Intervest Bancshares Corporation (NASDAQ-GS: IBCA), parent
company of Intervest National Bank, today reported its financial
results for the fourth quarter of 2010.
Financial Highlights:
- Net earnings for the fourth quarter of
2010 ("Q4-10") amounted to $0.4 million, or $0.02 per diluted
common share, compared to a net loss of $0.7 million, or $0.07 per
share, for the third quarter of 2010 ("Q3-10"), and net earnings of
$0.3 million, or $0.04 per share, for the same quarter a year ago
("Q4-09").
- Pre-tax earnings before deducting
provisions for loan and real estate losses and real estate expenses
amounted to $6.6 million in Q4-10, compared to $4.9 million in
Q3-10 and $7.8 million in Q4-09.
- Net interest margin for Q4-10 was
2.06%, compared to 1.98% in Q3-10 and 2.04% in Q4-09.
- Nonaccrual loans and real estate owned
totaled $80 million at December 31, 2010, up only slightly from $77
million at September 30, 2010 despite one loan for $14 million
being placed on nonaccrual status in Q4-10, and down substantially
from $156 million at December 31, 2009.
- The allowance for loan losses increased
to 2.61% of total outstanding loans at December 31, 2010, up from
2.37% at September 30, 2010 and 1.94% at December 31, 2009.
- The Company continued to control its
non-interest expenses despite substantial increases in FDIC deposit
insurance premiums and regulatory compliance costs. Inclusive of
these higher costs, noninterest expense amounted to $4.9 million in
Q4-10, compared to $5.2 million in Q3-10 and $4.4 million in
Q4-09.
- The Company completed the sale of
common stock in a public offering in Q4-10 that raised $21 million
of new capital, most of which was down streamed to Intervest
National Bank to strengthen its capital. At December 31, 2010, the
Bank's regulatory capital ratios were well in excess of its
regulatory minimums and were as follows: total capital to
risk-weighted assets – 14.22%; Tier 1 capital to risk-weighted
assets – 12.96%; and Tier 1 capital to total average assets
(leverage ratio) – 9.61%. The Bank's regulatory minimum capital
ratios are 12%, 10% and 9%, respectively.
- Common book value per share was $7.61
at December 31, 2010.
Net earnings in Q4-10 increased by $0.1 million over Q4-09. The
results were favorably impacted by a $0.9 million decrease in real
estate expenses (due to a lower level of nonperforming assets), a
$0.8 million decrease in the total provision for loan and real
estate losses (reflecting a lower level of problem loans and credit
rating downgrades), and a $1.0 million increase in noninterest
income (due to $0.4 million of non-recurring fees and a $0.5
million decrease in security impairment charges). The aggregate of
these items was nearly offset by a $1.7 million decrease in net
interest and dividend income, a $0.5 million increase in
noninterest expenses (primarily due to higher FDIC insurance
premiums) and a $0.4 million increase in income tax expense
(primarily due to higher pre-tax income).
The decrease in net interest and dividend income reflected the
impact of the planned reduction in the size of the Company's
balance sheet as well as the sale of performing loans as part of a
bulk sale in May 2010, partially offset by an improved net interest
margin as noted above. The increased margin resulted from lower
rates paid on deposits, largely offset by calls of higher yielding
U.S. government agency security investments (coupled with the
reinvestment of the proceeds into similar securities with lower
interest rates) and the sale of loans yielding approximately 5%.
The yield on average interest-earning assets decreased by 36 basis
points to 4.89% in Q4-10, from 5.25% in Q4-09, while the average
cost of funds decreased at a greater pace or by 51 basis points to
3.03% in Q4-10, from 3.54% in Q4-09.
For the full year 2010, the Company had a net loss of $55.0
million, or $4.95 per diluted common share, compared to net
earnings of $1.5 million, or $0.18 per share, for 2009. The net
loss for 2010 was driven primarily by a bulk sale of assets and
additional loan and real estate loss provisions due to declining
commercial real estate values and continued weakness in the
economy. As previously reported, in May 2010, the Company sold in
bulk certain nonperforming and underperforming loans (including
restructured loans or TDRs) aggregating to $192.6 million and other
real estate owned of $14.4 million. The assets were sold at a
substantial discount to their net carrying values for a total
purchase price of $121.5 million. The transaction contributed
approximately $44 million to the net loss. The Company recorded a
$34 million deferred tax asset related to this transaction.
Total assets at December 31, 2010 decreased to $2.07 billion
from $2.40 billion at December 31, 2009, primarily reflecting a
decrease in loans receivable and security investments, partially
offset by an increase in the deferred tax asset and overnight
investments.
Total loans receivable, net of unearned fees, amounted to $1.33
billion at December 31, 2010, a $349 million decrease from $1.68
billion at December 31, 2009. The decrease was due to an aggregate
of $286 million of principal repayments (resulting from the bulk
sale of loans, other loan payoffs and normal amortization), $41
million of loans transferred to real estate owned and $100 million
of loan chargeoffs (which included approximately $80 million of
chargeoffs related to the bulk sale), partially offset by $77
million of new loan originations. The Company does not own or
originate construction/development loans.
Total nonaccrual loans and real estate owned aggregated $80
million, or 3.9% of total assets, at December 31, 2010, compared to
$77 million, or 3.7%, at September 30, 2010 and $156 million, or
6.5%, at December 31, 2009. The decrease in the size of the loan
portfolio during 2010 negatively impacted the percentages.
Nonaccrual loans at September 30, 2010 and December 31, 2010 also
included $21 million of performing TDRs that are classified as
nonaccrual based on regulatory guidance. These TDRs continue to pay
as agreed under their renegotiated terms.
The allowance for loan losses at December 31, 2010 was $34.8
million, representing 2.61% of total net loans, compared to $32.3
million, or 2.37%, at September 30, 2010 and $32.6 million, or
1.94%, at December 31, 2009. The overall allowance included
specific reserves for impaired loans (comprised of nonaccrual loans
and TDRs) at each date of $7.2 million, $4.0 million and $13.8
million, respectively.
Total securities held to maturity decreased by $20.5 million to
$614.3 million at December 31, 2010 from $634.8 million at December
31, 2009, primarily due to calls exceeding new purchases. The
securities portfolio is comprised mainly of U.S. government agency
securities. At December 31, 2010, the Company had a net deferred
tax asset totaling $47.1 million, of which $27 million related to
an unused gross operating loss carryforward of $61 million.
Total deposits at December 31, 2010 decreased to $1.77 billion
from $2.03 billion at December 31, 2009, reflecting a $204.7
million decrease in time deposits and a $59.3 million decrease in
money market deposit accounts resulting from Intervest National
Bank's planned shrinkage through a reduction in its deposit rates.
Total borrowed funds and related interest payable at December 31,
2010 decreased to $85 million, from $119 million at December 31,
2009, due to the maturity and repayment of FHLBNY borrowings. Total
stockholders' equity decreased to $186 million at December 31, 2010
from $214 million at December 31, 2009, primarily due to the 2010
net loss before preferred dividend requirements of $53.3 million,
partially offset by the private placement in May of 850,000 shares
of common stock at $5 per share for net proceeds of approximately
$4.0 million and a public offering of common stock in October of
11,686,377 shares at $1.95 per share for net proceeds of
approximately $21.0 million.
Intervest Bancshares Corporation is a bank holding company. Its
principal operating subsidiary is Intervest National Bank, 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. Intervest Bancshares Corporation's Class A
Common Stock is listed on the NASDAQ Global Select Market: Trading
Symbol IBCA. This press 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 affect the Company's actual
results of operations. The following important factors, among
others, could cause actual results to differ materially from those
set forth in forward looking statements: changes in general
economic conditions and real estate values in the Company's market
areas; changes in regulatory policies and enforcement actions;
fluctuations in interest rates; demand for loans and deposits;
changes in tax laws or the availability of net operating losses,
the effects of additional capital, the availability of regulatory
waivers; and competition. Reference is made to the Company's
filings with the SEC for further discussion of risks and
uncertainties regarding the Company's business. Historical results
are not necessarily indicative of the future prospects of the
Company.
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:
2010 2009 2010
2009 Interest and dividend income $ 24,747 $
31,176 $ 107,072 $ 123,598 Interest
expense 14,307 19,080
62,692 81,000 Net interest and
dividend income 10,440 12,096 44,380 42,598 Provision for loan
losses 2,693 3,926 101,463 10,865 Noninterest income 1,073 72 2,110
297 Noninterest expenses: Provision for real estate losses 2,004
1,587 15,509 2,275 Real estate expenses 343 1,259 4,105 4,945 All
other noninterest expenses 4,887
4,409 19,069 19,864
Earnings (loss) before income taxes 1,586 987 (93,656) 4,946
Provision (benefit) for income taxes 727
281 (40,348)
1,816 Net earnings (loss) before preferred dividend
requirements 859 706 (53,308) 3,130 Preferred dividend requirements
(1) 422 409
1,667 1,632 Net earnings (loss) available to
common stockholders $ 437 $ 297 $
(54,975) $ 1,498 Basic earnings (loss) per
common share $ 0.02 $ 0.04 $ (4.95) $ 0.18 Diluted earnings (loss)
per common share $ 0.02 $ 0.04 $
(4.95) $ 0.18 Average common shares used to
calculate: Basic and diluted earnings (loss) per common share (2)
18,308,205 8,270,812 11,101,196 8,270,812 Common shares outstanding
at end of period 21,126,489 8,270,812 21,126,489 8,270,812 Common
stock options/warrants outstanding at end of period
1,045,422 1,019,722
1,045,422 1,019,722 Yield on
interest-earning assets 4.89% 5.25% 5.08% 5.32% Cost of funds 3.03%
3.54% 3.20% 3.87% Net interest margin (3)
2.06% 2.04% 2.11%
1.83% Return on average assets (annualized) 0.16%
0.12% -2.42% 0.13% Return on average common equity (annualized)
2.19% 1.49% -32.20% 1.65% Effective income tax rate 45.84% 28.47%
43.08% 36.72% Efficiency ratio (4) 42%
36% 41% 46%
Total average loans outstanding $ 1,357,549 $ 1,698,251 $ 1,489,004
$ 1,721,688 Total average securities outstanding 638,791 641,616
599,519 586,344 Total average short-term investments outstanding
11,170 17,652 18,502 14,544 Total average assets outstanding
2,102,186 2,408,538
2,200,436 2,357,422 Total
average interest-bearing deposits outstanding $ 1,786,801 $
2,031,381 $ 1,863,612 $ 1,972,982 Total average borrowings
outstanding 86,229 108,067 97,031 117,856 Total average
stockholders' equity 180,857
213,595 189,197
212,877
At Dec 31, At
Sep 30, At Jun 30,
At Mar 31, At Dec
31, Selected Financial Condition Information:
2010 2010 2010
2010 2009 Total assets $ 2,070,868 $
2,104,098 $ 2,164,442 $ 2,284,257 $
2,401,204 Total cash and short-term investments 23,911 13,815
35,535 56,470 7,977 Total securities held to maturity 614,335
613,844 621,244 491,067 634,856 Total loans, net of unearned fees
1,337,326 1,363,312 1,395,564 1,634,140 1,686,164 Total deposits
1,766,083 1,806,834 1,852,356 1,926,772 2,029,984 Total borrowed
funds and accrued interest payable 84,676 89,135 98,582 103,060
118,552 Total preferred equity 23,852 23,755 23,659 23,563 23,466
Total common equity 162,108 140,317 140,643 187,711 190,588 Common
book value per share (5) 7.61
15.26 15.33 22.69
23.04 Total allowance for loan losses $ 34,840
$ 32,250 $ 30,350 $ 28,300 $ 32,640 Allowance for loan losses/net
loans 2.61% 2.37% 2.17% 1.73% 1.94% Total loan recoveries for the
quarter 283 600 - - 25 Total loan chargeoffs for the quarter 386
298 85,483 13,979 3,126 Total real estate chargeoffs for the
quarter 2,970 912
11,732 - -
Total loans ninety days past due and still
accruing (6)
$ 7,481 $ 16,865 $ 8,788 $ 3,629 $ 6,800 Total accruing troubled
debt restructured loans (7) 3,632 617 21,362 116,906 97,311 Total
nonaccrual loans 52,923 38,560 18,927 96,248 123,877 Total real
estate owned, net of valuation allowance
27,064 38,792 34,259
57,858 31,866 (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) Net interest margin is reported
exclusive of income from loan prepayments, which is included as a
component of noninterest income. (4) Represents noninterest
expenses (excluding provision for real estate losses & real
estate expenses) as a percentage of net interest and dividend
income plus noninterest income. (5) Represents common stockholders'
equity less preferred dividends in arrears ($1.4 million at
December 31, 2010 only) divided by common shares outstanding. (6)
At December 31, 2010, these were performing loans that were past
their contractual maturity date. Extensions for the majority at
market terms are pending. (7) Represent loans whose terms have been
modified mostly through the deferral of principal and/or a partial
reduction in interest payments.
INTERVEST
BANCSHARES CORPORATION
Consolidated Financial
Highlights
At or For The Period Ended
($ in thousands, except per share
amounts)
YearEndedDec 31,2010
YearEndedDec 31,2009
YearEndedDec 31,2008
YearEndedDec 31,2007
YearEndedDec 31,2006
Balance Sheet Highlights: Total
assets $ 2,070,868 $ 2,401,204 $ 2,271,833 $ 2,021,392 $ 1,971,753
Total cash and short-term investments 23,911 7,977 54,903 33,086
40,195 Total securities held to maturity 614,335 634,856 475,581
344,105 404,015 Total loans, net of unearned fees 1,337,326
1,686,164 1,705,711 1,614,032 1,490,653 Total deposits 1,766,083
2,029,984 1,864,135 1,659,174 1,588,534 Total borrowed funds and
accrued interest payable. 84,676 118,552 149,566 136,434 172,909
Preferred stockholder's equity 23,852 23,466 23,080 - - Common
stockholders' equity 162,108 190,588 188,894 179,561 170,046 Common
book value per share (1) 7.61 23.04 22.84 22.23 20.31 Market price
per common share 2.93 3.28
3.99 17.22
34.41
Asset Quality Highlights Nonaccrual
loans $ 52,923 $ 123,877 $ 108,610 $ 90,756 $ 3,274 Real estate
owned, net of valuation allowance 27,064 31,866 9,081 - - Accruing
troubled debt restructured loans (2) 3,632 97,311 - - - Loans
ninety days past due and still accruing 7,481 6,800 1,964 11,853 -
Allowance for loan losses 34,840 32,640 28,524 21,593 17,833
Allowance for loan losses/net loans 2.61 % 1.94 % 1.67 % 1.34 %
1.20 % Loan chargeoffs 100,146 8,103 4,227 - - Real estate
chargeoffs 15,614 - - - - Loan recoveries 883
1,354 - -
-
Statement of Operations
Highlights: Interest and dividend income $ 107,072 $ 123,598 $
128,497 $ 131,916 $ 128,605 Interest expense 62,692
81,000 90,335
89,653 78,297 Net interest and
dividend income 44,380 42,598 38,162 42,263 50,308 Provision for
loan losses 101,463 10,865 11,158 3,760 2,652 Noninterest income
2,110 297 5,026 8,825 6,855 Noninterest expenses: Provision for
real estate losses 15,509 2,275 518 - - Real estate expenses 4,105
4,945 4,281 489 - All other noninterest expenses 19,069
19,864 14,074
12,387 13,027 (Loss)
earnings before income taxes (93,656 ) 4,946 13,157 34,452 41,484
(Benefit) provision for income taxes (40,348 )
1,816 5,891 15,012
17,953 Net (loss) earnings before preferred
dividend requirements (53,308 ) 3,130 7,266 19,440 23,531 Preferred
dividend requirements (3) 1,667 1,632
41 -
- Net (loss) earnings available to common stockholders $
(54,975 ) $ 1,498 $ 7,225 $
19,440 $ 23,531 Basic (loss) earnings per
common share $ (4.95 ) $ 0.18 $ 0.87 $ 2.35 $ 2.98 Diluted (loss)
earnings per common share $ (4.95 ) $ 0.18 $ 0.87 $ 2.31 $ 2.82
Adjusted net (loss) earnings used to calculate
diluted (loss) earnings per common
share
$
(54,975
)
$
1,498
$
7,225
$
19,484
$
23,679
Average common shares used to calculate: Basic (loss) earnings per
common share 11,101,196 8,270,812 8,259,091 8,275,539 7,893,489
Diluted (loss) earnings per common share 11,101,196 8,270,812
8,267,781 8,422,017 8,401,379 Common shares outstanding
21,126,489 8,270,812
8,270,812 8,075,812
8,371,595 Net interest margin (4) 2.11 % 1.83 % 1.79 % 2.11
% 2.75 % Return on average assets -2.42 % 0.13 % 0.34 % 0.96 % 1.28
% Return on average common equity -32.20 % 1.65 % 3.94 % 11.05 %
15.82 % Effective income tax rate 43.08 % 36.72 % 44.77 % 43.57 %
43.28 % Efficiency ratio (5) 41 % 46 % 33 % 24 % 23 % Full-service
banking offices 7 7
7 7 7
(1) Represents common stockholders' equity less preferred
dividends in arrears ($1.4 million at December 31, 2010 only)
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 2.17%
for 2010, 1.89% for 2009, 1.90% for 2008, 2.46% for 2007 and 3.02%
for 2006. (5) Represents noninterest expenses (excluding provision
for real estate losses and real estate expenses) as a percentage of
net interest and dividend income plus noninterest income.
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