Intervest Bancshares Corporation (NASDAQ-GS: IBCA), parent
company of Intervest National Bank, today reported its 2011 fourth
quarter and full year financial results. Financial highlights for
the quarter follow.
- Net earnings for the fourth quarter of
2011 ("Q4-11") increased to $2.7 million, or $0.13 per diluted
common share, from $0.4 million, or $0.02 per share, for the fourth
quarter of 2010 ("Q4-10").
- Earnings before deducting provisions
for loan and real estate losses, real estate expenses, income taxes
and preferred dividend requirements amounted to $7.8 million in
Q4-11, compared to $6.6 million in Q4-10.
- Provisions for loan and real estate
losses decreased to $1.4 million in Q4-11, from $4.7 million in
Q4-10. The allowance for loan losses amounted to $30.4 million at
December 31, 2011 and represented 2.61% of total outstanding
loans.
- Net interest and dividend income was
$10.6 million in Q4-11, compared to $10.4 million in Q4-10. The net
interest margin improved to 2.22% in Q4-11, from 2.06% in
Q4-10.
- Noninterest expenses decreased to $3.8
million in Q4-11, from $4.9 million in Q4-10. The Company's
efficiency ratio, which is a measure of its ability to control
expenses as a percentage of its revenues, continues to be strong
and was 32% in Q4-11, compared to 42% in Q4-10.
- Nonaccrual loans and real estate owned
(REO) totaled $86 million at December 31, 2011, compared to $87
million at September 30, 2011 and $80 million at December 31, 2010.
Nonaccrual loans include certain restructured loans (TDRs) that are
current and performing in accordance with their renegotiated terms,
but are classified nonaccrual based on regulatory guidance. At
December 31, 2011, such loans totaled $46 million and were yielding
5.08%, compared to $37 million yielding 4.71% at September 30, 2011
and $21 million yielding 2.98% at December 31, 2010.
- Intervest National Bank's regulatory
capital ratios continue to be well above its minimum requirements.
At December 31, 2011, its actual ratios were as follows: Tier One
Leverage - 11.21%; Tier One Risk-Based - 16.06%; and Total
Risk-Based Capital - 17.33%, compared to its minimum requirements
of 9%, 10% and 12%, respectively. The Bank's Tier 1 capital
amounted to $218 million and was $43 million in excess of the
required minimum for its leverage ratio.
- Book value per common share increased
to $8.07 at December 31, 2011, from $7.61 at December 31,
2010.
Net earnings for Q4-11 increased by $2.3 million over Q4-10 due
to the following: a $3.3 million decrease in the total provision
for loan and real estate losses (resulting from fewer credit rating
downgrades on loans and writedowns of REO); a $1.1 million decrease
in noninterest expenses (reflecting decreases of $0.9 million in
FDIC premiums, $0.2 million in data processing costs and $0.2
million in professional fees, partially offset by a $0.2 million
increase in salaries and benefits); and a $0.2 million increase in
net interest and dividend income (as described below). The total of
these items was partially offset by a $2.0 million increase in
income tax expense (due to higher pre-tax income) and a $0.3
million increase in real estate expenses. The effective income tax
rate was 46% in Q4-11 and Q4-10.
The increase in net interest and dividend income over Q4-10
reflected a 16 basis point improvement in the net interest margin,
largely offset by a planned decrease in the Bank's assets and
liabilities as well as decreased lending opportunities due to
current economic conditions. In Q4-11, total average
interest-earning assets decreased by $108 million from Q4-10,
reflecting a $166 million decrease in loans, partially offset by a
$61 million increase in security investments. At the same time,
average deposits and borrowed funds decreased by $119 million and
$12 million, respectively, while average stockholders' equity
increased by $15 million. The decrease in assets positively
impacted the Bank's regulatory capital ratios.
The higher net interest margin was attributable to lower rates
paid on deposit accounts and the repayment of maturing higher-cost
brokered CDs and FHLB borrowings, largely offset by the decrease in
loans. Overall, the average cost of funds decreased by 41 basis
points to 2.62% in Q4-11, from 3.03% in Q4-10, while the yield on
average earning assets decreased at a slower pace by 26 basis
points to 4.63% in Q4-11, from 4.89% in Q4-10, due to payoffs of
higher yielding loans and calls of U.S. government agency security
investments due to declining interest rates, coupled with the
re-investment of a large portion of these cash inflows into
securities at lower market interest rates.
For 2011, net earnings were $9.5 million, or $0.45 per diluted
common share, compared to a net loss of $55.0 million, or $4.95 per
share, for 2010. The improvement was due to $108.6 million decrease
in the total provision for loan and real estate losses; a $2.5
million decrease in real estate expenses; a $2.2 million increase
in noninterest income (reflecting a $1.1 million increase in loan
prepayment income and a $1.0 million decrease in security
impairment writedowns); and a $3.2 million decrease in noninterest
expenses (reflecting decreases of $1.7 million in FDIC premiums,
$1.3 million in data processing costs and $0.7 million in
professional fees, partially offset by a $0.5 million increase in
salaries and benefits). The total of these items was partially
offset by a $2.1 million decrease in net interest and dividend
income and a $49.9 million increase in income tax expense (due to
pre-tax income of $21 million in 2011 versus a pre-tax loss of $94
million in 2010). The net loss in 2010 was primarily driven by a
bulk sale in May of nonperforming and underperforming assets as
discussed in prior releases. The assets sold aggregated to $207
million and consisted of $192 million of loans and $15 million of
REO. The assets were sold at a substantial discount to their net
carrying values. As a result of this transaction, a $79 million
combined provision for loan and real estate losses was recorded,
which after taxes contributed approximately $44 million, or 80%, to
the reported loss. At December 31, 2011, the Company had a deferred
tax asset totaling $38.8 million, which included remaining unused
NOL carryforwards of $34 million for Federal purposes and $66
million for state and local purposes. The NOLs, which arose from
the bulk sale, are available to reduce taxes payable on future
taxable income.
Total assets at December 31, 2011 decreased to $1.97 billion
from $2.07 billion at December 31, 2010, primarily reflecting a
decrease in loans, partially offset by an increase in security
investments. Loans totaled $1.16 billion at December 31, 2011, a
$174 million decrease from $1.34 billion at December 31, 2010. The
decrease reflected $243 million of principal repayments, $9.6
million of chargeoffs and $4.4 million of transfers to REO,
partially offset by $82 million of new loans. The loan portfolio is
comprised of commercial and multifamily real estate loans, and the
Company does not own or originate construction/development
loans.
Nonaccrual loans and REO aggregated to $86 million, or 4.3% of
total assets, at December 31, 2011, compared to $80 million, or
3.9%, at December 31, 2010. Nonaccrual loans totaled $57 million at
December 31, 2011 and $53 million at December 31, 2010 and included
$46 million (12 loans) and $21 million (6 loans) of TDRs that were
current at each date, respectively. All the TDRs classified as
nonaccrual have performed as agreed under their renegotiated terms
and interest income is being recorded on a cash basis. During 2011,
based on updated appraisals received on the underlying collateral
properties, a portion of seven TDRs (or $5.8 million of principal)
were charged off, although the borrowers remain obligated to pay
all contractual principal due.
The allowance for loan losses at December 31, 2011 was $30.4
million, representing 2.61% of total net loans, compared to $34.8
million, or 2.61%, at December 31, 2010. The allowance included
specific reserves for impaired loans (comprised of all nonaccrual
loans as well as accruing TDRs) at each date totaling $8.0 million
and $7.2 million, respectively.
Securities held to maturity increased by $86 million to $700
million at December 31, 2011 from $614 million at December 31,
2010. The growth in the portfolio was a function of decreased
lending opportunities. At December 31, 2011, the portfolio, which
represented 36% of total assets and comprised nearly all of U.S.
government agency debt securities, had a weighted-average yield to
earliest call date of 1.39% and a weighted-average remaining
contractual maturity of 5 years. The Bank invests in U.S.
government agency debt obligations to emphasize safety and
liquidity, and does not own or invest in collateralized debt
obligations, collateralized mortgage obligations or
derivatives.
Deposits at December 31, 2011 decreased to $1.66 billion from
$1.77 billion at December 31, 2010, primarily reflecting a $106
million decrease in CD accounts, of which $31 million were
brokered. Borrowed funds and related interest payable at December
31, 2011 decreased to $79 million, from $85 million at December 31,
2010, due to the maturity and repayment of $8 million of FHLB
borrowings, partially offset by a $2 million increase in accrued
interest payable on trust preferred securities. Since February
2010, as required by our regulators and as permitted by the
underlying documents, the Company has suspended the payment of
interest on $55 million of trust preferred securities as well as
the declaration and payment of TARP dividends on $25 million of
preferred stock held by the U.S. Treasury. Stockholders' equity
increased to $198 million at December 31, 2011 from $186 million at
December 31, 2010, primarily due to $11 million of net earnings
before preferred dividend requirements.
Intervest Bancshares Corporation (IBC) is a bank holding
company. Its operating subsidiary is Intervest National Bank (INB),
a nationally chartered commercial bank that has its headquarters
and full-service banking office at One Rockefeller Plaza, in New
York City, and a total of six full-service banking offices in
Clearwater and Gulfport, Florida. IBC's Common Stock is listed on
the NASDAQ Global Select Market: Trading Symbol IBCA. This release
may contain forward-looking information. Words such as "may,"
"will," "could," "should," "would," "believe," "anticipate,"
"estimate," "expect," "intend," "plan," "project," "assume,"
"indicate," "continue," "target," "goal," and similar words or
expressions of the future are intended to identify forward-looking
statements. Except for historical information, the matters
discussed herein are subject to certain risks and uncertainties
that may adversely affect our business, financial condition and
results of operations. The following factors, among others, could
cause actual results to differ materially from those set forth in
forward looking statements: the regulatory agreements to which IBC
and INB are currently subject to and any operating restrictions
arising therefrom including availability of regulatory approvals or
waivers; changes in economic conditions and real estate values both
nationally and in our market areas; changes in our borrowing
facilities, volume of loan originations and deposit flows; changes
in the levels of our non-interest income and provisions for loan
and real estate losses; changes in the composition and credit
quality of our loan portfolio; legislative or regulatory changes,
including increased expenses arising therefrom; changes in interest
rates which may reduce our net interest margin and net interest
income; increases in competition; technological changes which we
may not be able to implement; changes in accounting or regulatory
principles, policies or guidelines; changes in tax laws and our
ability to utilize our deferred tax asset, including NOL
carryforwards; and our ability to attract and retain key members of
management. Reference is made to IBC's filings with the SEC for
further discussion of risks and uncertainties regarding our
business. Historical results are not necessarily indicative of our
future prospects.
Selected Consolidated Financial Information
Follows.
INTERVEST
BANCSHARES CORPORATION
Selected Consolidated Financial
Information
(Dollars in thousands, except per share amounts)
Quarter
Ended Year Ended December 31, December 31,
Selected Operating Data: 2011
2010 2011 2010 Interest
and dividend income $22,166 $ 24,747 $92,837 $107,072 Interest
expense 11,524 14,307 50,540 62,692 Net
interest and dividend income 10,642 10,440 42,297 44,380 Provision
for loan losses 40 2,693 5,018 101,463 Noninterest income 974 1,073
4,308 2,110 Noninterest expenses:
Provision for real estate losses
1,370 2,004 3,349 15,509 Real estate expenses 619 343 1,619 4,105
All other noninterest expenses 3,774 4,887 15,861
19,069 Earnings (loss) before income taxes 5,813
1,586 20,758 (93,656 ) Provision (benefit) for income taxes 2,679
727 9,512 (40,348 ) Net earnings (loss) before
preferred dividend requirements 3,134 859 11,246 (53,308 )
Preferred dividend requirements (1) 440 422 1,730
1,667 Net earnings (loss) available to common
stockholders $ 2,694 $ 437 $ 9,516 $(54,975 )
Basic earnings (loss) per common share $0.13 $0.02 $0.45 $(4.95 )
Diluted earnings (loss) per common share $0.13 $0.02
$0.45 $(4.95 ) Average shares used for basic and
diluted earnings (loss) per share (2) 21,125,289 18,308,205
21,126,187 11,101,196 Common shares outstanding at end of period
21,125,289 21,126,489 21,125,289 21,126,489 Common stock
options/warrants outstanding at end of period 1,085,622
1,045,422 1,085,622 1,045,422 Yield on
interest-earning assets 4.63 % 4.89 % 4.80 % 5.08 % Cost of funds
2.62 % 3.03 % 2.83 % 3.20 % Net interest margin 2.22 % 2.06
% 2.18 % 2.11 % Return on average assets (annualized) 0.63 % 0.16 %
0.56 % -2.42 % Return on average common equity (annualized) 7.31 %
2.19 % 6.74 % -32.20 % Effective income tax rate 46 % 46 % 46 % 43
% Efficiency ratio (3) 32 % 42 % 34 % 41 % Average loans
outstanding $1,191,177 $1,357,549 $1,258,454 $1,489,004 Average
securities outstanding 700,221 638,791 665,608 599,519 Average
short-term investments outstanding 7,658 11,170 11,806 18,502
Average assets outstanding 1,984,615 2,102,186
2,023,957 2,200,436 Average interest-bearing deposits
outstanding $1,668,111 $1,786,801 $1,707,150 $1,863,612 Average
borrowings outstanding 74,202 86,229 78,298 97,031 Average
stockholders' equity 195,576 180,857 190,954
189,197
At Dec 31, At Sep 30,
At Jun 30, At Mar 31,
At Dec 31, Selected Financial Condition
Information: 2011 2011
2011 2011 2010 Total
assets $1,969,540 $1,991,245 $2,050,379 $2,014,125 $2,070,868 Cash
and short-term investments 29,863 36,798 14,461 29,079 23,911
Securities held to maturity 700,444 678,118 691,334 589,940 614,335
Loans, net of unearned fees 1,163,790 1,199,770 1,252,128 1,300,546
1,337,326 Allowance for loan losses 30,415 32,365 31,772 32,400
34,840 Allowance for loan losses/net loans 2.61 % 2.70 % 2.54 %
2.49 % 2.61 % Deposits 1,662,024 1,678,003 1,735,292 1,706,630
1,766,083 Borrowed funds and accrued interest payable 78,606 78,156
82,634 82,072 84,676 Preferred stockholder's equity 24,238 24,141
24,045 23,948 23,852 Common stockholders' equity 173,293 170,164
167,109 164,243 162,108 Common book value per share (4) 8.07
7.94 7.81 7.69 7.61 Loan
chargeoffs for the quarter $ 2,044 $ 1,667 $ 1,374 $ 4,513 $ 386
Loan recoveries for the quarter 54 69 4 28 283 Real estate
chargeoffs for the quarter - - - - 2,970 Security impairment
writedowns for the quarter - 96 - 105
351 Nonaccrual loans (5) $ 57,240 $ 59,707 $ 45,352 $
45,192 $ 52,923 Real estate owned, net of valuation allowance
28,278 27,005 25,786 27,064 27,064 Investment securities on a cash
basis 4,379 4,379 4,475 4,475 2,318 Accruing troubled debt
restructured (TDR) loans (6). 9,030 5,601 5,619 5,630 3,632 Loans
90 days past due and still accruing 1,925 8,571 4,594 3,879 7,481
Loans 31-89 days past due and still accruing (7) 28,770
939 7,704 21,785 11,364
(1) Represents dividend requirements on cumulative preferred
stock held by the U.S. Treasury and amortization of related
preferred stock discount.
(2) Outstanding options/warrants were not dilutive for the
reporting periods.
(3) Represents noninterest expenses (excluding provisions for
real estate losses & real estate expenses) as a percentage of
net interest and dividend income plus noninterest income.
(4) Represents common stockholders' equity less preferred
dividends in arrears ($2.8 million at Dec 31, 2011 and $1.4 million
at Dec 31, 2010) divided by common shares outstanding.
(5) Include performing TDRs maintained on nonaccrual status of
$46 million, $37 million, $33 million, $18 million and $21 million,
respectively.
(6) Represent loans whose terms have been modified mostly
through the deferral of principal and/or a partial reduction in
interest payments.
(7) Of the balance reported at Dec 31, 2011, $13 million was
brought current in Jan 2012 and $14 million matured and are in the
process of being extended.
INTERVEST
BANCSHARES CORPORATION
Consolidated Financial
Highlights
At or For The Period Ended
($ in thousands, except per share
amounts)
Year
Ended
Dec 31,
2011
Year
Ended
Dec 31,
2010
Year
Ended
Dec 31,
2009
Year
Ended
Dec 31,
2008
Year
Ended
Dec 31,
2007
Balance Sheet Highlights: Total assets $1,969,540 $2,070,868
$2,401,204 $2,271,833 $2,021,392 Cash and short-term investments
29,863 23,911 7,977 54,903 33,086 Securities held to maturity
700,444 614,335 634,856 475,581 344,105 Loans, net of unearned fees
1,163,790 1,337,326 1,686,164 1,705,711 1,614,032 Allowance for
loan losses 30,415 34,840 32,640 28,524 21,593 Allowance for loan
losses/net loans 2.61 % 2.61 % 1.94 % 1.67 % 1.34 % Deposits
1,662,024 1,766,083 2,029,984 1,864,135 1,659,174 Borrowed funds
and accrued interest payable 78,606 84,676 118,552 149,566 136,434
Preferred stockholder's equity 24,238 23,852 23,466 23,080 - Common
stockholders' equity 173,293 162,108 190,588 188,894 179,561 Common
book value per share (1) 8.07 7.61 23.04 22.84 22.23 Market price
per common share 2.65 2.93 3.28 3.99
17.22
Asset Quality Highlights Nonaccrual
loans $57,240 $52,923 $123,877 $108,610 $90,756 Real estate owned,
net of valuation allowance 28,278 27,064 31,866 9,081 - Investment
securities on a cash basis 4,379 2,318 1,385 - - Accruing troubled
debt restructured loans (2) 9,030 3,632 97,311 - - Loans past due
90 days and still accruing 1,925 7,481 6,800 1,964 11,853 Loans
past due 31-89 days and still accruing 28,770 11,364 5,925 18,943
25,122 Loan chargeoffs 9,598 100,146 8,103 4,227 - Loan recoveries
155 883 1,354 - - Real estate chargeoffs - 15,614 - - - Impairment
writedowns on security investments 201 1,192
2,258 - -
Statement of Operations
Highlights: Interest and dividend income $92,837 $ 107,072
$123,598 $128,497 $131,916 Interest expense 50,540 62,692
81,000 90,335 89,653 Net interest and
dividend income 42,297 44,380 42,598 38,162 42,263 Provision for
loan losses 5,018 101,463 10,865 11,158 3,760 Noninterest income
4,308 2,110 297 5,026 8,825 Noninterest expenses:
Provision for real estate losses
3,349 15,509 2,275 518 -
Real estate expenses
1,619 4,105 4,945 4,281 489
All other noninterest expenses
15,861 19,069 19,864 14,074 12,387
Earnings (loss) before income taxes 20,758 (93,656 ) 4,946
13,157 34,452 Provision (benefit) for income taxes 9,512
(40,348 ) 1,816 5,891 15,012 Net earnings
(loss) before preferred dividend requirements 11,246 (53,308 )
3,130 7,266 19,440 Preferred dividend requirements (3) 1,730
1,667 1,632 41 - Net earnings (loss)
available to common stockholders $ 9,516 $(54,975 ) $ 1,498
$ 7,225 $ 19,440 Basic earnings (loss)
per common share $0.45 $(4.95 ) $0.18 $0.87 $2.35 Diluted earnings
(loss) per common share $0.45 $(4.95 ) $0.18 $0.87 $2.31
Average common shares used to calculate: Basic earnings (loss) per
common share 21,126,187 11,101,196 8,270,812 8,259,091 8,275,539
Diluted earnings (loss) per common share 21,126,187 11,101,196
8,270,812 8,267,781 8,422,017 Common shares outstanding 21,125,289
21,126,489 8,270,812 8,270,812
8,075,812 Net interest margin (4) 2.18 % 2.11 % 1.83 % 1.79
% 2.11 % Return on average assets 0.56 % -2.42 % 0.13 % 0.34 % 0.96
% Return on average common equity 6.74 % -32.20 % 1.65 % 3.94 %
11.05 % Effective income tax rate 46 % 43 % 37 % 45 % 44 %
Efficiency ratio (5) 34 % 41 % 46 % 33 % 24 %
(1) Represents common stockholders' equity less preferred
dividends in arrears ($2.8 million at December 31, 2011 and $1.4
million at December 31, 2010) divided by common shares
outstanding.
(2) Represent loans whose terms have been modified mostly
through the deferral of principal and/or a partial reduction in
interest payments.
(3) Represents dividend requirements on cumulative preferred
stock held by the U.S. Treasury and amortization of related
preferred stock discount.
(4) Net interest margin is reported exclusive of income from
loan prepayments, which is included as a component of noninterest
income. Inclusive of such income, the margin would compute to
2.31%, 2.17%, 1.89%, 1.90% and 2.46%, respectively.
(5) Represents noninterest expenses (excluding provisions for
real estate losses and real estate expenses) as a percentage of net
interest and dividend income plus noninterest income.
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