Intervest Bancshares Corporation (NASDAQ-GS:IBCA), parent company of Intervest National Bank, today reported net earnings for the third quarter of 2012 ("Q3-12") of $2.2 million, or $0.10 per common share, compared to $2.6 million, or $0.12 per share, for the third quarter of 2011 ("Q3-11"). For the first nine months of 2012 ("9mths-12"), net earnings amounted to $7.3 million or $0.34 per share, compared to $6.8 million, or $0.32 per share, for the first nine months of 2011 ("9mths-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 September 30, 2012 were as follows: Tier One Leverage - 13.24%; Tier One Risk-Based - 18.41%; and Total Risk-Based Capital - 19.67%; well above its minimum requirements of 9%, 10% and 12%, respectively. Tier One capital amounted to $237 million and was $76 million in excess of the required minimum for the Tier One Leverage ratio.
- New loan originations increased to $159 million in the 9mths-12 period, from $50 million in 9mths-11.
- Nonaccrual loans decreased to $48 million at September 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 September 30, 2012, such loans totaled $39 million compared to $46 million at December 31, 2011. These loans were yielding approximately 5% at September 30, 2012.
- Real estate owned through foreclosure (REO) decreased to $21.9 million at September 30, 2012, from $28.3 million at December 31, 2011, reflecting $4.9 million of sales and $2.9 million of writedowns, partially offset by $1.4 million of additions.
- Provisions for loan and real estate losses decreased to $1.0 million in Q3-12 from $2.9 million in Q3-11, and $2.9 million in 9mths-12 from $6.9 million in 9mths-11.
- Operating expenses amounted to $4.2 million in Q3-12, compared to $3.6 million in Q3-11, and $12.5 million in 9mths-12, compared to $12.1 million in 9mths-11. The Company's efficiency ratio (which measures its ability to control expenses as a percentage of revenues) continued to be favorable and was 38% for Q3-12 and 9mths-12.
- The net interest margin (exclusive of loan prepayment income) increased to 2.32% in Q3-12 and 2.23% in 9mths-12, from 2.13% and 2.17% for the same periods of 2011. Net interest and dividend income, which was affected by a smaller balance sheet, amounted to $9.8 million in Q3-12 compared to $10.4 million in Q3-11, and $29.5 million in 9mths-12 compared to $31.7 million in 9mths-11.
- Book value per common share (after subtracting preferred dividends in arrears) increased to $8.28 at September 30, 2012.
Net earnings for Q3-12 decreased by $0.4 million from Q3-11 due to a $0.6 million decrease in net interest and dividend income (as detailed below), a $0.8 million decrease in noninterest income (reflecting less income from loan prepayments), a $0.8 million increase in real estate expenses (due primarily to increased repairs, maintenance and insurance costs on REO) and a $0.6 million increase in operating expenses (due primarily to a $0.4 million aggregate increase in salaries, benefits and stock compensation expense including the impact of several new officer positions filled during 2012). The sum of these items was partially offset by a $1.9 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 $0.5 million decrease in income tax expense (due to lower pre-tax income). The effective income tax rate was 46% in Q3-12 and 47% in Q3-11.