Encore Bancshares (EBTX) 8-K/A Results of Operations and Financial Condition

Exhibit 99.1

Encore Bancshares, Inc. and Subsidiaries

FINANCIAL HIGHLIGHTS

(Unaudited, amounts in thousands, except per share data)

	As of and for the Three Months Ended December 31,						As of and for the Years Ended December 31,
	2010			2009			2010			2009
Operations Statement Data:
Interest income	$	16,725		$	18,555		$	68,803		$	77,226
Interest expense		5,624			6,934			24,304			30,731
Net interest income		11,101			11,621			44,499			46,495
Provision for loan losses		2,597			3,009			35,169			16,660
Net interest income after provision for loan losses		8,504			8,612			9,330			29,835
Noninterest income		9,859			8,093			31,743			27,337
Noninterest expense		19,013			14,687			77,400			54,424
Net earnings (loss) before income taxes		(650	)		2,018			(36,327	)		2,748
Income tax expense (benefit)		(534	)		435			(12,881	)		962
Net earnings (loss)	$	(116	)	$	1,583		$	(23,446	)	$	1,786
Earnings (loss) available to common shareholders	$	(673	)	$	1,029		$	(25,670	)	$	(428	)
Common Share Data:
Basic earnings (loss) per share (1)	$	(0.06	)	$	0.10		$	(2.30	)	$	(0.04	)
Diluted earnings (loss) per share (1)		(0.06	)		0.09			(2.30	)		(0.04	)
Book value per share		12.07			15.01			12.07			15.01
Tangible book value per share (2)		8.52			11.10			8.52			11.10
Average common shares outstanding		11,391			10,513			11,179			10,381
Diluted average common shares outstanding		11,391			11,536			11,179			10,381
Common shares outstanding at end of period		11,431			10,504			11,431			10,504
Selected Performance Ratios:
Return on average assets		(0.03	)%		0.39	%		(1.43	)%		0.11	%
Return on average common equity (1)		(1.90	)%		2.58	%		(16.89	)%		(0.27	)%
Return on average tangible common equity (1)(2)		(2.67	)%		3.27	%		(23.11	)%		(0.34	)%
Taxable-equivalent net interest margin (2)		2.89	%		3.04	%		2.93	%		3.10	%
Efficiency ratio		77.96	%		81.66	%		91.45	%		75.16	%
Noninterest income to total revenue		47.04	%		41.05	%		41.63	%		37.03	%

(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.

1

Encore Bancshares, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(Unaudited, dollars in thousands, except per share data)

	Dec 31, 2010			Sept 30, 2010			June 30, 2010			March 31, 2010			Dec 31, 2009
ASSETS
Cash and due from banks	$	13,523		$	16,825		$	14,718		$	18,420		$	16,796
Interest-bearing deposits in banks		49,478			231,866			314,624			237,771			172,984
Federal funds sold and other		1,098			993			902			1,695			7,396
Cash and cash equivalents		64,099			249,684			330,244			257,886			197,176
Securities available-for-sale, at estimated fair value		251,784			198,530			72,153			138,495			140,651
Securities held-to-maturity, at amortized cost		107,618			55,436			68,628			88,454			117,171
Loans held-for-sale		12,115			111,505			77,914			81,953			1,058
Loans receivable		920,457			924,589			972,765			974,301			1,078,205
Allowance for loan losses		(18,639	)		(20,967	)		(26,675	)		(25,132	)		(26,501	)
Net loans receivable		901,818			903,622			946,090			949,169			1,051,704
Federal Home Loan Bank of Dallas stock, at cost		9,610			9,602			9,593			9,578			9,569
Investment in real estate		9,298			10,852			13,602			11,054			14,639
Premises and equipment, net		7,023			7,284			7,567			9,327			15,484
Cash surrender value of life insurance policies		15,935			15,786			15,637			15,489			15,339
Goodwill		35,799			35,799			35,799			35,799			35,799
Other intangible assets, net		4,716			4,876			5,034			5,192			5,351
Accrued interest receivable and other assets		47,466			44,430			40,085			32,176			31,414
Other assets held-for-sale		—			3,256			3,269			3,344			—
	$	1,467,281		$	1,650,662		$	1,625,615		$	1,637,916		$	1,635,355
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing	$	219,756		$	205,927		$	182,729		$	156,071		$	174,102
Interest-bearing		830,688			838,125			832,876			802,597			1,017,734
Deposits held-for-sale		—			187,433			184,106			242,755			—
Total deposits		1,050,444			1,231,485			1,199,711			1,201,423			1,191,836
Borrowings and repurchase agreements		219,777			220,818			219,602			218,560			220,612
Junior subordinated debentures		20,619			20,619			20,619			20,619			20,619
Accrued interest payable and other liabilities		9,016			8,028			7,804			7,094			15,620
Other liabilities held-for-sale		—			6			6			10			—
Total liabilities		1,299,856			1,480,956			1,447,742			1,447,706			1,448,687
Commitments and contingencies
Shareholders’ equity:
Preferred stock		29,500			29,368			29,238			29,107			28,976
Common stock		11,479			11,421			11,416			11,195			10,527
Additional paid-in capital		122,678			121,939			121,533			121,345			116,084
Retained earnings		5,425			6,098			15,079			28,288			31,095
Common stock in treasury, at cost		(455	)		(389	)		(346	)		(319	)		(233	)
Accumulated other comprehensive income (loss)		(1,202	)		1,269			953			594			219
Shareholders’ equity		167,425			169,706			177,873			190,210			186,668
	$	1,467,281		$	1,650,662		$	1,625,615		$	1,637,916		$	1,635,355
Ratios and Per Share Data:
Leverage ratio		8.17	%		9.00	%		9.93	%		10.73	%		10.55	%
Tier 1 risk-based capital ratio		12.94	%		13.26	%		14.59	%		15.56	%		14.80	%
Total risk-based capital ratio		14.20	%		14.79	%		15.86	%		16.82	%		16.07	%
Book value per share	$	12.07		$	12.33		$	13.06		$	14.43		$	15.01
Tangible book value per share (1)		8.52			8.76			9.47			10.76			11.10
Tangible common equity to tangible assets (1)		6.83	%		6.19	%		6.80	%		7.52	%		7.31	%

(1) Non-GAAP measure. See calculation of tangible common equity in subsequent table.

2

Encore Bancshares, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, amounts in thousands, except per share data)

	Three Months Ended														Years Ended December 31,
	Dec 31,			Sept 30,			June 30,			March 31,			Dec 31,
	2010			2010			2010			2010			2009		2010			2009
Interest income:
Loans, including fees	$	14,646		$	15,408		$	15,441		$	15,694		$	16,168	$	61,189		$	68,006
Securities		1,872			1,276			1,526			2,046			2,177		6,720			8,518
Federal funds sold and other		207			238			234			215			210		894			702
Total interest income		16,725			16,922			17,201			17,955			18,555		68,803			77,226
Interest expense:
Deposits		2,562			2,827			2,962			3,042			4,507		11,393			21,013
Deposits held-for-sale		636			698			863			1,010			—		3,207			—
Borrowings and repurchase agreements		2,128			2,127			2,139			2,116			2,129		8,510			8,493
Junior subordinated debentures		298			301			298			297			298		1,194			1,225
Total interest expense		5,624			5,953			6,262			6,465			6,934		24,304			30,731
Net interest income		11,101			10,969			10,939			11,490			11,621		44,499			46,495
Provision for loan losses		2,597			9,599			18,013			4,960			3,009		35,169			16,660
Net interest income after provision for loan losses		8,504			1,370			(7,074	)		6,530			8,612		9,330			29,835
Noninterest income:
Trust and investment management fees		5,122			4,639			4,591			4,618			4,557		18,970			16,894
Mortgage banking		501			150			78			36			41		765			653
Insurance commissions and fees		1,120			1,524			1,488			1,639			1,098		5,771			5,477
Net gain on sale of available-for-sale securities		38			261			120			99			1,937		518			2,324
Gain on sale of branches		2,567			—			1,115			—			—		3,682			—
Other		511			454			555			517			460		2,037			1,989
Total noninterest income		9,859			7,028			7,947			6,909			8,093		31,743			27,337
Noninterest expense:
Compensation		8,469			8,503			8,638			8,551			7,657		34,161			30,163
Occupancy		1,339			1,395			1,454			1,478			1,546		5,666			6,050
Equipment		261			274			330			363			383		1,228			1,695
Advertising and promotion		137			146			153			181			177		617			807
Outside data processing		910			874			897			870			829		3,551			3,173
Professional fees		1,165			1,325			1,435			921			1,126		4,846			4,017
Intangible amortization		160			158			159			158			170		635			681
FDIC assessment		790			1,532			703			655			1,047		3,680			2,115
Foreclosed real estate expenses, net		119			4,458			1,402			1,124			675		7,103			1,503
Write down of assets held-for-sale		4,544			1,012			2,793			2,535			—		10,884			—
Other		1,119			1,051			1,431			1,428			1,077		5,029			4,220
Total noninterest expense		19,013			20,728			19,395			18,264			14,687		77,400			54,424
Net earnings (loss) before income taxes		(650	)		(12,330	)		(18,522	)		(4,825	)		2,018		(36,327	)		2,748
Income tax expense (benefit)		(534	)		(3,904	)		(5,869	)		(2,574	)		435		(12,881	)		962
Net earnings (loss)	$	(116	)	$	(8,426	)	$	(12,653	)	$	(2,251	)	$	1,583	$	(23,446	)	$	1,786
Earnings (loss) available to common shareholders	$	(673	)	$	(8,981	)	$	(13,209	)	$	(2,807	)	$	1,029	$	(25,670	)	$	(428	)
Earnings (loss) per common share:
Basic	$	(0.06	)	$	(0.79	)	$	(1.16	)	$	(0.27	)	$	0.10	$	(2.30	)	$	(0.04	)
Diluted		(0.06	)		(0.79	)		(1.16	)		(0.27	)		0.09		(2.30	)		(0.04	)
Average common shares outstanding		11,391			11,380			11,375			10,558			10,513		11,179			10,381
Diluted average common shares outstanding		11,391			11,380			11,375			10,558			11,536		11,179			10,381

3

Encore Bancshares, Inc. and Subsidiaries

SELECTED FINANCIAL DATA

(Unaudited, dollars in thousands)

Loan Portfolio:	Dec 31, 2010			Sept 30, 2010			June 30, 2010			March 31, 2010			Dec 31, 2009
Commercial:
Commercial	$	147,090		$	138,594		$	131,712		$	115,653		$	115,431
Commercial real estate		166,043			154,476			189,471			199,166			259,480
Real estate construction		46,326			54,140			55,332			66,618			87,008
Total commercial		359,459			347,210			376,515			381,437			461,919
Consumer:
Residential real estate first lien		205,531			207,386			215,911			211,366			222,337
Residential real estate second lien		269,727			280,245			290,934			289,344			291,433
Home equity lines		60,609			63,983			66,311			68,677			74,356
Consumer installment—indirect		4,671			5,520			6,311			7,339			8,372
Consumer other		20,460			20,245			16,783			16,138			19,788
Total consumer		560,998			577,379			596,250			592,864			616,286
Loans receivable		920,457			924,589			972,765			974,301			1,078,205
Loans held-for-sale		12,115			111,505			77,914			81,953			1,058
Total loans	$	932,572		$	1,036,094		$	1,050,679		$	1,056,254		$	1,079,263
Asset Quality:
Nonaccrual loans—Texas (1)	$	15,167		$	17,445		$	22,441		$	8,860		$	9,908
Nonaccrual loans—Florida (1)		12,510			34,251			41,773			31,851			26,080
Total nonaccrual loans (1)		27,677			51,696			64,214			40,711			35,988
Investment in real estate—Texas		4,783			5,762			6,194			6,954			9,494
Investment in real estate—Florida		4,515			5,090			7,408			4,100			5,145
Total investment in real estate		9,298			10,852			13,602			11,054			14,639
Total nonperforming assets	$	36,975		$	62,548		$	77,816		$	51,765		$	50,627
Accruing loans past due 90 days or more	$	313		$	—		$	—		$	—		$	1,489
Restructured loans still accruing	$	804		$	2,570		$	1,072		$	5,710		$	530
Asset Quality Ratios:
Nonperforming assets to total loans and investment in real estate		3.93	%		5.97	%		7.31	%		4.85	%		4.63	%
Net charge-offs to average total loans		1.95	%		5.75	%		6.23	%		2.41	%		1.49	%
Allowance for loan losses to period end loans (excluding loans held-for-sale)		2.02	%		2.27	%		2.74	%		2.58	%		2.46	%
Allowance for loan losses to nonperforming loans (excluding loans held-for-sale)		94.11	%		88.89	%		45.47	%		61.73	%		73.64	%
Deposits:
Noninterest-bearing deposits	$	219,756		$	205,927		$	182,729		$	156,071		$	174,102
Interest checking		173,839			145,257			152,041			157,796			211,174
Money market and savings		278,507			293,381			259,189			237,204			294,840
Time deposits less than $100		117,974			124,132			132,514			130,898			191,372
Core deposits		790,076			768,697			726,473			681,969			871,488
Time deposits $100 and greater		239,129			251,271			265,076			251,089			298,163
Brokered deposits		21,239			24,084			24,056			25,610			22,185
Deposits held-for-sale		—			187,433			184,106			242,755			—
Total deposits	$	1,050,444		$	1,231,485		$	1,199,711		$	1,201,423		$	1,191,836
Assets Under Management	$	2,857,390		$	2,732,757		$	2,592,186		$	2,786,220		$	2,673,832

(1) Nonaccrual troubled debt restructurings are included in nonaccrual loans.

4

Encore Bancshares, Inc. and Subsidiaries

SEGMENT OPERATIONS

(Unaudited, dollars in thousands)

	As of and for the Three Months Ended															As of and for the Years
	Dec 31,			Sept 30,			June 30,			March 31,			Dec 31,			Ended December 31,
	2010			2010			2010			2010			2009			2010			2009
Banking
Net interest income	$	11,361		$	11,231		$	11,191		$	11,742		$	11,873		$	45,525		$	47,548
Provision for loan losses		2,597			9,599			18,013			4,960			3,009			35,169			16,660
Noninterest income		3,602			857			1,800			647			2,423			6,906			4,781
Noninterest expense		14,276			16,133			14,747			13,675			10,591			58,831			37,901
Earnings (loss) before income taxes		(1,910	)		(13,644	)		(19,769	)		(6,246	)		696			(41,569	)		(2,232	)
Income tax expense (benefit)		(893	)		(4,370	)		(6,311	)		(3,076	)		(57	)		(14,650	)		(896	)
Net earnings (loss)	$	(1,017	)	$	(9,274	)	$	(13,458	)	$	(3,170	)	$	753		$	(26,919	)	$	(1,336	)
Total assets at quarter end	$	1,475,037		$	1,650,297		$	1,628,706		$	1,645,468		$	1,644,083		$	1,475,037		$	1,644,083
Wealth Management
Net interest income	$	34		$	34		$	41		$	40		$	40		$	149		$	155
Noninterest income		5,130			4,638			4,593			4,618			4,570			18,979			16,907
Noninterest expense		3,612			3,442			3,547			3,562			3,022			14,163			12,248
Earnings before income taxes		1,552			1,230			1,087			1,096			1,588			4,965			4,814
Income tax expense		475			438			385			388			575			1,686			1,788
Net earnings	$	1,077		$	792		$	702		$	708		$	1,013		$	3,279		$	3,026
Total assets at quarter end	$	63,254		$	63,933		$	62,518		$	61,316		$	59,618		$	63,254		$	59,618
Insurance
Net interest income	$	4		$	5		$	5		$	5		$	6		$	19		$	17
Noninterest income		1,127			1,533			1,554			1,644			1,100			5,858			5,649
Noninterest expense		1,125			1,153			1,101			1,027			1,074			4,406			4,275
Earnings before income taxes		6			385			458			622			32			1,471			1,391
Income tax expense (benefit)		(12	)		134			161			218			21			501			498
Net earnings	$	18		$	251		$	297		$	404		$	11		$	970		$	893
Total assets at quarter end	$	9,095		$	9,063		$	8,714		$	8,053		$	7,962		$	9,095		$	7,962
Other
Net interest expense	$	(298	)	$	(301	)	$	(298	)	$	(297	)	$	(298	)	$	(1,194	)	$	(1,225	)
Loss before income taxes		(298	)		(301	)		(298	)		(297	)		(298	)		(1,194	)		(1,225	)
Income tax benefit		(104	)		(106	)		(104	)		(104	)		(104	)		(418	)		(428	)
Net loss	$	(194	)	$	(195	)	$	(194	)	$	(193	)	$	(194	)	$	(776	)	$	(797	)
Total assets at quarter end	$	(80,105	)	$	(72,631	)	$	(74,323	)	$	(76,921	)	$	(76,308	)	$	(80,105	)	$	(76,308	)
Consolidated
Net interest income	$	11,101		$	10,969		$	10,939		$	11,490		$	11,621		$	44,499		$	46,495
Provision for loan losses		2,597			9,599			18,013			4,960			3,009			35,169			16,660
Noninterest income		9,859			7,028			7,947			6,909			8,093			31,743			27,337
Noninterest expense		19,013			20,728			19,395			18,264			14,687			77,400			54,424
Earnings (loss) before income taxes		(650	)		(12,330	)		(18,522	)		(4,825	)		2,018			(36,327	)		2,748
Income tax expense (benefit)		(534	)		(3,904	)		(5,869	)		(2,574	)		435			(12,881	)		962
Net earnings (loss)	$	(116	)	$	(8,426	)	$	(12,653	)	$	(2,251	)	$	1,583		$	(23,446	)	$	1,786
Total assets at quarter end	$	1,467,281		$	1,650,662		$	1,625,615		$	1,637,916		$	1,635,355		$	1,467,281		$	1,635,355

5

Encore Bancshares, Inc. and Subsidiaries

NON-GAAP FINANCIAL MEASURES

(Unaudited, amounts in thousands)

	Dec 31, 2010		Sept 30, 2010		June 30, 2010		March 31, 2010		Dec 31, 2009
Shareholders’ equity (GAAP)	$	167,425	$	169,706	$	177,873	$	190,210	$	186,668
Less: Preferred stock		29,500		29,368		29,238		29,107		28,976
Goodwill and other intangible assets, net		40,515		40,675		40,833		40,991		41,150
Tangible common equity (1)	$	97,410	$	99,663	$	107,802	$	120,112	$	116,542
Total assets (GAAP)	$	1,467,281	$	1,650,662	$	1,625,615	$	1,637,916	$	1,635,355
Less: Goodwill and other intangible assets, net		40,515		40,675		40,833		40,991		41,150
Tangible assets	$	1,426,766	$	1,609,987	$	1,584,782	$	1,596,925	$	1,594,205
							��
Common shares outstanding at end of period		11,431		11,380		11,380		11,162		10,504

(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 December 31,				Years Ended December 31,
	2010		2009		2010		2009
Net interest income (GAAP)	$	11,101	$	11,621	$	44,499	$	46,495
Taxable-equivalent adjustment (1)		119		129		488		454
Net interest income on a taxable-equivalent basis	$	11,220	$	11,750	$	44,987	$	46,949

(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.

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