Encore Bancshares Reports Second Quarter 2009 Net Earnings of $821,000, or $.02 Per Diluted Share
- Press Release
- Source: Encore Bancshares, Inc.
- On 7:50 am EDT, Friday July 24, 2009
HOUSTON, July 24, 2009 (GLOBE NEWSWIRE) -- Encore Bancshares, Inc. (Nasdaq:EBTX - News) today announced its financial results for the second quarter of 2009.
Related Quotes
| Symbol | Price | Change |
|---|---|---|
| EBTX | 8.06 | +0.04 |
Earnings of $821,000 improved $340,000 compared with the second quarter of 2008
* Net earnings included a FDIC special assessment of $684,000, or $0.04 per diluted share * Revenue increased 1.7% to $17.8 million, including a 6.8% increase in net interest income on a fully tax equivalent basis (TE) to $11.6 million * Noninterest expense, excluding the FDIC special assessment, remained essentially unchanged Maintained credit quality * Nonperforming assets decreased 9.1% compared with March 31, 2009 * Allowance for loan losses was $25.2 million, or 2.19% of total loans Maintained strong capital position * Tier 1 capital of $174.7 million, or 15.02% tier 1 risk-based capital ratio * $125.5 million of tangible common equity, or $12.14 per share * Tangible common equity ratio was 7.93%
"We are encouraged that, despite high unemployment and a continued weak economy, earnings improved and nonperforming assets declined slightly for the quarter," said James S. D'Agostino, Jr., Chairman and Chief Executive Officer. "Our strong capital position, allowance, and pre-provision, pre-tax earnings position us well in the face of continued economic uncertainty. We continue to see increased momentum in growth of low-cost deposits and attracting assets under management. The recently announced leadership additions to Encore Bank of Preston Moore as President and CEO, and Carmen Jordan, EVP and Chief Lending Officer, significantly enhance our ability to develop additional business banking."
Earnings
For the three months ended June 30, 2009, net earnings were $821,000, compared with $481,000 for the same period of 2008. Earnings per diluted common share for the second quarter of 2009 were $0.02, compared with $0.04 for the comparable period of 2008. The decrease in diluted earnings per share was due to the dividends on preferred stock issued in the fourth quarter of 2008. Results for the second quarter of 2009 include an improvement in net interest income (TE) of $736,000, or 6.8%, and a decrease in provision for loan losses of $850,000. Partly offsetting these improvements was a $639,000 increase in noninterest expense, which was due primarily to a special insurance assessment from the FDIC.
For the six months ended June 30, 2009, net earnings were $2.0 million, compared with $1.7 million for the same period of 2008. Earnings per diluted common share for the six months ended June 30, 2009 were $0.08 compared with $0.15 for the same period of 2008. Net interest income (TE) increased by $2.4 million, or 11.6%, as the net interest margin expanded 8 basis points, but was partly offset by higher credit costs and lower trust and investment management fees.
Net Interest Income
Net interest income (TE) for the second quarter of 2009 was $11.6 million, an increase of $736,000, or 6.8%, compared with the second quarter of 2008. The net interest margin (TE), however, decreased 4 basis points to 3.09%. The margin compression was due in part to greater liquidity on the balance sheet and a shift in the deposit mix as clients moved to certificates of deposit in pursuit of higher yields. On a linked quarter basis (compared with immediately preceding quarter), net interest income (TE) remained essentially unchanged, and the net interest margin (TE) contracted 4 basis points.
Noninterest Income
Noninterest income was $6.3 million for the second quarter of 2009, a decrease of $308,000, or 4.6%, compared with the same period of 2008. The decrease was due primarily to trust and investment management fees, which decreased $573,000, or 12.3%, as assets under management fell 16.0% due to the sharp drop in equity markets from the prior year. This decrease was partly offset by a $222,000 gain on sale of second mortgage loans.
Noninterest Expense
Noninterest expense was $13.7 million for the second quarter of 2009, an increase of $639,000, or 4.9%, compared with the same period of 2008. The increase was due primarily to a special FDIC assessment of $684,000, which was levied on all banks to replenish the FDIC insurance fund. In addition, professional fees increased, which were primarily related to higher legal and audit fees at the bank.
Segment Earnings
On a segment basis, our banking operation showed net earnings of $47,000 for the second quarter of 2009, an increase of $879,000 compared with the same period of 2008. Net interest income increased $610,000, or 5.5%, driven by higher earning assets. The provision for loan losses decreased $850,000, or 22.5%, due to a slight decline in nonperforming assets. Noninterest income increased $219,000 compared with the second quarter of 2008, due to higher mortgage banking income. Noninterest expense increased $316,000, or 3.4%, which was due primarily to the FDIC special assessment. Wealth management had net earnings of $701,000 for the second quarter of 2009, a decrease of $562,000, or 44.5%, compared with the same period of 2008. Revenue for this segment decreased due primarily to lower assets under management, which declined 16.0%. Expenses increased $315,000, or 11.6%, due primarily to a reversal of an accrual for a legal settlement in 2008. Our insurance agency had net earnings of $276,000 for the second quarter of 2009, essentially unchanged from the same period of 2008.
Loans
Period end loans were $1.1 billion at June 30, 2009, a decrease of $20.3 million, or 1.7%, compared with June 30, 2008. In April and June, we sold second mortgage loans totaling approximately $9.7 million.
Deposits
Period end deposits were $1.2 billion at June 30, 2009, an increase of $121.8 million, or 11.5%, compared with June 30, 2008. Noninterest-bearing deposits were $146.4 million at June 30, 2009, an increase of $22.8 million, or 18.4%, compared with June 30, 2008. Average deposits were $1.1 billion for the second quarter of 2009, an increase of $52.8 million, or 4.8%, compared with the same period of 2008.
Credit Quality and Capital Ratios
The provision for loan losses was $2.9 million for the second quarter of 2009. The decrease in provision, compared with the second quarter of 2008, resulted primarily from a slight decline in nonperforming assets for the quarter. Net charge-offs for the second quarter of 2009 were $4.4 million, or 1.51% of average total loans on an annualized basis, compared with $3.3 million, or 1.14% of average total loans on an annualized basis for the second quarter of 2008. Most of the commercial loan charge-offs resulted from loans on which we had previously recorded specific reserves. The increase in consumer loan charge-offs was primarily related to first mortgage residential loans in Florida.
At June 30, 2009, nonperforming assets were $36.6 million, or 3.16% of total loans and investment in real estate, compared with $40.2 million, or 3.40% of total loans and investment in real estate at March 31, 2009 and $14.4 million, or 1.23% of total loans and investment in real estate at June 30, 2008. At June 30, 2009, nonaccrual loans were $28.6 million, compared with $34.7 million at March 31, 2009, a decrease of $6.1 million, or 17.7%. The decrease was due primarily to a commercial loan to a trial lawyer for approximately $2.3 million that was resolved, and the repossession of properties securing a $2.4 million residential construction loan to a builder. Investment in real estate was $8.0 million at June 30, 2009, compared with $5.5 million at March 31, 2009.
As of June 30, 2009, our estimated Tier 1 risk-based, total risk-based, and leverage capital ratios were 15.02%, 16.28% and 11.22%, respectively, and Encore Bank was considered "well capitalized" pursuant to regulatory capital definitions.
Conference Call
A conference call will be held on Friday, July 24, 2009 at 10:00 a.m., Central time, to discuss second quarter 2009 results. A question and answer session will follow the prepared remarks. Individuals may access the call by dialing 1-888-339-3401, or access the live webcast by visiting https://encorebank.com/investorRelations.php
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 and six in southwest Florida. Headquartered in Houston and with $1.6 billion in assets, Encore Bank builds relationships with professional firms, privately-owned businesses, investors and affluent individuals. Encore Bank offers a full range of business and personal banking products and services, as well as financial planning, wealth management, trust and insurance products through its trust division, Encore Trust, and its affiliated companies, Linscomb & Williams and Town & Country Insurance. Products and services offered by Encore Bank's affiliates are not FDIC insured. The Company's common stock is listed on the NASDAQ Global Market under the symbol "EBTX".
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 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 Encore strongly encourages investors to review its 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; changes in the interest rate environment; the continued service of key management personnel; our ability to attract, motivate and retain key employees; changes in availability of funds; 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 2008 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 As of and for
the Three Months the Six Months
Ended June 30, Ended June 30,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
Operations Statement Data:
Interest income $ 19,529 $ 20,065 $ 39,154 $ 40,597
Interest expense 8,071 9,220 16,235 19,873
-------- -------- -------- --------
Net interest income 11,458 10,845 22,919 20,724
Provision for loan losses 2,927 3,777 5,966 5,278
-------- -------- -------- --------
Net interest income after
provision for loan losses 8,531 7,068 16,953 15,446
Noninterest income (1) 6,327 6,635 12,431 13,284
Noninterest expense (1) 13,711 13,072 26,448 26,321
-------- -------- -------- --------
Net earnings before
income taxes 1,147 631 2,936 2,409
Income tax expense 326 150 980 758
-------- -------- -------- --------
Net earnings $ 821 $ 481 $ 1,956 $ 1,651
======== ======== ======== ========
Earnings available to common
shareholders (2) $ 267 $ 481 $ 849 $ 1,651
======== ======== ======== ========
Common Share Data:
Basic earnings per share (3) $ 0.03 $ 0.05 $ 0.08 $ 0.16
Diluted earnings per share (3) 0.02 0.04 0.08 0.15
Book value per share 15.39 15.65 15.39 15.65
Tangible book value
per share (4) 12.14 12.30 12.14 12.30
Average common shares
outstanding (3) 10,334 10,202 10,284 10,173
Diluted average common shares
outstanding (3) 11,145 10,925 11,013 10,889
Shares outstanding at
end of period 10,337 10,234 10,337 10,234
Selected Performance Ratios:
Return on average assets 0.21% 0.13% 0.25% 0.23%
Return on average common
equity (5) 0.67% 1.21% 1.08% 2.08%
Return on average tangible
common equity (4)(5) 0.85% 1.54% 1.37% 2.66%
Net interest margin (6) 3.09% 3.13% 3.11% 3.03%
Efficiency ratio (1) 76.14% 73.71% 73.86% 76.29%
Noninterest income to
total revenue (1) 35.57% 37.96% 35.17% 39.06%
(1) Prior periods adjusted to include net expenses of foreclosed real
estate in other noninterest expense.
(2) Net earnings after deducting preferred dividends. The shares of
preferred stock were issued on December 5, 2008.
(3) Prior periods adjusted to include nonvested restricted stock in
average common shares outstanding as required by EITF 03-6-1.
(4) Non-GAAP measure. See calculation of tangible common equity in
subsequent table.
(5) Using earnings available to common shareholders.
(6) On taxable-equivalent basis in 2009. Taxable-equivalent amounts
in 2008 were immaterial.
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,
2009 2009 2008 2008 2008
---------- ---------- ---------- ---------- ----------
ASSETS
Cash and
due from
banks $ 17,891 $ 19,313 $ 23,044 $ 21,005 $ 21,954
Interest
-bearing
deposits
in banks 124,959 100,982 91,459 13,471 28,297
Federal
funds sold
and other 3,263 3,290 3,549 5,562 10,716
---------- ---------- ---------- ---------- ----------
Cash and
cash
equiv
-alents 146,113 123,585 118,052 40,038 60,967
Securities
available
-for-sale,
at
estimated
fair value 132,437 77,875 78,816 57,077 41,508
Securities
held-to
-maturity,
at
amortized
cost 108,594 114,706 95,875 100,329 107,424
Mortgages
held-for
-sale 1,168 6,340 150 448 --
Loans
receivable 1,148,820 1,179,083 1,218,404 1,198,445 1,169,151
Allowance
for loan
losses (25,214) (26,664) (25,105) (14,620) (12,054)
---------- ---------- ---------- ---------- ----------
Net loans
receiv
-able 1,123,606 1,152,419 1,193,299 1,183,825 1,157,097
Federal
Home Loan
Bank of
Dallas
stock, at
cost 9,561 9,547 9,534 10,513 7,943
Investment
in real
estate 8,032 5,537 2,781 2,215 2,063
Premises
and
equipment,
net 16,435 16,901 17,362 17,688 17,050
Goodwill 27,873 27,873 27,873 27,975 27,975
Other
intangible
assets,
net 5,691 5,861 6,031 6,218 6,406
Cash
surrender
value of
life
insurance
policies 15,019 14,870 14,686 14,539 14,398
Accrued
interest
receivable
and other
assets 22,189 22,210 23,385 17,358 17,882
---------- ---------- ---------- ---------- ----------
$1,616,718 $1,577,724 $1,587,844 $1,478,223 $1,460,713
========== ========== ========== ========== ==========
LIABILITIES
AND
SHAREHOLDERS'
EQUITY
Deposits:
Non
-interest
-bearing $ 146,373 $ 158,994 $ 131,709 $ 121,100 $ 123,594
Interest
-bearing 1,030,134 957,602 969,088 917,379 931,149
---------- ---------- ---------- ---------- ----------
Total
deposits 1,176,507 1,116,596 1,100,797 1,038,479 1,054,743
Borrowings
and
repurchase
agreements 223,218 244,999 272,026 249,426 212,257
Junior
subord
-inated
debentures 20,619 20,619 20,619 20,619 20,619
Accrued
interest
payable
and other
liabil
-ities 8,565 7,926 8,660 8,690 12,882
---------- ---------- ---------- ---------- ----------
Total
liabil
-ities 1,428,909 1,390,140 1,402,102 1,317,214 1,300,501
Commitments
and
contin
-gencies -- -- -- -- --
Share
-holders'
equity:
Preferred
stock 28,718 28,590 28,461 -- --
Common
stock 10,346 10,240 10,247 10,243 10,240
Addit
-ional
paid-in
capital 115,698 115,743 115,489 109,488 109,169
Retained
earnings 32,372 32,105 31,523 41,642 41,414
Common
stock in
treasury,
at cost (123) (109) (98) (98) (98)
Accumu
-lated
other
compre
-hensive
income
(loss) 798 1,015 120 (266) (513)
---------- ---------- ---------- ---------- ----------
Share
-holders'
equity 187,809 187,584 185,742 161,009 160,212
---------- ---------- ---------- ---------- ----------
$1,616,718 $1,577,724 $1,587,844 $1,478,223 $1,460,713
========== ========== ========== ========== ==========
Ratios and
Per Share
Data:
Leverage
ratio* 11.22% 11.26% 11.61% 10.18% 10.07%
Tier 1 risk
-based
capital
ratio* 15.02% 14.83% 14.58% 12.58% 12.82%
Total risk
-based
capital
ratio* 16.28% 16.09% 15.84% 13.87% 13.87%
Book value
per share $ 15.39 $ 15.54 $ 15.36 $ 15.73 $ 15.65
Tangible
book value
per share** 12.14 12.24 12.05 12.39 12.30
Tangible
common
equity to
tangible
assets** 7.93% 8.11% 7.94% 8.78% 8.82%
* Estimated at June 30, 2009.
** 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
------------------------------------------------
June 30, March 31, Dec 31, Sept 30, June 30,
2009 2009 2008 2008 2008
-------- -------- -------- -------- --------
Interest income:
Loans,
including fees $ 17,220 $ 17,479 $ 18,394 $ 18,738 $ 18,238
Mortgages
held-for-sale 32 28 9 13 25
Securities 2,121 1,962 1,585 1,469 1,250
Federal funds sold
and other 156 156 205 261 552
-------- -------- -------- -------- --------
Total interest
income 19,529 19,625 20,193 20,481 20,065
Interest expense:
Deposits 5,643 5,732 5,748 6,458 7,123
Borrowings and
repurchase
agreements 2,119 2,116 2,174 2,085 1,767
Junior subordinated
debentures 309 316 329 330 330
-------- -------- -------- -------- --------
Total interest
expense 8,071 8,164 8,251 8,873 9,220
-------- -------- -------- -------- --------
Net interest income 11,458 11,461 11,942 11,608 10,845
Provision for
loan losses 2,927 3,039 18,648 5,249 3,777
-------- -------- -------- -------- --------
Net interest income
after provision
for loan losses 8,531 8,422 (6,706) 6,359 7,068
Noninterest income:
Trust and investment
management fees 4,087 3,749 3,985 4,277 4,660
Mortgage banking 351 151 34 28 135
Insurance
commissions
and fees 1,404 1,610 1,184 1,385 1,385
Net loss on sale of
available-for-sale
securities -- -- (1) (2) --
Impairment write
down on securities -- -- (1,984) -- --
Other* 485 594 343 412 455
-------- -------- -------- -------- --------
Total noninterest
income* 6,327 6,104 3,561 6,100 6,635
Noninterest expense:
Compensation 7,231 7,514 6,781 6,991 7,467
Occupancy 1,554 1,454 1,645 1,477 1,485
Equipment 449 433 448 494 487
Advertising
and promotion 200 216 232 187 219
Outside data
processing 783 764 797 762 717
Professional fees 1,043 936 904 671 739
Intangible
amortization 169 171 187 187 188
FDIC assessment 746 52 50 50 30
Other* 1,536 1,197 1,443 1,379 1,740
-------- -------- -------- -------- --------
Total noninterest
expense* 13,711 12,737 12,487 12,198 13,072
-------- -------- -------- -------- --------
Net earnings (loss)
before income
taxes 1,147 1,789 (15,632) 261 631
Income tax expense
(benefit) 326 654 (5,679) 33 150
-------- -------- -------- -------- --------
Net earnings (loss) $ 821 $ 1,135 $ (9,953) $ 228 $ 481
======== ======== ======== ======== ========
Earnings (loss)
available to common
shareholders $ 267 $ 582 $(10,119) $ 228 $ 481
======== ======== ======== ======== ========
Earnings (loss)
per common share:
Basic** $ 0.03 $ 0.06 $ (0.99) $ 0.02 $ 0.05
Diluted** 0.02 0.05 (0.99) 0.02 0.04
Average common shares
outstanding** 10,334 10,233 10,236 10,237 10,202
Diluted average
common shares
outstanding** 11,145 10,880 10,236 10,934 10,925
Six Months Ended
June 30,
------------------
2009 2008
-------- --------
Interest income:
Loans, including fees $ 34,699 $ 36,616
Mortgages held-for-sale 60 57
Securities 4,083 2,569
Federal funds sold and other 312 1,355
-------- --------
Total interest income 39,154 40,597
Interest expense:
Deposits 11,375 15,665
Borrowings and repurchase agreements 4,235 3,522
Junior subordinated debentures 625 686
-------- --------
Total interest expense 16,235 19,873
-------- --------
Net interest income 22,919 20,724
Provision for loan losses 5,966 5,278
-------- --------
Net interest income after provision
for loan losses 16,953 15,446
Noninterest income:
Trust and investment management fees 7,836 9,067
Mortgage banking 502 189
Insurance commissions and fees 3,014 3,112
Net loss on sale of available-for-sale securities -- --
Impairment write down on securities -- --
Other* 1,079 916
-------- --------
Total noninterest income* 12,431 13,284
Noninterest expense:
Compensation 14,745 15,545
Occupancy 3,008 2,923
Equipment 882 1,018
Advertising and promotion 416 423
Outside data processing 1,547 1,411
Professional fees 1,979 1,895
Intangible amortization 340 375
FDIC assessment 798 61
Other* 2,733 2,670
-------- --------
Total noninterest expense* 26,448 26,321
-------- --------
Net earnings (loss) before income taxes 2,936 2,409
Income tax expense (benefit) 980 758
-------- --------
Net earnings (loss) $ 1,956 $ 1,651
======== ========
Earnings (loss) available to common shareholders $ 849 $ 1,651
======== ========
Earnings (loss) per common share:
Basic** $ 0.08 $ 0.16
Diluted** 0.08 0.15
Average common shares outstanding** 10,284 10,173
Diluted average common shares outstanding** 11,013 10,889
* Prior periods adjusted to include net expenses of foreclosed real
estate in other noninterest expense.
** Prior periods adjusted to include nonvested restricted stock in
average common shares outstanding as required by EITF 03-6-1.
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,
2009 2009 2008 2008 2008
---------- ---------- ---------- ---------- ----------
Assets:
Interest
-earning
assets:
Loans $1,166,448 $1,208,697 $1,205,310 $1,186,606 $1,170,959
Mortgages
held-for
-sale 1,612 1,391 405 596 1,151
Securities 215,473 187,953 162,221 156,354 139,510
Federal
funds
sold and
other 121,328 95,314 66,057 40,128 82,841
---------- ---------- ---------- ---------- ----------
Total
interest
-earning
assets 1,504,861 1,493,355 1,433,993 1,383,684 1,394,461
Less:
Allowance
for loan
losses (25,656) (25,181) (14,275) (12,630) (11,526)
Noninterest
-earning
assets 111,519 111,018 102,341 108,224 103,918
---------- ---------- ---------- ---------- ----------
Total
assets $1,590,724 $1,579,192 $1,522,059 $1,479,278 $1,486,853
========== ========== ========== ========== ==========
Liabilities
and
share
-holders'
equity:
Interest
-bearing
liabil
-ities:
Interest
checking $ 177,393 $ 181,976 $ 179,797 $ 192,424 $ 194,973
Money
market
and
savings 243,276 228,402 244,195 283,130 307,047
Time
deposits 564,583 555,006 495,880 448,983 466,199
---------- ---------- ---------- ---------- ----------
Total
interest
-bearing
deposits 985,252 965,384 919,872 924,537 968,219
Borrowings
and
repur
-chase
agree
-ments 226,118 255,526 267,081 240,104 202,229
Junior
subord
-inated
deben
-tures 20,619 20,619 20,619 20,619 20,619
---------- ---------- ---------- ---------- ----------
Total
interest
-bearing
liabil
-ities 1,231,989 1,241,529 1,207,572 1,185,260 1,191,067
---------- ---------- ---------- ---------- ----------
Noninterest
-bearing
liabil
-ities:
Non
-interest
-bearing
deposits 159,257 140,821 133,226 119,024 123,453
Other
liabil
-ities 11,366 10,269 11,244 12,186 12,015
---------- ---------- ---------- ---------- ----------
Total
liabil
-ities 1,402,612 1,392,619 1,352,042 1,316,470 1,326,535
Share
-holders'
equity 188,112 186,573 170,017 162,808 160,318
---------- ---------- ---------- ---------- ----------
Total
liabil
-ities and
share
-holders'
equity $1,590,724 $1,579,192 $1,522,059 $1,479,278 $1,486,853
========== ========== ========== ========== ==========
Encore Bancshares, Inc. and Subsidiaries
SELECTED FINANCIAL DATA
(Unaudited, dollars in thousands)
Loan June 30, March 31, Dec 31, Sept 30, June 30,
Portfolio: 2009 2009 2008 2008 2008
---------- ---------- ---------- ---------- ----------
Commercial:
Commercial $ 126,079 $ 127,279 $ 135,534 $ 130,484 $ 127,639
Commercial
real
estate 308,441 315,090 311,909 305,570 298,562
Real estate
construc
-tion 78,045 87,352 95,668 96,450 91,371
---------- ---------- ---------- ---------- ----------
Total
commer
-cial 512,565 529,721 543,111 532,504 517,572
Consumer:
Residential
real
estate
first lien 232,885 229,981 241,969 247,765 256,201
Residential
real
estate
second
lien 292,891 294,994 302,141 291,933 269,409
Home equity
lines 77,793 80,099 82,555 79,888 79,913
Consumer
install
-ment
- indirect 11,202 12,643 14,409 16,461 18,806
Consumer
other 21,484 31,645 34,219 29,894 27,250
---------- ---------- ---------- ---------- ----------
Total
consumer 636,255 649,362 675,293 665,941 651,579
---------- ---------- ---------- ---------- ----------
Total
loans
receiv
-able $1,148,820 $1,179,083 $1,218,404 $1,198,445 $1,169,151
========== ========== ========== ========== ==========
Nonper
-forming
Assets:
Nonaccrual
loans $ 28,552 $ 34,698 $ 30,531 $ 21,142 $ 12,118
Accruing
loans past
due 90
days or
more* -- -- 646 23 240
Restruc
-tured
loans** -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total
nonper
-forming
loans 28,552 34,698 31,177 21,165 12,358
---------- ---------- ---------- ---------- ----------
Investment
in real
estate 8,032 5,537 2,781 2,215 2,063
---------- ---------- ---------- ---------- ----------
Total
nonper
-forming
assets $ 36,584 $ 40,235 $ 33,958 $ 23,380 $ 14,421
========== ========= ========== ========== ==========
Asset
Quality
Ratios:
Nonper
-forming
assets to
total
loans and
investment
in real
estate 3.16% 3.40% 2.78% 1.95% 1.23%
Net charge
-offs to
average
loans 1.51% 0.50% 2.69% 0.90% 1.14%
Allowance
for loan
losses to
period end
loans 2.19% 2.26% 2.06% 1.22% 1.03%
Allowance
for loan
losses to
nonper
-forming
loans 88.31% 76.85% 80.52% 69.08% 97.54%
Deposits:
Noninterest
-bearing
deposits $ 146,373 $ 158,994 $ 131,709 $ 121,100 $ 123,594
Interest
checking 184,620 171,881 197,384 182,456 186,902
Money
market and
savings 295,176 215,726 252,571 268,969 292,631
Time
deposits
less than
$100 206,149 207,648 188,302 192,603 198,603
---------- ---------- ---------- ---------- ----------
Core
deposits 832,318 754,249 769,966 765,128 801,730
---------- ---------- ---------- ---------- ----------
Time
deposits
$100 and
greater 321,737 330,919 274,903 245,018 239,556
Brokered
deposits 22,452 31,428 55,928 28,333 13,457
---------- ---------- ---------- ---------- ----------
Total
deposits $1,176,507 $1,116,596 $1,100,797 $1,038,479 $1,054,743
========== ========== ========== ========== ==========
Assets
Under
Manage
-ment $2,299,338 $2,137,137 $2,248,047 $2,607,702 $2,736,790
========== ========== ========== ========== ==========
* Beginning in 2009, loans past due 90 days or more are either
charged-off or included in nonaccrual loans.
** All 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,
2009 2009 2008 2008 2008
------- ------- ------- ------- -------
Allowance for loan losses
at beginning of quarter $26,664 $25,105 $14,620 $12,054 $11,603
Charge-offs:
Commercial:
Commercial (796) (236) (5,950) (301) (2,119)
Commercial real estate (557) (99) (751) (407) (289)
Real estate construction (474) (239) (408) (356) (57)
------- ------- ------- ------- -------
Total commercial (1,827) (574) (7,109) (1,064) (2,465)
------- ------- ------- ------- -------
Consumer:
Residential real estate
first lien (1,446) (34) (142) (256) (193)
Residential real estate
second lien (634) (454) (378) (417) (151)
Home equity lines (517) (282) (477) (831) (463)
Consumer installment
- indirect (150) (261) (265) (254) (200)
Consumer other (9) (48) (23) (23) (5)
------- ------- ------- ------- -------
Total consumer (2,756) (1,079) (1,285) (1,781) (1,012)
------- ------- ------- ------- -------
Total charge-offs (4,583) (1,653) (8,394) (2,845) (3,477)
------- ------- ------- ------- -------
Recoveries:
Commercial:
Commercial 62 22 111 8 9
Commercial real estate -- -- -- -- 6
Real estate construction 6 -- -- -- --
------- ------- ------- ------- -------
Total commercial 68 22 111 8 15
------- ------- ------- ------- -------
Consumer:
Residential real estate
first lien 1 34 18 3 19
Residential real estate
second lien 13 17 71 54 3
Home equity lines 88 24 3 4 --
Consumer installment
- indirect 36 76 15 81 37
Consumer other -- -- 13 12 77
------- ------- ------- ------- -------
Total consumer 138 151 120 154 136
------- ------- ------- ------- -------
Total recoveries 206 173 231 162 151
------- ------- ------- ------- -------
Net charge-offs (4,377) (1,480) (8,163) (2,683) (3,326)
------- ------- ------- ------- -------
Provision for loan losses 2,927 3,039 18,648 5,249 3,777
------- ------- ------- ------- -------
Allowance for loan losses
at end of quarter $25,214 $26,664 $25,105 $14,620 $12,054
======= ======= ======= ======= =======
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,
2009 2009 2008 2008 2008
---------- ---------- ---------- ---------- ----------
Banking
-------
Net
interest
income $ 11,726 $ 11,736 $ 12,223 $ 11,871 $ 11,116
Provision
for loan
losses 2,927 3,039 18,648 5,249 3,777
Non
-interest
income* 760 661 (1,596) 425 541
Non
-interest
expense* 9,614 8,606 9,307 8,113 9,298
---------- ---------- ---------- ---------- ----------
Earnings
(loss)
before
income
taxes (55) 752 (17,328) (1,066) (1,418)
Income tax
expense
(benefit) (102) 291 (6,251) (446) (586)
---------- ---------- ---------- ---------- ----------
Net
earnings
(loss) $ 47 $ 461 $ (11,077) $ (620) $ (832)
========== ========== ========== ========== ==========
Total
assets at
quarter
end $1,623,467 $1,584,698 $1,592,933 $1,481,311 $1,472,045
========== ========== ========== ========== ==========
Wealth
Management
-----------
Net
interest
income $ 38 $ 38 $ 44 $ 51 $ 37
Non
-interest
income 4,087 3,749 3,985 4,277 4,660
Non
-interest
expense 3,040 3,098 2,179 3,083 2,725
---------- ---------- ---------- ---------- ----------
Earnings
before
income
taxes 1,085 689 1,850 1,245 1,972
Income tax
expense 384 243 606 451 709
---------- ---------- ---------- ---------- ----------
Net
earnings $ 701 $ 446 $ 1,244 $ 794 $ 1,263
========== ========== ========== ========== ==========
Total
assets at
quarter
end $ 49,563 $ 48,648 $ 47,879 $ 49,263 $ 48,146
========== ========== ========== ========== ==========
Insurance
---------
Net
interest
income $ 3 $ 3 $ 4 $ 16 $ 22
Non
-interest
income 1,480 1,694 1,172 1,398 1,458
Non
-interest
expense 1,057 1,033 1,001 1,002 1,049
---------- ---------- ---------- ---------- ----------
Earnings
before
income
taxes 426 664 175 412 431
Income tax
expense 150 233 85 147 154
---------- ---------- ---------- ---------- ----------
Net
earnings $ 276 $ 431 $ 90 $ 265 $ 277
========== ========== ========== ========== ==========
Total
assets at
quarter
end $ 7,625 $ 7,695 $ 6,738 $ 6,997 $ 13,188
========== ========== ========== ========== ==========
Other
-----
Net
interest
expense $ (309) $ (316) $ (329) $ (330) $ (330)
Non
-interest
income -- -- -- -- (24)
---------- ---------- ---------- ---------- ----------
Loss
before
income
taxes (309) (316) (329) (330) (354)
Income tax
benefit (106) (113) (119) (119) (127)
---------- ---------- ---------- ---------- ----------
Net loss $ (203) $ (203) $ (210) $ (211) $ (227)
========== ========== ========== ========== ==========
Total
assets at
quarter
end $ (63,937) $ (63,317) $ (59,706) $ (59,348) $ (72,666)
========== ========== ========== ========== ==========
Consolidated
------------
Net
interest
income $ 11,458 $ 11,461 $ 11,942 $ 11,608 $ 10,845
Provision
for loan
losses 2,927 3,039 18,648 5,249 3,777
Non
-interest
income* 6,327 6,104 3,561 6,100 6,635
Non
-interest
expense* 13,711 12,737 12,487 12,198 13,072
---------- ---------- ---------- ---------- ----------
Earnings
(loss)
before
income
taxes 1,147 1,789 (15,632) 261 631
Income tax
expense
(benefit) 326 654 (5,679) 33 150
---------- ---------- ---------- ---------- ----------
Net
earnings
(loss) $ 821 $ 1,135 $ (9,953) $ 228 $ 481
========== ========== ========== ========== ==========
Total
assets at
quarter
end $1,616,718 $1,577,724 $1,587,844 $1,478,223 $1,460,713
========== ========== ========== ========== ==========
As of and for
the Six Months
Ended June 30,
----------------------
2009 2008
---------- ----------
Banking
-------
Net interest income $ 23,462 $ 21,246
Provision for loan losses 5,966 5,278
Noninterest income* 1,421 1,032
Noninterest expense* 18,220 18,373
---------- ----------
Earnings (loss) before income taxes 697 (1,373)
Income tax expense (benefit) 189 (601)
---------- ----------
Net earnings (loss) $ 508 $ (772)
========== ==========
Total assets at quarter end $1,623,467 $1,472,045
========== ==========
Wealth Management
-----------------
Net interest income $ 76 $ 101
Noninterest income 7,836 9,067
Noninterest expense 6,138 5,795
---------- ----------
Earnings before income taxes 1,774 3,373
Income tax expense 627 1,213
---------- ----------
Net earnings $ 1,147 $ 2,160
========== ==========
Total assets at quarter end $ 49,563 $ 48,146
========== ==========
Insurance
---------
Net interest income $ 6 $ 63
Noninterest income 3,174 3,190
Noninterest expense 2,090 2,153
---------- ----------
Earnings before income taxes 1,090 1,100
Income tax expense 383 394
---------- ----------
Net earnings $ 707 $ 706
========== ==========
Total assets at quarter end $ 7,625 $ 13,188
========== ==========
Other
-----
Net interest expense $ (625) $ (686)
Noninterest income -- (5)
---------- ----------
Loss before income taxes (625) (691)
Income tax benefit (219) (248)
---------- ----------
Net loss $ (406) $ (443)
========== ==========
Total assets at quarter end $ (63,937) $ (72,666)
========== ==========
Consolidated
------------
Net interest income $ 22,919 $ 20,724
Provision for loan losses 5,966 5,278
Noninterest income* 12,431 13,284
Noninterest expense* 26,448 26,321
---------- ----------
Earnings (loss) before income taxes 2,936 2,409
Income tax expense (benefit) 980 758
---------- ----------
Net earnings (loss) $ 1,956 $ 1,651
========== ==========
Total assets at quarter end $1,616,718 $1,460,713
========== ==========
* Prior periods adjusted to include net expenses of foreclosed
real estate in other noninterest expense.
Encore Bancshares, Inc. and Subsidiaries
YIELD ANALYSIS
(Unaudited, dollars in thousands)
Three Months Ended June 30,
-------------------------------------------------------
2009 2008
--------------------------- ---------------------------
Average Average Average Average
Outstan- Interest Average Outstan- Interest Average
ding Income/ Yield/ ding Income/ Yield/
Balance Expense Rate Balance Expense Rate
---------- -------- ------- ---------- -------- -------
Assets:
Interest-
earning
assets:
Loans* $1,166,448 $ 17,291 5.95% $1,170,959 $ 18,238 6.26%
Mortgages
held-for-sale 1,612 32 7.96% 1,151 25 8.74%
Securities* 215,473 2,173 4.04% 139,510 1,250 3.60%
Federal funds
sold and
other 121,328 156 0.52% 82,841 552 2.68%
---------- -------- ---------- --------
Total interest-
earning
assets* 1,504,861 19,652 5.24% 1,394,461 20,065 5.79%
Less: Allowance
for loan
losses (25,656) (11,526)
Noninterest-
earning assets 111,519 103,918
---------- ----------
Total assets $1,590,724 $1,486,853
========== ==========
Liabilities and
shareholders'
equity:
Interest-
bearing
liabilities:
Interest
checking $ 177,393 $ 212 0.48% $ 194,973 $ 641 1.32%
Money market
and savings 243,276 685 1.13% 307,047 1,363 1.79%
Time deposits 564,583 4,746 3.37% 466,199 5,119 4.42%
---------- -------- ---------- --------
Total
interest-
bearing
deposits 985,252 5,643 2.30% 968,219 7,123 2.96%
Borrowings and
repurchase
agreements 226,118 2,119 3.76% 202,229 1,767 3.51%
Junior
subordinated
debentures 20,619 309 6.01% 20,619 330 6.44%
---------- -------- ---------- --------
Total
interest-
bearing
liabilities 1,231,989 8,071 2.63% 1,191,067 9,220 3.11%
---------- -------- ---------- --------
Noninterest-
bearing
liabilities:
Noninterest-
bearing
deposits 159,257 123,453
Other
liabilities 11,366 12,015
---------- ----------
Total
liabilities 1,402,612 1,326,535
Shareholders'
equity 188,112 160,318
---------- ----------
Total
liabilities
and
shareholders'
equity $1,590,724 $1,486,853
========== ==========
Net interest
income* $ 11,581 $ 10,845
======== ========
Net interest
spread* 2.61% 2.68%
Net interest
margin* 3.09% 3.13%
* On taxable-equivalent basis in 2009. Taxable-equivalent amounts in
2008 were immaterial. See calculation in subsequent table.
Encore Bancshares, Inc. and Subsidiaries
YIELD ANALYSIS
(Unaudited, dollars in thousands)
Six Months Ended June 30,
-------------------------------------------------------
2009 2008
--------------------------- ---------------------------
Average Average Average Average
Outstan- Interest Average Outstan- Interest Average
ding Income/ Yield/ ding Income/ Yield/
Balance Expense Rate Balance Expense Rate
---------- -------- ------- ---------- -------- -------
Assets:
Interest-
earning
assets:
Loans* $1,187,456 $ 34,835 5.92% $1,145,199 $ 36,616 6.43%
Mortgages
held-for-sale 1,502 60 8.06% 1,308 57 8.76%
Securities* 201,789 4,146 4.14% 140,804 2,569 3.67%
Federal funds
sold and
other 108,393 312 0.58% 86,130 1,355 3.16%
---------- -------- ---------- --------
Total interest-
earning
assets* 1,499,140 39,353 5.29% 1,373,441 40,597 5.94%
Less: Allowance
for loan
losses (25,420) (11,352)
Noninterest-
earning
assets 111,270 103,092
---------- ----------
Total assets $1,584,990 $1,465,181
========== ==========
Liabilities and
shareholders'
equity:
Interest-
bearing
liabilities:
Interest
checking $ 179,672 $ 425 0.48% $ 188,728 $ 1,594 1.70%
Money market
and savings 235,880 1,363 1.17% 320,144 3,743 2.35%
Time deposits 559,821 9,587 3.45% 450,398 10,328 4.61%
---------- -------- ---------- --------
Total
interest-
bearing
deposits 975,373 11,375 2.35% 959,270 15,665 3.28%
Borrowings and
repurchase
agreements 240,741 4,235 3.55% 198,042 3,522 3.58%
Junior
subordinated
debentures 20,619 625 6.11% 20,619 686 6.69%
---------- -------- ---------- --------
Total
interest-
bearing
liabilities 1,236,733 16,235 2.65% 1,177,931 19,873 3.39%
---------- -------- ---------- --------
Noninterest-
bearing
liabilities:
Noninterest-
bearing
deposits 150,090 115,179
Other
liabilities 10,820 12,664
---------- ----------
Total
liabilities 1,397,643 1,305,774
Shareholders'
equity 187,347 159,407
---------- ----------
Total
liabilities
and
shareholders'
equity $1,584,990 $1,465,181
========== ==========
Net interest
income* $ 23,118 $ 20,724
======== ========
Net interest
spread* 2.64% 2.55%
Net interest
margin* 3.11% 3.03%
* On taxable-equivalent basis in 2009. Taxable-equivalent amounts in
2008 were immaterial. See calculation 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,
2009 2009 2008 2008 2008
---------- ---------- ---------- ---------- ----------
Shareholders'
equity $ 187,809 $ 187,584 $ 185,742 $ 161,009 $ 160,212
Less: Preferred
stock 28,718 28,590 28,461 -- --
Goodwill
and other
intangible
assets,
net 33,564 33,734 33,904 34,193 34,381
---------- ---------- ---------- ---------- ----------
Tangible
common
equity* $ 125,527 $ 125,260 $ 123,377 $ 126,816 $ 125,831
========== ========== ========== ========== ==========
Total assets $1,616,718 $1,577,724 $1,587,844 $1,478,223 $1,460,713
Less: Goodwill
and other
intangible
assets, net 33,564 33,734 33,904 34,193 34,381
---------- ---------- ---------- ---------- ----------
Tangible
assets $1,583,154 $1,543,990 $1,553,940 $1,444,030 $1,426,332
========== ========== ========== ========== ==========
Shares
outstanding at
end of period 10,337 10,233 10,241 10,238 10,234
* 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 Six Months
Ended June 30, Ended June 30,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
Net interest income on a GAAP
basis $ 11,458 $ 10,845 $ 22,919 $ 20,724
Taxable-equivalent adjustment* 123 -- 199 --
-------- -------- -------- --------
Net interest income on a
taxable-equivalent basis $ 11,581 $ 10,845 $ 23,118 $ 20,724
======== ======== ======== ========
* 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.
Contact:
Encore Bancshares, Inc.
L. Anderson Creel, Chief Financial Officer
713.787.3138
James S. D'Agostino, Jr., Chairman and CEO
713.787.3103
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