Intervest Bancshares Corporation (NASDAQ-GS: IBCA), parent
company of Intervest National Bank ("INB"), today reported that its
net earnings for the first quarter of 2013 ("Q1-13") increased to
$3.4 million, or $0.16 per common share, from $2.8 million, or
$0.13 per common share, for the first quarter of 2012 ("Q1-12").
The $0.6 million increase in net earnings was driven by a $1.0
million credit for loan losses and a $1.4 million decrease in net
real estate expenses. These items were largely offset by a $0.9
million decrease in net interest and dividend income, a $0.4
million decrease in noninterest income, a $0.4 million increase in
income tax expense and a $0.1 million increase in the provision for
real estate losses.
Key points regarding the quarter's results follow:
- A credit for loan losses of $1.0
million was recorded in Q1-13, compared to no provision for loan
losses in Q1-12. The credit was the result of $1.1 million of
recoveries of prior loan charge offs (from settlements of various
litigation on two foreclosure actions commenced prior to
2011).
- Expenses, net of rental income,
associated with real estate owned through foreclosure ("REO")
totaled $0.5 million in Q1-12, compared to net income of $0.9
million in Q1-13. The amount for Q1-13 included a $1.5 million
recovery of real estate expenses from prior periods associated with
one property (that was sold in 2008) due to the litigation
settlement noted above.
- Net interest and dividend income
decreased to $9.0 million in Q1-13, from $9.9 million in Q1-12,
primarily due to a planned reduction in INB's assets. The decrease
in assets contributed to a significant increase in INB's regulatory
capital ratios. The net interest margin (exclusive of loan
prepayment income) improved to 2.37% in Q1-13, from 2.16% in
Q1-12.
- Noninterest income decreased to $0.7
million in Q1-13, from $1.1 million in Q1-12. The decrease was due
to $0.2 million of less income from loan prepayments and other
lending fees, and a $0.2 million increase in security impairment
charges.
- Income tax expense increased to $3.1
million in Q1-13, from $2.7 million in Q1-12 due to higher pre-tax
income.
- A provision for real estate losses of
$0.6 million was recorded in Q1-13, compared to $0.5 million in
Q1-12.
- Operating expenses for Q1-13 totaled
$4.2 million, unchanged from Q1-12 as a $0.1 million increase in
salaries and benefits expense was offset by a $0.1 million decrease
in FDIC insurance expense. The Company's efficiency ratio (which
measures its ability to control expenses as a percentage of
revenues) continued to be favorable but increased slightly to 42%
in Q1-13, from 38% in Q1-12.
- Nonaccrual loans decreased to $41
million at March 31, 2013, from $46 million at December 31, 2012.
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 reported nonaccrual
based on regulatory guidance. At March 31, 2013, such loans totaled
$33 million compared to $36 million at December 31, 2012. These
loans were yielding 4.82% at March 31, 2013.
- REO increased to $18.3 million at March
31, 2013, from $15.9 million at December 31, 2012, reflecting the
addition of one property for $3.0 million, partially offset by $0.6
million of write-downs (recorded as a provision for real estate
losses) in the carrying value of several properties.
- New loan originations for Q1-13
increased to $62 million, from $50 million in Q1-12. Total loan
repayments increased to $86 million in Q1-13, from $57 million in
Q1-12.
- Book value per common share (after
subtracting preferred dividends in arrears) was $8.48 at March 31,
2013 and $8.44 at December 31, 2012.
As previously announced, on March 21, 2013, INB's primary
regulator, the Office of the Comptroller of the Currency,
terminated its Formal Agreement with INB and INB is no longer
subject to any related operating restrictions. INB is also no
longer subject to heightened regulatory capital requirements which
had been in effect since February 2010. INB's regulatory capital
ratios at March 31, 2013 were as follows: Tier One Leverage -
15.55%; Tier One Risk-Based - 20.90%; and Total Risk-Based Capital
- 22.17%, well above the minimum requirements to be considered a
well-capitalized institution. As of March 31, 2013, Intervest
Bancshares Corporation ("IBC") remained subject to its written
agreement with the Federal Reserve Bank of New York (the "FRB") and
the restrictions contained therein.
The U.S. Treasury is currently conducting periodic, individual
auctions of TARP securities it owns, including those of IBC. IBC is
exploring opportunities to repurchase its TARP securities held by
the Treasury through such auctions. In order to repurchase the
securities, IBC would need to first repay $6.7 million of accrued
interest on its $55 million of outstanding junior subordinated
debentures as well as approximately $4.6 million of dividends in
arrears on its $25 million of preferred stock held by the Treasury.
Both IBC and INB have received approvals from their regulators to
undertake the necessary steps, including making a necessary
one-time cash dividend payment from INB to IBC of $31 million, to
permit IBC to participate in such auctions and make a bid to
purchase its securities. IBC would use INB's cash dividend and a
large portion of its $8.5 million of available cash on hand at
March 31, 2013 to fund the foregoing actions. IBC expects to make a
bid in the second quarter of 2013.
The $0.9 million decrease in net interest and dividend income
was due to INB's smaller balance sheet, partially offset by a
higher net interest margin. In Q1-13, total average
interest-earning assets decreased by $308 million from Q1-12,
reflecting decreases of $68 million in loans and $240 million in
total securities and overnight investments. At the same time,
average deposits and borrowed funds decreased by $306 million and
$13 million, respectively, while average stockholders' equity
increased by $14 million. The net interest margin increased by 21
basis points, reflecting an 18 basis point improvement in the
interest rate spread and a higher ratio of interest-earning assets
to interest-bearing liabilities, or an $11 million increase in net
earning assets. The higher spread was due to a steady reduction
since 2010 in rates paid on deposits and the 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 into new
loans and securities at significantly lower market interest rates.
Overall, the average cost of funds decreased by 41 basis points to
2.13% in Q1-13, from 2.54% in Q1-12, while the average yield on
earning assets decreased at a slower pace or by 23 basis points to
4.27% in Q1-13, from 4.50% in Q1-12.
Total assets at March 31, 2013 decreased to $1.63 billion from
$1.67 billion at December 31, 2012, primarily reflecting a $35
million decrease in security investments and a $26 million decrease
in loans, partially offset by a $24 million increase in cash and
short-term investments to $84 million, a significant portion of
which is expected to be used for the purposes noted earlier.
Securities held to maturity decreased to $409 million at March
31, 2013 from $444 million at December 31, 2012, reflecting calls
of securities exceeding new purchases. The bulk of the resulting
proceeds were used to fund planned deposit outflow. At March 31,
2013, the securities portfolio, which represented 25% of total
assets and was comprised almost entirely of U.S. government agency
debt ($327 million) and residential mortgage-backed pass-through
securities ($78 million), had a weighted-average expected yield,
remaining life and remaining contractual maturity of 1.06%, 2.4
years and 6.9 years, respectively.
Loans totaled $1.08 billion at March 31, 2013, compared to $1.11
billion at December 31, 2012. The decrease reflected $77.6 million
of payoffs, $8.1 million of amortization, $0.1 million of
chargeoffs and $3.0 million of transfers to REO, mostly offset by
$61.6 million of new loans and $1.2 million of recoveries of prior
loan charge offs. Loans paid off had a weighted-average yield of
6.14%. New loans in Q1-13, nearly all with fixed interest rates,
had a weighted-average yield, term and loan-to-value ratio of
4.60%, 5.1 years and 58%, respectively, compared to 4.83%, 5.5
years and 60%, respectively, in Q1-12.
Nonaccrual loans and REO aggregated to $59 million, or 3.6% of
total assets, at March 31, 2013, compared to $62 million, or 3.7%,
at December 31, 2012. Nonaccrual loans totaled $41 million at March
31, 2013, down from $46 million at December 31, 2012. Nonaccrual
loans included $33 million (8 loans) and $36 million (10 loans) of
TDRs that were current at each date, respectively.
The allowance for loan losses at March 31, 2013 was $28.2
million, representing 2.61% of total net loans, compared to $28.1
million, or 2.54%, at December 31, 2012. The allowance included
specific reserves for impaired loans (comprised of all nonaccrual
loans as well as accruing TDRs) at each date totaling $5.8 million
and $5.9 million, respectively.
At March 31, 2013, the Company had a consolidated deferred tax
asset totaling $26 million, which included remaining unused NOL and
AMT credit carryforwards totaling $10 million for Federal tax
purposes and $40 million for State and Local tax purposes. These
carryforwards are available to reduce taxes payable on future
taxable income.
Deposits at March 31, 2013 decreased to $1.32 billion from $1.36
billion at December 31, 2012, primarily reflecting a $30 million
decrease in CD accounts, of which $8 million were brokered. At
March 31, 2013, there were $70 million of brokered CDs outstanding
with a rate of 4.89%, of which $33 million mature within one
year.
Borrowed funds and related interest payable at March 31, 2013
increased to $63.4 million, from $62.9 million at December 31,
2012, due to a $0.5 million increase in accrued interest payable on
outstanding junior subordinated debentures (TRUPs). Stockholders'
equity increased to $215 million at March 31, 2013 from $211
million at December 31, 2012, primarily due to $3.9 million of net
earnings before preferred dividend requirements. Since February
2010, as required by the FRB and as permitted by the underlying
documents, IBC has suspended the payment of interest on its TRUPs
as well as the declaration and payment of dividends on $25 million
of its preferred stock held by the Treasury.
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 agreement
to which IBC is subject 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. We assume no obligation to update any forward looking
statements. 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 March 31,
Selected Operating Data: 2013
2012 Interest and
dividend income $ 16,249 $ 20,698 Interest expense
7,245 10,740 Net interest
and dividend income 9,004 9,958 (Credit) provision for loan losses
(1,000 ) - Noninterest income 743 1,125 Noninterest expenses:
Provision for real estate losses 629 511 Real estate (income)
expenses, net (986 ) 460 Operating expenses 4,138
4,164 Earnings before income taxes
6,966 5,948 Provision for income taxes 3,075
2,694 Net earnings before preferred dividend
requirements 3,891 3,254 Preferred dividend requirements (1)
462 444 Net earnings available
to common stockholders $ 3,429 $ 2,810
Basic and diluted earnings per common share $ 0.16
$ 0.13 Average shares used for basic
earnings per share 21,832,200 21,493,518 Average shares used for
diluted earnings per share (2) 21,854,455 21,493,518 Common shares
outstanding at end of period 21,925,089 21,590,689 Common stock
options/warrants outstanding at end of period (2)
1,069,022 1,085,022 Yield
on interest-earning assets 4.27 % 4.50 % Cost of funds 2.13 % 2.54
% Net interest margin (3) 2.37 %
2.16 % Return on average assets (annualized) 0.95 % 0.67 %
Return on average common equity (annualized) 8.29 % 7.46 %
Effective income tax rate 44 % 45 % Efficiency ratio (4)
42 % 38 % Average loans
outstanding $ 1,096,881 $ 1,165,330 Average securities outstanding
435,611 678,844 Average short-term investments outstanding 10,869
7,664 Average assets outstanding 1,638,065
1,945,130 Average
interest-bearing deposits outstanding $ 1,325,942 $ 1,631,664
Average borrowings outstanding 56,702 70,356 Average stockholders'
equity 212,510
198,746
At Mar
31,
At Dec
31,
At Sep
30,
At Jun
30,
At Mar
31,
Selected Financial Condition Information:
2013 2012 2012
2012 2012 Total assets $
1,627,787 $ 1,665,792 $ 1,751,880 $1,862,110 $ 1,909,052 Cash and
short-term investments 83,945 60,395 94,268 122,378 89,839
Securities held to maturity 409,184 443,777 440,002 535,056 590,959
Loans, net of unearned fees 1,081,482 1,107,466 1,155,171 1,137,780
1,155,437 Allowance for loan losses 28,210 28,103 28,382 28,844
29,169 Allowance for loan losses/net loans 2.61 % 2.54 % 2.46 %
2.54 % 2.52 % Deposits 1,318,215 1,362,619 1,432,209 1,554,615
1,599,653 Borrowed funds and accrued interest payable 63,373 62,930
69,487 72,528 72,064 Preferred stockholder's equity 24,720 24,624
24,528 24,431 24,335 Common stockholders' equity 190,545 186,323
182,580 179,690 176,716 Common book value per share (5)
8.48 8.44
8.28 8.16
8.04 Loan chargeoffs for the quarter $ 115 $ 676 $
548 $498 $ 1,430 Loan recoveries for the quarter 1,222 397 86 173
184 Real estate chargeoffs for the quarter - 1,124 3,642 - -
Security impairment writedowns for the quarter
366 425 -
- 157
Nonaccrual loans (6) $ 40,931 $ 45,898 $ 47,957 $50,643 $ 53,208
Real estate owned, net of valuation allowance 18,334 15,923 21,858
26,370 27,767 Investment securities on a cash basis 3,292 3,721
4,221 4,221 4,221 Accruing troubled debt restructured (TDR) loans
(7). 13,906 20,076 14,167 14,596 8,980 Loans 90 days past due and
still accruing 5,916 4,391 6,503 5,290 2,798 Loans 60-89 days past
due and still accruing - - 15,477 1,902 6,303 Loans 31-59 days past
due and still accruing 12,998
15,497 50
- 11,840 (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 to purchase 928,112
shares and 1,085,622 shares were not dilutive for the 2013 and 2012
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 compute to 2.54% and 2.37%, respectively. (4)
Represents operating expenses as a percentage of net interest and
dividend income plus noninterest income. (5) Represents common
stockholders' equity less preferred dividends in arrears of $4.6
million, $4.2 million, $3.8 million, $3.5 million and $3.1 million,
respectively, divided by common shares outstanding. (6) Include
performing TDRs maintained on nonaccrual status of $33 million, $36
million, $39 million, $39 million and $44 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 March 31, 2013, all
loans were performing and were yielding approximately 5%. One loan
in the amount of $2.1 million matured and was in the process of
renewal at March 31, 2013. Such loan was also included in the
"Loans 90 days past due and still accruing" category.
INTERVEST
BANCSHARES CORPORATIONConsolidated Financial
Highlights
At or For The Period Ended
($ in thousands, except per share
amounts)
QuarterEndedMar 31,2013
YearEndedDec 31,2012
YearEndedDec 31,2011
YearEndedDec 31,2010
YearEndedDec 31,
2009
Balance Sheet Highlights:
Total assets $ 1,627,787 $ 1,665,792 $
1,969,540 $ 2,070,868 $ 2,401,204 Cash and short-term investments
83,945 60,395 29,863 23,911 7,977 Securities held to maturity
409,184 443,777 700,444 614,335 634,856 Loans, net of unearned fees
1,081,482 1,107,466 1,163,790 1,337,326 1,686,164 Allowance for
loan losses 28,210 28,103 30,415 34,840 32,640 Allowance for loan
losses/net loans 2.61 % 2.54 % 2.61 % 2.61 % 1.94 % Deposits
1,318,215 1,362,619 1,662,024 1,766,083 2,029,984 Borrowed funds
and accrued interest payable 63,373 62,930 78,606 84,676 118,552
Preferred stockholder's equity 24,720 24,624 24,238 23,852 23,466
Common stockholders' equity 190,545 186,323 173,293 162,108 190,588
Common book value per share (1) 8.48 8.44 8.07 7.61 23.04 Market
price per common share 5.88
3.89 2.65
2.93 3.28
Asset
Quality Highlights Nonaccrual loans $ 40,931 $ 45,898 $ 57,240
$ 52,923 $ 123,877 Real estate owned, net of valuation allowance
18,334 15,923 28,278 27,064 31,866 Investment securities on a cash
basis 3,292 3,721 4,378 2,318 1,385 Accruing troubled debt
restructured loans (2) 13,906 20,076 9,030 3,632 97,311 Loans 90
days past due and still accruing 5,916 4,391 1,925 7,481 6,800
Loans 31-89 days past due and still accruing 12,998 15,497 28,770
11,364 5,925 Loan chargeoffs 115 3,152 9,598 100,146 8,103 Loan
recoveries 1,222 840 155 883 1,354 Real estate chargeoffs - 4,766 -
15,614 - Impairment writedowns on security investments
366 582
201 1,192
2,258
Statement of Operations
Highlights: Interest and dividend income $ 16,249 $ 77,284 $
92,837 $ 107,072 $ 123,598 Interest expense 7,245
38,067 50,540
62,692
81,000 Net interest and dividend income 9,004 39,217 42,297
44,380 42,598 (Credit) provision for loan losses (1,000 ) - 5,018
101,463 10,865 Noninterest income 743 6,194 4,308 2,110 297
Noninterest expenses: Provision for real estate losses 629 4,068
3,349 15,509 2,275 Real estate (income) expenses, net (986 ) 2,146
1,619 4,105 4,945 Operating expenses 4,138
16,668 15,861
19,069 19,864
Earnings (loss) before income taxes 6,966 22,529 20,758
(93,656 ) 4,946 Provision (benefit) for income taxes 3,075
10,307
9,512 (40,348 )
1,816 Net earnings (loss) before preferred dividend
requirements 3,891 12,222 11,246 (53,308 ) 3,130 Preferred dividend
requirements (3) 462 1,801
1,730 1,667
1,632 Net earnings (loss)
available to common stockholders $ 3,429 $
10,421 $ 9,516 $ (54,975
) $ 1,498 Basic earnings (loss) per common
share $ 0.16 $ 0.48 $ 0.45 $ (4.95 ) $ 0.18 Diluted earnings (loss)
per common share $ 0.16 $ 0.48 $ 0.45 $ (4.95 ) $ 0.18 Average
common shares used to calculate: Basic earnings (loss) per common
share 21,832,200 21,566,009 21,126,187 11,101,196 8,270,812 Diluted
earnings (loss) per common share 21,854,455 21,568,196 21,126,187
11,101,196 8,270,812 Common shares outstanding
21,925,089 21,589,589
21,125,289 21,126,489
8,270,812
Other ratios:
Net interest margin (4) 2.37 % 2.29 % 2.18 % 2.11 % 1.83 % Return
on average assets 0.95 % 0.66 % 0.56 % -2.42 % 0.13 % Return on
average common equity 8.29 % 6.82 % 6.74 % -32.20 % 1.65 %
Effective income tax rate 44 % 46 % 46 % 43 % 37 % Efficiency ratio
(5) 42 % 37 %
34 % 41 %
46 % (1) Represents common stockholders' equity less
preferred dividends in arrears ($4.6 million at March 31, 2013,
$4.2 million at December 31, 2012 and $2.8 million at December 31,
2011) 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. At March
31, 2013, all loans were performing and were yielding approximately
5%. One loan in the amount of $2.1 million matured and was in the
process of renewal at March 31, 2013. Such loan was also included
in the "Loans 90 days past due and still accruing" category. (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 2.54%, 2.59%, 2.31%, 2.17% and 1.89%, respectively. (5)
Represents operating expenses as a percentage of net interest and
dividend income plus noninterest income.
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