updated 1/28/2011 8:17:33 AM ET 2011-01-28T13:17:33

HOUSTON, Jan. 28, 2011 (GLOBE NEWSWIRE) -- Encore Bancshares, Inc. (Nasdaq:EBTX) today announced its financial results for the fourth quarter of 2010.

Fourth Quarter Highlights

Completed sale of Florida franchise on December 31, 2010

Included in the sale:

  • $180.8 million of deposits
  • $61.5 million of loans
  • 4 branches

Continued growth of Texas franchise compared with December 31, 2009

  • Deposit growth of 10.0%
  • Commercial loan growth of 12.0%
  • Demand deposits were 20.9% of total deposits, up from 14.6%
  • Assets under management grew 6.9% to $2.9 billion

Significant improvement in credit quality

  • Nonperforming assets decreased $24.9 million, or 39.7%, compared with September 30, 2010
  • Allowance for loan losses of 2.02% of loans, excluding loans held for sale

Capital ratios continue to be strong

  • Estimated tier 1 capital ratio of 15.06%
  • Tangible common equity ratio of 6.86%

"With the completion of the sale of our Florida operations, our sole focus will be Houston, which we believe is leading the rebounding economy," said James S. D'Agostino, Jr., Chairman and Chief Executive Officer of Encore Bancshares, Inc. "We are very optimistic about our growth potential in Houston as we believe we can benefit from the disruptions local customers are likely to experience from other bank consolidations. We will continue providing the highest level of personalized service in the Houston market."

Earnings

For the three months ended December 31, 2010, our net earnings were $420,000, compared with net earnings of $1.6 million for the same period of 2009. Loss per diluted common share for the fourth quarter of 2010 was $0.01, compared with earnings per diluted common share of $0.09 for the same period of 2009, after deducting preferred dividends for each period.

For the twelve months ended December 31, 2010, the net loss was $22.9 million, compared with net earnings of $1.8 million for the same period of 2009. The loss per diluted common share was $2.25, compared with a net loss of $0.04 per diluted common share for the comparable period of 2009, after deducting preferred dividends for each period. The loss was due primarily to credit costs and write downs of assets held for sale in Florida.

Net Interest Income

Net interest income on a tax equivalent basis (TE) for the fourth quarter of 2010 was $11.2 million, a decrease of $530,000, or 4.5% compared with the same period of 2009. The net interest margin (TE) contracted 15 basis points to 2.89% during the same comparison period. Net interest income (TE) for the twelve months ended December 31, 2010 was $45.0 million, a decrease of $2.0 million, or 4.2%, compared with the same period of 2009. The net interest margin (TE) contracted 17 basis points during this same comparison period. The decrease in margin for both periods was due primarily to the decrease in loans, due in part to the sale of loans in Florida as we exited the Florida market, and an offsetting increase in short term lower yielding investments. On a linked quarter basis (compared with the immediately preceding quarter), net interest income (TE) was relatively flat, as average earning assets decreased by approximately $16.5 million, and the net interest margin increased 6 basis points.  The increase in margin was due primarily to an increase in securities, and an offsetting decrease in temporary investments. Average temporary investments, which we were holding partly in anticipation of the Florida operations sale which closed December 31, were $243.3 million or 15.8% of average interest earning assets for the fourth quarter of 2010.

Noninterest Income

Noninterest income was $9.9 million for the fourth quarter of 2010, an increase of $1.8 million, or 21.8%, compared with the same period of 2009. In the fourth quarter of 2010, we recorded a $2.6 million gain on sale of branches related to the sale of our Florida operations. This one time gain was partly offset by a $1.9 million reduction in the gain on sale of securities compared with the fourth quarter of 2009. In addition, trust and investment management fees increased $565,000, or 12.4%, as assets under management grew 6.9% due primarily to the improvements in the equity markets. We also had a gain of $319,000 in the fourth quarter on the sale of $6.4 million of second mortgage loans.

Noninterest Expense

Noninterest expense was $18.3 million for the fourth quarter of 2010, an increase of $3.6 million, compared with the same period of 2009. The increase was due primarily to a $3.8 million write down of assets held for sale in Florida and compensation expense. Compensation expense rose in part due to the addition of new lenders earlier in the year to grow our commercial lending platform in Houston.  These expenses were partially offset by lower expenses for foreclosed real estate.

Segment Earnings

On a segment basis, our banking segment showed a net loss of $394,000, compared with earnings of $753,000 in the same period of 2009. Our wealth management group had net earnings of $1.0 million for the fourth quarter of 2010, essentially the same as the comparable period of 2009. Our insurance agency showed essentially flat earnings compared with the same period of 2009.

Loans

Period end loans, including loans held for sale, were $933.3 million at December 31, 2010, a decrease of $146.0 million, or 13.5%, compared with December 31, 2009. This decrease was due primarily to the sale of Florida loans as we exited the Florida market. Commercial loans in Texas grew 12.0% in the same comparison period. 

Deposits

Period end deposits were $1.1 billion, at December 31, 2010, a decrease of $141.4 million, or 11.9%, compared with December 31, 2009. The decrease was due primarily to the sale of approximately $231.3 million in Florida deposits in May and December. Total Texas deposits increased 10.0% compared with year end 2009. Noninterest-bearing deposits at December 31, 2010 were $219.8 million, an increase of $65.2 million, or 42.2%, and represent 20.9% of total deposits at such date.  Average deposits were $1.2 billion for the fourth quarter of 2010, an increase of $59.0 million, or 5.0%, compared with the same period of 2009.

Credit Quality and Capital Ratios

The provision for loan losses was $2.6 million for the fourth quarter of 2010, compared with $3.0 million for the same period of 2009. Net charge-offs for the fourth quarter were $4.9 million, or 1.95% of average total loans on an annualized basis, compared with $4.1 million, or 1.49% of average total loans on an annualized basis in the same period of 2009. Commercial loan charge-offs were $2.4 million, which consisted primarily of a land loan in Houston for which a specific reserve was provided in the second quarter of 2010.  The allowance for loan losses was $18.6 million, or 2.02% of loans, excluding loans held for sale, at December 31, 2010, compared with $26.5 million, or 2.46% of loans at December 31, 2009.  

At December 31, 2010, nonperforming assets were $37.7 million compared with $62.5 million at September 30, 2010 and $50.6 million at December 31, 2009. Nonperforming loans were $28.4 million at December 31, 2010, compared with $51.7 million at September 30, 2010, a decrease of $23.3 million, or 45.1%. The decrease in nonperforming loans was due mainly to the bulk sale of Florida loans in the fourth quarter, which included $19.8 million in nonperforming loans. Of the $13.2 million of nonperforming loans in Florida at December 31, 2010, $8.6 million were held for sale. Nonperforming loans in Texas were $15.2 million at December 31, 2010, compared with $17.4 million at September 30, 2010.

Investment in real estate was $9.3 million at December 31, 2010, compared with $10.9 million at September 30, 2010, a decrease of $1.6 million, or 14.3%. The decrease resulted primarily from the sale of a Houston residential property. Restructured loans still accruing were $804,000 at December 31, 2010, compared with $2.6 million at September 30, 2010. The decrease was due primarily to a land loan in Florida that was sold.

As of December 31, 2010, our estimated Tier 1 risk-based, total risk-based and leverage capital ratios were 15.06%, 16.62%, and 9.06%, 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 $12.11 and $8.57 at December 31, 2010, compared with $12.33 and $8.76 at September 30, 2010.

Conference Call

Encore will host a conference call for investors and analysts that will be broadcast live via the Internet on Friday, January 28, 2011, 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, January 31, 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".

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. 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; 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 As of and for the Years 
  Months Ended December 31, 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  18,289  14,687  76,676  54,424
Net earnings (loss) before income taxes  74  2,018  (35,603)  2,748
Income tax expense (benefit)  (346)  435  (12,693)  962
Net earnings (loss)  $ 420  $ 1,583  $ (22,910)  $ 1,786
         
Earnings (loss) available to common shareholders  $ (137)  $ 1,029  $ (25,134)  $ (428)
         
Common Share Data:        
Basic earnings (loss) per share (1)  $ (0.01)  $ 0.10  $ (2.25)  $ (0.04)
Diluted earnings (loss) per share (1)  (0.01)  0.09  (2.25)  (0.04)
Book value per share  12.11  15.01  12.11  15.01
Tangible book value per share (2)  8.57  11.10  8.57  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 0.10% 0.39% (1.40)% 0.11%
Return on average common equity (1) (0.39)% 2.58% (16.54)% (0.27)%
Return on average tangible common equity (1)(2) (0.54)% 3.27% (22.62)% (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. 
 
Encore Bancshares, Inc. and Subsidiaries
           
CONSOLIDATED BALANCE SHEETS
           
(Unaudited, dollars in thousands, except per share data)
           
   Dec 31,   Sept 30,   June 30,   March 31,   Dec 31, 
   2010   2010   2010   2010   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  12,838  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  47,279  44,430  40,085  32,176  31,414
Other assets held-for-sale  --  3,256  3,269  3,344  --
   $ 1,467,817  $ 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   5,961  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  167,961  169,706  177,873  190,210  186,668
   $ 1,467,817  $ 1,650,662  $ 1,625,615  $ 1,637,916  $ 1,635,355
           
Ratios and Per Share Data:          
Leverage ratio (1) 9.06% 9.00% 9.93% 10.73% 10.55%
Tier 1 risk-based capital ratio (1) 15.06% 13.26% 14.59% 15.56% 14.80%
Total risk-based capital ratio (1) 16.62% 14.79% 15.86% 16.82% 16.07%
Book value per share  $ 12.11  $ 12.33  $ 13.06  $ 14.43  $ 15.01
Tangible book value per share (2)  8.57  8.76  9.47  10.76  11.10
Tangible common equity to tangible assets (2) 6.86% 6.19% 6.80% 7.52% 7.31%
           
(1) Estimated at December 31, 2010.
(2) Non-GAAP measure. See calculation of tangible common equity in subsequent table. 
 
 
Encore Bancshares, Inc. and Subsidiaries
               
CONSOLIDATED STATEMENTS OF OPERATIONS
               
(Unaudited, amounts in thousands, except per share data)
               
  Three Months Ended Years Ended
  Dec 31, Sept 30, June 30, March 31, Dec 31, December 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  3,820  1,012  2,793  2,535  --  10,160  --
Other  1,119  1,051  1,431  1,428  1,077  5,029  4,220
Total noninterest expense  18,289  20,728  19,395  18,264  14,687  76,676  54,424
Net earnings (loss) before income taxes   74  (12,330)  (18,522)  (4,825)  2,018  (35,603)  2,748
Income tax expense (benefit)  (346)  (3,904)  (5,869)  (2,574)  435  (12,693)  962
Net earnings (loss)  $ 420  $ (8,426)  $ (12,653)  $ (2,251)  $ 1,583  $ (22,910)  $ 1,786
Earnings (loss) available to common shareholders  $ (137)  $ (8,981)  $ (13,209)  $ (2,807)  $ 1,029  $ (25,134)  $ (428)
Earnings (loss) per common share:              
 Basic  $ (0.01)  $ (0.79)  $ (1.16)  $ (0.27)  $ 0.10  $ (2.25)  $ (0.04)
 Diluted  (0.01)  (0.79)  (1.16)  (0.27)  0.09  (2.25)  (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
 
 
Encore Bancshares, Inc. and Subsidiaries
           
AVERAGE CONSOLIDATED BALANCE SHEETS
           
(Unaudited, dollars in thousands)
           
  Three Months Ended 
  Dec 31, Sept 30, June 30, March 31, Dec 31,
   2010   2010   2010   2010   2009 
           
Assets:          
Interest-earning assets:          
Loans  $ 1,004,472  $ 1,056,657  $ 1,059,695  $ 1,064,375  $ 1,085,616
Securities  292,241  209,365  186,777  230,390  241,267
Federal funds sold and other  243,304  290,541  275,148  220,019  205,944
Total interest-earning assets  1,540,017  1,556,563  1,521,620  1,514,784  1,532,827
Less: Allowance for loan losses  (20,433)  (27,144)  (24,796)  (26,672)  (27,197)
Noninterest-earning assets  131,861  128,197  122,236  126,284  111,470
Noninterest-earning assets held-for-sale  4,403  4,196  4,481  7,377  --
Total assets  $ 1,655,848  $ 1,661,812  $ 1,623,541  $ 1,621,773  $ 1,617,100
           
Liabilities and shareholders' equity:          
Interest-bearing liabilities:          
Interest checking  $ 148,875  $ 139,820  $ 145,856  $ 153,023  $ 194,642
Money market and savings   298,725  279,084  238,000  240,292  312,987
Time deposits  386,634  410,318  415,615  400,451  507,102
Interest-bearing deposits held-for-sale  167,869  171,805  201,919  219,809  --
Total interest-bearing deposits  1,002,103  1,001,027  1,001,390  1,013,575  1,014,731
Borrowings and repurchase agreements  220,042  220,068  218,794  220,759  222,428
Junior subordinated debentures  20,619  20,619  20,619  20,619  20,619
Total interest-bearing liabilities  1,242,764  1,241,714  1,240,803  1,254,953  1,257,778
Noninterest-bearing liabilities:          
Noninterest-bearing deposits  220,169  220,166  168,021  146,779  163,333
Noninterest-bearing deposits held-for-sale  14,767  14,983  17,830  17,213  -- 
Other liabilities  8,019  7,132  6,384  15,412  8,922
Other liabilities held-for-sale  197  216  253  303  --
Total liabilities  1,485,916  1,484,211  1,433,291  1,434,660  1,430,033
Shareholders' equity   169,932  177,601  190,250  187,113  187,067
Total liabilities and shareholders' equity   $ 1,655,848  $ 1,661,812  $ 1,623,541  $ 1,621,773  $ 1,617,100
 
 
Encore Bancshares, Inc. and Subsidiaries
             
SELECTED FINANCIAL DATA
             
(Unaudited, dollars in thousands)
             
  Dec 31, Sept 30, June 30, March 31, Dec 31,  
Loan Portfolio:  2010   2010   2010   2010   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  12,838  111,505  77,914  81,953  1,058  
Total loans  $ 933,295  $ 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)  13,233  34,251  41,773  31,851  26,080  
Total nonaccrual loans (1)  28,400  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  $ 37,698  $ 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 4.00% 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  85,160  124,132  132,514  130,898  191,372  
Core deposits   757,262  768,697  726,473  681,969  871,488  
Time deposits $100 and greater  271,943  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.  
 
 
Encore Bancshares, Inc. and Subsidiaries
           
ALLOWANCE FOR LOAN LOSSES
           
(Unaudited, dollars in thousands)
           
  Three Months Ended
  Dec 31, Sept 30, June 30, March 31, Dec 31,
   2010   2010   2010   2010   2009 
           
Allowance for loan losses at beginning of quarter  $ 20,967  $ 26,675  $ 25,132  $ 26,501  $ 27,575
           
Charge-offs:          
Commercial:          
Commercial  (21)  (160)  (402)  (382)  (326)
Commercial real estate  (14)  (10,049)  (10,118)  (4,346)  (701)
Real estate construction   (2,329)  (3,407)  (3,101)  (322)  (3,142)
Total commercial   (2,364)  (13,616)  (13,621)  (5,050)  (4,169)
           
Consumer:          
Residential real estate first lien   (1,261)  (503)  (1,707)  (618)  (813)
Residential real estate second lien   (1,106)  (879)  (1,301)  (434)  (626)
Home equity lines   (430)  (664)  (237)  (699)  (677)
Consumer installment - indirect  (7)  (53)  (68)  (77)  (100)
Consumer other   (2)  (20)  (180)  (7)  (3)
Total consumer  (2,806)  (2,119)  (3,493)  (1,835)  (2,219)
           
Total charge-offs  (5,170)  (15,735)  (17,114)  (6,885)  (6,388)
           
Recoveries:          
Commercial:          
Commercial  52  157  543  131  2,269
Commercial real estate   --  --  17  --  --
Real estate construction   54  1  3  46  --
Total commercial   106  158  563  177  2,269
           
Consumer:          
Residential real estate first lien   --  161  9  134  1
Residential real estate second lien   31  36  27  132  12
Home equity lines   80  11  11  78  4
Consumer installment - indirect  23  33  33  34  18
Consumer other   5  29  1  1  1
Total consumer  139  270  81  379  36
           
Total recoveries  245  428  644  556  2,305
           
Net charge-offs  (4,925)  (15,307)  (16,470)  (6,329)  (4,083)
           
Provision for loan losses  2,597  9,599  18,013  4,960  3,009
           
Allowance for loan losses at end of quarter  $ 18,639  $ 20,967  $ 26,675  $ 25,132  $ 26,501
 
 
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  13,552  16,133  14,747  13,675  10,591  58,107  37,901
Earnings (loss) before income taxes  (1,186)  (13,644)  (19,769)  (6,246)  696  (40,845)  (2,232)
Income tax expense (benefit)  (792)  (4,370)  (6,311)  (3,076)  (57)  (14,549)  (896)
Net earnings (loss)   $ (394)  $ (9,274)  $ (13,458)  $ (3,170)  $ 753  $ (26,296)  $ (1,336)
Total assets at quarter end  $ 1,467,189  $ 1,650,297  $ 1,628,706  $ 1,645,468  $ 1,644,083  $ 1,467,189  $ 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   546  438  385  388  575  1,757  1,788
Net earnings   $ 1,006  $ 792  $ 702  $ 708  $ 1,013  $ 3,208  $ 3,026
Total assets at quarter end  $ 63,244  $ 63,933  $ 62,518  $ 61,316  $ 59,618  $ 63,244  $ 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   4  134  161  218  21  517  498
Net earnings   $ 2  $ 251  $ 297  $ 404  $ 11  $ 954  $ 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  $ (71,711)  $ (72,631)  $ (74,323)  $ (76,921)  $ (76,308)  $ (71,711)  $ (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  18,289  20,728  19,395  18,264  14,687  76,676  54,424
Earnings (loss) before income taxes  74  (12,330)  (18,522)  (4,825)  2,018  (35,603)  2,748
Income tax expense (benefit)   (346)  (3,904)  (5,869)  (2,574)  435  (12,693)  962
Net earnings (loss)   $ 420  $ (8,426)  $ (12,653)  $ (2,251)  $ 1,583  $ (22,910)  $ 1,786
Total assets at quarter end  $ 1,467,817  $ 1,650,662  $ 1,625,615  $ 1,637,916  $ 1,635,355  $ 1,467,817  $ 1,635,355
 
 
Encore Bancshares, Inc. and Subsidiaries
             
TAXABLE-EQUIVALENT (TE) YIELD ANALYSIS (1)
             
(Unaudited, dollars in thousands)
             
  Three Months Ended December 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 - TE yield  $ 1,004,472  $ 14,702 5.81%  $ 1,085,616  $ 16,237 5.93%
Securities - TE yield  292,241  1,935 2.63%  241,267  2,237 3.68%
Federal funds sold and other  243,304  207 0.34%  205,944  210 0.40%
Total interest-earning assets - TE yield  1,540,017  16,844 4.34%  1,532,827  18,684 4.84%
Less: Allowance for loan losses  (20,433)      (27,197)    
Noninterest-earning assets  131,861      111,470    
Noninterest-earning assets held-for-sale  4,403      --    
Total assets  $ 1,655,848      $ 1,617,100    
             
Liabilities and shareholders' equity:            
Interest-bearing liabilities:            
Interest checking  $ 148,875  $ 90 0.24%  $ 194,642  $ 236 0.48%
Money market and savings  298,725  368 0.49%  312,987  780 0.99%
Time deposits  386,634  2,104 2.16%  507,102  3,491 2.73%
Interest-bearing deposits held-for-sale  167,869  636 1.50%  --   --   
Total interest-bearing deposits  1,002,103  3,198 1.27%  1,014,731  4,507 1.76%
Borrowings and repurchase agreements  220,042  2,128 3.84%  222,428  2,129 3.80%
Junior subordinated debentures  20,619  298 5.73%  20,619  298 5.73%
Total interest-bearing liabilities  1,242,764  5,624 1.80%  1,257,778  6,934 2.19%
Noninterest-bearing liabilities:            
Noninterest-bearing deposits  220,169      163,333    
Noninterest-bearing deposits held-for-sale  14,767      --    
Other liabilities  8,019      8,922    
Other liabilities held-for-sale  197      --    
Total liabilities  1,485,916      1,430,033    
Shareholders' equity   169,932      187,067    
Total liabilities and shareholders' equity   $ 1,655,848      $ 1,617,100    
             
Net interest income - TE    $ 11,220      $ 11,750  
             
Net interest spread - TE     2.54%     2.65%
Net interest margin - TE     2.89%     3.04%
             
(1) Non-GAAP measure. See calculation of taxable-equivalent amounts in subsequent table.
 
 
Encore Bancshares, Inc. and Subsidiaries
             
TAXABLE-EQUIVALENT (TE) YIELD ANALYSIS (1)
             
(Unaudited, dollars in thousands)
             
  Years Ended December 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 - TE yield  $ 1,046,164  $ 61,433 5.87%  $ 1,146,839  $ 68,280 5.95%
Securities - TE yield  229,807  6,964 3.03%  220,317  8,698 3.95%
Federal funds sold and other  257,408  894 0.35%  148,059  702 0.47%
Total interest-earning assets - TE yield  1,533,379  69,291 4.52%  1,515,215  77,680 5.13%
Less: Allowance for loan losses  (24,751)      (25,503)    
Noninterest-earning assets  127,162      110,963    
Noninterest-earning assets held-for-sale  5,104      --    
Total assets  $ 1,640,894      $ 1,600,675    
             
Liabilities and shareholders' equity:            
Interest-bearing liabilities:            
Interest checking  $ 146,863  $ 415 0.28%  $ 186,440  $ 888 0.48%
Money market and savings  264,227  1,763 0.67%  273,188  2,976 1.09%
Time deposits  403,236  9,215 2.29%  537,963  17,149 3.19%
Interest-bearing deposits held-for-sale  190,157  3,207 1.69%  --   --   
Total interest-bearing deposits  1,004,483  14,600 1.45%  997,591  21,013 2.11%
Borrowings and repurchase agreements  219,914  8,510 3.87%  231,648  8,493 3.67%
Junior subordinated debentures  20,619  1,194 5.79%  20,619  1,225 5.94%
Total interest-bearing liabilities  1,245,016  24,304 1.95%  1,249,858  30,731 2.46%
Noninterest-bearing liabilities:            
Noninterest-bearing deposits  189,071      152,873    
Noninterest-bearing deposits held-for-sale  16,188      --    
Other liabilities  9,210      10,334    
Other liabilities held-for-sale  242      --    
Total liabilities  1,459,727      1,413,065    
Shareholders' equity   181,167      187,610    
Total liabilities and shareholders' equity   $ 1,640,894      $ 1,600,675    
             
Net interest income - TE    $ 44,987      $ 46,949  
             
Net interest spread - TE     2.57%     2.67%
Net interest margin - TE     2.93%     3.10%
             
(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)
           
  Dec 31, Sept 30, June 30, March 31, Dec 31,
   2010   2010   2010   2010   2009 
           
Shareholders' equity (GAAP)  $ 167,961  $ 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)  $ 97,946  $ 99,663  $ 107,802  $ 120,112  $ 116,542
           
Total assets (GAAP)  $ 1,467,817  $ 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  $ 1,427,302  $ 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   Years Ended
  December 31,   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. 
CONTACT: L. Anderson Creel
         Chief Financial Officer
         713.787.3138
         
         James S. D'Agostino, Jr.
         Chairman and CEO
         713.787.3103

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Card type Today +/- Last Week
Low Interest Cards 13.57%
13.57%
Cash Back Cards 17.91%
17.91%
Rewards Cards 17.15%
17.15%
Source: Bankrate.com