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Date:
See Effective Date on page
1
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Superior
Bancorp
Order to
Cease and Desist
Page 12
of 12