Apr. 12, 2011 (Business Wire) — Intervest Bancshares Corporation (NASDAQ-GS: IBCA), parent company of Intervest National Bank, today reported its financial results for the first quarter of 2011.
Financial Highlights:
- Net earnings for the first quarter of 2011 (“Q1-11”) amounted to $1.7 million, or $0.08 per diluted common share, compared to a net loss of $2.9 million, or $0.35 per share, for the same quarter a year ago (“Q1-10”) and net earnings of $0.4 million, or $0.02 per share, for the fourth quarter of 2010 (“Q4-10”).
- Pre-tax earnings before deducting provisions for loan and real estate losses and real estate expenses amounted to $6.3 million in Q1-11, compared to $8.3 million in Q1-10 and $6.6 million in Q4-10.
- Net interest margin for Q1-11 was 2.14%, compared to 2.23% in Q1-10 and 2.06% in Q4-10.
- Nonaccrual loans and real estate owned totaled $72 million at March 31, 2011, down 10% from $80 million at December 31, 2010 and 53% from $154 million at March 31, 2010. New non-accrual loans decreased to $5 million in Q1-11, down from $26 million in Q1-10 and $15 million in Q4-10.
- The total provision for loan and real estate losses decreased to $2.0 million for Q1-11, down substantially from $11.6 million in Q1-10 and $4.7 million in Q4-10. The allowance for loan losses amounted to 2.49% of total outstanding loans at March 31, 2011, compared to 2.61% at December 31, 2010 and 1.73% at March 31, 2010.
- Noninterest expense amounted to $4.4 million in Q1-11, down from $4.7 million in Q1-10 and $4.9 million in Q4-10. The Company’s efficiency ratio, which is a measure of its ability to control expenses as a percentage of its revenues, was 41% in Q1-11, 42% in Q4-10 and 36% in Q1-10.
- Intervest National Bank’s regulatory capital ratios continued to improve and were well in excess of the minimums that the Bank has agreed with its regulator to maintain. At March 31, 2011, the Bank’s actual ratios were as follows: total capital to risk-weighted assets – 14.81%; Tier 1 capital to risk-weighted assets – 13.55%; and Tier 1 capital to total average assets (leverage ratio) – 10.04%. The Bank’s minimum required capital ratios are 12%, 10% and 9%, respectively.
- Common book value per share increased to $7.69 at March 31, 2011 from $7.61 at December 31, 2010.
Net earnings for Q1-11 increased by $4.6 million over Q1-10 due to a $9.6 million decrease in the total provision for loan and real estate losses (reflecting fewer problem assets and credit rating downgrades), a $0.6 million decrease in real estate expenses (reflecting less real estate owned) and a $0.3 million decrease in noninterest expenses (primarily due to lower data processing costs). The aggregate of these items was partially offset by a $2.1 million decrease in net interest and dividend income, a $0.2 million decrease in noninterest income and a $3.6 million increase in tax expense (resulting from pre-tax income in Q1-11 versus a pre-tax loss in Q1-10).
The decrease in net interest and dividend income reflected the planned reduction in the Bank’s assets and liabilities and a slightly lower net interest margin as noted above. Total average interest-earning assets decreased by $305 million in Q1-11 from Q1-10 in part due to the previously reported bulk loan sale in May 2010, with the remainder due to loan payoffs and principal repayments exceeding a reduced volume of new loan originations. These cash inflows were used to fund deposit outflow and repayments of maturing borrowed funds, which positively impacted the Bank’s regulatory capital ratios.
The decrease in the net interest margin in Q1-11 from Q1-10 reflected the impact of the bulk loan sale, a large portion of which included the sale of $108 million of performing troubled debt restructured loans (TDRs) and other loans yielding approximately 5%, payoffs of other higher yielding loans and early calls of U.S. government agency security investments coupled with the reinvestment of the proceeds into similar securities with lower market interest rates, all of which was largely offset by lower rates paid on deposit accounts. The yield on average interest-earning assets decreased by 42 basis points to 4.88% in Q1-11, from 5.30% in Q1-10, while the average cost of funds decreased at nearly the same pace or by 40 basis points to 2.96% in Q1-11, from 3.36% in Q1-10.
Total assets at March 31, 2011 decreased to $2.01 billion from $2.07 billion at December 31, 2010, primarily reflecting a decrease in loans receivable and security investments.
Loans receivable, net of unearned fees, amounted to $1.30 billion at March 31, 2011, a $37 million decrease from $1.34 billion at December 31, 2010. The decrease was due to an aggregate of $39.5 million of principal repayments (resulting from loan payoffs and normal amortization) and $4.5 million of loan chargeoffs, partially offset by $6.6 million of new loan originations. The Company does not own or originate construction/development loans.
Nonaccrual loans and real estate owned aggregated to $72 million, or 3.6% of total assets, at March 31, 2011, compared to $80 million, or 3.9%, at December 31, 2010 and $154 million, or 6.8%, at March 31, 2010. The decrease in total assets since 2009 has negatively impacted the percentages. Nonaccrual loans at March 31, 2011 and December 31, 2010 included $18 million and $21 million, respectively, of performing TDRs that are classified as nonaccrual based on regulatory guidance. These TDRs continue to pay as agreed under their renegotiated terms. As a result of updated appraisals in March 2011, the Bank charged off in Q1-11 a portion of three of these performing TDRs.
The allowance for loan losses at March 31, 2011 was $32.4 million, representing 2.49% of total net loans, compared to $34.8 million, or 2.61%, at December 31, 2010 and $28.3 million, or 1.73%, at March 31, 2010. The overall allowance included specific reserves for impaired loans (comprised of nonaccrual loans and TDRs) at each date of $3.8 million, $7.2 million and $11.0 million, respectively.
Securities held to maturity decreased by $24.4 million to $589.9 million at March 31, 2011 from $614.3 million at December 31, 2010, primarily due to calls exceeding new purchases. The securities portfolio is comprised mainly of U.S. government agency debt securities. At March 31, 2011, the portfolio had a weighted-average yield to earliest call date of 1.64% and a weighted-average remaining contractual maturity of 4.8 years. The Bank invests in U.S. government agency debt obligations to emphasize safety and liquidity. The Company does not own or invest in collateralized debt obligations or collateralized mortgage obligations.
Deposits at March 31, 2011 decreased to $1.71 billion from $1.77 billion at December 31, 2010, reflecting a $46.2 million decrease in time deposits and a $12.8 million decrease in money market deposit accounts.
Borrowed funds and related interest payable at March 31, 2011 decreased to $82 million, from $85 million at December 31, 2010, due to the maturity and repayment of FHLBNY borrowings.
Stockholders’ equity increased to $188 million at March 31, 2011 from $186 million at December 31, 2010, primarily due to the Q1-11 net earnings before preferred dividend requirements of $2.2 million. As required by agreements with its regulators, and as permitted by the underlying documents, the Company has suspended the payment of TARP dividends on its preferred stock and interest on its trust preferred securities since February 2010.
Intervest Bancshares Corporation is a bank 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 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. 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 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 regulatory policies and enforcement actions; fluctuations in interest rates; demand for loans and deposits; changes in tax laws or the availability of net operating losses, the effects of additional capital, the availability of regulatory waivers; 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 |
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| (Dollars in thousands, except per share amounts) | Quarter Ended | ||||||||||||||||||||||||||||
| March 31, | |||||||||||||||||||||||||||||
| Selected Operating Data: | 2011 | 2010 | |||||||||||||||||||||||||||
| Interest and dividend income | $23,594 | $29,631 | |||||||||||||||||||||||||||
| Interest expense | 13,243 | 17,141 | |||||||||||||||||||||||||||
| Net interest and dividend income | 10,351 | 12,490 | |||||||||||||||||||||||||||
| Provision for loan losses | 2,045 | 9,639 | |||||||||||||||||||||||||||
| Noninterest income | 323 | 512 | |||||||||||||||||||||||||||
| Noninterest expenses: | |||||||||||||||||||||||||||||
| Provision for real estate losses | – | 2,001 | |||||||||||||||||||||||||||
| Real estate expenses | 325 | 976 | |||||||||||||||||||||||||||
| All other noninterest expenses | 4,410 | 4,689 | |||||||||||||||||||||||||||
| Earnings (loss) before income taxes | 3,894 | (4,303 | ) | ||||||||||||||||||||||||||
| Provision (benefit) for income taxes | 1,741 | (1,825 | ) | ||||||||||||||||||||||||||
| Net earnings (loss) before preferred dividend requirements | 2,153 | (2,478 | ) | ||||||||||||||||||||||||||
| Preferred dividend requirements (1) | 427 | 409 | |||||||||||||||||||||||||||
| Net earnings (loss) available to common stockholders | $ 1,726 | $(2,887 | ) | ||||||||||||||||||||||||||
| Basic earnings (loss) per common share | $0.08 | $(0.35 | ) | ||||||||||||||||||||||||||
| Diluted earnings (loss) per common share | $0.08 | $(0.35 | ) | ||||||||||||||||||||||||||
| Average shares used for basic and diluted earnings (loss) per share (2) | 21,126,489 | 8,270,812 | |||||||||||||||||||||||||||
| Common shares outstanding at end of period | 21,126,489 | 8,270,812 | |||||||||||||||||||||||||||
| Common stock options/warrants outstanding at end of period | 1,045,422 | 1,018,722 | |||||||||||||||||||||||||||
| Yield on interest-earning assets | 4.88 | % | 5.30 | % | |||||||||||||||||||||||||
| Cost of funds | 2.96 | % | 3.36 | % | |||||||||||||||||||||||||
| Net interest margin | 2.14 | % | 2.23 | % | |||||||||||||||||||||||||
| Return on average assets (annualized) | 0.42 | % | -0.42 | % | |||||||||||||||||||||||||
| Return on average common equity (annualized) | 5.29 | % | -5.20 | % | |||||||||||||||||||||||||
| Effective income tax rate | 44.71 | % | 42.41 | % | |||||||||||||||||||||||||
| Efficiency ratio (3) | 41 | % | 36 | % | |||||||||||||||||||||||||
| Average loans outstanding | $1,329,413 | $1,680,810 | |||||||||||||||||||||||||||
| Average securities outstanding | 615,357 | 566,635 | |||||||||||||||||||||||||||
| Average short-term investments outstanding | 17,055 | 19,145 | |||||||||||||||||||||||||||
| Average assets outstanding | 2,045,999 | 2,335,592 | |||||||||||||||||||||||||||
| Average interest-bearing deposits outstanding | $1,732,180 | $1,961,132 | |||||||||||||||||||||||||||
| Average borrowings outstanding | 81,589 | 109,028 | |||||||||||||||||||||||||||
| Average stockholders’ equity | 186,823 | 214,235 | |||||||||||||||||||||||||||
| At Mar 31, | At Dec 31, | At Sep 30, | At Jun 30, | At Mar 31, | |||||||||||||||||||||||||
| Selected Financial Condition Information: | 2011 | 2010 | 2010 | 2010 | 2010 | ||||||||||||||||||||||||
| Total assets | $ | 2,014,125 | $ | 2,070,868 | $ | 2,104,098 | $ | 2,164,442 | $ | 2,284,257 | |||||||||||||||||||
| Cash and short-term investments | 29,079 | 23,911 | 13,815 | 35,535 | 56,470 | ||||||||||||||||||||||||
| Securities held to maturity | 589,940 | 614,335 | 613,844 | 621,244 | 491,067 | ||||||||||||||||||||||||
| Loans, net of unearned fees | 1,300,546 | 1,337,326 | 1,363,312 | 1,395,564 | 1,634,140 | ||||||||||||||||||||||||
| Allowance for loan losses | 32,400 | 34,840 | 32,250 | 30,350 | 28,300 | ||||||||||||||||||||||||
| Allowance for loan losses/net loans | 2.49 | % | 2.61 | % | 2.37 | % | 2.17 | % | 1.73 | % | |||||||||||||||||||
| Deposits | 1,706,630 | 1,766,083 | 1,806,834 | 1,852,356 | 1,926,772 | ||||||||||||||||||||||||
| Borrowed funds and accrued interest payable | 82,072 | 84,676 | 89,135 | 98,582 | 103,060 | ||||||||||||||||||||||||
| Preferred stockholder’s equity | 23,948 | 23,852 | 23,755 | 23,659 | 23,563 | ||||||||||||||||||||||||
| Common stockholders’ equity | 164,243 | 162,108 | 140,317 | 140,643 | 187,711 | ||||||||||||||||||||||||
| Common book value per share (4) | 7.69 | 7.61 | 15.26 | 15.33 | 22.69 | ||||||||||||||||||||||||
| Loan chargeoffs for the quarter | $ | 4,513 | $ | 386 | $ | 298 | $ | 85,483 | $ | 13,979 | |||||||||||||||||||
| Loan recoveries for the quarter | 28 | 283 | 600 | – | – | ||||||||||||||||||||||||
| Real estate chargeoffs for the quarter | – | 2,970 | 912 | 11,732 | – | ||||||||||||||||||||||||
| Security impairment writedowns for the quarter | 105 | 351 | 293 | 18 | 530 | ||||||||||||||||||||||||
| Nonaccrual loans | $ | 45,192 | $ | 52,923 | $ | 38,560 | $ | 18,927 | $ | 96,248 | |||||||||||||||||||
| Real estate owned, net of valuation allowance | 27,064 | 27,064 | 38,792 | 34,259 | 57,858 | ||||||||||||||||||||||||
| Investment securities on a cash basis | 4,475 | 2,318 | 2,670 | 2,963 | 2,981 | ||||||||||||||||||||||||
| Accruing troubled debt restructured (TDR) loans (5). | 5,630 | 3,632 | 617 | 21,362 | 116,906 | ||||||||||||||||||||||||
| Loans 90 days past due and still accruing | 3,879 | 7,481 | 16,865 | 8,788 | 3,629 | ||||||||||||||||||||||||
| Loans 31-89 days past due and still accruing (6) | 21,785 | 11,364 | 5,264 | 13,066 | 14,427 | ||||||||||||||||||||||||
| (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 ($1.7 million and $1.4 million at March 31, 2011 and December 31, 2010 only) divided by common shares outstanding. | |
| (5) | Represent loans whose terms have been modified mostly through the deferral of principal and/or a partial reduction in interest payments. | |
| (6) | At March 31, 2011, these loans were past due 31-59 days. Five loans ($12.3 million) matured – payments are current and extensions are in process, three loans ($6.0 million) are historically slow payers, one loan ($0.9 million) was brought current in April and one loan ($2.6 million) is expected to be extended. |
| INTERVEST BANCSHARES CORPORATION
Consolidated Financial Highlights |
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| At or For The Period Ended | |||||||||||||||||||||||||
| Quarter | Year | Year | Year | Year | |||||||||||||||||||||
| ($ in thousands, except per share amounts) | Ended | Ended | Ended | Ended | Ended | ||||||||||||||||||||
| Mar 31, | Dec 31, | Dec 31, | Dec 31, | Dec 31, | |||||||||||||||||||||
| 2011 | 2010 | 2009 | 2008 | 2007 | |||||||||||||||||||||
| Balance Sheet Highlights: | |||||||||||||||||||||||||
| Total assets | $ | 2,014,125 | $ | 2,070,868 | $ | 2,401,204 | $ | 2,271,833 | $ | 2,021,392 | |||||||||||||||
| Cash and short-term investments | 29,079 | 23,911 | 7,977 | 54,903 | 33,086 | ||||||||||||||||||||
| Securities held to maturity | 589,940 | 614,335 | 634,856 | 475,581 | 344,105 | ||||||||||||||||||||
| Loans, net of unearned fees | 1,300,546 | 1,337,326 | 1,686,164 | 1,705,711 | 1,614,032 | ||||||||||||||||||||
| Allowance for loan losses | 32,400 | 34,840 | 32,640 | 28,524 | 21,593 | ||||||||||||||||||||
| Allowance for loan losses/net loans | 2.49 | % | 2.61 | % | 1.94 | % | 1.67 | % | 1.34 | % | |||||||||||||||
| Deposits | 1,706,630 | 1,766,083 | 2,029,984 | 1,864,135 | 1,659,174 | ||||||||||||||||||||
| Borrowed funds and accrued interest payable | 82,072 | 84,676 | 118,552 | 149,566 | 136,434 | ||||||||||||||||||||
| Preferred stockholder’s equity | 23,948 | 23,852 | 23,466 | 23,080 | – | ||||||||||||||||||||
| Common stockholders’ equity | 164,243 | 162,108 | 190,588 | 188,894 | 179,561 | ||||||||||||||||||||
| Common book value per share (1) | 7.69 | 7.61 | 23.04 | 22.84 | 22.23 | ||||||||||||||||||||
| Market price per common share | 2.55 | 2.93 | 3.28 | 3.99 | 17.22 | ||||||||||||||||||||
| Asset Quality Highlights | |||||||||||||||||||||||||
| Nonaccrual loans | $ | 45,192 | $ | 52,923 | $ | 123,877 | $ | 108,610 | $ | 90,756 | |||||||||||||||
| Real estate owned, net of valuation allowance | 27,064 | 27,064 | 31,866 | 9,081 | – | ||||||||||||||||||||
| Investment securities on a cash basis | 4,475 | 2,318 | 1,385 | – | – | ||||||||||||||||||||
| Accruing troubled debt restructured loans (2) | 5,630 | 3,632 | 97,311 | – | – | ||||||||||||||||||||
| Loans past due 90 days and still accruing | 3,879 | 7,481 | 6,800 | 1,964 | 11,853 | ||||||||||||||||||||
| Loans past due 31-89 days and still accruing | 21,785 | 11,364 | 5,925 | 18,943 | 25,122 | ||||||||||||||||||||
| Loan chargeoffs | 4,513 | 100,146 | 8,103 | 4,227 | – | ||||||||||||||||||||
| Loan recoveries | 28 | 883 | 1,354 | – | – | ||||||||||||||||||||
| Real estate chargeoffs | – | 15,614 | – | – | – | ||||||||||||||||||||
| Impairment writedowns on security investments | 105 | 1,192 | 2,258 | – | – | ||||||||||||||||||||
| Statement of Operations Highlights: | |||||||||||||||||||||||||
| Interest and dividend income | $ | 23,594 | $ | 107,072 | $ | 123,598 | $ | 128,497 | $ | 131,916 | |||||||||||||||
| Interest expense | 13,243 | 62,692 | 81,000 | 90,335 | 89,653 | ||||||||||||||||||||
| Net interest and dividend income | 10,351 | 44,380 | 42,598 | 38,162 | 42,263 | ||||||||||||||||||||
| Provision for loan losses | 2,045 | 101,463 | 10,865 | 11,158 | 3,760 | ||||||||||||||||||||
| Noninterest income | 323 | 2,110 | 297 | 5,026 | 8,825 | ||||||||||||||||||||
| Noninterest expenses: | |||||||||||||||||||||||||
| Provision for real estate losses | – | 15,509 | 2,275 | 518 | – | ||||||||||||||||||||
| Real estate expenses | 325 | 4,105 | 4,945 | 4,281 | 489 | ||||||||||||||||||||
| All other noninterest expenses | 4,410 | 19,069 | 19,864 | 14,074 | 12,387 | ||||||||||||||||||||
| Earnings (loss) before income taxes | 3,894 | (93,656 | ) | 4,946 | 13,157 | 34,452 | |||||||||||||||||||
| Provision (benefit) for income taxes | 1,741 | (40,348 | ) | 1,816 | 5,891 | 15,012 | |||||||||||||||||||
| Net earnings (loss) before preferred dividend requirements | 2,153 | (53,308 | ) | 3,130 | 7,266 | 19,440 | |||||||||||||||||||
| Preferred dividend requirements (3) | 427 | 1,667 | 1,632 | 41 | – | ||||||||||||||||||||
| Net earnings (loss) available to common stockholders | $ | 1,726 | $ | (54,975 | ) | $ | 1,498 | $ | 7,225 | $ | 19,440 | ||||||||||||||
| Basic earnings (loss) per common share | $ | 0.08 | $ | (4.95 | ) | $ | 0.18 | $ | 0.87 | $ | 2.35 | ||||||||||||||
| Diluted earnings (loss) per common share | $ | 0.08 | $ | (4.95 | ) | $ | 0.18 | $ | 0.87 | $ | 2.31 | ||||||||||||||
| Adjusted net earnings (loss) used to calculatediluted earnings (loss) per common share | $ | 1,726 | $ | (54,975 | ) | $ | 1,498 | $ | 7,225 | $ | 19,484 | ||||||||||||||
| 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) | 2.14 | % | 2.11 | % | 1.83 | % | 1.79 | % | 2.11 | % | |||||||||||||||
| Return on average assets | 0.42 | % | -2.42 | % | 0.13 | % | 0.34 | % | 0.96 | % | |||||||||||||||
| Return on average common equity | 5.29 | % | -32.20 | % | 1.65 | % | 3.94 | % | 11.05 | % | |||||||||||||||
| Effective income tax rate | 44.71 | % | 43.08 | % | 36.72 | % | 44.77 | % | 43.57 | % | |||||||||||||||
| Efficiency ratio (5) | 41 | % | 41 | % | 46 | % | 33 | % | 24 | % | |||||||||||||||
| (1) | Represents common stockholders’ equity less preferred dividends in arrears ($1.7 million and $1.4 million at March 31, 2011 and December 31, 2010 only) 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 2.14% for the quarter ended March 31, 2011, 2.32% for 2010, 1.68% for 2009, 1.74% for 2008 and 2.64% for 2007. | |
| (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. |
Intervest Bancshares Corporation
Lowell S. Dansker, Chairman
Phone 212-218-2800
Fax 212-218-2808