HOUSTON, Oct. 26, 2007 (PRIME NEWSWIRE) -- Encore Bancshares, Inc. (Nasdaq:EBTX) today announced earnings for the third quarter of 2007.
Highlights:
* Net earnings grew 32% over third quarter of 2006 * Net interest margin improved 41 basis points over the prior year quarter * Loans increased 20% compared with the third quarter of 2006 * Nonperforming assets dropped 27% compared with the second quarter of 2007
"We continued to make good progress in improving our net interest margin and profitability during the quarter," said James S. D'Agostino, Jr., Chairman and Chief Executive Officer. "In addition, we reported a 38% increase in wealth management earnings, with assets under management up 16% to $2.8 billion. Further I am pleased that our credit quality metrics are improving."
In the third quarter of 2007, we completed our initial public offering of 2,190,475 shares of common stock (including the underwriter's over allotment), which priced at $21.00 per share on July 17, 2007. The net proceeds of the offering, approximately $41.7 million, contributed to total shareholders' equity of $155.4 million as of September 30, 2007.
Earnings
For the three months ended September 30, 2007, net earnings were $2.2 million, or $0.22 per diluted share, compared with $1.7 million, or $0.21 per diluted share, for the same period of 2006. The 32.3% 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.
For the nine months ended September 30, 2007, net earnings were $5.7 million, or $0.64 per diluted share, compared with $6.3 million, or $0.80 per diluted share, for the first nine months of 2006. The 10.0% decrease in net earnings, period over period, was due primarily to a decrease in mortgage banking income.
Net Interest Income
Net interest income for the third quarter of 2007 was $9.1 million, up $1.5 million, or 20.1%, compared with the third quarter of 2006. The net interest margin expanded 41 basis points to 2.86%, reflecting an improved asset and funding mix resulting from the replacement of lower yielding first mortgage loans and securities with higher yielding loans. For the nine months ended September 30, 2007, net interest income was $24.7 million, an increase of $2.0 million, or 8.6%, compared with the same period in 2006. The net interest margin increased 20 basis points to 2.69%, due primarily to improvements in the asset and funding mix. Linked quarter (compared with the immediately preceding quarter) net interest income rose $1.1 million, or 13.4%, and the net interest margin improved 19 basis points.
Noninterest Income
Noninterest income was $7.5 million in the third quarter of 2007, down $359,000, or 4.6%, compared with the third quarter of 2006. Noninterest income for the nine months ended September 30, 2007 was $24.7 million, a decrease of $2.1 million, or 8.0%, compared with the same period of 2006. The decrease in noninterest income for both periods was primarily attributable to reduced mortgage banking income, the majority of which was related to second mortgages. This reduction occurred due to the combined effects of a lower dollar volume of mortgage loans sold and lower pricing, which resulted from a slowdown in the housing market and changes in the market for mortgage loans.
As a result of the unfavorable mortgage market conditions that have developed, and giving consideration to our assessment that the credit quality of the mortgage loans we originate is strong and the yield is favorable, we intend to originate these loans for our portfolio. We began this practice with all new loans originated in the latter part of the third quarter. We anticipate that the near-term decrease in mortgage banking income resulting from this change in strategy will be mitigated in the long term by an increase in interest income as a result of the growth in the loan portfolio from the retained mortgage loans. In an effort to further mitigate the decrease in mortgage banking income, we initiated a cost reduction effort in the fourth quarter of 2007, which includes a staff consolidation of approximately 5%. We expect that these cost reductions will yield expense savings of approximately $2.0 million in 2008 which will mostly be reinvested in growing our business.
Noninterest Expense
Noninterest expense was $12.5 million for the third quarter of 2007, up $420,000, or 3.5%, compared with the third quarter of 2006. Noninterest expense for the nine months ended September 30, 2007 was $38.2 million, up $551,000, or 1.5%, compared with the same period of 2006. The change in both periods was due primarily to the costs associated with opening two new private client offices. Partially offsetting these increased expenses were lower commissions paid as a result of the slowdown in mortgage origination and lower expenses due to the sale of certain trust related assets in June 2006. Linked quarter noninterest expense decreased $800,000, or 6.0%, as a result of a loss related to an early debt extinguishment in the second quarter of 2007 and increased cost deferrals associated with originating second mortgages for the loan portfolio.
Segment Earnings
On a segment basis, our banking net earnings were $1.3 million for the third quarter of 2007, an increase of $153,000, or 13.7%, compared with the same period of 2006, resulting from a rise in net interest income that was partially offset by a decline in mortgage banking income. Our wealth management group showed net earnings of $915,000 for the third quarter of 2007, an increase of $251,000, or 37.8%, over the prior year quarter. The growth in net earnings was due primarily to a 16.2% increase in assets under management. Our insurance group also reported earnings growth, with net earnings of $316,000 for the third quarter of 2007, an increase of $64,000, or 25.4% compared with the prior year quarter. The increased net earnings were due primarily to growth in commercial business lines.
Loans
Period end loans were $1.0 billion at September 30, 2007, an increase of $173.1 million, or 20.2%, from September 30, 2006, and up $77.3 million, or 8.1%, on a linked quarter basis. Average loans were $973.6 million for the third quarter of 2007, an increase of $133.0 million, or 15.8%, compared with the prior year quarter.
Deposits
Period end deposits were $1.0 billion, up $92.8 million, or 9.9%, from September 30, 2006 and up $11.9 million, or 1.2%, on a linked quarter basis. Noninterest-bearing deposits were $115.7 million, up $28.9 million, or 33.3%, from September 30, 2006. Average deposits were $1.0 billion for the third quarter of 2007, up $86.8 million, or 9.4%, compared with the prior year quarter.
Credit Quality
Net charge-offs for the third quarter of 2007 were $465,000, or 0.19% of average total loans on an annualized basis, compared with $182,000, or 0.09% of average total loans on an annualized basis, for the third quarter of 2006. The provision for loan losses was $1.0 million in the third quarter, an increase of $243,000, or 31.8%, compared with the prior year quarter, reflecting the growth in the loan portfolio. The allowance for loan losses was $10.7 million, or 1.04% of total loans at September 30, 2007, compared with $10.2 million, or 1.07% of total loans at June 30, 2007.
At September 30, 2007, nonperforming assets were $9.5 million, or 0.92% of total loans and investment in real estate, compared with $9.7 million, or 1.07% of total loans and investment in real estate at December 31, 2006. At September 30, 2007, non-accrual loans were $8.7 million compared with $9.1 million at June 30, 2007. Non-accrual loans consisted primarily of one loan in the amount of $6.3 million to a law firm. Loans 90 days past due and still accruing were $20,000 at September 30, 2007 compared with $2.2 million at June 30, 2007. The improvement is primarily attributable to a number of small commercial loans that were renewed or repaid. Investment in real estate decreased $1.1 million, due to the sale of a property that was originally acquired to be a private client office. We expect that nonperforming assets will be further reduced prior to year-end 2007.
Other Information
Effective October 1, 2007, Encore Bank's Executive Vice President and Chief Credit Officer, John Fields, resigned from his position. Mr. Fields has been with Encore Bank since 2000 and has served in his current position since that time.
To ensure continuity of our strong credit culture as well as adherence to credit policies and practices, the duties of Chief Credit Officer have been assumed on an interim basis by Chairman and CEO, James D'Agostino, until a permanent replacement is named. In addition, Jim Riley, an experienced banker, who joined the bank in March 2007 as a credit consultant, will continue to support credit administration.
Conference Call
A conference call will be held on Friday, October 26, 2007 at 10 a.m., Central time to discuss third quarter 2007 results. A question and answer session will follow the prepared remarks. Individuals may access the call by dialing 1-800-289-0569 (Int'l callers dial 913-981-5542), 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. Encore builds 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 the As of and for the
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
2007 2006 2007 2006
-------- -------- -------- --------
Earnings Statement Data:
Interest income $ 21,032 $ 19,513 $ 60,187 $ 56,220
Interest expense 11,966 11,963 35,443 33,435
-------- -------- -------- --------
Net interest income 9,066 7,550 24,744 22,785
Provision for loan losses 1,008 765 2,853 2,287
-------- -------- -------- --------
Net interest income after
provision for loan
losses 8,058 6,785 21,891 20,498
Noninterest income 7,521 7,880 24,697 26,839
Noninterest expense 12,489 12,069 38,240 37,689
-------- -------- -------- --------
Net earnings before
income taxes 3,090 2,596 8,348 9,648
Income tax expense 842 897 2,667 3,334
-------- -------- -------- --------
Net earnings $ 2,248 $ 1,699 $ 5,681 $ 6,314
======== ======== ======== ========
Common Share Data:
Basic earnings per share $ 0.24 $ 0.23 $ 0.70 $ 0.84
Diluted earnings per
share 0.22 0.21 0.64 0.80
Book value per share 15.36 13.34 15.36 13.34
Tangible book value per
share 11.91 8.85 11.91 8.85
Weighted average shares
outstanding (basic) 9,347,162 7,503,526 8,160,116 7,500,999
Weighted average shares
outstanding (diluted) 10,156,090 7,934,716 8,836,428 7,906,746
Shares outstanding at
end of period 10,120,440 7,781,709 10,120,440 7,781,709
Selected Performance Ratios:
Return on average assets 0.66% 0.51% 0.58% 0.64%
Return on average equity 6.20% 6.60% 6.31% 8.44%
Return on average
tangible equity 8.20% 10.05% 8.93% 13.03%
Net interest margin 2.86% 2.45% 2.69% 2.49%
Efficiency ratio 74.03% 76.68% 75.80% 74.50%
Noninterest income to
total revenue 45.34% 51.07% 49.95% 54.08%
Encore Bancshares, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited, dollars in thousands, except per share data)
Sept 30, June 30, March 31, Dec 31, Sept 30,
2007 2007 2007 2006 2006
---------- ---------- ---------- ---------- ----------
ASSETS
Cash and due
from banks $ 19,044 $ 23,972 $ 23,912 $ 27,428 $ 24,143
Interest-
bearing
deposits in
banks 1,804 2,903 7,122 2,904 3,924
Federal funds
sold and
other 100,630 9,862 888 8,764 18,398
---------- ---------- ---------- ---------- ----------
Cash and
cash
equivalents 121,478 36,737 31,922 39,096 46,465
Securities
available-
for-sale,
at estimated
fair value 12,205 15,298 51,439 83,701 88,193
Securities
held-to-
maturity, at
amortized
cost 140,507 148,983 156,472 172,555 180,967
Mortgages
held-for-
sale 2,244 54,004 45,954 57,769 51,916
Loans
receivable 1,030,133 952,838 932,793 908,368 857,005
Allowance for
loan losses (10,711) (10,168) (9,790) (9,056) (10,123)
---------- ---------- ---------- ---------- ----------
Net loans
receivable 1,019,422 942,670 923,003 899,312 846,882
Federal Home
Loan Bank
of Dallas
stock, at
cost 5,805 6,424 6,611 7,719 9,416
Investments
in real
estate 731 1,785 1,785 235 450
Premises and
equipment,
net 15,814 15,790 13,051 12,639 12,337
Goodwill 27,922 27,905 27,894 27,869 27,085
Other
intangible
assets, net 6,991 7,200 7,408 7,618 7,855
Cash
surrender
value of
life
insurance
policies 13,951 13,818 13,684 13,551 13,419
Accrued
interest
receivable
and other
assets 16,062 16,587 15,764 14,779 13,967
---------- ---------- ---------- ---------- ----------
$1,383,132 $1,287,201 $1,294,987 $1,336,843 $1,298,952
========== ========== ========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-
bearing $ 115,742 $ 106,064 $ 112,585 $ 131,476 $ 86,845
Interest-
bearing 916,442 914,208 884,713 899,335 852,563
---------- ---------- ---------- ---------- ----------
Total
deposits 1,032,184 1,020,272 997,298 1,030,811 939,408
Borrowings
and
repurchase
agreements 166,359 125,753 157,505 171,732 227,455
Junior
subordinated
debentures 20,619 20,619 20,619 20,619 20,619
Accrued
interest
payable and
other
liabilities 8,538 9,447 10,621 8,004 7,648
---------- ---------- ---------- ---------- ----------
Total
liabilities 1,227,700 1,176,091 1,186,043 1,231,166 1,195,130
Commitments
and
contingencies -- -- -- -- --
Puttable
common stock -- -- -- 774 774
Puttable
common stock
in excess
of par -- -- -- 9,492 9,492
---------- ---------- ---------- ---------- ----------
Total
puttable
common stock -- -- -- 10,266 10,266
Shareholders'
equity:
Preferred
stock -- -- -- -- --
Common stock 10,124 7,925 7,901 7,016 7,014
Additional
paid-in
capital 107,954 68,188 67,670 57,585 57,248
Retained
earnings 38,060 35,812 34,154 32,529 31,365
Common stock
in treasury,
at cost (69) (69) (69) (69) (104)
Accumulated
other
comprehensive
loss (637) (746) (712) (1,650) (1,967)
---------- ---------- ---------- ---------- ----------
Total
shareholders'
equity 155,432 111,110 108,944 95,411 93,556
---------- ---------- ---------- ---------- ----------
$1,383,132 $1,287,201 $1,294,987 $1,336,843 $1,298,952
========== ========== ========== ========== ==========
Ratios:
Leverage
ratio 10.71% 7.66% 7.40% 6.35% 6.26%
Tier 1
risk-based
capital
ratio 14.20% 10.31% 10.28% 9.20% 9.56%
Total risk-
based
capital
ratio 15.28% 11.40% 11.35% 11.37% 11.99%
Book value
per share $ 15.36 $ 14.03 $ 13.80 $ 13.57 $ 13.34
Tangible
book value
per share 11.91 9.60 9.33 9.01 8.85
Tangible
common
equity to
tangible
assets 8.94% 6.07% 5.85% 5.39% 5.45%
Encore Bancshares, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited, dollars in thousands, except per share data)
Three Months Ended
------------------------------------------------------
Sept 30, June 30, March 31, Dec 31, Sept 30,
2007 2007 2007 2006 2006
---------- ---------- ---------- ---------- ----------
Interest
income:
Loans,
including
fees $ 17,309 $ 16,346 $ 15,808 $ 15,283 $ 14,651
Mortgages
held-for-sale 1,346 1,202 1,121 1,442 1,787
Securities 1,463 1,745 2,273 2,583 2,705
Federal funds
sold and
other 914 382 278 282 370
---------- ---------- ---------- ---------- ----------
Total
interest
income 21,032 19,675 19,480 19,590 19,513
Interest
expense:
Deposits 9,947 9,525 9,456 9,441 8,603
Borrowings
and
repurchase
agreements 1,651 1,779 1,889 2,318 2,898
Junior
subordinated
debentures 368 373 455 443 462
---------- ---------- ---------- ---------- ----------
Total
interest
expense 11,966 11,677 11,800 12,202 11,963
---------- ---------- ---------- ---------- ----------
Net interest
income 9,066 7,998 7,680 7,388 7,550
Provision for
loan losses 1,008 945 900 1,204 765
---------- ---------- ---------- ---------- ----------
Net interest
income
after
provision
for loan
losses 8,058 7,053 6,780 6,184 6,785
Noninterest
income:
Trust and
investment
management
fees 4,501 4,268 4,244 4,159 3,899
Mortgage
banking 1,167 2,052 2,192 2,643 2,243
Insurance
commissions
and fees 1,450 1,562 1,713 1,114 1,364
Real estate
operations,
including
net gain on
sales 178 107 18 (21) 81
Net loss
on sale of
available-
for-sale
securities -- (32) (149) -- --
Other 225 764 437 349 293
---------- ---------- ---------- ---------- ----------
Total
noninterest
income 7,521 8,721 8,455 8,244 7,880
Noninterest
expense:
Compensation 7,318 7,855 7,863 7,272 7,482
Occupancy 1,438 1,499 1,399 1,634 1,236
Equipment 506 497 520 516 511
Advertising
and
promotion 328 271 196 374 227
Outside data
processing 884 904 808 834 861
Professional
fees 401 458 390 405 497
Intangible
amortization 209 211 209 236 237
Loss on early
debt
extinguishment -- 391 -- -- --
Other 1,405 1,203 1,077 1,378 1,018
---------- ---------- ---------- ---------- ----------
Total
noninterest
expense 12,489 13,289 12,462 12,649 12,069
---------- ---------- ---------- ---------- ----------
Net earnings
before
income
taxes 3,090 2,485 2,773 1,779 2,596
Income tax
expense 842 827 998 615 897
---------- ---------- ---------- ---------- ----------
NET
EARNINGS $ 2,248 $ 1,658 $ 1,775 $ 1,164 $ 1,699
========== ========== ========== ========== ==========
Earnings Per
Common Share:
Basic $ 0.24 $ 0.22 $ 0.23 $ 0.16 $ 0.23
Diluted 0.22 0.20 0.22 0.15 0.21
Average
common
shares
outstanding 9,347,162 7,558,597 7,554,893 7,501,526 7,503,526
Diluted average
common shares
outstanding 10,156,090 8,199,564 8,131,379 7,981,883 7,934,716
Nine Months
Ended September 30,
----------------------------
2007 2006
-------- --------
Interest income:
Loans, including fees $ 49,463 $ 41,470
Mortgages held-for-sale 3,669 5,104
Securities 5,481 8,656
Federal funds sold and other 1,574 990
-------- --------
Total interest income 60,187 56,220
Interest expense:
Deposits 28,928 21,079
Borrowings and repurchase
agreements 5,319 11,060
Junior subordinated
debentures 1,196 1,296
-------- --------
Total interest expense 35,443 33,435
-------- --------
Net interest income 24,744 22,785
Provision for loan losses 2,853 2,287
-------- --------
Net interest income after
provision for loan losses 21,891 20,498
Noninterest income:
Trust and investment management
fees 13,013 13,156
Mortgage banking 5,411 8,018
Insurance commissions and
fees 4,725 4,342
Real estate operations,
including net gain on sales 303 355
Net loss on sale of
available-for-sale securities (181) --
Other 1,426 968
-------- --------
Total noninterest income 24,697 26,839
Noninterest expense:
Compensation 23,036 23,775
Occupancy 4,336 3,831
Equipment 1,523 1,534
Advertising and promotion 795 718
Outside data processing 2,596 2,419
Professional fees 1,249 1,404
Intangible amortization 629 719
Loss on early debt extinguishment 391 --
Other 3,685 3,289
-------- --------
Total noninterest expense 38,240 37,689
-------- --------
Net earnings before
income taxes 8,348 9,648
Income tax expense 2,667 3,334
-------- --------
NET EARNINGS $ 5,681 $ 6,314
======== ========
Earnings Per Common Share:
Basic $ 0.70 $ 0.84
Diluted 0.64 0.80
Average common shares
outstanding 8,160,116 7,500,999
Diluted average common
shares outstanding 8,836,428 7,906,746
Encore Bancshares, Inc. and Subsidiaries
AVERAGE CONSOLIDATED BALANCE SHEETS
(Unaudited, dollars in thousands)
Three Months Ended
------------------------------------------------------
Sept 30, June 30, March 31, Dec 31, Sept 30,
2007 2007 2007 2006 2006
---------- ---------- ---------- ---------- ----------
Assets:
Interest-
earning
assets:
Loans $ 973,641 $ 938,356 $ 916,523 $ 887,439 $ 840,674
Mortgages
held-for-sale 60,959 53,926 52,273 59,042 80,951
Securities 156,159 183,008 232,154 262,873 277,854
Federal funds
sold and
other 68,347 27,755 19,412 18,448 25,248
---------- ---------- ---------- ---------- ----------
Total
interest-
earning
assets 1,259,106 1,203,045 1,220,362 1,227,802 1,224,727
Less:
Allowance for
loan losses (10,391) (9,843) (9,268) (10,110) (9,726)
Noninterest-
earning
assets 102,667 103,512 102,234 104,350 100,204
---------- ---------- ---------- ---------- ----------
Total assets $1,351,382 $1,296,714 $1,313,328 $1,322,042 $1,315,205
========== ========== ========== ========== ==========
Liabilities,
shareholders'
equity and
puttable
common
stock:
Interest-
bearing
liabilities:
Interest
checking $ 169,860 $ 167,956 $ 183,335 $ 175,640 $ 168,222
Money market
and savings 358,732 340,950 334,971 331,517 294,911
Time deposits 375,896 373,669 374,389 369,385 373,687
---------- ---------- ---------- ---------- ----------
Total
interest-
bearing
deposits 904,488 882,575 892,695 876,542 836,820
Borrowings
and
repurchase
agreements 158,203 161,698 172,660 205,667 252,416
Junior
subordinated
debentures 20,619 20,930 20,619 20,619 20,619
---------- ---------- ---------- ---------- ----------
Total
interest-
bearing
liabilities 1,083,310 1,065,203 1,085,974 1,102,828 1,109,855
---------- ---------- ---------- ---------- ----------
Noninterest-
bearing
liabilities:
Noninterest-
bearing
deposits 108,168 109,753 105,950 100,773 89,038
Other
liabilities 16,128 12,127 13,685 14,091 14,161
---------- ---------- ---------- ---------- ----------
Total
liabilities 1,207,606 1,187,083 1,205,609 1,217,692 1,213,054
Shareholders'
equity and
puttable
common stock 143,776 109,631 107,719 104,350 102,151
---------- ---------- ---------- ---------- ----------
Total
liabilities,
shareholders'
equity and
puttable
common stock $1,351,382 $1,296,714 $1,313,328 $1,322,042 $1,315,205
========== ========== ========== ========== ==========
Encore Bancshares, Inc. and Subsidiaries
SELECTED FINANCIAL DATA
(Unaudited, dollars in thousands)
Loan Sept 30, June 30, March 31, Dec 31, Sept 30,
Portfolio: 2007 2007 2007 2006 2006
---------- ---------- ---------- ---------- ----------
Commercial:
Commercial $ 111,072 $ 113,370 $ 115,896 $ 113,526 $ 106,201
Commercial
real estate 249,576 225,985 210,992 190,550 169,811
Real estate
construction 132,557 130,168 134,781 121,848 109,761
---------- ---------- ---------- ---------- ----------
Total
commercial 493,205 469,523 461,669 425,924 385,773
Consumer:
Residential
real estate 411,260 355,279 334,156 336,077 317,390
Home equity
lines 76,096 76,452 78,430 78,158 75,038
Consumer
installment
- indirect 29,210 33,622 39,204 44,360 50,020
Consumer other 20,362 17,962 19,334 23,849 28,784
---------- ---------- ---------- ---------- ----------
Total
consumer 536,928 483,315 471,124 482,444 471,232
---------- ---------- ---------- ---------- ----------
Total loans
receivable $1,030,133 $ 952,838 $ 932,793 $ 908,368 $ 857,005
========== ========== ========== ========== ==========
Nonperforming
Assets:
Nonaccrual
loans $ 8,734 $ 9,111 $ 8,446 $ 9,411 $ 4,453
Accruing loans
past due
90 days or
more 20 2,178 100 96 870
Restructured
loans -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total
nonperforming
loans 8,754 11,289 8,546 9,507 5,323
---------- ---------- ---------- ---------- ----------
Investment in
real estate 731 1,785 1,785 235 450
---------- ---------- ---------- ---------- ----------
Total
nonperforming
assets $ 9,485 $ 13,074 $ 10,331 $ 9,742 $ 5,773
========== ========== ========== ========== ==========
Asset Quality
Ratios:
Nonperforming
assets to
total loans
and investment
in real estate 0.92% 1.37% 1.11% 1.07% 0.67%
Net charge-offs
to average
loans 0.19% 0.24% 0.07% 1.02% 0.09%
Allowance for
loan losses
to period-end
loans 1.04% 1.07% 1.05% 1.00% 1.18%
Allowance for
loan losses to
nonperforming
loans 122.36% 90.07% 114.56% 95.26% 190.17%
Deposits:
Noninterest-
bearing
deposits $ 115,742 $ 106,064 $ 112,585 $ 131,476 $ 86,845
Interest
checking 169,646 172,079 174,602 191,683 162,172
Money market
and savings 362,289 368,682 329,414 332,605 323,724
Time deposits
less than
$100,000 175,071 166,482 174,281 178,216 173,340
---------- ---------- ---------- ---------- ----------
Core deposits 822,748 813,307 790,882 833,980 746,081
---------- ---------- ---------- ---------- ----------
Time deposits
$100,000 and
greater 194,619 188,075 195,894 187,864 184,339
Brokered
deposits 14,817 18,890 10,522 8,967 8,988
---------- ---------- ---------- ---------- ----------
Total
deposits $1,032,184 $1,020,272 $ 997,298 $1,030,811 $ 939,408
========== ========== ========== ========== ==========
Assets Under
Management $2,792,894 $2,683,841 $2,609,893 $2,509,185 $2,403,681
========== ========== ========== ========== ==========
Encore Bancshares, Inc. and Subsidiaries
ALLOWANCE FOR LOAN LOSSES
(Unaudited, dollars in thousands)
Three Months Ended
-------------------------------------------
Sept 30, June 30, March 31, Dec 31, Sept 30,
2007 2007 2007 2006 2006
------- ------ ------- ------- -------
Allowance for loan
losses at beginning of
quarter $10,168 $ 9,790 $ 9,056 $10,123 $ 9,540
Charge-offs:
Commercial:
Commercial (42) -- -- (1,488) --
Commercial real estate -- -- -- -- --
Real estate construction -- -- -- -- --
------- ------- ------- ------- -------
Total commercial (42) -- -- (1,488) --
------- ------- ------- ------- -------
Consumer:
Residential real estate (340) (416) (84) (66) (27)
Home equity lines (25) -- (10) (61) (71)
Consumer installment -
indirect (307) (215) (80) (439) (174)
Consumer other (13) (24) (144) (340) (76)
------- ------- ------- ------- -------
Total consumer (685) (655) (318) (906) (348)
------- ------- ------- ------- -------
Total charge-offs (727) (655) (318) (2,394) (348)
------- ------- ------- ------- -------
Recoveries:
Commercial:
Commercial 6 -- -- -- --
Commercial real estate -- -- -- -- --
Real estate construction -- -- -- -- --
------- ------- ------- ------- -------
Total commercial 6 -- -- -- --
------- ------- ------- ------- -------
Consumer:
Residential real estate 157 7 26 3 99
Home equity lines -- -- 43 -- 1
Consumer installment -
indirect 76 45 64 100 43
Consumer other 23 36 19 20 23
------- ------- ------- ------- -------
Total consumer 256 88 152 123 166
------- ------- ------- ------- -------
Total recoveries 262 88 152 123 166
------- ------- ------- ------- -------
Net charge-offs (465) (567) (166) (2,271) (182)
------- ------- ------- ------- -------
Provision for loan losses 1,008 945 900 1,204 765
------- ------- ------- ------- -------
Allowance for loan
losses at end of
quarter $10,711 $10,168 $ 9,790 $ 9,056 $10,123
======= ======= ======= ======= =======
Encore Bancshares, Inc. and Subsidiaries
SEGMENT OPERATIONS
(Unaudited, dollars in thousands)
As of and for the Three Months Ended
------------------------------------------------------
Sept 30, June 30, March 31, Dec 31, Sept 30,
2007 2007 2007 2006 2006
---------- ---------- ---------- ---------- ----------
Banking
-------
Net interest
income $ 9,315 $ 8,258 $ 8,035 $ 7,732 $ 7,927
Provision for
loan losses 1,008 945 900 1,204 765
Noninterest
income 1,559 2,807 2,481 2,978 2,620
Noninterest
expense 8,338 8,853 8,453 8,522 8,223
---------- ---------- ---------- ---------- ----------
Earnings
before
income taxes 1,528 1,267 1,163 984 1,559
Income tax
expense 261 370 396 373 445
---------- ---------- ---------- ---------- ----------
Net earnings $ 1,267 $ 897 $ 767 $ 611 $ 1,114
========== ========== ========== ========== ==========
Total assets
at quarter
end $1,392,156 $1,292,112 $1,301,562 $1,342,446 $1,304,825
========== ========== ========== ========== ==========
Wealth Management
-----------------
Net interest
income $ 82 $ 77 $ 73 $ 73 $ 66
Noninterest
income 4,501 4,268 4,244 4,160 3,898
Noninterest
expense 3,137 2,988 3,027 3,190 2,860
---------- ---------- ---------- ---------- ----------
Earnings
before
income taxes 1,446 1,357 1,290 1,043 1,104
Income tax
expense 531 483 467 344 440
---------- ---------- ---------- ---------- ----------
Net earnings $ 915 $ 874 $ 823 $ 699 $ 664
========== ========== ========== ========== ==========
Total assets
at quarter
end $ 45,425 $ 44,395 $ 43,935 $ 42,684 $ 41,419
========== ========== ========== ========== ==========
Insurance
---------
Net interest
income $ 37 $ 36 $ 27 $ 26 $ 19
Noninterest
income 1,460 1,637 1,716 1,117 1,352
Noninterest
expense 1,014 1,057 982 937 986
---------- ---------- ---------- ---------- ----------
Earnings
before
income taxes 483 616 761 206 385
Income tax
expense 167 232 272 195 133
---------- ---------- ---------- ---------- ----------
Net earnings $ 316 $ 384 $ 489 $ 11 $ 252
========== ========== ========== ========== ==========
Total assets
at quarter
end $ 9,219 $ 9,101 $ 9,278 $ 8,231 $ 8,219
========== ========== ========== ========== ==========
Other
-----
Net interest
expense $ (368)$ (373)$ (455)$ (443)$ (462)
Noninterest
income 1 9 14 (11) 10
Noninterest
expense -- 391 -- -- --
---------- ---------- ---------- ---------- ----------
Loss before
income taxes (367) (755) (441) (454) (452)
Income tax
benefit (117) (258) (137) (297) (121)
---------- ---------- ---------- ---------- ----------
Net loss $ (250)$ (497)$ (304)$ (157)$ (331)
========== ========== ========== ========== ==========
Total assets
at quarter
end $ (63,668)$ (58,407)$ (59,788)$ (56,518)$ (55,511)
========== ========== ========== ========== ==========
Consolidated
------------
Net interest
income $ 9,066 $ 7,998 $ 7,680 $ 7,388 $ 7,550
Provision for
loan losses 1,008 945 900 1,204 765
Noninterest
income 7,521 8,721 8,455 8,244 7,880
Noninterest
expense 12,489 13,289 12,462 12,649 12,069
---------- ---------- ---------- ---------- ----------
Earnings
before
income taxes 3,090 2,485 2,773 1,779 2,596
Income tax
expense 842 827 998 615 897
---------- ---------- ---------- ---------- ----------
Net earnings $ 2,248 $ 1,658 $ 1,775 $ 1,164 $ 1,699
========== ========== ========== ========== ==========
Total assets
at quarter
end $1,383,132 $1,287,201 $1,294,987 $1,336,843 $1,298,952
========== ========== ========== ========== ==========
Encore Bancshares, Inc. and Subsidiaries
YIELD ANALYSIS
(Unaudited, dollars in thousands)
For the Three Months Ended September 30,
---------------------------------------------------------
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 $ 973,641 $17,309 7.05% $ 840,674 $14,651 6.91%
Mortgages
held-for-
sale 60,959 1,346 8.76% 80,951 1,787 8.76%
Securities 156,159 1,463 3.72% 277,854 2,705 3.86%
Federal
funds sold
and other 68,347 914 5.31% 25,248 370 5.81%
---------- ------- ---------- -------
Total
interest-
earning
assets 1,259,106 21,032 6.63% 1,224,727 19,513 6.32%
Less:
Allowance
for loan
losses (10,391) (9,726)
Noninterest-
earning
assets 102,667 100,204
---------- ----------
Total
assets $1,351,382 $1,315,205
========== ==========
Liabilities,
shareholders'
equity
and puttable
common stock:
Interest-
bearing
liabilities:
Interest
checking $ 169,860 $ 1,347 3.15%$ 168,222 $ 1,184 2.79%
Money market
and savings 358,732 3,907 4.32% 294,911 3,206 4.31%
Time
deposits 375,896 4,693 4.95% 373,687 4,213 4.47%
---------- ------- ---------- -------
Total
interest-
bearing
deposits 904,488 9,947 4.36% 836,820 8,603 4.08%
Borrowings
and
repurchase
agreements 158,203 1,651 4.14% 252,416 2,898 4.55%
Junior
subordinated
debentures 20,619 368 7.08% 20,619 462 8.89%
---------- ------- ---------- -------
Total
interest-
bearing
liabilities 1,083,310 11,966 4.38% 1,109,855 11,963 4.28%
---------- ------- ---------- -------
Noninterest-
bearing
liabilities:
Noninterest-
bearing
deposits 108,168 89,038
Other
liabilities 16,128 14,161
---------- ----------
Total
liabilities 1,207,606 1,213,054
Shareholders'
equity and
puttable
common stock 143,776 102,151
---------- ----------
Total
liabilities,
shareholders'
equity and
puttable
common
stock $1,351,382 $1,315,205
========== ==========
Net interest
income $ 9,066 $ 7,550
======= =======
Net interest
spread 2.25% 2.04%
Net interest
margin 2.86% 2.45%
Encore Bancshares, Inc. and Subsidiaries
YIELD ANALYSIS
(Unaudited, dollars in thousands)
For the Nine Months Ended September 30,
---------------------------------------------------------
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 $ 943,048 $49,463 7.01% $ 824,456 $41,470 6.73%
Mortgages
held-for-
sale 55,753 3,669 8.80% 77,673 5,104 8.79%
Securities 190,165 5,481 3.85% 296,578 8,656 3.90%
Federal funds
sold and
other 38,746 1,574 5.43% 25,951 990 5.10%
---------- ------- ---------- -------
Total
interest-
earning
assets 1,227,712 60,187 6.55% 1,224,658 56,220 6.14%
Less:
Allowance
for loan
losses (9,838) (9,217)
Noninterest-
earning
assets 102,592 99,339
---------- ----------
Total assets $1,320,466 $1,314,780
========== ==========
Liabilities,
shareholders'
equity
and puttable
common stock:
Interest-
bearing
liabilities:
Interest
checking $ 173,671 $ 3,915 3.01% $ 166,603 $ 2,969 2.38%
Money market
and savings 344,978 11,203 4.34% 241,540 6,738 3.73%
Time deposits 374,654 13,810 4.93% 359,101 11,372 4.23%
---------- ------- ---------- -------
Total
interest-
bearing
deposits 893,303 28,928 4.33% 767,244 21,079 3.67%
Borrowings
and
repurchase
agreements 164,133 5,319 4.33% 330,328 11,060 4.48%
Junior
subordinated
debentures 20,743 1,196 7.71% 20,619 1,296 8.40%
---------- ------- ---------- -------
Total
interest-
bearing
liabilities 1,078,179 35,443 4.40% 1,118,191 33,435 4.00%
---------- ------- ---------- -------
Noninterest-
bearing
liabilities:
Noninterest-
bearing
deposits 107,965 83,416
Other
liabilities 14,015 13,099
---------- ----------
Total
liabilities 1,200,159 1,214,706
Shareholders'
equity and
puttable
common stock 120,307 100,074
---------- ----------
Total
liabilities,
shareholders'
equity and
puttable
common stock $1,320,466 $1,314,780
========== ==========
Net interest
income $24,744 $22,785
======= =======
Net interest
spread 2.15% 2.14%
Net interest
margin 2.69% 2.49%