Intervest Bancshares Corporation (NASDAQ-GS: IBCA), parent
company of Intervest National Bank (INB), announced that its net
earnings for the second quarter of 2013 (Q2-13) increased 39% to
$3.2 million, or $0.14 per share, from $2.3 million, or $0.11 per
share, for the second quarter of 2012 (Q2-12). For the first half
of 2013 (6mths-13), net earnings increased 30% to $6.6 million, or
$0.30 per share, from $5.1 million, or $0.24 per share, for the
first half of 2012 (6mths-12).
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.
The increase in net earnings for both 2013 periods was primarily
driven by a credit for loan losses, a lower provision for real
estate losses and a decrease in net real estate expenses, partially
offset by decreases in both net interest income and noninterest
income and higher income tax expense as discussed below.
Financial Operating Highlights
- A credit for loan losses of $0.8
million and $1.8 million was recorded in Q2-13 and 6mths-13,
respectively, compared to no credits or provisions for loan losses
in the same periods of 2012. The credits were a function of partial
cash recoveries of prior loan charge offs, fewer substandard loans
outstanding and an overall decrease in the loan portfolio.
- The provision for real estate losses
decreased to $0.1 million in Q2-13 from $1.4 million in Q2-12, and
to $0.7 million in 6mths-13 from $1.9 million in 6mths-12,
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 $0.5 million in Q2-12 and $0.9 million in
6mths-12. For 2013, REO activities produced net income of $0.3
million in Q2-13 and $1.3 million in 6mths-13, due to a $0.7
million gain from the sale of one property in Q2-13 and a total of
$1.6 million ($1.5 million in Q1-13 and $0.1 million in Q2-13) of
cash recoveries of expenses associated with previously owned
properties. Exclusive of these income items, net real estate
expenses would have been $0.5 million in Q2-13 and $1.0 million in
6mths-13.
- Net interest and dividend income
decreased to $8.6 million in Q2-13, from $9.7 million in Q2-12, and
to $17.6 million in 6mths-13 from $19.7 million in 6mths-12. The
net interest margin (exclusive of loan prepayment income) improved
to 2.30% in Q2-13, from 2.23% in Q2-12 and to 2.33% in 6mths-13,
from 2.19% in 6mths-12.
- Noninterest income decreased to $0.7
million in Q2-13 from $1.4 million in Q2-12, and to $1.4 million in
6mths-13 from $2.5 million in 6mths-12. The decreases in both
periods were due to less income from loan prepayments and a higher
level of security impairment charges.
- Operating expenses decreased to $4.0
million in Q2-13 from $4.2 million in Q2-12, and to $8.1 million in
6mths-13 from $8.3 million in 6mths-12, primarily due to a decrease
in FDIC insurance expense. The Company's efficiency ratio (which
measures its ability to control expenses as a percentage of
revenues) continued to be favorable but increased to 43% in Q2-13,
from 37% in Q2-12, due to lower revenues.
- Income tax expense increased to $2.8
million in Q2-13, from $2.3 million in Q2-12, and to $5.9 million
in 6mths-13, from $5.0 million in 6mths-12, due to higher pre-tax
income.
Financial Condition Highlights
- Total assets at June 30, 2013 decreased
to $1.60 billion from $1.67 billion at December 31, 2012, primarily
reflecting decreases of $51 million in loans and $33 million in
security investments, partially offset by a $27 million increase in
cash and short-term investments.
- Total loans decreased to $1.06 billion
at June 30, 2013, from $1.11 billion at December 31, 2012. New loan
originations for 6mths-13 increased to $124 million, from $97
million for 6mths-12. Total loan repayments increased to $172
million in 6mths-13, from $121 million in 6mths-12.
- The allowance for loan losses at June
30, 2013 was $26.5 million, representing 2.50% of total net loans,
compared to $28.1 million, or 2.54%, at December 31, 2012. The
allowance included specific reserves for impaired loans (comprised
of all nonaccrual loans as well as accruing restructured loans or
TDRs) at each date totaling $4.7 million and $5.9 million,
respectively.
- Total securities held to maturity
decreased to $411 million at June 30, 2013 from $444 million at
December 31, 2012.
- Total deposits at June 30, 2013
decreased to $1.29 billion from $1.36 billion at December 31,
2012.
- Borrowed funds and related interest
payable at June 30, 2013 decreased to $56.7 million, from $62.9
million at December 31, 2012, due to the payment in June of accrued
interest payable on outstanding debentures.
- Nonaccrual loans decreased to $39
million at June 30, 2013, from $46 million at December 31, 2012.
Nonaccrual loans include certain TDRs that are current as to
payments and performing in accordance with their renegotiated
terms. At June 30, 2013, such loans totaled $35.8 million compared
to $36.3 million at December 31, 2012. These loans were yielding
4.57% at June 30, 2013.
- REO decreased to $14.8 million at June
30, 2013, from $15.9 million at December 31, 2012. The decrease
reflected the sale of one property ($3.4 million) and $0.7 million
of write-downs in the carrying value of various properties,
partially offset by one new property ($3.0 million).
- Total stockholders' equity increased
slightly to $212 million at June 30, 2013, from $211 million at
December 31, 2012. Book value per common share (after subtracting
preferred dividends in arrears) increased to $8.64 at June 30, 2013
from $8.44 at December 31, 2012.
- INB's regulatory capital ratios at June
30, 2013 were as follows: Tier One Leverage - 15.45%; Tier One
Risk-Based - 20.99%; and Total Risk-Based Capital - 22.25%, well
above the minimum requirements to be considered a well-capitalized
institution.
The decrease in net interest and dividend income, the Company's
primary source of earnings, of $1.1 million in Q2-13 and $2.1
million in 6mths-13 was primarily due to INB's smaller balance
sheet, partially offset by a higher net interest margin. In Q2-13,
total average interest-earning assets decreased by $260 million
from Q2-12, reflecting decreases of $98 million in loans and $162
million in total securities and overnight investments. At the same
time, average deposits and borrowed funds decreased by $274 million
and $10 million, respectively, while average stockholders' equity
increased by $14 million. The net interest margin increased
slightly by 7 basis points to 2.30% in Q2-13, reflecting a 5 basis
point improvement in the interest rate spread and a higher ratio of
interest-earning assets to interest-bearing liabilities, or a $24
million increase in net interest-earning assets. The higher spread
was due to 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.
Overall, the average cost of funds decreased by 37 basis points to
2.09% in Q2-13, from 2.46% in Q2-12, while the average yield on
earning assets decreased at a slower pace or by 32 basis points to
4.20% in Q2-13, from 4.52% in Q2-12. For the 6mths-13 period, total
average interest-earning assets decreased by $284 million from
6mths-12, reflecting decreases of $83 million in loans and $201
million in total securities and overnight investments. At the same
time, average deposits and borrowed funds decreased by $290 million
and $12 million, respectively, while average stockholders' equity
increased by $14 million. The net interest margin increased by 14
basis points to 2.33% in 6mths-13. The average cost of funds
decreased by 39 basis points to 2.11% in 6mths-13, from 2.50% in
6mths-12, while the average yield on earning assets decreased by 28
basis points to 4.23% in 6mths-13, from 4.51% in 6mths-12. The
reasons for the six-month changes were the same as the quarterly
variances.
The decrease in securities held to maturity was due to calls
exceeding new purchases. At June 30, 2013, the portfolio
represented 26% of total assets and was comprised almost entirely
of U.S. government agency debt ($335 million) and residential
mortgage-backed pass-through securities ($73 million), with a
weighted-average expected yield, remaining life and contractual
maturity of 1.04%, 3.5 years and 6.6 years, respectively.
The decrease in loans receivable reflected $154.0 million of
payoffs, $18.5 million of amortization, $1.9 million of chargeoffs
and a $3.0 million transfer to REO, largely offset by $124.2
million of new loans and $2.0 million of recoveries of prior loan
charge offs. New originations were comprised primarily of $78.3
million of commercial real estate loans, $25.8 million of
multifamily loans and $19.6 million of loans made on investor owned
1-4 family condominiums. Loans paid off in 6mths-13 had a
weighted-average yield of 5.98%. New loans in 6mths-13 had a
weighted-average yield, term and loan-to-value ratio of 4.47%, 5.9
years and 58%, respectively, compared to 4.85%, 5.4 years and 58%,
respectively, in 6mths-12. Nearly all of the new loans in both
periods had fixed interest rates.
The decrease in deposits reflected a $54 million decrease in CD
accounts, of which $8 million were brokered, and a $24 million
decrease in money market accounts. At June 30, 2013, there were $70
million of brokered CDs outstanding with a rate of 4.89%, of which
$33 million mature within one year.
The increase in stockholders' equity was primarily due to $7.4
million of net earnings (before preferred dividend requirements)
and $0.7 million from the exercise of stock options and stock
compensation expense. These increases were nearly offset by a $6.1
million reduction in preferred stock and the payment of $1.2
million in preferred dividends. As previously announced, in June
2013, IBC completed the repurchase of 6,250 shares of its Series A
Preferred Stock from the U.S. Treasury and those shares were
retired. The shares were repurchased at $970 per share, plus
accrued and unpaid dividends through June 24, 2013. The remaining
18,750 shares were sold by the Treasury to third party investors
and continue to be outstanding at June 30, 2013.
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. We assume no
obligation to update any forward looking statements. 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 Six-Months Ended June
30, June 30, Selected Operating Data:
2013 2012 2013
2012 Interest and dividend income $ 15,623 $ 19,706 $
31,872 $ 40,404 Interest expense 7,048
10,001 14,293
20,741 Net interest and dividend income 8,575 9,705 17,579
19,663 (Credit) provision for loan losses (750 ) - (1,750 ) -
Noninterest income 702 1,406 1,445 2,531 Noninterest expenses:
Provision for real estate losses 76 1,397 705 1,908 Real estate
(income) expenses, net (346 ) 479 (1,332 ) 939 Operating expenses
3,954 4,149 8,092
8,313 Earnings before income taxes
6,343 5,086 13,309 11,034 Provision for income taxes 2,804
2,326 5,879
5,020 Net earnings before preferred dividend
requirements 3,539 2,760 7,430 6,014 Preferred dividend
requirements (1) 326 448
788 892 Net earnings available
to common stockholders $ 3,213 $ 2,312
$ 6,642 $ 5,122 Basic and diluted earnings per
common share $ 0.14 $ 0.11 $
0.30 $ 0.24 Average shares used for basic
earnings per share 21,923,243 21,590,689 21,877,973 21,542,103
Average shares used for diluted earnings per share (2) 22,003,149
21,591,648 21,920,280 21,542,103 Common shares outstanding at end
of period 21,923,756 21,590,689 21,923,756 21,590,689 Common stock
options/warrants outstanding at end of period (2)
1,061,755 1,082,322
1,061,755 1,082,322 Yield on
interest-earning assets 4.20 % 4.52 % 4.23 % 4.51 % Cost of funds
2.09 % 2.46 % 2.11 % 2.50 % Net interest margin (3)
2.30 % 2.23 % 2.33 % 2.19
% Return on average assets (annualized) 0.88 % 0.58 % 0.91 % 0.63 %
Return on average common equity (annualized) 7.39 % 6.22 % 7.83 %
6.83 % Effective income tax rate 44 % 46 % 44 % 46 % Efficiency
ratio (4) 43 % 37 % 43 %
37 % Average loans outstanding $ 1,061,202 $
1,159,305 $ 1,078,943 $ 1,162,318 Average securities outstanding
420,763 586,814 428,146 632,829 Average short-term investments
outstanding 11,343 7,071 11,107 7,368 Average assets outstanding
1,613,961 1,887,668
1,625,946 1,916,410
Average interest-bearing deposits outstanding $ 1,297,106 $
1,570,674 $ 1,311,444 $ 1,601,169 Average borrowings outstanding
56,702 67,202 56,702 68,779 Average stockholders' equity
215,752 201,873
214,140 200,319
At Jun
30,
At Mar
31,
At Dec
31,
At Sep
30,
At Jun
30,
Selected Financial Condition Information: 2013
2013 2012 2012
2012 Total assets $ 1,596,639 $ 1,627,787 $ 1,665,792 $
1,751,880 $ 1,862,110 Cash and short-term investments 86,977 83,945
60,395 94,268 122,378 Securities held to maturity 410,986 409,184
443,777 440,002 535,056 Loans, net of unearned fees 1,056,191
1,081,482 1,107,466 1,155,171 1,137,780 Allowance for loan losses
26,455 28,210 28,103 28,382 28,844 Allowance for loan losses/net
loans 2.50 % 2.61 % 2.54 % 2.46 % 2.54 % Deposits 1,293,175
1,318,215 1,362,619 1,432,209 1,554,615 Borrowed funds and accrued
interest payable 56,760 63,373 62,930 69,487 72,528 Preferred
stockholder's equity 18,620 24,720 24,624 24,528 24,431 Common
stockholders' equity 193,155 190,545 186,323 182,580 179,690 Common
book value per share (5) 8.64
8.48 8.44 8.28
8.16 Loan chargeoffs for the quarter $ 1,823 $
115 $ 676 $ 548 $ 498 Loan recoveries for the quarter 818 1,222 397
86 173 Real estate chargeoffs for the quarter - - 1,124 3,642 -
Security impairment writedowns for the quarter 325
366 425
- - Nonaccrual loans (6) $
39,069 $ 40,931 $ 45,898 $ 47,957 $ 50,643 Real estate owned, net
of valuation allowance 14,869 18,334 15,923 21,858 26,370
Investment securities on a cash basis 2,923 3,292 3,721 4,221 4,221
Accruing troubled debt restructured (TDR) loans (7). 11,464 13,906
20,076 14,167 14,596 Loans 90 days past due and still accruing
5,285 5,916 4,391 6,503 5,290 Loans 60-89 days past due and still
accruing 11,065 - - 15,477 1,902 Loans 31-59 days past due and
still accruing - 12,998
15,497 50 -
(1) Represents dividend requirements on
cumulative preferred stock plus amortization of related preferred
stock discount. (2) Outstanding options/warrants to purchase
235,630; 1,043,322; 235,630 and 1,082,322 shares were not dilutive
for quarter and six-month 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 2.47%, 2.46%, 2.51% and 2.41%,
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 $3.7 million, $4.6 million, $4.2 million, $3.8 million
and $3.5 million, respectively, divided by common shares
outstanding. (6) Include performing TDRs maintained on nonaccrual
status of $36 million, $33 million, $36 million, $39 million and
$39 million, respectively. (7) Represent loans whose terms have
been modified mostly through the deferral of principal and/or a
partial reduction in interest payments, or extension of maturity
date. At June 30, 2013, all loans were performing and were yielding
approximately 5%.
INTERVEST
BANCSHARES CORPORATION
Consolidated Financial
Highlights
At or For The Period Ended
($ in thousands, except per share
amounts)
Six-Months
Ended
June 30,
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 $ 1,596,639 $ 1,665,792 $ 1,969,540 $ 2,070,868 $ 2,401,204
Cash and short-term investments 86,977 60,395 29,863 23,911 7,977
Securities held to maturity 410,986 443,777 700,444 614,335 634,856
Loans, net of unearned fees 1,056,191 1,107,466 1,163,790 1,337,326
1,686,164 Allowance for loan losses 26,455 28,103 30,415 34,840
32,640 Allowance for loan losses/net loans 2.50 % 2.54 % 2.61 %
2.61 % 1.94 % Deposits 1,293,175 1,362,619 1,662,024 1,766,083
2,029,984 Borrowed funds and accrued interest payable 56,760 62,930
78,606 84,676 118,552 Preferred stockholder's equity 18,620 24,624
24,238 23,852 23,466 Common stockholders' equity 193,155 186,323
173,293 162,108 190,588 Common book value per share (1) 8.64 8.44
8.07 7.61 23.04 Market price per common share 6.68
3.89 2.65
2.93 3.28
Asset Quality
Highlights Nonaccrual loans $ 39,069 $ 45,898 $ 57,240 $ 52,923
$ 123,877 Real estate owned, net of valuation allowance 14,869
15,923 28,278 27,064 31,866 Investment securities on a cash basis
2,923 3,721 4,378 2,318 1,385 Accruing troubled debt restructured
loans (2) 11,464 20,076 9,030 3,632 97,311 Loans 90 days past due
and still accruing 5,285 4,391 1,925 7,481 6,800 Loans 31-89 days
past due and still accruing 11,065 15,497 28,770 11,364 5,925 Loan
chargeoffs 1,938 3,152 9,598 100,146 8,103 Loan recoveries 2,040
840 155 883 1,354 Real estate chargeoffs - 4,766 - 15,614 -
Impairment writedowns on security investments 691
582 201
1,192 2,258
Statement of
Operations Highlights: Interest and dividend income $ 31,872 $
77,284 $ 92,837 $ 107,072 $ 123,598 Interest expense 14,293
38,067 50,540
62,692 81,000 Net
interest and dividend income 17,579 39,217 42,297 44,380 42,598
(Credit) provision for loan losses (1,750 ) - 5,018 101,463 10,865
Noninterest income 1,445 6,194 4,308 2,110 297 Noninterest
expenses: Provision for real estate losses 705 4,068 3,349 15,509
2,275 Real estate (income) expenses, net (1,332 ) 2,146 1,619 4,105
4,945 Operating expenses 8,092 16,668
15,861 19,069
19,864 Earnings (loss) before income taxes
13,309 22,529 20,758 (93,656 ) 4,946 Provision (benefit) for income
taxes 5,879 10,307
9,512 (40,348 ) 1,816 Net
earnings (loss) before preferred dividend requirements 7,430 12,222
11,246 (53,308 ) 3,130 Preferred dividend requirements (3)
788 1,801 1,730
1,667 1,632 Net earnings
(loss) available to common stockholders $ 6,642 $
10,421 $ 9,516 $ (54,975 ) $
1,498 Basic earnings (loss) per common share $ 0.30 $ 0.48 $
0.45 $ (4.95 ) $ 0.18 Diluted earnings (loss) per common share $
0.30 $ 0.48 $ 0.45 $ (4.95 ) $ 0.18 Average common shares used to
calculate: Basic earnings (loss) per common share 21,877,973
21,566,009 21,126,187 11,101,196 8,270,812 Diluted earnings (loss)
per common share 21,920,280 21,568,196 21,126,187 11,101,196
8,270,812 Common shares outstanding 21,923,756
21,589,589 21,125,289
21,126,489 8,270,812
Other ratios: Net interest margin (4) 2.33 % 2.29 % 2.18 %
2.11 % 1.83 % Return on average assets 0.91 % 0.66 % 0.56 % -2.42 %
0.13 % Return on average common equity 7.83 % 6.82 % 6.74 % -32.20
% 1.65 % Effective income tax rate 44 % 46 % 46 % 43 % 37 %
Efficiency ratio (5) 43 % 37 %
34 % 41 % 46 % (1)
Represents common stockholders' equity less preferred dividends in
arrears ($3.7 million at June 30, 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)
Represent loans whose terms have been modified mostly through the
deferral of principal and/or a partial reduction in interest
payments. At June 30, 2013, all loans were performing and were
yielding approximately 5%. (3) Represents dividend requirements on
cumulative preferred stock plus 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 2.51%, 2.59%, 2.31%, 2.17% and 1.89%, respectively. (5)
Represents operating expenses as a percentage of net interest and
dividend income plus noninterest income.
Intervest Bancshares CorporationLowell S. Dansker, Chairman,
212-218-2800Fax: 212-218-2808
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