Intervest Bancshares Corporation (NASDAQ-GS: IBCA), parent company of Intervest National Bank, today reported its 2011 third quarter financial results. Financial highlights follow.
- Net earnings amounted to $2.6 million, or $0.12 per diluted common share, for the third quarter of 2011 ("Q3-11"), compared to net earnings of $2.5 million, or $0.12 per share, for the second quarter of 2011 ("Q2-11'') and a net loss of $0.7 million, or $0.07 per share for the third quarter of 2010 ("Q3-10"). Earnings before deducting provisions for loan and real estate losses, real estate expenses, income taxes and preferred dividend requirements were $8.9 million in Q3-11, compared to $7.8 million in Q2-11 and $4.9 million in Q3-10.
- The net interest margin was 2.13% for Q3-11, compared to 2.24% for Q2-11 and 1.98% for Q3-10.
- Nonaccrual loans and real estate owned (REO) totaled $87 million at September 30, 2011, compared to $71 million at June 30, 2011 and $80 million at December 31, 2010. Nonaccrual loans include certain restructured loans (TDRs) that are current and performing in accordance with their renegotiated terms, but are classified nonaccrual based on regulatory guidance. At September 30, 2011, such loans totaled $37 million and were yielding 4.71%, compared to $33 million yielding 4.43% at June 30, 2011 and $21 million yielding 2.98% at December 31, 2010.
- The total provision for loan and real estate losses amounted to $2.9 million in Q3-11, compared to $2.0 million in Q2-11 and $4.6 million in Q3-10. The allowance for loan losses was 2.70% of total outstanding loans at September 30, 2011, compared to 2.54% at June 30, 2011 and 2.61% at December 31, 2010.
- Noninterest expenses amounted to $3.6 million in Q3-11, compared to $4.1 million in Q2-11 and $5.2 million in Q3-10. The Company's efficiency ratio, which is a measure of its ability to control expenses as a percentage of its revenues, improved to 29% in Q3-11, from 35% in Q2-11 and 51% in Q3-10.
- Intervest National Bank's regulatory capital ratios at September 30, 2011 were well above its minimum requirements and were as follows: Tier One Leverage - 10.62%; Tier One Risk-Based - 15.28%; and Total Risk-Based Capital - 16.54%. The Bank's minimum required capital ratios as per its agreement with its regulator are 9%, 10% and 12%, respectively.
- Common book value per share increased to $7.94 at September 30, 2011.
Net earnings for Q3-11 increased by $3.3 million over Q3-10 due to the following: a $2.0 million increase in noninterest income primarily from loan prepayments, including $0.9 million of income from one loan; a $1.7 million decrease in the total provision for loan and real estate losses resulting from fewer credit rating downgrades on loans and writedowns of REO; a $1.6 million decrease in noninterest expenses reflecting decreases of $0.8 million in FDIC insurance premiums, $0.7 million in data processing costs and $0.2 million in professional fees; a $0.5 million decrease in real estate expenses primarily reflecting less REO and a $0.3 million increase in net interest and dividend income (as described below). The total of these items was partially offset by a $2.8 million increase in income tax expense (due to pre-tax income of $5.8 million in Q3-11 versus a $0.3 million loss in Q3-10). The effective tax rate was 47% in Q3-11 versus 25% in Q3-10. The 2010 rate was negatively impacted to a greater degree by a deductibility limit on certain executive compensation resulting from IBC's participation in the TARP program.