EXHIBIT 99.1
Encore Bancshares Reports First Quarter 2010 Net Loss of $2.3 Million, or $0.27 Per Diluted Share, Including $4.3 Million Charge on Florida Sale
HOUSTON, April 23, 2010 (GLOBE NEWSWIRE) -- Encore Bancshares, Inc. (Nasdaq:EBTX) today announced its financial results for the first quarter of 2010. On March 15, 2010, we announced agreements to sell our Florida operations. In connection with those proposed transactions, we recognized charges of $4.3 million in the quarter. We expect the transactions to close by the end of the third quarter of 2010 and upon closing, recognize gains that will reduce the net charge to approximately $1.0 million.
Florida transactions
- Executed agreements to sell Florida operations including six branches with deposits of $242.8 million and certain loans totaling approximately $80.0 million
- $4.3 million write down of Florida assets held for sale, including $1.8 million charged to the allowance for loan losses
Total revenue up 5% compared with the first quarter of 2009
- Assets under management increased 30.4% to $2.8 billion
- Trust and investment management fees rose 23.2%
- Average total deposits increased 6.5%
- Average noninterest-bearing deposits in Houston increased 14.1%
Capital position and credit reserves remain strong
- Tier 1 capital of 15.82% and tangible common equity ratio was 7.52%
- Allowance for loan losses of 2.58% of loans, excluding loans held for sale
"I am very pleased with our prospects as we shift our focus exclusively to Houston," said James S. D'Agostino, Jr., Chairman and Chief Executive Officer of Encore Bancshares, Inc. "We are investing in the Houston market and redeploying capital to the fourth largest city in the U.S. which has outperformed in this recession and is participating in the recovery. Our commitment to business banking and our ability to take advantage of local market opportunities supports our optimism."
Earnings
For the three months ended March 31, 2010, our net loss was $2.3 million, compared with net earnings of $1.1 million for the same period of 2009. Loss per diluted common share for the first quarter of 2010 was $0.27, compared with earnings per diluted common share of $0.05 for the same period of 2009. Earnings per share include the dividends on preferred stock issued in the fourth quarter of 2008. The decrease in earnings was due primarily to the write down of assets held for sale in connection with the anticipated sale of our Florida operations.
Net Interest Income
Net interest income on a tax equivalent basis (TE) for the first quarter of 2010 was $11.6 million, an increase of $79,000, or 0.7% compared with the same period of 2009. The net interest margin (TE) contracted 2 basis points during the same comparison period. The decrease in net interest margin was due primarily to a decrease in loans and an increase in lower yielding temporary investments. On a linked quarter basis (compared with immediately preceding quarter), net interest income (TE) decreased $134,000, or 1.1%, but the net interest margin (TE) expanded 7 basis points. The increase in net interest margin was due primarily to lower deposit cost.
Noninterest Income
Noninterest income was $6.9 million for the first quarter of 2010, an increase of $805,000, or 13.2%, compared with the same period of 2009. The increase was due primarily to trust and investment management fees, as assets under management increased 30.4%, due to the strong performance of the equity markets.
Noninterest Expense
Noninterest expense was $18.3 million for the first quarter of 2010, an increase of $5.5 million, compared with the same period of 2009. Excluding the write down of assets held for sale in connection with the Florida transactions, noninterest expense was $15.7 million, an increase of $3.0 million, or 23.5%, compared with the same period of 2009. The increase was due primarily to a combination of higher compensation expense, foreclosed real estate expense and FDIC assessments. The increase in compensation was due in part to the addition of executive management, loan workout personnel and new lenders to grow the bank's commercial lending platform in Houston. The increase in foreclosed real estate expense primarily reflected write downs or losses on the sale of properties, as we reduced investment in real estate by $3.6 million, or 24.5%, from December 31, 2009. The higher FDIC assessment expenses reflect higher assessment rates imposed by the FDIC, a growing deposit base, and the expirati on of credits in previous quarters.
Segment Earnings
On a segment basis, our banking segment showed a net loss of $3.2 million, compared with net earnings of $461,000 in the same period of 2009, due primarily to the write down of assets held for sale in connection with the Florida transactions. Our wealth management group showed net earnings of $708,000 for the first quarter of 2010, an increase of $262,000, or 58.7%, compared with the same period of 2009. Wealth management income rose due primarily to rising equity valuations, but was partially offset by an increase in compensation. Our insurance agency had net earnings of $404,000, a decrease of $27,000, compared with the same period of 2009.
Loans
Period end loans, including loans held for sale, were $1.1 billion at March 31, 2010, a decrease of $129.2 million, or 10.9%, compared with March 31, 2009. The reduction in the loan portfolio reflected the deleveraging of our clients. The largest reduction was in construction loans resulting primarily from the weak residential and commercial real estate markets.
Deposits
Period end deposits were $1.2 billion, including deposits held for sale, at March 31, 2010, an increase of $84.8 million, or 7.6%, compared with March 31, 2009. Average deposits were $1.2 billion for the first quarter of 2010, an increase of $71.4 million, or 6.5%, compared with the same period of 2009.
Credit Quality and Capital Ratios
The provision for loan losses was $5.0 million for the first quarter of 2010, including $1.8 million related to loans held for sale, compared with $3.0 million for the first quarter of 2009. The provision for loan losses continues to reflect the lingering effects of the weak economy and depressed collateral values, primarily in Florida. Net charge-offs for the first quarter of 2010 were $6.3 million, or 2.41% of average total loans on an annualized basis, compared with $1.5 million, or 0.50% of average total loans on an annualized basis in the same period of 2009. Charge-offs for the first quarter of 2010 included $3.1 million in partial charge-offs for two commercial real estate loans in Florida as well as the $1.8 million charge-off in connection with the Florida transactions. The allowance for loan losses was $25.1 million, or 2.58% of loans, excluding loans held for sale, at March 31, 2010, compared with $26.7 million, or 2.26% at March 31, 2009.
At March 31, 2010, nonperforming assets were $51.8 million, or 4.85% of total loans and investment in real estate, compared with $50.6 million, or 4.63% at December 31, 2009 and $40.2 million, or 3.38% at March 31, 2009. At March 31, 2010, nonaccrual loans were $40.7 million, compared with $36.0 million at December 31, 2009, an increase of $4.7 million, or 13.1%. The increase in nonaccrual loans was due primarily to two commercial real estate loans in Florida which totaled $7.4 million. Investment in real estate was $11.1 million at March 31, 2010 compared with $14.6 million at December 31, 2009, a decrease of $3.6 million, or 24.5%. The decrease was due primarily to the sale of several residential properties in Houston. Loans 90 days or more past due and still accruing, which are not included as nonperforming loans or assets, were reduced to zero from $1.5 million at December 31, 2009. This category consisted of one commercial real estate loan in Florida. Restructured loans st ill accruing were $5.7 million as of March 31, 2010, compared with $530,000 as of December 31, 2009. Restructured loans still accruing consisted primarily of a land loan in Houston.
As of March 31, 2010, our estimated Tier 1 risk-based, total risk-based and leverage capital ratios were 15.82%, 17.08%, and 10.73%, respectively. In addition, Encore Bank was considered "well capitalized" pursuant to regulatory capital definitions. Book value per share and tangible book value per share were $14.43 and $10.76 at March 31, 2010, compared with $15.01 and $11.10 at December 31, 2009. The decline in book value reflects the issuance of approximately 696,000 shares during the first quarter as a result of the completion of a contingency payment related to the acquisition of Linscomb & Williams.
Conference Call
Encore will host a conference call for investors and analysts that will be broadcast live via the Internet on Friday, April 23, 2010, at 10:00 a.m. Eastern Time. Interested parties may participate by calling 877-303-6295 at least ten minutes prior to the start time.
To listen to this conference call live via the Internet, please visit the Investor Relations section of the Company's web site at http://www.encorebank.com at least fifteen minutes prior to the call to register, download and install any necessary audio software. An audio archive of the call will also be available on the web site on or before Monday, April 26, 2010.
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. Additionally, Encore has reviewed and presented non-GAAP financial information related to its Florida operations held-for-sale on pages 10 and 11. Encore's management believes this non-GAAP financial information is useful to investors in understanding our financial results. These non-GAAP measures should not be considered a substitute for operating results determined in accordance with GAAP and we strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.
This press release contains certain forward-looking information about Encore Bancshares that is intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. Such statements involve risks and uncertainties that may cause actual results to differ materially from those expressed in or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to: competitive pressure among financial institutions; volatility and disruption in national and international financial markets; government intervention in the U.S. financial system; our ability to expand and grow our businesses and operations and to realize the cost savings and revenue enhancements expected from such activities; a deterioration of credit quality or a reduced demand for credit; the failure to complete the pending transactions for the sale of our Florida operations; incorrect assumptions underlying the establishment of and provisions made to the allowance for loan losses; changes in the interest rate environment; the continued service of key management personnel; our ability to attract, motivate and retain key employees; the incurrence and possible impairment of goodwill associated with an acquisition and possible adverse short-term effects on our results of operations; changes in availability of funds; 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 2009 Annual Report on Form 10-K and other reports and documents filed with the Securities and Exchange Commission.
| Encore Bancshares, Inc. and Subsidiaries |
| | | | |
| FINANCIAL HIGHLIGHTS |
| | | | |
| (Unaudited, amounts in thousands, except per share data) |
| | | | |
| | As of and for the Three Months Ended |
| | March 31, | December 31, |
| | 2010 | 2009 | 2009 |
| | | | |
| Operations Statement Data: | | | |
| Interest income | $ 17,955 | $ 19,625 | $ 18,555 |
| Interest expense | 6,465 | 8,164 | 6,934 |
| Net interest income | 11,490 | 11,461 | 11,621 |
| Provision for loan losses | 4,960 | 3,039 | 3,009 |
Net interest income after provision
for loan losses | 6,530 | 8,422 | 8,612 |
| Noninterest income (1) | 6,909 | 6,104 | 8,093 |
| Noninterest expense (1) | 18,264 | 12,737 | 14,687 |
| Net earnings (loss) before income taxes | (4,825) | 1,789 | 2,018 |
| Income tax expense (benefit) | (2,574) | 654 | 435 |
| Net earnings (loss) | $ (2,251) | $ 1,135 | $ 1,583 |
| Earnings (loss) available to common shareholders | $ (2,807) | $ 582 | $ 1,029 |
| | | | |
| Common Share Data: | | | |
| Basic earnings (loss) per share (2) | $ (0.27) | $ 0.06 | $ 0.10 |
| Diluted earnings (loss) per share (2) | (0.27) | 0.05 | 0.09 |
| Book value per share | 14.43 | 15.54 | 15.01 |
| Tangible book value per share (3) | 10.76 | 12.24 | 11.10 |
| | | | |
| Average common shares outstanding | 10,558 | 10,233 | 10,513 |
| Diluted average common shares outstanding | 10,558 | 10,880 | 11,536 |
| Shares outstanding at end of period | 11,162 | 10,233 | 10,504 |
| | | | |
| Selected Performance Ratios: | | | |
| Return on average assets | (0.56)% | 0.29% | 0.39% |
| Return on average common equity (2) | (7.20)% | 1.49% | 2.58% |
| Return on average tangible common equity (2)(3) | (9.73)% | 1.90% | 3.27% |
| Taxable-equivalent net interest margin (3) | 3.11% | 3.13% | 3.04% |
| Efficiency ratio (1) | 85.09% | 71.54% | 81.66% |
| Noninterest income to total revenue (1) | 37.55% | 34.75% | 41.05% |
| | | | |
(1) Three months ended March 31, 2009 adjusted to include
net expenses of foreclosed real estate in noninterest expense. | | | |
| (2) Using earnings (loss) available to common shareholders. | | |
(3) Non-GAAP measure. See calculation of tangible common
equity and taxable-equivalent amounts in subsequent tables. | | | |
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| Encore Bancshares, Inc. and Subsidiaries |
| | | | | | |
| CONSOLIDATED BALANCE SHEETS |
| | | | | | |
| (Unaudited, dollars in thousands, except per share data) |
| | | | | | |
| | March 31, | Dec 31, | Sept 30, | June 30, | March 31, |
| | 2010 | 2009 | 2009 | 2009 | 2009 |
| | | | | | |
| ASSETS | | | | | |
| Cash and due from banks | $ 16,995 | $ 16,796 | $ 15,035 | $ 17,891 | $ 19,313 |
| Interest-bearing deposits in banks | 237,771 | 172,984 | 144,238 | 124,959 | 100,982 |
| Federal funds sold and other | 1,695 | 7,396 | 6,818 | 3,263 | 3,290 |
| Cash and cash equivalents | 256,461 | 197,176 | 166,091 | 146,113 | 123,585 |
| Securities available-for-sale, at estimated fair value | 138,495 | 140,651 | 134,079 | 132,437 | 77,875 |
| Securities held-to-maturity, at amortized cost | 88,454 | 117,171 | 117,316 | 108,594 | 114,706 |
| Loans held-for-sale (1) | 81,953 | 1,058 | -- | 1,168 | 6,340 |
| Loans receivable | 974,301 | 1,078,205 | 1,106,169 | 1,148,820 | 1,179,083 |
| Allowance for loan losses | (25,132) | (26,501) | (27,575) | (25,214) | (26,664) |
| Net loans receivable | 949,169 | 1,051,704 | 1,078,594 | 1,123,606 | 1,152,419 |
| Federal Home Loan Bank of Dallas stock, at cost | 9,578 | 9,569 | 9,565 | 9,561 | 9,547 |
| Investment in real estate | 11,054 | 14,639 | 6,952 | 8,032 | 5,537 |
| Premises and equipment, net | 9,327 | 15,484 | 15,953 | 16,435 | 16,901 |
| Cash surrender value of life insurance policies | 15,489 | 15,339 | 15,182 | 15,019 | 14,870 |
| Goodwill | 35,799 | 35,799 | 27,873 | 27,873 | 27,873 |
| Other intangible assets, net | 5,192 | 5,351 | 5,521 | 5,691 | 5,861 |
| Accrued interest receivable and other assets | 32,176 | 31,414 | 23,594 | 22,189 | 22,210 |
| Other assets held-for-sale | 4,769 | -- | -- | -- | -- |
| | $ 1,637,916 | $ 1,635,355 | $ 1,600,720 | $ 1,616,718 | $ 1,577,724 |
| | | | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | |
| Deposits: | | | | | |
| Noninterest-bearing | $ 156,071 | $ 174,102 | $ 152,367 | $ 146,373 | $ 158,994 |
| Interest-bearing | 802,597 | 1,017,734 | 1,012,466 | 1,030,134 | 957,602 |
| Deposits held-for-sale | 242,755 | -- | -- | -- | -- |
| Total deposits | 1,201,423 | 1,191,836 | 1,164,833 | 1,176,507 | 1,116,596 |
| Borrowings and repurchase agreements | 218,560 | 220,612 | 221,492 | 223,218 | 244,999 |
| Junior subordinated debentures | 20,619 | 20,619 | 20,619 | 20,619 | 20,619 |
| Accrued interest payable and other liabilities | 7,094 | 15,620 | 7,316 | 8,565 | 7,926 |
| Other liabilities held-for-sale | 10 | -- | -- | -- | -- |
| Total liabilities | 1,447,706 | 1,448,687 | 1,414,260 | 1,428,909 | 1,390,140 |
| | | | | | |
| Commitments and contingencies | | | | | |
| Shareholders' equity: | | | | | |
| Preferred stock | 29,107 | 28,976 | 28,847 | 28,718 | 28,590 |
| Common stock | 11,195 | 10,527 | 10,508 | 10,346 | 10,240 |
| Additional paid-in capital | 121,345 | 116,084 | 115,860 | 115,698 | 115,743 |
| Retained earnings | 28,288 | 31,095 | 30,066 | 32,372 | 32,105 |
| Common stock in treasury, at cost | (319) | (233) | (123) | (123) | (109) |
| Accumulated other comprehensive income | 594 | 219 | 1,302 | 798 | 1,015 |
| Shareholders' equity | 190,210 | 186,668 | 186,460 | 187,809 | 187,584 |
| | $ 1,637,916 | $ 1,635,355 | $ 1,600,720 | $ 1,616,718 | $ 1,577,724 |
| | | | | | |
| Ratios and Per Share Data: | | | | | |
| Leverage ratio (2) | 10.73% | 10.55% | 10.94% | 11.22% | 11.26% |
| Tier 1 risk-based capital ratio (2) | 15.82% | 14.80% | 15.30% | 14.99% | 14.83% |
| Total risk-based capital ratio (2) | 17.08% | 16.07% | 16.57% | 16.25% | 16.09% |
| Book value per share | $ 14.43 | $ 15.01 | $ 15.01 | $ 15.39 | $ 15.54 |
| Tangible book value per share (3) | 10.76 | 11.10 | 11.83 | 12.14 | 12.24 |
| Tangible common equity to tangible assets (3) | 7.52% | 7.31% | 7.93% | 7.93% | 8.11% |
| | | | | | |
| (1) As of March 31, 2010, includes $80,028 in loans held-for-sale in connection with proposed sale of our Florida operations. |
| (2) Estimated at March 31, 2010. | | | | | |
| (3) Non-GAAP measure. See calculation of tangible common equity in subsequent table. | | | |
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| Encore Bancshares, Inc. and Subsidiaries |
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| CONSOLIDATED STATEMENTS OF OPERATIONS |
| | | | | | |
| (Unaudited, amounts in thousands, except per share data) |
| | | | | | |
| | Three Months Ended |
| | March 31, | Dec 31, | Sept 30, | June 30, | March 31, |
| | 2010 | 2009 | 2009 | 2009 | 2009 |
| Interest income: | | | | | |
| Loans, including fees | $ 14,316 | $ 16,157 | $ 17,045 | $ 17,220 | $ 17,479 |
| Loans held-for-sale | 1,378 | 11 | 34 | 32 | 28 |
| Securities | 2,046 | 2,177 | 2,258 | 2,121 | 1,962 |
| Federal funds sold and other | 215 | 210 | 180 | 156 | 156 |
| Total interest income | 17,955 | 18,555 | 19,517 | 19,529 | 19,625 |
| Interest expense: | | | | | |
| Deposits | 3,042 | 4,507 | 5,131 | 5,643 | 5,732 |
| Deposits held-for-sale | 1,010 | -- | -- | -- | -- |
| Borrowings and repurchase agreements | 2,116 | 2,129 | 2,129 | 2,119 | 2,116 |
| Junior subordinated debentures | 297 | 298 | 302 | 309 | 316 |
| Total interest expense | 6,465 | 6,934 | 7,562 | 8,071 | 8,164 |
| Net interest income | 11,490 | 11,621 | 11,955 | 11,458 | 11,461 |
| Provision for loan losses | 4,960 | 3,009 | 7,685 | 2,927 | 3,039 |
| Net interest income after provision for loan losses | 6,530 | 8,612 | 4,270 | 8,531 | 8,422 |
| Noninterest income: | | | | | |
| Trust and investment management fees | 4,618 | 4,557 | 4,501 | 4,087 | 3,749 |
| Mortgage banking | 36 | 41 | 110 | 351 | 151 |
| Insurance commissions and fees | 1,639 | 1,098 | 1,365 | 1,404 | 1,610 |
| Net gain on sale of available-for-sale securities | 99 | 1,937 | 387 | -- | -- |
| Other (1) | 517 | 460 | 450 | 485 | 594 |
| Total noninterest income (1) | 6,909 | 8,093 | 6,813 | 6,327 | 6,104 |
| Noninterest expense: | | | | | |
| Compensation | 8,551 | 7,657 | 7,761 | 7,231 | 7,514 |
| Occupancy | 1,478 | 1,546 | 1,496 | 1,554 | 1,454 |
| Equipment | 363 | 383 | 430 | 449 | 433 |
| Advertising and promotion | 181 | 177 | 214 | 200 | 216 |
| Outside data processing | 870 | 829 | 797 | 783 | 764 |
| Professional fees | 921 | 1,126 | 912 | 1,043 | 936 |
| Intangible amortization | 158 | 170 | 171 | 169 | 171 |
| FDIC assessment | 655 | 1,047 | 270 | 746 | 52 |
| Foreclosed real estate expenses, net (1) | 1,124 | 675 | 183 | 378 | 267 |
| Write down of assets held-for-sale | 2,535 | -- | -- | -- | -- |
| Other | 1,428 | 1,077 | 1,055 | 1,158 | 930 |
| Total noninterest expense (1) | 18,264 | 14,687 | 13,289 | 13,711 | 12,737 |
| Net earnings (loss) before income taxes | (4,825) | 2,018 | (2,206) | 1,147 | 1,789 |
| Income tax expense (benefit) | (2,574) | 435 | (453) | 326 | 654 |
| Net earnings (loss) | $ (2,251) | $ 1,583 | $ (1,753) | $ 821 | $ 1,135 |
| Earnings (loss) available to common shareholders | $ (2,807) | $ 1,029 | $ (2,306) | $ 267 | $ 582 |
| Earnings (loss) per common share: | | | | | |
| Basic | $ (0.27) | $ 0.10 | $ (0.22) | $ 0.03 | $ 0.06 |
| Diluted | (0.27) | 0.09 | (0.22) | 0.02 | 0.05 |
| Average common shares outstanding | 10,558 | 10,513 | 10,441 | 10,334 | 10,233 |
| Diluted average common shares outstanding | 10,558 | 11,536 | 10,441 | 11,145 | 10,880 |
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| (1) Three months ended March 31, 2009 adjusted to include net expenses of foreclosed real estate in noninterest expense. | | |
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| Encore Bancshares, Inc. and Subsidiaries |
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| SELECTED FINANCIAL DATA OF FLORIDA OPERATIONS HELD-FOR-SALE (1) |
| | | | | | |
| (Unaudited, amounts in thousands) |
| | | | | | |
| | Three Months Ended |
| | March 31, | Dec 31, | Sept 30, | June 30, | March 31, |
| Income and Expense Data | 2010 | 2009 | 2009 | 2009 | 2009 |
| Interest income on loans, including fees | $ 1,366 | $ 1,396 | $ 1,377 | $ 1,358 | $ 1,336 |
| Interest expense on deposits | 1,010 | 1,139 | 1,380 | 1,643 | 1,677 |
| Net interest income (expense) | 356 | 257 | (3) | (285) | (341) |
| | | | | | |
| Write down of loans held-for-sale | 1,792 | -- | -- | -- | -- |
| | | | | | |
| Noninterest income | 25 | 21 | 15 | 10 | 13 |
| Noninterest expense: | | | | | |
| Compensation | 571 | 485 | 499 | 500 | 499 |
| Occupancy | 261 | 263 | 270 | 255 | 258 |
| Equipment | 53 | 56 | 65 | 65 | 58 |
| Advertising and promotion | 6 | 8 | 57 | 25 | 11 |
| Outside data processing | 10 | 1 | 3 | 1 | (1) |
| FDIC assessment | 127 | 213 | 203 | 13 | 11 |
| Write down of assets held-for-sale | 2,535 | -- | -- | -- | -- |
| Other | 261 | 113 | 108 | 105 | 80 |
| Total noninterest expense | 3,824 | 1,139 | 1,205 | 964 | 916 |
| | | | | | |
| Net expense from Florida operations held-for-sale | (5,235) | (861) | (1,193) | (1,239) | (1,244) |
| | | | | | |
| Average Balances of Assets and Liabilities | | | | | |
| Assets: | | | | | |
| Loans | $ 84,594 | $ 86,543 | $ 85,413 | $ 85,107 | $ 84,624 |
| Noninterest-earning assets | 7,377 | 7,532 | 7,607 | 7,494 | 7,615 |
| Total assets | $ 91,971 | $ 94,075 | $ 93,020 | $ 92,601 | $ 92,239 |
| Liabilities: | | | | | |
| Interest checking | $ 46,780 | $ 43,461 | $ 37,078 | $ 29,106 | $ 27,157 |
| Money market and savings | 48,704 | 50,517 | 48,982 | 46,094 | 44,103 |
| Time deposits | 124,325 | 124,952 | 139,859 | 160,861 | 160,004 |
| Total interest-bearing deposits | 219,809 | 218,930 | 225,919 | 236,061 | 231,264 |
| Noninterest-bearing deposits | 17,213 | 14,412 | 14,455 | 14,893 | 12,210 |
| Other liabilities | 303 | 350 | 436 | 601 | 539 |
| Total liabilities | $ 237,325 | $ 233,692 | $ 240,810 | $ 251,555 | $ 244,013 |
| | | | | | |
| (1) This data represents a non-GAAP presentation of Florida operations held-for-sale that we believe provides selected information useful to investors in understanding our financial results. This information should not be considered a substitute for operating results determined in accordance with GAAP. This table includes certain direct income and expense of our Florida operations held-for-sale for all prior periods for comparison purposes and no corporate income or expense allocations have been made. |
| Encore Bancshares, Inc. and Subsidiaries |
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| AVERAGE CONSOLIDATED BALANCE SHEETS |
| | | | | | |
| (Unaudited, dollars in thousands) |
| | | | | | |
| | Three Months Ended |
| | March 31, | Dec 31, | Sept 30, | June 30, | March 31, |
| | 2010 | 2009 | 2009 | 2009 | 2009 |
| | | | | | |
| Assets: | | | | | |
| Interest-earning assets: | | | | | |
| Loans | $ 979,171 | $ 998,519 | $ 1,038,069 | $ 1,081,341 | $ 1,124,073 |
| Loans held-for-sale (1) | 85,204 | 87,097 | 87,129 | 86,719 | 86,015 |
| Total loans | 1,064,375 | 1,085,616 | 1,125,198 | 1,168,060 | 1,210,088 |
| Securities | 230,390 | 241,267 | 235,819 | 215,473 | 187,953 |
| Federal funds sold and other | 220,019 | 205,944 | 168,213 | 121,328 | 95,314 |
| Total interest-earning assets | 1,514,784 | 1,532,827 | 1,529,230 | 1,504,861 | 1,493,355 |
| Less: Allowance for loan losses | (26,672) | (27,197) | (23,972) | (25,656) | (25,181) |
| Noninterest-earning assets | 126,284 | 103,938 | 102,245 | 104,025 | 103,403 |
| Noninterest-earning assets held-for-sale (1) | 7,377 | 7,532 | 7,607 | 7,494 | 7,615 |
| Total assets | $ 1,621,773 | $ 1,617,100 | $ 1,615,110 | $ 1,590,724 | $ 1,579,192 |
| | | | | | |
| Liabilities and shareholders' equity: | | | | | |
| Interest-bearing liabilities: | | | | | |
| Interest checking | $ 153,023 | $ 151,181 | $ 154,475 | $ 148,287 | $ 154,819 |
| Money market and savings | 240,292 | 262,470 | 257,807 | 197,182 | 184,299 |
| Time deposits | 400,451 | 382,150 | 385,962 | 403,722 | 395,002 |
| Interest-bearing deposits held-for-sale (1) | 219,809 | 218,930 | 225,919 | 236,061 | 231,264 |
| Total interest-bearing deposits | 1,013,575 | 1,014,731 | 1,024,163 | 985,252 | 965,384 |
| Borrowings and repurchase agreements | 220,759 | 222,428 | 222,978 | 226,118 | 255,526 |
| Junior subordinated debentures | 20,619 | 20,619 | 20,619 | 20,619 | 20,619 |
| Total interest-bearing liabilities | 1,254,953 | 1,257,778 | 1,267,760 | 1,231,989 | 1,241,529 |
| Noninterest-bearing liabilities: | | | | | |
| Noninterest-bearing deposits | 146,779 | 148,921 | 133,433 | 144,364 | 128,611 |
| Noninterest-bearing deposits held-for-sale (1) | 17,213 | 14,412 | 14,455 | 14,893 | 12,210 |
| Other liabilities | 15,412 | 8,572 | 10,356 | 10,765 | 9,730 |
| Other liabilities held-for-sale (1) | 303 | 350 | 436 | 601 | 539 |
| Total liabilities | 1,434,660 | 1,430,033 | 1,426,440 | 1,402,612 | 1,392,619 |
| Shareholders' equity | 187,113 | 187,067 | 188,670 | 188,112 | 186,573 |
| Total liabilities and shareholders' equity | $ 1,621,773 | $ 1,617,100 | $ 1,615,110 | $ 1,590,724 | $ 1,579,192 |
| | | | | | |
| (1) Portions of this table represent a non-GAAP presentation of Florida operations held-for-sale that we believe provide information useful to investors in understanding our financial results. This table includes average balances of Florida operations held-for-sale for all prior periods for comparison purposes. |
| Encore Bancshares, Inc. and Subsidiaries |
| | | | | | |
| SELECTED FINANCIAL DATA |
| | | | | | |
| (Unaudited, dollars in thousands) |
| | | | | | |
| | March 31, | Dec 31, | Sept 30, | June 30, | March 31, |
| Loan Portfolio: | 2010 | 2009 | 2009 | 2009 | 2009 |
| | | | | | |
| Commercial: | | | | | |
| Commercial | $ 115,653 | $ 115,431 | $ 107,034 | $ 126,079 | $ 127,279 |
| Commercial real estate (1) | 199,166 | 259,480 | 253,634 | 232,179 | 233,207 |
| Real estate construction (1) | 66,618 | 87,008 | 118,513 | 154,307 | 169,235 |
| Total commercial | 381,437 | 461,919 | 479,181 | 512,565 | 529,721 |
| Consumer: | | | | | |
| Residential real estate first lien | 211,366 | 222,337 | 228,090 | 232,885 | 229,981 |
| Residential real estate second lien | 289,344 | 291,433 | 292,265 | 292,891 | 294,994 |
| Home equity lines | 68,677 | 74,356 | 76,369 | 77,793 | 80,099 |
| Consumer installment - indirect | 7,339 | 8,372 | 9,743 | 11,202 | 12,643 |
| Consumer other | 16,138 | 19,788 | 20,521 | 21,484 | 31,645 |
| Total consumer | 592,864 | 616,286 | 626,988 | 636,255 | 649,362 |
| Loans receivable | 974,301 | 1,078,205 | 1,106,169 | 1,148,820 | 1,179,083 |
| Loans held-for-sale (2) | 81,953 | 1,058 | -- | 1,168 | 6,340 |
| | | | | | |
| Total loans (3) | $ 1,056,254 | $ 1,079,263 | $ 1,106,169 | $ 1,149,988 | $ 1,185,423 |
| | | | | | |
| Asset Quality: | | | | | |
| Nonaccrual loans (4) | $ 40,711 | $ 35,988 | $ 38,369 | $ 28,552 | $ 34,698 |
| Investment in real estate | 11,054 | 14,639 | 6,952 | 8,032 | 5,537 |
| Total nonperforming assets | $ 51,765 | $ 50,627 | $ 45,321 | $ 36,584 | $ 40,235 |
| | | | | | |
| Accruing loans past due 90 days or more (5) | $ -- | $ 1,489 | $ -- | $ -- | $ -- |
| | | | | | |
| Restructured loans still accruing | $ 5,710 | $ 530 | $ -- | $ -- | $ -- |
| | | | | | |
| Asset Quality Ratios: | | | | | |
| Nonperforming assets to total loans and investment in real estate (3)(5) | 4.85% | 4.63% | 4.07% | 3.16% | 3.38% |
| Net charge-offs to average total loans (3) | 2.41% | 1.49% | 1.88% | 1.50% | 0.50% |
| Allowance for loan losses to period end loans (excluding loans held-for-sale) | 2.58% | 2.46% | 2.49% | 2.19% | 2.26% |
| Allowance for loan losses to nonperforming loans (5) | 61.73% | 73.64% | 71.87% | 88.31% | 76.85% |
| | | | | | |
| Deposits: | | | | | |
| Noninterest-bearing deposits | $ 156,071 | $ 174,102 | $ 152,367 | $ 146,373 | $ 158,994 |
| Interest checking | 157,796 | 211,174 | 189,143 | 184,620 | 171,881 |
| Money market and savings | 237,204 | 294,840 | 312,206 | 295,176 | 215,726 |
| Time deposits less than $100 | 130,898 | 191,372 | 193,005 | 206,149 | 207,648 |
| Core deposits | 681,969 | 871,488 | 846,721 | 832,318 | 754,249 |
| Time deposits $100 and greater | 251,089 | 298,163 | 293,041 | 321,737 | 330,919 |
| Brokered deposits | 25,610 | 22,185 | 25,071 | 22,452 | 31,428 |
| Deposits held-for-sale | 242,755 | -- | -- | -- | -- |
| Total deposits | $ 1,201,423 | $ 1,191,836 | $ 1,164,833 | $ 1,176,507 | $ 1,116,596 |
| | | | | | |
| Assets Under Management | $ 2,786,220 | $ 2,673,832 | $ 2,519,458 | $ 2,299,338 | $ 2,137,137 |
| | | | | | |
| (1) As of December 31, 2009, land loans were reclassified from commercial real estate to real estate construction for all periods. | | | |
| (2) As of March 31, 2010, includes $80,028 in loans held-for-sale in connection with proposed sale of our Florida operations. | | | |
| (3) As of March 31, 2010, loans held-for-sale are included in total loans for all periods. | | | | | |
| (4) Nonaccrual troubled debt restructurings are included in nonaccrual loans. | | | | | |
| (5) As of December 31, 2009, accruing loans past due 90 days or more were reclassified from nonperforming loans to a separate category for all periods. | | | |
| | | | | | |
| Encore Bancshares, Inc. and Subsidiaries |
| | | | | | |
| ALLOWANCE FOR LOAN LOSSES |
| | | | | | |
| (Unaudited, dollars in thousands) |
| | | | | | |
| | Three Months Ended |
| | March 31, | Dec 31, | Sept 30, | June 30, | March 31, |
| | 2010 | 2009 | 2009 | 2009 | 2009 |
| | | | | | |
| Allowance for loan losses at beginning of quarter | $ 26,501 | $ 27,575 | $ 25,214 | $ 26,664 | $ 25,105 |
| | | | | | |
| Charge-offs: | | | | | |
| Commercial: | | | | | |
| Commercial | (382) | (326) | (1,475) | (796) | (236) |
| Commercial real estate (1) | (4,346) | (701) | (64) | (313) | (97) |
| Real estate construction (1) | (322) | (3,142) | (2,679) | (718) | (241) |
| Total commercial | (5,050) | (4,169) | (4,218) | (1,827) | (574) |
| | | | | | |
| Consumer: | | | | | |
| Residential real estate first lien | (618) | (813) | (474) | (1,446) | (34) |
| Residential real estate second lien | (434) | (626) | (829) | (634) | (454) |
| Home equity lines | (699) | (677) | (344) | (517) | (282) |
| Consumer installment - indirect | (77) | (100) | (145) | (150) | (261) |
| Consumer other | (7) | (3) | (18) | (9) | (48) |
| Total consumer | (1,835) | (2,219) | (1,810) | (2,756) | (1,079) |
| | | | | | |
| Total charge-offs | (6,885) | (6,388) | (6,028) | (4,583) | (1,653) |
| | | | | | |
| Recoveries: | | | | | |
| Commercial: | | | | | |
| Commercial | 131 | 2,269 | 564 | 62 | 22 |
| Commercial real estate (1) | -- | -- | -- | -- | -- |
| Real estate construction (1) | 46 | -- | -- | 6 | -- |
| Total commercial | 177 | 2,269 | 564 | 68 | 22 |
| | | | | | |
| Consumer: | | | | | |
| Residential real estate first lien | 134 | 1 | 74 | 1 | 34 |
| Residential real estate second lien | 132 | 12 | 28 | 13 | 17 |
| Home equity lines | 78 | 4 | 15 | 88 | 24 |
| Consumer installment - indirect | 34 | 18 | 22 | 36 | 76 |
| Consumer other | 1 | 1 | 1 | -- | -- |
| Total consumer | 379 | 36 | 140 | 138 | 151 |
| | | | | | |
| Total recoveries | 556 | 2,305 | 704 | 206 | 173 |
| | | | | | |
| Net charge-offs | (6,329) | (4,083) | (5,324) | (4,377) | (1,480) |
| | | | | | |
| Provision for loan losses | 4,960 | 3,009 | 7,685 | 2,927 | 3,039 |
| | | | | | |
| Allowance for loan losses at end of quarter | $ 25,132 | $ 26,501 | $ 27,575 | $ 25,214 | $ 26,664 |
| | | | | | |
| (1) As of December 31, 2009, land loans were reclassified from commercial real estate to real estate construction for all periods. | |
| | | | | | |
| Encore Bancshares, Inc. and Subsidiaries |
| | | | | | |
| SEGMENT OPERATIONS |
| | | | | | |
| (Unaudited, dollars in thousands) |
| | | | | | |
| | As of and for the Three Months Ended |
| | March 31, | Dec 31, | Sept 30, | June 30, | March 31, |
| | 2010 | 2009 | 2009 | 2009 | 2009 |
| Banking | | | | | |
| Net interest income | $ 11,742 | $ 11,873 | $ 12,213 | $ 11,726 | $ 11,736 |
| Provision for loan losses | 4,960 | 3,009 | 7,685 | 2,927 | 3,039 |
| Noninterest income (1) | 647 | 2,423 | 937 | 760 | 661 |
| Noninterest expense (1) | 13,675 | 10,591 | 9,090 | 9,614 | 8,606 |
| Earnings (loss) before income taxes | (6,246) | 696 | (3,625) | (55) | 752 |
| Income tax expense (benefit) | (3,076) | (57) | (1,028) | (102) | 291 |
| Net earnings (loss) | $ (3,170) | $ 753 | $ (2,597) | $ 47 | $ 461 |
| Total assets at quarter end | $ 1,645,468 | $ 1,644,083 | $ 1,608,348 | $ 1,623,467 | $ 1,584,698 |
| | | | | | |
| Wealth Management | | | | | |
| Net interest income | $ 40 | $ 40 | $ 39 | $ 38 | $ 38 |
| Noninterest income | 4,618 | 4,570 | 4,501 | 4,087 | 3,749 |
| Noninterest expense | 3,562 | 3,022 | 3,088 | 3,040 | 3,098 |
| Earnings before income taxes | 1,096 | 1,588 | 1,452 | 1,085 | 689 |
| Income tax expense | 388 | 575 | 586 | 384 | 243 |
| Net earnings | $ 708 | $ 1,013 | $ 866 | $ 701 | $ 446 |
| Total assets at quarter end | $ 61,316 | $ 59,618 | $ 50,174 | $ 49,563 | $ 48,648 |
| | | | | | |
| Insurance | | | | | |
| Net interest income | $ 5 | $ 6 | $ 5 | $ 3 | $ 3 |
| Noninterest income | 1,644 | 1,100 | 1,375 | 1,480 | 1,694 |
| Noninterest expense | 1,027 | 1,074 | 1,111 | 1,057 | 1,033 |
| Earnings before income taxes | 622 | 32 | 269 | 426 | 664 |
| Income tax expense | 218 | 21 | 94 | 150 | 233 |
| Net earnings | $ 404 | $ 11 | $ 175 | $ 276 | $ 431 |
| Total assets at quarter end | $ 8,053 | $ 7,962 | $ 7,390 | $ 7,625 | $ 7,695 |
| | | | | | |
| Other | | | | | |
| Net interest expense | $ (297) | $ (298) | $ (302) | $ (309) | $ (316) |
| Loss before income taxes | (297) | (298) | (302) | (309) | (316) |
| Income tax benefit | (104) | (104) | (105) | (106) | (113) |
| Net loss | $ (193) | $ (194) | $ (197) | $ (203) | $ (203) |
| Total assets at quarter end | $ (76,921) | $ (76,308) | $ (65,192) | $ (63,937) | $ (63,317) |
| | | | | | |
| Consolidated | | | | | |
| Net interest income | $ 11,490 | $ 11,621 | $ 11,955 | $ 11,458 | $ 11,461 |
| Provision for loan losses | 4,960 | 3,009 | 7,685 | 2,927 | 3,039 |
| Noninterest income (1) | 6,909 | 8,093 | 6,813 | 6,327 | 6,104 |
| Noninterest expense (1) | 18,264 | 14,687 | 13,289 | 13,711 | 12,737 |
| Earnings (loss) before income taxes | (4,825) | 2,018 | (2,206) | 1,147 | 1,789 |
| Income tax expense (benefit) | (2,574) | 435 | (453) | 326 | 654 |
| Net earnings (loss) | $ (2,251) | $ 1,583 | $ (1,753) | $ 821 | $ 1,135 |
| Total assets at quarter end | $ 1,637,916 | $ 1,635,355 | $ 1,600,720 | $ 1,616,718 | $ 1,577,724 |
| | | | | | |
| (1) Three months ended March 31, 2009 adjusted to include net expenses of foreclosed real estate in noninterest expense. | | | | | |
| | | | | | |
| Encore Bancshares, Inc. and Subsidiaries |
| | | | | | | |
| TAXABLE-EQUIVALENT YIELD ANALYSIS (1) |
| | | | | | | |
| (Unaudited, dollars in thousands) |
| | | | | | | |
| | Three Months Ended March 31, |
| | 2010 | 2009 |
| | Average | Interest | Average | Average | Interest | Average |
| | Outstanding | Income/ | Yield/ | Outstanding | Income/ | Yield/ |
| | Balance | Expense | Rate | Balance | Expense | Rate |
| Assets: | | | | | | |
| Interest-earning assets: | | | | | | |
| Loans | $ 979,171 | $ 14,382 | 5.96% | $ 1,208,697 | $ 17,544 | 5.89% |
| Loans held-for-sale | 85,204 | 1,378 | 6.56% | 1,391 | 28 | 8.16% |
| Total loans | 1,064,375 | 15,760 | 6.00% | 1,210,088 | 17,572 | 5.89% |
| Securities | 230,390 | 2,106 | 3.71% | 187,953 | 1,973 | 4.26% |
| Federal funds sold and other | 220,019 | 215 | 0.40% | 95,314 | 156 | 0.66% |
| Total interest-earning assets | 1,514,784 | 18,081 | 4.84% | 1,493,355 | 19,701 | 5.35% |
| Less: Allowance for loan losses | (26,672) | | | (25,181) | | |
| Noninterest-earning assets | 126,284 | | | 111,018 | | |
| Noninterest-earning assets held-for-sale | 7,377 | | | -- | | |
| Total assets | $ 1,621,773 | | | $ 1,579,192 | | |
| | | | | | | |
| Liabilities and shareholders' equity: | | | | | | |
| Interest-bearing liabilities: | | | | | | |
| Interest checking | $ 153,023 | $ 122 | 0.32% | $ 181,976 | $ 213 | 0.47% |
| Money market and savings | 240,292 | 506 | 0.85% | 228,402 | 678 | 1.20% |
| Time deposits | 400,451 | 2,414 | 2.44% | 555,006 | 4,841 | 3.54% |
| Interest-bearing deposits held-for-sale | 219,809 | 1,010 | 1.86% | -- | -- | |
| Total interest-bearing deposits | 1,013,575 | 4,052 | 1.62% | 965,384 | 5,732 | 2.41% |
| Borrowings and repurchase agreements | 220,759 | 2,116 | 3.89% | 255,526 | 2,116 | 3.36% |
| Junior subordinated debentures | 20,619 | 297 | 5.84% | 20,619 | 316 | 6.22% |
| Total interest-bearing liabilities | 1,254,953 | 6,465 | 2.09% | 1,241,529 | 8,164 | 2.67% |
| Noninterest-bearing liabilities: | | | | | | |
| Noninterest-bearing deposits | 146,779 | | | 140,821 | | |
| Noninterest-bearing deposits held-for-sale | 17,213 | | | -- | | |
| Other liabilities | 15,412 | | | 10,269 | | |
| Other liabilities held-for-sale | 303 | | | -- | | |
| Total liabilities | 1,434,660 | | | 1,392,619 | | |
| Shareholders' equity | 187,113 | | | 186,573 | | |
| Total liabilities and shareholders' equity | $ 1,621,773 | | | $ 1,579,192 | | |
| | | | | | | |
| Net interest income | | $ 11,616 | | | $ 11,537 | |
| | | | | | | |
| Net interest spread | | | 2.75% | | | 2.68% |
| Net interest margin | | | 3.11% | | | 3.13% |
| | | | | | | |
| (1) Non-GAAP measure. See calculation of taxable-equivalent amounts in subsequent table. | | | |
| | | | | | | |
| Encore Bancshares, Inc. and Subsidiaries |
| | | | | | |
| NON-GAAP FINANCIAL MEASURES |
| | | | | | |
| (Unaudited, amounts in thousands) |
| | | | | | |
| | March 31, | Dec 31, | Sept 30, | June 30, | March 31, |
| | 2010 | 2009 | 2009 | 2009 | 2009 |
| | | | | | |
| Shareholders' equity (GAAP) | $ 190,210 | $ 186,668 | $ 186,460 | $ 187,809 | $ 187,584 |
| Less: Preferred stock | 29,107 | 28,976 | 28,847 | 28,718 | 28,590 |
| Goodwill and other intangible assets, net | 40,991 | 41,150 | 33,394 | 33,564 | 33,734 |
| Tangible common equity (1) | $ 120,112 | $ 116,542 | $ 124,219 | $ 125,527 | $ 125,260 |
| | | | | | |
| Total assets (GAAP) | $ 1,637,916 | $ 1,635,355 | $ 1,600,720 | $ 1,616,718 | $ 1,577,724 |
| Less: Goodwill and other intangible assets, net | 40,991 | 41,150 | 33,394 | 33,564 | 33,734 |
| Tangible assets | $ 1,596,925 | $ 1,594,205 | $ 1,567,326 | $ 1,583,154 | $ 1,543,990 |
| | | | | | |
| Shares outstanding at end of period | 11,162 | 10,504 | 10,499 | 10,337 | 10,233 |
| | | | | | |
| (1) Tangible common equity, a non-GAAP financial measure, includes total equity, less preferred equity, goodwill and other intangible assets. Management reviews tangible common equity along with other measures of capital as part of its financial analyses and has included this information because of current interest on the part of market participants in tangible common equity as a measure of capital. The methodology of determining tangible common equity may differ among companies. |
| | | | | | |
| | | | | | |
| | Three Months Ended | | |
| | March 31, | | |
| | 2010 | 2009 | | | |
| Net interest income (GAAP) | $ 11,490 | $ 11,461 | | | |
| Taxable-equivalent adjustment (1) | 126 | 76 | | | |
| Net interest income on a taxable-equivalent basis | $ 11,616 | $ 11,537 | | | |
| | | | | | |
| (1) Net interest income, net interest spread and net interest margin are reported on a taxable-equivalent basis. The taxable-equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets. Management believes that it is a standard practice in the banking industry to present net interest income, net interest spread and net interest margin on a fully taxable-equivalent basis. Management believes these measures provide useful information to investors by allowing them to make peer comparisons. |
| | | | | | |
CONTACT: Encore Bancshares, Inc.
L. Anderson Creel, Chief Financial Officer
713.787.3138
James S. D'Agostino, Jr., Chairman and CEO
713.787.3103