The decrease in net interest and dividend income in Q1-12 compared to Q1-11 reflected a planned reduction in the size of the Bank's balance sheet as well as fewer suitable lending opportunities during the period. In Q1-12, total average interest-earning assets decreased by $110 million from Q1-11, reflecting a $164 million decrease in average loans, partially offset by a $54 million net increase in average security and overnight investments. At the same time, average deposits and borrowed funds decreased by $101 million and $11 million, respectively, while average stockholders' equity increased by $12 million. The reduction in the balance sheet positively impacted the Bank's regulatory capital ratios. The slightly higher net interest margin was attributable to lower rates paid on deposit accounts and the run off of higher-cost CDs and borrowings, largely offset by payoffs of higher yielding loans and calls of security investments due to declining interest rates, coupled with the re-investment of a large portion of these cash inflows into new securities and loans at lower market interest rates. Overall, the average cost of funds decreased by 42 basis points to 2.54% in Q1-12, from 2.96% in Q1-11, while the average yield on earning assets decreased at a slower pace by 38 basis points to 4.50% in Q1-12, from 4.88% in Q1-11.Total assets at March 31, 2012 decreased to $1.91 billion from $1.97 billion at December 31, 2011, primarily reflecting a decrease in security investments, partially offset by an increase in cash and short-term investments.
Intervest Bancshares Corporation Reports 2012 First Quarter Earnings Of $2.8 Million Or $0.13 Per Share
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