Intervest Bancshares Corporation (NASDAQ-GS: IBCA) (the
"Company") today reported a net loss for the first quarter of 2010
("Q1-10") of $2.9 million, or $0.35 per diluted common share,
compared to net income of $0.5 million, or $0.06 per share, for the
first quarter of 2009 ("Q1-09").
The Company's operating results have been affected by the weak
economy, high unemployment, increased office and retail vacancy
rates and an increasing supply of distressed properties for sale in
the marketplace at discounted prices, all of which have
significantly reduced commercial and multifamily real estate values
both nationally and in the Company's lending areas.
The net loss for Q1-10 was driven by a $7.8 million increase in
the provision for loan losses and a $1.7 million increase in
noninterest expenses. The total of these items was partially offset
by a $3.2 million increase in net interest and dividend income, a
$0.4 million increase in noninterest income and a $2.5 million
decrease in the provision for income tax expense.
The provision for loan losses increased to $9.7 million in Q1-10
from $1.9 million in Q1-09. The increase was attributable to the
downgrading of internal risk ratings on various loans and lower
estimates of value on a number of collateral properties. During
Q1-10, the Company charged off a total of $14.0 million of loan
principal as a result of declining real estate values.
Noninterest expenses increased to $7.6 million in Q1-10 from
$5.9 million in Q1-09. The increase was due to a $1.9 million
increase in the provision for losses on real estate owned, a $0.4
million increase in FDIC insurance expense due to higher premium
rates imposed on all FDIC insured banks, a $0.2 million increase in
regulatory and professional fees and a $0.2 million increase in
expenses associated with nonperforming assets. The aggregate of
these items was partially offset by $1.0 million of expense in
Q1-09 that did not recur in Q1-10 from the early retirement of
higher cost borrowings. The Company recorded an income tax benefit
of $1.8 million in Q1-10 compared to $0.7 million of tax expense in
Q1-09. The Company's effective tax rate was 42% in Q1-10, compared
to 43% in Q1-09.
Net interest and dividend income increased to $12.5 million in
Q1-10 from $9.3 million in Q1-09, reflecting an improved net
interest margin. The margin increased to 2.23% in Q1-10 from 1.67%
in Q1-09 primarily due to lower rates paid on deposits, the early
retirement of higher cost borrowings and the recovery of $0.8
million of nonaccrual interest from the full repayment of a
nonaccrual loan. The positive effect of these items was partially
offset by calls of higher yielding U.S. government agency security
investments (coupled with the reinvestment of the proceeds into
similar securities with lower interest rates). The yield on the
Company's average interest-earning assets decreased by 21 basis
points to 5.30% in Q1-10, from 5.51% in Q1-09. The Company's
average cost of funds decreased at a faster pace by 93 basis points
to 3.36% in Q1-10, from 4.29% in Q1-09.
Noninterest income increased to $0.5 million in Q1-10 from $0.1
million in Q1-09, primarily due to $0.4 million of fees from the
full repayment of the nonaccrual loan noted above.
Total assets at March 31, 2010 were $2.28 billion compared to
$2.40 billion at December 31, 2009, reflecting a decrease in
security investments and loans receivable, partially offset by an
increase in overnight investments and foreclosed real estate. As a
result of current market conditions and higher regulatory capital
requirements, Intervest National Bank has reduced its aggregate
deposits and its new loan originations.
Total securities held to maturity decreased by $143.8 million to
$491.1 million at March 31, 2010, primarily due to calls exceeding
new purchases. A portion of the resulting proceeds were used to
fund deposit outflow and the repayment of FHLB borrowings. The
securities portfolio had a weighted-average remaining contractual
maturity and a yield of 4.4 years and 2.58%, respectively, at March
31, 2010.
Total loans receivable, net of unearned fees, amounted to $1.63
billion at March 31, 2010, a $52 million decrease from $1.68
billion at December 31, 2009. The decrease was due to an aggregate
of $33.7 million of principal repayments, $28.0 million of loans
transferred to foreclosed real estate and $14.0 million of loan
chargeoffs exceeding $23.0 million of new loan originations.
Total nonperforming assets at March 31, 2010 amounted to $154.1
million, or 6.75% of total assets, compared to $155.8 million, or
6.49% of total assets at December 31, 2009. At March 31, 2010,
nonperforming assets consisted of $96.2 million of nonaccrual
loans, made up of 32 loans, and $57.9 million of real estate
acquired through foreclosure, made up of 15 properties. At March
31, 2010, we also had $116.9 million (21 loans) of accruing
restructured loans (with a weighted average interest rate of 4.87%)
on which the Bank has granted certain concessions to provide
payment relief to the borrower. These concessions generally consist
of the deferral of principal and or interest payments for a period
of time, or a partial reduction in interest payments.
The total allowance for loan losses decreased to $28.3 million
at March 31, 2010 from $32.6 million at December 31, 2009, due to
$14.0 million of chargeoffs, partially offset by a $9.7 million
loan loss provision. The allowance represented 1.73% of total loans
(net of deferred fees) at March 31, 2010, compared to 1.94% at
December 31, 2009. At each date, a SFAS 114 specific valuation
allowance (included as part of the overall allowance for loan
losses) in the aggregate amount of $11.0 million and $13.8 million,
respectively, was maintained on total nonaccrual and restructured
loans.
Total deposits at March 31, 2010 decreased to $1.93 billion from
$2.03 billion at December 31, 2009, nearly all of which was due to
a $95 million decrease in certificate of deposit accounts.
Total borrowed funds and related interest payable at March 31,
2010 decreased to $103 million, from $119 million at December 31,
2009, due to the maturity and repayment of $16 million of FHLBNY
borrowings. As disclosed in a prior report on Form 8-K, the Company
has exercised its right to defer regularly scheduled interest
payments on its $55 million of junior subordinated notes relating
to its outstanding trust preferred securities and has also deferred
the payment of its regular quarterly cash dividends on its $25
million of preferred stock held by the U.S. Treasury. The interest
and dividend requirements continue to be accrued for financial
statement purposes.
Total stockholders' equity at March 31, 2010 decreased to $211.3
million from $214.1 million at December 31, 2009, primarily due to
the net loss of $2.9 million for Q1-10. At March 31, 2010,
Intervest National Bank's regulatory capital ratios were as
follows: total capital to risk-weighted assets – 14.33%, Tier 1
capital to risk-weighted assets – 13.08% and Tier 1 capital to
total average assets (leverage ratio) – 10.38%. INB maintains
capital ratios in excess of its current regulatory requirements as
well as those necessary to be designated as a well-capitalized
institution under applicable regulations.
Intervest Bancshares Corporation is a holding company. Its
principal operating subsidiary is Intervest National Bank, 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. Intervest National Bank maintains capital
ratios in excess of the regulatory requirements to be designated as
a well-capitalized institution. Intervest Bancshares Corporation's
Class A Common Stock is listed on the NASDAQ Global Select Market:
Trading Symbol IBCA. This press release may contain forward-looking
information. Except for historical information, the matters
discussed herein are subject to certain risks and uncertainties
that may affect the Company's actual results of operations. The
following important factors, among others, could cause actual
results to differ materially from those set forth in forward
looking statements: changes in general economic conditions and real
estate values in the Company's market areas; changes in policies by
regulatory agencies; fluctuations in interest rates; demand for
loans and deposits; and competition. Reference is made to the
Company's filings with the SEC for further discussion of risks and
uncertainties regarding the Company's business. Historical results
are not necessarily indicative of the future prospects of the
Company.
INTERVEST BANCSHARES
CORPORATION
Selected Consolidated Financial
Information
(Dollars in thousands, except per share amounts)
Quarter
Ended March 31, Selected Operating Data:
2010 2009 Interest and dividend income
$29,631 $30,679 Interest expense 17,141 21,389
Net interest and dividend income 12,490 9,290 Provision for
loan losses 9,639 1,857 Net interest and
dividend income after provision for loan losses 2,851 7,433
Noninterest income 512 73 Noninterest expenses 7,666
5,939 (Loss) earnings before income taxes (4,303 ) 1,567
(Benefit) provision for income taxes (1,825 ) 672 Net
(loss) earnings before preferred dividend requirements (2,478 ) 895
Preferred dividend requirements (1) 409 405
Net (loss) earnings available to common stockholders $(2,887
) $ 490
Basic (loss) earnings per common share
$ (0.35 ) $ 0.06
Diluted (loss) earnings per common share
(0.35 ) 0.06 Average common shares used to
calculate: Basic (loss) earnings per common share 8,270,812
8,270,812 Diluted (loss) earnings per common share (2) 8,270,812
8,270,812 Common shares outstanding at end of period 8,270,812
8,270,812 Common stock options/warrants outstanding at end of
period 1,018,722 959,112 Yield on
interest-earning assets 5.30 % 5.51 % Cost of funds 3.36 % 4.29 %
Net interest margin (3) 2.23 % 1.67 % Return on
average assets (annualized) -0.42 % 0.16 % Return on average common
equity (annualized) -5.20 % 1.89 % Effective income tax rate 42.41
% 42.88 % Efficiency ratio (4) 36 % 54 % Total
average loans outstanding $1,680,810 $1,713,685 Total average
securities outstanding 566,635 525,702 Total average short-term
investments outstanding 19,145 17,212 Total average
interest-earning assets outstanding 2,266,590 2,256,599 Total
average assets outstanding 2,335,592 2,281,226
Total average interest-bearing deposits outstanding
$1,961,132 $1,888,774 Total average borrowings outstanding 109,028
131,461 Total average interest-bearing liabilities outstanding
2,070,160 2,020,235 Total average stockholders' equity
214,235 212,159
At Mar 31,
At Dec 31,
At Sep 30,
At Jun 30,
At Mar 31,
Selected Financial Condition Information: 2010
2009 2009 2009
2009 Total assets $2,284,257 $2,401,204 $2,382,170
$2,380,044 $ 2,317,613 Total cash and short-term investments
56,470 7,977 30,660 23,441 30,203 Total securities held to maturity
491,067 634,856
598,313
566,722 544,702 Total FRB and FHLB stock 9,989 10,708 9,929 9,929
9,657 Total loans, net of unearned fees 1,634,140 1,686,164
1,696,064 1,746,087 1,708,752 Total deposits 1,926,772 2,029,984
2,012,995 1,995,165 1,938,123 Total borrowed funds and accrued
interest payable 103,060 118,552 107,547 118,035 122,194 Total
preferred equity 23,563 23,466 23,370 23,273 23,177 Total common
equity 187,711 190,588 190,249 189,864 189,440 Book value per
common share 22.69 23.04 23.00
22.96 22.90 Total
allowance for loan losses $ 28,300 $ 32,640 $ 31,815 $ 32,054 $
30,371 Total loan recoveries for the quarter - 25 - 1,329 - Total
loan chargeoffs for the quarter 13,979 3,126 2,635 2,332 10 Total
accruing troubled debt restructured loans (5) 116,906 97,311 71,156
76,210 30,586 Total loans ninety days past due and still accruing.
3,629 6,800 1,947 6,367 1,958 Total nonaccrual loans 96,248 123,877
131,742 129,784 119,305 Total foreclosed real estate 57,858 31,866
32,915 18,214 9,742 Allowance for loan losses/net loans 1.73
% 1.94 % 1.88 % 1.84 % 1.78 %
(1) Represents accrued dividends on $25 million of 5%
cumulative preferred stock held by the U.S. Treasury and
amortization of related preferred stock discount. (2) Outstanding
options/warrants were not dilutive for the Q1-09 reporting period.
Outstanding options/warrants are dilutive when their exercise price
is above the average market price of the Class A common stock
during the reporting period. (3) Net interest margin is reported
exclusive of income from loan prepayments, which is included as a
component of noninterest income. (4) Represents noninterest
expenses (excluding provisions for loan and real estate losses
& real estate expenses) as a percentage of net interest and
dividend income plus noninterest income. (5) Represent loans whose
terms have been modified mostly through the deferral of principal
and/or a partial reduction in interest payments.
INTERVEST BANCSHARES
CORPORATION
Consolidated Financial
Highlights
At or For The Period Ended
($ in thousands, except per share
amounts)
Quarter
Ended
Mar 31,
2010
Year
Ended
Dec 31,
2009
Year
Ended
Dec 31,
2008
Year
Ended
Dec 31,
2007
Year
Ended
Dec 31,
2006
Balance Sheet Highlights: Total
assets $ 2,284,257 $ 2,401,204 $ 2,271,833 $ 2,021,392 $ 1,971,753
Percentage change -5 % 6 % 12 % 3 % 16 % Total loans, net of
unearned fees 1,634,140 1,686,164 1,705,711 1,614,032 1,490,653
Percentage change -3 % -1 % 6 % 8 % 9 % Total deposits 1,926,772
2,029,984 1,864,135 1,659,174 1,588,534 Percentage change -5 % 9 %
12 % 4 % 16 % Loans/deposits (Intervest National Bank) 81 % 79 % 85
% 88 % 84 % Total borrowed funds and accrued interest payable.
103,060 118,552 149,566 136,434 172,909 Preferred equity 23,563
23,466 23,080 - - Common equity 187,711 190,588 188,894 179,561
170,046 Common book value per share 22.69 23.04 22.84 22.23 20.31
Market price per common share 3.90
3.28 3.99 17.22
34.41
Asset Quality Highlights
Nonaccrual loans $ 96,248 $ 123,877 $ 108,610 $ 90,756 $ 3,274
Foreclosed real estate 57,858 31,866 9,081 - - Accruing troubled
debt restructured loans (1) 116,906 97,311 - - - Loans ninety days
past due and still accruing 3,629 6,800 1,964 11,853 - Allowance
for loan losses 28,300 32,640 28,524 21,593 17,833 Loan recoveries
- 1,354 - - - Loan chargeoffs 13,979 8,103 4,227 - - Allowance for
loan losses/net loans 1.73 % 1.94 %
1.67 % 1.34 % 1.20 %
Statement of Operations Highlights: Interest and dividend
income $ 29,631 $ 123,598 $ 128,497 $ 131,916 $ 128,605 Interest
expense 17,141 81,000
90,335 89,653
78,297 Net interest and dividend income 12,490 42,598 38,162
42,263 50,308 Provision for loan losses 9,639 10,865 11,158 3,760
2,652 Noninterest income 512 297 5,026 8,825 6,855 Noninterest
expenses 7,666 27,084
18,873 12,876
13,027 (Loss) earnings before income taxes (4,303 ) 4,946
13,157 34,452 41,484 (Benefit) provision for income taxes
(1,825 ) 1,816 5,891
15,012 17,953 Net (loss)
earnings before
preferred dividend
requirements
(2,478
)
3,130
7,266
19,440
23,531
Preferred dividend requirements (2) 409
1,632 41 -
- Net (loss) earnings available to common
stockholders $ (2,887 ) $ 1,498 $ 7,225
$ 19,440 $ 23,531 Basic (loss) earnings
per common share $ (0.35 ) $ 0.18 $ 0.87 $ 2.35 $ 2.98 Diluted
(loss) earnings per common share $ (0.35 ) $ 0.18 $ 0.87 $ 2.31 $
2.82 Adjusted net earnings used to calculate
diluted (loss) earnings per common
share
$
(2,887
)
$
1,498
$
7,225
$
19,484
$
23,679
Average common shares used to calculate: Basic (loss) earnings per
common share 8,270,812 8,270,812 8,259,091 8,275,539 7,893,489
Diluted (loss) earnings per common share 8,270,812 8,270,812
8,267,781 8,422,017 8,401,379 Common shares outstanding
8,270,812 8,270,812
8,270,812 8,075,812
8,371,595 Net interest margin (3) 2.23 % 1.83 % 1.79 % 2.11
% 2.75 % Return on average assets -0.42 % 0.13 % 0.34 % 0.96 % 1.28
% Return on average common equity -5.20 % 1.65 % 3.94 % 11.05 %
15.82 % Effective income tax rate 42.41 % 36.72 % 44.77 % 43.57 %
43.28 % Efficiency ratio (4) 36 % 46 % 33 % 24 % 23 % Full-service
banking offices 7 7
7 7 7
(1) Represent loans whose terms have been modified
mostly through the deferral of principal and/or a partial reduction
in interest payments. (2) Represents accrued dividends on $25
million of 5% cumulative preferred stock held by the U.S. Treasury
and amortization of related preferred stock discount. (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 2.32%
for the quarter ended March 31, 2010, 1.68% for 2009, 1.74% for
2008, 2.64% for 2007 and 3.31% for 2006. (4) Represents noninterest
expenses (excluding provision for loan losses and real estate
expenses) as a percentage of net interest and dividend income plus
noninterest income. Noninterest expenses for 2006 included a
one-time charge of $1.5 million.
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