HOUSTON, July 29, 2011 (GLOBE NEWSWIRE) -- Encore Bancshares, Inc. (Nasdaq:EBTX) today announced its financial results for the second quarter of 2011.
Second Quarter Highlights
Earnings metrics improvement compared with second quarter 2010
- Revenue was $19.1 million, up 1.0%, and up 7.3% excluding one-time items in 2010
- Net interest margin (TE) expanded 62 basis points to 3.54%
- Wealth management revenue increased 11.7%
- Noninterest expense decreased 27.2%
Growth of Texas franchise compared with June 30, 2010
- Demand deposit growth of 29.6%
- Demand deposits were 22.7% of total deposits, up from 18.0%
- Commercial loan growth of 25.6%, total loan growth of 4.9%
- Assets under management grew 10.5% to $2.9 billion
Continued improvement in credit quality
- Net charge-offs declined to $1.8 million, compared with $16.5 million for the second quarter 2010
- Nonperforming assets decreased 69.5%, compared with June 30, 2010
- Allowance for loan losses of 1.97% of loans, or $19.1 million, as the provision exceeded net charge-offs
Capital ratios remain solid
- Estimated tier 1 capital ratio of 13.23%
- Tangible common equity ratio of 7.13%
"The positive financial results for the second quarter reflect a continued improvement in credit quality and modest growth in loan demand," said James S. D'Agostino, Jr., Chairman and Chief Executive Officer of Encore Bancshares, Inc. "We have demonstrated good progress in increasing revenue by growing loans and assets under management while leveraging our cost structure. While national economic issues provide some caution, the Houston economy continues to recover and our lending team and asset management team are focused on building our share of this attractive market."
Earnings
For the three months ended June 30, 2011, our net earnings were $2.1 million, compared with a net loss of $12.7 million for the same period of 2010. Earnings per diluted common share for the second quarter of 2011 were $0.13, compared with a loss per diluted common share of $1.16 for the same period of 2010, after deducting preferred dividends for each period.
For the six months ended June 30, 2011, our net earnings were $3.2 million, compared with a net loss of $14.9 million for the same period of 2010. Earnings per diluted common share for the first half were $0.18, compared with a loss per diluted common share of $1.46, after deducting preferred dividends for each period. Earnings for both periods of 2011 improved due to lower credit costs and reduced expenses related to the sale of our Florida operations, which was completed December 31, 2010.
Net Interest Income
Net interest income on a tax equivalent basis (TE) for the second quarter of 2011 was $11.8 million, an increase of $784,000, or 7.1% compared with the same period of 2010, reflecting an improved net interest margin. The net interest margin (TE) expanded 62 basis points to 3.54% during the same comparison period. The increase in margin was due primarily to an improved balance sheet mix, as temporary investments and higher costing deposits decreased after the sale of our Florida operations. In addition, the loan yield was higher during the second quarter of 2011 due to an interest recovery of $418,000. Excluding the interest recovery, the net interest margin was 3.41%. On a linked quarter basis (compared with the immediately preceding quarter), net interest income (TE) increased $635,000, or 5.7%, and the net interest margin increased by 17 basis points, resulting mainly from the aforementioned interest recovery and lower deposit cost.
Noninterest Income
Noninterest income was $7.3 million for the second quarter of 2011, a decrease of $613,000, or 7.7%, compared with the same period of 2010, which included a $1.1 million gain on sale of two Florida branches. Excluding the gain on sale, noninterest income increased 7.3%. Trust and investment management fees increased $535,000, or 11.7%, as assets under management grew 10.5% primarily due to the improvements in the equity markets.
Noninterest Expense
Noninterest expense was $14.1 million for the second quarter of 2011, a decrease of $5.3 million, compared with the same period of 2010. The decrease in noninterest expenses was due primarily to the sale of our Florida operations, which resulted in a significant reduction in credit related costs, including write downs of assets held for sale, and other operating expenses.
Segment Earnings
On a segment basis, our banking segment had net earnings of $929,000, compared with a net loss of $13.5 million in the same period of 2010. The second quarter of 2010 included significant credit related costs, which were primarily in Florida. Our wealth management group had net earnings of $1.1 million for the second quarter of 2011, a $349,000, or 49.7% increase, compared with the same period of 2010. The growth in earnings resulted mainly from a 10.5% increase in assets under management. Our insurance agency had earnings of $278,000, down $19,000, compared with the same period of 2010, due to higher expenses reflecting growth in the Ft. Worth office.
Loans
Period end loans, including loans held for sale, were $971.4 million at June 30, 2011, a decrease of $79.3 million, or 7.5%, compared with June 30, 2010. This decrease was due primarily to the sale of Florida loans as we exited the Florida market. Excluding Florida loans, total loans increased $43.6 million, or 4.9% and commercial loans in Texas grew $82.1 million, or 25.6%, in the same comparison period.
Deposits
Period end deposits were $1.0 billion at June 30, 2011, a decrease of $156.2 million, or 13.0%, compared with June 30, 2010. The decrease was mainly due to the sale of approximately $231.3 million in Florida deposits in 2010. Total Texas deposits increased 2.7% in the same comparison period. Texas noninterest-bearing deposits at June 30, 2011 were $236.9 million, an increase of $54.1 million, or 29.6%, and represented 22.7% of total deposits.
Credit Quality and Capital Ratios
The provision for loan losses was $1.9 million for the second quarter of 2011, compared with $18.0 million for the same period of 2010. The decline in the provision for loan losses reflected improving credit quality. Net charge-offs for the second quarter were $1.8 million, or 0.76% of average total loans on an annualized basis, compared with $16.5 million, or 6.23% of average total loans on an annualized basis for the same period of 2010. Commercial loan charge-offs were $1.0 million for the second quarter of 2011, compared with $13.6 million in the same period of 2010. The commercial charge-offs in the second quarter of 2010 were primarily in our Florida loan portfolio. The allowance for loan losses was $19.1 million, or 1.97% of loans, excluding loans held for sale, at June 30, 2011, compared with $26.7 million, or 2.74% of loans, excluding loans held for sale, at June 30, 2010.
At June 30, 2011, nonperforming assets were $23.8 million compared with $35.0 million at March 31, 2011 and $77.8 million at June 30, 2010. Of the nonperforming assets at June 30, 2011, $11.9 million were in Florida. Nonperforming loans were $16.6 million at June 30, 2011, compared with $27.7 million at March 31, 2011, a decrease of $11.2 million, or 40.3%. The decrease in nonperforming loans was due primarily to a combination of the resolution of a $6.6 million lending relationship in Texas and a $1.1 million commercial real estate loan in Florida. We also sold 3 nonperforming Florida commercial real estate loans totaling $3.5 million.
Investment in real estate was $7.2 million at June 30, 2011, compared with $7.3 million at March 31, 2011, a decrease of $111,000, or 1.5%. Restructured loans still accruing were $1.5 million at June 30, 2011, compared with $1.8 million at March 31, 2011. The decrease was due mainly to two residential loans in Houston.
As of June 30, 2011, our estimated Tier 1 risk-based, total risk-based and leverage capital ratios were 13.23%, 14.49%, and 9.67%, 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 $12.17 and $8.72 at June 30, 2011, compared with $11.97 and $8.48 at March 31, 2011.
Conference Call
Encore will host a conference call for investors and analysts that will be broadcast live via the Internet on Friday, July 29, 2011, at 10:30 a.m. Eastern Time. Interested parties may participate by calling 877-303-6295 at least ten minutes prior to the start time.
To listen to this conference call live via the Internet, please visit the Investor Relations section of the Company's web site at http://www.encorebank.com/">http://www.encorebank.com at least fifteen minutes prior to the call to register, download and install any necessary audio software. An audio archive of the call will also be available on the web site on or before Monday, August 1, 2011.
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 11 private client offices in the Greater Houston area. 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 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".
The Encore Bancshares, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4257
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; 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 2010 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 Three | As of and for the Six | |||
Months Ended June 30, | Months Ended June 30, | |||
2011 | 2010 | 2011 | 2010 | |
Operations Statement Data: | ||||
Interest income | $ 16,383 | $ 17,201 | $ 32,222 | $ 35,156 |
Interest expense | 4,648 | 6,262 | 9,392 | 12,727 |
Net interest income | 11,735 | 10,939 | 22,830 | 22,429 |
Provision for loan losses | 1,919 | 18,013 | 4,089 | 22,973 |
Net interest income after provision for loan losses | 9,816 | (7,074) | 18,741 | (544) |
Noninterest income | 7,334 | 7,947 | 14,400 | 14,856 |
Noninterest expense | 14,112 | 19,395 | 28,467 | 37,659 |
Net earnings (loss) before income taxes | 3,038 | (18,522) | 4,674 | (23,347) |
Income tax expense (benefit) | 973 | (5,869) | 1,457 | (8,443) |
Net earnings (loss) | $ 2,065 | $ (12,653) | $ 3,217 | $ (14,904) |
Earnings (loss) available to common shareholders | $ 1,507 | $ (13,209) | $ 2,101 | $ (16,016) |
Common Share Data: | ||||
Basic earnings (loss) per share (1) | $ 0.13 | $ (1.16) | $ 0.18 | $ (1.46) |
Diluted earnings (loss) per share (1) | 0.13 | (1.16) | 0.18 | (1.46) |
Book value per share | 12.17 | 13.06 | 12.17 | 13.06 |
Tangible book value per share (2) | 8.72 | 9.47 | 8.72 | 9.47 |
Average common shares outstanding | 11,582 | 11,375 | 11,537 | 10,969 |
Diluted average common shares outstanding | 11,628 | 11,375 | 11,602 | 10,969 |
Common shares outstanding at end of period | 11,663 | 11,380 | 11,663 | 11,380 |
Selected Performance Ratios: | ||||
Return on average assets | 0.57% | (3.13)% | 0.45% | (1.85)% |
Return on average common equity (1) | 4.33% | (32.89)% | 3.06% | (20.24)% |
Return on average tangible common equity (1)(2) | 6.09% | (44.09)% | 4.32% | (27.24)% |
Taxable-equivalent net interest margin (2) | 3.54% | 2.92% | 3.46% | 3.01% |
Efficiency ratio | 70.78% | 93.16% | 74.31% | 89.05% |
Noninterest income to total revenue | 38.46% | 42.08% | 38.68% | 39.84% |
(1) Using earnings (loss) available to common shareholders. | ||||
(2) Non-GAAP measure. See calculation of tangible common equity and taxable-equivalent amounts in subsequent tables. | ||||
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, | ||
2011 | 2011 | 2010 | 2010 | 2010 | ||
ASSETS | ||||||
Cash and due from banks | $ 13,025 | $ 18,477 | $ 13,523 | $ 16,825 | $ 14,718 | |
Interest-bearing deposits in banks | 91,790 | 49,109 | 49,478 | 231,866 | 314,624 | |
Federal funds sold and other | 904 | 856 | 1,098 | 993 | 902 | |
Cash and cash equivalents | 105,719 | 68,442 | 64,099 | 249,684 | 330,244 | |
Securities available-for-sale, at estimated fair value | 183,058 | 241,370 | 251,784 | 198,530 | 72,153 | |
Securities held-to-maturity, at amortized cost | 104,565 | 101,235 | 107,618 | 55,436 | 68,628 | |
Loans held-for-sale, at lower of cost or fair value | 863 | 2,913 | 10,915 | 111,505 | 77,914 | |
Loans receivable | 970,566 | 936,036 | 920,457 | 924,589 | 972,765 | |
Allowance for loan losses | (19,110) | (19,008) | (18,639) | (20,967) | (26,675) | |
Net loans receivable | 951,456 | 917,028 | 901,818 | 903,622 | 946,090 | |
Federal Home Loan Bank of Dallas stock, at cost | 9,810 | 10,206 | 9,610 | 9,602 | 9,593 | |
Investment in real estate | 7,200 | 7,311 | 9,298 | 10,852 | 13,602 | |
Premises and equipment, net | 6,545 | 6,757 | 7,023 | 7,284 | 7,567 | |
Cash surrender value of life insurance policies | 16,217 | 16,078 | 15,935 | 15,786 | 15,637 | |
Goodwill | 35,799 | 35,799 | 35,799 | 35,799 | 35,799 | |
Other intangible assets, net | 4,434 | 4,575 | 4,716 | 4,876 | 5,034 | |
Other assets | 40,829 | 46,467 | 47,882 | 44,430 | 40,085 | |
Other assets held-for-sale | -- | -- | -- | 3,256 | 3,269 | |
$ 1,466,495 | $ 1,458,181 | $ 1,466,497 | $ 1,650,662 | $ 1,625,615 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
Deposits: | ||||||
Noninterest-bearing | $ 236,873 | $ 219,629 | $ 219,756 | $ 205,927 | $ 182,729 | |
Interest-bearing | 806,627 | 821,163 | 830,688 | 838,125 | 832,876 | |
Deposits held-for-sale | -- | -- | -- | 187,433 | 184,106 | |
Total deposits | 1,043,500 | 1,040,792 | 1,050,444 | 1,231,485 | 1,199,711 | |
Borrowings and repurchase agreements | 222,879 | 221,582 | 219,777 | 220,818 | 219,602 | |
Junior subordinated debentures | 20,619 | 20,619 | 20,619 | 20,619 | 20,619 | |
Other liabilities | 7,783 | 7,274 | 9,016 | 8,028 | 7,804 | |
Other liabilities held-for-sale | -- | -- | -- | 6 | 6 | |
Total liabilities | 1,294,781 | 1,290,267 | 1,299,856 | 1,480,956 | 1,447,742 | |
Commitments and contingencies | ||||||
Shareholders' equity: | ||||||
Preferred stock | 29,766 | 29,633 | 29,500 | 29,368 | 29,238 | |
Common stock | 11,733 | 11,603 | 11,479 | 11,421 | 11,416 | |
Additional paid-in capital | 123,771 | 123,329 | 122,678 | 121,939 | 121,533 | |
Retained earnings | 6,742 | 5,235 | 4,641 | 6,098 | 15,079 | |
Common stock in treasury, at cost | (735) | (497) | (455) | (389) | (346) | |
Accumulated other comprehensive income (loss) | 437 | (1,389) | (1,202) | 1,269 | 953 | |
Shareholders' equity | 171,714 | 167,914 | 166,641 | 169,706 | 177,873 | |
$ 1,466,495 | $ 1,458,181 | $ 1,466,497 | $ 1,650,662 | $ 1,625,615 | ||
Ratios and Common Share Data: | ||||||
Leverage ratio (1) | 9.67% | 9.29% | 8.10% | 9.18% | 9.93% | |
Tier 1 risk-based capital ratio (1) | 13.23% | 13.05% | 12.83% | 13.53% | 14.59% | |
Total risk-based capital ratio (1) | 14.49% | 14.31% | 14.09% | 14.79% | 15.86% | |
Book value per share | $ 12.17 | $ 11.97 | $ 12.00 | $ 12.33 | $ 13.06 | |
Tangible book value per share (2) | 8.72 | 8.48 | 8.45 | 8.76 | 9.47 | |
Tangible common equity to tangible assets (2) | 7.13% | 6.91% | 6.78% | 6.19% | 6.80% | |
(1) Estimated at June 30, 2011. | ||||||
(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 | Six Months Ended | ||||||
June 30, | March 31, | Dec 31, | Sept 30, | June 30, | June 30, | ||
2011 | 2011 | 2010 | 2010 | 2010 | 2011 | 2010 | |
Interest income: | |||||||
Loans, including fees | $ 14,254 | $ 13,442 | $ 14,646 | $ 15,408 | $ 15,441 | $ 27,696 | $ 31,135 |
Securities | 2,025 | 2,305 | 1,872 | 1,276 | 1,526 | 4,330 | 3,572 |
Federal funds sold and other | 104 | 92 | 207 | 238 | 234 | 196 | 449 |
Total interest income | 16,383 | 15,839 | 16,725 | 16,922 | 17,201 | 32,222 | 35,156 |
Interest expense: | |||||||
Deposits | 2,234 | 2,340 | 2,562 | 2,827 | 2,962 | 4,574 | 6,004 |
Deposits held-for-sale | -- | -- | 636 | 698 | 863 | -- | 1,873 |
Borrowings and repurchase agreements | 2,117 | 2,106 | 2,128 | 2,127 | 2,139 | 4,223 | 4,255 |
Junior subordinated debentures | 297 | 298 | 298 | 301 | 298 | 595 | 595 |
Total interest expense | 4,648 | 4,744 | 5,624 | 5,953 | 6,262 | 9,392 | 12,727 |
Net interest income | 11,735 | 11,095 | 11,101 | 10,969 | 10,939 | 22,830 | 22,429 |
Provision for loan losses | 1,919 | 2,170 | 2,597 | 9,599 | 18,013 | 4,089 | 22,973 |
Net interest income after provision for loan losses | 9,816 | 8,925 | 8,504 | 1,370 | (7,074) | 18,741 | (544) |
Noninterest income: | |||||||
Trust and investment management fees | 5,126 | 5,072 | 5,122 | 4,639 | 4,591 | 10,198 | 9,209 |
Mortgage banking | 97 | 140 | 501 | 150 | 78 | 237 | 114 |
Insurance commissions and fees | 1,587 | 1,440 | 1,120 | 1,524 | 1,488 | 3,027 | 3,127 |
Net gain (loss) on sale of available-for-sale securities | (64) | (31) | 38 | 261 | 120 | (95) | 219 |
Gain on sale of branches | -- | -- | 2,567 | -- | 1,115 | -- | 1,115 |
Other | 588 | 445 | 511 | 454 | 555 | 1,033 | 1,072 |
Total noninterest income | 7,334 | 7,066 | 9,859 | 7,028 | 7,947 | 14,400 | 14,856 |
Noninterest expense: | |||||||
Compensation | 8,414 | 8,706 | 8,469 | 8,503 | 8,638 | 17,120 | 17,189 |
Occupancy | 1,128 | 1,287 | 1,339 | 1,395 | 1,454 | 2,415 | 2,932 |
Equipment | 268 | 241 | 261 | 274 | 330 | 509 | 693 |
Advertising and promotion | 156 | 156 | 137 | 146 | 153 | 312 | 334 |
Outside data processing | 793 | 783 | 910 | 874 | 897 | 1,576 | 1,767 |
Professional fees | 905 | 1,134 | 1,165 | 1,325 | 1,435 | 2,039 | 2,356 |
Intangible amortization | 143 | 140 | 160 | 158 | 159 | 283 | 317 |
FDIC assessment | 472 | 798 | 790 | 1,532 | 703 | 1,270 | 1,358 |
Foreclosed real estate expenses, net | 666 | 83 | 119 | 4,458 | 1,402 | 749 | 2,526 |
Write down of assets held-for-sale | 427 | 21 | 5,744 | 1,012 | 2,793 | 448 | 5,328 |
Other | 740 | 1,006 | 1,119 | 1,051 | 1,431 | 1,746 | 2,859 |
Total noninterest expense | 14,112 | 14,355 | 20,213 | 20,728 | 19,395 | 28,467 | 37,659 |
Net earnings (loss) before income taxes | 3,038 | 1,636 | (1,850) | (12,330) | (18,522) | 4,674 | (23,347) |
Income tax expense (benefit) | 973 | 484 | (950) | (3,904) | (5,869) | 1,457 | (8,443) |
Net earnings (loss) | $ 2,065 | $ 1,152 | $ (900) | $ (8,426) | $ (12,653) | $ 3,217 | $ (14,904) |
Earnings (loss) available to common shareholders | $ 1,507 | $ 594 | $ (1,457) | $ (8,981) | $ (13,209) | $ 2,101 | $ (16,016) |
Earnings (loss) per common share: | |||||||
Basic | $ 0.13 | $ 0.05 | $ (0.13) | $ (0.79) | $ (1.16) | $ 0.18 | $ (1.46) |
Diluted | 0.13 | 0.05 | (0.13) | (0.79) | (1.16) | 0.18 | (1.46) |
Average common shares outstanding | 11,582 | 11,491 | 11,391 | 11,380 | 11,375 | 11,537 | 10,969 |
Diluted average common shares outstanding | 11,628 | 11,575 | 11,391 | 11,380 | 11,375 | 11,602 | 10,969 |
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, | |
2011 | 2011 | 2010 | 2010 | 2010 | |
Assets: | |||||
Interest-earning assets: | |||||
Loans | $ 955,019 | $ 933,361 | $ 1,004,472 | $ 1,056,657 | $ 1,059,695 |
Securities | 315,681 | 354,250 | 292,241 | 209,365 | 186,777 |
Federal funds sold and other | 71,909 | 60,084 | 243,304 | 290,541 | 275,148 |
Total interest-earning assets | 1,342,609 | 1,347,695 | 1,540,017 | 1,556,563 | 1,521,620 |
Less: Allowance for loan losses | (19,219) | (18,604) | (20,433) | (27,144) | (24,796) |
Noninterest-earning assets | 127,583 | 131,183 | 131,861 | 128,197 | 122,236 |
Noninterest-earning assets held-for-sale | -- | -- | 4,403 | 4,196 | 4,481 |
Total assets | $ 1,450,973 | $ 1,460,274 | $ 1,655,848 | $ 1,661,812 | $ 1,623,541 |
Liabilities and shareholders' equity: | |||||
Interest-bearing liabilities: | |||||
Interest checking | $ 163,926 | $ 162,577 | $ 148,875 | $ 139,820 | $ 145,856 |
Money market and savings | 269,422 | 287,029 | 298,725 | 279,084 | 238,000 |
Time deposits | 379,721 | 379,142 | 386,634 | 410,318 | 415,615 |
Interest-bearing deposits held-for-sale | -- | -- | 167,869 | 171,805 | 201,919 |
Total interest-bearing deposits | 813,069 | 828,748 | 1,002,103 | 1,001,027 | 1,001,390 |
Borrowings and repurchase agreements | 223,145 | 224,792 | 220,042 | 220,068 | 218,794 |
Junior subordinated debentures | 20,619 | 20,619 | 20,619 | 20,619 | 20,619 |
Total interest-bearing liabilities | 1,056,833 | 1,074,159 | 1,242,764 | 1,241,714 | 1,240,803 |
Noninterest-bearing liabilities: | |||||
Noninterest-bearing deposits | 217,624 | 210,885 | 220,169 | 220,166 | 168,021 |
Noninterest-bearing deposits held-for-sale | -- | -- | 14,767 | 14,983 | 17,830 |
Other liabilities | 7,225 | 8,344 | 8,019 | 7,132 | 6,384 |
Other liabilities held-for-sale | -- | -- | 197 | 216 | 253 |
Total liabilities | 1,281,682 | 1,293,388 | 1,485,916 | 1,484,211 | 1,433,291 |
Shareholders' equity | 169,291 | 166,886 | 169,932 | 177,601 | 190,250 |
Total liabilities and shareholders' equity | $ 1,450,973 | $ 1,460,274 | $ 1,655,848 | $ 1,661,812 | $ 1,623,541 |
Encore Bancshares, Inc. and Subsidiaries | |||||
SELECTED FINANCIAL DATA | |||||
(Unaudited, dollars in thousands) | |||||
June 30, | March 31, | Dec 31, | Sept 30, | June 30, | |
Loan Portfolio: | 2011 | 2011 | 2010 | 2010 | 2010 |
Commercial: | |||||
Commercial | $ 194,260 | $ 164,053 | $ 147,090 | $ 138,594 | $ 131,712 |
Commercial real estate | 167,973 | 168,893 | 166,043 | 154,476 | 189,471 |
Real estate construction | 54,769 | 52,106 | 46,326 | 54,140 | 55,332 |
Total commercial | 417,002 | 385,052 | 359,459 | 347,210 | 376,515 |
Consumer: | |||||
Residential real estate first lien | 205,171 | 205,012 | 205,531 | 207,386 | 215,911 |
Residential real estate second lien | 262,958 | 263,286 | 269,727 | 280,245 | 290,934 |
Home equity lines | 58,553 | 59,832 | 60,609 | 63,983 | 66,311 |
Consumer other | 26,882 | 22,854 | 25,131 | 25,765 | 23,094 |
Total consumer | 553,564 | 550,984 | 560,998 | 577,379 | 596,250 |
Loans receivable | 970,566 | 936,036 | 920,457 | 924,589 | 972,765 |
Loans held-for-sale | 863 | 2,913 | 10,915 | 111,505 | 77,914 |
Total loans | $ 971,429 | $ 938,949 | $ 931,372 | $ 1,036,094 | $ 1,050,679 |
Asset Quality: | |||||
Nonaccrual loans - Texas (1) | $ 7,655 | $ 14,557 | $ 15,167 | $ 17,445 | $ 22,441 |
Nonaccrual loans - Florida (1) | 8,897 | 13,169 | 11,310 | 34,251 | 41,773 |
Total nonaccrual loans (1) | 16,552 | 27,726 | 26,477 | 51,696 | 64,214 |
Investment in real estate - Texas | 4,155 | 4,226 | 4,783 | 5,762 | 6,194 |
Investment in real estate - Florida | 3,045 | 3,085 | 4,515 | 5,090 | 7,408 |
Total investment in real estate | 7,200 | 7,311 | 9,298 | 10,852 | 13,602 |
Total nonperforming assets | $ 23,752 | $ 35,037 | $ 35,775 | $ 62,548 | $ 77,816 |
Accruing loans past due 90 days or more | $ -- | $ -- | $ 313 | $ -- | $ -- |
Restructured loans still accruing | $ 1,522 | $ 1,755 | $ 804 | $ 2,570 | $ 1,072 |
Asset Quality Ratios: | |||||
Nonperforming assets to total loans and investment in real estate | 2.43% | 3.70% | 3.80% | 5.97% | 7.31% |
Net charge-offs to average total loans | 0.76% | 0.78% | 1.95% | 5.75% | 6.23% |
Allowance for loan losses to period end loans (excluding loans held-for-sale) | 1.97% | 2.03% | 2.02% | 2.27% | 2.74% |
Allowance for loan losses to nonperforming loans (excluding loans held-for-sale) | 115.45% | 74.72% | 94.11% | 88.89% | 45.47% |
Deposits: | |||||
Noninterest-bearing deposits | $ 236,873 | $ 219,629 | $ 219,756 | $ 205,927 | $ 182,729 |
Interest checking | 179,292 | 155,262 | 173,839 | 145,257 | 152,041 |
Money market and savings | 252,100 | 285,612 | 278,507 | 293,381 | 259,189 |
Time deposits less than $100 | 112,975 | 114,819 | 117,974 | 124,132 | 132,514 |
Core deposits | 781,240 | 775,322 | 790,076 | 768,697 | 726,473 |
Time deposits $100 and greater | 236,653 | 239,936 | 239,129 | 251,271 | 265,076 |
Brokered deposits | 25,607 | 25,534 | 21,239 | 24,084 | 24,056 |
Deposits held-for-sale | -- | -- | -- | 187,433 | 184,106 |
Total deposits | $ 1,043,500 | $ 1,040,792 | $ 1,050,444 | $ 1,231,485 | $ 1,199,711 |
Assets Under Management | $ 2,863,293 | $ 2,855,544 | $ 2,857,390 | $ 2,732,757 | $ 2,592,186 |
(1) Nonaccrual troubled debt restructurings are included in nonaccrual loans. |
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, | |
2011 | 2011 | 2010 | 2010 | 2010 | |
Allowance for loan losses at beginning of quarter | $ 19,008 | $ 18,639 | $ 20,967 | $ 26,675 | $ 25,132 |
Charge-offs: | |||||
Commercial: | |||||
Commercial | (112) | (196) | (21) | (160) | (402) |
Commercial real estate | (752) | (465) | (14) | (10,049) | (10,118) |
Real estate construction | (137) | (4) | (2,329) | (3,407) | (3,101) |
Total commercial | (1,001) | (665) | (2,364) | (13,616) | (13,621) |
Consumer: | |||||
Residential real estate first lien | (305) | (222) | (1,261) | (503) | (1,707) |
Residential real estate second lien | (513) | (1,059) | (1,106) | (879) | (1,301) |
Home equity lines | (360) | (296) | (430) | (664) | (237) |
Consumer other | (67) | (36) | (9) | (73) | (248) |
Total consumer | (1,245) | (1,613) | (2,806) | (2,119) | (3,493) |
Total charge-offs | (2,246) | (2,278) | (5,170) | (15,735) | (17,114) |
Recoveries: | |||||
Commercial: | |||||
Commercial | 10 | 3 | 52 | 157 | 543 |
Commercial real estate | 141 | 12 | -- | -- | 17 |
Real estate construction | 18 | 131 | 54 | 1 | 3 |
Total commercial | 169 | 146 | 106 | 158 | 563 |
Consumer: | |||||
Residential real estate first lien | 41 | 223 | -- | 161 | 9 |
Residential real estate second lien | 123 | 71 | 31 | 36 | 27 |
Home equity lines | 23 | 19 | 80 | 11 | 11 |
Consumer other | 73 | 18 | 28 | 62 | 34 |
Total consumer | 260 | 331 | 139 | 270 | 81 |
Total recoveries | 429 | 477 | 245 | 428 | 644 |
Net charge-offs | (1,817) | (1,801) | (4,925) | (15,307) | (16,470) |
Provision for loan losses | 1,919 | 2,170 | 2,597 | 9,599 | 18,013 |
Allowance for loan losses at end of quarter | $ 19,110 | $ 19,008 | $ 18,639 | $ 20,967 | $ 26,675 |
Encore Bancshares, Inc. and Subsidiaries | |||||||
SEGMENT OPERATIONS | |||||||
(Unaudited, dollars in thousands) | |||||||
As of and for the Three Months Ended | As of and for the Six | ||||||
June 30, | March 31, | Dec 31, | Sept 30, | June 30, | Months Ended June 30, | ||
2011 | 2011 | 2010 | 2010 | 2010 | 2011 | 2010 | |
Banking | |||||||
Net interest income | $ 12,014 | $ 11,367 | $ 11,361 | $ 11,231 | $ 11,191 | $ 23,381 | $ 22,933 |
Provision for loan losses | 1,919 | 2,170 | 2,597 | 9,599 | 18,013 | 4,089 | 22,973 |
Noninterest income | 535 | 529 | 3,602 | 857 | 1,800 | 1,064 | 2,447 |
Noninterest expense | 9,348 | 9,563 | 15,476 | 16,133 | 14,747 | 18,911 | 28,422 |
Earnings (loss) before income taxes | 1,282 | 163 | (3,110) | (13,644) | (19,769) | 1,445 | (26,015) |
Income tax expense (benefit) | 353 | (34) | (1,309) | (4,370) | (6,311) | 319 | (9,387) |
Net earnings (loss) | $ 929 | $ 197 | $ (1,801) | $ (9,274) | $ (13,458) | $ 1,126 | $ (16,628) |
Total assets at period end | $ 1,469,429 | $ 1,467,887 | $ 1,473,837 | $ 1,650,297 | $ 1,628,706 | $ 1,469,429 | $ 1,628,706 |
Wealth Management | |||||||
Net interest income | $ 16 | $ 24 | $ 34 | $ 34 | $ 41 | $ 40 | $ 81 |
Noninterest income | 5,132 | 5,089 | 5,130 | 4,638 | 4,593 | 10,221 | 9,211 |
Noninterest expense | 3,523 | 3,643 | 3,612 | 3,442 | 3,547 | 7,166 | 7,109 |
Earnings before income taxes | 1,625 | 1,470 | 1,552 | 1,230 | 1,087 | 3,095 | 2,183 |
Income tax expense | 574 | 516 | 475 | 438 | 385 | 1,090 | 773 |
Net earnings | $ 1,051 | $ 954 | $ 1,077 | $ 792 | $ 702 | $ 2,005 | $ 1,410 |
Total assets at period end | $ 56,105 | $ 64,157 | $ 63,254 | $ 63,933 | $ 62,518 | $ 56,105 | $ 62,518 |
Insurance | |||||||
Net interest income | $ 2 | $ 2 | $ 4 | $ 5 | $ 5 | $ 4 | $ 10 |
Noninterest income | 1,667 | 1,448 | 1,127 | 1,533 | 1,554 | 3,115 | 3,198 |
Noninterest expense | 1,241 | 1,149 | 1,125 | 1,153 | 1,101 | 2,390 | 2,128 |
Earnings before income taxes | 428 | 301 | 6 | 385 | 458 | 729 | 1,080 |
Income tax expense (benefit) | 150 | 106 | (12) | 134 | 161 | 256 | 379 |
Net earnings | $ 278 | $ 195 | $ 18 | $ 251 | $ 297 | $ 473 | $ 701 |
Total assets at period end | $ 7,370 | $ 6,827 | $ 9,095 | $ 9,063 | $ 8,714 | $ 7,370 | $ 8,714 |
Other | |||||||
Net interest expense | $ (297) | $ (298) | $ (298) | $ (301) | $ (298) | $ (595) | $ (595) |
Loss before income taxes | (297) | (298) | (298) | (301) | (298) | (595) | (595) |
Income tax benefit | (104) | (104) | (104) | (106) | (104) | (208) | (208) |
Net loss | $ (193) | $ (194) | $ (194) | $ (195) | $ (194) | $ (387) | $ (387) |
Total assets at period end | $ (66,409) | $ (80,690) | $ (79,689) | $ (72,631) | $ (74,323) | $ (66,409) | $ (74,323) |
Consolidated | |||||||
Net interest income | $ 11,735 | $ 11,095 | $ 11,101 | $ 10,969 | $ 10,939 | $ 22,830 | $ 22,429 |
Provision for loan losses | 1,919 | 2,170 | 2,597 | 9,599 | 18,013 | 4,089 | 22,973 |
Noninterest income | 7,334 | 7,066 | 9,859 | 7,028 | 7,947 | 14,400 | 14,856 |
Noninterest expense | 14,112 | 14,355 | 20,213 | 20,728 | 19,395 | 28,467 | 37,659 |
Earnings (loss) before income taxes | 3,038 | 1,636 | (1,850) | (12,330) | (18,522) | 4,674 | (23,347) |
Income tax expense (benefit) | 973 | 484 | (950) | (3,904) | (5,869) | 1,457 | (8,443) |
Net earnings (loss) | $ 2,065 | $ 1,152 | $ (900) | $ (8,426) | $ (12,653) | $ 3,217 | $ (14,904) |
Total assets at period end | $ 1,466,495 | $ 1,458,181 | $ 1,466,497 | $ 1,650,662 | $ 1,625,615 | $ 1,466,495 | $ 1,625,615 |
Encore Bancshares, Inc. and Subsidiaries | ||||||
TAXABLE-EQUIVALENT (TE) YIELD ANALYSIS (1) | ||||||
(Unaudited, dollars in thousands) | ||||||
Three Months Ended June 30, | ||||||
2011 | 2010 | |||||
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 | $ 955,019 | $ 14,304 | 6.01% | $ 1,059,695 | $ 15,505 | 5.87% |
Securities - TE yield | 315,681 | 2,087 | 2.65% | 186,777 | 1,586 | 3.41% |
Federal funds sold and other | 71,909 | 104 | 0.58% | 275,148 | 234 | 0.34% |
Total interest-earning assets - TE yield | 1,342,609 | 16,495 | 4.93% | 1,521,620 | 17,325 | 4.57% |
Less: Allowance for loan losses | (19,219) | (24,796) | ||||
Noninterest-earning assets | 127,583 | 122,236 | ||||
Noninterest-earning assets held-for-sale | -- | 4,481 | ||||
Total assets | $ 1,450,973 | $ 1,623,541 | ||||
Liabilities and shareholders' equity: | ||||||
Interest-bearing liabilities: | ||||||
Interest checking | $ 163,926 | 81 | 0.20% | $ 145,856 | $ 113 | 0.31% |
Money market and savings | 269,422 | 274 | 0.41% | 238,000 | 447 | 0.75% |
Time deposits | 379,721 | 1,879 | 1.98% | 415,615 | 2,402 | 2.32% |
Interest-bearing deposits held-for-sale | -- | -- | 201,919 | 863 | 1.71% | |
Total interest-bearing deposits | 813,069 | 2,234 | 1.10% | 1,001,390 | 3,825 | 1.53% |
Borrowings and repurchase agreements | 223,145 | 2,117 | 3.81% | 218,794 | 2,139 | 3.92% |
Junior subordinated debentures | 20,619 | 297 | 5.78% | 20,619 | 298 | 5.80% |
Total interest-bearing liabilities | 1,056,833 | 4,648 | 1.76% | 1,240,803 | 6,262 | 2.02% |
Noninterest-bearing liabilities: | ||||||
Noninterest-bearing deposits | 217,624 | 168,021 | ||||
Noninterest-bearing deposits held-for-sale | -- | 17,830 | ||||
Other liabilities | 7,225 | 6,384 | ||||
Other liabilities held-for-sale | -- | 253 | ||||
Total liabilities | 1,281,682 | 1,433,291 | ||||
Shareholders' equity | 169,291 | 190,250 | ||||
Total liabilities and shareholders' equity | $ 1,450,973 | $ 1,623,541 | ||||
Net interest income - TE | $ 11,847 | $ 11,063 | ||||
Net interest spread - TE | 3.17% | 2.55% | ||||
Net interest margin - TE | 3.54% | 2.92% | ||||
(1) Non-GAAP measure. See calculation of taxable-equivalent amounts in subsequent table. |
Encore Bancshares, Inc. and Subsidiaries | ||||||
TAXABLE-EQUIVALENT (TE) YIELD ANALYSIS (1) | ||||||
(Unaudited, dollars in thousands) | ||||||
Six Months Ended June 30, | ||||||
2011 | 2010 | |||||
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 | $ 944,250 | $ 27,799 | 5.94% | $ 1,062,022 | $ 31,265 | 5.94% |
Securities - TE yield | 334,859 | 4,456 | 2.68% | 208,463 | 3,692 | 3.57% |
Federal funds sold and other | 66,029 | 196 | 0.60% | 247,736 | 449 | 0.37% |
Total interest-earning assets - TE yield | 1,345,138 | 32,451 | 4.86% | 1,518,221 | 35,406 | 4.70% |
Less: Allowance for loan losses | (18,913) | (25,729) | ||||
Noninterest-earning assets | 129,373 | 124,249 | ||||
Noninterest-earning assets held-for-sale | -- | 5,921 | ||||
Total assets | $ 1,455,598 | $ 1,622,662 | ||||
Liabilities and shareholders' equity: | ||||||
Interest-bearing liabilities: | ||||||
Interest checking | $ 163,255 | $ 172 | 0.21% | $ 149,420 | $ 235 | 0.32% |
Money market and savings | 278,177 | 583 | 0.42% | 239,140 | 953 | 0.80% |
Time deposits | 379,433 | 3,819 | 2.03% | 408,075 | 4,816 | 2.38% |
Interest-bearing deposits held-for-sale | -- | -- | 210,814 | 1,873 | 1.79% | |
Total interest-bearing deposits | 820,865 | 4,574 | 1.12% | 1,007,449 | 7,877 | 1.58% |
Borrowings and repurchase agreements | 223,964 | 4,223 | 3.80% | 219,771 | 4,255 | 3.90% |
Junior subordinated debentures | 20,619 | 595 | 5.82% | 20,619 | 595 | 5.82% |
Total interest-bearing liabilities | 1,065,448 | 9,392 | 1.78% | 1,247,839 | 12,727 | 2.06% |
Noninterest-bearing liabilities: | ||||||
Noninterest-bearing deposits | 214,273 | 157,459 | ||||
Noninterest-bearing deposits held-for-sale | -- | 17,523 | ||||
Other liabilities | 7,782 | 10,873 | ||||
Other liabilities held-for-sale | -- | 278 | ||||
Total liabilities | 1,287,503 | 1,433,972 | ||||
Shareholders' equity | 168,095 | 188,690 | ||||
Total liabilities and shareholders' equity | $ 1,455,598 | $ 1,622,662 | ||||
Net interest income - TE | $ 23,059 | $ 22,679 | ||||
Net interest spread - TE | 3.08% | 2.64% | ||||
Net interest margin - TE | 3.46% | 3.01% | ||||
(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) | |||||
June 30, | March 31, | Dec 31, | Sept 30, | June 30, | |
2011 | 2011 | 2010 | 2010 | 2010 | |
Shareholders' equity (GAAP) | $ 171,714 | $ 167,914 | $ 166,641 | $ 169,706 | $ 177,873 |
Less: Preferred stock | 29,766 | 29,633 | 29,500 | 29,368 | 29,238 |
Goodwill and other intangible assets, net | 40,233 | 40,374 | 40,515 | 40,675 | 40,833 |
Tangible common equity (1) | $ 101,715 | $ 97,907 | $ 96,626 | $ 99,663 | $ 107,802 |
Total assets (GAAP) | $ 1,466,495 | $ 1,458,181 | $ 1,466,497 | $ 1,650,662 | $ 1,625,615 |
Less: Goodwill and other intangible assets, net | 40,233 | 40,374 | 40,515 | 40,675 | 40,833 |
Tangible assets | $ 1,426,262 | $ 1,417,807 | $ 1,425,982 | $ 1,609,987 | $ 1,584,782 |
Common shares outstanding at end of period | 11,663 | 11,552 | 11,431 | 11,380 | 11,380 |
(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 | Six Months Ended | ||||
June 30, | June 30, | ||||
2011 | 2010 | 2011 | 2010 | ||
Net interest income (GAAP) | $ 11,735 | $ 10,939 | $ 22,830 | $ 22,429 | |
Taxable-equivalent adjustment (1) | 112 | 124 | 229 | 250 | |
Net interest income on a taxable-equivalent basis | $ 11,847 | $ 11,063 | $ 23,059 | $ 22,679 | |
(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. |