Intervest Bancshares Corporation (NASDAQ-GS: IBCA), parent
company of Intervest National Bank, today reported its 2011 third
quarter financial results. Financial highlights follow.
- Net earnings amounted to $2.6 million,
or $0.12 per diluted common share, for the third quarter of 2011
("Q3-11"), compared to net earnings of $2.5 million, or $0.12 per
share, for the second quarter of 2011 ("Q2-11'') and a net loss of
$0.7 million, or $0.07 per share for the third quarter of 2010
("Q3-10"). Earnings before deducting provisions for loan and real
estate losses, real estate expenses, income taxes and preferred
dividend requirements were $8.9 million in Q3-11, compared to $7.8
million in Q2-11 and $4.9 million in Q3-10.
- The net interest margin was 2.13% for
Q3-11, compared to 2.24% for Q2-11 and 1.98% for Q3-10.
- Nonaccrual loans and real estate owned
(REO) totaled $87 million at September 30, 2011, compared to $71
million at June 30, 2011 and $80 million at December 31, 2010.
Nonaccrual loans include certain restructured loans (TDRs) that are
current and performing in accordance with their renegotiated terms,
but are classified nonaccrual based on regulatory guidance. At
September 30, 2011, such loans totaled $37 million and were
yielding 4.71%, compared to $33 million yielding 4.43% at June 30,
2011 and $21 million yielding 2.98% at December 31, 2010.
- The total provision for loan and real
estate losses amounted to $2.9 million in Q3-11, compared to $2.0
million in Q2-11 and $4.6 million in Q3-10. The allowance for loan
losses was 2.70% of total outstanding loans at September 30, 2011,
compared to 2.54% at June 30, 2011 and 2.61% at December 31,
2010.
- Noninterest expenses amounted to $3.6
million in Q3-11, compared to $4.1 million in Q2-11 and $5.2
million in Q3-10. The Company's efficiency ratio, which is a
measure of its ability to control expenses as a percentage of its
revenues, improved to 29% in Q3-11, from 35% in Q2-11 and 51% in
Q3-10.
- Intervest National Bank's regulatory
capital ratios at September 30, 2011 were well above its minimum
requirements and were as follows: Tier One Leverage - 10.62%; Tier
One Risk-Based - 15.28%; and Total Risk-Based Capital - 16.54%. The
Bank's minimum required capital ratios as per its agreement with
its regulator are 9%, 10% and 12%, respectively.
- Common book value per share increased
to $7.94 at September 30, 2011.
Net earnings for Q3-11 increased by $3.3 million over Q3-10 due
to the following: a $2.0 million increase in noninterest income
primarily from loan prepayments, including $0.9 million of income
from one loan; a $1.7 million decrease in the total provision for
loan and real estate losses resulting from fewer credit rating
downgrades on loans and writedowns of REO; a $1.6 million decrease
in noninterest expenses reflecting decreases of $0.8 million in
FDIC insurance premiums, $0.7 million in data processing costs and
$0.2 million in professional fees; a $0.5 million decrease in real
estate expenses primarily reflecting less REO and a $0.3 million
increase in net interest and dividend income (as described below).
The total of these items was partially offset by a $2.8 million
increase in income tax expense (due to pre-tax income of $5.8
million in Q3-11 versus a $0.3 million loss in Q3-10). The
effective tax rate was 47% in Q3-11 versus 25% in Q3-10. The 2010
rate was negatively impacted to a greater degree by a deductibility
limit on certain executive compensation resulting from IBC's
participation in the TARP program.
The increase in net interest and dividend income over Q3-10
reflected a 15 basis point improvement in the net interest margin,
partially offset by a planned decrease in the Bank's assets and
liabilities as well as decreased lending opportunities. In Q3-11
total average interest-earning assets decreased by $82 million from
Q3-10, reflecting a $155 million decrease in loans, partially
offset by an $81 million increase in security investments. At the
same time, average deposits and borrowed funds decreased by $103
million and $15 million, respectively, while average stockholders'
equity increased by $28 million (primarily from a common stock
offering completed in October 2010). The decrease in average assets
positively impacted the Bank's regulatory capital ratios.
The higher net interest margin was attributable to lower rates
paid on deposits (particularly CDs) and the ongoing repayment of
maturing higher-cost brokered CDs and FHLB borrowings, largely
offset by the negative impact from the net decrease in the loan
portfolio. Overall, the yield on average earning assets decreased
by 22 basis points to 4.74% in Q3-11, from 4.96% in Q3-10, due to
the impact of payoffs of higher yielding loans and calls of
security investments due to declining interest rates, coupled with
the re-investment of a large portion of these cash inflows into
securities at lower interest rates. The average cost of funds
decreased at a faster pace by 34 basis points to 2.81% in Q3-11,
from 3.15% in Q3-10, due to the factors noted above.
Net earnings for the first nine months of 2011 amounted to $6.8
million, or $0.32 per diluted common share, compared to a net loss
of $55.4 million, or $6.39 per share for the same 2010 period. The
improvement resulted from a $105.3 million decrease in the total
provision for loan and real estate losses, a $2.7 million decrease
in real estate expenses, a $2.3 million increase in noninterest
income and a $2.1 million decrease in noninterest expenses, the
total of which was partially offset by a $2.3 million decrease in
net interest and dividend income and a $47.9 million increase in
income tax expense. The net loss in the 2010 period was primarily
driven by a bulk sale in May of nonperforming and underperforming
assets as discussed in prior releases. The assets sold aggregated
to $207 million and consisted of $192 million of loans and $15
million of REO. The assets were sold at a substantial discount to
their net carrying values. As a result of this transaction, a $79
million combined provision for loan and real estate losses was
recorded, which after taxes contributed approximately $44 million,
or 79%, to the reported loss. The reasons for the changes in the
other factors noted are similar to those described earlier
regarding the quarterly variances. At September 30, 2011, the
Company had a net deferred tax asset totaling $41.1 million, which
included unused net operating loss carryforwards (NOLs) of $40
million for Federal purposes and $72 million for state and local
purposes. The NOLs, which arose from the bulk sale, are available
to reduce taxes payable on future taxable income.
Total assets at September 30, 2011 decreased to $1.99 billion
from $2.07 billion at December 31, 2010, primarily reflecting a
decrease in loans, partially offset by an increase in security
investments. Loans totaled $1.20 billion at September 30, 2011, a
$138 million decrease from $1.34 billion at December 31, 2010. The
decrease reflected $180.1 million of principal repayments
(resulting from payoffs and amortization), $7.6 million of loan
chargeoffs and $1.7 million transferred to REO, partially offset by
$50.3 million of new originations. New loan originations for the
first nine months of 2010 amounted to $46 million.
Nonaccrual loans and REO aggregated to $87 million, or 4.4% of
total assets, at September 30, 2011, compared to $80 million, or
3.9%, at December 31, 2010. Nonaccrual loans totaled $60 million at
September 30, 2011 and $53 million at December 31, 2010 and
included $37 million (9 loans) and $21 million (6 loans) of
performing TDRs at each date, respectively. The increase in TDRs
was primarily due to a $14.8 million nonaccrual loan restructured
in June, which included $0.5 million of past due interest recovered
as part of the settlement. The new terms call for interest payments
at 5% in year one, increasing thereafter at predetermined amounts.
All TDRs classified as nonaccrual have performed as agreed under
their renegotiated terms and interest income is being recorded on a
cash basis. In the first nine months of 2011, based on updated
appraisals received on the underlying collateral properties, we
charged off a portion ($4.7 million in principal) of five TDRs. The
borrowers remain obligated to pay all principal amounts due. The
Company does not own or originate construction/development
loans.
The allowance for loan losses at September 30, 2011 was $32.4
million, representing 2.70% of total net loans, compared to $34.8
million, or 2.61%, at December 31, 2010. The overall allowance
included specific reserves for impaired loans (comprised of all of
our nonaccrual loans as well as accruing TDRs) at each date
totaling $7.2 million.
Securities held to maturity increased by $63.8 million to $678.1
million at September 30, 2011 from $614.3 million at December 31,
2010, due to new purchases exceeding calls and maturities. The
growth in the security investments has been a function of decreased
lending opportunities. At September 30, 2011, the portfolio,
comprised mainly of U.S. government agency debt securities, had a
weighted-average yield to earliest call date of 1.47% and a
weighted-average remaining contractual maturity of 4.9 years. The
Bank invests in U.S. government agency debt obligations to
emphasize safety and liquidity, and does not own or invest in
collateralized debt obligations, collateralized mortgage
obligations or derivatives.
Deposits at September 30, 2011 decreased to $1.68 billion from
$1.77 billion at December 31, 2010, primarily reflecting an $89
million decrease in CD accounts. Borrowed funds and related
interest payable at September 30, 2011 decreased to $78 million,
from $85 million at December 31, 2010, due to the maturity and
repayment of $8 million of FHLB borrowings, partially offset by a
$1.7 million increase in accrued interest payable on trust
preferred securities. As required by our regulators and as
permitted by the underlying documents, since February 2010 we have
suspended the payment of interest on $55 million of trust preferred
securities as well as the declaration and payment of TARP dividends
on $25 million of preferred stock held by the U.S. Treasury.
Stockholders' equity increased to $194 million at September 30,
2011 from $186 million at December 31, 2010, due to $8 million of
net earnings before preferred dividend requirements.
Intervest Bancshares Corporation (IBC) is a bank holding
company. Its principal 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 there from 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 there from; 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 deferred tax assets, including NOLs; 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: 2011
2010 2011 2010
Interest and dividend income $23,160 $ 25,265 $70,671
$82,325 Interest expense 12,729
15,180 39,016 48,385
Net interest and dividend income 10,431 10,085 31,655 33,940
Provision for loan losses 2,191 1,598 4,978 98,770 Noninterest
income 2,004 7 3,334 1,037 Noninterest expenses: Provision for real
estate losses 701 2,984 1,979 13,505 Real estate expenses 121 665
1,000 3,762 All other noninterest expenses 3,578
5,163 12,087
14,182 Earnings (loss) before income taxes 5,844 (318 )
14,945 (95,242 ) Provision (benefit) for income taxes 2,771
(78 ) 6,833
(41,075 ) Net earnings (loss) before preferred dividend
requirements 3,073 (240 ) 8,112 (54,167 ) Preferred dividend
requirements (1) 435 421
1,290 1,245 Net earnings (loss)
available to common stockholders $ 2,638 $
(661 ) $ 6,822 $(55,412 ) Basic
earnings (loss) per common share $0.12 $(0.07 ) $0.32 $(6.39 )
Diluted earnings (loss) per common share $0.12
$(0.07 ) $0.32
$(6.39 ) Average shares used for basic and diluted earnings (loss)
per share (2) 21,126,489 9,120,812 21,126,489 8,672,460 Common
shares outstanding at end of period 21,126,489 9,120,812 21,126,489
9,120,812 Common stock options/warrants outstanding at end of
period 1,045,422 1,018,122
1,045,422 1,018,122
Yield on interest-earning assets 4.74 % 4.96 % 4.85 % 5.14 %
Cost of funds 2.81 % 3.15 % 2.90 % 3.25 % Net interest margin
2.13 % 1.98 % 2.17 %
2.12 % Return on average assets (annualized) 0.60 %
-0.05 % 0.53 % -3.23 % Return on average common equity (annualized)
7.31 % -0.68 % 6.54 % -42.89 % Effective income tax rate 47 % 25 %
46 % 43 % Efficiency ratio (3) 29 % 51
% 35 % 41 % Average loans outstanding
$1,228,049 $1,382,753 $1,281,126 $1,533,305 Average securities
outstanding 705,291 624,197 653,943 586,284 Average short-term
investments outstanding 6,179 14,690 13,204 20,973 Average assets
outstanding 2,036,412 2,127,002
2,037,215 2,233,547
Average interest-bearing deposits outstanding $1,716,529
$1,819,907 $1,720,306 $1,889,498 Average borrowings outstanding
78,148 92,801 79,678 100,671 Average stockholders' equity
192,314 164,288
189,396 192,008
At Sep
30,
At Jun
30,
At Mar
31,
At Dec
31,
At Sep
30,
Selected Financial Condition Information:
2011 2011 2011
2010 2010 Total assets
$1,991,245 $2,050,379 $2,014,125 $2,070,868 $2,104,098 Cash and
short-term investments 36,798 14,461 29,079 23,911 13,815
Securities held to maturity 678,118 691,334 589,940 614,335 613,844
Loans, net of unearned fees 1,199,770 1,252,128 1,300,546 1,337,326
1,363,312 Allowance for loan losses 32,365 31,772 32,400 34,840
32,250 Allowance for loan losses/net loans 2.70 % 2.54 % 2.49 %
2.61 % 2.37 % Deposits 1,678,003 1,735,292 1,706,630 1,766,083
1,806,834 Borrowed funds and accrued interest payable 78,156 82,634
82,072 84,676 89,135 Preferred stockholder's equity 24,141 24,045
23,948 23,852 23,755 Common stockholders' equity 170,164 167,109
164,243 162,108 140,317 Common book value per share (4)
7.94 7.81 7.69
7.61 15.26 Loan
chargeoffs for the quarter $ 1,667 $ 1,374 $ 4,513 $ 386 $ 298 Loan
recoveries for the quarter 69 4 28 283 600 Real estate chargeoffs
for the quarter - - - 2,970 912 Security impairment writedowns for
the quarter 96 -
105 351 293
Nonaccrual loans (5) $ 59,707 $ 45,352 $ 45,192 $ 52,923 $ 38,560
Real estate owned, net of valuation allowance 27,005 25,786 27,064
27,064 38,792 Investment securities on a cash basis 4,379 4,475
4,475 2,318 2,670 Accruing troubled debt restructured (TDR) loans
(6). 5,601 5,619 5,630 3,632 617 Loans 90 days past due and still
accruing 8,571 4,594 3,879 7,481 16,865 Loans 31-89 days past due
and still accruing 939 7,704
21,785 11,364
5,264 (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 were not dilutive for the reporting
periods. (3) Represents noninterest expenses (excluding provisions
for real estate losses & real estate expenses) as a percentage
of net interest and dividend income plus noninterest income. (4)
Represents common stockholders' equity less preferred dividends in
arrears ($2.4 million at September 30, 2011 and $1.4 million at
December 31, 2010) divided by common shares outstanding. (5)
Include performing TDRs maintained on nonaccrual status of $37
million, $33 million, $18 million, $21 million and $22 million,
respectively. (6) Represent loans whose terms have been modified
mostly through the deferral of principal and/or a partial reduction
in interest payments.
INTERVEST
BANCSHARES CORPORATION
Consolidated Financial
Highlights
At or For The Period Ended
($ in thousands, except per share
amounts)
Nine-Months
Ended
Sep 30,
2011
Year
Ended
Dec 31,
2010
Year
Ended
Dec 31,
2009
Year
Ended
Dec 31,
2008
Year
Ended
Dec 31,
2007
Balance Sheet Highlights:
Total assets $1,991,245 $2,070,868 $2,401,204
$2,271,833 $2,021,392 Cash and short-term investments 36,798 23,911
7,977 54,903 33,086 Securities held to maturity 678,118 614,335
634,856 475,581 344,105 Loans, net of unearned fees 1,199,770
1,337,326 1,686,164 1,705,711 1,614,032 Allowance for loan losses
32,365 34,840 32,640 28,524 21,593 Allowance for loan losses/net
loans 2.70 % 2.61 % 1.94 % 1.67 % 1.34 % Deposits 1,678,003
1,766,083 2,029,984 1,864,135 1,659,174 Borrowed funds and accrued
interest payable 78,156 84,676 118,552 149,566 136,434 Preferred
stockholder's equity 24,141 23,852 23,466 23,080 - Common
stockholders' equity 170,164 162,108 190,588 188,894 179,561 Common
book value per share (1) 7.94 7.61 23.04 22.84 22.23 Market price
per common share 2.68
2.93 3.28 3.99
17.22
Asset Quality Highlights
Nonaccrual loans $59,707 $52,923 $123,877 $108,610 $90,756 Real
estate owned, net of valuation allowance 27,005 27,064 31,866 9,081
- Investment securities on a cash basis 4,379 2,318 1,385 - -
Accruing troubled debt restructured loans (2) 5,601 3,632 97,311 -
- Loans past due 90 days and still accruing 8,571 7,481 6,800 1,964
11,853 Loans past due 31-89 days and still accruing 939 11,364
5,925 18,943 25,122 Loan chargeoffs 7,554 100,146 8,103 4,227 -
Loan recoveries 101 883 1,354 - - Real estate chargeoffs - 15,614 -
- - Impairment writedowns on security investments
201 1,192 2,258
- -
Statement
of Operations Highlights: Interest and dividend income $70,671
$ 107,072 $123,598 $128,497 $131,916 Interest expense 39,016
62,692 81,000
90,335 89,653 Net
interest and dividend income 31,655 44,380 42,598 38,162 42,263
Provision for loan losses 4,978 101,463 10,865 11,158 3,760
Noninterest income 3,334 2,110 297 5,026 8,825 Noninterest
expenses: Provision for real estate losses 1,979 15,509 2,275 518 -
Real estate expenses 1,000 4,105 4,945 4,281 489 All other
noninterest expenses 12,087 19,069
19,864 14,074
12,387 Earnings (loss) before income taxes
14,945 (93,656 ) 4,946 13,157 34,452 Provision (benefit) for income
taxes 6,833 (40,348 )
1,816 5,891 15,012
Net earnings (loss) before preferred dividend requirements 8,112
(53,308 ) 3,130 7,266 19,440 Preferred dividend requirements (3)
1,290 1,667 1,632
41 - Net earnings
(loss) available to common stockholders $ 6,822
$(54,975 ) $ 1,498
$ 7,225 $ 19,440 Basic earnings
(loss) per common share $0.32 $(4.95 ) $0.18 $0.87 $2.35 Diluted
earnings (loss) per common share $0.32 $(4.95 ) $0.18 $0.87 $2.31
Average common shares used to calculate: Basic earnings
(loss) per common share 21,126,489 11,101,196 8,270,812 8,259,091
8,275,539 Diluted earnings (loss) per common share 21,126,489
11,101,196 8,270,812 8,267,781 8,422,017 Common shares outstanding
21,126,489 21,126,489
8,270,812 8,270,812
8,075,812 Net interest margin (4) 2.17 % 2.11 % 1.83
% 1.79 % 2.11 % Return on average assets 0.53 % -2.42 % 0.13 % 0.34
% 0.96 % Return on average common equity 6.54 % -32.20 % 1.65 %
3.94 % 11.05 % Effective income tax rate 46 % 43 % 37 % 45 % 44 %
Efficiency ratio (5) 35 % 41 %
46 % 33 % 24 % (1)
Represents common stockholders' equity less preferred dividends in
arrears ($2.4 million at September 30, 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 2.31%, 2.18%, 1.81%, 1.95% and
2.57%, respectively. (5) Represents noninterest expenses (excluding
provisions for real estate losses and real estate expenses) as a
percentage of net interest and dividend income plus noninterest
income.
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