Intervest Bancshares Corporation (NASDAQ-GS: IBCA) (the "Company")
today reported net earnings for the third quarter of 2008 ("Q3-08")
of $2.6 million, or $0.32 per diluted share, compared to $4.8
million, or $0.58 per diluted share, for the third quarter of 2007
("Q3-07"). For the first nine months of 2008 ("9mths-08"), net
earnings were $6.8 million, or $0.82 per diluted share, compared to
$15.6 million, or $1.83 per diluted share, for the first nine
months of 2007 ("9mths-07"). The Company reported that its
nonperforming assets decreased from June 30, 2008 by $18.5 million
to $107.9 million and its book value per common share increased to
$22.52 at September 30, 2008. The Company's capital ratios, at both
the holding company level and at Intervest National Bank, continue
to be in excess of "well-capitalized" levels as defined by the
regulatory agencies. Net earnings for Q3-08 as compared to Q3-07
decreased by $2.2 million due to a $2.1 million increase in
noninterest expenses, a $1.9 million increase in the provision for
loan losses and a $1.3 million decrease in noninterest income.
These items were partially offset by a $1.5 million increase in net
interest and dividend income and a $1.6 million decrease in the
provision for income tax expense. Net interest and dividend income
increased to $11.1 million in Q3-08 from $9.6 million in Q3-07,
reflecting the receipt of approximately $1.4 million of past due
interest from the payoff of $22.2 million of nonaccrual loans. The
Company's net interest margin (excluding prepayment income)
increased to 2.04% in Q3-08, from 1.88% in Q3-07. The margin
benefited from a lower level of interest income not recorded on
nonaccrual loans ($1.4 million in Q3-08, compared to a $2.0 million
in Q3-07) and decreases in deposit and borrowing costs, partially
offset by repayments of higher yielding loans, lower competitive
pricing for new loans and lower yields earned on investment
securities and short-term investments. The Company's cost of funds
decreased to 4.57% in Q3-08 from 5.00% in Q3-07 reflecting lower
deposit costs as well as early repayment of higher cost borrowings.
Intervest National Bank nonetheless continues to experience strong
competition in attracting deposits, which has not allowed its
deposit rates to decrease fully in step with the Federal Reserve's
rate reductions. The provision for loan losses increased to $3.4
million in Q3-08, from $1.5 million in Q3-07 due to credit
downgrades on nonaccrual loans and lower estimated real estate
values on certain collateral properties. Noninterest expenses
increased to $5.3 million in Q3-08, from $3.2 million in Q3-07 due
to an increase in expenses associated with nonaccrual loans and
foreclosed real estate. Excluding expenses associated with
nonperforming assets, the Company's operating expenses remained
relatively unchanged. Noninterest income decreased to $2.3 million
in Q3-08, from $3.6 million in Q3-07 due to a decrease in income
from loan prepayments. The Company's effective income tax rate was
44% in Q3-08, compared to 43% in Q3-07. The Company had 70
employees at September 30, 2008 and 2007. As a result of the
negative effects of nonperforming assets described above, the
Company's efficiency ratio, which is a measure of its ability to
control expenses as a percentage of its revenues, increased to 39%
in Q3-08 from 24% in Q3-07. Return on average assets and equity
decreased to 0.48% and 5.69% in Q3-08, from 0.95% and 10.96% in
Q3-07, respectively. Net earnings for 9mths-08 as compared to
9mths-07 decreased by $8.8 million due to a $3.7 million decrease
in net interest and dividend income, a $5.4 million increase in the
provision for loan losses, a $3.9 million increase in noninterest
expenses and $2.7 million decrease in noninterest income, partially
offset by a $6.9 million decrease in the provision for income tax
expense. Total assets at September 30, 2008 increased to $2.2
billion, from $2.0 billion at December 31, 2007, primarily
reflecting growth in the loan portfolio and a higher level of
security investments. Total loans, net of unearned fees, increased
to $1.69 billion at September 30, 2008, from $1.61 billion at
December 31, 2007. The increase was due to $327 million of new
originations secured by commercial and multi-family real estate
exceeding the aggregate of: $221 million of principal repayments;
$25 million of loans transferred to foreclosed real estate; and
$4.3 million of loan chargoffs. Nearly all of the new loans have
fixed-rates with a weighted-average yield and term of 6.34% and 5.3
years, respectively. New loans totaled $101 million for Q3-08 and
$327 million for 9mths-08, compared to $157 million for Q3-07 and
$467 million for 9mths-07. Principal repayments totaled $111
million for Q3-08 and $221 million for 9mths-08, compared to $147
million for Q3-07 and $329 million for 9mths-07. Total
nonperforming assets at September 30, 2008 amounted to $107.9
million, or 4.95% of total assets, compared to $126.4 million, or
5.72%, at June 30, 2008 and $90.8 million, or 4.49%, at December
31, 2007. At September 30, 2008, nonperforming assets were
comprised of $82.8 million of nonaccrual loans, or 19 loans, and
$25.1 million of real estate acquired through foreclosure, or 4
properties. During Q3-08, a total of $24.6 million (outstanding
principal) of nonaccrual loans were satisfied through sales of
collateral properties and a $10.9 million loan was restored to
accrual status. In Q3-08, loan charge offs amounted to $4.3 million
and new nonaccrual loans totaled $21.4 million. At September 30,
2008 and in accordance with SFAS No. 114, a specific valuation
allowance in the aggregate amount of $5.4 million (included as part
of the overall allowance for loan losses) was maintained on
nonaccrual loans, which are considered impaired. Bankruptcy filings
by borrowers continue to delay the Company's ability to complete
foreclosure or other proceedings to acquire and sell the collateral
properties. Timing of the resolution/disposition of nonperforming
assets cannot be predicted with certainty. There can be no
assurance that the Company will not incur additional loan loss
provisions, additional loan charge offs or additional significant
expenses in connection with the ultimate collection of nonaccrual
loans or in carrying and disposing of properties acquired through
foreclosure. Although the Company has never originated or acquired
subprime loans nor invested in securities collateralized by
subprime loans, the current world financial crisis has affected the
Company indirectly through reductions in overall real estate
values, reduced home sales and construction, and a weakening of the
overall economy, particularly in the State of Florida. The Company
does not own or originate construction/development loans. The total
allowance for loan losses was $25.8 million at September 30, 2008,
compared to $26.6 million at June 30, 2008 and $21.6 million at
December 31, 2007. The allowance represented 1.53% of total loans
(net of deferred fees) outstanding at September 30, 2008, 1.54% at
June 30, 2008 and 1.34% at December 31, 2007. The increase in the
allowance from December 31, 2007 was due to provisions totaling
$8.5 million, of which $7.5 million was attributable to credit
downgrades on various loans and lower real estate values, and $1.0
million due to net loan growth of $76.4 million from December 31,
2007, partially offset by loan charge offs of $4.3 million. Total
securities held to maturity at September 30, 2008 increased to $411
million, from $344 million at December 31, 2007. The portfolio had
a weighted-average remaining contractual maturity and a yield of
4.6 years and 4.21%, respectively, at September 30, 2008. Total
deposits at September 30, 2008 increased to $1.73 billion, from
$1.66 billion at December 31, 2007, reflecting an increase in money
market accounts. Total borrowed funds and related interest payable
at September 30, 2008 increased to $211 million, from $136 million
at December 31, 2007, reflecting a $95 million increase in
short-term FHLBNY advances, partially offset by the early repayment
of $21 million of higher rate subordinated debentures. Total
stockholders' equity at September 30, 2008 increased to $186.2
million, from $179.5 million at December 31, 2007 due to: $6.8
million from net earnings; $1.8 million from the issuance of
195,000 shares of Class B common stock upon the exercise of
outstanding Class B warrants in January; and $0.2 million from
stock-based compensation; partially offset by a $2.1 million cash
dividend paid in June. Intervest Bancshares Corporation is a
financial holding company. Its operating subsidiaries are:
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;
and Intervest Mortgage Corporation, a mortgage investment company.
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. Selected Consolidated Financial Information Follows. �
INTERVEST BANCSHARES CORPORATION Selected Consolidated Financial
Information � (Dollars in thousands, except per share amounts) �
Quarter EndedSeptember 30, � Nine-Months EndedSeptember 30, � �
2008 � 2007 � 2008 � 2007 Selected Operating Data: � � � Interest
and dividend income $ 33,508 $ 32,384 $ 97,072 $ 99,731 Interest
expense � 22,424 � � � 22,834 � � � 68,069 � � � 67,018 � Net
interest and dividend income 11,084 9,550 29,003 32,713 Provision
for loan losses � 3,446 � � � 1,523 � � � 8,462 � � � 3,092 � Net
interest and dividend income after provision for loan losses 7,638
8,027 20,541 29,621 Noninterest income 2,318 3,677 4,400 7,121
Noninterest expenses � 5,276 � � � 3,216 � � � 12,991 � � � 9,102 �
Earnings before income taxes 4,680 8,488 11,950 27,640 Provision
for income taxes � 2,054 � � � 3,647 � � � 5,182 � � � 12,079 � Net
earnings $ 2,626 � � $ 4,841 � � $ 6,768 � � $ 15,561 � Basic
earnings per share $ 0.32 $ 0.59 $ 0.82 $ 1.87 Diluted earnings per
share $ 0.32 $ 0.58 $ 0.82 $ 1.83 Cash dividends paid per share $ -
$ - $ 0.25 $ 0.25 Adjusted net earnings for diluted earnings per
share (1) $ 2,626 $ 4,841 $ 6,768 $ 15,605 Weighted-average common
shares and common equivalent shares outstanding for computing:
Basic earnings per share 8,270,812 8,232,899 8,255,155 8,340,234
Diluted earnings per share (2) 8,270,812 8,314,099 8,257,204
8,511,381 Common shares outstanding at end of period 8,270,812
8,148,151 8,270,812 8,148,151 Common stock options/warrants
outstanding at end of period � � 132,040 � � � 195,000 � � �
132,040 � � � 195,000 � Yield on interest-earning assets 6.16 %
6.36 % 6.08 % 6.65 % Cost of funds 4.57 % 5.00 % 4.73 % 4.98 % Net
interest margin (3) � � 2.04 % � � 1.88 % � � 1.82 % � � 2.18 %
Return on average assets (annualized) 0.48 % 0.95 % 0.42 % 1.02 %
Return on average equity (annualized) 5.69 % 10.96 % 4.92 % 11.83 %
Effective income tax rate 43.89 % 42.97 % 43.36 % 43.70 %
Efficiency ratio (4) � � 39 % � � 24 % � � 39 % � � 23 % Total
average loans outstanding $ 1,720,596 $ 1,629,037 $ 1,689,846 $
1,590,114 Total average securities outstanding $ 437,463 $ 378,495
$ 422,457 $ 397,908 Total average short-term investments
outstanding $ 5,642 $ 12,408 $ 20,961 $ 17,734 Total average
interest-earning assets outstanding $ 2,163,701 $ 2,019,940 $
2,133,264 $ 2,005,756 Total average assets outstanding � $
2,188,594 � � $ 2,039,384 � � $ 2,154,650 � � $ 2,024,935 � Total
average interest-bearing deposits outstanding $ 1,775,307 $
1,637,611 $ 1,766,829 $ 1,636,582 Total average borrowings
outstanding $ 177,270 $ 173,673 $ 154,456 $ 163,507 Total average
interest-bearing liabilities outstanding $ 1,952,577 $ 1,811,284 $
1,921,285 $ 1,800,089 Total average stockholders' equity � $
184,496 � � $ 176,732 � � $ 183,561 � � $ 175,435 � � Selected
Financial Condition Information: � At Sep 30, 2008 At Jun 30, 2008
At Mar 31, 2008 At Dec 31, 2007 At Sep 30, 2007 Total assets � $
2,180,746 $ 2,207,170 $ 2,165,017 $ 2,021,392 $ 2,033,662 Total
cash and short-term investments $ 21,969 $ 16,726 $ 47,229 $ 33,086
$ 24,081 Total securities held to maturity $ 410,844 $ 430,934 $
406,727 $ 344,105 $ 347,001 Total FRB and FHLB stock $ 10,912 $
8,428 $ 7,368 $ 6,351 $ 6,351 Total loans, net of unearned fees $
1,691,851 $ 1,723,213 $ 1,677,119 $ 1,614,032 $ 1,628,387 Total
deposits $ 1,734,820 $ 1,809,683 $ 1,781,188 $ 1,659,174 $
1,673,443 Total borrowed funds and accrued interest payable $
210,551 $ 168,063 $ 159,189 $ 136,434 $ 136,247 Total stockholders'
equity $ 186,230 $ 183,549 $ 183,703 $ 179,561 $ 177,182 Total
allowance for loan losses $ 25,828 $ 26,609 $ 23,856 $ 21,593 $
20,925 Total loan chargeoffs $ 4,227 $ - $ - $ - $ - Total loans
ninety days past due and still accruing. $ - $ 3,051 $ 837 $ 11,853
$ - Total nonaccrual loans $ 82,759 $ 119,078 $ 97,692 $ 90,756 $
74,526 Total foreclosed real estate $ 25,099 $ 7,272 $ 4,022 $ - $
975 Book value per common share $ 22.52 $ 22.19 $ 22.21 $ 22.23 $
21.75 Allowance for loan losses/net loans � � 1.53 % � 1.54 % �
1.42 % � 1.34 % � 1.29 % (1) Represents net earnings plus interest
expense on dilutive convertible debentures, net of taxes, that
would not occur if the convertible debentures were assumed to be
converted during the period they were outstanding for purposes of
computing diluted earnings per share. (2) Diluted EPS includes
shares that would be outstanding if dilutive common stock
options/warrants and convertible debentures were assumed to be
exercised/converted during the period. All outstanding
options/warrants were considered for the EPS computations, except
for 132,040 options, which were not dilutive because the exercise
price was above the average market price of the Class A common
stock during the 2008 periods. (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 2.31% and 2.51% for the quarters ended
September 30, 2008 and 2007, respectively, and 1.95% and 2.57% for
the nine-months ended September 30, 2008 and 2007, respectively.
(4) Represents noninterest expenses (excluding the provision for
loan losses) as a percentage of net interest and dividend income
plus noninterest income. � INTERVEST BANCSHARES CORPORATION
Consolidated Financial Highlights � � At or For The Period Ended �
($ in thousands, except per share amounts) � Nine-Months Ended Sep
30, 2008 Year Ended Dec 31, 2007 Year Ended Dec 31, 2006 Year Ended
Dec 31, 2005 Year Ended Dec 31, 2004 Balance Sheet Highlights:
Total assets $ 2,180,746 $ 2,021,392 $ 1,971,753 $ 1,706,423 $
1,316,751 Asset growth rate 8 % 3 % 16 % 30 % 44 % Total loans, net
of unearned fees $ 1,691,851 $ 1,614,032 $ 1,490,653 $ 1,367,986 $
1,015,396 Loan growth rate 5 % 8 % 9 % 35 % 51 % Total deposits $
1,734,820 $ 1,659,174 $ 1,588,534 $ 1,375,330 $ 993,872 Deposit
growth rate 5 % 4 % 16 % 38 % 47 % Loans/deposits (Intervest
National Bank) 89 % 88 % 84 % 88 % 86 % Borrowed funds and accrued
interest payable $ 210,551 $ 136,434 $ 172,909 $ 155,725 $ 202,682
Stockholders' equity $ 186,230 $ 179,561 $ 170,046 $ 136,178 $
90,094 Common shares outstanding (1) 8,270,812 8,075,812 8,371,595
7,823,058 6,271,433 Common book value per share $ 22.52 $ 22.23 $
20.31 $ 17.41 $ 14.37 Market price per common share � $ 7.63 � $
17.22 � $ 34.41 � $ 24.04 � $ 19.74 � Asset Quality Highlights
Nonaccrual loans $ 82,759 $ 90,756 $ 3,274 $ 750 $ 4,607 Loans
ninety days past due and still accruing $ - $ 11,853 $ - $ 2,649 $
- Foreclosed real estate $ 25,099 $ - $ - $ - $ - Allowance for
loan losses $ 25,828 $ 21,593 $ 17,833 $ 15,181 $ 11,106 Loan
recoveries $ - $ - $ - $ - $ - Loan chargeoffs $ 4,227 $ - $ - $ -
$ - Allowance for loan losses / net loans � � 1.53 % � 1.34 % �
1.20 % � 1.11 % � 1.09 % Statement of Operations Highlights:
Interest and dividend income $ 97,072 $ 131,916 $ 128,605 $ 97,881
$ 66,549 Interest expense � 68,069 � � 89,653 � � 78,297 � � 57,447
� � 38,683 � Net interest and dividend income 29,003 42,263 50,308
40,434 27,866 Provision for loan losses 8,462 3,760 2,652 4,075
4,526 Noninterest income 4,400 8,825 6,855 6,594 5,140 Noninterest
expenses � 12,991 � � 12,876 � � 13,027 � � 10,703 � � 8,251 �
Earnings before income taxes 11,950 34,452 41,484 32,250 20,229
Provision for income taxes � 5,182 � � 15,012 � � 17,953 � � 14,066
� � 8,776 � Net earnings $ 6,768 � $ 19,440 � $ 23,531 � $ 18,184 �
$ 11,453 � Basic earnings per share $ 0.82 $ 2.35 $ 2.98 $ 2.65 $
1.89 Diluted earnings per share $ 0.82 $ 2.31 $ 2.82 $ 2.47 $ 1.71
Adjusted net earnings used to calculate diluted earnings per share
� $ 6,768 $ 19,484 $ 23,679 $ 18,399 $ 11,707 Average common shares
used to calculate: Basic earnings per share 8,255,155 8,275,539
7,893,489 6,861,887 6,068,755 Diluted earnings per share 8,257,204
8,422,017 8,401,379 7,449,658 6,826,176 Net interest margin (2)
1.82 % 2.11 % 2.75 % 2.70 % 2.52 % Return on average assets 0.42 %
0.96 % 1.28 % 1.20 % 1.02 % Return on average equity 4.92 % 11.05 %
15.82 % 16.91 % 14.14 % Effective income tax rate 43.36 % 43.57 %
43.28 % 43.62 % 43.38 % Efficiency ratio (3) 39 % 25 % 23 % 23 % 25
% Full-service banking offices � � 7 � � 7 � � 7 � � 6 � � 6 � (1)
The increase in shares in 2008 is comprised of 195,000 shares from
the exercise of Class B common stock warrants. ����The decrease in
shares in 2007 is comprised of 404,339 shares of Class A common
stock repurchased, partially offset by the issuance of 108,556
shares of Class a common stock from the conversion of convertible
debentures. ����The increase in shares in 2006 is comprised of
501,465 shares from the exercise of Class A common stock warrants
and 47,072 shares from the conversion of convertible debentures
into Class A common stock. ����The increase in shares in 2005 is
comprised of 1,436,468 shares from a public offering of Class A
common stock and 115,157 shares from the conversion of convertible
debentures into Class A common stock. ����The increase in shares in
2004 is comprised of 42,510 shares from the exercise of Class A
common stock warrants and 240,546 shares from the conversion of
convertible debentures into Class A common stock. (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 compute to 1.95% for the nine-months ended
September 30, 2008, 2.57% for 2007, 3.11% for 2006, 2.94% for 2005
and 2.93% for 2004. (3) Represents noninterest expenses (excluding
the provision for loan losses) 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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