EXHIBIT 99.1
Encore Bancshares Reports First Quarter 2011 Net Earnings of $1.2 Million or $0.05 Per Common Share
HOUSTON, April 29, 2011 (GLOBE NEWSWIRE) -- Encore Bancshares, Inc. (Nasdaq:EBTX) today announced its financial results for the first quarter of 2011.
First Quarter Highlights
Earnings metrics improvement compared with first quarter 2010
- Net interest margin expanded 26 basis points to 3.37%
- Provision for loan losses decreased $2.8 million
- Wealth management revenue increased 9.8%
- Noninterest expense decreased 21.4%
Growth of Texas franchise compared with March 31, 2010
- Deposit growth of 8.6%
- Commercial loan growth of 18.9%
- Demand deposits were 21.1% of total deposits, up from 16.3%
- Assets under management grew 2.5% to $2.9 billion
Continued improvement in credit quality
- Net charge-offs declined to $1.8 million, compared with $6.3 million for the first quarter 2010
- Nonperforming assets decreased 32.3%, compared with March 31, 2010
- Allowance for loan losses of 2.03% of loans, excluding loans held for sale
Capital ratios remain solid
- Estimated tier 1 capital ratio of 13.07%
- Tangible common equity ratio of 6.91%
"I am very pleased with our return to profitability and the improvement in our net interest margin," said James S. D'Agostino, Jr., Chairman and Chief Executive Officer of Encore Bancshares, Inc. "We are executing on our strategy to grow our Houston franchise and to improve credit quality."
Earnings
For the three months ended March 31, 2011, our net earnings were $1.2 million, compared with a net loss of $2.3 million for the same period of 2010. Earnings per diluted common share for the first quarter of 2011 were $0.05, compared with a loss per diluted common share of $0.27 for the same period of 2010, after deducting preferred dividends for each period. Earnings in the first quarter of 2011 improved due to lower credit costs and reduced expenses as the first quarter of 2010 included charges related to the sale of our Florida operations, which was completed December 31, 2010.
Net Interest Income
Net interest income on a tax equivalent basis (TE) for the first quarter of 2011 was $11.2 million, a decrease of $404,000, or 3.5% compared with the same period of 2010, reflecting the decline in interest earning assets, which was mainly a result of the sale of our Florida operations. The net interest margin (TE) expanded 26 basis points to 3.37% during the same comparison period. The increase in margin was due primarily to an improved balance sheet mix, as temporary investments and higher costing deposits decreased after the sale of our Florida operations. On a linked quarter basis (compared with the immediately preceding quarter), net interest income (TE) was relatively flat. Although average earning assets decreased by approximately $192.3 million, the net interest margin increased 48 basis points. The increase in margin was due primarily to the sale of the Florida operations and the investment of surplus liquidity into securities. Average temporary investments, which we were holding partly in anticipation of the Florida operations sale were $243.3 million, or 15.8% of average interest earning assets, for the fourth quarter of 2010, compared with $60.1 million, or 4.5% of interest earning assets, for the first quarter of 2011.
Noninterest Income
Noninterest income was $7.1 million for the first quarter of 2011, an increase of $157,000, or 2.3%, compared with the same period of 2010. Trust and investment management fees increased $454,000, or 9.8%, as assets under management grew 2.5% primarily due to the improvements in the equity markets. This improvement was partially offset by lower insurance commissions and a loss on securities sales compared with a gain in the first quarter of 2010.
Noninterest Expense
Noninterest expense was $14.4 million for the first quarter of 2011, a decrease of $3.9 million, compared with the same period of 2010. The first quarter of 2010 included a write down of assets held for sale of $2.5 million and $1.1 million in foreclosed real estate expenses, both of which were primarily attributable to our Florida operations.
Segment Earnings
On a segment basis, our banking segment showed net earnings of $197,000, compared with a net loss of $3.2 million in the same period of 2010. The first quarter of 2010 included significant expenses related to the mark to market of our held-for-sale Florida operations. Our wealth management group had net earnings of $954,000 for the first quarter of 2011, a $246,000, or 34.7% increase, compared with the same period of 2010. The growth in earnings resulted mainly from a 2.5% increase in assets under management. Our insurance agency showed lower earnings compared with the same period of 2010, due to lower contingent commissions and higher expenses reflecting growth in the Ft. Worth office.
Loans
Period end loans, including loans held for sale, were $938.9 million at March 31, 2011, a decrease of $117.3 million, or 11.1%, compared with March 31, 2010. This decrease was due primarily to the sale of Florida loans as we exited the Florida market. Commercial loans in Texas grew $58.3 million, or 18.9%, in the same comparison period.
Deposits
Period end deposits were $1.0 billion at March 31, 2011, a decrease of $160.6 million, or 13.4%, compared with March 31, 2010. The decrease was mainly due to the sale of approximately $231.3 million in Florida deposits in May and December 2010. Total Texas deposits increased 8.6% in the same comparison period. Noninterest-bearing deposits at March 31, 2011 were $219.6 million, an increase of $63.6 million, or 40.7%, and represented 21.1% of total deposits.
Credit Quality and Capital Ratios
The provision for loan losses was $2.2 million for the first quarter of 2011, compared with $5.0 million for the same period of 2010. The decline in the provision for loan losses reflected improving credit quality. Net charge-offs for the first quarter were $1.8 million, or 0.78% of average total loans on an annualized basis, compared with $6.3 million, or 2.41% of average total loans on an annualized basis for the same period of 2010. Commercial loan charge-offs were $665,000 for the first quarter of 2011, compared with $5.1 million in the same period of 2010. The charge-offs in the first quarter of 2010 included $1.8 million in mark to market adjustments on certain Florida loans which were classified as held-for-sale. The allowance for loan losses was $19.0 million, or 2.03% of loans, excluding loans held for sale, at March 31, 2011, compared with $25.1 million, or 2.58% of loans at March 31, 2010.
At March 31, 2011, nonperforming assets were $35.0 million compared with $35.8 million at December 31, 2010 and $51.8 million at March 31, 2010. Nonperforming loans were $27.7 million at March 31, 2011, compared with $26.5 million at December 31, 2010, an increase of $1.2 million, or 4.7%. The increase in nonperforming loans was due primarily to three commercial real estate loans in Florida.
Subsequent to March 31, 2011, we received pay downs totaling $6.5 million on two lending relationships that had been reported as nonperforming. On a proforma basis as of March 31, 2011, our nonperforming assets would be $28.5 million, or 3.04% of total loans and investment in real estate, after these payments.
Investment in real estate was $7.3 million at March 31, 2011, compared with $9.3 million at December 31, 2010, a decrease of $2.0 million, or 21.4%. The decrease resulted primarily from the sale of several properties, which consisted mostly of vacant land in Florida. Restructured loans still accruing were $1.8 million at March 31, 2011, compared with $804,000 at December 31, 2010. The increase was due primarily to one commercial loan in Houston.
As of March 31, 2011, our estimated Tier 1 risk-based, total risk-based and leverage capital ratios were 13.07%, 14.33%, and 9.29%, respectively. In addition, Encore Bank was considered "well capitalized" pursuant to regulatory capital definitions. Book value per common share and tangible book value per common share were $11.97 and $8.48 at March 31, 2011, compared with $12.00 and $8.45 at December 31, 2010.
Conference Call
Encore will host a conference call for investors and analysts that will be broadcast live via the Internet on Friday, April 29, 2011, at 10:30 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, May 2, 2011.
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. 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".
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 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; 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; our ability to fully realize our net deferred tax asset; our ability to raise capital when needed; 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 2010 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, |
| | 2011 | 2010 | 2010 |
| | | | |
| Operations Statement Data: | | | |
| Interest income | $ 15,839 | $ 17,955 | $ 16,725 |
| Interest expense | 4,744 | 6,465 | 5,624 |
| Net interest income | 11,095 | 11,490 | 11,101 |
| Provision for loan losses | 2,170 | 4,960 | 2,597 |
| Net interest income after provision for | | | |
| loan losses | 8,925 | 6,530 | 8,504 |
| Noninterest income | 7,066 | 6,909 | 9,859 |
| Noninterest expense | 14,355 | 18,264 | 20,213 |
| Net earnings (loss) before income taxes | 1,636 | (4,825) | (1,850) |
| Income tax expense (benefit) | 484 | (2,574) | (950) |
| Net earnings (loss) | $ 1,152 | $ (2,251) | $ (900) |
| Earnings (loss) available to common shareholders | $ 594 | $ (2,807) | $ (1,457) |
| | | | |
| Common Share Data: | | | |
| Basic earnings (loss) per share (1) | $ 0.05 | $ (0.27) | $ (0.13) |
| Diluted earnings (loss) per share (1) | 0.05 | (0.27) | (0.13) |
| Book value per share | 11.97 | 14.43 | 12.00 |
| Tangible book value per share (2) | 8.48 | 10.76 | 8.45 |
| | | | |
| Average common shares outstanding | 11,491 | 10,558 | 11,391 |
| Diluted average common shares outstanding | 11,575 | 10,558 | 11,391 |
| Common shares outstanding at end of period | 11,552 | 11,162 | 11,431 |
| | | | |
| Selected Performance Ratios: | | | |
| Return on average assets | 0.32% | (0.56)% | (0.22)% |
| Return on average common equity (1) | 1.75% | (7.20)% | (4.11)% |
| Return on average tangible common equity (1)(2) | 2.49% | (9.73)% | (5.79)% |
| Taxable-equivalent net interest margin (2) | 3.37% | 3.11% | 2.89% |
| Efficiency ratio | 78.02% | 85.09% | 77.96% |
| Noninterest income to total revenue | 38.91% | 37.55% | 47.04% |
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| (1) Using earnings (loss) available to common shareholders. | | | |
| (2) 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 |
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| CONSOLIDATED BALANCE SHEETS |
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| (Unaudited, dollars in thousands, except per share data) |
| | | | | | |
| | March 31, | Dec 31, | Sept 30, | June 30, | March 31, |
| | 2011 | 2010 | 2010 | 2010 | 2010 |
| | | | | | |
| ASSETS | | | | | |
| Cash and due from banks | $ 18,477 | $ 13,523 | $ 16,825 | $ 14,718 | $ 18,420 |
| Interest-bearing deposits in banks | 49,109 | 49,478 | 231,866 | 314,624 | 237,771 |
| Federal funds sold and other | 856 | 1,098 | 993 | 902 | 1,695 |
| Cash and cash equivalents | 68,442 | 64,099 | 249,684 | 330,244 | 257,886 |
| Securities available-for-sale, at estimated fair value | 241,370 | 251,784 | 198,530 | 72,153 | 138,495 |
| Securities held-to-maturity, at amortized cost | 101,235 | 107,618 | 55,436 | 68,628 | 88,454 |
| Loans held-for-sale | 2,913 | 10,915 | 111,505 | 77,914 | 81,953 |
| Loans receivable | 936,036 | 920,457 | 924,589 | 972,765 | 974,301 |
| Allowance for loan losses | (19,008) | (18,639) | (20,967) | (26,675) | (25,132) |
| Net loans receivable | 917,028 | 901,818 | 903,622 | 946,090 | 949,169 |
| Federal Home Loan Bank of Dallas stock, at cost | 10,206 | 9,610 | 9,602 | 9,593 | 9,578 |
| Investment in real estate | 7,311 | 9,298 | 10,852 | 13,602 | 11,054 |
| Premises and equipment, net | 6,757 | 7,023 | 7,284 | 7,567 | 9,327 |
| Cash surrender value of life insurance policies | 16,078 | 15,935 | 15,786 | 15,637 | 15,489 |
| Goodwill | 35,799 | 35,799 | 35,799 | 35,799 | 35,799 |
| Other intangible assets, net | 4,575 | 4,716 | 4,876 | 5,034 | 5,192 |
| Accrued interest receivable and other assets | 46,467 | 47,882 | 44,430 | 40,085 | 32,176 |
| Other assets held-for-sale | -- | -- | 3,256 | 3,269 | 3,344 |
| | $ 1,458,181 | $ 1,466,497 | $ 1,650,662 | $ 1,625,615 | $ 1,637,916 |
| | | | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | |
| Deposits: | | | | | |
| Noninterest-bearing | $ 219,629 | $ 219,756 | $ 205,927 | $ 182,729 | $ 156,071 |
| Interest-bearing | 821,163 | 830,688 | 838,125 | 832,876 | 802,597 |
| Deposits held-for-sale | -- | -- | 187,433 | 184,106 | 242,755 |
| Total deposits | 1,040,792 | 1,050,444 | 1,231,485 | 1,199,711 | 1,201,423 |
| Borrowings and repurchase agreements | 221,582 | 219,777 | 220,818 | 219,602 | 218,560 |
| Junior subordinated debentures | 20,619 | 20,619 | 20,619 | 20,619 | 20,619 |
| Accrued interest payable and other liabilities | 7,274 | 9,016 | 8,028 | 7,804 | 7,094 |
| Other liabilities held-for-sale | -- | -- | 6 | 6 | 10 |
| Total liabilities | 1,290,267 | 1,299,856 | 1,480,956 | 1,447,742 | 1,447,706 |
| | | | | | |
| Commitments and contingencies | | | | | |
| Shareholders' equity: | | | | | |
| Preferred stock | 29,633 | 29,500 | 29,368 | 29,238 | 29,107 |
| Common stock | 11,603 | 11,479 | 11,421 | 11,416 | 11,195 |
| Additional paid-in capital | 123,329 | 122,678 | 121,939 | 121,533 | 121,345 |
| Retained earnings | 5,235 | 4,641 | 6,098 | 15,079 | 28,288 |
| Common stock in treasury, at cost | (497) | (455) | (389) | (346) | (319) |
| Accumulated other comprehensive income (loss) | (1,389) | (1,202) | 1,269 | 953 | 594 |
| Shareholders' equity | 167,914 | 166,641 | 169,706 | 177,873 | 190,210 |
| | $ 1,458,181 | $ 1,466,497 | $ 1,650,662 | $ 1,625,615 | $ 1,637,916 |
| | | | | | |
| Ratios and Common Share Data: | | | | | |
| Leverage ratio (1) | 9.29% | 8.10% | 9.00% | 9.93% | 10.73% |
| Tier 1 risk-based capital ratio (1) | 13.07% | 12.83% | 13.26% | 14.59% | 15.56% |
| Total risk-based capital ratio (1) | 14.33% | 14.09% | 14.79% | 15.86% | 16.82% |
| Book value per share | $ 11.97 | $ 12.00 | $ 12.33 | $ 13.06 | $ 14.43 |
| Tangible book value per share (2) | 8.48 | 8.45 | 8.76 | 9.47 | 10.76 |
| Tangible common equity to tangible assets (2) | 6.91% | 6.78% | 6.19% | 6.80% | 7.52% |
| | | | | | |
| (1) Estimated at March 31, 2011. | | | | | |
| (2) 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, |
| | 2011 | 2010 | 2010 | 2010 | 2010 |
| Interest income: | | | | | |
| Loans, including fees | $ 13,442 | $ 14,646 | $ 15,408 | $ 15,441 | $ 15,694 |
| Securities | 2,305 | 1,872 | 1,276 | 1,526 | 2,046 |
| Federal funds sold and other | 92 | 207 | 238 | 234 | 215 |
| Total interest income | 15,839 | 16,725 | 16,922 | 17,201 | 17,955 |
| Interest expense: | | | | | |
| Deposits | 2,340 | 2,562 | 2,827 | 2,962 | 3,042 |
| Deposits held-for-sale | -- | 636 | 698 | 863 | 1,010 |
| Borrowings and repurchase agreements | 2,106 | 2,128 | 2,127 | 2,139 | 2,116 |
| Junior subordinated debentures | 298 | 298 | 301 | 298 | 297 |
| Total interest expense | 4,744 | 5,624 | 5,953 | 6,262 | 6,465 |
| Net interest income | 11,095 | 11,101 | 10,969 | 10,939 | 11,490 |
| Provision for loan losses | 2,170 | 2,597 | 9,599 | 18,013 | 4,960 |
| Net interest income after provision for loan losses | 8,925 | 8,504 | 1,370 | (7,074) | 6,530 |
| Noninterest income: | | | | | |
| Trust and investment management fees | 5,072 | 5,122 | 4,639 | 4,591 | 4,618 |
| Mortgage banking | 140 | 501 | 150 | 78 | 36 |
| Insurance commissions and fees | 1,440 | 1,120 | 1,524 | 1,488 | 1,639 |
| Net gain (loss) on sale of available-for-sale securities | (31) | 38 | 261 | 120 | 99 |
| Gain on sale of branches | -- | 2,567 | -- | 1,115 | -- |
| Other | 445 | 511 | 454 | 555 | 517 |
| Total noninterest income | 7,066 | 9,859 | 7,028 | 7,947 | 6,909 |
| Noninterest expense: | | | | | |
| Compensation | 8,706 | 8,469 | 8,503 | 8,638 | 8,551 |
| Occupancy | 1,287 | 1,339 | 1,395 | 1,454 | 1,478 |
| Equipment | 241 | 261 | 274 | 330 | 363 |
| Advertising and promotion | 156 | 137 | 146 | 153 | 181 |
| Outside data processing | 783 | 910 | 874 | 897 | 870 |
| Professional fees | 1,134 | 1,165 | 1,325 | 1,435 | 921 |
| Intangible amortization | 140 | 160 | 158 | 159 | 158 |
| FDIC assessment | 798 | 790 | 1,532 | 703 | 655 |
| Foreclosed real estate expenses, net | 83 | 119 | 4,458 | 1,402 | 1,124 |
| Write down of assets held-for-sale | 21 | 5,744 | 1,012 | 2,793 | 2,535 |
| Other | 1,006 | 1,119 | 1,051 | 1,431 | 1,428 |
| Total noninterest expense | 14,355 | 20,213 | 20,728 | 19,395 | 18,264 |
| Net earnings (loss) before income taxes | 1,636 | (1,850) | (12,330) | (18,522) | (4,825) |
| Income tax expense (benefit) | 484 | (950) | (3,904) | (5,869) | (2,574) |
| Net earnings (loss) | $ 1,152 | $ (900) | $ (8,426) | $ (12,653) | $ (2,251) |
| Earnings (loss) available to common shareholders | $ 594 | $ (1,457) | $ (8,981) | $ (13,209) | $ (2,807) |
| Earnings (loss) per common share: | | | | | |
| Basic | $ 0.05 | $ (0.13) | $ (0.79) | $ (1.16) | $ (0.27) |
| Diluted | 0.05 | (0.13) | (0.79) | (1.16) | (0.27) |
| Average common shares outstanding | 11,491 | 11,391 | 11,380 | 11,375 | 10,558 |
| Diluted average common shares outstanding | 11,575 | 11,391 | 11,380 | 11,375 | 10,558 |
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| Encore Bancshares, Inc. and Subsidiaries |
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| AVERAGE CONSOLIDATED BALANCE SHEETS |
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| (Unaudited, dollars in thousands) |
| | | | | | |
| | Three Months Ended |
| | March 31, | Dec 31, | Sept 30, | June 30, | March 31, |
| | 2011 | 2010 | 2010 | 2010 | 2010 |
| Assets: | | | | | |
| Interest-earning assets: | | | | | |
| Loans | $ 933,361 | $ 1,004,472 | $ 1,056,657 | $ 1,059,695 | $ 1,064,375 |
| Securities | 354,250 | 292,241 | 209,365 | 186,777 | 230,390 |
| Federal funds sold and other | 60,084 | 243,304 | 290,541 | 275,148 | 220,019 |
| Total interest-earning assets | 1,347,695 | 1,540,017 | 1,556,563 | 1,521,620 | 1,514,784 |
| Less: Allowance for loan losses | (18,604) | (20,433) | (27,144) | (24,796) | (26,672) |
| Noninterest-earning assets | 131,183 | 131,861 | 128,197 | 122,236 | 126,284 |
| Noninterest-earning assets held-for-sale | -- | 4,403 | 4,196 | 4,481 | 7,377 |
| Total assets | $ 1,460,274 | $ 1,655,848 | $ 1,661,812 | $ 1,623,541 | $ 1,621,773 |
| | | | | | |
| Liabilities and shareholders' equity: | | | | | |
| Interest-bearing liabilities: | | | | | |
| Interest checking | $ 162,577 | $ 148,875 | $ 139,820 | $ 145,856 | $ 153,023 |
| Money market and savings | 287,029 | 298,725 | 279,084 | 238,000 | 240,292 |
| Time deposits | 379,142 | 386,634 | 410,318 | 415,615 | 400,451 |
| Interest-bearing deposits held-for-sale | -- | 167,869 | 171,805 | 201,919 | 219,809 |
| Total interest-bearing deposits | 828,748 | 1,002,103 | 1,001,027 | 1,001,390 | 1,013,575 |
| Borrowings and repurchase agreements | 224,792 | 220,042 | 220,068 | 218,794 | 220,759 |
| Junior subordinated debentures | 20,619 | 20,619 | 20,619 | 20,619 | 20,619 |
| Total interest-bearing liabilities | 1,074,159 | 1,242,764 | 1,241,714 | 1,240,803 | 1,254,953 |
| Noninterest-bearing liabilities: | | | | | |
| Noninterest-bearing deposits | 210,885 | 220,169 | 220,166 | 168,021 | 146,779 |
| Noninterest-bearing deposits held-for-sale | -- | 14,767 | 14,983 | 17,830 | 17,213 |
| Other liabilities | 8,344 | 8,019 | 7,132 | 6,384 | 15,412 |
| Other liabilities held-for-sale | -- | 197 | 216 | 253 | 303 |
| Total liabilities | 1,293,388 | 1,485,916 | 1,484,211 | 1,433,291 | 1,434,660 |
| Shareholders' equity | 166,886 | 169,932 | 177,601 | 190,250 | 187,113 |
| Total liabilities and shareholders' equity | $ 1,460,274 | $ 1,655,848 | $ 1,661,812 | $ 1,623,541 | $ 1,621,773 |
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| Encore Bancshares, Inc. and Subsidiaries |
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| SELECTED FINANCIAL DATA |
| | | | | | |
| (Unaudited, dollars in thousands) |
| | | | | | |
| | March 31, | Dec 31, | Sept 30, | June 30, | March 31, |
| Loan Portfolio: | 2011 | 2010 | 2010 | 2010 | 2010 |
| Commercial: | | | | | |
| Commercial | $ 164,053 | $ 147,090 | $ 138,594 | $ 131,712 | $ 115,653 |
| Commercial real estate | 168,893 | 166,043 | 154,476 | 189,471 | 199,166 |
| Real estate construction | 52,106 | 46,326 | 54,140 | 55,332 | 66,618 |
| Total commercial | 385,052 | 359,459 | 347,210 | 376,515 | 381,437 |
| Consumer: | | | | | |
| Residential real estate first lien | 205,012 | 205,531 | 207,386 | 215,911 | 211,366 |
| Residential real estate second lien | 263,286 | 269,727 | 280,245 | 290,934 | 289,344 |
| Home equity lines | 59,832 | 60,609 | 63,983 | 66,311 | 68,677 |
| Consumer other | 22,854 | 25,131 | 25,765 | 23,094 | 23,477 |
| Total consumer | 550,984 | 560,998 | 577,379 | 596,250 | 592,864 |
| Loans receivable | 936,036 | 920,457 | 924,589 | 972,765 | 974,301 |
| Loans held-for-sale | 2,913 | 10,915 | 111,505 | 77,914 | 81,953 |
| Total loans | $ 938,949 | $ 931,372 | $ 1,036,094 | $ 1,050,679 | $ 1,056,254 |
| | | | | | |
| Asset Quality: | | | | | |
| Nonaccrual loans - Texas (1) | $ 14,557 | $ 15,167 | $ 17,445 | $ 22,441 | $ 8,860 |
| Nonaccrual loans - Florida (1) | 13,169 | 11,310 | 34,251 | 41,773 | 31,851 |
| Total nonaccrual loans (1) | 27,726 | 26,477 | 51,696 | 64,214 | 40,711 |
| Investment in real estate - Texas | 4,226 | 4,783 | 5,762 | 6,194 | 6,954 |
| Investment in real estate - Florida | 3,085 | 4,515 | 5,090 | 7,408 | 4,100 |
| Total investment in real estate | 7,311 | 9,298 | 10,852 | 13,602 | 11,054 |
| Total nonperforming assets | $ 35,037 | $ 35,775 | $ 62,548 | $ 77,816 | $ 51,765 |
| Accruing loans past due 90 days or more | $ -- | $ 313 | $ -- | $ -- | $ -- |
| Restructured loans still accruing | $ 1,755 | $ 804 | $ 2,570 | $ 1,072 | $ 5,710 |
| | | | | | |
| Asset Quality Ratios: | | | | | |
| Nonperforming assets to total loans and | | | | | |
| investment in real estate | 3.70% | 3.80% | 5.97% | 7.31% | 4.85% |
| Net charge-offs to average total loans | 0.78% | 1.95% | 5.75% | 6.23% | 2.41% |
| Allowance for loan losses to period end | | | | | |
| loans (excluding loans held-for-sale) | 2.03% | 2.02% | 2.27% | 2.74% | 2.58% |
| Allowance for loan losses to nonperforming | | | | | |
| loans (excluding loans held-for-sale) | 74.72% | 94.11% | 88.89% | 45.47% | 61.73% |
| | | | | | |
| Deposits: | | | | | |
| Noninterest-bearing deposits | $ 219,629 | $ 219,756 | $ 205,927 | $ 182,729 | $ 156,071 |
| Interest checking | 155,262 | 173,839 | 145,257 | 152,041 | 157,796 |
| Money market and savings | 285,612 | 278,507 | 293,381 | 259,189 | 237,204 |
| Time deposits less than $100 | 114,819 | 117,974 | 124,132 | 132,514 | 130,898 |
| Core deposits | 775,322 | 790,076 | 768,697 | 726,473 | 681,969 |
| Time deposits $100 and greater | 239,936 | 239,129 | 251,271 | 265,076 | 251,089 |
| Brokered deposits | 25,534 | 21,239 | 24,084 | 24,056 | 25,610 |
| Deposits held-for-sale | -- | -- | 187,433 | 184,106 | 242,755 |
| Total deposits | $ 1,040,792 | $ 1,050,444 | $ 1,231,485 | $ 1,199,711 | $ 1,201,423 |
| | | | | | |
| Assets Under Management | $ 2,855,544 | $ 2,857,390 | $ 2,732,757 | $ 2,592,186 | $ 2,786,220 |
| | | | | | |
| (1) Nonaccrual troubled debt restructurings are included in nonaccrual loans. | | | | |
| | | | | | |
| 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, |
| | 2011 | 2010 | 2010 | 2010 | 2010 |
| | | | | | |
| Allowance for loan losses at beginning of quarter | $ 18,639 | $ 20,967 | $ 26,675 | $ 25,132 | $ 26,501 |
| | | | | | |
| Charge-offs: | | | | | |
| Commercial: | | | | | |
| Commercial | (196) | (21) | (160) | (402) | (382) |
| Commercial real estate | (465) | (14) | (10,049) | (10,118) | (4,346) |
| Real estate construction | (4) | (2,329) | (3,407) | (3,101) | (322) |
| Total commercial | (665) | (2,364) | (13,616) | (13,621) | (5,050) |
| | | | | | |
| Consumer: | | | | | |
| Residential real estate first lien | (222) | (1,261) | (503) | (1,707) | (618) |
| Residential real estate second lien | (1,059) | (1,106) | (879) | (1,301) | (434) |
| Home equity lines | (296) | (430) | (664) | (237) | (699) |
| Consumer other | (36) | (9) | (73) | (248) | (84) |
| Total consumer | (1,613) | (2,806) | (2,119) | (3,493) | (1,835) |
| | | | | | |
| Total charge-offs | (2,278) | (5,170) | (15,735) | (17,114) | (6,885) |
| | | | | | |
| Recoveries: | | | | | |
| Commercial: | | | | | |
| Commercial | 3 | 52 | 157 | 543 | 131 |
| Commercial real estate | 12 | -- | -- | 17 | -- |
| Real estate construction | 131 | 54 | 1 | 3 | 46 |
| Total commercial | 146 | 106 | 158 | 563 | 177 |
| | | | | | |
| Consumer: | | | | | |
| Residential real estate first lien | 223 | -- | 161 | 9 | 134 |
| Residential real estate second lien | 71 | 31 | 36 | 27 | 132 |
| Home equity lines | 19 | 80 | 11 | 11 | 78 |
| Consumer other | 18 | 28 | 62 | 34 | 35 |
| Total consumer | 331 | 139 | 270 | 81 | 379 |
| | | | | | |
| Total recoveries | 477 | 245 | 428 | 644 | 556 |
| | | | | | |
| Net charge-offs | (1,801) | (4,925) | (15,307) | (16,470) | (6,329) |
| | | | | | |
| Provision for loan losses | 2,170 | 2,597 | 9,599 | 18,013 | 4,960 |
| | | | | | |
| Allowance for loan losses at end of quarter | $ 19,008 | $ 18,639 | $ 20,967 | $ 26,675 | $ 25,132 |
| | | | | | |
| 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, |
| | 2011 | 2010 | 2010 | 2010 | 2010 |
| Banking | | | | | |
| Net interest income | $ 11,367 | $ 11,361 | $ 11,231 | $ 11,191 | $ 11,742 |
| Provision for loan losses | 2,170 | 2,597 | 9,599 | 18,013 | 4,960 |
| Noninterest income | 529 | 3,602 | 857 | 1,800 | 647 |
| Noninterest expense | 9,563 | 15,476 | 16,133 | 14,747 | 13,675 |
| Earnings (loss) before income taxes | 163 | (3,110) | (13,644) | (19,769) | (6,246) |
| Income tax benefit | (34) | (1,309) | (4,370) | (6,311) | (3,076) |
| Net earnings (loss) | $ 197 | $ (1,801) | $ (9,274) | $ (13,458) | $ (3,170) |
| Total assets at quarter end | $ 1,467,887 | $ 1,473,837 | $ 1,650,297 | $ 1,628,706 | $ 1,645,468 |
| | | | | | |
| Wealth Management | | | | | |
| Net interest income | $ 24 | $ 34 | $ 34 | $ 41 | $ 40 |
| Noninterest income | 5,089 | 5,130 | 4,638 | 4,593 | 4,618 |
| Noninterest expense | 3,643 | 3,612 | 3,442 | 3,547 | 3,562 |
| Earnings before income taxes | 1,470 | 1,552 | 1,230 | 1,087 | 1,096 |
| Income tax expense | 516 | 475 | 438 | 385 | 388 |
| Net earnings | $ 954 | $ 1,077 | $ 792 | $ 702 | $ 708 |
| Total assets at quarter end | $ 64,157 | $ 63,254 | $ 63,933 | $ 62,518 | $ 61,316 |
| | | | | | |
| Insurance | | | | | |
| Net interest income | $ 2 | $ 4 | $ 5 | $ 5 | $ 5 |
| Noninterest income | 1,448 | 1,127 | 1,533 | 1,554 | 1,644 |
| Noninterest expense | 1,149 | 1,125 | 1,153 | 1,101 | 1,027 |
| Earnings before income taxes | 301 | 6 | 385 | 458 | 622 |
| Income tax expense (benefit) | 106 | (12) | 134 | 161 | 218 |
| Net earnings | $ 195 | $ 18 | $ 251 | $ 297 | $ 404 |
| Total assets at quarter end | $ 6,827 | $ 9,095 | $ 9,063 | $ 8,714 | $ 8,053 |
| | | | | | |
| Other | | | | | |
| Net interest expense | $ (298) | $ (298) | $ (301) | $ (298) | $ (297) |
| Loss before income taxes | (298) | (298) | (301) | (298) | (297) |
| Income tax benefit | (104) | (104) | (106) | (104) | (104) |
| Net loss | $ (194) | $ (194) | $ (195) | $ (194) | $ (193) |
| Total assets at quarter end | $ (80,690) | $ (79,689) | $ (72,631) | $ (74,323) | $ (76,921) |
| | | | | | |
| Consolidated | | | | | |
| Net interest income | $ 11,095 | $ 11,101 | $ 10,969 | $ 10,939 | $ 11,490 |
| Provision for loan losses | 2,170 | 2,597 | 9,599 | 18,013 | 4,960 |
| Noninterest income | 7,066 | 9,859 | 7,028 | 7,947 | 6,909 |
| Noninterest expense | 14,355 | 20,213 | 20,728 | 19,395 | 18,264 |
| Earnings (loss) before income taxes | 1,636 | (1,850) | (12,330) | (18,522) | (4,825) |
| Income tax expense (benefit) | 484 | (950) | (3,904) | (5,869) | (2,574) |
| Net earnings (loss) | $ 1,152 | $ (900) | $ (8,426) | $ (12,653) | $ (2,251) |
| Total assets at quarter end | $ 1,458,181 | $ 1,466,497 | $ 1,650,662 | $ 1,625,615 | $ 1,637,916 |
| | | | | | |
| Encore Bancshares, Inc. and Subsidiaries |
| | | | | | | |
| TAXABLE-EQUIVALENT (TE) YIELD ANALYSIS (1) |
| | | | | | | |
| (Unaudited, dollars in thousands) |
| | | | | | | |
| | Three Months Ended March 31, |
| | 2011 | 2010 |
| | Average | Interest | Average | Average | Interest | Average |
| | Outstanding | Income/ | Yield/ | Outstanding | Income/ | Yield/ |
| | Balance | Expense | Rate | Balance | Expense | Rate |
| Assets: | | | | | | |
| Interest-earning assets: | | | | | | |
| Loans - TE yield | $ 933,361 | $ 13,495 | 5.86% | $ 1,064,375 | $ 15,760 | 6.00% |
| Securities - TE yield | 354,250 | 2,369 | 2.71% | 230,390 | 2,106 | 3.71% |
| Federal funds sold and other | 60,084 | 92 | 0.62% | 220,019 | 215 | 0.40% |
| Total interest-earning assets - TE yield | 1,347,695 | 15,956 | 4.80% | 1,514,784 | 18,081 | 4.84% |
| Less: Allowance for loan losses | (18,604) | | | (26,672) | | |
| Noninterest-earning assets | 131,183 | | | 126,284 | | |
| Noninterest-earning assets held-for-sale | -- | | | 7,377 | | |
| Total assets | $ 1,460,274 | | | $ 1,621,773 | | |
| | | | | | | |
| Liabilities and shareholders' equity: | | | | | | |
| Interest-bearing liabilities: | | | | | | |
| Interest checking | $ 162,577 | $ 91 | 0.23% | $ 153,023 | $ 122 | 0.32% |
| Money market and savings | 287,029 | 309 | 0.44% | 240,292 | 506 | 0.85% |
| Time deposits | 379,142 | 1,940 | 2.08% | 400,451 | 2,414 | 2.44% |
| Interest-bearing deposits held-for-sale | -- | -- | | 219,809 | 1,010 | 1.86% |
| Total interest-bearing deposits | 828,748 | 2,340 | 1.15% | 1,013,575 | 4,052 | 1.62% |
| Borrowings and repurchase agreements | 224,792 | 2,106 | 3.80% | 220,759 | 2,116 | 3.89% |
| Junior subordinated debentures | 20,619 | 298 | 5.86% | 20,619 | 297 | 5.84% |
| Total interest-bearing liabilities | 1,074,159 | 4,744 | 1.79% | 1,254,953 | 6,465 | 2.09% |
| Noninterest-bearing liabilities: | | | | | | |
| Noninterest-bearing deposits | 210,885 | | | 146,779 | | |
| Noninterest-bearing deposits held-for-sale | -- | | | 17,213 | | |
| Other liabilities | 8,344 | | | 15,412 | | |
| Other liabilities held-for-sale | -- | | | 303 | | |
| Total liabilities | 1,293,388 | | | 1,434,660 | | |
| Shareholders' equity | 166,886 | | | 187,113 | | |
| Total liabilities and shareholders' equity | $ 1,460,274 | | | $ 1,621,773 | | |
| | | | | | | |
| Net interest income - TE | | $ 11,212 | | | $ 11,616 | |
| | | | | | | |
| Net interest spread - TE | | | 3.01% | | | 2.75% |
| Net interest margin - TE | | | 3.37% | | | 3.11% |
| | | | | | | |
| (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, |
| | 2011 | 2010 | 2010 | 2010 | 2010 |
| | | | | | |
| Shareholders' equity (GAAP) | $ 167,914 | $ 166,641 | $ 169,706 | $ 177,873 | $ 190,210 |
| Less: Preferred stock | 29,633 | 29,500 | 29,368 | 29,238 | 29,107 |
| Goodwill and other intangible assets, net | 40,374 | 40,515 | 40,675 | 40,833 | 40,991 |
| Tangible common equity (1) | $ 97,907 | $ 96,626 | $ 99,663 | $ 107,802 | $ 120,112 |
| | | | | | |
| Total assets (GAAP) | $ 1,458,181 | $ 1,466,497 | $ 1,650,662 | $ 1,625,615 | $ 1,637,916 |
| Less: Goodwill and other intangible assets, net | 40,374 | 40,515 | 40,675 | 40,833 | 40,991 |
| Tangible assets | $ 1,417,807 | $ 1,425,982 | $ 1,609,987 | $ 1,584,782 | $ 1,596,925 |
| | | | | | |
| Common shares outstanding at end of period | 11,552 | 11,431 | 11,380 | 11,380 | 11,162 |
| | | | | | |
| (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, | | |
| | 2011 | 2010 | | | |
| Net interest income (GAAP) | $ 11,095 | $ 11,490 | | | |
| Taxable-equivalent adjustment (1) | 117 | 126 | | | |
| Net interest income on a taxable-equivalent basis | $ 11,212 | $ 11,616 | | | |
| | | | | | |
| (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: L. Anderson Creel
Chief Financial Officer
713.787.3138
James S. D'Agostino, Jr.
Chairman and CEO
713.787.3103