Intervest Bancshares Corporation (IBC) (NASDAQ-GS: IBCA), parent
company of Intervest National Bank (INB), today announced that its
net earnings for the third quarter of 2013 (Q3-13) increased 16% to
$2.6 million, or $0.12 per share, from $2.2 million, or $0.10 per
share, for the third quarter of 2012 (Q3-12). For the first nine
months of 2013 (9mths-13), net earnings increased 26% to $9.2
million, or $0.42 per share, from $7.3 million, or $0.34 per share,
for the first nine months of 2012 (9mths-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.
As discussed below, the increase in quarterly earnings was
driven primarily by 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. The increase in
year-to-date earnings was a function of the same quarterly factors
as well as a credit for loan losses.
Financial Operating
Highlights
- The provision for real estate losses
decreased to $0.2 million in Q3-13 from $1.0 million in Q3-12, and
to $0.9 million in 9mths-13 from $2.9 million in 9mths-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, decreased to $0.2 million in Q3-13 from $0.9 million
in Q3-12, reflecting a lower level of REO. For 9mths-13, REO
activities produced net income of $1.1 million, compared to $1.8
million of net expenses in 9mths-12, largely due to $0.8 million of
gains from the sale of three properties and $1.6 million of cash
recoveries of expenses associated with previously owned properties.
Exclusive of these income items, net real estate expenses would
have been $1.3 million in 9mths-13.
- The provision for loan losses was $0.3
million in Q3-13 compared to no provision in Q3-12. The increase
was driven primarily by growth in the loan portfolio. For 9mths-13,
a net credit for loan losses of $1.5 million was recorded compared
to no provisions or credits for loan losses in 9mths-12. The credit
was largely a function of partial cash recoveries of prior loan
charge offs during the first and second quarters of 2013.
- Net interest and dividend income
decreased to $8.8 million in Q3-13, from $9.8 million in Q3-12, and
to $26.4 million in 9mths-13 from $29.5 million in 9mths-12. The
net interest margin was 2.32% in Q3-13 and Q3-12, and 2.33% in
9mths-13 and 2.23% in 9mths-12.
- Noninterest income decreased to $0.9
million in Q3-13 from $1.2 million in Q3-12, and to $2.3 million in
9mths-13 from $3.7 million in 9mths-12. The decreases for both
periods were due to less income from loan prepayments and a higher
level of security impairment charges.
- Operating expenses decreased to $3.9
million in Q3-13 from $4.2 million in Q3-12, and to $12.0 million
in 9mths-13 from $12.5 million in 9mths-12, primarily due to a
decrease in FDIC insurance expense resulting from a smaller balance
sheet and improved risk assessment rating.
- Our efficiency ratio (which measures
our ability to control expenses as a percentage of revenues)
continued to be favorable but increased slightly to 40% in Q3-13,
from 38% in Q3-12, due to lower revenues.
- Income tax expense amounted to $2.3
million in both Q3-13 and Q3-12. For 9mths-13, income tax expense
increased to $8.2 million from $7.3 million in 9mths-12 due to
higher pre-tax income.
Financial Condition
Highlights
- Assets at September 30, 2013 totaled
$1.58 billion compared to $1.67 billion at December 31, 2012,
primarily reflecting decreases of $27 million in security
investments and $30 million in cash and short-term
investments.
- Loans outstanding increased by $44
million during Q3-13 and totaled $1.10 billion at September 30,
2013, compared to $1.11 billion at December 31, 2012. New loan
originations for 9mths-13 increased to $221 million, from $159
million for 9mths-12, while loan repayments also increased to $225
million in 9mths-13, from $165 million in 9mths-12.
- Nonaccrual loans decreased to $39.5
million at September 30, 2013, from $45.9 million at December 31,
2012. Nonaccrual loans included restructured loans (TDRs) of $35.8
million at September 30 and $36.3 million at December 31 that were
current and have performed in accordance with their renegotiated
terms. At September 30, 2013, such loans had a weighted-average
yield of 4.57%.
- The allowance for loan losses at
September 30, 2013 was $26.8 million, or 2.43% of total 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 and TDRs) at each date totaling $4.8
million and $5.9 million, respectively.
- Securities held to maturity decreased
to $416 million at September 30, 2013 from $444 million at December
31, 2012.
- Deposits at September 30, 2013
decreased to $1.30 billion from $1.36 billion at December 31,
2012.
- Borrowed funds and related interest
payable at September 30, 2013 decreased to $57.2 million, from
$62.9 million at December 31, 2012, reflecting the payment in Q2-13
of accrued interest payable on outstanding debentures.
- REO decreased to $12.0 million at
September 30, 2013, from $15.9 million at December 31, 2012. The
decrease reflected $6.0 million of sales and $0.9 million of
write-downs in carrying value, partially offset by the addition of
one property in the amount of $3.0 million.
- Stockholders' equity decreased to $192
million at September 30, 2013, from $211 million at December 31,
2012, reflecting the redemption of $25 million of preferred stock
and the payment of $5.1 million of preferred dividends in arrears,
partially offset by $10 million of earnings.
- INB's regulatory capital ratios at
September 30, 2013 were well above the minimum requirements to be
considered a well-capitalized institution and were as follows: Tier
One Leverage - 14.97%; Tier One Risk-Based - 19.21%; and Total
Risk-Based Capital - 20.48%.
- Book value per common share was $8.77
at September 30, 2013.
The $1.0 million decrease in net interest and dividend income
(our primary source of earnings) in Q3-13 compared to Q3-12 was due
to a smaller balance sheet. In Q3-13, total average
interest-earning assets decreased by $183 million from Q3-12,
reflecting decreases of $84 million in loans and $99 million in
total securities and overnight investments. At the same time,
average deposits and borrowed funds decreased by $215 million and
$10 million, respectively, while average stockholders' equity
decreased by $4 million. The net interest margin was 2.32% in
Q3-13, unchanged from Q3-12, as the benefit of a higher ratio of
interest-earning assets to interest-bearing liabilities (or a $42
million increase in net interest-earning assets) was offset by a 5
basis point decrease in our interest rate spread. The lower spread
was due to 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, largely offset by lower rates paid on
deposits and the run-off of higher-cost CDs and borrowings.
Overall, the average yield on earning assets decreased by 38 basis
points to 4.10% in Q3-13, from 4.48% in Q3-12, while the average
cost of funds decreased by 33 basis points to 2.02% in Q3-13, from
2.35% in Q3-12.
The decrease in net interest and dividend income of $3.1 million
in 9mths-13 compared to 9mths-12 was also due to a smaller balance
sheet, partially offset by an improved net interest margin for the
period. In 9mths-13, total average interest-earning assets
decreased by $250 million from 9mths-12, reflecting decreases of
$84 million in loans and $166 million in total securities and
overnight investments. At the same time, average deposits and
borrowed funds decreased by $265 million and $11 million,
respectively, while average stockholders' equity increased by $8
million. The net interest margin improved to 2.33% in 9mths-13,
from 2.23% in 9mths-12, reflecting a 6 basis point improvement in
our interest rate spread and a $26 million increase in net
interest-earning assets. The average cost of funds decreased by 37
basis points to 2.08% in 9mths-13, from 2.45% in 9mths-12, while
the average yield on earning assets decreased by 31 basis points to
4.19% in 9mths-13, from 4.50% in 9mths-12. The reasons for the
changes in the average yield and cost of funds were the same as
those noted above in the quarterly variance.
The decrease in securities held to maturity was due to calls
exceeding new purchases. At September 30, 2013, the portfolio
represented 26% of total assets and was comprised almost entirely
of U.S. government agency debt ($333 million) and residential
mortgage-backed pass-through securities ($80 million), with a
weighted-average expected yield, remaining life and contractual
maturity of 1.14%, 3.3 years and 6.3 years, respectively.
The change in loans receivable reflected $198.3 million of
payoffs, $26.9 million of amortization, $1.9 million of chargeoffs
and a $3.0 million transfer to REO, largely offset by $221.1
million of new loans and $2.1 million of recoveries of prior loan
charge offs. New originations were comprised of $139 million of
commercial real estate loans, $50 million of multifamily loans and
$32 million of loans made on investor owned 1-4 family
condominiums. Loans paid off in 9mths-13 had a weighted-average
rate of 5.96%. New loans in 9mths-13 had a weighted-average rate,
term and loan-to-value ratio of 4.40%, 6.6 years and 61%,
respectively, compared to 4.64%, 6.0 years and 58%, respectively,
in 9mths-12. Nearly all of the new loans in both periods had fixed
interest rates. At September 30, 2013, the loan portfolio was
comprised of approximately 74% of commercial real estate loans and
25% of multifamily loans (inclusive of loans on investor owned 1-4
family condominiums).
The decrease in deposits reflected a $39 million decrease in CD
accounts, of which $29 million were brokered, and a $25 million
decrease in money market accounts. At September 30, 2013, there
were $85 million of brokered CDs outstanding with a
weighted-average rate of 3.48%, of which $32 million (with a
weighted-average rate of 4.76%) mature within one year.
On June 24, 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. On August 15, 2013, IBC
redeemed the remaining 18,750 shares of Preferred Stock (which were
purchased by unrelated third parties from the Treasury) for a
purchase price equaling the stated liquidation value of $1,000 per
share, plus accumulated and unpaid dividends. The total cost of
redeeming these shares was $22.6 million, which included $3.9
million of preferred dividends. All 25,000 shares of Preferred
Stock were cancelled and IBC had no preferred stockholders at
September 30, 2013. As of the date of this release, the 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 Nine-Months Ended
September 30, September 30, Selected
Operating Data: 2013
2012 2013 2012 Interest and
dividend income $15,624 $19,082 $47,496 $59,486
Interest expense 6,794 9,223 21,087 29,964 Net
interest and dividend income 8,830 9,859 26,409 29,522 Provision
(credit) for loan losses 250 - (1,500) - Noninterest income 901
1,187 2,346 3,718 Noninterest expenses: Provision for real estate
losses 250 1,025 955 2,933 Real estate expenses (income), net 212
883 (1,120) 1,822 Operating expenses 3,862 4,160
11,954 12,473 Earnings before income taxes 5,157 4,978
18,466 16,012 Provision for income taxes 2,300 2,300
8,179 7,320 Net earnings before preferred dividend
requirements 2,857 2,678 10,287 8,692 Preferred dividend
requirements (1) 269 453 1,057 1,345 Net
earnings available to common stockholders $ 2,588 $ 2,225
$ 9,230 $ 7,347 Basic and diluted earnings per common
share $0.12 $0.10 $0.42 $0.34 Preferred cash dividends paid
$3,840 - $5,068 - Average shares
used for basic earnings per share 21,915,596 21,589,744 21,891,886
21,558,092 Average shares used for diluted earnings per share (2)
22,051,462 21,590,722 21,972,950 21,558,368 Common shares
outstanding at end of period 21,916,623 21,589,589 21,916,623
21,589,589 Common stock options/warrants outstanding at end of
period (2) 1,054,455 1,041,122
1,054,455 1,041,122 Yield on interest-earning assets 4.10%
4.48% 4.19% 4.50% Cost of funds 2.02% 2.35% 2.08% 2.45% Net
interest margin (3) 2.32% 2.32%
2.33% 2.23% Return on average assets (annualized) 0.72%
0.59% 0.85% 0.62% Return on average common equity (annualized)
5.94% 5.93% 7.20% 6.53% Effective income tax rate 45% 46% 44% 46%
Efficiency ratio (4) 40% 38% 42%
38% Average loans outstanding $1,077,578 $1,162,038
$1,078,483 $1,162,224 Average securities outstanding 422,234
524,000 426,153 595,455 Average short-term investments outstanding
11,027 7,987 11,080 7,576 Average assets outstanding
1,577,214 1,814,884 1,609,523 1,882,314
Average interest-bearing deposits outstanding $1,278,867 $1,494,247
$1,300,465 $1,565,268 Average borrowings outstanding 56,702 66,213
56,702 67,918 Average stockholders' equity
201,401 205,206 209,847 201,953
At Sep
30,
At Jun
30,
At Mar
31,
At Dec
31,
At Sep
30,
Selected Financial Condition Information: 2013
2013 2013 2012
2012 Total assets $1,584,239 $1,596,639 $1,627,787
$1,665,792 $1,751,880 Cash and short-term investments 30,253 86,977
83,945 60,395 94,268 Securities held to maturity 416,321 410,986
409,184 443,777 440,002 Loans, net of unearned fees 1,100,277
1,056,191 1,081,482 1,107,466 1,155,171 Allowance for loan losses
26,777 26,455 28,210 28,103 28,382 Allowance for loan losses/net
loans 2.43% 2.50% 2.61% 2.54% 2.46% Deposits 1,298,403 1,293,175
1,318,215 1,362,619 1,432,209 Borrowed funds and accrued interest
payable 57,165 56,760 63,373 62,930 69,487 Preferred stockholder's
equity - 18,620 24,720 24,624 24,528 Common stockholders' equity
192,288 193,155 190,545 186,323 182,580 Common book value per share
(5) 8.77 8.64 8.48 8.44 8.28
Loan chargeoffs for the quarter $ - $1,823 $ 115 $ 676 $ 548 Loan
recoveries for the quarter 72 818 1,222 397 86 Real estate
chargeoffs for the quarter 4,171 - - 1,124 3,642 Security
impairment writedowns for the quarter 273 325
366 425 - Nonaccrual loans (6) $39,517 $39,069
$40,931 $45,898 $47,957 Real estate owned, net of valuation
allowance 12,019 14,869 18,334 15,923 21,858 Investment securities
on a cash basis 2,604 2,923 3,292 3,721 4,221 Accruing troubled
debt restructured (TDR) loans (7) 11,381 11,464 13,906 20,076
14,167 Loans 90 days past due and still accruing (8) 18,403 5,285
5,916 4,391 6,503 Loans 60-89 days past due and still accruing
3,265 11,065 - - 15,477 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 234,430 shares and
1,041,122 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
compute to 2.48%, 2.49%, 2.50% and 2.44%, 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 $0,
$3.7 million, $4.6 million, $4.2 million and $3.8 million,
respectively, divided by common shares outstanding. (6) Include
performing TDRs maintained on nonaccrual status of $36 million, $36
million, $33 million, $36 million and $39 million, respectively.
(7) Represent loans whose terms have been modified mostly through
the deferral of principal and/or a partial reduction in interest
payments, or extension of maturity date. At September 30, 2013, all
loans were performing and were yielding approximately 5%. (8) The
amount at September 30, 2013 consisted of seven loans that matured
and the borrowers were making monthly loan payments. The loans were
in the process of being extended as of September 30, 2013.
INTERVEST
BANCSHARES CORPORATION
Consolidated Financial
Highlights
At or For The Period Ended
($ in thousands, except per share
amounts)
Nine-Months
Ended
Sep 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 $1,584,239 $1,665,792 $1,969,540 $2,070,868 $2,401,204 Cash
and short-term investments 30,253 60,395 29,863 23,911 7,977
Securities held to maturity 416,321 443,777 700,444 614,335 634,856
Loans, net of unearned fees 1,100,277 1,107,466 1,163,790 1,337,326
1,686,164 Allowance for loan losses 26,777 28,103 30,415 34,840
32,640 Allowance for loan losses/net loans 2.43% 2.54% 2.61% 2.61%
1.94% Deposits 1,298,403 1,362,619 1,662,024 1,766,083 2,029,984
Borrowed funds and accrued interest payable 57,165 62,930 78,606
84,676 118,552 Preferred stockholder's equity - 24,624 24,238
23,852 23,466 Common stockholders' equity 192,288 186,323 173,293
162,108 190,588 Common book value per share (1) 8.77 8.44 8.07 7.61
23.04 Market price per common share 7.93 3.89
2.65 2.93 3.28
Asset Quality Highlights
Nonaccrual loans $39,517 $45,898 $57,240 $52,923 $123,877 Real
estate owned, net of valuation allowance 12,019 15,923 28,278
27,064 31,866 Investment securities on a cash basis 2,604 3,721
4,378 2,318 1,385 Accruing troubled debt restructured loans (2)
11,381 20,076 9,030 3,632 97,311 Loans 90 days past due and still
accruing (3) 18,403 4,391 1,925 7,481 6,800 Loans 31-89 days past
due and still accruing 3,265 15,497 28,770 11,364 5,925 Loan
chargeoffs 1,938 3,152 9,598 100,146 8,103 Loan recoveries 2,112
840 155 883 1,354 Real estate chargeoffs 4,171 4,766 - 15,614 -
Impairment writedowns on security investments 964 582
201 1,192 2,258
Statement of Operations
Highlights: Interest and dividend income $47,496 $77,284
$92,837 $107,072 $123,598 Interest expense 21,087 38,067
50,540 62,692 81,000 Net interest and dividend
income 26,409 39,217 42,297 44,380 42,598 (Credit) provision for
loan losses (1,500) - 5,018 101,463 10,865 Noninterest income 2,346
6,194 4,308 2,110 297 Noninterest expenses:
Provision for real estate losses
955 4,068 3,349 15,509 2,275 Real estate (income) expenses, net
(1,120) 2,146 1,619 4,105 4,945 Operating expenses 11,954
16,668 15,861 19,069 19,864 Earnings (loss)
before income taxes 18,466 22,529 20,758 (93,656) 4,946 Provision
(benefit) for income taxes 8,179 10,307 9,512
(40,348) 1,816 Net earnings (loss) before preferred dividend
requirements 10,287 12,222 11,246 (53,308) 3,130 Preferred dividend
requirements (4) 1,057 1,801 1,730 1,667
1,632 Net earnings (loss) available to common stockholders
$9,230 $10,421 $ 9,516 $(54,975) $
1,498 Basic earnings (loss) per common share $0.42 $0.48 $0.45
$(4.95) $0.18 Diluted earnings (loss) per common share $0.42 $0.48
$0.45 $(4.95) $0.18 Average common shares used to calculate: Basic
earnings (loss) per common share 21,891,886 21,566,009 21,126,187
11,101,196 8,270,812 Diluted earnings (loss) per common share
21,972,950 21,568,196 21,126,187 11,101,196 8,270,812 Common shares
outstanding 21,916,623 21,589,589 21,125,289
21,126,489 8,270,812
Other ratios: Net
interest margin (5) 2.33% 2.29% 2.18% 2.11% 1.83% Return on average
assets 0.85% 0.66% 0.56% -2.42% 0.13% Return on average common
equity 7.20% 6.82% 6.74% -32.20% 1.65% Effective income tax rate
44% 46% 46% 43% 37%
Efficiency ratio (6)
42% 37% 34% 41% 46% (1)
Represents common stockholders' equity less preferred dividends in
arrears (none at September 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 September 30, 2013, all loans were performing and were
yielding approximately 5%. (3) The amount at September 30, 2013
consisted of seven loans that matured and the borrowers were making
monthly loan payments. The loans were in the process of being
extended as of September 30, 2013. (4) Represents dividend
requirements on cumulative preferred stock plus amortization of
related preferred stock discount. (5) 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 2.50%, 2.59%, 2.31%, 2.17% and
1.89%, respectively. (6) Represents operating expenses as a
percentage of net interest and dividend income plus noninterest
income.
Intervest Bancshares CorporationLowell S. Dansker,
ChairmanPhone 212-218-2800Fax 212-218-2808
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