HOUSTON, Oct. 23, 2009 (GLOBE NEWSWIRE) -- Encore Bancshares, Inc. (Nasdaq:EBTX) today announced its financial results for the third quarter of 2009.
Improved key revenue drivers
* Record quarterly revenue of $18.9 million on a tax equivalent
basis (TE)
* Revenue (TE) growth of 6.7% compared with the third quarter of
2008
* Core deposit growth of 10.7% compared with September 30, 2008,
which included noninterest-bearing deposit growth of 25.8%
* Net interest margin (TE) improvement of 4 basis points compared
with the second quarter of 2009
Increased credit reserve
* Allowance for loan losses increased to 2.49% of total loans
Maintained strong capital position
* Tier 1 capital of $173.0 million, or 15.29% Tier 1 risk-based
capital ratio
* Tangible common equity ratio was 7.93%
"We reported record revenue in the third quarter and I am encouraged that our key revenue drivers continue to improve," said James S. D'Agostino, Jr., Chairman and Chief Executive Officer of Encore Bancshares, Inc. "However, credit costs, particularly in Florida, continue to remain high and we added $2.4 million in excess of net charge-offs to our allowance for loan losses during the quarter, bringing our allowance to 2.49% of total loans. Our capital position remains strong as we maintained a tangible common equity ratio of 7.93%."
Earnings
For the three months ended September 30, 2009, the net loss was $1.8 million, compared with net earnings of $228,000 for the same period of 2008. Loss per diluted common share for the third quarter of 2009 was $0.22, compared with earnings per diluted common share of $0.02 for the same period of 2008. Earnings per share include the dividends on preferred stock issued in the fourth quarter of 2008. The decrease in earnings was due primarily to higher credit costs, as we provisioned $2.4 million in excess of net charge-offs for the third quarter reflecting the deterioration of real estate values in Florida.
For the nine months ended September 30, 2009, net earnings were $203,000, compared with $1.9 million for the same period of 2008. The loss per diluted common share for the nine months ended September 30, 2009 was $0.14, compared with net earnings of $0.17 for the comparable period of 2008. Net interest income (TE) increased $2.9 million, or 8.9%, but was more than offset by higher credit costs and higher expenses. The increase in expenses was due primarily to higher FDIC insurance assessments.
Net Interest Income
Net interest income (TE) for the third quarter of 2009 was $12.1 million, an increase of $473,000, or 4.1%, compared with the same period of 2008. The net interest margin (TE) contracted 21 basis points to 3.13%, due primarily to a decrease in loans and greater liquidity on the balance sheet as a result of the slow economy. On a linked quarter basis (compared with immediately preceding quarter), net interest income (TE) rose $500,000, or 4.3%, and the net interest margin (TE) expanded 4 basis points. The improvement in the margin was due primarily to the repricing of time deposits at lower rates. For the nine months ended September 30, 2009, net interest income (TE) was $35.2 million, an increase of $2.9 million, or 8.9%, compared with the same period of 2008. The net interest margin (TE) decreased 2 basis points.
Noninterest Income
Noninterest income was $6.8 million for the third quarter of 2009, an increase of $713,000, or 11.7%, compared with the same period in 2008. The increase reflected growth in trust and investment management fees and gain on sale of securities. For the nine months ended September 30, 2009, noninterest income was $19.2 million, a decrease of $140,000 compared with the same period of 2008. The decrease was due primarily to lower trust and investment management fees resulting from lower assets under management, as equity values declined during the recession.
Noninterest Expense
Noninterest expense was $13.3 million for the third quarter of 2009, an increase of $1.1 million, or 8.9%, compared with the same period of 2008. The increase was due primarily to a combination of higher FDIC insurance assessments, higher professional expenses related to loan collection, and higher compensation expense. For the nine months ended September 30, 2009, noninterest expense was $39.7 million, an increase of $1.2 million, or 3.2%, compared with the same period of 2008. The increase was due primarily to higher FDIC insurance assessments, which included the special assessment of $684,000 in the second quarter of 2009, and higher professional expenses related to loan collection. The FDIC has adopted a proposed rule to require depository institutions to pre-pay, on December 30, 2009, estimated quarterly risk-based assessments for the fourth quarter of 2009 and all of 2010, 2011 and 2012. Comments to the proposed rule are due to the FDIC by October 28, 2009 and a final rule will be adopted after that date.
Segment Earnings
On a segment basis, our wealth management group showed net earnings of $866,000 for the third quarter of 2009, an increase of $72,000, or 9.1%, compared with the same period of 2008. The increase was mainly due to higher trust and investment management fees, as expenses were essentially flat. Our banking segment lost $2.6 million, a decrease of $2.0 million, compared with the same period in 2008, due primarily to higher credit costs. Our insurance agency had net earnings of $175,000, a decrease of $90,000, or 34.0%, compared with the same period of 2008.
Loans
Period end loans were $1.1 billion at September 30, 2009, a decrease of $92.3 million, or 7.7%, compared with September 30, 2008. The reduction in the loan portfolio was primarily in the commercial and construction categories as our clients continue to de-lever as a result of the weak economy.
Deposits
Period end deposits were $1.2 billion at September 30, 2009, an increase of $126.4 million, or 12.2%, compared with September 30, 2008. Noninterest-bearing deposits grew to $152.4 million, an increase of $31.3 million, or 25.8%, compared with September 30, 2008. Average deposits were $1.2 billion for the third quarter of 2009, an increase of $128.5 million, or 12.3%, compared with the same period of 2008.
Credit Quality and Capital Ratios
The provision for loan losses was $7.7 million for the third quarter of 2009, compared with $5.2 million in the third quarter of 2008. The increase in provision reflected the rise in unemployment and declining collateral values and specific reserves for two commercial real estate loans located in Florida. Net charge-offs for the third quarter of 2009 were $5.3 million, or 1.88% of average total loans on an annualized basis, compared with $2.7 million, or 0.90% of average total loans on an annualized basis for the same period of 2008. The increase in charge-offs resulted primarily from two private client loans and a residential construction loan in Houston, and a charge down of a commercial land loan in Florida. The allowance for loan losses was $27.6 million, or 2.49% of total loans at September 30, 2009, compared with $14.6 million, or 1.22%, at September 30, 2008.
At September 30, 2009, nonperforming assets were $39.9 million, or 3.58% of total loans and investment in real estate, compared with $36.6 million, or 3.16% of total loans and investment in real estate at June 30, 2009, and $23.4 million, or 1.95% of total loans and investment in real estate at September 30, 2008. At September 30, 2009, nonaccrual loans were $32.9 million, compared with $28.6 million at June 30, 2009, an increase of $4.4 million, or 15.4%. The increase was due primarily to a commercial construction loan in Florida. Investment in real estate was $7.0 million at September 30, 2009, compared with $8.0 million at June 30, 2009. The decrease was due primarily to the sale of several residential properties in Houston. At September 30, 2009, restructured loans consisted of a single commercial real estate loan in Florida, which continues to pay interest.
As of September 30, 2009, our estimated Tier 1 risk-based, total risk-based and leverage capital ratios were 15.29%, 16.56%, and 10.94%, respectively, and Encore Bank was considered "well capitalized" pursuant to regulatory capital definitions.
Conference Call
A conference call will be held on Friday, October 23, 2009 at 9:30 a.m., Central time, to discuss third quarter 2009 results. A question and answer session will follow the prepared remarks. Individuals may access the call by dialing 1-888-820-9415, or access the live webcast by visiting www.encorebank.com.
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 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 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 the As of and for the
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
Operations Statement Data:
Interest income $ 19,517 $ 20,481 $ 58,671 $ 61,078
Interest expense 7,562 8,873 23,797 28,746
-------- -------- -------- --------
Net interest income 11,955 11,608 34,874 32,332
Provision for loan losses 7,685 5,249 13,651 10,527
-------- -------- -------- --------
Net interest income after
provision for loan losses 4,270 6,359 21,223 21,805
Noninterest income(1) 6,813 6,100 19,244 19,384
Noninterest expense(1) 13,289 12,198 39,737 38,519
-------- -------- -------- --------
Net earnings (loss) before
income taxes (2,206) 261 730 2,670
Income tax expense (benefit) (453) 33 527 791
-------- -------- -------- --------
Net earnings (loss) $ (1,753) $ 228 $ 203 $ 1,879
======== ======== ======== ========
Earnings (loss) available to
common shareholders(2) $ (2,306) $ 228 $ (1,457) $ 1,879
======== ======== ======== ========
Common Share Data:
Basic earnings (loss) per
share(3) $ (0.22) $ 0.02 $ (0.14) $ 0.18
Diluted earnings (loss) per
share(3) (0.22) 0.02 (0.14) 0.17
Book value per share 15.01 15.73 15.01 15.73
Tangible book value per
share(4) 11.83 12.39 11.83 12.39
Average common shares
outstanding(3) 10,441 10,237 10,337 10,194
Diluted average common shares
outstanding(3) 10,441 10,934 10,337 10,904
Shares outstanding at end of
period 10,499 10,238 10,499 10,238
Selected Performance Ratios:
Return on average assets (0.43)% 0.06% 0.02% 0.17%
Return on average common
equity(5) (5.72)% 0.56% (1.22)% 1.56%
Return on average tangible
common equity(4)(5) (7.24)% 0.71% (1.55)% 1.99%
Net interest margin (6) 3.13% 3.34% 3.12% 3.14%
Efficiency ratio (1) 71.37% 67.82% 73.00% 73.39%
Noninterest income to total
revenue(1) 36.30% 34.45% 35.56% 37.48%
(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 FASB ASC
260-45-60A.
(4) Non-GAAP measure. See calculation of tangible common equity in
subsequent table.
(5) Using earnings (loss) 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)
Sept 30, June 30, March 31, Dec 31, Sept 30,
2009 2009 2009 2008 2008
---------- ---------- ---------- ---------- ----------
ASSETS
Cash and due
from banks $ 15,035 $ 17,891 $ 19,313 $ 23,044 $ 21,005
Interest-
bearing
deposits in
banks 144,238 124,959 100,982 91,459 13,471
Federal funds
sold and other 6,818 3,263 3,290 3,549 5,562
---------- ---------- ---------- ---------- ----------
Cash and cash
equivalents 166,091 146,113 123,585 118,052 40,038
Securities
available-for-
sale, at
estimated fair
value 134,079 132,437 77,875 78,816 57,077
Securities
held-to-
maturity, at
amortized cost 117,316 108,594 114,706 95,875 100,329
Mortgages
held-for-sale -- 1,168 6,340 150 448
Loans
receivable 1,106,169 1,148,820 1,179,083 1,218,404 1,198,445
Allowance for
loan losses (27,575) (25,214) (26,664) (25,105) (14,620)
---------- ---------- ---------- ---------- ----------
Net loans
receivable 1,078,594 1,123,606 1,152,419 1,193,299 1,183,825
Federal Home
Loan Bank of
Dallas stock,
at cost 9,565 9,561 9,547 9,534 10,513
Investment in
real estate 6,952 8,032 5,537 2,781 2,215
Premises and
equipment, net 15,953 16,435 16,901 17,362 17,688
Goodwill 27,873 27,873 27,873 27,873 27,975
Other
intangible
assets, net 5,521 5,691 5,861 6,031 6,218
Cash surrender
value of life
insurance
policies 15,182 15,019 14,870 14,686 14,539
Accrued
interest
receivable and
other assets 23,594 22,189 22,210 23,385 17,358
---------- ---------- ---------- ---------- ----------
$1,600,720 $1,616,718 $1,577,724 $1,587,844 $1,478,223
========== ========== ========== ========== ==========
LIABILITIES AND
SHAREHOLDERS'
EQUITY
Deposits:
Noninterest-
bearing $ 152,367 $ 146,373 $ 158,994 $ 131,709 $ 121,100
Interest-
bearing 1,012,466 1,030,134 957,602 969,088 917,379
---------- ---------- ---------- ---------- ----------
Total
deposits 1,164,833 1,176,507 1,116,596 1,100,797 1,038,479
Borrowings and
repurchase
agreements 221,492 223,218 244,999 272,026 249,426
Junior
subordinated
debentures 20,619 20,619 20,619 20,619 20,619
Accrued
interest
payable and
other
liabilities 7,316 8,565 7,926 8,660 8,690
---------- ---------- ---------- ---------- ----------
Total
liabilities 1,414,260 1,428,909 1,390,140 1,402,102 1,317,214
Commitments and
contingencies -- -- -- -- --
Shareholders'
equity:
Preferred
stock 28,847 28,718 28,590 28,461 --
Common stock 10,508 10,346 10,240 10,247 10,243
Additional
paid-in
capital 115,860 115,698 115,743 115,489 109,488
Retained
earnings 30,066 32,372 32,105 31,523 41,642
Common stock
in treasury,
at cost (123) (123) (109) (98) (98)
Accumulated
other
compre-
hensive
income
(loss) 1,302 798 1,015 120 (266)
---------- ---------- ---------- ---------- ----------
Shareholders'
equity 186,460 187,809 187,584 185,742 161,009
---------- ---------- ---------- ---------- ----------
$1,600,720 $1,616,718 $1,577,724 $1,587,844 $1,478,223
========== ========== ========== ========== ==========
Ratios and Per
Share Data:
Leverage ratio* 10.94% 11.22% 11.26% 11.61% 10.18%
Tier 1 risk-
based capital
ratio* 15.29% 14.99% 14.83% 14.58% 12.58%
Total risk-
based capital
ratio* 16.56% 16.25% 16.09% 15.84% 13.87%
Book value per
share $ 15.01 $ 15.39 $ 15.54 $ 15.36 $ 15.73
Tangible book
value per
share** 11.83 12.14 12.24 12.05 12.39
Tangible common
equity to
tangible
assets** 7.93% 7.93% 8.11% 7.94% 8.78%
* Estimated at September 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
------------------------------------------------
Sept 30, June 30, March 31, Dec 31, Sept 30,
2009 2009 2009 2008 2008
-------- -------- -------- -------- --------
Interest income:
Loans, including
fees $ 17,045 $ 17,220 $ 17,479 $ 18,394 $ 18,738
Mortgages held-for-
sale 34 32 28 9 13
Securities 2,258 2,121 1,962 1,585 1,469
Federal funds sold
and other 180 156 156 205 261
-------- -------- -------- -------- --------
Total interest
income 19,517 19,529 19,625 20,193 20,481
Interest expense:
Deposits 5,131 5,643 5,732 5,748 6,458
Borrowings and
repurchase
agreements 2,129 2,119 2,116 2,174 2,085
Junior subordinated
debentures 302 309 316 329 330
-------- -------- -------- -------- --------
Total interest
expense 7,562 8,071 8,164 8,251 8,873
-------- -------- -------- -------- --------
Net interest income 11,955 11,458 11,461 11,942 11,608
Provision for loan
losses 7,685 2,927 3,039 18,648 5,249
-------- -------- -------- -------- --------
Net interest income
after provision
for loan losses 4,270 8,531 8,422 (6,706) 6,359
Noninterest income:
Trust and investment
management fees 4,501 4,087 3,749 3,985 4,277
Mortgage banking 110 351 151 34 28
Insurance
commissions and
fees 1,365 1,404 1,610 1,184 1,385
Net gain (loss) on
sale of available-
for-sale
securities 387 -- -- (1) (2)
Impairment write
down on securities -- -- -- (1,984) --
Other* 450 485 594 343 412
-------- -------- -------- -------- --------
Total noninterest
income* 6,813 6,327 6,104 3,561 6,100
Noninterest expense:
Compensation 7,761 7,231 7,514 6,781 6,991
Occupancy 1,496 1,554 1,454 1,645 1,477
Equipment 430 449 433 448 494
Advertising and
promotion 214 200 216 232 187
Outside data
processing 797 783 764 797 762
Professional fees 912 1,043 936 904 671
Intangible
amortization 171 169 171 187 187
FDIC assessment 270 746 52 50 50
Other* 1,238 1,536 1,197 1,443 1,379
-------- -------- -------- -------- --------
Total noninterest
expense* 13,289 13,711 12,737 12,487 12,198
-------- -------- -------- -------- --------
Net earnings (loss)
before income
taxes (2,206) 1,147 1,789 (15,632) 261
Income tax expense
(benefit) (453) 326 654 (5,679) 33
-------- -------- -------- -------- --------
Net earnings (loss) $ (1,753) $ 821 $ 1,135 $ (9,953) $ 228
======== ======== ======== ======== ========
Earnings (loss)
available to common
shareholders $ (2,306) $ 267 $ 582 $(10,119) $ 228
======== ======== ======== ======== ========
Earnings (loss) per
common share:
Basic** $ (0.22) $ 0.03 $ 0.06 $ (0.99) $ 0.02
Diluted** (0.22) 0.02 0.05 (0.99) 0.02
Average common shares
outstanding** 10,441 10,334 10,233 10,236 10,237
Diluted average
common shares
outstanding** 10,441 11,145 10,880 10,236 10,934
Nine Months Ended
September 30,
------------------
2009 2008
-------- --------
Interest income:
Loans, including fees $ 51,744 $ 55,354
Mortgages held-for-sale 94 70
Securities 6,341 4,038
Federal funds sold and other 492 1,616
-------- --------
Total interest income 58,671 61,078
Interest expense:
Deposits 16,506 22,123
Borrowings and repurchase agreements 6,364 5,607
Junior subordinated debentures 927 1,016
-------- --------
Total interest expense 23,797 28,746
-------- --------
Net interest income 34,874 32,332
Provision for loan losses 13,651 10,527
-------- --------
Net interest income after provision for loan
losses 21,223 21,805
Noninterest income:
Trust and investment management fees 12,337 13,344
Mortgage banking 612 217
Insurance commissions and fees 4,379 4,497
Net gain (loss) on sale of available-for-sale
securities 387 (2)
Impairment write down on securities -- --
Other* 1,529 1,328
-------- --------
Total noninterest income* 19,244 19,384
Noninterest expense:
Compensation 22,506 22,536
Occupancy 4,504 4,400
Equipment 1,312 1,512
Advertising and promotion 630 610
Outside data processing 2,344 2,173
Professional fees 2,891 2,566
Intangible amortization 511 562
FDIC assessment 1,068 111
Other* 3,971 4,049
-------- --------
Total noninterest expense* 39,737 38,519
-------- --------
Net earnings (loss) before income taxes 730 2,670
Income tax expense (benefit) 527 791
-------- --------
Net earnings (loss) $ 203 $ 1,879
======== ========
Earnings (loss) available to common shareholders $ (1,457) $ 1,879
======== ========
Earnings (loss) per common share:
Basic** $ (0.14) $ 0.18
Diluted** (0.14) 0.17
Average common shares outstanding** 10,337 10,194
Diluted average common shares outstanding** 10,337 10,904
* 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 FASB ASC
260-45-60A.
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,
2009 2009 2009 2008 2008
---------- ---------- ---------- ---------- ----------
Assets:
Interest-
earning
assets:
Loans $1,123,482 $1,166,448 $1,208,697 $1,205,310 $1,186,606
Mortgages
held-for-sale 1,716 1,612 1,391 405 596
Securities 235,819 215,473 187,953 162,221 156,354
Federal funds
sold and
other 168,213 121,328 95,314 66,057 40,128
---------- ---------- ---------- ---------- ----------
Total interest-
earning assets 1,529,230 1,504,861 1,493,355 1,433,993 1,383,684
Less: Allowance
for loan
losses (23,972) (25,656) (25,181) (14,275) (12,630)
Noninterest-
earning assets 109,852 111,519 111,018 102,341 108,224
---------- ---------- ---------- ---------- ----------
Total assets $1,615,110 $1,590,724 $1,579,192 $1,522,059 $1,479,278
========== ========== ========== ========== ==========
Liabilities and
shareholders'
equity:
Interest-
bearing
liabilities:
Interest
checking $ 191,553 $ 177,393 $ 181,976 $ 179,797 $ 192,424
Money market
and savings 306,789 243,276 228,402 244,195 283,130
Time deposits 525,821 564,583 555,006 495,880 448,983
---------- ---------- ---------- ---------- ----------
Total
interest-
bearing
deposits 1,024,163 985,252 965,384 919,872 924,537
Borrowings and
repurchase
agreements 222,978 226,118 255,526 267,081 240,104
Junior
subordinated
debentures 20,619 20,619 20,619 20,619 20,619
---------- ---------- ---------- ---------- ----------
Total
interest-
bearing
liabilities 1,267,760 1,231,989 1,241,529 1,207,572 1,185,260
---------- ---------- ---------- ---------- ----------
Noninterest-
bearing
liabilities:
Noninterest-
bearing
deposits 147,888 159,257 140,821 133,226 119,024
Other
liabilities 10,792 11,366 10,269 11,244 12,186
---------- ---------- ---------- ---------- ----------
Total
liabilities 1,426,440 1,402,612 1,392,619 1,352,042 1,316,470
Shareholders'
equity 188,670 188,112 186,573 170,017 162,808
---------- ---------- ---------- ---------- ----------
Total
liabilities
and
shareholders'
equity $1,615,110 $1,590,724 $1,579,192 $1,522,059 $1,479,278
========== ========== ========== ========== ==========
Encore Bancshares, Inc. and Subsidiaries
SELECTED FINANCIAL DATA
(Unaudited, dollars in thousands)
Sept 30, June 30, March 31, Dec 31, Sept 30,
Loan Portfolio: 2009 2009 2009 2008 2008
---------- ---------- ---------- ---------- ----------
Commercial:
Commercial $ 107,034 $ 126,079 $ 127,279 $ 135,534 $ 130,484
Commercial real
estate 326,256 308,441 315,090 311,909 305,570
Real estate
construction 45,891 78,045 87,352 95,668 96,450
---------- ---------- ---------- ---------- ----------
Total
commercial 479,181 512,565 529,721 543,111 532,504
Consumer:
Residential
real estate
first lien 228,090 232,885 229,981 241,969 247,765
Residential
real estate
second lien 292,265 292,891 294,994 302,141 291,933
Home equity
lines 76,369 77,793 80,099 82,555 79,888
Consumer
installment -
indirect 9,743 11,202 12,643 14,409 16,461
Consumer other 20,521 21,484 31,645 34,219 29,894
---------- ---------- ---------- ---------- ----------
Total consumer 626,988 636,255 649,362 675,293 665,941
---------- ---------- ---------- ---------- ----------
Total loans
receivable $1,106,169 $1,148,820 $1,179,083 $1,218,404 $1,198,445
========== ========== ========== ========== ==========
Nonperforming
Assets:
Nonaccrual
loans $ 32,945 $ 28,552 $ 34,698 $ 30,531 $ 21,142
Accruing loans
past due 90
days or more* -- -- -- 646 23
---------- ---------- ---------- ---------- ----------
Total
nonperforming
loans 32,945 28,552 34,698 31,177 21,165
---------- ---------- ---------- ---------- ----------
Investment in
real estate 6,952 8,032 5,537 2,781 2,215
---------- ---------- ---------- ---------- ----------
Total
nonperforming
assets $ 39,897 $ 36,584 $ 40,235 $ 33,958 $ 23,380
========== ========== ========== ========== ==========
Restructured
loans still
accruing $ 5,424 $ -- $ -- $ -- $ --
========== ========== ========== ========== ==========
Asset Quality
Ratios:
Nonperforming
assets to
total loans
and investment
in real estate 3.58% 3.16% 3.40% 2.78% 1.95%
Net charge-offs
to average
loans 1.88% 1.51% 0.50% 2.69% 0.90%
Allowance for
loan losses to
period end
loans 2.49% 2.19% 2.26% 2.06% 1.22%
Allowance for
loan losses to
nonperforming
loans 83.70% 88.31% 76.85% 80.52% 69.08%
Deposits:
Noninterest-
bearing
deposits $ 152,367 $ 146,373 $ 158,994 $ 131,709 $ 121,100
Interest
checking 189,143 184,620 171,881 197,384 182,456
Money market
and savings 312,206 295,176 215,726 252,571 268,969
Time deposits
less than $100 193,005 206,149 207,648 188,302 192,603
---------- ---------- ---------- ---------- ----------
Core deposits 846,721 832,318 754,249 769,966 765,128
---------- ---------- ---------- ---------- ----------
Time deposits
$100 and
greater 293,041 321,737 330,919 274,903 245,018
Brokered
deposits 25,071 22,452 31,428 55,928 28,333
---------- ---------- ---------- ---------- ----------
Total
deposits $1,164,833 $1,176,507 $1,116,596 $1,100,797 $1,038,479
========== ========== ========== ========== ==========
Assets Under
Management $2,519,458 $2,299,338 $2,137,137 $2,248,047 $2,607,702
========== ========== ========== ========== ==========
* Beginning in 2009, loans past due 90 days or more are either
charged-off or included in nonaccrual loans.
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,
2009 2009 2009 2008 2008
-------- -------- -------- -------- --------
Allowance for loan
losses at beginning
of quarter $ 25,214 $ 26,664 $ 25,105 $ 14,620 $ 12,054
Charge-offs:
Commercial:
Commercial (1,475) (796) (236) (5,950) (301)
Commercial real
estate (1,409) (557) (99) (751) (407)
Real estate
construction (1,334) (474) (239) (408) (356)
-------- -------- -------- -------- --------
Total commercial (4,218) (1,827) (574) (7,109) (1,064)
-------- -------- -------- -------- --------
Consumer:
Residential real
estate first lien (474) (1,446) (34) (142) (256)
Residential real
estate second lien (829) (634) (454) (378) (417)
Home equity lines (344) (517) (282) (477) (831)
Consumer installment
- indirect (145) (150) (261) (265) (254)
Consumer other (18) (9) (48) (23) (23)
-------- -------- -------- -------- --------
Total consumer (1,810) (2,756) (1,079) (1,285) (1,781)
-------- -------- -------- -------- --------
Total charge-offs (6,028) (4,583) (1,653) (8,394) (2,845)
-------- -------- -------- -------- --------
Recoveries:
Commercial:
Commercial 564 62 22 111 8
Commercial real
estate -- -- -- -- --
Real estate
construction -- 6 -- -- --
-------- -------- -------- -------- --------
Total commercial 564 68 22 111 8
-------- -------- -------- -------- --------
Consumer:
Residential real
estate first lien 74 1 34 18 3
Residential real
estate second lien 28 13 17 71 54
Home equity lines 15 88 24 3 4
Consumer installment
- indirect 22 36 76 15 81
Consumer other 1 -- -- 13 12
-------- -------- -------- -------- --------
Total consumer 140 138 151 120 154
-------- -------- -------- -------- --------
Total recoveries 704 206 173 231 162
-------- -------- -------- -------- --------
Net charge-offs (5,324) (4,377) (1,480) (8,163) (2,683)
-------- -------- -------- -------- --------
Provision for loan
losses 7,685 2,927 3,039 18,648 5,249
-------- -------- -------- -------- --------
Allowance for loan
losses at end of
quarter $ 27,575 $ 25,214 $ 26,664 $ 25,105 $ 14,620
======== ======== ======== ======== ========
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,
2009 2009 2009 2008 2008
---------- ---------- ---------- ---------- ----------
Banking
-------
Net
interest
income $ 12,213 $ 11,726 $ 11,736 $ 12,223 $ 11,871
Provision
for
loan
losses 7,685 2,927 3,039 18,648 5,249
Non-
interest
income* 937 760 661 (1,596) 425
Non-
interest
expense* 9,090 9,614 8,606 9,307 8,113
---------- ---------- ---------- ---------- ----------
Earnings
(loss)
before
income
taxes (3,625) (55) 752 (17,328) (1,066)
Income
tax
expense
(benefit) (1,028) (102) 291 (6,251) (446)
---------- ---------- ---------- ---------- ----------
Net
earnings
(loss) $ (2,597) $ 47 $ 461 $ (11,077) $ (620)
========== ========== ========== ========== ==========
Total
assets
at
quarter
end $1,608,348 $1,623,467 $1,584,698 $1,592,933 $1,481,311
========== ========== ========== ========== ==========
Wealth
Management
-----------
Net
interest
income $ 39 $ 38 $ 38 $ 44 $ 51
Non-
interest
income 4,501 4,087 3,749 3,985 4,277
Non-
interest
expense 3,088 3,040 3,098 2,179 3,083
---------- ---------- ---------- ---------- ----------
Earnings
before
income
taxes 1,452 1,085 689 1,850 1,245
Income
tax
expense 586 384 243 606 451
---------- ---------- ---------- ---------- ----------
Net
earnings $ 866 $ 701 $ 446 $ 1,244 $ 794
========== ========== ========== ========== ==========
Total
assets
at
quarter
end $ 50,174 $ 49,563 $ 48,648 $ 47,879 $ 49,263
========== ========== ========== ========== ==========
Insurance
---------
Net
interest
income $ 5 $ 3 $ 3 $ 4 $ 16
Non-
interest
income 1,375 1,480 1,694 1,172 1,398
Non-
interest
expense 1,111 1,057 1,033 1,001 1,002
---------- ---------- ---------- ---------- ----------
Earnings
before
income
taxes 269 426 664 175 412
Income
tax
expense 94 150 233 85 147
---------- ---------- ---------- ---------- ----------
Net
earnings $ 175 $ 276 $ 431 $ 90 $ 265
========== ========== ========== ========== ==========
Total
assets
at
quarter
end $ 7,390 $ 7,625 $ 7,695 $ 6,738 $ 6,997
========== ========== ========== ========== ==========
Other
-----
Net
interest
expense $ (302) $ (309) $ (316) $ (329) $ (330)
Non-
interest
income -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Loss
before
income
taxes (302) (309) (316) (329) (330)
Income
tax
benefit (105) (106) (113) (119) (119)
---------- ---------- ---------- ---------- ----------
Net loss $ (197) $ (203) $ (203) $ (210) $ (211)
========== ========== ========== ========== ==========
Total
assets
at
quarter
end $ (65,192) $ (63,937) $ (63,317) $ (59,706) $ (59,348)
========== ========== ========== ========== ==========
Consolidated
------------
Net
interest
income $ 11,955 $ 11,458 $ 11,461 $ 11,942 $ 11,608
Provision
for loan
losses 7,685 2,927 3,039 18,648 5,249
Non-
interest
income* 6,813 6,327 6,104 3,561 6,100
Non-
interest
expense* 13,289 13,711 12,737 12,487 12,198
---------- ---------- ---------- ---------- ----------
Earnings
(loss)
before
income
taxes (2,206) 1,147 1,789 (15,632) 261
Income
tax
expense
(benefit) (453) 326 654 (5,679) 33
---------- ---------- ---------- ---------- ----------
Net
earnings
(loss) $ (1,753) $ 821 $ 1,135 $ (9,953) $ 228
========== ========== ========== ========== ==========
Total
assets
at
quarter
end $1,600,720 $1,616,718 $1,577,724 $1,587,844 $1,478,223
========== ========== ========== ========== ==========
As of and for the Nine
Months Ended September 30,
-------------------------
2009 2008
---------- ----------
Banking
-------
Net interest income $ 35,675 $ 33,117
Provision for loan losses 13,651 10,527
Noninterest income* 2,358 1,457
Noninterest expense* 27,310 26,486
---------- ----------
Earnings (loss) before income taxes (2,928) (2,439)
Income tax expense (benefit) (839) (1,047)
---------- ----------
Net earnings (loss) $ (2,089) $ (1,392)
========== ==========
Total assets at quarter end $1,608,348 $1,481,311
========== ==========
Wealth Management
-----------------
Net interest income $ 115 $ 152
Noninterest income 12,337 13,344
Noninterest expense 9,226 8,878
---------- ----------
Earnings before income taxes 3,226 4,618
Income tax expense 1,213 1,664
---------- ----------
Net earnings $ 2,013 $ 2,954
========== ==========
Total assets at quarter end $ 50,174 $ 49,263
========== ==========
Insurance
---------
Net interest income $ 11 $ 79
Noninterest income 4,549 4,588
Noninterest expense 3,201 3,155
---------- ----------
Earnings before income taxes 1,359 1,512
Income tax expense 477 541
---------- ----------
Net earnings $ 882 $ 971
========== ==========
Total assets at quarter end $ 7,390 $ 6,997
========== ==========
Other
-----
Net interest expense $ (927) $ (1,016)
Noninterest income -- (5)
---------- ----------
Loss before income taxes (927) (1,021)
Income tax benefit (324) (367)
---------- ----------
Net loss $ (603) $ (654)
========== ==========
Total assets at quarter end $ (65,192) $ (59,348)
========== ==========
Consolidated
------------
Net interest income $ 34,874 $ 32,332
Provision for loan losses 13,651 10,527
Noninterest income* 19,244 19,384
Noninterest expense* 39,737 38,519
---------- ----------
Earnings (loss) before income taxes 730 2,670
Income tax expense (benefit) 527 791
---------- ----------
Net earnings (loss) $ 203 $ 1,879
========== ==========
Total assets at quarter end $1,600,720 $1,478,223
========== ==========
* 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 September 30,
------------------------------------------------------
2009 2008
-------------------------- --------------------------
Average Interest Average Average Interest Average
Outstanding Income/ Yield/ Outstanding Income/ Yield/
Balance Expense Rate Balance Expense Rate
---------- ------- ----- ---------- ------- -----
Assets:
Interest-
earning
assets:
Loans* $1,123,482 $17,114 6.04% $1,186,606 $18,738 6.28%
Mortgages
held-for-
sale 1,716 34 7.86% 596 13 8.68%
Securities* 235,819 2,315 3.89% 156,354 1,469 3.74%
Federal
funds sold
and other 168,213 180 0.42% 40,128 261 2.59%
---------- ------- ---------- -------
Total
interest-
earning
assets* 1,529,230 19,643 5.10% 1,383,684 20,481 5.89%
Less:
Allowance
for loan
losses (23,972) (12,630)
Non-
interest-
earning
assets 109,852 108,224
---------- ----------
Total
assets $1,615,110 $1,479,278
========== ==========
Liabilities
and share-
holders'
equity:
Interest-
bearing
liabilities:
Interest
checking $ 191,553 $ 227 0.47%$ 192,424 $ 610 1.26%
Money
market and
savings 306,789 833 1.08% 283,130 1,217 1.71%
Time
deposits 525,821 4,071 3.07% 448,983 4,631 4.10%
---------- ------- ---------- -------
Total
interest-
bearing
deposits 1,024,163 5,131 1.99% 924,537 6,458 2.78%
Borrowings
and
repurchase
agreements 222,978 2,129 3.79% 240,104 2,085 3.45%
Junior
subordinated
debentures 20,619 302 5.81% 20,619 330 6.37%
---------- ------- ---------- -------
Total
interest-
bearing
liabilities 1,267,760 7,562 2.37% 1,185,260 8,873 2.98%
---------- ------- ---------- -------
Non-
interest-
bearing
liabilities:
Non-
interest-
bearing
deposits 147,888 119,024
Other
liabilities 10,792 12,186
---------- ----------
Total
liabilities 1,426,440 1,316,470
Shareholders'
equity 188,670 162,808
---------- ----------
Total
liabilities
and share-
holders'
equity $1,615,110 $1,479,278
========== ==========
Net interest
income* $12,081 $11,608
======= =======
Net interest
spread* 2.73% 2.91%
Net interest
margin* 3.13% 3.34%
* On taxable-equivalent basis in 2009. Taxable-equivalent amounts in
2008 were immaterial. See calcuation in subsequent table.
Encore Bancshares, Inc. and Subsidiaries
YIELD ANALYSIS
(Unaudited, dollars in thousands)
Nine Months Ended September 30,
--------------------------------------------------------
2009 2008
--------------------------- ---------------------------
Average Interest Average Average Interest Average
Outstanding Income/ Yield/ Outstanding Income/ Yield/
Balance Expense Rate Balance Expense Rate
---------- ------- ----- ---------- ------- -----
Assets:
Interest-
earning
assets:
Loans* $1,165,897 $51,949 5.96% $1,159,102 $55,354 6.38%
Mortgages
held-for-
sale 1,574 94 7.98% 1,069 70 8.75%
Securities* 213,257 6,461 4.05% 146,025 4,038 3.69%
Federal
funds
sold and
other 128,552 492 0.51% 70,684 1,616 3.05%
---------- ------- ---------- -------
Total
interest-
earning
assets* 1,509,280 58,996 5.23% 1,376,880 61,078 5.93%
Less:
Allowance
for loan
losses (24,932) (11,781)
Noninterest-
earning
assets 110,792 104,815
---------- ----------
Total
assets $1,595,140 $1,469,914
========== ==========
Liabilities
and share-
holders'
equity:
Interest-
bearing
liabilities:
Interest
checking $ 183,676 $ 652 0.47% $ 189,969 $ 2,204 1.55%
Money
market and
savings 259,776 2,196 1.13% 307,716 4,960 2.15%
Time
deposits 548,363 13,658 3.33% 449,923 14,959 4.44%
---------- ------- ---------- -------
Total
interest-
bearing
deposits 991,815 16,506 2.23% 947,608 22,123 3.12%
Borrowings
and
repurchase
agreements 234,755 6,364 3.62% 212,165 5,607 3.53%
Junior
subordinated
debentures 20,619 927 6.01% 20,619 1,016 6.58%
---------- ------- ---------- -------
Total
interest-
bearing
liabili-
ties 1,247,189 23,797 2.55% 1,180,392 28,746 3.25%
---------- ------- ---------- -------
Noninterest-
bearing
liabilities:
Non-
interest-
bearing
deposits 149,348 116,470
Other
liabilities 10,810 12,503
---------- ----------
Total
liabili-
ties 1,407,347 1,309,365
Shareholders'
equity 187,793 160,549
---------- ----------
Total
liabilities
and share-
holders'
equity $1,595,140 $1,469,914
========== ==========
Net interest
income* $35,199 $32,332
======= =======
Net interest
spread* 2.68% 2.68%
Net interest
margin* 3.12% 3.14%
* On taxable-equivalent basis in 2009. Taxable-equivalent amounts in
2008 were immaterial. See calcuation in subsequent table.
Encore Bancshares, Inc. and Subsidiaries
NON-GAAP FINANCIAL MEASURES
(Unaudited, amounts in thousands)
Sept 30, June 30, March 31, Dec 31, Sept 30,
2009 2009 2009 2008 2008
--------- --------- --------- --------- ---------
Shareholders'
equity
(GAAP) $ 186,460 $ 187,809 $ 187,584 $ 185,742 $ 161,009
Less:
Preferred
stock 28,847 28,718 28,590 28,461 --
Goodwill
and other
intangible
assets,
net 33,394 33,564 33,734 33,904 34,193
--------- --------- --------- --------- ---------
Tangible
common
equity* $ 124,219 $ 125,527 $ 125,260 $ 123,377 $ 126,816
========= ========= ========= ========= =========
Total
assets
(GAAP) $ 1,600,720 $ 1,616,718 $ 1,577,724 $ 1,587,844 $ 1,478,223
Less:
Goodwill
and
other
intangible
assets, net 33,394 33,564 33,734 33,904 34,193
---------- ---------- ---------- ---------- ----------
Tangible
assets $1,567,326 $1,583,154 $1,543,990 $1,553,940 $1,444,030
========== ========== ========== ========== ==========
Shares
outstanding
at end of
period 10,499 10,337 10,233 10,241 10,238
* 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 Nine Months Ended
September 30, September 30,
-------------------- -------------------
2009 2008 2009 2008
-------- -------- -------- --------
Net interest income
(GAAP) $ 11,955 $ 11,608 $ 34,874 $ 32,332
Taxable-equivalent
adjustment* 126 -- 325 --
-------- -------- -------- --------
Net interest income
on a
taxable-equivalent
basis $ 12,081 $ 11,608 $ 35,199 $ 32,332
======== ======== ======== ========
* 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.