Declares Quarterly
Common Stock Dividend of $0.05 per share
Intervest Bancshares Corporation (IBC) (NASDAQ-GS:IBCA), parent
company of Intervest National Bank (INB), today announced that its
net earnings for the second quarter of 2014 (Q2-14) increased 79%
to $5.7 million, or $0.26 per share, from $3.2 million, or $0.14
per share, for the second quarter of 2013 (Q2-13). For the first
half of 2014 (6mths-14), net earnings increased 44% to $9.6
million, or $0.43 per share, from $6.6 million, or $0.30 per share,
for the first half of 2013 (6mths-13). IBC also announced that its
Board of Directors declared a quarterly dividend of $0.05 per
common share payable on August 26, 2014 to shareholders of record
at the close of business August 15, 2014.
Operating
Summary
- Net interest and dividend income
increased to $10.9 million in Q2-14, from $8.6 million in Q2-13,
and to $21.1 million in 6mths-14, from $17.6 million in 6mths-13,
reflecting a higher net interest margin. The margin (exclusive of
loan prepayment income) increased to 2.84% in Q2-14 and 2.79% in
6mths-14, from 2.30% and 2.33% in the same periods of 2013.
- Credits for loan losses of $1.0 million
and $1.5 million were recorded in Q2-14 and 6mths-14, respectively,
compared to $0.8 million and $1.8 million in the same periods of
2013. The amounts in the 2014 periods reflected improved credit
quality resulting from the payoff of four substandard loans
totaling $6.9 million in Q2-14 and an upgrade of one loan ($1.6
million) in Q1-14, while the 2013 amounts were due to partial
recoveries of prior loan charge offs.
- Noninterest income (inclusive of loan
prepayment income) increased to $2.5 million in Q2-14 and to $3.3
million in 6mths-14, from $0.7 million and $1.4 million in the same
periods of 2013. The increases were due to a higher level of loan
prepayment income (including $0.7 million in Q2-14 from one loan)
and the absence of security impairment charges in the 2014
periods.
- No provisions for real estate losses
were required on properties owned through foreclosure (REO) in the
2014 periods, compared to $0.1 million in Q2-13 and $0.7 million in
6mths-13.
- Real estate expenses, net of rental and
other income, amounted to $0.3 million in Q2-14 and $0.5 million in
6mths-14, compared to net income of $0.3 million in Q2-13 and net
income of $1.3 million in 6mths-13. The net income for the 2013
periods reflected recoveries of expenses associated with previously
owned properties. Exclusive of these recoveries, REO expense would
have been $0.5 million and $1.0 million for 2013 periods,
respectively.
- Operating expenses decreased slightly
to $3.9 million in Q2-14, from $4.0 million in Q2-13, but increased
to $8.5 million in 6mths-14, from $8.1 million in 6mths-13. The
six-month period increase was primarily due to normal salary
increases and higher stock compensation and employee bonus expense,
partially offset by a decrease in FDIC insurance premiums.
- Our efficiency ratio, which measures
our ability to control expenses as a percentage of revenues,
continued to be favorable and improved to 27% for Q2-14 and 35% for
6mths-14, from 43% in the same periods of 2013.
- There were no preferred dividend
requirements in the 2014 periods, compared to $0.3 million in Q2-13
and $0.8 million in 6mths-13. The 2013 dividend requirements
related to IBC's TARP preferred stock, which was repurchased and
retired during June and August 2013.
Balance Sheet
Summary
- Assets amounted to $1.57 billion at
June 30, 2014, unchanged from December 31, 2013, as increases of
$31 million in loans and $11 million in cash and short-term
investments were offset by decreases of $26 million in security
investments and $8 million in REO.
- Loans increased to $1.16 billion at
June 30, 2014, from $1.13 billion at December 31, 2013. New loan
originations for 6mths-14 increased to $165 million from $124
million for 6mths-13. Loan repayments decreased to $134 million in
6mths-14 from $172 million in 6mths-13.
- Deposits amounted to $1.28 billion at
June 30, 2014, a decrease of $4.4 million from December 31,
2013.
- Stockholders' equity increased to $207
million at June 30, 2014, from $197 million at December 31, 2013,
reflecting primarily an increase in retained earnings of $8.5
million, net of a $1.1 million cash dividend on common stock paid
on May 26, 2014.
- INB's regulatory capital ratios at June
30, 2014 were as follows: Tier One Leverage - 15.92%; Tier One
Risk-Based Capital - 20.18%; and Total Risk-Based Capital -
21.45%.
- Book value per common share increased
to $9.38 at June 30, 2014, from $8.99 at December 31, 2013.
Asset Quality
Summary
- Impaired loans (comprised of nonaccrual
loans, restructured loans (TDRs) and one other accruing and
performing loan) totaled $57.8 million at June 30, 2014, compared
to $57.2 million at December 31, 2013.
- Nonaccrual loans decreased to $23.0
million at June 30, 2014, from $35.9 million at December 31, 2013,
primarily reflecting one loan transferred to an accruing TDR
status. Nonaccrual loans included TDRs at each date of $17.7
million and $33.2 million, respectively. These TDRs were current
and had a weighted-average interest rate of 4.25% as of June 30,
2014.
- Accruing TDR loans increased to $27.1
million at June 30, 2014 from $13.4 million at December 31, 2013,
due to the transfer of the loan noted above. These TDR loans had a
weighted-average interest rate of approximately 5% at June 30,
2014.
- The allowance for loan losses was $26.6
million, or 2.30% of total loans, at June 30, 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 $5.5 million and $6.1 million, respectively).
- REO decreased to $2.6 million at June
30, 2014, from $10.6 million at December 31, 2013, reflecting the
sales of two properties.
Net Interest and
Dividend Income
The $2.3 million quarterly increase in net interest and dividend
income reflected an improved interest rate spread and a higher
ratio (1.15x compared to 1.10x) of interest-earning assets to
interest-bearing liabilities due to deployment of cash into new
loans. The net interest margin increased to 2.84% in Q2-14 from
2.30% in Q2-13, primarily due to a 53 basis point increase in the
interest rate spread and a $56 million increase in net
interest-earning assets. The higher spread reflected primarily the
run-off and replacement of higher-cost legacy CDs with new CDs at
lower interest rates, which reduced the average cost of funds by 54
basis points to 1.55% in Q2-14 from 2.09% in Q2-13. The average
yield on earning assets decreased slightly to 4.19% in Q2-14 from
4.20% in Q2-13 as the negative impact of payoffs of older, higher
yielding loans coupled with new loan originations at lower market
interest rates was offset by higher yields on security investments
and the growth in net interest earning assets. Total average
interest-earning assets increased by $44 million in Q2-14 from
Q2-13, reflecting a $107 million increase in loans, partially
offset by a $63 million decrease in total securities and overnight
investments. At the same time, total average deposits decreased by
$12 million, while average total stockholders' equity decreased by
$13 million (reflecting the repurchase and retirement of $25
million of preferred stock during the middle of 2013, partially
offset by an $11 million increase in retained earnings).
The $3.5 million six-month increase in net interest and dividend
income was due to the same reasons noted above. The net interest
margin increased to 2.79% in 6mths-14, from 2.33% in 6mths-13. The
average cost of funds decreased by 54 basis points to 1.57% in
6mths-14, from 2.11% in 6mths-13, while the average yield on
earning assets decreased by only 6 basis points to 4.17% in
6mths-14, from 4.23% in 6mths-13. Total average interest-earning
assets increased for the 6mths-14 period by $10 million from
6mths-13, reflecting an increase of $71 million in loans, partially
offset by a $61 million decrease in total securities and overnight
investments. At the same time, total average deposits decreased by
$25 million, while average stockholders' equity decreased by $13
million.
Loans
The $31 million net increase in loans at June 30, 2014 compared
to December 31, 2013 reflected $164.6 million of new originations
and $0.3 million of recoveries of prior charge offs, partially
offset by $110.1 million of payoffs and $24.2 million of principal
amortization and partial pay downs. New originations were comprised
of $131 million of commercial real estate (CRE) loans, $28 million
of multifamily loans and $5 million of loans secured by
investor-owned, 1-4 family condominiums. New CRE loans included $25
million of single tenant credit and $28 million of single tenant
non-credit properties.
New originations for the first half of 2014 had a
weighted-average rate, term, debt service coverage ratio and
loan-to-value ratio of 4.72%, 6.6 years, 1.24x and 59%,
respectively, compared to 4.47%, 5.9 years, 1.29x and 58%,
respectively, for new loans originated in the first half of 2013.
Nearly all of the new loans in both periods had fixed interest
rates. Loans paid off in 6mths-14 and 6mths-13 had a
weighted-average rate of 5.22% and 5.98%, respectively.
At June 30, 2014, the loan portfolio was concentrated in CRE
loans and was comprised of 76% of loans secured by CRE, 18% secured
by multifamily properties and 5% by investor-owned, 1-4 family
condominiums. The single tenant category totaled $206 million at
June 30, 2014, or approximately 23% of the total CRE loan
portfolio, up from $157 million and 19% at December 31, 2013.
Deposits
The $4.4 million decrease in deposits reflected an $18.9 million
decrease in total money market and checking accounts, partially
offset by a $14.5 million increase in certificate of deposit
accounts.
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 Six-Months Ended June 30, June 30,
Selected Operating Data: 2014
2013 2014 2013
Interest and dividend income $ 16,066 $ 15,623 $ 31,579 $31,872
Interest expense 5,195 7,048
10,465 14,293 Net interest and dividend income 10,871
8,575 21,114 17,579 Credit for loan losses (1,000 ) (750 ) (1,500 )
(1,750 ) Noninterest income 2,461 702 3,327 1,445 Noninterest
expenses: Provision for real estate losses - 76 - 705 Real estate
expenses (income), net 298 (346 ) 499 (1,332 ) Operating expenses
3,926 3,954 8,498 8,092
Earnings before income taxes 10,108 6,343 16,944 13,309
Provision for income taxes 4,370 2,804
7,364 5,879 Net earnings before preferred
dividend requirements 5,738 3,539 9,580 7,430 Preferred dividend
requirements (1) - 326 -
788 Net earnings available to common stockholders $ 5,738
$ 3,213 $ 9,580 $ 6,642 Basic and
diluted earnings per common share $ 0.26 $ 0.14 $ 0.43 $ 0.30 Cash
dividends paid per common share $ 0.05 - $ 0.05 - Average shares
used for basic earnings per share 22,023,783 21,923,243 22,007,706
21,877,973 Average shares used for diluted earnings per share (2)
22,248,479 22,003,149 22,235,805
21,920,280 Common shares outstanding at end of period
22,025,390 21,923,756 22,025,390 21,923,756 Common stock
options/warrants outstanding at end of period (2) 1,025,278
1,061,755 1,025,278 1,061,755
Yield on interest-earning assets 4.19 % 4.20 % 4.17 % 4.23 %
Cost of funds 1.55 % 2.09 % 1.57 % 2.11 % Net interest margin (3)
2.84 % 2.30 % 2.79 % 2.33 % Return on average
assets (annualized) 1.45 % 0.88 % 1.21 % 0.91 % Return on average
common equity (annualized) 11.31 % 7.39 % 9.54 % 7.83 % Effective
income tax rate 43 % 44 % 44 % 44 % Efficiency ratio (4) 27
% 43 % 35 % 43 % Average loans outstanding $
1,167,943 $ 1,061,202 $ 1,149,835 $1,078,943 Average securities
outstanding 362,098 420,763 370,262 428,146 Average short-term
investments outstanding 7,146 11,343 8,009 11,107 Average assets
outstanding 1,587,282 1,613,961
1,586,160 1,625,946 Average interest-bearing deposits
outstanding $ 1,284,865 $ 1,297,106 $ 1,286,150 $1,311,444 Average
borrowings outstanding 56,702 56,702 56,702 56,702 Average
stockholders' equity 202,886 215,752
200,789 214,140
At Jun
30,
At Mar
31,
At Dec
31,
At Sep
30,
At Jun
30,
Selected Financial Condition Information: 2014
2014 2013
2013 2013 Total assets $
1,571,824 $ 1,596,027 $ 1,567,796 $1,584,239 $ 1,596,639 Cash and
short-term investments 35,367 79,157 24,700 30,253 86,977
Securities held to maturity 358,338 346,425 383,937 416,321 410,986
Loans, net of unearned fees 1,157,957 1,142,231 1,127,522 1,100,277
1,056,191 Allowance for loan losses 26,598 27,418 27,833 26,777
26,455 Allowance for loan losses/net loans 2.30 % 2.40 % 2.47 %
2.43 % 2.50 % Deposits 1,277,823 1,303,972 1,282,232 1,298,403
1,293,175 Borrowed funds and accrued interest payable 56,760 56,769
57,570 57,165 56,760 Preferred stockholder's equity - - - - 18,620
Common stockholders' equity 206,579 201,644 196,991 192,288 193,155
Common book value per share (5) 9.38 9.16
8.99 8.77 8.64 Loan
chargeoffs for the quarter $ - $ - $ - $ - $ 1,823 Loan recoveries
for the quarter 180 85 106 72 818 Real estate chargeoffs for the
quarter 803 824 256 4,171 - Security impairment writedowns for the
quarter - - - 273
325 Impaired Loans: Nonaccrual loans (6) $ 23,005 $
38,750 $ 35,903 $ 39,517 $ 39,069 Accruing troubled debt
restructured (TDR) loans (7) 27,088 13,337 13,429 11,381 11,464
Accruing performing loan 7,727 7,777 7,828 - - Real estate owned,
net of valuation allowance 2,650 9,335 10,669 12,019 14,869
Investment securities on a cash basis - - - 2,604 2,923 Loans 90
days past due and still accruing (8) 2,993 - 4,087 18,403 5,285
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 - - (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 223,280 shares and 235,630 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 3.36%, 2.47%, 3.12% and 2.51%,
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 ($3.7 million at June 30, 2013 only) divided by common
shares outstanding. (6) Include performing TDRs maintained on
nonaccrual status, or cash basis, of $18 million, $33 million, $33
million, $36 million and $36 million, respectively. (7) Represent
loans whose terms have been modified mostly through the deferral of
principal and/or a partial reduction in interest payments, or
extension of maturity date. At June 30, 2014, all loans were
performing and were yielding approximately 5% on a weighted-average
basis. (8) Represents one performing and paying loan at June 30,
2014 that matured and was in the process of an extension.
INTERVEST
BANCSHARES CORPORATION
Consolidated Historical Financial
Information
At or For The Period Ended
($ in thousands, except per share
amounts)
Six-MonthsEndedJune 30,2014
YearEndedDec 31,2013
YearEndedDec 31,2012
YearEndedDec 31,2011
YearEndedDec 31,2010
Balance Sheet Highlights: Total assets $ 1,571,824 $
1,567,796 $ 1,665,792 $ 1,969,540 $ 2,070,868 Cash and short-term
investments 35,367 24,700 60,395 29,863 23,911 Securities held to
maturity 358,338 383,937 443,777 700,444 614,335 Loans, net of
unearned fees 1,157,957 1,127,522 1,107,466 1,163,790 1,337,326
Allowance for loan losses 26,598 27,833 28,103 30,415 34,840
Allowance for loan losses/net loans 2.30 % 2.47 % 2.54 % 2.61 %
2.61 % Deposits 1,277,823 1,282,232 1,362,619 1,662,024 1,766,083
Borrowed funds and accrued interest payable 56,760 57,570 62,930
78,606 84,676 Preferred stockholder's equity - - 24,624 24,238
23,852 Common stockholders' equity 206,579 196,991 186,323 173,293
162,108 Common book value per share (1) 9.38 8.99 8.44 8.07 7.61
Market price per common share 7.74 7.51
3.89 2.65 2.93
Asset
Quality Highlights Impaired Loans: Nonaccrual loans $ 23,005 $
35,903 $ 45,898 $ 57,240 $ 52,923 Accruing troubled debt
restructured loans 27,088 13,429 20,076 9,030 3,632 Accruing
performing loan 7,727 7,828 - - - Real estate owned, net of
valuation allowance 2,650 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 2,993 4,087 4,391 1,925 7,481 Loans 31-89
days past due and still accruing - 2,642 15,497 28,770 11,364 Loan
chargeoffs - 1,938 3,152 9,598 100,146 Loan recoveries 265 2,218
840 155 883 Real estate chargeoffs 1,627 4,427 4,766 - 15,614
Impairment writedowns on security investments -
964 582 201 1,192
Statement of Operations Highlights: Interest and
dividend income $ 31,579 $ 63,616 $ 77,284 $ 92,837 $ 107,072
Interest expense 10,465 27,110
38,067 50,540 62,692 Net
interest and dividend income 21,114 36,506 39,217 42,297 44,380
(Credit) provision for loan losses (1,500 ) (550 ) - 5,018 101,463
Noninterest income 3,327 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 499 (836 ) 2,146 1,619
4,105 Operating expenses 8,498 15,584
16,668 15,861 19,069
Earnings (loss) before income taxes 16,944 26,149 22,529 20,758
(93,656 ) Provision (benefit) for income taxes 7,364
11,655 10,307 9,512
(40,348 ) Net earnings (loss) before preferred dividend
requirements 9,580 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 $ 9,580 $ 13,437
$ 10,421 $ 9,516 $ (54,975 ) Basic earnings
(loss) per common share $ 0.43 $ 0.61 $ 0.48 $ 0.45 $ (4.95 )
Diluted earnings (loss) per common share $ 0.43 $ 0.61 $ 0.48 $
0.45 $ (4.95 ) Cash dividends paid per common share $ 0.05 - - - -
Average common shares used to calculate: Basic earnings (loss) per
common share 22,007,706 21,894,030 21,566,009 21,126,187 11,101,196
Diluted earnings (loss) per common share 22,235,805 21,993,626
21,568,196 21,126,187 11,101,196 Common shares outstanding
22,025,390 21,918,623 21,589,589
21,125,289 21,126,489
Other
ratios: Net interest margin (2) 2.79 % 2.39 % 2.29 % 2.18 %
2.11 % Return on average assets 1.21 % 0.90 % 0.66 % 0.56 % -2.42 %
Return on average common equity 9.54 % 7.58 % 6.82 % 6.74 % -32.20
% Effective income tax rate 44 % 45 % 46 % 46 % 43 % Efficiency
ratio 35 % 38 % 37 % 34 % 41 %
(1) Represents common stockholders' equity less any
preferred dividends in arrears (none at June 30, 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 3.12%, 2.56%, 2.59%, 2.31% and 2.17%, respectively.
Intervest Bancshares CorporationLowell S. Dansker,
ChairmanPhone: 212-218-2800Fax: 212-218-2808
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