HOUSTON, Jan. 25, 2008 (PRIME NEWSWIRE) -- Encore Bancshares, Inc. (Nasdaq:EBTX) today announced its financial results for the fourth quarter of 2007.
Highlights of the fourth quarter 2007 compared with fourth quarter of 2006:
* Net earnings grew 46% * Loans increased 21% * Net interest margin improved 46 basis points * Wealth management earnings increased 60%
"We performed in line with our long term expectation for growth and profitability, despite a challenging environment," said James S. D'Agostino, Jr., Chairman and Chief Executive Officer. "In addition, our strong capital position, as a result of our recent IPO, leaves us well positioned for the challenges and opportunities ahead."
Earnings
For the three months ended December 31, 2007, net earnings were $1.7 million, or $0.16 per diluted share, compared with $1.2 million, or $0.15 per diluted share, for the same period of 2006. The improvement in net earnings was due primarily to greater net interest income resulting from an improved asset and funding mix and growth in wealth management earnings. The change in net earnings was different than earnings per share primarily because of the additional shares issued in the initial public offering in the third quarter of 2007.
For the year ended December 31, 2007, net earnings were $7.4 million, or $0.79 per diluted share, compared with $7.5 million, or $0.94 per diluted share, for the 2006 year. The decline in net earnings was due primarily to a decrease in mortgage banking income.
Net Interest Income
Net interest income for the fourth quarter of 2007 was $9.4 million, up $2.0 million, or 27.7%, compared with the fourth quarter of 2006. The net interest margin expanded 46 basis points to 2.85% for the same comparison period, reflecting an improved asset mix resulting from the replacement of lower yielding first mortgage loans and securities with higher yielding loans. For the year ended December 31, 2007, net interest income was $34.2 million, an increase of $4.0 million, or 13.3%, compared with the year ended December 31, 2006. The net interest margin increased 28 basis points to 2.74%, due primarily to improvements in the asset mix. On a linked quarter basis (compared with the immediately preceding quarter), net interest income rose $365,000, or 4.0%, although the net interest margin declined one basis point reflecting the lag in deposit repricing, compared with the immediate change in rates on our floating rate commercial loans.
Noninterest Income
Noninterest income was $6.3 million in the fourth quarter of 2007, a decrease of $2.0 million, or 24.0%, compared with the fourth quarter of 2006. Noninterest income for the full year ended December 31, 2007 was $31.0 million, down $4.1 million, or 11.7% compared with 2006. The decrease in noninterest income for both periods was due primarily to a reduction in mortgage banking income, which was partially offset by improvements in fees from our wealth management and insurance operations.
Noninterest Expense
Noninterest expense was $12.4 million in the fourth quarter of 2007, a reduction of $282,000, or 2.2% from the fourth quarter of 2006. Noninterest expense for the fourth quarter of 2007 included termination payments of $235,000, related to the previously announced staff reduction. Noninterest expense was $50.6 million for the year ended December 31, 2007, an increase of $269,000, or 0.5%, compared with the year ended December 31, 2006. This modest increase over the prior year was attributable to expenses related to the opening of two new private client offices as well as professional fees associated with being a public company.
Segment Earnings
On a segment basis, our wealth management group showed net earnings of $1.1 million for the fourth quarter of 2007, an increase of $421,000, or 60.2%, compared with the prior year quarter. The growth in net earnings was due primarily to an 11.0% growth in assets under management and a 4.6% expense reduction. Our banking net earnings were $526,000 for the fourth quarter of 2007, a decrease of $85,000, or 13.9%, compared with the same period of 2006. The decrease in net earnings resulted from a decline in mortgage banking income. The decrease in noninterest income was partially offset by higher net interest income, as the bank improved its balance sheet mix. Our insurance group had net earnings of $238,000, an increase of $227,000, which resulted primarily from growth in commercial lines.
Loans
Period end loans were $1.1 billion at December 31, 2007, an increase of $188.9 million, or 20.8%, compared with December 31, 2006 and up $67.1 million, or 6.5%, on a linked quarter basis. Average loans were $1.1 billion for the fourth quarter of 2007, an increase of $173.5 million, or 19.5%, compared with the prior year quarter.
Deposits
Period end deposits were $1.0 billion, up $10.6 million, or 1.0%, compared with December 31, 2006 and up $9.2 million, or 0.9%, on a linked quarter basis. Average deposits were $1.0 billion for the fourth quarter of 2007, an increase of $64.8 million, or 6.6%, compared with the prior year quarter.
Credit Quality
Net charge-offs for the fourth quarter of 2007 were $726,000, or 0.27% of average total loans on an annualized basis, compared with $2.3 million, or 1.02% of average total loans on an annualized basis for the fourth quarter of 2006. The provision for loan losses was $1.2 million in the fourth quarter of 2007, essentially unchanged from the prior year quarter. The allowance for loan losses was $11.2 million, or 1.02% of total loans at December 31, 2007, compared with $10.7 million, or 1.04% of total loans at September 30, 2007, and $9.1 million, or 1.00% of total loans, at December 31, 2006.
At December 31, 2007, nonperforming assets, including loans past due 90 days or more and still accruing, were $14.2 million, or 1.30% of total loans and investment in real estate, compared with $9.5 million, or 0.92% of total loans and investment in real estate at September 30, 2007. At December 31, 2007, non-accrual loans were $11.2 million compared with $8.7 million at September 30, 2007. The increase in non-accrual loans was primarily attributable to purchased residential mortgages and three commercial loans. Included in non-accrual loans was a loan in the amount of $6.3 million to a law firm. Repayment of this loan is primarily dependant on a lawsuit which has been settled and the proceeds are in escrow, but distribution of the attorneys fee to our client is pending final court action. Loans 90 days past due and still accruing were $2.2 million at December 31, 2007 compared with $20,000 at September 30, 2007. The increase was due primarily to one loan in the amount of $1.5 million, which is now current. Investment in real estate was essentially unchanged.
Conference Call
A conference call will be held on Friday, January 25, 2008 at 10:30 a.m., Central time to discuss fourth quarter 2007 results. A question and answer session will follow the prepared remarks. Individuals may access the call by dialing 1-888-224-1121, or access the live webcast by visiting www.encorebank.com/investorrelations.shtml or www.bestcalls.com
About Encore Bancshares, Inc.
Encore Bancshares, Inc. is a bank holding company headquartered in Houston, Texas, with $1.4 billion in consolidated assets. We focus on building relationships with professional firms, privately-owned businesses, investors and affluent individuals. We offer a full range of business and personal banking products and services, as well as financial planning, wealth management, trust and insurance products through Encore Bank, N.A. and its subsidiaries Linscomb & Williams and Town & Country Insurance. Encore Bank operates eleven private client offices in Houston and six in southwest Florida. Encore Bancshares' common stock is listed on the NASDAQ Global Market under the symbol "EBTX."
The Encore Bancshares, Inc. logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=4257
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. Risks and uncertainties include, but are not limited to: competitive pressure among financial institutions; 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; changes in the interest rate environment; the continued service of key management personnel; our ability to attract, motivate and retain key employees; 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 in our public filings with the Securities and Exchange Commission.
Encore Bancshares, Inc. and Subsidiaries FINANCIAL HIGHLIGHTS (Unaudited, dollars in thousands, except per share data) As of and for As of and for the Three Months the Years Ended December 31, Ended December 31, ---------------------- ---------------------- 2007 2006 2007 2006 ---------- ---------- ---------- ---------- Earnings Statement Data: Interest income $ 21,240 $ 19,590 $ 81,427 $ 75,810 Interest expense 11,809 12,202 47,252 45,637 ---------- ---------- ---------- ---------- Net interest income 9,431 7,388 34,175 30,173 Provision for loan losses 1,176 1,204 4,029 3,491 ---------- ---------- ---------- ---------- Net interest income after provision for loan losses 8,255 6,184 30,146 26,682 Noninterest income 6,269 8,244 30,966 35,083 Noninterest expense 12,367 12,649 50,607 50,338 ---------- ---------- ---------- ---------- Net earnings before income taxes 2,157 1,779 10,505 11,427 Income tax expense 454 615 3,121 3,949 ---------- ---------- ---------- ---------- Net earnings $ 1,703 $ 1,164 $ 7,384 $ 7,478 ========== ========== ========== ========== Common Share Data: Basic earnings per share $ 0.17 $ 0.16 $ 0.86 $ 1.00 Diluted earnings per share 0.16 0.15 0.79 0.94 Book value per share 15.56 13.57 15.56 13.57 Tangible book value per share 12.13 9.01 12.13 9.01 Weighted average shares outstanding (basic) 9,808,483 7,501,526 8,575,595 7,501,131 Weighted average shares outstanding (diluted) 10,660,621 7,981,883 9,296,224 7,925,685 Shares outstanding at end of period 10,123,840 7,786,315 10,123,840 7,786,315 Selected Performance Ratios: Return on average assets 0.48% 0.35% 0.55% 0.57% Return on average equity 4.33% 4.43% 5.71% 7.42% Return on average tangible equity 5.57% 6.67% 7.84% 11.40% Net interest margin 2.85% 2.39% 2.74% 2.46% Efficiency ratio 77.44% 79.41% 76.19% 75.68% Noninterest income to total revenue 39.93% 52.74% 47.54% 53.76% Encore Bancshares, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS (Unaudited, dollars in thousands, except per share data) Dec 31, Sept 30, June 30, March 31, Dec 31, 2007 2007 2007 2007 2006 ---------- ---------- ---------- ---------- ---------- ASSETS Cash and due from banks $ 18,817 $ 19,044 $ 23,972 $ 23,912 $ 27,428 Interest- bearing deposits in banks 18,581 1,804 2,903 7,122 2,904 Federal funds sold and other 41,017 100,630 9,862 888 8,764 ---------- ---------- ---------- ---------- ---------- Cash and cash equivalents 78,415 121,478 36,737 31,922 39,096 Securities available- for-sale, at estimated fair value 12,207 12,205 15,298 51,439 83,701 Securities held-to- maturity, at amortized cost 134,056 140,507 148,983 156,472 172,555 Mortgages held-for- sale 1,396 2,244 54,004 45,954 57,769 Loans receivable 1,097,268 1,030,133 952,838 932,793 908,368 Allowance for loan losses (11,161) (10,711) (10,168) (9,790) (9,056) ---------- ---------- ---------- ---------- ---------- Net loans receivable 1,086,107 1,019,422 942,670 923,003 899,312 Federal Home Loan Bank of Dallas stock, at cost 5,880 5,805 6,424 6,611 7,719 Investments in real estate 835 731 1,785 1,785 235 Premises and equipment, net 16,831 15,814 15,790 13,051 12,639 Goodwill 27,942 27,922 27,905 27,894 27,869 Other intangible assets, net 6,780 6,991 7,200 7,408 7,618 Cash surrender value of life insurance policies 14,091 13,951 13,818 13,684 13,551 Accrued interest receivable and other assets 16,657 16,062 16,587 15,764 14,779 ---------- ---------- ---------- ---------- ---------- $1,401,197 $1,383,132 $1,287,201 $1,294,987 $1,336,843 ========== ========== ========== ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Noninterest- bearing $ 106,382 $ 115,742 $ 106,064 $ 112,585 $ 131,476 Interest- bearing 934,992 916,442 914,208 884,713 899,335 ---------- ---------- ---------- ---------- ---------- Total deposits 1,041,374 1,032,184 1,020,272 997,298 1,030,811 Borrowings and repurchase agreements 173,395 166,359 125,753 157,505 171,732 Junior subordinated debentures 20,619 20,619 20,619 20,619 20,619 Accrued interest payable and other liabilities 8,330 8,538 9,447 10,621 8,004 ---------- ---------- ---------- ---------- ---------- Total liabilities 1,243,718 1,227,700 1,176,091 1,186,043 1,231,166 Commitments and contingencies -- -- -- -- -- Puttable common stock -- -- -- -- 774 Puttable common stock in excess of par -- -- -- -- 9,492 ---------- ---------- ---------- ---------- ---------- Total puttable common stock -- -- -- -- 10,266 Shareholders' equity: Preferred stock -- -- -- -- -- Common stock 10,128 10,124 7,925 7,901 7,016 Additional paid-in capital 108,173 107,954 68,188 67,670 57,585 Retained earnings 39,763 38,060 35,812 34,154 32,529 Common stock in treasury, at cost (69) (69) (69) (69) (69) Accumulated other comprehensive loss (516) (637) (746) (712) (1,650) ---------- ---------- ---------- ---------- ---------- Total shareholders' equity 157,479 155,432 111,110 108,944 95,411 ---------- ---------- ---------- ---------- ---------- $1,401,197 $1,383,132 $1,287,201 $1,294,987 $1,336,843 ========== ========== ========== ========== ========== Ratios: Leverage ratio 10.47% 10.71% 7.66% 7.40% 6.35% Tier 1 risk- based capital ratio 13.59% 14.20% 10.31% 10.28% 9.20% Total risk- based capital ratio 14.65% 15.28% 11.40% 11.35% 11.37% Book value per share $ 15.56 $ 15.36 $ 14.03 $ 13.80 $ 13.57 Tangible book value per share 12.13 11.91 9.60 9.33 9.01 Tangible common equity to tangible assets 8.98% 8.94% 6.07% 5.85% 5.39% Encore Bancshares, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited, dollars in thousands, except per share data) Three Months Ended ------------------------------------------------------ Dec 31, Sept 30, June 30, March 31, Dec 31, 2007 2007 2007 2007 2006 ---------- ---------- ---------- ---------- ---------- Interest income: Loans, including fees $ 18,536 $ 17,309 $ 16,346 $ 15,808 $ 15,283 Mortgages held-for-sale 64 1,346 1,202 1,121 1,442 Securities 1,442 1,463 1,745 2,273 2,583 Federal funds sold and other 1,198 914 382 278 282 ---------- ---------- ---------- ---------- ---------- Total interest income 21,240 21,032 19,675 19,480 19,590 Interest expense: Deposits 9,731 9,947 9,525 9,456 9,441 Borrowings and repurchase agreements 1,710 1,651 1,779 1,889 2,318 Junior subordinated debentures 368 368 373 455 443 ---------- ---------- ---------- ---------- ---------- Total interest expense 11,809 11,966 11,677 11,800 12,202 ---------- ---------- ---------- ---------- ---------- Net interest income 9,431 9,066 7,998 7,680 7,388 Provision for loan losses 1,176 1,008 945 900 1,204 ---------- ---------- ---------- ---------- ---------- Net interest income after provision for loan losses 8,255 8,058 7,053 6,780 6,184 Noninterest income: Trust and investment management fees 4,533 4,501 4,268 4,244 4,159 Mortgage banking 95 1,167 2,052 2,192 2,643 Insurance commissions and fees 1,217 1,450 1,562 1,713 1,114 Real estate operations, including net gain on sales 63 178 107 18 (21) Net loss on sale of available- for-sale securities -- -- (32) (149) -- Other 361 225 764 437 349 ---------- ---------- ---------- ---------- ---------- Total noninterest income 6,269 7,521 8,721 8,455 8,244 Noninterest expense: Compensation 7,081 7,318 7,855 7,863 7,272 Occupancy 1,428 1,438 1,499 1,399 1,634 Equipment 553 506 497 520 516 Advertising and promotion 223 328 271 196 374 Outside data processing 883 884 904 808 834 Professional fees 797 401 458 390 405 Intangible amortization 209 209 211 209 236 Loss on early debt extinguishment -- -- 391 -- -- Other 1,193 1,405 1,203 1,077 1,378 ---------- ---------- ---------- ---------- ---------- Total noninterest expense 12,367 12,489 13,289 12,462 12,649 ---------- ---------- ---------- ---------- ---------- Net earnings before income taxes 2,157 3,090 2,485 2,773 1,779 Income tax expense 454 842 827 998 615 ---------- ---------- ---------- ---------- ---------- NET EARNINGS $ 1,703 $ 2,248 $ 1,658 $ 1,775 $ 1,164 ========== ========== ========== ========== ========== Earnings Per Common Share: Basic $ 0.17 $ 0.24 $ 0.22 $ 0.23 $ 0.16 Diluted 0.16 0.22 0.20 0.22 0.15 Average common shares outstanding 9,808,483 9,347,162 7,558,597 7,554,893 7,501,526 Diluted average common shares outstanding 10,660,621 10,156,090 8,199,564 8,131,379 7,981,883 Years Ended December 31, ---------------------- 2007 2006 --------- --------- Interest income: Loans, including fees $ 67,999 $ 56,753 Mortgages held-for-sale 3,733 6,546 Securities 6,923 11,239 Federal funds sold and other 2,772 1,272 --------- --------- Total interest income 81,427 75,810 Interest expense: Deposits 38,659 30,520 Borrowings and repurchase agreements 7,029 13,378 Junior subordinated debentures 1,564 1,739 --------- --------- Total interest expense 47,252 45,637 --------- --------- Net interest income 34,175 30,173 Provision for loan losses 4,029 3,491 --------- --------- Net interest income after provision for loan losses 30,146 26,682 Noninterest income: Trust and investment management fees 17,546 17,315 Mortgage banking 5,506 10,661 Insurance commissions and fees 5,942 5,456 Real estate operations, including net gain on sales 366 334 Net loss on sale of available-for-sale securities (181) -- Other 1,787 1,317 --------- --------- Total noninterest income 30,966 35,083 Noninterest expense: Compensation 30,117 31,047 Occupancy 5,764 5,465 Equipment 2,076 2,050 Advertising and promotion 1,018 1,092 Outside data processing 3,479 3,253 Professional fees 2,046 1,809 Intangible amortization 838 955 Loss on early debt extinguishment 391 -- Other 4,878 4,667 --------- --------- Total noninterest expense 50,607 50,338 --------- --------- Net earnings before income taxes 10,505 11,427 Income tax expense 3,121 3,949 --------- --------- NET EARNINGS $ 7,384 $ 7,478 ========= ========= Earnings Per Common Share: Basic $ 0.86 $ 1.00 Diluted 0.79 0.94 Average common shares outstanding 8,575,595 7,501,131 Diluted average common shares outstanding 9,296,224 7,925,685 Encore Bancshares, Inc. and Subsidiaries AVERAGE CONSOLIDATED BALANCE SHEETS (Unaudited, dollars in thousands) Three Months Ended ------------------------------------------------------ Dec 31, Sept 30, June 30, March 31, Dec 31, 2007 2007 2007 2007 2006 ---------- ---------- ---------- ---------- ---------- Assets: Interest- earning assets: Loans $1,060,927 $ 973,641 $ 938,356 $ 916,523 $ 887,439 Mortgages held-for- sale 2,693 60,959 53,926 52,273 59,042 Securities 148,912 156,159 183,008 232,154 262,873 Federal funds sold and other 98,789 68,347 27,755 19,412 18,448 ---------- ---------- ---------- ---------- ---------- Total interest- earning assets 1,311,321 1,259,106 1,203,045 1,220,362 1,227,802 Less: Allowance for loan losses (10,754) (10,391) (9,843) (9,268) (10,110) Noninterest- earning assets 101,783 102,667 103,512 102,234 104,350 ---------- ---------- ---------- ---------- ---------- Total assets $1,402,350 $1,351,382 $1,296,714 $1,313,328 $1,322,042 ========== ========== ========== ========== ========== Liabilities, shareholders' equity and puttable common stock: Interest- bearing liabilities: Interest checking $ 169,823 $ 169,860 $ 167,956 $ 183,335 $ 175,640 Money market and savings 359,217 358,732 340,950 334,971 331,517 Time deposits 399,224 375,896 373,669 374,389 369,385 ---------- ---------- ---------- ---------- ---------- Total interest- bearing deposits 928,264 904,488 882,575 892,695 876,542 Borrowings and repurchase agreements 170,141 158,203 161,698 172,660 205,667 Junior subordinated debentures 20,619 20,619 20,930 20,619 20,619 ---------- ---------- ---------- ---------- ---------- Total interest- bearing liabilities 1,119,024 1,083,310 1,065,203 1,085,974 1,102,828 ---------- ---------- ---------- ---------- ---------- Noninterest- bearing liabilities: Noninterest- bearing deposits 113,849 108,168 109,753 105,950 100,773 Other liabilities 13,428 16,128 12,127 13,685 14,091 ---------- ---------- ---------- ---------- ---------- Total liabilities 1,246,301 1,207,606 1,187,083 1,205,609 1,217,692 Shareholders' equity and puttable common stock 156,049 143,776 109,631 107,719 104,350 ---------- ---------- ---------- ---------- ---------- Total liabilities, shareholders' equity and puttable common stock $1,402,350 $1,351,382 $1,296,714 $1,313,328 $1,322,042 ========== ========== ========== ========== ========== Encore Bancshares, Inc. and Subsidiaries SELECTED FINANCIAL DATA (Unaudited, dollars in thousands) Loan Dec 31, Sept 30, June 30, March 31, Dec 31, Portfolio: 2007 2007 2007 2007 2006 ---------- ---------- ---------- ---------- ---------- Commercial: Commercial $ 127,583 $ 111,072 $ 113,370 $ 115,896 $ 113,526 Commercial real estate 277,047 249,576 225,985 210,992 190,550 Real estate construction 100,975 132,557 130,168 134,781 121,848 ---------- ---------- ---------- ---------- ---------- Total commercial 505,605 493,205 469,523 461,669 425,924 Consumer: Residential real estate 466,929 411,260 355,279 334,156 336,077 Home equity lines 79,023 76,096 76,452 78,430 78,158 Consumer installment - indirect 25,262 29,210 33,622 39,204 44,360 Consumer other 20,449 20,362 17,962 19,334 23,849 ---------- ---------- ---------- ---------- ---------- Total consumer 591,663 536,928 483,315 471,124 482,444 ---------- ---------- ---------- ---------- ---------- Total loans receivable $1,097,268 $1,030,133 $ 952,838 $ 932,793 $ 908,368 ========== ========== ========== ========== ========== Nonperforming Assets: Nonaccrual loans $ 11,208 $ 8,734 $ 9,111 $ 8,446 $ 9,411 Accruing loans past due 90 days or more 2,183 20 2,178 100 96 Restructured loans -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total nonperforming loans 13,391 8,754 11,289 8,546 9,507 ---------- ---------- ---------- ---------- ---------- Investment in real estate 835 731 1,785 1,785 235 ---------- ---------- ---------- ---------- ---------- Total nonperforming assets $ 14,226 $ 9,485 $ 13,074 $ 10,331 $ 9,742 ========== ========== ========== ========== ========== Asset Quality Ratios: Nonperforming assets to total loans and investment in real estate 1.30% 0.92% 1.37% 1.11% 1.07% Net charge- offs to average loans 0.27% 0.19% 0.24% 0.07% 1.02% Allowance for loan losses to period-end loans 1.02% 1.04% 1.07% 1.05% 1.00% Allowance for loan losses to nonperforming loans 83.35% 122.36% 90.07% 114.56% 95.26% Deposits: Noninterest- bearing deposits $ 106,382 $ 115,742 $ 106,064 $ 112,585 $ 131,476 Interest checking 179,486 169,646 172,079 174,602 191,683 Money market and savings 345,066 362,289 368,682 329,414 332,605 Time deposits less than $100,000 193,900 175,071 166,482 174,281 178,216 ---------- ---------- ---------- ---------- ---------- Core deposits 824,834 822,748 813,307 790,882 833,980 ---------- ---------- ---------- ---------- ---------- Time deposits $100,000 and greater 201,932 194,619 188,075 195,894 187,864 Brokered deposits 14,608 14,817 18,890 10,522 8,967 ---------- ---------- ---------- ---------- ---------- Total deposits $1,041,374 $1,032,184 $1,020,272 $ 997,298 $1,030,811 ========== ========== ========== ========== ========== Assets Under Management $2,784,617 $2,792,894 $2,683,841 $2,609,893 $2,509,185 ========== ========== ========== ========== ========== Encore Bancshares, Inc. and Subsidiaries ALLOWANCE FOR LOAN LOSSES (Unaudited, dollars in thousands) Three Months Ended ------------------------------------------------ Dec 31, Sept 30, June 30, March 31, Dec 31, 2007 2007 2007 2007 2006 -------- -------- -------- -------- -------- Allowance for loan losses at beginning of quarter $ 10,711 $ 10,168 $ 9,790 $ 9,056 $ 10,123 Charge-offs: Commercial: Commercial (20) (42) -- -- (1,488) Commercial real estate -- -- -- -- -- Real estate construction (79) -- -- -- -- -------- -------- -------- -------- -------- Total commercial (99) (42) -- -- (1,488) -------- -------- -------- -------- -------- Consumer: Residential real estate (110) (340) (416) (84) (66) Home equity lines (299) (25) -- (10) (61) Consumer installment - indirect (360) (307) (215) (80) (439) Consumer other (45) (13) (24) (144) (340) -------- -------- -------- -------- -------- Total consumer (814) (685) (655) (318) (906) -------- -------- -------- -------- -------- Total charge-offs (913) (727) (655) (318) (2,394) -------- -------- -------- -------- -------- Recoveries: Commercial: Commercial 40 6 -- -- -- Commercial real estate -- -- -- -- -- Real estate construction -- -- -- -- -- -------- -------- -------- -------- -------- Total commercial 40 6 -- -- -- -------- -------- -------- -------- -------- Consumer: Residential real estate 22 157 7 26 3 Home equity lines -- -- -- 43 -- Consumer installment - indirect 109 76 45 64 100 Consumer other 16 23 36 19 20 -------- -------- -------- -------- -------- Total consumer 147 256 88 152 123 -------- -------- -------- -------- -------- Total recoveries 187 262 88 152 123 -------- -------- -------- -------- -------- Net charge-offs (726) (465) (567) (166) (2,271) -------- -------- -------- -------- -------- Provision for loan losses 1,176 1,008 945 900 1,204 -------- -------- -------- -------- -------- Allowance for loan losses at end of quarter $ 11,161 $ 10,711 $ 10,168 $ 9,790 $ 9,056 ======== ======== ======== ======== ======== Encore Bancshares, Inc. and Subsidiaries SEGMENT OPERATIONS (Unaudited, dollars in thousands) As of and for the Three Months Ended ------------------------------------------------------ Dec 31, Sept 30, June 30, March 31, Dec 31, 2007 2007 2007 2007 2006 ---------- ---------- ---------- ---------- ---------- Banking ------- Net interest income $ 9,674 $ 9,315 $ 8,258 $ 8,035 $ 7,732 Provision for loan losses 1,176 1,008 945 900 1,204 Noninterest income 509 1,559 2,807 2,481 2,978 Noninterest expense 8,378 8,338 8,853 8,453 8,522 ---------- ---------- ---------- ---------- ---------- Earnings before income taxes 629 1,528 1,267 1,163 984 Income tax expense 103 261 370 396 373 ---------- ---------- ---------- ---------- ---------- Net earnings $ 526 $ 1,267 $ 897 $ 767 $ 611 ========== ========== ========== ========== ========== Total assets at quarter end $1,411,934 $1,392,156 $1,292,112 $1,301,562 $1,342,446 ========== ========== ========== ========== ========== Wealth Management ----------- Net interest income $ 89 $ 82 $ 77 $ 73 $ 73 Noninterest income 4,533 4,501 4,268 4,244 4,160 Noninterest expense 3,042 3,137 2,988 3,027 3,190 ---------- ---------- ---------- ---------- ---------- Earnings before income taxes 1,580 1,446 1,357 1,290 1,043 Income tax expense 460 531 483 467 344 ---------- ---------- ---------- ---------- ---------- Net earnings $ 1,120 $ 915 $ 874 $ 823 $ 699 ========== ========== ========== ========== ========== Total assets at quarter end $ 46,270 $ 45,425 $ 44,395 $ 43,935 $ 42,684 ========== ========== ========== ========== ========== Insurance --------- Net interest income $ 36 $ 37 $ 36 $ 27 $ 26 Noninterest income 1,222 1,460 1,637 1,716 1,117 Noninterest expense 947 1,014 1,057 982 937 ---------- ---------- ---------- ---------- ---------- Earnings before income taxes 311 483 616 761 206 Income tax expense 73 167 232 272 195 ---------- ---------- ---------- ---------- ---------- Net earnings $ 238 $ 316 $ 384 $ 489 $ 11 ========== ========== ========== ========== ========== Total assets at quarter end $ 9,242 $ 9,219 $ 9,101 $ 9,278 $ 8,231 ========== ========== ========== ========== ========== Other ----- Net interest expense $ (368)$ (368)$ (373)$ (455)$ (443) Noninterest income 5 1 9 14 (11) Noninterest expense -- -- 391 -- -- ---------- ---------- ---------- ---------- ---------- Loss before income taxes (363) (367) (755) (441) (454) Income tax benefit (182) (117) (258) (137) (297) ---------- ---------- ---------- ---------- ---------- Net loss $ (181)$ (250)$ (497)$ (304)$ (157) ========== ========== ========== ========== ========== Total assets at quarter end $ (66,249)$ (63,668)$ (58,407)$ (59,788)$ (56,518) ========== ========== ========== ========== ========== Consolidated ------------ Net interest income $ 9,431 $ 9,066 $ 7,998 $ 7,680 $ 7,388 Provision for loan losses 1,176 1,008 945 900 1,204 Noninterest income 6,269 7,521 8,721 8,455 8,244 Noninterest expense 12,367 12,489 13,289 12,462 12,649 ---------- ---------- ---------- ---------- ---------- Earnings before income taxes 2,157 3,090 2,485 2,773 1,779 Income tax expense 454 842 827 998 615 ---------- ---------- ---------- ---------- ---------- Net earnings $ 1,703 $ 2,248 $ 1,658 $ 1,775 $ 1,164 ========== ========== ========== ========== ========== Total assets at quarter end $1,401,197 $1,383,132 $1,287,201 $1,294,987 $1,336,843 ========== ========== ========== ========== ========== Encore Bancshares, Inc. and Subsidiaries YIELD ANALYSIS (Unaudited, dollars in thousands) For the Three Months Ended December 31, ------------------------------------------------------ 2007 2006 -------------------------- -------------------------- Average Interest Average Average Interest Average Outstanding Earned/ Yield/ Outstanding Earned/ Yield/ Balance Paid Rate Balance Paid Rate ---------- ---------- ---- ---------- ---------- ---- Assets: Interest- earning assets: Loans $1,060,927 $ 18,536 6.93% $ 887,439 $ 15,283 6.83% Mortgages held-for- sale 2,693 64 9.43% 59,042 1,442 9.69% Securities 148,912 1,442 3.84% 262,873 2,583 3.90% Federal funds sold and other 98,789 1,198 4.81% 18,448 282 6.06% ---------- ---------- ---------- ---------- Total interest- earning assets 1,311,321 21,240 6.43% 1,227,802 19,590 6.33% Less: Allowance for loan losses (10,754) (10,110) Noninterest- earning assets 101,783 104,350 ---------- ---------- Total assets $1,402,350 $1,322,042 ========== ========== Liabilities, shareholders' equity and puttable common stock: Interest- bearing liabilities: Interest checking $ 169,823 $ 1,216 2.84% $ 175,640 $ 1,251 2.83% Money market and savings 359,217 3,553 3.92% 331,517 3,719 4.45% Time deposits 399,224 4,962 4.93% 369,385 4,471 4.80% ---------- ---------- ---------- ---------- Total interest- bearing deposits 928,264 9,731 4.16% 876,542 9,441 4.27% Borrowings and repurchase agreements 170,141 1,710 3.99% 205,667 2,318 4.47% Junior subordinated debentures 20,619 368 7.08% 20,619 443 8.52% ---------- ---------- ---------- ---------- Total interest- bearing liabilities 1,119,024 11,809 4.19% 1,102,828 12,202 4.39% ---------- ---------- ---------- ---------- Noninterest- bearing liabilities: Noninterest- bearing deposits 113,849 100,773 Other liabilities 13,428 14,091 ---------- ---------- Total liabilities 1,246,301 1,217,692 Shareholders' equity and puttable common stock 156,049 104,350 ---------- ---------- Total liabilities, shareholders' equity and puttable common stock $1,402,350 $1,322,042 ========== ========== Net interest income $ 9,431 $ 7,388 ========== ========== Net interest spread 2.24% 1.94% Net interest margin 2.85% 2.39% Encore Bancshares, Inc. and Subsidiaries YIELD ANALYSIS (Unaudited, dollars in thousands) For the Years Ended December 31, --------------------------------------------------------- 2007 2006 ----------------------------- -------------------------- Average Interest Average Average Interest Average Outstanding Earned/ Yield/ Outstanding Earned/ Yield/ Balance Paid Rate Balance Paid Rate ----------- ------- ------- -------- ------- -------- Assets: Interest- earning assets: Loans $ 972,760 $67,999 6.99% $ 840,330 $56,753 6.75% Mortgages held-for- sale 42,379 3,733 8.81% 72,977 6,546 8.97% Securities 179,767 6,923 3.85% 288,082 11,239 3.90% Federal funds sold and other 53,880 2,772 5.14% 24,127 1,272 5.27% ---------- ------- ---------- ------- Total interest- earning assets 1,248,786 81,427 6.52% 1,225,516 75,810 6.19% Less: Allowance for loan losses (10,069) (9,442) Noninterest- earning assets 102,388 100,498 ---------- ---------- Total assets $1,341,105 $1,316,572 ========== ========== Liabilities, shareholders' equity and puttable common stock: Interest- bearing liabilities: Interest checking $ 172,701 $ 5,131 2.97% $ 168,881 $ 4,220 2.50% Money market and savings 348,567 14,756 4.23% 264,219 10,457 3.96% Time deposits 380,847 18,772 4.93% 361,693 15,843 4.38% ---------- ------- ---------- ------- Total interest- bearing deposits 902,115 38,659 4.29% 794,793 30,520 3.84% Borrowings and repurchase agreements 165,647 7,029 4.24% 298,907 13,378 4.48% Junior subordinated debentures 20,712 1,564 7.55% 20,619 1,739 8.43% ---------- ------- ---------- ------- Total interest- bearing liabil- ities 1,088,474 47,252 4.34% 1,114,319 45,637 4.10% ---------- ------- ---------- ------- Noninterest- bearing liabilities: Noninterest- bearing deposits 109,448 87,788 Other liabilities 13,867 13,638 ---------- ---------- Total liabil- ities 1,211,789 1,215,745 Shareholders' equity and puttable common stock 129,316 100,827 ---------- ---------- Total liabilities, shareholders' equity and puttable common stock $1,341,105 $1,316,572 ========== ========== Net interest income $34,175 $30,173 ======= ======= Net interest spread 2.18% 2.09% Net interest margin 2.74% 2.46%