Intervest Bancshares Corporation (IBC) (NASDAQ-GS: IBCA), parent
company of Intervest National Bank (INB), today announced that its
net earnings for the first quarter of 2014 (Q1-14) increased 12% to
$3.8 million, or $0.17 per share, from $3.4 million, or $0.16 per
share, for the first quarter of 2013 (Q1-13).
Since 1993, Intervest has been engaged in commercial and
multifamily real estate mortgage lending with an emphasis on cash
flowing properties located mostly on the East Coast of the U.S.
Most recently, Intervest has also expanded its lending market to
include some Midwest and Western states, primarily in loans on
single tenant credit and non-credit (triple-net leased) retail
properties. Intervest's 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.
Operating
Summary
- There were no preferred dividend
requirements in Q1-14, compared to $0.5 million in Q1-13, due to
the repurchase and retirement of IBC's preferred stock (TARP)
during June and August 2013.
- Net interest and dividend income
increased 13% to $10.2 million in Q1-14, from $9.0 million in
Q1-13, reflecting a higher net interest margin. The margin
(exclusive of loan prepayment income) benefitted from lower deposit
costs and increased to 2.73% in Q1-14 from 2.37% in Q1-13.
- A credit for loan losses of $0.5
million was recorded in Q1-14, compared to a $1.0 million credit in
Q1-13. The amount for Q1-14 reflected the upgrade of one performing
TDR loan due to an increase in the loan's collateral value. The
Q1-13 credit was primarily the result of $1.1 million of cash
recoveries of prior charge offs from settlements of litigation
relating to foreclosure actions.
- No provision for real estate losses was
recorded in Q1-14, compared to $0.6 million in Q1-13. The amount
for Q1-13 reflected decreases in the estimated fair value of a
number of properties owned through foreclosure (REO).
- Noninterest income (inclusive of loan
prepayment income) remained relatively unchanged at $0.8 million in
Q1-14, compared to $0.7 million in Q1-13, as a lower level of loan
prepayment income was offset by a decrease in security impairment
charges.
- Real estate expenses, net of rental and
other income, amounted to $0.2 million in Q1-14, compared to net
income of $0.9 million in Q1-13. The income for Q1-13 reflected
$1.5 million of cash recoveries of expenses from litigation
settlements. Excluding the recoveries, real estate expenses would
have amounted to $0.6 million Q1-13.
- Operating expenses increased to $4.6
million in Q1-14, from $4.2 million in Q1-13, primarily due to
normal salary increases, awards of bonuses to employees and higher
stock compensation expense, partially offset by a decrease in FDIC
insurance expense.
- Our efficiency ratio, which measures
our ability to control expenses as a percentage of revenues,
continued to be favorable and was 41% in Q1-14, compared to 42% in
Q1-13.
Balance Sheet
Summary
- Assets increased to $1.60 billion at
March 31, 2014, from $1.57 billion at December 31, 2013, reflecting
increases of $54 million in cash and short-term investments and $15
million in loans, partially offset by a $38 million decrease in
security investments.
- Loans outstanding increased to $1.15
billion at March 31, 2014, from $1.13 billion at December 31,
2013.
- Loan originations increased to $67
million in Q1-14, from $62 million in Q1-13. Loan repayments
decreased to $52 million in Q1-14 from $86 million in Q1-13.
- Deposits increased to $1.30 billion at
March 31, 2014, from $1.28 billion at December 31, 2013.
- Stockholders' equity increased to $202
million at March 31, 2014, from $197 million at December 31, 2013,
reflecting primarily an increase in retained earnings of $3.8
million.
- INB was well-capitalized at March 31,
2014 with regulatory capital ratios as follows: Tier One Leverage -
15.55%; Tier One Risk-Based Capital - 19.84%; and Total Risk-Based
Capital - 21.10%.
- Book value per common share increased
to $9.16 at March 31, 2014, from $8.99 at December 31, 2013.
Asset Quality
Summary
- Nonaccrual loans totaled $38.7 million
at March 31, 2014, compared to $35.9 million at December 31, 2013,
and included certain restructured loans (TDRs) at each period of
$32.6 million and $33.2 million, respectively. The TDRs were
current, have performed in accordance with their restructured terms
and had a weighted-average interest rate of approximately 4.6% at
each date.
- Accruing TDR loans amounted to
approximately $13 million at March 31, 2014 and December 31, 2013.
These loans had a weighted-average interest rate of approximately
5% at each date.
- The allowance for loan losses was $27.4
million, or 2.40% of total loans, at March 31, 2014, compared to
$27.8 million, or 2.47%, at December 31, 2013. The allowance
included specific reserves allocated to impaired loans at each date
(totaling $5.7 million and $6.1 million, respectively). Impaired
loans (comprised of nonaccrual loans, accruing TDRs and one other
accruing and performing loan) totaled $59.9 million at March 31,
2014, compared to $57.2 million at December 31, 2013.
- REO decreased to $9.3 million at March
31, 2014 from $10.6 million at December 31, 2013, reflecting the
sale of one property.
Net Interest and
Dividend Income
The $1.2 million increase in net interest and dividend income
was due to a higher net interest margin. The margin improved to
2.73% in Q1-14 from 2.37% in Q1-13, primarily due to a 41 basis
point increase in the interest rate spread and a $14 million
increase in net interest-earning assets. The higher spread
reflected lower rates paid on new deposits and run-off of
higher-cost legacy CDs, partially offset by payoffs of older,
higher yielding loans coupled with new loan originations at lower
market interest rates. Overall, our average cost of funds decreased
by 54 basis points to 1.59% in Q1-14 from 2.13% in Q1-13, while our
average yield on earning assets decreased by 13 basis points to
4.14% in Q1-14 from 4.27% in Q1-13. Total average interest-earning
assets decreased by $24 million in Q1-14 from Q1-13, reflecting a
$59 million decrease in total securities and overnight investments,
partially offset by a $35 million increase in loans. At the same
time, average deposits and borrowed funds decreased by $38 million,
while average total stockholders' equity decreased by $14 million
(due to the repurchase of preferred stock during 2013, partially
offset by an increase in average common equity).
Loans
The $15 million increase in loans reflected $66.8 million of new
originations and $0.1 million of recoveries of prior charge offs,
offset by $36.6 million of payoffs and $15.4 million of principal
amortization and partial pay downs. New originations were comprised
of $50 million of commercial real estate (CRE) loans, $15 million
of multifamily loans and $2 million of loans secured by investor
owned 1-4 family condominiums. CRE loans included $20 million of
single tenant credit and $15 million of single tenant non-credit
properties.
In Q1-14, new originations had a weighted-average rate, term and
loan-to-value ratio of 4.76%, 7.0 years and 59%, respectively,
compared to 4.60%, 5.1 years and 58%, respectively, for new loans
in Q1-13. Nearly all of the new loans in both periods had fixed
interest rates. Loans paid off in Q1-14 and Q1-13 had a
weighted-average rate of 5.44% and 6.14%, respectively.
At March 31, 2014, the loan portfolio was concentrated in CRE
loans and was comprised of 75% of loans secured by CRE, 18% secured
by multifamily properties and 6% by investor owned 1-4 family
condominiums. The single tenant category totaled $191 million at
March 31, 2014, or approximately 22% of the total CRE loan
portfolio.
Deposits
The $22 million increase in deposits reflected a $30 million
increase in certificate of deposit accounts, partially offset by an
$8 million decrease in total money market and checking
accounts.
Termination of
Agreement
As previously reported, on March 13, 2014, the Federal Reserve
Bank of New York announced the termination of the written agreement
dated as of January 14, 2011 between IBC and the FRB. The
termination was effective March 7, 2014. As a result of this
termination and the March 2013 termination of INB’s formal
agreement with its primary regulator, neither the Company nor the
Bank is subject to any formal or informal regulatory agreement.
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: 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 March 31, Selected Operating
Data: 2014
2013 Interest and dividend income $ 15,513
$ 16,249 Interest expense 5,270
7,245 Net interest and dividend income 10,243 9,004 Credit
for loan losses (500 ) (1,000 ) Noninterest income 866 743
Noninterest expenses: Provision for real estate losses - 629 Real
estate expenses (income), net 201 (986 ) Operating expenses
4,572 4,138 Earnings before income
taxes 6,836 6,966 Provision for income taxes 2,994
3,075 Net earnings before preferred dividend
requirements 3,842 3,891 Preferred dividend requirements (1)
- 462 Net earnings available to common
stockholders $ 3,842 $ 3,429 Basic and diluted
earnings per common share $ 0.17 $ 0.16 Average shares used for
basic earnings per share 21,991,451 21,832,200 Average shares used
for diluted earnings per share (2) 22,220,501
21,854,455 Common shares outstanding at end of
period 22,021,190 21,925,089 Common stock options/warrants
outstanding at end of period (2) 1,029,478
1,069,022 Yield on interest-earning assets
4.14 % 4.27 % Cost of funds 1.59 % 2.13 % Net interest margin (3)
2.73 % 2.37 % Return on average assets
(annualized) 0.97 % 0.95 % Return on average common equity
(annualized) 7.74 % 8.29 % Effective income tax rate 44 % 44 %
Efficiency ratio (4) 41 % 42 % Average
loans outstanding $ 1,131,526 $ 1,096,881 Average securities
outstanding 378,516 435,611 Average short-term investments
outstanding 8,882 10,869 Average assets outstanding
1,585,025 1,638,065 Average
interest-bearing deposits outstanding $ 1,287,449 $ 1,325,942
Average borrowings outstanding 56,702 56,702 Average stockholders'
equity 198,669 212,510
At Mar 31,
At Dec 31, At Sep
30, At Jun 30,
At Mar 31, Selected Financial Condition
Information: 2014
2013 2013
2013 2013 Total assets $
1,596,027 $ 1,567,796 $ 1,584,239 $ 1,596,639 $ 1,627,787 Cash and
short-term investments 79,157 24,700 30,253 86,977 83,945
Securities held to maturity 346,425 383,937 416,321 410,986 409,184
Loans, net of unearned fees 1,142,231 1,127,522 1,100,277 1,056,191
1,081,482 Allowance for loan losses 27,418 27,833 26,777 26,455
28,210 Allowance for loan losses/net loans 2.40 % 2.47 % 2.43 %
2.50 % 2.61 % Deposits 1,303,972 1,282,232 1,298,403 1,293,175
1,318,215 Borrowed funds and accrued interest payable 56,769 57,570
57,165 56,760 63,373 Preferred stockholder's equity - - - 18,620
24,720 Common stockholders' equity 201,644 196,991 192,288 193,155
190,545 Common book value per share (5) 9.16
8.99 8.77
8.64 8.48 Loan chargeoffs for the
quarter $ - $ - $ - $ 1,823 $ 115 Loan recoveries for the quarter
85 106 72 818 1,222 Real estate chargeoffs for the quarter 824 256
4,171 - - Security impairment writedowns for the quarter
- - 273
325 366 Impaired Loans:
Nonaccrual loans (6) $ 38,750 $ 35,903 $ 39,517 $ 39,069 $ 40,931
Accruing troubled debt restructured (TDR) loans (7) 13,337 13,429
11,381 11,464 13,906 Accruing performing loan 7,777 7,828 - - -
Real estate owned, net of valuation allowance 9,335 10,669 12,019
14,869 18,334 Investment securities on a cash basis - - 2,604 2,923
3,292 Loans 90 days past due and still accruing - 4,087 18,403
5,285 5,916 Loans 60-89 days past due and still accruing - - 3,265
11,065 - Loans 31-59 days past due and still accruing
10,927 2,642 -
- 12,998
(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 110,340 shares and
928,112 shares were not dilutive for the 2014 and 2013 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 2.87% and
2.54%, 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 March 31, 2014, December 31, 2013 and
September 30, 2013; $3.7 million at June 30, 2013 and $4.6 million
at March 31, 2013) divided by common shares outstanding.
(6) Include performing TDRs maintained on nonaccrual status, or
cash basis, of $33 million, $33 million, $36 million, $36 million
and $33 million, respectively.
(7) Represent loans whose terms have been modified mostly
through the deferral of principal and/or a partial reduction in
interest payments, or extension of maturity date. At March 31,
2014, all loans were performing and were yielding approximately 5%
on a weighted average basis.
INTERVEST
BANCSHARES CORPORATION
Consolidated Historical Financial
Information
At or For The Period Ended
($ in thousands, except per share
amounts)
Quarter
Ended
Mar 31,
2014
Year
Ended
Dec 31,
2013
Year
Ended
Dec 31,
2012
Year
Ended
Dec 31,
2011
Year
Ended
Dec 31,
2010
Balance Sheet Highlights: Total
assets $ 1,596,027 $ 1,567,796 $ 1,665,792 $ 1,969,540 $ 2,070,868
Cash and short-term investments 79,157 24,700 60,395 29,863 23,911
Securities held to maturity 346,425 383,937 443,777 700,444 614,335
Loans, net of unearned fees 1,142,231 1,127,522 1,107,466 1,163,790
1,337,326 Allowance for loan losses 27,418 27,833 28,103 30,415
34,840 Allowance for loan losses/net loans 2.40 % 2.47 % 2.54 %
2.61 % 2.61 % Deposits 1,303,972 1,282,232 1,362,619 1,662,024
1,766,083 Borrowed funds and accrued interest payable 56,769 57,570
62,930 78,606 84,676 Preferred stockholder's equity - - 24,624
24,238 23,852 Common stockholders' equity 201,644 196,991 186,323
173,293 162,108 Common book value per share (1) 9.16 8.99 8.44 8.07
7.61 Market price per common share 7.45
7.51 3.89 2.65
2.93
Asset Quality Highlights
Impaired Loans: Nonaccrual loans $ 38,750 $ 35,903 $ 45,898 $
57,240 $ 52,923 Accruing troubled debt restructured loans 13,337
13,429 20,076 9,030 3,632 Accruing performing loan 7,777 7,828 - -
- Real estate owned, net of valuation allowance 9,335 10,669 15,923
28,278 27,064 Investment securities on a cash basis - - 3,721 4,378
2,318 Loans 90 days past due and still accruing - 4,087 4,391 1,925
7,481 Loans 31-89 days past due and still accruing 10,927 2,642
15,497 28,770 11,364 Loan chargeoffs - 1,938 3,152 9,598 100,146
Loan recoveries 85 2,218 840 155 883 Real estate chargeoffs 824
4,427 4,766 - 15,614 Impairment writedowns on security investments
- 964 582
201 1,192
Statement of Operations Highlights: Interest and dividend
income $ 15,513 $ 63,616 $ 77,284 $ 92,837 $ 107,072 Interest
expense 5,270 27,110
38,067 50,540
62,692 Net interest and dividend income 10,243 36,506 39,217
42,297 44,380 (Credit) provision for loan losses (500 ) (550 ) -
5,018 101,463 Noninterest income 866 4,946 6,194 4,308 2,110
Noninterest expenses: Provision for real estate losses - 1,105
4,068 3,349 15,509 Real estate expenses (income), net 201 (836 )
2,146 1,619 4,105 Operating expenses 4,572
15,584 16,668
15,861 19,069 Earnings (loss) before
income taxes 6,836 26,149 22,529 20,758 (93,656 ) Provision
(benefit) for income taxes 2,994 11,655
10,307 9,512
(40,348 ) Net earnings (loss) before preferred
dividend requirements 3,842 14,494 12,222 11,246 (53,308 )
Preferred dividend requirements - 1,057
1,801 1,730
1,667 Net earnings (loss) available to common
stockholders $ 3,842 $ 13,437 $ 10,421
$ 9,516 $ (54,975 ) Basic earnings
(loss) per common share $ 0.17 $ 0.61 $ 0.48 $ 0.45 $ (4.95 )
Diluted earnings (loss) per common share $ 0.17 $ 0.61 $ 0.48 $
0.45 $ (4.95 ) Average common shares used to calculate: Basic
earnings (loss) per common share 21,991,451 21,894,030 21,566,009
21,126,187 11,101,196 Diluted earnings (loss) per common share
22,220,501 21,993,626 21,568,196 21,126,187 11,101,196 Common
shares outstanding 22,021,190
21,918,623 21,589,589
21,125,289 21,126,489
Other
ratios: Net interest margin (2) 2.73 % 2.39 % 2.29 % 2.18 %
2.11 % Return on average assets 0.97 % 0.90 % 0.66 % 0.56 % -2.42 %
Return on average common equity 7.74 % 7.58 % 6.82 % 6.74 % -32.20
% Effective income tax rate 44 % 45 % 46 % 46 % 43 % Efficiency
ratio 41 % 38 % 37 %
34 % 41 %
(1) Represents common stockholders' equity less any preferred
dividends in arrears (none at March 31, 2014 and 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) 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 2.87%, 2.56%,
2.59%, 2.31% and 2.17%, respectively.
Intervest Bancshares CorporationLowell S. Dansker,
212-218-2800ChairmanFax: 212-218-2808
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