HOUSTON, July 25, 2008 (PRIME NEWSWIRE) -- Encore Bancshares, Inc. (Nasdaq:EBTX) today announced its financial results for the second quarter of 2008.
* Net interest margin improved 46 basis points to 3.13% compared with the second quarter of 2007 and 19 basis points compared with the first quarter of 2008. * Net interest income up 35.6% compared with the second quarter of 2007. * Noninterest expense fell 5.2% compared with the second quarter of 2007. * Nonperforming assets declined from March 31, 2008, reflecting the resolution of a $6.3 million law firm loan. * Tier 1 Capital was $146.3 million or 12.82% at June 30, 2008.
"I am very pleased with the growth in our net interest margin and the growth of our banking and wealth management businesses," said James S. D'Agostino, Jr., Chairman and Chief Executive Officer. "We will continue to focus on achieving our goal of 1% return on assets for 2009, while managing the challenges of the current credit cycle. With our substantial capital base, management believes we are well positioned to continue to build a strong and profitable company."
Earnings
For the three months ended June 30, 2008, net earnings were $481,000, or $0.04 per diluted share, compared with $1.7 million, or $0.20 per diluted share for the same period of 2007. During the quarter, a $6.3 million loan to a Houston law firm, previously discussed in our filings since July 17, 2007, was resolved resulting in a charge-off of $2.1 million. Subsequently, we considered it prudent to build the allowance for loan losses due to the challenges of the current credit environment. Excluding the $2.1 million credit reserve build, net earnings were $1.9 million, or $0.18 per diluted share. Further, net earnings reflected a $2.8 million improvement in net interest income and lower expenses over the same period of 2007, partially offset by a $1.9 million decrease in mortgage banking income as a result of the strategic decision to discontinue second mortgage sales beginning in the third quarter of 2007.
For the six months ended June 30, 2008, net earnings were $1.7 million, or $0.15 per diluted share, compared with $3.4 million, or $0.42 per diluted share for the same period of 2007. Net interest income increased by $5.0 million, but this increase was offset by a $3.4 million increase in the provision for loan losses and a $4.3 million decrease in noninterest income, primarily related to a decrease in mortgage banking earnings. The change in net earnings was different than the earnings per share primarily because of the additional shares issued in our initial public offering in the third quarter of 2007.
Net Interest Income
Net interest income for the second quarter of 2008 was a record $10.8 million, an increase of $2.8 million, or 35.6%, compared with the second quarter of 2007. The net interest margin expanded 46 basis points to 3.13%, reflecting an improved asset and liability mix, as we continued to replace low yielding assets with higher yielding loans. In addition, we benefited from a steepening yield curve which allowed us to decrease the pricing of our deposits by an average rate that was more than the decline in average yield on our earning assets. For the six months ended June 30, 2008, net interest income was $20.7 million, an increase of $5.0 million, or 32.2%, compared with the same period of 2007. The net interest margin improved 42 basis points to 3.03%, due primarily to improvements in the asset and liability mix. On a linked quarter basis (compared with the immediately preceding quarter), net interest income rose $966,000, or 9.8%, and the net interest margin improved 19 basis points. The margin increase was due to a combination of a continued improvement in our asset and liability mix and the steepening of the yield curve.
Noninterest Income
Noninterest income was $6.2 million for the second quarter of 2008, a decrease of $2.6 million, or 29.4%, compared with the same period of 2007. Noninterest income for the six months ended June 30, 2008 was $12.8 million, a decrease of $4.3 million, or 25.3%, compared with the same period of 2007. The decrease for both periods was due primarily to lower mortgage banking income, resulting from our decision to discontinue second mortgage sales in the third quarter of 2007, and $405,000 in write downs of other real estate owned, which is recorded in real estate operations.
Noninterest Expense
Noninterest expense was $12.6 million for the second quarter of 2008, a decrease of $692,000, or 5.2% compared with the same period of 2007. The decrease in expenses was due in part to lower compensation, which was a result of last year's expense reduction initiative. The second quarter of 2007 also included a nonrecurring charge for early debt extinguishment which resulted from refinancing trust preferred securities. Excluding the 2007 nonrecurring charge, second quarter 2008 noninterest expense was lower by 2.3%. Noninterest expense was $25.9 million for the six months ended June 30, 2008, up $123,000, or 0.5% compared with the same period of 2007.
Segment Earnings
On a segment basis, our wealth management group showed net earnings of $1.3 million for the second quarter of 2008, an increase of $389,000, or 44.5%, compared with the prior year quarter. The growth in net earnings was due primarily to a 2.0% growth in assets under management and lower expenses. Our banking segment lost $832,000 for the second quarter of 2008, compared with net earnings of $897,000 for the same period of 2007. Net interest income improved $2.9 million, but this increase was more than offset by lower mortgage banking income and the higher loan loss provision. Our insurance group had net earnings of $277,000 for the second quarter of 2008, compared with $384,000 for the same period in 2007. The decrease in net earnings was due primarily to a soft property and casualty market, resulting in lower commission fee income.
Loans
Period end loans were $1.2 billion at June 30, 2008, up $216.3 million, or 22.7%, compared with June 30, 2007, and up $12.7 million, or 1.1%, on a linked quarter basis. Average loans were $1.2 billion, for the second quarter of 2008, an increase of $232.6 million, or 24.8%, compared with the same period of 2007.
Deposits
Period end deposits were $1.1 billion at June 30, 2008, up $34.5 million, or 3.4%, compared with June 30, 2007, and down $56.4 million, or 5.1% on a linked quarter basis. Deposits decreased during the second quarter due primarily to the strategic decision to focus on profitability and not match some competitors' aggressive deposit pricing. Noninterest-bearing deposits were $123.6 million at June 30, 2008, an increase of $17.5 million, or 16.5%, compared with June 30, 2007. Average deposits were $1.1 billion for the second quarter of 2008, an increase of $99.3 million, or 10.0%, compared with the same period of 2007.
Credit Quality and Capital Ratios
The provision for loan losses was $3.8 million in the second quarter of 2008, an increase of $2.8 million compared with the same period of 2007. The increase in the provision reflected growth in the loan portfolio, the overall credit environment, and higher net charge-offs during the quarter. Net charge-offs for the second quarter of 2008 were $3.3 million, or 1.14% of average total loans on an annualized basis, compared with $567,000, or 0.24% of average total loans for the second quarter of 2007. Net charge-offs included a $2.1 million partial charge-off of a loan to a Houston law firm. Excluding this charge-off, net charge-offs were 0.41% of average total loans on an annualized basis. The allowance for loan losses was $12.1 million, or 1.03% of total loans at June 30, 2008, compared with $10.2 million, or 1.07% of total loans at June 30, 2007.
At June 30, 2008, nonperforming assets, including loans past due 90 days or more and still accruing, were $14.4 million, or 1.23% of total loans and investment in real estate, compared with $16.5 million, or 1.42% of total loans and investment in real estate at March 31, 2008, and $13.1 million, or 1.37% of total loans and investment in real estate at June 30, 2007. At June 30, 2008, non-accrual loans were $12.1 million, compared with $14.1 million at March 31, 2008. The decrease in non-accrual loans was due primarily to the resolution of a $6.3 million loan to a Houston law firm that was previously mentioned. Loans 90 days past due or more and still accruing were $240,000 at June 30, 2008 compared with $283,000 at March 31, 2008. Investment in real estate was $2.1 million at June 30, 2008, the same as March 31, 2008.
As of June 30, 2008, our Tier 1 risked based, total risked based, and leverage capital ratios were 12.82%, 13.87% and 10.07%, respectively, and Encore Bank was considered "well capitalized" pursuant to regulatory capital definitions.
Conference Call
A conference call will be held on Friday, July 25, 2008 at 10:00 a.m., Central time, to discuss second quarter 2008 results. A question and answer session will follow the prepared remarks. Individuals may access the call by dialing 1-877-440-5786, or access the live webcast by visiting www.encorebank.com/investorrelations.shtml
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 subsidiaries. Encore Bank operates 11 private client offices in the Greater Houston area and six in southwest Florida. Headquartered in Houston and with $1.5 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 subsidiaries 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".
The Encore Bancshares, Inc. logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=4257
This press release contains certain financial information determined by methods other than in accordance with GAAP. Encore's management believes these non-GAAP financial measures provide information useful to investors in understanding our financial results and facilitates comparisons with the performance of peers within the financial services industry. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP.
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; 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 from time to time in our 2007 Annual Report on Form 10-K and other reports and documents filed with the Securities and Exchange Commission.
Encore Bancshares, Inc. and Subsidiaries
FINANCIAL HIGHLIGHTS
(Unaudited, amounts in thousands, except per share data)
As of and for the As of and for the
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2008 2007 2008 2007
-------- -------- -------- --------
Earnings Statement Data:
Interest income $ 20,065 $ 19,675 $ 40,597 $ 39,155
Interest expense 9,220 11,677 19,873 23,477
-------- -------- -------- --------
Net interest income 10,845 7,998 20,724 15,678
Provision for loan losses 3,777 945 5,278 1,845
-------- -------- -------- --------
Net interest income after
provision for loan losses 7,068 7,053 15,446 13,833
Noninterest income 6,160 8,721 12,837 17,176
Noninterest expense 12,597 13,289 25,874 25,751
-------- -------- -------- --------
Net earnings before income
taxes 631 2,485 2,409 5,258
Income tax expense 150 827 758 1,825
-------- -------- -------- --------
Net earnings $ 481 $ 1,658 $ 1,651 $ 3,433
======== ======== ======== ========
Common Share Data:
Basic earnings per share $ 0.05 $ 0.22 $ 0.17 $ 0.45
Diluted earnings per share 0.04 0.20 0.15 0.42
Book value per share 15.65 14.03 15.65 14.03
Tangible book value per share 12.30 9.60 12.30 9.60
Average common shares
outstanding 9,886 7,559 9,866 7,557
Diluted average common shares
outstanding 10,780 8,200 10,747 8,166
Shares outstanding at end of
period 10,234 7,921 10,234 7,921
Selected Performance Ratios:
Return on average assets 0.13% 0.51% 0.23% 0.53%
Return on average equity 1.21% 6.07% 2.08% 6.39%
Return on average tangible
equity 1.54% 8.94% 2.66% 9.48%
Net interest margin 3.13% 2.67% 3.03% 2.61%
Efficiency ratio 72.97% 78.07% 75.98% 76.68%
Noninterest income to total
revenue 36.22% 52.16% 38.25% 52.28%
Encore Bancshares, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited, dollars in thousands, except per share data)
June 30, March 31, Dec 31, Sept 30, June 30,
2008 2008 2007 2007 2007
---------- ---------- ---------- ---------- ----------
ASSETS
Cash and
due from
banks $ 21,954 $ 16,608 $ 18,817 $ 19,044 $ 23,972
Interest-
bearing
deposits
in banks 28,297 40,328 18,581 1,804 2,903
Federal
funds
sold and
other 10,716 58,769 41,017 100,630 9,862
---------- ---------- ---------- ---------- ----------
Cash and
cash
equiva-
lents 60,967 115,705 78,415 121,478 36,737
Securities
available-
for-sale,
at
estimated
fair value 41,508 12,108 12,207 12,205 15,298
Securities
held-to-
maturity,
at
amortized
cost 107,424 123,133 134,056 140,507 148,983
Mortgages
held-for-
sale -- 1,928 1,396 2,244 54,004
Loans
receivable 1,169,151 1,156,501 1,097,268 1,030,133 952,838
Allowance
for loan
losses (12,054) (11,603) (11,161) (10,711) (10,168)
---------- ---------- ---------- ---------- ----------
Net loans
receiva-
ble 1,157,097 1,144,898 1,086,107 1,019,422 942,670
Federal
Home Loan
Bank of
Dallas
stock, at
cost 7,943 6,987 5,880 5,805 6,424
Investment
in real
estate 2,063 2,078 835 731 1,785
Premises
and
equipment,
net 17,050 16,789 16,831 15,814 15,790
Goodwill 27,975 27,969 27,942 27,922 27,905
Other
intangible
assets,
net 6,406 6,592 6,780 6,991 7,200
Cash
surrender
value of
life
insurance
policies 14,398 14,256 14,091 13,951 13,818
Accrued
interest
receivable
and other
assets 17,882 16,183 16,657 16,062 16,587
---------- ---------- ---------- ---------- ----------
$1,460,713 $1,488,626 $1,401,197 $1,383,132 $1,287,201
========== ========== ========== ========== ==========
LIABILITIES
AND
SHAREHOLDERS'
EQUITY
Deposits:
Noninterest-
bearing $ 123,594 $ 129,983 $ 106,382 $ 115,742 $ 106,064
Interest-
bearing 931,149 981,164 934,992 916,442 914,208
---------- ---------- ---------- ---------- ----------
Total
deposits 1,054,743 1,111,147 1,041,374 1,032,184 1,020,272
Borrowings
and
repurchase
agreements 212,257 188,845 173,395 166,359 125,753
Junior
subordi-
nated
debentures 20,619 20,619 20,619 20,619 20,619
Accrued
interest
payable
and other
liabili-
ties 12,882 8,604 8,330 8,538 9,447
---------- ---------- ---------- ---------- ----------
Total
liabili-
ties 1,300,501 1,329,215 1,243,718 1,227,700 1,176,091
Commitments
and
contingen-
cies -- -- -- -- --
Share-
holders'
equity:
Preferred
stock -- -- -- -- --
Common
stock 10,240 10,158 10,128 10,124 7,925
Additio-
nal
paid-in
capital 109,169 108,813 108,173 107,954 68,188
Retained
earnings 41,414 40,933 39,763 38,060 35,812
Common
stock in
treasury,
at cost (98) (69) (69) (69) (69)
Accumu-
lated
other
compre-
hensive
loss (513) (424) (516) (637) (746)
---------- ---------- ---------- ---------- ----------
Total
share-
holders'
equity 160,212 159,411 157,479 155,432 111,110
---------- ---------- ---------- ---------- ----------
$1,460,713 $1,488,626 $1,401,197 $1,383,132 $1,287,201
========== ========== ========== ========== ==========
Ratios and
Per Share
Data:
Leverage
ratio 10.07% 10.31% 10.47% 10.71% 7.66%
Tier 1
risk-based
capital
ratio 12.82% 12.91% 13.59% 14.20% 10.31%
Total
risk-based
capital
ratio 13.87% 13.94% 14.65% 15.28% 11.40%
Book value
per share $ 15.65 $ 15.70 $ 15.56 $ 15.36 $ 14.03
Tangible
book value
per share 12.30 12.30 12.13 11.91 9.60
Tangible
common
equity to
tangible
assets 8.82% 8.59% 8.98% 8.94% 6.07%
Encore Bancshares, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited, amounts in thousands, except per share data)
Three Months Ended
------------------------------------------------
June 30, March 31, Dec 31, Sept 30, June 30,
2008 2008 2007 2007 2007
-------- -------- -------- -------- --------
Interest income:
Loans, including
fees $ 18,238 $ 18,378 $ 18,536 $ 17,309 $ 16,346
Mortgages held-for-
sale 25 32 64 1,346 1,202
Securities 1,250 1,319 1,442 1,463 1,745
Federal funds sold
and other 552 803 1,198 914 382
-------- -------- -------- -------- --------
Total interest
income 20,065 20,532 21,240 21,032 19,675
Interest expense:
Deposits 7,123 8,542 9,731 9,947 9,525
Borrowings and
repurchase
agreements 1,767 1,755 1,710 1,651 1,779
Junior subordinated
debentures 330 356 368 368 373
-------- -------- -------- -------- --------
Total interest
expense 9,220 10,653 11,809 11,966 11,677
-------- -------- -------- -------- --------
Net interest income 10,845 9,879 9,431 9,066 7,998
Provision for loan
losses 3,777 1,501 1,176 1,008 945
-------- -------- -------- -------- --------
Net interest income
after provision
for loan losses 7,068 8,378 8,255 8,058 7,053
Noninterest income:
Trust and investment
management fees 4,660 4,407 4,533 4,501 4,268
Mortgage banking 135 54 95 1,167 2,052
Insurance
commissions and
fees 1,385 1,727 1,217 1,450 1,562
Real estate
operations (452) 55 63 178 107
Net loss on sale of
available-for-sale
securities -- -- -- -- (32)
Other 432 434 361 225 764
-------- -------- -------- -------- --------
Total noninterest
income 6,160 6,677 6,269 7,521 8,721
Noninterest expense:
Compensation 7,467 8,078 7,081 7,318 7,855
Occupancy 1,485 1,438 1,428 1,438 1,499
Equipment 487 531 553 506 497
Advertising and
promotion 219 204 223 328 271
Outside data
processing 717 694 883 884 904
Professional fees 739 1,156 797 401 458
Intangible
amortization 188 187 209 209 211
Loss on early debt
extinguishment -- -- -- -- 391
Other 1,295 989 1,193 1,405 1,203
-------- -------- -------- -------- --------
Total noninterest
expense 12,597 13,277 12,367 12,489 13,289
-------- -------- -------- -------- --------
Net earnings before
income taxes 631 1,778 2,157 3,090 2,485
Income tax expense 150 608 454 842 827
-------- -------- -------- -------- --------
NET EARNINGS $ 481 $ 1,170 $ 1,703 $ 2,248 $ 1,658
======== ======== ======== ======== ========
Earnings Per Common
Share:
Basic $ 0.05 $ 0.12 $ 0.17 $ 0.24 $ 0.22
Diluted 0.04 0.11 0.16 0.22 0.20
Average common
shares outstanding 9,886 9,846 9,808 9,347 7,559
Diluted average
common shares
outstanding 10,780 10,714 10,661 10,156 8,200
Six Months
Ended June 30,
------------------
2008 2007
-------- --------
Interest income:
Loans, including fees $ 36,616 $ 32,154
Mortgages held-for-sale 57 2,323
Securities 2,569 4,018
Federal funds sold and other 1,355 660
-------- --------
Total interest income 40,597 39,155
Interest expense:
Deposits 15,665 18,981
Borrowings and repurchase agreements 3,522 3,668
Junior subordinated debentures 686 828
-------- --------
Total interest expense 19,873 23,477
-------- --------
Net interest income 20,724 15,678
Provision for loan losses 5,278 1,845
-------- --------
Net interest income after provision for loan
losses 15,446 13,833
Noninterest income:
Trust and investment management fees 9,067 8,512
Mortgage banking 189 4,244
Insurance commissions and fees 3,112 3,275
Real estate operations (397) 125
Net loss on sale of available-for-sale securities -- (181)
Other 866 1,201
-------- --------
Total noninterest income 12,837 17,176
Noninterest expense:
Compensation 15,545 15,718
Occupancy 2,923 2,898
Equipment 1,018 1,017
Advertising and promotion 423 467
Outside data processing 1,411 1,712
Professional fees 1,895 848
Intangible amortization 375 420
Loss on early debt extinguishment -- 391
Other 2,284 2,280
-------- --------
Total noninterest expense 25,874 25,751
-------- --------
Net earnings before income taxes 2,409 5,258
Income tax expense 758 1,825
-------- --------
NET EARNINGS $ 1,651 $ 3,433
======== ========
Earnings Per Common Share:
Basic $ 0.17 $ 0.45
Diluted 0.15 0.42
Average common shares outstanding 9,866 7,557
Diluted average common shares outstanding 10,747 8,166
Encore Bancshares, Inc. and Subsidiaries
AVERAGE CONSOLIDATED BALANCE SHEETS
(Unaudited, dollars in thousands)
Three Months Ended
------------------------------------------------------
June 30, March 31, Dec 31, Sept 30, June 30,
2008 2008 2007 2007 2007
---------- ---------- ---------- ---------- ----------
Assets:
Interest-
earning
assets:
Loans $1,170,959 $1,119,439 $1,060,927 $ 973,641 $ 938,356
Mortgages
held-for-sale 1,151 1,465 2,693 60,959 53,926
Securities 139,510 142,098 148,912 156,159 183,008
Federal funds
sold and
other 82,841 89,419 98,789 68,347 27,755
---------- ---------- ---------- ---------- ----------
Total interest-
earning assets 1,394,461 1,352,421 1,311,321 1,259,106 1,203,045
Less: Allowance
for loan
losses (11,526) (11,178) (10,754) (10,391) (9,843)
Noninterest-
earning assets 103,918 102,266 101,783 102,667 103,512
---------- ---------- ---------- ---------- ----------
Total assets $1,486,853 $1,443,509 $1,402,350 $1,351,382 $1,296,714
========== ========== ========== ========== ==========
Liabilities and
shareholders'
equity:
Interest-
bearing
liabilities:
Interest
checking $ 194,973 $ 182,483 $ 169,823 $ 169,860 $ 167,956
Money market
and savings 307,047 333,241 359,217 358,732 340,950
Time deposits 466,199 434,597 399,224 375,896 373,669
---------- ---------- ---------- ---------- ----------
Total
interest-
bearing
deposits 968,219 950,321 928,264 904,488 882,575
Borrowings and
repurchase
agreements 202,229 193,855 170,141 158,203 161,698
Junior
subordinated
debentures 20,619 20,619 20,619 20,619 20,930
---------- ---------- ---------- ---------- ----------
Total
interest-
bearing
liabilities 1,191,067 1,164,795 1,119,024 1,083,310 1,065,203
---------- ---------- ---------- ---------- ----------
Noninterest-
bearing
liabilities:
Noninterest-
bearing
deposits 123,453 106,905 113,849 108,168 109,753
Other
liabilities 12,015 13,313 13,428 16,128 12,127
---------- ---------- ---------- ---------- ----------
Total
liabilities 1,326,535 1,285,013 1,246,301 1,207,606 1,187,083
Shareholders'
equity 160,318 158,496 156,049 143,776 109,631
---------- ---------- ---------- ---------- ----------
Total
liabilities
and
shareholders'
equity $1,486,853 $1,443,509 $1,402,350 $1,351,382 $1,296,714
========== ========== ========== ========== ==========
Encore Bancshares, Inc. and Subsidiaries
SELECTED FINANCIAL DATA
(Unaudited, dollars in thousands)
June 30, March 31, Dec 31, Sept 30, June 30,
Loan Portfolio: 2008 2008 2007 2007 2007
---------- ---------- ---------- ---------- ----------
Commercial:
Commercial $ 127,639 $ 142,259 $ 127,583 $ 111,072 $ 113,370
Commercial real
estate 298,562 291,543 277,047 249,576 225,985
Real estate
construction 91,371 97,807 100,975 132,557 130,168
---------- ---------- ---------- ---------- ----------
Total
commercial 517,572 531,609 505,605 493,205 469,523
Consumer:
Residential
real estate
first lien 256,201 264,445 271,346 264,541 265,901
Residential
real estate
second lien 269,409 234,623 195,583 146,719 89,378
Home equity
lines 79,913 78,860 79,023 76,096 76,452
Consumer
installment -
indirect 18,806 21,917 25,262 29,210 33,622
Consumer other 27,250 25,047 20,449 20,362 17,962
---------- ---------- ---------- ---------- ----------
Total consumer 651,579 624,892 591,663 536,928 483,315
---------- ---------- ---------- ---------- ----------
Total loans
receivable $1,169,151 $1,156,501 $1,097,268 $1,030,133 $ 952,838
========== ========== ========== ========== ==========
Nonperforming
Assets:
Nonaccrual
loans $ 12,118 $ 14,131 $ 11,208 $ 8,734 $ 9,111
Accruing loans
past due 90
days or more 240 283 2,183 20 2,178
Restructured
loans -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total
nonperforming
loans 12,358 14,414 13,391 8,754 11,289
---------- ---------- ---------- ---------- ----------
Investment in
real estate 2,063 2,078 835 731 1,785
---------- ---------- ---------- ---------- ----------
Total
nonperforming
assets $ 14,421 $ 16,492 $ 14,226 $ 9,485 $ 13,074
========== ========== ========== ========== ==========
Asset Quality
Ratios:
Nonperforming
assets to
total loans
and investment
in real estate 1.23% 1.42% 1.30% 0.92% 1.37%
Net charge-offs
to average
loans 1.14% 0.38% 0.27% 0.19% 0.24%
Allowance for
loan losses to
period-end
loans 1.03% 1.00% 1.02% 1.04% 1.07%
Allowance for
loan losses to
nonperforming
loans 97.54% 80.50% 83.35% 122.36% 90.07%
Deposits:
Noninterest-
bearing
deposits $ 123,594 $ 129,983 $ 106,382 $ 115,742 $ 106,064
Interest
checking 186,902 190,633 179,486 169,646 172,079
Money market
and savings 292,631 338,386 345,066 362,289 368,682
Time deposits
less than
$100,000 198,603 201,735 193,900 175,071 166,482
---------- ---------- ---------- ---------- ----------
Core deposits 801,730 860,737 824,834 822,748 813,307
---------- ---------- ---------- ---------- ----------
Time deposits
$100,000 and
greater 239,556 233,462 201,932 194,619 188,075
Brokered
deposits 13,457 16,948 14,608 14,817 18,890
---------- ---------- ---------- ---------- ----------
Total
deposits $1,054,743 $1,111,147 $1,041,374 $1,032,184 $1,020,272
========== ========== ========== ========== ==========
Assets Under
Management $2,736,790 $2,737,603 $2,784,617 $2,792,894 $2,683,841
========== ========== ========== ========== ==========
Encore Bancshares, Inc. and Subsidiaries
ALLOWANCE FOR LOAN LOSSES
(Unaudited, dollars in thousands)
Three Months Ended
------------------------------------------------
June 30, March 31, Dec 31, Sept 30, June 30,
2008 2008 2007 2007 2007
-------- -------- -------- -------- --------
Allowance for loan
losses at beginning
of quarter $ 11,603 $ 11,161 $ 10,711 $ 10,168 $ 9,790
Charge-offs:
Commercial:
Commercial (2,119) (231) (20) (42) --
Commercial real
estate (289) (80) -- -- --
Real estate
construction (57) (9) (79) -- --
-------- -------- -------- -------- --------
Total commercial (2,465) (320) (99) (42) --
-------- -------- -------- -------- --------
Consumer:
Residential real
estate first lien (193) (43) (66) (124) --
Residential real
estate second lien (151) (377) (44) (216) (416)
Home equity lines (463) (42) (299) (25) --
Consumer installment
- indirect (200) (297) (360) (307) (215)
Consumer other (5) (29) (45) (13) (24)
-------- -------- -------- -------- --------
Total consumer (1,012) (788) (814) (685) (655)
-------- -------- -------- -------- --------
Total charge-offs (3,477) (1,108) (913) (727) (655)
-------- -------- -------- -------- --------
Recoveries:
Commercial:
Commercial 9 11 40 6 --
Commercial real
estate 6 -- -- -- --
Real estate
construction -- -- -- -- --
-------- -------- -------- -------- --------
Total commercial 15 11 40 6 --
-------- -------- -------- -------- --------
Consumer:
Residential real
estate first lien 19 1 22 12 --
Residential real
estate second lien 3 2 -- 145 7
Home equity lines -- 2 -- -- --
Consumer installment
- indirect 37 6 109 76 45
Consumer other 77 27 16 23 36
-------- -------- -------- -------- --------
Total consumer 136 38 147 256 88
-------- -------- -------- -------- --------
Total recoveries 151 49 187 262 88
-------- -------- -------- -------- --------
Net charge-offs (3,326) (1,059) (726) (465) (567)
-------- -------- -------- -------- --------
Provision for loan
losses 3,777 1,501 1,176 1,008 945
-------- -------- -------- -------- --------
Allowance for loan
losses at end of
quarter $ 12,054 $ 11,603 $ 11,161 $ 10,711 $ 10,168
======== ======== ======== ======== ========
Encore Bancshares, Inc. and Subsidiaries
SEGMENT OPERATIONS
(Unaudited, dollars in thousands)
As of and for the Three Months Ended
----------------------------------------------------------
June 30, March 31, Dec 31, Sept 30, June 30,
2008 2008 2007 2007 2007
---------- ---------- ---------- ---------- ----------
Banking
-------
Net
interest
income $ 11,116 $ 10,130 $ 9,674 $ 9,315 $ 8,258
Provision
for loan
losses 3,777 1,501 1,176 1,008 945
Noninterest
income 66 519 509 1,559 2,807
Noninterest
expense 8,823 9,103 8,378 8,338 8,853
---------- ---------- ---------- ---------- ----------
Earnings
(loss)
before
income
taxes (1,418) 45 629 1,528 1,267
Income
tax
expense
(benefit) (586) (15) 103 261 370
---------- ---------- ---------- ---------- ----------
Net
earnings
(loss) $ (832) $ 60 $ 526 $ 1,267 $ 897
========== ========== ========== ========== ==========
Total
assets at
quarter
end $1,472,045 $1,500,462 $1,411,934 $1,392,156 $1,292,112
========== ========== ========== ========== ==========
Wealth
Management
-----------
Net
interest
income $ 37 $ 64 $ 89 $ 82 $ 77
Noninterest
income 4,660 4,407 4,533 4,501 4,268
Noninterest
expense 2,725 3,070 3,042 3,137 2,988
---------- ---------- ---------- ---------- ----------
Earnings
before
income
taxes 1,972 1,401 1,580 1,446 1,357
Income tax
expense 709 504 460 531 483
---------- ---------- ---------- ---------- ----------
Net
earnings $ 1,263 $ 897 $ 1,120 $ 915 $ 874
========== ========== ========== ========== ==========
Total
assets at
quarter
end $ 48,146 $ 47,444 $ 46,270 $ 45,425 $ 44,395
========== ========== ========== ========== ==========
Insurance
---------
Net
interest
income $ 22 $ 41 $ 36 $ 37 $ 36
Noninterest
income 1,458 1,732 1,222 1,460 1,637
Noninterest
expense 1,049 1,104 947 1,014 1,057
---------- ---------- ---------- ---------- ----------
Earnings
before
income
taxes 431 669 311 483 616
Income tax
expense 154 240 73 167 232
---------- ---------- ---------- ---------- ----------
Net
earnings $ 277 $ 429 $ 238 $ 316 $ 384
========== ========== ========== ========== ==========
Total
assets at
quarter
end $ 13,188 $ 10,143 $ 9,242 $ 9,219 $ 9,101
========== ========== ========== ========== ==========
Other
-----
Net
interest
expense $ (330) $ (356) $ (368) $ (368) $ (373)
Noninterest
income (24) 19 5 1 9
Noninterest
expense -- -- -- -- 391
---------- ---------- ---------- ---------- ----------
Loss
before
income
taxes (354) (337) (363) (367) (755)
Income tax
benefit (127) (121) (182) (117) (258)
---------- ---------- ---------- ---------- ----------
Net loss $ (227) $ (216) $ (181) $ (250) $ (497)
========== ========== ========== ========== ==========
Total
assets at
quarter
end $ (72,666) $ (69,423) $ (66,249) $ (63,668) $ (58,407)
========== ========== ========== ========== ==========
Consolidated
------------
Net
interest
income $ 10,845 $ 9,879 $ 9,431 $ 9,066 $ 7,998
Provision
for loan
losses 3,777 1,501 1,176 1,008 945
Noninterest
income 6,160 6,677 6,269 7,521 8,721
Noninterest
expense 12,597 13,277 12,367 12,489 13,289
---------- ---------- ---------- ---------- ----------
Earnings
before
income
taxes 631 1,778 2,157 3,090 2,485
Income tax
expense 150 608 454 842 827
---------- ---------- ---------- ---------- ----------
Net
earnings $ 481 $ 1,170 $ 1,703 $ 2,248 $ 1,658
========== ========== ========== ========== ==========
Total
assets at
quarter
end $1,460,713 $1,488,626 $1,401,197 $1,383,132 $1,287,201
========== ========== ========== ========== ==========
As of and for the Six
Months Ended June 30,
----------------------
2008 2007
---------- ----------
Banking
-------
Net interest income $ 21,246 $ 16,293
Provision for loan losses 5,278 1,845
Noninterest income 585 5,288
Noninterest expense 17,926 17,306
---------- ----------
Earnings (loss) before income taxes (1,373) 2,430
Income tax expense (benefit) (601) 766
---------- ----------
Net earnings (loss) $ (772) $ 1,664
========== ==========
Total assets at quarter end $1,472,045 $1,292,112
========== ==========
Wealth Management
-----------------
Net interest income $ 101 $ 150
Noninterest income 9,067 8,512
Noninterest expense 5,795 6,015
---------- ----------
Earnings before income taxes 3,373 2,647
Income tax expense 1,213 950
---------- ----------
Net earnings $ 2,160 $ 1,697
========== ==========
Total assets at quarter end $ 48,146 $ 44,395
========== ==========
Insurance
---------
Net interest income $ 63 $ 63
Noninterest income 3,190 3,353
Noninterest expense 2,153 2,039
---------- ----------
Earnings before income taxes 1,100 1,377
Income tax expense 394 504
---------- ----------
Net earnings $ 706 $ 873
========== ==========
Total assets at quarter end $ 13,188 $ 9,101
========== ==========
Other
-----
Net interest expense $ (686) $ (828)
Noninterest income (5) 23
Noninterest expense -- 391
---------- ----------
Loss before income taxes (691) (1,196)
Income tax benefit (248) (395)
---------- ----------
Net loss $ (443) $ (801)
========== ==========
Total assets at quarter end $ (72,666) $ (58,407)
========== ==========
Consolidated
------------
Net interest income $ 20,724 $ 15,678
Provision for loan losses 5,278 1,845
Noninterest income 12,837 17,176
Noninterest expense 25,874 25,751
---------- ----------
Earnings before income taxes 2,409 5,258
Income tax expense 758 1,825
---------- ----------
Net earnings $ 1,651 $ 3,433
========== ==========
Total assets at quarter end $1,460,713 $1,287,201
========== ==========
Encore Bancshares, Inc. and Subsidiaries
YIELD ANALYSIS
(Unaudited, dollars in thousands)
For the Three Months Ended June 30,
----------------------------------------------------------
2008 2007
---------------------------- -----------------------------
Average Interest Average Average Interest Average
Outstanding Earned/ Yield/ Outstanding Earned/ Yield/
Balance Paid Rate Balance Paid Rate
----------- -------- ------- ----------- -------- -------
Assets:
Interest-
earning
assets:
Loans $1,170,959 $18,238 6.26% $ 938,356 $16,346 6.99%
Mortgages
held-for-
sale 1,151 25 8.74% 53,926 1,202 8.94%
Securities 139,510 1,250 3.60% 183,008 1,745 3.82%
Federal
funds sold
and other 82,841 552 2.68% 27,755 382 5.52%
---------- ------- ---------- -------
Total
interest-
earning
assets 1,394,461 20,065 5.79% 1,203,045 19,675 6.56%
Less:
Allowance
for loan
losses (11,526) (9,843)
Noninterest-
earning
assets 103,918 103,512
---------- ----------
Total
assets $1,486,853 $1,296,714
========== ==========
Liabilities
and
shareholders'
equity:
Interest-
bearing
liabilities:
Interest
checking $ 194,973 $ 641 1.32% $ 167,956 $ 1,267 3.03%
Money market
and savings 307,047 1,363 1.79% 340,950 3,677 4.33%
Time
deposits 466,199 5,119 4.42% 373,669 4,581 4.92%
---------- ------- ---------- -------
Total
interest-
bearing
deposits 968,219 7,123 2.96% 882,575 9,525 4.33%
Borrowings
and
repurchase
agreements 202,229 1,767 3.51% 161,698 1,779 4.41%
Junior
subordinated
debentures 20,619 330 6.44% 20,930 373 7.15%
---------- ------- ---------- -------
Total
interest-
bearing
liabili-
ties 1,191,067 9,220 3.11% 1,065,203 11,677 4.40%
---------- ------- ---------- -------
Noninterest-
bearing
liabilities:
Noninterest-
bearing
deposits 123,453 109,753
Other
liabilities 12,015 12,127
---------- ----------
Total
liabili-
ties 1,326,535 1,187,083
Shareholders'
equity 160,318 109,631
---------- ----------
Total
liabilities
and
shareholders'
equity $1,486,853 $1,296,714
========== ==========
Net interest
income $10,845 $ 7,998
======= =======
Net interest
spread 2.68% 2.16%
Net interest
margin 3.13% 2.67%
Encore Bancshares, Inc. and Subsidiaries
YIELD ANALYSIS
(Unaudited, dollars in thousands)
For the Six months Ended June 30,
----------------------------------------------------------
2008 2007
---------------------------- -----------------------------
Average Interest Average Average Interest Average
Outstanding Earned/ Yield/ Outstanding Earned/ Yield/
Balance Paid Rate Balance Paid Rate
----------- -------- ------- ----------- -------- -------
Assets:
Interest-
earning
assets:
Loans $1,145,199 $36,616 6.43%$ 927,498 $32,154 6.99%
Mortgages
held-for-
sale 1,308 57 8.76% 53,107 2,323 8.82%
Securities 140,804 2,569 3.67% 207,450 4,018 3.91%
Federal
funds sold
and other 86,130 1,355 3.16% 23,700 660 5.62%
---------- ------- ---------- -------
Total
interest-
earning
assets 1,373,441 40,597 5.94% 1,211,755 39,155 6.52%
Less:
Allowance
for loan
losses (11,352) (9,557)
Noninterest-
earning
assets 103,092 102,554
---------- ----------
Total
assets $1,465,181 $1,304,752
========== ==========
Liabilities,
shareholders'
equity and
puttable
common stock:
Interest-
bearing
liabilities:
Interest
checking $ 188,728 $ 1,594 1.70% $ 175,608 $ 2,568 2.95%
Money market
and
savings 320,144 3,743 2.35% 337,987 7,296 4.35%
Time
deposits 450,398 10,328 4.61% 374,023 9,117 4.92%
---------- ------- ---------- -------
Total
interest-
bearing
deposits 959,270 15,665 3.28% 887,618 18,981 4.31%
Borrowings
and
repurchase
agreements 198,042 3,522 3.58% 167,147 3,668 4.43%
Junior
subordinated
debentures 20,619 686 6.69% 20,806 828 8.03%
---------- ------- ---------- -------
Total
interest-
bearing
liabili-
ties 1,177,931 19,873 3.39% 1,075,571 23,477 4.40%
---------- ------- ---------- -------
Noninterest-
bearing
liabilities:
Noninterest-
bearing
deposits 115,179 107,862
Other
liabilities 12,664 12,941
---------- ----------
Total
liabili-
ties 1,305,774 1,196,374
Shareholders'
equity and
puttable
common stock 159,407 108,378
---------- ----------
Total
liabilities,
shareholders'
equity and
puttable
common
stock $1,465,181 $1,304,752
========== ==========
Net interest
income $20,724 $15,678
======= =======
Net interest
spread 2.55% 2.12%
Net interest
margin 3.03% 2.61%