EXHIBIT 99.1
(BW) (INTERVEST-BANCSHARES) (IBCA)
INTERVEST BANCSHARES CORPORATION
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REPORTS 2006 THIRD QUARTER EARNINGS OF $4.9 MILLION AND TOTAL ASSETS OF $1.97
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BILLION
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Business Editors - New York - (Business Wire - October 17, 2006)
Intervest Bancshares Corporation (NASDAQ-GS: IBCA) (the "Company") today
reported that its consolidated net earnings for the third quarter of 2006
increased by $0.3 million, or 7%, to $4.9 million, or $0.59 per diluted share,
from $4.6 million, or $0.61 per diluted share, in the third quarter of 2005. For
the first nine months of 2006, consolidated net earnings increased by $5.4
million, or 44%, to $17.7 million or $2.13 per diluted share, from $12.3 million
or $1.76 per diluted share in the first nine months of 2005. The earnings per
share calculations for the 2006 periods included a greater number of average
shares outstanding resulting primarily from a public offering of 1.4 million
shares of Class A common stock during the third quarter of 2005. Earnings for
the 2006 periods were reduced by a one-time charge of $1.5 million ($0.9 million
after tax) resulting from the Company's contractual obligation to provide death
benefit payments to the spouse of the Company's former Chairman and founder,
Jerome Dansker, who passed away in August of this year. This charge represents
the estimated net present value of the future contractual payments that total
$1.9 million.
The $0.3 million increase in 2006 third quarter earnings over the same
period of 2005 was due to a $1.9 million increase in net interest and dividend
income and a $0.9 million decrease in the provision for loan losses, partially
offset by a $1.6 million increase in noninterest expenses, a $0.6 million
decrease in noninterest income and a $0.3 million increase in the provision for
income taxes. The increase in net interest and dividend income reflected the
continued growth in the Company's lending activities. Total average loans
outstanding grew by $240 million while the Company's net interest margin
decreased slightly to 2.71% from 2.74%, despite a higher cost of funds. The
provision for loan losses was lower primarily due to a decrease in the rate of
net loan growth over the prior year period, while the increase in noninterest
expenses was nearly all due to the one-time charge of $1.5 million noted above.
Noninterest income decreased due to a lower level of income from loan
prepayments, while the provision for income taxes increased due to higher pretax
income. The Company had 75 employees at September 30, 2006, compared to 68 at
September 30, 2005, and its effective income tax rate was approximately 44% for
both periods.
The Company's efficiency ratio, which is a measure of its ability to
control expenses as a percentage of its revenues, continued to be favorable and
was 20% (excluding the one-time charge) in the third quarter of 2006, compared
to 21% in the third quarter of 2005. The Company's return on average assets and
equity was 1.05% and 12.90%, respectively, in the 2006 third quarter, compared
to 1.17% and 16.32% in the 2005 third quarter. Book value per common share rose
to $19.66 at September 30, 2006, from $17.41 at December 31, 2005.
Earnings for the first nine months of 2006 increased by $5.4 million over
the same period of 2005 due to a $10.0 million increase in net interest and
dividend income, a $1.4 million decrease in the provision for loan losses and a
$0.2 million increase in noninterest income. These items were partially offset
by a $2.0 million increase in noninterest expenses and a $4.2 million increase
in the provision for income taxes. The increase in net interest and dividend
income was due to a $285 million increase in average loans outstanding and a
higher net interest margin of 2.85% compared to 2.61%. The higher margin was a
function of the Company's yield on interest-earning assets increasing at a
faster pace than its cost of funds as well as an increase of $51 million in net
interest-earning assets resulting largely from $26.3 million of proceeds from
the issuance of common stock and increased retained earnings. The increase in
noninterest expenses reflected the $1.5 million charge noted above as well as
increases in professional fees and other operating expenses associated with the
Company's growth in total assets. The increase in noninterest income was due to
a higher level of banking fee income and fees earned from loan commitments that
expired unfunded, partially offset by a lower lever of income from loan
prepayments. The reasons for the changes in the provision for loan losses and
income taxes were the same as those for the quarterly period.
Total consolidated assets at September 30, 2006 increased by 15% to $1.97
billion from $1.71 billion at December 31, 2005. The increase reflected the
growth in the Company's loan portfolio as well as increases in security
investments and other short-term investments.
Total consolidated loans, net of unearned fees, at September 30, 2006
increased by 9% to $1.49 billion from $1.37 billion at December 31, 2005. The
increase was due to new originations secured by commercial and multifamily real
estate exceeding principal repayments. New originations totaled $147 million in
the third quarter of 2006 and $437 million in the first nine months of 2006,
compared to $221 million and $545 million, respectively, for the same periods of
2005. Loans on nonaccrual status amounted to $7.7 million and were comprised of
three loans at September 30, 2006, compared to two loans totaling $0.7 million
at December 31, 2005. In September 2006, the two loans on nonaccrual status at
December 31, 2005 were repaid. At September 30, 2006, there were six loans
totaling $19.6 million ninety days past due and still accruing interest since
they were deemed to be well secured and in the process of collection. Five of
the loans ($17.2 million) have matured and the borrowers continue to make
monthly payments of interest and principal. It is anticipated that all six loans
will be repaid in full or refinanced in the near term.
Total consolidated security investments at September 30, 2006 increased 35%
to $346.6 million from $256.7 million at December 31, 2005. The investment
portfolio at September 30, 2006, all of which was held by Intervest National
Bank, had a weighted-average remaining maturity of 1.5 years and a yield of
4.53%, compared to 1.1 years and a yield of 3.26% at December 31, 2005.
Intervest National Bank continues to invest in short-term U.S. government agency
debt obligations to emphasize liquidity and currently targets its
loan-to-deposit ratio at approximately 85%.
Total consolidated cash and other short-term investments at September 30,
2006 increased by 82% to $103.0 million from $56.7 million at December 31, 2005.
The increase reflected the temporary investment of deposit inflows during
September 2006. A portion of these funds is expected to fund new loans and to
retire prior to their stated maturity certain debentures outstanding in the
fourth quarter of 2006.
Total consolidated deposits at September 30, 2006 increased by 16% to
$1.60 billion from $1.38 billion at December 31, 2005, reflecting an increase in
certificate of deposit accounts of $228.6 million partially offset by a net
decrease in checking, savings and money market accounts totaling $2.8 million.
Total consolidated borrowed funds and related interest payable at September
30, 2006 increased by 12% to $174.1 million from $155.7 million at December 31,
2005. The increase was due to the previously announced sale on September 21,
2006 of $10.0 million of additional trust preferred securities as well as a $10
million net increase in the outstanding debentures of the Company's subsidiary,
Intervest Mortgage Corporation. The Company intends to use the proceeds from the
sale of the trust preferred securities, together with $5 million of available
cash, to redeem on December 18, 2006 $15 million of other trust preferred
securities with a fixed rate of 9.88%. The net effect of these actions will
reduce annual interest expense by $0.8 million going forward. Upon redemption,
$0.4 million of related unamortized issuance costs will be expensed in the
fourth quarter of 2006. At such time, there will be $55 million of trust
preferred securities outstanding, compared to $70 million at September 30, 2006.
Total consolidated stockholders' equity at September 30, 2006 increased by
13% to $154.4 million from $136.2 million at December 31, 2005. The increase
resulted from $17.7 million of net earnings and $0.5 million from the conversion
of convertible debentures into common stock.
Intervest Bancshares Corporation is a financial holding company. Its
operating subsidiaries are: Intervest National Bank, a nationally chartered
commercial bank, that has its headquarters and full-service banking office at
One Rockefeller Plaza, in New York City, and a total of five full-service
banking offices in Clearwater and Gulfport, Florida; Intervest Mortgage
Corporation, a mortgage investment company; and Intervest Securities
Corporation, a broker/dealer and an NASD member firm. Intervest National Bank
expects to open an additional branch office at 483 Mandalay Avenue in Clearwater
Beach, Florida on November 1, 2006. Intervest National Bank maintains capital
ratios in excess of the regulatory requirements to be designated as a
well-capitalized institution. Intervest Bancshares Corporation's Class A Common
Stock is listed on the NASDAQ Global Select Market: Trading Symbol IBCA.
This press release may contain forward-looking information. Except for
historical information, the matters discussed herein are subject to certain
risks and uncertainties that may affect the Company's actual results of
operations. The following important factors, among others, could cause actual
results to differ materially from those set forth in forward looking statements:
changes in general economic conditions in the Company's market areas; changes in
policies by regulatory agencies; fluctuations in interest rates; demand for
loans; and competition. Reference is made to the Company's filings with the SEC
for further discussion of risks and uncertainties regarding the Company's
business. Historical results are not necessarily indicative of the future
prospects of the Company.
CONTACT: LOWELL S. DANSKER, CHAIRMAN, INTERVEST BANCSHARES CORPORATION
One Rockefeller Plaza (Suite 400), New York, New York 10020-2002
Phone 212-218-2800 Fax 212-218-2808
SELECTED CONSOLIDATED FINANCIAL INFORMATION FOLLOWS.
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INTERVEST BANCSHARES CORPORATION
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SELECTED CONSOLIDATED FINANCIAL INFORMATION
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QUARTER ENDED NINE-MONTHS ENDED
(Dollars in thousands, except per share amounts) SEPTEMBER 30, SEPTEMBER 30,
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2006 2005 2006 2005
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SELECTED OPERATING DATA:
Interest and dividend income. . . . . . . . . . . . . . . . . $ 32,760 $ 25,761 $ 94,563 $ 69,025
Interest expense. . . . . . . . . . . . . . . . . . . . . . . 20,206 15,106 56,433 40,889
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Net interest and dividend income. . . . . . . . . . . . . . . 12,554 10,655 38,130 28,136
Provision for loan losses . . . . . . . . . . . . . . . . . . 907 1,803 1,857 3,288
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Net interest and dividend income
after provision for loan losses . . . . . . . . . . . . . . 11,647 8,852 36,273 24,848
Noninterest income. . . . . . . . . . . . . . . . . . . . . . 1,215 1,813 4,909 4,700
Noninterest expenses. . . . . . . . . . . . . . . . . . . . . 4,202 2,566 9,730 7,689
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Earnings before income taxes. . . . . . . . . . . . . . . . . 8,660 8,099 31,452 21,859
Provision for income taxes. . . . . . . . . . . . . . . . . . 3,776 3,533 13,740 9,522
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NET EARNINGS. . . . . . . . . . . . . . . . . . . . . . . . . $ 4,884 $ 4,566 $ 17,712 $ 12,337
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BASIC EARNINGS PER SHARE. . . . . . . . . . . . . . . . . . . $ 0.62 $ 0.66 $ 2.26 $ 1.90
DILUTED EARNINGS PER SHARE. . . . . . . . . . . . . . . . . . $ 0.59 $ 0.61 $ 2.13 $ 1.76
Adjusted net earnings for diluted earnings per share (1). . . $ 4,920 $ 4,621 $ 17,825 $ 12,502
Weighted-average common shares and common
equivalent shares outstanding for computing:
Basic earnings per share. . . . . . . . . . . . . . . . . 7,852,537 6,967,473 7,840,289 6,508,297
Diluted earnings per share (2). . . . . . . . . . . . . . 8,384,870 7,572,891 8,370,601 7,106,540
Common shares outstanding at end of period. . . . . . . . . . 7,855,490 7,739,903 7,855,490 7,739,903
Common stock warrants outstanding at end of period. . . . . . 696,465 696,465 696,465 696,465
Yield on interest-earning assets. . . . . . . . . . . . . . . 7.06% 6.63% 7.08% 6.39%
Cost of funds . . . . . . . . . . . . . . . . . . . . . . . . 4.82% 4.26% 4.68% 4.14%
Net interest margin . . . . . . . . . . . . . . . . . . . . . 2.71% 2.74% 2.85% 2.61%
Return on average assets (3). . . . . . . . . . . . . . . . . 1.05% 1.17% 1.31% 1.13%
Return on average equity (3). . . . . . . . . . . . . . . . . 12.90% 16.32% 16.28% 16.53%
Effective income tax rate . . . . . . . . . . . . . . . . . . 43.60% 43.62% 43.69% 43.56%
Efficiency ratio (4). . . . . . . . . . . . . . . . . . . . . 31% 21% 23% 23%
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AT AT AT AT AT
SEP 30, JUN 30, MAR 31, DEC 31, SEP 30,
SELECTED FINANCIAL CONDITION INFORMATION: 2006 2006 2006 2005 2005
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Total assets . . . . . . . . . . . . . . . . . . . . . $1,970,106 $1,791,672 $1,790,524 $1,706,423 $1,630,845
Total cash and short-term investments. . . . . . . . . $ 103,001 $ 19,540 $ 27,831 $ 56,716 $ 43,023
Total securities held to maturity. . . . . . . . . . . $ 340,783 $ 300,779 $ 327,974 $ 251,508 $ 237,724
Total FRB and FHLB stock . . . . . . . . . . . . . . . $ 5,813 $ 5,813 $ 6,299 $ 5,241 $ 6,118
Total loans, net of unearned fees. . . . . . . . . . . $1,492,352 $1,439,436 $1,402,008 $1,367,986 $1,319,155
Total deposits . . . . . . . . . . . . . . . . . . . . $1,601,124 $1,450,955 $1,429,681 $1,375,330 $1,302,309
Total borrowed funds and accrued interest payable. . . $ 174,080 $ 149,528 $ 178,480 $ 155,725 $ 160,491
Total stockholders' equity . . . . . . . . . . . . . . $ 154,402 $ 149,413 $ 142,828 $ 136,178 $ 129,207
Total allowance for loan losses. . . . . . . . . . . . $ 17,038 $ 16,131 $ 15,542 $ 15,181 $ 14,394
Total loans ninety days past due and still accruing. . $ 18,639 $ 1,332 $ 1,505 $ 2,649 $ 2,672
Total nonperforming loans. . . . . . . . . . . . . . . $ 7,672 $ 3,076 $ 1,725 $ 750 $ 750
Total loan chargeoffs. . . . . . . . . . . . . . . . . $ - $ - $ - $ - $ -
Book value per common share. . . . . . . . . . . . . . $ 19.66 $ 19.04 $ 18.22 $ 17.41 $ 16.69
Allowance for loan losses / net loans. . . . . . . . . 1.14% 1.12% 1.11% 1.11% 1.09%
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(1) Represents net earnings plus interest expense on dilutive convertible
debentures, net of taxes, that would not occur if the convertible
debentures were assumed to be converted for purposes of computing diluted
earnings per share.
(2) Diluted EPS includes shares that would be outstanding if dilutive common
stock warrants and convertible debentures were assumed to be
exercised/converted during the period. All outstanding warrants were
considered for the EPS computations.
Convertible debentures (principal and accrued interest) outstanding at
September 30, 2006 and 2005 totaling $3,129,000 and $4,572,000,
respectively, were convertible into common stock at a price of $16.00 per
share in 2006 and $14.00 per share in 2005. Assumed conversion results in
additional common shares (based on average balances outstanding) of
approximately 200,000 in the 2006 EPS computations and 337,000 in the 2005
EPS computations.
(3) Returns for the quarterly and nine-month periods have been annualized.
(4) Represents noninterest expenses (excluding the provision for loan losses)
as a percentage of net interest and dividend income plus noninterest
income. Noninterest expenses for the 2006 periods included a one-time
charge of $1.5 million.
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INTERVEST BANCSHARES CORPORATION
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CONSOLIDATED FINANCIAL HIGHLIGHTS
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At or For The Period Ended
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Nine-Months Year Year Year Year
Ended Ended Ended Ended Ended
Sep 30, Dec 31, Dec 31, Dec 31, Dec 31,
($in thousands, except per share amounts) 2006 2005 2004 2003 2002
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BALANCE SHEET HIGHLIGHTS:
Total assets . . . . . . . . . . . . . . . . . $ 1,970,106 $1,706,423 $1,316,751 $ 911,523 $ 686,443
Asset growth rate. . . . . . . . . . . . . . . 15% 30% 44% 33% 34%
Total loans, net of unearned fees. . . . . . . $ 1,492,352 $1,367,986 $1,015,396 $ 671,125 $ 489,912
Loan growth rate . . . . . . . . . . . . . . . 9% 35% 51% 37% 33%
Total deposits . . . . . . . . . . . . . . . . $ 1,601,124 $1,375,330 $ 993,872 $ 675,513 $ 505,958
Deposit growth rate. . . . . . . . . . . . . . 16% 38% 47% 34% 40%
Loans/deposits (Intervest National Bank) . . . 84% 88% 86% 79% 76%
Borrowed funds and accrued interest payable. . $ 174,080 $ 155,725 $ 202,682 $ 140,383 $ 114,032
Stockholders' equity . . . . . . . . . . . . . $ 154,402 $ 136,178 $ 90,094 $ 75,385 $ 53,126
Common shares outstanding (1). . . . . . . . . 7,855,490 7,823,058 6,271,433 5,988,377 4,703,087
Common book value per share. . . . . . . . . . $ 19.66 $ 17.41 $ 14.37 $ 12.59 $ 11.30
Market price per common share. . . . . . . . . $ 43.56 $ 24.04 $ 19.74 $ 14.65 $ 10.80
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ASSET QUALITY HIGHLIGHTS
Nonperforming loans. . . . . . . . . . . . . . $ 7,672 $ 750 $ 4,607 $ 8,474 $ -
Allowance for loan losses. . . . . . . . . . . $ 17,038 $ 15,181 $ 11,106 $ 6,580 $ 4,611
Loans ninety days past due and still accruing. $ 18,639 $ 2,649 $ - $ - $ -
Loan recoveries (2). . . . . . . . . . . . . . $ - $ - $ - $ - $ 107
Loan chargeoffs (3). . . . . . . . . . . . . . $ - $ - $ - $ - $ 150
Foreclosed real estate . . . . . . . . . . . . $ - $ - $ - $ - $ 1,081
Allowance for loan losses / net loans. . . . . 1.14% 1.11% 1.09% 0.98% 0.94%
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STATEMENT OF OPERATIONS HIGHLIGHTS:
Interest and dividend income . . . . . . . . . $ 94,563 $ 97,881 $ 66,549 $ 50,464 $ 43,479
Interest expense . . . . . . . . . . . . . . . 56,433 57,447 38,683 28,564 26,325
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Net interest and dividend income . . . . . . . 38,130 40,434 27,866 21,900 17,154
Provision for loan losses. . . . . . . . . . . 1,857 4,075 4,526 1,969 1,274
Noninterest income . . . . . . . . . . . . . . 4,909 6,594 5,140 3,321 2,218
Noninterest expenses . . . . . . . . . . . . . 9,730 10,703 8,251 7,259 6,479
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Earnings before income taxes . . . . . . . . . 31,452 32,250 20,229 15,993 11,619
Provision for income taxes . . . . . . . . . . 13,740 14,066 8,776 6,873 4,713
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Net earnings . . . . . . . . . . . . . . . . . $ 17,712 $ 18,184 $ 11,453 $ 9,120 $ 6,906
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Basic earnings per share . . . . . . . . . . . $ 2.26 $ 2.65 $ 1.89 $ 1.85 $ 1.71
Diluted earnings per share . . . . . . . . . . $ 2.13 $ 2.47 $ 1.71 $ 1.53 $ 1.37
Adjusted net earnings used to calculate
diluted earnings per share . . . . . . . $ 17,825 $ 18,399 $ 11,707 $ 9,572 $ 7,342
Average common shares used to calculate:
Basic earnings per share . . . . . . . . . 7,840,289 6,861,887 6,068,755 4,938,995 4,043,619
Diluted earnings per share . . . . . . . . 8,370,601 7,449,658 6,826,176 6,257,720 5,348,121
Net interest margin. . . . . . . . . . . . . . 2.85% 2.70% 2.52% 2.90% 2.88%
Return on average assets (4) . . . . . . . . . 1.31% 1.20% 1.02% 1.19% 1.13%
Return on average equity (4) . . . . . . . . . 16.28% 16.91% 14.14% 15.34% 15.56%
Effective income tax rate. . . . . . . . . . . 43.69% 43.62% 43.38% 42.98% 40.56%
Efficiency ratio (5) . . . . . . . . . . . . . 23% 23% 25% 29% 33%
Full-service banking offices . . . . . . . . . 6 6 6 6 6
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(1) The increase of 32,432 shares in 2006 from 2005 was from the conversion of
convertible debentures into Class A common stock. The increase in shares in
2005 from 2004 was due to 1,436,468 from a public offering of Class A
common stock and 115,157 from the conversion of convertible debentures into
Class A common stock. The increase in 2004 from 2003 was due to 42,510 from
the exercise of Class A common stock warrants and 240,546 from the
conversion of convertible debentures. The increase in 2003 from 2002 was
due to the following: 945,717 from the exercise of Class A common stock
warrants; 309,573 from the conversion of convertible debentures; and 30,000
from newly issued Class B common stock in connection with the acquisition
of Intervest Securities Corporation.
(2) The amount for 2002 represents proceeds received from the sale of
collateral from a loan that was charged off prior to 1997.
(3) The amount for 2002 represents a chargeoff taken in connection with the
transfer of a nonperforming loan to foreclosed real estate.
(4) Returns for the nine-month period have been annualized.
(5) Noninterest expenses (excluding the provision for loan losses) as a
percentage of net interest and dividend income plus noninterest income.
Noninterest expenses for the 2006 period included a one-time charge of $1.5
million.
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