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.