U.S. SECURTIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
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Commission File No. 000-23377
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INTERVEST BANCSHARES CORPORATION
(Exact name of small business issuer as specified in its charter)
Delaware 13-3699013
- ---------------------------- ----------------
(State or other jurisdiction (I.R.S. employer
of incorporation) identification no.)
10 Rockefeller Plaza, Suite 1015
New York, New York 10020-1903
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(Address of principal executive offices)
(212) 757-7300
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(Issuer's telephone number, including area code)
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(Former name, address and fiscal year, if changed since last report)
Check whether the issuer: (1) 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 .
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Title of Each Class: Shares Outstanding:
- -------------------- -------------------
Class A Common Stock, $1.00 2,184,515 Outstanding at
par value per share October 30, 1998
Class B Common Stock, $1.00 300,000 Outstanding at
par value per share October 30, 1998
<PAGE>
<TABLE>
<CAPTION>
INTERVEST BANCSHARES CORPORATION AND SUBSIDIARY
FORM 10-QSB
September 30, 1998
TABLE OF CONTENTS
Page
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Financial Condition as of
September 30, 1998 and December 31, 1997.................................. 1
Condensed Consolidated Statements of Income for the Quarters Ended
September 30, 1998 and 1997............................................... 2
Condensed Consolidated Statements of Income for the Nine Months Ended
September 30, 1998 and 1997............................................... 3
Condensed Consolidated Statements of Changes in Stockholders' Equity
for the Nine Months Ended September 30, 1998 and 1997..................... 4
Condensed Consolidated Statements of Cash Flows
for the Nine Months Ended September 30, 1998 and 1997 .................... 5
Notes to Condensed Consolidated Financial Statements ............................... 6
Item 2. Management's Discussion and Analysis or Plan of Operation .......................... 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings................................................................... 18
Item 2. Changes in Securities and Use of Proceeds........................................... 18
Item 3. Defaults Upon Senior Securities..................................................... 18
Item 4. Submission of Matters to a Vote of Security Holders................................. 18
Item 5. Other Information................................................................... 18
Item 6. Exhibits and Reports on Form 8-K ................................................... 18
Signatures.................................................................................. 19
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
- -----------------------------
ITEM 1. Financial Statements
----------------------------
Intervest Bancshares Corporation and Subsidiary
Condensed Consolidated Statements of Financial Condition
<TABLE>
<CAPTION>
(Unaudited)
September 30, December 31,
($ in thousands, except par value) 1998 1997 Change
- ---------------------------------- ---- ---- ------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 1,856 $ 1,738 $ 118
Federal funds sold 7,492 162 7,330
Short-term investments 5,355 7,276 (1,921)
---------- ---------- ----------
Total cash and cash equivalents 14,703 9,176 5,527
Interest-bearing deposits 199 99 100
Securities held to maturity, net (estimated fair value of
$64,258 and $58,836, respectively) 63,847 58,821 5,026
Federal Reserve Bank stock, at cost 233 233 --
Loans receivable (net of allowance for loan losses of
$1,532 and $1,173, respectively) 98,310 75,652 22,658
Accrued interest receivable 1,557 1,327 230
Premises and equipment, net 4,975 4,877 98
Deferred income tax asset 496 485 11
Other assets 826 85 741
---------- ---------- ----------
Total assets $ 185,146 $ 150,755 $ 34,391
========== ========== ==========
LIABILITIES
Deposits:
Demand deposits $ 3,276 $ 3,490 $ (214)
Savings and NOW deposits 23,111 17,119 5,992
Money-market deposits 23,497 17,180 6,317
Time deposits 105,172 93,378 11,794
---------- ---------- ----------
Total deposits 155,056 131,167 23,889
Convertible debentures 7,000 -- 7,000
Accrued interest on convertible debentures 156 -- 156
Mortgage escrow funds 2,458 590 1,868
Other liabilities 1,490 1,357 133
---------- ---------- ----------
Total liabilities 166,160 133,114 33,046
Minority interest 23 21 2
STOCKHOLDERS' EQUITY
Preferred stock (300,000 shares authorized, none issued) -- -- --
Class A common stock ($1.00 par value, 7,500,000 shares authorized,
2,164,715 and 2,124,415 shares issued and outstanding, respectively) 2,165 2,124 41
Class B common stock ($1.00 par value, 700,000 shares authorized,
300,000 issued and outstanding) 300 300 --
Additional paid-in-capital, common 13,636 13,360 276
Retained earnings 2,862 1,836 1,026
---------- ---------- ----------
Total stockholders' equity 18,963 17,620 1,343
---------- ---------- ----------
Total liabilities, minority interest and stockholders' equity $ 185,146 $ 150,755 $ 34,391
========== ========== ==========
See accompanying notes to condensed consolidated financial statements.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Intervest Bancshares Corporation and Subsidiary
Condensed Consolidated Statements of Income
(Unaudited)
For the Quarter Ended
September 30,
-------------
($ in thousands, except per share data) 1998 1997 Change
- --------------------------------------- ---- ---- ------
<S> <C> <C> <C>
INTEREST AND DIVIDEND INCOME
Loans receivable $ 2,279 $ 1,656 $ 623
Securities 1,037 616 421
Other interest-earning assets 123 65 58
------- ------- -------
Total interest and dividend income 3,439 2,337 1,102
INTEREST EXPENSE
Deposits 2,042 1,480 562
Convertible debentures 150 -- 150
------- ------- -------
Total interest expense 2,192 1,480 712
Net interest and dividend income 1,247 857 390
Provision for loan losses 127 82 45
------- ------- -------
Net interest and dividend income after provision for loan losses 1,120 775 345
------- ------- -------
NONINTEREST INCOME
Customer service fees 45 27 18
Other 7 1 6
------- ------- -------
Total noninterest income 52 28 24
------- ------- -------
NONINTEREST EXPENSES
Salaries and employee benefits 266 221 45
Occupancy and equipment, net 94 119 (25)
Professional fees 43 37 6
Stationery and supplies 22 20 2
Other 93 70 23
------- ------- -------
Total noninterest expenses 518 467 51
------- ------- -------
Income before income taxes 654 336 318
Income taxes 261 121 140
------- ------- -------
Net income $ 393 $ 215 $ 178
======= ======= =======
Basic earnings per share $ 0.16 $ 0.13 $ 0.03
Diluted earnings per share $ 0.13 $ 0.11 $ 0.02
------- ------- -------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-2-
<PAGE>
<TABLE>
<CAPTION>
Intervest Bancshares Corporation and Subsidiary
Condensed Consolidated Statements of Income
(Unaudited)
For the Nine Months Ended
September 30,
($ in thousands, except per share data) 1998 1997 Change
- --------------------------------------- ---- ---- ------
<S> <C> <C> <C>
INTEREST AND DIVIDEND INCOME
Loans receivable $ 6,078 $ 4,659 $ 1,419
Securities 3,075 1,845 1,230
Other interest-earning assets 302 137 165
------- ------- -------
Total interest and dividend income 9,455 6,641 2,814
------- ------- -------
INTEREST EXPENSE
Deposits 5,837 4,167 1,670
Convertible debentures and other borrowed funds 168 1 167
------- ------- -------
Total interest expense 6,005 4,168 1,837
------- ------- -------
Net interest and dividend income 3,450 2,473 977
Provision for loan losses 357 266 91
------- ------- -------
Net interest and dividend income after provision for loan losses 3,093 2,207 886
------- ------- -------
NONINTEREST INCOME
Customer service fees 134 83 51
Other 19 13 6
------- ------- -------
Total noninterest income 153 96 57
------- ------- -------
NONINTEREST EXPENSES
Salaries and employee benefits 782 659 123
Occupancy and equipment, net 250 310 (60)
Advertising and promotion 16 42 (26)
Professional fees 164 105 59
Stationery and supplies 81 61 20
Other 261 230 31
------- ------- -------
Total noninterest expenses 1,554 1,407 147
------- ------- -------
Income before income taxes 1,692 896 796
Income taxes 666 334 332
------- ------- -------
Net income $ 1,026 $ 562 $ 464
======= ======= =======
Basic earnings per share $ 0.42 $ 0.34 $ 0.08
Diluted earnings per share $ 0.32 $ 0.28 $ 0.04
------- ------- -------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-3-
<PAGE>
<TABLE>
<CAPTION>
Intervest Bancshares Corporation and Subsidiary
Condensed Consolidated Statements of Changes in Stockholders' Equity
(Unaudited)
For the Nine Months Ended
September 30,
-------------------------
($ in thousands) 1998 1997
- --------------- ---- ----
<S> <C> <C>
CLASS A COMMON STOCK
Balance at beginning of period $ 2,124 $ 900
Effect of 1.5 for 1 stock split in September 1997 -- 450
Issuance of 40,300 shares upon exercise of warrants in 1998 41 --
-------- --------
Balance at end of period 2,165 1,350
-------- --------
CLASS B COMMON STOCK
Balance at beginning of period 300 200
Effect of 1.5 for 1 stock split in September 1997 -- 100
-------- --------
Balance at end of period 300 300
-------- --------
ADDITIONAL PAID-IN-CAPITAL, COMMON
Balance at beginning of period 13,360 7,655
Effect of 1.5 for 1 stock split in September 1997 -- (550)
Compensation related to issuance of stock warrants in 1998 36 --
Issuance of 40,300 shares upon exercise of stock warrants in 1998 240 --
-------- --------
Balance at end of period 13,636 7,105
-------- --------
RETAINED EARNINGS
Balance at beginning of period 1,836 992
Net income for the period 1,026 562
-------- --------
Balance at end of period 2,862 1,554
-------- --------
-------- --------
Total stockholders' equity at end of period $ 18,963 $ 10,309
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-4-
<PAGE>
<TABLE>
<CAPTION>
Intervest Bancshares Corporation and Subsidiary
Condensed Consolidated Statements of Cash Flows
(Unaudited)
For the Nine Months Ended
September 30,
-------------------------
($ in thousands) 1998 1997
- ---------------- ---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,026 $ 562
Adjustments to reconcile net income to
net cash provided by operating
activities:
Provision for loan losses 357 266
Depreciation and amortization 121 179
Provision for deferred income taxes (11) 31
Accrued interest expense on debentures 156 --
Compensation expense related to stock warrants 36 --
Amortization of premiums, fees and discounts, net (71) 42
Increase in accrued interest receivable and other assets (417) (257)
Increase in other liabilities 122 654
--------- -------
Net cash provided by operating activities 1,319 1,477
--------- -------
INVESTING ACTIVITIES
Increase in interest-earning deposits (100) (98)
Principal repayments of securities held to maturity 32,826 17,118
Purchases of securities held to maturity (37,841) (26,369)
Net increase in loans receivable (22,947) (13,281)
Purchases of Federal Reserve Bank Stock -- (29)
Purchases of premises and equipment, net (291) (1,781)
Sales of foreclosed real estate -- 184
--------- -------
Net cash used by investing activities (28,353) (24,256)
--------- -------
FINANCING ACTIVITIES
Net increase in demand, savings, NOW and money-market deposits 12,095 13,096
Net increase in time deposits 11,794 13,244
Net increase in mortgage escrow funds 1,868 1,213
Proceeds from convertible debentures and other borrowed funds 7,683 --
Repayment of other borrowed funds (1,160) --
Proceeds from issuance of common stock 281 --
--------- -------
Net cash provided by financing activities 32,561 27,553
--------- -------
Net increase in cash and cash equivalents 5,527 4,774
Cash and cash equivalents at beginning of period 9,176 6,320
--------- -------
Cash and cash equivalents at end of period $ 14,703 $ 11,094
--------- -------
SUPPLEMENTAL DISCLOSURES
Cash paid during the period for:
Interest $ 5,758 $ 4,130
Income taxes 510 525
Noncash financing activities:
Compensation related to stock warrants 36 --
Interest on convertible debentures 156 --
--------- -------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
Intervest Bancshares Corporation and Subsidiary
Notes to Condensed Consolidated Financial Statements (Unaudited)
Note 1 - General
The consolidated financial statements of Intervest Bancshares
Corporation and Subsidiary in this report have not been audited except for the
information derived from the audited Consolidated Statement of Financial
Condition as of December 31, 1997. The statements should be read in conjunction
with the consolidated financial statements and related notes thereto included in
the Company's Annual Report to Stockholders on Form 10-KSB for the year ended
December 31, 1997. The consolidated financial statements include the accounts of
Intervest Bancshares Corporation, a bank holding company (the "Holding
Company"), and its subsidiary, Intervest Bank (the "Bank"). The Holding Company
and Intervest Bank are referred to as the "Company" on a consolidated basis. The
Holding Company's primary business activity is the ownership of the Bank. All
intercompany accounts and transactions have been eliminated in consolidation. 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 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 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' presentations.
Note 2 - Loan Impairment and Credit Losses
No loans were classified as nonaccrual or identified as being impaired
during the 1998 and 1997 reporting periods. The table below summarizes the
activity in the allowance for loan losses:
<TABLE>
<CAPTION>
For the For the
Quarter Ended Nine Months Ended
September 30, September 30,
------------- -----------------
($ in thousands) 1998 1997 1998 1997
- ---------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Balance at beginning of period $1,405 $ 999 $1,173 $ 811
Provision for loan losses charged to operations 127 82 357 266
Recoveries -- 3 2 7
------ ------ ------ ------
Balance at end of period $1,532 $1,084 $1,532 $1,084
====== ====== ====== ======
</TABLE>
The Company monitors its loan portfolio to determine the appropriate
level of the allowance for loan losses based on various factors that are
discussed on pages 21 and 22 of the Company's 1997 Annual Report on Form 10-KSB.
The increase reflected the growth in the loan portfolio as well as management's
intent to maintain the allowance at a level it believes to be adequate.
Note 3 - Convertible Debentures
On June 26, 1998, the Holding Company sold $7,000,000 of Convertible
Subordinated Debentures (the "Debentures"). The proceeds from the sale, net of
underwriting discounts, commissions and other fees, amounted to approximately
$6,500,000. The proceeds are part of the Holding Company's capital funds and are
not restricted to their usage. The Debentures are due July 1, 2008 and are
convertible at the option of the holders at any time prior to April 1, 2008,
unless previously redeemed by the Holding Company, into shares Class A common
stock at an initial conversion price of $11.50 per share through December 31,
1998. The table that follows on page 7 shows the conversion prices beginning
January 1, 1999.
-6-
<PAGE>
Intervest Bancshares Corporation and Subsidiary
Notes to Condensed Consolidated Financial Statements (Unaudited)
----------------------------------------------------------------
Period Conversion Price Per Share
------ --------------------------
From January 1, 1999 to June 30, 1999 $12.50
From July 1, 1999 to June 30, 2000 $14.00
From July 1, 2000 to June 30, 2001 $15.50
From July 1, 2001 to June 30, 2002 $17.00
From July 1, 2002 to June 30, 2003 $18.50
From July 1, 2003 to June 30, 2004 $20.50
From July 1, 2004 to June 30, 2005 $22.50
From July 1, 2005 to June 30, 2006 $25.50
From July 1, 2006 to June 30, 2007 $28.50
From July 1, 2007 to April 1, 2008 $32.50
The Holding Company has the right to establish conversion prices, which are
less than those set forth above for such periods as the Holding Company may
determine. The conversion prices are also subject to adjustments based on
certain conditions and circumstances. The Holding Company also has the option at
any time to call all or any part of the Debentures for payment and redeem the
same at any time prior to maturity thereof. The redemption price for the
Debentures is (i) the face amount plus a 2% premium if the date of redemption is
prior to July 1, 1999, (ii) the face amount plus a 1% premium if redemption
occurs on or after July 1, 1999 and prior to July 1, 2000, or (iii) the face
amount if the date of redemption is on or after July 1, 2000. In all cases, the
debenture holder will also receive accrued interest to the date of redemption.
Interest on the Debentures will accrue and compound each calendar quarter at 8%.
All accrued interest is payable at the maturity of the Debentures whether by
acceleration, redemption or otherwise. Subject to certain procedures, a
debenture holder may, on or before July 1 of each year commencing July 1, 2003,
elect to be paid all accrued interest and to thereafter receive payments of
interest quarterly. Once made, the election to receive interest is irrevocable.
Note 4 - Earnings Per Share (EPS) and Common Stock Warrants
Basic EPS is calculated by dividing net income by the weighted-average
number of shares of common stock outstanding. Diluted EPS is calculated by
dividing net income by the weighted-average number of shares of common stock and
dilutive potential common stock shares that may be outstanding in the future.
Potential common stock shares consist of outstanding dilutive common stock
warrants (which are computed using the treasury stock method). Diluted EPS
considers the potential dilution that could occur if the Company's outstanding
stock warrants were converted into common stock that then shared in the earnings
of the Company. The Debentures outstanding were antidilutive (using the if
converted method) for the 1998 periods when considered with other potential
dilutive common stock and accordingly, were excluded from the Diluted EPS
computations. Prior to the public stock offering in November 1997, there was no
public market for the Company's common stock. For purposes of calculating
Diluted EPS for the 1997 periods, the $10 stock offering price is assumed to be
the market price.
-7-
<PAGE>
Intervest Bancshares Corporation and Subsidiary
Notes to Condensed Consolidated Financial Statements (Unaudited)
----------------------------------------------------------------
Net income applicable to common stock and the weighted-average number of shares
used for basic and diluted earnings per share computations are summarized as
follows:
<TABLE>
<CAPTION>
For the Quarter Ended For the Nine Months Ended
September 30, September 30,
------------- -------------
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Basic earnings per share:
Net income applicable to common stockholders $ 393,000 $ 215,000 $1,026,000 $ 562,000
Average number of common shares outstanding 2,463,107 1,650,000 2,448,241 1,650,000
---------- ---------- ---------- ----------
Basic earnings per share amount $ 0.16 $ 0.13 $ 0.42 $ 0.34
---------- ---------- ---------- ----------
Diluted earnings per share:
Net income applicable to common stockholders $ 393,000 $ 215,000 $1,026,000 $ 562,000
Average number of common shares outstanding:
Common shares outstanding 2,463,107 1,650,000 2,448,241 1,650,000
Potential dilutive shares from conversion of warrants 487,711 355,615 737,825 355,615
---------- ---------- ---------- ----------
Total average number of common shares used 2,950,818 2,005,615 3,186,066 2,005,615
---------- ---------- ---------- ----------
Diluted earnings per share amount $ 0.13 $ 0.11 $ 0.32 $ 0.28
========== ========== ========== ==========
</TABLE>
On March 16, 1998, the Board of Directors of the Holding Company
authorized the grant of stock warrants to directors of the Holding Company and
officers, directors and employees of Intervest Bank to purchase a total of
122,000 shares of Class A common stock at an initial purchase price per share of
$14.00 through December 31, 1999 (which represented the market price of the
common stock on the grant date). The purchase price per share increases to
$15.00 from January 1, 2000 through December 31, 2000, $16.00 from January 1,
2001 through December 31, 2001 and $17.00 from January 1, 2002 through
expiration. The grant was approved by the Company's shareholders on May 27,
1998. The warrants vest immediately and expire on December 31, 2002. The
warrants were not included in the computations of Diluted EPS for the 1998
periods because the warrants' exercise price was greater than the average market
price of the common shares.
On April 27, 1998, the Board of Directors of the Holding Company also
authorized the issuance of stock warrants to the Chairman of the Board to
purchase a total of 50,000 shares of Class B common stock, exercisable on or
before January 31, 2008, at a price of $10.00 per share. The issuance of these
stock warrants was also approved by the Company's shareholders on May 27, 1998.
The warrants vest as follows: 7,100 immediately; 7,100 on each anniversary of
the grant date for five years; and 7,400 on the sixth anniversary date. The
warrants become fully vested earlier upon certain conditions. The exercise price
of the warrants was below the market price of the common shares at the date of
grant. Therefore, in accordance with APB No. 25, "Accounting for Stock Issued to
Employees," approximately $20,000, net of taxes, was charged to earnings in the
first nine months of 1998 in connection with the issuance of these warrants.
-8-
<PAGE>
Intervest Bancshares Corporation and Subsidiary
Notes to Condensed Consolidated Financial Statements (Unaudited)
----------------------------------------------------------------
Note 5 - Regulatory Capital
The Holding Company's subsidiary, Intervest Bank, is required to
maintain certain minimum regulatory capital requirements. The following is a
summary at September 30, 1998 of the regulatory capital requirements and
Intervest Bank's actual capital on a percentage basis:
<TABLE>
<CAPTION>
Ratios of Minimum To Be Considered
the Bank Requirement Well Capitalized
-------- ----------- ----------------
<S> <C> <C> <C>
Total capital to risk-weighted assets 10.46% 8.00% 10.00%
Tier 1 capital to risk-weighted assets 9.21% 4.00% 6.00%
Tier 1 capital to total average assets - leverage ratio 6.00% 4.00% 5.00%
</TABLE>
Note 6 - Proposed Bank
On July 10, 1998, an application for a national bank charter was filed with
the Office of the Comptroller of the Currency and the FDIC by Intervest National
Bank, In Organization. The proposed bank will be a wholly owned subsidiary of
the Holding Company, with a principal office in the borough of Manhattan in New
York City. The proposed bank will have an initial capital of $9,000,000, which
will be provided by the Holding Company.
Note 7 - Recent Accounting Pronouncements
Reporting Comprehensive Income
On January 1, 1998, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income," which
establishes standards for reporting comprehensive income. Comprehensive income
is defined by the standard as the change in equity of an enterprise except for
those changes resulting from stockholder transactions. All components of
comprehensive income are required to be reported in a new financial statement
that is displayed with equal prominence as existing financial statements. The
Company has no items of comprehensive income, therefore such a statement is not
presented.
Employers' Disclosures about Pensions and Other Postretirement Benefits
In February 1998, the Financial Accounting Standards Board (FASB) issued
SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement
Benefits - an amendment of SFAS No. 87, 88 and 106." The statement revises,
deletes or adds certain disclosures with regard to such plans. It does not
change the measurement or recognition of those plans. The statement is effective
for fiscal years beginning after December 15, 1997. This standard has no impact
to the Company's financial statement disclosures, since the Company currently
does not provide these benefits.
-9-
<PAGE>
Intervest Bancshares Corporation and Subsidiary
Notes to Condensed Consolidated Financial Statements (Unaudited)
----------------------------------------------------------------
Accounting for Derivative Instruments and Hedging Activities
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. It
requires, among other things, that an entity recognizes all derivatives as
either assets or liabilities in the statement of financial condition and
measures those instruments at fair value. The statement is effective for all
fiscal quarters of fiscal years beginning after June 15, 1999. Since the Company
does not currently use derivative financial instruments, the standard will not
have any impact to the Company's financial statements when adopted.
Accounting for Start-Up Costs
In April 1998, the AICPA issued Statement of Position (SOP) 98-5,
"Reporting on the Costs of Start-Up Activities," which is effective for all
nongovermental entities, except as provided for therein, for fiscal years
beginning after December 15, 1998. The SOP requires that all start-up costs
(except for those that are capitalizable under other GAAP) be expensed as
incurred.
At September 30, 1998, the Holding Company had $177,000 of deferred
costs associated with organizing the proposed bank. Upon adoption of this
statement, it is anticipated that a significant portion of these deferred costs
will be expensed. In addition, the Holding Company expects additional start-up
costs to be incurred in the fourth quarter of 1998 in connection with organizing
the proposed bank.
Accounting for the Costs of Computer Software Developed or Obtained for Internal
Use
In March 1998, the AICPA issued SOP 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use," which is effective
for all nongovermental entities for fiscal years beginning after December 15,
1998. The SOP, among other things, provides guidance as to when and what types
of costs should be capitalized as it relates to internal-use software. Upon
adoption, the Company expects that this SOP will not have a material impact on
its financial statements.
-10-
<PAGE>
ITEM 2. Management's Discussion and Analysis or Plan of Operation
Overview
--------
Intervest Bancshares Corporation and Subsidiary (the "Company") earned
$393,000 for the third quarter of 1998, an increase of 83% from $215,000 in the
third quarter of 1997. On a diluted per share basis, net income was $0.13,
compared to $0.11 in the third quarter of 1997. For the first nine months of
1998, net income also increased 83% to $1,026,000 or $0.32 per diluted share,
from $562,000, or $0.28 per diluted share, for the same period of 1997. (The
computations of net income per share for the 1998 periods included a higher
amount of common shares, due to the public offering of Class A common stock in
November 1997 and an increase in common stock warrants outstanding.) The
increase in net income for both periods of 1998 over the corresponding periods
of 1997, was primarily due to higher net interest and dividend income resulting
from growth in interest-earning assets.
The following table shows selected ratios at the end of or for the
period indicated:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
For the Quarter Ended For the Nine Months Ended
September 30, September 30, September 30, September 30,
------------- ------------- ---------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Stockholders' equity to total assets 10.24% 7.70% 10.24% 7.70%
Average stockholders' equity to total assets 10.13% 7.61% 9.87% 7.47%
Return on average assets 0.87% 0.70% 0.81% 0.64%
Return on average equity 8.39% 8.43% 7.49% 7.49%
Average interest-earning assets to
interest-bearing liabilities 1.11x 1.08x 1.11x 1.08x
Net interest margin 2.88% 2.95% 2.84% 2.96%
Noninterest expense to average assets 1.14% 1.52% 1.22% 1.60%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
In June, the Holding Company completed the sale of $7,000,000 of
Convertible Subordinated Debentures (the "Debentures") for net proceeds of
approximately $6,500,000. The Debentures are due July 1, 2008 and are
convertible at the option of the holders at any time prior to April 1, 2008 into
shares of Class A common stock at an initial conversion price of $11.50 per
share through December 31, 1998. The conversion price per share increases over
the life of the Debentures. The Holding Company can also redeem the Debentures
plus accrued interest at any time prior to maturity at various redemption
prices. Interest on the debentures accrues and compounds quarterly at 8%, with
all accrued interest payable at maturity. For additional information on the
Debentures, see note 3 to the condensed consolidated financial statements on
page 6 of this report.
In July, an application for a national bank charter was filed with the
OCC and FDIC by Intervest National Bank, In Organization. The proposed bank will
be a wholly owned subsidiary of the Holding Company, with a principal office in
the borough of Manhattan in New York City. The proposed bank will have initial
capital of $9,000,000, which will be provided by the Holding Company.
Comparison of Financial Condition at September 30, 1998 and December 31, 1997
- -----------------------------------------------------------------------------
Overview. Total assets at September 30, 1998 increased to $185,146,000,
from $150,755,000 at December 31, 1997. The increase was primarily due to a
higher level of loans receivable, securities held to maturity and cash and cash
equivalents. Total liabilities increased from $133,135,000 at December 31, 1997,
to $166,183,000 at September 30, 1998, reflecting an increase in deposit
liabilities and the borrowing of funds through the sale of the Debentures.
-11-
<PAGE>
The Company's balance sheet was comprised of the following:
<TABLE>
<CAPTION>
At September 30, 1998 At December 31, 1997
--------------------- --------------------
Carrying % of Carrying % of
($ in thousands) Value Total Assets Value Total Assets
- ---------------- ----- ------------ ----- ------------
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 14,703 7.9% $ 9,176 6.1%
Securities held to maturity 63,847 34.5 58,821 39.0
Loans receivable, net 98,310 53.1 75,652 50.2
All other assets 8,286 4.5 7,106 4.7
-------- ----- -------- -----
Total assets $185,146 100.0% $150,755 100.0%
-------- ----- -------- -----
Deposits $155,056 83.7% $131,167 87.0%
Convertible debentures 7,000 3.8 -- --
All other liabilities 4,127 2.3 1,968 1.3
-------- ----- -------- -----
Total liabilities 166,183 89.8 133,135 88.3
-------- ----- -------- -----
Stockholders' equity 18,963 10.2 17,620 11.7
-------- ----- -------- -----
Total liabilities and stockholders' equity $185,146 100.0% $150,755 100.0%
======== ===== ======== =====
</TABLE>
Cash and Cash Equivalents. Cash and cash equivalents increased primarily
due to the short-term investment of a portion of the proceeds from the sale of
the Debentures.
Securities Held to Maturity. Securities held to maturity increased due
to purchases of U.S. government agency securities, partially offset by
maturities of U.S. treasury obligations.
Loans Receivable. Loans receivable increased due to new originations of
commercial real estate loans, partially offset by principal repayments on the
loan portfolio. At September 30, 1998 and December 31, 1997, the Company did not
have any loans on a nonaccrual status or classified as impaired.
Allowance for Loan Losses. The Company monitors its loan portfolio to
determine the appropriate level of the allowance for loan losses based on
various factors that are discussed on pages 21 and 22 of the Company's 1997
Annual Report on Form 10-KSB. At September 30, 1998, the allowance amounted to
$1,532,000, compared to $1,173,000 at year-end 1997. The increase reflected the
growth in the loan portfolio as well as management's intent to maintain the
allowance at a level it believes to be adequate.
All Other Assets. All other assets increased largely due to deferred
costs related the sale of the Debentures ($532,000) and organizing Intervest
National Bank ($177,000), and an increase in accrued interest receivable
($230,000).
In April 1998, the AICPA issued Statement of Position (SOP) 98-5,
"Reporting on the Costs of Start-Up Activities," which is effective for the
Company's 1999 financial statements. The SOP requires that all start-up costs
(except for those that are capitalizable under other generally accepted
accounting principles) be expensed as incurred. Previously, start-up costs were
generally capitalized and amortized over a period of time. Upon adoption of the
SOP, it is anticipated that a significant portion of the deferred costs
associated with organizing the proposed bank will be expensed. In addition, the
Holding Company expects additional start-up costs to be incurred in the fourth
quarter of 1998 in connection with organizing the proposed bank.
-12-
<PAGE>
Deposits. Deposit liabilities increased due to net deposit inflows and
growth in deposit accounts. At September 30, 1998, time deposit accounts totaled
$105,172,000 and demand deposits, savings, NOW and money-market accounts
aggregated $49,884,000. This compared to deposits of $93,378,000 and
$37,789,000, respectively, at December 31, 1997. Time deposits represented 68%
of total deposits at September 30, 1998, compared to 71% at year-end 1997.
All Other Liabilities. All other liabilities increased largely due to a
higher level of mortgage escrow funds, which represent advance payments by
borrowers for taxes and insurance.
Stockholders' Equity and Regulatory Capital. Stockholders' equity
increased primarily as a result of net income of $1,026,000 for the nine months
ended September 30, 1998 and $281,000 of proceeds from the issuance of 40,300
shares of Class A common stock upon the exercise of stock warrants. Intervest
Bank's Tier 1 leverage capital ratio was 6.00% at September 30, 1998, compared
to 6.53% at December 31, 1997. The Bank's total risk-based capital ratio
amounted to 10.46% at September 30, 1998, compared to 11.46% at year-end 1997.
The decline in these ratios reflected the growth in the Bank's assets.
Liquidity and Capital Resources
-------------------------------
The Company's primary source of cash for the nine months ended September
30, 1998 was from the maturity of securities totaling $32,826,000 and net
deposit inflows of $23,889,000. In addition, the Holding Company sold $7,000,000
of Convertible Subordinated Debentures on June 26, 1998 for proceeds, net of
underwriting costs and other fees, of approximately $6,500,000. Cash flow was
used primarily for net loan originations of $22,947,000 and the purchase of
securities totaling $37,841,000. At September 30, 1998, cash and cash
equivalents totaled $14,703,000, compared to $9,176,000 at December 31, 1997.
Interest Rate Sensitivity
-------------------------
Interest rate risk arises from differences in the repricing of assets
and liabilities within a given time period. The Company's principal objective of
its asset/liability management strategy is to minimize its exposure to changes
in interest rates by matching the maturity and repricing horizons of its
interest-earning assets and interest-bearing liabilities. The Company uses "gap
analysis" to monitor its interest rate sensitivity. For a further discussion of
interest rate risk and gap analysis, including the assumptions used in
developing the gap analysis, see the Company's 1997 Annual Report on Form
10-KSB, pages 16 and 17. At September 30, 1998, the Company's one-year negative
interest-rate sensitivity gap was $56,153,000, compared to $42,489,000 at
December 31, 1997.
Year 2000 Compliance
--------------------
The Company's operations are, by their nature, dependent upon its
internal computer systems as well as those of other third-party companies. The
Company is conducting a review of its computer systems to identify systems that
could be affected by the "Year 2000" issue and has an ongoing program designed
to ensure that its operational and financial systems will continue to function
properly on and after the year 2000, free of software failures due to processing
errors arising from calculations using the year 2000 date.
-13-
<PAGE>
The Year 2000 issue is the result of computer programs, which 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.
The Company primarily uses personal computer based systems, which
operate using industry standard software systems that have been developed and
are supported by third-party software companies. Currently, the Company's costs
to resolve Year 2000 issues are not expected to be material. The Year 2000
issue, however, creates risk for the Company from unforeseen problems in its
computer processing and from the computer processing problems of other third
parties with which the Company conducts financial transactions. As a result,
incomplete or untimely resolution of such Year 2000 problems may have an adverse
impact on the operations of the Company.
The Federal banking regulators have issued safety and soundness
guidelines to be followed by insured depository institutions to assure
resolution of any Year 2000 problems. Any institution's failure to address
appropriately the Year 2000 problem could result in supervisory action.
As part of its plan, the Company is monitoring the Year 2000 compliance
of its vendors and requiring them to represent that their products provided to
the Company are, or will be, year 2000 compliant. In addition the Company will
be participating in the testing of systems during 1999. Management is also
developing appropriate contingency plans to deal with problems as they may
arise. There can be no assurance, however, that the systems of other companies
on which the Company's systems rely will also be converted timely or that any
such failure to convert by another company would not have an adverse effect on
the Company's systems.
Comparison of Results of Operations for the Quarters Ended
----------------------------------------------------------
September 30, 1998 and 1997
---------------------------
Overview. Net income for the third quarter of 1998 increased to $393,000
or $0.13 per diluted share, from $215,000, or $0.11 per diluted share, for the
same quarter of 1997. Higher net income was primarily due to a $390,000 increase
in net interest and dividend income, partially offset by increases of $140,000
in the provision for income taxes, $51,000 in noninterest expenses and $45,000
in the provision for loan losses.
Net Interest and Dividend Income. Net interest and dividend income is
the Company's largest source of earnings and is influenced primarily by the
amount, distribution and repricing characteristics of its interest-earning
assets and interest-bearing liabilities as well as by the relative levels and
movements of interest rates.
-14-
<PAGE>
The table below sets forth information on average assets, liabilities
and stockholders' equity; yields earned on interest-earning assets; and rates
paid on interest-bearing liabilities for the periods indicated. The yields and
rates shown are based on a computation of annualized income/expense for each
period divided by average interest-earning assets/interest-bearing liabilities
during each period. Certain yields and rates shown are adjusted for related fee
income or expense. Average balances are derived from daily balances. Net
interest margin is computed by dividing annualized net interest and dividend
income by the average of total interest-earning assets during each period.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
For the Quarter Ended
---------------------------------------------------------------
September 30, 1998 September 30, 1997
------------------ ------------------
Average Interest Yield/ Average Interest Yield/
($ in thousands) Balance Inc./Exp. Rate Balance Inc./Exp. Rate
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest-earning assets:
Loans $ 97,782 $ 2,279 9.32%$ 71,700 $ 1,656 9.24%
Securities 66,464 1,037 6.24 39,897 616 6.18
Other interest-earning assets 9,214 123 5.34 4,774 65 5.45
- ------------------------------------------------------------------------------------------------------------
Total interest-earning assets 173,460 $ 3,439 7.93% 116,371 $ 2,337 8.03%
- ------------------------------------------------------------------------------------------------------------
Noninterest-earning assets 7,952 6,559
- ------------------------------------------------------------------------------------------------------------
Total assets $181,412 $122,930
- ------------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Demand, money market and NOW deposits $ 29,292 $ 343 4.68% $20,373 $ 226 4.44%
Savings deposits 16,842 207 4.92 6,279 86 5.48
Time deposits 103,123 1,492 5.79 80,905 1,168 5.77
------- ----- ---- ------ ------ ----
Total deposits accounts 149,257 2,042 5.47 107,557 1,480 5.50
------- ----- ---- ------- --------- ----
Convertible debentures 7,062 150 8.50 -- -- --
- ------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 156,319 $ 2,192 5.61% 107,557 $ 1,480 5.50%
- ------------------------------------------------------------------------------------------------------------
Noninterest-bearing liabilities 6,346 5,175
Stockholders' equity 18,747 10,198
- ------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $181,412 $122,930
- ------------------------------------------------------------------------------------------------------------
Net interest and dividend income/spread $ 1,247 2.32% $ 857 2.53%
- ------------------------------------------------------------------------------------------------------------
Net interest-earning assets/margin $ 17,141 2.88% $ 8,814 2.95%
- ------------------------------------------------------------------------------------------------------------
Ratio of total interest-earning assets
to total interest-bearing liabilities 1.11x 1.08x
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Net interest and dividend income increased to $1,247,000 in the third
quarter of 1998, from $857,000 in the 1997 third quarter. The increase was due
to growth in interest-earning assets, partially offset by a decline in the net
interest margin from 2.95% to 2.88%.
The decline in the margin was a function of a lower interest rate
spread caused by a decline in the yield on the Company's earning assets and an
increase in its cost of funds. The yield on earning assets declined by 10 basis
points due to the investment of a large portion of funds from deposit inflow,
the sale of the Debentures and the public stock offering in November 1997 into
securities and short-term investments. Securities and short-term investments
have lower yields than the Company's loans. The Company's cost of funds
increased by 11 basis points due to sale of the Debentures, partially offset by
a decline in the cost of deposits.
-15-
<PAGE>
The effect of the decrease in the interest rate spread described above
was largely offset by an increase of $8,327,000 in net interest-earning assets.
The increase in net interest-earning assets was largely due to the investment of
the proceeds from the issuance of common stock as well as the reinvestment of
earnings generated from operations.
The following table sets forth information regarding changes in interest
and dividend income and interest expense of the Company for the periods
indicated. For each category of interest-earning assets and interest-bearing
liabilities, information is provided on changes attributable to (1) changes in
rate (change in rate multiplied by prior volume), (2) changes in volume (change
in volume multiplied by prior rate) and (3) changes in rate-volume (change in
rate multiplied by change in volume).
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
For the Quarter Ended September 30, 1998 vs. 1997
-------------------------------------------------
Increase (Decrease) Due to Change in:
-------------------------------------
($ in thousands) Rate Volume Rate/Volume Total
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest-earning assets:
Loans $ 14 $ 602 $ 7 $ 623
Securities 6 410 5 421
Other interest-earning assets (1) 60 (1) 58
- -----------------------------------------------------------------------------------------------
Total interest-earning assets 19 1,072 11 1,102
- -----------------------------------------------------------------------------------------------
Interest-bearing liabilities:
Demand, money market and NOW deposits 15 97 5 117
Savings deposits (9) 145 (15) 121
Time deposits 4 320 -- 324
------ ------ ------ ------
Total deposits accounts 10 562 (10) 562
Convertible debentures -- -- 150 150
- -----------------------------------------------------------------------------------------------
Total interest-bearing liabilities 10 562 140 712
- -----------------------------------------------------------------------------------------------
Net change in interest and dividend income $ 9 $ 510 $ (129) $ 390
- -----------------------------------------------------------------------------------------------
</TABLE>
Provision for Loan Losses. The provision for loan losses is based on
management's ongoing assessment of the adequacy of the allowance for loan
losses. The provision amounted to $127,000 in the third quarter of 1998,
compared to $82,000 in the third quarter of 1997, reflecting a higher level of
outstanding loans as well as management's intent to maintain the allowance at a
level it believes to be adequate.
Noninterest Expenses. Total noninterest expenses increased to $518,000
in the third quarter of 1998, from $467,000 in the third quarter of 1997. The
increase over last year's period was largely due to an increase in salaries and
employee benefits, resulting primarily from the Company's growth and need for
increased staff.
Provision for Income Taxes. The provision for income taxes increased to
$261,000 in the third quarter of 1998, from $121,000 in the third quarter of
1997, due to higher pre-tax earnings. The Company's effective tax rate
(inclusive of state and local taxes) amounted to 39.9% in the third quarter of
1998, compared to 36.0% in the same quarter of 1997. The higher rate was due to
an increase in pre-tax earnings generated by the Holding Company, which has a
higher tax rate than its subsidiary in Florida .
-16-
<PAGE>
Comparison of Results of Operations for the Nine Months Ended
-------------------------------------------------------------
September 30, 1998 and 1997
---------------------------
Overview. Net income for the nine months ended September 30, 1998
increased to $1,026,000, or $0.32 per diluted share, from $562,000, or $0.28 per
diluted share, for the same period of 1997. Higher net income was primarily due
to a $977,000 increase in net interest and dividend income, partially offset by
increases of $332,000 in the provision for income taxes, $147,000 in noninterest
expenses and $91,000 in the provision for loan losses. The reasons for the
changes in the provision for loan losses and income taxes as well as noninterest
expenses are essentially the same as those discussed in the comparison of the
quarters ended September 30, 1998 and 1997.
Net Interest and Dividend Income. The table that follows sets forth
information similar to the table on page 15 for the nine-month periods.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
For the Nine Months Ended
-------------------------
September 30, 1998 September 30, 1997
------------------ ------------------
Average Interest Yield/ Average Interest Yield/
($ in thousands) Balance Inc./Exp. Rate Balance Inc./Exp. Rate
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest-earning assets:
Loans $ 87,762 $ 6,078 9.23% $ 67,573 $ 4,659 9.19%
Securities 66,577 3,075 6.16 40,184 1,845 6.12
Other interest-earning assets 7,642 302 5.27 3,537 137 5.16
- ----------------------------------------------------------------------------------------------------------------
Total interest-earning assets 161,981 $ 9,455 7.78% 111,294 $ 6,641 7.96%
- ----------------------------------------------------------------------------------------------------------------
Noninterest-earning assets 7,678 6,147
- ----------------------------------------------------------------------------------------------------------------
Total assets $169,659 $117,441
- ----------------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Demand, money market and NOW deposits $ 26,323 $ 913 4.62% $ 17,177 $ 574 4.46%
Savings deposits 15,703 572 4.86 8,269 302 4.87
Time deposits 101,193 4,352 5.73 77,338 3,291 5.67
----------------------------------------------------------------
Total deposits accounts 143,219 5,837 5.43 102,784 4,167 5.41
----------------------------------------------------------------
Convertible debentures and other
borrowed funds 2,645 168 8.47 18 1 5.80
- ----------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 145,864 $ 6,005 5.49% 102,802 $ 4,168 5.41%
- ----------------------------------------------------------------------------------------------------------------
Noninterest-bearing liabilities 5,527 4,630
Stockholders' equity 18,268 10,009
- ----------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $169,659 $117,441
- ----------------------------------------------------------------------------------------------------------------
Net interest and dividend income/spread $ 3,450 2.29% $ 2,473 2.55%
- ----------------------------------------------------------------------------------------------------------------
Net interest-earning assets/margin $ 16,117 2.84% $ 8,492 2.96%
- ----------------------------------------------------------------------------------------------------------------
Ratio of total interest-earning assets
to total interest-bearing liabilities 1.11x 1.08x
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Net interest and dividend income increased to $3,450,000 in the
nine-month period ended September 30, 1998, from $2,473,000 in the same period
of 1997. The increase was due to a higher level of net interest-earning assets,
partially offset by a decline in the net interest margin. The reasons for these
changes are essentially the same as those discussed in the comparison of the
quarters ended September 30, 1998 and 1997.
-17-
<PAGE>
The table that follows sets forth information similar to the table on
page 16 for the nine-month periods.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
For the Nine Months Ended September 30, 1998 vs. 1997
-----------------------------------------------------
Increase (Decrease) Due to Change in:
-------------------------------------
<S> <C> <C> <C> <C>
($ in thousands) Rate Volume Rate/Volume Total
Interest-earning assets:
Loans $ 20 $1,393 $ 6 $1,419
Securities 12 1,210 8 1,230
Other interest-earning assets 3 159 3 165
- -----------------------------------------------------------------------------------------------
Total interest-earning assets 35 2,762 17 2,814
- -----------------------------------------------------------------------------------------------
Interest-bearing liabilities:
Demand, money market and NOW deposits 21 306 12 339
Savings deposits (1) 272 (1) 270
Time deposits 35 1,014 12 1,061
-------------------------------------------
Total deposits accounts 55 1,592 23 1,670
Convertible debentures and other borrowed funds -- 114 53 167
- -----------------------------------------------------------------------------------------------
Total interest-bearing liabilities 55 1,706 76 1,837
- -----------------------------------------------------------------------------------------------
Net change in interest and dividend income $ (20) $1,056 $ (59) $ 977
- -----------------------------------------------------------------------------------------------
</TABLE>
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
ITEM 3. Defaults Upon Senior Securities
Not Applicable
ITEM 4. Submission of Matters to a Vote of Security Holders
Not Applicable
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 quarter ended September 30,
1998.
-18-
<PAGE>
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 BANCSHARES CORPORATION AND SUBSIDIARY
Date: November 9, 1998 By: /s/ Lowell S. Dansker
-------------------------------------------
Lowell S. Dansker, President and Treasurer
(Chief Financial Officer)
Date: November 9, 1998 By: /s/ Lawrence G. Bergman
-------------------------------------------
Lawrence G. Bergman, Vice President
and Secretary
-19-
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,856
<INT-BEARING-DEPOSITS> 199
<FED-FUNDS-SOLD> 7,492
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 63,847
<INVESTMENTS-MARKET> 64,258
<LOANS> 99,842
<ALLOWANCE> 1,532
<TOTAL-ASSETS> 185,146
<DEPOSITS> 155,056
<SHORT-TERM> 0
<LIABILITIES-OTHER> 4,127
<LONG-TERM> 7,000
0
0
<COMMON> 2,465
<OTHER-SE> 16,498
<TOTAL-LIABILITIES-AND-EQUITY> 185,146
<INTEREST-LOAN> 6,078
<INTEREST-INVEST> 3,075
<INTEREST-OTHER> 302
<INTEREST-TOTAL> 9,455
<INTEREST-DEPOSIT> 5,837
<INTEREST-EXPENSE> 6,005
<INTEREST-INCOME-NET> 3,450
<LOAN-LOSSES> 357
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,554
<INCOME-PRETAX> 1,692
<INCOME-PRE-EXTRAORDINARY> 1,692
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,026
<EPS-PRIMARY> .42
<EPS-DILUTED> .32
<YIELD-ACTUAL> 7.78
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,173
<CHARGE-OFFS> 0
<RECOVERIES> 2
<ALLOWANCE-CLOSE> 1,532
<ALLOWANCE-DOMESTIC> 1,532
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
