- Net earnings for the fourth quarter of 2011 ("Q4-11") increased to $2.7 million, or $0.13 per diluted common share, from $0.4 million, or $0.02 per share, for the fourth quarter of 2010 ("Q4-10").
- Earnings before deducting provisions for loan and real estate losses, real estate expenses, income taxes and preferred dividend requirements amounted to $7.8 million in Q4-11, compared to $6.6 million in Q4-10.
- Provisions for loan and real estate losses decreased to $1.4 million in Q4-11, from $4.7 million in Q4-10. The allowance for loan losses amounted to $30.4 million at December 31, 2011 and represented 2.61% of total outstanding loans.
- Net interest and dividend income was $10.6 million in Q4-11, compared to $10.4 million in Q4-10. The net interest margin improved to 2.22% in Q4-11, from 2.06% in Q4-10.
- Noninterest expenses decreased to $3.8 million in Q4-11, from $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, continues to be strong and was 32% in Q4-11, compared to 42% in Q4-10.
- Nonaccrual loans and real estate owned (REO) totaled $86 million at December 31, 2011, compared to $87 million at September 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 December 31, 2011, such loans totaled $46 million and were yielding 5.08%, compared to $37 million yielding 4.71% at September 30, 2011 and $21 million yielding 2.98% at December 31, 2010.
- Intervest National Bank's regulatory capital ratios continue to be well above its minimum requirements. At December 31, 2011, its actual ratios were as follows: Tier One Leverage - 11.21%; Tier One Risk-Based - 16.06%; and Total Risk-Based Capital - 17.33%, compared to its minimum requirements of 9%, 10% and 12%, respectively. The Bank's Tier 1 capital amounted to $218 million and was $43 million in excess of the required minimum for its leverage ratio.
- Book value per common share increased to $8.07 at December 31, 2011, from $7.61 at December 31, 2010.
The increase in net interest and dividend income over Q4-10 reflected a 16 basis point improvement in the net interest margin, largely offset by a planned decrease in the Bank's assets and liabilities as well as decreased lending opportunities due to current economic conditions. In Q4-11, total average interest-earning assets decreased by $108 million from Q4-10, reflecting a $166 million decrease in loans, partially offset by a $61 million increase in security investments. At the same time, average deposits and borrowed funds decreased by $119 million and $12 million, respectively, while average stockholders' equity increased by $15 million. The decrease in assets positively impacted the Bank's regulatory capital ratios.The higher net interest margin was attributable to lower rates paid on deposit accounts and the repayment of maturing higher-cost brokered CDs and FHLB borrowings, largely offset by the decrease in loans. Overall, the average cost of funds decreased by 41 basis points to 2.62% in Q4-11, from 3.03% in Q4-10, while the yield on average earning assets decreased at a slower pace by 26 basis points to 4.63% in Q4-11, from 4.89% in Q4-10, due to payoffs of higher yielding loans and calls of U.S. government agency security investments due to declining interest rates, coupled with the re-investment of a large portion of these cash inflows into securities at lower market interest rates. For 2011, net earnings were $9.5 million, or $0.45 per diluted common share, compared to a net loss of $55.0 million, or $4.95 per share, for 2010. The improvement was due to $108.6 million decrease in the total provision for loan and real estate losses; a $2.5 million decrease in real estate expenses; a $2.2 million increase in noninterest income (reflecting a $1.1 million increase in loan prepayment income and a $1.0 million decrease in security impairment writedowns); and a $3.2 million decrease in noninterest expenses (reflecting decreases of $1.7 million in FDIC premiums, $1.3 million in data processing costs and $0.7 million in professional fees, partially offset by a $0.5 million increase in salaries and benefits). The total of these items was partially offset by a $2.1 million decrease in net interest and dividend income and a $49.9 million increase in income tax expense (due to pre-tax income of $21 million in 2011 versus a pre-tax loss of $94 million in 2010). The net loss in 2010 was primarily driven by a bulk sale in May of nonperforming and underperforming assets as discussed in prior releases. The assets sold aggregated to $207 million and consisted of $192 million of loans and $15 million of REO. The assets were sold at a substantial discount to their net carrying values. As a result of this transaction, a $79 million combined provision for loan and real estate losses was recorded, which after taxes contributed approximately $44 million, or 80%, to the reported loss. At December 31, 2011, the Company had a deferred tax asset totaling $38.8 million, which included remaining unused NOL carryforwards of $34 million for Federal purposes and $66 million for state and local purposes. The NOLs, which arose from the bulk sale, are available to reduce taxes payable on future taxable income.
Total assets at December 31, 2011 decreased to $1.97 billion from $2.07 billion at December 31, 2010, primarily reflecting a decrease in loans, partially offset by an increase in security investments. Loans totaled $1.16 billion at December 31, 2011, a $174 million decrease from $1.34 billion at December 31, 2010. The decrease reflected $243 million of principal repayments, $9.6 million of chargeoffs and $4.4 million of transfers to REO, partially offset by $82 million of new loans. The loan portfolio is comprised of commercial and multifamily real estate loans, and the Company does not own or originate construction/development loans.Nonaccrual loans and REO aggregated to $86 million, or 4.3% of total assets, at December 31, 2011, compared to $80 million, or 3.9%, at December 31, 2010. Nonaccrual loans totaled $57 million at December 31, 2011 and $53 million at December 31, 2010 and included $46 million (12 loans) and $21 million (6 loans) of TDRs that were current at each date, respectively. All the TDRs classified as nonaccrual have performed as agreed under their renegotiated terms and interest income is being recorded on a cash basis. During 2011, based on updated appraisals received on the underlying collateral properties, a portion of seven TDRs (or $5.8 million of principal) were charged off, although the borrowers remain obligated to pay all contractual principal due. The allowance for loan losses at December 31, 2011 was $30.4 million, representing 2.61% of total net loans, compared to $34.8 million, or 2.61%, at December 31, 2010. The allowance included specific reserves for impaired loans (comprised of all nonaccrual loans as well as accruing TDRs) at each date totaling $8.0 million and $7.2 million, respectively. Securities held to maturity increased by $86 million to $700 million at December 31, 2011 from $614 million at December 31, 2010. The growth in the portfolio was a function of decreased lending opportunities. At December 31, 2011, the portfolio, which represented 36% of total assets and comprised nearly all of U.S. government agency debt securities, had a weighted-average yield to earliest call date of 1.39% and a weighted-average remaining contractual maturity of 5 years. The Bank invests in U.S. government agency debt obligations to emphasize safety and liquidity, and does not own or invest in collateralized debt obligations, collateralized mortgage obligations or derivatives.
Deposits at December 31, 2011 decreased to $1.66 billion from $1.77 billion at December 31, 2010, primarily reflecting a $106 million decrease in CD accounts, of which $31 million were brokered. Borrowed funds and related interest payable at December 31, 2011 decreased to $79 million, from $85 million at December 31, 2010, due to the maturity and repayment of $8 million of FHLB borrowings, partially offset by a $2 million increase in accrued interest payable on trust preferred securities. Since February 2010, as required by our regulators and as permitted by the underlying documents, the Company has suspended the payment of interest on $55 million of trust preferred securities as well as the declaration and payment of TARP dividends on $25 million of preferred stock held by the U.S. Treasury. Stockholders' equity increased to $198 million at December 31, 2011 from $186 million at December 31, 2010, primarily due to $11 million of net earnings before preferred dividend requirements.Intervest Bancshares Corporation (IBC) is a bank holding company. Its operating subsidiary is Intervest National Bank (INB), 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. IBC's Common Stock is listed on the NASDAQ Global Select Market: Trading Symbol IBCA. This 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 adversely affect our business, financial condition and results of operations. The following factors, among others, could cause actual results to differ materially from those set forth in forward looking statements: the regulatory agreements to which IBC and INB are currently subject to and any operating restrictions arising therefrom including availability of regulatory approvals or waivers; changes in economic conditions and real estate values both nationally and in our market areas; changes in our borrowing facilities, volume of loan originations and deposit flows; changes in the levels of our non-interest income and provisions for loan and real estate losses; changes in the composition and credit quality of our loan portfolio; legislative or regulatory changes, including increased expenses arising therefrom; changes in interest rates which may reduce our net interest margin and net interest income; increases in competition; technological changes which we may not be able to implement; changes in accounting or regulatory principles, policies or guidelines; changes in tax laws and our ability to utilize our deferred tax asset, including NOL carryforwards; and our ability to attract and retain key members of management. Reference is made to IBC's filings with the SEC for further discussion of risks and uncertainties regarding our business. Historical results are not necessarily indicative of our future prospects.
Selected Consolidated Financial Information Follows.
|INTERVEST BANCSHARES CORPORATION Selected Consolidated Financial Information|
|(Dollars in thousands, except per share amounts)||Quarter Ended||Year Ended|
|December 31,||December 31,|
|Selected Operating Data:||2011||2010||2011||2010|
|Interest and dividend income||$22,166||$ 24,747||$92,837||$107,072|
|Net interest and dividend income||10,642||10,440||42,297||44,380|
|Provision for loan losses||40||2,693||5,018||101,463|
|Provision for real estate losses||1,370||2,004||3,349||15,509|
|Real estate expenses||619||343||1,619||4,105|
|All other noninterest expenses||3,774||4,887||15,861||19,069|
|Earnings (loss) before income taxes||5,813||1,586||20,758||(93,656||)|
|Provision (benefit) for income taxes||2,679||727||9,512||(40,348||)|
|Net earnings (loss) before preferred dividend requirements||3,134||859||11,246||(53,308||)|
|Preferred dividend requirements (1)||440||422||1,730||1,667|
|Net earnings (loss) available to common stockholders||$ 2,694||$ 437||$ 9,516||$(54,975||)|
|Basic earnings (loss) per common share||$0.13||$0.02||$0.45||$(4.95||)|
|Diluted earnings (loss) per common share||$0.13||$0.02||$0.45||$(4.95||)|
|Average shares used for basic and diluted earnings (loss) per share (2)||21,125,289||18,308,205||21,126,187||11,101,196|
|Common shares outstanding at end of period||21,125,289||21,126,489||21,125,289||21,126,489|
|Common stock options/warrants outstanding at end of period||1,085,622||1,045,422||1,085,622||1,045,422|
|Yield on interest-earning assets||4.63||%||4.89||%||4.80||%||5.08||%|
|Cost of funds||2.62||%||3.03||%||2.83||%||3.20||%|
|Net interest margin||2.22||%||2.06||%||2.18||%||2.11||%|
|Return on average assets (annualized)||0.63||%||0.16||%||0.56||%||-2.42||%|
|Return on average common equity (annualized)||7.31||%||2.19||%||6.74||%||-32.20||%|
|Effective income tax rate||46||%||46||%||46||%||43||%|
|Efficiency ratio (3)||32||%||42||%||34||%||41||%|
|Average loans outstanding||$1,191,177||$1,357,549||$1,258,454||$1,489,004|
|Average securities outstanding||700,221||638,791||665,608||599,519|
|Average short-term investments outstanding||7,658||11,170||11,806||18,502|
|Average assets outstanding||1,984,615||2,102,186||2,023,957||2,200,436|
|Average interest-bearing deposits outstanding||$1,668,111||$1,786,801||$1,707,150||$1,863,612|
|Average borrowings outstanding||74,202||86,229||78,298||97,031|
|Average stockholders' equity||195,576||180,857||190,954||189,197|
|At Dec 31,||At Sep 30,||At Jun 30,||At Mar 31,||At Dec 31,|
|Selected Financial Condition Information:||2011||2011||2011||2011||2010|
|Cash and short-term investments||29,863||36,798||14,461||29,079||23,911|
|Securities held to maturity||700,444||678,118||691,334||589,940||614,335|
|Loans, net of unearned fees||1,163,790||1,199,770||1,252,128||1,300,546||1,337,326|
|Allowance for loan losses||30,415||32,365||31,772||32,400||34,840|
|Allowance for loan losses/net loans||2.61||%||2.70||%||2.54||%||2.49||%||2.61||%|
|Borrowed funds and accrued interest payable||78,606||78,156||82,634||82,072||84,676|
|Preferred stockholder's equity||24,238||24,141||24,045||23,948||23,852|
|Common stockholders' equity||173,293||170,164||167,109||164,243||162,108|
|Common book value per share (4)||8.07||7.94||7.81||7.69||7.61|
|Loan chargeoffs for the quarter||$ 2,044||$ 1,667||$ 1,374||$ 4,513||$ 386|
|Loan recoveries for the quarter||54||69||4||28||283|
|Real estate chargeoffs for the quarter||-||-||-||-||2,970|
|Security impairment writedowns for the quarter||-||96||-||105||351|
|Nonaccrual loans (5)||$ 57,240||$ 59,707||$ 45,352||$ 45,192||$ 52,923|
|Real estate owned, net of valuation allowance||28,278||27,005||25,786||27,064||27,064|
|Investment securities on a cash basis||4,379||4,379||4,475||4,475||2,318|
|Accruing troubled debt restructured (TDR) loans (6).||9,030||5,601||5,619||5,630||3,632|
|Loans 90 days past due and still accruing||1,925||8,571||4,594||3,879||7,481|
|Loans 31-89 days past due and still accruing (7)||28,770||939||7,704||21,785||11,364|
(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 ($2.8 million at Dec 31, 2011 and $1.4 million at Dec 31, 2010) divided by common shares outstanding. (5) Include performing TDRs maintained on nonaccrual status of $46 million, $37 million, $33 million, $18 million and $21 million, respectively. (6) Represent loans whose terms have been modified mostly through the deferral of principal and/or a partial reduction in interest payments. (7) Of the balance reported at Dec 31, 2011, $13 million was brought current in Jan 2012 and $14 million matured and are in the process of being extended.
|INTERVEST BANCSHARES CORPORATION Consolidated Financial Highlights|
|At or For The Period Ended|
|($ in thousands, except per share amounts)||Year Ended Dec 31, 2011||Year Ended Dec 31, 2010||Year Ended Dec 31, 2009||Year Ended Dec 31, 2008||Year Ended Dec 31, 2007|
|Balance Sheet Highlights:|
|Cash and short-term investments||29,863||23,911||7,977||54,903||33,086|
|Securities held to maturity||700,444||614,335||634,856||475,581||344,105|
|Loans, net of unearned fees||1,163,790||1,337,326||1,686,164||1,705,711||1,614,032|
|Allowance for loan losses||30,415||34,840||32,640||28,524||21,593|
|Allowance for loan losses/net loans||2.61||%||2.61||%||1.94||%||1.67||%||1.34||%|
|Borrowed funds and accrued interest payable||78,606||84,676||118,552||149,566||136,434|
|Preferred stockholder's equity||24,238||23,852||23,466||23,080||-|
|Common stockholders' equity||173,293||162,108||190,588||188,894||179,561|
|Common book value per share (1)||8.07||7.61||23.04||22.84||22.23|
|Market price per common share||2.65||2.93||3.28||3.99||17.22|
|Asset Quality Highlights|
|Real estate owned, net of valuation allowance||28,278||27,064||31,866||9,081||-|
|Investment securities on a cash basis||4,379||2,318||1,385||-||-|
|Accruing troubled debt restructured loans (2)||9,030||3,632||97,311||-||-|
|Loans past due 90 days and still accruing||1,925||7,481||6,800||1,964||11,853|
|Loans past due 31-89 days and still accruing||28,770||11,364||5,925||18,943||25,122|
|Real estate chargeoffs||-||15,614||-||-||-|
|Impairment writedowns on security investments||201||1,192||2,258||-||-|
|Statement of Operations Highlights:|
|Interest and dividend income||$92,837||$ 107,072||$123,598||$128,497||$131,916|
|Net interest and dividend income||42,297||44,380||42,598||38,162||42,263|
|Provision for loan losses||5,018||101,463||10,865||11,158||3,760|
|Provision for real estate losses||3,349||15,509||2,275||518||-|
|Real estate expenses||1,619||4,105||4,945||4,281||489|
|All other noninterest expenses||15,861||19,069||19,864||14,074||12,387|
|Earnings (loss) before income taxes||20,758||(93,656||)||4,946||13,157||34,452|
|Provision (benefit) for income taxes||9,512||(40,348||)||1,816||5,891||15,012|
|Net earnings (loss) before preferred dividend requirements||11,246||(53,308||)||3,130||7,266||19,440|
|Preferred dividend requirements (3)||1,730||1,667||1,632||41||-|
|Net earnings (loss) available to common stockholders||$ 9,516||$(54,975||)||$ 1,498||$ 7,225||$ 19,440|
|Basic earnings (loss) per common share||$0.45||$(4.95||)||$0.18||$0.87||$2.35|
|Diluted earnings (loss) per common share||$0.45||$(4.95||)||$0.18||$0.87||$2.31|
|Average common shares used to calculate:|
|Basic earnings (loss) per common share||21,126,187||11,101,196||8,270,812||8,259,091||8,275,539|
|Diluted earnings (loss) per common share||21,126,187||11,101,196||8,270,812||8,267,781||8,422,017|
|Common shares outstanding||21,125,289||21,126,489||8,270,812||8,270,812||8,075,812|
|Net interest margin (4)||2.18||%||2.11||%||1.83||%||1.79||%||2.11||%|
|Return on average assets||0.56||%||-2.42||%||0.13||%||0.34||%||0.96||%|
|Return on average common equity||6.74||%||-32.20||%||1.65||%||3.94||%||11.05||%|
|Effective income tax rate||46||%||43||%||37||%||45||%||44||%|
|Efficiency ratio (5)||34||%||41||%||46||%||33||%||24||%|
(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 2.31%, 2.17%, 1.89%, 1.90% and 2.46%, respectively. (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.