Intervest Bancshares Corporation (NASDAQ-GS:IBCA), parent
company of Intervest National Bank, today reported net earnings for
the third quarter of 2012 ("Q3-12") of $2.2 million, or $0.10 per
common share, compared to $2.6 million, or $0.12 per share, for the
third quarter of 2011 ("Q3-11"). For the first nine months of 2012
("9mths-12"), net earnings amounted to $7.3 million or $0.34 per
share, compared to $6.8 million, or $0.32 per share, for the first
nine months of 2011 ("9mths-11").
Key Points Follow:
- Intervest National Bank's regulatory
capital ratios continued to increase through the retention of
earnings and a gradual reduction in the size of its balance sheet.
The Bank's ratios at September 30, 2012 were as follows: Tier One
Leverage - 13.24%; Tier One Risk-Based - 18.41%; and Total
Risk-Based Capital - 19.67%; well above its minimum requirements of
9%, 10% and 12%, respectively. Tier One capital amounted to $237
million and was $76 million in excess of the required minimum for
the Tier One Leverage ratio.
- New loan originations increased to $159
million in the 9mths-12 period, from $50 million in 9mths-11.
- Nonaccrual loans decreased to $48
million at September 30, 2012, from $57 million at December 31,
2011. Nonaccrual loans include certain restructured loans (TDRs)
that are current as to payments and performing in accordance with
their renegotiated terms, but are required to be classified
nonaccrual based on regulatory guidance. At September 30, 2012,
such loans totaled $39 million compared to $46 million at December
31, 2011. These loans were yielding approximately 5% at September
30, 2012.
- Real estate owned through foreclosure
(REO) decreased to $21.9 million at September 30, 2012, from $28.3
million at December 31, 2011, reflecting $4.9 million of sales and
$2.9 million of writedowns, partially offset by $1.4 million of
additions.
- Provisions for loan and real estate
losses decreased to $1.0 million in Q3-12 from $2.9 million in
Q3-11, and $2.9 million in 9mths-12 from $6.9 million in
9mths-11.
- Operating expenses amounted to $4.2
million in Q3-12, compared to $3.6 million in Q3-11, and $12.5
million in 9mths-12, compared to $12.1 million in 9mths-11. The
Company's efficiency ratio (which measures its ability to control
expenses as a percentage of revenues) continued to be favorable and
was 38% for Q3-12 and 9mths-12.
- The net interest margin (exclusive of
loan prepayment income) increased to 2.32% in Q3-12 and 2.23% in
9mths-12, from 2.13% and 2.17% for the same periods of 2011. Net
interest and dividend income, which was affected by a smaller
balance sheet, amounted to $9.8 million in Q3-12 compared to $10.4
million in Q3-11, and $29.5 million in 9mths-12 compared to $31.7
million in 9mths-11.
- Book value per common share (after
subtracting preferred dividends in arrears) increased to $8.28 at
September 30, 2012.
Net earnings for Q3-12 decreased by $0.4 million from Q3-11 due
to a $0.6 million decrease in net interest and dividend income (as
detailed below), a $0.8 million decrease in noninterest income
(reflecting less income from loan prepayments), a $0.8 million
increase in real estate expenses (due primarily to increased
repairs, maintenance and insurance costs on REO) and a $0.6 million
increase in operating expenses (due primarily to a $0.4 million
aggregate increase in salaries, benefits and stock compensation
expense including the impact of several new officer positions
filled during 2012). The sum of these items was partially offset by
a $1.9 million decrease in the total provision for loan and real
estate losses (resulting primarily from fewer loans outstanding and
fewer credit rating downgrades) and a $0.5 million decrease in
income tax expense (due to lower pre-tax income). The effective
income tax rate was 46% in Q3-12 and 47% in Q3-11.
The decrease in net interest and dividend income was largely due
to a planned reduction in the size of the Bank's balance sheet. In
Q3-12, total average interest-earning assets decreased by $245
million from Q3-11, reflecting decreases of $66 million in average
loans and $179 million in average total securities and overnight
investments. At the same time, average deposits and borrowed funds
decreased by $222 million and $12 million, respectively, while
average stockholders' equity increased by $13 million. The net
interest margin benefited from an improved interest rate spread,
partially offset by an $11 million decrease in net average
interest-earning assets (due to a higher level of cash on hand).
The spread increased by 20 basis points due to the steady reduction
in rates paid on deposits and 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 lower market interest rates. Overall, the average cost of funds
decreased by 46 basis points to 2.35% in Q3-12, from 2.81% in
Q3-11, while the average yield on earning assets decreased at a
slower pace or by 26 basis points to 4.48% in Q3-12, from 4.74% in
Q3-11.
Net earnings for 9mths-12 increased by $0.5 million over
9mths-11 due to a $4.0 million decrease in the total provision for
loan and real estate losses and a $0.4 million increase in
noninterest income, partially offset by a $2.2 million decrease in
net interest and dividend income, a $0.8 million increase in real
estate expenses, a $0.4 million increase in operating expenses and
a $0.5 million increase in income tax expense.
Total assets at September 30, 2012 decreased to $1.75 billion
from $1.97 billion at December 31, 2011, primarily reflecting a
$260 million decrease in security investments, partially offset by
a $64 million increase in cash and short-term investments. The Bank
expects to utilize a large portion of the increase in cash to fund
new loans.
Securities held to maturity decreased to $440 million at
September 30, 2012 from $700 million at December 31, 2011,
reflecting calls of securities exceeding new purchases. A portion
of the resulting proceeds was used to fund planned deposit outflow
and a portion was being held temporarily in cash and short-term
investments as denoted above. At September 30, 2012, the securities
portfolio, which represented 25% of total assets and was comprised
nearly all of U.S. government agency debt ($347 million) and
residential mortgage-backed pass through securities ($89 million),
had a weighted-average expected yield, remaining life and remaining
contractual maturity of 1.32%, 1.3 years and 7.2 years,
respectively.
Loans totaled $1.15 billion at September 30, 2012, compared to
$1.16 billion at December 31, 2011. The decrease reflected $132
million of payoffs, $33 million of amortization and $2.5 million of
chargeoffs, mostly offset by $159 million of new loans. Loans paid
off had a weighted-average yield of 6.24%. New loans, nearly all
with fixed interest rates, had a weighted-average yield, term and
loan-to-value ratio of 4.64%, 6.0 years and 58%, respectively.
Nonaccrual loans and REO aggregated to $70 million, or 4.0% of
total assets, at September 30, 2012, compared to $86 million, or
4.3%, at December 31, 2011. Nonaccrual loans totaled $48 million at
September 30, 2012 and $57 million at December 31, 2011, and
included $39 million (12 loans) and $46 million (12 loans) of TDRs
that were current at each date, respectively. One loan ($5.5
million) was upgraded and classified as an accruing TDR in June
2012. All the TDRs classified as nonaccrual have performed as
agreed under their renegotiated terms and interest income is being
recorded on a cash basis. Based on annual updated appraisals
received on the underlying collateral properties, a portion of four
TDRs (or $1.6 million of aggregate principal) was charged off for
financial statement purposes during 9mths-12. The borrowers remain
obligated to pay all contractual principal due on the TDRs.
The allowance for loan losses at September 30, 2012 was $28.4
million, representing 2.46% of total net loans, compared to $30.4
million, or 2.61%, at December 31, 2011. The allowance included
specific reserves for impaired loans (comprised of all nonaccrual
loans as well as accruing TDRs) at each date totaling $5 million
and $8 million, respectively.
At September 30, 2012, the Company had a deferred tax asset
totaling $32 million, which included remaining unused NOL and AMT
credit carryforwards totaling $22 million for Federal tax purposes
and $52 million for State and Local tax purposes. These
carryforwards are available to reduce taxes payable on the
Company's future taxable income.
Deposits at September 30, 2012 decreased to $1.43 billion from
$1.66 billion at December 31, 2011, primarily reflecting a $210
million decrease in CD accounts, of which $43 million were
brokered. At September 30, there were $85 million of brokered CDs
outstanding with a rate of 4.89% and $36 million mature within one
year. The Bank expects to repay these CDs as they mature.
Borrowed funds and related interest payable at September 30,
2012 decreased to $69.5 million, from $78.6 million at December 31,
2011, due to the maturity and repayment of $10.5 million of FHLB
borrowings, partially offset by a $1.4 million increase in accrued
interest payable on trust preferred securities (TRUPs). Since
February 2010, as required by its regulator and as permitted by the
underlying documents, the Company has suspended the payment of
interest on $55 million of its debt in the form of TRUPs as well as
the declaration and payment of dividends on $25 million of TARP
preferred stock held by the U.S. Treasury.
Stockholders' equity increased to $207 million at September 30,
2012 from $198 million at December 31, 2011, primarily due to $8.7
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 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. 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 Nine-Months Ended September 30,
September 30, Selected Operating Data:
2012 2011 2012
2011 Interest and dividend income $19,082 $23,160
$59,486 $70,671 Interest expense 9,223 12,729
29,964 39,016 Net interest and dividend income 9,859 10,431
29,522 31,655 Provision for loan losses - 2,191 - 4,978 Noninterest
income 1,187 2,004 3,718 3,334 Noninterest expenses: Provision for
real estate losses 1,025 701 2,933 1,979 Real estate expenses 883
121 1,822 1,000 Operating expenses 4,160 3,578 12,473
12,087 Earnings before income taxes 4,978 5,844 16,012
14,945 Provision for income taxes 2,300 2,771 7,320
6,833 Net earnings before preferred dividend requirements
2,678 3,073 8,692 8,112 Preferred dividend requirements (1) 453
435 1,345 1,290 Net earnings available to
common stockholders $ 2,225 $ 2,638 $ 7,347 $
6,822 Basic and diluted earnings per common share $0.10
$0.12 $0.34 $0.32 Average shares used for
basic earnings per share 21,589,744 21,126,489 21,558,092
21,126,489 Average shares used for diluted earnings per share (2)
21,590,722 21,126,489 21,558,368 21,126,489 Common shares
outstanding at end of period 21,589,589 21,126,489 21,589,589
21,126,489 Common stock options/warrants outstanding at end of
period (2) 1,041,122 1,045,422 1,041,122
1,045,422 Yield on interest-earning assets 4.48% 4.74% 4.50%
4.85% Cost of funds 2.35% 2.81% 2.45% 2.90% Net interest margin (3)
2.32% 2.13% 2.23% 2.17% Return on
average assets (annualized) 0.59% 0.60% 0.62% 0.53% Return on
average common equity (annualized) 5.93% 7.31% 6.53% 6.54%
Effective income tax rate 46% 47% 46% 46% Efficiency ratio (4)
38% 29% 38% 35% Average loans
outstanding $1,162,038 $1,228,049 $1,162,224 $1,281,126 Average
securities outstanding 524,000 705,291 595,455 653,943 Average
short-term investments outstanding 7,987 6,179 7,576 13,204 Average
assets outstanding 1,814,884 2,036,412
1,882,314 2,037,215 Average interest-bearing deposits
outstanding $1,494,247 $1,716,529 $1,565,268 $1,720,306 Average
borrowings outstanding 66,213 78,148 67,918 79,678 Average
stockholders' equity 205,206 192,314 201,953
189,396
At Sep
30,
At Jun
30,
At Mar
31,
At Dec
31,
At Sep
30,
Selected Financial Condition Information: 2012
2012 2012 2011
2011 Total assets $1,751,880 $1,862,110 $1,909,052
$1,969,540 $1,991,245 Cash and short-term investments 94,268
122,378 89,839 29,863 36,798 Securities held to maturity 440,002
535,056 590,959 700,444 678,118 Loans, net of unearned fees
1,155,171 1,137,780 1,155,437 1,163,790 1,199,770 Allowance for
loan losses 28,382 28,844 29,169 30,415 32,365 Allowance for loan
losses/net loans 2.46% 2.54% 2.52% 2.61% 2.70% Deposits 1,432,209
1,554,615 1,599,653 1,662,024 1,678,003 Borrowed funds and accrued
interest payable 69,487 72,528 72,064 78,606 78,156 Preferred
stockholder's equity 24,528 24,431 24,335 24,238 24,141 Common
stockholders' equity 182,580 179,690 176,716 173,293 170,164 Common
book value per share (5) 8.28 8.16 8.04
8.07 7.94 Loan chargeoffs for the quarter $ 548 $498 $1,430
$2,044 $1,667 Loan recoveries for the quarter 86 173 184 54 69 Real
estate chargeoffs for the quarter 3,642 - - - - Security impairment
writedowns for the quarter - - 157 -
96 Nonaccrual loans (6) $47,957 $50,643 $53,208 $57,240
$59,707 Real estate owned, net of valuation allowance 21,858 26,370
27,767 28,278 27,005 Investment securities on a cash basis 4,221
4,221 4,221 4,378 4,378 Accruing troubled debt restructured (TDR)
loans (7). 14,167 14,596 8,980 9,030 5,601 Loans 90 days past due
and still accruing 6,503 5,290 2,798 1,925 8,571 Loans 60-89 days
past due and still accruing 15,477 1,902 6,303 3,894 939 Loans
31-59 days past due and still accruing 50 -
11,840 24,876 - (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 to purchase 1,041,122 shares and
1,045,422 shares were not dilutive for the 2012 and 2011 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
compute to 2.49%, 2.46%, 2.44% and 2.31%, respectively. (4)
Represents operating expenses as a percentage of net interest and
dividend income plus noninterest income. (5) Represents common
stockholders' equity less preferred dividends in arrears of $3.8
million, $3.5 million, $3.1 million, $2.8 million and $2.4 million,
respectively, divided by common shares outstanding. (6) Include
performing TDRs maintained on nonaccrual status of $39 million, $39
million, $44 million, $46 million and $37 million, respectively.
(7) Represent loans whose terms have been modified mostly through
the deferral of principal and/or a partial reduction in interest
payments, or extension of maturity date. All loans were performing
and current as of September 30, 2012 and were yielding
approximately 6.1%.
INTERVEST
BANCSHARES CORPORATION
Consolidated Financial
Highlights
At or For The Period Ended
($ in thousands, except per share
amounts)
Nine-Months
Ended
Sep 30,
2012
Year
Ended
Dec 31,
2011
Year
Ended
Dec 31,
2010
Year
Ended
Dec 31,
2009
Year
Ended
Dec 31,
2008
Balance Sheet Highlights: Total
assets $1,751,880 $1,969,540 $2,070,868 $2,401,204 $2,271,833 Cash
and short-term investments 94,268 29,863 23,911 7,977 54,903
Securities held to maturity 440,002 700,444 614,335 634,856 475,581
Loans, net of unearned fees 1,155,171 1,163,790 1,337,326 1,686,164
1,705,711 Allowance for loan losses 28,382 30,415 34,840 32,640
28,524 Allowance for loan losses/net loans 2.46% 2.61% 2.61% 1.94%
1.67% Deposits 1,432,209 1,662,024 1,766,083 2,029,984 1,864,135
Borrowed funds and accrued interest payable 69,487 78,606 84,676
118,552 149,566 Preferred stockholder's equity 24,528 24,238 23,852
23,466 23,080 Common stockholders' equity 182,580 173,293 162,108
190,588 188,894 Common book value per share (1) 8.28 8.07 7.61
23.04 22.84 Market price per common share 3.80 2.65
2.93 3.28 3.99
Asset Quality Highlights
Nonaccrual loans $47,957 $57,240 $52,923 $123,877 $108,610 Real
estate owned, net of valuation allowance 21,858 28,278 27,064
31,866 9,081 Investment securities on a cash basis 4,221 4,378
2,318 1,385 - Accruing troubled debt restructured loans (2) 14,167
9,030 3,632 97,311 - Loans past due 90 days and still accruing
6,503 1,925 7,481 6,800 1,964 Loans past due 31-89 days and still
accruing 15,527 28,770 11,364 5,925 18,943 Loan chargeoffs 2,476
9,598 100,146 8,103 4,227 Loan recoveries 443 155 883 1,354 - Real
estate chargeoffs 3,642 - 15,614 - - Impairment writedowns on
security investments 157 201 1,192
2,258 -
Statement of Operations Highlights: Interest
and dividend income $59,486 $92,837 $ 107,072 $123,598 $128,497
Interest expense 29,964 50,540 62,692 81,000
90,335 Net interest and dividend income 29,522 42,297 44,380
42,598 38,162 Provision for loan losses - 5,018 101,463 10,865
11,158 Noninterest income 3,718 4,308 2,110 297 5,026 Noninterest
expenses: Provision for real estate losses 2,933 3,349 15,509 2,275
518 Real estate expenses 1,822 1,619 4,105 4,945 4,281 Operating
expenses 12,473 15,861 19,069 19,864
14,074 Earnings (loss) before income taxes 16,012 20,758 (93,656)
4,946 13,157 Provision (benefit) for income taxes 7,320
9,512 (40,348) 1,816 5,891 Net earnings (loss)
before preferred dividend requirements 8,692 11,246 (53,308) 3,130
7,266 Preferred dividend requirements (3) 1,345 1,730
1,667 1,632 41 Net earnings (loss) available to
common stockholders $ 7,347 $ 9,516 $(54,975)
$ 1,498 $ 7,225 Basic earnings (loss) per common share $0.34
$0.45 $(4.95) $0.18 $0.87 Diluted earnings (loss) per common share
$0.34 $0.45 $(4.95) $0.18 $0.87 Average common shares used to
calculate: Basic earnings (loss) per common share 21,558,092
21,126,187 11,101,196 8,270,812 8,259,091 Diluted earnings (loss)
per common share 21,558,368 21,126,187 11,101,196 8,270,812
8,267,781 Common shares outstanding 21,589,589
21,125,289 21,126,489 8,270,812 8,270,812
Other ratios: Net interest margin (4) 2.23% 2.18% 2.11%
1.83% 1.79% Return on average assets 0.62% 0.56% -2.42% 0.13% 0.34%
Return on average common equity 6.53% 6.74% -32.20% 1.65% 3.94%
Effective income tax rate 46% 46% 43% 37% 45% Efficiency ratio (5)
38% 34% 41% 46% 33% (1)
Represents common stockholders' equity less preferred dividends in
arrears ($3.8 million at September 30, 2012, $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
2.44%, 2.31%, 2.17%, 1.89% and 1.90%, respectively. (5) Represents
operating expenses as a percentage of net interest and dividend
income plus noninterest income.
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