EXHIBIT 99.1
Encore Bancshares Reports Third Quarter 2008 Net Earnings of $228,000, or $.02 Per Diluted Share
HOUSTON, Oct. 24, 2008 (GLOBE NEWSWIRE) -- Encore Bancshares, Inc. (Nasdaq:EBTX) today announced its financial results for the third quarter of 2008.
* Improved net interest margin by 48 basis points to 3.34% compared
with the third quarter of 2007 and by 21 basis points compared with
the second quarter of 2008.
* Improved the efficiency ratio to 67.59% compared with 74.03% for
the third quarter of 2007.
* Built reserves by $2.3 million, or $0.14 per diluted share, which
increased the allowance for loan losses to total loans from 1.03%
at June 30, 2008 to 1.22% at September 30, 2008.
* Maintained Tier 1 Capital at $147.1 million, or 12.58%, at
September 30, 2008.
"I am very pleased with the significant improvement in our net interest margin and in our efficiency ratio in the third quarter," said James S. D'Agostino, Jr., Chairman and Chief Executive Officer. "We have continued to improve our key metrics, strengthen our loan loss reserves and maintain our strong capital position. We are well positioned to take advantage of the opportunities that uncertainty and change create. I am very proud of our experienced professionals who provide personalized service and foster long-term relationships with our clients."
Earnings
For the three months ended September 30, 2008, net earnings were $228,000, or $0.02 per diluted share, compared with $2.2 million, or $0.22 per diluted share, for the same period of 2007. During the quarter, we made an additional provision for loan losses of $2.3 million, which increased our allowance for loan losses to period end loans to 1.22% at September 30, 2008 from 1.03% at June 30, 2008. We believe this increase in the allowance for loan losses was prudent given the challenging economy and credit environment. Excluding this additional provision, net earnings would have been $1.7 million, or $0.16 per diluted share. Net earnings were positively impacted by a $2.5 million, or 28.0%, improvement in net interest income and a $416,000, or 3.3%, decline in noninterest expense, but these improvements were offset by a rise in credit costs.
For the nine months ended September 30, 2008, net earnings were $1.9 million, or $0.17 per diluted share, compared with $5.7 million, or $0.64 per diluted share for the same period of 2007. Net interest income increased $7.6 million, or 30.7%, but this increase was offset by higher credit costs and a reduction in mortgage banking income.
Net Interest Income
Net interest income for the third quarter of 2008 was a record $11.6 million, an increase of $2.5 million, or 28.0%, compared with the third quarter of 2007. The net interest margin expanded 48 basis points to 3.34%. For the nine months ended September 30, 2008, net interest income was $32.3 million, an increase of $7.6 million, or 30.7%, compared with the same period of 2007. The net interest margin improved 45 basis points to 3.14%. The improvements in both periods were due primarily to a combination of improved asset mix, as a result of average loan growth of approximately 22% in the quarter, and a steepening yield curve, which allowed us to decrease the pricing of our deposits by an average rate that was more than the decline in average yield on our earning assets. On a linked quarter basis (compared with immediately preceding quarter), net interest income rose $763,000, or 7.0%, and the net interest margin improved 21 basis points.
Noninterest Income
Noninterest income was $6.0 million for the third quarter of 2008, a decrease of $1.5 million, or 20.6%, compared with the same period of 2007. Noninterest income for the nine months ended September 30, 2008 was $18.8 million, a decrease of $5.9 million, or 23.8%, compared with the same period of 2007. The decrease in both periods was due primarily to lower mortgage banking income, resulting from our decision to discontinue second mortgage sales in the third quarter of 2007.
Noninterest Expense
Noninterest expense was $12.1 million for the third quarter of 2008, a decrease of $416,000, or 3.3%, compared with the same period of 2007. Noninterest expense was $37.9 million for the nine months ended September 30, 2008, a decrease of $293,000, or 0.8%, compared with the same period of 2007. The reduction in both periods was due principally to a combination of compensation, advertising and outside data processing expense reduction initiatives.
Segment Earnings
On a segment basis, our wealth management group showed net earnings of $794,000 for the third quarter of 2008, a decrease of $121,000, or 13.2%, compared with the same period of 2007. The decrease in net earnings was due primarily to a 6.6% decrease in assets under management, reflecting the declining valuation of the stock market. Our banking segment lost $620,000 for the third quarter of 2008, compared with net earnings of $1.3 million for the same period of 2007. Net interest income improved $2.6 million, or 27.4%, but this increase was more than offset by lower mortgage banking income and by higher credit costs. Our insurance group had net earnings of $265,000 for the third quarter of 2008, compared with $316,000 for the same period of 2007. The decrease in net earnings was due primarily to a soft property and casualty market, resulting in lower commission fee income.
Loans
Period end loans were $1.2 billion at September 30, 2008, up $168.3 million, or 16.3%, compared with September 30, 2007, and up $29.3 million, or 2.5%, on a linked quarter basis. Average loans were $1.2 billion for the third quarter of 2008, an increase of $213.0 million, or 21.9%, compared with the same period of 2007.
Deposits
Period end deposits were $1.0 billion at September 30, 2008, up $6.3 million, or 0.6%, compared with September 30, 2007, and down $16.3 million, or 1.5%, on a linked quarter basis. Deposits decreased during the third quarter due primarily to the strategic decision to focus on profitability and not match some competitors' aggressive deposit pricing. Noninterest-bearing deposits were $121.1 million at September 30, 2008, an increase of $5.4 million, or 4.6%, compared with September 30, 2007. Average deposits were $1.0 billion for the third quarter of 2008, an increase of $30.9 million, or 3.1%, compared with the same period of 2007.
Credit Quality and Capital Ratios
The provision for loan losses was $5.2 million in the third quarter of 2008, an increase of $4.2 million compared with the same period of 2007. The increase in the provision reflected growth in the loan portfolio, the overall credit environment, and higher net charge-offs during the quarter. The provision for loan losses included $2.3 million to build the loan loss reserve in light of the current and anticipated economic conditions and credit environment. Net charge-offs for the third quarter of 2008 were $2.7 million, or 0.90% of average total loans on an annualized basis, compared with $465,000, or 0.19% of average total loans for the third quarter of 2007. The allowance for loan losses was $14.6 million, or 1.22% of total loans at September 30, 2008, compared with $10.7 million, or 1.04% of total loans at September 30, 2007.
At September 30, 2008, nonperforming assets, including loans past due 90 days and still accruing, were $23.4 million, or 1.95% of total loans and investment in real estate, compared with $14.4 million, or 1.23% of total loans and investment in real estate at June 30, 2008, and $9.5 million, or 0.92% of total loans and investment in real estate at September 30, 2007. At September 30, 2008, nonaccrual loans were $21.1 million, compared with $12.1 million at June 30, 2008. The increase in nonaccrual loans was due primarily to three residential construction loans in Houston. Loans 90 days past due or more and still accruing were $23,000 at September 30, 2008, compared with $240,000 at June 30, 2008. Investment in real estate was $2.2 million at September 30, 2008 compared with $2.1 million at June 30, 2008.
As of September 30, 2008, our Tier 1 risked-based, total risked-based, and leverage capital ratios were 12.58%, 13.87% and 10.18%, respectively, and Encore Bank was considered "well capitalized" pursuant to regulatory capital definitions.
Conference Call
A conference call will be held on Friday, October 24, 2008 at 10:00 a.m., Central time, to discuss third quarter 2008 results. A question and answer session will follow the prepared remarks. Individuals may access the call by dialing 1-877-681-3371, or access the live webcast by visiting www.encorebank.com/investorrelations.shtml
About Encore Bancshares, Inc.
Encore Bancshares, Inc. is a financial holding company headquartered in Houston, Texas and offers a broad range of banking, wealth management and insurance services through Encore Bank, N.A., and its affiliated companies. Encore Bank operates 11 private client offices in the Greater Houston area and six in southwest Florida. Headquartered in Houston and with $1.5 billion in assets, Encore Bank builds relationships with professional firms, privately-owned businesses, investors and affluent individuals. Encore Bank offers a full range of business and personal banking products and services, as well as financial planning, wealth management, trust and insurance products through its trust division, Encore Trust, and its affiliated companies, Linscomb & Williams and Town & Country Insurance. Products and services offered by Encore Bank's affiliates are not FDIC insured. The Company's common stock is listed on the NASDAQ Global Market under the symbol "EBTX".
The Encore Bancshares, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4257
This press release contains certain financial information determined by methods other than in accordance with GAAP. Encore's management believes these non-GAAP financial measures provide information useful to investors in understanding our financial results and facilitates comparisons with the performance of peers within the financial services industry. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP.
This press release contains certain forward-looking information about Encore Bancshares that is intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. Such statements involve risks and uncertainties that may cause actual results to differ materially from those expressed in or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to: competitive pressure among financial institutions; 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; general economic conditions, either nationally, regionally or in the market areas in which we operate; legislative or regulatory developments or changes in laws; changes in the securities markets and other risks that are described from time to time in our 2007 Annual Report on Form 10-K and other reports and documents filed with the Securities and Exchange Commission.
Encore Bancshares, Inc. and Subsidiaries
FINANCIAL HIGHLIGHTS
(Unaudited, amounts in thousands, except per share data)
As of and for the As of and for the
Three Months Ended Nine Months Ended
September 30, September 30,
----------------- -----------------
2008 2007 2008 2007
------- ------- ------- -------
Earnings Statement Data:
Interest income $20,481 $21,032 $61,078 $60,187
Interest expense 8,873 11,966 28,746 35,443
------- ------- ------- -------
Net interest income 11,608 9,066 32,332 24,744
Provision for loan losses 5,249 1,008 10,527 2,853
------- ------- ------- -------
Net interest income after
provision for loan losses 6,359 8,058 21,805 21,891
Noninterest income 5,975 7,521 18,812 24,697
Noninterest expense 12,073 12,489 37,947 38,240
------- ------- ------- -------
Net earnings before
income taxes 261 3,090 2,670 8,348
Income tax expense 33 842 791 2,667
------- ------- ------- -------
Net earnings $ 228 $ 2,248 $ 1,879 $ 5,681
======= ======= ======= =======
Common Share Data:
Basic earnings per share $ 0.02 $ 0.24 $ 0.19 $ 0.70
Diluted earnings per share 0.02 0.22 0.17 0.64
Book value per share 15.73 15.36 15.73 15.36
Tangible book value per share 12.39 11.91 12.39 11.91
Average common
shares outstanding 9,895 9,347 9,876 8,160
Diluted average common shares
outstanding 10,771 10,156 10,755 8,836
Shares outstanding
at end of period 10,238 10,120 10,238 10,120
Selected Performance Ratios:
Return on average assets 0.06% 0.66% 0.17% 0.58%
Return on average equity 0.56% 6.20% 1.56% 6.31%
Return on average
tangible equity 0.71% 8.20% 1.99% 8.93%
Net interest margin 3.34% 2.86% 3.14% 2.69%
Efficiency ratio 67.59% 74.03% 73.09% 75.80%
Noninterest income
to total revenue 33.98% 45.34% 36.78% 49.95%
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,
2008 2008 2008 2007 2007
---------- ---------- ---------- ---------- ----------
ASSETS
Cash and
due from
banks $ 21,005 $ 21,954 $ 16,608 $ 18,817 $ 19,044
Interest
-bearing
deposits
in banks 13,471 28,297 40,328 18,581 1,804
Federal
funds sold
and other 5,562 10,716 58,769 41,017 100,630
---------- ---------- ---------- ---------- ----------
Cash and
cash
equiv-
alents 40,038 60,967 115,705 78,415 121,478
Securities
available
-for-sale,
at
estimated
fair value 57,077 41,508 12,108 12,207 12,205
Securities
held-to-
maturity,
at
amortized
cost 100,329 107,424 123,133 134,056 140,507
Mortgages
held
-for-sale 448 -- 1,928 1,396 2,244
Loans
receivable 1,198,445 1,169,151 1,156,501 1,097,268 1,030,133
Allowance
for loan
losses (14,620) (12,054) (11,603) (11,161) (10,711)
---------- ---------- ---------- ---------- ----------
Net loans
receiv-
able 1,183,825 1,157,097 1,144,898 1,086,107 1,019,422
Federal
Home Loan
Bank of
Dallas
stock, at
cost 10,513 7,943 6,987 5,880 5,805
Investment
in real
estate 2,215 2,063 2,078 835 731
Premises
and
equipment,
net 17,688 17,050 16,789 16,831 15,814
Goodwill 27,975 27,975 27,969 27,942 27,922
Other
intangible
assets,
net 6,218 6,406 6,592 6,780 6,991
Cash
surrender
value of
life
insurance
policies 14,539 14,398 14,256 14,091 13,951
Accrued
interest
receivable
and other
assets 17,358 17,882 16,183 16,657 16,062
---------- ---------- ---------- ---------- ----------
$1,478,223 $1,460,713 $1,488,626 $1,401,197 $1,383,132
========== ========== ========== ========== ==========
LIABILITIES
AND
SHAREHOLDERS'
EQUITY
Deposits:
Noninterest
-bearing $ 121,100 $ 123,594 $ 129,983 $ 106,382 $ 115,742
Interest
-bearing 917,379 931,149 981,164 934,992 916,442
---------- ---------- ---------- ---------- ----------
Total
deposits 1,038,479 1,054,743 1,111,147 1,041,374 1,032,184
Borrowings
and
repurchase
agreements 249,426 212,257 188,845 173,395 166,359
Junior
subord-
inated
debentures 20,619 20,619 20,619 20,619 20,619
Accrued
interest
payable
and other
liabil-
ities 8,690 12,882 8,604 8,330 8,538
---------- ---------- ---------- ---------- ----------
Total
liabil-
ities 1,317,214 1,300,501 1,329,215 1,243,718 1,227,700
Commitments
and
contin-
gencies -- -- -- -- -
Share-
holders'
equity:
Preferred
stock -- -- -- -- -
Common
stock 10,243 10,240 10,158 10,128 10,124
Additional
paid-in
capital 109,488 109,169 108,813 108,173 107,954
Retained
earnings 41,642 41,414 40,933 39,763 38,060
Common
stock in
treasury,
at cost (98) (98) (69) (69) (69)
Accum-
ulated
other
compre-
hensive
loss (266) (513) (424) (516) (637)
---------- ---------- ---------- ---------- ----------
Total
share-
holders'
equity 161,009 160,212 159,411 157,479 155,432
---------- ---------- ---------- ---------- ----------
$1,478,223 $1,460,713 $1,488,626 $1,401,197 $1,383,132
========== ========== ========== ========== ==========
Ratios and
Per Share
Data:
Leverage
ratio 10.18% 10.07% 10.31% 10.47% 10.71%
Tier 1
risk-based
capital
ratio 12.58% 12.82% 12.91% 13.59% 14.20%
Total
risk-based
capital
ratio 13.87% 13.87% 13.94% 14.65% 15.28%
Book value
per share $ 15.73 $ 15.65 $ 15.70 $ 15.56 $ 15.36
Tangible
book value
per share 12.39 12.30 12.30 12.13 11.91
Tangible
common
equity to
tangible
assets 8.78% 8.82% 8.59% 8.98% 8.94%
Encore Bancshares, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited, amounts in thousands, except per share data)
Three Months Ended
--------------------------------------- Nine Months
Sept June March Dec Sept Ended Sept 30,
30, 30, 31, 31, 30, ---------------
2008 2008 2008 2007 2007 2008 2007
------- ------- ------- ------- ------- ------- -------
Interest income:
Loans,
including
fees $18,738 $18,238 $18,378 $18,536 $17,309 $55,354 $49,463
Mortgages
held-for
-sale 13 25 32 64 1,346 70 3,669
Securities 1,469 1,250 1,319 1,442 1,463 4,038 5,481
Federal funds
sold and
other 261 552 803 1,198 914 1,616 1,574
------- ------- ------- ------- ------- ------- -------
Total
interest
income 20,481 20,065 20,532 21,240 21,032 61,078 60,187
Interest
expense:
Deposits 6,458 7,123 8,542 9,731 9,947 22,123 28,928
Borrowings
and
repurchase
agreements 2,085 1,767 1,755 1,710 1,651 5,607 5,319
Junior
subordinated
debentures 330 330 356 368 368 1,016 1,196
------- ------- ------- ------- ------- ------- -------
Total
interest
expense 8,873 9,220 10,653 11,809 11,966 28,746 35,443
------- ------- ------- ------- ------- ------- -------
Net interest
income 11,608 10,845 9,879 9,431 9,066 32,332 24,744
Provision for
loan losses 5,249 3,777 1,501 1,176 1,008 10,527 2,853
------- ------- ------- ------- ------- ------- -------
Net interest
income
after
provision
for loan
losses 6,359 7,068 8,378 8,255 8,058 21,805 21,891
Noninterest
income:
Trust and
investment
management
fees 4,277 4,660 4,407 4,533 4,501 13,344 13,013
Mortgage
banking 28 135 54 95 1,167 217 5,411
Insurance
commissions
and fees 1,385 1,385 1,727 1,217 1,450 4,497 4,725
Real estate
operations (103) (452) 55 63 178 (500) 303
Net loss on
sale of
available-
for-sale
securities (2) -- -- -- -- (2) (181)
Other 390 432 434 361 225 1,256 1,426
------- ------- ------- ------- ------- ------- -------
Total
noninterest
income 5,975 6,160 6,677 6,269 7,521 18,812 24,697
Noninterest
expense:
Compensation 6,991 7,467 8,078 7,081 7,318 22,536 23,036
Occupancy 1,477 1,485 1,438 1,428 1,438 4,400 4,336
Equipment 494 487 531 553 506 1,512 1,523
Advertising
and
promotion 187 219 204 223 328 610 795
Outside data
processing 762 717 694 883 884 2,173 2,596
Professional
fees 671 739 1,156 797 401 2,566 1,249
Intangible
amortization 187 188 187 209 209 562 629
Loss on early
debt
extinguish-
ment -- -- -- -- -- -- 391
Other 1,304 1,295 989 1,193 1,405 3,588 3,685
------- ------- ------- ------- ------- ------- -------
Total
noninterest
expense 12,073 12,597 13,277 12,367 12,489 37,947 38,240
------- ------- ------- ------- ------- ------- -------
Net earnings
before
income
taxes 261 631 1,778 2,157 3,090 2,670 8,348
Income tax
expense 33 150 608 454 842 791 2,667
------- ------- ------- ------- ------- ------- -------
NET
EARNINGS $ 228 $ 481 $ 1,170 $ 1,703 $ 2,248 $ 1,879 $ 5,681
======= ======= ======= ======= ======= ======= =======
Earnings Per
Common Share:
Basic $ 0.02 $ 0.05 $ 0.12 $ 0.17 $ 0.24 $ 0.19 $ 0.70
Diluted 0.02 0.04 0.11 0.16 0.22 0.17 0.64
Average common
shares
outstanding 9,895 9,886 9,846 9,808 9,347 9,876 8,160
Diluted
average
common shares
outstanding 10,771 10,780 10,714 10,661 10,156 10,755 8,836
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,
2008 2008 2008 2007 2007
---------- ---------- ---------- ---------- ----------
Assets:
Interest
-earning
assets:
Loans $1,186,606 $1,170,959 $1,119,439 $1,060,927 $ 973,641
Mortgages
held-for-sale 596 1,151 1,465 2,693 60,959
Securities 156,354 139,510 142,098 148,912 156,159
Federal funds
sold and
other 40,128 82,841 89,419 98,789 68,347
---------- ---------- ---------- ---------- ----------
Total interest-
earning assets 1,383,684 1,394,461 1,352,421 1,311,321 1,259,106
Less: Allowance
for loan
losses (12,630) (11,526) (11,178) (10,754) (10,391)
Noninterest-
earning assets 108,224 103,918 102,266 101,783 102,667
---------- ---------- ---------- ---------- ----------
Total assets $1,479,278 $1,486,853 $1,443,509 $1,402,350 $1,351,382
========== ========== ========== ========== ==========
Liabilities and
shareholders'
equity:
Interest
-bearing
liabilities:
Interest
checking $ 192,424 $ 194,973 $ 182,483 $ 169,823 $ 169,860
Money market
and savings 283,130 307,047 333,241 359,217 358,732
Time deposits 448,983 466,199 434,597 399,224 375,896
---------- ---------- ---------- ---------- ----------
Total
interest
-bearing
deposits 924,537 968,219 950,321 928,264 904,488
Borrowings and
repurchase
agreements 240,104 202,229 193,855 170,141 158,203
Junior
subordinated
debentures 20,619 20,619 20,619 20,619 20,619
---------- ---------- ---------- ---------- ----------
Total
interest
-bearing
liabilities 1,185,260 1,191,067 1,164,795 1,119,024 1,083,310
---------- ---------- ---------- ---------- ----------
Noninterest
-bearing
liabilities:
Noninterest
-bearing
deposits 119,024 123,453 106,905 113,849 108,168
Other
liabilities 12,186 12,015 13,313 13,428 16,128
---------- ---------- ---------- ---------- ----------
Total
liabilities 1,316,470 1,326,535 1,285,013 1,246,301 1,207,606
Shareholders'
equity 162,808 160,318 158,496 156,049 143,776
---------- ---------- ---------- ---------- ----------
Total
liabilities
and
shareholders'
equity $1,479,278 $1,486,853 $1,443,509 $1,402,350 $1,351,382
========== ========== ========== ========== ==========
Encore Bancshares, Inc. and Subsidiaries
SELECTED FINANCIAL DATA
(Unaudited, dollars in thousands)
Sept 30, June 30, March 31, Dec 31, Sept 30,
Loan Portfolio: 2008 2008 2008 2007 2007
---------- ---------- ---------- ---------- ----------
Commercial:
Commercial $ 130,484 $ 127,639 $ 142,259 $ 127,583 $ 111,072
Commercial
real estate 305,570 298,562 291,543 277,047 249,576
Real estate
construction 96,450 91,371 97,807 100,975 132,557
---------- ---------- ---------- ---------- ----------
Total
commercial 532,504 517,572 531,609 505,605 493,205
Consumer:
Residential
real estate
first lien 247,765 256,201 264,445 271,346 264,541
Residential
real estate
second lien 291,933 269,409 234,623 195,583 146,719
Home equity
lines 79,888 79,913 78,860 79,023 76,096
Consumer
installment -
indirect 16,461 18,806 21,917 25,262 29,210
Consumer other 29,894 27,250 25,047 20,449 20,362
---------- ---------- ---------- ---------- ----------
Total consumer 665,941 651,579 624,892 591,663 536,928
---------- ---------- ---------- ---------- ----------
Total loans
receivable $1,198,445 $1,169,151 $1,156,501 $1,097,268 $1,030,133
========== ========== ========== ========== ==========
Nonperforming
Assets:
Nonaccrual
loans $ 21,142 $ 12,118 $ 14,131 $ 11,208 $ 8,734
Accruing loans
past due 90
days or more 23 240 283 2,183 20
Restructured
loans -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total
nonperforming
loans 21,165 12,358 14,414 13,391 8,754
---------- ---------- ---------- ---------- ----------
Investment in
real estate 2,215 2,063 2,078 835 731
---------- ---------- ---------- ---------- ----------
Total
nonperforming
assets $ 23,380 $ 14,421 $ 16,492 $ 14,226 $ 9,485
========== ========== ========== ========== ==========
Asset Quality
Ratios:
Nonperforming
assets to
total loans
and
investment in
real estate 1.95% 1.23% 1.42% 1.30% 0.92%
Net charge-offs
to average
loans 0.90% 1.14% 0.38% 0.27% 0.19%
Allowance for
loan losses to
period end
loans 1.22% 1.03% 1.00% 1.02% 1.04%
Allowance for
loan losses to
nonperforming
loans 69.08% 97.54% 80.50% 83.35% 122.36%
Deposits:
Noninterest
-bearing
deposits $ 121,100 $ 123,594 $ 129,983 $ 106,382 $ 115,742
Interest
checking 182,456 186,902 190,633 179,486 169,646
Money market
and savings 268,969 292,631 338,386 345,066 362,289
Time deposits
less than
$100,000 192,603 198,603 201,735 193,900 175,071
---------- ---------- ---------- ---------- ----------
Core deposits 765,128 801,730 860,737 824,834 822,748
---------- ---------- ---------- ---------- ----------
Time deposits
$100,000
and greater 245,018 239,556 233,462 201,932 194,619
Brokered
deposits 28,333 13,457 16,948 14,608 14,817
---------- ---------- ---------- ---------- ----------
Total
deposits $1,038,479 $1,054,743 $1,111,147 $1,041,374 $1,032,184
========== ========== ========== ========== ==========
Assets Under
Management $2,607,702 $2,736,790 $2,737,603 $2,784,617 $2,792,894
========== ========== ========== ========== ==========
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,
2008 2008 2008 2007 2007
-------- -------- -------- -------- --------
Allowance
for loan losses
at beginning of
quarter $ 12,054 $ 11,603 $ 11,161 $ 10,711 $ 10,168
Charge-offs:
Commercial:
Commercial (301) (2,119) (231) (20) (42)
Commercial
real estate (407) (289) (80) -- --
Real estate
construction (356) (57) (9) (79) --
-------- -------- -------- -------- --------
Total
commercial (1,064) (2,465) (320) (99) (42)
-------- -------- -------- -------- --------
Consumer:
Residential
real estate
first lien (256) (193) (43) (66) (124)
Residential
real estate
second lien (417) (151) (377) (44) (216)
Home
equity lines (831) (463) (42) (299) (25)
Consumer
installment
- indirect (254) (200) (297) (360) (307)
Consumer other (23) (5) (29) (45) (13)
-------- -------- -------- -------- --------
Total consumer (1,781) (1,012) (788) (814) (685)
-------- -------- -------- -------- --------
Total
charge-offs (2,845) (3,477) (1,108) (913) (727)
-------- -------- -------- -------- --------
Recoveries:
Commercial:
Commercial 8 9 11 40 6
Commercial
real estate -- 6 -- -- --
Real estate
construction -- -- -- -- --
-------- -------- -------- -------- --------
Total
commercial 8 15 11 40 6
-------- -------- -------- -------- --------
Consumer:
Residential
real estate
first lien 3 19 1 22 12
Residential
real estate
second lien 54 3 2 -- 145
Home equity
lines 4 -- 2 -- --
Consumer
installment
- indirect 81 37 6 109 76
Consumer other 12 77 27 16 23
-------- -------- -------- -------- --------
Total consumer 154 136 38 147 256
-------- -------- -------- -------- --------
Total
recoveries 162 151 49 187 262
-------- -------- -------- -------- --------
Net
charge-offs (2,683) (3,326) (1,059) (726) (465)
-------- -------- -------- -------- --------
Provision for
loan losses 5,249 3,777 1,501 1,176 1,008
-------- -------- -------- -------- --------
Allowance for
loan losses at
end of quarter $ 14,620 $ 12,054 $ 11,603 $ 11,161 $ 10,711
======== ======== ======== ======== ========
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,
2008 2008 2008 2007 2007
---------- ---------- ---------- ---------- ----------
Banking
Net
interest
income $ 11,871 $ 11,116 $ 10,130 $ 9,674 $ 9,315
Provision
for loan
losses 5,249 3,777 1,501 1,176 1,008
Noninterest
income 300 66 519 509 1,559
Noninterest
expense 7,988 8,823 9,103 8,378 8,338
---------- ---------- ---------- ---------- ----------
Earnings
(loss)
before
income
taxes (1,066) (1,418) 45 629 1,528
Income tax
expense
(benefit) (446) (586) (15) 103 261
---------- ---------- ---------- ---------- ----------
Net
earnings
(loss) $ (620) $ (832) $ 60 $ 526 $ 1,267
========== ========== ========== ========== ==========
Total
assets at
quarter
end $1,481,311 $1,472,045 $1,500,462 $1,411,934 $1,392,156
========== ========== ========== ========== ==========
Wealth
Management
Net
interest
income $ 51 $ 37 $ 64 $ 89 $ 82
Noninterest
income 4,277 4,660 4,407 4,533 4,501
Noninterest
expense 3,083 2,725 3,070 3,042 3,137
---------- ---------- ---------- ---------- ----------
Earnings
before
income
taxes 1,245 1,972 1,401 1,580 1,446
Income tax
expense 451 709 504 460 531
---------- ---------- ---------- ---------- ----------
Net
earnings $ 794 $ 1,263 $ 897 $ 1,120 $ 915
========== ========== ========== ========== ==========
Total
assets at
quarter
end $ 49,263 $ 48,146 $ 47,444 $ 46,270 $ 45,425
========== ========== ========== ========== ==========
Insurance
Net
interest
income $ 16 $ 22 $ 41 $ 36 $ 37
Noninterest
income 1,398 1,458 1,732 1,222 1,460
Noninterest
expense 1,002 1,049 1,104 947 1,014
---------- ---------- ---------- ---------- ----------
Earnings
before
income
taxes 412 431 669 311 483
Income tax
expense 147 154 240 73 167
---------- ---------- ---------- ---------- ----------
Net
earnings $ 265 $ 277 $ 429 $ 238 $ 316
========== ========== ========== ========== ==========
Total
assets at
quarter
end $ 6,997 $ 13,188 $ 10,143 $ 9,242 $ 9,219
========== ========== ========== ========== ==========
Other
Net
interest
expense $ (330) $ (330) $ (356) $ (368) $ (368)
Noninterest
income -- (24) 19 5 1
Noninterest
expense -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Loss before
income
taxes (330) (354) (337) (363) (367)
Income tax
benefit (119) (127) (121) (182) (117)
---------- ---------- ---------- ---------- ----------
Net loss $ (211) $ (227) $ (216) $ (181) $ (250)
========== ========== ========== ========== ==========
Total
assets at
quarter
end $ (59,348) $ (72,666) $ (69,423) $ (66,249) $ (63,668)
========== ========== ========== ========== ==========
Consolidated
Net
interest
income $ 11,608 $ 10,845 $ 9,879 $ 9,431 $ 9,066
Provision
for loan
losses 5,249 3,777 1,501 1,176 1,008
Noninterest
income 5,975 6,160 6,677 6,269 7,521
Noninterest
expense 12,073 12,597 13,277 12,367 12,489
---------- ---------- ---------- ---------- ----------
Earnings
before
income
taxes 261 631 1,778 2,157 3,090
Income tax
expense 33 150 608 454 842
---------- ---------- ---------- ---------- ----------
Net
earnings $ 228 $ 481 $ 1,170 $ 1,703 $ 2,248
========== ========== ========== ========== ==========
Total
assets at
quarter
end $1,478,223 $1,460,713 $1,488,626 $1,401,197 $1,383,132
========== ========== ========== ========== ==========
As of and for the Nine
Months Ended
September 30,
----------------------
2008 2007
---------- ----------
Banking
Net interest income $ 33,117 $ 25,608
Provision for loan losses 10,527 2,853
Noninterest income 885 6,847
Noninterest expense 25,914 25,644
---------- ----------
Earnings (loss) before income taxes (2,439) 3,958
Income tax expense (benefit) (1,047) 1,027
---------- ----------
Net earnings (loss) $ (1,392) $ 2,931
========== ==========
Total assets at quarter end $1,481,311 $1,392,156
========== ==========
Wealth Management
Net interest income $ 152 $ 232
Noninterest income 13,344 13,013
Noninterest expense 8,878 9,152
---------- ----------
Earnings before income taxes 4,618 4,093
Income tax expense 1,664 1,481
---------- ----------
Net earnings $ 2,954 $ 2,612
========== ==========
Total assets at quarter end $ 49,263 $ 45,425
========== ==========
Insurance
Net interest income $ 79 $ 100
Noninterest income 4,588 4,813
Noninterest expense 3,155 3,053
---------- ----------
Earnings before income taxes 1,512 1,860
Income tax expense 541 671
---------- ----------
Net earnings $ 971 $ 1,189
========== ==========
Total assets at quarter end $ 6,997 $ 9,219
========== ==========
Other
Net interest expense $ (1,016) $ (1,196)
Noninterest income (5) 24
Noninterest expense -- 391
---------- ----------
Loss before income taxes (1,021) (1,563)
Income tax benefit (367) (512)
---------- ----------
Net loss $ (654) $ (1,051)
========== ==========
Total assets at quarter end $ (59,348) $ (63,668)
========== ==========
Consolidated
Net interest income $ 32,332 $ 24,744
Provision for loan losses 10,527 2,853
Noninterest income 18,812 24,697
Noninterest expense 37,947 38,240
---------- ----------
Earnings before income taxes 2,670 8,348
Income tax expense 791 2,667
---------- ----------
Net earnings $ 1,879 $ 5,681
========== ==========
Total assets at quarter end $1,478,223 $1,383,132
========== ==========
Encore Bancshares, Inc. and Subsidiaries
YIELD ANALYSIS
(Unaudited, dollars in thousands)
Three Months Ended September 30,
------------------------------------
2008
------------------------------------
Average Interest Average
Outstanding Income/ Yield/
Balance Expense Rate
---------- ---------- ----------
Assets:
Interest-earning assets:
Loans $1,186,606 $ 18,738 6.28%
Mortgages held-for-sale 596 13 8.68%
Securities 156,354 1,469 3.74%
Federal funds sold and other 40,128 261 2.59%
---------- ----------
Total interest-earning assets 1,383,684 20,481 5.89%
Less: Allowance for loan losses (12,630)
Noninterest-earning assets 108,224
----------
Total assets $1,479,278
==========
Liabilities and
shareholders' equity:
Interest-bearing liabilities:
Interest checking $ 192,424 $ 610 1.26%
Money market and savings 283,130 1,217 1.71%
Time deposits 448,983 4,631 4.10%
---------- ----------
Total interest-bearing
deposits 924,537 6,458 2.78%
Borrowings and
repurchase agreements 240,104 2,085 3.45%
Junior subordinated debentures 20,619 330 6.37%
---------- ----------
Total interest-bearing
liabilities 1,185,260 8,873 2.98%
---------- ----------
Noninterest-bearing liabilities:
Noninterest-bearing deposits 119,024
Other liabilities 12,186
----------
Total liabilities 1,316,470
Shareholders' equity 162,808
----------
Total liabilities
and shareholders' equity $1,479,278
==========
Net interest income $ 11,608
==========
Net interest spread 2.91%
Net interest margin 3.34%
------------------------------------
2007
------------------------------------
Average Interest Average
Outstanding Income/ Yield/
Balance Expense Rate
---------- ---------- ----------
Assets:
Interest-earning assets:
Loans $ 973,641 $ 17,309 7.05%
Mortgages held-for-sale 60,959 1,346 8.76%
Securities 156,159 1,463 3.72%
Federal funds sold and other 68,347 914 5.31%
---------- ----------
Total interest-earning assets 1,259,106 21,032 6.63%
Less: Allowance for loan losses (10,391)
Noninterest-earning assets 102,667
----------
Total assets $1,351,382
==========
Liabilities and
shareholders' equity:
Interest-bearing liabilities:
Interest checking $ 169,860 $ 1,347 3.15%
Money market and savings 358,732 3,907 4.32%
Time deposits 375,896 4,693 4.95%
---------- ----------
Total interest-bearing
deposits 904,488 9,947 4.36%
Borrowings and
repurchase agreements 158,203 1,651 4.14%
Junior subordinated debentures 20,619 368 7.08%
---------- ----------
Total interest-bearing
liabilities 1,083,310 11,966 4.38%
---------- ----------
Noninterest-bearing liabilities:
Noninterest-bearing deposits 108,168
Other liabilities 16,128
----------
Total liabilities 1,207,606
Shareholders' equity 143,776
----------
Total liabilities
and shareholders' equity $1,351,382
==========
Net interest income $ 9,066
==========
Net interest spread 2.25%
Net interest margin 2.86%
Encore Bancshares, Inc. and Subsidiaries
YIELD ANALYSIS
(Unaudited, dollars in thousands)
Nine Months Ended September 30,
------------------------------------
2008
------------------------------------
Average Interest Average
Outstanding Income/ Yield/
Balance Expense Rate
---------- ---------- ----------
Assets:
Interest-earning assets:
Loans $1,159,102 $ 55,354 6.38%
Mortgages held-for-sale 1,069 70 8.75%
Securities 146,025 4,038 3.69%
Federal funds sold and other 70,684 1,616 3.05%
---------- ----------
Total interest-earning assets 1,376,880 61,078 5.93%
Less: Allowance for loan losses (11,781)
Noninterest-earning assets 104,815
----------
Total assets $1,469,914
==========
Liabilities, shareholders'
equity and puttable
common stock:
Interest-bearing liabilities:
Interest checking $ 189,969 $ 2,204 1.55%
Money market and savings 307,716 4,960 2.15%
Time deposits 449,923 14,959 4.44%
---------- ----------
Total interest-bearing
deposits 947,608 22,123 3.12%
Borrowings and
repurchase agreements 212,165 5,607 3.53%
Junior subordinated debentures 20,619 1,016 6.58%
---------- ----------
Total interest-bearing
liabilities 1,180,392 28,746 3.25%
---------- ----------
Noninterest-bearing liabilities:
Noninterest-bearing deposits 116,470
Other liabilities 12,503
----------
Total liabilities 1,309,365
Shareholders' equity and
puttable common stock 160,549
----------
Total liabilities,
shareholders' equity and
puttable common stock $1,469,914
==========
Net interest income $ 32,332
==========
Net interest spread 2.68%
Net interest margin 3.14%
------------------------------------
2007
------------------------------------
Average Interest Average
Outstanding Income/ Yield/
Balance Expense Rate
---------- ---------- ----------
Assets:
Interest-earning assets:
Loans $ 943,048 $ 49,463 7.01%
Mortgages held-for-sale 55,753 3,669 8.80%
Securities 190,165 5,481 3.85%
Federal funds sold and other 38,746 1,574 5.43%
---------- ----------
Total interest-earning assets 1,227,712 60,187 6.55%
Less: Allowance for loan losses (9,838)
Noninterest-earning assets 102,592
----------
Total assets $1,320,466
==========
Liabilities, shareholders' equity
and puttable common stock:
Interest-bearing liabilities:
Interest checking $ 173,671 $ 3,915 3.01%
Money market and savings 344,978 11,203 4.34%
Time deposits 374,654 13,810 4.93%
---------- ----------
Total interest-bearing
deposits 893,303 28,928 4.33%
Borrowings and
repurchase agreements 164,133 5,319 4.33%
Junior subordinated debentures 20,743 1,196 7.71%
---------- ----------
Total interest-bearing
liabilities 1,078,179 35,443 4.40%
---------- ----------
Noninterest-bearing liabilities:
Noninterest-bearing deposits 107,965
Other liabilities 14,015
----------
Total liabilities 1,200,159
Shareholders' equity and
puttable common stock 120,307
----------
Total liabilities,
shareholders' equity and
puttable common stock $1,320,466
==========
Net interest income $ 24,744
==========
Net interest spread 2.15%
Net interest margin 2.69%
CONTACT: Encore Bancshares, Inc.
L. Anderson Creel, Chief Financial Officer
713.787.3138
James S. D'Agostino, Jr., Chairman and CEO
713.787.3103
