Intervest Bancshares Corporation (IBC) (NASDAQ-GS:IBCA), parent
company of Intervest National Bank (INB), today announced that its
earnings for the fourth quarter of 2013 (Q4-13) increased 37% to
$4.2 million, or $0.19 per share, from $3.1 million, or $0.14 per
share, for the fourth quarter of 2012 (Q4-12). Net earnings for the
full year 2013 increased 29% to $13.4 million, or $0.61 per share,
from $10.4 million, or $0.48 per share, for 2012.
Since 1993, Intervest has been primarily engaged in commercial
and multifamily real estate mortgage lending with an emphasis on
cash flowing properties located on the East Coast of the U.S. Its
lending operation is highly personalized and targeted to provide
customized financing solutions for real estate acquisitions and
operations. Intervest does not make construction or land
development loans or single family home loans.
Financial Operating
Highlights
- Net interest income increased to $10.1
million in Q4-13, from $9.7 million in Q4-12, reflecting a higher
net interest margin. For 2013, net interest income decreased to
$36.5 million from $39.2 million in 2012, reflecting a smaller
average balance sheet. The net interest margin improved to 2.57% in
Q4-13 from 2.47% in Q4-12, and to 2.39% for 2013 from 2.29% for
2012.
- The provision for loan losses increased
to $1.0 million in Q4-13 from no provision in Q4-12, reflecting
primarily the impact of $27 million of net loan growth and the
downgrade of one performing loan (of $7.8 million) to substandard
in Q4-13. For 2013, a net credit of $0.5 million was recorded
compared to no provision in 2012. The credit was primarily a
function of $2.2 million of cash recoveries of prior charge offs
exceeding current chargeoffs of $1.9 million and an improvement in
the qualitative factors used in the determination of the allowance
for loan losses.
- Noninterest income increased to $2.6
million in Q4-13 from $2.5 million in Q4-12 due to a $1.5 million
gain from the sale of impaired investment securities (TRUPs) and a
$0.4 million decrease in security impairment charges, mostly offset
by a $1.7 million decrease in loan prepayment income. For 2013,
noninterest income decreased to $4.9 million from $6.2 million in
2012, primarily due to $2.5 million of lower prepayment income,
partially offset by the gain from the sale of TRUPs.
- The provision for real estate losses
decreased to $0.1 million in Q4-13 from $1.1 million in Q4-12, and
to $1.1 million in 2013 from $4.1 million in 2012, reflecting fewer
write-downs in the carrying value of real estate owned through
foreclosure (REO).
- Real estate expenses, net of rental and
other income, totaled $0.3 million in Q4-13, unchanged from Q4-12.
For 2013, REO activities produced net income of $0.8 million
compared to $2.1 million of net expenses in 2012, largely due to
$0.9 million of net gains from sales of REO and $1.6 million of
cash recoveries of expenses associated with previously owned
properties.
- Operating expenses decreased to $3.6
million in Q4-13 from $4.2 million in Q4-12, and to $15.6 million
in 2013 from $16.7 million in 2012, primarily due to decreases in
FDIC insurance expense, professional fees and stock compensation
expense.
- Our efficiency ratio (which measures
our ability to control expenses as a percentage of revenues)
improved to 29% in Q4-13 from 35% in Q4-12.
- Income tax expense increased to $3.5
million in Q4-13 from $3.0 million in Q4-12, and to $11.7 million
in 2013 from $10.3 million in 2012, reflecting higher pre-tax
income.
- Preferred dividend requirements
decreased to none in Q4-13 from $0.5 million in Q4-12, and to $1.1
million in 2013 from $1.8 million in 2012, reflecting the
repurchase of TARP preferred stock during June and August of
2013.
Financial Condition
Highlights
- Assets totaled $1.57 billion at
December 31, 2013 compared to $1.67 billion at December 31, 2012,
reflecting decreases of $60 million in security investments and $36
million in cash and short-term investments.
- Loans outstanding increased by $20
million and totaled $1.13 billion at December 31, 2013, compared to
$1.11 billion at December 31, 2012. Loan originations increased to
$303 million in 2013 from $242 million in 2012. Loan repayments
increased to $279 million in 2013 from $249 million in 2012.
- Nonaccrual loans decreased to $35.9
million at December 31, 2013 from $45.9 million at December 31,
2012, and included restructured loans (TDRs) of $33.2 million and
$36.3 million, respectively. All the TDRs were current and have
performed in accordance with their restructured terms. The TDRs had
a weighted-average yield of 4.56% at December 31, 2013.
- The allowance for loan losses was $27.8
million, or 2.47% of total loans, at December 31, 2013, compared to
$28.1 million, or 2.54%, at December 31, 2012. The allowance
included specific reserves for impaired loans at each date
(totaling $6.1 million and $5.9 million, respectively). Impaired
loans (which include all nonaccrual loans and TDRs) totaled $57.2
million at December 31, 2013, compared to $66.0 million at December
31, 2012.
- Securities held to maturity decreased
to $384 million at December 31, 2013 from $444 million at December
31, 2012, due to calls exceeding new purchases.
- REO decreased to $10.6 million at
December 31, 2013 from $15.9 million at December 31, 2012,
reflecting $7.2 million of sales and $1.1 million of write-downs in
carrying value, partially offset by the addition of one property
for $3.0 million.
- Deposits decreased to $1.28 billion at
December 31, 2013 from $1.36 billion at December 31, 2012,
reflecting net deposit outflow for the year.
- Borrowed funds and related accrued
interest payable decreased to a total of $57.6 million at December
31, 2013 from $62.9 million at December 31, 2012, reflecting the
payment of accrued interest on outstanding debentures.
- Stockholders' equity decreased to $197
million at December 31, 2013 from $211 million at December 31,
2012, reflecting primarily the repurchase of $25 million of TARP
preferred stock and payment of $5.1 million of accumulated
preferred dividends, partially offset by earnings (before preferred
dividend requirements) of $14.5 million.
- INB was well-capitalized at December
31, 2013 with regulatory capital ratios as follows: Tier One
Leverage - 15.23%; Tier One Risk-Based - 19.65%; and Total
Risk-Based Capital - 20.91%.
- Book value per common share increased
to $8.99 at December 31, 2013 from $8.44 at December 31, 2012.
The $0.4 million increase in quarterly net interest income was
due to an improved net interest margin. The margin increased to
2.57% in Q4-13 from 2.47% in Q4-12, primarily due to a $98 million
increase in net interest-earning assets (primarily from the
deployment of cash on hand into new loans) and a 2 basis point
increase in our interest rate spread. The higher spread reflected
lower rates paid on deposits and the run-off of higher-cost CDs and
borrowings, largely offset by payoffs of higher yielding loans and
calls of security investments, coupled with the re-investment of a
large portion of these cash inflows into new loans and securities
at significantly lower market interest rates. Total average
interest-earning assets in Q4-13 decreased slightly or by $0.8
million from Q4-12, reflecting a $21.5 million decrease in total
securities and overnight investments, mostly offset by a $20.7
million increase in loans. At the same time, average deposits and
borrowed funds decreased by $97 million and $2 million,
respectively, while average stockholders' equity decreased by $16
million (due to the repurchase of preferred stock). Overall, our
average cost of funds decreased by 46 basis points to 1.76% in
Q4-13 from 2.22% in Q4-12, while our average yield on earning
assets decreased by 44 basis points to 4.10% in Q4-13 from 4.54% in
Q4-12.
The $2.7 million decrease in year over year net interest income
was due to a smaller average balance sheet, partially offset by a
higher net interest margin. In 2013, total average interest-earning
assets decreased by $187 million from 2012 (reflecting decreases of
$57 million in loans and $130 million in total securities and
overnight investments) while average deposits and borrowed funds
decreased by $223 million and $9 million, respectively. The net
interest margin improved to 2.39% in 2013 from 2.29% in 2012,
reflecting a 6 basis point improvement in our interest rate spread
and a $44 million increase in net interest-earning assets. Overall,
our average cost of funds decreased by 40 basis points to 2.00% in
2013 from 2.40% in 2012, while our average yield on earning assets
decreased by 34 basis points to 4.17% in 2013 from 4.51% in 2012.
The reasons for the changes in the average yield and cost of funds
were the same as those for the quarterly variance.
The $60 million decrease in securities held to maturity was due
to calls exceeding new purchases. At December 31, 2013, the HTM
portfolio represented 24.5% of our total assets and was comprised
of U.S. government agency debt ($306 million) and residential
mortgage-backed pass-through securities ($78 million). The entire
portfolio had a weighted-average expected yield, remaining life and
contractual maturity of 1.11%, 3.3 years and 6.0 years,
respectively. In December 2013, in advance of the requirements of
the "Volcker Rule" of the Dodd-Frank Act, INB transferred to
available for sale and subsequently sold all (or $2.6 million in
carrying value) of its investments in corporate TRUPs (which were
non-investment grade and other than temporarily impaired by varying
degrees since 2008) for a net gain on sale of $1.5 million.
The $20 million increase in loans receivable reflected $302.7
million of new loans and $2.2 million of recoveries of prior charge
offs, largely offset by $243.8 million of payoffs, $35.7 million of
amortization, $1.9 million of chargeoffs and a $3.0 million
transfer to REO. New originations were comprised of $204 million of
commercial real estate loans, $59 million of multifamily loans and
$36 million of loans secured by investor owned 1-4 family
condominiums. New loans in 2013 had a weighted-average rate, term
and loan-to-value ratio of 4.53%, 6.8 years and 60%, respectively,
compared to 4.87%, 5.8 years and 56%, respectively, for new loans
in 2012. Nearly all of the new loans in both periods had fixed
interest rates. Loans paid off in 2013 and 2012 had a
weighted-average rate of 5.85% and 6.15%, respectively. At December
31, 2013, the loan portfolio was comprised of 75% of loans secured
by commercial real estate, 19% secured by multifamily properties
and 6% by investor owned 1-4 family condominiums.
The $80 million decrease in deposits reflected a $55 million net
decrease in CD accounts, of which $38 million were brokered CDs,
and a $28 million decrease in money market accounts. At December
31, 2013, we had $91 million of brokered CDs outstanding with a
weighted-average rate of 3.01%, of which $23 million (with a
weighted-average rate of 4.76%) mature within one year.
As previously reported, in June 2013, IBC repurchased 6,250
shares of its Series A Preferred Stock (Preferred Stock) from the
U.S. Treasury for $6.1 million, plus an additional $1.2 million in
accrued and unpaid dividends, for a total of $7.3 million. In
August 2013, IBC redeemed the remaining 18,750 shares of Preferred
Stock (which were purchased from the U.S. Treasury by unrelated
third parties) for the stated liquidation value of $1,000 per
share. The total cost of redeeming these shares was $22.6 million,
which included $3.9 million in accrued and unpaid dividends. All
shares of Preferred Stock were cancelled and IBC no longer had any
preferred stockholders as of August 31, 2013. The U.S. Treasury
continues to hold a warrant to purchase 691,882 shares of IBC's
common stock at an exercise price of $5.42 per share.
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 agreement to which IBC
is subject 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 and AMT 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. Forward looking
statements speak only as of the date they are made. We undertake no
obligation to publicly update or revise forward looking
information, whether as a result of new, updated information,
future events, or otherwise. 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:
2013 2012 2013
2012 Interest and dividend income $16,120
$17,798 $63,616 $77,284 Interest
expense 6,023 8,103 27,110
38,067 Net interest and dividend income 10,097 9,695 36,506
39,217 Provision (credit) for loan losses 950 - (550) - Noninterest
income 2,600 2,476 4,946 6,194 Noninterest expenses: Provision for
real estate losses 150 1,135 1,105 4,068 Real estate expenses
(income), net 284 324 (836) 2,146 Operating expenses 3,630
4,195 15,584 16,668 Earnings
before income taxes 7,683 6,517 26,149 22,529 Provision for income
taxes 3,476 2,987 11,655
10,307 Net earnings before preferred dividend requirements 4,207
3,530 14,494 12,222 Preferred dividend requirements (1) -
456 1,057 1,801 Net earnings
available to common stockholders $ 4,207 $ 3,074
$13,437 $10,421 Basic and diluted
earnings per common share $0.19 $0.14 $0.61 $0.48 Preferred cash
dividends paid - - $5,068
- Average shares used for basic earnings per share
21,900,391 21,589,589 21,894,030 21,566,009 Average shares used for
diluted earnings per share (2) 22,041,319 21,594,468 21,993,626
21,568,196 Common shares outstanding at end of period 21,918,623
21,589,589 21,918,623 21,589,589 Common stock options/warrants
outstanding at end of period (2) 1,041,445
1,078,122 1,041,445 1,078,122
Yield on interest-earning assets 4.10% 4.54% 4.17% 4.51% Cost of
funds 1.76% 2.22% 2.00% 2.40% Net interest margin (3)
2.57% 2.47% 2.39% 2.29%
Return on average assets (annualized) 1.06% 0.82% 0.90% 0.66%
Return on average common equity (annualized) 8.72% 7.67% 7.58%
6.82% Effective income tax rate 45% 46% 45% 46% Efficiency ratio
(4) 29% 35% 38%
37% Average loans outstanding $1,133,017 $1,112,357
$1,092,229 $1,149,689 Average securities outstanding 415,858
437,604 423,558 555,777 Average short-term investments outstanding
10,648 10,350 10,972 8,273 Average assets outstanding
1,593,216 1,712,892 1,605,435
1,839,727 Average interest-bearing deposits outstanding
$1,298,646 $1,395,622 $1,299,998 $1,522,625 Average borrowings
outstanding 57,873 59,452 56,997 65,789 Average stockholders'
equity 193,064 208,691
205,635 203,647
At Dec
31, At Sep 30,
At Jun 30, At Mar
31, At Dec 31,
Selected Financial Condition Information:
2013 2013 2013
2013 2012 Total assets
$1,567,796 $1,584,239 $1,596,639 $1,627,787 $1,665,792 Cash and
short-term investments 24,700 30,253 86,977 83,945 60,395
Securities held to maturity 383,937 416,321 410,986 409,184 443,777
Loans, net of unearned fees 1,127,522 1,100,277 1,056,191 1,081,482
1,107,466 Allowance for loan losses 27,833 26,777 26,455 28,210
28,103 Allowance for loan losses/net loans 2.47% 2.43% 2.50% 2.61%
2.54% Deposits 1,282,232 1,298,403 1,293,175 1,318,215 1,362,619
Borrowed funds and accrued interest payable 57,570 57,165 56,760
63,373 62,930 Preferred stockholder's equity - - 18,620 24,720
24,624 Common stockholders' equity 196,991 192,288 193,155 190,545
186,323 Common book value per share (5) 8.99
8.77 8.64 8.48
8.44 Loan chargeoffs for the quarter $ - $ - $1,823 $ 115 $ 676
Loan recoveries for the quarter 106 72 818 1,222 397 Real estate
chargeoffs for the quarter 256 4,171 - - 1,124 Security impairment
writedowns for the quarter - 273
325 366 425 Nonaccrual loans (6)
$35,903 $39,517 $39,069 $40,931 $45,898 Real estate owned, net of
valuation allowance 10,669 12,019 14,869 18,334 15,923 Investment
securities on a cash basis - 2,604 2,923 3,292 3,721 Accruing
troubled debt restructured (TDR) loans (7) 13,429 11,381 11,464
13,906 20,076 Loans 90 days past due and still accruing (8) 4,087
18,403 5,285 5,916 4,391 Loans 60-89 days past due and still
accruing - 3,265 11,065 - - Loans 31-59 days past due and still
accruing 2,642 - -
12,998 15,497 (1) Represents
dividend requirements on cumulative preferred stock outstanding
during the period plus amortization of related preferred stock
discount. (2) Outstanding options/warrants to purchase 224,630
shares and 997,622 shares were not dilutive for the 2013 and 2012
periods, respectively. (3) 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 be 2.74%, 3.08%, 2.56% and 2.59%, respectively. (4)
Represents operating expenses as a percentage of net interest and
dividend income plus noninterest income. (5) Represents common
stockholders' equity less any preferred dividends in arrears (none
at December 31 and September 30, 2013, $3.7 million at June 30,
2013, $4.6 million at March 31, 2013 and $4.2 million at December
31, 2012) divided by common shares outstanding. (6) Include
performing TDRs maintained on nonaccrual status, or cash basis, of
$33 million, $36 million, $36 million, $33 million and $36 million,
respectively. (7) Represent loans whose terms have been modified
mostly through the deferral of principal and/or a partial reduction
in interest payments, or extension of maturity date. At December
31, 2013, all loans were performing and were yielding approximately
5% on a weighted average basis. (8) The amount at December 31, 2013
consisted of three loans that matured and as to which the borrowers
were making monthly loan payments. The loans were in the process of
being extended as of December 31, 2013.
INTERVEST
BANCSHARES CORPORATION
Consolidated Financial Highlights At or For
The Period Ended
($ in thousands, except per share
amounts)
Year
Ended
Dec 31,
2013
Year
Ended
Dec 31,
2012
Year
Ended
Dec 31,
2011
Year
Ended
Dec 31,
2010
Year
Ended
Dec 31,
2009
Balance Sheet Highlights:
Total assets $1,567,796 $1,665,792 $1,969,540
$2,070,868 $2,401,204 Cash and short-term investments 24,700 60,395
29,863 23,911 7,977 Securities held to maturity 383,937 443,777
700,444 614,335 634,856 Loans, net of unearned fees 1,127,522
1,107,466 1,163,790 1,337,326 1,686,164 Allowance for loan losses
27,833 28,103 30,415 34,840 32,640 Allowance for loan losses/net
loans 2.47% 2.54% 2.61% 2.61% 1.94% Deposits 1,282,232 1,362,619
1,662,024 1,766,083 2,029,984 Borrowed funds and accrued interest
payable 57,570 62,930 78,606 84,676 118,552 Preferred stockholder's
equity - 24,624 24,238 23,852 23,466 Common stockholders' equity
196,991 186,323 173,293 162,108 190,588 Common book value per share
(1) 8.99 8.44 8.07 7.61 23.04 Market price per common share
7.51 3.89 2.65
2.93 3.28
Asset Quality Highlights Nonaccrual
loans $35,903 $45,898 $57,240 $52,923 $123,877 Real estate owned,
net of valuation allowance 10,669 15,923 28,278 27,064 31,866
Investment securities on a cash basis - 3,721 4,378 2,318 1,385
Accruing troubled debt restructured loans 13,429 20,076 9,030 3,632
97,311 Loans 90 days past due and still accruing (2) 4,087 4,391
1,925 7,481 6,800 Loans 31-89 days past due and still accruing
2,642 15,497 28,770 11,364 5,925 Loan chargeoffs 1,938 3,152 9,598
100,146 8,103 Loan recoveries 2,218 840 155 883 1,354 Real estate
chargeoffs 4,427 4,766 - 15,614 - Impairment writedowns on security
investments 964 582 201
1,192 2,258
Statement of Operations
Highlights: Interest and dividend income $63,616 $77,284
$92,837 $107,072 $123,598 Interest expense 27,110
38,067 50,540 62,692
81,000 Net interest and dividend income 36,506 39,217 42,297 44,380
42,598 (Credit) provision for loan losses (550) - 5,018 101,463
10,865 Noninterest income 4,946 6,194 4,308 2,110 297 Noninterest
expenses: Provision for real estate losses 1,105 4,068 3,349 15,509
2,275 Real estate (income) expenses, net (836) 2,146 1,619 4,105
4,945 Operating expenses 15,584 16,668
15,861 19,069 19,864 Earnings (loss)
before income taxes 26,149 22,529 20,758 (93,656) 4,946 Provision
(benefit) for income taxes 11,655 10,307
9,512 (40,348) 1,816 Net
earnings (loss) before preferred dividend requirements 14,494
12,222 11,246 (53,308) 3,130 Preferred dividend requirements 1,057
1,801 1,730 1,667
1,632 Net earnings (loss) available to common stockholders
$13,437 $10,421 $ 9,516
$(54,975) $ 1,498 Basic earnings (loss) per common
share $0.61 $0.48 $0.45 $(4.95) $0.18 Diluted earnings (loss) per
common share $0.61 $0.48 $0.45 $(4.95) $0.18 Average common shares
used to calculate: Basic earnings (loss) per common share
21,894,030 21,566,009 21,126,187 11,101,196 8,270,812 Diluted
earnings (loss) per common share 21,993,626 21,568,196 21,126,187
11,101,196 8,270,812 Common shares outstanding
21,918,623 21,589,589 21,125,289
21,126,489 8,270,812
Other ratios: Net
interest margin (3) 2.39% 2.29% 2.18% 2.11% 1.83% Return on average
assets 0.90% 0.66% 0.56% -2.42% 0.13% Return on average common
equity 7.58% 6.82% 6.74% -32.20% 1.65% Effective income tax rate
45% 46% 46% 43% 37% Efficiency ratio 38%
37% 34% 41% 46%
(1) Represents common stockholders' equity less any
preferred dividends in arrears (none at December 31, 2013, $4.2
million at December 31, 2012, $2.8 million at December 31, 2011 and
$1.4 million at December 31, 2010) divided by common shares
outstanding. (2) The amount at December 31, 2013 consisted
of three loans that matured and as to which the borrowers were
making monthly loan payments. The loans were in the process of
being extended as of December 31, 2013. (3) 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 be 2.56%, 2.59%, 2.31%, 2.17% and 1.89%,
respectively.
Intervest Bancshares CorporationLowell S. Dansker,
212-218-2800Fax: 212-218-2808Chairman
Intervest Bancshares (NASDAQ:IBCA)
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