HOUSTON, April 27, 2012 (GLOBE NEWSWIRE) -- Encore Bancshares, Inc. (Nasdaq:EBTX) today reported first quarter 2012 net income of $3.2 million, or $0.26 per diluted common share, compared to $1.2 million or $0.05 per diluted common share for the same period in 2011.
First Quarter Highlights
Improved earnings metrics
- Net income increased $1.1 million or 50.5% over the fourth quarter of 2011 and $2.0 million or 177.3% over the first quarter of 2011
- Net interest margin increased 12 basis points over the fourth quarter of 2011 and 10 basis points over the first quarter of 2011
- Noninterest income increased $0.3 million or 4.6% over the prior quarter and $0.5 million or 7.3% over the first quarter of 2011
- Noninterest expense included $0.3 million in merger-related professional fees
Grew loans and deposits
- Commercial loans grew 6.4% over the prior quarter and 33.9% over the first quarter of 2011
- Noninterest-bearing demand deposits grew 13.2% from December 31, 2011 and 72.6% from March 31, 2011
- Noninterest-bearing demand deposits increased to 32.6% of total deposits, up from 30.4% in the prior quarter and 21.1% in the first quarter of 2011
Continued improvement in credit quality
- Net charge-offs were $0.7 million or 0.28% of average total loans, down from $1.9 million or 0.77% of average total loans for the fourth quarter of 2011
- Nonperforming assets were $10.6 million or 1.01% of total loans and other real estate owned, down from $12.9 million or 1.25% of total loans and other real estate owned at December 31, 2011
- Nonaccrual loans were $6.6 million, down from $10.8 million at December 31, 2011
- Allowance for loan losses was $18.0 million or 1.72% of loans (excluding loans held for sale) at March 31, 2012, with a coverage ratio of 270.9% of nonaccrual loans
Maintained solid capital ratios
- Estimated tier 1 capital ratio of 13.61%
- Tangible common equity to tangible assets ratio of 6.76%
Merger with Cadence Bancorp, LLC
As previously announced, on March 5, 2012, Encore and Cadence Bancorp, LLC, a company headquartered in Houston, Texas, agreed to a strategic business combination in which Encore will merge into a wholly-owned subsidiary of Cadence. The transaction is expected to be completed in the second half of 2012 and is subject to customary closing conditions, including regulatory approvals and approval by Encore's shareholders.
"Our first quarter earnings reflect strong loan demand funded by noninterest-bearing deposit growth, as well as continued improvements in our credit quality," said James S. D'Agostino, Jr., Chairman and Chief Executive Officer of Encore Bancshares, Inc. "Our previously announced merger with Cadence Bancorp is expected to close in the second half of 2012. With the growth in our balance sheet and decreased nonaccrual loans, we believe that Encore will help create a strong Houston network of branches and augment the lending capabilities for the Cadence franchise."
Net Income
For the three months ended March 31, 2012, net income was $3.2 million, compared with $1.2 million for the same period of 2011. Earnings per diluted common share for the first quarter of 2012 were $0.26, compared with $0.05 for the same period of 2011, after deducting preferred dividends for each period.
Net Interest Income
Net interest income on a tax equivalent basis (TE) for the first quarter of 2012 was $12.2 million, an increase of $1.1 million, or 9.5%, compared with the same period of 2011. The net interest margin (TE) expanded 10 basis points to 3.48% during the same comparison period. The increase in margin was primarily due to lower rates on deposit products and a change in the deposit mix as higher costing interest-bearing deposits were replaced with noninterest-bearing deposits.
Noninterest Income
Noninterest income was $7.6 million for the first quarter of 2012, up $0.5 million compared with the same period of 2011 due to an increase in trust and investment management fees and higher insurance fees and commissions.
Noninterest Expense
Noninterest expense was $14.2 million for the first quarter of 2012, a decrease of $0.2 million, compared with the same period of 2011. This decrease was due primarily to a combination of lower FDIC assessments and a decrease in other noninterest expense. The decrease in other noninterest expense was due in part to a reduction in the reserve for losses on unfunded loan commitments. These decreases were partially offset by an increase in professional fees of $0.4 million primarily due to merger-related costs.
Loans
Period end loans, including loans held for sale, were $1.0 billion at March 31, 2012, an increase of $109 million, or 11.6%, compared with March 31, 2011. Commercial and commercial real estate loans have increased $70.7 million or 43.1% and $55.6 million or 32.9%, respectively, for this time period due to continued efforts to grow the commercial loan portfolio as a percentage of the total loan portfolio.
Deposits
Period end deposits were $1.2 billion at March 31, 2012, an increase of $123 million, or 11.8%, compared with March 31, 2011. Period-end noninterest-bearing deposits were $379 million, an increase of $160 million, or 72.6%, compared with March 31, 2011 and represented 32.6% of total deposits at March 31, 2012.
Credit Quality and Capital Ratios
The provision for loan losses was $0.7 million for the first quarter of 2012, compared with $1.9 million for the fourth quarter of 2011 and $2.2 million for the first quarter of 2011. The decrease in the provision for loan losses was due to overall improvements in credit quality and lower net charge-offs which included a $0.4 million recovery in the first quarter of 2012. Net charge-offs for the first quarter were $0.7 million, or 0.28% of average total loans on an annualized basis, compared with $1.9 million or 0.77% of average total loans for the fourth quarter of 2011 and $1.8 million, or 0.78% of average total loans, for the first quarter of 2011. The allowance for loan losses was $18.0 million, or 1.72% of loans, excluding loans held-for-sale, at March 31, 2012, compared with $19.0 million, or 2.03% of loans, excluding loans held-for-sale, at March 31, 2011.
At March 31, 2012, nonperforming assets were $10.6 million compared with $12.9 million at December 31, 2011 and $35.0 million at March 31, 2011. Nonaccrual loans were $6.6 million at March 31, 2012, compared with $10.8 million at December 31, 2011, a decrease of $4.2 million. Other real estate owned was $4.0 million at March 31, 2012, compared with $2.1 million at December 31, 2011, an increase of $1.9 million.
As of March 31, 2012, our estimated Tier 1 risk-based, total risk-based and leverage capital ratios were 13.61%, 14.87%, and 9.99%, respectively. In addition, Encore Bank was considered "well capitalized" pursuant to regulatory capital definitions. Book value per common share and tangible book value per common share were $12.26 and $8.80 at March 31, 2012.
Additional Information
Management of Encore will not be hosting a conference call. As previously announced, on March 5, 2012, Encore Bancshares, Inc., and Cadence Bancorp LLC, a bank holding company headquartered in Houston, Texas, agreed to a strategic business combination in which Encore will merge into a wholly-owned subsidiary of Cadence.
In connection with the proposed merger transaction, Encore has filed with the Securities and Exchange Commission (SEC) a Proxy Statement for a special meeting of Encore shareholders and mailed the definitive Proxy Statement to its shareholders on or about April 12, 2012. SHAREHOLDERS ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT REGARDING THE MERGER AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY CONTAIN IMPORTANT INFORMATION.
A free copy of the definitive Proxy Statement, as well as other filings containing information about Cadence and Encore, may be obtained at the SEC's Internet site (http://www.sec.gov). You may obtain these documents, free of charge, from Encore by accessing Encore's website at www.encorebank.com under the tab "Investor Relations" and then under the heading "SEC Filings."
Encore and certain of its directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of Encore in connection with the proposed merger. Information about the directors and executive officers of Encore is set forth in Encore's Form 10-K/A to be filed with the SEC on or about April 27, 2012. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the above-referenced definitive Proxy Statement and other relevant materials filed with the SEC. Free copies of these documents may be obtained as described in the preceding paragraph.
About Encore Bancshares, Inc.
Encore Bancshares, Inc. is a financial holding company headquartered in Houston, Texas and offers a broad range of banking, wealth management and insurance services through Encore Bank, N.A., and its affiliated companies. Encore Bank operates 12 private client offices in the Greater Houston area. Headquartered in Houston and with $1.6 billion in assets, Encore Bank builds relationships with professional firms, privately-owned businesses, investors and affluent individuals. Encore Bank offers a full range of business and personal banking products and services, as well as financial planning, wealth management, trust and insurance products through its trust division, Encore Trust, and its affiliated companies, Linscomb & Williams and Town & Country Insurance. Products and services offered by Encore Bank's affiliates are not FDIC insured. The Company's common stock is listed on the NASDAQ Global Market under the symbol "EBTX".
This press release contains certain financial information determined by methods other than in accordance with GAAP. Specifically, Encore reviews tangible book value per share, return on average tangible common equity and the tangible common equity to tangible assets ratio for internal planning and forecasting purposes. Encore reviews its net interest income, net interest spread and net interest margin on a tax equivalent basis, which is standard practice in the banking industry. Encore has included in this press release information relating to these non-GAAP financial measures for the applicable periods presented. Encore's management believes these non-GAAP financial measures provide information useful to investors in understanding our financial results and believes that its presentation, together with the accompanying reconciliations, provides a complete understanding of factors and trends affecting our business and allows investors to view performance in a manner similar to management, the entire financial services sector, bank stock analysts and bank regulators. These non-GAAP measures should not be considered a substitute for operating results determined in accordance with GAAP and we strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.
This press release contains certain forward-looking information about Encore Bancshares that is intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. Such statements involve risks and uncertainties that may cause actual results to differ materially from those expressed in or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to: competitive pressure among financial institutions; volatility and disruption in national and international financial markets; government intervention in the U.S. financial system; our ability to expand and grow our businesses and operations and to realize the cost savings and revenue enhancements expected from such activities; a deterioration of credit quality or a reduced demand for credit; incorrect assumptions underlying the establishment of and provisions made to the allowance for loan losses; changes in the interest rate environment; the continued service of key management personnel; our ability to attract, motivate and retain key employees; our ability to complete the proposed merger; the incurrence and possible impairment of goodwill associated with an acquisition and possible adverse short-term effects on our results of operations; changes in availability of funds; our ability to fully realize our net deferred tax asset; our ability to raise capital when needed; general economic conditions, either nationally, regionally or in the market areas in which we operate; legislative or regulatory developments or changes in laws; changes in the securities markets and other risks that are described from time to time in our 2011 Annual Report on Form 10-K and other reports and documents filed with the Securities and Exchange Commission.
Encore Bancshares, Inc. | Nine Greenway Plaza, Suite 1000 | Houston, Texas 77046
| Encore Bancshares, Inc. and Subsidiaries | |||
| FINANCIAL HIGHLIGHTS | |||
| (Unaudited, amounts in thousands, except per share data) | |||
| As of and for the Three Months Ended | |||
| March 31, | December 31, | ||
| 2012 | 2011 | 2011 | |
| Operations Statement Data: | |||
| Interest income | $ 16,157 | $ 15,777 | $ 15,851 |
| Interest expense | 4,048 | 4,744 | 4,229 |
| Net interest income | 12,109 | 11,033 | 11,622 |
| Provision for loan losses | 733 | 2,170 | 1,898 |
| Net interest income after provision for loan losses | 11,376 | 8,863 | 9,724 |
| Noninterest income | 7,645 | 7,128 | 7,312 |
| Noninterest expense | 14,200 | 14,355 | 13,924 |
| Net income before income taxes | 4,821 | 1,636 | 3,112 |
| Income tax expense | 1,627 | 484 | 990 |
| Net income | $ 3,194 | $ 1,152 | $ 2,122 |
| Income available to common shareholders | $ 3,112 | $ 594 | $ 1,943 |
| Common Share Data: | |||
| Basic income per share (1) | $ 0.26 | $ 0.05 | $ 0.17 |
| Diluted income per share (1) | 0.26 | 0.05 | 0.17 |
| Book value per common share | 12.26 | 11.97 | 12.05 |
| Tangible book value per share (2) | 8.80 | 8.48 | 8.59 |
| Average common shares outstanding | 11,751 | 11,491 | 11,654 |
| Diluted average common shares outstanding | 11,917 | 11,575 | 11,699 |
| Common shares outstanding at end of period | 11,900 | 11,552 | 11,657 |
| Selected Performance Ratios: | |||
| Return on average assets | 0.85% | 0.32% | 0.56% |
| Return on average common equity (1) | 8.79% | 1.75% | 5.52% |
| Return on average tangible common equity (1)(2) | 12.27% | 2.49% | 7.77% |
| Taxable-equivalent net interest margin (2) | 3.48% | 3.38% | 3.36% |
| Efficiency ratio (3) | 71.02% | 78.02% | 71.29% |
| Noninterest income to total revenue | 38.70% | 39.25% | 38.62% |
| Note: In 2012, income earned on certain assets was reclassified from interest income to noninterest income for all periods presented. | |||
| (1) Using income available to common shareholders. | |||
| (2) Non-GAAP measure. See calculation of tangible common equity and taxable-equivalent amounts in subsequent tables. | |||
| (3) Total noninterest expense (excluding intangible amortization and write down of assets held-for-sale) divided by the sum of net interest income and noninterest income (excluding gains or losses on sales of securities). | |||
| Encore Bancshares, Inc. and Subsidiaries | |||||
| CONSOLIDATED BALANCE SHEETS | |||||
| (Unaudited, dollars in thousands, except per share data) | |||||
| March 31, | Dec 31, | Sept 30, | June 30, | March 31, | |
| 2012 | 2011 | 2011 | 2011 | 2011 | |
| ASSETS | |||||
| Cash and due from banks | $ 16,135 | $ 13,397 | $ 13,797 | $ 13,025 | $ 18,477 |
| Interest-bearing deposits in banks | 150,053 | 114,403 | 100,719 | 91,790 | 49,109 |
| Federal funds sold and other | 1,382 | 1,269 | 1,207 | 904 | 856 |
| Cash and cash equivalents | 167,570 | 129,069 | 115,723 | 105,719 | 68,442 |
| Securities available-for-sale, at fair value | 181,107 | 170,801 | 164,735 | 183,058 | 241,370 |
| Securities held-to-maturity, at amortized cost | 97,400 | 99,630 | 102,871 | 104,565 | 101,235 |
| Loans held-for-sale, at lower of cost or fair value | 1,350 | 1,778 | 7,277 | 863 | 2,913 |
| Loans receivable | 1,046,168 | 1,023,486 | 978,236 | 970,566 | 936,036 |
| Allowance for loan losses | (17,977) | (17,968) | (18,007) | (19,110) | (19,008) |
| Net loans receivable | 1,028,191 | 1,005,518 | 960,229 | 951,456 | 917,028 |
| Federal Home Loan Bank of Dallas stock, at cost | 9,838 | 9,829 | 9,820 | 9,810 | 10,206 |
| Other real estate owned | 3,954 | 2,090 | 5,135 | 7,200 | 7,311 |
| Premises and equipment, net | 8,876 | 6,537 | 6,486 | 6,545 | 6,757 |
| Cash surrender value of life insurance policies | 16,654 | 16,508 | 16,363 | 16,217 | 16,078 |
| Goodwill | 35,799 | 35,799 | 35,799 | 35,799 | 35,799 |
| Other intangible assets, net | 5,321 | 4,533 | 4,694 | 4,434 | 4,575 |
| Other assets | 35,303 | 40,491 | 40,534 | 40,829 | 46,467 |
| $ 1,591,363 | $ 1,522,583 | $ 1,469,666 | $ 1,466,495 | $ 1,458,181 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
| Deposits: | |||||
| Noninterest-bearing | $ 379,184 | $ 334,859 | $ 281,981 | $ 236,873 | $ 219,629 |
| Interest-bearing | 784,483 | 765,378 | 765,715 | 806,627 | 821,163 |
| Total deposits | 1,163,667 | 1,100,237 | 1,047,696 | 1,043,500 | 1,040,792 |
| Borrowings and repurchase agreements | 220,971 | 218,702 | 219,424 | 222,879 | 221,582 |
| Junior subordinated debentures | 20,619 | 20,619 | 20,619 | 20,619 | 20,619 |
| Other liabilities | 7,351 | 9,636 | 9,749 | 7,783 | 7,274 |
| Total liabilities | 1,412,608 | 1,349,194 | 1,297,488 | 1,294,781 | 1,290,267 |
| Commitments and contingencies | |||||
| Shareholders' equity: | |||||
| Preferred stock | 32,914 | 32,914 | 32,914 | 29,766 | 29,633 |
| Common stock | 11,995 | 11,739 | 11,733 | 11,733 | 11,603 |
| Additional paid-in capital | 126,475 | 124,762 | 124,250 | 123,771 | 123,329 |
| Retained earnings | 9,062 | 5,950 | 4,007 | 6,742 | 5,235 |
| Common stock in treasury, at cost | (1,116) | (854) | (823) | (735) | (497) |
| Accumulated other comprehensive income (loss) | (575) | (1,122) | 97 | 437 | (1,389) |
| Shareholders' equity | 178,755 | 173,389 | 172,178 | 171,714 | 167,914 |
| $ 1,591,363 | $ 1,522,583 | $ 1,469,666 | $ 1,466,495 | $ 1,458,181 | |
| Ratios and Common Share Data: | |||||
| Leverage ratio (1) | 9.99% | 9.73% | 9.34% | 9.67% | 9.29% |
| Tier 1 risk-based capital ratio (1) | 13.61% | 13.22% | 13.37% | 13.23% | 13.05% |
| Total risk-based capital ratio (1) | 14.87% | 14.48% | 14.63% | 14.49% | 14.31% |
| Book value per common share | $ 12.26 | $ 12.05 | $ 11.95 | $ 12.17 | $ 11.97 |
| Tangible book value per common share (2) | 8.80 | 8.59 | 8.47 | 8.72 | 8.48 |
| Tangible common equity to tangible assets (2) | 6.76% | 6.76% | 6.91% | 7.13% | 6.91% |
| (1) Estimated at March 31, 2012. | |||||
| (2) Non-GAAP measure. See calculation of tangible common equity in subsequent table. | |||||
| Encore Bancshares, Inc. and Subsidiaries | |||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||
| (Unaudited, amounts in thousands, except per share data) | |||||
| Three Months Ended | |||||
| March 31, | Dec 31, | Sept 30, | June 30, | March 31, | |
| 2012 | 2011 | 2011 | 2011 | 2011 | |
| Interest income: | |||||
| Loans, including fees | $ 14,455 | $ 14,189 | $ 13,966 | $ 14,254 | $ 13,442 |
| Securities | 1,626 | 1,569 | 1,714 | 2,025 | 2,305 |
| Federal funds sold and other | 76 | 93 | 98 | 37 | 30 |
| Total interest income | 16,157 | 15,851 | 15,778 | 16,316 | 15,777 |
| Interest expense: | |||||
| Deposits | 1,627 | 1,798 | 2,142 | 2,234 | 2,340 |
| Borrowings and repurchase agreements | 2,120 | 2,131 | 2,131 | 2,117 | 2,106 |
| Junior subordinated debentures | 301 | 300 | 298 | 297 | 298 |
| Total interest expense | 4,048 | 4,229 | 4,571 | 4,648 | 4,744 |
| Net interest income | 12,109 | 11,622 | 11,207 | 11,668 | 11,033 |
| Provision for loan losses | 733 | 1,898 | 1,265 | 1,919 | 2,170 |
| Net interest income after provision for loan losses | 11,376 | 9,724 | 9,942 | 9,749 | 8,863 |
| Noninterest income: | |||||
| Trust and investment management fees | 5,239 | 5,066 | 4,852 | 5,126 | 5,072 |
| Insurance commissions and fees | 1,597 | 1,266 | 1,545 | 1,587 | 1,440 |
| Net loss on sale of available-for-sale securities | -- | (1) | -- | (64) | (31) |
| Other | 809 | 981 | 682 | 752 | 647 |
| Total noninterest income | 7,645 | 7,312 | 7,079 | 7,401 | 7,128 |
| Noninterest expense: | |||||
| Compensation | 8,918 | 8,513 | 8,464 | 8,414 | 8,706 |
| Occupancy | 1,198 | 1,270 | 1,200 | 1,128 | 1,287 |
| Equipment | 250 | 278 | 258 | 268 | 241 |
| Advertising and promotion | 149 | 132 | 107 | 156 | 156 |
| Outside data processing | 818 | 775 | 761 | 793 | 783 |
| Professional fees | 1,515 | 1,229 | 984 | 905 | 1,134 |
| Intangible amortization | 170 | 160 | 161 | 143 | 140 |
| FDIC assessment | 193 | 309 | 479 | 472 | 798 |
| Other real estate owned expenses, net | 252 | (31) | 1,293 | 666 | 83 |
| Write down of assets held-for-sale | -- | 265 | -- | 427 | 21 |
| Other | 737 | 1,024 | 1,151 | 740 | 1,006 |
| Total noninterest expense | 14,200 | 13,924 | 14,858 | 14,112 | 14,355 |
| Net income before income taxes | 4,821 | 3,112 | 2,163 | 3,038 | 1,636 |
| Income tax expense | 1,627 | 990 | 262 | 973 | 484 |
| Net income | $ 3,194 | $ 2,122 | $ 1,901 | $ 2,065 | $ 1,152 |
| Income (loss) available to common shareholders (1) | $ 3,112 | $ 1,943 | $ (2,735) | $ 1,507 | $ 594 |
| Income (loss) per common share: | |||||
| Basic | $ 0.26 | $ 0.17 | $ (0.23) | $ 0.13 | $ 0.05 |
| Diluted | 0.26 | 0.17 | (0.23) | 0.13 | 0.05 |
| Average common shares outstanding | 11,751 | 11,654 | 11,658 | 11,582 | 11,491 |
| Diluted average common shares outstanding | 11,917 | 11,699 | 11,658 | 11,628 | 11,575 |
| (1) Includes $4,102 accelerated amortization of preferred stock discount for the three months ended September 30, 2011. | |||||
| Encore Bancshares, Inc. and Subsidiaries | |||||
| AVERAGE CONSOLIDATED BALANCE SHEETS | |||||
| (Unaudited, dollars in thousands) | |||||
| Three Months Ended | |||||
| March 31, | Dec 31, | Sept 30, | June 30, | March 31, | |
| 2012 | 2011 | 2011 | 2011 | 2011 | |
| Assets: | |||||
| Interest-earning assets: | |||||
| Loans | $ 1,032,628 | $ 1,002,206 | $ 973,060 | $ 955,019 | $ 933,361 |
| Securities | 275,511 | 268,607 | 275,900 | 315,681 | 354,250 |
| Federal funds sold and other | 102,876 | 113,894 | 150,190 | 61,981 | 49,926 |
| Total interest-earning assets | 1,411,015 | 1,384,707 | 1,399,150 | 1,332,681 | 1,337,537 |
| Less: Allowance for loan losses | (18,463) | (17,829) | (19,429) | (19,219) | (18,604) |
| Noninterest-earning assets | 127,671 | 127,199 | 132,750 | 137,511 | 141,341 |
| Total assets | $ 1,520,223 | $ 1,494,077 | $ 1,512,471 | $ 1,450,973 | $ 1,460,274 |
| Liabilities and shareholders' equity: | |||||
| Interest-bearing liabilities: | |||||
| Interest checking | $ 185,283 | $ 173,079 | $ 170,534 | $ 163,926 | $ 162,577 |
| Money market and savings | 252,138 | 243,992 | 257,040 | 269,422 | 287,029 |
| Time deposits | 338,025 | 345,664 | 364,946 | 379,721 | 379,142 |
| Total interest-bearing deposits | 775,446 | 762,735 | 792,520 | 813,069 | 828,748 |
| Borrowings and repurchase agreements | 219,646 | 219,699 | 223,258 | 223,145 | 224,792 |
| Junior subordinated debentures | 20,619 | 20,619 | 20,619 | 20,619 | 20,619 |
| Total interest-bearing liabilities | 1,015,711 | 1,003,053 | 1,036,397 | 1,056,833 | 1,074,159 |
| Noninterest-bearing liabilities: | |||||
| Noninterest-bearing deposits | 320,764 | 309,919 | 295,823 | 217,624 | 210,885 |
| Other liabilities | 8,513 | 8,487 | 7,975 | 7,225 | 8,344 |
| Total liabilities | 1,344,988 | 1,321,459 | 1,340,195 | 1,281,682 | 1,293,388 |
| Shareholders' equity: | |||||
| Preferred | 32,914 | 32,914 | 29,944 | 29,680 | 29,513 |
| Common | 142,321 | 139,704 | 142,332 | 139,611 | 137,373 |
| Total shareholders' equity | 175,235 | 172,618 | 172,276 | 169,291 | 166,886 |
| Total liabilities and shareholders' equity | $ 1,520,223 | $ 1,494,077 | $ 1,512,471 | $ 1,450,973 | $ 1,460,274 |
| Encore Bancshares, Inc. and Subsidiaries | |||||
| SELECTED FINANCIAL DATA | |||||
| (Unaudited, dollars in thousands) | |||||
| March 31, | Dec 31, | Sept 30, | June 30, | March 31, | |
| Loan Portfolio: | 2012 | 2011 | 2011 | 2011 | 2011 |
| Commercial: | |||||
| Commercial | $ 234,760 | $ 214,575 | $ 194,393 | $ 194,260 | $ 164,053 |
| Commercial real estate | 224,479 | 210,437 | 185,541 | 167,973 | 168,893 |
| Real estate construction | 56,322 | 59,589 | 52,993 | 54,769 | 52,106 |
| Total commercial | 515,561 | 484,601 | 432,927 | 417,002 | 385,052 |
| Consumer: | |||||
| Residential real estate first lien | 203,122 | 202,968 | 201,485 | 205,171 | 205,012 |
| Residential real estate second lien | 241,849 | 252,825 | 258,020 | 262,958 | 263,286 |
| Home equity lines | 55,044 | 55,191 | 56,869 | 58,553 | 59,832 |
| Consumer other | 30,592 | 27,901 | 28,935 | 26,882 | 22,854 |
| Total consumer | 530,607 | 538,885 | 545,309 | 553,564 | 550,984 |
| Loans receivable | 1,046,168 | 1,023,486 | 978,236 | 970,566 | 936,036 |
| Loans held-for-sale | 1,350 | 1,778 | 7,277 | 863 | 2,913 |
| Total loans | $ 1,047,518 | $ 1,025,264 | $ 985,513 | $ 971,429 | $ 938,949 |
| Asset Quality: | |||||
| Nonaccrual loans (1) | $ 6,636 | $ 10,789 | $ 18,053 | $ 16,552 | $ 27,726 |
| Other real estate owned | 3,954 | 2,090 | 5,135 | 7,200 | 7,311 |
| Total nonperforming assets | $ 10,590 | $ 12,879 | $ 23,188 | $ 23,752 | $ 35,037 |
| Accruing loans past due 90 days or more | $ -- | $ -- | $ -- | $ -- | $ -- |
| Restructured loans still accruing | $ 2,628 | $ 4,122 | $ 1,706 | $ 1,522 | $ 1,755 |
| Asset Quality Ratios: | |||||
| Nonperforming assets to total loans and other real estate owned | 1.01% | 1.25% | 2.34% | 2.43% | 3.70% |
| Nonperforming assets to total assets | 0.67% | 0.85% | 1.58% | 1.62% | 2.40% |
| Net charge-offs to average total loans | 0.28% | 0.77% | 0.97% | 0.76% | 0.78% |
| Allowance for loan losses to period end loans (excluding loans held-for-sale) | 1.72% | 1.76% | 1.84% | 1.97% | 2.03% |
| Allowance for loan losses to nonaccrual loans (excluding loans held-for-sale) (2) | 270.90% | 166.54% | 136.57% | 115.45% | 74.72% |
| Deposits: | |||||
| Noninterest-bearing deposits | $ 379,184 | $ 334,859 | $ 281,981 | $ 236,873 | $ 219,629 |
| Interest checking | 187,270 | 183,339 | 164,781 | 179,292 | 155,262 |
| Money market and savings | 258,066 | 238,579 | 248,009 | 252,100 | 285,612 |
| Time deposits less than $100 | 98,061 | 102,207 | 107,487 | 112,975 | 114,819 |
| Core deposits | 922,581 | 858,984 | 802,258 | 781,240 | 775,322 |
| Time deposits $100 and greater | 225,786 | 224,210 | 228,316 | 236,653 | 239,936 |
| Brokered deposits | 15,300 | 17,043 | 17,122 | 25,607 | 25,534 |
| Total deposits | $ 1,163,667 | $ 1,100,237 | $ 1,047,696 | $ 1,043,500 | $ 1,040,792 |
| Assets Under Management | $ 2,978,555 | $ 2,778,693 | $ 2,682,467 | $ 2,863,293 | $ 2,855,544 |
| (1) Nonaccrual troubled debt restructurings are included in nonaccrual loans. | |||||
| (2) Excludes $0, $0, $4,868, $0, and $2,288 nonaccrual loans held-for-sale. | |||||
| Encore Bancshares, Inc. and Subsidiaries | |||||
| ALLOWANCE FOR LOAN LOSSES | |||||
| (Unaudited, dollars in thousands) | |||||
| Three Months Ended | |||||
| March 31, | Dec 31, | Sept 30, | June 30, | March 31, | |
| 2012 | 2011 | 2011 | 2011 | 2011 | |
| Allowance for loan losses at beginning of quarter | $ 17,968 | $ 18,007 | $ 19,110 | $ 19,008 | $ 18,639 |
| Charge-offs: | |||||
| Commercial: | |||||
| Commercial | -- | (12) | (1) | (112) | (196) |
| Commercial real estate | (194) | (264) | (1,212) | (752) | (465) |
| Real estate construction | -- | -- | (64) | (137) | (4) |
| Total commercial | (194) | (276) | (1,277) | (1,001) | (665) |
| Consumer: | |||||
| Residential real estate first lien | (366) | (294) | (319) | (305) | (222) |
| Residential real estate second lien | (403) | (607) | (623) | (513) | (1,059) |
| Home equity lines | (249) | (938) | (398) | (360) | (296) |
| Consumer other | (24) | (48) | (14) | (67) | (36) |
| Total consumer | (1,042) | (1,887) | (1,354) | (1,245) | (1,613) |
| Total charge-offs | (1,236) | (2,163) | (2,631) | (2,246) | (2,278) |
| Recoveries: | |||||
| Commercial: | |||||
| Commercial | 420 | 51 | 76 | 10 | 3 |
| Commercial real estate | -- | 8 | 2 | 141 | 12 |
| Real estate construction | 3 | 1 | 1 | 18 | 131 |
| Total commercial | 423 | 60 | 79 | 169 | 146 |
| Consumer: | |||||
| Residential real estate first lien | 23 | 35 | 90 | 41 | 223 |
| Residential real estate second lien | 31 | 97 | 27 | 123 | 71 |
| Home equity lines | 21 | 21 | 28 | 23 | 19 |
| Consumer other | 14 | 13 | 39 | 73 | 18 |
| Total consumer | 89 | 166 | 184 | 260 | 331 |
| Total recoveries | 512 | 226 | 263 | 429 | 477 |
| Net charge-offs | (724) | (1,937) | (2,368) | (1,817) | (1,801) |
| Provision for loan losses | 733 | 1,898 | 1,265 | 1,919 | 2,170 |
| Allowance for loan losses at end of quarter | $ 17,977 | $ 17,968 | $ 18,007 | $ 19,110 | $ 19,008 |
| Encore Bancshares, Inc. and Subsidiaries | ||||||
| SEGMENT OPERATIONS | ||||||
| (Unaudited, dollars in thousands) | ||||||
| As of and for the Three Months Ended | ||||||
| March 31, | Dec 31, | Sept 30, | June 30, | March 31, | ||
| 2012 | 2011 | 2011 | 2011 | 2011 | ||
| Banking | ||||||
| Net interest income | $ 12,400 | $ 11,910 | $ 11,494 | $ 11,947 | $ 11,305 | |
| Provision for loan losses | 733 | 1,898 | 1,265 | 1,919 | 2,170 | |
| Noninterest income | 791 | 956 | 638 | 602 | 591 | |
| Noninterest expense | 9,132 | 9,176 | 9,923 | 9,348 | 9,563 | |
| Income before income taxes | 3,326 | 1,792 | 944 | 1,282 | 163 | |
| Income tax expense (benefit) | 1,096 | 521 | 258 | 353 | (34) | |
| Net income | $ 2,230 | $ 1,271 | $ 686 | $ 929 | $ 197 | |
| Total assets at period end | $ 1,602,540 | $ 1,527,207 | $ 1,473,144 | $ 1,469,429 | $ 1,467,887 | |
| Wealth Management | ||||||
| Net interest income | $ 9 | $ 11 | $ 10 | $ 16 | $ 24 | |
| Noninterest income | 5,239 | 5,070 | 4,884 | 5,132 | 5,089 | |
| Noninterest expense | 3,845 | 3,583 | 3,691 | 3,523 | 3,643 | |
| Income before income taxes | 1,403 | 1,498 | 1,203 | 1,625 | 1,470 | |
| Income tax expense | 497 | 531 | 426 | 574 | 516 | |
| Net income | $ 906 | $ 967 | $ 777 | $ 1,051 | $ 954 | |
| Total assets at period end | $ 57,869 | $ 57,031 | $ 55,951 | $ 56,105 | $ 64,157 | |
| Insurance | ||||||
| Net interest income | $ 1 | $ 1 | $ 1 | $ 2 | $ 2 | |
| Noninterest income | 1,615 | 1,286 | 1,557 | 1,667 | 1,448 | |
| Noninterest expense | 1,223 | 1,165 | 1,244 | 1,241 | 1,149 | |
| Income before income taxes | 393 | 122 | 314 | 428 | 301 | |
| Income tax expense | 139 | 43 | 111 | 150 | 106 | |
| Net income | $ 254 | $ 79 | $ 203 | $ 278 | $ 195 | |
| Total assets at period end | $ 8,706 | $ 8,281 | $ 7,923 | $ 7,370 | $ 6,827 | |
| Other | ||||||
| Net interest expense | $ (301) | $ (300) | $ (298) | $ (297) | $ (298) | |
| Loss before income taxes | (301) | (300) | (298) | (297) | (298) | |
| Income tax benefit | (105) | (105) | (533) | (104) | (104) | |
| Net income (loss) | $ (196) | $ (195) | $ 235 | $ (193) | $ (194) | |
| Total assets at period end | $ (77,752) | $ (69,936) | $ (67,352) | $ (66,409) | $ (80,690) | |
| Consolidated | ||||||
| Net interest income | $ 12,109 | $ 11,622 | $ 11,207 | $ 11,668 | $ 11,033 | |
| Provision for loan losses | 733 | 1,898 | 1,265 | 1,919 | 2,170 | |
| Noninterest income | 7,645 | 7,312 | 7,079 | 7,401 | 7,128 | |
| Noninterest expense | 14,200 | 13,924 | 14,858 | 14,112 | 14,355 | |
| Income before income taxes | 4,821 | 3,112 | 2,163 | 3,038 | 1,636 | |
| Income tax expense | 1,627 | 990 | 262 | 973 | 484 | |
| Net income | $ 3,194 | $ 2,122 | $ 1,901 | $ 2,065 | $ 1,152 | |
| Total assets at period end | $ 1,591,363 | $ 1,522,583 | $ 1,469,666 | $ 1,466,495 | $ 1,458,181 | |
| Encore Bancshares, Inc. and Subsidiaries | ||||||
| TAXABLE-EQUIVALENT (TE) YIELD ANALYSIS (1) | ||||||
| (Unaudited, dollars in thousands) | ||||||
| Three Months Ended March 31, | ||||||
| 2012 | 2011 | |||||
| Average | Interest | Average | Average | Interest | Average | |
| Outstanding | Income/ | Yield/ | Outstanding | Income/ | Yield/ | |
| Balance | Expense | Rate | Balance | Expense | Rate | |
| Assets: | ||||||
| Interest-earning assets: | ||||||
| Loans - TE yield | $ 1,032,628 | $ 14,492 | 5.64% | $ 933,361 | $ 13,495 | 5.86% |
| Securities - TE yield | 275,511 | 1,689 | 2.47% | 354,250 | 2,369 | 2.71% |
| Federal funds sold and other | 102,876 | 76 | 0.30% | 49,926 | 30 | 0.24% |
| Total interest-earning assets - TE yield | 1,411,015 | 16,257 | 4.63% | 1,337,537 | 15,894 | 4.82% |
| Less: Allowance for loan losses | (18,463) | (18,604) | ||||
| Noninterest-earning assets | 127,671 | 141,341 | ||||
| Total assets | $ 1,520,223 | $ 1,460,274 | ||||
| Liabilities and shareholders' equity: | ||||||
| Interest-bearing liabilities: | ||||||
| Interest checking | $ 185,283 | $ 41 | 0.09% | $ 162,577 | $ 91 | 0.23% |
| Money market and savings | 252,138 | 121 | 0.19% | 287,029 | 309 | 0.44% |
| Time deposits | 338,025 | 1,465 | 1.74% | 379,142 | 1,940 | 2.08% |
| Total interest-bearing deposits | 775,446 | 1,627 | 0.84% | 828,748 | 2,340 | 1.15% |
| Borrowings and repurchase agreements | 219,646 | 2,120 | 3.88% | 224,792 | 2,106 | 3.80% |
| Junior subordinated debentures | 20,619 | 301 | 5.87% | 20,619 | 298 | 5.86% |
| Total interest-bearing liabilities | 1,015,711 | 4,048 | 1.60% | 1,074,159 | 4,744 | 1.79% |
| Noninterest-bearing liabilities: | ||||||
| Noninterest-bearing deposits | 320,764 | 210,885 | ||||
| Other liabilities | 8,513 | 8,344 | ||||
| Total liabilities | 1,344,988 | 1,293,388 | ||||
| Shareholders' equity | 175,235 | 166,886 | ||||
| Total liabilities and shareholders' equity | $ 1,520,223 | $ 1,460,274 | ||||
| Net interest income - TE | $ 12,209 | $ 11,150 | ||||
| Net interest spread - TE | 3.03% | 3.03% | ||||
| Net interest margin - TE | 3.48% | 3.38% | ||||
| (1) Non-GAAP measure. See calculation of taxable-equivalent amounts in subsequent table. | ||||||
| Encore Bancshares, Inc. and Subsidiaries | |||||
| NON-GAAP FINANCIAL MEASURES | |||||
| (Unaudited, amounts in thousands) | |||||
| March 31, | Dec 31, | Sept 30, | June 30, | March 31, | |
| 2012 | 2011 | 2011 | 2011 | 2011 | |
| Shareholders' equity (GAAP) | $ 178,755 | $ 173,389 | $ 172,178 | $ 171,714 | $ 167,914 |
| Less: Preferred stock | 32,914 | 32,914 | 32,914 | 29,766 | 29,633 |
| Goodwill and other intangible assets, net | 41,120 | 40,332 | 40,493 | 40,233 | 40,374 |
| Tangible common equity (1) | $ 104,721 | $ 100,143 | $ 98,771 | $ 101,715 | $ 97,907 |
| Total assets (GAAP) | $ 1,591,363 | $ 1,522,583 | $ 1,469,666 | $ 1,466,495 | $ 1,458,181 |
| Less: Goodwill and other intangible assets, net | 41,120 | 40,332 | 40,493 | 40,233 | 40,374 |
| Tangible assets | $ 1,550,243 | $ 1,482,251 | $ 1,429,173 | $ 1,426,262 | $ 1,417,807 |
| Common shares outstanding at end of period | 11,900 | 11,657 | 11,655 | 11,663 | 11,552 |
| (1) Tangible common equity, a non-GAAP financial measure, includes total equity, less preferred equity, goodwill and other intangible assets. Management reviews tangible common equity along with other measures of capital as part of its financial analyses and has included this information because of current interest on the part of market participants in tangible common equity as a measure of capital. The methodology of determining tangible common equity may differ among companies. | |||||
| Three Months Ended | |||||
| March 31, | |||||
| 2012 | 2011 | ||||
| Net interest income (GAAP) | $ 12,109 | $ 11,033 | |||
| Taxable-equivalent adjustment (1) | 100 | 117 | |||
| Net interest income on a taxable-equivalent basis | $ 12,209 | $ 11,150 | |||
| (1) Net interest income, net interest spread and net interest margin are reported on a taxable-equivalent basis. The taxable-equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets. Management believes that it is a standard practice in the banking industry to present net interest income, net interest spread and net interest margin on a fully taxable-equivalent basis. Management believes these measures provide useful information to investors by allowing them to make peer comparisons. | |||||