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
             
(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
       
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 calculate

diluted 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.

Copyright Business Wire 2010

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