Encore Bancshares Inc. in Houston reported a 33% drop in its first-quarter profit, from the year earlier, to $1.2 million, largely due to a bigger provision for loan losses and a $417,000 after-tax severance charge for a former executive.
The $1.5 billion-asset company earned 11 cents per share, missing the average of analyst estimates in a Thomson Reuters survey by a nickel.
Loans grew about 24%, to $1.2 billion, from the year earlier, and 5.4% from the previous quarter. Deposits increased 11.4% from the year earlier and 6.7% from the previous quarter, to $1.1 billion.
The company increased its loss provision by 67%, to $1.5 million, to reflect loan growth as well as increases in nonperforming loans and chargeoffs.
Nonperforming assets were $16.5 million, or 1.42% of total loans, compared to $10.3 million, or 1.11% of the total, a year earlier. Net chargeoffs grew from 0.07% of total loans during the first quarter last year to 0.38%, or $1.1 million, this year.
The net interest margin continued to improve as the company replaced relatively low-yielding mortgages and securities with higher-yielding loans. The net interest margin at the end of the quarter was 2.94%, compared to 2.55% a year earlier and 2.85% in the fourth quarter.
