Intervest Bancshares Corporation (NASDAQ-GS:IBCA), parent
company of Intervest National Bank, today reported net earnings for
the second quarter of 2012 ("Q2-12") of $2.3 million, or $0.11 per
diluted common share, compared to $2.5 million, or $0.12 per share,
for the second quarter of 2011 ("Q2-11"). For the first half of
2012 (6mths-12), net earnings were $5.1 million, or $0.24 per
share, compared to $4.2 million, or $0.20 per share, for the first
half of 2011 (6mths-11).
Key Points Follow:
- Intervest National Bank's regulatory
capital ratios continued to increase through the retention of
earnings and a gradual reduction in the size of its balance sheet.
The Bank's ratios at June 30, 2012 were as follows: Tier One
Leverage - 12.40%; Tier One Risk-Based - 17.79%; and Total
Risk-Based Capital - 19.05%; well above its minimum requirements of
9%, 10% and 12%, respectively. Tier 1 capital amounted to $230
million and was $63 million in excess of the required minimum for
the Tier One Leverage ratio.
- New loan originations increased to $97
million in the 6mths-12 period from $28 million in the 6mths-11
period.
- Nonaccrual loans decreased to $51
million at June 30, 2012, from $57 million at December 31, 2011.
Nonaccrual loans include certain restructured loans (TDRs) that are
current as to payments and performing in accordance with their
renegotiated terms, but are required to be classified nonaccrual
based on regulatory guidance. At June 30, 2012, such loans totaled
$39 million compared to $46 million at December 31, 2011. These
loans were yielding approximately 5%.
- Real estate owned through foreclosure
(REO) decreased to $26.4 million at June 30, 2012, from $28.3
million at December 31, 2011, reflecting $1.9 million of writedowns
since year end. The bulk of the writedowns, or $1.3 million, is
associated with two properties in Florida that were in the process
of being sold as of June 30, 2012, with closings expected early in
the third quarter. The net carrying value of these properties
totaled $3.3 million at June 30, 2012, which approximated their
contractual net selling prices.
- Provisions for loan and real estate
losses decreased to $1.4 million in Q2-12 from $2.0 million in
Q2-11, and to $1.9 million in 6mths-12 from $4.1 million in
6mths-11.
- Operating expenses for Q2-12 were $4.1
million, unchanged from Q2-11, and $8.3 million in 6mths-12, down
from $8.5 million in 6mths-11. The Company's efficiency ratio
(which measures its ability to control expenses as a percentage of
revenues) continued to be favorable and was 37% for Q2-12 and
6mths-12.
- Net interest and dividend income, which
was affected by a smaller balance sheet, amounted to $9.7 million
in Q2-12, compared to $10.9 million in Q2-11, and $19.7 million in
6mths-12 compared to $21.2 million in 6mhs-11. The net interest
margin was 2.23% in Q2-12 and 2.19% in 6mths-12, compared to 2.24%
and 2.19%, respectively, for the same periods of 2011.
- Book value per common share increased
to $8.16 at June 30, 2012, from $8.07 at December 31, 2011.
Net earnings for Q2-12 decreased by $0.2 million from Q2-11 due
to a $1.2 million decrease in net interest and dividend income (as
detailed below), largely offset by a $0.6 million decrease in the
total provision for loan and real estate losses (resulting
primarily from fewer loans outstanding and fewer credit rating
downgrades) and a $0.4 million increase in noninterest income (due
to higher income from loan prepayments). Operating expenses for
Q2-12 were unchanged from Q2-11 as a $0.4 million decrease in FDIC
premiums was offset by a $0.4 million aggregate increase in
salaries, benefits and stock compensation expense, including the
impact of several new officer positions during 2012. The effective
income tax rate was 46% in Q2-12 and 45% in Q2-11.
The decrease in net interest and dividend income was largely due
to a planned reduction in the size of the Bank's balance sheet. In
Q2-12, total average interest-earning assets decreased by $191
million from Q2-11, reflecting a $128 million decrease in average
loans and a $63 million decrease in average securities and
overnight investments. At the same time, average deposits and
borrowed funds decreased by $142 million and $12 million,
respectively, while average stockholders' equity increased by $13
million. The net interest margin was nearly unchanged as a $37
million decrease in net average interest-earning assets (due to a
higher level of cash on hand) was offset by a slight increase in
the interest rate spread. The spread improved by 4 basis points due
to the steady reduction in rates paid on deposits and run off of
higher-cost CDs and borrowings, largely offset by payoffs of higher
yielding loans and calls of security investments, coupled with the
re-investment of a large portion of these cash inflows in new loans
and securities at lower market interest rates. Overall, the average
cost of funds decreased by 46 basis points to 2.46% in Q2-12, from
2.92% in Q2-11, while the average yield on earning assets decreased
at a slower pace by 42 basis points to 4.52% in Q2-12, from 4.94%
in Q2-11.
Net earnings for 6mths-12 increased by $0.9 million over
6mths-11 due to the following: a $2.1 million decrease in the total
provision for loan and real estate losses; a $1.2 million increase
in noninterest income; and a $0.2 million decrease in operating
expenses, partially offset by a $1.6 million decrease in net
interest and dividend income and a $1.0 million increase in income
tax expense. The reasons for these changes were essentially the
same as the factors that caused the quarterly variances.
Total assets at June 30, 2012 decreased to $1.86 billion from
$1.97 billion at December 31, 2011, primarily reflecting a $165
million decrease in security investments and a $26 million decrease
in loans, partially offset by a $92 million increase in cash and
short-term investments. The Bank expects to utilize a large portion
of the increase in cash to fund new loans. At June 30, 2012, the
Bank had $77 million of potential new real estate loans in its
origination pipeline.
Securities held to maturity decreased to $535 million at June
30, 2012 from $700 million at December 31, 2011, reflecting calls
of securities exceeding new purchases. A portion of the resulting
proceeds was used to fund planned deposit outflow and a portion was
being held temporarily in cash and short-term investments as
denoted above. At June 30, 2012, the securities portfolio, which
represented 29% of total assets and was comprised mostly of U.S.
government agency debt ($434 million) and residential
mortgage-backed pass through securities ($96 million), had a
weighted-average expected yield, remaining life and remaining
contractual maturity of 1.37%, 1.4 years and 7.1 years,
respectively.
Loans totaled $1.14 billion at June 30, 2012, compared to $1.16
billion at December 31, 2011. The decrease reflected $97 million of
payoffs, $24 million of amortization and $1.9 million of
chargeoffs, partially offset by $97 million of new loans. Loans
paid off had a weighted-average yield of 6.21%. New loans, nearly
all with fixed interest rates, had a weighted-average yield, term
and loan-to-value ratio of 4.85%, 5.4 years and 58%,
respectively.
Nonaccrual loans and REO aggregated to $77 million, or 4.1% of
total assets, at June 30, 2012, compared to $86 million, or 4.3%,
at December 31, 2011. Nonaccrual loans totaled $51 million at June
30, 2012 and $57 million at December 31, 2011, and included $39
million (12 loans) and $46 million (12 loans) of TDRs that were
current at each date, respectively. One loan ($5.5 million) was
upgraded and classified as an accruing TDR in Q2-12. All the TDRs
classified as nonaccrual have performed as agreed under their
renegotiated terms and interest income is being recorded on a cash
basis. Based on annual updated appraisals received on the
underlying collateral properties, a portion of three TDRs (or $1.4
million of aggregate principal) was charged off for financial
statement purposes in Q1-12. The borrowers remain obligated to pay
all contractual principal due on the TDRs.
The allowance for loan losses at June 30, 2012 was $28.8
million, representing 2.54% of total net loans, compared to $30.4
million, or 2.61%, at December 31, 2011. The allowance included
specific reserves for impaired loans (comprised of all nonaccrual
loans as well as accruing TDRs) at each date totaling $6 million
and $8 million, respectively.
At June 30, 2012, the Company had a deferred tax asset totaling
$34.1 million, which included remaining unused NOL and AMT credit
carryforwards totaling $25 million for Federal tax purposes and $56
million for State and Local tax purposes. These carryforwards are
available to reduce taxes payable on the Company's future taxable
income.
Deposits at June 30, 2012 decreased to $1.55 billion from $1.66
billion at December 31, 2011, primarily reflecting a $102 million
decrease in CD accounts, of which $16.5 million were brokered. At
June 30, 2012, there were $33 million of scheduled maturities of
brokered CDs through December 31, 2012, which the Bank expects to
repay as they mature.
Borrowed funds and related interest payable at June 30, 2012
decreased to $72.5 million, from $78.6 million at December 31,
2011, due to the maturity and repayment of $7 million of FHLB
borrowings, partially offset by a $0.9 million increase in accrued
interest payable on trust preferred securities (TRUPs). Since
February 2010, as required by its regulator and as permitted by the
underlying documents, the Company has suspended the payment of
interest on $55 million of its debt in the form of TRUPs as well as
the declaration and payment of dividends on $25 million of TARP
preferred stock held by the U.S.Treasury.
Stockholders' equity increased to $204 million at June 30, 2012
from $198 million at December 31, 2011, primarily due to $6 million
of net earnings before preferred dividend requirements.
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: the regulatory agreements to which IBC
and INB are currently subject to and any operating restrictions
arising therefrom 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 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. 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: 2012
2011 2012 2011
Interest and dividend income $19,706 $23,917 $40,404 $47,511
Interest expense 10,001 13,044 20,741 26,287
Net interest and dividend income 9,705 10,873 19,663 21,224
Provision for loan losses - 742 - 2,787 Noninterest income 1,406
1,007 2,531 1,330 Noninterest expenses: Provision for real estate
losses 1,397 1,278 1,908 1,278 Real estate expenses 479 554 939 879
Operating expenses 4,149 4,099 8,313 8,509
Earnings before income taxes 5,086 5,207 11,034 9,101
Provision for income taxes 2,326 2,321 5,020
4,062 Net earnings before preferred dividend requirements
2,760 2,886 6,014 5,039 Preferred dividend requirements (1) 448
428 892 855 Net earnings available to
common stockholders $ 2,312 $ 2,458 $ 5,122 $
4,184 Basic and diluted earnings per common share
$0.11 $0.12 $0.24 $0.20 Average shares
used for basic earnings per share (2) 21,590,689 21,126,489
21,542,103 21,126,489 Average shares used for diluted earnings per
share (2) 21,591,648 21,126,489 21,542,103 21,126,489 Common shares
outstanding at end of period 21,590,689 21,126,489 21,590,689
21,126,489 Common stock options/warrants outstanding at end of
period 1,082,322 1,045,422 1,082,322
1,045,422 Yield on interest-earning assets 4.52 % 4.94 %
4.51 % 4.91 % Cost of funds 2.46 % 2.92 % 2.50 % 2.94 % Net
interest margin 2.23 % 2.24 % 2.19 % 2.19 % Return on
average assets (annualized) 0.58 % 0.57 % 0.63 % 0.49 % Return on
average common equity (annualized) 6.22 % 7.00 % 6.83 % 6.15 %
Effective income tax rate 46 % 45 % 46 % 45 % Efficiency ratio (3)
37 % 35 % 37 % 38 % Average loans outstanding $1,159,305
$1,287,029 $1,162,318 $1,308,104 Average securities outstanding
586,814 640,194 632,829 627,844 Average short-term investments
outstanding 7,071 16,497 7,368 16,774 Average assets outstanding
1,887,668 2,029,339 1,916,410 2,037,623
Average interest-bearing deposits outstanding $1,570,674
$1,712,380 $1,601,169 $1,722,225 Average borrowings outstanding
67,202 79,334 68,779 80,455 Average stockholders' equity
201,873 188,993 200,319 187,914
At Jun 30, At Mar 31,
At Dec 31, At Sep 30,
At Jun 30, Selected Financial Condition
Information: 2012 2012 2011
2011 2011 Total assets
$1,862,110 $1,909,052 $1,969,540 $1,991,245 $2,050,379 Cash and
short-term investments 122,378 89,839 29,863 36,798 14,461
Securities held to maturity 535,056 590,959 700,444 678,118 691,334
Loans, net of unearned fees 1,137,780 1,155,437 1,163,790 1,199,770
1,252,128 Allowance for loan losses 28,844 29,169 30,415 32,365
31,772 Allowance for loan losses/net loans 2.54 % 2.52 % 2.61 %
2.70 % 2.54 % Deposits 1,554,615 1,599,653 1,662,024 1,678,003
1,735,292 Borrowed funds and accrued interest payable 72,528 72,064
78,606 78,156 82,634 Preferred stockholder's equity 24,431 24,335
24,238 24,141 24,045 Common stockholders' equity 179,690 176,716
173,293 170,164 167,109 Common book value per share (4) 8.16
8.04 8.07 7.94 7.81 Loan
chargeoffs for the quarter $498 $1,430 $2,044 $1,667 $ 1,374 Loan
recoveries for the quarter 173 184 54 69 4 Real estate chargeoffs
for the quarter - - - - - Security impairment writedowns for the
quarter - 157 - 96 -
Nonaccrual loans (5) $50,643 $53,208 $57,240 $59,707 $45,352 Real
estate owned, net of valuation allowance 26,370 27,767 28,278
27,005 25,786 Investment securities on a cash basis 4,222 4,222
4,379 4,379 4,475
Accruing troubled debt restructured (TDR)
loans (6)
14,596 8,980 9,030 5,601 5,619 Loans 90 days past due and still
accruing 5,290 2,798 1,925 8,571 4,594 Loans 60-89 days past due
and still accruing 1,902 6,303 3,894 939 7,704 Loans 31-59 days
past due and still accruing - 11,840 24,876
- -
(1) Represents dividend requirements on cumulative preferred
stock held by the U.S. Treasury and amortization of related
preferred stock discount.
(2) For the 2012 quarterly and six-month periods, outstanding
options/warrants to purchase 1,043,322 shares and 1,082,322 shares,
respectively, were not dilutive. For both 2011 periods, outstanding
options/warrants to purchase 1,045,422 shares were not
dilutive.
(3) Represents operating expenses as a percentage of net
interest and dividend income plus noninterest income.
(4) Represents common stockholders' equity less preferred
dividends in arrears of $3.5 million, $3.1 million, $2.8 million,
$2.4 million and $2.1 million, respectively, divided by common
shares outstanding.
(5) Include performing TDRs maintained on nonaccrual status of
$39 million, $44 million, $46 million, $37 million and $33 million,
respectively.
(6) Represent loans whose terms have been modified mostly
through the deferral of principal and/or a partial reduction in
interest payments, or extension of maturity date. All loans were
performing and current as of June 30, 2012 and were yielding
approximately 6.1%.
INTERVEST
BANCSHARES CORPORATION
Consolidated Financial
Highlights
At or For The Period Ended
($ in thousands, except per share
amounts)
Six-Months
Ended
June 30,
2012
Year
Ended
Dec 31,
2011
Year
Ended
Dec 31,
2010
Year
Ended
Dec 31,
2009
Year
Ended
Dec 31,
2008
Balance Sheet Highlights: Total assets $1,862,110 $1,969,540
$2,070,868 $2,401,204 $2,271,833 Cash and short-term investments
122,378 29,863 23,911 7,977 54,903 Securities held to maturity
535,056 700,444 614,335 634,856 475,581 Loans, net of unearned fees
1,137,780 1,163,790 1,337,326 1,686,164 1,705,711 Allowance for
loan losses 28,844 30,415 34,840 32,640 28,524 Allowance for loan
losses/net loans 2.54 % 2.61 % 2.61 % 1.94 % 1.67 % Deposits
1,554,615 1,662,024 1,766,083 2,029,984 1,864,135 Borrowed funds
and accrued interest payable 72,528 78,606 84,676 118,552 149,566
Preferred stockholder's equity 24,431 24,238 23,852 23,466 23,080
Common stockholders' equity 179,690 173,293 162,108 190,588 188,894
Common book value per share (1) 8.16 8.07 7.61 23.04 22.84 Market
price per common share 3.83 2.65 2.93
3.28 3.99
Asset Quality Highlights Nonaccrual
loans $50,643 $57,240 $52,923 $123,877 $108,610 Real estate owned,
net of valuation allowance 26,370 28,278 27,064 31,866 9,081
Investment securities on a cash basis 4,222 4,379 2,318 1,385 -
Accruing troubled debt restructured loans (2) 14,596 9,030 3,632
97,311 - Loans past due 90 days and still accruing 5,290 1,925
7,481 6,800 1,964 Loans past due 31-89 days and still accruing
1,902 28,770 11,364 5,925 18,943 Loan chargeoffs 1,928 9,598
100,146 8,103 4,227 Loan recoveries 357 155 883 1,354 - Real estate
chargeoffs - - 15,614 - - Impairment writedowns on security
investments 157 201 1,192 2,258
-
Statement of Operations Highlights: Interest and
dividend income $40,404 $92,837 $ 107,072 $123,598 $128,497
Interest expense 20,741 50,540 62,692 81,000
90,335 Net interest and dividend income 19,663 42,297
44,380 42,598 38,162 Provision for loan losses - 5,018 101,463
10,865 11,158 Noninterest income 2,531 4,308 2,110 297 5,026
Noninterest expenses: Provision for real estate losses 1,908 3,349
15,509 2,275 518 Real estate expenses 939 1,619 4,105 4,945 4,281
Operating expenses 8,313 15,861 19,069 19,864
14,074 Earnings (loss) before income taxes 11,034
20,758 (93,656 ) 4,946 13,157 Provision (benefit) for income taxes
5,020 9,512 (40,348 ) 1,816 5,891 Net
earnings (loss) before preferred dividend requirements 6,014 11,246
(53,308 ) 3,130 7,266 Preferred dividend requirements (3) 892
1,730 1,667 1,632 41 Net
earnings (loss) available to common stockholders $ 5,122 $
9,516 $(54,975 ) $ 1,498 $ 7,225 Basic
earnings (loss) per common share $0.24 $0.45 $(4.95 ) $0.18 $0.87
Diluted earnings (loss) per common share $0.24 $0.45 $(4.95 ) $0.18
$0.87 Average common shares used to calculate: Basic earnings
(loss) per common share 21,542,103 21,126,187 11,101,196 8,270,812
8,259,091 Diluted earnings (loss) per common share 21,542,103
21,126,187 11,101,196 8,270,812 8,267,781 Common shares outstanding
21,590,689 21,125,289 21,126,489
8,270,812 8,270,812
Other ratios: Net interest
margin (4) 2.19 % 2.18 % 2.11 % 1.83 % 1.79 % Return on average
assets 0.63 % 0.56 % -2.42 % 0.13 % 0.34 % Return on average common
equity 6.83 % 6.74 % -32.20 % 1.65 % 3.94 % Effective income tax
rate 46 % 46 % 43 % 37 % 45 % Efficiency ratio (5) 37 % 34 %
41 % 46 % 33 %
(1) Represents common stockholders' equity less preferred
dividends in arrears ($3.5 million at June 30, 2012, $2.8 million
at December 31, 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
2.41%, 2.24%, 2.26%, 1.72% and 1.77%, respectively.
(5) Represents operating expenses as a percentage of net
interest and dividend income plus noninterest income.
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