U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED June 30, 2000
Commission File No. 33-22976-NY
INTERVEST CORPORATION OF NEW YORK
(Exact name of registrant as specified in its charter)
New York 13-3415815
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(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation)
10 Rockefeller Plaza, Suite 1015
New York, New York 10020-1903
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(Address of principal executive offices)
(212) 218-2800
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act
of 1934 during the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days:
YES XX NO
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Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date:
Title of Each Class: Shares Outstanding:
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Common Stock, no par value per share 100 shares outstanding at July 31, 2000
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INTERVEST CORPORATION OF NEW YORK AND SUBSIDIARIES
FORM 10-Q
June 30, 2000
TABLE OF CONTENTS
I. FINANCIAL INFORMATION Page
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Item 1. Financial Statements
Condensed Consolidated Balance Sheets
as of June 30, 2000 (Unaudited) and December 31, 1999 ............ 2
Condensed Consolidated Statements of Operations (Unaudited)
for the Quarters and Six-Months Ended June 30, 2000 and 1999 ...... 3
Condensed Consolidated Statements of Changes in Stockholders'
Equity (Unaudited) for the Six-Months Ended June 30, 2000
and 1999........................................................... 4
Condensed Consolidated Statements of Cash Flows (Unaudited)
for the Six-Months Ended June 30, 2000 and 1999.................... 5
Notes to Condensed Consolidated Financial Statements (Unaudited)...... 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations...................................... 9
Item 3. Quantitative and Qualitative Disclosures about Market Risk.... 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.......................................... 11
Item 2. Changes in Securities and Use of Proceeds.................. 11
Item 3. Defaults Upon Senior Securities............................. 12
Item 4. Submission of Matters to a Vote of Security Holders......... 12
Item 5. Other Information........................................... 12
Item 6. Exhibits and Reports on Form 8-K ........................... 12
Signatures................................................................ 12
Private Securities Litigation Reform Act Safe Harbor Statement
The Company is making this statement in order to satisfy the "Safe Harbor"
provision contained in the Private Securities Litigation Reform Act of 1995. The
statements contained in this report on Form 10-Q that are not statements of
historical fact may include forward-looking statements that involve a number of
risks and uncertainties. Such forward-looking statements are made based on
management's expectations and beliefs concerning future events impacting the
Company and are subject to uncertainties and factors relating to the Company's
operations and economic environment, all of which are difficult to predict and
many of which are beyond the control of the Company, that could cause actual
results of the Company to differ materially from those matters expressed in or
implied by forward-looking statements. The following factors are among those
that could cause actual results to differ materially from the forward-looking
statements: changes in general economic, market and regulatory conditions, the
development of an interest rate environment that may adversely affect the
Company's net interest income, other income or cash flow anticipated from the
Company's operations, investment and lending activities; and changes in laws and
regulations affecting the Company.
1
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PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Intervest Corporation of New York and Subsidiaries
Condensed Consolidated Balance Sheets
<TABLE>
(Unaudited)
June 30, December 31,
($ in thousands) 2000 1999
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<S> <C> <C>
ASSETS
Cash and due from banks $ 187 $ 1,535
Short-term investments 4,648 29,219
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Total cash and cash equivalents 4,835 30,754
Mortgage loans receivable, net of unearned fees and discount (note 2) 60,234 63,290
Accrued interest receivable 644 646
Income taxes receivable 475 320
Fixed assets, net 86 96
Deferred debenture offering costs, net (note 3) 2,462 3,242
Other assets 346 392
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Total assets $69,082 $98,740
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LIABILITIES
Mortgage escrow funds payable $ 1,582 $ 1,854
Subordinated debentures payable (note 4) 53,400 77,400
Debenture interest payable at maturity (note 4) 5,029 7,200
Other liabilities 116 146
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Total liabilities 60,127 86,600
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STOCKHOLDERS' EQUITY
Common stock (no par value, 100 and 31.84 shares
issued and outstanding, respectively) 2,100 2,000
Class B common stock (no par value, 15.89 shares
issued and outstanding at December 31, 1999) - 100
Additional paid-in-capital 3,509 3,509
Retained earnings 3,346 6,531
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Total stockholders' equity 8,955 12,140
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Total liabilities and stockholders' equity $69,082 $98,740
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See accompanying notes to condensed consolidated financial statements.
</TABLE>
2
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Intervest Corporation of New York and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
Quarter Ended Six-Months Ended
June 30, June 30,
----------- ------------ ------------ -----------
($ in thousands) 2000 1999 2000 1999
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<S> <C> <C> <C> <C>
REVENUES
Interest and fee income on mortgages $1,975 $2,472 $3,976 $4,813
Interest income on short-term investments 182 294 550 607
----------- ------------ ------------ -----------
Total interest income 2,157 2,766 4,526 5,420
Gain on early repayment of mortgages 17 27 33 302
Other income (note 5) 116 36 197 52
----------------------------------------------------------------------------- ----------- ------------ ------------ -----------
Total revenues 2,290 2,829 4,756 5,774
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EXPENSES
Interest on debentures 1,734 2,034 3,769 4,076
Amortization of deferred debenture offering costs 178 225 399 453
General and administrative 274 289 552 543
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Total expenses 2,186 2,548 4,720 5,072
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Income before income taxes and extraordinary item 104 281 36 702
Provision for income taxes 48 128 15 321
Extraordinary item, net of tax (note 4) (206) - (206) -
----------------------------------------------------------------------------- ----------- ------------ ------------ -----------
Net (loss) income $ (150) $153 $ (185) $381
----------------------------------------------------------------------------- ----------- ------------ ------------ -----------
See accompanying notes to condensed consolidated financial statements.
</TABLE>
3
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Intervest Corporation of New York and Subsidiaries
Condensed Consolidated Statements of Changes in Stockholders' Equity
(Unaudited)
<TABLE>
Six-Months Ended
June 30,
-----------------------------
($ in thousands) 2000
1999
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<S> <C> <C>
COMMON STOCK
Balance at beginning of period $ 2,000 $ 2,000
Retirement of 31.84 shares (2,000) -
Issuance of 100 shares to Parent Company 2,100 -
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Balance at end of period 2,100 2,000
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CLASS B COMMON STOCK
Balance at beginning of period 100 100
Retirement of 15.89 shares (100) -
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Balance at end of period - 100
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ADDITIONAL PAID-IN-CAPITAL, COMMON
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Balance at beginning and end of period 3,509 3,509
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RETAINED EARNINGS
Balance at beginning of period 6,531 5,959
Cash dividend declared and paid to Parent Company (3,000) -
Net (loss) income for the period (185) 381
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Balance at end of period 3,346 6,340
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Total stockholders' equity at end of period $ 8,955 $11,949
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See accompanying notes to condensed consolidated financial statements.
</TABLE>
4
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Intervest Corporation of New York and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
Six-Months Ended
June 30,
---------------- -----------------
($ in thousands) 2000 1999
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<S> <C> <C>
OPERATING ACTIVITIES
Net (loss) income $ (185) $ 381
Adjustments to reconcile net (loss) income to net cash provided by
operating activities:
Depreciation 10 2
Amortization of deferred debenture offering costs 780 453
Amortization of premiums, fees and discounts, net (347) (195)
Gain on early repayment of mortgages (33) (302)
(Decrease) increase in mortgage escrow funds payable (272) 594
(Decrease) increase in debenture interest payable at maturity (2,171) 526
Change in all other assets and liabilities, net 71 (75)
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Net cash (used) provided by operating activities (2,147) 1,384
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INVESTING ACTIVITIES
Principal repayments (originations) of mortgage loans receivable, net 3,228 (6,390)
Purchases of premises and equipment, net - (62)
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Net cash provided (used) by investing activities 3,228 (6,452)
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FINANCING ACTIVITIES
Proceeds from issuance of debentures, net of offering costs - 488
Repayments of debentures (24,000) (6,000)
Dividends paid to Parent Company (3,000) -
--------------------------------------------------------------------------------- ---------------- -----------------
--------------------------------------------------------------------------------- ---------------- -----------------
Net cash used by financing activities (27,000) (5,512)
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Net decrease in cash and cash equivalents (25,919) (10,580)
Cash and cash equivalents at beginning of period 30,754 27,452
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Cash and cash equivalents at end of period $4,835 $ 16,872
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SUPPLEMENTAL DISCLOSURES Cash paid (received) during the period for:
Interest $5,942 $ 3,551
Income taxes (12) 444
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See accompanying notes to condensed consolidated financial statements.
</TABLE>
5
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Intervest Corporation of New York and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
--------------------------------------------------------------------------------
Note 1 - General
The condensed consolidated financial statements of Intervest Corporation of New
York and Subsidiaries (the "Company") in this report have not been audited
except for the information derived from the audited Consolidated Balance Sheet
as of December 31, 1999. The financial statements in this report should be read
in conjunction with the consolidated financial statements and related notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1999.
The condensed consolidated financial statements include the accounts of
Intervest Corporation of New York and its wholly owned subsidiaries, Intervest
Distribution Corporation and Intervest Realty Servicing Corporation. All
material intercompany accounts and transactions have been eliminated in
consolidation.
The Company is engaged in the real estate business, including the origination
and purchase of real estate mortgage loans, consisting of first mortgage, junior
mortgage and wraparound mortgage loans. The Company's investment policy
emphasizes the investment in mortgage loans on income producing properties.
On March 10, 2000, Intervest Bancshares Corporation (the "Parent Company")
acquired all the outstanding shares of the Company in exchange for 1,250,000
shares of the Parent Company's Class A common stock. Former shareholders of the
Company are officers of the Parent Company and serve on the Boards of Directors
of both companies.
In the opinion of management, all material adjustments necessary for a fair
presentation of financial condition and results of operations for the interim
periods presented in this report have been made. These adjustments are of a
normal recurring nature. The results of operations for the interim periods are
not necessarily indicative of results that may be expected for the entire year
or any other interim period. In preparing the condensed consolidated financial
statements, management is required to make estimates and assumptions that affect
the reported amounts of assets, liabilities, revenues and expenses. Actual
results could differ from those estimates. Certain reclassifications have been
made to prior period amounts to conform to the current periods' presentation.
Note 2 - Allowance for Loan Loss Reserves
Management's periodic evaluation of the need for, or adequacy of the allowance
is based on the Company's past loan loss experience, known and inherent risks in
the portfolio, adverse situations that may affect the borrower's ability to
repay (including the timing of future payments), the estimated value of the
underlying collateral and other relevant factors. This evaluation is inherently
subjective, as it requires material estimates including the amounts and timing
of future cash flows expected to be received on any impaired loans that may be
susceptible to significant change.
Management believes that all loans at June 30, 2000 were collectible. During the
reporting periods in this report, an allowance for loan loss reserves was not
maintained and no loans were classified as nonaccrual or impaired.
Note 3 - Deferred Debenture Offering Costs
Costs related to offerings of debentures are deferred and amortized over the
respective terms of the debentures. Deferred debenture offering costs consist
primarily of underwriter's commissions. At June 30, 2000, deferred debenture
offering costs, net of accumulated amortization, amounted to $2,462,000,
compared to $3,242,000 at December 31, 1999. See note 4 for a discussion of
certain debentures that were retired by the Company.
6
<PAGE>
Intervest Corporation of New York and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
--------------------------------------------------------------------------------
Note 4 - Subordinated Debentures Payable and Extraordinary Item
The following table summarizes debenture payable.
<TABLE>
At June 30, At December 31,
($ in thousands) 2000 1999
---------------------------------------------------------------------- ----------------- --------------------
<S> <C> <C>
Series 06/29/92 - interest at 2% above prime - due April 1, 2000 $ - $7,000
Series 09/13/93 - interest at 2% above prime - due October 1, 2001 - 8,000
Series 01/28/94 - interest at 2% above prime - due April 1, 2002 - 4,500
Series 10/28/94 - interest at 2% above prime - due April 1, 2003 - 4,500
Series 05/12/95 - interest at 2% above prime - due April 1, 2004 9,000 9,000
Series 10/19/95 - interest at 2% above prime - due October 1, 2004 9,000 9,000
Series 05/10/96 - interest at 2% above prime - due April 1, 2005 10,000 10,000
Series 10/15/96 - interest at 2% above prime - due October 1, 2005 5,500 5,500
Series 04/30/97 - interest at 1% above prime - due October 1, 2005 8,000 8,000
Series 11/10/98 - interest at 8% fixed - due January 1, 2001 1,400 1,400
Series 11/10/98 - interest at 81/2% fixed - due January 1, 2003 1,400 1,400
Series 11/10/98 - interest at 9% fixed - due January 1, 2005 2,600 2,600
Series 06/28/99 - interest at 8% fixed - due July 1, 2002 2,500 2,500
Series 06/28/99 - interest at 81/2% fixed - due July 1, 2004 2,000 2,000
Series 06/28/99 - interest at 9% fixed - due July 1, 2006 2,000 2,000
---------------------------------------------------------------------- ----------------- --------------------
$53,400 $77,400
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</TABLE>
The "Prime" refers to the prime rate of Chase Manhattan Bank, which was
9.5% on June 30, 2000, 9% on March 31, 2000 and 8.50% at December 31,
1999.
On March 1, 2000, Series 6/29/92 debentures totaling $7,000,000 in principal and
maturing on April 1, 2000 were redeemed for outstanding principal plus accrued
interest of $1,435,000. In the second quarter of 2000, Series 9/13/93, 1/28/94
and 10/28/94 debentures maturing on October 1, 2001, April 1, 2002 and April 1,
2003, respectively, were redeemed for outstanding principal aggregating
$17,000,000 plus accrued interest totaling $2,535,000. In connection with these
early redemptions, approximately $382,000 of unamortized deferred debenture
offering costs, net of a tax benefit of $176,000, was charged to expense and
reported as an extraordinary item in the second quarter of 2000.
Series 5/12/95, 10/19/95, 5/10/96, 10/15/96 and 4/30/97 debentures have a
maximum interest rate of 12%. The payment of interest on an aggregate of
$18,440,000 of these debentures, which interest is compounded, is deferred until
maturity. The payment of interest on the remaining debentures is made quarterly.
Any debenture holder in the aforementioned Series who has deferred receipt of
interest may at any time elect to receive the deferred interest and subsequently
receive regular payments of interest.
The Series 11/10/98 and Series 6/28/99 debentures accrue and compound interest
quarterly. The holders of these debentures can require the Company to repurchase
the debentures for face amount plus accrued interest each year beginning on July
1, 2001 and July 1, 2002, respectively, provided, however that in no calendar
year will the Company be required to purchase more than $100,000 in principal
amount of each maturity of debentures, on a non-cumulative basis.
All the debentures may be redeemed, in whole or in part, at any time at the
option of the Company, for face value, except for certain debentures issued in
1998, which would be at a premium of 1% if the redemption is prior to January 1,
2001 (for Series 11/10/98 due January 1, 2003 and 2005). All the debentures are
unsecured and subordinate to all present and future senior indebtedness, as
defined.
7
<PAGE>
Intervest Corporation of New York and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
-------------------------------------------------------------------------------
Note 4 - Subordinated Debentures Payable and Extraordinary Item, Continued
Scheduled contractual maturities of debentures as of June 30, 2000 are
summarized as follows:
($ in thousands) Principal Accrued Interest
-------------------------------------------------------- --------------------
For the six-months ended December 31, 2000 $ - $ -
For the year ended December 31, 2001 1,400 184
For the year ended December 31, 2002 2,500 187
For the year ended December 31, 2003 1,400 197
For the year ended December 31, 2004 20,000 2,914
Thereafter 28,100 1,547
-------------------------------------------------------- --------------------
$53,400 $5,029
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Note 5 - Related Party Transactions
In June 1999, the Company entered into a service agreement with respect to
mortgage lending with Intervest National Bank, a wholly owned subsidiary of the
Parent Company. The Company received $74,000 and $145,000 from Intervest
National Bank for the quarter and six-months ended June 30, 2000, respectively,
in connection with this service agreement. In 1999, the Company received $20,000
in the second quarter of 1999. These amounts are included in other income in the
condensed consolidated statements of operations.
The Company participates with Intervest Bank and Intervest National Bank in
certain mortgage loans. The balances of the Company's participation in these
mortgages were $4,659,000 and $7,747,000 at June 30, 2000 and December 31, 1999,
respectively. These two banks are wholly owned subsidiaries of the Parent
Company.
8
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ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
General
The Company is engaged in the real estate business and its results of operations
are affected by general economic trends in real estate markets, as well as by
trends in the general economy and the movement of interest rates. Since the
properties underlying the Company's mortgages are concentrated in the New York
City area, the economic condition in that area can also have an impact on the
Company's operations.
On March 10, 2000, Intervest Bancshares Corporation (the "Parent Company")
acquired all the outstanding shares of the Company in exchange for 1,250,000
shares of the Parent Company's Class A common stock. Former shareholders of the
Company are officers of the Parent Company and serve on the Boards of Directors
of both companies.
The Company has historically invested primarily in short-term real estate
mortgage loans secured by income producing real property that mature in
approximately five years. The properties to be mortgaged are personally
inspected by management and mortgage loans are made only on those properties
where management is knowledgeable as to operating income and expense. The
Company generally relies upon management in connection with the valuation of
properties. From time to time, however, it may engage independent appraisers and
other agents to assist in determining the value of income-producing properties
underlying mortgages, in which case the costs associated with such services are
generally paid by the mortgagor. The Company does not finance new construction.
The Company may also, from time to time, acquire interests in real property,
including fee interests.
The number of instances of prepayment of mortgage loans tends to increase during
periods of declining interest rates and tends to decrease during periods of
increasing interest rates. Certain of the Company's mortgages include prepayment
provisions, and others prohibit prepayment of indebtedness entirely. In any
event, the Company believes that it would be able to reinvest the proceeds of
any prepayments of mortgage loans in new mortgages consistent with its mortgage
investment policy.
The rental housing market in New York City remains stable and the Company
expects that such properties will continue to appreciate in value with little or
no reduction in occupancy rates. The Company's mortgage portfolio is composed
predominantly of mortgages on multi-family residential properties, most of which
are subject to applicable rent control and rent stabilization statutes and
regulations. In both cases, any increases in rent are subject to specific
limitations. As such, properties of the nature of those constituting the most
significant portion of the Company's mortgage portfolio are not affected by the
general movement of real estate values in the same manner as other
income-producing properties.
Comparison of Financial Condition at June 30, 2000 and December 31, 1999
Total assets at June 30, 2000 declined to $69,082,000, from $98,740,000 at
December 31, 1999. The majority of the decrease was due to the retirement of
$24,000,000 in debentures. The retirement of the debentures was funded by cash
and cash equivalents.
Mortgage loans receivable, net of unearned income, amounted to $60,234,000 at
June 30, 2000, relatively unchanged from $63,290,000 at December 31, 1999. At
June 30, 2000 and December 31, 1999, the Company did not have any nonperforming
loans.
Deferred debenture offering costs, net of accumulated amortization, declined to
$2,462,000 at June 30, 2000, from $3,242,000 at December 31, 1999. The decline
was due to normal amortization as well as the accelerated recognition of
$382,000 in connection with the early retirement of $17,000,000 of debentures in
the second quarter of 2000.
Total liabilities at June 30, 2000 declined to $60,127,000, from $86,600,000 at
December 31, 1999. The decline reflected the retirement of debentures and
9
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payment of related accrued interest payable. Subordinated debentures outstanding
at June 30, 2000 declined to $53,400,000, from $77,400,000 at December 31, 1999.
Debenture interest payable at maturity declined to $5,029,000 at June 30, 2000,
from $7,200,000 at December 31, 1999.
Stockholders' equity declined to $8,955,000 at June 30, 2000, from $12,140,000
at year-end 1999. The decrease was due to the payment of a $3,000,000 cash
dividend to the Parent Company and an extraordinary charge (as discussed below)
in connection with the early retirement of debentures.
Comparison of Results of Operations for the Quarter Ended June 30, 2000 and 1999
The Company recorded a net loss of $150,000 for the second quarter of 2000,
compared to net income of $153,000 for the second quarter of 1999. The decline
in earnings was primarily due to an extraordinary charge, net of taxes, of
$206,000, in connection with the early retirement of debentures, as well as
lower interest income from mortgage loans. These items were partially offset by
a decline in interest expense on debentures.
Total interest income was $2,157,000 for the quarter ended June 30, 2000,
compared to $2,766,000 for the same period a year ago. The decrease of $609,000
was due to a decline in mortgage loans (due to principal repayments exceeding
new loans) and a decline in short-term investments. These factors were partially
offset by rate increases on floating-rate mortgage loans and higher yields
earned on short-term investments.
Interest expense on debentures was $1,734,000 for the quarter ended June 30,
2000, compared $2,034,000 for the same period of 1999. The decrease of $300,000
was due to a decline in debentures outstanding (from retirements), offset in
part by rate increases on floating-rate debentures.
Amortization of deferred debenture offering costs was $178,000 for the quarter
ended June 30, 2000, compared to $225,000 for the same period of 1999. The
decrease reflected the retirement of debentures.
General and administrative expenses aggregated $274,000 for the quarter ended
June 30, 2000, relatively unchanged from $289,000 for the same period of 1999.
The provision for income taxes amounted to $48,000 and $128,000 for the quarter
ended June 30, 2000 and 1999, respectively. The provision represented 46% of
pretax income for each period.
The extraordinary charge represents $382,000 of unamortized deferred debenture
offering costs that was charged to expense in the second quarter of 2000 in
connection with the earlier retirement of debentures. This expense was reported
as an extraordinary charge, net of a tax benefit of $176,000, in the condensed
consolidated statements of operations for the quarter and six-months ended June
30, 2000.
Comparison of Results of Operations for the Six-Months Ended June 30, 2000 and
1999
The Company recorded a net loss of $185,000 for the six-months ended June 30,
2000, compared to net income of $381,000 for the same period of 1999. The
decline in earnings was primarily due to lower interest income on mortgage
loans, lower income from the early repayment of mortgage loans and an
extraordinary charge, net of taxes, of $206,000, in connection with the early
retirement of debentures. These items were partially offset by a decline in
interest expense on debentures and a lower provision for income taxes.
Interest income was $4,526,000 for the six-months ended June 30, 2000, compared
to $5,420,000 for the same period a year ago, or a decrease of $894,000.
Interest expense on debentures was $3,769,000 for the six-months ended June 30,
2000, compared $4,076,000 for the same period of 1999, or a $307,000 decrease.
Amortization of deferred debenture offering costs was $399,000 for the
six-months ended June 30, 2000, compared to $453,000 for the same period of
1999, or a decrease of $54,000. The reasons for the aforementioned declines are
the same as those discussed in the Comparison of Results of Operations for the
Quarter Ended June 30, 2000 and June 30, 1999.
General and administrative expenses aggregated $552,000 for the six-months ended
June 30, 2000, relatively unchanged from $543,000 for the same period of 1999.
10
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The provision for income taxes amounted to $15,000 and $321,000 for the
six-months ended June 30, 2000 and 1999, respectively. The provision represented
42% and 46% of pretax income for each period, respectively.
Liquidity and Capital Resources
The Company manages its liquidity position on a daily basis to assure that funds
are available to meet operations, loan and investment funding commitments and
the repayment of borrowed funds. The Company's principal sources of funds have
consisted of borrowings (through the issuance of its subordinated debentures),
mortgage repayments and cash flow generated from ongoing operations. For
information about the cash flows from the Company's operating, investing and
financing activities, see the condensed consolidated statements of cash flows in
this report.
In the first half of 2000, the Company repaid $24,000,000 in principal amount of
debentures, plus accrued interest of $3,970,000 to debenture holders. The
Company maintained adequate funds to retire these debentures. During the first
quarter of 2000, the Company paid a cash dividend of $3,000,000 to the Parent
Company. At June 30, 2000, the Company's total commitment to lend aggregated
approximately $1,300,000.
The Company considers its current liquidity and sources of funds sufficient to
satisfy its outstanding lending commitments and its maturing liabilities.
Year 2000 Issue
The Year 2000 issue is the result of computer programs that were written using
two digits rather than four digits to define the applicable year. As a result,
such programs may recognize a date using "00" as the year 1900 instead of the
year 2000, which could result in system failures or miscalculations. Prior to
January 1, 2000, the Company had completed upgrades necessary to ensure that its
operating and financial systems were Year 2000 compliant. To date, the Company
has not experienced any problems as a result of the Year 2000 issue, nor does
management expect it will. Expenses incurred by the Company related to the Year
2000 issue have not been material.
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
Market risk is the risk of loss from adverse changes in market prices and
interest rates. The Company's market risk arises primarily from interest rate
risk inherent in its lending and debenture issuing activities. The Company has
no risk related to trading accounts, commodities or foreign exchange.
Management actively monitors and manages the Company's interest rate risk
exposure. The primary objective in managing interest rate risk is to limit,
within established guidelines, the adverse impact of changes in interest rates
on the Company's interest income, interest expense and capital, while adjusting
the Company's asset-liability structure to obtain the maximum yield versus cost
spread on that structure. Management relies primarily on its asset-liability
structure to control interest rate risk. A sudden and substantial increase in
interest rates could adversely impact the Company's earnings, to the extent that
the interest rates borne by assets and liabilities do not change at the same
speed, to the same extent, or on the same basis. Management believes that there
have been no significant changes in the Company's market risk exposure since
December 31, 1999.
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
Not Applicable
ITEM 2. Changes in Securities and Use of Proceeds
(a) Not Applicable (b) Not Applicable (c) Not Applicable (d) Not Applicable
11
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ITEM 3. Defaults Upon Senior Securities
Not Applicable
ITEM 4. Submission of Matters to a Vote of Security Holders
(a) Not Applicable
(b) Not Applicable
(c) Not Applicable
(d) By written consent executed by the sole shareholder of the Company
(Intervest Bancshares Corporation) dated April 24, 2000, the Company's
Board of Directors was reelected in its entirety.
ITEM 5. Other Information
Not Applicable
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibit Index (numbered in accordance with Item 601 of Regulation S-B)
27 - Financial Data Schedule (For SEC Purposes only)
(b) No reports on Form 8-K were filed during the reporting period
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
INTERVEST CORPORATION OF NEW YORK AND SUBSIDIARIES
Date: August 11, 2000 By: /s/ Lowell S. Dansker
----------------------------
Lowell S. Dansker, President (Principal Executive
Officer), Treasurer (Principal Financial Officer
and Principal Accounting Officer) and Director
Date: August 11, 2000 By: /s/ Lawrence G. Bergman
------------------------------
Lawrence G. Bergman, Vice President, Secretary
and Director
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